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Report of the Panel on Sludge Management and Public Policy Judith T. Kildow, Massachusetts Institute of Technology, Chairman *Daniel J. Basta, National Oceanic and Atmospheric Administration **Robert K. Bastian, Environmental Protection Agency Dail Brown, National Oceanic and Atmospheric Administration Michael S. Connor, Harvard School of Public Health *A. Myrick Freeman III, Bowdoin College Paul M. Fye, Woods Hole Oceanographic Institution Edward D. Goldberg, Scripps Institution of Oceanography Philip S. Jessup, William H. Donner Foundation Kenneth S. Kamlet, National Wildlife Federation Raphael G. Kasper, National Research Council Thomas M. Leschine, Wood Hole Oceanographic Institution James S. Mattson, Mattson & Pave, PC **Warren R. Muir, Johns Hopkins University **James P. Murray, Harvard University Thomas O'Connor, National Oceanic and Atmospheric Administration Andrew Robertson, Administration William Robertson IV, Andrew W. Mellon Foundation Eric D. Schneider, National Oceanic and Atmospheric Administration Douglas A. Segar, SEAM Ocean, Inc. National Oceanic and Atmospheric *Economic **Risk Assessment 8

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9 1.1 DEFINITION OF THE P ROB LiEM The United States produces an estimated 3 billion tons of solid waste material annually. Some of this waste material is harmless to humans and the environment, some of it can be rendered harmless by natural or technological processes, and some of it must be carefully handled and stored to avoid known or potential harm. The necessity of managing these waste materials--by recycling, treatment, storage, or dispersal--often produces clashes among conflicting interests. Even though well-intentioned, disposal schemes, adopted under the pressure of urgency, often go awry because a disposal method is selected before sufficient information about it is available. This happened recently in South Essex, Massachusetts. Faced with a growing burden of municipal waste sludge, the town took what it thought was a careful look at the available options and chose to incinerate its sludge. The result, local officials and citizens believed, would be sterile ash that could be deposited in the town landfill without harm. The citizens of the town did not know that incineration would convert the chromium in the sludge to an extremely hazardous substance, hexavalent chromium, and that this hazardous ash would be difficult and expensive to dispose of. Other local governments have run into storms of citizen outrage that have thwarted well-intentioned plans to develop sludge disposal projects. In 1978, with the help of federal construction grants, Nassau County, New York, sought to solve its growing sludge disposal problem by building a community composting facility according to nationally tested methods. But the plant was never used. Local citizens opposed its operation, fearing groundwater contamination through chemical leaching if the compost was used on nearby lands as has been planned. Had the county not shut down the plant, its elected officials might have lost their jobs in the next election. Of major concern in waste management are the toxic chemicals and pathogens in many wastes, even though these are usually only a small part of the waste. Often it is not feasible to destroy all pathogens or to remove toxic chemicals for disposal elsewhere. The amounts of toxic chemicals in wastes can be reduced in several ways, most notably through some types of regulatory action. Among the specific chemicals that have been banned from produc tion and use because of scientific evidence or public -

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10 suspicion of harm to the environment and public health are the following: 1. DOT for the effect on non-target organisms, 2. PCBs for the effect on public health, and 3. Fluorocarbons for the effect on the quality of the atmosphere (ozone layer). Scientific evidence, economics, or regulatory constraints or combinations of the three have also been the stimuli for process changes such as the following: --Recovery of chrome from tannery wastewater treatment facilities, --Recycling of ferric chloride in sewage treatment for titanium dioxide extraction processes, --Recycling of bark waste and gas by-products in the pulp and sugar cane industries for use as a fuel, --Use of anaerobic digestion to produce methane from e organic residues. Wastes usually change the environment into which they are placed. The question is whether the change is harmful or beneficial. For example, waste disposal can result in increased or decreased biological productivity on land or in water. 1. 2 CONSTRAINTS ON POLICY IMPLEMENTATION Waste-management decisions take place in a world of political, bureaucratic, and financial forces that often impede the implementation of nationally existing regula- tions and standards. No matter how scientifically sound or economically rational a waste disposal decision may be, it will encounter resistance and inefficiency in the eventual administrative implementation of the decision and financial difficulties that affect the disposer's ability to comply with the original decision. In designing a method for assessing the appropriateness of using land, sea, or air through incineration or a combination thereof for disposal of waste (hereinafter referred to as "multimedia assessment"), therefore, it will be useful to know as much as possible about the constraints that may influence the practical utility of the process. Many municipalities have already developed rudimentary approaches to multimedia decision making-

