oversight

Water Pollution: Proposed Pretreatment Standards for Industrial Laundries

Published by the Government Accountability Office on 1999-01-20.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

      United States
GAO   General Accounting
      Washington,
                            Office
                    D.C. 20548

      Resources, Community,     and
      Economic Development      Division


      B-281557


      January 20, 1999

      The Honorable Bud Shuster
      Chairman, Committee on Transportation
        and Infrastructure
      House of Representatives

      Subject:     Water Pollution: Pronosed Pretreatment Standards for
                   Industrial Laundries

      Dear Mr. Chairman:

      The Clean Water Act authorizes the Environmental Protection Agency (EPA) to
      issue regulations that specify the extent to which industries can discharge
      polhrtants to public wastewater treatment facilities. These regulations-called
      “pretreatment” standards-are established when the agency determines that
      pollutants being discharged by an industry are passing through wastewater
      treatment facilities into surface waters or otherwise interfering with the
      treatment processes of these facilities.

      Pursuant to a January 1992 consent decree and subsequent agreements with the
      National Resources Defense Council, EPA published proposed pretreatment
      standards for industrial laundries on December 17, 1997. Through their cleaning
      processes, these laundries remove dirt as well as solvents, grease, and other
      pollutants from industrial textile items such as shop towels, printer towels, rags,
      and mats. Ultimately, the laundries discharge their wastewater through publicly
      owned wastewater treatment facilities. EPA and the Council agreed that the
      agency would take final action by June 1999. EPA anticipates either
      establishing standards or choosing a “no regulation” option by that date.

      Leading to its proposed pretreatment standards, EPA conducted years of
      technical and economic studies, including cost-benefit analyses of pollution
      control alternatives. The agency’s proposal stated that (1) pollutants were
      passing through wastewater treatment facilities and entering waters of the
      United States; (2) technology was available to laundries for removing the
      pollutants; and (3) the use of such technology was achievable economically for
      all but a small percentage of the laundries nationwide. In comments filed on

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the proposed regulation, the Uniform & Textile Service Association and the
Textile RentaI Services Association-two organizations representing industriaI
laundries-disputed EPA’s cost and benefit analyses. The two organizations
contended that EPA had underestimated compliance costs by a factor of at least
3 and overestimated benefits to an even greater extent. .’

EPA determined that the proposed regulation for industria.I laundries is subject
to the Unfunded Mandates Reform Act of 1995 (UMRA), which requires federal
agencies to conduct regulatory cost-benefit analyses under certain
circumstances and to select the “least costly, most cost-effective, or least
burdensome” regulatory alternative. ’ EPA prepared several documents
describing its cost-benefit analyses and stated in the proposed rule that it
believes it has satisfied UMRA’s requirements.

To aid in your oversight of water quality programs, you asked us to review the
dispute between EPA and the industrial laundry industry. You also asked us to
examine EPA’s implementation of UMRA. Specifically, we addressed three
questions in response to your inquiry:

     Why are there significant differences between EPA’s and the industry’s
     cost estimates of this proposed regulation?

     How did EPA estimate the benefits of the proposed ruIe and disclose the
     uncertainties associated with the accuracy of its estimates?

     How does EPA’s anaIysis support its belief that the agency has chosen the
     least costly, most cost-effective, or least burdensome regulatory
     alternative?

We briefed your staff on the results of our review on December 1, 1998. (See
enc. I for our results.)




