United States
Environmental Protection
Agency
Office of Air Quality
Planning and Standards
Research Triangle Park. NC 27711
EPA-450/3-91-029
March 1994
Air
& EPA
Economic Impact Analysis
For Proposed Emission
Standards and Guidelines
For Municipal Waste Combustors
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EPA-450/3-91-029
Economic Impact Analysis for
Proposed Emission Standards and
Guidelines for Municipal Waste Combustors
A Description of the Basis for, and Impacts of,
Proposed Revisions to Air Pollutant Emission
Regulations for New and Existing Municipal Waste Combustors
Under Clean Air Act Sections lll(b), lll(d), and 129
March 1994
U.S. Environmental Protection Agency
Region 5, Library (PL-12J)
U.S. ENVIRONMENTAL PROTECTION AGENCY
Office of Air and Radiation
Office of Air Quality Planning and Standards
Research Triangle Park, North Carolina
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This report is issued by the Emission Standards
Division of the Office of Air Quality Planning and
Standards (OAQPS) of the Environmental Protection
Agency. It presents technical data of interest to a
limited number of readers. Copies are available free
of charge to Federal employees, current contractors and
grantees, and non-profit organizations -- as supplies
permit -- from the Library Services Office (MD-35),
U.S. Environmental Protection Agency, Research Triangle
Park, NC 27711, phone 919-541-2777, or may be obtained
for a fee from the National Technical Information
Service, 5285 Port Royal Road, Springfield, VA 22161,
phone 703-487-4650 (FTS 737-4650} . This report may
also be downloaded from the OAQPS Technology Transfer
Network. Phone 919-541-5742 for modems up to 14,100
bps.
11
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CONTENTS
Chapter Page
V
r-o
1 Introduction and Summary 1-1
1.1 Background 1-2
j) 1.2 Analytical Approach 1-9
"X 1.3 Summary of Results 1-11
'O) 2 Regulatory Background 2-1
C_f 2.1 Executive Order 12866 2-2
2.2 The Need for Regulatory Action 2-2
2.3 Alternatives to Federal Regulation 2-5
2.3.1 Market Solutions 2-5
2.3.2 State and Local Regulation 2-6
2.3.3 Judicial Recourse 2-7
2.4 Regulatory Background 2-8
2.4.1 MWC I (1991) Emission Guidelines and
New Source Performance Standards .... 2-10
2.4.2 Overview of Section 129 2-13
3 Industry Profile 3-1
3.1 Demand for MWC Services 3-1
3.2 Supply of MWC Services 3-5
3.2.1 Combustion Technology 3-5
3.2.2 Air Pollution Control Technology .... 3-7
3.2.3 Facility Profile 3-8
3.2.4 Baseline Waste Flow Projections .... 3-9
3.3 Model Plant Approach 3-11
4 Regulatory Approaches 4-1
4.1 Background 4-1
4.2 Market-Based Approaches 4-2
4.2.1 Emission Fees 4-3
4.2.2 Marketable Permits 4-3
4.3 Regulatory Standards 4-4
5 Economic Impacts 5-1
5.1 Market Response 5-1
5.2 Engineering-Cost Inputs 5-3
5.3 Assumptions and Conventions for Computing
Impacts 5-14
5.4 Enterprise Costs 5-17
5.5 National-Level Impacts 5-22
5.5.1 National Social Costs 5-22
5.5.2 Miscellaneous Costs 5-24
5.5.3 National Emissions and
Energy Impacts 5-33
5.5.4 Social Cost/Effectiveness of
Acid Gas and Mercury Control 5-33
6 Sensitivity Analysis 6-1
111
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7 Government, Private Firm, and Household
Impacts 7-1
7.1 Affected Entities 7-1
7.2 Regulatory Flexibility Act Requirements .... 7-3
7.3 Distributional Impacts 7-8
7.3.1 Impacts on Government Entities 7-8
7.3.2 Firm Impacts 7-18
7.3.3 Household Impacts 7-21
7.4 Mitigating Measures 7-26
8 Benefits and Net Benefits 8-1
8.1 Benefits 8-1
8.1.1 Particulate Matter Benefits 8-1
8.1.2 Sulfur Dioxide Benefits 8-2
8.1.3 Lead Benefits 8-3
8.1.4 Unquantified Benefits 8-3
8.1.5 Conclusion 8-9
8.2 Net Benefits 8-9
8.2.1 Evaluation Criterion 8-9
8.2.2 Qualifications 8-9
8.2.3 Results 8-10
References R-l
IV
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FIGURES
Number Page
7-1 MWC II/III EG: Population distribution of
government entities that own an MWC 7-11
7-2 MWC II/III NSPS: Population distribution of
government entities planning to build an MWC 7-12
v
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TABLES
Number Page
1-1 MWC II/III EG: Emission Limit Requirements
for the Regulation that EPA is Proposing 1-5
1-2 MWC II/III EG: Control Technology Bases
for the Regulation that EPA is Proposing 1-7
1-3 MWC II/III NSPS: Emission Limit Requirements
for the Regulation that EPA is Proposing 1-8
1-4 MWC II/III EG: Enterprise Costs and Tipping
Fee Increases for Publicly and Privately
Owned MWCs Under the Regulation that EPA
is Proposing 1-12
1-5 MWC II/III NSPS: Enterprise Costs and Tipping
Fee Increases for Publicly and Privately
Owned MWCs Under the Regulation that EPA is
Proposing 1-13
1-6 MWC II/III EG: National Social Costs and Cost/
Effectiveness of the Regulation that EPA is Proposing . 1-14
1-7 MWC II/III NSPS: National Social Costs and Cost/
Effectiveness of the Regulation that EPA is Proposing . 1-15
1-8 MWC II/III EG: Average Annual Household Impacts
Under the Regulation that EPA is Proposing 1-18
1-9 MWC II/III NSPS: Average Annual Household Impacts
Under the Regulation that EPA is Proposing 1-19
2-1 Pollutants Emitted by MWCs 2-4
2-2 MWC I Emission Reduction Requirements for Plants
Subject to NSPS and EG 2-12
3-1 Distribution of Combustion Technologies Across
Existing Facilities 3-9
3-2 Distribution of Air Pollution Technologies Across
Existing Facilities 3-10
3-3 MSW Disposal Projections 3-10
3-4 MWC II/III EG: Characteristics of Model Plants .... 3-13
3-5 MWC II/III NSPS: Characteristics of Model Plants . . . 3-14
3-6 MWC II/III EG: National Capacity and Waste Flow
Estimates for Existing MWC Facilities 3-15
3-7 MWC II/III NSPS: National Capacity and Waste Flow
Estimates for Existing MWC Facilities 3-17
4-1 Control Technologies Associated with Acid Gas,
Particulate Matter, and Metals Control 4-7
4-2 MWC II/III EG: Control Technology Bases Used to
Estimate the Impacts of the Regulatory Alternatives . . 4-8
4-3 MWC II/III NSPS: Control Technology Bases Used to
Estimate the Impacts of the Regulatory Alternatives . . 4-11
VI
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TABLES
(Continued)
Number Page
5-1 MWC II/III EG: Model Plant Capital and Annual
Operating Costs of Acid Gas, Particulate Matter,
and Metals Control 5-5
5-2 MWC II/III NSPS: Model Plant Capital and Annual
Operating Costs of Acid Gas, Particulate Matter,
and Metals Control 5-6
5-3 MWC II/III EG: Model Plant Capital and Annual
Operating Costs for Hg Control 5-7
5-4 MWC II/III EG: Model Plant Capital and Annual
Operating Costs for NOX Control 5-8
5-5 MWC II/III NSPS: Model Plant Capital and Annual
Operating Costs for Hg Control 5-9
5-6 MWC II/III NSPS: Model Plant Capital and Annual
Operating Costs for NOX Control 5-10
5-7 MWC II/III EG: Model Plant Testing, Reporting,
and Recordkeeping Costs 5-12
5-8 MWC II/III NSPS: Model Plant Testing, Reporting,
and Recordkeeping Costs 5-13
5-9 Assumptions and Conventions 5-15
5-10 MWC II/III EG: Average Annual Enterprise Costs .... 5-20
5-11 MWC II/III NSPS: Average Annual Enterprise Costs . . . 5-21
5-12 MWC II/III: Average Tipping Fee Increases
Projected for MWCs Assuming a Full Cost Pass Through . 5-23
5-13 MWC I National Social Costs 5-25
5-14 MWC II/III EG: National Social Costs by Regulatory
Alternative and Compliance Scenario 5-26
5-15 MWC II/III EG: Incremental National Social Costs . . . 5-27
5-16 MWC II/III NSPS: National Social Costs by
Regulatory Alternative 5-28
5-17 MWC II/III NSPS: Incremental National Social Costs . . 5-29
5-18 MWC II/III EG: Average Annual Social Cost per
Megagram of MSW by Regulatory Alternative and
Compliance Scenario 5-30
5-19 MWC II/III NSPS: Average Annual Social Cost per
Megagram of MSW by Regulatory Alternative 5-31
5-20 MWC I National Baseline Emissions and Emissions
Reductions 5-34
5-21 MWC II/III EG: National Baseline Emissions and
Emissions Reductions by Regulatory Alternative and
Compliance Scenario 5-35
5-22 MWC II/III NSPS: National Baseline Emissions and
Emissions Reductions by Regulatory Alternative .... 5-36
5-23 MWC I National Annual Energy Impacts 5-37
5-24 MWC II/III EG: National Annual Energy Impacts .... 5-38
5-25 MWC II/III EG: Incremental National Annual Energy
Impacts 5-39
5-26 MWC II/III NSPS: National Annual Energy Impacts . . . 5-40
5-27 MWC II/III NSPS: Incremental National Annual
Energy Impacts 5-40
Vll
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TABLES
(Continued)
Number Page
5-28 MWC II/III EG: Average National Social Cost/
Effectiveness 5-44
5-29 MWC II/III EG: Incremental National Social
Cost/Effectiveness 5-45
5-30 MWC II/III NSPS: Average National Social Cost/
Effectiveness 5-46
5-31 MWC II/III NSPS: Incremental National Social
Cost/Effectiveness 5-47
6-1 MWC II/III EG: National Social Cost/Effectiveness
of Acid Gas Control Using Alternative Credits for
PM Reductions 6-2
6-2 MWC II/III NSPS: National Incremental Social Cost/
Effectiveness of Acid Gas Control Using Alternative
Credits for PM Reductions 6-3
6-3 MWC II/III EG: National Social Cost/Effectiveness
of Acid Gas Control Using Alternative Weights for
HCl Reductions 6-4
6-4 MWC II/III NSPS: National Incremental Social Cost/
Effectiveness of Acid Gas Control Using Alternative
Weights for HCl Reductions 6-5
6-5 MWC II/III EG: National Annual Social Cost Using
Alternative Discount Rates 6-7
6-6 MWC II/III NSPS: National Annual Social Cost
Using Alternative Discount Rates 6-7
6-7 MWC II/III EG: National Annual Social Cost Using
Alternative Downtime Assumptions 6-8
6-8 MWC II/III EG: National Annual Social Cost Using
Alternative Capacity Utilization Rates 6-9
6-9 MWC II/III NSPS: National Annual Social Cost Using
Alternative Capacity Utilization Rates 6-10
6-10 MWC II/III EG: National Emission Reductions Using
Alternative Capacity Utilization Rates 6-11
6-11 MWC II/III NSPS: National Emission Reductions Using
Alternative Capacity Utilization Rates 6-12
7-1 Number of Public and Private Entities that Own
an MWC Subject to MWC II/III EG or NSPS 7-6
7-2 Distributional Analysis Data Sources 7-9
7-3 Financing Options Available to Government Entities . . 7-14
7-4 MWC II/III EG: Share of Government Entities with
Potential Difficulty Issuing Revenue Bonds 7-17
7-5 MWC II/III: Average Tipping Fee Increases at
Privately Owned MWCs by Size of Firm 7-20
7-6 MWC II/III EG: Average Annual Cost Per Household . . . 7-22
7-7 MWC II/III NSPS: Average Annual Cost Per Household . . 7-23
7-8 MWC II/III EG: Average Annual Cost per Household
as a Percentage of Household Income 7-24
7-9 MWC II/III NSPS: Average Annual Cost per Household
as a Percentage of Household Income 7-25
Vlll
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Number
8-1
8-2
8-3
8-4
TABLES
(Continued)
Page
MWC II/III EG: Partial National Benefit Estimates
for Sulfur Dioxide and Particulate Matter Emission
Reductions 8-4
MWC II/III NSPS: Partial National Benefit Estimates
for Sulfur Dioxide and Particulate Matter Emission
Reductions 8-5
Some Health and Welfare Effects of MWC Emissions . . . 8-6
MWC II/III National Social Costs and Partial
National Benefits from Reducing MWC Emissions 8-11
IX
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CONVERSIONS AND DEFINITIONS
This report uses metric units, as well as acronyms and terms
that may not be familiar to all readers. Following is a short guide
to conversions and definitions for a selection of the units,
acronyms, and terms.
CONVERSIONS
To Convert From
Mg
(megagram)
g/dscm
(grams/dry
standard
cubic meter)
TJ
(terajoule)
TJ
(terajoule)
To
Ton
(2,000 Ib)
gr/dscf
(grains/dry
standard
cubic foot)
106 Btu
(million British
Thermal Units)
MWh
(megawatt hours
Multiply by
1.1025
0.44
948
278
Examples from Text
35 Mg =
225 Mg
39 tons
= 250 tons
0.02 g/dscm =0.01
gr/dscf
0.18 g/dscm =0.08
gr/dscf
8.54 TJ = 8,100 106
Btu
34.2 TJ = 32,400 10e
Btu
4.32 TJ = 1,200 MWh
13 TJ = 3,600 MWh
OTHER MEASURES
ng
Nm3
mg
ppmv
103,- 106
Nanogram-one billionth of a gram (10 gram)
Normal cubic meter (a normal cubic meter is
at 0°C, while a standard cubic meter is at
20°C; both at 1 atmosphere of pressure.
Milligram-one thousandth of a gram
(10~3 gram)
Parts per million by volume
Thousands; Millions
POLLUTANTS
CDD/CDF
CO
HC1
NOX
Pb
PM
S02
Cd
Hg
Polychlorinated dibenzo-p-dioxins and
dibenzofurans
Carbon monoxide
Hydrogen chloride
Nitrogen oxides
Lead
Particulate matter
Sulfur dioxide
Cadmium
Mercury
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CONVERSIONS AND DEFINITIONS (CONTINUED)
GENERAL ACRONYMS
BDT
MACT
APCD
MSW
MWC
Best demonstrated technology
Maximum achievable control technology
Air pollution control device
Municipal solid waste
Municipal waste combustor
ECONOMIC TERMS
MSC
MSB
Enterprise cost
National social cost
$1990
Tipping fee
C/E
Marginal social cost
Marginal social benefit
The regulatory costs incurred by each MWC,
discounted and annualized at real market
interest rates
The sum of the regulatory costs incurred by
each MWC (without accounting for tax
effects), discounted and annualized at
interest rates reflecting society's real
opportunity costs for capital and
consumption
Constant (real) dollars at their mid-year
1990 value
The charge for incinerating or landfilling
MSW, usually $/Mg MSW, imposed by MWCs or
landfill operators on MSW collectors.
Tipping fees, where they are charged, do not
reflect the cost of collecting and
transporting MSW to the disposal site and
may or may not reflect the full cost of
incineration or landfilling.
Cost-effectiveness
REGULATORY AND LEGISLATIVE TERMS
Baseline
EG
MWC I
Conditions that would exist were there to be
no more emission control than that mandated
by regulation in existence before 1991, that
is, by 40 CFR Subparts E and Db (but not by
EPA's 1987 new source review operational
guidance).
Clean Air Act Sections lll(d) and 129
emission guidelines for existing sources
Emission Standards and Guidelines
promulgated February 11, 1991 for large MWCs
XI
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CONVERSIONS AND DEFINITIONS (CONTINUED)
REGULATORY AND LEGISLATIVE TERMS (Continued)
MWC II/III Revised and expanded Emission Standards and
Guidelines to be proposed for large MWCs
(MWC II) and small MWCs (MWC II)
NSPS Clean Air Act Sections lll(b) and 129 new
source performance standards
CAA Clean Air Act (In some references, as
amended through 1977; in most references, as
amended through 1990)
E.O. Executive Order
OMB Office of Management and Budget
RCRA Resource Conservation and Recovery Act
NAAQS National Ambient Air Quality Standards
SIP State Implementation Plan
RFA Regulatory Flexibility Act
EIA Economic Impact Analysis
POLLUTION CONTROL TECHNOLOGIES
GCP Good combustion practices
DSI Dry sorbent injection
ESP Electrostatic precipitator
ESP(m) Enhanced electrostatic precipitator
SD Spray dryer
FF Fabric filter
CI Activated carbon injection (used for mercury
control)
SNCR Selective non-catalytic reduction (ammonia
injection for NOX control)
XII
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CONVERSIONS AND DEFINITIONS (CONTINUED)
MODEL PLANTS/COMBUSTION TECHNOLOGIES
Model plant A hypothetical MWC representative of a class
of MWCs; used to analyze impacts of
regulation
S Small (35 to 225 Mg/day capacity)
L Large (over 225 Mg/day capacity)
BB Bubbling bed (a type of FBC)
CB Circulating bed (a type of FBC)
EA Excess air
FBC Fluidized-bed combustion
MB Mass burn
MOD Modular
RDF Refuse-derived fuel
REF Refractory
RG Rocking grate
RK Rotary kiln
RWW Rotary waterwall
SA Starved air
TG Travelling grate
TR Transfer rams
UC Under construction
WW Waterwall
Xlll
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CHAPTER 1
INTRODUCTION AND SUMMARY
The Clean Air Act (CAA) of 1990 requires that the U.S.
Environmental Protection Agency (EPA) develop, propose,
promulgate, and enforce regulations to improve health and
welfare by reducing the quantity of air pollutants emitted
from sources such as combustors. Sections 111 and 129 of the
CAA direct EPA to develop Emission Guidelines (EG) for
existing municipal waste combustors (MWCs) and New Source
Performance Standards (NSPS) for new MWCs. Municipalities use
MWCs to reduce the quantity of municipal solid waste (MSW)1
that must be landfilled and, frequently, to generate energy.
The EPA projects that, by 1996, the proposed EG will
potentially affect approximately 179 MWCs combusting about
32.82 million Mg of waste annually. Furthermore, EPA projects
that, by 2000, approximately 70 new plants subject to the NSPS
will combust an additional 14.95 million Mg of MSW. Thus, the
total 2000 projected waste flow affected by the regulations is
47.77 million Mg/yr.
The regulations are needed because MSW combustion
generates unwanted by-products that are discharged into the
atmosphere--including criteria pollutants and other organics,
metals, and acid gases. Elevated exposures of people, plants,
is defined as either a mixture or a single item stream of
household, commercial, and/or institutional discards. This
definition includes refuse-derived fuel (RDF), which is waste that
is shredded and classified by size (or pelletized) before combustion
to increase the heating value of the waste. Discards from
industrial and manufacturing processes are not included in the
definition of MSW.
1-1
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animals, structures, and materials to these pollutants reduce
both health and welfare. This combined Economic Impact
Analysis (EIA) presents an analysis of the potential economic
impacts of the EG and NSPS for MWCs.
1.1 BACKGROUND
Air pollution caused by municipal solid waste combustion
in MWCs is a classic example of a "negative externality":
costs are imposed on uncompensated parties. Private market
systems have failed to make MWC operators consider these costs
in their production decisions or to compensate damaged parties
for the negative effects associated with pollution. Damaged
parties cannot collect compensation because the adverse
effects of the pollutants are nonmarket goods—that is, goods
that are not explicitly and routinely traded in organized free
markets. One way to address the problem of externalities is
through Federal regulatory intervention.
Alternatives to Federal intervention addressed in this
analysis include State or local regulation and judicial
recourse. The EPA believes that relying on State and local
action is not a viable substitute for Federal regulatory
action in the case of controlling MWC emissions. Federal
action is likely to provide a more consistent, efficient, and
complete societal response to the problem of MWC emissions.
Similarly, litigation, although possible under both the CAA
and the Resource Conservation and Recovery Act (RCRA), is
expensive and risky in comparison to direct regulation.
Congress decided that Federal regulatory action is
necessary, and EPA must decide on a regulatory policy
strategy. Several policy options are available to EPA to
reduce the pollution from MWCs from an excessive to an optimal
level, or to any other desired level. These options include
both market-based approaches and regulatory standards.
The market-based approaches considered in this analysis
include emission fees and marketable permits. An attractive
1-2
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feature of both of these market-based approaches is that each
discharger would independently choose a level of control
resulting in equivalent marginal control costs across all
polluters. This approach minimizes the cost to achieve a
given level of aggregate control.
The government traditionally uses regulatory standards to
control pollution. Two broad categories of this regulatory
approach include design standards and emission standards.
Design standards specify the type of control equipment to be
installed by polluters, whereas emission standards specify the
maximum quantity of a given pollutant that a polluter may
release. The candidate regulatory alternatives analyzed in
this report are emission standards based on the requirements
in Section 129 of the CAA. For comparison purposes, three
candidate regulatory alternatives are examined under the EG
and two under the NSPS.
The CAA requires EPA to regulate MWCs based on the
maximum achievable control technology (MACT). MACT is the
maximum degree of reduction in emissions, taking into
consideration the cost of achieving such emission reduction,
and any non-air quality health and environmental impacts and
energy requirements. Emission standards and guidelines cannot
be less stringent than what EPA calls the MACT "floor."
Specifically, for new MWCs, the standards must be at least as
stringent as the emissions control achieved in practice by the
best controlled similar MWC. For existing MWCs, the
guidelines can be less stringent than standards for new MWCs
in the same category, but must not be less stringent than the
average emissions limitation achieved by the best performing
12 percent of MWCs in the same category.
Section 129 of the CAA indicates that EPA should
promulgate the Section 111 standards and guidelines that were
already in the pipeline in 1990 (when Section 129 was added to
the CAA), but that those standards and guidelines subsequently
should be revised and expanded to bring them into conformance
with the new requirements of Section 129. EPA therefore
1-3
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promulgated the Section 111 standards and guidelines on
February 11, 1991. They are referred to as MWC I in this
analysis. MWC I requirements have been implemented for new
MWCs but not for existing MWCs; they will be expanded and
strengthened with more stringent requirements based on MACT.
This EIA focuses on these MACT-based requirements, and all
reported impacts are incremental to the pre-MWC I baseline.
In this analysis, MWC II refers to the additional MACT-
based requirements for MWCs greater than 225 Mg/day (large)
capacity. Similarly, MWC III refers to the MACT-based
requirements for MWCs between 35 and 225 Mg/day (small)
capacity also required in Section 129. These requirements are
referred to collectively as MWC II/III throughout the balance
of this report.
Table 1-1 reports the emission limits for the MWC II/III
EG regulatory alternative that EPA is proposing (Regulatory
Alternative II). The proposed limits are different for
segments of the regulated population based on plant size
classification. Plant size classification is determined by
the combustion capacity per day in aggregate for all units at
a plant, given in megagrams per day (Mg/day). Plants
classified as small have a combustion capacity between 35 and
225 Mg/day, and those classified as large have a capacity of
over 225 Mg/day.
Although MWC operators may use any technology that
achieves the emission limit to comply with the EG, the impacts
of the regulation estimated in this analysis are based on
specified demonstrated control technologies that achieve the
mandated emission requirements for each plant size.2
Generally speaking, MWC owners and operators are assumed to
choose the minimum-cost control technology that will meet the
emission requirements. However, where there is uncertainty
2Section 3.2.2 provides descriptions of the pollution control
technologies.
1-4
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TABLE 1-1. MWC II/III EG: EMISSION LIMIT REQUIREMENTS
FOR THE REGULATION THAT EPA IS PROPOSING
Emission Limits3
CO
CDD/CDF (Total)
PM
HC1
S02
Pb
Cd
Hg
NOX
Size Classification
Small (35 to 225)
50-250 ppmv
(varies by
technology)
60 ng/dscmb
69 mg/dscm
300 ppmv
80 ppmv
1.6 mg/dscm
0.10 mg/dscm
0 . 10 mg/dscm or
80 percent
reduction
no control
(Mg MSW/day)c
Large (Over 225)
50-250 ppmv
(varies by
technology)
30 ng/dscmb
27 mg/dscm
3 5 ppmv
35 ppmv
0.50 mg/dscm
0.04 mg/dscm
0.10 mg/dscm or
80 percent
reduction
180 ppmv (except
REF MWCs)
aEmission levels are corrected to 7 percent 02.
bCDD/CDF limits are expressed as total CDD/CDF. On a toxic
equivalency (TEQ) basis, 60 ng/dscm (total) « 1.0 ng/dscm
(TEQ), and 30 ng/dscm (total) ~ 0.5 ng/dscm (TEQ).
cThe control technology bases for large and small plants are
provided in Table 1-2.
Note:
1. Definitions are provided on p. x.
1-5
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regarding the actual emission limit that an existing control
technology can be upgraded to, owners may choose a more
conservative (or potentially more costly) retrofit strategy to
reduce the risk of noncompliance. This is particularly true
where the investment decision affects the facility's ability
to remain in operation (e.g., noncompliance results in plant
shutdown), is a long-term decision, or involves a significant
capital outlay. Consequently, this analysis evaluates two
compliance scenarios for acid gas controls for existing plants
subject to EG.
Table 1-2 describes the control technology bases
evaluated under each of the two compliance scenarios included
in this analysis. The scenarios illustrate two possible acid
gas control compliance strategies MWC owners or operators may
take in response to the emission requirements. Note that the
compliance strategies are identical under both scenarios for
small plants. Consequently, the estimated impacts are
identical under both scenarios. However, the compliance
strategies modeled for larger plants differ under Scenarios A
and B. Thus, the impacts estimated for larger plants differ
under the two scenarios.
The compliance scenarios are differentiated based on the
projected responses modeled for MWCs with (1) essentially no
air pollution control equipment in the baseline, (2) only a
minimal level of control equipment in the baseline (ESP), and
(3) relatively advanced pollution control equipment in the
baseline (SD/ESP or SD/FF).3 Scenario A assumes that owners
whose plants are only minimally equipped with air pollution
control equipment in the baseline will attempt to meet the
acid gas limitations by adding to and enhancing their existing
equipment and by improving their operating practices.
Scenario B assumes that these same owners will attempt to meet
the acid gas limitations by replacing some of their existing
3The control technologies are described in Section 3.
1-6
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TABLE 1-2.
MWC II/III EG: CONTROL TECHNOLOGY BASES FOR THE
REGULATION THAT EPA IS PROPOSING3
Compliance Scenario
and Baseline APCD
Size Classification (Mg MSW/day)
Small (35 to 225)
Large (Over 225)
Scenario A
No Control
Minimal Control (ESP)
Advanced Control
(SD/ESP)
Advanced Control
(SD/FF)
Scenario B
No Control
Minimal Control (ESP)
Advanced Control
(SD/ESP)
Advanced Control
(SD/FF)
GCP+DSI/FF+CI
GCP+DSI/ESP+CI
GCP+SD/ESP+CI
GCP+SD/FF+CI
Same as Scenario A
Same as Scenario A
Same as Scenario A
Same as Scenario A
GCP+SD/FF+CI+SNCR
GCP+SD/ESP(m)+CI+SNCR
GCP+SD/ESP(m)+CI+SNCR
GCP+SD/FF+CI+SNCR
Same as Scenario A
GCP+SD/FF+CI+SNCR
Same as Scenario A
Same as Scenario A
aThe control technologies
definitions are provided
are described in Section 3 and
on p. x.
equipment with more advanced technology. Under both
scenarios, EPA assumes that owners whose plants have advanced
acid gas control equipment in the baseline will meet the acid
gas limitations without replacing their existing control
equipment. However, these owners may have to adjust their
operating practices to achieve the acid gas limits. Likewise,
under both scenarios, we assume that owners of MWCs that have
essentially no air pollution control equipment will respond to
the acid gas requirements by installing the most effective
equipment available and by improving their operating
practices.
Table 1-3 contains the emission limits for the NSPS
regulatory alternative that EPA is proposing for new MWCs
constructed after the NSPS is proposed (Regulatory Alternative
II). The scenario analysis used for the EG is not used to
1-7
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TABLE 1-3.
MWC II/III NSPS: EMISSION LIMIT REQUIREMENTS FOR
THE REGULATION THAT EPA IS PROPOSING
Size Classification (Mg MSW/day)c
Emission Limitsa
CO
CDD/CDF (Total)
PM
HC1
S02
Pb
Cd
Hg
NOX
Small (35 to 225)
50-100 ppmv
(varies by
technology)
10 ng/dscmb
15 mg/dscm
25 ppmv
2 6 ppmv
0 . 12 mg/dscm
0.01 mg/dscm
0.10 mg/dscm or 80
percent reduction
no control
Large (Over 225)
50-100 ppmv
(varies by
technology)
10 ng/dscmb
15 mg/dscm
25 ppmv
2 6 ppmv
0.12 mg/dscm
0.01 mg/dscm
0.10 mg/dscm or
80 percent
reduction
167 ppmv
aEmission levels are corrected to 7 percent 02.
bCDD/CDF limits are expressed as total CDD/CDF. On a toxic
equivalency (TEQ) basis, 10 ng/dscm (total) = 0.2 ng/dscm
(TEQ).
cThe control technology basis for small plants is GCP+SD/
FF+CI and for large plants is GCP+SD/FF+CI+SNCR.
Note:
1. Definitions are provided on p. x.
1-8
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evaluate impacts for plants subject to the NSPS. Much of the
variation in compliance costs for the EG is due to the
variable baseline for existing plants—some plants have
essentially no baseline control equipment whereas others have
advanced pollution control systems in place. The scenario
analysis for EG projects responses to the emission limitations
that are differentiated based on the level of baseline
control. For the NSPS analysis, EPA defines the baseline for
new plants based on the 40 CFR Subparts E and Db prior to
1991. Because the baseline for new plants is not variable, a
scenario analysis similar to that used for the EG is not
relevant for the NSPS.
1.2 ANALYTICAL APPROACH
In this analysis a model plant approach is used to
analyze the impacts of the EG and NSPS. Sixteen EG model
plant categories and 11 NSPS model plant categories represent
the design characteristics of actual existing and planned
facilities. These model plants are further subcategorized by
size classification and baseline control technology. Weights
or scaling factors are computed for each subcategory based on
the waste flow of plants assigned to the subcategory. These
scaling factors are used to scale the plant-level impacts to
national levels.
