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Utility Solid Waste Activities Group v. Environmental Protection Agency

United States Court of Appeals, District of Columbia Circuit

August 21, 2018

Utility Solid Waste Activities Group, et al., Petitioners
v.
Environmental Protection Agency, Respondent Waterkeeper Alliance, et al., Intervenors

          Argued November 20, 2017

          On Petitions for Review of Administrative Action of the United States Environmental Protection Agency

          Douglas H. Green and Paul J. Zidlicky argued the causes for Industry petitioners. With them on the joint briefs were John F. Cooney, Margaret K. Kuhn, Samuel B. Boxerman, Eric Murdock, Makram B. Jaber, Joshua R. More, Raghav Murali, Richard G. Stoll, Lori A. Rubin, and Thomas J. Grever. Stephen J. Bonebrake, Brian H. Potts, and Aaron J. Wallisch entered appearances.

          Thomas Cmar argued the cause for Environmental petitioners. With him on the briefs were Matthew E. Gerhart, Mary M. Whittle, and Lisa Evans.

          Perry M. Rosen, Attorney, U.S. Department of Justice, argued the cause for respondents. With him on the briefs were Jeffrey H. Wood, Acting Assistant Attorney General, Jonathan Skinner-Thompson, Attorney, and Laurel Celeste, Attorney, U.S. Environmental Protection Agency.

          Douglas H. Green, John F. Cooney, and Margaret K. Kuhn were on the brief for Industry intervenor-respondents.

          Matthew E. Gerhart, Mary M. Whittle, and Lisa Evans were on the brief for Environmental intervenor-respondents.

          Before: Henderson, Millett and Pillard, Circuit Judges.

          OPINION

          PER CURIAM.

         These consolidated petitions challenge the Environmental Protection Agency's 2015 Final Rule governing the disposal of coal combustion residuals ("Coal Residuals") produced by electric utilities and independent power plants. See Hazardous and Solid Waste Management System; Disposal of Coal Combustion Residuals from Electric Utilities ("Final Rule"), 80 Fed. Reg. 21, 302 (April 17, 2015). Coal Residuals make up "one of the largest industrial waste streams generated in the U.S." Id. at 21, 303. Coal-fired power plants in the United States burned upwards of 800 million tons of coal in 2012 alone and produced approximately 110 million tons of solid waste as Coal Residuals. Id. That waste contains myriad carcinogens and neurotoxins. See Hazardous and Solid Waste Management System; Identification and Listing of Special Wastes; Disposal of Coal Combustion Residuals from Electric Utilities ("Proposed Rule"), 75 Fed. Reg. 35, 128, 35, 153, 35, 168 (June 21, 2010). Power plants generally store it on site in aging piles or pools that are at varying degrees of risk of protracted leakage and catastrophic structural failure. See 80 Fed. Reg. 21, 327- 21, 328. The Final Rule sets criteria designed to ensure that human health and the environment face "no reasonable probability" of harm from Coal Residuals spilling, leaking, or seeping from their storage units and harming humans and the environment. Id. at 21, 338-21, 339; 42 U.S.C. § 6944(a).

         The statutory framework calling for regulation of solid waste generation, storage, and disposal has been in place since 1976, when Congress enacted the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. § 6901 et seq., but regulations implementing RCRA have been long in the making. The EPA has long studied the Coal Residuals disposal problem and struggled over how to address its scale, complexity, and gravity. The agency has been goaded by public outrage over catastrophic failures at sites storing toxic Coal Residuals, see 75 Fed. Reg. at 35, 132, 35, 137, and was directed by a federal court to devise a schedule to comply with its obligation to regulate under RCRA, see Appalachian Voices v. McCarthy, 989 F.Supp.2d 30, 56 (D.D.C. 2013). Nearly four decades after Congress enacted RCRA, the EPA finally promulgated its first Final Rule regulating Coal Residuals in 2015.

         These consolidated petitions-one on behalf of environmental organizations ("Environmental Petitioners") and several others (collectively, "Industry Petition") for a consortium of power companies and their trade associations ("Industry Petitioners")-challenge various provisions of that Final Rule under the Administrative Procedure Act and RCRA. RCRA Subtitle D calls on the EPA to promulgate criteria distinguishing "sanitary landfills," which are permissible under the statute, from "open dumps," which are prohibited. 42 U.S.C. § 6944(a); see id. § 6903(14), (28). The statutory baseline for the 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 at such facility." Id. § 6944(a). Each claim here relates to what a utility operating one or more Coal Residuals disposal site(s) must do to qualify such site as a sanitary landfill that may lawfully operate under RCRA.

