Prepared by Division of Water Quality Staff April 9, 2008

Transcription

1 Fiscal and Economic Analysis for the Proposed Amendment To the Groundwater Quality Standard for Arsenic 15A NCAC 02L Classifications and Water Quality Standards Applicable to the Groundwaters of North Carolina Prepared by Division of Water Quality Staff April 9, 2008 Revised by the NC Office of State Budget and Management September 2, 2008

2 TABLE OF CONTENTS I. Purpose of Rule II. III. IV. Overview of Regulated Parties and Costs Assumptions, Baseline, and Limitations Benefits V. Policy Alternatives and Risk Analysis VI. Private Sector Impact a. Coal-fired Power Plants b. Treated Wood Facilities and Users c. Sites Administered by NC Division of Waste Management d. Small Business Impact VII. Local Government Impact a. Non-Discharge Permittees b. Pretreatment Permittees VIII. State Impact IX. Other Comments

3 I. Purpose of Rule The intent of the rules established in 15A NCAC 02L is to maintain and preserve the quality of the groundwaters, prevent and abate pollution and contamination of the waters of the state, protect public health and permit management of the groundwaters for their best usage by the citizens of NC. It is the policy of the North Carolina Environment Management Commission (EMC) that the best usage of groundwaters of the state is as a source of drinking water. Groundwater classifications and standards are listed in North Carolina Administrative Code at 15A NCAC 2L As defined in 15A NCAC 2L.0201, groundwaters that have an existing or potential use as a source of drinking water supply and are considered suitable for drinking in their natural state, but which may require treatment to improve quality related to natural conditions are classified as Class GA groundwaters. Groundwaters that have a chloride concentration in excess of 250 milligrams per liter (mg/l) due to natural conditions in the aquifer are Class GSA groundwaters. Class GSA groundwaters are an existing or potential source of water supply for potable mineral water and conversion to fresh waters and are generally associated with groundwaters that occur in coastal areas of the state. The groundwater quality standards for the protection of the groundwaters of the state, as specified in 15A NCAC 02L.0202, are the maximum allowable concentrations resulting from any discharge of contaminants to the land or waters of the state, which may be tolerated without creating a threat to human health or which would otherwise render the groundwater unsuitable for its intended best usage. The current groundwater standard for arsenic is 50 parts per billion (ppb), or micrograms per liter (ug/l), which is based on outdated health and toxicological information. In accordance with 15A NCAC 02L.0202 (d)(2) and (e)(1), the EMC has proposed to amend the groundwater quality standard for arsenic to 0.02 ppb. The proposed standard is based upon the most currently available and finalized federal level health-based information (Integrated Risk Information System (IRIS) and is in accordance with the EMC s criteria for establishing groundwater standards. The proposed standard for arsenic corresponds to an individual s incremental lifetime cancer risk of 1 x 10-6 or one cancer per one million persons. 1

4 II. Overview of Regulated Parties and Costs The North Carolina Division of Water Quality (DWQ) has identified potential fiscal and economic impacts to regulated parties. These regulated parties are persons responsible for cleanup of releases of substances containing arsenic, non-discharge permittees who have monitoring requirements for arsenic at their facilities and pretreatment permittees who pre-treat waste that contains arsenic before it enters a municipal wastewater system if the wastewater is then land-applied. Therefore, it is assumed that there may be costs to these regulated parties as a result of this rulemaking. In addition, the DWQ has conducted outreach to and collected information from the North Carolina Department of Agriculture and members of the regulated community that have expressed concerns about the proposed amendment, such as power utility companies and treated wood industries, as well as other regulatory agencies. The regulated parties identified during the outreach activities potentially affected by this rulemaking are: Private Sector: Coal-fired power plants Treated Wood Facilities and Users Sites Administered by NC Division of Waste Management (DWM) Hazardous Waste Services (HWS) and Inactive Hazardous Sites Branch (IHSB) Local Governments Non-Discharge Permittees Pretreatment Permittees State Government DENR Groundwater standards listed in 15A NCAC 02L.0202 are maximum allowable concentrations which may be tolerated without creating a threat to human health or which would otherwise render the groundwater unsuitable for use as a drinking water source. As such, they are used by a number of state agency programs and regulated parties to determine: The cleanup standard for arsenic at sites they regulate; The effectiveness of current cleanup efforts via monitoring of water supply wells and other wells; The effectiveness of efforts to contain, control, or limit public exposure to contaminant concentrations at a site; The potential migration of substances to receptors (i.e. wells, sewers, building foundations, etc.); Health effects in the event it is discovered that concentrations are impacting humans; The effectiveness of a permit to discharge wastewater onto or below land surface (commonly referred to as a Non-Discharge Permit ) and meet the conditions of the permit; 2

5 If a treatment process at a pretreatment facility will be effective at preventing substances from impacting compliance boundaries under title 15A NCAC 2L.0107; If an exceedence has occurred beyond the compliance boundary for a Non- Discharge Facility; and/or The necessity to refer a site to another state agency for review and cleanup. For example, the Pesticide Section of the NC Department of Agriculture does not have the authority to require cleanup if pesticide misuse results in an adverse impact to groundwater. Private Sector Overview: Coal-fired Power Plants: The DWQ staff conducted direct outreach to electric utilities (Progress Energy Incorporated of the Carolina s (Progress Energy) and Duke Energy Corporation (Duke Energy)) due to concerns that the proposed change in the groundwater quality standard for arsenic has the potential to require greater monitoring, regulation, and reengineering of existing coal ash ponds and changes to regulation of coal product piles stored on site that could result in significant costs to their operations. The industries submitted direct comment to DWQ including cost estimates of what they believe could be the impact from the proposed standard change. There are fourteen facilities that the utilities believe could potentially be impacted by a change in the groundwater quality standard for arsenic. Treated Wood Facilities and Users: Due to the fact that arsenic compounds are used to treat wood and prevent degradation of this product from wood-destroying insects, treated wood facilities can potentially have cleanup responsibilities for releases at their respective facilities. A non-profit organization known as the Treated Wood Council, Incorporated (TWC) submitted information and figures showing the potential impacts to 27 member businesses that could be held responsible for cleanup based on the proposed change in the groundwater quality standard for arsenic. In addition, the DWQ investigated the potential impact to treated wood users such as electric utilities utilizing treated wood power poles. Sites Administered by NC DWM: Because the NC Division of Waste Management (DWM) conducts monitoring and cleanup programs on sites containing arsenic, the DWM was contacted for information about the sites they regulate. The DWQ Aquifer Protection Section (APS) (formerly known as the DWQ Groundwater Section) was also consulted because they have been regulating product spills and other types of releases up until early On February 22, 2007, the Department of Environment and Natural Resources (DENR) transferred certain incident management responsibilities from the DWQ to the DWM. Sites where cleanup is required and there is no permit from the DWQ are now under the purview of the DWM - Inactive Hazardous Sites Branch (IHSB) and a Memorandum of Agreement between the Directors of both DWQ and DWM was signed on April 17, The DWM-IHSB identified a total of three cleanup sites for which increased costs are likely as a result of lowering the groundwater quality standard for arsenic. 3

