In a matter of days, Americans have been asked to stay home as states across the country issue orders requiring non-essential businesses to cease operations. Given the essential public health role of the waste and recycling industries, however, these industries must continue service. This alert explores how the Department of Homeland Security and most states that have issued “stay at home” orders recognize the waste industry as an essential service, allowing the industry to continue operating during these unprecedented times.

Waste Industry Deemed “Essential Critical Infrastructure” by Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency

The Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (“CISA”) has recognized solid and hazardous waste collection workers and wastewater treatment workers as part of the Essential Critical Infrastructure Workforce. This classification identifies workers who conduct operations and services that are essential to continued critical infrastructure and it is intended to help state and local officials as they contemplate how to protect their communities from COVID-19. CISA listed the following waste industry personnel as critical infrastructure workers:

Transportation and Logistics

  • Truck drivers who haul hazardous and waste materials to support critical infrastructure, capabilities, functions, and services.

Hazardous Materials

  • Workers at nuclear facilities, workers managing medical waste, workers managing waste from pharmaceuticals and medical material production, and workers at laboratories processing test kits;
  • Workers who support hazardous materials response and cleanup; and
  • Workers who maintain digital systems infrastructure supporting hazardous materials management operations.

Water and Wastewater

  • Employees needed to operate and maintain drinking water and wastewater/drainage infrastructure, including:
    • Operational staff at water authorities;
    • Operational staff at community water systems;
    • Operational staff at wastewater treatment facilities;
    • Workers repairing water and wastewater conveyances and performing required sampling or monitoring;
    • Operational staff for water distribution and testing;
    • Operational staff at wastewater collection facilities;
    • Operational staff and technical support for SCADA Control systems;
    • Chemical suppliers for wastewater and personnel protection; and
    • Workers that maintain digital systems infrastructure supporting water and wastewater operations.

Public Works

  • Support to ensure the effective removal, storage, and disposal of residential and commercial solid waste and hazardous waste.

These classifications provide a significant benefit to the waste industry. While state, local, tribal, and territorial governments are ultimately in charge of implementing response activities in their communities, states across the nation are looking to CISA’s guidance to determine which businesses and employees to deem essential. As illustrated below, 16 out of 22 states that have issued “stay at home” orders follow the CISA guidance.

How the Current “Stay at Home” Orders Impact the Waste Industry by State

California

California’s Stay at Home Order permits the critical infrastructure sectors, as outlined by CISA, to continue operating while the Order is in effect.

Colorado

Colorado’s Stay at Home Order permits critical businesses to continue operating while the Order is in effect. The Order directs the executive director of the Colorado Department of Public Health and Environment (“CDPHE”) to issue a public health order identifying those critical businesses. CDPHE identified the following as critical businesses: (1) public water and wastewater; (2) trash, compost, and recycling collection, processing and disposal; (3) firms and professionals for who provide services necessary to maintain the safety, sanitation, and critical operation of residences and other Critical Businesses or Critical Government Functions, and other essential services; (4) disinfection; (5) treatment plants; and (6) hazardous material safety.

Connecticut

Connecticut’s Stay at Home Order permits the critical infrastructure sectors, as outlined by CISA, to continue operating while the Order is in effect. The Order also directed the Department of Economic and Community Development (“DECD”) to issue guidance about which additional businesses are essential. The DECD identified “water and wastewater operations, systems, and businesses” and “trash and recycling collection, hauling, and processing” as essential businesses.

Delaware

Delaware’s fourth and fifth modifications to its state of emergency declaration closed all non-essential businesses and ordered Delaware residents to stay at home. The fourth modification permits the critical infrastructure sectors, as outlined by CISA, to continue operating while the Order is in effect. The state also published an independent list of essential and non-essential businesses. This list states that following businesses are essential: (1) waste collection; (2) waste treatment and disposal; and (3) remediation and other waste management services.

Hawaii

Hawaii’s Stay at Home Order permits the critical infrastructure sectors, as outlined by CISA, to continue operating while the Order is in effect. The Order also specifically provides that “manufacturing companies, distributors, and supply chain companies producing and supplying essential products and services in and for industries such as . . . waste pickup and disposal” are essential businesses.

