Coal ash is often blended into concrete to give it additional strength. It also is used in wallboard, bricks and mortars.
Madden said if the EPA is able to reclassify the material as hazardous, the coal ash recycling industry could be destroyed.
"Who is going to want to use wallboards in their home if they know that the EPA says it contains a hazardous substance?" she said.
Madden also said a hazardous-materials classification would result in more coal ash getting sent to landfills instead of being recycled.
Environmental groups argued that the EPA's efforts wouldn't hurt the sales or the image of coal ash products.
"Guess what? The federal courts in 1989 already designated coal ash as hazardous under Superfund law, and that hasn't hurt the use or sale one bit," said Lisa Evans, senior administrative counsel of Earthjustice. "If there was a stigma attached to recycling coal ash it already would be obvious."
John Ward, chairman of Citizens for Recycling First, which represents companies operating in the coal ash industry, said the EPA in 2000 indicated it didn't intend to regulate coal ash as a hazardous substance. But that changed in 2008 after a massive spill from a sludge pond in Tennessee flooded 300 acres, destroying homes and polluting waterways.
Coal ash can be stored as a liquid in large impoundment ponds or disposed of in solid form in landfills.
"This is a case where we really need regulatory certainty," Ward said.
Ward said well more than 80 percent of the companies involved in the industry are small businesses. Many of those companies would be harmed if the EPA is successful because it would add more costs onto the industry, he said.
"And I think that is why Congress stepped in," Ward said.
The bill, H.R. 2273, passed on a 267-144 vote. All of Utah's House members voted in favor of the bill.
Last year, the EPA proposed two ways to handle disposal of coal ash. It could classify coal ash with hazardous materials, which would give it direct authority over permits and enforcement, allowing it to require liners for the types of sludge ponds that breached in Tennessee. Or the EPA said it could establish standards, while leaving states and citizen lawsuits to ensure they're met.
According to the EPA, the federal-authority choice would cost the industry $1.5 billion a year, while the state-enforcement option would cost $587 million.
The legislation passed last week in the U.S. House of Representatives would make state environmental authorities responsible for standards and enforcement.
"I expect that the next thing that will happen is that a similar bill (to the one that passed the House) will be filed in the Senate," Ward said.
He is optimistic that if a bill can pass the Senate, it will become law.
"The White House opposed the (House) bill but didn't indicate that it would be vetoed if it passed the Senate. And so far, we have had quite a bit of bipartisan support," he said.
Bloomberg News contributed to this story.