6 These sites have approved corrective action plans for cleanup of arsenic contamination. In addition, the DWM - Hazardous Waste Section (HWS) examined records for 28 sites for which laboratory results have revealed arsenic contamination. Of these sites, 17 may have economic impacts to private individuals. These are persons responsible for cleanup of releases of these substances at facilities regulated by the DWM-HWS. The DWM compared its laboratory monitoring results using the current standard for arsenic and the proposed standard concentration of 0.02 ppb in determining which sites could be affected. The DWQ made contact with the DWM Solid Waste Section (SWS) to determine if the change in the groundwater quality standard for arsenic would have any impact on their regulated landfill facilities. No information on the impact of lowering the standard was provided to the DWQ. Landfills permitted by the DWM-SWS in accordance to 15A NCAC 13B are required to install and maintain liners to prevent leaching of contaminants to the groundwater, and groundwater monitoring is required on a regular basis to detect groundwater contamination that might occur as a result of landfill activities. Therefore, the DWQ assumed that there is no impact to these facilities as a result of this rulemaking because of the regulations already in place that require controls to be in place to prevent and abate contamination. It is important to note that any releases from unlined landfills are regulated by the DWM-IHSB. Local Government Overview: Non-Discharge Permittees: The DWQ Aquifer Protection Section (APS) regulates non-discharge permitting by rules in 15A NCAC 2T and 15A NCAC 2L The DWQ-APS identified and contacted all fifteen persons with active permits to discharge wastes onto or below land surface (non-discharge permits) that have monitoring requirements for arsenic in their respective permits. Contact was made to these persons to request specific information on what permittees believed would be the effect of changing the groundwater quality standard for arsenic. Letters were sent to the permittees and DWQ received only two sets of comments. Based on the information received from these two facilities, DWQ assumed that five of the facilities currently conducting land application of residual solids could be affected by the proposed change in the arsenic standard. Pretreatment Permitttees: The DWQ Pretreatment Program identified four sites that they believe might be potentially impacted by this rulemaking, all of which are municipal Publicly Owned Treatment Works (POTWs). Costs to these POTWs are anticipated to affect four (Winton, Candor, Edenton, and New Bern) local government budgets. The DWQ-Pretreatment Program requirements are in the 15A NCAC 2H rules and specify that persons who discharge waste into a POTW will not send wastes into that system that would create a contravention of state standards. The facilities impacted by this rulemaking are POTWs that conduct or require pretreatment of wastes containing arsenic from what are generally described as industrial customers. 4

7 State Government Overview: The Department of Environment and Natural Resources (DENR) will incur some costs from the proposed arsenic standard, mostly opportunity costs of labor from increased compliance monitoring and site visits. Other Potential Parties: Because arsenic was once used as a crop pesticide, DWQ contacted persons in the North Carolina Department of Agriculture & Consumer Services (NCDA&CS) Pesticide Section who regulate the labeled and non-labeled use of crop pesticides. The DWQ staff has had numerous discussions with the Pesticide Section and they have not identified any sites that would be impacted by the rule proposal. The Pesticide Section does not have regulatory authority to cleanup pesticides and refers all sites that require cleanup to appropriate agencies. The Division of Environmental Health (DEH) Onsite Wastewater Programs that permit large capacity septic systems was contacted to determine if any of these operations would have significant impact as a result of the proposed rule. No sites were identified. Based on DWQ outreach activities, the following table summarizes the potentially regulated parties that were identified and the number of exiting facilities potentially affected by the proposed rule change: Table 1: Summary of Outreach Information Existing Facilities Possibly Affected Private Sector Coal Fired Plant Facilities 14 Treated Wood Facilities and Users 27 DWM-Inactive Hazardous Sites Branch 3 DWM-Hazardous Waste Section 17 Local Governments Non-Discharge Permittees 5 Pretreatment Permittees 4 Total 70 The net present value of costs to all affected parties, including the private sector, local governments, and state government, is $219 million, which includes $197 million of costs to the private sector, $23 million of costs to local governments, and $254,000 in costs to the state government. See Table 2 for costs for each regulated party and activity for ten future years. Please note that future costs are discounted at a 7% annual rate. 5

8 Table 2: Annual costs average $12M (discounted $, thousands) Private Sector FY FY FY FY FY FY FY FY FY FY Coal-fired Power Plants Investigation Remediation ,254 16,125 15,071 14,085 13,163 Total ,254 16,125 15,071 14,085 13,163 Treated Wood Facilities Capital 4, O&M Total 4, DWM IHSB Sites Installation O&M Total DWM HWS Sites Installation 2, O&M Total 3, Total for Private Sector 8,609 2,930 2,823 2,717 2,614 19,196 18,005 16,887 15,839 14,855 Local Governments Non-Discharge Permittees Gastonia Thomasville Marion Elizabeth City Raleigh 1,234 1,153 1,078 1, Total 1,725 1,612 1,507 1,408 1,316 1,230 1,149 1,074 1, Pretreatment Permittees Winton Candor Edenton New Bern Total Total for Local Governments 1,990 2,107 1,969 1,840 1,720 1,607 1,502 1,404 1,312 1,226 State Government DENR Corrective action plan Site visits Total Total for State Government Total for All Entities 10,685 5,053 4,807 4,572 4,347 20,816 19,518 18,302 17,161 16,091 6

9 III. Assumptions, Baselines, and Limitations Assumptions There is uncertainty regarding the actual health effects of the presence of arsenic in groundwater and the costs included because of steps required to meet the proposed standard of 0.02 ppb. To estimate benefits and costs of changing the arsenic standard, certain simplifying assumptions must be made. The most significant of these assumptions are: 1. There are 2.7 million NC citizens that consume groundwater. 52% of NC s population depends upon groundwater for its drinking water supply, and an estimated 2,700,000 residents are served by privately owned individual wells. 1,2 It is expected that most of the benefits of this new standard will be benefits to those citizens who are served by private wells. 2. Citizens that consume groundwater consume 2 liters/day, which is the recommended amount of fluid intake to replace lost fluids. This is probably an overestimate of the actual consumption of groundwater by citizens. 3. The dose/response curve for arsenic carcinogenicity is linear. EPA s estimate of arsenic carcinogenicity in the IRIS system is based on this assumption. The World Health Organization, however, maintains that there remains considerable uncertainty over the actual risks [of arsenic exposure] at low concentrations. 3 To estimate health benefits when faced with this uncertainty, it is assumed that the dose-response curve is indeed linear. 4. Arsenic contamination from coal-fired power plant and treated wood sources results in concentrations below 50 ppb and above 0.02 ppb. Power plants and treated wood sources may contaminate groundwater with arsenic, but the actual level of contamination is uncertain. The costs outlined in sections VI.a and VI.b result from steps required of coal-fired power plant owners and treated wood producers and users to prevent the contamination of groundwater with arsenic. Therefore, this analysis assumes that the contamination resulting from these sources is below the current standard of 50 ppb but above the proposed standard of 0.02 ppb, and that the new standard would require elimination and/or prevention of this contamination. 5. Naturally-occurring arsenic does not contaminate groundwater to above a concentration of 0.02 ppb. DENR rules allow for the existence of naturallyoccurring arsenic in groundwater, and detection of naturally-occurring arsenic concentrations does not constitute a violation of the rule. In 90% of groundwater samples, the US Geological Survey (USGS) did not detect arsenic concentrations exceeding 1 ppb (see Baseline, below). 4 It is reasonable to assume, therefore, that naturally-occurring arsenic is not a significant contributor to groundwater contamination in NC. 1 North Carolina Groundwater Association, < 2 US Geological Survey, March 2004 Report on 2000 Water Use, at < 3 WHO Arsenic in Drinking-Water, Background document for development of WHO Guidelines for Drinking-water Quality, p < 4 < 7

