2016 Legislative Session in Review: Environmental Legislation

July 12, 2016. The 2016 General Assembly session resulted in changes to several environmental laws, but ended without final action on a major regulatory reform bill.  Among the more significant environmental provisions enacted outside the budget bill:

Coal Ash. House Bill 630 eliminated the Coal Ash Management Commission, giving the Department of Environmental Quality (DEQ) authority to make decisions about final closure of coal ash impoundments.  The bill also changed the criteria for prioritizing impoundment closures and required Duke Energy to provide a permanent alternative water supply to  well owners within 1/2 mile of a coal ash impoundments (unless separated from the impoundment by a river or lake) and to other well owners potentially affected by the migration of groundwater contamination from the impoundments. See an earlier post for more detail on H630  changes to the 2014 Coal Ash Management Act.

Commissions.  House Bill 630 responded to the Governor’s constitutional objections to three state regulatory commissions — the Coal Ash Management Commission, the Oil and Gas Commission, and the Mining Commission. The Governor successfully challenged  the laws creating  all three commissions as violating separation of powers; in part, the Governor objected to the legislature’s power to appoint a majority of each commission’s members.  A post on the N.C. Supreme Court decision can be found here.  The Governor vetoed an earlier bill (Senate Bill 71)  attempting to resolve the separation of powers issue by giving the Governor a majority of commission appointments.  The Governor’s position  on Senate Bill 71 suggested an ongoing objection to any  commission exercising executive powers unless the Governor had authority to appoint a majority of the members without legislative confirmation;  direct the actions of the commission;  and remove commissioners at will.

The Governor’s Office reportedly accepted H630 as a compromise. The  bill eliminates the Coal Ash Management Commission,  but retains the Oil and Gas Commission and the Mining Commission under conditions the Governor had previously objected to — legislative confirmation of appointees and the ability to remove commissioners only for cause. [Note: Although there have been indications that the Governor’s Office agreed to H630, the Governor has not yet signed the bill.]

Renewable Energy. Two provisions in Senate Bill 770 (N.C. Farm Act of 2016) amended laws related to renewable energy specifically to benefit agricultural sources, such as swine waste-to-energy projects. Sec. 10 of the bill extends the state’s renewable energy tax credit (25% of project costs)  to projects in service by January 1, 2020 (previously January 1, 2017) as long as the facility began construction by December 31, 2013.  The extension will likely benefit some swine waste-to-energy projects that have been in the works for several years, but are not yet generating electricity. Sec. 18 of the same bill gives  poultry and swine waste-to-energy projects priority over other renewable energy generation projects in connecting to electric utility delivery systems.

Sediment Pollution. Sec. 14 of Senate Bill 770 amends G.S. 113A-52.01 to add production of  “[m]ulch, ornamental plants, and other horticultural products”  to the list of agricultural activities exempt from the state’s Sedimentation Pollution Control Act (or “Sediment Act”). The Sediment Act otherwise requires activities disturbing an acre or more to maintain a stream buffer and use erosion barriers to keep sediment out of rivers, lakes and streams. The addition of ornamental plants will not raise many questions, but mulch is not an agricultural product similar to the others. Including mulch production in the Sediment Act exemption will raise two questions:

1. What kinds of operations will be covered by the mulch exemption?  Mulch operations include  large-scale municipal  waste disposal facilities that mulch yard waste and have no relationship to agriculture.

2. How will the mulch exemption affect Clean Water Act permitting? The exemption seems to go beyond the federal stormwater exemption for agriculture. That is important because most land-disturbing activities in N.C.  meet federal construction stormwater requirements by complying with the state Sediment Act.  If the Sediment Act exempts activities that don’t also fall under a Clean Water Act stormwater exemption, the activity may require  a separate federal stormwater permit.

What didn’t happen.   Several efforts to enact legislation significantly restricting wind energy development  failed, although Sen. Harry Brown has already indicated an intent to reintroduce a bill prohibiting erection of wind turbines in designated military air corridors in 2017. Proposals to repeal the ban on landfill disposal of electronics and to end the state’s electronics recycling program also failed.  Legislators apparently could not reach agreement on bills attempting to clarify the protocol for advising well owners on the heath effects of well contamination — an issue sparked by controversies over conflicting advice given to well owners near coal ash impoundments; those bills never got to a floor vote. The Senate received House Bill 593 (Amend Environmental Laws 2)  from the House and expanded the bill to include a number of additional  provisions on stormwater, beach nourishment, stream mitigation and other issues. The House did not concur in the Senate changes, leaving those proposals to die with adjournment.

2016 Legislative Session in Review: The Budget

July 7, 2016. A few notes on how the General Assembly allocated state funds for the environment.

A New Trend Toward Funding Environmental Studies at UNC-CH   The legislature directed (and in most cases funded) the University of North Carolina at Chapel Hill to study  or convene stakeholder groups on  environmental and natural resource policies rather than assigning those projects to the Department of Environmental Quality (DEQ)  or to a legislative study committee:

♦  The budget directs UNC to create a North Carolina Policy Collaborative  to “facilitate the dissemination of the policy and research expertise of UNC for practical use by State and local government”. The Collaborative will focus on research related to natural resource management, including “research related to the environmental and economic components of the management of the natural resources within the State of North Carolina and of new technologies for habitat, environment and water quality improvement.” The legislature appropriated $1 million to the UNC Board of Governors for the N.C. Policy Collaborative for the 2016-2017 fiscal year.

♦ A UNC-led stakeholder group will study efforts to “ecologically restore and achieve economic sustainability” the state’s shellfish aquaculture industry.  The budget provision directs the UNC-Chapel Hill Chief Sustainability Officer (Brad Ives, former Assistant Secretary in DEQ) to lead the stakeholder group. The legislature did not appropriate funds for the effort.

♦ The budget creates a new study of water quality programs to reduce nutrient pollution focused on the Falls Lake and Jordan Lake nutrient reduction strategies. See an earlier post for more detail on the substance of this  budget provision and the effect on enforcement of the Falls Lake and Jordan Lake water quality rules. The legislation gives the UNC-CH Chief Sustainability Officer responsibility for this study as well and provides funding  at $500,000 per year for six years. (The budget provision allocates an additional $1.3 million to DEQ in 2016-2017 to  study  in situ technologies to reduce nutrient impacts.)

These represent unusually large and extended state investments in environmental studies. The combined UNC/DEQ  appropriations for environmental research, collaboration and water quality studies total  $2.8 million just for FY 2016-2017. The UNC nutrient study will be  funded at $500,000 per year for  another five years beyond that. By comparison,  the legislature appropriated only $100,000  for a one-year study of another high profile environmental issue —  hydraulic fracturing — in 2011-2012.  Another reference point may be the annual budget of  $4.1 million for the state’s  non-point source water pollution program; the 2016-2017 appropriations for environmental studies represent 2/3 of the annual operating budget for the non-point source water pollution program.