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11 deciding between land application and incineration, for instance--and some, such as Los Angeles and Chicago, have made considerable progress in rationalizing this process. We can learn from these case histories. Constraints on waste management decision making can be put into four categories: (1) statutory limits, including federal laws and state and local ordinances, as well as their interpretation by the courts; (2) the public administration system in which waste management decisions are made, including the administrative regulations that interpret the laws, the people that make the decisions, and the public reaction to these decisions; (3) economic forces in the financial marketplace that affect the capacity of a producer of waste to raise capital or to generate operating revenues; and (4) information limits, including lack of information, as well as uncertainty and disagreement among experts about the validity and value of information. This section describes these constraints, and recommends strategies and tactics for overcoming some of the barriers. 1.2.1 The Statutory Framework The medium-by-medium approach to environmental lawmaking over the past decade has resulted in a legal framework that creates barriers to a rational choice for waste disposal. Such constraints arise as a result of direct Congressional intent or come about through administrative or judicial interpretation of Congressional intent. A number of studies have analyzed the complex statutory maze that Congress has created to manage ocean, land, and air resources and wastes. These include NAS'S first report on multimedia decision making (1977) 2 and a more recent report by National Advisory Committee on Oceans and Atmosphere (NACOA) (1981). The authors of these studies as well as many observers have noted that the highly fragmented environmental statutory framework for managing wastes has made it extremely difficult for decision makers to implement these statutes effectively. Some of the most important federal laws that comprise this fragmented framework are the following: 1. The Marine Protection, Research and Sanctuaries Act of 1972, as amended; 2. The Federal Water Pollution Control Act of 1972 and amendments thereto;

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1976; 12 3. The Clear Air Act of 1977; 4. The Resource Conservation and Recovery Act of 5. The Toxic Substances Control Act of 1976; 6. The Safe Water Drinking Act; 7. National Environmental Policy Act (NEPA) of 1970; 8. the Endangered Species Act of 1973; 9. The Marine Mammal Protection Act of 1972; 10. The Fish and Wildlife Coordination Act; and 11. The Federal Insecticide, Fungicide, and Rodenticide Act. The proliferation of federal statutes relating to the environment reflects the inclination of our society to deal with wastes according to both source and disposal site. There is no uniform regulatory framework for governing the assessment of risks, costs, and disposal options associated with all wastes. The absence of such a framework poses a severe constraint at the federal level. There are statutory provisions, for example, that impose different restrictions on existing and new sources of waste material. If new source requirements are more stringent than those for existing sources, for instance, then the phase out of inefficient older sources or the retrofitting of these sources with more efficient tech- nology will be severely constrained, because it will be easier and less costly to retain old sources. State laws on regulating wastes are often modeled on federal waste regulations. The Federal Water Pollution Control Act of 1972, for instance, established for the first time nationally uniform water-quality standards and pollution-control requirements. The states were required to respond by changing their own laws and building new programs consistent with the federal initiative. The states, therefore, tend to replicate the same legal constraints that exist at the federal level. Local waste ordinances tend to be much more diverse than do state and federal laws. They often prohibit certain waste disposal practices that place additional constraints on the implementation of federal and state laws. The proliferation of such local ordinances reflects the "first law of waste management"--that it is difficult to move wastes across political boundaries. Such local ordinances take numerous forms. They may be zoning regulations that prohibit landfills or siting of incin- erators, laws that limit the transportation of waste, or health ordinances that regulate the application of sludge on agricultural land. A positive example follows: the