The choices facing suppliers of MWC services are
characterized as either substitution choices or compliance
choices. Substitution choices refer to the operating and
investment decisions that affect the amount of MSW combusted
at existing or planned MWCs. This analysis assumes that the
amount of MSW combusted at MWCs, and the mix of combustion
technology, will not change in response to the regulation.
Compliance choices refer to the decisions regarding the type
of control technology selected to comply with the MWC II/III
emission standards. Impacts are evaluated based on the
assumption that MWC owners and operators will choose the
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minimum-cost control technology that will meet the emission
reduction requirements, subject to some uncertainties
regarding the level of control that will actually be achieved
by a particular control technology.
In this analysis the increased cost of combustion due to
the regulation is estimated for each affected MWC and at the
national level. The estimated costs incurred by each affected
MWC are called enterprise costs in this analysis. Enterprise
costs are computed for publicly owned and privately owned
MWCs.4 The differences in the costs for these two types of
ownership reflect differences in assumptions regarding
discount rates, as well as the treatment of taxes.
The national-level impacts of the EG and NSPS computed
for this analysis include annual social costs, emission
reductions, and energy impacts. National social costs refer
to the regulatory costs for the nation as a whole and are
computed based on a discount rate reflecting society's real
opportunity cost of capital. National social costs and
emission reductions are used to compute the cost/effectiveness
(C/E) of the regulation.
Affordability issues are addressed in a distributional
analysis of impacts on governments, businesses, and households
affected by the EG and NSPS. Of particular concern are the
impacts on small entities affected by the regulation. The
Regulatory Flexibility Act (RFA) requires that Federal
agencies consider whether regulations they develop will have a
significant adverse economic impact on a substantial number of
small entities. If more than 20 percent of all small
potentially affected entities are likely to incur such an
impact, then a regulatory flexibility analysis is required.
In the case of the MWC II/III regulations, a regulatory
4MWCs owned by government entities are referred to as "publicly
owned" MWCs throughout this report. MWCs owned by non-governmental
entities are referred to as "privately owned" MWCs throughout this
report, regardless of whether the firm is publicly or p>rivately
held.
1-10
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flexibility analysis is not required because the share of
small entities likely to incur any economic impacts is less
than 20 percent. Even though regulatory flexibility analysis
is not required, EPA believes analyzing the impacts of the
regulation on affected entities, and on small affected
entities in particular, is appropriate.
Distributional impacts are computed using demographic and
financial data collected for individual communities and firms
identified for this analysis. To evaluate the impacts on
publicly owned MWCs, EPA projects the share of government
entities with potential difficulty issuing bonds to finance
the costs of the regulation. Impacts on firms are measured as
a percentage of total annual sales and as projected tipping
fee increases at the facility. Household impacts are measured
in absolute terms (cost per household per year) and as a
percentage of average household income.
Finally, a partial analysis of the benefits of reducing
particulate matter (PM) and sulfur dioxide (S02) is provided.
Specifically, the EIA provides a partial analysis of benefits
from reductions in morbidity and mortality. The absence of
sufficient exposure-response and valuation information for
many of the MWC pollutants precludes a comprehensive benefits
analysis.
1.3 SUMMARY OF RESULTS
Tables 1-4 and 1-5 show the estimated costs per megagram
of MSW combusted and corresponding tipping fee increases for
MWCs under the EG and NSPS that EPA is proposing. These costs
are incremental to the pre-MWC I (1991) baseline and include
the costs for controlling all pollutants including nitrogen
oxides (NOX) and mercury (Hg). The tipping fee increases are
computed based on an average tipping fee of $57/Mg (1990$)
(Berenyi and Gould, 1993). Average costs for most publicly
owned plants range from about $20 to $34/Mg of MSW combusted
for the EG and from $11 to $33/Mg of MSW combusted for the
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TABLE 1-4. MWC II/III EG: ENTERPRISE COSTS AND TIPPING FEE
INCREASES FOR PUBLICLY AND PRIVATELY OWNED MWCs UNDER
THE REGULATION THAT EPA IS PROPOSING3'b
Size Classification (Mg MSW/day)
Small (35 to 225)
Type of Average
Ownership and Annual Cost Tipping Fee
Compliance ($1990/ Increase
Scenario Mg MSW)C (percent )d
Public
Entities
Scenario A 33.65 59
Scenario B 33 . 65 59
Private
Entities
Scenario A 37.04 65
Scenario B 37.04 65
Large (over 225)
Average
Annual Cost Tipping Fee
($1990/ Increase
Mg MSW)C (percent )d
20.24 36
20.25 36
23.37 41
23.88 42
aCosts are computed using the control technology bases reported in
Table 1-2.
bCosts are annual operating costs plus capital costs, annualized at
4 percent for public MWCs and 8 percent for private MWCs. Annual
operating costs include testing, reporting, and recordkeeping costs,
some of which are also annualized.
cCost per megagram of MSW is computed by dividing total annual cost
of the regulation by the total amount of MSW processed per year at
large plants that do not have SD/ESP or SD/FF systems and small
plants that do not have DSI/ESP, SD/ESP, or SD/FF systems in the
baseline.
Dipping fee increases assume a full cost pass through and are based
on an average tipping fee of $57/Mg ($1990).
Notes:
1. MWC capacity utilization is assumed to average 83 to 88 percent
for most plants.
2. Definitions are provided on p. x.
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TABLE 1-5. MWC II/III NSPS: ENTERPRISE COSTS AND TIPPING FEE
INCREASES FOR PUBLICLY AND PRIVATELY OWNED MWCs UNDER
THE REGULATION THAT EPA IS PROPOSING3'13
Size Classification (Mg MSW/day)
Small (35 to 225)
Type of
Ownership
Public
Entities
Private
Entities
Average
Annual Cost
($1990/
Mg MSW)C
33.34
38.26
Tipping Fee
Increase
(percent )d
58
67
Large (over 225)
Average
Annual Cost
($1990/
Mg MSW)C
11.49
12.98
Tipping Fee
Increase
( percent )d
20
23
aCosts are computed using the following control technology bases:
GCP+SD/FF+CI for small plants and GCP+SD/FF+CI+SNCR for large plants.
bCosts are annual operating costs plus capital costs, annualized at
4 percent for public MWCs and 8 percent for private MWCs. Annual
operating costs include testing, reporting, and recordkeeping costs,
some of which are also annualized.
cCost per megagram of MSW is computed by dividing total annual cost
of the regulation by the total amount of MSW processed per year at
all plants affected by the regulation.
"^Tipping fee increases assume a full cost pass through and are based
on an average tipping fee of $57/Mg ($1990) .
Notes:
1. MWC capacity utilization is assumed to average 83 to 88 percent
for most plants.
2. Definitions are provided on p. x.
NSPS. Average costs for most privately owned plants are
slightly higher due to differences in the discount rate and
treatment of taxes.
Tables 1-6 and 1-7 show the national annual social costs,
the average cost per megagram of MSW combusted, and C/E
(relative to the baseline) for the EG and NSPS that EPA is
proposing. Costs are projected in this analysis for the year
2000. Costs for existing plants range from a total of $443
million per year under Scenario A to $448 million per year
under Scenario B. Costs for new plants total approximately
$201 million per year.
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TABLE 1-6. MWC II/III EG: NATIONAL SOCIAL COSTS AND COST/
EFFECTIVENESS OF THE REGULATION THAT EPA IS PROPOSING ($1990)a
Compliance Scenario
and Control Cost
Category
Annual Social Costsb
($103/yr) ($/Mg MSW)C
Social Cost/
Effectiveness
($103/Mg
Emissions
Reduction)
Scenario A
Acid Gas/PM/ 355,000
Metals Control
Hg Control 17,800
NOX Control 56,300
Testing, Reporting, 13,500
Recordkeeping
Total 443,000
Scenario B
Acid Gas/PM/ 366,000
Metals Control
Hg Control 13,000
NOX Control 56,300
Testing, Reporting, 13,500
Recordkeeping
Total 448,000
21.10
0.72
2.05
0.41
3.02e
374f
2.93f
21.70
0.53
2.05
0.41
3.12e
273f
2.93f
aCosts are computed using the control technology bases reported in
Table 1-2.
bAnnual social costs are the sum of capital costs, annualized at
7 percent, and annual operating costs. Annual operating costs
include testing, reporting, and recordkeeping costs, some of which
are also annualized.
cCost per megagram of MSW is computed by dividing total annual cost
of the regulation by the total amount of MSW processed per year at
large plants that do not have SD/ESP or SD/FF systems and small
plants that do not have DSI/ESP, SD/ESP, or SD/FF systems in the
baseline.
dThe total cost per megagram of MSW is not shown because NOX control
costs are not incurred at the same set of MWC plants that incur
costs for controlling other pollutants.
eSocial cost/effectiveness of acid gas control is [Annual social
cost of acid gas control-($17,700 * PM reductions)}/(annual S02 +
HCl reductions).
fSocial cost/effectiveness of Hg or NOX control is (Annual social
cost of Hg or NOX control)/(annual Hg or NOX reductions).
Notes:
1. MWC capacity utilization is assumed to average 83 to 88
percent for most plants.
2. Definitions are provided on p. x.
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TABLE 1-7. MWC II/III NSPS: NATIONAL SOCIAL COSTS AND
COST/EFFECTIVENESS OF THE REGULATION THAT EPA IS PROPOSING
($1990)a
Social
Annual Social Costsb Cost/Effectiveness
Control Cost ($103/Mg Emissions
Category ($103/yr) ($/Mg MSW)C Reduction)
Acid Gas/PM/Metals
Control
Hg Control
NOX Control
Testing, Reporting,
Recordkeeping
Total
166,000
4,500
25,400
5,290
201,000
11.
0.
1.
0.
_d
10
40
80
35
0.59e
167f
2.42f
-
-
aCosts are computed using GCP+SD/FF+CI as the control technology-
basis for small plants and GCP+SD/FF+CI+SNCR as the control
technology basis for large plants .
bAnnual social costs are the sum of capital costs, annualized at
7 percent, and annual operating costs. Annual operating costs
include testing, reporting, and recordkeeping costs, some of which
are also annualized.
cCost per megagram of MSW is computed by dividing total annual cost
of the regulation by the total amount of MSW processed per year at
all plants affected by the regulation.
total cost per megagram of MSW is not shown because NOX control
costs are not incurred at small MWC plants, which incur costs for
controlling other pollutants.
eSocial cost/effectiveness of acid gas control is [Annual social
cost of acid gas control- ($17, 700 * PM reductions) ]/ (annual SO2 +
HCl reductions) .
fSocial cost/effectiveness of Hg or NOX control is (Annual social
cost of Hg or NOX control) / (annual Hg or NOX reductions) .
Notes:
1. MWC capacity utilization is assumed to average 83 to 88 percent
for most plants.
2. Definitions are provided on p. x.
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EPA identified 100 potentially affected government entities
that own an MWC subject to the EG and another 15 government
entities planning to build an MWC that would be subject to the
NSPS. The analysis of government impacts indicates that none of
the government entities above 50,000 in population are projected
to have difficulty issuing revenue bonds as a result of the EG.
However, approximately 3 to 5 percent of small affected
government entities below 50,000 population are projected to have
potentially difficulty issuing revenue bonds under the regulation
that EPA is proposing for existing MWCs. None of the government
entities potentially affected by the NSPS is projected to
experience difficulty issuing revenue bonds.
The EPA identified 39 firms that own one or more MWCs
subject to the EG and 5 firms planning to build one or more MWCs
subject to the NSPS. Of these, 22 are small firms that own one
or more existing MWCs and 4 are small firms planning to build
one or more MWCs.5 Detailed financial data are published for
only 17 of the large firms and none of the small firms with MWCs
projected to incur costs due to the EG. Total annual costs of
the regulation as a percentage of annual sales average less than
1 percent for each of these 17 firms. Detailed financial data
are available for only one of the large firms and none of the
small firms with MWCs subject to the NSPS. Total costs of the
regulation amount to less than one percent of sales for this
firm.
Tipping fee increases are also computed for small and large
MWCs owned by private entities. As explained in Chapter 7,
tipping fee increases at existing MWCs owned by small firms
average 18 percent under both Scenario A and Scenario B. The
corresponding tipping fee increases at existing MWCs owned by
large firms average 14 percent. Under the NSPS, tipping fee
increases average 28 percent for small firms and 17 percent for
large firms.
5Firms for which financial data were unavailable are assumed to
be small (under $6 million in annual sales).
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Tables 1-8 and 1-9 report household impacts under the EG
and NSPS alternatives that EPA is proposing. Average annual
costs per household range from $22 to $30 per household per
year for communities affected by the EG and from about $17 to
$29 per household per year for communities affected by the
NSPS. This amounts to less than one percent of average
household income for these communities.
Partial benefits for reduction of PM and SO2--primarily
benefits from reductions in morbidity and mortality—are
expected to total about $106 million under the EG and about
$160 million under the NSPS annually.
The impacts summarized in this chapter are described in
greater detail in the balance of this report. Chapter 2
provides the regulatory background and identifies the basis
for Federal regulatory action to control air emissions from
MWCs. Chapter 3 contains a description of the demand and
supply conditions in the market for waste combustion services.
An overview of potential regulatory approaches -- including
market-based approaches, design standards, and emission
standards -- that can be used to address the air pollution
problem is contained in Chapter 4. Chapter 4 also describes
the candidate regulatory alternatives examined for this
analysis. Chapter 5 describes the methods and assumptions
used to compute the economic impacts of each candidate
regulatory alternative. The national-level impacts and the
enterprise-cost impacts are reported in Chapter 5. Chapter 6
presents a sensitivity analysis to measure the effects of
changing certain assumptions used to compute the impacts
presented in Chapter 5. The distributional impacts on
affected households, government entities, and firms are
presented in Chapter 7. Finally, Chapter 8 reports partial
benefits quantified for this analysis.
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TABLE 1-8. MWC II/III EG: AVERAGE ANNUAL HOUSEHOLD IMPACTS
UNDER THE REGULATION THAT EPA IS PROPOSING
Compliance Scenario
and Impact Measure
Community Size
(Population 103)
0 to
50
50 to
100
100 to
250
Over
250
Number of Observations 68 22 37 48
Scenario A
Cost per Household 22 29 24 26
($1990/Household/yr)a
Cost per Household as a Percentage 0.06 0.09 0.07 0.07
of Household Income (percent)13
Scenario B
Cost Per Household 22 30 24 26
($1990/Household)a
Cost Per Household as a Percentage 0.06 0.09 0.07 0.07
of Household Income (percent)b
aCost per household is computed by dividing the total annual
compliance cost for the MWC by the estimated number of households
in the service area. Total annual cost is the sum of capital
costs annualized over 20 years (computed using 8 percent for
privately owned facilities and 4 percent for publicly owned
facilities) and annual operating costs. Annual operating costs
include testing, reporting, and recordkeeping costs, some of
which are also annualized.
bCost per household as a percentage of household income is computed
using the per-capita income and number of persons per household
reported in County and City Data Book.
Notes:
1. Where ownership data are unavailable, it is assumed that the
facility is publicly owned.
2. For privately owned facilities and facilities for which the type
of ownership is not identified, community size is based on the
population of the entity identified as the location. For
publicly owned facilities, community size is based on the
population of the entity that owns the MWC.
3. The number of observations indicates the number of entities for
which relevant demographic data are available.
Sources: U.S. Department of Commerce. 1988. County and City Data
Book 1988; U.S. Environmental Protection Agency. 1992.
Characterization of Municipal Solid Waste in the United States: 1992
Update. Office of Solid Waste and Emergency Response (OS-305).
EPA/530-R-92-019; U.S. Department of Commerce. 1991. 1991
Statistical Abstract of the United States.
1-18
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TABLE 1-9. MWC II/III NSPS: AVERAGE ANNUAL HOUSEHOLD IMPACTS
UNDER THE REGULATION THAT EPA IS PROPOSING
Community Size (Population 103)
Impact Measure 0 to 50 50 to 100 100 to 250 Over 250
Number of Observations
Cost per Household
6
27
4
29
1
23
9
17
($1990/Household/yr)
a
Cost Per Household as 0.07 0.09 0.06 0.04
a Percentage of
Household Income
(percent)13
aCost per household is computed by dividing the total annual
compliance cost for the MWC by the estimated number of households
in the service area. Total annual cost is the sum of capital
costs annualized over 30 years (computed using 8 percent for
privately owned facilities and 4 percent for publicly owned
facilities) and annual operating costs. Annual operating costs
include testing, reporting, and recordkeeping costs, some of
which are also annualized.
bCost per household as a percentage of household income is computed
using the per-capita income and number of persons per household
reported in County and City Data Book.
Notes:
1. Where ownership data are unavailable, it is assumed that the
facility is publicly owned.
2. For privately owned facilities and facilities for which the type
of ownership is not identified, community size is based on the
population of the entity identified as the location. For
publicly owned facilities, community size is based on the
population of the entity that owns the MWC.
3. The number of observations indicates the number of entities for
which relevant demographic data are available.
Sources: U.S. Department of Commerce. 1988. County and City Data
Book 1988; U.S. Environmental Protection Agency. 1992.
Characterization of Municipal Solid Waste in the United States: 1992
Update. Office of Solid Waste and Emergency Response (OS-305) .
EPA/530-R-92-019; U.S. Department of Commerce. 1991. 1991
Statistical Abstract of the United States.
1-19
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CHAPTER 2
REGULATORY BACKGROUND
To reduce the quantity of MSW that must be landfilled
and, frequently, to generate energy, many municipalities in
the U.S. burn solid waste in MWCs. Combustion of MSW reduces
the volume of this waste by 70 to 90 percent. This reduction
translates into substantial extensions of the lifetimes of
existing and future landfills. Combustion also destroys
harmful pathogens present in solid waste and reduces the odors
associated with the decay of uncombusted solid waste. The EPA
projects an estimated 32.82 million Mg of MSW will be
combusted by 1996 in existing MWC plants subject to the EG.
The additional MSW combusted in new MWC plants subject to the
NSPS is projected to be 14.95 million Mg in 2000.
Unfortunately, this combustion of MSW generates unwanted
by-products including criteria pollutants and other organics,
metals, and acid gases that are usually discharged to the
atmosphere. Elevated exposures of people, plants, animals,
structures, and materials to these pollutants reduce health
and welfare. In accordance with Sections 111 and 129 of the
CAA, EPA is developing EG and NSPS for existing and new MWCs,
respectively. The EG and NSPS will improve health and welfare
as well as help establish MSW combustion as a viable disposal
option for improving environmental quality.
This EIA presents an analysis of the potential economic
impacts of the proposed EG and NSPS as well as additional
alternatives. This chapter also provides an overview of the
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needs for Federal regulatory action, alternatives to Federal
intervention, and the regulatory background.1
2.1 EXECUTIVE ORDER 12866
Under E.O. 12866, EPA must submit to OMB for review
regulations that will be "significant." There are several
criteria for judging whether a regulation will be significant.
The fact that the EG will have an annual effect on the economy
exceeding $100 million (beyond the effect of MWC I) triggers
one of the criteria, and for that reason EPA classifies the EG
as significant. Technically, the NSPS may not qualify as
significant. (The annual effect on the economy, incremental
to MWC I, will be less than $100 million.) However, for the
purposes of this EIA, EPA is analyzing the EG and NSPS
together, and therefore is considering both to be significant
within the meaning of E.O. 12866.
The Executive Order directs EPA to, among other duties,
describe the need for regulation and the alternatives to
regulation. In addition, EPA must address the benefits as
well as the costs of regulation.
2.2 THE NEED FOR REGULATORY ACTION
Regulation is needed wherever there is a market failure
that cannot be resolved be measures other than Federal
regulation. Economic theory identifies three sources of
market failure:
For additional information on the regulations, their
background, and the general decision making process leading to the
EG and NSPS, the reader should see the preamble to the proposed EG
and NSPS. The preambles will appear in the Federal Register at the
time their regulations are proposed.
2-2
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• externalities,
• natural monopolies, or
• inadequate information.
The first category of market failure, environmental
externality, is the theoretical basis for using government
intervention to address the air pollution problem. An
externality occurs when one party's actions impose
uncompensated benefits or costs on another party outside the
marketplace. Air pollution is a classic example of a
"negative externality": costs are imposed on uncompensated
parties. Indeed, the British economist Pigou (1920), who was
the first to identify the market failure created by
externalities, used air pollution as an example of such a
negative externality. Pigou observed that industrialists had
no incentive to install "smoke-preventing appliances" because
of the difference between the social costs and the private
costs of these devices—they benefit the community but not the
industrialist or his customers. Industrialists understandably
acted then (and act now) to promote their own welfare and
indirectly that of their customers, by producing products,
presumably employing minimum-cost combinations of resources,
and discarding wastes in the cheapest manner. From the
industrialists' viewpoint, the cheapest manner was to
discharge them to the environment. The result, according to
Pigou (1920), was "a heavy uncharged loss on the community in
injury to buildings and vegetables, expenses for washing
clothes and cleaning rooms, expenses for the provision of
extra artificial light, and in many other ways."
Table 2-1 lists the categories of pollutants emitted from
MWCs. Organics include dioxins and furans, labeled CDD/CDF in
this report, and other products of incomplete combustion. The
metals emitted are mostly trace metals, such as lead (Pb),
cadmium (Cd), and mercury (Hg). Acid gases emitted include
sulfur dioxide (S02), hydrogen chloride (HCl), and, to a
2-3
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TABLE 2-1. POLLUTANTS EMITTED BY MWCs
Category Pollutant
Organics Dioxins and furansa, which include
2,3,7,8-tetrachlorodibenzo-p-dioxin,
2,3,7,8-tetrachlorodibenzofuran, and
other tetra through octa
chlorodibenzo-p-dioxins and
chlorodibenzofurans; benzene;
chlorinated benzenes; chlorinated
phenols; polychlorinated aromatic
hydrocarbons (including benzo-a-
pyrene)
Metals Arsenic (As), beryllium (Be), cadmium
(Cd), chromium (Cr), copper, lead
(Pb) , mercury, nickel
Acid Gases Sulfur dioxide (S02)b, hydrogen
chloride (HCR), hydrogen fluoride (HF)
Criteria Particulate matter (PM), carbon
Pollutants0 monoxide (CO), nitrogen oxides (NOX),
sulfur dioxide (S02), lead (Pb)
aThe family of dioxins and furans is also referred to as
CDD/CDFs, which are products of incomplete combustion.
bSO2 and Pb are also criteria pollutants.
cCriteria pollutants are those for which National Ambient Air
Quality Standards (NAAQS) exist.
lesser extent, hydrogen fluoride (HF). Nitrogen oxides (NOX)
(which are also acid gases), particulate matter (PM), and
carbon monoxide (CO) are criteria pollutants (as well as SO2
and Pb) released by MWCs. Carbon dioxide (CO2) is emitted,
but is not addressed in this report.
As shown in Chapter 8, exposure to these pollutants is
known to induce human mortality and morbidity. Exposures to
organics can cause cancer; to metals, brain damage,
hypertension, central nervous system injury, and renal
dysfunction; exposure to acid gases can cause respiratory
tract problems and cardiovascular, nervous, and pulmonary
systems effects; and exposure to PM can cause eye and throat
2-4
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irritation, bronchitis, and lung damage. Soiling and
materials damage, reduced visibility, and greenhouse gas
formation are also associated with MWC pollutants.
Private market systems fail to make the generators of air
pollution consider these adverse effects in their production
decisions or to compensate damaged parties. Because the
adverse effects of the pollutants are nonmarket goods—that
is, goods that are not explicitly and routinely traded in
organized free markets--damaged parties cannot collected
compensation.
2.3 ALTERNATIVES TO FEDERAL REGULATION
The existence of market failure does not in and of itself
demonstrate the need for regulatory intervention at the
Federal level. Other measures may adequately resolve the
market failure and should be considered before Federal
regulatory action is taken. Alternatives to Federal
intervention considered in this analysis include market
solutions, State or local regulation, and judicial recourse.
2.3.1 Market Solutions
Coase (I960) argued that, regardless of the distribution
of property rights, under some situations private negotiations
will "internalize" an externality. In our context, parties
damaged by MWC emissions could pay those generators to reduce
their discharges to the atmosphere. Alternatively, if
property rights to the atmosphere are vested in the damaged
parties, they could demand payment from generators for the
damages they suffer.
Such markets have not arisen in the case of MWCs for a
number of reasons. First, individuals damaged by MWC
pollutants may not realize that they are exposed and damaged.
For example, a person could suffer a health or welfare effect
of elevated atmospheric concentrations of a pollutant and not
realize that the source of the effect is exposure to a
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pollutant or that the source of the pollutant is a specific
MWC. No monitoring system is in place that measures the
exposure of particular receptors. Such a monitoring system
would be expensive, contributing to high "transactions costs"
of voluntary exchange, thus undermining the possibility of
market development.
Second, emission reductions for one are emission
reductions for all. Therefore, even if the damaged parties
realized the extent and source of their damage, they would
have difficulty organizing to provide the proper amount of
payment to emission generators to get them to reduce
emissions, given the damaged parties' incentive to "free ride"
(i.e., to let others who are damaged pay for emission
reductions).
This discussion has explicitly assumed that polluters are
vested with ownership of environmental resources although such
"ownership" runs contrary to both popular sentiment and most
legislative mandates and judicial interpretation. However,
similar impediments to private negotiation are present if
ownership is explicitly vested in individuals damaged by
exposure.
2.3.2 State and Local Regulation
The CAA requires each State to develop and implement
measures to attain and maintain EPA's NAAQS. Each State
assembles these measures in a document called the State
Implementation Plan (SIP). The EPA, which is empowered to
compel revision of plans it believes are inadequate, approves
SIPs and may assume enforcement authority over air pollution
control programs that any State fails to implement. EG and
NSPS become part of each State's SIP and enforcement authority
is delegated to the States. If EPA were not to promulgate EG
or NSPS for MWCs, States could still regulate MWCs in their
SIPs. In the past, some CAA regulations that EPA has prepared
but not promulgated have subsequently been adopted by some
States but usually only for enforcement in nonattainment
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areas. (Nonattainment areas are regions, designated by EPA,
where air quality is below EPA's air quality standards.)
State or local regulation alone is not an attractive
solution to the failure of the market to address the
externalities caused by MWC emissions discussed above. First,
and most importantly, air emissions from MWCs generate damages
outside of local or even State jurisdictions. The State or
local regulatory approach may, therefore, merely result in the
shifting of damages rather than inducing appropriate emission
reductions. For example, higher MWC stack heights would
reduce damages to local citizens but increase exposure and
damages elsewhere.
Second, local "NIMBY" (not in my backyard) politics has
forced some State and local governments, on their own
initiative, to control MWC emissions, but such efforts have
been inconsistent. More often than not, NIMBY politics has
forced State and local governments into inaction on MWC siting
applications. This attitude can lead to inappropriately low
MWC emissions in the sense that social resources, including
environmental resources, may be wasted as solid waste is
disposed of by other means.
The EPA believes that relying on State and local action
alone is not a viable substitute for Federal regulatory
action. This belief holds even if EPA were to step up
research and technology transfer programs to assist State and
local governments. For reasons explained above, Federal
action is likely to be a more consistent, efficient, and
complete societal response to the problem of MWC emissions.
In addition, State and local officials frequently find that
EPA regulations give them additional authority in the
regulated community.
2.3.3 Judicial Recourse
Citizens may sue State and local governments to force
them to control MWC emissions. Litigation under both CAA and
RCRA is possible. However, such an approach is piecemeal
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because it relies on independent action by citizens, public
interest groups, States, and local governments. More
importantly, litigation is expensive and risky in comparison
to regulation.
For a conventional civil damages suit to be successful,
the plaintiffs must prove that they have been damaged by MWC
emissions. Proving this is very difficult because similar
pollutants are emitted by other sources; hence, similar
damages can arise from these sources. Identifying MWC
emissions, or a particular MWC, as the source of damage is
problematic. Furthermore, the court may insist that the
damage actually had to occur (i.e., prospective damages may
not be an acceptable basis for a suit).
Even assuming that the court does allow prospective
damages or the MWC's contribution to damage to be the basis
for a suit, identifying the MWC's contribution to damage and
valuation of prospective and partial contributions is
difficult and controversial. The need to determine the
likelihood of the damage event in the absence of the MWC and
the possibilities for and costs of averting action, as well as
the monetization of the damage itself, places a great burden
on the plaintiff and creates great uncertainty regarding the
outcome of the case. Under these circumstances, citizens or
agencies probably would not press a suit against an MWC; hence
the threat of such suits probably would not result in
appropriate reductions in MWC emissions.
2.4 REGULATORY BACKGROUND
On December 20, 1989, EPA proposed NSPS for new MWCs and
EG for existing MWCs. Eleven months later the 1990 CAA
Amendments were signed into law. These amendments add Section
129, a new section addressing emission limits for MWCs.
Section 129 indicates that EPA should promulgate the standards
and guidelines already in the pipeline under Section 111, but
that those standards and guidelines subsequently should be
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revised and expanded to bring them into conformance with the
new requirements of Section 129. EPA therefore promulgated
the standards and guidelines on February 11, 1991. They are
f
referred to as MWC I in this analysis.
Section 129 requires EPA to regulate MWCs based on the
maximum achievable control technology (MACT). MACT is the
maximum degree of reduction in emissions, taking into
consideration the cost of achieving such emission reduction,
and any non-air quality health and environmental impacts and
not energy requirements. Emission standards and guidelines
can not be less stringent than what EPA calls the MACT
"floor." Specifically, for new MWCs, the standards must be at
least as stringent as the emissions control achieved in
practice by the best controlled similar MWC. For existing
MWCs, the guidelines can be less stringent than standards for
new MWCs in the same category, but must not be less stringent
than the average emissions limitation achieved by the best
performing 12 percent of MWCs in the same category.
Section 129 further directs EPA to propose revised NSPS
and EG for MWCs with aggregate plant capacity above
225 Mg/day. These requirements—referred to as MWC II in this
analysis—cover additional pollutants, include siting
requirements, and are to be based on the MACT. The third
phase of requirements described in Section 129 expands the
requirements to include MWCs with smaller design capacity.
These expanded requirements are referred to as MWC III in this
analysis. The MWC II and MWC III requirements are the focus
of this EIA and are referred to collectively as MWC II/III
throughout this report. The EPA also plans to regulate other
types of waste incinerators. However, requirements for these
other waste incinerators facilities are not addressed in this
EIA.