Earmarked Funds for Water and Wastewater Infrastructure.  Most new funding  for DEQ’s Water Infrastructure Division to support local government water and wastewater projects has been earmarked for specific projects. Of the approximately  $18.8 million in water/wastewater funding added to DEQ’s  2016-2017 budget, the legislature directed approximately $16.6 million to the following projects:

$400,000 to an unnamed municipality  (population < 100) for wastewater improvements needed to eliminate illegal wastewater discharges.

$1,000,000 to Duplin County for improvements to the on-site wastewater system at an elementary school

$700,000 to the Town of Fontana Dam for wastewater system upgrades

$14.5 million to fund extension of water lines to cities and counties in an as-yet unformed Regional Water and Sewer Authority intended to include Guilford County, Rockingham County and one or more municipalities. If the Regional Water and Sewer Authority is not formed by June 30, 2017, the funds revert back to the state’ General Fund. (In other words, the funds cannot be allocated to other water and wastewater projects.)

Restoration of Funds for Commercial UST Cleanups and the Water and Air Quality Account:  Some  transportation-related environmental programs have long been funded by a small portion of the state’s gas tax.  Those programs include the Commercial Underground Storage Tank Fund, (which pays to clean up petroleum contamination from leaking underground storage tanks at convenience stores, gas stations and other businesses) and the N.C. air quality program. In 2015, the legislature replaced the on-going gas tax allocation to these two  programs with a one-time appropriation and ordered a program review.  The main purpose of the review was to look at the diversion of gas tax money from the Highway Fund to non-highway uses — a legislative concern for several years. The 2016 budget restores the gas tax allocation to both programs, putting them back on a stable (although not necessarily adequate)  funding source.

House-Senate Compromise on Watershed Rules

June 30, 2016. The House has begun debate on a  compromise version of the 2016-2017 budget bill (House Bill 1030) that resolves differences between House and Senate budget proposals. The new budget bill includes a modified version of a Senate provision on watershed-based water quality rules. See an earlier post  for more on the original Senate provision in Sec. 14.13 of the budget bill. The significant pieces of the compromise provision:

The scope  of the budget provision has been reduced. The new version of Sec. 14.13 only applies to nutrient rules adopted for the Falls Lake and Jordan Lake watersheds.

The provision no longer sunsets existing nutrient rules. The budget provision still funds a UNC study of nutrient rules (focused on the Falls Lake and Jordan Lake rules) and directs the Environmental Management Commission to review and readopt  those nutrient management rules based on recommendations from the study.  But the bill no longer automatically sunsets existing rules.

The UNC study of nutrient management strategies.  The budget provision now funds the study for six years at $500,000 per year ($3 million for the entire study) and has separate report-back dates for the two watersheds — December 31, 2018 for  Jordan Lake and December 21, 2021 for Falls Lake. In part, the provision requires UNC to compare water quality trends  in Falls Lake and Jordan Lake to implementation of the different parts of the nutrient strategies. Since a number of the nutrient rules have not yet gone into effect because of legislative delays, evaluating the effectiveness of the rules based on water quality trends will be difficult. That is particularly true for wastewater discharge limits and stormwater controls that have never been implemented or only partially implemented in the two watersheds.

Delayed implementation of the Jordan Lake and Falls Lake rules. The provision further delays implementation of the nutrient management rules until at least 2019 for the Jordan Lake watershed and 2022 for the Falls Lake watershed.

DEQ study of in-situ technologies to address nutrient-related water quality problems. The budget provision continues to require a DEQ study of in situ technologies to reduce nutrient problems — now focused on algaecides and phosphorus-locking technologies. The DEQ study will be entirely separate from the UNC study of nutrient management strategies and  receives a separate appropriation of  $1.3 million for a trial of in situ technologies.    The final report will be due on March 1, 2018.

Exclusion of areas within the Jordan Lake watershed from stormwater requirements. The compromise  budget includes a new  subsection 14.13(f)  that says new impervious surface added in the Jordan Lake watershed between July 31, 2013  and December 2020 (after study and readopting of the rules as required under the budget provision) should not be counted as built-upon area for purposes of developing nutrient reduction targets under the Jordan Lake stormwater rules.  It isn’t entirely clear what this means.

Under  federal Clean Water Act requirements, the state has an obligation to cap discharges of any pollutant causing impaired water quality. These caps (called a Total Maximum Daily Load  or “TMDL”) must be approved by the U.S. Environmental Protection Agency. The Jordan Lake rules cap nutrient loading at a level necessary to address impaired water quality in the Jordan Lake reservoir; meeting the TMDL  requires a reduction  in nutrient loading  from the   baseline years  of 1997-2001. The rules then allocate the reductions proportionately to the different arms of Jordan Lake and to major nutrient sources in those watersheds – wastewater dischargers, stormwater runoff from developed areas, and agricultural activities.

So  the new Sec. 14.13(f) raises several issues –

  1. The new subsection  is written as though local governments in the Jordan Lake watershed develop their own stormwater nutrient reduction targets and can change the reduction target by excluding newly developed areas.  In reality, the reduction targets have been based on  allocation of the  reductions required  to meet the Jordan Lake TMDL under  EMC rules and a watershed model developed by DEQ.
  2. It  assumes that the nutrient reduction target assigned to stormwater would change based on development over this 7-year time period, but the target is based on reduction from the historic baseline of 1997-2001. The one thing that changes by delaying implementation of the Jordan Lake stormwater rules is that more areas will fall under requirements for stormwater retrofits of existing development rather than stormwater rules for new development projects.
  3. If the intent is to exclude these recently developed areas from future implementation of  Jordan Lake stormwater rules for new or existing development, DEQ may have to allocate greater reductions to other nutrient sources in order to meet the Jordan Lake TMDL approved by EPA.

A new cross-reference to Chesapeake Bay stormwater measures. Another new subsection, Sec. 14.13(i),  requires the state to allow stormwater measures approved by the Chesapeake Bay Commission for use in meeting the Chesapeake Bay  TMDL to also be used to meet the Jordan Lake  and Falls Lake TMDLs  based on the same nutrient reduction credit allowed under the Chesapeake Bay program.  The Chesapeake Bay Program (rather than the Chesapeake Bay Commission) maintains the Chesapeake Bay TMDL model and seems to be the gatekeeper for pollution reduction credits included in the model. Credits for nutrient removal under the Chesapeake Bay model  will likely turn out to be a range based on the type of stormwater measure; the area; the volume of stormwater treated; etc. It isn’t immediately clear  what — if any — stormwater measures would be authorized under this provision that are not already allowed under state rules.