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13 City of Los Angeles is prohibited from incinerating and can only use toxic waste landfill for sludge disposal. However, pyrolytic combustion of the gas produced is currently used to generate power. There was a change in the interpretation of incineration in order to allow this practice. Although state or federal officials do have the option of preempting local ordinances that are in conflict with a desired waste disposal decision, the practical utility of preemption as a normal instrument of public policy, given the politics and legal uncertainties involved, is quite limited. The Federal Water Pollution Control Act of 1972 and other environmental laws add yet another dimension to this set of problems, since they include sanctions with criminal penalties attached. This can and often does result in an adversarial relationship between operating and enforcement agencies. The adversarial aspect of this relationship must be resolved, because much effort is spent at the local level, particularly protecting operating agencies from possible actions of state and federal regulatory agencies. To demonstrate the strength of this problem, the City of Burbank, California, responding to the enforcement level overseeing its activities, has contracted out all of its work because the burden of responsibility and liability was felt so strongly. This decision is more costly and probably less effective. An atmosphere must be sought in which regu- latory agencies are supportive of operating agencies in their search for environmentally acceptable, practical solutions to sludge disposal questions. The power to set public policy for waste disposal is divided among local, state, and federal governments. Thus, in some instances there may be no single entity in a position to accept full responsibility for the disposal of wastes. In addition, the deliberate diffusion of responsibility and frequent conflict within the decision- making structure can result in a suboptimal choice. The absence of a legislative framework to encompass the various disposal media and to give evenhanded treatment to each sludge management case has a harmful effect on the decision-making process. Each of the three options--land, air, and sea disposal--falls under different legislation and different authority, making consistency and continuity in multimedia assessments difficult and resulting in the absence of a single focal point--governmental entity--for a decision.

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14 There are several ways to ameliorate these problems. One would be to develop more effective ways to carry out multimedia analyses within the existing legal framework (and possibly by modifying existing regulations) and ultimately to force "organic" changes in the implementa- tion of laws, e.g., more flexibility. A second would be to revise the laws. The former would be preferable, since legislation revision would leave open the possibility of creating a whole new--and equally unbalanced--set of laws owing to the nature of the legislative process and the need to serve pluralistic interests. A third approach would be to enact a new federal statute that would require waste disposal decision making to be conducted that would give equal consideration to all media, allowing for the full use of (in an evenhanded manner) multimedia assessments. Such a statute might eliminate the problems caused by the present unbalanced statutory framework, disallowing some media and allowing others. Fourth and finally, the use of the EPA Sludge Task Force could result in a movement toward changing legis- lation by developing a list of coherent recommendations for simultaneous, uniform changes in all the regulations through amendments. 1.2.2 The System of Public Administration The second category of constraints on waste-management decision making is the public administration system in which such decisions are made. Included under this heading are the regulations, the regulator, and the public responses. A variety of federal regulatory agencies have been set up to administer the waste-management statutes. This fragmentation of responsibility at the federal level is one of the primary bureaucratic constraints on multimedia assessment, which would require greater integration in designing criteria, implementing the criteria, and evaluating results scientifically. Should the National Oceanic and Atmospheric Administration, the U.S. Environmental Protection Agency (EPA) , the U.S. Coast Guard, the Food and Drug Administration, or the Corps of Engineers identify those characteristics of the ocean's response to waste that need to be measured for the purpose of comparing ocean disposal with land and air options? NACOA asserts that, depending on the agency of