In this section, a brief review of the MWC I requirements
for new and existing MWCs is first presented as background for
analyzing the emission limits proposed under MWC II/III.
These MWC I requirements have been implemented for new MWCs
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but not for existing MWCs. Therefore, the impacts of the MWC
II/III requirements presented in this report are not
incremental to the MWC I requirements, but rather are
incremental to the pre-MWC I baseline (December 20, 1989).
Thus, the MWC II/III costs and emissions reductions presented
in this analysis are not additive to the MWC I costs and
emission reductions. An overview of the Section 129
requirements contained in the CAA follows the description of
the MWC I requirements. The Section 129 requirements form the
basis for the regulatory alternatives proposed under MWC
II/III.
2.4.1 MWC I (1991) Emission Guidelines and New Source
Performance Standards
MWC I emission limits apply to MWC combustor units with
greater than 225 Mg/day capacity. Co-fired combustors burning
a fuel feedstream that, in aggregate, comprises 30 percent or
less by weight of MSW or RDF are not subject to the MWC I
requirements. These combustors are required, however, to
submit reports of the amount of MSW and other fuels combusted
to document that less than 30 percent MSW is fired on a daily
basis.
MWC I emission limits under Section III of the CAA of
1977 are based on the best demonstrated technology (BDT) for
MWCs with unit capacity to combust over 225 Mg/day of MSW.
The BDT basis is different for new and existing plants.
Therefore, MWC I specifies different levels of emission
control depending on the MWC's designation as new or existing.
Under MWC I, existing plants subject to EG are defined as
those MWCs placed under construction on or before December 20,
1989. New plants subject to NSPS are defined as those MWCs
placed under construction after that date. Furthermore, BDT
for existing plants varies with the size of the plant.
Therefore, plant capacity is considered in determining the
applicable emission control level for existing plants. New
plants subject to the NSPS are not subdivided by plant size.
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Table 2-2 presents the MWC I emission requirements and the
control technology bases for new and existing MWCs.
2.4.1.1 MWC I EG. MWC I EG require States to develop
emission limits for organics, acid gases, and metals. MWC
organic emissions are measured as total CDD/CDF, MWC acid
gases as S02 and HC1 emissions, and MWC metals as PM
emissions. The MWC I EG also require States to develop
emission limits for other pollutants (e.g., CO) not included
in these three categories. In addition to requiring States to
develop emission limits, the EG include requirements for
combustor operating practices, provisions for training and
certification of personnel operating the MWC facility,
performance testing, monitoring requirements, and reporting
and recordkeeping requirements.
Specified emission limits for plants subject to MWC I EG
are based on the conclusion that BDT for existing plants is
different for MWCs at different plant capacities. MWCs with
plant capacities below 1,000 Mg/day are subject to less
stringent emission requirements than very large MWCs with
capacities greater than 1,000 Mg/day.
Although MWC operators may use any technology to achieve
the emission limit to comply with the EG, the impacts of the
regulation are estimated here based on specified demonstrated
control technologies that achieve the mandated emission
requirements for each plant size. For large existing plants,
the control technology basis includes good combustion practice
(GCP) and dry sorbent injection (DSI) followed by an
electrostatic precipitator (ESP). The control technology
basis for very large plants includes GCP and a spray dryer
(SD) followed by an ESP.2
2.4.1.2 MWC I NSPS. New plants must control NOX
emissions in addition to the organics, acid gases, metals, and
CO emissions that existing plants must control under MWC I.
Again, MWC operators may use any technology that achieves the
2Air pollution control technologies are described in Chapter 3.
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to
i
TABLE 2-2. MWC I EMISSION REDUCTION REQUIREMENTS FOR PLANTS
SUBJECT TO NSPS AND EGa
EG
Control Technology
Basisb
NSPS
GCP
SD
FF
Large Plants
(225 to 1000 Mg/day)
GCP
DSI
ESP
Very Large Plants
(>1000 Mg/day)
GCP
SD
ESP
Emission Limits
CDD/CDF
CO
PM
SO0
SNCR (NOX)
30 ng/dscm
50 to 150 ppmv
(Varies by technology)
34 mg/dscm
80% reduction or
30 ppmv
125 ng/dscm
(250 ng/dscm for RDF)
50 to 250 ppmv
(Varies by technology)
69 mg/dscm
50% reduction or
3 0 ppmv
60 ng/dscm
50 to 250 ppmv
(Varies by technology)
34 mg/dscm
70% reduction or
3 0 ppmv
HC1
NCL
95% reduction or
25 ppmv
180 ppmv
50% reduction or
2 5 ppmv
No Guidelines
95% reduction or
2 5 ppmv
No Guidelines
aOnly those MWCs with combustor units designed to combust more than 225 Mg/day are subject to
MWC I emission reduction requirements.
bThe control technologies are described in Section 3.
Note:
1. Conversions and definitions are provided on p. x.
-------
emission limit to comply with the NSPS. However, the impacts
of the regulation estimated here are based on specified
control technologies demonstrated to achieve NSPS emission
requirements. The control technology basis for NSPS plants
includes GCP, an SD followed by fabric filter (FF) to achieve
additional control of organics as well as metals and acid
gases, and the application of selective noncatalytic reduction
(SNCR) for NOX control.
2.4.2 Overview of Section 129
Section 129 of the CAA of 1990 requires EG and NSPS for
MWCs to be revised to
reflect the maximum degree of reduction in
emissions of air pollutants listed under Section
(a)(4) that [EPA], taking into consideration the
cost of achieving such emission reduction, and any
non-air quality health and environmental impacts and
energy requirements, determines is achievable for
new or existing units in each category. (House of
Representatives, 1991, p. 126)
Under Section 129, EPA must broaden the control
requirements beyond those specified in MWC I. The MWC II/III
regulatory alternatives address the additional requirements
under Section 129. The following sections describe the
categories of emissions and the control technology basis
required under Section 129 for new and existing MWCs.
2.4.2.1 Emissions Controlled Under Section 129. Under
Section 129, EPA is required to establish emission limits for
PM, metals, organics, acid gases, CO, and NOX. Under MWC
II/III, existing plants are required to control the emissions
regulated under MWC I (CDD/CDF, S02, HCl, PM, CO) plus NOX/
Hg, Pb, Cd, and fly ash/bottom ash fugitive emissions.3 New
plants subject to NSPS under MWC II/III are required to
control the emissions regulated under MWC I (CDD/CDF, S02/
Fly ash/bottom ash fugitive emission control is not a specific
emission requirement of Section 129.
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HC1, PM, CO, NOX) plus Hg, Pb, Cd, and fly ash/bottom ash
fugitive emissions. Thus, Section 129 expands the set of
regulated pollutants. In addition to controlling for the
above-listed pollutants, MWC II/III requires good combustion
practices and training and certification of operating
personnel, as with MWC I. The performance testing,
monitoring, and reporting and recordkeeping requirements are
included under MWC II/III, with expanded coverage for the new
required pollutants.
2.4.2.2 Control Technology Basis. The control
technology basis for establishing NSPS and EG for MWCs under
Section 129 is referred to as MACT (maximum achievable control
technology). For new MWCs, Section 129 specifies the
following: "The degree of reduction in emissions that is
deemed achievable for new units in a category shall not be
less stringent than the emissions control that is achieved in
practice by the best controlled similar unit ..." (House of
Representatives, 1991, p. 126). For each category of MWC,
this defines what EPA calls the MACT "floor" for the NSPS.
For existing MWCs, the CAA states that emissions
standards for existing units in a category may be no less
stringent than, "the average emissions limitation achieved by
the best performing 12 percent of units in the category ..."
(House of Representatives, 1991, p. 126). For each category
of MWC, this defines what EPA calls the MACT floor for the EG.
Control requirements may be more, but not less, stringent than
the MACT floors for each category.
Section 129 stipulates that costs may be considered when
determining MACT and that the "Administrator may distinguish
among classes, types . . . , and sizes of units ..." (House
of Representatives, 1991, p. 126). In other words,
technology, plant capacity, age, or other criteria may be used
to distinguish existing MWCs for the purpose of developing
MACT regulations. Separate emission limits consistent with
MACT within each subcategory of existing MWCs could be
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proposed for each subcategory. Chapter 4 discusses in greater
detail the candidate regulatory alternatives considered under
MWC II/III.
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CHAPTER 3
INDUSTRY PROFILE
Regulating emissions from MWCs will directly affect
suppliers of combustion services as well as households,
businesses, and institutions located in communities with MWCs,
This chapter begins with a discussion of the demand for MSW
collection and disposal services. The supply side, discussed
next, includes several components: combustion technologies
and air pollution control technologies available to MWCs,
characteristics of MWCs, and baseline waste flows to MWCs.
The chapter concludes by introducing the model plant approach
used to assess the various impacts of the MWC II/III
regulation.
3.1 DEMAND FOR MWC SERVICES
Because MSW generators require collection and disposal
services, they provide most of the demand for MWC services.
This demand is a derived demand because the generators
generally do not directly purchase MWC services but instead
leave the purchase up to the collectors. MSW generators can
be partitioned into four broad categories:
Residential: waste from single- and multiple-family
homes.
Commercial: waste from retail stores, shopping
centers, office buildings, restaurants, hotels,
airports, wholesalers, auto garages, and other
commercial establishments.
Industrial: waste such as corrugated boxes and other
packaging, cafeteria waste, and paper towels from
factories or other industrial buildings. Industrial
MSW does not include waste from industrial processes,
whether hazardous or nonhazardous.
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• Other: waste from public works such as street
sweepings and tree and brush trimmings, and
institutional waste from schools and colleges,
hospitals, prisons, and similar public or quasi-public
buildings. Infectious and hazardous wastes from these
generators are managed separately from MSW.
Households are the primary direct source of MSW, followed
by the commercial sector. On average, each U.S. household
directly generated 1.16 Mg of solid waste in 1990. This
estimate of household waste is based on the average number of
persons per household in 1990 (2.63) (U.S. Department of
Commerce, 1991), the product of the average annual waste
generated per person in 1.990 (0.71 Mg) , and the estimated
share of waste directly generated by households in 1990 (62
percent) (EPA, 1992).
The commercial, industrial, and other sectors each
generate smaller portions of MSW than households. Because the
industrial sector manages most of its own solid residuals--
whether MSW or industrial process wastes—by recycling, reuse,
or self disposal, the industry directly contributes only a
small share of the MSW flow. Consequently, the analysis of
generator behavior in the remainder of this section focuses on
households.
Little empirical evidence is available about the factors
that affect household waste generation rates. However,
without substantial changes in market conditions or policies,
increases in economic activity and in the population indicate
that MSW generation will increase in the future. Franklin
Associates estimates that MSW will increase at an annual rate
of approximately 1.2 percent over the 1990-2000 period (EPA,
1992). This growth rate is slightly more than the population
growth rate, indicating an increase in expected per-capita
waste generation from 0.71 Mg in 1990 to 0.75 Mg in 2000.
Regulatory actions may change the conditions under which
households make MSW generation and collection choices.
Households' responsiveness to these changes is important. A
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household may be viewed as having a demand for solid waste
collection and disposal services just as it has a demand for
food and other consumer goods. Household demand for
collection and disposal services is a function of household
income, the price of waste collection and disposal services,
service conditions (e.g., frequency of collection and site of
collection, degree of waste separation required, materials
accepted), and the cost of self-management (e.g., recycling,
incinerating, burying, littering).
Although changes in service conditions and costs of
self-management affect the household's demand for MSW
collection and disposal services, these factors are not
influenced by the MWC regulation. Consequently, for the
purposes of analysis, these factors are assumed to remain
constant. Household income (after tax) and the price of waste
collection disposal, however, may be affected by the
regulation.
In most communities today, MSW collection and disposal
services are financed by general tax revenues. If increased
costs for these services result in increased tax rates, after-
tax household income will be reduced. Decreases in the
household's income results in decreased consumption spending;
however, because of savings, the relationship is not one-for-
one. Decreases in consumption include decreases for
commodities that generate solid wastes which, in turn, result
in a decrease in the demand for MSW disposal services.
Solid waste collection and disposal services are likely a
normal good. As income declines, all other arguments in the
demand function held constant, the demand for solid waste
collection and disposal services declines. Wertz (1976)
argues that the income elasticity of demand for collection and
disposal services is likely to be positive, but small.
Goddard (1975), although noting serious data and methodology
problems in a study of demand for waste collection in Chicago,
reports an income elasticity of 0.4. A positive income
3-3
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elasticity of demand for waste collection and disposal
services indicates that a decrease in household income reduces
MSW generation. Because both the income elasticity and the
cost of MSW collection and disposal as a share of all taxes
are small, however, this effect is unlikely to be significant.
The relationship between quantity demanded and price is
an inverse one: increases in the price for MSW collection
reduce the quantity demanded of these services. This inverse
relationship has been empirically demonstrated for a large
variety of commodities; MSW collection and disposal services
should not be an exception to these findings. However,
demonstrating the responsiveness of MSW collection and
disposal services and estimating the numerical relationship
are difficult for the following reasons:
• the variety of MSW collection service arrangements,
• the absence of MSW collection pricing on a
per-unit-of-service basis, and
• the lack of adequate data on household waste generation
rates.
As noted above, most communities today have no price
mechanism to provide incentives to households to adjust their
use of MSW collection and disposal services because of a
change in the cost of these services. When households are not
charged, the price of collection and disposal services is
zero. In some communities households are charged a flat fee
per week or month for a specified service (e.g., solid waste
collected from four containers twice weekly). At best, this
situation provides a weak link between the fee (or price of
service) and the amount of MSW generated because the fee does
not vary with the amount of waste generated by any given
household.
The MWC II/III regulations will likely result in
increased costs of combustion, which may affect household
income and/or the price of disposal services. For the reasons
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cited above, however, it is assumed that generator behavior
will not change in response to changes in the costs of
combustion services.
3.2 SUPPLY OF MWC SERVICES
MSW combustion is the process of reducing the volume of
MSW through incineration. Because combustion reduces waste
volume by as much as 70 to 90 percent, this method of waste
management has the potential to significantly reduce the need
for landfills. Combustion has two principal products, MSW
volume reduction and energy generation, along with the
residual products of ash and emissions to the ambient air.
The inputs are capital services (e.g., combustor unit, land,
building, air pollution control devices), operating services
(e.g., labor services, maintenance services, fuel for
cofiring, utility services), and MSW. The following two
sections briefly describe combustion technology and air
pollution control technology.
3.2.1 Combustion Technology
MWCs can be classified according to three principal
types: mass burn (MB), modular (MOD), and refuse-derived fuel
(RDF) combustors. A fourth type, combustors that employ
fluidized-bed combustion (FBC), is less common. Variations
exist within these categories, and some designs incorporate
features of more than one type. Regardless of the technology,
each MWC plant site or facility has at least one, and
potentially more than one, individual combustor unit.
MB combustors burn waste without any pre-processing other
than removal of bulky noncombustible material and items too
large to squeeze through the entrance to the combustion
chamber. They are large field erected facilities and span a
wide size range: individual combustor units range in capacity
from 45 to 900 Mg/day. Each site typically has two or three
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individual units per site, and site or facility capacities
range from about 90 to 2,700 Mg/day.
MOD combustors also burn waste without much processing
but are usually shop-fabricated units. Components range in
capacity from 5 to 110 Mg/day. Typically each facility
contains one to four or more individual combustor units, and
facility or site capacities typically range from about 15 to
360 Mg/day. Generally, MOD units are dual-chambered
combustors. Depending on the design, the volume of combustion
air supplied to the primary chamber either is greater than the
amount needed for complete combustion (these are called
modular excess air MWCs) or less than the amount needed for
complete combustion (these are modular starved air MWCs). A
secondary combustion chamber is used after the primary chamber
to complete the combustion process. Many existing MOD
combustors do not have energy recovery, but the majority of
planned MOD combustors are expected to incorporate energy
recovery.
RDF combustors burn processed and shredded MSW. The
degree of processing varies from simple removal of bulky items
accompanied by shredding of the remaining waste to removal of
most noncombustible material and processing of the residue
into fine particles. The sorting and separating typically is
accomplished by a process line of shredders, magnets, screens,
and air classifiers. The resulting waste stream has a higher
energy value and lower ash content than less-processed MSW.
Most RDF components range in capacity from 270 to 900 Mg/day.
Plants typically have two to four combustors and handle from
550 to 3,600 Mg/day.
The last class of MWCs employs FBC. FBC units have two
basic designs: bubbling bed and circulating bed. The former
operates with relatively low turbulence to minimize entrapment
of solids in the flue gas. The latter operates with
relatively high turbulence and employs a cyclone separator to
capture and return unburned and inert particles to the bed.
By making the waste behave as a liquid or gas, FBC ensures
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good fuel mixing, good heat transfer, and efficient
combustion. At present, however, applying this technology to
MWCs is relatively new. Typical component combustor
capacities for planned FBC units are 180 to 450 Mg/day, and
total facility capacities range from 270 to 900 Mg/day.
3.2.2 Air Pollution Control Technology
Some air pollution control devices (APCDs) control
emissions from individual units, while others control
emissions from all units on the site. In addition, various
types of devices control various types of pollution to a
greater or lesser extent.
Good combustion practices (GCP) alter the combustion
process to reduce the formation and emissions of MWC organics.
Organics can originate in waste feedstreams, combustion
reactions, or post-combustion reactions in the flue gas. In
broad terms, GCPs include the proper design, construction,
operation, and maintenance of an MWC. Specific practices
include operator training and certification, CO emissions
monitoring, operating load monitoring and control, and APCD
inlet temperature control.
MWCs use a variety of control technologies to reduce PM
emissions including electrostatic precipitators (ESPs), fabric
filters (FFs), electrostatic gravel bed filters, cyclones, and
venturi scrubbers. Of these, ESPs and FFs are the most
commonly used technologies. When properly designed and
operated, ESPs and FFs are capable of achieving high levels of
PM control. Data on the control efficiency of the other PM
control devices are limited or unavailable. Consequently, the
analysis of PM control options is limited to ESPs and FFs.
Spray dryers (SDs) or dry sorbent injection (DSI) systems
are generally used to remove acid gases from MWC emissions.
Combining a PM control device with an acid gas control device
has the potential to significantly reduce the amount of acid
gases, CDD/CDF, and metals emitted by MWCs. SD/FF is the most
effective APCD combination for controlling acid gases, PM, and
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metals. An SD used in combination with an ESP is the second-
most effective control technology combination. Note, however,
that MWC owners can enhance the performance of their SD/ESPs
by modifying their operating practices to achieve emission
reductions that approach or equal those achieved with an SD/FF
for most pollutants except for control of the particulate
matter and associated metals (e.g., Pb and Cd). These
enhanced SD/ESP systems are referred to as SD/ESP(m) in the
remainder of this report.
In addition to the APCDs used to control acid gases, PM,
and metals, some MWCs employ control technologies to limit
their HG and NOX emissions. Selective noncatalytic reduction
(SNCR) is the control technology generally used to control NOX
emissions from MWCs. Two types of SNCR, ammonia injection and
urea injection, are roughly equivalent in their effectiveness
for NOX control. The principal technology currently
demonstrated for controlling Hg emissions is activated carbon
injection (CI).
3.2.3 Facility Profile
For this EIA, EPA has identified approximately 436
combustor units operating at 179 existing MWC facilities with
design capacities above 35 Mg/day. In addition, numerous very
small facilities with design capacities below 35 Mg/day are
not specifically identified. These very small facilities
constitute less than one percent of the total waste flow to
MWC facilities and will be exempt from the requirements of MWC
II/III. Therefore, the balance of this section focuses on
MWCs above 35 Mg/day capacity.
Table 3-1 shows the distribution of the combustion
technologies by the number of facilities. The most common
types of MWCs are MB, MOD, and RDF. Combined, these three
types of plants account for over 98 percent of all facilities
and an equal share of combustion capacity.
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TABLE 3-1. DISTRIBUTION OF COMBUSTION TECHNOLOGIES ACROSS
EXISTING FACILITIES
Combustion Technology
Mass Burn
Modular
Refuse-derived fuel
Othera
Total
Number of
Facilities
100
44
32
3
179
Frequency
(percent)
55.
24.
17.
1.
100.
87
58
88
68
00
aOther includes fluidized-bed combustion and facilities for which
information is not available.
Table 3-2 shows the distribution of air pollution control
technologies. The most common control technologies among the
facilities identified for this analysis are ESP and SD/FF,
used at 59 facilities each. SD/ESPs are used at 11
facilities. These three groups account for almost two-thirds
of all facilities and over 90 percent of MWC capacity.
3.2.4 Baseline Waste Flow Projections
EPA estimates that 29.35 million Mg of MSW was disposed
of through combustion in 1991 (see Table 3-3). To project the
1991 baseline waste flow to MWCs, EPA compiled MSW generation
data from several sources and adjusted the data for
differences in definitions and coverage. A discussion of the
methods and sources used to estimate the amount of MSW
disposed of through combustion in 1991 is presented in
Economic Impact of Air Pollutant Emission Guidelines for
Existing Municipal Waste Combustors (EPA, 1989a). The year
1991 is significant because this is the estimated waste flow
used to evaluate the MWC I EG. The baseline waste flow to
combustion for 1996 -- 32.82 million Mg -- is based on the
3-9
-------
TABLE 3-2. DISTRIBUTION OF AIR POLLUTION CONTROL
TECHNOLOGIES ACROSS EXISTING FACILITIES?
Air Pollution
Control Technology
None
ESP
SD/ESP
SD/FF
Other3
Total
Number of
Facilities
14
59
11
59
36
179
Frequency
(percent)
7.82
32.96
6.15
32.96
20.11
100.00
aOther includes cyclones, wet scrubbers, FFs, dry sorbent injection, or
some combination of these devices, and facilities for which information is
not available.
Note:
1. Definitions are provided on p. x.
TABLE 3-3. MSW DISPOSAL PROJECTIONS (106 Mg)
Year
Disposal Method
1991
1996
2000
Discards to Landfills
and Other Disposal
Recovery for Recycling
and Composting
Combustion
Total
117
31
29
178
.80
.33
.35
.48
106
45
32
185
.30
.90
.82
.03
97
62
47
208
.92
.31
.80
.03
Sources: Landfilling and recycling estimates are based on estimates from
U.S. Environmental Protection Agency. 1992. Characterization
of Municipal Solid Waste in the United States: 1992 Update.
Office of Solid Waste and Emergency Response (OS-305).
EPA/530-R-92-019.
Combustion estimates are based on estimates from U.S.
Environmental Protection Agency. 1989a. Economic Impact of Air
Pollutant Emission Guidelines for Existing Municipal Waste
Combustors. Office of Air Quality Planning and Standards. EPA-
450/3-89-005; and Davis, Lee. 1993. Memorandum to Walter
Stevenson, EPA/SDB. Research Triangle Park, NC. November 10.
3-10
-------
1991 estimate for MWC I and data compiled by Radian
Corporation (Davis, 1993) on the additional MWC capacity
projected to come on line by 1996. For this analysis, EPA
assumes that MWCs subject to the MWC II/III EG include all
facilities that are operational by the year 1996. Thus, the
waste flow subject to the MSW II/III EG is 32.82 million Mg
per year.
The year 2000 is the year for which NSPS impacts are
evaluated in this analysis. EPA estimates that, by 2000,
facilities subject to the NSPS will combust 14.95 million Mg
of MSW per year. Thus, the total projected annual waste flow
to MWCs by the year 2000 is the sum of the annual waste flow
to EG facilities (32.82 million Mg) and the annual waste flow
to NSPS facilities (14.95 million Mg) or 47.80 million Mg.
This represents about a 10 percent annual growth rate in the
amount of MSW that will be combusted between 1996 and 2000.
In addition to the MSW flow projections, Table 3-3 also
presents the estimated MSW flows to landfills and other
disposal and to recovery for recycling and composting.1 These
MSW flows are computed using estimates presented in Appendix C
of the Characterization of MSW in the United States: 1992
Update (EPA, 1992) . Total MSW flows to combustion are
estimated for this analysis as described below.
3.3 MODEL PLANT APPROACH
Analyzing the impacts of alternative regulations and
selecting the appropriate level of stringency for regulations
requires either collecting or developing large amounts of cost
and emissions information. Because of the difficulties
1The EPA's goal for the nation as stated in the Agenda for
Action (1989f) is to reduce MSW by 25 percent using source reduction
and recycling techniques. Table 3-3 shows 31.33 and 45.90 million
Mg for recycling in 1991 and 1996, or 18 and 24 percent of the
totals, respectively. These baseline projections are only for
analytical purposes and should not be interpreted as alternatives to
the goals and projections used in the Agenda.
3-11
-------
involved in collecting such data, EPA has created "model
plants" that are prototypes of the plants or facilities that
will be regulated. For the development of the EG, 16 model
plants are defined, and for the NSPS 11 model plants are
defined. (Plants represented by EG model plant 13 and NSPS
model plant 7 in earlier analyses are no longer operating or
are now represented in other model plant categories.) The EG
model plants are based on the design characteristics of the
facilities discussed in Section 3.2.3. Table 3-4 describes
the basic characteristics of the EG model plants. The model
plants developed to represent NSPS facilities are based on
recently built facilities or facilities currently under
construction. Table 3-5 shows the characteristics of NSPS
model plants.
Tables 3-4 and 3-5 show the model plant number, the type
of combustor used at that model plant, plant capacity in
megagrams per day, plant annual waste flow in megagrams per
day, and the number of hours of operation per year. In
addition, the tables also indicate whether the model plant has
some form of energy recovery. Model plant waste flow is
computed by multiplying the model plant capacity by annual
operating hours (converted to hours per day). The annual
hours of operation are based on average capacity utilization
reported in the 1991 Resource Recovery Yearbook (Gould, 1991).
In 1990, the averages for capacity utilization, which may be
thought of as the percentage of days a plant or combustor
operates, were the following:
• Mass burn: 87.5 percent
• Modular: 84.2 percent
• RDF and FBC: 83.3 percent
Tables 3-6 and 3-7 show the size, baseline APCD (EG
only), national capacity, national waste flow, and scale
factors for each EG and NSPS model plant category and
subcategory. Note that model plants are subcategorized by
size and APCD (EG only), in addition to type of combustor,
3-12
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TABLE 3-4. MWC II/III EG: CHARACTERISTICS OF MODEL PLANTS5
Model
Plant
Number*5
1
2
3
4
5
6
7
8
9
10
11
12
14
15
16
17
Description
MB/REF/TG
MB/REF/RG
MB/REF/RK
MB/WW (large)
MB/WW
(midsize)
MB/WW (small)
RDF (large)
RDF (small)
MOD/SA/TR
MOD/SA/G
MOD/EA
MB/RWW
MB/WW (UC)
RDF (large)
(UC)
RDF (small)
(UC)
MB/RWW (UC)
Energy
Recovery
none
none
none
electric
electric
electric
electric
electric
steam
none
steam
electric
electric
electric
electric
electric
Annual
Operating
Hours0
6,500
6,200
7,665
7,665
7,665
7,665
7,297
7,297
4,917
6,500
7,376
7,665
7,665
7,297
7,297
7,665
Combustion
Capacity
(Mg MSW/day)
680
218
816
2,041
980
181
1,814
544
136
45
181
454
181
1,814
544
454
Annual
Waste Flow
(Mg/day)
505
154
714
1,786
857
159
1,511
453
76
34
153
397
159
1,511
453
397
aModel plants are based on the May 1991 EPA Inventory of Municipal
Waste Combustors (Fenn and Nebel, 1992).
bPlants assigned to model plant 13 in an earlier analysis are no
longer operating.
cAnnual operating hours are based on the average capacity utilization
estimates reported in the 1991 Resource Recovery Yearbook (Gould, 1991).
Annual operating hours at model plants 1,2, and 10 reflect the assumption
of increased downtime for older plants. Operating hours for model plant
9 reflect a stand-by combustor unit.
Note:
1. Definitions are provided on p. x.
3-13
-------
TABLE 3-5. MWC II/III NSPS: CHARACTERISTICS OF MODEL PLANTS*
Model
Plant
Numberb
1
2
3
4
5
6
8
9
10
11
12
Description
MB/WW
(small)
MB/WW
(midsize)
MB/WW
(large)
MB/REF
MB/REF
RDF
MOD/EA
MOD/SA
(small)
MOD/SA
(midsize)
FBC/BB
FBC/CB
Energy
Recovery
steam
electric
electric
electric
electric
electric
electric
none
electric
electric
electric
Annual
Operating
Hoursc
5,000
7,665
7,665
7,665
7,665
7,297
7,367
5,000
7,367
7,525
7,525
Combustion
Capacity
(Mg MSW/day)
181
726
2,041
454
952
1,814
218
45
91
816
816
Annual
Waste Flow
(Mg/day)
104
635
1,786
397
833
1,511
183
26
76
701
701
aModel plant categories are based on recently built MWCs or MWCs
currently under construction as reported in the May 1991 EPA
Inventory of Municipal Waste Combustors (Fenn and Nebel, 1992).
bPlants assigned to model plant 7 in an earlier analysis were
reassigned to model plant 6.
cAnnual operating hours are based on the average capacity
utilization estimates reported in the 1991 Resource Recovery
Yearbook (Gould, 1991). Annual operating hours at model plants
1 and 9 reflect the assumption of increased downtime for smaller
plants.