A Senate Proposal on Coal Ash and Commissions

June 29, 2016. The N.C. Senate quickly brought to committee and then to the floor a new bill attempting  to resolve the separation of powers conflict over  appointments to the Coal Ash Management Commission, the Mining Commission and the Oil and Gas Commission.  (The Governor had vetoed an earlier bill to address the separation of powers issue; see this post for background on the previous bill and the Governor’s objections.)

The new bill, a  repurposed  House Bill 630 , represents a compromise between the Governor’s Office,  the Department of Environmental Quality (DEQ), and Senate leaders. House leaders did not participate in the negotiation and will have to vote to accept the changes for H 630 to  become law. A summary of H 630 as it passed the Senate below:

The Commissions. The bill eliminates the Coal Ash Management Commission, leaving implementation of the Coal Ash Management Act entirely to DEQ.  The Mining Commission and the Oil and Gas Commission remain,  but those laws have been amended to  give the Governor power to appoint a majority of the commission members subject to confirmation by the legislature. The bill also slightly modifies the Governor’s power to remove a commission member, adding “for good cause” to existing provisions that  allow the Governor to remove a member for misfeasance, malfeasance or nonfeasance.  (It isn’t clear how much “for good cause”  adds to the Governor’s removal power.)

The bill previously vetoed by the Governor had amended the appointment provisions for all three commissions and clarified the Governor’s power to remove commission members. In vetoing that bill, the Governor’s Office argued that commissions operating outside the Governor’s full  direction and control cannot constitutionally make executive decisions. The Governor’s Office also rejected the idea of legislative confirmation of appointees as another violation of separation of powers.  Agreement to H 630 suggests the Governor’s Office has softened on those positions, but the price of the agreement may have been elimination of the Coal Ash Management Commission.

Implementation of the Coal Ash Management Act.  H 630 also makes significant changes to the 2014 Coal Ash Management Act (CAMA).

♦  H 630 requires  Duke Energy to provide a permanent alternative water supply to well owners within 1/2 mile of the compliance boundary around a coal ash impoundment and to well owners in areas where groundwater contamination associated with the impoundment is expected to migrate based on hydrogeologic studies.

♦  By eliminating the Coal Ash Management Commission, the bill gives DEQ complete control over the risk classification of impoundments and approval of final closure plans.

♦  The process for assigning final risk classifications to each impoundment has changed significantly:

— The bill eliminates the list of specific risk classification criteria in the 2014 law, leaving only general language on consideration of  “risks to public health, safety, and welfare; the environment; and natural resources”.

—  The number of impoundment sites with predetermined risk classifications has expanded from the four sites designated as High Risk in the 2014 Coal Ash Management Act to include an additional 3 sites designated by H 630  as Intermediate Risk. Impoundments classified as High Risk or Intermediate Risk under CAMA must be excavated and the coal ash removed for disposal in a lined landfill or beneficial reuse. Citizen’s suits over coal ash at the three sites designated as Intermediate Risk had ended in settlement agreements requiring excavation and removal of the coal ash in those impoundments.

—  H 630 allows every other impoundment site  (seven total) to be classified as Low Risk as long as Duke Energy: 1.   provides a permanent alternative water supply to potentially affected well owners as required under the bill;  and 2. resolves all  structural dam safety issues.  Under CAMA, Low Risk sites can potentially be closed by dewatering and capping the ash in place instead of removing the ash for disposal or reuse. For those  seven sites, a final classification decision can remain open until Nov. 30 2018 (or Nov. 30 2019 if DEQ grants an extension) to allow  Duke Energy time to complete alternative water supply projects and dam safety improvements. Impoundments that fail to meet the Low Risk criteria by those dates would automatically be classified as  Intermediate Risk.

Having reduced the criteria for Low Risk classification to just the two, the bill provides no opportunity  for additional public input before DEQ finalizes those impoundment classifications.

♦ The bill gives DEQ more power over final closure plans. In addition to removing oversight by the Coal Ash Management Commission, the bill allows DEQ to determine the final closure plan rather than simply approving or disapproving a plan proposed by Duke Energy.  Theoretically, DEQ could reject a Duke Energy proposal to excavate an impoundment rather than cap the coal ash in place. The bill doesn’t provide criteria for DEQ to apply in making final closure decisions.  (The 2014 CAMA had directed the Coal Ash Management Commission to consider economic and technical feasibility; protection of public health, safety,  welfare, the environment and natural resources; and potential impact on cost to ratepayers.)

♦  H 630 keeps existing CAMA language  prohibiting  approval of a cap in place closure plan unless the plan will “prevent…post-closure exceedances of groundwater quality standards beyond the compliance boundary”, but adds an alternative closure standard that may be less protective of groundwater.

Under the new alternative,  DEQ could  also approve a cap in place closure plan under standards in federal coal ash disposal rules.  Unlike  CAMA, the federal rule does not explicitly bar use of capping in place if the capped coal ash would be a continuing source of groundwater contamination, saying only that the closure plan must:

Control, minimize or eliminate, to the maximum extent feasible, post-closure infiltration of liquids into the waste and releases of CCR, leachate, or contaminated run-off to the ground or surface waters or to the atmosphere…

[40 CFR 257.100(b). This rule applies to closure of inactive coal ash impoundments, but similar language appears in closure standards for active impoundments.]

The standard in the federal rule does not clearly require a cap in place closure plan to prevent  post-closure groundwater standard violations. Allowing use of the federal closure standard could be interpreted to give DEQ discretion to authorize capping in place as long as leaching of contaminants to groundwater will be “minimized”  — a lesser requirement than preventing post-closure groundwater contamination beyond the compliance boundary.  The challenge will be how to square application of the federal closure standard with groundwater corrective action requirements in other sections of the Coal Ash Management Act.

♦ A new section on coal ash reuse  requires Duke Energy to identify three coal ash sites that would each be  capable of processing 300,000 tons of ash for cement products — two sites to be identified in January 2017 and a third by July 2017.  The bill directs Duke Energy  to begin work on contracts/permit applications  as soon as possible after identifying the sites and to begin operation within 24 months after receiving permits.

The Senate version of H 630 has now gone back to the House for a concurrence vote.

The Future of Watershed-Based Water Quality Rules

June 22, 2016. A controversial water quality provision in the N.C. Senate’s proposed budget would repeal (and perhaps replace –that is less certain) all state rules adopted over the last twenty years to address pollution problems caused by excess nutrients.  Sec. 14.13 in the Senate version of House Bill 1030 further delays full implementation of the Falls Lake and Jordan Lake rules; creates a  $2 million study of nutrient management programs; and repeals all existing water quality rules addressing nutrients pollution effective December 31, 2020.