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15 origin, current regulations may be overly protective of one or another medium. Waste disposal decisions therefore tend to follow the path of least regulatory resistance. The selection of any medium or any specific site for disposal of waste will generate public reaction, both favorable and unfavorable, and it will be shaped by a number of factors. The most prominent is that such decisions are, by their nature, inequitable, since benefits and risks are distributed unequally. Indeed, effectively managing this distribution of benefits and risks by counterbalancing inequities with incentives is a necessary consideration in public decision making. There is uncertainty in every scientific observation and measurement and in every prediction of the effects of a waste disposal plan. It would be helpful if these uncertainties were explicitly described as inescapable and communicated to the public. More data and less uncertainty are always desirable in making environmental decisions. It should be recognized that while the possibility of certain effects may be the pivotal issue in making a decision, a decision may be much more affected by the uncertainties related to these effects. At any given time, a decision to use one of the available options rather than to wait for more data will depend on the likelihood of obtaining more data on the cost and time required to get new data and on the like- lihood that additional data will significantly reduce the uncertainties. The cost must include the transaction costs to the government of focusing on regulatory processes rather than moving on to other issues. The high costs of resolving uncertainties in scien- tific data often deter decision makers from effectively addressing these questions. In addition to dealing with uncertainties resulting from insufficient data, decision makers must also address uncertainties with regard to time needed to evaluate environmental impacts. It took scientists about 10 years, for example, to ascertain that methyl mercury was the toxin in the Minimata Bay epidemic in Japan. It also took scientists many years to under- stand the relationship between DOT and eggshell thinning and the subsequent population decline of some marine birds. Political reaction times on environmental problems also lag considerably. Effective political response only came years after the scientists had concluded their assessments of methyl mercury and DOT in the cases

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18 disposal unless multimedia assessments are required by federal law. The number (more than 200) of recent applications by coastal communities for waivers from secondary treatment under Section 301(h) of the Federal Water Pollution Control Act is one indication of these financial pressures. It therefore appears that municipal- ities will develop sophisticated and innovative methods of raising private capital more easily if EPA simultane- ously cuts back construction grants and firmly enforces standards and if accelerated depreciation provisions of the new federal tax laws are allowed to remain in effect. Municipalities can use these laws to facilitate private sector building of facilities and then lease or purchase the facility according to certain legal conditions. Business profits result and municipalities do not have to raise capital funds, which could have an impact on local taxes. The synergistic relationship between municipal finances and waste disposal suggests that there is need for more study of the ways in which federal policy can help municipalities and states to obtain private capital. New Jersey, for instance, is seeking to establish an "infrastructure bank" in which federal construction grants, bond proceeds, and state revenues would be pooled, but changes in federal policy will be required if the state is to carry out this experiment. The federal government has also affected the waste disposal site-selection process by the funding mechanism that it has used. In the past, the possibility of cost sharing among local, state, and federal agencies has often influenced the choice of a waste-management method Some major cities, however, have found that smaller . operating costs for certain disposal methods were large enough to offset construction grant incentives. EPA funding incentives, which emphasize pretreatment, have also influenced the quality of the waste streams. Financial incentives could also be used to discourage undesirable waste disposal practices. From a human welfare perspective, the quantity of waste should be reduced as the cost of disposal per unit of waste increases. One possible, but not necessarily equitable,* way to foster this relationship would be to impose a fee *Sometimes the waste is not entirely the responsiblity of the polluter (disposer) owing to inconsistencies in the regulatory process.

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30 2. The indirect costs associated with the presence of the disposed materials in the environment. These indirect or external costs arise because of the common property aspects of the environmental media. Substances that are added to the water, land, or air can have adverse effects on third parties through a variety of channels. For example, individuals may find their health impaired because of air pollutants, contaminated food, or con- taminated water. Or the discharge of substances to the ocean might adversely affect aquatic ecosystems and result in decreased productivity of commercial fisheries or reduced recreation opportunities. The monetary values of such adverse effects are measured by individuals' willingness to pay to avoid these effects. One way to view the waste-management problem is to consider different options as representing trade-offs between direct and indirect costs. Consider two options, A and B. Suppose that option B has direct costs that are greater than those of option A by $10 million. This could be because wastes are transported a greater distance to avoid sensitive environments or because the need to contain the wastes results in higher engineering costs or because it is necessary to process the wastes to remove potentially harmful substances. Option B should therefore be chosen only if incurring the direct costs would lead to a reduction of indirect costs at least equal to $10 million. Otherwise, the costs of option B would be even higher. The conclusion above, however, is subject to two qualifications. First, if equity is an objective of public policy, decision makers may reject the option that minimizes total cost on the grounds that it imposes additional costs on already disadvantaged groups; that is, it leads to an inequitable distribution of costs. If equity matters to decision makers, then the data and models used to estimate benefits and costs must allow the assignment of benefits or costs to specific groups identified by characteristics that concern the decision makers, for example, income level, race, or political affiliation. Since an ideal estimation model would be disaggregated to begin with, e.g., with data segregated according to groups, effects, or other related factors-- the effort to present information on distribution means only that the step of aggregation to total benefits or costs is omitted.

