N.C. Enacts Coal Ash Legislation

August 21, 2014.  After two weeks of drama in which the House and Senate had a falling out over one critical provision  and threatened to adjourn without voting on a final bill, the N.C. General Assembly enacted coal ash legislation by strong bipartisan margins in both chambers.  The  final bill now goes to Governor Pat McCrory for signature.  Senate Bill 729  follows eighteen months of controversy over the environmental impacts of the 33 coal ash impoundments located at 14  electric generating facilities  in North Carolina and the McCrory administration’s response to the problems.   Coal ash became an urgent  legislative priority after  a stormwater pipe under an  impoundment in Rockingham County ruptured and spilled more that 30,000 tons of coal ash into the Dan River. (Earlier posts on N.C. coal ash impoundments  and the Dan River spill here and here.)

What Senate Bill 729  Does:

♦ Sets timelines for  conversion from  wet to dry ash handling;  an  end to deposition of  coal combustion residuals (CCRs)  in wet impoundments; and final closure of  all 33 impoundments under  environmental standards.  Nothing in existing state or federal law otherwise requires any of those actions. Under current law, the state  can take enforcement action  to require a utility to address  unpermitted  wastewater  discharges or groundwater standard violations associated with an impoundment, but it is more difficult to effect comprehensive policy change through individual enforcement cases.

Under prior N.C. law, CCRs in a wet impoundment had been considered “wastewater residuals” and  exempt from the state’s solid waste disposal laws.  Senate Bill 729   requires CCRs removed from a wet impoundment  to be disposed of as solid waste.  Unless put to an approved reuse, the  bill requires disposal in a landfill that meets the most current standards  for  industrial landfills (including a liner system, leachate collection,  groundwater monitoring, and financial assurance).

♦  Sets  timelines for groundwater assessment and remediation  for all 33 CCR impoundments.  The state would otherwise have to seek assessment and remediation through enforcement cases. Even in response to enforcement action, existing state  rules generally allow the person (or company) responsible for the contamination to propose a schedule for assessment and remediation.

[Note:  In  litigation over  how state groundwater remediation rules apply to  pre-1984 CCR impoundments, a superior court judge recently interpreted the rules to require "immediate" removal of  coal ash causing  groundwater contamination beyond the compliance boundary. Senate Bill 729 reverses that decision;  see  "Controversies" below.]

♦ Requires the utilities to  identify drinking water wells within one-half  mile down-gradient of each CCR impoundment; test  wells potentially affected by groundwater contamination from the impoundment;  and provide  an alternative water supply if  testing finds a contaminant associated with  CCRs at levels exceeding the groundwater standard.  Under existing law, DENR can use enforcement authority to require a person responsible for groundwater contamination  to  identify and test wells for contamination.  Enforcement actions  focus on conditions at individual sites and the groundwater assessments tend to be more incremental, gradually working out from the known source of contamination and continuing  only as far as testing  shows high levels of contamination. The  comprehensive requirements of Senate Bill 729 may provide more information on well contamination more quickly.

The bill requires the utilities to provide  alternative water supply to any well owner whose drinking water well shows high levels of a contaminant associated with coal combustion residuals.  Without this kind of statutory remedy, a well owner may have to sue for damage to the water supply well — bearing both the upfront costs of  litigation and the burden of proving the impoundment caused the  well contamination. Senate Bill 729  requires  the electric utilities to provide an alternative drinking water supply within 24 hours  and alternative water supply for other purposes (such as bathing) within thirty days based  simply on data showing  that the well water exceeds the  groundwater standard for any constituent associated with CCRs.

♦ Requires the utilities to inspect all CCR impoundments;  report on all wastewater discharges (permitted and unpermitted) ;  and take action to eliminate unpermitted discharges to surface waters on a timeline set in the law. DENR has existing authority to take enforcement action in response to an unpermitted discharge of wastewater to surface waters, but would  normally have to take those actions on a site by site basis. Senate Bill 729 may prompt earlier identification and correction of the violations.

