New Coal Ash Regulations Causing Additional Controversy

Last December, EPA announced its final rule regarding the management of coal combustion residuals (“CCR” a/k/a “coal ash”). This came several years after initial alternative proposals were offered for public comment, and the Agency’s subsequent review of over 450,000 written comments. The announcement reflected a decision to regulate CCR as a non-hazardous waste under Subtitle D of the Resource Conservation and Recovery Act (“RCRA”). Such a classification had been supported by the power industry and industry groups and businesses that use coal ash in manufacturing and construction. This meant, in turn, that the material would not be regulated as a hazardous waste under the more stringent requirements of Subtitle C of RCRA, a classification that had been urged by many environmental interest groups during the comment period and in subsequent lobbying with the Agency and the White House.

Although the rule has not yet become final since it has not yet been published in the Federal Register, Congress appears to be moving quickly on legislation intended to limit certain aspects of the rule. As a result, the opposing sides in the original rulemaking process are at odds again, but now urging different positions regarding the merits of the rule announced by EPA. Environmental groups find themselves in a position of supporting the rule as announced by EPA while industry groups are seeking changes through the Congressional process.

After urging EPA to adopt the less restrictive Subtitle D classification, utilities and coal ash recyclers are supporting a bill sponsored by Representative David McKinley (R-W.Va.) that would put into law a version of the rules, but with certain changes that would address industry concerns. The legislation is intended to formalize the process of regulating coal ash by focusing primarily on state enforcement authorities and requiring the states to develop enforceable permits for such units. In part, this is intended to address industry concerns that the EPA may impose more stringent regulations under the hazardous waste program at a later date.

Rep. McKinley’s bill appears to be on something of a fast track in the House. It was publicized in draft form in mid-March. (The Hill, March 12). Within two weeks, a House subcommittee of the Energy and Commerce Committee had conducted hearings and passed the legislation out of subcommittee to the entire committee. (The Hill, March 25). During committee hearings prior to the vote, Mathy Stanislous, EPA’s Assistant Administrator for Solid Waste, voiced concern that the legislation eliminated certain key components of the regulations including the availability of information to the public. However, EPA did not take the position in opposition of the legislation, and three Democrats on the subcommittee supported it along with all of the Republican members.

As noted, many in the environmental community are now supporting the EPA’s rule even though it does not regulate coal ash as a hazardous waste. Thus, environmental groups are seeking to organize opposition to the McKinley legislation. (See for example: the Clean Energy.org website)

The issue certainly has practical ongoing effects. A recent NPR report (here) about the coal ash spill into the Dan River in North Carolina reflects not only the substantial monetary penalty that the State has proposed for Duke Energy, but also the effort to identify and approve a location for a landfill to receive the CCR.

EPA’s Rules Related to Carbon Emissions and Climate Change Prompt A New Focus By The Opposition

EPA’s new rules for limiting emissions of carbon dioxide for both existing power plants and proposed plants have prompted at least two substantive reports by public policy institutes focusing on the economic aspects of the proposals. The Beacon Hill Institute at Suffolk University and The Heritage Foundation have recently published reports that estimate the potential costs, particularly in terms of jobs, associated with the adoption of these regulations. These reports can be viewed here (Beacon Hill) and (Heritage Foundation).

The Heritage Foundation report has apparently generated the greatest interest due to its effort to detail the number of jobs that the regulations may cost each state. Thus, a recent article on www.al.com covering several Alabama news sources, noted that the regulations may cost Alabama as many as 10,700 jobs or about 4.14% of the State’s manufacturing employment. (Wake Up Call al.com 2/20/15 ). Overall, the Heritage Foundation estimates that over a half million manufacturing jobs will be lost nationwide

Although the very issue of climate change continues to have prominent deniers, the arguments put forth by those who oppose climate change regulations seem to be edging away from absolute denial of the science supporting the fact of any change in the earth’s average temperature and towards the potential economic and social impacts of the issue. Until fairly recently, there has been a vocal group of individuals with scientific credentials who openly rejected the scientific basis for the position that the world’s climate is warming. As scientists have moved to a general consensus that the problem is real, the argument has generally moved from outright denial that the earth’s temperatures are rising to one that questions the cause. Many who originally denied that there was any climate change now acknowledge that temperatures are increasing, but argue that the cause is primarily the result of a natural climate cycle and not the result of human activity such as through the combustion of coal. Even that debate tends to be between scientists and senior policy-makers. These recent studies may indicate a further shift towards more practical aspects of climate change issues: the impacts of the various regulatory proposals the situation has prompted. Regardless of whether the estimates of costs, particularly in jobs, are valid, the fear of the loss of jobs in significant numbers seems much more likely to raise concerns on the part of the general public than has a debate between scientists.