10 6. Pump and treat remediation technology is able to reduce arsenic concentrations to below 0.02 ppb. Some of the cost estimates herein are based on the purchase and operation of pump-and-treat technology, which has not yet been shown to be able to reduce arsenic concentrations in water to the level of the proposed standard. For the purposes of this analysis, though, it is assumed that this technology has this capability, or that in the future, technology of a similar cost will exist that will have this capability. Baseline Establishing a baseline for arsenic in NC groundwater is problematic, as extensive data on the current concentration of arsenic in NC does not exist. To quantify the effects of the rule change, two potential baselines have been identified: Baseline 1: Worst-Case Scenario. In this baseline, 100% of NC citizens that consume groundwater are consuming groundwater containing the highest currently allowable concentration of arsenic, 50 ppb. The Division of Waste Management, a state agency which regulates the cleanup of contaminated sites, reported that eight of its sites currently have arsenic above 50 ppb. It is also important to note that because the arsenic standard is currently 50 ppb, sites with arsenic groundwater concentrations below 50 ppb are not being actively regulated or tracked. Baseline 2: Arsenic exposure consistent with USGS sampling. The USGS analyzed arsenic in groundwater in the US, including a database of arsenic concentrations in groundwater samples drawn from over 20,000 wells, including 148 wells in NC. 5 The 148 groundwater samples from NC, drawn between 1988 and 1996, ranged from 21 ppb to less than 1 ppb. Two samples contained approximately 20 ppb, 14 contained between 10 and 1 ppb, and the remaining 132 samples contained less than 1 ppb. Therefore, we assume for Baseline 2 that arsenic is distributed similarly throughout the state, and that the groundwaterconsuming population is exposed to arsenic as follows: 1% of the population is exposed to arsenic at 20 ppb, 10% of the population is exposed to arsenic at 10 ppb, and 89% of the population is exposed to arsenic at 1 ppb. Baseline 1 is certain to overestimate the arsenic exposure to the groundwaterdrinking population, and Baseline 2 may underestimate exposure. The USGS samples used for Baseline 2 are not widely distributed geographically, and were instead clustered around Charlotte, the Piedmont Triad region, and the coastal counties. Sampling groundwater from other areas of the state would indicate whether exposure is likely to be higher than in Baseline 2. However, it is reasonable to assume that the actual current exposure of the NC population to arsenic lies somewhere between Baselines 1 and 2. 5 < 8

11 Figure 1: Concentration of Arsenic in USGS NC Groundwater Samples Source: Arsenic in Ground-Water Resources of the United States, USGS, May Limitations of this Economic Analysis and Fiscal Note Private Sector - Coal-Fired Power Plants: DWQ examined non-discharge permits with monitoring requirements for arsenic to determine if there were any current environmental cleanup activities related to arsenic contamination. DWQ-APS reported that that there are no pump and treat cleanup activities underway for sites under the APS purview. In addition, there are no nondischarge permits with monitoring requirements for arsenic that 1) have received Notices of Violation related to arsenic outside compliance boundaries or 2) are being required to conduct activities to prevent or cleanup exceedences of groundwater quality standards as result of the permitted operation. Progress Energy and Duke Energy belong to the Utility Solid Waste Activities Group (USWAG). This is an industry trade group whose stated purpose is to work with state and federal authorities at developing management strategies for the beneficial reuse of and disposal of coal combustion products. In addition to this activity, USWAG is committed to working with state agencies on protecting groundwater while avoiding incremental regulatory compliance costs. It is under the umbrella of USWAG that the power utilities have been having discussions with various state agencies on the management and regulation of coal combustion products and coal piles in the state. The majority of permits for ash ponds are under the National Pollutant Discharge Elimination System (NPDES) to protect surface waters. There are eight NPDES permits at coal ash ponds identified by DWQ-APS at Progress Energy properties. Duke Energy has seven NPDES permits for ash ponds. The existing federal policy for coal fly ash basins has been to have self-directed groundwater monitoring and the DWQ-APS is collecting voluntary data at these permitted facilities. 6 Available at: < 9

12 From the limited voluntary data available, one Duke Energy facility, Belews Creek Steam Station (Permit Number NC ), has had an exceedence of the current groundwater quality standard in one monitoring well at 63 ppb. Discussions with Duke Energy staff revealed that the arsenic found here is believed to have come from nearby landfill operations where fly ash is disposed of and not from storage operations at the pond. According to Duke Energy, the company has already initiated actions to address this circumstance including closing of this landfill and activities to address remediation of this landfill falls under a DWM permit. In addition, since this is an exceedence of the current groundwater quality standard the Duke Energy staff does not believe it is an outgrowth of changing the standard. Therefore, remediation activities at the Belews Creek Steam Station are not a result of this rule proposal. Staff that manages the NPDES activities were asked to determine if they could identify any other permits with groundwater monitoring conditions for arsenic, and no other permits were identified. One permitted facility owned by Progress Energy (NC Sutton Steam Electric Plant), has permit conditions for monitoring arsenic in groundwater at this time. Progress Energy has examined its own monitoring data and found that the exceedence occurred at a monitoring well located at the review boundary for the facility. Review boundaries are established under 15A NCAC 2L.0108 at the midway point between the waste boundary and the compliance boundary for a non-discharge permitted facility and are intended to give permittees a location to determine if the waste or effluent will impact groundwaters at or beyond the compliance boundary. The company conducted a review of the monitoring data and groundwater modeling and determined that there would not be any impacts from the current standard. The company believes that there could be exceedences at this site if the standard is lowered or made more restrictive. DWQ received additional volunteer monitoring data from Progress Energy on its Sutton Steam Electric Plant. This data shows that concentrations in one well are above the current standard. However, no Notices of Violation have been issued for this permit as of December 19, 2007 and the company is currently not required to take any corrective actions. A change in the standard may necessitate additional monitoring or, if exceedence occurs at the compliance boundary, may require some remedial action such as cleanup. The DWQ-APS is not able to predict the future status of this site once the new standard goes into effect. The DWQ-APS has noted that many of the activities discussed in the utility companies comments are activities that may be required at some facilities that have current permit requirements for arsenic. If these facilities have exceedences of the present groundwater quality standard of 50 ppb, then these facilities are potentially subject to corrective action with respect to their ash basins. Those actions that require costs for equipment and remediation due to exceedences of the current standard of 50 ppb are not additional costs or costs as a result of the proposed standard. Costs associated with lowering the standard to 0.02 ppb could show up as costs for additional equipment or longer cleanup periods. It is impossible to determine precisely which of the facilities could be affected based on the limited voluntary data but many may already be technically in exceedence of the current standard; therefore, costs estimated by the 10

13 utilities for the proposed standard due to lowering the current standard are worst-case estimates and could be significantly lower. Progress Energy and Duke Energy have submitted information that reflects their best available estimate of the cost that the utilities could potentially have from operations related to coal fly ash disposal and storage and coal pile storage and these estimates are included in this economic and fiscal analysis. The cost numbers represent both companies best estimates of what could happen if all sites identified by them came under cleanup requirements as a result of changing groundwater quality standard for arsenic. Private Sector - Treated Wood Facilities and Users: DWM-HWS was contacted concerning the effects of changing the standard. Only one wood treatment site was identified as potentially being affected by lowering the current standard. This site was identified as a RCRA-Treatment Storage and Disposal Facility (TSDF) and is listed in DWM-HWS records as Durable Wood. Monitoring records indicate that this site would likely fall under cleanup requirements if the standard were to change. There are no other known facilities in North Carolina that would be impacted by the rule change. The staff believes that the Treated Wood Council has submitted its best estimate of what are the potential costs to the wood treatment industry, if sites they have identified came under cleanup requirements as a result of changing the standard. With respect to costs to wood power poles, it is possible that not all sites considered in Duke Energy s analysis would need to implement cleanup using pump and treat technology. The decision to implement power pole replacement would be based on site-specific information such as impacts to receptors (that is, water supply wells) or a judgment by Duke Energy that there is a need to remove poles to prevent impacts. Duke Energy has submitted information that reflects their best available estimate of the costs related to wood treated with arsenic; however, these costs are not included in the economic analysis and fiscal note. Private Sector Division of Waste Management Sites: There are 134 sites that DWM IHSB oversees the regulated parties efforts to address contamination of metals at sites. There are 100 facilities required to meet DWM- HWS requirements where metals have been released. Therefore, the total number of sites that require cleanup of metals is 234 sites. Of these sites, the DWM-IHSB believes that eight (8) of the 134 sites have arsenic contamination, which is about 6%. DWM-HWS believes that twenty-eight (28) of its 100 sites are known to have been addressing arsenic contamination or could potentially do so once the groundwater quality standard changes to the proposed number. This number represents 28% of its sites. Of the 234 metals sites in the DWM databases, the sites may be: Recent releases that have been assigned incident management numbers by DWM; 11