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32 first their quantification in the relevant units of measurement (e.g., reduced productivity of commercial fisheries, reduced opportunities for recreation or agriculture, or increased illness or risk of death) and then the imputation of money measures of willingness to pay to avoid these effects. Consider, for example, the indirect costs of spreading sludge on land surfaces. If runoff from the land surface containing pollutants reaches surface waters and reduces the attractiveness or suitability of these waters for recreation, this is a cost. There are several economic models and techniques for predicting changes in recreation behavior as a function of (among other things) changes in the quality of water or changes in the probability of catching desirable species of fish. If the changes in water quality or fishing success are known, these models can be used to impute the willingness of recreationists to pay to avoid these adverse effects. If certain pollutants would contaminate drinking water and thus have adverse effects on human health, and if the magnitude of the health effects can be predicted from dose-effect relationships, then economic methods exist for inferring individuals' willingness to pay to avoid these health effects. Models and methods also exist for estimating the value of groundwater, commercial fisheries, and other resources. If these resources were to be destroyed or impaired by pollution from waste disposal activities, these models and methods could be the basis for imputing the indirect costs of disposal. There is one type of possible effect of waste disposal that lies outside the economic sphere: adverse effects on some species of no commercial, recreational, or aesthetic importance to man. Economic methods are relevant only to measuring effects on human welfare, that is, those effects that matter to individuals who are therefore willing to pay to avoid them. If some species is adversely affected by pollution but individuals have zero willingness to pay to avoid the effect, the economic cost of the effect is zero. If such effects matter to decision makers, they must be listed separately from economic effects. And the decision maker must make trade-offs within the process, since the equity issue is constantly present.

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34 technical facts, and (4) inability of the policy process to judge when maximum welfare has been achieved. Other features of decision-making systems that can lead to suboptimal choices are disaggregated and decentralized decision making, inappropriate use of technical informa- tion resulting in part from confusion about which state- ments express facts and which express value preferences, and judgments by inappropriate persons. (Policymakers, for example, may begin to make technical judgments, while technical experts may tend to render value judgments if a protracted debate over policy objectives develops.) Over the past decade, conflict has been characteristic of the process for formulating ocean dumping policy both at the national level, where general dumping policies are set, and at the local and regional levels, where site- specific choices are made. An unfortunate consequence of policymaking in an adversarial atmosphere is that it can result in outcomes that leave one or more parties to the decision worse off while the general welfare has not been improved.6 Such would be the case, for example, if sludge dumping activities in the New York Bight were to be moved to a more distant site at a greater cost to municipalities without a corresponding improvement in the quality of the nearshore marine environment. On the other hand, cleanup of a contaminated dump site such as the New York Bight must start somewhere if the desire for environmental improvement is ever to be satisfied. The problem that confronts the decision maker is one of making a decision under uncertainty in the face of multiple and conflicting objectives. A number of analytic methods exist for determining relative values and identifying trade-offs when all the effects of a decision are not readily quantifiable in monetary terms. These "decision aids" are aimed at identifying and quantifying the important elements of decision problems so that an "optimal" solution can be developed. 7 The results of applying the methods of decision analysis to problems as complex as multimedia waste management have been decidedly mixed, and replacing traditional institutional structures for dealing with such problems with new, formal decision-making structures is premature. Instead, the methods of decision analysis can be of great value as supplements to traditional decision-making studies if they are accompanied by major efforts at public education or by the creation of ad hoc groups to review waste-management decisions by means of analytic policy methods.8