‘The act requires each federal agency to assess, among other things, the costs
and benefits of any proposed or final rule expected to require annual
expenditures of $100 milhon or more by the private or nonfederal governmental
sectors. For final rules meeting these criteria, the agency must choose the least
costly, most cost-effective, or least burdensome regulatory alternative that
achieves the objectives of the rule, or publish an explanation of why such an
alternative was not selected.
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SUMMARY

Significant differences exist between EPA’s and the industry’s estimates of the
costs of the proposed pretreatment standards for industrial laundries because
                                                         _.
different methodologies were used.
-    EPA’s estimate of $136.4 million annuahy for compliance costs reflects an
     extensive analysis of the additional costs laundries would incur to comply
     with the rule.2 EPA based its estimate on a stratified random sample of
     laundry facilities and the cost of instalhng and operating what the agency
     determined to be the best available technology-called chemical
     precipitation-for removing pollutants in laundries’ wastewater. The
     industrial laundry industry raised questions about EPA’s methodology. For
     example, the agency used 1993 data, which the industry believes do not
     reflect the current status of the industry. Also, EPA assumed that
     chemical precipitation technology requires a part-time operator, but the
     industry argues that the technology must be attended by a full-time
     operator. Furthermore, EPA sampled only one facility to estimate how
     efficiently chemical precipitation removes total petroleum hydrocarbons
     from laundries’ wastewater. The industry questions whether the estimate
     is representative of removal rates that can be achieved by other facilities.
     EPA decided to collect additional information to address questions about
     its methodology.

     The industry’s cost estimate of $401 million annually for compliance costs
     is based on data submitted voluntarily by 204 laundries. The industry
     associations determined an average annual compliance cost for a single
     facility and multiplied this cost by the number of facilities EPA estimates
     will be affected by the rule. The industry’s methodology has several
     limitations. For example, the industry’s sample of laundries was not
     random, and the industry’s survey instrument included language critical of
     EPA, which may have biased the responses. Also, the industry assumed
     that all laundries will have to Wart from scratch” and install equipment to
     comply with the proposed standards; it is unlikely that all laundries
     potentially affected by the rule would have to do this.


2EPA’s cost estimate is expressed in 1997 dollars. Ahhough the industry’s
operating and maintenance cost estimate is in 1997 dollars, its capital cost
estimate is the summation of capital expenditures by various laundries in
whatever year they occurred.
vocal petroleum hydrocarbons include many petroleum-based organic
compounds with varying physical, chemical, and toxicological properties.
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EPA estimated that total annual benefits range from $2.9 million to $10.6
million. Included are human health, recreational, and other benefits. EPA
recognized the uncertainty in the accuracy of its estimates by presenting a
range of benefit estimates and discussing limitations. The industry raised
concerns, however, about key assumptions in EPA’s analyses. For example, it
argued against EPA’s use of total petroleum hydrocarbons as an indicator* of
the removal of other pollutants and questioned the agency’s estimate of the
toxici@ of such hydrocarbons in laundries’ wastewater. EPA is collecting
additional data to address these concerns.

In preparing the proposed rule, EPA followed the Office of Management and
Budget’s (OMB) best practices for preparing economic analyses by explaining
the need for the rule, identifying alternative approaches, and analyzing costs
and benefits.

     Regarding the need for the rule, EPA interpreted the pass-through
     provision of the Clean Water Act to mean that a pollutant “passes through”
     a wastewater treatment facility if an available pretreatment option removes
     pollutants with greater efficiency than a well-operated wastewater
     treatment facility does. On the basis of its data collection and analysis,
     EPA concluded that chemical precipitation technology removes some
     pollutants, including total petroleum hydrocarbons, with greater efficiency
     than most wastewater treatment facilities; therefore, EPA concluded that
     pass-through does occur.

     Considering the identification of alternative approaches, EPA
     examined the performance and economic achievability of five
     technological options and determined that chemical precipitation was
     the “best available technology economically achievable” for existing
     laundries. EPA also requested comment on a no regulation option.