♦  Establishes stricter design, construction and siting standards for large projects  using coal ash as fill for construction projects and puts a moratorium on smaller structural fill projects. (Any project using more than 8,000 tons of coal ash per acres or more than 80,000 tons  total will be considered a “large” structural fill.) Existing  state rules  governing use of coal ash as structural fill have significant gaps. The new law fills a number of those gaps by requiring large structural fill projects to be lined;  have leachate collection systems;   monitor for groundwater impacts and provide financial assurance.  The bill also  establishes new siting criteria for large structural fills, including  setbacks from streams, wetlands, wells and property boundaries.

The bill puts a one-year moratorium on smaller structural fill projects while DENR studies  the adequacy of standards for those projects. The bill allows for two exceptions to the moratorium on small structural fills: 1. voluntary compliance with the new, stricter standards applied to large structural fill projects; or 2. use of CCRs as structural fill for a  public road  project.

Amends the state Dam Safety Act to require Emergency Action Plans for all  high or intermediate hazard dams (including CCR impoundments) and  sets specific inspection requirements for CCR impoundments.

♦ Amends water quality laws to require  earlier notice to DENR and to the public following a wastewater spill that reaches surface waters. Prior law had been unclear about notice to DENR and allowed 48 hours  for notice to the public. Senate Bill 729 requires notice to DENR as soon as practicable  (and no later than 24 hours after the spill reaches surface waters) and to notify the  public within 24 hours. The new notice requirements apply to all wastewater spills and not just those associated with CCR impoundments.

♦ Repeals  much  of a 2013 regulatory reform provision dealing with groundwater contamination. Senate Bill 729   repeals two significant parts of the 2013 law: 1. a  presumption that the groundwater compliance boundary should be at the property line;  and 2.  restrictions on  DENR’s ability to require action inside the compliance boundary to control  groundwater contamination. (See the section on groundwater legislation  in an earlier post  for  more explanation of  what the 2013 provision did and Senate Bill 729 now undoes.)

♦ Imposes a new fee on electric utilities that own CCR impoundments to support implementation of the law. The bill allocates funds for 25 new  positions in DENR to work on coal ash and 5 positions in the Department of Public Safety to support the Coal Ash Management Commission.

Weak Points:

Creating a  new Coal Ash Management Commission in the Department of Public Safety with  authority to overrule DENR decisions on prioritization of impoundments for closure and approval of closure plans — but without the expertise or staff support to make those decisions. The Department of Public Safety has no experience with implementation of state and federal environmental laws and the bill authorizes a small staff of five to support all of the commission’s activities.  Commission appointment criteria do not require any member to have expertise in  groundwater hydrology or water quality  -  likely to be critical in prioritizing sites for closure and approving closure plans.

The bill provides few guiding standards for classifying impoundments based on risk. Risk classification will be one of the most important decisions required under the law  because the classification determines whether coal ash has to be removed from the site or can potentially be capped in place. The bill lists a number of factors to be considered, but provides no guidance on how to translate the  factors into high, intermediate and low risk classifications. Existing state programs that use similar classification systems to guide remediation work  have gone through rulemaking to  adopt specific criteria for defining high, intermediate and low risk. In the absence of rulemaking, the lack of legislative guidance could lead to inconsistent and arbitrary decision-making. Senate Bill 729   identifies four sites for immediate closure and in debating the bill a number of legislators questioned  the basis for prioritizing those four over others with similar environmental problems. Those kinds of question aren’t going to go away when the prioritization process shifts over to DENR and the new commission.

The bill authorizes  the Coal Ash Management Commission to issue variances from the impoundment closure deadlines, although the final version of the bill  allows only one variance of no more than three years for an individual impoundment.

Controversies:

In debate on the final bill, Democratic lawmakers again raised concerns about  the impact on ratepayers if  utilities  try to recover assessment and cleanup costs in a rate case. Senate Bill 729 prevents  utilities from recovering costs associated with an illegal spill (like the one on the Dan River), but only puts a  brief moratorium on recovery of  costs associated with assessment, cleanup and closure of coal ash impoundments.  The moratorium ends January 15, 2015 — before the utilities are likely to have incurred significant costs.  Some  legislators  would clearly prefer to leave the cost recovery issue entirely to the N.C. Utilities Commission; others  suggested  the General Assembly will  have time to revisit the cost recovery issue next session.