The Senate Proposal.  The provision requires the state’s Environmental Management Commission (EMC) to adopt new nutrient management rules based on the study results, but repeals all  existing rules at the end of 2020  even if no alternative  rules are in place.  In addition to Jordan Lake  and Falls Lake, the repeal/replace provision would affect water quality rules in the Tar-Pamlico River Basin; the Neuse River Basin; the Catawba River Basin; the Randleman Reservoir watershed; and the endangered species management plan in the Yadkin-PeeDee River’s Goose Creek watershed. It would also apply to any other riparian buffer requirements identified by the Department of Environmental Quality (DEQ).   Still hoping for an alternative to  rules, the Senate budget also appropriates $500,000  to  study use of freshwater mussels to reduce the water quality impact of excess  nutrients.

In most cases, state nutrient management rules also satisfy a federal Clean Water Act requirement to reduce the discharge of a pollutant (in this case nitrogen and/or phosphorus) causing impaired water quality. In North Carolina’s  “nutrient sensitive” river basins and watersheds,  the U.S. Environmental Protection Agency (EPA)  has approved the nutrient reduction targets in state rules as meeting Clean Water Act  requirements.   To achieve the reduction targets, the rules require reductions in nutrient  discharges by wastewater treatment plants and nutrient runoff from agriculture and development activities. Walking away from the nutrient reduction targets has implications for Clean Water Act enforcement and the state’s delegated water quality permitting programs.

Although the Goose Creek rules rely on similar pollution reduction tools (including riparian buffers and stormwater controls),  those rules protect endangered species habitat.  The rules resulted from a lengthy negotiation with the  U.S. Fish and Wildlife Service which has responsibility for enforcing the federal Endangered Species Act. Repeal of the rules would likely bring both U.S. Fish and Wildlife  and EPA into the conversation.

Nothing similar to the Senate provision appears in the House version of the budget or in any other legislation pending in the House.  The two chambers are currently negotiating this (and other) differences between the House and Senate budget bills.

Have the Nutrient Rules Failed? The Senate provision describes the state’s existing nutrient management  programs as failures. In reality, legislation has prevented full implementation of the Falls Lake and Jordan Lake nutrient rules.  The rules that have been fully implemented  — such as those in the Neuse River and Tar River basins — significantly reduced nutrient loading from wastewater discharges, agriculture and stormwater runoff.  In judging the effectiveness of watershed-based strategies, some things to keep in mind: 1.  Population growth and development in the watersheds continued to increase; and 2. Existing nutrient reduction strategies do not address all potential nutrient sources (smaller wastewater treatment plants; failing septic tanks; atmospheric deposition of nitrogen; and soil erosion).

DEQ has tracked the effect of nutrient rules in the Neuse River and Tar-Pamlico River basins; some of the results can be found here.  A  number of independent academic researchers have also studied the Neuse and Tar-Pamlico  river basin rules.  All of the studies confirm that sources covered by the rules significantly reduced their nutrient discharges. Wastewater treatment plants met the goal of reducing nitrogen discharges by 30% from the baseline years even as population and wastewater flows increased. Agriculture met or exceeded the 30% reduction goal for agricultural operations through use of  Best Management Practices. A recent EMC report confirmed  the value of  riparian buffers as part of a watershed-based plan to reduce nutrient runoff from developed areas.

Complicating the picture is the fact that  total  in-stream nutrient concentrations  have not consistently remained below  baseline levels.  A DEQ  study completed in 2008 found that in-stream concentrations of inorganic forms of nitrogen  (nitrates and ammonia) declined at the monitoring sites, but  increases in organic nitrogen offset those reductions.   The rules haven’t  failed; given population growth and increased development in the Neuse and Tar-Pamlico river basins,   nitrogen concentrations would have been higher in the absence of the rules. But the rules have not fully solved the problem of nutrient over-enrichment.

Opposition to the Nutrient Rules.  Opposition has tended to be strongest in the communities on the Haw River arm of the Jordan Lake watershed affected by the Jordan Lake rules. (The Haw River watershed includes the cities of Greensboro and Burlington.) Since EMC adoption of the Jordan Lake rules in 2009,  legislation to repeal or delay implementation of the rules has been introduced every year.  Objections  have focused on the cost of wastewater treatment plant upgrades to meet tighter discharge limits;  expansion of  stormwater programs;  and the development impact of new riparian buffer requirements. To these upstream Haw River communities, the costs have no local benefit; water quality improvements benefit downstream communities. (Although many of the downstream communities have met similar requirements under the Neuse River rules for years to benefit the Neuse River estuary.)

The City of Durham and Durham County, affected by both the Falls Lake and the Jordan Lake rules, also have concerns about the feasibility and cost of meeting nutrient reduction goals.

Also in the background — riparian buffer requirements have long been unpopular with real estate developers and homebuilders in all of the river basins/watersheds where buffers have been part of a nutrient reduction strategy.

DEQ’s Position.   DEQ has not taken a public position on the Senate proposal, but a February presentation by DEQ Assistant Secretary Tom Reeder to the legislature’s Environmental Review Commission questioned the effectiveness of the watershed-based nutrient rules.  Reeder’s presentation tended to emphasize the cost of the nutrient rules and  limited impact on instream nitrogen and phosphorus concentrations.  Asked what alternative to the nutrient management rules would protect the Falls Lake and Jordan Lake drinking water supplies, Reeder responded that drinking water treatment may become more expensive. The presentation suggested little DEQ commitment to defend watershed-based nutrient rules and a willingness to shift the cost of impaired water quality to communities using  Falls Lake and Jordan Lake as drinking water sources. Reeder’s presentation did not  address the impacts of a failure to reduce excess nutrients  on natural resources such as fisheries; recreational use of these rivers, lakes and estuaries; or compliance with the Clean Water Act.

Possible compromises.  Past studies of the Neuse and Tar-Pamlico rules suggest a need to fill gaps in the nutrient strategies, but do not provide a  scientific case for  abandoning watershed-based nutrient reduction strategies. Nearly seven years after final adoption of the Jordan Lake rules, opponents have not identified an alternative approach to protect drinking water  and meet Clean Water Act requirements.

At the same time, the  EMC’s recent riparian buffer report  identified potential buffer rule changes to ease the burden on property owners while maintaining the buffer’s  water quality benefits.  The legislature could also look at the possibility of  authorizing cost-sharing arrangements to allocate some of the upstream cost of water quality improvements to  the  downstream communities that will benefit. The idea surfaced briefly during development of the Falls Lake and Jordan Lake rules, but wasn’t pursued at the time.

Coal Ash, Contaminated Wells and Providing a Safe Drinking Water Supply

May 31, 2016. The previous post  discussed legislative efforts to resolve the separation of powers conflict still hovering over implementation of the 2014 Coal Ash Management Act. The same piece of legislation, Senate Bill 71,  also attempts to fix other problems that have developed around coal ash cleanup efforts. One of the most significant changes in Senate Bill 71 responds to concerns about contaminated drinking water wells near coal ash ponds.  The final version of Senate Bill 71 approved today by both the House and Senate gives more well owners the certainty of an alternative water supply.  A comparison of Senate Bill 71 to the original Coal Ash Management Act below.