Idaho

Idaho’s Stay at Home Order permits essential businesses and essential infrastructure to continue operating while the Order is in effect. The Order provides that “solid waste collection and removal” is essential infrastructure. The Order further identifies “service providers who provide services that are necessary to maintaining the safety, sanitation, and essential operation of residences” as an essential business. The Order also incorporates by reference the guidance issued by CISA.

Illinois

Illinois’ Stay at Home Order permits essential infrastructure or essential businesses to continue operating while the Order is in effect. The Order defines “solid waste and recycling collection and removal” as essential infrastructure. The Order also provides that the following are essential businesses: (1) service providers who provide services that are necessary to maintaining sanitation; and (2) “manufacturing companies, distributors, and supply chain companies producing and supplying essential products and services in and for industries such as . . . waste pickup and disposal.” The definition of essential businesses also encompasses workers identified in the critical infrastructure sectors, as outlined by CISA.

Indiana

Indiana’s Stay at Home Order permits the critical infrastructure sectors, as outlined by CISA, to continue operating while the Order is in effect. The Order also specifically provides that essential infrastructure or essential businesses may continue operating while the Order is in effect. The Order defines “solid waste and recycling collection and removal” as essential infrastructure. The Order also states that the following are essential businesses: (1) “manufacturing companies, distributors, and supply chain companies producing and supplying essential products and services in and for industries such as . . . waste pickup and disposal”; and (2) service providers who provide services that are necessary to maintaining sanitation.

Louisiana

Louisiana’s Stay at Home Order permits the critical infrastructure sectors, as outlined by CISA, to continue operating while the Order is in effect.

Massachusetts

Massachusetts’ Stay at Home Order permits essential services to continue operating while the Order is in effect. The Order lists the critical infrastructure sectors, as outlined by CISA, as essential services.

Michigan

Michigan’s Stay at Home Order permits the critical infrastructure sectors, as outlined by CISA, to continue operating while the Order is in effect.

Minnesota

Minnesota’s Stay at Home Order permits critical sectors to continue operating while the Order is in effect. The Order lists the following as critical sectors: (1) water and wastewater workers listed in the CISA guidance; (2) transportation and logistics workers listed in the CISA guidance; (3) public works workers listed in the CISA guidance; and (4) hazardous materials workers listed in the CISA guidance.

New Hampshire

New Hampshire’s Stay at Home Order permits essential services to continue operating while the Order is in effect. The Order lists the following as essential services: (1) water and wastewater workers listed in the CISA guidance; (2) “truck drivers who haul hazardous and waste materials to support critical infrastructure, capabilities, functions, and services”; (3) “support to ensure the effective removal, storage, and disposal of residential and commercial solid waste and hazardous waste”; (4) “solid waste collection and removal”; (5) “municipal transfer stations”; (6) “waste pickup and disposal”; (7) “wastewater treatment”; (8) hazardous materials workers listed in the CISA guidance; and (9) “licensed site clean-up professionals and other workers addressing hazardous spills, waste sites, and remediation.”

New Jersey

New Jersey’s Stay at Home Order does not explicitly identify waste removal as an essential business or service. Clarifying guidance, however, provides that all businesses, aside from non-essential retail businesses and recreational and entertainment businesses, may continue to operate.

New Mexico

New Mexico’s Stay at Home Order permits essential businesses to continue operating while the Order is in effect. The Order lists the following as essential businesses: (1) solid waste collection and removal; (2) trash and recycling collection; (3) processing and disposal; and (4) contractors and suppliers engaged in water and wastewater supply.

New York

New York’s Stay at Home Order permits essential businesses and essential services to continue operating while the Order is in effect. Further guidance issued by the New York Department of Economic Development provides that “essential services necessary to maintain the safety, sanitation and essential operations of residences or other businesses” are essential services.

The New York State Department of Environmental Conservation (“NYSDEC”) has advised its Staff and Standby Consultants and Contractors that these services are being interpreted as “any service related to emergency (spill) response and remedial activities at inactive hazardous waste sites, including the operation and maintenance of remedial systems put in place for the protection of public health.”