     Regarding the analysis of costs and benefits, EPA recognized that the
     proposed pretreatment standards are not cost-effective. The agency


41ndetermining which polhttants to regulate, EPA assessed whether certain
pollutants could serve as “indicator” pollutants for others. Because many of the
pollutants of concern originate from similar sources and have similar
treatability properties, setting standards for some indicator pollutants would
effectively control a broader set of pollutants and reduce monitoring costs.
 5Toxicity is the degree of danger posed by a substance to human health and
 animal or plant life.
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    noted, however, that the Clean Water Act does not require EPA to
    directly consider cost-effectiveness in setting pretreatment standards.
    Instead, EPA determines whether pass-through of pollutants is
    occurring and, if so, identifies the best available economically
    achievable technology to remove the pollutants.       .’

However, since EPA published the proposed rule in December 1997, several
concerns, discussed earlier in this report, were raised about key assumptions
that the agency used in its ana.Iysis of the costs and benefits. As a result, EPA
collected additional information and began assessing how the new data affect
its calculation of costs and benefits. By the June 1999 deadline established in a
consent decree and subsequent agreements, the agency expects to have
concluded its assessment and, in accordance with the Unfunded Mandates
Reform Act, selected the least costly, most cost-effective, or least burdensome
alternative.

AGENCY COMMENTS AND OUR EVALUATION

We provided a draft of this report to EPA for its review and comment. We met
with EPA officials, including the Branch Chief, Engineering and Analysis
Division, Office of Science and Technology, Office of Water. EPA generally
agreed with the information presented in the report and provided several
clarifications and corrections, which we incorporated as appropriate. EPA also
provided updated information on the status of the agency’s additional data
collection efforts and cited several preliminary fhxlings.6 Specifically, EPA

     noted that it significantly overstated the toxicity of total petroleum
     hydrocarbons;

     affirmed that total petroleum hydrocarbons are a good indicator of
     the removal of other pollutants;

     confirmed that its original estimates accurately measured the ability of
     chemical precipitation technology to remove these hydrocarbons; and


6EPA presented the status of its data collection and its preliminary analysis of
this information in a notice of data availability published in the Federal Register
on December 22, 1998. In addition to the results mentioned in this report, the
notice indicates that (1) EPA is considering the option of regulating only
facilities that launder shop and printer towels and (2) the organizations
representing industrial laundries, to support the no regulation option, had
proposed a voluntary program through which laundries would reduce pollutants
in their wastewater.
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     found that wastewater treatment facilities were removing about 74 percent
     of these hydrocarbons rather than the 65 percent EPA had originally
     estimated.

EPA intends to use this new information to reassess th@’costs, economic
impacts, cost-effectiveness, and benefits of the proposed standards.

SCOPE AND METHODOLOGY

In addressing these questions, we reviewed documents supporting EPA’s cost
and benefit estimates and the two industrial laundry associations’ cost estimates
and comments on the proposed rule. We also interviewed officials from EPA
and OMB, the two industry associations, the Association of Metropolitan
Sewerage Agencies, and several laundries. To assess how well EPA’s analysis
supported its belief about satisfying the Unfunded Mandates Reform Act, we
drew on standard microeconomic principles and OMB’s best practices guide on
how to prepare economic analyses. We conducted our work from May through
December 1998 in accordance with generally accepted government auditing
standards.



We will send copies of this report to the Administrator of EPA and to other
interested parties. We will also make copies available to others on request. If
you or your staff have any questions or need additional information, please call
me at (202) 512-6111. Major contributors to this report were Lisa Pittelkau, Tim
Guinane, Rich Johnson, Sherry Hong, and Bob Levin.

Sincerely yours,




David G. Wood
Associate Director, Environmental Protection Issues

Enclosure




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ENCLOSURE I                                   ENCLOSURE I




W    Briefing for House Committee on
     Transportation and Infrastructure

        Proposed Pretreatment Standards for
        Industrial Laundries




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      l           Pretreatment standards specify quantities or concentrations of
                  pollutants that specific industries may discharge to public wastewater
                  treatment facilities.
      l           Standards are established when it is determined that pollutants pass
                  through or interfere with the treatment processes or sludge disposal
                  methods of public wastewater treatment facilities.
          l       The Environmental Protection Agency (EPA) is subject to a consent
                  decree and subsequent agreements requiring the agency to take final
                  action on guidelines and standards for industrial laundries by June
                  1999.
          l       An industrial laundry is any facility that launders industrial textile items
                  for other business entities for a fee or through a cooperative
                  arrangement. For this proposed rule, laundering means washing with
                  water, including water washing following dry cleaning. This rule would
                  not apply to laundering exclusively through dry cleaning.
              l   EPA published proposed pretreatment standards for industrial
                  laundries on December 17, 1997, after several years of analysis.