2014 Coal Ash Management Act:

Guaranteed an alternative water supply only to well owners located within 1/2 mile and down-gradient of the coal ash impoundment.  Well testing and groundwater assessment done around the impoundments since 2014  have detected high levels of one or more contaminants associated with coal ash, including hexavalent chromium, in wells located up-gradient or side-gradient of the impoundments. Although groundwater usually follows surface topography, the  underlying geology and human activity can alter the direction of  flow. The alternative water supply provision in the Coal Ash Management Act did not apply to those wells.

♦   The requirement for Duke Energy to provide an alternative water supply was contingent on well sampling showing a contaminant associated with coal ash above the level allowed under state groundwater standards.  The  lack  of a state groundwater standard for some contaminants  (including venadium and hexavalent chromium) led to confusion, conflicting advice to well owners,  and lack of clarity on the standard DEQ would use to require Duke Energy to provide an alternative water source.  For background on the controversy over the groundwater standards see an earlier post here . Many well owners have received bottled water for months because of documented well contamination, but remain uncertain whether DEQ will require Duke Energy to provide a permanent alternative water supply.

♦  The provision on alternate water supply enacted in 2014, G.S. 130A-309.209(c), did not specifically require a permanent solution — such as connection to a public water system — rather than bottled water.

♦ Under the 2014 law, owners of contaminated wells located up-gradient and side-gradient of a coal ash impoundment might receive alternate supplies under the state’s groundwater corrective action rules,.  The rules (referenced in the 2014 Coal Ash Management Act) apply to all groundwater contamination incidents and require a company responsible for groundwater contamination to address health risks created by the contamination.  The  corrective action rules,  however, only apply to a person/company shown to be 1. responsible for contamination that 2. exceeds state groundwater standards. Two years after enactment of the Coal Ash Management Act,  controversy surrounds the standards for some contaminants and groundwater studies have not yet been sufficient to determine whether the coal ash ponds  caused contamination found  in up-gradient and side-gradient wells.

Senate Bill 71:

♦ Requires Duke Energy to provide an alternative water supply to the owner of every well located within 1/2 mile of the compliance boundary surrounding a coal ash pond. (The compliance boundary — either 250 feet or 500 feet from the edge of the impoundment depending on its age — is the point at which exceedance of a state  groundwater standard would be a violation.)

♦  For wells within 1/2 mile of the compliance boundary around an ash pond, alternative water supply would be required without regard to the location of the well in relation to the impoundment (down-gradient, up-gradient or side-gradient) or demonstration of a groundwater standard violation.

♦ The bill also requires Duke Energy to provide alternative water supply to well owners located outside the 1/2 mile perimeter, but located in an area at risk  of contamination because of the projected migration of groundwater contamination.

♦ The bill expressly requires Duke Energy to provide a permanent alternative water supply source and creates a preference for connection to a public water system.  The bill allows  installation of a filtration system instead if extension of a water line would be cost-prohibitive. The State Water Infrastructure Authority would review Duke Energy’s alternative water supply plan for each impoundment site and make the final decision on the type of permanent water supply.

Several things are notable about the Senate Bill 71 approach.   First, the bill  provides  certainty to well owners  that would not have been possible as clearly or as quickly any other way.  But the bill is also a reminder that property owners affected by groundwater contamination from other sources have a longer, more difficult and less certain road to a safe drinking water supply.

Separation of Powers Battle, Part II

May 25, 2016.  In response  to the N.C. Supreme Court decision in McCrory v. Berger,  the House of Representatives has approved a bill to reconstitute the Coal Ash Management Commission, the Mining Commission and the Oil and Gas Commission.   The lawsuit largely concerned the constitutionality of  legislative appointments to the commissions, but also challenged  a provision in the Coal Ash Management Act  that made the Coal Ash Management Commission independent  of oversight by any executive branch department.   See an earlier post on the court decision here.

The McCrory v. Berger decision does not state any clear, generally applicable separation of powers rule with respect to organization and appointment of state boards and commissions. (The court so stoutly resists providing any general rule, that the decision may raise more questions than it answers.) But the court clearly held that the General Assembly violated the separation of powers doctrine in the N.C. Constitution by giving the legislature power to appoint a majority of each commission’s members. Senate Bill 71 attempts to cure that separation of powers violation.

The Governor’s Office does not believe the bill resolves the separation of powers issues and has put the legislature on notice that the Governor will file suit again if the new bill becomes law.  In fact, the Governor’s objections have broadened and appear to attack the entire concept of giving executive authority to citizen commissions. The expansive interpretation of McCrory v. Berger adopted by the Governor’s Office would potentially affect many other longstanding commissions, including the Environmental Management Commission.

The Senate Bill 71 response to McCrory v. Berger. The bill  amends laws creating the three commissions at issue in McCrory v. Berger to give the Governor a majority of appointments subject to confirmation by the General Assembly. The bill also  insures that the governor’s appointees  represent a majority of the quorum required for commission action. Senate Bill 71 removes language in the Coal Ash Management Act that made the Coal Ash Management Commission “independent” of  supervision by the Department of Public Safety (where the Commission has been administratively housed) and adds a clause noting the powers and duties of the Secretary of Public Safety — appointed by the Governor — with respect to programs in  the department.

As a backstop, the bill has a provision that transfers the responsibilities of the Coal Ash Management Commission to the existing Environmental Management Commission if Governor McCrory fails to make timely appointments or the reconstituted CAMC becomes the focus of new litigation.

The Governor’s opposition.  The Governor’s Office does not believe the bill resolves the separation of powers issues surrounding appointment and supervision of the three commissions. The Governor’s legal counsel, Bob Stephens,  appeared in a House Committee  to oppose the bill and listed several objections:

  1. The Governor opposes  legislative confirmation of  commission appointees as a new violation of separation of powers.  Legislative confirmation has been the exception rather than the rule in North Carolina, but is required for a few boards and commissions.  State law has long required legislative confirmation of the Governor’s appointees to the N.C. Utilities Commission.  The McCrory v. Berger  decision does not discuss legislative confirmation one way or the other since it was not an issue in the case.  Mr. Stephens did not explain the legal basis for the Governor’s position in committee, but a letter from Mr. Stephens to legislative leaders contends that legislative confirmation inappropriately interferes with the Governor’s appointment power.
  2.  Governor McCrory  objects to provisions giving the Governor authority to remove a commission member only for  misconduct or failure to perform their duties. Stephens argued that the decision in McCrory v. Berger means the governor must have the power to remove governor’s appointees at will.  On this point, the McCrory v. Berger decision itself is unclear.  The court talks about power to remove commission members as necessary for the Governor to effectively supervise commissions with executive powers.  Although the decision can be read to imply that removal for cause may not be sufficient,  the court never  expressly holds the Governor must have power to remove commissioners at will.  Instead, the court treats power to remove as one of several factors  to be considered in determining whether the legislature has inappropriately limited the Governor’s executive authority. The actual holding in the case turns on the number of legislative appointments to each commission.
  3. Governor McCrory does not believe Senate Bill 71  sufficiently  recognizes the Governor’s authority to supervise the Coal Ash Management Commission. The CAMC  has  been administratively housed in the Division of Emergency Management of the  Department of Public Safety, but the 2014 Coal Ash Management Act  included language that put the CAMC outside the supervision and direction of either the Division or the Department. Senate Bill 71 removes the “independence” language and adds a clause noting the statutory authority of the Secretary of Public Safety (which includes supervisory responsibility for programs in the department).  Stephens rejected the changes as insufficient to  give the Governor supervisory control over the CAMC consistent with  McCrory v. Berger, but did not suggest alternative language to the committee.