Note:
1. Definitions are provided on p. x.
3-14
-------
TABLE 3-6
MWC II/III EG: NATIONAL CAPACITY AND WASTE FLOW
ESTIMATES FOR EXISTING MWC FACILITIES3
Model
Plant
Number
1
2
2
3
3
4
4
4
5
5
5
6
6
6
7
8
9
9
10
11
11
12
12
14
14
14
Baseline Air
Pollution
Control
Device
ESP
ESP
ESP
ESP
SD/FF
ESP
SD/ESP
SD/FF
ESP
SD/ESP
SD/FF
ESP
ESP
SD/FF
ESP
ESP
ESP (low)
ESP (low)
None
ESP
ESP
ESP
ESP
ESP
ESP
SD/FF
Size
Classifi
cationb
L
S
L
L
L
L
L
L
L
L
L
S
L
S
L
L
S
L
S
S
L
S
L
S
L
S
National
Capacity
(Mg/Yr)c
1,096,
269,
1,728,
1,411,
185,
3,209,
1,894,
' 6,222,
2,399,
835,
4,169,
395,
226,
132,
2,106,
2,791,
627,
345,
695,
112,
356,
70,
377,
152,
319,
42,
002
317
735
799
763
843
334
524
535
934
946
537
631
900
962
859
234
519
442
508
665
318
471
941
512
191
National
Waste Flow
(Mg/yr)d
813
190
1,223
1,235
162
2,808
1,657
5,444
2,099
731
3,648
346
198
116
1,755
2,325
352
193
516
94
300
61
330
133
279
36
,244
,612
,534
,324
,543
,613
,542
,708
,594
,442
,703
,095
,302
,288
,080
,593
,067
,940
,024
,733
,315
,528
,287
,823
,573
,917
Scale
Factors6
4
3
21
4
0
4
2
8
3
1
5
5
3
2
3
14
12
6
42
1
5
0
2
2
4
0
.41
.39
.76
.74
.62
.31
.54
.35
.22
.12
.60
.97
.42
.01
.18
.06
.63
.96
.01
.70
.39
.42
.28
.31
.83
.64
(continued)
3-15
-------
TABLE 3-6. MWC II/III EG: NATIONAL CAPACITY AND WASTE FLOW
ESTIMATES FOR EXISTING MWC FACILITIES3 (Continued)
Model
Plant
Number
14
15
15
15
16
16
17
17
TotalŁ
Baseline Air
Pollution
Control
Device
SD/FF
ESP
SD/ESP
SD/FF
ESP
SD/FF
ESP
SD/FF
Size National
Classifi- Capacity
cationb (Mg/Yr)c
L
L
L
L
L
L
L
L
297,
1,157,
1,999,
701,
526,
527,
192,
1,416,
38,996,
221
648
574
605
204
567
451
891
582
National
Waste Flow Scale
(Mg/yr)d Factors6
260,
964,
1,665,
584,
438,
439,
168,
1,239,
32,816,
068
310
627
431
323
459
394
780
816
4
1
3
1
2
2
1
8
193
.49
.75
.02
.06
.65
.66
.16
.56
.23
aModel plants are based on May 1991 EPA Inventory of Municipal Waste
Combustors (Fenn and Nebel, 1992).
bSmall plants (S) have a 35 to 225 Mg/day capacity and
large plants (L) have a larger capacity.
cNational capacity estimates are based on the national waste flow
estimates and model plant capacity utilization based on annual operating
hours reported in Table 3-4.
dNational waste flow estimates are based on the share of waste flow
assigned to each model plant subcategory and a total waste flow to EG
plants of 32.82 million Mg/yr, which includes an estimate of additional
capacity to be constructed in 1994.
eScale factors are computed by dividing national capacity reported in
this table by model plant combustion capacity reported in Table 3-4.
fDetails may not sum to totals due to rounding.
Note:
1. Definitions are provided on p. x.
3-16
-------
TABLE 3-7. MWC II/III NSPS: NATIONAL CAPACITY AND WASTE FLOW
ESTIMATES FOR EXISTING MWC FACILITIES3
Model Plant Size National Capacity National Waste
Number Classification13 (Mg/Yr)c flow (Mg/yr)d
I S
1 L
2 L
3 L
4 L
5 L
6 L
8 S
8 L
9 S
10 S
10 L
11 L
12 L
Totalf
333
214
4,696
5,375
342
1,194
4,363
58
205
184
238
135
64
171
17,579
,931
,333
,042
,265
,933
,479
,826
,299
,760
,755
,767
,030
,300
,467
,188
190
122
4,109
4,703
300
1,045
3,635
49
173
105
200
113
55
147
14,950
,600
,336
,037
,357
,067
,169
,027
,028
,040
,454
,799
,558
,235
,293
,000
Scale
Factors6
5
3
17
7
2
3
6
0
2
11
7
4
0
0
71
.04
.24
.73
.22
.07
.44
.59
.73
.59
.16
.21
.08
.22
.58
.89
aModel plant categories are based on recently built MWCs or MWCs currently
under construction as reported in the May 1991 EPA Inventory of Municipal
Waste Combustors (Fenn and Nebel, 1992).
bSmall plants (S) have a 35 to 225 Mg/day capacity and large plants (L)
have a larger capacity.
cNational capacity estimates are based on the national waste flow estimates
and model plant capacity utilization based on the annual operating hours
reported in Table 3-5.
dNational waste flow estimates are based on the share of waste flow
assigned to each model plant subcategory and a total waste flow to NSPS
plants of 14.95 million Mg/yr.
eScale factors are computed by dividing national capacity reported in
this table by model plant combustion capacity reported in Table 3-5.
fDetails may not sum to total due to rounding.
Note:
1. Definitions are provided on p. x.
3-17
-------
which results in several entries for many of the model plant
numbers. Because actual plants do not always fit neatly
within a model plant category with respect to the size of the
plant (in the case of the NSPS and EG) or baseline APCD (in
the case of the EG), subcategories are used to reflect
differences in actual plant characteristics.
The national capacity estimates reported in Tables 3-6
and 3-7 are computed by summing the capacity for actual plants
assigned to the model plant category. National waste flow
estimates are based on the national capacity and the annual
hours of operation. Scale factors are computed by dividing
national capacity for each model plant category reported in
Tables 3-6 and 3-7 by the corresponding model plant capacity
reported in Tables 3-4 and 3-5. Note that the scale factors
do not equal the number of plants subject to the regulation in
each model plant category because of differences in the plant
capacity for actual plants versus model plants. The scale
factors corresponding to each model plant category are used in
the balance of the analysis to compute the national-level
impacts of the EG and NSPS.
3-18
-------
CHAPTER 4
REGULATORY APPROACHES
The EPA has several policy options to reduce the
pollution from MWCs. These options include both market-based
approaches and regulatory standards. E.G. 12866 states that
EPA shall "assess both the costs and the benefits of the
intended regulation and, recognizing that some costs and
benefits are difficult to quantify, propose or adopt a
regulation only upon a reasoned determination that the
benefits of the intended regulation justify its costs"
(Federal Register, 1993, p. 51736). In this chapter, several
regulatory approaches are considered, including market-based
approaches and regulatory standards. This chapter also
describes the regulatory approach selected and defines the
regulatory alternatives examined for the MWC II/III EG and
NSPS. The regulatory alternatives considered incorporate
different requirements for different segments of the regulated
population.
4.1 BACKGROUND
Public choice theory counsels that, given a criterion of
maximizing economic efficiency, an optimum level of
environmental quality and, hence, emissions (or emission
reduction) exists. This optimum value reflects the
recognition that improvements in environmental quality will
have both benefits and costs. Ideally, before selecting a
regulatory approach, EPA identifies the optimum level of
emission reductions. In practice, however, identifying this
level is costly and time consuming. Rarely does EPA have all
the relevant data to identify the optimal level. In addition,
the data may be subjective. Typically, the data available to
4-1
-------
EPA comprise totals and averages rather than marginal
quantities.
The optimal level of pollution control is the level at
which the (declining) marginal social benefit (MSB) of control
equals the (rising) marginal social cost (MSC) of control. Up
to the optimal level of pollution control (e.g., the point
where MSB and MSC are equal), every megagram of emission
reduction saves society goods valued more highly than those
required to achieve a given reduction. In other words, the
benefits of controlling emissions exceed the costs up to the
optimal point. Beyond the optimal point, however, the
additional costs of pollution abatement outweigh the
additional benefits.
When all costs are internalized, the market will
frequently equilibrate at the optimal level of pollution.
However, where externalities exist, the benefits of abatement
do not accrue to the polluter and too little pollution control
occurs from a societal perspective. In these cases, public
choice theory recognizes that government should address this
reallocation of resources by intervening, either directly or
indirectly, in the behavior of polluters.
4.2 MARKET-BASED APPROACHES
The primary market-based approaches include emission fees
and marketable permits. Emission fees are charges assessed by
the government for each unit of pollution discharged to the
environment. Marketable permits endow the holder with the
right to discharge a given amount of pollution to the
environment within a specified period of time. These permits
are issued by the government and may be traded freely. Both
policies must be enforced through monitoring and assessing
monetary sanctions for either underpayment of fees under the
emission fee system or overdischarges of pollutants under the
permit system.
4-2
-------
4.2.1 Emission Fees
Emission fees are designed to internalize the costs of
externalities. Costs formerly borne by society are assessed
to the owners of MWC facilities in the form of emission fees.
In the aggregate, profit-maximizing polluters would reduce
emissions to the point where the marginal cost of control is
equivalent to the emission fee. Where the marginal cost of
control exceeds the emission fee, each owner would opt to pay
the fee rather than control emissions. An attractive feature
of emission fees is that each discharger would independently
choose a level of control resulting in equivalent marginal
control costs across all polluters, hence minimizing the cost
to achieve the optimal level of emission reductions. Another
positive feature of emission charges is that they provide an
on-going incentive for polluters to find new, less costly
control methods.
This approach poses three problems. First, for reasons
discussed previously, the optimal level of emission reduction
is difficult to identify. Second, even if some desired level
of emission reduction is identified, the appropriate amount
for the emission fee is often difficult to estimate because of
insufficient data on the marginal costs and benefits of
controlling emissions and the baseline level of emissions.
Finally, limiting the overall level of pollution to an optimal
level does not guarantee that pollution levels within a
specific region or other geographic area is optimal.
4.2.2 Marketable Permits
Marketable permits offer a solution to the second problem
identified above for emission fees. Like emission fees,
marketable permits result in higher costs for MWC owners
leading to lower levels of emissions. Permits differ from
fees, however, in that the market, not EPA, establishes the
price that must be paid for emitting one megagram of a
pollutant. Under this approach, EPA would issue permits to
emit an amount consistent with the desired level of emission
4-3
-------
reductions. These permits could be auctioned off to
dischargers. Owners with higher marginal control costs would
be willing to pay more for the permits than owners with lower
marginal control costs.
Another way of implementing this approach would be to
give each discharger a specified share of the total permits
based on design capacity or some other criterion. Some
dischargers would initially have more permits than needed,
others fewer permits. Dischargers with an inadequate number
could purchase permits from owners with excess permits until
an efficient allocation is reached. Under either
implementation method, the market equilibrium for an emission
permit system would result in a cost-effective allocation.
Under this approach, the lack of accurate control-cost
data is not a factor. However, the problem of identifying the
optimal level of pollution remains. Furthermore, unless
geographic restrictions are imposed, marketable permits also
fail to guarantee that pollution levels within a specific
region are optimal. In addition, monitoring and enforcement
are crucial for the system to work properly. Specifically,
sanctions must be imposed on polluters that release emissions
without a permit to do so--otherwise the system breaks down.
4.3 REGULATORY STANDARDS
The government traditionally uses the regulatory
standards approach to control emissions. The two broad
categories of regulatory standards include design standards
and emission standards. Design standards specify the type of
control equipment polluters must install, whereas emission
standards specify the maximum quantity of a given pollutant
that any one polluter may release.
Design standards offer the least flexible approach
considered in this analysis. Polluters must install the
specified control equipment regardless of the additional
emission reductions achieved or the relative cost of
4-4
-------
alternative means of emission reductions. It is conceivable,
indeed likely, that some plants could achieve an equivalent
level of emission reductions for a lower cost when given the
option to do so. Therefore, for a given level of emission
reduction, this approach is generally more costly than other
approaches. In addition, design standards effectively reduce
any motivation for dischargers to develop more efficient
control approaches.
Emission standards allow greater flexibility in the
methods used to reduce emissions. Firms are free to meet the
emission limit in the manner that is least costly to them.
Consequently, for a given level of emission reductions,
emission standards are generally less costly than design
standards. Furthermore, emission standards give dischargers
an incentive to develop more effective means of controlling
emissions.
Even though emission standards generally result in a more
efficient allocation of costs than design standards, uniform
emission standards are still potentially more costly than
necessary. Uniform emission standards require the same level
of emission control of every discharger. Because marginal
control costs differ for plants of different sizes, different
technologies, different levels of product recovery (i.e., in
the chemical industry), and different levels of baseline
control, a more cost-effective solution can be reached if
standards are carefully tailored to the special
characteristics of each discharger. This type of standard is
referred to as a differentiated standard.
In formulating its MWC II/III regulatory alternatives,
EPA selected candidate regulatory alternatives that contain
control limits for MWCs differentiated by general size
classification. Small facilities are defined as MWC plants
with aggregate plant capacity between 35 and 225 Mg/day.
Large facilities are defined as MWCs with aggregate plant
capacity over 225 Mg/day.
4-5
-------
The MWC II/III regulatory alternatives do not specify a
particular control technology; rather, they specify emission
limits that facilities must meet. Current practice indicates
that the EG limits for acid gases, PM, and metals will likely
be met with one of six different types of control tech-
nologies, depending on the applicable emission limits. Table
4-1 presents acid gas, PM, and metals control technologies
listed in order of increasing efficiency. Current practice
also suggests that Hg control will be met with mainly one
technology, activated carbon injection (CI), in conjunction
with an existing acid gas control device. Post-combustion NOV
vt
control using selective noncatalytic reduction (SNCR) is most
commonly used for MWC NOX control.
In designing MWC regulatory alternatives, EPA considered
emission limits consistent with the combinations of the acid
gas control technologies listed in Table 4-1. Small plants
may be required to meet one control limit and large plants
another under a given regulatory alternative. Table 4-2 shows
the control technologies projected for the EG regulatory
alternatives under two compliance scenarios for acid gas, PM,
and metals control. The control technology bases identified
in this table are not intended to imply a design standard.
Rather, the technology bases are identified only for the
purpose of estimating costs and emission reductions.
The regulatory alternatives represent alternative levels
of control considered by EPA, whereas the compliance scenarios
represent potential alternative responses by the MWC owners
and operators to the emission requirements. Generally
speaking, we assume that MWC owners and operators will choose
the minimum-cost control technology that will meet the
emission requirements. However, where there is uncertainty
regarding the actual emission limits that a particular control
technology will achieve in practice, owners may choose a more
•"•SNCR applicability and performance are problematic with small
plants. Therefore, NOX control is not required at small MWC plants.
4-6
-------
TABLE 4-1. CONTROL TECHNOLOGIES ASSOCIATED WITH ACID GAS,
PARTICULATE MATTER, AND METALS CONTROL
GCP + ESP
GCP + DSI/ESP
GCP + DSI/FF
GCP + SD/ESP
GCP + SD/ESP(m)
GCP + SD/FF
Note:
1. The control technologies are described in Section 3 and
definitions are provided on p. x.
conservative (and potentially more costly) compliance strategy
to reduce the risk of noncompliance. A conservative
investment decision is particularly likely when the investment
decision affects the facility's ability to remain in operation
(e.g., noncompliance results in plant shutdown), is a long-
term decision, or involves a significant capital outlay.
Consequently, we evaluate two compliance scenarios for meeting
the acid gas, PM, and metals control requirements for existing
plants subject to EG.
The scenarios evaluated in this analysis differ only for
large plants with more than 225 Mg/day of capacity. Under
Scenario A, we assume that owners of large MWCs with at least
a minimal level of air pollution control in the baseline will
attempt to meet the acid gas limitations by adding to and
enhancing their existing equipment and by improving their
operating practices rather than by replacing their existing
equipment. In particular, we assume that owners of MWCs with
only an ESP will meet the control requirement by retaining and
upgrading their ESP and by adding an SD. Under Scenario B, we
assume that these same owners will attempt to meet the acid
4-7
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TABLE 4-2. MWC II/III EG: CONTROL TECHNOLOGY BASES USED TO
ESTIMATE THE IMPACTS OF THE REGULATORY ALTEFlNATIVES
Size Classification (Mg MSW/day)
Regulatory Alternative,
Compliance Scenario,
and Baseline APCD
Small (35 to 225)
Large (Over 225)
Reg. Alt. I-A
No Control
ESP (low)
SD/ESP
SD/FF
Reg. Alt. I-B
No Control
ESP (low)
SD/ESP
SD/FF
Reg. Alt. II-A
No Control
ESP (low)
SD/ESP
SD/FF
Reg. Alt. II-B
No Control
ESP (low)
SD/ESP
SD/FF
Reg. Alt. Ill (A & B)
No Control
ESP (low)
SD/ESP
SD/FF
GCP+ESP
GCP+ESP
GCP+SD/ESP
GCP+SD/FF
Same as Scenario A
Same as Scenario A
Same as Scenario A
Same as Scenario A
GCP+DSI/FF+CI
GCP+DSI/ESP+CI
GCP+SD/ESP+CI
GCP+SD/FF+CI
Same as Scenario A
Same as Scenario A
Same as Scenario A
Same as Scenario A
GCP+SD/FF+CI
GCP+SD/FF+CI
GCP+SD/FF+CI
GCP+SD/FF+CI
GCP+SD/FF+CI+SNCR
GCP+SD/ESP(m)+CI+SNCR
GCP+SD/ESP(m)+CI+SNCR
GCP+SD/FF+CI+SNCR
Same as Scenario A
GCP+SD/FF+CI+SNCR
Same as Scenario A
Same as Scenario A
GCP+SD/FF+CI+SNCR
GCP+SD/ESP(m)+CI+SNCR
GCP+SD/ESP(m)+CI+SNCR
GCP+SD/FF+CI+SNCR
Same as Scenario A
GCP+SD/FF+CI+SNCR
Same as Scenario A
Same as Scenario A
GCP+SD/FF+CI+SNCR
GCP+SD/FF+CI+SNCR
GCP+SD/FF+CI+SNCR
GCP+SD/FF+CI+SNCR
Notes:
1. The MWC II/III regulation does not mandate a specific type of control equipment.
The MWC owner/operator may use any control equipment that meets the emission
standards. The control technologies are the projected compliance strategies
used as the basis for computing costs. If the MWC has equipment that is meeting
or exceeding the control requirements, no additional costs are incurred.
2. Section 129 of the CAA specifies that the emission guidelines must include
emissions limits for NOX for all subcategories of MWCs. This holds even if the
maximum achievable control technology selected for all subcategories does not
include NOX. Therefore, EPA is proposing a no-control emission limit of 500
ppmv wherever SNCR does not appear in this table. This emission limit is
achievable at no cost, and no emission reduction will occur.
3. The control technologies are described in Section 3 and definitions are provided
on p. x.
4-8
-------
gas limitations by replacing their existing equipment with the
SD/FF technology. Under both scenarios, we assume that owners
whose plants have fairly advanced acid gas control equipment
in the baseline such as SD/ESPs and SD/FFs will be able to
meet the acid gas limitations without replacing their control
equipment. However, these owners may have to adjust their
operating practices to achieve the acid gas limits. Likewise,
under both scenarios, we assume that owners of MWCs that have
virtually no air pollution control equipment will respond to
the acid gas requirements by installing SD/FF systems and by
improving their operating practices.
Even though Hg and NOX controls are included on Table 4-
2, compliance with the control requirements for these
pollutants is not evaluated using a scenario framework. This
is due to the limited number of control technologies currently
available to meet the Hg and NOX limits (see Section 3 for a
description of the control technologies) and less variation in
the baseline level of control across potentially affected
facilities.
Under the EG, Hg control is required whenever acid gas
control is required. Consequently, Hg control is required of
large plants under all regulatory alternatives and small
plants under Regulatory Alternatives II and III. Small plants
are not required to control acid gases or Hg above baseline
levels under Regulatory Alternative I.
NOX control is required for large plants under all of the
alternatives evaluated. Small plants are not required to
control NOX emissions under any of the regulatory
alternatives. Note that in addition to the controls specified
for acid gases, metals, PM, Hg, and NOX, each of the EG
regulatory alternatives considered in this analysis also
includes testing, reporting, and recordkeeping requirements.
4-9
-------
Table 4-3 reports the control technology bases for the
MWC II/III NSPS regulatory alternatives. The scenario
analysis used for the EG is not used to evaluate impacts for
plants subject to the NSPS. Much of the variation in
compliance costs for the EG is due to the variable baseline
for existing plants—some plants have virtually no baseline
control equipment whereas others have advanced pollution
control systems in place. The scenario analysis for EG
projects responses to the emission limitations that are
differentiated based on the level of baseline control. For
this analysis, we define the baseline for new plants based on
the 40 CFR Subparts E and Db prior to 1991. Thus, the
baseline for new plants is not variable and a scenario
analysis similar to that used for the EG is not relevant for
the NSPS.
The impacts reported in the remainder of this report are
computed using the control technology bases described in
Tables 4-2 and 4-3.
4-10
-------
TABLE 4-3. MWC II/III NSPS: CONTROL TECHNOLOGY BASES USED TO
ESTIMATE THE IMPACTS OF THE REGULATORY ALTERNATIVES
Size Classification (Mg MSW/day)
Regulatory Alternative Small (35 to 225) Large (over 225)
Reg. Alt. I None Required GCP+SD/FF+CI+SNCR
Reg. Alt. II GCP+SD/FF+CI GCP+SD/FF+CI+SNCR
Notes:
1. The MWC II/III regulation does not mandate a specific type of control
equipment. The MWC owner/operator may use any control equipment that
meets the emission standards. These control technologies are the
projected compliance strategies used as the basis for computing
costs. None required means no control required over baseline where
baseline is based on 40 CFR subparts E and Db prior to 1991.
2. Section 129 of the Clean Air Act specifies that the emission
standards must include emissions limits for NOX for all subcategories
of MWCs. This holds even if the maximum achievable control
technology selected for all subcategories does not include NOX.
Therefore, EPA is proposing a no-control emission limit of 500 ppmv
wherever SNCR does not appear in this table. This emission limit is
achievable at no cost, and no emission reduction will occur.
3. Descriptions of the control technologies are in Section 3 and a list
of definitions on p. x.
4-11
-------
CHAPTER 5
ECONOMIC IMPACTS
This chapter presents the results of the economic impact
analysis for MWC facilities subject to EG and NSPS, and
outlines the inputs, methods, and assumptions used in the
analysis. Impacts are estimated for each of the model plants
and for the nation as a whole. Model plant cost impacts are
presented for publicly and privately owned MWCs. National-
level impacts reported in this chapter include the annual
social costs, emission reductions, and energy impacts.
Finally, the cost-effectiveness (C/E) of each regulatory
alternative is computed based on the national social cost and
national emissions reductions.
5.1 MARKET RESPONSE
The proposed regulations for new and existing MWCs will
result in additional costs for many governments and private
firms that supply solid waste combustion services. These
additional costs will require affected enterprises to make a
number of investment and/or operating decisions. The
objectives guiding government entities and firms that supply
combustion services will determine their response(s) to
regulation. In conventional economic analysis, firms are
profit maximizers, engaging in behavior that maximizes the net
present value of the firm. This condition provides the basis
for modeling the behavior of firms in response to governmental
regulations.
Governmental decisionmaking is of particular concern
because governmental entities play a large role in shaping MSW
management systems. Unfortunately, the theoretical and
5-1
-------
applied literature does not provide much positive guidance on
the behavior of governments. However, normative literature on
MSW management often assumes that cost minimization is the
basis for government decisionmaking (Robinson, 1986).
For the purposes of this EIA, the choices facing
suppliers of MWC services are characterized as either
substitution choices or compliance choices. Substitution
choices refer to the operating and investment decisions that
affect the amount of MSW combusted at the existing or planned
MWC. For example, communities with nearby landfills may
decide to substitute landfilling for combustion when faced
with higher combustion costs due to the regulation.,
Communities with an existing MWC may decide to shut down the
existing plant and build a new plant rather than retrofit.
Likewise, communities planning to build an MWC may decide to
modify the design specifications of the plant or to cancel the
MWC project altogether. In addition, communities may decide
to institute or increase the scope of recycling programs as
the cost of waste disposal increases.
The analysis of substitution choices is complicated by
several factors:
• institutional constraints common in MSW management
systems (e.g., financial and contractual obligations),
• difficulty siting new waste disposal facilities
resulting from "not in my backyard" (NIMBY) attitudes
in many communities,
• public perceptions regarding the relative
environmental impact of the alternative disposal
technologies, and
• uncertainty regarding the objective function of
government entities.
In addition, a thorough analysis of substitution choices would
consider the net costs and benefits of the substitute waste
disposal technologies. Consequently, a quantitative
examination of the economic impacts under a substitution
5-2
-------
scenario is beyond the scope of this analysis.
Suppliers that make the decision to continue operations
or to invest in a new plant are faced with compliance
decisions. Operators of existing MWCs that do not meet the
requirements of the proposed regulations must either take
steps to bring the facility into compliance with the
regulation or discontinue operations. Likewise entities
planning to build an MWC may have to change the design
specifications to ensure that the facility is in compliance
with the NSPS.
This analysis generally assumes that the MWC owner will
choose the minimum-cost control technology that will meet the
requirements of the regulation. However, where there is
uncertainty regarding the actual emission limits that a
particular control technology will achieve in practice, owners
may choose a more conservative (and potentially more costly)
compliance strategy to reduce the risk of noncompliance. A
conservative investment decision is particularly likely when
the investment decision affects the facility's ability to
remain in operation (e.g., noncompliance results in plant
shutdown), is a long-term decision, or involves a significant
capital outlay. Consequently, we evaluate two compliance
scenarios for existing plants subject to EG. Scenario A
assumes that owners select a compliance strategy for acid gas
control that has a lower cost and potentially higher level of
uncertainty than alternative strategies. Scenario B assumes
that MWC owners are slightly more risk averse and choose a
higher cost, lower uncertainty strategy.
5.2 ENGINEERING-COST INPUTS
The MWC II/III regulatory alternatives, as discussed in
Chapter 4, do not specify a particular control technology;
rather, they specify emission limits that facilities must
meet. However, current practice indicates that the EG limits
for acid gases, PM, and metals will likely be met with one of
5-3
-------
six different types of control technologies, depending on the
applicable emission limits. These control options, listed in
order of increasing efficiency, are shown in Table 4-1 of
Chapter 4.
Similarly the NSPS limits for acid gases, PM, and metals
will be met with one of three types of control technologies
(also listed in order of increasing efficiency) depending on
the applicable emission limits:
• GCP + ESP
• GCP + DSI/FF
• GCP + SD/FF
Tables 5-1 and 5-2 show the capital and annual operating
costs for each acid gas/PM/metals control technology for EG
and NSPS model plant categories, respectively.1 These tables
are not designed to show the costs of regulation; rather they
are designed to show the variations in capital and operating
costs across control options and model plant categories.
The costs reported in Tables 5-1 and 5-2 reflect
differing levels of model plant configuration, baseline
control, and additional controls. Sixteen existing and 11 new
model plants varying by size and technology are examined. In
this analysis, baseline refers to the pre-MWC I condition. As
mentioned in Section 3.3, the model plant subcategories
reflect different-sized facilities within model plant
categories and differing levels of baseline control. As shown
in Table 5-1, existing plants with baseline controls that
exceed the emission requirements of the baseline will
experience lower costs of compliance. For example, if a
facility already has an SD/FF, it will not incur any acid gas,
PM, and metals control costs (beyond monitoring and testing,
reporting and recordkeeping costs) under a regulation that
1The cost associated with GCP + DSI/ESP and GCP + DSI/FF are combined
in Table 5-1.
5-4
-------
TABLE 5-1. MWC II/III EG: MODEL PLANT CAPITAL AND ANNUAL OPERATING COSTS
OF ACID GAS, PARTICULATE MATTER, AND METALS CONTROL ($1990 103)a
i
Ul
Model
Plant
Number
1
2
3
3
4
4
4
5
5
5
6
6
7
8
9
10
11
12
14
14
15
15
15
16
16
17
17
Baseline
APCD
ESP
ESP
ESP
SD/FF
ESP
SD/ESP
SD/FF
ESP
SD/ESP
SD/FF
ESP
SD/FF
ESP
ESP
none
none
ESP
ESP
ESP
SD/FF
ESP
SD/ESP
SD/FF
ESP
SD/FF
ESP
SD/FF
GCP+
Ins tailed
Capital
Cost
18,968
6,783
1,480
0
96
0
0
96
0
0
3,600
0
13,577
5,267
2,154
1,284
1,523
3,403
2,621
0
0
0
0
0
0
2,824
0
ESP
Annual
Operating
Cost
-211C
490
283
0
146
0
0
146
0
0
341
0
263
187
234
217
66
138
195
0
0
0
0
0
0
126
0
GCP+DSI/ESP or FFb
Installed
Capital
Cost
21,745
8,041
10,208
0
19,172
0
0
10,085
0
0
5,118
0
20,449
12,862
3,232
1,762
2,612
5,792
4,576
0
6,872
0
0
6,992
0
5,213
0
Annual
Operating
Cost
644
857
1,810
0
2,725
0
0
1,767
0
0
894
0
2,219
1,348
536
502
416
946
765
0
1,942
0
0
1,144
0
988
0
GCP+
Installed
Capital
Cost
36,075
12,217
30,939
0
33,671
0
0
20,433
0
0
8,648
0
53,245
23,720
5,072
4,125
4,897
11,101
8,102
0
26,477
0
0
14,510
0
10,774
0
SD/ESP
Annual
Operating
Cost
1,712
1,094
3,315
0
3,597
0
0
2,314
0
0
1,037
0
3,345
1,686
517
532
527
1,176
904
0
3,079
0
0
1,499
0
1,163
0
GCP+SD/ESP(m)
Installed
Capital
Cost
36,075
12,217
30,939
0
33,671
0
0
20,433
0
0
8,648
0
53,245
23,720
5,072
4,125
4,897
11,101
8,102
0
26,477
0
0
14,510
0
10,774
0
Annual
Operating
Cost
1,997
1,277
3,867
0
4,088
491
0
2,528
214
0
1,210
0
3,902
1,879
604
621
614
1,372
1,054
0
3,431
352
0
1,670
0
1,357
0
GCP+
Installed
Capital
Cost
39,077
13,602
34,784
0
45,625
21,987
0
25,873
11,259
0
9,992
0
64,115
28,223
5,176
3,862
5,556
12,969
9,443
0
33,491
23,016
0
16,980
0
12,636
0
SD/FF
Annual
Operating
Cost
2,300
1,367
4,130
0
5,035
2,618
0
3,193
1,265
0
1,292
0
4,814
2,310
708
607
688
1,597
1,150
0
4,357
2,568
0
1,986
0
1,586
0
aCosts are incremental to the baseline and include a credit for avoided operating costs of supplanted baseline
control equipment.
bThese costs represent GCP + DSI/ESP costs for most model plant categories. However, costs for small model
plants with essentially no baseline controls (model plants 9 and 10) represent GCP + DSI/FF costs.
cNegative values represent cost savings.