         Shortly before oral argument, the EPA announced its intent to reconsider the Final Rule, and moved to hold all proceedings in abeyance. We asked for clarification on the exact provisions of the Rule that would be subject to reconsideration. The EPA then filed a separate motion to remand six specific provisions.

         For the reasons that follow, we deny the EPA's abeyance motion, and partially grant its remand motion. We also grant in part the Environmental Petition and deny the Industry Petition.

         I. Background

         A.

         "Coal Residuals" is a catch-all term for the byproducts of coal combustion that occurs at power plants. It includes "fly ash," "bottom ash," "boiler slag," and "flue gas desulfurization materials." See 75 Fed. Reg. at 35, 137. These residuals vary in their size and texture, but all contain "contaminants of * * * environmental concern." Id. at 35, 138. According to the EPA, Coal Residuals contain carcinogens and neurotoxins, including arsenic, boron, cadmium, hexavalent chromium, lead, lithium, mercury, molybdenum, selenium, and thallium. 80 Fed. Reg. at 21, 449. The risks to humans associated with exposure to the identified contaminants include elevated probabilities of "cancer in the skin, liver, bladder, and lungs," as well as non-cancer risks such as "neurological and psychiatric effects," "cardiovascular effects," "damage to blood vessels," and "anemia." Id. at 21, 451. Both cancer and non-cancer risks to infants "tend[] to be higher than other childhood cohorts, and also higher than risks to adults." Id. at 21, 466. The risks to plant and animal wildlife include "elevated selenium levels in migratory birds, wetland vegetative damage, fish kills, amphibian deformities, * * * [and] plant toxicity." 75 Fed. Reg. at 35, 172.

         In developing the Final Rule, the EPA collected data on coal-fired units and their environs, identified hazards for evaluation, and specified benchmarks of toxicity that it determined "generally will be considered to pose a substantial present or potential hazard to human health and the environment and generally will be regulated." Final Rule, 80 Fed. Reg. at 21, 449, 21, 451. The EPA analyzed potential pathways of contamination to determine those most likely to pose a reasonable probability of adverse effects on humans or the environment. Id. at 21, 450-21, 451. The EPA concluded that current management practices for Coal Residuals posed risks to human health and the environment at levels justifying uniform national guidelines. Id. at 21, 303. The main exposure pathways the EPA found were through waste that escapes landfills and surface impoundments and then contaminates groundwater tapped as drinking water, and contaminates surface water that comes in direct contact with fish and other ecological receptors. Id.

         Under most circumstances, the operators of coal-fired power plants dispose of the waste either by dumping it in dry landfills or by mixing it with water to channel it to wet surface impoundments. 80 Fed. Reg. at 21, 303. These disposal sites are massive. On average, landfills span more than 120 acres and are more than 40 feet deep. Id. Surface impoundments average more than 50 acres in size with an average depth of 20 feet. Id. As of 2012, there were at least 310 landfills and 735 surface impoundments in the United States currently receiving coal ash. Id. The EPA identified at least 111 surface impoundments that are no longer receiving coal ash, but are not fully closed. See EPA, Regulatory Impact Analysis: EPA's 2015 RCRA Final Rule Regulating Coal Combustion Residual (CCR) Landfills and Surface Impoundments at Coal-Fired Utility Power Plants, 2-3 (2014), Joint App'x (J.A.) 1096. The record does not specify the number of inactive landfills. See id. The Rule also addresses circumstances under which Coal Residuals safely may be "beneficially used"-e.g., to make cement-thereby reducing the total volume that must be managed as waste. See 75 Fed. Reg. at 35, 212.

         Landfills and surface impoundments both pose threats to human health and the environment. 80 Fed. Reg. at 21, 327- 21, 328. The risks generally stem from the fact that "thousands, if not millions, of tons [of coal ash are] placed in a single concentrated location." Id. These disposal sites are at risk of structural failure, particularly where they are located in unstable areas such as wetlands or seismic impact zones. Id. at 21, 304. The sheer volume of Coal Residuals at these sites, moreover, can force contaminants into the underlying soil and groundwater, threatening sources of drinking water. Id. at 21, 304-21, 305. Surface water bodies-i.e., rivers, lakes, and streams, see 75 Fed. Reg. at 35, 131-are also at risk of contamination through harmful constituents that migrate through groundwater, or flow into surface waters as run-off or wastewater discharge, any of which can lead to environmental harms such as "wetland vegetative damage, fish kills, amphibian deformities, * * * [and] plant toxicity." See id. at 35, 172.

