Coal ash has become one of the most pressing environmental issues confronting the electric power industry. The ash pond release at the TVA Kingston plant in late 2008 focused intense scrutiny not only on the regulatory status and health effects of coal ash, but also on the storage of coal ash and the beneficial use of coal ash in numerous products. The recent 60 Minutes episode on the subject raised even more public interest in the issue. And largely because of the TVA Kingston release, EPA Administrator Lisa Jackson has made her views very clear—the old ways of managing coal ash are gone.
The Issue: Will Coal Ash Be Regulated as a “Hazardous Waste”?
The ultimate issue is whether EPA and the states will regulate coal ash as a “hazardous waste” under the federal hazardous waste law, the Resource Conservation and Recovery Act (“RCRA”). In 2000, after several comprehensive assessments and investigations, EPA found that coal combustion byproducts presented few human health or environmental risks. Based on those evaluations, EPA has continued to regulate coal ash as a non-hazardous solid waste, and power producers have not been required to comply with the host of technical and expensive “hazardous waste” requirements. But largely because of the TVA release, EPA is now reconsidering its historical approach.
Information from several sources indicates that EPA will propose a “hybrid” rule that will (a) treat coal ash destined for beneficial reuse as a non-hazardous waste, and (b) treat coal ash destined for storage in ash ponds or surface impoundments as a “hazardous waste,” subject to many of the requirements of the RCRA hazardous waste framework. The Agency proposed such a bifurcated approach before, when it proposed to regulate cement kiln dust, but that rule was never implemented. Recently, EPA sent its proposed rule to OMB for review, and the Agency has stated that it will issue a proposed rule by December 2009.
No matter how the proposed rule is finalized, the electric power industry, industries that purchase coal ash for use in their products, industries that rely on coal-fired boilers, and environmental groups are likely to assert legal challenges. Judging by similar efforts in the past, the final rules may not take effect for a year or more, even if they are not stayed because of litigation.
Complicating matters further, some observers expect additional litigation over the health and environmental effects of existing products containing coal ash and other coal combustion byproducts, no matter what the proposed regulations require. To respond to these challenges, several brick and block manufacturers already have conducted studies on the toxicological effects of their products containing coal ash. Preliminary studies show no adverse health effects.
Implications of EPA’s Expected Coal Ash Framework
If coal ash is regulated as a hazardous waste, the implications could be far-reaching and fundamental for power producers and industries that sell or purchase coal ash for beneficial uses. A material that has been accepted for numerous beneficial uses for decades—in applications and products ranging from road bed material to drywall to ordinary bricks—may now be stigmatized as a product containing “hazardous” materials. If coal ash destined for surface impoundments is now labeled as “hazardous waste,” the range of potential beneficial uses for the identical material could dwindle, as current beneficial use purchasers cease to purchase, fearing future regulatory burdens. Ironically, EPA’s expected hybrid treatment of coal ash may actually increase the amount of coal ash destined for storage by stigmatizing the purchase of coal ash for beneficial use.
Can Your Company Answer The Following Questions About Your Coal Ash?
With EPA’s anticipated release of draft regulations for coal ash disposal and use, your company should consider the following questions:
1. Does Your Company’s Public Relations Strategy Recognize the Fundamental Change that Regulating Coal Ash as a “Hazardous Waste” Would Entail?
Providing an informed and timely PR response for the proposed new regulatory requirements for coal ash will require a Herculean effort. Before and immediately after EPA’s regulations are released, it is critical to assess your strategy to make sure that it directly reflects how your company uses, handles, and sells coal ash. Your strategy should generally recognize current science on coal ash and specifically be able to address the soon-to-be-released “health evaluation” on coal ash by the CDC’s Agency for Toxic Substances and Disease Registry (“ATSDR”). Your strategy should also reflect your state-specific law governing many of the issues which may arise in coal ash litigation.