The guidance also lists “trash and recycling collection, processing and disposal” as an essential service. NYSDEC has explained that this includes “collection, transportation, processing and disposal activities for any solid wastes, regulated medical waste, hazardous wastes, radioactive wastes and other associated waste categories”. NYSDEC also noted “[r]egulations associated with these activities continue to be in effect and any related questions should be directed to appropriate DEC program staff.”

“Public water and wastewater” is also identified as essential infrastructure.

Ohio

Ohio’s Stay at Home Order permits the critical infrastructure sectors, as outlined by CISA, to continue operating while the Order is in effect. The Order also specifically provides that essential infrastructure or essential businesses may continue operating while the Order is in effect. The Order defines “solid waste and recycling collection and removal” as essential infrastructure. The Order further provides that “manufacturing companies, distributors, and supply chain companies producing and supplying essential products and services in and for industries such as . . . waste pick up and disposal” are essential businesses.

Oregon

Oregon’s Stay at Home Order lists those businesses which must cease operations, as opposed to defining which businesses are essential and may remain open. Waste-related businesses were not included in the list.

Vermont

Vermont’s Stay at Home Order permits businesses deemed critical to public health and safety to continue operating while the order is in effect. The order lists “trash collection and disposal recycling, and operations and maintenance of drinking water and wastewater/drainage infrastructure” as critical.

Washington

Washington’s Stay at Home Order permits essential critical infrastructure to continue operating while the Order is in effect. In accordance with the Order, the Governor designed the following waste-related businesses as “essential critical infrastructure workers:” (1) the critical infrastructure sectors, as outlined by CISA; and (2) service providers who provide services that are necessary to maintaining the safety, sanitation, and essential operation of construction sites and construction projects (including support to ensure the effective removal, storage, and disposal of solid waste and hazardous waste).

West Virginia

West Virginia’s Stay at Home Order permits the critical infrastructure sectors, as outlined by CISA, to continue operating while the Order is in effect. The Order also specifically provides that essential infrastructure or essential businesses may continue operating while the Order is in effect. The Order defines “solid waste and recycling collection and removal” as essential infrastructure. The Order also provides that “manufacturing companies, distributors, and supply chain companies producing and supplying essential products and services in and for industries such as . . . waste pickup and disposal” are essential businesses.

Wisconsin

Wisconsin’s Stay at Home Order permits the critical infrastructure sectors, as outlined by CISA, to continue operating while the Order is in effect. The Order also specifically provides that essential infrastructure or essential businesses may continue operating while the Order is in effect. The Order defines “wastewater testing laboratories” and “solid waste and recycling collection and removal” as essential infrastructure. The Order also provides that “manufacturing companies, distributors, and supply chain companies producing and supplying essential products and services in and for industries such as . . . waste pickup and disposal” are essential businesses.

Take-Away

Given the essential public health role of the waste industry, most states have explicitly recognized that the waste industry is an essential business and have adhered to the CISA’s guidance. However, potential challenges and uncertainty may arise in states that have not provided clarity with respect to certain sectors of the industry.

On March 26th, the U.S. Environmental Protection Agency (“EPA” or “Agency”) issued a sweeping guidance memorandum, announcing its intent not to bring enforcement actions for a range of violations of environmental laws caused by the ongoing COVID-19 pandemic.

For an indefinite period of time, “[i]n general, the EPA does not expect to seek penalties for violations of routine compliance monitoring, integrity testing, sampling, laboratory analysis, training, and reporting or certification obligations in situations where the EPA agrees that COVID-19 was the cause of the noncompliance and the entity provides supporting documentation to the EPA upon request.”

The guidance also announces the Agency’s intent to be lenient even with more serious violations, including those that cause harm or a threat of harm to human health or the environment. If such circumstances arise, “[t]he EPA will consider the circumstances, including the COVID-19 pandemic, when determining whether an enforcement response is appropriate.”

Nevertheless, the policy does not give carte blanche to pollute or violate applicable standards. EPA’s enforcement abstention is specifically conditioned on good-faith efforts by regulated entities to maintain compliance and the ability to adequately document those efforts. So facilities that are not able to meet all of their environmental obligations should keep records of the specific nature and dates of any noncompliance, and be prepared to explain precisely how COVID-19 was the cause of the deviation. Regulated entities should also continue to report any noncompliance, even with routine activities, using existing procedures identified in applicable permits, regulations and statutes. And the guidance reaffirms the requirement to notify EPA or the applicable state implementing authority in the case of a system failure that leads to a release or emissions exceedance.