         Groundwater contamination is more likely to occur at sites that are unlined or lack adequate lining between the coal ash and the soil beneath it. See id.; see also Regulatory Impact Analysis, 5-22. However, most existing coal ash disposal sites-70% of landfills and 65% of surface impoundments- have no liner at all. See Regulatory Impact Analysis, 3-4 nn.104-105, J.A. 1108. And while most new landfills and surface impoundments are constructed with liners, see 80 Fed. Reg. at 21, 324, not all liners are alike. Composite lining, which includes a plastic geomembrane and several feet of compacted soil to act as a buffer, effectively eliminates the risk of groundwater contamination. See EPA, Human & Ecological Risk Assessment of Coal Combustion Residuals (Risk Assessment), 4-8 to 4-9, J.A. 1110-1111. But many impoundments are lined only with compacted soil and are therefore far less protective. See Regulatory Impact Analysis, 5-22, J.A. 1112. The EPA has acknowledged that it "will not always be possible" to restore groundwater or surface water to background conditions after a contamination event. See Response to Comments 50, J.A. 1301.

         Structural failures of surface impoundments pose additional risks that are more episodic but potentially more catastrophic than harm from liner leakage. Impoundment dam ruptures can result in "significant coal slurry releases, causing fish kills and other ecologic damage, and in some instances damage to infrastructure." 80 Fed. Reg. at 21, 457 (footnote omitted). The EPA is aware of at least 50 surface impoundments that are a "high" hazard, see EPA, Coal Combustion Residuals Impoundment Assessment Reports, J.A. 446-469, which the Rule defines to mean that "failure or mis-operation will probably cause loss of human life" in addition to other harms, 40 C.F.R. § 257.53. The EPA has tagged another 250 impoundments as posing a "significant" hazard, see Impoundment Assessment Reports, J.A. 446-469, where failure or mis-operation is unlikely to kill people, but would "probably cause economic loss, environmental damage, or disruption of lifeline facilities, or impact other concerns." 40 C.F.R. § 257.53. Structural risk is exacerbated at sites located in geologically unstable areas, such as those with poor foundation conditions, areas susceptible to earthquakes or other mass movements, or those with karst terrains. See id.; 80 Fed. Reg. at 21, 365-21, 367.

         Risks from inactive surface impoundments at inactive power plants, which the parties refer to as "legacy ponds," are also apparent in the record. As with surface impoundments at active plants, groundwater contamination or catastrophic structural failure of a legacy pond threatens human health and the environment. But legacy ponds, which by their nature are older than most surface impoundments, are "generally unlined" and unmonitored, and so are shown to be more likely to leak than units at utilities still in operation. 80 Fed. Reg. at 21, 343- 21, 344. Without an on-site operator to monitor and maintain such a unit, consequences of leakage or structural failure may be amplified. Cf. id. at 21, 394 (requiring qualified personnel to conduct weekly inspections at active surface impoundments).

         The EPA record reports on the many cases in which damage has already occurred. "EPA has confirmed a total of 157 cases * * * in which [Coal Residual] mismanagement has caused damage to human health and the environment." 80 Fed. Reg. at 21, 325. The EPA recounts that public pressure to regulate Coal Residuals escalated after an unlined surface impoundment in Kingston, Tennessee suffered a "catastrophic" structural failure on December 22, 2008. See 75 Fed. Reg. at 35, 132. The impoundment released approximately 5.4 million cubic yards of Coal Residual sludge across 300 acres of land and into the nearby Emory River. See EPA, Damage Case Compendium: Technical Support Document, Volume I: Proven Damage Cases, 143 (2014), J.A. 1192. According to the EPA, the spill was one of the "largest volume industrial spill[s] in U.S. history." Id. at 143 n.612, J.A. 1192. The Coal Residual sludge ruptured a natural gas line, disrupted power in the area, damaged or destroyed dozens of homes, and resulted in elevated levels of arsenic and lead in the Emory River. Id. The resulting river contamination "completely destroyed" more than 80 acres of aquatic ecosystems. Id. at 144, J.A. 1193. More than a year after the spill, the majority of fish collected from the river contained toxins that rendered them unsafe for human consumption. Id. The disaster forced the closure of the Emory River for almost two years. The Tennessee Valley Authority took four years and spent more than $1.2 billion to remove Coal Residuals and contaminated sediment from the river and adjoining areas, to monitor and repair associated damage, and to construct a new disposal unit. Id. at 148, J.A. 1197.

         B.