A number of environmental organizations have criticized the bill for potentially allowing use of capping in place to close impoundments that have CCRs  in  close proximity to  groundwater. This  issue  nearly derailed the bill completely  as House and Senate conferees tried to reach agreement on a final bill.     Both House and Senate versions of the bill required removal of CCRs from impoundments classified as high or intermediate risk.  Although worded differently, both versions of the bill allowed low risk impoundments to be closed by dewatering the coal ash and  installing an impermeable clay cap over the ash under standards  applied to closure of solid waste landfills  – the practice known as  “capping in place”.   Neither version of the bill  addressed  the concern  that a “low risk” impoundment may  be in close proximity to groundwater, allowing  CCRs to be a continuing source of groundwater contamination even after installation of a cap.

House  members  raised the issue for the first time in conference and proposed  new language to bar  “capping in place” if any part of the impoundment was located below the seasonal high water table. See an earlier post for more on the conflict between House and Senate conferees and the cost concern in the background of  debates over capping in  place. The final bill did not include the language proposed by House conferees, but added a sentence  barring approval of  a “cap in place” closure

…unless the Department finds that the proposed closure plan includes design measures to prevent, upon the plan’s full implementation, post-closure exceedances of groundwater quality standards beyond the compliance boundary that are attributable to constituents associated with the presence of the impoundment.

The new language would allow the utilities to cap in place  CCRs  in close proximity to groundwater as long as the closure plan  includes other measures (such as engineered groundwater remediation systems) to  prevent groundwater standard violations  beyond the compliance boundary.   The language clearly does not provide as high a level of protection  as a separation between the  coal ash  and groundwater — but  would   be consistent  with existing state  rules allowing DENR to approve a groundwater remediation plan based on use of engineered systems  to treat or control the contamination source and prevent groundwater violations beyond the compliance boundary. The question may be the level of confidence in DENR’s review and approval of remediation measures and the utilities’ commitment to long-term maintenance of remediation systems.

A final (related) controversy has to do with  language in Senate Bill 729  to   overrule a recent superior court decision interpreting state groundwater rules to impose more rigid remediation requirements  on waste disposal systems permitted before 1984. An earlier  post discusses the issue and Judge Ridgeway’s decision (now on appeal to the N.C. Court of Appeals) in more detail. In brief, the judge interpreted  state rules to require  immediate removal of the contamination source at any pre-1984 waste disposal site where contamination has caused a exceedance of a groundwater standard beyond the compliance boundary.   At a waste disposal facility, the contamination source usually turns out to be the waste disposed of in the facility  – which  could  be garbage  put in  a landfill or coal ash placed in an impoundment. The judge’s interpretation does not allow the alternative of using engineered groundwater remediation systems to treat or control the source of contamination at these older facilities — something the rules  allow for newer  facilities.

Senate Bill 729 reverses the effect of Judge Ridgeway’s decision by requiring groundwater remediation rules to be applied consistently to all waste disposal facilities without regard to the date of permitting.  Legislative intervention  seemed to be driven  by  some combination of concern about completely foreclosing the possibility of capping coal ash in place  and the impact of the decision on county and municipal waste disposal sites permitted before 1984.

The bill now sits  on the Governor’s desk, waiting for signature or veto.

Coal Ash Legislation Hits the Wall

August 2, 2014. Senate Bill 729 (Coal Ash Management Act of 2014) hit a wall  this week  when the conference committee  trying to resolve differences between House and Senate versions of the bill failed to reach agreement and the Senate adjourned for a two-week recess.  (The House adjourns today following a final budget vote.)  The General Assembly  returns on August 14, although the Senate’s adjournment resolution suggests the coal ash bill may not be eligible for consideration then. It  may  be November before the General Assembly takes up  coal ash legislation again.