14 In the process of assessment by responsible parties to determine the potential threat to health and the environment; Under assessments to determine the necessity for cleanup or other corrective actions; Assessed by one or more responsible parties, but cleanup plans have not been completed or approved; Under a corrective action plan other than a pump and treat cleanup. It is conceivable that a number of these sites will never see this cost of change in the standard because cleanup via pump and treat may be discontinued under applicable rules before remediation reaches a groundwater quality standard. These locations include groundwater contamination incidents that are at such levels as to require monitoring only, soil remediation without the need for groundwater cleanup, cleanup under 15A NCAC 2L.0106(k), (l) and/or (m), or a variance under 15A NCAC 2L.0113; In the process of implementing corrective action prior to the 2007 DENR reorganization but now fall under cleanup guidelines in the DWM IHSB that allow for the cessation of pump and treat cleanup, which means they are no longer pursuing cleanup; A facility that is addressing contamination of metals other than arsenic such as Chromium or Lead and therefore the change in the arsenic groundwater standard in 15A NCAC 2L.0202 has no cost impact; Releases under a corrective action plan where concentrations have risen and will require additional corrective action; and/or Sites that have met regulatory closure requirements or have been cleaned up to the standards and were closed by the DWQ prior to the 2007 DENR reorganization of certain incident management responsibilities. It is important to note that the databases are not specific enough to definitively determine if a particular site has arsenic contamination. It is possible that arsenic may appear at sites other than those discussed. Substances could appear in co-mingled plumes of groundwater contamination from a number of sources. These plumes arise when multiple releases of either product or waste occur together or migrate into each other in the groundwater or the subsurface. None of the databases from any state agencies provide sufficient detail to determine such sites. Another consideration is that other substances besides arsenic that are present in these plumes may drive a pump and treat cleanup such that remediation continues beyond the projected cleanup period and an evaluation of costs specifically for arsenic would not be an additional cost. It should also be noted that groundwater contamination at some of the sites may be of such magnitude that cleanup to the 15A NCAC 2L.0202 groundwater quality standards will not occur within a definable time. A few sites may apply for regulatory variance under 15A NCAC 2L Some sites may need to clean up contaminated groundwater indefinitely. The progress of cleanup is affected by hydrogeologic conditions in the subsurface, solubility of the contaminant, the tendency for the substance to degrade or attenuate, 12

15 dilution, the effects of rainfall, and many other site-specific factors. Contaminants at some sites will be reduced at a faster rate than at other sites. These considerations are mitigating factors that will reduce the cost for some responsible parties because the rate of cleanup to appropriate regulatory closure levels or to a groundwater quality standard will vary from site to site. Not enough information is available to determine a dollar amount on these mitigating factors. Three existing cleanup sites for arsenic contaminated groundwater were identified by the DENR IBEAM Database and the Regional Offices and were transferred from DWQ to DWM-IHSB as a result of the 2007 reorganization. It is possible that some transferred sites may fall under rules and practices of the DWM-IHSB program and may not need to continue to implement the cleanup requirements of 15A NCAC 2L If any of these sites fall under the requirements of the DWM-IHSB, it is possible that they could suspend pump and treat cleanup, conduct additional assessments, and/or apply land use controls in lieu of some active cleanup activities for arsenic. A variance pursuant to 15A NCAC 2L.0113 may be pursued as a means of allowing residual contaminant levels if the application of best available technology is no longer feasible for cleanup for sites that fall under North Carolina General Statute (e). It is possible that the seventeen sites or a portion of them may not necessarily need to proceed with pump and treat cleanup to address arsenic levels. DWM-HWS has identified an alternative technology called permeable reactive barrier with zero valance ion and this technology has been used at certain hazardous waste sites in North Carolina for approximately ten years. The typical site where this technology is generally applied is where the substances are located in a small area and are near the ground surface. The DWM-HWS did not have any information on which of the seventeen sites this technology could be applied because reviews would need to be conducted to determine its applicability to each site. Based on the fact that pump and treat is generally accepted as the best available technology for most situations, it is assumed that all seventeen sites will be using pump and treat cleanup. Note that initial assessment costs due to a release are not included because these costs would be required regardless of the standard. The purpose of the initial assessment is to ascertain if a release could have potentially impacted groundwater above a standard. Once it has been established that groundwater has been impacted above the standard then a corrective action plan would be required detailing how the contamination will be delineated and what corrective action is necessary to remediate the contamination. Once it has been determined that groundwater remediation is required, the revised arsenic standard could have an impact on installation of a remediation system and yearly operation and maintenance costs of the system. Local Governments - Non-discharge permittees: DWQ-APS data shows fifteen permitted sites have monitoring conditions for arsenic. Not all sites that may have arsenic in waste streams are monitored for that substance. Arsenic could also enter the waste stream through waste management operations from adjacent properties, which could get into wastewater disposal systems. If 13

16 a release of arsenic occurred from these operations such that the substances were to cause an exceedence of the groundwater quality standard at a permitted facility beyond the compliance boundary or the migration of those substances could result in a violation of the standard, cleanup activities would be required. Incidents involving arsenic that require cleanup from non-permitted activities unrelated to non-discharge operations could also occur on the permittees property. Typically, if an incident occurs the DWM is the agency providing regulatory oversight for groundwater cleanup. The exception would be if an incident occurred on property where the DWQ granted a non-discharge permit. In this situation, the cleanup would generally be handled as a separate activity from a permit under the DWQ-APS. Regional Office staff was contacted to determine if they know of any monitoring wells impacted, or Notices of Violation for arsenic at permitted facilities or any pending actions to require cleanup outside of compliance boundaries for arsenic at any facility. With the exception of one permit (City of Shelby: Water Treatment Plant Water Quality Permit NC ) there are no violations of the groundwater quality standard for arsenic at the compliance boundary for currently permitted non-discharge facilities. Since there are already exceedences of the current standard at the City of Shelby and it is not envisioned that the permittee would be required to take any additional actions than are already being pursued, there is no additional impact to the City of Shelby s permit. Note that there are a number of other substances at this facility that could potentially drive regulatory actions and cleanup activities. In addition, regional office staff provided information that the monitoring requirements for arsenic at Townsend Farms Incorporated (WQ ) was removed due to a number of years of data showing concentration values below detection limits. The EPA has developed standards for acceptable soil concentrations for metals derived from a risk assessment as described in A Guide to the Biosolids Risk Assessments for the EPA Part 503 Rule, published in September 1995 (EPA/832-B ). This risk assessment was used to establish the 40 CFR Part 503 ceiling and cumulative pollutant loading rate limits. EPA determined ceiling and cumulative loading rates by conducting risk assessments for 14 exposure pathways identified for agricultural land and 12 exposure pathways identified for nonagricultural land. The risk-based models were designed to determine a safe level of risk for highly exposed individual (HEI) to the pollutants of concern. The ceiling and cumulative pollutant-loading rates were established as the most limiting rate determined from the risk assessments from the exposure pathways. A description of models used for each pathway analyzed in the risk assessment are included in the guide, unfortunately the pathway in question (pathway 14: Sewage Sludge Soil Groundwater Human) was omitted from the document available on the EPA website. DWQ-APS has performed an extensive literature search and contacted the USEPA in an attempt to obtain the missing information and to evaluate the process by which the agency performed the risk assessment. At this time, DWQ-APS has been unable to obtain the missing technical documentation for analyzing the exposure pathway 14