         Two years after the Kingston disaster, the EPA promulgated the Proposed Rule announcing its intent to regulate Coal Residuals under RCRA. See 75 Fed. Reg. At 35, 128.[1]

         A key question for the EPA had long been whether to regulate Coal Residuals as hazardous waste under the cradle-to-grave federal hazardous waste management authority conferred by RCRA Subtitle C, 42 U.S.C. §§ 6921-6939g, or to treat it as nonhazardous solid waste subject to national guidelines under Subtitle D, id. §§ 6941-6949a. A waste is "hazardous" and subject to regulation under Subtitle C only if it exhibits one of four hazard characteristics: ignitability, corrosivity, reactivity, or toxicity. See id. § 6921; 40 C.F.R. §§ 261.11, 261.20-261.24. Under Subtitle C, the EPA directly regulates all stages of production and disposition of hazardous wastes, and has administrative enforcement power as well as authority to initiate or recommend civil and criminal actions in court. See 42 U.S.C. §§ 6922-6928. Subtitle D, in contrast, envisions that states are primarily responsible for regulating disposal of nonhazardous wastes in landfills and dumps. The EPA's principal role under Subtitle D is to announce federal guidelines for state management of nonhazardous wastes; Subtitle D leaves it up to the states to "use federal financial and technical assistance to develop solid waste management plans in accordance with [the] federal guidelines." Environmental Def. Fund v. EPA, 852 F.2d 1309, 1310 (D.C. Cir. 1988).

         Substantively, Subtitle D prohibits the disposal of solid waste in "open dumps," 42 U.S.C. § 6945(a), and calls on the EPA to promulgate criteria for determining whether a waste facility constitutes an open dump-criteria that, if followed, will ensure "no reasonable probability of adverse effects on health or the environment from disposal of solid waste at such facility," id. § 6944(a). Subtitle D neither grants the EPA direct enforcement authority nor requires states to adopt or implement its requirements. See id. § 6941. Enforcement is left to states' own policy decisions and to the initiative of people bringing citizen suits to enforce the federal standards. See id. §§ 6946-6947, 6972. But see infra Part II.A. (discussing recent amendments to RCRA).

         The EPA initially published two alternative proposed rules to govern Coal Residuals, one under each Subtitle, basing the Subtitle C proposal on the toxicity of Coal Residuals. See 75 Fed. Reg. at 35, 146. The proposals drew 450, 000 public comments, the vast bulk of which spoke to the threshold question of which RCRA Subtitle to use, and the majority of which supported regulation under Subtitle C. 80 Fed. Reg. at 21, 319. Most of the commenters were individuals and environmental groups pressing for stronger regulation "because state programs have failed to adequately regulate the disposal of [Coal Residuals] and because the risks associated with the management of these wastes are significant." Id. Only a handful of states, for example, required any groundwater monitoring around units holding Coal Residuals, id. at 21, 323-21, 324, including only one of the eight states with the biggest volumes of Coal Residuals, Regulatory Impact Analysis, G-6, J.A. 1121. On the other hand, the enormous volume of waste permeated with relatively low concentrations of toxins posed practical difficulties for any Subtitle C regulation. See 80 Fed. Reg. at 21, 321.

         Based on many years of analysis, the EPA found "a compelling need for a uniform system of requirements to address the[] risks [from Coal Residuals]," and decided to move forward with a Final Rule. 80 Fed. Reg. at 21, 327. The EPA opted to proceed under the less muscular Subtitle D even as it continued to study factors potentially supporting regulating Coal Residuals as hazardous waste under RCRA Subtitle C. See id. at 21, 319-21, 327. The EPA thus formally deferred deciding whether Subtitle C regulation is warranted, and used its Subtitle D authority to set forth guidelines on where and how disposal sites for Coal Residuals are to be built, maintained, and monitored. See 80 Fed. Reg. at 21, 302.

         The Final Rule sets minimum criteria for the disposal of Coal Residuals in landfills and surface impoundments. Among the provisions of the Final Rule at issue here are location restrictions on landfills and surface impoundments, requirements pertaining to lining, structural integrity, and groundwater monitoring, and criteria for recycling Coal Residuals for beneficial uses, such as substituting for cement in road construction, in lieu of keeping it in disposal units. See 40 C.F.R. §§ 257.60-257.74. The Final Rule also sets compliance deadlines, procedures for closing non-complying landfills and surface impoundments, and requirements that operators of these disposal sites make records of their compliance with the Final Rule publicly available. See id. §§ 257.100-257.07. We discuss the relevant criteria in more detail in addressing the merits of the consolidated petitions.

         C.