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      l   Industry’s review of the proposed rule concluded that EPA
          underestimated compliance costs by a factor of at least 3 and
          overestimated benefits to an even greater extent.
      l   The Unfunded Mandates Reform Act (UMRA) requires agencies to
          prepare a written statement that includes a cost-benefit analysis for
          proposed and final rules with “federal mandates” of $100 million or
          more in any one year.
      l   UMRA section 205 requires agencies to select the least costly, most
          cost-effective, or least burdensome alternative that achieves the
          objective of the rule or to publish a written explanation of why such an
          alternative was not selected. This requirement does not apply where
          it is inconsistent with any other law.
      0 EPA prepared several documents describing its cost-benefit analysis
        of the proposed rule and believes it has satisfied UMRA section 205.




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      l   Why are there significant differences between EPA’s and the industry’s
          cost estimates of this proposed regulation?
      l   How did EPA estimate the benefits of the proposed rule and disclose
          the uncertainties associated with the accuracy of its estimates?
      * How does EPA’s analysis support its belief that the agency selected the
        “least costly, most cost-effective, or least burdensome” regulatory
        alternative?




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w          Scope and Methodology

      l   We reviewed documents supporting EPA’s cost and benefit estimates.
      l   We reviewed the industrial laundry industry’s comments on the rule
          and its cost estimates.
      l   We interviewed officials from EPA, the Uniform & Textile Service
          Association (UTSA), the Textile Rental Services Association (TRSA),
          the Association of Metropolitan Sewerage Agencies (AMSA), and
          several laundries.
      l   We used the Office of Management and Budget’s (OMB) “best
          practices” guide on how to prepare economic analyses and standard
          microeconomic principles to assess how well EPA’s analysis
          supported its conclusion that it satisfied UMRA.




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wQuestion     1: Why Do EPA’s and
   industry’s Cost Estimates Differ?
  l Derivation of EPA’
                     s estimates
       l    EPA analyzed the effects of the rule on social costs,‘posttax
            compliance costs,* facility and firm closures and failures, and national
            output and employment. EPA performed an extensive analysis of the
            incremental costs of complying with the rule.3
        l   EPA’s analysis is based on a stratified, random sample from a universe
            of 1,960 industrial laundries.
        l   EPA estimated that 1,606 laundries would potentially be affected by the
            rule. This number excludes facilities that launder less than 1 million
            pounds of laundry per year and less than 255,000 pounds of shop
            and/or printer towels.




      ‘Social costs reflect the costs to society of the proposed rule and include pretax
       compliance, administrative, and unemployment-related      costs.

      2Posttax compliance costs are the costs to industry to comply with the regulation, after
       compliance costs have been expensed or depreciated for tax purposes and income
       taxes have been paid on earnings.

      31ncremental costs represent the difference between the costs of the regulatory option
       and the costs of the baseline or status quo.

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wQuestion      1: Why Do EPA’s and
   Industrv’s Cost Estimates Differ?
    l Derivation of EPA’
                       s estimates
       l   EPA sent a detailed questionnaire to a subset of the laundries (275
           questionnaires) affected by the rule. These laundries reported having a
           range of treatment technologies in place. After gathering additional data
           on candidate technologies, EPA proposed chemical precipitation as the
           best available technology.
       l   Chemical precipitation is a treatment technology used to remove dissolved
           pollutants from process wastewater. Chemicals are added to the
           wastewater and cause pollutants to settle out so they can be more readily
           removed. EPA determined that this technology could remove pollution to
           a level of 15 milligrams of total petroleum hydrocarbons--a key pollutant
           discharged in industrial laundries’ wastewater--per liter of wastewater.
       l   EPA based its cost estimates on incremental costs--those costs incurred
           using chemical precipitation technology to remove pollutants from the
           portion of wastewater generated by laundering industrial items only.