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36 2. There is no threshold for information, that is, no definition of how much is necessary. No minimum amount of information is worth an undefined, large amount of money. The costs of obtaining additional information must be weighed against the benefits of acquiring it. 3e National waste-management decisions and site-specific decisions require different information bases. The information developed in site-specific and regional studies is not necessarily sufficient for national waste-management decisions. 4. Consideration of multimedia waste-management strategies may increase the complexity of analysis and the amount of information needed for decision making. S. The waste generator who bears the true total costs of waste disposal activities has strong incentives to optimize both the scale and methods of waste-management practices. It is therefore appropriate to consider all options in multimedia assessments, including reductions in the quantity of wastes generated or changes in their form. 6. Because all decisions on policy have equity impacts, compensation mechanisms must be considered part of the decision to rectify equity imbalances. Economic analysis of alternatives entails comparison of benefits and costs and selection of the alternative having the highest net benefits (total benefits minus total costs) This benefit-cost criterion ignores the distribution of benefits and costs across groups. Environmental policy options may impose costs on one group while generating benefits for another group. In some instances those who bear the costs (if they are aware of the situation) will oppose the use of benefit-cost analysis. The problem of equity impacts waste disposal policy when an option imposes risks on one group while the benefits accrue to some other group. One might argue that equity considera- tions call for compensation to those who bear the risks associated with waste disposal. Compensation could be the dollar amount that would make the individuals willing to incur the risk in question. The possibility of compensation is relevant to political processes, since if adequate compensation is paid, in some cases neighbors of dump sites may no longer oppose the location of the dump. In some cases, however, compensation may have limited or no utility. A policy of appropriately compensating losers associated with waste disposal alternatives could avoid the impasses brought on by the ~not-in-my-backyard"

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38 6 See R. Dorfman, H. G. Jacoby, and H. A. Thomas, Jr., eds. Models for Managing Regional Water Quality, Harvard U. Press, Cambridge, Mass., 1972, Chapter 2, for a discussion of methods for determining so-called "Pareto admissible" decisions with analytical models. 7 Analytical decision models are discussed generally in D. Bell, R. Keeney, and H. Raiffa, eds., Conflicting Objectives in Decisions, Wiley, New York, 1977. Chapter 12 discusses the application of a number of decision analytic methods in a coastal zone planning context. R. Keeney and H. Raiffa, Decisions with Multiple Objectives: Preferences and Value Tradeoffs, Wiley, New York, 1976, . develop in detail multiattribute utility theory, from which most of these analytic methods are derived. Numerous novel decision-making or review processes have been suggested for social choices that involve complex technological issues or questions of risk. The science court proposed by A. Kantrowitz (Science 156:763-764, 1967) has been criticized for relying on traditional adversarial models of dispute settlement (A. R. Matheny and B. A. Williams, Law & Policy Quart. 3:341-364, 1981). D. Bazelon (Science 205:277-280, 1979) has suggested that more discretionary review power be granted to the judiciary for dealing with technologically complex questions. K. Lee (Science 208:679-684, 1980) proposed a siting jury for locating a repository for high-level radioactive wastes. S. Ramo (Science 213:837-842, 1980) proposed that specially convened boards make decisions on regulating technological activities after a separate agency review of the positive and negative characteristics of the technology involved. 9L. Susskind and L. Dunlap (Environ. Impact Assessment Rev. 2:335-395, 1982) discuss the effects of problem definition and composition of decision-making body on the decision outcomes in several waste-management case studies. See also D. Nelkin, ea., Controversy: Politics of Technical Decisions, Sage Publications, San Antonio, Tex., 1979. Keeney and Raiffa, op. cit., Chapter 10, discuss decision problem solution by creative recombina- tion of alternatives. H. M. Sapolsky (Science 162:427-433, 1968) noted that technical controversy can lead to risk-adverse voter behavior. In a study of the drinking-water fluoridation issue he noted that fluori- dation was accepted much more frequently by communities in which public officials made the decision than where it was put to a public referendum.