Once the pandemic ends, EPA will not require facilities to “catch-up” with all monitoring and reporting that is excused under the conditions of the guidance. The Agency does, however, expect facilities to eventually submit all annual and bi-annual reports, and conduct associated monitoring, even if that must be done late.

For environmental obligations that exist pursuant to settlement agreements, the guidance establishes that the Agency considers the pandemic to qualify as a force majeure event. Notice provisions for invoking force majeure clauses in such agreements remain applicable and should be followed. Consent orders, however, are subject to the jurisdiction of a court, and while EPA intends to work with the Department of Justice to help avoid the imposition of certain penalties, its authority in that area is more limited.

Hazardous waste generators that are unable to transfer waste out of their facilities within a Resource Conservation and Recovery Act (“RCRA”) prescribed time period will not be treated as storage and disposal facilities, as long as they continue to properly label and store the waste.

The guidance identifies protection of public water supplies as the Agency’s highest priority and makes no specific exceptions for testing and maintenance of public water systems. Nevertheless, the Agency will consider the pandemic when determining if any enforcement action is appropriate for violations involving public water systems.

Significantly, this is federal guidance only. States and other government entities with environmental enforcement authority may exercise the same or similar enforcement discretion, but are under no obligation to do so. That further underscores the significance of taking all possible action to maintain compliance. EPA’s stated leniency is significant, but the regulated community should not assume that any violations that occur during the COVID-19 pandemic cannot lead to enforcement problems down the road.

The Occupational Safety and Health Administration (“OSHA”) has recently released guidance for solid waste and wastewater management workers and employers handling waste with potential or known COVID-19 contamination. This blog post details what that guidance means for employers.

While OSHA previously recommended treating this waste as regulated medical waste, OSHA now states that “the management of waste that is suspected or known to contain or be contaminated with COVID-19 does not require special precautions beyond those already used to protect workers from the hazards they encounter during their routine job tasks in solid waste and wastewater management.” This change came after recent engagement by both the National Waste & Recycling Association (“NWRA”) and Solid Waste Association of North America (“SWANA”).

Per the updated OSHA guidance, “[w]orkers and employers should manage municipal (e.g., household, business) solid waste with potential or known COVID-19 contamination like any other non-contaminated municipal waste.” OSHA’s recommendation includes maintaining standard safety precautions that have been put in place, such as using puncture-resistant gloves and face and eye protection. These same recommendations also apply to workers handling recyclable material.

For medical waste with potential or known COVID-19 contamination, OSHA’s recommended approach is the same as for any other medical material. OSHA recommends continuing to use typical engineering and administrative controls, safe work practices, and personal protective equipment (“PPE”), such as puncture-resistant gloves and face and eye protection, to prevent worker exposure to the waste streams (or types of wastes), including any contaminants in the materials, they manage.

From a wastewater treatment perspective, OSHA has indicated the virus is considered susceptible to normal disinfectant procedures in wastewater, so current disinfection conditions in wastewater treatment facilities is expected to be sufficient. This includes conditions for practices such as oxidation with hypochlorite (i.e., chlorine bleach) and peracetic acid, as well as inactivation through the use of ultraviolet irradiation. According to OSHA, “[t]here is no evidence to suggest that additional, COVID-19-specific protections are needed for employees involved in wastewater management operations, including those at wastewater treatment facilities.”

 

 

The Department of Justice (DOJ) issued a memorandum, dated March 12, 2020, ending a long-standing practice of allowing companies to reduce civil penalties by performing Supplemental Environmental Projects (SEPs).  DOJ states in the memo that SEPs violate the Miscellaneous Receipts Act (MRA), 31 U.S.C. § 3302, which requires funds received on behalf of the United States to be deposited in the Treasury.  According to the DOJ, civil penalties are considered to be funds received by the government and, therefore, diverting that money to third parties is inconsistent with the MRA, absent authorization by Congress.

