Coal Ash Rule Update: Legacy Sites: Will a New Administration fix this Hole in EPA's Holistic Approach?

Introduction 

Over two years ago, the DC Circuit ordered the US Environmental Protection Agency (EPA) to come up with new or revised regulations covering three different aspects of its 2015 Coal Ash Rule. In 2019 and early 2020, EPA rolled out a program it dubbed “A Holistic Approach to Closure” parts A and B, containing new regulations covering two of those three areas. As of late 2020, however, there is no part C to EPA’s Holistic Approach. In an October 2020 Advanced Notice of Proposed Rulemaking (ANPR), EPA appeared to admit that it still has no idea what to do about the third topic the DC Circuit ordered it to tackle in 2018: Legacy Sites.

Background: The Coal Ash Rule, the USWAG decision, and Legacy Sites

The Coal Ash Rule is a set of regulations that became effective on October 19, 2015. (40 CFR § 257 et seq.) It established national criteria under Subtitle D of the Resource Conservation and Recovery Act (42 U.S.C. §6901 et seq.) (RCRA) for Coal Combustion Residual (CCR) landfills and CCR surface impoundments, including location restrictions, structural integrity requirements, liner design criteria, groundwater monitoring and corrective action requirements. Sites that fail to meet EPA’s strict criteria must retrofit or close. Currently, hundreds of CCR impoundments around the country are preparing for closure, or are in closure or post closure because they were unable to meet EPA’s criteria for continued operation.

As originally drafted, however, the Coal Ash Rule had several important gaps, at least according to the environmental groups who challenged the regulations in court. First, it allowed owners and operators of CCR impoundments that did not meet the criteria for continued, safe operation several years to begin the process of retrofitting or closure. Next, it treated unlined and clay or soil lined CCR impoundments as if they were lined, allowing them to continue to operate until bi-annual groundwater monitoring proved that they were leaking. Third, it completely declined to regulate Legacy Sites (inactive surface impoundments containing CCR which are not located at active power plants) under the Coal Ash Rule.

Environmental groups responded by filing several lawsuits, including Waterkeeper Alliance, Inc., et al. v. EPA (D.C. Cir. 2018) (the “Waterkeeper case”) and Solid Waste Activities Group v. Environmental Protection Agency (D.C. Cir. 2018) (the “USWAG case”). The DC Circuit remanded the Waterkeeper case without vacatur after EPA voluntarily agreed to reconsider its deadlines and to “expedite its rulemaking proceedings on remand to the fullest extent possible.” EPA promised new rules “within as little as nine months,” but took two years to publish its final rule which it called “A Holistic Approach to Closure Part A.”

In the USWAG case, the DC Circuit rejected EPA’s requests for remand and took the agency to task over its decisions regarding unlined impoundments and Legacy Sites. First, the court vacated 40 CFR § 257.101 (which allowed unlined CCR impoundments to operate until a leak was detected) and 40 CFR § 257.71(a)(1)(ii) (which defined clay lined impoundments as “lined”) and remanded those portions of the Coal Ash Rule to EPA for further rulemaking consistent with the court's opinion. EPA addressed these issues in 2020 with its “A Holistic Approach to Closure Part B.”

Next, the USWAG case used EPA’s own words as a basis to sharply criticize the agency’s decision not to regulate Legacy Sites. The Coal Ash Rule contains a long preamble describing the nature of coal ash and the issues that led EPA to promulgate the rule, including several highly publicized and catastrophic spills. (80 Fed. Reg. 21,302 et seq.) The USWAG decision uses a detailed summary of the preamble to emphasize that CCR contains carcinogens and neurotoxins which can create elevated risks of “cancer in the skin, liver, bladder, and lungs,” as well as non-cancer risks such as “neurological and psychiatric effects,” “cardiovascular effects,” “damage to blood vessels,” and “anemia.” EPA also admitted in its preamble that CCR surface impoundments pose threats to the environment stemming from the fact that “thousands, if not millions, of tons [of CCR are] placed in a single concentrated location.” These disposal sites, according to EPA, are at risk for structural failure, particularly when they are located in unstable areas, fault areas, and seismic impact zones, and the sheer volume of CCR at these sites can force contaminants into the underlying soil and groundwater, threatening sources of drinking water. With respect to Legacy Sites, the EPA’s preamble expressly stated that they pose risks of groundwater contamination and catastrophic structural failure. Further, according to EPA, because Legacy Sites by their nature are older than most surface impoundments and are “generally unlined” and unmonitored, they are more likely to leak than units at utilities still in operation.

But, while admitting in its preamble that Legacy Sites likely pose more significant risks to human health and the environment than CCR impoundments at active sites, EPA paradoxically declined to regulate them, arguing that owners of Legacy Sites are sometimes difficult to identify. In the absence of an identified owner or other responsible party, the EPA reasoned, enforcing the Coal Ash Rule would be problematic. Instead of pro-actively regulating Legacy Sites, EPA argued that it could assert its authority over Legacy Sites under RCRA’s “imminent and substantial endangerment” provision after leakage was detected and reported (42 U.S.C. § 6973(a)) or could attempt an after-the-spill clean-up under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) (42 U.S.C. § 9601 et seq.).