17 of human drinking water from wells contaminated with pollutants leaching from sewage sludge, and ongoing attempts to acquire information from the USEPA have yet to produce sufficient information. The APS staff believes that if the groundwater quality standard for arsenic is lowered there is a potential to impact the arsenic ceiling or cumulative concentration limits for land application of residuals. For this fiscal analysis, DWQ staff assumed that five of the six facilities identified that land apply residual solids would incur costs. These costs were estimated using information provided by the City of Gastonia for hauling residuals. Actual costs to these facilities may be higher or lower depending on the amount of residuals generated by each facility and the arsenic concentration detected in the residuals. Local Governments Pretreatment Facilities: The information in the document titled Proposed Arsenic in Drinking Water Rule Regulatory Impact Analysis June 2000 (EPA 815-R-00-13) focused entirely on the effect of changing the federal standard for drinking water from its previous concentration of 50 ppb liter to a new standard of 10 ppb (Federal Maximum Contaminant Level). It is important to observe that the characteristics of wastewater can vary considerably from drinking water that is processed from a surface water supply or from a groundwater supply. For wastewaters pretreated in advance of final treatment, the concentration of arsenic, chemical characteristics in the waste stream, and the presence of other substances may result in the necessity for more pretreatment and greater costs. These factors can affect the treatability and the cost of removing this substance from the waste stream in order to keep the waste effluent in compliance with permit conditions could be greater than shown. However, because the proposed groundwater standard of 0.02 ppb is below the federal drinking water MCL of 10 ppb, the costs at pretreatment could be a costsavings at the final water treatment plant. When the USEPA conducted rulemaking to develop the revised Maximum Contaminant Level for arsenic, they were required to look at treatability using existing technology and costs of treatment since these standards are focused on the establishment of standards for public water supplies. In developing the EPA 815-R document to assess the economics of a new federal drinking water standard, the EPA considered possible Maximum Contaminant Levels (MCLs) from 3 ppb to a maximum of 20 ppb. The typical Practical Quantitation Limit for arsenic is currently 5 ppb. 15

18 IV. Benefits A wide variety of adverse health effects have been associated with the chronic ingestion of arsenic, including both cancerous and non-cancerous. These health effects include cancer of the bladder, lungs, skin, kidney, nasal passages, liver, and prostate. Arsenic ingestion has also been associated with cardiovascular, pulmonary, immunological, neurological, endocrine, and reproductive and development effects. Further description of the health effects of arsenic can be found in the following documents: Arsenic in Drinking Water by the National Research Council (NRC, 1999), and the Agency for Toxic Substances Disease Registry s Draft Toxicological Profile for Arsenic (ATSDR, 1998, updated 2000). The non-carcinogenic health effects of arsenic ingestion are not considered in this analysis, as these generally occur at concentrations an order of magnitude higher than the proposed standard. The relative cancer risk of various concentrations of arsenic to the general public that consumes groundwater as a source of drinking water is demonstrated in Table 3. Table 3: Estimated Cancer Risks from Drinking Water (2 liters/day) Arsenic Conc. (ppb) Lifetime Lung and Bladder Cancer Risk Cancer Risk Category 50 1 in 30 persons Very High 20 1 in 75 persons Very High 10 1 in 150 persons High 1 1 in 1500 persons Moderate in 1,000,000 persons Low Source: NC Department of Health and Human Services - Division of Public Health February 20, 2006 The benefits associated with a reduction of arsenic in groundwater include a reduction in the adverse human health effects as describe above, and to a lesser degree, the cost of avoiding exposure (bottled water, an alternate water supply or water treatment system). The benefit of a reduction in the risk of adverse health effects also includes the avoidance of medical costs, the avoidance of pain and suffering associated with illness, the losses associated with risk and uncertainty of morbidity, and the reduction in risk of premature mortality. To estimate the number of cancer cases avoided, some assumptions about the efficacy of the new standard must be made: Scenario A: The rule change causes a reduction in groundwater arsenic concentrations to 0.02 ppb where concentrations currently exceed 0.02 ppb. Scenario B: The efficacy of the treatment and prevention options is assumed to be imperfect, and therefore technology does not allow remediation to a concentration lower than 1 ppb. Calculations combining these two scenarios with the two baselines defined above result in an estimate of 28 to 1,286 cancer cases avoided per year (see Table 4). To 16

19 narrow the range of cancer cases avoided, more accurate information on current arsenic levels in groundwater is needed. Also, please note that the calculations in Table 4 rely on simplifying assumptions, including that cancer risk is uniform over ages and populations. Any reduction in cancer cases per year would only occur after the new standard has been effective for a number of years. Reducing the concentration of arsenic in groundwater will take years, and the current NC population that drinks groundwater has already been exposed to existing arsenic contamination. Table 4: Between 28 and 1,286 cancer cases avoided per year Population Baseline After New Standard Exposed to Exposed to Baseline / Scenario # % Concentration (ppb) Cancers per Year Concentration (ppb) Cancers per Year Reduction in Cancers per Year Baseline 1, Scenario A (Most Optimistic) 2,700, , ,286 Total 1, ,286 Baseline 1, Scenario B (Optimistic) 2,700, , ,260 Total 1, ,260 Baseline 2, Scenario A (Pessimistic) 27, , ,403, Total Baseline 2, Scenario B (Most Pessimistic) 27, , ,403, Total

20 V. Policy Alternatives and Risk Analysis The federal government has lowered the federal drinking water maximum contaminant level, or MCL, from 50 ppb to 10 ppb. When establishing MCLs, the USEPA first sets a non-enforceable maximum contaminant level goal (MCLG), which establishes the contaminant level at which no known or anticipated adverse health effects occur. USEPA set an MCLG of zero for arsenic in drinking water systems based on its carcinogenic effects. USEPA then sets an enforceable MCL as close as technologically possible to the MCLG. When the USEPA conducted rulemaking to develop the revised MCL for arsenic, they were required to look at treatability using existing technology and costs of treatment since these standards are focused on the establishment of standards for public water supplies. In developing the EPA 815-R document to assess the economics of a new federal drinking water standard, the EPA considered possible Maximum Contaminant Levels (MCLs) from 3 ppb to a maximum of 20 ppb. EPA s MCL was established at 10 ppb in order to maximize health risk reduction at a level where costs and benefits are balanced. As defined in 15A NCAC 02L.0202 (d), the groundwater quality standards shall be established as the least of: 1. Systemic threshold concentration calculated as follows: [Reference Dose (mg/kg/day) x 70 kg (adult body weight) x Relative Source Contribution (0.10 for inorganics; 0.20 for organics)]/[2liters/day (avg. water consumption)]; 2. Concentration which corresponds to an incremental lifetime cancer risk of 1x 10-6 ; 3. Taste threshold limit value; 4. Odor threshold limit value; 5. Federal maximum contaminant level; or 6. National secondary drinking water standard. Unless the EMC amends the rules to change the current requirements for establishing groundwater standards, cost and other economic factors cannot be considered when establishing a groundwater standard. However, other applicable 2L regulations do allow for economic and technical feasibility consideration when a party is required to remediate groundwater that has been contaminated above a standard. For example, 15 NCAC 02L.0106 states that where groundwater quality has been degraded, the goal of any required corrective action shall be restoration to the level of the standards, or as closely thereto as is economically and technologically feasible. In addition, 15A NCAC 02L.0113 allows the EMC to grant variances to the groundwater rules. Some environmental cleanup programs in the North Carolina Department of Environment and Natural Resources (NCDENR) Superfund Section are currently requiring groundwater cleanup to the arsenic MCL of 10 ppb, rather than the current 2L groundwater standard of 50 ppb. The MCL is considered to be an applicable or relevant and appropriate requirement by cleanup programs with USEPA oversight and is more protective of human health and the environment. It is interesting to note that one of the criteria for establishing a 2L groundwater standard is the MCL. 18

