On August 21, 2018, the US Court of Appeals for the District of Columbia Circuit handed down its long-awaited opinion in the case of Utility Solid Waste Activities Group v. Environmental Protection Agency (the USWAG case). In a previous Steptoe Coal Ash Rule Update, we reported on EPA's attempt to delay oral argument in the USWAG case, and EPA's request to have most of the controversy remanded to EPA so the agency could complete the process of reconsidering major sections of the Coal Combustion Residuals (CCR or Coal Ash) Rule. The DC Circuit declined to rule on the EPA's request for remand and conducted lengthy oral argument on November 17, 2017. Both USWAG and a group of environmental NGOs challenged portions of the Coal Ash Rule. The DC Circuit's recent opinion grants the EPA’s motion to remand in part, denies it in part, grants most of the relief requested by the NGOs, and denies most of the relief requested by USWAG.

Background

The 2015 Coal Ash Rule, for the first time, brought the disposal of CCR under the purview of the Resource Conservation and Recovery Act (RCRA). RCRA was passed in 1976 and designed to be a "cradle to grave" scheme for the management of solid and hazardous waste. Hazardous waste is addressed in subtitle C of RCRA. Under subtitle C, EPA directly regulates all stages of production and disposition of hazardous waste and has administrative enforcement power, as well as authority to initiate or recommend civil and criminal actions for violations. By contrast, subtitle D envisions that states are primarily responsible for regulating disposal of non-hazardous wastes in landfills and dumps. Despite recognizing that CCR contains hazardous and toxic constituents, EPA in the Coal Ash Rule elected to regulate CCR under subtitle D, and, as addressed in previous Coal Ash Rule Updates, has vigorously encouraged the states to take a more active role in managing CCR sites.

Subtitle D of RCRA, however, calls on EPA to promulgate criteria distinguishing "sanitary landfills" which are permitted under RCRA, from "open dumps," which are not. The statutory baseline for EPA’s criteria for sanitary landfills is that, at a minimum, they "shall provide that a facility may be classified as a sanitary landfill and not an open dump only if there is no reasonable probability of adverse effects on health or the environment from disposal of solid waste in such a facility." In the USWAG case, the NGOs argued certain aspects of the Coal Ash Rule actually did result in a "reasonable probability of adverse effects" on human health and the environment and, therefore, certain types of CCR impoundments were not "sanitary landfills" subject to the less stringent requirements of subtitle D, but rather "open dumps" that are prohibited under RCRA. The DC Circuit, for the most part, agreed.

The following are the highlights of the NGOs' challenges:

Unlined Surface Impoundments

According to the DC Circuit, EPA concluded that unlined surface impoundments are dangerous. The opinion cites various statistics about the propensity of unlined surface impoundments to leak and to contaminate groundwater. Yet, while the CCR Rule requires a newly installed surface impoundment to be constructed with a composite liner that effectively secures the impoundment against leakage, the rule allows existing unlined impoundments to continue to receive CCR until their operators detect a leak. The court noted that, once a leak is detected, the operator must either begin retrofitting the impoundment with a composite liner or begin closing it down – a process that may take up to 15 years. The court held that the evidence did not support EPA's argument that new CCR units needed composite liners in order to meet the "no reasonable probability" standard, while existing units could meet the "no reasonable probability" standard with no liners until they in fact sprung a leak which was detected by bi-annual groundwater monitoring.

The court noted that, of the 504 CCR sites for which EPA had collected data, only 17 percent had full composite liners, and that hundreds of unlined, active CCR impoundments were "at significant risk of harmful leakage." The court vacated the portion of the Coal Ash Rule which allowed for the continued operation of unlined CCR disposal units and remanded the case for further consideration consistent with RCRA’s mandate that EPA set minimum standards for CCR units that prevent harm to health or the environment.

Clay Lined Surface Impoundments

The CCR Rule also allowed existing CCR sites to be lined with "two feet of compacted soil to act as a buffer between the coal residual sludge and the local soil." Under the CCR Rule, if a clay-lined CCR unit is found to be leaking, the operator is allowed to attempt to repair the unit and need only begin closure activities if the repair process fails. The court described the steps involved in evaluating the potential repair, emphasizing that the process could take many months before the operator even determines that a repair is feasible and many more months to determine whether a repair had been effective. The court then repeated that the closure process – once the repair is determined to be ineffective – could take five to 15 years. Under the circumstances, the court held that the use of clay liners failed to ensure that there was "no reasonable probability" of adverse effects to the environment, as Subtitle D of RCRA requires.

Legacy Ponds

The Coal Ash Rule exempts inactive impoundments at inactive sites (so-called "legacy ponds"), from the same preventative regulations applied to all other sites. EPA did not dispute that legacy ponds posed the same potential dangers as active CCR units, but claimed that the difficulties involved in identifying the parties responsible for legacy ponds justified a less active approach. EPA proposed to address legacy ponds only after an "imminent and substantial endangerment" to the environment had been detected.

The DC Circuit characterized EPA's approach to legacy ponds as "arbitrary and capricious." The court noted the threats posed by legacy ponds were very real, and noted that legacy ponds "caused multiple human health and environmental disasters in the years leading up to the Rule's promulgation," including the Windows Creek spill in Alabama and the Dan River spill in North Carolina. The court concluded when "confronted by those considerable dangers, the EPA's decision to shrug off preventative regulation makes no sense." The court vacated the EPA’s legacy pond rule.

Implications of the DC Circuit's Remand

The DC Circuit's decision in the USWAG case raises several interesting questions. The first is whether EPA will seek re-hearing or appeal. As of the date of this update, EPA had not yet made its intentions public.

The second question is what steps EPA will take to address the DC Circuit’s determination that unlined CCR impoundments are not "sanitary landfills" under Subtitle D, but rather "open dumps." EPA has deferred deciding whether CCR impoundments should be regulated under the much more stringent Subtitle C of RCRA, but the DC Circuit’s ruling implies that unlined CCR impoundments are both regulated under Subtitle D and noncompliant.

Next, the USWAG case poses difficulties for owners and operators of unlined CCR impoundments. It is unclear how they will be required to react to the decision in terms of retrofitting and/or closure.

Finally, the decision poses a quandary for states considering their own CCR programs under the WIIN Act. As addressed in previous Coal Ash Updates, EPA has encouraged states to develop their own CCR regulations under the WIIN Act, but those state-level programs must be "at least as protective" as the federal program. Now that the federal rules regarding unlined CCR impoundments have been remanded to EPA for further analysis, state-level environmental management authorities face uncertainty as to the standards they may apply to unlined CCR impoundments.

The final contours of the Coal Ash Rule remain in flux. Steptoe will continue to follow related developments and provide additional updates.