SEPs have been the norm in U.S. Environmental Protection Agency (EPA) civil enforcement cases for the past 20-30 years.  Companies have been able to reduce civil penalties by up to 80% by performing in-kind environmentally-beneficial projects.  A frequently used SEP has been retrofitting of diesel engines for school buses and other governmental motor vehicles.  This SEP has been specifically authorized by Congress and, according to the memo, is one SEP that will continue, but only in mobile-source cases.

The memo leaves open the option for Congress to authorize further exceptions.  In the meantime, attorneys negotiating SEPs on behalf of their clients will no longer have the benefit of reducing the total penalty sum by the cost of implementing an environmentally-friendly project in a community.  It’s a loss for businesses and the communities in which they operate.  Our experience is that money spent on SEPs, such as replacing lead-glass windows or changing out PCB-light ballasts in schools (two SEPs our clients have implemented recently), often put penalty dollars to better use than simply depositing the money in the U.S. Treasury.

Last week, a federal judge denied a request from the U.S. Environmental Protection Agency (“EPA”) seeking to shift its timeline for implementing a 2016 rule targeting landfill emissions. As a result, EPA is required to finalize its federal implementation plan for landfill methane emissions by January 14, 2020.

This ruling marks the latest turn in a contentious battle for the industry. In 2016, U.S. EPA introduced its Emissions Guidelines (“EG”) rule alongside its New Source Performance Standards Rule, as part of a focus on reducing methane emissions. Under the original rules, state agencies were required to submit plans by May 2017 that would outline their proposal on reducing methane and other emissions from landfills. States that did not meet this deadline, or EPA’s standards, would have been subject to the federal plans.

Industry participants challenged these regulations, however, and were granted a 90-day stay in May 2017. Next steps remained unclear until October 2017, when the EPA confirmed that it would not sanction states that did not file EG plans. Arizona, California, Delaware, New Mexico, and West Virginia have since all submitted EG compliance plans, while other states are trying to determine whether to submit their own.

In 2018, California, Pennsylvania, Illinois, Maryland, New Mexico, Oregon, Rhode Island, and Vermont challenged EPA, arguing that EPA must promulgate a federal plan. That challenge led to the May 6, 2019 ruling declaring EPA in violation of “long-overdue non-discretionary duties” under the Clean Air Act and directing the agency to issue, “no later than November 6, 2019,” a federal plan to implement its 2016 Landfill Emissions Guidelines.

EPA requested to delay promulgation of its final emissions plan, but its request was ultimately denied. The Court did, however, grant the agency a 60-day stay. Plaintiffs responded on December 5, 2019, arguing that “the equities here tilt sharply in favor of rejecting EPA’s bid to further delay implementation of regulations.” In a subsequent request, EPA again asserted the need for a delay of the regulations.

EPA’s subsequent request was denied, requiring the agency to finalize its federal implementation plan by January 14, 2020. EPA immediately responded to this denial by asking the Ninth Circuit Court of Appeals to postpone the deadline. Among its arguments, EPA asserted that “the number of landfills expected to be impacted by the landfill emission guidelines is small.” EPA requested relief by January 13, 2020.

For companies that operate landfills in multiple states around the country, this back-and-forth has been counterproductive and confusing. The regulatory disputes have left many operators with mixed messages over landfill regulations and have unfortunately required operators to wait for a path forward. Litigation over the issue is likely to continue nonetheless, to the dismay of the industry.

The regulation of PFAS substances has become a matter of contention between U.S. EPA, states and local governments, environmental groups, and industry participants. EPA is under pressure by health experts, environmental groups, and affected communities to set a Maximum Containment Level (“MCL”) for PFAS, but has yet to do so. States, however, are beginning to push for state specific regulations that would lower the amount of PFAS substances allowed in drinking water and groundwater. Industry participants have strongly opposed these new regulations, arguing that states are legislating before thoroughly evaluating the costs, benefits, and science that can back up setting stricter standards.