21 To get a general idea of how other states were addressing arsenic in groundwater, thirteen states (AL, CT, FL, GA, IL, MD, MA, MS, NJ, SC, TN, VA, and WI) were surveyed. The results from the survey show that five of the thirteen states use the federal MCL of 10 ppb as their groundwater standard, five (including NC) are still using the outdated federal MCL of 50 ppb, one (NJ) has the same health-based standard as proposed by NC of 0.02 ppb and two calculate a risk-based groundwater standard on an as-needed basis. It is interesting to note that many states adopt the federal MCL as their state s groundwater standard. While the proposed groundwater standard for arsenic has been established at 0.02 ppb, most laboratories, including the DWQ laboratory, are only able to reliably detect and quantify arsenic concentrations in groundwater at 5 ppb. This quantifiable concentration is referred to as the practical quantitation limit or PQL. Per 15A NCAC 2L.0202 (b), where the standard for a substance is less than the practical quantitation limit, the detection of that substance at or above the practical quantitation limit constitutes a violation of the standard. Therefore, until analytical technology improves, for all practical purposes the groundwater standard is the PQL. The lung and bladder cancer risk at an exposure concentration of 5 ppb is approximately 1 in 300 persons. If the standard is reduced to 0.02 ppb it will provide an incentive for analytical labs to improve their analytical capability and lower the arsenic quantitation limit. As the PQL is lowered, more health benefits will be realized. 19

22 VI. Private Sector Impact a. Coal-Fired Power Plants In the fall of 2006, the DWQ staff conducted direct outreach to electric utilities (Progress Energy Incorporated of the Carolina s (Progress Energy) and Duke Energy Corporation (Duke Energy)) due to concerns expressed by the utility companies that the proposed change in the groundwater quality standard for arsenic has the potential to require greater monitoring, regulation, and reengineering of existing coal ash ponds and changes to regulation of coal product piles stored on site that could result in significant costs to their operations. The industries submitted direct comment to DWQ including cost estimates of what they believe could be the impact from the proposed standard change. There are fourteen facilities that the utilities believe could potentially be impacted by a change in the groundwater quality standard for arsenic. Progress Energy operates 16 power plants in North Carolina with a total power generating capacity of 11,000 megawatts, and seven of these facilities are coal fired plants. Duke Energy operates a mix of power production operations including nuclear, hydroelectric and coal fired plants, and seven of these facilities are coal-fired utility plants. The total customer base for the Duke Energy Corporation includes 3.9 million customers of which 2.2 million of these persons reside in North Carolina. The power companies believe that a lowered standard could impact costs with respect to the storage of fly ash in permitted ponds or basins and the management of on-site coal product. On November 30, 2006, Progress Energy submitted comments to the DWQ-PLS staff. On January 5, 2007, Duke Energy submitted comments to the DWQ-PLS staff. Discussion of Cost Estimates to Utilities that use Coal for Power Generation: Fly-ash pond structures are used by coal-fired operations to provide a place for storage, disposal and retrieval of fly-ash by-product generated by the burning of coal. The average concentration of arsenic in coal from the United States is 24,000 ppb. During combustion, most of the arsenic contained in coal is transformed from a solid phase to a gaseous phase. As the flue gas cools, the arsenic condenses and adsorbs on fly ash particles. Various types of air pollution control equipment remove the fly ash from the flue gas. As a result, 90 to 100 percent of the arsenic contained in the coal is captured in these coal combustion products (e.g. fly ash, bottom ash, and flue-gas desulphurization sludge). Some of these coal combustion products may be beneficially reused by the utility. They may also be disposed of in on-site ponds or landfills. According to information submitted by both Progress Energy and Duke Energy the size of these fly ash basins can range from four acres to 600 acres per site. With respect to fly ash ponds and basins, the potential costs that the utilities believe would come from the proposed change arise from the requirement to conduct groundwater monitoring to determine if there are exceedences of the standard for arsenic. In addition, they could be required to change the manner in which these products are stored and handled at these sites. If the change in the standard resulted in non-compliance with the standard and/or violations of existing permit conditions at the compliance boundaries for coal fired utilities, the power companies believe that they may have to do the following: 20

23 Significantly expand groundwater monitoring at permitted facilities that presently do not require monitoring under state permits. The utilities believe that monitoring could be needed to determine if a revision to permit conditions would be required; Abandoning and possibly needing to install impervious caps over ponds; Conversion of wet ponds, basins and impoundments to dry ash handling; Groundwater remediation (i.e. the implementation of pump and treat cleanup at or beyond compliance boundaries or non-discharge facilities or cleanup at waste management facilities); Soil and or subsurface remediation and disposal; Building new lined landfills to dispose of fly ash materials; and/or Installation of physical barriers to contain or divert groundwater movement away from ash ponds and basins. The power companies also expressed concerns about the effect the proposed standard may have on the permitting of coal storage piles. Coal storage piles are used to store raw fuel available for coal power plants. Power utilities typically store coal at each power plant and the size of these piles can range from four acres to fifty acres. Surface runoff from these piles goes to state permitted National Pollutant Discharge Elimination System (NPDES) facilities. If groundwater monitoring were required, this may result in the necessity to conduct activities to prevent migration of rainwater and contaminants from moving through coal piles. The means by which the power utilities believe this can be accomplished is by placing an impermeable liner beneath these coal piles to prevent migration of precipitation to the subsurface. Another alternative may be installing impervious covers over piles to prevent precipitation from causing the migration of substances from coal piles into the subsurface and groundwater. The utilities believe this may be necessary to prevent the movement of arsenic into the subsurface in order to prevent potential exceedences of the groundwater quality standard of 0.02 ppb of arsenic. Considering the size of some of these coal piles, this cost could be significant. With respect to fly ash ponds and coal piles, both Progress Energy and Duke Energy commented that there would be additional investigative costs to determine the extent of groundwater contamination if monitoring were required at all fourteen of these coal fired utility plants. In developing these estimates, Progress Energy s projected cost is expressed as a total cost to all of its seven (7) coal power generating facilities. The estimates were further broken down in a December 7, 2006 follow-up Potential Investigation Costs: $200,000 (initial) to $400,000 (detailed) per facility for seven facilities = $1.4 million to $2.8 million Installing an Impervious Liner Beneath a Coal Pile: $135,000 per acre for seven piles averaging 12.5 acres each = $12 million Capping ash ponds: $50,000 per acre for 14 ponds averaging 76 acres each = $53 million 21

