Analysis - The Institute for Southern Studies

Step 3. Calculate Future Impoundment Failure Avoided Cleanup Cost Benefits
After fitting a distribution of the number of releases likely to occur, EPA proceeded to combine these with the cost data presented in Step 1
above. This was done for the average case and three high-end cases (90 th , 95 th , and 99 th percentiles). For each case, the number of expected
releases seen in Exhibit 5B-4 below was divided by 50 to get the expected number of releases per year. These events were then multiplied by
their respective costs, and the catastrophic and significant release values were summed in each year.
Exhibit 5B-4
Projected Future CCR Impoundment Releases
Based on 15-Year (1995-2009) Period of Historical CCR Impoundment Structural Failure Cases
Type of CCR
Expected Number of Release Events
Assigned Cost
Impoundment Release 99 th %-ile 95 th %-ile 90 th %-ile Average Per Failure Event
Catastrophic 8 7 6 3 $3.0 billion*
Significant 27 24 22 17 $23.1 million
* Note: $3.0 billion is EPA’s initial “social cost” estimate assigned in this RIA to the December 2008 TVA Kingston
TN impoundment release event. Social cost represents the opportunity costs incurred by society, not just the monetary
costs for cleanup. OMB's 2003 "Circular A-4: Regulatory Analysis" (page 18) instructs Federal agencies to estimate
"opportunity costs" for purpose of valuing benefits and costs in RIAs. This $3.0 billion social cost estimate is larger
than TVA’s $933 million to $1.2 billion cleanup cost estimate (i.e., TVA’s estimate as of 03 Feb 2010), because
EPA’s social cost estimate consists of three other social cost elements in addition to TVA’s cleanup cost estimate: (a)
TVA cleanup cost, (b) response, oversight and ancillary costs associated with local, state, and other Federal agencies,
(c) ecological damages, and (d) local (community) socio-economic damages. Appendix Q to this RIA provides
EPA's documentation and calculation of these four cost elements, which total $3.0 billion in social cost. Appendix Q
to this RIA also provides an alternative, lower estimate of social costs, based on different modeling assumptions for
capturing such costs. This alternative analysis suggests that TVA’s cleanup costs alone may be close to the social costs
associated with the Kingston impoundment failure. EPA specifically requests comment on this social cost estimate,
and will continue to develop this estimate for the final rule.
However, EIA data indicate that there is a current trend among coal-fired power plants to switch from wet handling to dry handling. As seen
below in Exhibit 5B-5, this will lead to a decrease of approximately 300,000 tons being disposed of in surface impoundments per year, or
approximately 1.3% of the initial 22.5 million tons in 2005. Since the tons disposed of (and similarly, the number of surface impoundments)
likely relate to the number of releases, these decreases are accounted for by using 2005 wet tonnage as a benchmark and assuming the quantity
of wet tonnage declines 300,000 tons per year. The cost for each year is multiplied by the remaining percent still handled wet.
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