On October 1, New Hampshire enacted stringent PFAS regulations that dropped the allowable limit of PFAS substances to 12 parts per trillion (“ppt”) for PFOA, 15 ppt for PFOS, and 18 ppt for PFHxS in drinking water and groundwater. The regulations were also the first in the United States to require routine landfill testing. 3M, a manufacturer of PFAS compounds, filed suit in New Hampshire Superior Court and sought an injunction to halt the enforcement of these lower limits. A local farmer, the town of Plymouth, and a sludge company joined 3M in the suit. Plaintiffs argued that the cost to comply with the new rules increased significantly compared to the costs attributed to the original proposed rule, the Department of Environmental Services (“DES”) failed to provide an estimate of the benefits associated with the new rule, and the state failed to allow adequate public comment before approving the standards.

New Hampshire Superior Court Judge Richard B. McNamara granted the requested injunction last week, agreeing with Plaintiffs that DES did not conduct an adequate cost-benefit analysis of the rule, as required under New Hampshire law. This injunction will bar the state from enforcing the stricter standards and will prohibit testing for PFAS in landfills, wastewater treatment plants, and water systems. Judge McNamara ordered that the injunction not take effect until December 31, however, so that either party can appeal or seek review in the New Hampshire Supreme Court.

This ruling highlights the resistance states are facing for pushing forward PFAS regulations without properly evaluating the data and the costs and benefits associated with stricter standards. Nevertheless, pressure to regulate PFAS is unlikely to decrease.

The ink is barely dry on the reclassification of the Chicago ozone nonattainment area from moderate to serious, under the 2008 ozone National Ambient Air Quality Standards (NAAQS), and the Illinois Environmental Protection Agency (IEPA) intends to seek redesignation to attainment.  According to IEPA staff, the agency has data supporting a request for redesignation to attainment of the 2008 NAAQS based on the latest 2019 monitoring values.  The IEPA’s goal is to submit the request for redesignation to the U.S. Environmental Protection Agency (USEPA) in January 2020.

Just this summer, the IEPA sent letters to affected sources to provide notification of the September 23, 2019 reclassification.  Those letters stated that the IEPA would give sources one year, or until September 23, 2020, to apply for an initial Clean Air Act Permit Program (CAAPP) permit or, to avoid CAAPP permitting, a federally enforceable state operating permit (FESOP) or a revised FESOP, if needed, to remain below the new major source level of 50 tons per year for VOM and NOx.  While the IEPA expects USEPA to take final action redesignating the area to attainment by that date, there are no guarantees.   According to IEPA staff, if there are high temperatures early in the summer and USEPA still has not acted, the redesignation could be in jeopardy,  The IEPA is advising affected sources to be prepared to submit permit applications consistent with the major source levels now in effect by the September 23, 2020 deadline.

Sources should also be aware that, even if the Chicago area is redesignated to attainment under the 2008 ozone NAAQS, the more stringent 2015 ozone NAAQS is still in effect.  Under that standard, Chicago is currently classified as a marginal area.  However, the IEPA staff recently stated that it is a certainty that the area will be bumped-up to moderate sometime in 2022.  The IEPA already has monitoring data showing that the area will not attain the lower 2015 NAAQS by the August 2021 attainment date.  It remains to be seen whether the IEPA will be required to adopt new regulations to meet the 2015 NAAQS, as emissions from mobile sources continue to decline.

The takeaway is that, given this uncertainty, affected VOC and NOx sources should proceed under the assumption that the Chicago area will continue to be designated as a serious area under the 2008 NAAQS, unless and until USEPA states otherwise.  This would include preparing any applications for a CAAPP permit, FESOP or revised FESOP as a result of the bump-up, but holding off on submittal until the current September 23, 2020 deadline, to see how it all plays out.

No Further Remediation Letters have become an established part of the regulatory landscape. These letters serve many purposes, including reducing uncertainty over future clean-up obligations and signifying that the property is “clean enough” for development. But the process can take time, which in some instances delays transactions and increases cost.

To address these delays, the Illinois Environmental Protection Agency (“IEPA”) has stated that it intends to move forward with an expedited No Further Remediation (“NFR”) Letter program by the end of the year. According to IEPA, this program will be modeled after the currently available program for air and water permits. Under the current program, an applicant is required to enter into a contract and pay an upfront fee that is intended to cover the cost of overtime review of the applicant’s Site Remediation Program (“SRP”) application and supporting documents, such as a Remedial Action Plan, Comprehensive Site Investigation Report, Remedial Objectives Report, Remedial Action Completion Report, etc. In turn, IEPA provides an estimated ‘guaranteed’ date by which IEPA will issue the permit.