The DC Circuit categorically rejected EPA’s rationale for declining to regulate Legacy Sites. The Court stated, “[c]onfronted by [the] considerable dangers [of Legacy Sites], the EPA’s decision to shrug off preventative regulation makes no sense. The asserted difficulty in locating the owners or operators responsible for legacy ponds does not hold water. The record shows that the EPA knows where existing legacy ponds are and, with that and other information, the EPA already is aware of or can feasibly identify the responsible parties.” Because the administrative record belied the EPA’s stated reason for its reactive, rather than preventative, approach, the DC Circuit held that the EPA’s Legacy Sites exemption in the Coal Ash Rule was “unreasoned, arbitrary, and capricious.”

Not So Holistic: EPA’s October, 2020 Advanced Notice of Proposed Rulemaking

It is difficult to see EPA’s October 2020 ANPR as being anything other than an attempt by EPA to evade the USWAG decision. In the ANPR, EPA asks for public comment on its authority to regulate Legacy Sites in the first place; the number, locations, owners and status of any potential Legacy Sites, and the types of regulations it should apply to closure and monitoring of Legacy Sites.

But in the USWAG decision, the DC Circuit found that EPA had the authority to regulate Legacy Sites under RCRA, and ordered EPA to do so. The USWAG court also noted that EPA has been compiling and maintaining a database for nearly a decade that identifies Legacy Sites and their owners with specificity. The court further claimed that the Coal Ash Rule’s Regulatory Impact Analysis named more than 30 other owners and operators of recently, or soon-to-be, retired power plants where more than 100 Legacy Sites are located. This included a state-by-state list detailing the number of already-inactive impoundments, and the utility responsible for each one. The database further identified 83 power plants that were scheduled to “fully close all coal-fired” facilities by the time the rule went into effect, over 75% of which would house a Legacy Site upon closure. The only issue the DC Circuit left open in the USWAG decision was how EPA would regulate Legacy Sites, not if it would regulate them.

Underlying EPA’s recent apparent uncertainty regarding Legacy Sites as expressed in the ANPR appears to be a concern that many Legacy Sites may be abandoned or that the owners of the Legacy Sites may not know of their existence and may not be financially or technically equipped to engage in closure activities. The questions EPA is asking are arguably legitimate, but EPA never says why it took the agency two years to formulate the questions or why it thinks it will not be able to promulgate proposed rules until July 2021.

What’s next for EPA and the owners of Legacy Sites?

Environmental groups were quick to condemn EPA’s ANPR. EarthJustice called it “a grossly inadequate and illegal response” to the USWAG decision. Waterkeepers accused EPA of “thumbing its nose at the courts.” While these environmental groups are fighting EPA and the current administration on many fronts, it is reasonable to assume that they will mount further court challenges to the ANPR in an effort to force EPA to address Legacy Sites on an expedited basis.

The ANPR also potentially enhances the risk that the current or former owners and operators of Legacy Sites will face legal action. RCRA allows for citizen suits against the owners and operators of facilities that pose a “reasonable probability of adverse effects on human health or the environment.” 42 U.S.C. § 6944. In the USWAG decision, the DC Circuit all but invited citizen suits against Legacy Sites when it stated, “the threat [posed by Legacy Sites] is very real. Legacy ponds caused multiple human-health and environmental disasters….” By declining to regulate Legacy Sites, EPA deprived the owners and operators of such sites of a route to EPA-approved closure and the potential for enhanced defenses to citizen suits such as EPA is offering under its new Subtitle E federal permit program. Further, EPA’s Regulatory Impact Analysis for EPA’s Proposed RCRA Regulation of Coal Combustion Residues, Information Request Responses from Electric Utilities (April 30, 2010), while now somewhat dated, contains a list of potential Legacy Sites and their owners. EPA identifies many sites on the list as having “high” or “significant” hazard potential. Citizens groups need only review the database to identify targets for citizens suits.

If EPA is really concerned about a holistic approach to the closure of CCR impoundments, one would think that the agency would attempt to address the burden on the owners and operators of Legacy Sites by providing a streamlined path to EPA approved closure, perhaps combined with new “good faith” or “innocent and owner” defenses to citizen suits. Assuming that EPA is interested in protecting these entities from unnecessary burdens, it would seem that the agency would be better able to do that through a limited set of regulations, rather than by leaving them to take their chances in the courts. Instead, the ANPR leaves both the agency and the owners and operators of these sites open to further litigation.

The upcoming change in administration will bring with it new leadership at EPA and new policy priorities. While the list of tasks confronting the new administration will be long, it is reasonable to assume that bringing Coal Ash regulations in line with the USWAG decision is somewhere on that list, and that EPA will likely seek to address this hole in its holistic approach rather than litigate the issue with EarthJustice, Waterkeepers, or some similar group.

Acknowledgement

The authors would like to thank Mark Rokoff and John Priebe of AECOM for their input on this topic and their editorial review and comments on this update.