Suppose that in 1996, two utility companies each have the same allowable 10 percent profit margin and the same rate base. Company A's 100,000 poles are all new steel poles, estimated to last 80 years. Company B's 100,000 poles are all new treated wood poles, estimated to last 40 years. The poles cost the same when they were new. 

In 2036, Company A's poles are still going. Company B's poles need to be replaced. They are replaced with new poles, which now cost an additional $40 each. By replacing the poles (again with treated wood poles), Company B, assuming a 10 percent profit rate, has just made a $400,000 profit. The fact that there are costs associated with buying, installing, and disposing of poles is irrelevant to the power company, which is allowed to pass on those costs to the consumer. 

There is another twist to this. Utilities are granted a depreciation allowance --allowable surcharge to help them set aside money to replace capital holdings. This depreciation means that the differential between new and old poles is even greater. 

There has been something of a move to introduce competition to utilities, but it is unlikely to change the critical aspects here.

From Bob Eye, former Chief Counsel, Kansas Department of Health and Environment; attorney representing citizens in utility cases, November  1996 

REGULATORY HISTORY

Inadequate chemical restrictions and failure to consider alternative materials

Environmental Stewardship

The Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) Because EPA does not operate with a "bright line" standard of unacceptable hazards and attributes benefits to chemicals without fully evaluating the availability of nonchemical strategies, the agency is constantly putting the public at unnecessary risk. Furthermore, because EPA does not consider the full range of adverse effects from a chemical's cradle to grave, from manufacturing to use to disposal, the full extent of the chemical's hazards are not analyzed. 

It was 1978 when EPA began its review of wood preservatives because of serious concerns about the public health and environmental threat that these chemicals represent. At that time, the agency put the chemicals into a special review process, then Rebuttable Presumption Against Registration (RPAR). Only chemicals that trigger serious health and environmental concerns are placed into this faster track review. However, instead of moving expeditiously to begin removing uses of these chemicals from the market, the agency delayed. A review timeline set by EPA at four years in 1978 was extended to over eight years ending in 1986. Over that period, EPA reversed itself and softened its approach under tremendous pressure and legal challenges from the chemical and wood preserving industry. The original proposals for chemical restriction became progressively weaker over the years. 

When EPA completed its review and negotiations with the wood preserving and chemical industry in 1986, it did not specifically regulate wood poles, but did regulate the use of wood preservatives. Moreover, as a part of this review, EPA did not evaluate the cradle to grave considerations. 

1978

Because EPA identified extraordinarily high risk to human health from the most widely used wood preservatives, the agency began a regulatory review process which evaluated the acceptability of their continued use. The agency on October 18, 1978 initiated what at the time was called a Rebuttable Presumption Against Registration, now called Special Review. This is a process during which EPA evaluates the risks and the benefits of the pesticides in question. EPA initiated action based on the following health triggers: 

• creosote - for oncogenicity (cancer) and mutagenicity (genetic damage). 
• pentachlorophenol (or its contaminants) - for oncogenicity, teratogenicity (birth defects) and fetotoxicity. 
• inorganic arsenicals (including copper chromated arsenate) - for oncogenicity, mutagenicity, reproductive effects and fetotoxicity. 

Formal benefits assessments are conducted only during this [Special] review and do not generally contain detailed economic analyses of alternative nonchemical or IPM [Integrated Pest Management] strategies. The effect of this practice is to assume that the economic value of nonchemical or integrated control strategies is near zero. Consequently, the benefits assessments tend to overstate the economic benefits of the individual pesticide under review as well as the impact of pesticide cancellation.

1981 

EPA issued a preliminary notice of determination concluding the RPAR for the wood preservatives in 1981. In this document, EPA proposed to adopt what it called "risk-reduction measures which are cost effective and which will reduce risk by a significant amount." Here again, the agency attributed irreplaceable benefits to wood preservatives, almost across-the-board, that rationalized continued use. In its position document, EPA wrote, "Due to the non-substitutability of the wood preservative compounds and the lack of acceptable non-wood or other chemical alternatives for many use situations, the economic impact which would result from an across-the-board cancellation would be immense." The agency does not reference alternative materials, just alternative chemicals. According to EPA, 

The data base for the alternative wood preservatives is so deficient as to disallow a definitive assessment of the risks associated with the use of the alternative wood preservatives. However, there is suggestive evidence to indicate that the acute toxicity of TBTO and Cu-8 may be unacceptable for unrestricted use. Similarly, the data for CZC, ACC, Cu-8, 2,4,5-TCP, 2,4,6-TCP and 2,3,4,6-Tetra indicate potential long term adverse effects. The toxicological potential of copper napthenate and zinc naphthenate cannot be assessed on the basis of a few acute toxicology studies in which LD50 [lethal effects that kills half the test population] values could not be determined. In conclusion, from a safety point of view, the alternatives do not appear to be preferable to the RPAR wood preservatives.