House and Senate versions of the bill differed  in several ways (such as appointments to the Coal Ash Management Commission),  but  negotiations apparently blew up over a new issue. House negotiators became concerned that the bill’s  provisions on closure of coal ash impoundments could allow coal ash in close proximity to groundwater to be  “capped in place” and remain a source of ongoing groundwater contamination.    “Closure”  means  final cleanup and restoration of the impoundment site under environmental standards.  “Capping in place” refers to a closure method that allows the coal ash to be dewatered  and then covered by a layer of low-permeability soil (such as clay) to reduce infiltration of rainwater.  Another layer of soil on top of the clay cap  provides a base for vegetation to stabilize the site and prevent erosion.

Capping the dewatered coal ash on site  avoids the expense of  moving  the coal ash for disposal in an industrial landfill.  Although Duke Energy has said the company has no bias in favor of capping in place (other than the lower cost), company representatives have  stressed to legislators the high cost of  removing all of the coal ash from impoundments at  14 electric generation sites in North Carolina (some operational and others closed).  Duke Energy’s State President for North Carolina,  Paul Newton,  used the graph below in an April presentation to the legislature’s Environmental Review Commission. The graph  shows a  “baseline” cost of  approximately $2.5 billion dollars to close impoundments at all 14  sites and convert to dry ash handling. The baseline estimate assumes that Duke Energy will entirely remove the coal ash  at four facilities  (Dan River, Riverbend, Asheville and Sutton) and use capping in place at the other ten facilities. Duke Energy estimated the cost of removing coal ash from all 14 facilities to be $10 billion.

(Duke Energy’s cost estimates are provided to give a sense of the utility’s message to legislators and not to validate the numbers.)  Mr. Newton’s entire presentation can be found here.

Negotiation of Senate Bill 729 broke down over the House conferees’ insistence on language that would put additional limits on capping in place.   S 729 requires coal ash  in  impoundments prioritized by DENR as high risk or intermediate risk to be removed and either  placed in a lined  industrial landfill or put to an approved beneficial reuse.  The bill allows low risk impoundments to  be closed by  capping in place under the same standard applied to closure of a municipal solid waste landfill.  But unlike  landfills, coal ash impoundments  were not  required to have a  liner  and maintain a minimum separation (in feet)  between the lowest level of waste  and groundwater. House negotiators became concerned that an impoundment with coal ash in  close proximity to  groundwater  could be  classified as low risk under the bill — allowing the coal ash to be capped in place  and  continue leaching contaminants into groundwater through direct contact with the water table.

House  conferees  proposed language  to  prevent the use of capping in place to close  impoundments below the seasonal high water table – by either  excluding  those impoundments from the low risk category completely or by  changing standards for  closure of low risk impoundments to allow capping in place only at impoundments located above the seasonal high water table.   Senate conferees agreed to  add proximity of coal ash to groundwater as another factor in  prioritizing  impoundments for closure, but  rejected House language to prevent  a “cap in place” closure  of  coal ash in impoundments  below the seasonal high water table.  House conferees refused to accept a bill without assurance that groundwater would be protected from ongoing contamination by coal ash in the water table.

Senate conferees prepared and signed a conference report including only the changes in S 729 acceptable to the Senate. House conferees prepared an alternative conference report. The Senate then adjourned  without final action on  the Coal Ash Management Act of 2014.

Update (1:30 p.m.)  The legislative session will continue until at least early next week because of lack of agreement on the adjournment resolution. The House modified  the  adjournment resolution adopted by the Senate to allow more bills to be considered during the August 14 session (including coal ash). The Senate, having already gone home, has not  voted on  the modified adjournment resolution so session continues. Senate will reconvene on  August 5 at 10:00 a.m. and the House on August 6 at  12:00 p.m. Whether the two bodies will do anything next week beyond agree on an adjournment resolution remains to be seen.