 

Fracking: To Ban Or Not To Ban?

The process of hydraulic fracturing (also known simply as “fracking”) continues to divide the public and public policymakers, even as resulting lower natural gas prices have encouraged industries, including many power plants, to convert from coal-fired boilers as one means as coping with coming limitations on the emissions of carbon monoxide.

Local concerns about fracking activity have their origin in concern about pollution of drinking water sources. Those concerns have now expanded to include concerns about the management of fracking fluid wastes and the possibility that the activity may prompt localized seismic activity. For example, scientists at the Universities of Miami and Ohio have asserted that fracking activity prompted localized earthquakes in a part of the state. (Ohio earthquakes).

A number of anti-fracking proposals were on state and local ballots this past year and many of them were adopted. (Local measures). And New York recently imposed a fracking ban by executive action, prompting suggestions that there may be similar actions in other states. (National Geographic).

At least part of the Obama Administration is arguing against such localized bans. Interior Secretary Sally Jewel recently criticized the bans stating that they prompt confusion for the oil and natural gas industries. (The Hill). She acknowledged the need for more scientific research, but in the interim, will rely on scientists at the U.S. Geological Survey to help guide her decisions about allowing fracking on federal lands. Ultimately, she believes it would be better to have uniform regulations for the activity. The Administration is, in fact, pursuing a set of regulations that would direct fracking activities on federal lands, but these have been pending for almost a year. (White House reviewing fracking rules). And EPA initiated a scientific study of fracking in 2011 with the intention of providing a final report last year. That report is yet to be issued. (EPA Fracking Study)

If broader regulation covering activities in the industry, both on federal lands and non-federal lands, is coming, the Administration may need to move promptly if it hopes to get out ahead of local action.

Environmental Issues and The Republican Majority

Expectations are running high among some that the incoming Republican majority in both Houses of Congress will act to change or eliminate various environmental regulations and statutory provisions that they claim harm the economy. Interest groups are extending these efforts to enlist State officials in opposing these regulations at that level and, for his part, President Obama has indicated an intent to use his veto authority in an effort to prevent major changes in regulation and policy.

One of the foremost issues of concern on the part of many Republicans is the proposal to limit carbon pollution from coal-fired power plants. In mid-December, 99 House members sent a letter to the President asking that he direct EPA to withdraw its proposed Clean Power Plan rule. (House letter). Similarly, various conservative groups have contacted State legislators and other elected officials calling on them to resist the Plan in any way possible. (The Hill). The States have substantial authorities for the implementation of air pollution control regulations under the federal Clean Air Act, just as they do with the implementation of other major federal environmental statute.

However, there are some indications that these position may not be quite as unified across the Republican leadership as first thought. For example, a recent interview given by Senator James Inhofe of Oklahoma to the Tulsa World indicates that initial efforts may focus elsewhere. Senator Inhofe, a leading denier of climate change science, will become the Chairman of the Environment and Public Works Committee the Senate’s key environmental committee. Yet, he indicated in the interview that initial focus of his chairmanship of would be on transportation and infrastructure. (Tulsa World). Also of interest, a recent poll conducted jointly by the Associated Press-NOR Center for Public Affairs Research and Yale University indicates that, while 6 in 10 Americans support regulation of carbon dioxide pollution, fully half of persons identifying themselves as Republicans hold the same position. (StarTribune). Even if the Republican majority eventually pushes substantial legislation through both Houses to affect environmental issues, including climate change, President Obama has promised a veto. (ABC Report).

While it seems clear that environmental issues will be at the forefront of Congressional debate in the upcoming Congress, it is not so clear how far this may go, or in exactly what direction. As we have seen before, exercising the powers of leadership often imposes restraints that are not in place when campaigning for leadership positions.

EPA Re-Defines “Solid Waste”

On December 10, 2014, the EPA administrator published its latest version on a rule revising recycling related provisions under the definition of solid waste rule (DSW rule). See 40 CFR Parts 260 and 261, Docket No. EPA-HQ-RCRA-2010-0742 (Dec. 10, 2014). The revisions were made to help alleviate concerns regarding disproportionate health and environmental risks suffered by low income communities buttressing local recycling facilities.