• cancel spray penta products available for retail sale in concentrations of 5% or less;. 
• classify some products for restricted use (only available to certified applicators or those operating under their supervision); 
• require protective clothing and equipment; 
• prohibit eating, drinking, and smoking while applying wood preservatives; 
• require proper care and disposal of work clothing and equipment; 
• require a closed mixing and a closed emptying system for all prilled (granular) formulations of penta, powder and prilled (granular) formulations of sodium penta and the powder formulations of the inorganic arsenicals; 
• prohibit indoor applications of the wood preservatives; 
• prohibit the use of pesticide-treated wood indoors, except for a few low exposure uses; 
• prohibit applications of the wood preservative pesticides in a manner which may result in direct exposure to domestic animals or livestock, or in the contamination of food, feed, or drinking an irrigation water; and, 
• require control technologies to reduce arsenic surfaces residues on the treated wood. 

1984 

EPA announced final action in 1984, now six years into its process of review, deliberation and negotiation. Despite all this effort, the action was immediately challenged by wood preservation trade associations and user groups, who requested an administrative hearing. As a result, EPA action was enjoined for another year. The notice proposed the following: 

• restricts sale and use of wood preservatives to certified applicators; 
• starts a mandatory consumer awareness program, Consumer Information Sheets will accompany pressure-treated wood ; 
• requires gloves, protective clothing, and respirators (when entering cylinders or opening cylinder doors), dust masks for high levels of inorganic arsenicals; 
• limits immediately the level of dioxin contamination in penta to 15 ppm [parts per million], and to one ppm within 18 months; and, 
• label changes, to include protective clothing statements, can't be applied inside or to wood intended to be inside, no eating, drinking, or smoking while applying. 

1985 

During the period July, 1984 to September, 1985, EPA negotiated with the trade and user groups, resulting in a weakening the original final action. Changes in the settlement include: 

• mandatory consumer awareness program was shifted to Volunteer consumer awareness program; 
• under this voluntary program, an annual survey will be conducted by American Wood Preservers Institute (AWPI) and Society of American Wood Preservers (SAWP), not EPA, as originally proposed; and, 
• EPA has the right to inspect the survey records for two years. 

1986 

The EPA proposal to limit dioxin contamination in penta was challenged by chemical manufacturers following the agency's issuance of the July, 1984 Notice of Intent to Cancel, which included an allowable 1 ppm (parts per million) of dioxin contamination. The two companies involved in this proceeding included Vulcan Materials Company and Idacon, Inc. Under pressure, EPA agreed to raise the dioxin levels by 4 times to 4 ppm in some cases. EPA reached a settlement on November 7, 1986 which accomplished the following: 

• changes the levels of hexachlorodibenzo-p-dioxin (HxCDD) from the original notice (lower the level to 15 ppm immediately, 1 ppm in 18 months) to: 
• immediately 15 ppm; 
• in one year, no batch will contain more than 6 ppm, but the average will not exceed 3 ppm; and, 
• in 2 years, no batch will exceed 4 ppm, average will not exceed 2 ppm 
• results must be analyzed and reported to EPA monthly. 

1987 

In announcing its January 2, 1987 Final Determination and Notice of Intent to Cancel and Deny Application for Registrations of Pesticide Products Containing Pentachlorophenol (including but not limited to its salts and esters) for nonwood uses, EPA said, 

The Agency is concerned about the ubiquity of pentachlorophenol, its persistence in the environment, its fetotoxic and teratogenic properties, its presence in human tissues, and its oncogenic risks from the presence of dioxins in the technical material.

Failure to Consider the Alternatives to Treated Wood Poles

In 1995, Canada took up the issue of wood preservative use with the establishment of a Strategic Options Process (SOP) for the Wood Preservation Sector. Environment Canada recognized that the availability of alternatives may have changed since this issue was evaluated in the 1980s and therefore launched a study to "rank the feasible alternatives to products that are made from creosote-, CCA-, ACA-, or pentachlorophenol-treated wood." According to a memorandum describing the review, "Alternative products may be wood treated with other pesticides, products made from materials other than wood, or alternative practices." Alternatives to be considered include steel, concrete, aluminum, fiberglass, plastics and composites. 

The Resource Conservation and Resource Recovery Act (RCRA)

The state of California has set levels for residues of wood preservatives in wood that are more stringent than the federal government. According to the state, tests have shown that wood preserved with pentachlorophenol, arsenic, chromium and copper fail the states Total Threshold Limit Concentration (TTLC), making the wood hazardous waste. However, a 1995 state law, AB 1965, specially exempts treated wood waste removed from electric, gas, or telephone service. While the treated wood waste is defined as hazardous, the law exempts it from being managed as hazardous waste if certain disposal management practices are used. Even prior to this law, the state had issued variances for the major utility in the state, PG&E, allowing the reuse, handling, and disposal of treated wood poles as nonhazardous waste, and permitting disposal in non-Class I hazardous waste landfills. Nevertheless, the state requires the disposal for wood wastes treated with creosote, penta and arsenicals in municipal landfills that: 

• contain a composite-lined portion; 
• are approved by the Regional Water Quality Control Board; 
• do not allow scavenging of the waste; and, 
• prohibit burning of such waste.

Other states have adopted similar laws to California. Both Washington and Oregon, while defining the treated wood waste as hazardous, have excluded it from hazardous waste management requirements with stipulations that the disposal occurs in landfills with leachate collection systems. 

Regarding waste generated by wood treatment plants, EPA is currently working on Land Disposal Restrictions which will regulate wastes, such as sludge and other wastes from wood preserving plants, as hazardous waste. Regulations are due out by April, 1997. A similar effort by regulators in California was stopped by legislators in that state.