Update on 2014 Budget: The Environment

July 31, 2014 (8:00 p.m.) At this point in the legislative session it’s a minute to minute situation. Last night, the General Assembly  released budget documents providing more detail on the House and Senate budget deal announced on Tuesday.  The budget conference report still must be approved by each chamber in two votes on successive days. The budget gives with one hand and takes away with the other — providing additional earmarked appropriations to DENR and funds for (very small) state employee pay raises, while making additional reductions  in DENR programs.  Some of the  more significant  budget  decisions  affecting environment and natural resource programs:

Coal Ash – The budget provides no additional resources  for response to the environmental threat posed by 33 coal ash impoundments across the state.    An appropriation for coal ash  regulation and oversight  ($1.7 million and authorization for  23 positions in DENR) had been one area of agreement between the House and Senate budget bills,  but the appropriation does not appear in  budget documents coming out of the conference committee.  The General Assembly could  add an appropriation  once  the House and Senate resolve their differences on the substantive  coal ash bill (Senate Bill 729) that is still in a conference committee. Given significant cuts to DENR’s water quality program over the last year, additional resources will be needed to respond to groundwater contamination; illegal discharges of wastewater to rivers and streams; and structural concerns associated with the coal ash impoundments with or without new  coal ash  legislation.

Diversion of Monies from Environmental Cleanup and Conservation Funds –  The budget transfers interest earned by  a number of DENR special funds to the  state’s General Fund.   Conservation  funds affected include the Clean Water Management Trust Fund; the Marine Conservation Fund; and the Parks and Recreation Trust Fund.  The transfer also affects a number of environmental cleanup funds including the Dry-Cleaning Solvent Cleanup Fund (remediation of sites contaminated by dry-cleaning solvents);  the Commercial Underground Storage Tank Fund (remediation of petroleum contamination from underground storage tanks);  the Non-Commercial Underground Storage Tank Fund (remediation of petroleum contamination from smaller USTs, including home heating oil tanks);  the Inactive Hazardous Sites Fund (assessment and remediation of sites contaminated by hazardous substances); the Bernard Allen Emergency Drinking Water Fund (funding alternative water supplies for  low income homeowners whose drinking water wells have become contaminated);  and the Brownfields fund (supporting  redevelopment of contaminated sites).

The Dry-Cleaning Solvent Cleanup Fund and the Commercial UST Trust Fund receive funding from  fees and taxes on the commercial activities  associated with past contamination problems. The Brownfields program  operates entirely on federal  funds and fees paid by prospective developers of contaminated sites; the program receives no state appropriations, so the special fund provides the only source of state operating funds.  A number of the  environmental cleanup funds (including the Commercial UST Fund) have been chronically underfunded and transfer of the interest income will only further reduce the resources available for assessment and cleanup of contamination. The transfer of interest income from these funds  allows the legislature to appropriate those funds for unrelated purposes as part of the General Fund budget.

Fisheries Enforcement –  The budget bill authorizes the state Division of Marine Fisheries to enter into a joint enforcement agreement with the National Marine Fisheries Service.  Commercial fishing interests  successfully opposed  a joint state-federal enforcement agreement for a number of years.  Under the agreement, state marine patrol officers will enforce federal fisheries regulations and DMF  will receive federal funding for those enforcement  activities.

Fee Increases –  The budget raises  several  license fees for commercial fishermen. Some of the fees will be used to replace General Fund appropriations for the At-Sea Observer Program.  (The  program  monitors the deaths of endangered species, such as sea turtles,  associated with the use of gill nets.  Federal regulators have required the observers as a condition for continued use of gill nets, which incidentally cause sea turtle deaths, by N.C. fishermen.)   The budget also authorizes new fees for access to GIS information collected by the Natural Heritage Program.

Missing from the compromise budget – 

No new state funds are appropriated for analysis of the state’s  shale basins and existing gas wells, digitizing shale gas data  and marketing the state’s shale gas resources. (The Senate had proposed appropriating $1.17 million.)

The budget does not include a special fund for acquisition of federal lands around Oregon Inlet and Highway 12 on Hatteras Island. (The Senate had set aside $15 million for land acquisition and legal fees.) The compromise budget still directs the Department of Administration to attempt to negotiate acquisition of those lands and begin proceedings to condemn the lands in 2015 if negotiations fail.  (State condemnation of federal lands should set up an interesting constitutional issue.) The budget bill also has special provisions authorizing the Governor, by executive order, to waive both Coastal Area Management Act permits and environmental impact statements for projects to reconstruct or relocate Highway 12.  For more on the content of the executive order provision, see an earlier post.