Note:
1. Definitions are provided on p. x.
Sources: U.S. Environmental Protection Agency. 1989a. Economic Impact of Air Pollutant Emission Guidelines for
Existing Municipal Haste Combustors. Office of Air Quality Planning and Standards.EPA-450/3-89-005;
Davis, A. Lee. 1991a.Memorandum to Michael G. Johnston, U.S. EPA/ISB. Radian Corporation. Research
Triangle Park, NC. April 24; Davis, Lee. 1991c. Memorandum to Walt Stevenson and John Robson,
EPA/SDB. Radian Corporation, Research Triangle Park, NC. November 14.
-------
TABLE 5-2. MWC II/III NSPS: MODEL PLANT CAPITAL AND ANNUAL
OPERATING COSTS OF ACID GAS, PARTICULATE
MATTER, AND METALS CONTROL ($1990 103)a
Model
Plant
Number
1
2
3
4
5
6
8
9
10
11
12
GCP
Installed
Capital
Cost
178
533
1,500
689
600
1,378
233
591
625
0
0
+ ESP
Annual
Operating
Cost
12
45
131
57
40
122
18
80
36
0
0
GCP +
Installed
Capital
Cost
1,222
3,744
8,699
3,089
4,244
8,510
1,400
1,555
1,398
500
500
DSI/FF
Annual
Operating
Cost
600
1,446
3,314
1,223
1,887
3,638
526
358
397
1,057
1,746
GCP +
Installed
Capital
Cost
4,533
9,855
20,365
9,799
12,743
21,842
3,955
3,100
3,064
9,510
9,510
SD/FF
Annual
Operating
Cost
732
1,666
3,740
1,504
2,185
4,064
625
436
454
1,542
1,542
aCosts are incremental to the baseline.
Note:
1. Definitions are provided on p. x.
Sources: U.S. Environmental Protection Agency. 1989b.
Pollutant Emission Standards for New Municipal
Economic Impact of Air
Waste Combustors.
Office of Air Quality Planning and Standards. EPA-450/3-89-006.
requires all facilities to meet emission limits generally
achieved by SD/FFs. Costs reported for NSPS plants (Table
5-2) reflect the assumption that, in the baseline, plants just
meet the Federal standards in effect prior to promulgation of
MWC I.
In addition to the costs for acid gas/PM/metals control,
costs for Hg control and NOX control are analyzed for each
model plant category. Tables 5-3 and 5-4 report the model
plant capital and operating costs of these controls for the EG
model plants, and Tables 5-5 and 5-6 report these costs for
the NSPS model plants. Note that the operating costs of Hg
control vary depending on the type of acid gas control
5-6
-------
TABLE 5-3. MWC II/III EG: MODEL PLANT CAPITAL AND ANNUAL
OPERATING COSTS FOR Hg CONTROL ($1990 103)a
Model Plant
Number
1
2
3
4
5
6
7d
8d
9
10
11
12
14
15
16
17
Installed Capital
Cost
160
81
179
310
310
72
0
0
61
32
72
126
72
0
0
126
Annual Operating
Gas
DSI/ESP or
DSI/FFC
245
75
346
865
865
77
0
0
37
16
74
192
77
0
0
192
Cost by Type
Control13
SD/ESP
156
48
221
553
553
49
0
0
24
10
47
123
49
0
0
123
of Acid
SD/FF
63
19
89
222
222
20
0
0
9
4
19
49
20
0
0
49
aCosts are incremental to acid gas control costs. Costs are estimated
based on CI control technology for Hg control applied to facilities with
acid gas control systems.
^Annual operating costs of Hg control vary by the type of acid gas control
used at the MWC. MWCs with SD/FF systems generally incur the lowest
operating control cost while MWCs with DSI/ESP systems incur the highest
operating control cost.
°These costs represent CI operating costs associated with DSI/ESP acid
gas control for most model plant categories. However, costs for small
model plants with essentially no baseline controls (model plants 9 and
10) represent CI operating costs associated with DSI/FF acid gas controls.
dRDF facilities do not incur Hg control costs beyond testing fee costs
because these facilities meet the Hg emission limits with acid gas
controls.
Note:
1. Definitions are provided on p. x.
Sources: Nebel, Kris. 1993. Memorandum to Walter Stevenson, EPA/SDB.
Radian Corporation. Research Triangle Park, NC. November 19;
Davis, Lee. 1991b. Memorandum to Glenn Morris, Research
Triangle Institute. Radian Corporation. Research Triangle Park,
NC. September 5.
5-7
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TABLE 5-4. MWC II/III EG: MODEL PLANT CAPITAL AND ANNUAL
OPERATING COSTS FOR NO^CONTROL ($1990 103)a
Model Plant
Number
lb
2b
3b
4
5
6
7
8
9
10
11
12
14
15
16
17
Installed
Capital Cost
0
0
0
5,322
3,271
1,364
5,196
2,599
1,063
832
53
53
1,364
5,196
2,599
53
Annual
Operating Cost
0
0
0
781
486
201
711
336
162
142
39
40
201
711
336
40
aCosts are incremental to the baseline.
"NOX control is not required at mass burn refractory plants
(model plants 1, 2, and 3).
Note:
1. Definitions are provided on p. x.
Sources: U.S. Environmental Protection Agency. 1989d.
Municipal Waste Combustors - Background Information
for Proposed Standards: Control of NOX Emissions.
Office of Air Quality Planning and Standards. EPA-
450/3-89-27d; Soderberg, Eric, David White, and
Kristina Nebel. 1991. Memorandum to Walter
Stevenson, U.S. EPA/SDB, and Michael G. Johnston,
U.S. EPA/ISB. Radian Corporation. Research Triangle
Park, NC. July 17.
5-8
-------
TABLE 5-5. MWC II/III NSPS: MODEL PLANT CAPITAL AND ANNUAL
OPERATING COSTS FOR Hg CONTROL ($1990 103)a
Annual Operating Cost bv Type
of Acid Gas Control13
Model Plant Installed
Number Capital Cost DSI/FF SD/FF
1
2
3
4
5
6°
8
9
10
11
12
72
167
310
126
196
0
81
32
48
179
179
50
308
865
192
404
0
89
13
37
340
340
13
79
222
49
104
0
23
3
9
87
87
aCosts are incremental to acid gas control costs. Costs
are estimated based on CI control technology for Hg control
applied to facilities with acid gas control systems.
bAnnual operating costs of Hg control vary by the type of
acid gas control used at the MWC. MWCs with SD/FF systems
generally incur the lowest operating control cost while
MWCs with DSI/FF systems incur the highest operating
control cost.
CRDF facilities do not incur Hg control costs beyond
testing fee costs because these facilities meet the Hg
emission limits with acid gas controls.
Note:
1. Definitions are provided on p. x.
Sources: Nebel, Kris. 1993. Memorandum to Walter Stevenson,
EPA/SDB. Radian Corporation. Research Triangle
Park, NC. November 19; Davis, Lee. 1991b.
Memorandum to Glenn Morris, Research Triangle
Institute. Radian Corporation. Research Triangle
Park, NC. September 5.
5-9
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TABLE 5-6. MWC II/III NSPS: MODEL PLANT CAPITAL AND ANNUAL
OPERATING COSTS FOR NOX CONTROL ($1990 103)a
Model Plant
Number
1
2
3
4b
5
6
8
9
10
11
12
Installed
Capital Cost
1,122
2,244
4,155
0
80
3,966
53
684
870
53
53
Annual
Operating Cost
163
337
691
0
61
699
39
121
148
40
40
aCosts are incremental to the baseline.
X control is not required at mass burn refractory plants
(model plant 4).
Note:
1. Definitions are provided on p. x.
Sources: U.S. Environmental Protection Agency. 1989d.
Municipal Waste Combustors - Background Information
for Proposed Standards; Control of NOX Emissions.
Office of Air Quality Planning and Standards. EPA-
450/3-89-27d.
5-10
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equipment that is used. More effective acid gas control
generally results in lower Hg operating control costs.
Costs of performance testing, reporting, and
recordkeeping for acid gas/PM/metals, mercury, and NOX control
are analyzed for each model plant category.2 These costs are
shown in Table 5-7 for EG and Table 5-8 for NSPS. MWC plants
incur a basic one-time cost for notification of construction,
anticipated start-up, actual start-up, initial performance
testing, and a basic siting analysis. All plants incur annual
recordkeeping costs, which include records of employee
training and certification; records of start-up malfunction,
etc; and mercury sorbent recordkeeping.
Performance testing and reporting are also required
annually by all plants. However, if small plants are able to
demonstrate compliance with the emission limits for three
consecutive years, they will be allowed to test for that
particular pollutant every third year instead of annually. If
the next test in the third year shows compliance, testing will
again be conducted the third year. If a failure occurs for
any pollutant, annual testing will resume until the plant
establishes three consecutive years of compliance. Small
plants that meet the criteria allowing them to perform
emission limit testing every third year will be required to
submit a simplified annual report for years in which a full
compliance test was not required.
The data in Tables 5-1 through 5-8 are used to calculate
cost impacts under the regulatory alternatives for each of the
model plants. For each model plant, EPA computes the
increased cost of combusting under MWC I and MWC II/III.
These costs were figured on both an enterprise and social
basis. The estimated costs incurred by each affected MWC are
called "enterprise costs" in this EIA. In enterprise
accounting, the real (constant dollar) municipal bond rate of
2Costs for continuous emissions monitoring are already included in the
respective control technology costs (Tables 5-1 through 5-6).
5-11
-------
TABLE 5-7. MWC II/III EG: MODEL PLANT TESTING. REPORTING,
AND RECORDKEEPING COSTS ($1990 103)a'b
Recordkeeping
Costs
Performance Testing and
Reporting Costs^
Model
Plant
Number
1
2
3
4
5
6
7
8
9
10
11
12
14
15
16
17
Basic One-
Time Costs0
8
8
8
8
8
8
8
8
8
8
8
8
8
8
8
8
Annual
6
6
9
9
9
6
6
6
9
6
6
6
6
6
6
6
Mercury
Annual6
2
2
4
4
4
2
0
0
4
2
2
2
2
0
0
2
PM/Metals
Recurring
55
55
75
75
75
55
55
55
75
55
55
55
55
55
55
55
Acid Gas
Recurring
6
6
8
8
8
6
6
6
8
6
6
6
6
6
6
6
Mercury
Recurring
3
3
4
4
4
3
3
3
4
3
3
3
3
3
3
3
aCosts are incremental to the baseline.
bCosts for continuous emissions monitoring are included in the respective
control technology costs.
cBasic one-time costs include initial notifications of
construction, anticipated start-up, actual start-up, initial
performance testing, and a basic siting analysis.
Annual recordkeeping costs include records of employee training
and certification, and records of start-up, malfunction, etc.
eAnnual mercury recordkeeping costs are for mercury sorbent
recordkeeping.
fUnits at small plants can begin testing every three years for
a particular pollutant if they pass their performance test for
that pollutant for three consecutive years.
Note:
1. Definitions are on p. x.
Source: Davis, Lee. 1994. Memorandum to Brenda Jellicorse, Research
Triangle Institute. Radian Corporation. Research Triangle
Park, NC. July 20.
5-12
-------
TABLE 5-8. MWC II/III NSPS: MODEL PLANT TESTING, REPORTING,
AND RECORDKEEPING COSTS ($1990 103)a/b
Recordkeeping
Costs
Model Basic One-
Plant Time
Number Costs0
1
2
3
4
5
6
8
9
10
11
12
8
8
8
8
8
8
8
8
8
8
8
Annual
6
6
9
6
9
12
6
6
6
6
6
Mercury
Annual6
2
2
4
2
4
0
2
2
2
2
2
Performance Testing and
Reporting Costs
PM/Metals
Recurring
55
55
75
55
75
96
55
55
55
55
55
Acid Gas
Recurring
6
6
8
6
8
9
6
6
6
6
6
Mercury
Recurring
3
3
4
3
4
5
3
3
3
3
3
aCosts are incremental to the baseline.
bCosts for continuous emissions monitoring are included in the respective
control technology costs.
cBasic one-time costs include initial notifications of
construction, anticipated start-up, actual start-up, initial
performance testing, and a basic siting analysis.
^Annual recordkeeping costs include records of employee training
and certification, and records of start-up, malfunction, etc.
eAnnual mercury recordkeeping costs are for mercury sorbent
recordkeeping.
fUnits at small plants can begin testing every three years for
a particular pollutant if they pass their performance test for
that pollutant for three consecutive years.
Note:
1. Definitions are on p. x.
Source: Davis, Lee. 1994. Memorandum to Brenda Jellicorse, Research
Triangle Institute. Radian Corporation. Research Triangle
Park, NC. July 20.
5-13
-------
4 percent is used as the rate for annualizing capital costs of
control for publicly owned facilities. A real, after-tax
weighted average cost of capital of 8 percent is used for
annualizing capital costs of control for privately owned
facilities. For a discussion of the methods and assumptions
used to compute these discount rates, see Appendix A in
Economic Impact of Air Pollutant Emission Guidelines for
Existing Municipal Waste Combustors (EPA, 1989a).
The term "social costs" refers to the regulatory costs
for the nation as a whole. Largely due to the combined
effects of taxes and social discount rates, national social
costs are not the sum of costs incurred by each affected MWC.
In social accounting, the capital costs of control are
annualized at a rate reflecting society's real opportunity
cost of capital, which is assumed to be 7 percent.
5.3 ASSUMPTIONS AND CONVENTIONS FOR COMPUTING IMPACTS
Various assumptions underlie the economic impacts
estimated to result from MWC II/III EG and NSPS. Table 5-9
summarizes the many assumptions, conventions, and calculated
values used in this EIA. The first three entries in the table
are self-explanatory. Because it is assumed that no existing
MWCs will close due to the EG, the total annual costs for the
EG remain constant over the estimated remaining facility life.
The EPA further assumes that model plant capacity
utilization and its analytical counterparts—employment,
annual emission reductions, and energy usage—remain unchanged
over the remaining plant life. This assumption avoids
computational complexity as well as controversy relating to
the evaluation of an uneven flow of emission reductions over
time. The assumption that annual operating costs and revenues
vary in proportion to capacity utilization would be needed
only for investigating the sensitivity of the economic
findings to the assumed model plant capacity utilization
rates.
5-14
-------
TABLE 5-9. ASSUMPTIONS AND CONVENTIONS
Affected MWCs:
• EG: All MWC units at plants with aggregate plant capacity >35 Mg/day
placed under construction on or before the proposal date (expected
mid-1994).
• NSPS: All MWC units at plants with aggregate plant capacity >35
Mg/day placed under construction after the proposal date (expected
mid-1994).
Monetary unit: Constant (real) June 1990 dollars
Year for which impacts are evaluated: 2000
Percentage utilization of daily capacity (There are some exceptions.
These percentages remain constant over time.):
• Mass burn: 87.5 percent
• RDF and FBC: 83.3 percent
• Modular: 84.2 percent
Baseline APCDs:
• EG: Variable (see Table 3-6)
• NSPS: All plants just meet the federal standards in effect prior to
MWC I; those regulations (40 CFR Part 60 Subpart E) limit PM
emissions to a maximum of 0.18 g/dscm for MWC plants with the
exception of plants with design capacity of 45 Mg/day or less.
Capital costs for each Air Pollution Control Device (APCD):
• Incurred only at the outset of operation of the APCD
• Amortized over the lifetime of the APCD
Annual operating costs and revenues for each MWC and APCD:
• Invariant over the lifetime of the MWC or APCD with the exception of
some performance, testing, and reporting costs.
• Proportional to MWC capacity utilization (for analysis purposes when
alternative capacity utilization rates are introduced)
Lifetimes of physical facilities:
• Existing MWCs: 20 years after compliance costs begin
• New MWCs: 30 years after compliance costs begin
• APCDs: the shorter of 30 years or remaining plant life
No substitution assumption (See text for discussion.)
Market interest (discount) rate for computing potential tipping fee
increases and analyzing the distribution of costs:
• Public owners: 4 percent real municipal revenue bond rate
• Private owners: 8 percent real, after-tax weighted average cost of
capital
Social discount rates for computing social costs:
» 7 percent for both capital and operating costs
5-15
-------
The next four entries are simplifying assumptions used to
compute the annual cost of the regulation. The EPA assumes
that all capital costs of control for each model plant are
incurred on the effective date of compliance, that annual
operating and maintenance expenditures and annual recovery
credits are unchanging over the cycle, and that salvage value
at the end of the cycle equals the cost of removing the worn-
out equipment and restoring the site. As noted in the
discussion of testing, reporting, and recordkeeping costs,
some of these costs are incurred at 3-year intervals rather
than annually.
Based on discussions with MWC industry officials, EPA
assumes that the remaining plant life on the date of
compliance is, on average, 20 years at EG plants and 30 years
at NSPS plants and that the equipment life cycle equals
remaining plant life. (The costs reported in Tables 5-1
through 5-8 reflect this assumption.) All of these
assumptions and procedures reduce computational complexity.
Moreover, the level of detail and uncertainty surrounding the
engineering cost data do not justify greater realism or finer
distinctions in the economic analysis.
One additional major assumption is not reflected in
Table 5-9 because it is not easily described in a few lines.
As described in Section 5.1, it is assumed that the amount of
waste combusted at planned or existing facilities does not
change due to the regulation. The demand for combustion
services provided by these facilities is assumed to be
perfectly inelastic (i.e., constant in the face of rising
costs). The inelasticity could be due to inelastic demand per
se, or to institutional arrangements that do not allow any
increase in costs to be passed on directly to waste
generators. Thus, this no-substitution assumption is a
reasonably worst-case cost scenario because it leads to
projections of higher national costs of control than are
likely to occur. The last two entries to Tables 5-9 -- the
discount rates used to estimate the enterprise costs and the
5-16
-------
social costs as well as the approach used to model both
costs -- are discussed in the following two sections.
5.4 ENTERPRISE COSTS
Having presented the model inputs and assumptions, the
next step is to describe methods by which model plant-level
cost impacts are calculated for the MWC II/III EG and NSPS.
For each model plant subcategory, the required control option
and the installed capital and annual operating costs of the
control option are known. The annual enterprise cost of the
regulation for a model plant subcategory is calculated in
several steps shown in the equations for privately owned and
publicly owned MWCs:
Private Annual Control Cost:
AC,
K-D
{1 - (1 +
[(OP - C) (1 - Xe)]
(5-1)
Public Annual Control Cost:
K
(1 - (1 H-
+ (OP - C)
(5-2)
Private Annual Testing, Reporting, and Recordkeepinq Costs
ATRRr
TRRn(l - Xe)
(5-3)
[(1 - (J + rprc)/rp]
5-17
-------
Public Annual Testing. Reporting, and Recordkeepinc? Costs
ATRRW
TRRn
n = 1 (1 + rm)n
(5-4)
Private Total Annual Compliance Cost
TACp = ACp + ATTRp (5-5)
Public Total Annual Compliance Cost
TACm = ACm + ATTRm (5-6)
where
ACp = Annual control cost at privately owned facilities
including annual capital recovery and annual
operating components;
ACm = Annual control cost at publicly owned facilities
including annual capital recovery and annual
operating components;
K = Capital cost of the required control option,
incurred at the beginning of period t;
r ,rm = Private and public real rates of discount
(r =8 percent; rm=4 percent); (See Appendix A
in the Economic Impact of Air Pollutant
Emission Guidelines for Existing Municipal
Waste Combustors (EPA, 1989a) for a discussion
of the estimation of these parameters.)
t = Estimated remaining life of the plant on the date
of compliance (20 years for EG plants, 30 years
for NSPS plants);
OP = Operating costs of the required control option;
C = Credit for the avoided operating costs associated
with baseline control equipment supplanted by more
stringent controls required under the regulation;
Xe = Effective tax rate equal to Xs + (1 - Xs)Xf, where
Xs and Xf are the State and Federal average tax
rates (Xs = 7 percent, Xf = 35 percent);
5-18
-------
D = The present value of the annual tax savings due to
depreciation; (Depreciation of the control
equipment is calculated as a straight line over
the expected life of the equipment or the
remaining life of the plant, whichever is
shorter.)
ATRRp = Annual testing, reporting, and recordkeeping cost
at privately owned facilities;
= Annual testing, reporting, and recordkeeping cost
at publicly owned facilities;
TRRn = Testing, reporting, and recordkeeping cost
incurred in the nth year; (These include costs
incurred every year by large plants and those
incurred every third year by small plants.)
TACp = Total annual compliance cost at privately owned
facilities including annual control cost and
annual testing, reporting, and recordkeeping
cost; and
TACm = Total annual compliance cost at publicly owned
facilities including annual control cost and
annual testing, reporting, and recordkeeping
cost.
The annual enterprise costs of the regulatory
alternatives are computed using the cost inputs listed in
Tables 5-1 through 5-8 and the control options identified in
Tables 4-2 through 4-3 as the technology bases under each
regulatory alternative and compliance scenario. Tables 5-10
and 5-11 display the results of these calculations.
The estimated annual enterprise costs per megagram
presented in Tables 5-10 through 5-11 differ for private and
public entities. Publicly owned entities will be able to meet
the financial obligations imposed by the regulation at a lower
cost than privately owned entities. The differences in costs
are due to differences in the tax obligations and the discount
rates faced by public versus private entities.
^Testing, reporting, and recordkeeping costs incurred by plants with
less than 35 Mg/day capacity are not reflected in the impacts reported in
this EIA.
5-19
-------
TABLE 5-10.
MWC II/III EG: AVERAGE ANNUAL ENTERPRISE COSTS
($1990/Mg MSW)a'b'c
Ownership and
Regulatory
Alternative
Public Entities
Reg. Alt. I-A
Reg. Alt. II-A
Reg. Alt. I-B
Reg. Alt. II-B
Reg. Alt. Ill
Private Entities
Reg. Alt. I-A
Reg. Alt. II-A
Reg. Alt. I-B
Reg. Alt. II-B
Reg. Alt. Ill
Size Classification (Mg
Small (35 to 225) Large
16.32
33.65
16.32
33.65
46.02
18.74
37.04
18.74
37.04
52.42
MSW/day)
(over 225)
20.24
20.24
20.25
20.25
17.21
23.37
23.37
23.88
23.88
20.33
aCosts are based on the regulatory alternatives and compliance
scenarios described in Table 4-2.
bCosts are MWC II/III costs over baseline. Costs are annual
operating costs plus capital costs, annualized at 4 percent
for public entities and 8 percent for private entities.
Annual operating costs include testing, reporting, and
recordkeeping costs, some of which are also annualized.
cCost per megagram of MSW is computed by dividing the
total annual cost of the regulation by the total (amount
of MSW processed per year at large plants that do not
have SD/ESP or SD/FF systems and small plants that do not
have DSI/ESP, SD/ESP, or SD/FF systems in the baseline.
Notes:
1. MWC capacity utilization is assumed to average 83 to 88
percent for most plants.
2. Definitions are provided on p. x.
5-20
-------
TABLE 5-11. MWC II/III NSPS: AVERAGE ANNUAL ENTERPRISE COSTS
($1990/Mg MSW)a'b'c
Size Classification
Ownership and (Mg MSW/day)
Regulatory
Alternative Small (35 to 225) Large (over 225)
Public Entities
Reg. Alt. I 0 11.49
Reg. Alt. II 33.34 11.49
Private Entities
Reg. Alt. I 0 12.98
Reg. Alt. II 38.26 12.98
aCosts are based on the regulatory alternatives described in
Table 4-3.
bCosts are MWC II/III costs over baseline. Costs are annual
operating costs plus capital costs, annualized at 4 percent
for publicly owned MWCs and 8 percent for privately owned
MWCs. Annual operating costs include testing, reporting,
and recordkeeping costs, some of which are also annualized.
GCost per megagram of MSW is computed by dividing the total
annual cost of the regulation by the total amount of MSW
processed per year at all plants affected by the regulation.
Notes:
1. MWC capacity utilization is assumed to average 83 to 88
percent for most plants.
2. Definitions are provided on p. x.
5-21
-------
An increase in the cost of combustion services for both
public and private entities will likely result in increases in
the average tipping fee charged. The amount of the cost that
is passed along to MWC customers in the form of higher tipping
fees is determined by institutional and market conditions
prevailing in the MSW area. If, for example, the contracts
between collectors and combustors allow combustor owners to
pass on pollution control costs to the collectors, or if no
viable alternatives to disposal by combustion exist locally
and costs are covered by tipping fees, then all or most of the
costs will be passed on to MWC customers. Table 5-12 shows
the average tipping fee increases for publicly owned and
privately owned entities if all of the costs are passed
through to the MWC customer.
5.5 NATIONAL-LEVEL IMPACTS
In addition to providing estimates of the enterprise cost
of EG and NSPS by model plant category and subcategory, this
analysis estimates the national social costs, the national
emission reductions, and the increase in energy retired by
upgraded controls associated with MWC I and the MWC II/III
regulatory alternatives. The costs are calculated on an
aggregate basis and per megagram of MSW combustion. Emission
reductions are calculated for CDD/CDF, CO, PM, SO2, HC1, Pb,
Cd, Hg,and NOX. Energy impacts are calculated for natural gas
and electricity.
5.5.1 National Social Costs
To determine the national social costs for a particular
regulatory alternative, the annual costs of that alternative
for each model plant subcategory are first computed using the
methods outlined above for publicly owned plants. As noted in
Section 5.2, the capital costs of control are annualized at a
rate reflecting society's real opportunity cost of capital,
which is assumed to be 7 percent. These annual model plant
5-22
-------
TABLE 5-12. MWC II/III: AVERAGE TIPPING FEE INCREASES
PROJECTED FOR MWCs ASSUMING A FULL COST PASS THROUGH
(Percent)a
Size Classification
(Mg MSW/day Capacity)
Ownership,
Regulatory
Alternative, and
Compliance Scenario Small (35 to 225) Large (over 225)
EG
Public Entities
Reg
Reg
Reg
Reg
Reg
Private
Reg
Reg
Reg
Reg
Reg
. Alt.
. Alt.
. Alt.
. Alt.
. Alt.
I-A
II -A
I-B
II-B
III
29
59
29
59
81
36
36
36
36
30
Entities
. Alt.
. Alt.
. Alt.
. Alt.
. Alt.
I-A
II-A
I-B
II-B
III
33
65
33
65
92
41
41
42
42
36
NSPS
Public Entities
Reg. Alt. I
Reg. Alt. II
Private Entities
Reg. Alt. I
Reg. Alt. II
0
58
0
67
20
20
23
23
aTipping fee increases are computed using the average cost
per megagram of MSW reported in Tables 5-10 and 5-11 and an
average tipping fee of $57/Mg. The average tipping fee is
based on the 1993 average tipping fee for MWCs reported in
Waste Age (Berenyi & Gould, 1993) converted to 1990 dollars
Note:
1. Definitions are provided on p. x.
5-23
-------
costs are then multiplied by scale factors (see Tables 3-6 and
3-7) and the products are then summed to compute the national-
level social costs.
This method is used to estimate the national social costs
of both MWC I and MWC II/III. Table 5-13 reports the national
social cost impacts of MWC I. Table 5-14 shows the MWC II/III
EG costs broken out by acid gas/PM/metals control; Hg control;
testing, reporting, and recordkeeping; and NO,, control. Table
J^
5-15 presents the incremental national social costs for EG.
Tables 5-16 and 5-17 report the NSPS national social cost
impacts and incremental costs, respectively. Note that the
costs of control reported in Tables 5-14 and 5-16 for MWC
II/III are incremental to the pre-MWC I baseline and are not
additive to MWC I costs. In Tables 5-15 and 5-17, incremental
costs are incremental to the previous alternative with the
exception of Regulatory Alternative I, which is incremental to
the pre-MWC I baseline.
The average annual social costs per megagram of MSW
combusted for EG by regulatory alternative and compliance
scenario are presented in Table 5-18. Large plants with
SD/ESP or SD/FF systems in the baseline or small plants with
DSI/ESP, SD/ESP, or SD/FF systems in the baseline will not
incur any acid gas capital costs. They would however, have
compliance costs for mercury control; NOX control; and
testing, reporting, and recordkeeping. On Table 5-18 a total
is given for plants with acid gas capital costs as well as a
total for all plants. Table 5-19 presents the average annual
social cost per megagram of MSW combusted for NSPS by
regulatory alternative.
5.5.2 Miscellaneous Costs
In addition to the costs reported in Section 5.5.1, costs
not quantified for this analysis are described below.
5-24
-------
TABLE 5-13. MWC I NATIONAL SOCIAL COSTSa
Control Cost Category
EG
NSPS
Annual Social Costs
($1990 103/yr)
Acid Gas/PM/Metals Control
NOV Control
A.
Total Annual Social Costs
168,000
0
168,000
133,652
23,537
157,190
Capital Costs ($1990 103)
Acid Gas/PM/Metals Control
NOX Control
Total Capital Costs
888,000
0
888,000
517,000
96,000
613,000
Annual Total Costs per Mg MSW
Combusted ($1990/Mg MSW)B
Acid Gas/PM/Metals Control
NOX Control
Total
13.68
0.0
13.68
9.82
1.91
11.73
aCosts are based on the requirements described in Table 2-2.
Annual social costs are the sum of capital costs annualized
at 7 percent, and annual operating costs. Annual operating
costs include testing, reporting, and recordkeeping costs,
some of which are also annualized. Details may not sum to
totals due to rounding.
3Cost per megagram of MSW for acid gas/PM metals control is
computed by dividing the total annual cost by the total
amount of MSW combusted per year at plants that incur
costs for acid gas, PM, and metals control. Total cost
per megagram of MSW for NOX control is computed by dividing
annual NOX costs by the total amount of MSW combusted per
year at plants required to control NO...
Notes :
1. MWC capacity utilization is assumed to average 83 to 88
percent for most plants.
2. Definitions are provided on p. x
5-25
-------
TABLE 5-14. MWC II/III EG: NATIONAL SOCIAL COSTS BY
REGULATORY ALTERNATIVE AND COMPLIANCE SCENARIO5
Reg. Alt. Reg. Alt. Reg. Alt. Reg. Alt. Reg. Alt.