 Questioning the entire concept of citizen commissions. Yesterday, Mr. Stephens sent a  letter  to House and Senate leaders to express the Governor’s concerns in writing. The letter goes beyond the comments offered in committee and opposes the exercise of executive authority by any citizen commission not entirely within the governor’s  supervision and control.  The Governor interprets McCrory v. Berger to mean the  Governor must have the ability to appoint members without legislative confirmation; remove members at will; and direct commission actions  in much the way the Governor, through cabinet secretaries, directs state agency employees. The letter to Senate President pro tempore Phil Berger and House Speaker Tim Moore rejects the idea of using the existing Environmental Management Commission as a backup for the Coal Ash Management Commission because:

The Environmental Management Commission suffers from the same constitutional defects as the proposed Coal Ash Management Commission. Again, the Governor must have a majority of appointments, the ability to remove his appointees at will and the ability to supervise the day to day activities of the commission.

The letter goes on to argue that commissions with ability to “review and approve” executive agency decisions:

pose an exceptional threat to the Governor’s duty to execute the laws…Some in the General Assembly believe that independent commissions superior to our agencies are a good idea — they serve as a check on the executive branch. But McCrory v. Berger rejects this argument.

That conclusion cannot be found in the McCrory v. Berger decision.  The court  went out of its way to avoid  grand declarations — to the point of leaving a lot of confusion about how to apply the decision beyond the three commissions directly involved in the case. The statement reflects the Governor’s expansive interpretation of McCrory v. Berger and signals an intent to use that interpretation to either eliminate semi-independent citizen commissions or to force a significant change in the role of commissions.

The practice of giving citizen commissions authority  to develop and implement state policy has a long history in North Carolina.  Commissions — rather than the Department of Environmental Quality– adopt most state environmental rules. While checking the executive branch may have been one purpose, commissions also bring a broad range of expertise and practical experience to policy development and implementation. Laws creating the commissions require  members to have backgrounds more diverse than those typically found among the technical staff of a state agency. By law, the Environmental Management Commission  must have members with  backgrounds in business, agriculture, public health, local government, conservation, etc. Members  bring that expertise and experience to bear on environmental policy decisions.  EMC members, like most state commission members, have other full-time jobs;  volunteer their time to the state; and in return receive only reimbursement of travel costs and a very small per diem for meeting days.

Given the different perspectives among commission members and a perch outside state government bureaucracy, commissions will not always see an issue in quite the way a Governor’s political appointees do. Recent friction between the Environmental Management Commission and the Department of Environmental Quality attests to that. On balance, the benefits of bringing citizen commissions into state policy development have outweighed the messiness and occasional friction. The Governor seems to prefer something more like the federal model — where policy development and policy implementation are both firmly under the control of a government agency. The question is whether a separation of powers argument can take him there.

Next steps for Senate Bill 71.  The bill passed the Senate last year as a bill to adjust the terms of Rules Review Commission members. Since the House has stripped out the original Senate bill text and replaced it with something entirely different, the bill now goes back to the Senate for concurrence in the changes.  The bill also makes other substantive changes to the Coal Ash Management Act to be discussed in another blogpost.

Regulating Renewable Energy Away?

May 11, 2016.  North Carolina’s General Assembly has been engaged in an internal battle over state renewable energy policy since 2013. That year, Republican legislators first introduced a bill to repeal the state’s renewable energy portfolio standard; the REPS law requires electric utilities to gradually increase the amount of power generated from renewable sources such as wind, solar and waste combustion. (For more on the REPS issue, see earlier posts here and here.)  The 2013 REPS repeal bill failed; similar bills to repeal or significantly limit the REPS requirement have been introduced every year since without success. Opponents of renewable energy subsidies did succeed in eliminating a state tax credit for renewable energy projects effective December 31, 2015.

In the just-convened 2016 legislative session, opposition to renewable energy has taken a new form — a  bill to put significant regulatory constraints on development of renewable energy projects. Senate Bill 843 (Renewable Energy Property Protection) expands an existing wind energy permitting law to cover other types of renewable energy facilities and adds new permitting requirements and regulatory standards.  Key provisions in Senate Bill 843:

Scope.  The bill applies to most renewable energy facilities other than hydroelectric plants, including solar,  wind and  waste-to-energy combustion projects. The proposed permitting standards do not apply to solar panels installed on single-family homes or to  “biomass resources”.  Since the bill only excludes solar installations on  single-family homes, the new permitting standards presumably apply to solar panels installed on commercial and institutional buildings (such as schools and churches) as well as utility-scale solar projects. It isn’t clear what the exclusion for  “biomass resources” means;  the term could be applied to plant-based fuels as well as combustion of animal waste.

Additional steps in the permitting process. Those steps include: 1. a  pre-application meeting with state regulators at least 120 days before submission of the permit application; 2. submission of pre-application project information 45 days before the meeting; and 3. notice of the pre-application meeting to federal regulatory agencies (such as the U.S. Army Corps of Engineers) and to “any other party [DEQ] deems relevant”. The bill also expands an existing wind energy permitting requirement  for a “scoping” meeting 60 days before application to all renewable energy projects —  even though the new pre-application meeting  and the scoping meeting seem to involve the same participants and much of the same information. See G.S. 143-215.118.

Addition of new standards for denial of renewable energy permits. The existing law setting standards for issuing or denying wind energy projects would be amended to cover all renewable energy projects and to add  two new grounds for permit denial. The new permit denial standards:

♦ Operation of the facility would cause ambient noise levels to exceed 35 decibels at the property line.

♦ The applicant failed to meet new financial assurance requirements for decommissioning the facility.

See the existing text of  G.S. 143-215.120 for the existing permit denial standards.

Setback and buffer requirements for wind and other renewable energy facilities. All wind and other renewable energy facilities would have to be sited 1 1/2 miles from the property line of an adjacent property. For comparison,  some examples of property line setback requirements for other state-permitted facilities and activities are shown below.