These new revisions are predicted to make it increasingly difficult for facilities who purport to be recycling to illegally dispose of hazardous materials. See Mike McLaughlin, Fact Sheet: 2014 DSW Final Rule, American Bar Association (Dec. 18, 2014).

Winter Draws Mixed Opinions Regarding Fracking

Fracking received much attention and debate in the fourth quarter. Fracking is the process of injecting large amounts of water, sand and chemicals into the ground at high pressures in order to release oil and natural gas into underground rock formations.

On December 17, 2014, New York Governor Andrew Cuomo announced his administration’s plan to ban fracking due to health concerns. His decision follows a presentation by New York state health commissioner finding “significant public health risks” linked to fracking. See Thomas Kaplan, Citing Health Risks, Cuomo Bans Fracking in New York State, The New York Times (Dec. 17, 2014).

Contrasting New York’s decision, North Carolina’s Oil and Gas Rules and Review Commission approved new fracking rules and the state legislature is expected to lift North Carolina’s fracking moratorium. See John Murawski, NC Rules Review Commission approves fracking standards, News & Observer (Dec. 17, 2014).

A long awaited study on the risks posed by fracking is estimated to be released by the EPA in early 2015. See Letter from United States Environmental Protection Agency, Region 8, Philip S. Strobel, Acting Director, NEPA Compliance and Review, Office of Ecosystems Protection and Remediation, Ref. No. 8EPR-N (Oct. 17, 2014) (on file with EPA).

New Year Brings New Coal Ash Regulations and New Legislative Proposals

December 19, 2014 marked the deadline for the Environmental Protection Agency (EPA) to announce its final decision regarding a new regulatory scheme for coal ash disposal (Coal Combustion Residuals or CCR). The new regulations are to focus on the disposal of coal ash.

The pressure for new regulations began mounting after the rupture of a Tennessee power plant in 2008 which sent over 1 billion gallons of coal ash into nearby Tennessee rivers. Subsequently, on February 2, 2014, a Duke Energy plant released approximately 39,000 tons of coal ash into the Dan River in North Carolina.

During the lead up to the EPA decision, interest groups have been battling over whether coal ash should be categorized as solid non-hazardous waste or hazardous material. This ongoing battle will likely foreshadow legislative arguments we can expect in 2015.

In the past, Representative, David McKinley of West Virginia and Senator John Hoeven of North Dakota both have been active in introducing legislation allowing states to regulate coal ash as non-hazardous waste. Additionally, Senator James Inhofe, the incoming chairman of the Senate Committee on Environment and Public Works has stated that states have “responsibly and effectively managed coal ash” without federal intervention.

Further, Inhofe has stated, “[i]n the new Congress, my colleagues and I will intently review the impacts this rule could have to our economy and electricity reliability as well as highlight how states are leading the way on properly disposing and recycling coal ash.” See Sean Cockerham, EPA rules on coal ash may disappoint environmentalists, buoy industry, ColumbusLedger-Enquirer (Dec. 17, 2014). Following his re-election, Majority leader Mitch McConnell stated that he feels a “deep responsibility” to stop the EPA from regulating carbon emissions at coal-burning power plants. McConnell said his top priority is “to try to do whatever I can to get the EPA reined in.” See Sam Youngman, McConnell: If Rand Paul runs for president, ‘he’ll be able to count on me’, Lexington Herald-Leader (Nov. 6, 2014).

EPA Releases Annual Environmental Enforcement Results

December 18, 2014, marked the release of the U.S. Environmental Protection Agency’s (EPA) annual environmental enforcement and compliance results. See News Release, U.S. Environmental Protection Agency, EPA Announces 2014 Annual Environmental Enforcement Results (Dec. 18, 2014). According to the EPA, its enforcement actions in 2014 required businesses across the country to invest more than $9.7 billion in regulatory compliance and equipment. Additionally, EPA collected a total of $163 million in combined federal administrative, civil judicial penalties, and criminal fines. Annual results showed a reduction of 141 million pounds of air pollutants, including 6.7 million pounds of air toxins, 337 million pounds of water pollutants, and 856 million cubic yards of contaminated water clean-up.

