On December 22, 2008, there was a massive failure of a retention wall at a coal ash containment area at the Tennessee Valley Authority (TVA)'s "Fossil Plant," located near Kingston, Tennessee. As a result of the breach, more than 5 million cubic yards of coal ash were released, covering an area of approximately 275 acres, including some 40 homes. Thankfully, there were no reports of injuries.

Though the Fossil Plant incident resulted from a dike failure, it has become the focal point of an effort by a large coalition of environmental interest groups to force federal and state agencies to undertake a broad-based review of the manner in which the disposal of coal combustion wastes ("CCW") are regulated. Some question whether the disposal of wet CCW (in impoundments) ought to continue to be permitted at all. Others contend that the trace metals found in CCW point to the need for regulation of such disposal facilities under the stringent rules promulgated pursuant to the federal Resource Conservation and Recovery Act ("RCRA"), governing the permitting of hazardous waste treatment, storage and disposal ("TSD") facilities. Complementing and gaining support from such lobbying efforts, some residents in and around the area of the Fossil Plant have filed lawsuits against the TVA, seeking compensation for the breach and for alleged groundwater infiltration of hazardous chemicals from the plant's ash disposal areas, under a number of different theories.

New Regulatory Programs on the Way?

On the regulatory front, the push to implement a new program for CCW disposal comes only a year or so after EPA closed its comment period on a "Notice of Data Availability on the Disposal of Coal Combustion Wastes in Landfills and Surface Impoundments" ("NOD"). 72 Fed. Reg. 49714 (August 29, 2007). The NOD presented the public with an opportunity to provide comments on whether EPA should reconsider its May, 2000 "Final Regulatory Determination on Wastes from the Combustion of Fossil Fuels," in which EPA concluded that CCW do no warrant regulation by EPA under RCRA Subtitle C (applicable to TSD facilities), but instead may be adequately regulated by the states under RCRA Subtitle D (pursuant to EPA guidance on disposal of non-hazardous solid waste).

EPA also ruled in 2000 that disposal of CCW (also known as "coal combustion byproducts" or "CCBs," when beneficially used) may properly take place at areas on abandoned and active coal mines under regulatory oversight of the federal Office of Surface Mining ("OSM") or delegated state agencies under the federal Surface Mining Control and Reclamation Action of 1977 ("SMCRA"). In 2007, EPA and OSM initiated a separate process to seek public input on developing specific standards for placement of CCBs at mine sites. Public interest groups have also recently called for an end to such mine-site placement of CCBs.

Apart from the Fossil Plant ash impoundment breach, the primary ground for the renewed push for tighter regulation of CCW disposal lies in the success of another environmental law-- the Clean Air Act. Because power plants have greatly improved their ability to minimize emissions of sulfur dioxide and other pollutants over the last decade or so, it is thought that the concentration of those captured chemicals in the resulting combustion wastes has increased, thereby increasing the risks to groundwater and surface waters in areas where they are disposed. On the other hand, industry has also greatly advanced in its ability to beneficially use CCBs in a variety of industrial applications, thereby reducing the need for landfills and impoundments. There is considerable reason to fear that tighter regulation -- especially under RCRA Subtitle C -- would substantially eliminate many of these alternative uses.

On March 9, 2009, EPA was to begin sending out questionnaires to 163 utilities, inquiring as to CCW handling and disposal practices, including data on the design and construction of CCW impoundments and on any historic releases from CCW containment areas. Given that EPA has expressed its intent to go forward with new regulations even before it receives responses, and in light of recent lawsuits (discussed below), CCW disposal operators will certainly want to be careful in preparing responses to any such questionnaires.

Class Actions and Other Lawsuits

Increased scrutiny and regulatory pressure, highlighted by the recent failure of the Fossil Plant's impoundment, make coal ash storage and retention ripe for tort litigation. The failed impoundment at the Fossil Plant has already spawned two class actions in Tennessee federal courts. Nearby residents and property owners have sued the TVA under a broad range of theories, including nuisance, negligence, trespass, strict liability (ultra-hazardous activity), and inverse condemnation. They seek compensatory damages for property loss, as well as punitive damages, injunctive relief and medical monitoring.

Other lawsuits have been asserted and settled, even in the absence of a dam failure like the one which occurred in Tennessee. In 2008, the owners of a Montana power plant agreed to pay $25 million to settle a suit filed by 57 nearby residents and workers who alleged the facility's coal ash storage pond contaminated the water supply for subdivisions and a trailer park. Earlier this year, a Baltimore court approved the $54 million settlement of a suit which alleged that water supplies were tainted after coal ash was dumped into a sand and gravel quarry. In a slightly different twist, a Virginia power company was more recently sued based on allegations that it used 1.5 million tons of coal ash as fill over which a golf course was constructed. Nearby residents have claimed that the failure to use an impervious liner allowed harmful chemicals to leach into ground water. Like other claimants, they are seeking compensation for property damage, punitive damages and medical monitoring.

Some EPA estimates suggest there are as many as 300 coal ash ponds nationwide. Given the recent attention, increased regulatory activity and possible lawsuits are realistic expectations. Utility companies, as well as other entities which produce, store and dispose of coal combustion wastes should, therefore, anticipate greater scrutiny in the months and years ahead.