24 The further stated that other costs in the November 30, 2006 letter from Progress Energy were based on anecdotal information. There was no attempt by Progress Energy to assess an annual cost due to their view that there are numerous uncertainties associated with the data submitted and costs shown should not be considered definitive. The following table summarizes Progress Energy s best estimate of the total costs to their respective operations: Table 5: Cost to Progress Energy Coal-Fired Plant Operations Activity Cost Time to Complete Potential Source Investigation Costs $1.4 to $2.8 M 5 years Installing an Impervious Liner Beneath Seven Coal Piles $12 M 15 years Capping 14 Ash Ponds $53 M 15 years Total $66 to $68 M 20 years In a subsequent letter, Duke Energy Corporation elaborated on its January 5, 2007 letter with a follow-up cost summary as shown in the following table: Table 6: Cost to Duke Energy Corporation Coal-Fired Plant Operations Activity Cost Time to Complete Source Investigation Costs $1.5 to $2.5 M 5 years Coal Pile Remediation/Liner Costs $25 to $30 M 15 years Dry Ash Handling and Landfilling & Coal Combustion Product Cap/Source Removal/ Remediation Costs $260 M to $280 M 15 years Total $285 M to $315 M 20 years Note that investigation and remediation activities could occur concurrently; however, for illustrative purposes they have been broken down into several components. To obtain the best estimate of total cost to utility companies as a result of the proposed rule, costs were broken down into the number of years it would take to complete the specific tasks. For example, the assumption is made that source investigation will take approximately five years to complete. It is further assumed that the next 5 to 15 years will be spent installing liners for coal piles, caps to ash ponds and conducting other remediation as needed based on the results of the investigation. By dividing the average investigation costs by a five year time period, DWQ projects that $0.8 million will be 22

25 spent per year for the first five years. By dividing the total remediation costs by a 15 year period DWQ projects that $24.2 million will be spent per year for the next 15 years. Remediation costs include Coal Pile Remediation/Liner Costs, Dry Ash Handling and Landfilling & Coal Combustion Product Cap/Source Removal/Remediation Costs (see Table 7). Table 7: Costs to Coal-Fired Power Plants (discounted $, thousands) Fiscal Year Investigation Remediation ,254 16,125 15,071 14,085 13,163 Total ,254 16,125 15,071 14,085 13,163 Progress Energy also submitted comments concerning the effect the rule might have on the use of organic arsenic pesticides used as herbicide treatments for road cuts and power substances; however, Progress Energy could not offer any cost figures related to this. 23

26 b. Treated Wood Facilities and Users A non-profit organization known as the Treated Wood Council, Incorporated (TWC) believes that the proposed change in the groundwater quality standard for arsenic will result in a cost to its members. Due to the fact that arsenic compounds are used to treat wood and prevent degradation of this product from wood-destroying insects, this industry can potentially have cleanup responsibilities for releases at their respective facilities. The TWC submitted information and figures showing the potential impacts to 27 member businesses that could be held responsible for cleanup. DWQ was contacted on August 9, 2006, by the TWC with concerns about the proposed standard. The TWC is a wood products industry group that assists its members by examining government policies, rules, and actions that may affect the interests of its membership, including persons who may be held responsible for cleanup of groundwater by the states. On September 22, 2006, the DWQ sent an outreach letter requesting assistance from the TWC in examining economic impacts of this rulemaking. As a result of these contacts, the TWC contracted AquAeTer Incorporated to analyze North Carolina rules and provide cost estimates to its members in North Carolina. In addition, Duke Energy expressed concerns about economic impacts related to treated wood. The company uses a water-borne preservative known as copper chromated arsenate (CCA) compound in wood poles used to distribute electricity. Duke Energy believes that lowering the standard may trigger regulatory review by the state at locations where its 330,000 power supply poles have been installed. Chromated copper arsenate (CCA) is used in pressure-treated wood to protect it from dry rot, fungi, molds, termites, and other pests. This wood is also used in decks, wooden playground equipment, picnic tables, gazebos, bridges, and other outdoor wood products. In February 2002 the U.S. Environmental Protection Agency (EPA) announced a phase out of the pesticide CCA, or chromated copper arsenate, an arsenic-based chemical mixture used to preserve so-called pressure-treated lumber. While these woods have been phased out for residential use in the US, they are still used for utility poles and industrial construction timbers. At the time of the phase out, EPA asserted that it does not believe there is any reason to remove or replace arsenic-treated structures, including decks or playground equipment (EPA, 2002). The environmental impact of chromated copper arsenate (CCA)-treated utility poles is linked to the possible soil and groundwater contamination with arsenic. However, it is not known to what extent groundwater could be impacted from CCA treated utility poles. Discussion of Possible Effects on Treated Wood Facilities and Users: The TWC stated that the direct impact to 27 treated wood sites would be $4,050,000. Assuming pump and treat cleanup would be required at all 27 sites, TWC based its conclusion on a capital cost of approximately $ 150,000 per site for construction of a treatment system. The TWC did not include in its total operation and maintenance costs. 24

27 The following table shows the potential capital costs of installing a pump and treat cleanup system to the 27 treated wood facilities and the estimated annual operation and maintenance costs of $37,000 per year for the system over a ten year period: Table 8: Costs to Treated Wood Facilities (discounted $, thousands) Fiscal Year Capital 4, O&M Total 4, Duke Energy Corporation stated that they use power poles treated with CCA, a water-soluble wood preservative. The company is concerned that this may result in greater liability and replacing poles could cost $100,000,000. This estimate was made with the assumption that the 330,000 CCA treated poles would be replaced with an alternative that costs approximately $300 per pole and specified in their response that replacement would be phased in over time. This cost represents labor costs for placing power poles into the ground and reconnecting power delivery lines. The type of pole that could be used to replace an existing CCA pole could either be a wooden pole that is treated with another substance such as Pentachlorophenol or the company could install concrete poles, if needed. In making this cost estimate, Duke Energy submitted a worstcase scenario stating that if power poles were replaced on an all at once basis it is estimated that the cost would be $1,650,000,000 to replace all 330,000 poles. Based on discussions with Duke Energy staff it is believed that phased-in replacement of power poles is a more likely set of circumstances. The requirement for Duke Energy to take action to replace wooden power poles would be based on individual site data showing the necessity to remove power poles to protect and prevent impacts to drinking water private wells, the discovery of arsenic in groundwater at concentrations requiring corrective action, and the schedule and timeframe for cleanup required by the state. If cleanup were required, state regulatory oversight would come from the various sections within the DWM. At this time, there are no known contamination incidents involving an exceedence of the current groundwater quality standard where power pole installation has occurred. Therefore, for purposes of this fiscal analysis the DWQ is not adding any costs to implement the rule from this potential source. 25

28 c. Sites Administered by NC Division of Waste Management North Carolina statutes and rules specify that persons who release substances into the environment that threaten groundwater quality, without a permit, are required to conduct corrective action. When a release of a substance occurs at a site and groundwater quality is threatened, an assessment of the extent and severity of the release is conducted to determine the threat to groundwater and public health. Corrective action is triggered by site evaluations and monitoring data that show concentrations of substances in groundwaters exceeding applicable groundwater quality standards. Corrective actions that a person, firm or corporation may be required to perform by the state might include but are not limited to: Removal of spills or releases of substances that may impact health and the environment in the present or future; The removal of the source of the contamination containing substances; The removal of materials that contain substances as wastes; Cleanup of soils that may impact groundwater. If conditions at a site warrant cleanup, a corrective action plan is implemented to remove or mitigate the threat. If a release of a contaminant to the environment exceeds a groundwater quality standard, the responsible regulated party is required to assess and conduct corrective action pursuant to the requirements of 15A NCAC 2L Costs to responsible parties as a result of changing a groundwater standard can occur from the following: Having to begin a cleanup because concentrations from the release exceed the groundwater quality standard and levels pose an unacceptable risk to public health and safety, if allowed to persist; Being required by the state to begin conducting cleanup due to the concentration of the substance exceeding the standard and the need to use best available technology to reduce contamination to the level of the standard; Being required to continue cleanup for a longer period of time, or to use better methods or additional technology as a result of the ineffectiveness of existing remedial actions, to reduce concentration levels to the more restrictive standard; or, Being required by the state to conduct or continue cleanup using more expensive technology due to the concentration of the substance exceeding the Groundwater Quality Standard because of impacts to receptors (i.e. wells, surface waters, basements). The 15A NCAC 2L rules require the use of best available technology where groundwater standards have been violated. Best available technology is often considered to be pump and treat technology. This technology is designed to remove the product and/or waste and reduce concentrations of substances in groundwater. In order to determine the cost to persons responsible for cleanup of releases as a result of revising the groundwater quality standard for arsenic, the cost of pump and treat cleanup needs to 26