Control Cost Category I-A II-A I-B II-B III
Annual Social Costs*5
($1990 103/yr)
Acid Gas/PM/ 327,000 355,000 338,000 366,000 407,000
Metals Control
Hg Control
Testing, Reporting,
Recordkeeping
Subtotal
NOX Control
Total Annual
Social Cost*
Capital Costs
($1990 103)
Acid Gas/PM/ 1,674,000 1,730,000 1,940,000 2,000,000 2,320,000
Metals Control0
15,200
13,200
356,000
56,300
412,000
17,800
13,500
386,000
56,300
443,000
10,300
13,200
361,000
56,300
418,000
13,000
13,500
392,000
56,300
448,000
10,100
13,500
431,000
56,300
487,000
Hg Control
Subtotal
NOX Control
Total Capital
ComtM
14,500
1,690,000
236,000
1,930,000
17,800
1,750,000
236,000
1,980,000
14,500
1,958,000
236,000
2,190,000
17,800
2,020,000
236,000
2,250,000
17,800
2,330,000
236,000
2,570,000
aCosts are based on the regulatory alternatives and scenarios described in
Table 4-2. Total costs are MWC II/III costs over baseline. Details may
not sum to totals due to rounding.
bAnnual social costs are the sum of capital costs, annualized at 7 percent,
and annual operating costs. Annual operating costs include testing,
reporting, and recordkeeping costs, some of which are also annualized.
GAcid gas/PM/metals capital costs include downtime costs computed using a
1993 average tipping fee of $57 Mg ($1990).
Notes:
1. MWC capacity utilization is assumed to average 83 to 88 percent for most
plants.
2. Definitions are provided on p. x.
5-26
-------
TABLE 5-15.
MWC II/III EG: INCREMENTAL NATIONAL
SOCIAL COSTS3
Control Cost Category
Annual Social Costs
($1990 105/yr)
Acid Gas/PM/Metals
Control
Hg Control
Testing, Reporting,
Recordkeeping
Subtotal
NOX Control
Total Annual
Social Coats
Capital Costs ($1990 103)
Acid Gas/PM/Metals
Control
Hg Control
Subtotal
NOX Control
Total Capital Coats
Annual Social Costs
($1990 10-Vyr)
Acid Gas/PM/Metals
Control
Hg Control
Testing, Reporting,
Recordkeeping
Subtotal
NOX Control
Total Annual Social
Coata
Capital Costs ($1990 103)
Acid Gas/PM/Metals
Control
Hg Control
Subtotal
NOX Control
Total Capital Coata
Change in
Baseline
Alt.
327,
15,
13,
356,
56,
412,
1,670,
14,
1,690,
236,
1,930,
Chanae in
Baseline
Alt.
338,
10,
13,
361,
56,
418,
1,940,
14,
1,960,
236,
2,190,
Regulatory
to Reg.
. I
000
200
200
600
300
000
000
500
000
000
000
Regulatory
to Reg .
. I
000
300
200
000
300
000
000
500
000
000
000
Alternative under
Reg. Alt. I to
Reg. Alt. II
27,800
2,620
295
30,700
0
30,700
54,400
3,340
57,700
0
57,700
Alternative under
Reg. Alt. I to
Reg. Alt. II
27,800
2,620
295
30,700
0
30,700
54,400
3,340
57,700
0
57,700
Compliance Scenario A
Reg. Alt. II to
Reg. Alt. Ill
52,400
-7,700
0
44,700
0
44,700
586,000
0
586,000
0
586.000
Compliance Scenario B
Reg. Alt. II to
Reg. Alt. Ill
41,800
-2,890
0
38,900
0
38,900
318,000
0
318,000
0
318,000
aThe incremental national social costs are derived from the national social
costs in Table 5-14. Details may not sum to totals due to rounding.
Note:
1. Definitions are provided on p. x.
5-27
-------
TABLE 5-16.
MWC II/III NSPS: NATIONAL SOCIAL COSTS BY
REGULATORY ALTERNATIVE3
Control Cost Category
Annual Social Costsb
($1990 103/yr)
Acid Gas/PM/Metals Control
Hg Control
Testing, Reporting,
Recordkeeping
Subtotal
NO.. Control
./x
Total Annual Social Costs
Capital Costs ($1990 103)
Acid Gas/PM/Metals
Hg Control
Subtotal
NOX Control
Total Capital Costs
Reg.
147,
4,
5,
157,
25,
182,
575,
6,
582,
104,
685,
Alt.
I
000
220
120
000
400
000
000
900
200
000
000
Reg. Alt.
II
166,000
4,500
5,290
176,000
25,400
201,000
657,000
8,020
665,000
104,000
769,000
aCosts are based on the regulatory alternatives described in
Table 4-3. Total costs are MWC II/III costs over baseline.
Details may not sum to totals due to rounding.
^Annual social costs are the sum of capital costs, annualized
at 7 percent, and annual operating costs. Annual operating
costs include testing, reporting, and recordkeeping costs,
some of which are also annualized.
Notes:
1. MWC capacity utilization is assumed to average 83 to 88
percent for most plants.
2. Definitions are provided on p. x.
5-28
-------
TABLE 5-17.
MWC II/III NSPS: INCREMENTAL NATIONAL
SOCIAL COSTSa
Change in Regulatory Alternative
Control Cost Category
Baseline to
Reg. Alt. I
Reg. Alt. I
to
Reg. Alt. II
Annual Social Costs
($1990 103/yr)
Acid Gas/PM/Metals
Control
Hg Control
Testing, Reporting,
Recordkeeping
Subtotal
NOX Control
Total Annual Social Costs
Capital Costs ($1990 103)
Acid Gas/PM/Metals
Control
147,000
4,220
5,120
157,000
25,400
182,000
575,000
18,900
276
162
19,400
0
19,400
82,500
Hg Control
Subtotal
NOX Control
Total Capital Costs
6,900
582,000
104,000
685,000
1,120
83,600
0
83,600
aThe incremental national social costs are derived from the
national social costs in Table 5-16. Details may not sum
to totals due to rounding.
Note:
1. Definitions are provided on p. x.
5-29
-------
01
i
TABLE 5-18. MWC IT/III EG: AVERAGE ANNUAL SOCIAL COST PER MEGAGRAM OF MSW
BY REGULATORY ALTERNATIVE AND COMPLIANCE SCENARIO ($1990/Mg MSW)a'b
Control Cost
Category
Acid Gas/
PM/Metals
Control
Reg. Alt. I-A
19.45
Reg. Alt. II-A
21.10
Reg. Alt. I-B
20.08
Reg. Alt. II-B
21.72
Reg. Alt. Ill
19.51
Hg Control
NOV Control
A
Testing,
Reporting,
Recordkeeping
Total for plants
with acid gas
capital costs0
Total for all
plants'3
0.66
2.05
0.40
22.10
12.55
0.72
2.05
0.41
23.91
13.49
0.45
2.05
0.40
22.44
12.73
0.53
2.05
0.41
24.26
13.66
mercury control costs, $0.50-$0.70;
recordkeeping, $0.40.
NOX control costs, $2.00; and testing, reporting and
^Columns do not add to totals because each individual cost number is an average taken
over the particular subset of MWCs that incur the cost. Specifically, small plants
do not incur mercury control costs under Alternative I, RDF plants do not incur
Mercury control costs under any of the alternatives, and mass burn refractory wall
plants do not incur NOX costs.
Note:
0.41
2.05
0.41
22.04
14.85
aCosts are based on the regulatory alternatives and scenarios described in Table 4-2.
^Average cost per megagram of MSW is computed by dividing the annual compliance
cost by the total amount of MSW combusted per year at affected plants.
cThe total for plants with acid gas capital costs under Regulatory Alternatives I and II
exclude large plants with SD/ESP or SD/FF systems and small plants with DSI/ESP, SD/ESP,
or SD/FF systems in the baseline. These plants will not incur any acid gas capital
costs, but will have the following approximate compliance costs per Mg of MSW combusted:
1. Definitions are provided on p. x.
-------
TABLE 5-19. MWC II/III NSPS: AVERAGE ANNUAL SOCIAL COST PER
MEGAGRAM OF MSW BY REGULATORY ALTERNATIVE ($/Mg MSW)a'b
Control Cost Category
Acid Gas/PM/Metals Control
Hg Control
NOX Control
Testing, Reporting,
Recordkeeping
Totalc
Reg. Alt. I
10.23
0.39
1.80
0.34
12.18
Reg. Alt. II
11.12
0.40
1.80
0.35
13.47
aCosts are based on the regulatory alternatives described in
Table 4-3.
^Average cost per megagram of MSW is computed by dividing the
total annual social cost by the total amount of MSW combusted
per year at affected plants.
cThe cost per Mg values for acid gas/PM/metals; mercury; NOX;
and testing, reporting, and recordkeeping do not sum to the
total cost because RDF plants do not incur Hg mercury control
costs under any of the alternatives.
Note:
1. Definitions are provided on p. x.
5-31
-------
Operator training. Operator training and certification
is essential to ensure proper operation of MWCs in accordance
with GCP. Operating MWCs and the associated APCDs is complex,
requiring qualified operators and supervisors. The MWC I EG
requires certification of the shift supervisor and chief plant
operator and development of a site-specific training manual
for use in training all plant operators. MWC II/III
regulations specify only minor additional training
requirements necessary to operate and service new APCD
equipment. The annual cost of operator training is expected
to be minor.
Governmental administration and enforcement. Federal,
State, and local governments incur costs to issue permits,
monitor performance, and enforce compliance with current
environment regulations for new and existing MWCs. The
additional costs associated with administering and enforcing
the MWC II/III regulations are not quantified.
Adjustment costs for displaced resources. Three types of
costs may occur while the economy adjusts to new regulations:
under-utilization of resources from lost output, resource
reallocation costs (such as moving to a new location), and the
operation of programs to help the unemployed. These costs are
not quantified.
Dead-weight welfare losses. These costs are defined as
the net losses in consumers' and producers' surplus that occur
when the output of goods and services decreases in response to
a regulatory action. Because the method used to estimate
costs assumes no reduction in provision of MWC services by
existing or planned MWCs, no dead-weight losses are estimated.
Paperwork. No paperwork burden costs have been estimated
here for the MWC II/III EG and NSPS beyond the testing,
reporting, and recordkeeping costs (see Tables 5-7 and 5-8).
Costs of Controlling Fugitive Emissions. The additional
costs to control fugitive emissions are not included in this
analysis.
5-32
-------
5.5.3 National Emissions and Energy Impacts
National-level emission reductions and energy impacts are
calculated on a basis similar to national costs. First, the
emission reductions for each model plant subcategory are
calculated by subtracting the emissions associated with a
particular control option from the baseline emissions for that
model plant subcategory. Then the emission reduction
computed for the model plant is multiplied by the
corresponding scale factor (see Tables 3-6 and 3-7). The
national emission reductions for a pollutant are equal to the
sum of all the emission reductions of a given pollutant for
the model plant subcategories multiplied by the corresponding
scale factors. Table 5-20 shows the national annual emission
reductions attributable to MWC I. The MWC II/III emission
reductions are reported in Tables 5-21 and 5-22.
Energy impacts are calculated in the same fashion as
emission reductions with the exception that there are no
baseline energy estimates. The national energy impacts are
calculated for natural gas and electricity. The MWC I
national energy impacts are presented in Table 5-23. The MWC
II/III national energy impacts and incremental impacts are
shown in Tables 5-24 and 5-25 for EG and Tables 5-26 and 5-27
for NSPS. The electricity impacts reported in the tables
represent a very small portion of the electricity generated at
MWCs -- less than 10 percent. The natural gas impacts are
negligible.
5.5.4 Social Cost/Effectiveness of Acid Gas and Mercury
Control
C/E is the ratio of cost to effectiveness. In this
context "costs" are the costs of acid gas control, Hg control,
4In the baseline, we assume all NSPS plants just meet the
Federal standards, which limit PM emissions to a maximum of 0.18
g/dscm for MWC plants with the exception of plants with design
capacity of 45 Mg/day or less. EG baseline emissions reflect
baseline levels of control characterized in Table 3-6.
5-33
-------
TABLE 5-20.
MWC I NATIONAL BASELINE EMISSIONS AND EMISSIONS
REDUCTIONS (Mg/yr)a
EG
Pollutant
Category
CDD/CDF
(total)
CO
PMb
S02
HC1
Pb
Cd
Hgc
NOX
Total ,
Ash Residual0
Baseline
Emissions6
0.142
21,700
5,750
47,600
54,300
99.3
6.71
54.7
53,700
6,920,000
Emissions
Reductions
0.117
5,890
1,120
25,300
35,800
29.7
2.12
11.4
0
-84,300
NSPS
Baseline
Emissions
0.030
5,440
8,040
41,900
51,700
161
10.9
34.0
29,800
4,090,000
Emissions
Reductions
0.
0
5,670
34,600
46,000
140
9.
9.
10,300
-239,000
028
00
00
aEmissions reductions are based on the emissions reduction
requirements described in Table 2-2.
bPM is total particulate matter and has not been adjusted to
exclude Cd, Pb, and Hg.
cHg control is not required under MWC I. However, Hg emissions
are reduced at RDF plants under MWC I as a result of acid gas
control .
ash residual reductions are negative reflecting an
increase over baseline levels because of the regulation.
eThe baseline emissions shown here for the 1991 EG are less
than the baseline emissions for the MWC II/III regulatory
alternatives shown in accompanying tables because the latter
include emissions from MWCs for which construction began
in the 1990 through 1994 period.
Notes :
1.
MWC capacity utilization is assumed to average 83 to 88
percent for most plants.
2. Definitions are provided on p. x.
Sources: U.S. Environmental Protection Agency. 1989c. Municipal
Waste Combustors — Background Information for Proposed
Guidelines for Existing Facilities. Office of Air Quality
Planning and Standards. EPA-450/3-89-27e; U.S. Environmental
Protection Agency. 1989e. Municipal Waste Combustors —
Background Information for Proposed Standards: lll(b) Model
Plant Description and Cost Report. EPA/450/3-89-27b.
5-34
-------
TABLE 5-21.
MWC II/III EG: NATIONAL BASELINE EMISSIONS AND EMISSIONS REDUCTIONS BY
REGULATORY ALTERNATIVE AND COMPLIANCE SCENARIO (Mg/yr)a
U1
1
-------
TABLE 5-22. MWC II/III NSPS: NATIONAL BASELINE EMISSIONS AND
EMISSIONS REDUCTIONS BY REGULATORY ALTERNATIVE (Mg/yr)a
Pollutant
Category
CDD/CDF
(total)
CO
PMb
SO2
HC1
Pb
Cd
Hg
NOX
Total Ash
Residual0
Baseline
Emissions
0.030
5,440
8,040
41,900
51,700
161
10.9
34
29,800
4,090,000
Reg. Alt. I
0.029
0
6,480
37,000
49,900
155
10.1
26
10,500
-267,000
Reg. Alt. II
0.029
0
6,480
37,700
50,200
157
10.2
27
10,500
-266,000
aEmissions reductions are based on regulatory alternatives described
in Table 4-3. Emissions reductions are MWC II/III reductions over
baseline. In the baseline, EPA assumes all NSPS plants just meet the
Federal standards, which limit PM emissions to a maximum of
0.18 g/dscm for MWC plants with the exception of plants with design
capacity of 45 Mg/day or less.
"PM is total particulate matter and has not been adjusted to exclude Cd,
Pb, and Hg.
cTotal ash residual reductions are negative reflecting an increase over
baseline levels because of the regulation.
Notes:
1. MWC capacity utilization is assumed to average 83 to 88 percent for
most plants.
2. Definitions are provided on p. x.
Sources: U.S. Environmental Protection Agency. 1989e. Municipal Waste
Combustors — Background Information for Proposed Standards:
lll(b) Model Plant Description and Cost Report. EPA-450/3-89-27b;
U.S. Environmental Protection Agency. 1989d. Municipal Waste
Combustors - Background Information for Proposed Standards:
Control of NO.^ Emissions. Office of Air Quality Planning and
Standards. EPA-450/3-89-27d; Nebel, Kris. 1991. Memorandum to
Walt Stevenson, EPA/SDB. Radian Corporation. Research Triangle
Park, NC. May 22.; Soderberg, Eric. 1990. Memorandum to Brenda
Jellicorse, Research Triangle Institute. Radian Corporation.
Research Triangle Park, NC. August 31.
5-36
-------
TABLE 5-23. MWC I NATIONAL ANNUAL ENERGY IMPACTS (TJ/yr)1
Energy Source
Electricity Gas
EG 481 481
NSPS
Acid Gas/PM/Metals 744 0
Control
NOX Control 212 0
Total 956 0
aEnergy impacts are based on the requirements reported in
Table 2-2.
Gas impacts result from GCP and electricity impacts
result from adding acid gas control for the EG and
from adding acid gas and NOX controls for the NSPS.
Notes:
1. MWC capacity utilization is assumed to average 83 to 88
percent for most plants.
2. Definitions are provided on p. x.
5-37
-------
TABLE 5-24. MWC II/III EG: NATIONAL ANNUAL ENERGY
IMPACTS (TJ/yr)a
Energy Source*3
Regulatory Alternative
and Compliance Scenario Electricity Gas
Reg. Alt.
Reg. Alt.
Reg. Alt.
Reg. Alt.
Reg. Alt.
I -A
II-A
I-B
II-B
III
1,
1,
1,
1,
1,
310
420
700
810
960
779
779
779
779
779
aEnergy impacts are based on regulatory alternatives
and scenarios described in Table 4-2. Energy impacts
are MWC II/III impacts over baseline.
bGas impacts result from GCP and electricity impacts
result from acid gas controls and NOX control.
Notes:
1. MWC capacity utilization is assumed to average 83
to 88 percent for most plants.
2. Definitions are provided on p. x.
Sources: Davis, A. Lee. 1991a. Memorandum to Michael G.
Johnston, U.S. EPA/ISB. Radian Corporation.
Research Triangle Park, NC. April 24; U.S.
Environmental Protection Agency. 1989c. Municipal
Waste Combustors--Background Information for
Proposed Guidelines for Existing Facilities. Office
of Air Quality Planning and Standards.
EPA-450/3-89-27e.
5-38
-------
TABLE 5-25. MWC II/III EG: INCREMENTAL NATIONAL ANNUAL
ENERGY IMPACTS (TJ/yr)a
Change in Regulatory Energy Source
Alternative and Compliance
Scenario Electricity Gas
Compliance Scenario A
Baseline to Reg. Alt. I 1,310 779
Reg. Alt. I to Reg. Alt. II 110 0
Reg. Alt. II to Reg. Alt. Ill 540 0
Compliance Scenario B
Baseline to Reg. Alt. I 1,700 779
Reg. Alt. I to Reg. Alt. II 110 0
Reg. Alt. II to Reg. Alt. Ill 150 0
alncremental energy impacts are based on the national
annual energy impacts in Table 5-24.
Note:
1. Definitions are provided on p. x.
5-39
-------
TABLE 5-26. MWC II/III NSPS: NATIONAL ANNUAL ENERGY
IMPACTS (TJ/yr)a
Energy Sourceb
Regulatory Alternative Electricity Gas
Reg. Alt. I 1,050 0
Reg. Alt. II 1, 052 0
aEmissions reductions are based on regulatory alternatives
described in Table 4-3. Energy impacts are MWC II/III
impacts over baseline.
Gas impacts result from GCP, and electricity impacts result
from acid gas controls and NOX control. There are no gas
costs because GCP is in the baseline.
Notes:
1. MWC capacity utilization is assumed to average 83 to
88 percent for most plants.
2. Definitions are provided on p. x.
Sources: U.S. Environmental Protection Agency. 1989e.
Municipal Waste Combustors — Background Information
for Proposed Standards; 111(b) Model Plant
Description and Cost Report. EPA-450/ 3-89-27b.
TABLE 5-27. MWC II/III NSPS: INCREMENTAL NATIONAL
ANNUAL ENERGY IMPACTS (TJ/yr)a
Change in R<
Alternative
Baseline to
Reg.
Alt. I
Energy Source
sgulatory —
Electricity
Reg. Alt. I 1,050
to Reg. Alt. II 2
Gas
0
0
Incremental energy impacts are based on the national annual
energy impacts in Table 5-26.
Note:
1. Definitions are provided on p. x.
5-40
-------
or NOV control, measured in dollars per year. The "effects"
.A.
are corresponding reductions in acid gas emissions (SO2 +
HC1), Hg emissions, or NOX emissions, measured in megagrams
per year. Consequently, a low C/E is preferred to a high C/E
because the former achieves control at a lower cost per
megagram of emissions reduced. Computing the social C/E for
Hg control and NOX control is straightforward because the
costs and emission reductions are associated with a single
pollutant, assuming acid gas controls are in place. However,
the same is not true for acid gas control. A discussion of
the methods and assumptions used in computing acid gas C/E
follows.
The control systems used to reduce acid gases also reduce
emissions of many other pollutants besides those defined as
acid gas. To compensate for the omission of these pollutants
from the "effectiveness" dimension of the C/E analysis, a
credit in the amount of $17,700/Mg of PM emission reduction is
applied to the costs. This credit is based on an estimated
value of damages caused by the emission of one megagram of PM
(see Chapter 8 for further discussion of PM damages). The
adjusted total annual cost represents the costs attributable
solely to acid gas control. Using this credit for PM
reductions implies the following working assumptions:
• PM embraces all pollutants emitted by MWCs except acid
gases (SO2 and HC1), Hg, and NOX;
• PM from MWCs is similar in composition to those
sources used to estimate damages from PM emissions;
• the damage estimates from those other sources transfer
to the situations characteristic of MWCs.
Although these assumptions are not expected to hold exactly,
they hold closely enough to justify using the current
procedures for policy guidance. In addition, the
effectiveness measure used here (HC1 + S02 reductions) does
not reflect any differences in the relative benefit of
5-41
-------
reducing HCl and S02. Alternative weights for HC1 and SO2 are
explored, however, in the sensitivity analysis that follows in
Chapter 6.
The scope of the cost component of a C/E analysis may
also be inadequate if the regulation under consideration
significantly affects the markets that serve or are served by
the regulated activities. If, for example, the demand for a
type of control equipment that was in short supply tripled
because of the regulation, the price of the equipment would
rise, affecting the cost, and perhaps even the effectiveness,
of the regulation. Even though most MWCs are operated in a
highly regulated market, the cost of operating may increase
enough to result in the substitution of some other waste
management method for combustion, especially if the cost of
the alternative disposal option is significantly less than
combustion.
Because of these limitations, EPA supplements C/E results
with judgments about which of the regulatory alternatives to
consider and about which of these are the most protective of
health and welfare, yet affordable and equitable. Despite its
shortcomings, C/E analysis does provide a quantifiable, if
somewhat narrow, means of comparing regulatory alternatives.
Selected C/E measures are discussed below for acid gas, Hg,
and NO... control.
J\.
C/E can be measured in either average or incremental
terms. Average C/E is computed relative to baseline
conditions and is, therefore, the total cost of control
divided by the total level of emission reductions.
Incremental C/E is calculated relative to the preceding
regulatory alternative as measured by the amount of emission
reductions. It is found by dividing the difference in cost
between the two regulatory alternatives by the difference in
emission reductions.
Of the two measures, incremental C/E alone is compatible
with "maximization of net benefits" (OMB, 1991) because
incremental C/E weighs the additional change in costs against
5-42
-------
the additional change in benefits. This comparison is
necessary to optimize the choice of a regulatory alternative
when more than one alternative has positive net benefits. In
this analysis, C/E therefore generally means incremental C/E.
Tables 5-28 through 5-31 show C/E measures for EG and
NSPS acid gas, Hg, and NOX control. These values are computed
using the national social costs found in Tables 5-14 (EG) and
5-16 (NSPS) and the emissions reductions found in Tables 5-21
(EG) and 5-22 (NSPS). Note that incremental C/E and average
C/E are the same for the first alternative considered under
each EG scenario and for the NSPS because incremental C/E for
the first alternative is relative to the baseline.
5-43
-------
(Jl
I
TABLE 5-28. MWC II/III EG: AVERAGE NATIONAL SOCIAL COST/EFFECTIVENESS
($1990 103/Mg emissions reduction)a
Control
Category
Acid
Gas/PM/
Metals
Controlb
Hg
Control0
NOX
Controld
Reg. Alt Reg. Alt. Reg. Alt. Reg. Alt. Reg. Alt.
I-A II-A I-B II-B III
2.94 3.02 3.05 3.12 3.42
339 374 231 273 212
2.93 2.93 2.93 2.93 2.93
aC/E is computed using annual social costs reported in Table 5-14 and
emission reductions reported in Table 5-21.
bAverage C/E of acid gas control is [total cost-(total PM reductions *
$17,700)]/total S02 + HC1 reductions).
°Average C/E of Hg control is (total Hg cost)/(total Hg reductions).
dAverage C/E of NOX control is (total NOX cost)/(total NOX reductions).
Note:
1. Definitions are provided on p. x.
-------
TABLE 5-29. MWC II/III EG: INCREMENTAL NATIONAL SOCIAL
COST/EFFECTIVENESS ($1990 103/Mg emissions reduction)5
Change in Regulatory Alternative under Compliance
Scenario A
Control Category
Baseline to Reg.
Alt. I
Reg. Alt. I to
Reg. Alt. II
Reg. Alt. II to
Reg. Alt. Ill
Acid Gas/PM/
Metals Control13
Hg Control0
NOX Controld
2.
339
2.
94 4.11
950
93 0.00
Change in Regulatory Alternative
Scenario B
Acid Gas/PM/
Metals Control*3
Hg Control0
NOX Controld
Baseline
Reg. Alt.
3.
231
2.
to Reg. Alt. I to Reg
, I Alt. II
05 4.11
950
93 o.OO
18.6
0.00
0.00
under Compliance
Reg. Alt. II to
Reg. Alt. Ill
14.6
0.00
0.00
Incremental C/E is computed using annual incremental social costs reported in
Table 5-15 and emission reductions reported in Table 5-21. Data presented in
all tables are rounded, but calculations are made with unrounded data.
Incremental C/E of acid gas control is [incremental cost-(incremental PM
reductions * $17,700)]/(incremental SO2 + HCl reductions).
Incremental C/E of Hg control is (incremental Hg cost)/(incremental Hg
reductions).
dlncremental C/E of NOX control is (incremental NOX cost)/(incremental NOX
reductions).
Note:
1. Definitions are provided on p. x.
5-45
-------
TABLE 5-30. MWC II/III NSPS: AVERAGE NATIONAL SOCIAL
COST/EFFECTIVENESS ($103/Mg emissions reduction)a
Control Category
Acid Gas
Controlb
Hg Control0
NOX Controld
Reg. Alt. I
0.38
162
2.42
Reg. Alt.
0.59
167
2.42
II
aC/E is computed using annual social costs reported in
Table 5-16 and emission reductions reported in 5-22. Data
presented in all tables are rounded, but calculations are
made with unrounded data.
bAverage C/E of acid gas control is [total cost-(total
PM reductions * $17,700]/(total SO2 + HCl reductions).
GAverage C/E of Hg control is (total Hg cost)/(total
Hg reductions).
dAverage C/E of NOX control is (total NOX cost)/(total
NOV reductions).
.A.
Note:
1. Definitions are provided on p. x.
5-46
-------
TABLE 5-31. MWC II/III NSPS: INCREMENTAL NATIONAL SOCIAL
COST/EFFECTIVENESS ($103/Mg emissions reduction)a
Change in Regulatory Alternative
Reg. Alt. I
Baseline to to
Reg. Alt. I Reg. Alt. II
Acid Gas Control13
Hg Control0
NOX Controld
0
162
2
.38
.42
19
313
0
.60
.0
Incremental C/E is computed using annual incremental social
costs reported in Table 5-17 and emission reductions reported
in Table 5-22. Data presented in all tables are rounded, but
calculations are made with unrounded data.
Incremental C/E of acid gas control is [incremental cost-
(incremental PM reductions * $17,700)]/(incremental S02 + HCl
reductions).
Incremental C/E of Hg control is (incremental Hg cost)/
(incremental Hg reductions).
dlncremental C/E of NOX control is (incremental NOX cost)/
(incremental NO., reductions) .
J\.
Note:
1. Definitions are provided on p. x.
5-47
-------
CHAPTER 6
SENSITIVITY ANALYSIS
This chapter examines the effects of changing certain
analytical assumptions on the national impacts estimated for
EG and NSPS. In particular, assumptions used to compute C/E
values, discount rates, downtime assumptions, and capacity
utilization rates are changed. For the EG, sensitivity
estimates are computed for Regulatory Alternative II under two
compliance scenarios. For the NSPS, sensitivity estimates are
computed for Regulatory Alternatives I and II.
Tables 6-1 and 6-2 show the effects on the acid gas C/E
estimates of using alternative credits for PM reductions. As
described in Chapter 5, acid gas C/E is computed by dividing
acid gas costs, net of a $17,700 credit for PM, by acid gas
reductions. The first column in each table reports the C/E
value with the $17,700/Mg credit for PM, and the second column
reports the C/E value with a $0/Mg credit for PM. No change
occurs in the incremental C/E value between NSPS Regulatory
Alternatives I and II because no incremental PM reductions are
associated with this change.
Tables 6-3 and 6-4 also address assumptions regarding C/E
for acid gas control. In particular, these tables report the
effects of using alternative weights for HCl reductions. In
Chapter 5, C/E is computed using S02 plus HCl reductions as
the estimate of acid gas effectiveness. The first column of
Tables 6-3 and 6-4 follows this convention for estimating C/E.
In the second column, however, estimates of C/E effectiveness
are computed using S02 reductions only. Excluding HCl
reductions from the estimates of acid gas effectiveness
results in significantly higher estimates of C/E because HCl
reductions account for at least half of the acid gas
reductions in most cases.
6-1
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TABLE 6-1. MWC II/III EG: NATIONAL SOCIAL COST/EFFECTIVENESS
OF ACID GAS CONTROL USING ALTERNATIVE CREDITS FOR PM
REDUCTIONS ($1990 103/Mg Reductions)*1
Credit for PM Reductions
Regulatory Alternative
and Compliance Scenariob $17, 700/Mg $0/Mg
Reg. Alt. II-A 3.02 3.56
Reg. Alt. II-B 3.12 3.67
aC/E is reported using annual social costs provided in
Table 5-14 and emission reductions provided in Table 5-21.
Data presented in all tables are rounded, but calculations
are made with unrounded data.
bRegulatory Alternative II and Scenarios A and B are
described in Table 4-2.
Notes:
1. C/E of acid gas control with a credit for PM reductions is
[total acid gas cost - (total PM reductions * $17,700)]/
(total S02 + HC1 reductions).
2. C/E of acid gas control with zero credit for PM reductions
is (total acid gas cost)/(total S02 + HC1 reductions).
