<p>Location restriction applies to karst terrains for coal combustion residue disposal site operation and closure. Vulnerability to sinkhole formation and release of contaminants from the disposal site to the environment are main concerns of such terrains. This paper presents a case study where coal combustion residue was disposed on clayey overburden, which is underlain by flat-lying limestone with well-developed karst features. The ground instability and groundwater or surface water quality risk associated with the disposal site was conducted through sinkhole inventory and interaction analysis, dye tracing test, and multi-factor based relative risk scoring system. The sinkhole inventory documented over 400 clustered sinkholes. Application of the hard-core Strauss model to sinkhole points resulted in a 40-m sinkhole radius of influence. A tracer test with fluorescein dye identified preferential groundwater flow path between the dye injection sinkhole and the nearby river. The site groundwater may discharge to the river through submerged springs, which was also evidenced by the infrared thermography image. The findings from the sinkhole interaction analysis and dye tracing test were integrated into a multi-factor matrix system to calculate the relative risk scores for three closure options: no action, closure-in-place, and closure-by-removal. The matrix analysis indicates that the sinkhole risk ranks from higher to lower in the order of closure-by-removal, no-action, and closure-in-place. Because the closure-in-place option does not eliminate potential releases of constituents into the groundwater and river, this alternative poses a higher potential risk to the environment than the closure-by-removal alternative.</p>