Rushing Stormwater

July 26, 2014. House Bill 201 (Building Reutilization for Economic Development Act) left the House as a  bill exempting restored buildings from the most recent state energy efficiency standards. The bill returned from the Senate with the addition of significant changes to state stormwater standards and a new exemption from  environmental review under the state Environmental Policy Act (SEPA). The bill received final House approval on July 24  without review by an  environment committee in either chamber.  The House approved the new measure on a vote of 66-42 and the bill will go to the Governor for signature.

The stormwater amendments   affect  a number  of existing state water quality  programs, including rules for development in water supply watersheds; coastal stormwater rules to protect the quality of shellfish waters; and nutrient management strategies adopted to restore water quality in rivers and reservoirs already degraded by excess nutrients. In the last 20 years,  stormwater controls have become increasingly important in reducing the amount of pollution running off developed areas into rivers, lakes and streams  The  bill raises two questions — 1. Will higher intensity development with significantly reduced stormwater controls be consistent with maintaining  water quality (particularly  in sensitive areas near shellfish waters  and drinking water supplies)? and 2. Are the changes consistent with federal Clean Water Act requirements?

What the stormwater provisions  do:

♦ A new definition of “development” excludes  existing built-on area from the calculation of stormwater requirements.

♦  The bill  prohibits the Environmental Management Commission (EMC)  from requiring private property owners to install new or increased stormwater controls on existing development “except as required by federal law” — a savings clause that will raise more questions than it answers.

Excluding existing development from the built-on area calculation for a site   could  allow redevelopment with seriously under-designed stormwater controls. Under existing rules for  water supply watersheds,  low density development (defined as no more than 12% built-on area) does not require engineered stormwater controls; projects exceeding 12% built-on area do.   H 201 would allow a  developer  in a  water supply watershed to  increase existing built-on area  by another 12% before being required to install any engineered stormwater controls. If the added built-on area exceeds  12%, the developer will  only have to provide stormwater controls for the added built-on area.

Using redevelopment of a property in a water supply watershed (but outside the water supply critical area) as example: If  the property  already has 50% built-on area,  H 201  allows the developer to  expand the built-on area by another 12%  with no engineered stormwater controls. The developer could add up to 30% additional built-on area (the maximum allowed under the rules) — for a total of 80% built-on area —  and only provide stormwater control  for 30%. The end result could be  a  property in a water supply watershed that is  largely impervious, but has either no stormwater controls  or stormwater controls designed  for only  a fraction of the stormwater generated by the development.  The EMC’s coastal stormwater rules and rules for municipal storm sewer systems also use the low density/high density approach  (with  different high-density  thresholds), so the bill will have similar results in  those programs.

It is less clear how the bill will affect  stormwater requirements  under nutrient management strategies for impaired waters (including the  Neuse River, Tar-Pamlico River, Falls Lake and Jordan Lake).  The nutrient management strategies address  the stormwater impacts of new development ( including  redevelopment that adds built-on area) by limiting nitrogen and/or phosphorus loading associated with the development activity.  Developers   usually  meet those load limits by either limiting built on area or installing stormwater controls, but the nutrient management rules do not directly link stormwater requirements  to percentage of built-on area.  The  question is whether the provision in  H 201  prohibiting the EMC from requiring a private property owner to provide stormwater controls for existing development would also affect the calculation of  nutrient loading on a redevelopment site where some part of the loading comes from  existing built-on area.   Nutrient management strategies will also be affected to the extent  those rules  loop in other stormwater standards (like those for water supply watersheds) in areas  with specific water quality classifications.

H 201 may not have a significant effect on the existing development rules included in the Falls Lake and Jordan Lake nutrient strategies. Depending on the success of other parts of those  nutrient management strategies,  local governments in the two watersheds could be required to  achieve additional reductions in nutrient loading from  existing developed areas.  Although stormwater retrofits will be one way to meet the reduction targets, the rules give local governments  flexibility  to use a number of strategies to achieve the load reductions and those may or may not include requirements on private property owners.