3. Definitions are provided on p. x.
6-2
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TABLE 6-2. MWC II/III NSPS: NATIONAL INCREMENTAL SOCIAL
COST/EFFECTIVENESS OF ACID GAS CONTROL USING ALTERNATIVE
CREDITS FOR PM REDUCTIONS ($1990 103/Mg Reductions)3
Credit for PM Reductions
Change in
Regulatory Alternative*3
$17,700/Mg
$0/Mg
Baseline to
Reg. Alt. I
Reg. Alt. I to
Reg. Alt. II
0.38
19.60
1.69
19.60
aC/E is reported using annual social costs provided in
Table 5-16 and emission reductions provided in Table 5-22.
Data presented in all tables are rounded, but calculations
are made with unrounded data.
bThe regulatory alternatives are described in Table 4-3.
Notes:
1. C/E of acid gas control with a credit for PM reductions is
[incremental acid gas cost - (incremental PM reductions *
$17,700)]/(incremental S02 + HCl reductions).
2. C/E of acid gas control with zero credit for PM reductions
is (incremental acid gas cost)/ (incremental S02 + HCl
reductions).
3. Definitions are provided on p. x.
6-3
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TABLE 6-3. MWC II/III EG: NATIONAL SOCIAL COST/EFFECTIVENESS
OF ACID GAS CONTROL USING ALTERNATIVE WEIGHTS FOR HC1
REDUCTIONS ($1990 103/Mg Reductions)a
Change in Regulatory Weights for HC1 Reductions
Alternative and
Compliance Scenario13 $103/Mg S02 + HC1 $103/Mg SO2 Only
Reg. Alt. II-A 3.02 6.94
Reg. Alt. II-B 3.12 7.19
aC/E is reported using annual social costs provided in
Table 5-14 and emission reductions provided in Table 5-21.
Data presented in all tables are rounded, but calculations
are made with unrounded data.
bRegulatory Alternative II and Scenarios A and B are
described in Table 4-2.
Notes:
1. C/E of acid gas control per megagram SO2 + HC1 is [total
acid gas cost - (total PM reductions * $17,700)]/(total
S02 + HC1 reductions).
2. C/E of acid gas control per megagram S02 is [total acid
gas cost - (total PM reductions * $17,700)]/ (total SO2
reductions).
3. Definitions are provided on p. x.
6-4
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TABLE 6-4. MWC II/III NSPS: NATIONAL INCREMENTAL SOCIAL
COST/EFFECTIVENESS OF ACID GAS CONTROL USING ALTERNATIVE
WEIGHTS FOR HC1 REDUCTIONS ($1990 103/Mg Reductions)3
Weights for HCl Reductions
Change in Regulatory
Alternative13 $103/Mg S02 + HCl $103/Mg S02 Only
Baseline to 0.38 0.88
Reg. Alt. I
Reg. Alt. I to 19.55 28.42
Reg. Alt. II
aC/E is reported using annual social costs provided in
Table 5-16 and emission reductions provided in Table 5-22.
Data presented in all tables are rounded, but calculations
are made with unrounded data.
bThe regulatory alternatives are described in Table 4-3.
Notes:
1. C/E of acid gas control per megagram S02 + HCl is
[incremental acid gas cost - (incremental PM reductions *
$17,700)]/(incremental S02 + HCl reductions).
2. C/E of acid gas control per megagram S02 is [incremental
acid gas cost - (incremental PM reductions *
$17,700)]/(incremental S02 reductions).
3. Definitions are provided on p. x.
6-5
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Tables 6-5 and 6-6 show the effects of changing discount
rates on the national annual costs of controlling all
emissions. Total annual costs are the sum of annualized
capital costs and annual operating costs. The differences in
costs by discount rate are due to differences in the estimated
annualized capital cost component of total annual costs. (To
the extent explained above in Sections 5.4 and 5.5 of Chapter
5, testing, reporting, and recordkeeping costs are also
somewhat affected by the discount rate.)
Installing pollution control equipment at existing MWC
plants may result in one or more months of downtime that
cannot be worked into normal maintenance downtime. This
situation is particularly true for GCP. Costs associated with
this downtime include lost tipping fees and energy recovery
revenues. The installed capital costs used to estimate
impacts reported in Chapter 5 include costs associated with
less than a month to 6 months of downtime depending on the
plant technology and the type of control equipment being
installed. Table 6-7 reports the effects of changing these
downtime assumptions to reflect a maximum downtime of one
month.
Tables 6-8 through 6-11 show the impacts of changing the
capacity utilization rates on national costs and emission
reductions. The impacts reported in Chapter 5 are based on
average capacity utilization reported in the 1991 Resource
Recovery Yearbook (Gould, 1991). Average capacity utilization
is about 83 to 88 percent for most plants. The first column
in Tables 6-8 and 6-9 reports costs based on average capacity
utilization. The second column in these tables reports costs
based on a capacity utilization rate of 91 percent for most
plants. Tables 6-10 and 6-11 show the corresponding emission
reductions.
6-6
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TABLE 6-5. MWC II/III EG: NATIONAL ANNUAL SOCIAL COST USING
ALTERNATIVE DISCOUNT RATES ($1990 103/yr)a
Regulatory Alternative
and Compliance Scenario"
Reg. Alt. II-A
Reg. Alt. II-B
Discount Rate
7%
443,000
448,000
3%
388,000
387,000
10%
489,000
501, 000
aAnnual costs are MWC II/III costs over baseline. Annual
costs are the sum of capital costs, annualized at 7, 3,
or 10 percent, and annual operating costs. Annual operating
costs include testing, reporting, and recordkeeping costs,
some of which also are annualized at 7, 3, or 10 percent.
bRegulatory Alternative II and Scenarios A and B are
described in Table 4-2.
Note:
1. Definitions are provided on p. x.
TABLE 6-6. MWC II/III NSPS: NATIONAL ANNUAL SOCIAL COST
USING ALTERNATIVE DISCOUNT RATES ($1990 103/yr)a
Discount Rate
Regulatory Alternative
Reg. Alt. I
Reg. Alt. II
7%
182,000
201,000
3%
162,000
178,000
10%
200,000
221,000
aAnnual costs are MWC II/III costs over baseline. Annual
costs are the sum of capital costs, annualized at 7, 3,
or 10 percent, and annual operating costs. Annual operating
costs include testing, reporting, and recordkeeping costs,
some of which also are annualized at 7, 3, or 10 percent.
The regulatory alternatives are described in Table 4-3.
Note:
1. Definitions are provided on p. x.
6-7
-------
TABLE 6-7. MWC II/III EG: NATIONAL ANNUAL SOCIAL COST USING
ALTERNATIVE DOWNTIME ASSUMPTIONS ($1990 103/yr)a
Regulatory Alternative Initial Downtime Maximum Downtime
and Compliance Scenario" Assumptions0 of One Month
Reg. Alt. II-A 443,000 438,000
Reg. Alt. II-B 448,000 444, 000
aAnnual costs are MWC II/III costs over baseline. Annual
costs are the sum of capital costs, annualized at 7 percent,
and annual operating costs. Annual operating costs include
testing, reporting, and recordkeeping costs, some of which
are also annualized at 7 percent.
"Regulatory Alternative II and Scenarios A and B are
described in Table 4-2.
clnitial downtime assumptions range from zero to 6 months
and are reported in MWCs—Background Information for
Proposed Guidelines for Existing Facilities (EPA, 1989c).
Note:
1. Definitions are provided on p. x.
6-8
-------
TABLE 6-8. MWC II/III EG: NATIONAL ANNUAL SOCIAL COST USING
ALTERNATIVE CAPACITY UTILIZATION RATES ($1990 103)a
Average Capacity
Utilization0
Regulatory
Alternative and
Compliance Scenario13
Reg. Alt. II-A
Reg. Alt. II-B
Total
Annual Cost
($103/yr)
443,000
448,000
Cost per
Mg MSW
Combusted
($/Mg MSW)d
23.90
24.30
High Capacity
Utilization0
Total
Cost
($103/yr)
454,000
459,000
Cost per
Mg MSW
Combusted
($/Mg MSW)d
23.20
23.50
aAnnual costs are MWC II/III costs over baseline. Total annual costs are
the sum of capital costs, annualized at 7 percent, and annual operating
costs. Annual operating costs include testing, reporting, and record-
keeping costs, some of which are also annualized at 7 percent.
bRegulatory Alternative II and Scenarios A and B are described in
Table 4-2.
cAverage capacity utilization is assumed to be 83 to 88 percent for most
plants. High capacity utilization is assumed to be about 91 percent for
most plants.
dCosts per megagram of MSW are total costs divided by the amount of MSW
combusted at MWCs, excluding large plants with SD/ESP or SD/FF systems
and small plants with DSI/ESP, SD/ESP, or SD/FF systems in the baseline.
Note:
1. Definitions are provided on p. x.
6-9
-------
TABLE 6-9. MWC II/III NSPS: NATIONAL ANNUAL SOCIAL COST
USING ALTERNATIVE CAPACITY UTILIZATION RATES ($1990 103)a
Average Capacity
Utilization0
Regulatory
Alternative*3
Reg. Alt. I
Reg. Alt. II
Total Annual
Cost
($103/yr)
182,000
201,000
Cost per Mg
MSW Combusted
($/Mg MSW)d
12.20
13.50
High Capacity Utilization0
Total Cost;
($103/yr)
189,000
209,000
Cost per Mg
MSW Combusted
($/Mg MSW)d
12.00
13.20
aAnnual costs are MWC II/III costs over baseline. Annual costs are the
sum of capital costs, annualized at 7 percent, and annual operating costs.
Annual operating costs include testing, reporting, and recordkeeping
costs, some of which are also annualized at 7 percent.
bThe regulatory alternatives are described in Table 4-3.
GAverage capacity utilization is assumed to be 83 to 88 percent for
most plants. High capacity utilization is assumed to be about
91 percent for most plants.
dCosts per megagram of MSW are total costs divided by the amount of
MSW combusted at planned MWCs subject to the NSPS.
Note:
1. Definitions are provided on p. x.
6-10
-------
TABLE 6-10. MWC II/III EG: NATIONAL EMISSION REDUCTIONS USING
ALTERNATIVE CAPACITY UTILIZATION RATES (Mg/yr)a
Regulatory Alternative
Total
CDD/CDF
Total Ash
CO PM S02 HC1 Pb Cd Hg NOX Residual0
Average Capacity Utilization
Reg. Alt.
Reg. Alt.
High Capacity
Reg. Alt.
Reg. Alt.
I
1 1 -A
Utilization51
II-A
II-B
0.156
0.157
0.164
0.165
8,680 3,070 43,300 56,300 74.8 5.24 47.5 19,300 -156,000
8,690 3,070 43,300 56,300 91.1 5.56 47.5 19,300 -214,000
8,950 3,140 46,200 59,700 77.2 5.40 50.1 20,500 -178,000
0.165 3,140 46,200 59,700 94.5 5.74 50.1 20,500 -239,000
aEmission reductions MWC II/III reductions over baseline.
^Regulatory Alternatives II and Scenarios A and B are described in Table 4-2.
cTotal ash residual is negative reflecting an increase over baseline levels due to the
regulation.
dAverage capacity utilization is assumed to be 83 to 88 percent for most plants. High
capacity utilization is assumed to be about 91 percent for most plants.
Note:
1. Definitions are provided on p. x.
-------
TABLE 6-11. MWC II/III NSPS: NATIONAL EMISSION REDUCTIONS USING
ALTERNATIVE CAPACITY UTILIZATION RATES (Mg/yr)a
1
M
[0
Regulatory Alternative13
Average Capacity Utilization6
Reg. Alt. I
Reg. Alt. II
High Capacity Utilization6
Reg. Alt. I
Reg. Alt. II
aEmission reductions MWC II/III
bRegulatory Alternatives I and
cTotal ash residual is negative
reaulation .
Total
CDD/CDF CO PM SO2 HCl Pb Cd Hg NOX
0.029 0
0.029 0
0.032 0
0.032 0
reductions
6,480 37,000 49,900 155 10.1 26.0 10,500
6,480 37,700 50,200 157 10.2 27.0 10,500
6,850 39,400 52,800 164 10.7 27.7 11,100
6,850 40,100 53,100 167 10.8 28.6 11,100
over baseline.
Total Ash
Residual0
-267,000
-266,000
-283,000
-282,000
II are described in Table 4-3.
reflecting
an increase over baseline levels due to the
^Average capacity utilization is assumed to be 83 to 88 percent for most plants. High
capacity utilization is assumed to be about 91 percent for most plants.
Note:
1. Definitions are provided on p. x.
-------
Using the higher estimates of capacity utilization
results in an increase in national-level costs and emission
reductions. Costs per megagram of MSW, however, decline as
capacity utilization rates increase. These movements are due
to three assumptions used to estimate costs with higher
capacity utilization rates. First, total capacity for EG and
NSPS plants is held constant. Thus the increase in capacity
utilization results in a higher waste flow combusted. Second,
operating costs are a function of the amount of waste
combusted and increase proportionate to the increase in the
waste flow. Finally, capital costs are a function of capacity
and do not change as a result of the higher capacity
utilization rate or increased waste flow.
The higher emission reductions reflect the increased
waste flow to MWCs under the higher capacity utilization
rates. Likewise, the total costs of the regulation increase
because operating costs increase proportionately to the waste
flow. Unlike total costs, however, the cost per megagram of
MSW declines as capacity utilization increases. This decline
occurs because, although total operating costs rise, the
operating costs per megagram do not change as a result of
higher capacity utilization. In addition, the annualized
capital cost component is spread over a larger waste flow,
resulting in a lower total cost per megagram of MSW.
If the total waste flow had been held constant for these
calculations, the total costs would have been slightly lower
with a higher capacity utilization. Emissions would have
remained unchanged under a constant total waste flow.
Alternatively, changing the total waste flow to NSPS and EG
while keeping the capacity utilization constant would result
in a change in total costs, costs per megagram, and emission
reductions proportionate to the change in the waste flow.
6-13
-------
CHAPTER 7
GOVERNMENT, PRIVATE FIRM, AND HOUSEHOLD IMPACTS
The costs estimated for the MWC II/III regulatory
alternatives will affect government entities, firms, and
households. This chapter examines how the impacts for
existing plants subject to EG and new plants subject to NSPS
affect these sectors of the economy. Of particular concern
are the impacts on small entities. The regulatory flexibility
act (RFA) of 1980 requires that special consideration be given
to small entities including businesses, government
jurisdictions, and nonprofit organizations potentially
affected by Federal regulation. The following sections
describe the affected entities, the requirements of the RFA,
the distribution of impacts across entities of all sizes, and
mitigating measures considered for small entities.
7.1 AFFECTED ENTITIES
The impacts of the regulatory alternatives may be direct
or indirect in nature. Directly affected entities may include
any entity that disposes of MSW in an MWC as well as any
entity that owns an MWC. The extent of the impacts of any one
regulatory alternative on a specific generator or owner
depends on several factors including the level of pollution
control in place at the time of the regulation, local market
conditions and contractual arrangements, size and type of the
MWC plant, financial status of the owner, and method of
financing MSW disposal. In addition, firms that supply
services and equipment in the MWC industry but do not own a
plant will be indirectly affected. These indirectly affected
firms may actually benefit from the regulation as demand for
air pollution control technology and equipment increases.
7-1
-------
Consequently, this chapter focuses on the impacts on directly
affected entities.
Potentially affected waste generators include households,
businesses, and institutions located in communities that
dispose of waste in an MWC. Households are the primary
generators of MSW. Indeed, an argument can be made that many
commercial and industrial wastes stem from consumer demand for
products. For example, a grocery store may dispose of
corrugated containers, but consumers demand the foods that are
packaged in these containers. Although commercial and
industrial entities generate waste, they have not been
incorporated into this analysis.
Owners of MWCs can be public entities or private firms.
Some MWCs are jointly owned by public entities and private
firms. Ownership impacts are evaluated using the criterion
for public entities where this type of joint ownership occurs.
Public owners can be a municipality as small as a single
village or as large as the Federal government. Private owners
may also range from one of the multimillion dollar waste
industry giants to very small, single-entity firms.
Public entities that own an MWC can be affected in
several ways. Depending on the relative cost of other means
of waste disposal, a public entity may decide to substitute
alternative waste disposal technologies (such as landfilling
or recycling) rather than purchase and operate the required
control equipment. However, quantitative examination of a
substitution scenario is beyond the scope of this analysis.
Affected entities typically incur two types of costs due
to imposed regulation: capital and operating. The capital
cost is an initial lump sum associated with purchasing and
installing pollution control equipment. Operating costs are
the annually recurring costs including costs associated with
operating and maintaining the control equipment, personnel
training costs, and emission monitoring costs. To raise the
money required to cover these costs, the public entity may
increase taxes, increase tipping fees, or direct funds away
7-2
-------
from other services. In any case, the impacts are passed
along to households in the affected jurisdictions. Private
firms may elect to secure a loan or redirect funds from other
uses to cover the initial and recurring costs. Part or all of
the increase in costs may be passed along to customers in the
form of increased tipping fees.
The impacts on affected entities are not necessarily
equitable across entities. Communities have different
prevailing economic and financial conditions, which lead to
different burdens for different communities. For example, a
relatively prosperous community may perceive compliance as
less costly than a community faced with difficult economic
times. Differences in the size of the service area or in the
population represented by the entity that owns the facility
can also translate into different degrees of impact for
communities. Furthermore, technological differences, both in
the type of MWC and the type of APCD, can result in inequities
from the proposed regulation. In particular, communities that
have recently invested in an APCD would probably be harder hit
by a requirement to purchase additional control equipment in a
relatively short time. Finally, differences in the time
period over which a community chooses to finance the capital
costs of control will affect the annualized costs of the
regulation.
Similarly, firms can experience different degrees of
effects because of differences in their individual situations.
Different cost structures, tax rates, technologies, past APCD
investments, and size can all result in inequities among firms
from the proposed regulation.
7.2 REGULATORY FLEXIBILITY ACT REQUIREMENTS
The RFA requires that Federal agencies consider whether
regulations they develop will affect small entities (which may
include nonprofit organizations, small governmental
jurisdictions, and small businesses) (U.S. Small Business
7-3
-------
Administration [SBA], 1982). If the proposed rule is likely
to have a significant adverse economic impact on a substantial
number of small entities, a regulatory flexibility analysis is
required. The Act allows some flexibility in defining small
entities and determining what a substantial number and
significant impact are.
Using SBA guidelines, EPA has identified small government
jurisdictions as those with populations of less than 50,000.
Small businesses are identified by SBA general size standard
definitions. For SIC code 4953, Refuse Systems, small
businesses are those receiving less than $6 milliori/yr,
averaged over the most recent three fiscal years (Code of
Federal Regulation, 1991).
The EPA (1982) provides guidelines for determining when a
"substantial number" of these small entities have been
"significantly affected." The EPA guidance states that a
"substantial number" is more than 20 percent of these (small
entities) affected for each industry the proposed rule would
cover. However, each office may develop its own criterion for
defining what is meant by a substantial number.
Under the RFA, for a rule to be proposed, EPA must
prepare an initial regulatory flexibility analysis or certify
that the proposed rule is not expected to exert "a significant
economic impact on a substantial number of small entities."
The following steps are used to determine whether a regulatory
flexibility analysis is required:
1. Project the total number of small entities potentially
affected by the proposed rule.
2. Project the number of small entities likely to incur
an economic impact.
3. Compute the share of all small entities potentially
affected that are likely to incur an economic impact.
7-4
-------
4. Measure the impacts on small entities and identify
small entities likely to incur a significant economic
impact.
5. Compute the share of all small entities potentially
affected that are likely to incur a significant
economic impact.
If the share computed in Step 3 is less than 20 percent, then
Steps 4 and 5 are unnecessary and a regulatory flexibility
analysis is not required. If the share computed in Step 3 is
greater than 20 percent, then Steps 4 and 5 are necessary.
Finally, if the share computed in Step 5 is greater than 20
percent, a regulatory flexibility analysis must be prepared.
The total number of potentially affected small entities
in the United States is difficult to measure because of the
wide variation in the size of MWCs. Sizes range from a small
portable unit in a 55-gallon drum to very large facilities
with a daily capacity of 3,000 Mg. The EPA specifically
identified 179 existing MWC facilities and 16 planned MWC
facilities for this distributional analysis.1 These
facilities range from 35 Mg/day to over 3,000 Mg/day in design
capacity. These facilities are owned by 63 small entities, as
defined above, that include the following:
• small government entities that own existing MWCs,
• small government entities planning to build MWCs,
• small firms that own existing MWCs, and
• small firms planning to build MWCs.
Table 7-1 reports the total number and the number of small
public and private entities that own an existing or planned
MWC over 35 Mg/day capacity. Where population or annual sales
data are unavailable, it is assumed that the entity is small.
Also note that where ownership data are not available, it is
assumed that the government jurisdiction representing the
lS±x additional planned plants were identified, but were not
included in the analysis because capacity data are not available.
7-5
-------
TABLE 7-1. NUMBER OF PUBLIC AND PRIVATE ENTITIES THAT OWN
AN MWC SUBJECT TO MWC II/III EG OR NSPSa
Regula-
tion
EG
NSPS
Number
of MWCsb
179
16
Number of Owners
Public
100
15
Private
39
5
Total
139
20
Number
Public
38
3
of Small Owners0
Private
22
4
Total
60
7
aExcludes entities that own an MWC below 35 Mg/day capacity.
bThe number of MWCs does not equal the number of owners because some owners
own multiple MWCs and some MWCs have more than one owner.
GSmall public entities are defined as those with a population below 50,000.
Small private entities are defined as those receiving less than $6 million
in annual sales.
Notes:
1. Where ownership data are unavailable, it is assumed that the community
where the facility is located is the owner.
2. Where population or annual sales data are unavailable, it is assumed
that the entity is small. Therefore, the number of small entities
may be overestimated.
7-6
-------
location or the future location of the MWC is also the owner
of the MWC.
In addition to the entities identified above, numerous
very small facilities below 35 Mg/day capacity are likely
owned by small entities that are not specifically identified
for this analysis. Many of these small facilities are located
in hospitals, apartment buildings, and shopping malls. Other
entities such as banks, kennels, stables, resorts, defense
contractors, country clubs, marinas, churches, camps, lodges,
schools, community buildings, military installations, naval
vessels, and law enforcement units also operate very small
combustors (Trott, 1991) .
In December 1989, EPA proposed a rule that would cover
all MWCs with no exemption for size. During the comment
period that followed that proposal, EPA received several
letters expressing concern about the impacts on small entities
that own very small MWCs (from >1 to 35 Mg/day capacity) . In
addition, several commentors expressed concern that the
definition of MSW contained in the December proposed rule
would result in restrictions for industrial incinerators and
medical waste incinerators.
To address these concerns, EPA introduced a size
exemption and a revised (narrower) definition of MSW that
excludes industrial incinerators and medical waste
incinerators from the requirements. These measures, along
with several others designed to mitigate impacts on small
entities, are included in the MWC II/III proposed rule. As a
result of these measures most of the potentially affected
small entities identified above will not incur any economic
impacts.
As indicated above, a "substantial number" of small
entities is defined as more than 20 percent of all potentially
affected small entities -- not just those identified in Table
7-1. Because of the size exemption and the other mitigating
measures, thousands of small entities will not incur any
economic impact. The share of small entities that are likely
7-7
-------
to incur impacts comprises less than 20 percent of all
potentially affected small entities in the industry.
Consequently, a regulatory flexibility analysis is not
required.
Even though a regulatory flexibility analysis is not
required, EPA believes analyzing the distribution of impacts
of the regulation on affected entities and small affected
entities in particular is appropriate. The next section
examines the distribution of impacts on government entities
and firms of all sizes as well as household impacts.
7.3 DISTRIBUTIONAL IMPACTS
This section examines the distribution of impacts on
government entities and firms that own MWCs and on households
served by MWCs. Specifically, this section first examines
government entities' ability to issue bonds to cover the
capital costs of the regulation. Next, the financial impacts
for firms that own or are planning to build MWCs is examined.
This section concludes with a discussion of the burden the
regulation imposes on households. Data sources used to
compute the distributional impacts on government entities,
firms, and households are identified in Table 7-2.
7.3.1 Impacts on Government Entities
An estimated 100 government entities subject to the EG
and 15 government entities subject to the NSPS are identified
for this analysis (see Table 7-1). Figures 7-1 and 7-2 show
the population distribution of government entities that own an
existing MWC subject to EG and government entities planning to
build an MWC subject to NSPS, respectively.
Approximately 74 communities with an existing MWC larger
than 35 Mg/day will likely incur initial capital costs
associated with the purchase of control equipment. The MWCs
owned by the remaining 26 communities are not projected to
incur any capital control costs because these facilities have
7-8
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TABLE 7-2. DISTRIBUTIONAL ANALYSIS DATA SOURCES
Plant data:
location, owner, combustor
type, pollution control
type, capacity
The National Solid Wastes
Management Association.
1992. "The 1992 Municipal
Waste Combustion Guide."
Waste Age. November.
HCI Publications. 1993.
The 1993 Energy-from-Waste
Activity Report. Kansas
City.
Riser, Jonathan V.L. 1993.
The IWSA Municipal Waste
Combustion Directory: 1993
Update of U.S. Plants.
Washington, D.C.:
Integrated Waste Services
Association. (Used for
NSPS Plants Only.)
MWC service area
population,a
operating hours per
year
Gould, Robert, M.S.,
M.P.H., ed. 1991. 1991
Resource Recovery Yearbook,
Directory and Guide.
Governmental Advisory
Associates.
Demographic data:
1986 population,
1985 per-capita income,
1985 persons per
household,
1990 population inflator
Financial data:
1990 per-capita income
inflator
1993 tipping fee
U.S. Department of
Commerce. 1988. County
and City Data Book 1988.
U.S. Department of
Commerce. 1991. 1991
Statistical Abstract of the
United States.
U.S. Department of
Commerce. 1991. 1991
Statistical Abstract of the
United States.
Berenyi, Eileen B. and
Robert N. Gould. 1993
"Municipal Waste Combustion
in 1993." Waste Age.
(November):51-56.
(continued)
7-9
-------
TABLE 7-2. DISTRIBUTIONAL ANALYSIS DATA SOURCES (continued)
Financial data (continued)
firm sales data
Other data:
average waste generation
per person
• Moody's Bank and Finance
Manual. 1992. New York:
Moody's Investors Service,
Danny A. Zottoli, Jr.,
publisher.
• Moody's Industrial Manual.
1992. New York: Moody's
Investors Service, Danny A.
Zottoli, Jr., publisher.
• Moody's Public Utility
Manual. 1992. New York:
Moody7s Investors Service,
Danny A. Zottoli, Jr.,
publisher.
• Ward's Business Directory
of U.S. Private and Public
Companies. 1993.
Washington, DC: Gale
Research, Inc.
• U.S. Environmental
Protection Agency. 1992.
Characterization of
Municipal Solid Waste in
the United States: 1992
Update. Office of Solid
Waste and Emergency
Response (OS-305).
EPA/530-R-92-019.
aWhere MWC service area population was not available from the
Resource Recovery Yearbook, the figure was estimated using
plant waste flow divided by 0.71 Mg/yr/person.
bFor privately owned plants and plants for which the owner
is unknown, these statistics represent the population of
the location of the plant; for publicly owned plants they
represent the population of the owning community.
7-10
-------
40 T
35 "
30 —
25 --
Number of
Government 20 -f~
Entities
15 T
10 "
38
30
0 to 50 50 to 100 100 to 250 Over 250
Community Size (Population in Thousands)
Figure 7-1. MWC II/III EG: Population distribution of
government entities that own an MWC
Notes:
1. Population data are unavailable for several municipalities
identified as MWC owners. County population is used for
these municipalities.
2. Where ownership data are unavailable, it is assumed that
the entity identified as the facility location is the
owner.
Sources: Sources are identified in Table 7-2.
7-11
-------
8 T
6 "
Number o f
Government 4 -f-
Entities
2 "
0 to 50 50 to 100 100 to 250 Over 250
Community Size (Population in Thousands)
Figure 7-2. MWC II/III NSPS: Population distribution of
government entities planning to build an MWC
Note:
1. Where ownership data are unavailable, it is assumed
that the entity identified as the facility location is
the owner.
Sources: Sources are identified in Table 7-2.
7-12
-------
fairly advanced baseline air pollution control equipment.
(Note, however, that all facilities are projected to incur
operating costs due to the regulation.) Some communities may
be able to cover the capital costs of the regulation from
their cash reserves. Other communities, however, may not have
the necessary cash reserves to cover the initial capital costs
of the regulation. These communities must either raise the
funds needed for the initial capital investment or shut down
their MWCs.
Table 7-3 provides a list of several financing options
available to government entities. Revenue bonds are the
primary financing mechanism municipalities use to secure funds
for MWC plant and equipment (Gould, 1991). Consequently, this
analysis measures the impacts of MWC II/III regulations on
government entities by projecting the government entity's
ability to issue revenue bonds to finance the capital control
costs imposed by the regulation. Revenue bonds are generally
repaid through user fees assessed to individuals that directly
benefit from the investment. Thus, the ability to issue
revenue bonds depends on the ability of the government entity
to increase user charges assessed to households in the service
area of the MWC. For this analysis, the ability of government
entities to issue revenue bonds is projected based on a
threshold criterion established in Municipalities, Small
Businesses, and Agriculture--The Challenge of Meeting
Environmental Responsibilities (EPA, 1988). Specifically, if
annual cost per household due to the regulation exceeds one
percent of average annual household income, then the community
is projected to have potential difficulty issuing revenue
bonds.
Household costs are computed using the following data:
• per-capita income;
• number of persons per household;
• average waste generation per person;
• service area population; and
• population of the owning entity (see Table 7-2 for a
list of data sources).
7-13
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TABLE 7-3. FINANCING OPTIONS AVAILABLE TO
GOVERNMENT ENTITIES
Operating budget
Capital improvement fund
General obligation bonds
Revenue bonds
Taxable bonds
Creative borrowing
Floating rate bonds
Zero coupon bonds
Compound interest bonds
Stripped coupon bonds
Stepped interest bonds
Put bonds
Bonds with warrants
Short-term borrowing
Bond anticipation notes
Grant anticipation notes
Revenue anticipation notes
Tax anticipation notes
Tax-exempt commercial paper
Tax-exempt demand master notes
Capital notes
Multijurisdictional capital pools
Federal grants
State grants
State infrastructure bank
State revolving load fund
State bond bank
Source: Matzer, John, Jr. 1989. Capital Projects:
New Strategies for Planning, Management, and Finance,
7-14
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Per-capita income is converted to 1990 dollars using the 1990
per-capita income inflator. The population data (except
persons per household for each entity) are projected to 1990
using the 1990 population inflator for the U.S. The above
data are combined with cost data to compute two ratios used to
measure the cost per household and the cost per household as a
percentage of pre-tax household income.