Currently, the expedited permit fee is four times the standard permit fee required for the requested permit, provided that the expedited permit fee shall not exceed $100,000. 415 ILCS 5/39.14(c). For recurring permit fees, the expedited permit fee is four times the amount of the recurring fee on a one-time basis for each expedited permitting action. Id. If an owner or operator is not required to pay a standard permit fee for the requested permit, the amount of the expedited permit fee is mutually agreed upon by the Agency and the applicant. Id.

Under the new program, IEPA will likely require the applicant to pay a similar fee arrangement and sign an agreement in exchange for a ‘guaranteed’ date by which IEPA will issue the NFR Letter. This program should make compliance with environmental regulations less burdensome and may prove valuable to developers who desire greater certainty for when a transaction will close. It is also encouraging that the IEPA has recognized regulatory delays are never good for property development projects.

The Illinois General Assembly has passed the Coal Ash Pollution Prevention Act.  Once it is signed into law by Governor Pritzker, Illinois will become the latest state to address a legacy of coal power generation with targeted legislation.  The impacts of the law – financial, environmental and operational – could be immense.  The most significant details, however, are being left to an upcoming administrative rulemaking process.  The Illinois EPA and the Illinois Pollution Control Board are now positioned to shape the State’s coal ash policy.  Their decisions will determine the fate of the State’s ash impoundments and the lengths power plant owners will have to go to fully close their facilities after retirement — and will have billions of dollars of implications.

What’s Missing?

The most glaring absence from the Act is clear direction on how each coal plant will have to close and secure its active impoundments.  The law requires submission of a closure alternatives analysis, and that analysis must assess the complete removal of ash from the impoundment, in addition to “all closure methods being considered.” The Illinois EPA, however, will ultimately have discretion whether to order complete removal of all ash or something less, such as dewatering and capping all remaining ash in place.

The significance of the closure method decision – economically as well as environmentally – is hard to overstate.  Illinois is putting itself on a path that could mirror the ongoing process in North Carolina, where the legislature first passed the Coal Ash Management Act (“CAMA”) in 2014.  Like the Coal Ash Pollution Prevention Act, CAMA delegated the closure method decision for some sites to environmental regulators.  North Carolina DEQ recently ordered complete excavation at all sites over which it had that jurisdiction.  Duke Energy, which owns the plants, is claiming that excavating all of the coal ash from certain sites will be more than 500% more expensive than capping the ash in place, and that as a result the total costs at some individual plants will exceed a billion dollars.

What Comes Next?

Delegating such substantial authority to Illinois EPA also sets up future court battles that could drag on for years.  Duke has already begun the process of challenging North Carolina DEQ’s basin excavation orders.

The Act also puts the Illinois EPA in the position to decide how much coal plant owners will pay in the short term.  The law mandates that plant owners post a performance bond or equivalent security sufficient to ensure the closure of all impoundments, to cover post closure care, and to fund any necessary environmental remediation.  These financial instruments will not come cheap, but just how expensive they will be will depend on how much financial assurance the Illinois EPA requires.  Regardless, those costs are likely to be far greater than the relatively small ash impoundment fees imposed by the Act ($75,000 initially for each operating impoundment, and another $25,000 per year).

The upcoming Illinois Pollution Control Board coal ash rulemaking therefore will go a long way to determining Illinois’ coal ash policy.  There is a possibility of additional legislation to modify or clarify parts of the Act, but that is not certain, and any additional legislation is likely to focus on financial assurance issues.  As it stands now, the Act instructs the Illinois EPA to propose rules within eight months of its effective date, and the Board to adopt final rules within the year after that.  The regulations the Illinois EPA proposes and the Board adopts not only will indicate how aggressive the Agency is likely to be in the future, but also will dictate how difficult it will be to challenge its decisions in court.  We will be keeping an eye on that process at Environmental Law Next and posting updates on significant developments.  Feel free to contact us if you have any questions or comments about our post.