Earlier this week the House Subcommittee on Rural Development, Entrepreneurship & Trade held a hearing on EPA’s proposal to classify coal ash (also known as coal combustion products (CCP)) as federally-regulated hazardous waste. Read more about the proposal.
The press release released by the Subcommittee stated:
During the hearing, entrepreneurs in the recycling industry said that a hazardous waste classification carries a stigma and would raise liability fears, making it difficult to use coal ash in building materials. Lawmakers also questioned whether the EPA had evaluated the full impact the proposed rule might have on small businesses. In one exchange with lawmakers, the EPA witness conceded that stiffer regulation of coal ash could potentially cause a 6 percent increase in electricity rates.
Should coal ash be classified as hazardous waste, there is also a potential for third party claims for existing building materials that contain the material. Stay tuned.
EPA has issued both a press release and a statement on its website announcing its proposed rule concerning the management of coal combustion products (CCP, also called “coal ash”). In the news release, EPA said:
The proposal opens a national dialogue by calling for public comment on two approaches for addressing the risks of coal ash management under the nation’s primary law for regulating solid waste, the Resource Conservation and Recovery Act (RCRA). One option is drawn from authorities available under Subtitle C, which creates a comprehensive program of federally enforceable requirements for waste management and disposal. The other option includes remedies under Subtitle D, which gives EPA authority to set performance standards for waste management facilities and would be enforced primarily through citizen suits. A chart comparing and contrasting the two approaches is available on EPA’s Web site.
Under both approaches proposed by EPA, the agency would leave in place the Bevill exemption for beneficial uses of coal ash in which coal combustion residuals are recycled as components of products instead of placed in impoundments or landfills. Large quantities of coal ash are used today in concrete, cement, wallboard and other contained applications that should not involve any exposure by the public to unsafe contaminants. These uses would not be impacted by today’s proposal.
The proposed rule is 563 pages long in the pre-publication form, but EPA developed a table to simply a comparison of the two regulatory approaches in the rule.
Our last entry discussed the concept of “Black Swan” events, a term created by noted author Nassim Nicholas Taleb to describe an event that is (a) so low in probablility that it is unforeseeable and (b) so catastrophic in impact that it changes history.
Certainly, risk assessments are predictive in nature and no one can predict the future with complete certainty. But in our view, one of the best tools available for risk assessments is an open mind. This can be a challenge in the EHSS world as we generally have engineering and other technical backgrounds. We have been trained to seek absolutes and eliminate uncertainties. At Elm, we believe that involving external support helps to identify and explore events (and their related exposures) that are relevant but get “technically rationalized” by internal staff.
With the BP oil spill and the December 2008 Kingston, Tennessee coal ash pond failure, we began thinking about some of the Black Swan events discussed with clients in the past. Below are a handful of EHSS Black Swan risk events that we have discussed with clients over the past years – and some that are currently on our mind.
- Radical change in EPA’s regulation of coal ash management (discussed several years before the Kingston event, and vehemently opposed by the client)
- Catastrophic failure of GHG emissions trading market
- Dramatic failures/errors in GHG footprint calculation methodology
- Nationalization of privately-owned CO2 emissions assets
- Regulation and class-action level public concerns over chemical content of consumer goods
- Waste disposal liability for and public pressures about exporting electronic wastes
- Dramatic increase in OSHA/EPA enforcement – frequency, severity and targeted industries/sites
- Major expansion of pollution exclusions/limitations in insurance policies
- Increased success of US-based NGOs in successfully obtaining US venue for lawsuits concerning EHSS allegations for non-US sites/projects/activities
- Unprecedented shareholder and SEC pressure on public companies related to EHSS matters
- Increased importance of EHSS in supply chains and procurement decisions
Perhaps these seem far-fetched to you or your company. But if that is the case, the egg of that – or another – Black Swan is quietly incubating somewhere in your organization.
The environmental newsletter of the Association of General Contractors (AGC) sheds some light on the status of EPA’s developing regulation of coal ash or coal combustion products (CCP). The newsletter indicated that
the agency expects to release a rulemaking on coal combustion residuals (or waste) in April 2010, with a hazardous designation reported likely.
CCP has been exempted from regulation as a hazardous waste through an interpretation of existing hazardous waste law. Under that interpretation, coal ash was “pardoned” as part of the “Bevill Amendment” – a 1980 amendment to the federal waste management legistration that excluded from regulation certain mining and mineral processing waste. The amendment also mandated that EPA conduct a study to determine how to manage CCP.
The study was completed and the findings were presented to Congress in 1988 and again in 1999 – both times, EPA recommended that CCP not be regulated as hazardous waste. Two regulatory determinations were subsequently published – one in 1993 and one in 2000, both again affirming that regulation of CCP as hazardous waste was not warranted.
Although EPA has not yet released its proposed regulation, AGC’s article stated that
sources indicate that EPA is strongly favoring a hazardous waste designation in order to establish standard and federally enforceable practices.
In addition to creating significant direct waste management costs to CCP generators, a hazardous waste designation for CCP would have a detrimental impact on CCP reuse. CCP-based materials would likely create the potential for third-party liabilities in addition to the costs/questions associated with regulatory compliance.
In case you haven’t yet seen it, EPA wrapped up the year with three significant announcements.
First, the Agency published its 2009 compliance enforcement results. The summary statistics are here. A few points from their website
- In fiscal year (FY) 2009, the Environmental Protection Agency’s enforcement and compliance program concluded civil and criminal enforcement actions requiring polluters to invest an estimated $5.4 billion to reduce pollution, clean up contaminated land and water, achieve compliance and fund environmentally beneficial projects. Civil and criminal defendants committed to reduce pollution by approximately 570 million pounds annually once all required controls are fully implemented.
- Approximately 57% of pollution reductions and 71% of pollution control investments obtained through the Agency’s FY 2009 enforcement actions focused on water and air pollution priority problems.
- In FY 2009, EPA opened 387 new environmental crime cases, the largest number of criminal case initiations in five years.
Second, EPA announced it has settled with Duke Energy to resolve violations of the Clean Air Act’s new source review requirements found at the company’s Gallagher coal-fired power plant in New Albany, Ind., located directly across the Ohio River from Louisville, Ky. The lawsuit was filed in 1999.
Under the settlement, Duke will spend approximately $85 million to reduce air pollution at the plant through a combination of fuel switching and air pollution control equipment, $1.75 million on the civil penalty, and another $6.25 million on environmental mitigation projects.
The Duke settlement is the 17th settlement secured by EPA and DOJ as part of a national enforcement initiative targeting coal-fired power plants under the Clean Air Act’s New Source Review requirements. See the press release.
Lastly, EPA announced it is delaying a decision on the regulatory determination for coal ash. No timeframe or deadline was offered by EPA. Read the press release.