         Two groups of petitioners sought review of the Final Rule. Environmental Petitioners are an assortment of environmental groups that includes the Environmental Integrity Project, Sierra Club, and Hoosier Environmental Council. They generally claim that EPA did not go far enough to protect the public and the environment from the harms of Coal Residual disposal. Specifically, they claim that the Final Rule unlawfully countenances significant risks of harmful leakage by allowing unlined impoundments as well as impoundments lined only with a layer of compacted soil to continue receiving Coal Residuals. Environmental Petitioners also contend that the EPA acted arbitrarily and capriciously by exempting from regulation so-called "legacy ponds"-inactive surface impoundments at shuttered power plants-given evidence that legacy ponds are at risk of unmonitored leaks and catastrophic structural failures. They also make a claim, not raised during rulemaking, that the EPA violated RCRA's citizen-suit provision by failing to require the operators of Coal Residual disposal sites to timely and publicly disclose records reflecting their compliance with the Final Rule.

         Industry Petitioners are a collection of industry trade associations and utilities including the Utility Solid Waste Activities Group, AES Puerto Rico, LP, the Edison Electric Institute, the National Rural Electric Cooperative Association, and the American Public Power Association. They first assert that the EPA exceeded its statutory authority under RCRA to set guidelines for facilities where waste "is disposed of," 42 U.S.C. § 6903(14), by regulating surface impoundments that no longer actively receive Coal Residuals. They further claim that the Rule's restriction on placement of new units and expansions of existing units near aquifers, 40 C.F.R. § 257.60 (aquifer location restriction), was inadequately noticed, and that the Rule's provision for nonconforming units to continue in operation if no alternative disposal capacity is available, id. § 257.103 (alternative closure provision), arbitrarily and capriciously excludes cost considerations from its definition of "available." Industry Petitioners also challenge the Rule's location restrictions and structural integrity criteria governing units in seismic impact zones. See id. §§ 257.63, 257.73- 257.74. They contend that the deadline for existing impoundments' compliance with those provisions was arbitrarily shortened from the timeframe in the Proposed Rule, that the Rule arbitrarily applied the location restrictions to new but not existing landfills, and that EPA failed to explain the strict design criteria it adopted for new landfills and impoundments.

         Environmental Petitioners intervened in Industry's petition for review, and vice versa. We consolidated the petitions. The case has been pending in this court since 2015, but several procedural matters delayed resolution until now. In June 2016, we granted the EPA's unopposed motion to remand to itself several provisions of the Final Rule not at issue here that the EPA had decided to vacate. See Per Curiam Order, Utility Solid Waste Activities Grp. v. EPA, No. 15-1219 (D.C. Cir. June 14, 2016). In doing so, we held all proceedings in abeyance while the EPA revised portions of the Rule affected by the vacatur. See id. We then set oral argument for October 17, 2017.

         Less than a month before oral argument, the EPA announced that it had granted the petition of several industry groups to reconsider the Final Rule, and moved us to hold all proceedings in abeyance. The EPA pointed to Congress's recent enactment of the Water Infrastructure Improvements for the Nation Act ("WIIN Act"), Pub. L. No. 114-322, 130 Stat. 1628 (2016) (codified at 42 U.S.C. § 6945(d)), in December 2016 that, among other things, amended RCRA Subtitle D to allow the EPA to approve State permitting programs "to operate in lieu of [EPA] regulation of coal combustion residuals units in the State," provided those programs are at least as environmentally protective as the existing (or successor) EPA regulations. 42 U.S.C. § 6945(d)(1)(A). When we asked EPA to specify which provisions it planned to reconsider, the EPA filed another motion. That motion sought to remand provisions of the Rule relating to the beneficial use of Coal Residuals, alternative compliance provisions, legacy ponds, and the EPA's statutory authority to regulate inactive surface impoundments. We deferred a ruling on both motions until now.

         On July 30, 2018, the EPA promulgated an amendment to the Final Rule (i) allowing a state or the EPA, when acting as a permitting authority, to use alternate groundwater performance standards, (ii) revising the groundwater performance standards for certain constituents, and (iii) extending the timeframe for facilities to cease receiving Coal Residuals once they are required to close. See Hazardous and Solid Waste Management System: Disposal of Coal Combustion Residuals from Electric Utilities; Amendments to the National Minimum Criteria, 83 Fed. Reg. 36, 435, 36, 436 (July 30, 2018).

         II. Request for Abeyance

         A. WIIN Act

         At the outset, the EPA requests that this case be held in abeyance while it considers potential regulatory changes in response to Congress's enactment of the WIIN Act, 42 U.S.C. § 6945(d). The WIIN Act amended RCRA's Subtitle D State permitting scheme. As relevant here, Section 6945(d) provides that the Administrator may approve qualified State "permit program[s] or other system[s] of prior approval and conditions under State law for regulation by the State of coal combustion residuals units" to "operate in lieu of [EPA] regulation of coal combustion residuals units in the State * * *." 42 U.S.C. § 6945(d)(1)(A).