29 be ascertained. The most direct means to do this is to determine the total number of sites impacted by a release of a given chemical constituent and the average cost of cleaning up that constituent, and obtain the average number of years it takes to get a site cleaned up. There are limitations to the type of information that can be obtained to develop fiscal and economic impacts. The following are important factors to consider in estimating cost impacts: Incident response databases at state agencies may not contain enough information to be useful in this analysis about the status of sites, types of substances that need to be cleaned up, and cleanup technology used. Readily available data may not show detailed information on which substances appear at what sites. Most databases do not tell us if a site is cleaning up groundwater with pump and treat or some other technology. General information about the type of release is shown in most databases. There is little consistency between state regulatory agencies with respect to the types of information collected. Although the groundwater quality standards in 15A NCAC 2L.0202 are used by various agencies as target cleanup goals, other narrative cleanup requirements of state regulatory agencies vary considerably. This is the result of requirements of state and federal laws, rules and guidance. For sites that fall under DWQ, responsible parties for these sites are required to remove sources of contamination and cleanup to the groundwater standard, unless that person s release can meet the attenuation requirements of a 15A NCAC 2L.0106 (k), (l) and/or (m). Similarly, the DWM-HWS uses the groundwater quality standards as cleanup goals at facilities it regulates. The DWM Superfund Section requires cleanup to contain contaminants on the National Priorities List of sites and state listed sites, based on federal laws and a priority system. The DWM Landfills Section requires mitigation or cleanup for decades since the source often cannot be removed and/or it is impractical to remove. The DWM Underground Storage Tank Section requires cleanup up until concentrations at a site reach risk-based levels in 15A NCAC 2L, Section The DWM-IHSB places sites for remediation on a priority list under applicable laws and guidance. Oversight is carried out with the intent of addressing the sites that pose the most impact or potential impact to private water supply wells, surface waters and other receptors to prevent health impacts. Responsible parties may demonstrate that cleanup using pump and treat would not be appropriate and allowing substances to exist at a site at either an alternate concentration level or the Practical Quantitation Limit is acceptable in accordance with applicable state rules and policies. For example, under 15A NCAC 2L.0106 (k)(l) and (m), a responsible party may request an alternate concentration level, allowing natural remedial processes to cleanup the site, or even site closure if certain criteria are met. Many of the sites that cannot reach the proposed standard for arsenic due to the limits of current technology may not necessary need to expend funds on pump and treat to conduct cleanup or continue cleanup. The actual duration of a groundwater cleanup using pump and treat technology varies based on many factors. The concentration of substances, vertical and lateral extent of contamination, solubility of substances, the ability of the substance to 27

30 naturally degrade or attenuate and the potential threat to groundwater and health all play a role in determining the time needed to cleanup a site. The best information available is from the Underground Storage Tank Section and shows that most pump and treat groundwater cleanups will take approximately 10 to 15 years, although many of these sites may never meet the 15A NCAC 2L.0202 groundwater quality standards. Because the duration of pump and treat cleanup varies, the overall cost for cleanup will vary from site to site. The best cost factors for sites under 15A NCAC 2L.0106 cleanup requirements were derived from information received from the Underground Storage Tank Section and that contact revealed that the average annual cost of pump and treat cleanup is $30,000 for operation and maintenance of the cleanup system. This cost figure is the best available figure for cleanup of sites where 15A NCAC 2L.0106 is being applied as the cleanup criteria. Prior to the 2007 reorganization of some cleanup responsibilities, sites remediated under the DWQ-APS were above ground storage tanks that released products and substances, which are similar to what is released from the typical underground storage tank. The UST Section is required to collect cost information for reimbursements out of the State Trust Fund. There is no state or federal requirement for other state agencies to collect this type of information. The best available cost figures for the implementation of pump and treat cleanup for hazardous waste sites comes from the Treated Wood Council Incorporated and was developed by AquaAeTer Incorporated. The contact revealed that the onetime estimated capital cost for installation of a pump and treated system was $150,818 and the average annual cost for operation and maintenance was $37,000 per year per site. Lowering of a standard could result in an increase in the number of years that a pump and treat cleanup operation is in place where a cleanup currently is underway. Therefore, the change could affect the overall cost of cleanup. There is no standard baseline data for the cost of cleaning up specific substances. The duration of cleanup is the most significant factor in determining costs. For the sites that are currently applying 15A NCAC 2L.0106 to clean up substances and that are under the purview of (recently transferred to) the DWM IHSB, it is possible to estimate the economic impacts to responsible parties based on number of sites where corrective action plans have been approved by state agencies. These are sites where groundwater cleanup is required using pump and treat technology, although the responsible parties may not have yet implemented cleanup. A factor in determining costs to responsible parties for cleaning up sites under 15A NCAC 2L.0106 is the time needed to remediate sites to the groundwater quality standard, or, in reality, the quantitation limit, for arsenic. The most significant factor in determining the final cost at a site is the duration of cleanup. At some pump and treat cleanup sites, remediation to groundwater quality standards may occur over a period of a few years due to the limited extent of contamination, local geologic conditions, rapid response by the person responsible for cleanup and other factors. At other sites the extent of contamination, complexity of the subsurface environment, and other factors may 28

31 influence the rate of cleanup such that a site may never reach the level of the standards in the foreseeable future. As a means of illustration, the USEPA has published a document titled Methods for Monitoring Pump-and-Treat Performance (EPA/600/R-94/123 June 1994). Figure 1-3 on Page 5 shows a general chart of the concentration versus pump and treat performance noted, reproduced below as Figure 2. This chart shows what is recognized by the USEPA as tailing and rebounding constraints of a typical pump and treat cleanup system. Tailing refers to the progressively slower rate of dissolved contaminant decline observed with continued operation of a pump and treat system. At many sites, the asymptotic residual often exceeds cleanup standards. Rebounding is an effect encountered once a site temporarily reaches the standards and the pump is turned off, concentrations may rise. It is for these reasons that state agencies have a variety of strategies to specify remedial methods that consider management solutions for groundwater contaminants other than pump and treat cleanup. Figure 2: Tailing and rebounding Source: Methods for Monitoring Pump-and-Treat Performance (EPA/600/R-94/123 June 1994) The UST Section administers the Commercial and Non-Commercial Leaking Petroleum Underground Storage Tank Trust Fund in North Carolina. According to information from the UST Section, the average time it takes to cleanup a site that has a groundwater standard is 10 to 15 years. Based on the DWQ monitoring information from previous variances to groundwater standards that have been previously approved by the EMC pursuant to 15A NCAC 2L.0113, the greatest reduction in cleanup occurs on the order of 80% to 90% within two to five years after cleanup begins using pump and treat technology. After that period, concentrations of remaining substances may be reduced by this technology at a significantly slower rate. At most sites, concentrations will fluctuate above the groundwater quality standard for a number of years before standards are met. The majority of corrective action plans that have been approved by the DWQ APS prior to the 2007 reorganization does not result in the cessation of pump and treat cleanup within the first five years after cleanup begins. Based on the best available data, cleanup using pump and treat technology will typically take at least 10 to 15 years. 29