Facility/Activity Property Line Setback
Oil and gas production (including wells and drilling waste storage)  0 ft
Major air pollutant sources  0 ft
Land application sites for septage  50 ft
Hazardous waste landfills  200 ft
Swine house or  swine waste lagoon  500 ft

A quick search did not turn up an existing  state-imposed property line setback of greater than  500 feet.

S 843 also requires wind and renewable energy facilities to be setback from all easements and rights of way for a state road or municipal street by a distance equal to 2 1/2 times the height of a wind turbine. Some wind turbines proposed in N.C. have a tower height of around 300 feet and total height (based on extension of one blade straight up)  of nearly 500 feet, resulting in a  road setback of 800-1250 feet.

New requirements for decommissioning a renewable energy facility, including financial assurance for decommissioning. The bill requires the owner/operator of a wind or renewable energy facility to remove all equipment and buildings and return the site to predevelopment conditions within one year after ceasing operation. The requirement seems to be unprecedented as applied to a utility or commercial development project.  To the extent existing laws include reclamation  or closure standards, the standards generally focus on eliminating specific safety hazards (appropriately closing abandoned wells); taking steps to prevent environmental degradation (capping closed landfills)  and restoring disturbed areas to provide stability and prevent erosion.  State permitting programs  do not normally require the owner/operator to return a site to pre-development conditions by removing buildings and equipment.

S 843  also makes the owner/operator responsible for “properly recycling each piece of equipment used in the facility”.  State law already prohibits landfill disposal of specific types of waste such as aluminum cans, scrap tires and computer equipment. (See G.S. 130A-310 for a complete list of materials banned from landfill disposal.)  S 843 appears to go much further and require recycling of all equipment used in a renewable energy facility.  The recycling requirement for renewable energy facilities looks particularly burdensome by comparison to a 2013 state law allowing  demolition debris from a decommissioned electric generation station to be buried on site. See G.S. 130A-301.3.

Strict liability for damages caused by construction, maintenance, operation, decommissioning, disassembly or demolition of a renewable energy facility. The bill would impose strict liability on the owner/operator of a renewable energy facility. “Strict liability” means the owner/operator  could be held liable for personal injury or property damage caused by the activity even if the damage was not the result of  intentional misconduct, negligence, or violation of any regulatory standard. Strict liability  can also deny the  owner/operator the benefit of some usual defenses against a damage claim — such as the defense that the injured person caused or contributed to their own injury. Usually,  strict liability is reserved for inherently dangerous activities where it provides an incentive for extra caution on the part of the person engaged  in the activity.  Very few  N.C. laws create strict liability for personal injury or property damage;  one applies to   owners of dangerous dogs and another makes parents responsible for damage caused by their minor child.   A few laws create a sort of limited strict liability.  For example, state law generally assumes a  hydraulic fracturing operation  will be liable for contamination of a water supply located within 5,000 feet of a natural gas well. But in that case, the presumption of liability only applies to one type of injury  occurring in a very specific  set of circumstances  — not to all injury or damage caused by a  fracking operation.

Taken together, the provisions in Senate Bill 843 treat renewable energy facilities as a serious threat to public safety and the environment.

A Proposal: Insure owners of wells near coal ash sites aren’t exposed to greater health risks as a result

April 18, 2016. An earlier post discussed the confusion over “do not drink” advisories issued — and later withdrawn —  for  a number of wells near coal ash sites.  There continues to be confusion among legislators, state agencies and the public about the correct response to high levels of hexavalent chromium (Cr-6) and vanadium in drinking water wells near coal ash impoundments. This post attempts to  clarify some misconceptions and offers a proposal.

First, a clarification about individual contaminant standards.  Some legislators understood presentations by the  Department of Environmental Quality (DEQ) and the Department of Health and Human Services (DHHS)  to mean that there are multiple, inconsistent standards for a contaminant. In fact,  the state uses one standard for each contaminant to determine health risk and require groundwater remediation. But as the earlier post explained, the standard may come from Safe Drinking Water Act standards  or state groundwater rules.  Drinking water standards address a narrow set of contaminants  likely to be found in public water systems; groundwater standards  cover a broader range of extremely hazardous substances that may become a health threat because of a specific pollution incident.

State groundwater rules list health-based concentration limits for many hazardous substances, but also recognize that a pollution incident may involve a contaminant that does not yet have a groundwater standard.  For those contaminants, the rules set the default standard at “non-detect” —  any detectable concentration of the contaminant would be a violation. But the rules also create a process for setting  an interim groundwater standard that would allow concentrations above detection levels based on an evaluation of health risk.  DHHS used that process  to develop the interim standards for vanadium and hexavalent chromium (CR-6) that  led to  “do not drink” advisories for  a number of wells near coal ash facilities.

Gaps in the changing state response.  DEQ and DHHS offered a two-part explanation for withdrawal of the “do not drink” letters. The two points and some additional context for each:

  1. Levels of vanadium and Cr-6 in the wells do not violate state or federal drinking water rules.  Since there is no drinking water standard for either vanadium or Cr-6, this is true as far as it goes.  But the lack of a drinking water standard does not imply safety.  State and federal agencies have never relied solely on drinking water standards to make decisions about mitigation of health risks at contaminated sites  because drinking water standards do not cover many extremely hazardous substances.  That is why the process for asking DHHS to set interim state groundwater standards  exists. The question should be whether concentrations of vanadium and Cr-6  in the wells represent a significant additional health risk that can be minimized by either providing an alternative water source or remediating the groundwater.
  2. A number of large N.C. public water systems also do not meet the DHHS interim standards for vanadium and Cr-6.  The implication has been that the well water is as safe as water supplied to customers of public water systems.  In recent weeks, media and public interest organizations have looked more closely at the levels of vanadium and Cr-6 in public water systems as compared to the wells near coal ash facilities.   Although some N.C. water systems exceed the DHHS interim standards for vanadium or hexavalent chromium, most  water systems appear to meet the DHHS standards. A WRAL news story includes a chart showing both maximum and average concentrations of Cr-6 in public water systems across the state here.  DHHS set the interim standard for Cr-6 at 0.07 parts per billion, representing a 1:1 million cancer risk over a lifetime. WRAL’s analysis found that only about one-third of N.C.’s public water systems have average concentrations of Cr-6 exceeding 0.07 ppb.  More importantly, those public water systems come much closer to meeting the  DHHS standard than a number of the tested wells. The public water systems with the highest average concentrations of Cr-6 had concentrations less than half that of some wells tested near Buck Steam Station.

A proposal:  Issuance of health advisories and steps to provide alternative water supply to well owners should be based on comparative health risk.