The release highlights EPA’s growing focus on enforcement of larger cases with greater impact. In the first of three notably large cases this year, EPA obtained a large settlement with the number one metallurgical coal supplier in the United States. Pursuant to the settlement agreement the company will invest $200 million to install and operate wastewater treatment facilities near coal mining operations in five states. Additionally, the company agreed to provide system-wide upgrades to assist in the reduction of coal mine pollution.

In November, the EPA reached a settlement agreement with two major auto manufacturers for an estimated $100 million for violations of the Clean Air Act based on the sale of more than 1 million vehicles with emissions collectively totaling 4.75 million metric tons of greenhouse gases.

On November 10, 2014, EPA obtained a settlement whereby the company agreed to pay more than $5.15 billion into a litigation trust (with $4.475 billion going to the trust’s environmental beneficiaries and $605 million going to its torts beneficiaries). According to the EPA, this case allowed EPA to close the year with its largest recovery for the cleanup of environmental contamination in history and the largest bankruptcy award the EPA has ever received for environmental claims and liabilities.

Coal Ash Regulation Update

The U.S. EPA’s efforts to develop a new regulatory path for coal ash (“Coal Combustion Residuals” or “CCR”) by regulating the material either as a hazardous waste or as a solid but non-hazardous waste, are nearing a conclusion. The deadline for EPA to announce a final decision is December 19. As we noted in February, this date was fixed by a consent decree filed in the U.S. District Court for the District of Columbia on January 29 of this year, and a press release at that time by the American Coal Ash Association provides a link to the consent decree. Statements by EPA Headquarters staff in a recent meeting with State officials at Region 4 offices in Atlanta indicate that EPA is intent on meeting the deadline.

In the run up to this deadline, interest groups on both sides of the issue have been making their cases. Advocates for classification of the material as either a non-hazardous waste regulated under Subtitle D of the Resource Conservation and Recovery Act and others who urge regulation as a hazardous waste under Subtitle C of the same Act have been diligently lobbying EPA and White House officials about their respective positions. In its most recent weekly report, Inside E.P.A. recounts the efforts of environmental side in this debate.

Interestingly, almost regardless of EPA’s final action, the leaders of both houses of the incoming Congress indicate that they are likely to emphasize legislation to address the issue. Both House Speaker Boehner and incoming Senate Majority Leader McConnell have indicated their intent to attempt to reign in several EPA actions, including those related to coal and CCR. (The Tampa Bay Times, and The Lexington Herald-Leader). If this proceeds, it is likely to focus on legislation sponsored in the House by West Virginia Representative, David McKinley (R. W.Va.) and Senator John Hoeven (R. N.D.) Both have previously introduced legislation intent on giving the States the authority to regulate coal ash as a non-hazardous waste with EPA becoming involved only in the event that an individual State fails to develop a regulatory program that is consistent with the federal legislation. McKinley and Hoeven have recently expressed renewed interest in pushing the legislation and expressed confidence that it will be taken up in both the House and the Senate during the 2014 Congress.

 

EPA Further Delays Hydraulic Fracturing Study as Controversy Builds

EPA’s current estimate of the completion time for a draft of its study of the risks posed by hydraulic fracturing (“fracking”) to drinking water is now projected by the agency to be developed in early 2015. This is based on comments in a letter originating from EPA’s Region 8 office stating that the study on the risks posed by fracking to drinking water won’t reach draft final form until “early 2015”. [Region 8 Letter]

The study was undertaken at the direction of Congress in 2009 when Congress requested EPA to conduct scientific research to examine the relationship between hydraulic fracturing in drinking water resources. Background and details of the study can be found at EPA’s website [here]. The initial plan was to issue initial results in 2012 and provide a final report in 2014, but EPA has regularly pushed back its timeframe projections. The idea of the study has been controversial from the start and has prompted controversy and criticism by interest groups and elected officials. See, for example, the objections raised in December 2013 by U.S. Chamber of Commerce President Thomas Donohue [here]. More recently, the Republican staff of the U.S. Senate’s Environment and Public Works Committee has issued a minority report which asserts that the impetus for the study was urged by “far left” interests intent on fighting against accessing domestic energy sources. [Link to Minority Staff Report].

Fracking has clearly expanded the availability of energy resources in the nation, but the concerns about potential impacts on drinking water and other resources remain unclear and have prompted substantial concerns. Over 30 states have moved to exercise some regulatory control over hydraulic fracturing activities, and EPA’s prolonged delay in pulling together any substantive scientific evidence regarding potential risks is simply making the controversy worse.