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GAQQuestion 1: Why Do EPA’s and
   Industry’s Cost Estimates Differ?
    l Derivation of EPA’
                       s estimates
        l       Annual “social” costs were estimated to be $139.4 million. This
                consists of:
                l       pretax compliance    ($136.4 million):
                l       administrative   ($2.9 million), and
                l       unemployment-related      costs ($0.1 million).
        l       EPA estimated that the total compliance cost for installing and
                operating chemical precipitation technology consists of:
                l       27 percent capital costs and
                    l   73 percent operations and maintenance costs.
            l   “Economic achievability” analysis determined that:
                    l   33 facilities would close and
                    l   470 net jobs (0.36 percent of total industry employment) would be
                        lost.

      4Pretax compliance costs are the costs to industry to comply with the
      regulation, before costs have been expensed or depreciated for tax
      purposes and income taxes have been paid on earnings.




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GP$3Question 1: Why Do EPA’s and
   Industrv’s Cost Estimates Differ?
      l        Questions about EPA’s methodology
           l   EPA’s estimate was based on data collected in 1993, which the
               industry believes does not reflect the current status of the industry.5
               In response to industry comments, EPA suggested that the
               industry collect and submit updated information. EPA is currently
               evaluating this information.
           l   EPA used point estimates that do not explicitly recognize the
               degree of uncertainty in the cost estimates for chemical
               precipitation and other alternatives. This implies a level of
               confidence in the cost estimates that may not be warranted.
           l   Industry questioned the use of total petroleum hydrocarbons (TPH)
               as an indicator pollutant and EPA’s method for measuring TPH.”
               EPA is collecting additional samples to address these concerns.
               The outcome could affect costs. For example, if EPA requires
               laundries to monitor for multiple pollutants rather than TPH,
               laundries’ monitoring costs would likely increase.

          ‘EPA’s cost estimate was adjusted to account for inflation and was
           expressed in 1997 dollars.

          6 In determining which pollutants to regulate, EPA assessed whether
          certain pollutants could serve as “indicator pollutants” for others.
           Because many of the pollutants of concern originate from similar sources
           and have similar treatability properties, setting standards for some
           indicator pollutants would effectively control a broader set of pollutants.
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wQuestion      1: Why Do EPA’s and
    Industrv’s Cost Estimates Differ?
  l Questions about EPA’ s methodology
      l       On the basis of site visits and other information, EPA determined that (1)
              chemical precipitation technology requires a part-time rather than a
              full-time operator and (2) laundries would not need to purchase additional
              land to build structures to house chemical precipitation technology Actual
              costs could be higher if these determinations prove to be incorrect.
      l       EPA sampled only one facility to estimate how efficiently chemical
              precipitation technology removes TPH. Industry questioned whether the
              results are representative. If, as UTSA/‘TRSA argue, chemical precipitation
              technology is less efficient than EPA estimates, actual costs for meeting
              the standards could be higher. EPA is currently collecting more data to
              reassess the removal efficiency of this technology.
          l   Laundries may implement less costly ways to meet the standards. For
              example, firms with multiple plants may consolidate the cleaning of heavily
              soiled items in one or more plants rather than install chemical precipitation
              technology in all plants.