         But the Administrator may only approve a state plan if its standards "are at least as protective as the criteria" set by the EPA in its corresponding RCRA regulations, specifically including Coal Residuals regulation, 40 C.F.R. pt. 257. 42 U.S.C. § 6945(d)(1)(C); see id. § 6945(d)(1)(B)(i). The WIIN Act also provides that a Coal Residuals disposal site can only qualify as a "sanitary landfill" if it is in full compliance with, among other things, the EPA's extant (or successor) regulations governing Coal Residuals waste sites. 42 U.S.C. § 6945(d)(6).

         The EPA argues that the WIIN Act has afforded it new regulatory options and makes "fundamental changes to RCRA Subtitle D as applied specifically to [Coal Residuals]." EPA WIIN Br. 4, 6, 8. On that basis, the EPA asks us to hold the case in abeyance while it decides whether or not "to alter some of its regulatory choices[.]" EPA WIIN Br. at 2, 6.

         We decline to exercise our discretion to hold the case in abeyance. We leave it open for the EPA to address on remand the relevance of the WIIN Act, the Act's express incorporation of the EPA regulations published at 40 C.F.R. Part 257, and its definition of "sanitary landfill."

         III. Environmental Petitioners' Challenges

         A. Unlined Surface Impoundments

         Environmental Petitioners challenge the Final Rule's provision that existing, unlined surface impoundments may continue to operate until they cause groundwater contamination. 40 C.F.R. § 257.101(a)(1). They contend that the EPA failed to show how continued operation of unlined impoundments meets RCRA's baseline requirement that any solid waste disposal site pose "no reasonable probability of adverse effects on health or the environment." 42 U.S.C. § 6944(a).

         The EPA found that unlined impoundments are dangerous: It concluded that, among the studied disposal methods, putting Coal Residuals "in unlined surface impoundments and landfills presents the greatest risks to human health and the environment." 80 Fed. Reg. at 21, 451. The Rule accordingly requires that all new surface impoundments be constructed with composite lining that effectively secures against leakage. See 40 C.F.R. § 257.72(a). But it allows existing unlined impoundments to continue to receive Coal Residuals indefinitely, until their operators detect that they are leaking. Id. § 257.101(a). Only once a leak is found must the operator of an unlined impoundment begin either retrofitting the unit with a composite liner, or closing it down-a process that the Rule contemplates may take upwards of fifteen years. Id. § 257.102(f). In view of the record evidence that led the EPA to conclude that composite liners are needed to ensure that new impoundments meet RCRA Subtitle D's "no reasonable probability" standard, Environmental Petitioners claim that the Rule's allowance for continued operation of existing, unlined surface impoundments is arbitrary and capricious and contrary to RCRA.

         The EPA and Industry Intervenors assert that the composite lining required for new units is not needed for existing units because most unlined impoundments do not leak, and an unlined impoundment that is not leaking is not dangerous. Industry Intervenors emphasize that the record suggests that "almost two-thirds of unlined impoundments do not leak," and they assert that "appropriate controls on impoundments that do leak" suffice to meet RCRA's "no reasonable probability" standard. Industry Intervenor Br. 6- 7. The EPA underscores that it made no finding of any "reasonable probability that each and every unlined impoundment will, in fact, result in adverse effects on health and the environment." Resp't Br. 82. It insists that RCRA's "no reasonable probability" standard is met by the Rule's provisions for "extensive monitoring of groundwater to detect constituent leaking," id. at 83, and "immediate action to stop that leak," "redress that leak," and to close the site as soon as a harmful leak is detected. Oral Arg. Tr. 100:20-100:25.

         The record shows, however, that the vast majority of existing impoundments are unlined, see Regulatory Impact Analysis 3-4, J.A. 1108, that unlined impoundments have a 36.2 to 57 per cent chance of leakage at a harmfully contaminating level during their foreseeable use, see id. at 4-9, 5-22, J.A. 1111-1112, and that the threat of contamination from unlined units exceeds the EPA's cancer risk criteria and thus "generally will be considered to pose a substantial present or potential hazard to human health and the environment," 80 Fed. Reg. at 21, 449-21, 450; see Risk Assessment 5-5, J.A. 1041. It is inadequate under RCRA for the EPA to conclude that a major category of impoundments that the agency's own data show are prone to leak pose "no reasonable probability of adverse effects on health or the environment," 42 U.S.C. § 6944(a), simply because they do not already leak.

