Coal-Ash Spill May Cost Utilities Billions in Rules (Update1)

By Alex Nussbaum (New York), Christopher Martin (New York) and Daniel Whitten (Washington), Bloomberg, Dec. 31, 2008

U.S. power companies may face billions of dollars a year in new costs after last week’s coal- sludge spill in east Tennessee if the accident results in regulating their wastes as toxic.

The accident that unleashed a billion-gallon outpouring from a Tennessee Valley Authority power plant on Dec. 22 may revive efforts in Washington to tighten rules on so-called fly ash that’s laden with heavy metals, and other waste from coal- fired generators. The proposals stalled during the eight years of President George W. Bush’s administration.

Increased regulation would bring costs to upgrade or close more than 600 landfills and waste ponds at 440 plants nationwide. While the Environmental Protection Agency put the price tag at $1 billion a year in 2000, power generators predict the cost would be as high as $5 billion, said Jim Roewer, executive director of the industry-funded Utility Solid Waste Activities Group, in a telephone interview. Power generators and ash recyclers predicted a push in Washington for more rules.

“There have been a handful of smaller spills over the years, but nothing like this one,” said David Goss, director of the American Coal Ash Association in Aurora, Colorado, in a phone interview yesterday. “I expect the spill will raise a lot of questions about how coal ash gets stored. We could see new regulations at the federal level.”

The Senate Committee on Environment and Public Works will hold a hearing Jan. 8 on the Tennessee Valley Authority and the ash spill, the panel said today in an e-mailed statement. The authority is the largest public power company in the U.S.

AEP, Southern Co., Duke

New regulations would add to pressures facing generators of coal-fired power such as American Electric Power Co.,Southern Co. and Duke Energy Corp.,the biggest U.S. coal consumers. The industry already faces the prospects of new limits on emissions that contribute to global warming.

The spill at the TVA’s Kingston Fossil Plant, 35 miles southwest of Knoxville, deluged more than 300 acres of rural Roane County, destroying three homes and damaging 42 other properties. Authorities warned residents against using private wells or touching the ash, after tests found levels of arsenic and other metals above drinking water standards.

Advocacy groups say the power industry should be responsible for the air and water pollution its coal waste produces, as well as for accidents like the Tennessee avalanche, said Lisa Evans, a New York attorney for Earthjustice, a nonprofit environmental law firm. The EPA identified 67 sites with proven or suspected contamination in a July 2007 report that nonetheless rejected a call for hazardous-waste regulation, she said.

“Right now, the cost is being borne by communities, by people drinking contaminated water,” Evans said in a phone interview. “The cost should be internalized by the coal industry.”

Pressing Obama

Environmentalists plan to push the administration of President-elect Barack Obama to review coal-waste disposal rules, an issue the next president didn’t talk about during his campaign, Evans said. Democrat Obama’s transition team didn’t immediately respond to a request for comment.

AEP, the biggest producer of coal-fired energy in the U.S., stores ash both in wet slurry ponds like the one in Tennessee and in dry landfills, said Melissa McHenry, a spokeswoman for the Columbus, Ohio-based utility, in a phone interview.

“Some of these ponds have been operating for decades without a spill,” she said. “We have a regular inspection schedule for each site and the largest ones have instruments to tell us when there’s a problem.”

U.S. power plants produced 131 million tons of waste last year, a number expected to grow in coming decades with increasing demand for coal-fueled electricity and tighter controls on air pollution, said the Coal Ash Association’s Goss.

42% Recyled

About 42 percent of the waste is recycled into gypsum wallboard, cement products, landfill for construction projects and other secondary uses, a market of more than $1 billion annually, Goss said. The rest is stored.

An EPA report in 2000 found a quarter of retention ponds and 57 percent of landfills lacked liners to prevent pollution from leaking into nearby water supplies, though the 2007 follow- up study found such controls more common at newer sites.

Regulating the material as hazardous waste would require companies to add liners and make other improvements to their waste sites, or to ship the material to designated toxic-waste landfills. The EPA, under outgoing Democratic President Bill Clinton, stopped short of that step in 2000 while calling for nationwide standards for utility landfills and impoundments. The Republican Bush administration never acted on the recommendation.

Cause Unknown

With the cause of the Tennessee spill still unclear, the Obama administration shouldn’t rush to make changes, said Roewer, of the Utility Solid Waste Activities Group. The TVA sludge broke free after a retaining dam burst following heavy rains, a failure that wouldn’t have been prevented by a liner or other steps that a hazardous-waste designation would trigger, he said.

“This seems to be an engineering failure,” Roewer said. “I don’t think it represents a trend or an epidemic, nothing that would require federal intervention.”

Since 2000, the EPA has done “extensive technical work” to develop the still unpublished rules to regulate coal combustion waste as nonhazardous, EPA spokeswoman Latisha Petteway said in an e-mailed statement today.

“The serious spill at the Kingston plant reiterates the importance of carefully managing coal combustion fly ash,” Petteway said.

To contact the reporters on this story: Alex Nussbaum in New York; Christopher Martin in New York at.; Daniel Whitten in Washington at.

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