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GAQQuestion 1: Why Do EPA’s and
   I ndustrv’s Cost Estimates. Differ?
        l       Derivation of industry’s estimates
            l   UTSA/TRSA used 1997 data submitted voluntarily by 204 laundries.’
                The industry estimated compliance costs only and did not consider
                other factors, such as administrative and unemployment-related
                costs.
            l   UTSNTRSA divided the laundries into three groups and calculated
                average annual costs for a laundry in each group:
                l   5 laundries that currently discharge no more than 15 milligrams of
                    TPH per liter of laundry wastewater - $237,000,
                l   149 laundries (including the above 5) that combine all wastewater
                    and discharge between 10 and 250 milligrams of TPH per liter of
                    laundry wastewater - $189,000, and
                l   55 laundries that treat only heavily soiled wastewater - $336,365.



      klthough industry’s operating and maintenance cost estimate is in 1997
      dollars, its capital cost estimate is the summation of capital expenditures
      by various laundries in whatever year they occurred.




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wQuestion     1: Why Do EPA’s and
   Industrv’s Cost Estimates Differ?
      l           Derivation of industry’s estimates
          l       UTSWTRSA summed the three cost estimates and divided the
                  result by three to derive an average annual cost per laundry of
                  $250,000.
          l       UTSA/TRSA multiplied $250,000 by 1,606 facilities (EPA’s
                  estimated number of facilities affected by the rule) to derive a total
                  annual cost to the industry of $401 million:
                  l   ,22 percent of annual costs were identified as capital costs and
                  * 78 percent of annual costs were identified as operations and
                    maintenance costs, including 27 percent for chemicals and 17
                    percent for labor.
              l   UTSAFRSA accounted for incremental costs by assuming all
                  laundries will have to “start from scratch” and install equipment to
                  comply with the proposed standards.




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GP”OQuestion 1: Why Do EPA’s and
   Industrv’s Cost Estimates Differ?
      l   Limitations of industry’s methodology
          l   UTSAITRSA acknowledged that the 204 laundries responding to
              its survey did not constitute a random, stratified sample. As a
              result, information derived from the survey may not represent the
              industry as a whole.
          l   The survey instrument included language critical of EPA; this
              may have biased the responses.
          l   Industry officials acknowledged the costs incurred by the five
              laundries that already meet the 15 milligrams per liter TPH limit
              should not have been included in calculations. The standard
              practice for cost-benefit analysis is to include only the
              incremental costs required to comply with the rule.
          l   Industry assumed that all 204 laundries surveyed would have to
              start from scratch. It is unlikely that all laundries potentially
              affected by the rule would have to do this.




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G+O Question 2: How Did EPA Estimate
    the Benefits of the Proposed Rule?
         0 EPA’s estimation of benefits
          l       EPA estimated the dollar value of the human health, ecological, and
                  economic productivity benefits.
          l       Human health benefits pertain to cancer cases avoided; ecological
                  benefits refer to recreational benefits and nonuse benefits (the
                  benefits of preserving a resource for future use); economic
                  productivity relates to reduced costs to treatment plants for sludge
                  disposal.
          l       Other benefits included reductions in noncancer health effects and
                  reduced operating costs for wastewater treatment facilities.
              l   EPA used a variety of data sources to estimate these benefits,
                  including data from the agency’s detailed questionnaire of industrial
                  laundries and a separate industry survey on the presence of
                  pollutants in discharged water.




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GJU Question 2: How Did EPA Estimate
    the Benefits of the Proposed Rule?
       l       EPA’s estimation of benefits
           l   On the basis of pollutant removals by chemical precipitation
               technology, total annual monetized benefits range from $2.9 million
               to $10.6 million.
               l   Human health benefits: $0.09 million to $0.50 million,
               l   Recreational benefits: $1.9 million to $6.7 million,
               l   Nonuse benefits: $0.9 million to $3.4 million, and
               l   Benefits to wastewater treatment facilities: $0.006 million to
                   $0.010 million.
           l   EPA estimated that pretreatment would annually prevent about
               407,000 “total pound equivalents” of pollutants from reaching
               wastewater treatment facilities?
           l   EPA recognized the uncertainty in its analysis by presenting a range
               of benefit estimates and discussing their limitations.