         The number of unlined impoundments is large. The EPA identified 735 existing active surface impoundments throughout the country. Of the 504 sites for which the EPA was able to collect liner data, approximately 65 per cent were completely unlined, with most of the rest lined only with compacted soil or other partial or high-permeability liners. See Regulatory Impact Analysis 3-4 n.105, J.A. 1108. Only 17 per cent of surface impoundments for which the EPA has liner data had composite liners-the sole liner type that the EPA found to be effective in reducing the risk of toxic chemical leakage to the level that the Agency found acceptable.

         Those hundreds of unlined impoundments are at significant risk of harmful leakage. Of 157 sites where the EPA confirmed that Coal Residuals have already caused damage to human health and the environment, the damage cases "were primarily associated with unlined units." 80 Fed. Reg. at 21, 452. The record evidence shows that an impoundment with composite lining, which the Rule requires of all new impoundments, has a 0.1 per cent chance of contaminating groundwater at drinking-water wells a mile distant from the impoundment perimeter over the course of a 100-year period. Regulatory Impact Analysis 5-22, J.A. 1112. An unlined impoundment, in contrast, has a 36.2 per cent chance of contaminating groundwater at such a distance. See id. And the probability of contamination is higher at distances closer to the impoundment site, id., J.A. 1112; measured one meter from the impoundment's perimeter, the contamination risk jumps to 57 per cent, id., J.A. 1111. See Risk Assessment ES-4, J.A. 1083-1084 ("In many of the potential damages cases, groundwater exceedances were discovered near the boundary" of the impoundment). According to the administrative record, then, a significant portion of the 575 identified unlined surface impoundments are likely to contaminate groundwater.

         Impoundment leakages pose substantial risks to humans and the environment. The EPA studied a wide range of toxins present in Coal Residuals, see Risk Assessment ES-4, J.A. 1010, and considered various forms of potential human and environmental exposures. The EPA uses risk benchmarks in assessing the propriety of regulatory action. For example, it treats a cancer risk in excess of 1 x 104, or 1 in 10, 000, as one that "generally will be considered to pose a substantial present or potential hazard to human health and the environment[.]" 80 Fed. Reg. at 21, 449. For non-cancer risks, the EPA determined that a Hazard Quotient-defined as the "ratio of the estimated exposure to the exposure at which it is likely that there would be no adverse health effects," 75 Fed. Reg. at 35, 168-gives rise to such a threat when it is greater than or equal to 1. See 80 Fed. Reg. at 21, 449. Using those benchmarks and the data it collected from the Risk Assessment, the EPA found that material human exposures derive from ingestion of contaminated groundwater or the consumption of contaminated fish. Id. at 21, 450-21, 451.[2]The plant and animal exposures the EPA identified as material derive from contact with contaminated surface water. See id.; Risk Assessment 5-8, J.A. 1044. The EPA also expressed concern about the contamination of groundwater that is not currently used as a source of drinking water because "[s]ources of drinking water are finite, and future users' interests must also be protected." 80 Fed. Reg. at 21, 452. In view of the record's limitation of the risk calculus associated with leakage to the subset of toxins and exposures that the EPA deemed to present a substantial risk to human health or the environment, the EPA's assertion in its brief that, even where it occurs, leakage "will not necessarily result in contamination of groundwater, either above allowable regulatory thresholds, or at all," is at best a red herring. Resp't Br. at 85. Every leakage the EPA record treated as material exceeded regulatory thresholds. In defending the Rule here, the EPA looks at too narrow a subset of risk information and applies the wrong legal test.

         The Final Rule's approach of relying on leak detection followed by closure is arbitrary and contrary to RCRA. This approach does not address the identified health and environmental harms documented in the record, as RCRA requires. Moreover, the EPA has not shown that harmful leaks will be promptly detected; that, once detected, they will be promptly stopped; or that contamination, once it occurs, can be remedied.

         On its own terms, the Rule does not contemplate that contamination will be detected as soon as it appears in groundwater. The EPA and Industry defend the rule as RCRA-compliant principally because, they say, it provides for retrofit with a composite liner or closure of an unlined impoundment "[o]n the first indication that an unlined unit is leaking[.]" Industry Intervenor Br. 6. But the required groundwater sampling need only occur "at least semiannual[ly]," or perhaps less frequently under certain geological conditions. 40 C.F.R. § 257.94(b), (d); id. § 257.95(c). The Rule thus contemplates that leaks will often go undetected for many months.

         By the time groundwater contamination from an unlined impoundment has been detected, more damage will have been done than had the impoundment been lined: Leakage from unlined impoundments is typically quicker, more pervasive, and at larger volumes than from lined impoundments. See 80 Fed. Reg. at 21, 406. Unlike lined impoundments, in which leaks are "usually caused by some localized or specific defect in the liner system that can more readily be identified and corrected," leakage from unlined impoundments is more pervasive and less amenable to any quick, localized fix. Id. at 21, 371. When an unlined impoundment begins to leak, Coal Residual sludge "will flow through the unit and into the environment unrestrained," such that retrofit or closure of the unit are typically "the only corrective action strateg[ies] that [the] EPA can determine will be effective[.]" See id.