To project whether a community is expected to have
potential difficulty issuing revenue bonds, the annual cost of
the regulation computed for the analysis of household costs is
used for each government entity that owns one or more MWCs.
The total annual cost of the regulation for a given community
that owns one or more MWCs is based on the annualized capital
cost and the annual operating cost estimated for the model
plant(s) representing the actual plant (or plants) owned by
the community.2 Where the actual plant differs from the
model plant in the amount of waste combusted per year, the
model plant annual operating costs are scaled up or down to
conform to the waste flow at the actual plant. Unlike
operating costs, however, small differences in capacity or
waste flow generally do not result in different capital costs.
Consequently, no adjustment is made to the capital cost
component.
The EG capital cost portion of total annual costs is
annualized using an estimated real discount rate of 4 percent
(EPA, 1989a) over a 20-year time period. This annualization
period for existing facilities implies that owners of these
facilities will pay off the capital costs of the regulation
over a 20-year period. However, some communities that own an
existing facility may decide to finance the capital costs of
the regulation over a shorter time period due to bond
covenants and other institutional constraints. Consequently,
the impacts of the EG are also evaluated based on the
2Annual operating costs include testing, reporting, and
recordkeeping costs, some of which are also annualized.
7-15
-------
assumption that owners of existing MWCs finance the capital
costs of the regulation over a 10-year period. Impacts of the
NSPS are computed based on a real discount rate of 4 percent
and a 30-year annualization period.
After computing the annual compliance costs for each
government entity as described above, the average cost per
household is computed for each affected community as follows.
The Resource Recovery Yearbook (Gould, 1991) reports the
service area population for many of the MWCs included in this
distributional analysis. For those MWCs not included in the
Resource Recovery Yearbook database, the service area
population is estimated by dividing the amount of MSW
combusted by the MWC annually by the average waste generated
per person annually (0.71 Mg/person/year) (EPA, 1992). To
compute the number of households served by the MWC, service
area population is divided by the average number of persons
per household for the government entity that owns the MWC.
Next, total compliance cost for the government entity is
divided by the average number of households served to compute
the average annual cost per household. Finally, the
estimated average annual cost per household is compared to the
average annual household income for the community. As noted
above, if the cost per household exceeds one percent of
average annual household income, then the community is
projected to have potential difficulty issuing revenue bonds.
Table 7-4 shows the share of government entities whose
compliance costs (annualized over 20 years) exceed the
threshold criterion under the EG. No government entities with
a population above 50,000 are projected to have difficulty
issuing revenue bonds as a result of the EG. However,
approximately 3 percent of small affected entities (population
below 50,000) are projected to have potential difficulty
a community owns more than one MWC, costs are summed
for all plants owned to get the total costs of the regulation
for the owning entity.
7-16
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TABLE 7-4. MWC II/III EG: SHARE OF GOVERNMENT ENTITIES
WITH POTENTIAL DIFFICULTY ISSUING REVENUE BONDS (Percent)3
Community Size
(Population 103)
Keguxatory
Alternative and
Compliance Scenario
Number of
Observations
Reg. Alt. I -A
Reg. Alt. II-A
Reg. Alt. I-B
Reg. Alt. II-B
Reg. Alt. Ill
0 to
50
38
0
3
0
3
8
50 to
100
11
0
0
0
0
0
100 to
250
22
0
0
0
0
0
Over
250
35
0
0
0
0
0
Communities are assumed to have difficulty issuing revenue
bonds if the following threshold criterion is exceeded:
[(total annual cost of the regulation/number of households
in the service area)/average household income] > 1 percent.
Total annual cost includes the annualized capital cost and
the annual operating cost. Annual operating costs include
testing, reporting, and recordkeeping costs, some of which
are also annualized.
Sources: Sources are identified in Table 7-2.
7-17
-------
issuing revenue bonds under Regulatory Alternative II. This
share increases to 8 percent under Regulatory Alternative III.
None of the government entities planning to build an MWC are
projected to have difficulty issuing revenue bonds due to the
NSPS.
The share of government entities with potential
difficulty issuing revenue bonds due to the EG is also
projected using a 10-year annualization period. When the
costs of the EG are annualized over 10 years, still no
government entities with a population above 50,000 are
projected to have difficulty issuing revenue bonds. However,
under Regulatory Alternative II, 5 percent of small affected
entities are projected to have difficulty issuing revenue
bonds (compared to the projected 3 percent when a 20-year
annualization period is used). Under Regulatory Alternative
III, 8 percent of the small affected entities are projected to
have difficulty issuing revenue bonds (under both
annualization period assumptions).
Government entities that are unable to issue a bond to
cover the costs of the regulation may decide to use other
financing mechanisms (see Table 7-3) or other waste disposal
options. Entities that are able to--and choose to—issue a
bond to finance the costs of the regulation face the
possibility that the additional debt burden will adversely
affect their financial health. If the impact is severe
enough, the government entity's bond rating may fall.
Examining the effect that additional costs due to the
regulation would have on municipality bond ratings is beyond
the scope of this analysis.
7.3.2 Firm Impacts
This analysis identifies 39 firms that own MWCs subject
to EG and 5 firms that own MWCs subject to NSPS. These firms
include private entities that own or are planning to build an
MWC over 35 Mg/day capacity. In several cases, especially for
the EG, a single firm owns multiple MWCs.
7-18
-------
As mentioned in Section 7.2, small entities are defined
as those receiving less than $6 million in annual sales.
Using this definition, 22 firms that own one or more existing
MWCs are small and 4 firms planning to build one or more MWCs
are small. Note that firms for which annual sales data are
not available are assumed to be small.
Detailed financial data are published for 17 of the large
firms and none of the small firms that own MWCs likely to
incur impacts under the EG. Total annual costs of the
regulation as a percentage of sales average less than 1
percent and range from less than 1 up to 80 percent for each
of these 17 firms. The total annual costs for firms that own
multiple MWCs are computed by summing the total estimated
annual costs for all plants owned by the firm.
Table 7-5 shows average tipping fee increases at
privately owned MWCs subject to EG and NSPS. These increases
are based on an average tipping fee of $57/Mg and the
assumption of a full cost pass through. The tipping fee
increase at each MWC owned by small firms averages from
approximately 17 percent under the least stringent regulatory
alternative to almost 21 percent under the most stringent one.
The tipping fee increase at each MWC owned by large firms
averages from approximately 14 percent under the least
stringent regulatory alternative to 15 percent under the most
stringent one.
Detailed financial data are published for only one of the
large firms and none of the small firms planning to build MWCs
subject to NSPS. Total annual costs of the regulation amount
to less than one percent of total annual sales for this firm.
Tipping fee increases average from 26 percent under Regulatory
Alternative I to 28 percent under Regulatory Alternative II
for MWCs owned by small firms. Tipping fee increases average
about 17 percent (under both alternatives) for MWCs owned by
large firms.
7-19
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TABLE 7-5. MWC II/III: AVERAGE TIPPING FEE INCREASES AT
PRIVATELY OWNED MWCs BY SIZE OF FIRM (Percent)3
Regulatory
Alternative and
Compliance Scenario
Size of the Firm (Annual Sales)
Small
($0 to $6 Million)
Large
(Over $6 Million)
EG
Reg. Alt. I-A
Reg. Alt. II-A
Reg. Alt. I-B
Reg. Alt. II-B
Reg. Alt. Ill
NSPS
Reg. Alt. I
Reg. Alt. II
16.6
18.1
16.6
18.1
20.7
25.9
27.7
13.7
13.9
14.0
14.2
15.3
17.2
17.2
aTipping fee increases are total annual costs per megagram
of MSW divided by an average tipping fee of $57/Mg of MSW.
Costs are MSW II/III total annual costs. Total annual
cost per megagram of MSW is the sum of capital costs
and the annualized portion of testing costs, annueilized
at 8 percent over 20 years, and annual operating costs
divided by the total annual waste flow at the facility.
Sources: Sources are identified in Table 7-2.
7-20
-------
7.3.3 Household Impacts
Regardless of the methods used to finance the costs of
the regulation, the government entity will pass these costs
along to households in the form of higher taxes, higher user
fees, or reduced services. Household impacts are computed
based on the methods discussed in Section 7.3.1. Household
impacts apply to communities served by MWCs owned by both
public and private entities. Therefore, the description in
Setion 7.3.1 of the methods used to compute average cost per
household and average cost per household as a percentage of
income for publicly owned MWCs also applies to privately owned
MWCs. Community size is based on the population of the
government entity that owns the MWC (in the case of publicly
owned facilities) or the population of the community where the
MWC is located (in the case of privately owned facilities).
Tables 7-6 and 7-7 show the average annual cost per
household under the EG and NSPS, respectively. These tables
report the average cost increase due to the regulation that is
directly assessed to households in the form of increased user
fees or increased taxes. The actual burden on a given
household may be larger or smaller depending on the method by
which the jurisdiction passes costs along to its customers.
The values reported in Table 7-6 indicate that, on average,
the EG costs per household are generally higher for entities
with a population between 50,000 and 100,000. The values
reported in Table 7-8 indicate that, on average, NSPS costs
per household are generally higher for communities with a
population less than 100,000.
Tables 7-8 and 7-9 report the average annual cost per
household as a percentage of average pre-tax household income
under the EG and NSPS, respectively. Because of higher costs
per household population coupled with lower average household
income levels, affected entities with a population ranging
from 50,000 to 100,000 will pay a larger portion of their
income to comply with the regulation. The EPA is aware of the
potential differential burden on households in small
7-21
-------
TABLE 7-6. MWC II/III EG: AVERAGE ANNUAL COST PER
HOUSEHOLD ($1990/household/year)a
Community Size
(Population 103)b
Regulatory
Alternative and 0 to 50 to 100 to Over
Compliance Scenario 50 100 250 250
Number of 68 22 37 48
Observations0
Reg.
Reg.
Reg.
Reg.
Reg.
Alt.
Alt.
Alt.
Alt.
Alt.
I -A
II-A
I-B
II-B
III
18
22
18
22
26
28
29
29
30
33
22
24
22
24
25
22
26
22
26
28
aCost per household is computed by dividing the total annual
compliance cost for the MWC by the estimated number of
households in the service area. Costs are MWC II/III total
annual costs. Total annual cost is the sum of capital
costs and the annualized portion of testing costs annualized
over 20 years (computed using 8 percent for privately owned
facilities and 4 percent for publicly owned facilities) and
annual operating costs.
bFor privately owned facilities and facilities for which
the type of ownership is not identified, community size is
based on the population of the entity identified as the
location. For publicly owned facilities community size is
based on the population of the entity that owns the MWC.
GThe number of observations indicates the number of entities
for which relevant demographic data are available.
Note:
1. These estimates are based on the assumption that
essentially all the community's waste goes to the
incinerator, and therefore are upper bound estimates.
They would overestimate the costs for communities that
are also served by landfills.
Sources: Sources are identified in Table 7-2.
7-22
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TABLE 7-7. MWC II/III NSPS: AVERAGE ANNUAL COST PER
HOUSEHOLD ($1990/household/year)a
Community Size
(Population 103)b
Regulatory
Alternative
0 to
50
50 to
100
100 to
250
Over
250
a
Number of 6419
Observations0
Reg. Alt. I 26 26 23 17
Reg. Alt. II 27 29 23 17
Cost per household is computed by dividing the total annual
compliance cost for the MWC by the estimated number of
households in the service area. Costs are MWC II/III total
annual costs. Total annual cost is the sum of capital
costs and the annualized portion of testing costs annualized
over 30 years (computed using 8 percent for privately owned
facilities and 4 percent for publicly owned facilities) and
annual operating costs.
bFor privately owned facilities and facilities for which
the type of ownership is not identified, community size is
based on the population of the entity identified as the
location. For publicly owned facilities community size is
based on the population of the entity that owns the MWC.
cThe number of observations indicates the number of entities
for which relevant demographic data are available.
Note:
1. These estimates are based on the assumption that
essentially all the community's waste goes to the
incinerator, and therefore are upper bound estimates.
They would overestimate the costs for communities that
are also served by landfills.
Sources: Sources are identified in Table 7-2.
7-23
-------
TABLE 7-8. MWC II/III EG: AVERAGE ANNUAL COST PER
HOUSEHOLD AS A PERCENTAGE OF HOUSEHOLD INCOME (Percent)a
Community Size
. (Population 103)b
t\.ey uxauuiy
Alternative and
Compliance Scenario
0 to
50
50 to
100
100 to
250
Over
250
Number of 68 22 37 48
Observations0
Reg.
Reg.
Reg.
Reg.
Reg.
Alt.
Alt.
Alt.
Alt.
Alt.
I -A
II-A
I-B
II-B
III
0
0
0
0
0
.05
.06
.05
.06
.07
0.
0.
0.
0.
0.
08
09
09
09
10
0
0
0
0
0
.06
.07
.06
.07
.07
0
0
0
0
0
.06
.07
.06
.07
.07
aCosts per household as a percentage of household income is
based on the cost computed for Table 7-6 and the per-capita
income and number of persons per household. Costs are MWC
II/III total annual costs. Total annual cost is the sum of
capital costs and the annualized portion of testing costs
annualized over 20 years (computed using 8 percent for
privately owned facilities and 4 percent for publicly owned
facilities) and annual operating costs.
bFor privately owned facilities and facilities for which
the type of ownership is not identified, community size is
based on the population of the entity identified as the
location. For publicly owned facilities community size is
based on the population of the entity that owns the MWC.
cThe number of observations indicates the number of entities
for which relevant demographic data are available.
Note:
1. These estimates are based on the assumption theit
essentially all the community's waste goes to the
incinerator, and therefore are upper bound estimates.
They would overestimate the costs for communities
that are also served by landfills.
Source: Sources are identified in Table 7-2.
7-24
-------
TABLE 7-9. MWC II/III NSPS: AVERAGE ANNUAL COST PER
HOUSEHOLD AS A PERCENTAGE OF HOUSEHOLD INCOME
($1990/household/year)a
Community Size
(Population 103)b
Regulatory
Alternative
0 to
50
50 to
100
100 to
250
Over
250
Number of
Observations0
Reg.
Reg.
Alt.
Alt.
I
II
0.
0.
07
07
0
0
.08
.09
0
0
.06
.06
0
0
.04
.04
aCosts per household as a percentage of household income is
based on the cost computed for Table 7-7 and the per-capita
income and number of persons per household. Costs are MWC
II/III total annual costs. Total annual cost is the sum of
capital costs and the annualized portion of testing costs
annualized over 30 years (computed using 8 percent for
privately owned facilities and 4 percent for publicly
owned facilities) and annual operating costs.
bFor privately owned facilities and facilities for which
the type of ownership is not identified, community size is
based on the population of the entity identified as the
location. For publicly owned facilities community size is
based on the population of the entity that owns the MWC.
GThe number of observations indicates the number of entities
for which relevant demographic data are available.
Note:
1. These estimates are based on the assumption that
essentially all the community's waste goes to the
incinerator, and therefore are upper bound estimates.
They would overestimate the costs for communities
that are also served by landfills.
Sources: Sources are identified in Table 7-2.
7-25
-------
communities. As a result, several mitigating measures have
been considered and are discussed in the next section.
7.4 MITIGATING MEASURES
The impacts reported in the previous sections for
government entities, firms, and households indicate that
entities of all sizes will experience impacts because of the
regulation. However, the impacts on small entities are
frequently relatively greater than the impacts on larger
entities. The EPA is particularly concerned about these
impacts on small entities. To address these concerns, several
measures designed to mitigate the impacts on small entities
were considered. The following measures are incorporated in
the regulatory alternatives:
• emission standards rather than design, equipment, work
practice, or operational standards;
• flexibility for States to make case-by-case judgments
under the EG;
• a size cutoff for all facilities below 35 Mg/day
capacity;
• less stringent emission standards for small
facilities; and
• reduced reporting requirements for small facilities.
The first measure reduces impacts by giving the MWC
owner/operator the freedom to use the least costly control
equipment that will satisfy the requirements of the
regulation. The second measure allows States the freedom to
review the EG requirements and make case-by-case judgments
where special considerations are warranted.
The last three measures are designed to mitigate impacts
at small facilities in particular. The size cutoff exempts
very small facilities below 35 Mg/day. In addition,
requirements for facilities between 35 and 225 Mg/day capacity
7-26
-------
are less stringent than those for larger plants under both the
NSPS and EG.
In designing the measures to mitigate impacts at small
facilities, EPA assumes that a correlation exists between the
size of the facility and the size of the entity that owns the
facility. This assumption generally holds true, especially
for publicly owned facilities. Consequently, measures aimed
at reducing impacts at small facilities also reduce impacts
for small entities.
7-27
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CHAPTER 8
BENEFITS AND NET BENEFITS
This chapter presents incremental benefit estimates for
the regulatory alternatives proposed for EG and NSPS. Because
of limitations on concentration-response functions and the
valuation of these functions, benefits are not quantified for
all pollutants.
Benefit estimates are quantified for the emission
reductions of PM and S02 that are expected to result from
these regulations. Benefit estimates for Pb are not available
yet but are in the process of being finalized. This chapter
presents the estimates for PM and SC>2 and a discussion of
benefits predicted from additional pollutant reductions. By
combining the benefit estimates for PM and S02, a net benefit
estimate is calculated. However, because benefit estimates
are not complete for all pollutants, the net benefits (i.e.,
benefits minus costs) results cannot be used to make
conclusions regarding the total net benefits of EG and NSPS
for MWC II/III.
8.1 BENEFITS
8.1.1 Particulate Matter Benefits
The valuation range used to calculate PM benefits is
derived using the same methodology employed in the analysis of
MWC I. In that methodology, the PM reductions are valued
using a synthesis of estimates for the following effects
categories: mortality risk, morbidity, and household soiling
and materials damage.
To value reductions in mortality risk, a range of $1.6 to
$8.5 million (1986 dollars) per statistical life saved is
taken from Fisher, Chestnut, and Violette (1989). The median
8-1
-------
estimate of this range is $4.4 million per statistical life,
derived by averaging estimates from the 13 studies used by
Fisher, Chestnut, and Violette (1989).
Morbidity is valued using the cost-of-illness approach,
which includes such costs as work-loss days (valued at the
wage rate), reduced-activity days (valued at half the wage
rate), and direct medical expenditures. Because reductions in
residual pain and suffering are not valued, the cosst-of-
illness approach tends to underestimate benefits. Lastly,
soiling and materials damage is valued using a supply and
demand model for goods purchased to maintain a desired level
of cleanliness. The model compares expenditures for laundry
and cleaning products, as well as gas and electricity, both
before and after PM controls.
Considering the sum of these three functions, the
estimated range of values for benefits per megagram of PM
reduced is $6,100 to $42,400/Mg in 1990 dollars with a best
point estimate of $17,700/Mg. To compute the national
benefits of reduced PM, the range of values per megagram has
been multiplied by the total emission reductions of PM
resulting from the regulation. Tables 8-1 and 8-2 present the
benefit estimates.
8.1.2 Sulfur Dioxide Benefits
As in the MWC I analysis, the estimated benefits per
megagram of S02 reduced that are used in this analysis come
from the Industrial Boiler-S02 RIA (EPA, 1987). These
estimates include direct S02 effects (morbidity, reduced
agricultural yield, and soiling and materials damage) and
indirect S04 effects (morbidity, visibility impairment, and
soiling and materials damage). The SO2 benefit estimates
reported in that analysis range from $560 to $780/Mg (1983
dollars).
These estimates are adjusted to reflect the Icick of
chronic morbidity effects and potential mortality effects and
are inflated to 1990 dollars. The final range of estimates is
8-2
-------
$1,000 to $l,300/Mg, with a best point estimate of $l,200/Mg.
National benefits are then computed by multiplying this range
of estimates by the total emission reductions from S02
control. Tables 8-1 and 8-2 present the benefit estimates.
8.1.3 Lead Benefits
Benefits will occur from reduced concentrations of Pb;
however, these benefit values are not available yet. Although
everyone is susceptible to toxic effects from Pb, the
following major subgroups of the population are particularly
sensitive: young children, middle-aged men, and pregnant
women and their fetuses. Pb seems to affect the biological
system directly rather than through metabolic transformations.
Moreover, effects of Pb ions at the subcellular or cellular
levels may have no biological threshold. Many of the
biochemical changes or mechanisms that appear to underlie Pb
toxicity (e.g., altered enzyme activity, membrane receptors,
and calcium homeostasis) have been observed at the lowest
exposure dosage.
8.1.4 Unquantified Benefits
Table 8-3 presents a summary of health and welfare
effects of MWC emissions. Emission reductions have been
calculated for Hg; however, benefits from these reductions
have not been valued. Likewise, emission reductions of HCl,
NOX, CO, Cd, and CDD/CDFs are also expected as a result of
controls imposed on MWCs. No valuation for reductions of
these pollutants exists at this time. However, extensive
research on probable health effects suggests that risk of
adverse health effects will increase commensurately at higher
ambient concentrations.
8-3
-------
TABLE 8-1. MWC II/III EG: PARTIAL NATIONAL BENEFIT
ESTIMATES FOR SULFUR DIOXIDE AND PARTICULATE MATTER
EMISSION REDUCTIONS ($1990 103/yr)
Regulatory Alternative
and Compliance Scenario PM
Reg.
Reg.
Reg.
Reg.
Reg.
Alt.
Alt.
Alt.
Alt.
Alt.
I -A
II-A
I-B
II-B
III
54,
54,
54,
54,
57,
300
300
300
300
300
S02
49,
52,
49,
52,
54,
500
000
500
000
000
Total
104,
106,
104,
106,
111,
000
000
000
000
000
Notes:
1. Benefits are calculated by multiplying the benefit
estimate per megagram reduction (in 1990 dollars) by
the emission reductions given in Table 5-21.
2. The benefit estimate for PM is $17,700/Mg reduced.
3. The benefit estimate for S02 is $l,200/Mg reduced.
4. Numbers may not add due to rounding.
5. Definitions are provided on p. x.
8-4
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TABLE 8-2. MWC II/III NSPS: PARTIAL NATIONAL BENEFIT
ESTIMATES FOR SULFUR DIOXIDE AND PARTICULATE MATTER
EMISSION REDUCTIONS ($1990 103/yr)
Regulatory
Alternative PM S02 Total
Reg. Alt. I 115,000 44,400 159,000
Reg. Alt. II 115,000 45,200 160,000
Notes:
1. Benefits are calculated by multiplying the benefit
estimate per megagram reduction (in 1990 dollars) by
the emission reductions given in Table 5-22.
2. The benefit estimate for PM is $17,700/Mg reduced.
3. The benefit estimate for SO2 is $l,200/Mg reduced.
4. Numbers may not add due to rounding.
5. Definitions are provided on p. x.
8-5
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TABLE 8-3.
SOME HEALTH AND WELFARE EFFECTS OF
MWC EMISSIONS
Pollutant Category*
Health and/or Welfare Effects
Organics
Mortality, morbidity
Carcinogenicity
Metals
Retardation and brain
damage, especially in
children
Hypertension
Central nervous system
injury
Renal dysfunction
Acid Gases
Mortality, morbidity
Cardiovascular, nervous,
and pulmonary systems
effects
Respiratory tract
problems, lung disease
Reduced exercise capacity
Dental erosion
Ozone formation
Acid rain
Reduced agricultural yield
Soiling and materials
damage
Particulate Matter
Mortality, morbidity
Eye and throat irritation,
bronchitis, lung damage
Impaired visibility
Soiling and materials
damage
aSee Table 2-1 for a list of pollutants in each pollutant
category.
Note:
The following MWC emissions are carcinogens:
Arsenic, beryllium, cadmium, chromium , nickel,
2,3,7,8-tetrachloro-dibenzo-p-dioxin, benzene,
benzo-a-pyrene, hexachlorobenzene, trichlorophenol,
polychlorinated biphenyls, and formaldehydes.
8-6
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HCl emissions are significant corrosive and toxic
emissions from MWCs. The health effects associated with HCl
emissions include corrosion of the respiratory tract and
dental erosion. Environmentally, HCl is a minor contributor
to acid rain. HCl is generated from chlorides and chlorinated
organics in the MWC waste stream. The major sources of
chlorine are paper and chlorinated plastics (e.g., polyvinyl
chloride and polyvinylidene chloride). Chlorine is used in
paper production mainly during the bleaching processes.
Aggressive recycling and precombustion or pollution prevention
techniques can lead to substantial reductions in emissions of
HCl and chlorinated hydrocarbons. Further prudent combustion
measures also reduce toxic HCl emissions.
NAAQS exist for NOX and CO to mitigate the health effects
associated with these pollutants. NOX is irritating to the
lungs and lowers resistance to respiratory infections. CO
reduces the amount of oxygen available to body tissue,
impairing the function of nerves and muscles.
Cd is a demonstrated carcinogen that causes kidney damage
and cancer. Long-term exposure also bioaccumulates, leading
to anemia, chronic fatigue, and loss of smell. Inhalation
exposure, specifically from occupational exposure, can cause
systemic effects in the respiratory area ranging from slight
toxicity of lung epithelial cells to severe effects such as
decreased lung function and emphysema, but the kidney is the
main target organ for Cd toxicity, regardless of route of
exposure. Chronic exposure to Cd may lead to proteinuria and,
with continued exposure, to more severe renal dysfunction such
as mineral metabolism disturbances, kidney stones, mild
tubular lesions, and widespread necrosis. Exposure to Cd
emissions can induce alterations of vitamin D metabolism,
which causes musculoskeletal effects. These effects suggest
that either Cd has a direct effect on bone at levels lower
than those causing kidney damage or that interference with
vitamin D metabolism in the proximal tubule of the kidney is a
sensitive indicator of kidney damage. Because the target
8-7
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tissue for inhalation exposure is the lung and because the
unit risk estimate makes Cd one of the more potent verified
carcinogens on the CAA list of hazardous air pollutants, Cd
presents a significant risk to human health.
CDD/CDFs have become a considerable health concern
because of their widespread occurrence and persistence in the
environment. Health effects associated with these pollutants
include an enlarged and impaired liver, neuromuscular
symptoms, abnormalities of the endocrine and immune systems,
altered metabolism, and general weakness and weight loss.
Occupational studies have shown that chronic exposure to
Hg can cause irreversible damage to the brain, kidneys, or
developing fetuses. Effects associated with the lowest
exposure levels produce nonspecific symptoms such as insomnia,
introversion, and anxiety. Biochemical alterations have been
observed in enzymes of plasma and red blood cells, and
increases in urinary excretion of specific proteins and
enzymes are also known to occur. Higher chronic exposures
produce more pronounced effects in cognitive function, such as
short-term memory loss and changes in personality, as well as
motor dysfunction and associated body tremors. The form of
Hg, the route of exposure, and the concentration influence
which of the above effects are most severe. For example,
organic Hg (i.e., methylmercury) ingested through contaminated
fish can readily cross the blood-brain and placental barriers
and will therefore tend to cause greater damage to the brain
and developing fetus, whereas inorganic Hg that is ingested
will tend to cause greater harm to the kidneys.
Because of Hg's potential to cause adverse health
effects, the Occupational Safety and Health Administration,
the National Institute of Occupational Safety and Health, the
Food and Drug Administration, and EPA have all set
concentration levels in various media that, if exceeded, may
not properly protect human health and the environment. Hg is
also included in the list of 189 hazardous air pollutants to
be regulated under Title III of the CAA.
8-8
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8.1.5 Conclusion
Tables 8-1 and 8-2 present a partial analysis of the
benefits associated with MWC II/III controls. In these
tables, benefits have been estimated for PM and SO2. This
analysis may be considered low end because of the unquantified
benefits mentioned in the previous section.
8.2 NET BENEFITS
8.2.1 Evaluation Criterion
Benefit-cost analysis provides a framework for assessing
the potential changes in society's well-being from the
adoption of any given regulatory alternative. Using the
Hicks-Kaldor compensation principle, society is judged to be
better off if potential net benefits (benefits minus costs)
are positive and potential gainers are able to compensate
potential losers. Applying this principle to environmental
regulations, however, is often complicated by the difficulty
of quantifying all the potential benefits from such
regulations.
8.2.2 Qualifications
Because of a lack of data, applying the benefit-cost
methodology to evaluating the regulatory alternatives examined
in this analysis is limited to comparing some of the benefits
with most of the costs. Consequently, drawing conclusions
about the net value to society of this regulation is
difficult. The fact that quantified potential benefits do not
exceed quantified potential costs does not necessary guarantee
that society's well-being is worsened.
Another limitation of this analysis concerns the degree
of accuracy in the cost and benefit estimates. Data
limitations, as well as time and resource constraints on the
analysis, seriously limit the degree of accuracy achievable at
this time.
8-9
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8.2.3 Results
Table 8-4 summarizes the monetized estimates of some of
the potential benefits and most of the costs for the MWC
II/III EG and NSPS. Even the high estimate of quantified
benefits falls well short of quantified costs. The EPA
cannot, however, conclude that potential net benefits from the
MWC II/III EG and NSPS would be negative because only PM and
S02 emission reductions can be valued at this time., However,
neither can EPA assert that society would be better off in a
Hicks-Kaldor compensation principle sense if EPA adopted EG
and NSPS for MWC II/III. Because of data paucities, the
allocation efficiency aspects of these rules remain ambiguous.
8-10
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TABLE 8-4. MWC II/III: NATIONAL SOCIAL COSTS AND
PARTIAL NATIONAL BENEFITS FROM REDUCING MWC EMISSIONS
($1990 103/yr)
Regulatory Alternative
and Compliance Scenario
EG
Reg.
Reg.
Reg.
Reg.
Reg.
NSPS
Reg.
Reg.
Alt.
Alt.
Alt.
Alt.
Alt.
Alt.
Alt.
I -A
II-A
I-B
II-B
III
I
II
Annual
412,
443,
418,
448,
487,
177,
184,
Costsa
000
000
000
000
000
000
000
Partial Annual
Benefits15
104,
106,
104,
106,
111,
159,
160,
000
000
000
000
000
000
000
aAnnual costs are taken from Table 5-14 (EG) and Table 5-16
(NSPS).
Benefits include only partial benefits for PM and SO2
reductions and are taken from Tables 8-1 and 8-2.
8-11
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