— When work began on a strange new reservoir in the hills outside this Ohio River town, local officials promoted the project as offering something for everyone: an aquatic playground for boaters and sunbathers, and for the local power plant, a dump.

“Eventually, you may swim and fish in this waste-disposal site!” a local newspaper enthused in 1976 about the Little Blue Run Impoundment, 1,000 acres of turquoise water that doubled as a receptacle for tons of arsenic-tainted coal ash.

Decades later, the dumping continues, but there is no sign of the idyllic recreational lake promised by electric company executives. Some neighbors are moving out to escape spreading groundwater contamination, foul odors and clouds of chalky dust. Others would love to flee but can’t because their property values have plummeted.

“It’s depressing. It’s sad,” said Annette Rhodes, 44, who has watched whole streets empty out in the hillside neighborhood behind the lake 30 miles west of Pittsburgh. “You get mad one minute, and you cry the next.”

Today, the Little Blue Run Impoundment is one of more than 600 artificial lakes built to hold coal ash, the powdery waste from coal furnaces that generate electricity. Some, like the Little Blue, have leaked contaminants, while others suffered catastrophic breaches that sent polluted water surging into nearby streams.

EPA takes aim at coal ash After years of delays, the EPA is moving to regulate coal ash, the leftover waste from coal furnaces that produce electricity. Power plants produce millions of tons of the ash, which contains significant amounts of arsenic, mercury and heavy metals that can be harmful to humans and wildlife. Much of it is stored in waste ponds, some of which have ruptured or leaked contaminants. Neighbors near the Little Blue Run impoundment say toxins from the lake are contaminating the groundwater.

(The Washington Post/Patterson Clark)

All have this in common: exemption from federal regulations governing waste disposal. Since the 1970s, utility companies have been allowed to dispose of coal ash under state laws that vary widely across jurisdictions. The exemption, created by Congress, blocked the EPA from classifying coal ash as hazardous waste, or even subjecting it to the same national standards that apply to other kinds of solid waste.

That could change as early as Friday as the EPA prepares to issue new rules that will include coal ash in federal guidelines for waste disposal. The long-awaited decision could significantly increase disposal costs for utility companies, depending on whether the EPA decides to classify coal ash as “hazardous” waste, requiring more stringent standards for disposal and cleanup.

Industry officials are bracing for tighter rules while hoping the EPA will opt for something short of a “hazardous” label that they say will hurt companies and raise utility rates. Thomas H. Adams, executive director of the American Coal Ash Association, said stricter laws are unnecessary for a waste product that has been deemed harmless enough for use as an additive in cement. He accused “anti-coal groups” of promoting a “steady stream of misleading publicity regarding the safety of coal ash.”

But community activists and environmental groups point to a decades-long record of dam breaks, spills and leaks. Hardly harmless, residue from coal-burning contains significant concentrations of arsenic, mercury and heavy metals that are toxic to people and wildlife, environmentalists and regulators say.

“Never before has EPA left matters of this vital importance to the voluntary whim of industry without federal oversight,” said Lisa Evans, a lawyer for EarthJustice, a nonprofit public-interest law organization that sued the EPA seeking federal oversight for coal ash.

Although it is invisible to most Americans, the coal-ash problem is immense, at least in volume. U.S. power plants annually produce about 140 million tons of the stuff, making it the nation’s second-largest single waste stream after mine debris.

The waste consists of powdery “fly ash” collected from smokestack filters and scrubbers as well as coarser bottom ash. All is collected and trucked or piped to disposal sites that range from landfills to recycling centers to ponds that hold a soup-like mixture of ash and water.

Momentum for stricter controls on coal ash has been building since 2008, when an earthen dike gave way at an impoundment near Kingston, Tenn., releasing more than a billion gallons of gray sludge that flattened several houses and polluted miles of the Emory and Clinch rivers.

The rupture captured national attention as the worst coal-ash spill in U.S. history. Then, six years later, a ruptured pipe at a Duke Energy impoundment leaked 39,000 tons of waste near Eden, N.C.

The two spills highlighted the gap in federal environmental oversight, while also reinforcing the potential dangers to those living nearby. The Little Blue impoundment — the nation’s largest — sits behind a 400-foot-high earthen dam that is officially classified as being a “high hazard potential” risk to downstream communities in case of a failure. While company officials cite a record of compliance and frequent safety inspections, some neighbors say they are nervous when they see trucks rushing to the dam.

“Sometimes they come up here at 10 p.m. with their trucks and big lights,” said Tonya Wiseman, a neighbor. “You never know from minute to minute what’s going to happen.”

But dam breaks are hardly the only worry. For more than a decade, residents of Chester’s working-class Lawrenceville neighborhood have been coping with what they describe as a slow-moving disaster, as contaminants from Little Blue migrate through their groundwater and, on certain days, gush from the hillside into their back yards.

Older residents of the community of ranch houses and bungalows still remember the men from the Bruce Mansfield power plant who passed out pamphlets in the mid-1970s about the man-made lake that was being constructed over the next ridge. Debbie Havens said she scoffed at their suggestion that a lake built for coal waste would someday benefit her family.

“They said it would be a recreational lake with pretty blue water, and there would be boating, skiing and picnicking,” Havens said. “I knew it was too good to be true.”

For years, the lake was mostly just a curiosity, a huge expanse of water where there had once been a wooded valley. The impoundment slowly filled with piped-in slurry, to which the power plant added chemicals so the waste would solidify into an impermeable barrier to prevent leaking. Sealed off to neighbors by a fence, the lake was notable mostly for its teal-blue color, an odd spectacle easily spotted in aerial photos.

The problems began years later when neighbors noticed water seeping from strange places along the hill that abuts the community. Tests confirmed that contaminated water from the lake was moving across hundreds of feet of rock and soil to gush to the surface in dishwater-gray springs. Arsenic and other toxins began turning up in test wells around the community.

A spokeswoman for the current owner of the power plant, FirstEnergy, touted the company’s record in responding to neighbors’ concerns, including a water-monitoring system that includes 100 test wells around the lake.

“FirstEnergy is committed to complying with all regulations regarding coal-ash disposal, and currently complies with some of the strictest state regulations in the country in Pennsylvania, West Virginia and Ohio,” FirstEnergy’s Stephanie Walton said.

For the Chester community, a partial remedy is on the horizon. Under a federal consent order reached last year, FirstEnergy agreed to stop dumping new waste into Little Blue by the end of 2016. After that, the company is required to drain the water and cover the lake with layers of impermeable sheeting to prevent more contaminated water from seeping into the ground.

The cleanup will not be completed until 2028, and existing contamination to the groundwater will presumably persist for decades afterward.

New coal ash, meanwhile, will be produced daily for years to come. Plant officials want to dispose of the material by loading it on barges and transporting it down the Ohio River to an old mine site. The proposal, which awaits approval by state environmental agencies, illustrates why the old way of regulating coal ash — a patchwork of state laws in which rules can vary from one town to the next — is problematic, said Lisa Graves-Marcucci, a Pennsylvania activist with the Environmental Integrity Project, the organization that filed the lawsuit that led to the clean-up order.

“For too long, it’s been left up to the citizens to enforce,” she said. “If the industry is not given clear ground rules that apply to all 50 states, they will find ways not to comply. And then the onus will fall again on citizens to catch them.”