       8A pound equivalent is a measure that addresses differences in the
       toxicity of pollutants removed. Total pound equivalents are derived by
       taking the number of pounds of a pollutant removed and multiplying this
       number by a toxic weighting factor.




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w         Question 2: How Did EPA Estimate
          the Benefits of the Proposed Rule?
      l           Concerns about EPA’s methodology
          l       UTSA and TRSA officials said EPA greatly overstated the toxicity of
                  TPH in laundries’ wastewater? As a result, the industry believes that
                  the rule would annually prevent about 14,000 total pound equivalents
                  from reaching wastewater treatment facilities, an amount that is
                  significantly less than EPA’s estimate of about 407,000 total pound
                  equivalents. EPA is collecting additional data to determine if the
                  toxicity of TPH should be revised. As noted earlier, EPA is also
                  reviewing whether TPH should be used as an indicator of pollutants
                  in laundries’ wastewater.
              l   For chemical precipitation technology, EPA estimated TPH removals
                  based on samples collected from one laundry over a 4-day period.
                  The results may not be representative. To address this issue, EPA
                  is collecting data to reassess how efficiently chemical precipitation
                  technology removes TPH.



      yoxicity is the degree of danger posed by a substance to human health
      and animal or plant life.




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0          Question 3: How Does EPA Support Its
           Belief About Satisfying UMRA?

       l   The Office of Management and Budget (OMB) has issued
           guidance to help agencies comply with UMRA. The guidance
           directs agencies to:
            l   explain the need for the rule,
            l   examine alternative approaches, and
            l   analyze the benefits and costs of each alternative.




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GAOQuestion 3: How Does EPA Support its
   Belief About Satisfying UMRA?
      l           Need for the rule
          l       The Clean Water Act authorizes EPA to establish pretreatment
                  standards for pollutants that pass through wastewater treatment
                  facilities or interfere with treatment processes or sludge disposal
                  methods at wastewater treatment facilities.
          l       According to EPA, the main reason it identified this industry for possible
                  rulemaking was that laundries may be receiving shop towels laden with
                  solvents identified as hazardous waste under the Resource
                  Conservation and Recovery Act (RCRA). The agency was concerned
                  that the solvents could be discharged to wastewater treatment facilities
                  following laundering, thus potentially circumventing control of these
                  wastes under RCRA.
              l   UTSA and TRSA officials note that EPA has delegated regulation of
                  shop towels under RCRA to the states, and all 50 states have
                  addressed this issue. Also, the officials believe that EPA’s concern
                  about the potential circumvention of RCRA should have been included
                  in the proposed rule to give parties an opportunity to comment on it.




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w      Question 3- How Does EPA Support Its
       Belief Abcdt Satisfying UMRA?
       l       Need for the rule
           l   For the proposed rule, EPA has defined pass-through to mean a pollutant
               passes through a wastewater treatment facility if an available pretreatment
               option removes pollutants with greater efficiency than a well-operated
               wastewater treatment facility does.
           l   Industry officials said that EPA has never before interpreted the
               pass-through provision by comparing the removal efficiency of indirect
               dischargers--facilities that discharge their wastewater to wastewater
               treatment facilities where it is treated before it is discharged to surface
               waters--to that of wastewater treatment facilities. These officials pointed
               out that all industrial laundries are indirect dischargers.
           l   EPA officials note that pretreatment standards are based on the
               application of best available technology (BAT). These officials believe that
               it is therefore appropriate when there are no direct dischargers in the
               industry, to compare the removal efficiencies of the candidate BAT
               pretreatment option and the wastewater treatment facilities in determining
               pass-throuah.