The discussion of health advisories issued to well owners around coal ash sites has become focused on whether  public water systems meet the DHHS recommended standards for vanadium and Cr-6.  That is the wrong question. Many (most) North Carolina water systems meet the DHHS standards;  those that do not still provide water that is safer than water in a number of the tested wells. Environmental remediation programs exist in part to reduce  health risks created by a pollution incident.  To the extent well owners will be exposed to greater health risk as a result of groundwater contamination, the additional risk should be eliminated or minimized to the extent possible.  The question is not whether all public water systems meet the DHHS standards. The question is whether groundwater pollution has exposed these well owners to greater health risk — and one way to answer that question is to compare contaminant levels in the well water to the nearest public water system. If the public water system provides water with lower contaminant concentrations that translate into lower additional cancer risk and less risk of acute toxicity, the well owner should be provided with advice on the higher risk of drinking the well water.  And any person responsible for the contamination should be required to provide an alternative water source.

The Fate of the Coal Ash Management Commission

March 19, 2016. An earlier post discussed the N.C. Supreme Court decision in McCrory v. Berger. In brief, the court ruled that laws giving the General Assembly  power to appoint a majority of the members of the Coal Ash Management Commission (CAMC) and two other state commissions violated the N.C. Constitution’s provisions on separation of powers.  (See the earlier post for more detail and a link to the court’s opinion.)   The decision means the Coal Ash Management Commission cannot take any further action until the General Assembly amends the CAMC’s  appointment statute  to be consistent with the court’s decision and new appointments are made.  The most likely solution would be to give the Governor power to appoint a majority of the members;  the law could be amended as early as April of this year when the legislature convenes again.

Multiple news outlets have now reported that the McCrory administration has taken steps to effectively disband the Coal Ash Management Commission in advance of the April legislative session.  The Charlotte Observer’s Bruce Henderson reported that the Governor’s Office informed CAMC executive director  Natalie Birdwell  that the commission is “no longer a legal entity”.  The same Charlotte Observer article reports that the move by the Governor’s Office to shut down the commission’s work will dissolve contracts with independent experts retained by the commission to provide an outside review of  the Department of Environmental Quality’s (DEQ) proposed risk classification of coal ash ponds.

A few observations about the Governor’s decision to shut down the Coal Ash Management Commission:

The Governor’s action  wasn’t required by the decision in McCrory v. Berger.  The court did not find anything unconstitutional in the creation of a Coal Ash Management Commission to oversee decisions on closure of coal ash ponds and coal ash disposal.  The court  only held the method of appointing CAMC members  to be  unconstitutional.  The N.C. Supreme Court has found commission appointments statutes unconstitutional in the past and the solution has been to amend the statute to change the appointment scheme.  In 1982, the N.C. Supreme Court  ruled in Wallace v. Bone  that the General Assembly violated the N.C. Constitution’s separation of powers provisions by designating four seats on the N.C. Environmental Management Commission (EMC) for active members of the legislature.  In response, the General Assembly amended the EMC appointments statute to replace the legislators serving on the commission with citizens appointed by the General Assembly.  Nothing in the court’s decision suggested the EMC must be dissolved and that did not happen; nothing in the decision questioned the validity of past EMC actions.  The decision in McCrory v. Berger likewise  does not hold that actions already taken by the Coal Ash Management Commission — such as hiring staff and entering into contracts  for services —  are void or voidable.

Another separation of powers case still pending in  Wake County Superior Court challenges appointments to the Mining and Energy Commission  (MEC) and specifically asks the court to void the MEC’s past rulemaking actions.   But to date, no  court has ruled that the presence of unconstitutionally appointed members invalidates a commission’s  past acts. The MEC case directly  raises the issue for the first time and could lead to a decision affecting future separation of powers cases. In the meantime, the McCrory administration has chosen to go further than the decision in McCrory v. Berger  requires to  undo the existing organizational, staff and contractual arrangements supporting the Coal Ash Management Commission.  (It isn’t clear whether the McCrory administration’s position on the CAMC  would carry over to support for the plaintiffs seeking to invalidate the Mining and Energy Commission’s past rulemaking actions on similar grounds.)

The General Assembly’s next move may depend on continued legislative interest in providing oversight for DEQ’s coal ash decision making.  In 2014, the General Assembly created the Coal Ash Management Commission to provide independent oversight for DEQ decisions related to coal ash disposal and closure of existing coal ash ponds. At the time, legislators expressed concern about relying entirely on DEQ’s judgment because of controversy surrounding early McCrory administration decisions on coal ash enforcement and a pending federal investigation of relationships between state regulators and Duke Energy. The question is whether those concerns still exist and,  if so,  how the legislature will react to the Governor’s unilateral move to disable the commission. The General Assembly can resolve the separation of powers issue and revive the CAMC by simply changing the CAMC appointment provision to  allow the Governor to make a majority of the appointments.

By forcing the Coal Ash Management Commission to start over, the Governor’s action may make it impossible for the commission to meet its first critical deadline –risk classification of coal ash ponds. The Coal Ash Management Act gave the CAMC final authority to determine the appropriate risk classification of each coal ash pond; the risk classification will determine how quickly the ash pond must be closed and whether the coal ash must be excavated and disposed of in a lined landfill. Only coal ash ponds classified as Low Risk can be closed out by dewatering and capping the ash in place.  Under the law, the CAMC must make a final decision on risk classification of a coal ash pond within 60 days after DEQ sends the commission a proposed risk classification. If the commission does not act within 60 days, DEQ’s proposed risk classification becomes the final classification by default.

Timelines in the law will  require DEQ to submit proposed classifications for all of the coal ash ponds to the  Coal Ash Management Commission by mid-May.  Some proposed classifications may be ready sooner. Even if  new appointments to the CAMC can be made under an amended appointments statute by that time, the Governor’s action means the newly appointed commission will have to reassemble a staff, re-engage consultants and revive basic  operating systems to function.  Unless the General Assembly extends the time for the CAMC to review and act on proposed risk classifications,  the DEQ proposed classifications may become final by default before the commission can act.

After the ash ponds have been classified, the next major set of CAMC decisions under the Coal Ash Management Act  involve approval of final closure plans for each coal ash pond.  The closure plans determine whether coal ash will be excavated and removed from the site or capped in place and  includes approval of technical specifications for final disposal of coal ash. The closure plan may also involve approval of a beneficial reuse project as an alternative to landfill disposal. The law directs the CAMC to make the final decision on  approving a final closure plan based on a recommendation from DEQ.  The law again gives the CAMC a limited time to act on each recommended closure plan; if the commission does not act within the time allowed, DEQ’s recommended closure plan becomes final by default.

If the General Assembly does not intervene to protect the Coal Ash Management Commission’s ability to carry out its responsibilities, the practical result could be a significant change in the way the Coal Ash Management Act works. Delaying the commission’s ability to act in time to affect DEQ’s decisions on closure of coal ash ponds will have the practical effect of ceding all  decision-making back to DEQ.  The original concept of providing  independent oversight of those decisions through the Coal Ash Management Commission will be lost.