         Neither retrofitting nor closure occurs immediately under the Rule; the timeline contemplates a process that takes from five to fifteen years. See 40 C.F.R. § 257.102. The EPA understates the harm its own record evidences by emphasizing that "leaking unlined impoundments must cease receiving [Coal Residuals] and initiate closure or retrofit activities within six months." Resp't Br. at 81; see 40 C.F.R. § 257.101(a)(1). What it neglects to account for is that the Rule gives the operator a further five years to complete retrofitting or closure activities. Id. §§ 257.102(f)(1)(ii), 257.102(k)(3). The Rule also allows the operators of surface impoundments to extend that window, by up to two years for smaller units and, for units larger than 40 acres-which most are, see 80 Fed. Reg. at 21, 303-for up to ten years, see 40 C.F.R. § 257.102(f)(2)(ii).

         The Rule addresses neither the risks to public health and to the environment before leakage is detected, nor the harms from continued leakage during the years before leakage is ultimately halted by retrofit or closure. See generally 40 C.F.R. §§ 257.90-257.104. In defending the Rule as compliant with RCRA, the EPA did not even consider harms during the retrofit or closure process. See Resp't Br. 80-86; 80 Fed. Reg. at 21, 403-21, 406; cf. Oral Arg. Tr. 102-105 (EPA counsel unable to identify record evidence regarding how quickly leaks can be detected or how quickly and thoroughly responsive action can occur, but referring generally to a practice of immediate "pump and treat," which the Rule does not appear to require). An agency's failure to consider an important aspect of the problem is one of the hallmarks of arbitrary and capricious reasoning. See United States Sugar Corp. v. EPA, 830 F.3d 579, 606 (D.C. Cir. 2016) (per curiam) (citing Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)).

         The EPA's position suffers additional flaws. The EPA determined that contaminated surface waters, such as rivers, streams, and lakes, are the principal pathway of harm to environmental receptors, but the Final Rule requires only monitoring of groundwater, and only for levels of contamination that would harm human health. See 40 C.F.R. §§ 257.90-257.95 (calling for groundwater monitoring systems); 75 Fed. Reg. at 35, 130 (defining maximum contaminant level in terms of drinking water safety). Surface water contamination poses environmental risks from "[e]levated selenium levels in migratory birds, wetland vegetative damage, fish kills, amphibian deformities, * * * [and] plant toxicity," 75 Fed. Reg. at 35, 172, and to humans through the possible consumption of contaminated fish, 80 Fed. Reg. at 21, 444. These risks exceed the EPA's risk criteria for ecological receptors. See Risk Assessment 5- 8, J.A. 1044. And some contamination levels that do not meet the risk threshold for humans may exceed thresholds for ecological receptors. See, e.g., id. (noting a risk exceedance unique to ecological receptors from cadmium). Yet the record does not explain how the Rule's provisions for groundwater monitoring, followed by corrective action only when human exposure benchmarks are exceeded, will mitigate these risks. RCRA requires the EPA to set minimum criteria for sanitary landfills that prevent harm to either "health or the environment." 42 U.S.C. § 6944(a) (emphasis added). The EPA's criteria for unlined surface impoundments, limited as they are to groundwater monitoring for contaminant levels keyed to human health, only partially address the first half of the statutory requirement.

         For these reasons, we vacate 40 C.F.R. § 257.101, which allows for the continued operation of unlined impoundments, and remand for additional consideration consistent with this opinion.

         B. Liner Type Criteria

         Environmental Petitioners next challenge the Final Rule's regulation of so-called "clay-lined" surface impoundments. A clay liner consists of at least two feet of compacted soil to act as a buffer between the Coal Residual sludge and the local soil. See Risk Assessment 4-8; J.A. 1024. Even as the Rule requires all newly constructed surface impoundments to be built with composite lining, disapproving any new impoundments lined only with compacted soil, it treats existing impoundments constructed with the same compacted soil and no geomembrane as if they were "lined." See 40 C.F.R. §§ 257.71(a)(1)(i), 257.96-257.98. The upshot is that such clay-lined impoundments may stay open and keep accepting Coal Residuals, subject to groundwater monitoring for leakage, see 40 C.F.R. § 257.101, but, unlike existing unlined impoundments-which must begin closure when they leak, id. ยง 257.71(a)(1)-clay-lined impoundments need not begin closure when they are ...


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