                                                               GAO/RCED-99-42R   Industrial   Laundries
25
ENCLOSURE I                                                                 ENCLOSURE I




GAQQuestion 3: How Does EPA Support Its
   Belief About Satisfying UMRA?
      l           Need for the rule
          l       On the basis of its data collection and analysis, EPA concluded
                  chemical precipitation technology removes some pollutants,
                  including TPH, with greater efficiency than most wastewater
                  treatment facilities; therefore, EPA concluded that pass-through
                  does occur.
          l       However, the industry and EPA disagree about wastewater
                  treatment facility removal rates. For example, based on an
                  Association of Metropolitan Sewerage Agencies’ study, industry
                  claims that wastewater treatment facilities already remove over 90
                  percent of TPH compared with EPA’s estimate of 65 percent.
              l   EPA officials said that they would collect additional information to
                  determine whether TPH is an appropriate indicator pollutant and to
                  reassess how efficiently treatment facilities remove TPH.




                                                                 GAO/RCED-99-42R   Industrial   Laundries
 26
ENCLOSURE I                                                            ENCLOSURE I




w     Question 3’ How Does EPA Support Its
      Belief Abo;t Satisfying UMRA?

      l       Alternative approaches
          l   EPA examined five t$ghnological options--chemical precipitation,
              dissolved air flotation, two options that are a coybination of
              chemical precipitation and dissolved air flotation, and organics
              control.‘*
          l   EPA examined the performance and economic achievability of the
              five options and determined that chemical precipitation was the best
              available technology economically achievable for existing laundries.
          l   EPA also requested comment on a no regulation option and
              encouraged commenters to support their arguments with data on
              pollution levels and the degree of pass-through.




      “Dissolved air flotation is a treatment technology used to remove
        suspended solids, oil, and some dissolved pollutants from process
        wastewater. This technology involves coagulating and flocculating the
        solids and oil and grease and then floating these substances to the
        surface using pressurized air.

      “Under the first combination option, either dissolved air flotation or
        chemical precipitation would form the basis of the standards by
        establishing one set of standards based on the less stringent of the two
        standards for each regulated pollutant for the two technologies. Under
                                                          GAOLRCED-99-42R   Industrial   Lanndries
ENCLOSURE 1                                                                   ENCLOSURE I




w        Question 3: How Does EPA Support Its
         Belief About Satisfying UMRA?
         l       Costs and benefits
             l   EPA estimated costs and benefits for three of the options--chemical
                 precipitation, dissolved air flotation, and a combination of chemical
                 precipitation and dissolved air flotation. EPA also defined the
                 baseline--what would occur absent the rule.
             l   Although EPA used point estimates for costs and did not explicitly
                 recognize the extent of uncertainty, the estimated costs of the rule
                 would likely exceed the benefits even if a range of possible costs were
                 considered.
             l   EPA recognized that this proposed rule is not cost-effective. The
                 agency noted, however, that the Clean Water Act does not require EPA
                 to directly consider cost-effectiveness in setting pretreatment
                 standards. Instead, EPA determines whether pass-through of
                 pollutants is occurring and, if so, identifies the best available,
                 economically achievable technology to remove the pollutants.

                 the second combination option, facilities with dissolved air flotation in
                 place as of the publication date of the proposal would have to comply
                 with the standards based on this technology, and all other facilities
                 would have to comply with standards based on chemical precipitation.

                 ‘*Organics control is a treatment technology that involves the use of
                  steam tumbling for treatment of shop and printer towels and mops for
                   removal of organic pollutants.

                                                                  GAO/RCED-99-42R   Industrial   Laundries
    28
ENCLOSURE I                                                               ENCLOSURE I




GAQOMB Review of Proposed Rule

           l   OMB officials said that they were impressed by the overall level of
               detail included in EPA’s cost-benefit analysis for this rule.
           l   OMB officials stressed that this is a proposed rule and that EPA
               appropriately asked for comments on the key assumptions that the
               agency made.




(160444)

                                                             GAO/RCED-99-4ZR   Industrial   Laundries
29
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