In developing your strategy, do your company contacts appreciate the difference between arsenic and radium, and how these two substances are central in the evaluation of the impacts of the TVA Kingston facility release? Just how will by-products from scrubbers and mercury capture affect the composition of your coal ash—and will they change the bottom line on environmental and health issues? If you are quoted as saying that your company “complies” with applicable law, does your PR strategy address how you will prove that statement in clear and understandable terms? If your PR contacts can’t answer these questions, you strategy needs attention.
2. Are Your Employees—and Contractors—Ready to Respond to Federal and State Regulatory Investigators?
With increased regulation comes increased scrutiny. If EPA shows up for a surprise inspection at your main operating headquarters, do your accounting supervisors know how to answer the Agency’s questions on the cost of coal ash disposal? Are your employees trained to respond to civil inspections? Perhaps more critically, given the record number of private party lawsuits involving the TVA Kingston spill, do your employees understand and appreciate the need for legal counsel on key topics and concern? It will be too late to prepare your employees and contractors to address these issues when agency investigators are knocking at your door.
3. Has Your Company Reviewed the Contractual Obligations and Responsibilities of Your Ash Purchasers, Contractors, and Vendors?
Do you know the names of the companies that have purchased your company’s coal ash for beneficial uses? Do those companies still exist? If so, do you have written agreements or contracts with them? Do you have copies of the agreements? Have you reviewed those agreements to learn whether the companies that purchased your ash are or were required to carry insurance? When and how do the contracts require you to notify purchasers, vendors and contractors who handle your coal ash regarding potential hazards?
4. Can Your Company Explain the Environmental and Health Effects of Coal Ash in its Various Forms, Uses, and Potential Exposures?
EPA’s new regulations may ultimately raise questions about the environmental and health effects of coal ash. EPA’s likely “hybrid” approach will increase the focus on the alleged health issues relating to coal ash, and it may cause some companies to question whether to continue selling coal ash for beneficial uses at all. Given the impending regulations, it may be time to review past studies of coal ash releases by the CDC/ATSDR, the agency that will be issuing a “health consultation” on the TVA Kingston release by the end of the year. As might be expected, the CDC/ATSDR’s soon-to-be-released health consultation will generate even more press on the health effects of coal ash.
Neither your PR strategy nor your legal strategy can succeed unless they are based on well reasoned research. If you haven’t reviewed recent research on the toxicity of bricks made with coal ash, your knowledge base may be incomplete, and you may need to update your knowledge about coal ash to meet the anticipated demands. You may also need a scientific expert who can provide internal advice on these topics and, if necessary, interact with concerned citizens and regulators.
5. How Will You Disclose the Financial Impact of EPA’s New Regulations to Stockholders and Ratings Companies?
For a typical power producer, the costs associated with EPA’s proposed hybrid approach could be significant depending on the specific requirements in the regulations actually released by EPA. If your company intends to continue burning coal, you may need to line existing ash ponds, implement RCRA corrective action plans for your existing surface impoundments, and even construct new surface impoundments. Although it’s too soon to tell, the industry’s well established techniques for ash management and handling may no longer be viable. Anticipating and predicting the costs of regulating coal ash as a “hazardous waste” will be critical for developing your financial and ratings agency disclosures. The financial impacts of disposal and waste management may skyrocket, and the actual mechanics of operating some equipment may change drastically, which will further increase the costs of generation.
6. What is Your Strategy for Coordinating with State Environmental Officials?
EPA’s release of its new approach to coal ash regulation is only the beginning. In many states, environmental agencies already have developed new regulations and proposed significant changes to existing regulations to deal with coal ash. In states that follow EPA’s lead, there may be even more regulatory impacts, on top of the federal requirements. EPA’s anticipated approach is not expected to include a federal “safe-harbor,” which means that compliance with federal regulations won’t exempt your company from additional state requirements. Given EPA’s likely approach, you should consider meeting with state officials now, if your company has not done so already, to discuss any actions you may need to take in response to new state ash handling requirements.