The savings clause  in H 201  allowing  the EMC to require stormwater controls on preexisting development to the extent required by federal law raises the question of what it means to be “required by federal law”. The  federal Clean Water Act  creates  a framework, but  allows the state to develop  water quality standards appropriate for state waters.  The U.S. Environmental Protection Agency (EPA) has delegated implementation of most federal Clean Water Act programs to North Carolina’s Department of Environment and Natural Resources (DENR),  but   subject to EPA approval and continuing oversight.  Federal law does not dictate the content of state water quality rules, but does require the state to have standards adequate to protect  water quality.  In the programs described above, stormwater controls have played an important role in those standards.  The question  is  whether state water quality  standards  will still be  adequate to  meet the goals of  the Clean Water Act  given  the restrictions  imposed by H 201.

The federal Clean Water Act also requires the state to establish a Total Maximum Daily Load (TMDL) for any pollutant contributing to impaired water quality. The  TMDL caps pollutant discharges  to an impaired water body at a level that will allow the waters to meet water quality standards.  TMDLs must be approved by EPA . State nutrient management strategies for the Tar-Pamlico River, Neuse River, Falls Lake and Jordan Lake have been designed (and approved by EPA) to meet the TMDL requirement for those nutrient-impaired water bodies. Each of those nutrient strategies relies in part on stormwater controls to reduce nutrient loading from new development. By significantly changing stormwater requirements as applied to existing development, H 201 has also changed the TMDLs previously approved by EPA.

Amendments to the Clean Water Act in the 1990s extended wastewater permitting requirements to municipal stormwater discharges, requiring municipalities to get National Pollutant Discharge Elimination System (NPDES) permits for storm sewer systems.  To have permit coverage, federal  rules require  municipalities to put  stormwater controls on new development. The EMC’s  urban area stormwater rules, which  set the minimum requirements for coverage under a federal NPDES stormwater permit, will also be affected by H 201.  It isn’t immediately clear whether the changes required by H 201 will be consistent with federal NPDES stormwater rules.

The  EIS exemption  in H 201 will likely have limited impact (positive or negative).  Under the  exemption, a state Environmental Impact Statement (EIS) would not be required for expansion or new construction that does not increase the footprint of a building or facility to more than 150% of the  previous footprint. (In other words, the total footprint of the expanded facility could be 50% larger than the existing facility without triggering an environment document.)  The State Environmental Policy Act, N.C.G.S. 113A-1, et seq.,  only requires an  EIS for a project that requires a state approval and involves expenditure of public funds or use of public lands. As a result,  SEPA  has a limited impact on private development projects.

For projects  meeting the  SEPA triggers,  DENR   rules already exempt many construction projects. The difference is that   H 201 grants an EIS exemption based  on the size of the expansion project alone and without regard to natural resource impacts. To the extent H 201 has an effect on SEPA reviews, it may be to exclude from review some construction projects that  would otherwise require an environmental document   because of the  sensitive location or amount of stream and wetland disturbance.  Note: some projects  will still trigger an EIS under federal law; the National Environmental Policy Act (NEPA) applies to both public and private projects and the H 201 exemption would have no impact on federal environmental review requirements.

NCDENR Questions Legal Basis for Proposed EPA Power Plant Rule

July 22, 2014.  On June 18, 2014, EPA published a proposed  rule to reduce emissions of carbon dioxide (CO2)   from existing coal-fired power plants.  Both Duke Energy  and  DENR’s   Division of Air Quality  indicated a detailed review of the draft rule would be required to fully understand the impact  on North Carolina’s electric utilities.    More recently,  Donald van der Vaart, DENR’s Energy Policy Advisor,  made a presentation on  the  proposed CO2 rules to the N.C. Energy  Policy Council. You can find both a video  and a copy of the  powerpoint presentation here.  Rather than discussing the rule’s potential impact on the state’s electric utilities, the presentation questioned the legal basis for the EPA rule.  The  legal analysis identified some legitimate questions about interpretation of the Clean Air Act provision  underlying the CO2 rule,  but the analysis also had significant flaws.

EPA  proposed the CO2 rule under Section 111 of the Clean Air Act,  which authorizes EPA to adopt standards for new and existing sources of air pollution by category; in this case, the category consists of electric generating units burning fossil fuels. (The Clean Air Act also gives EPA two other tools for addressing air pollution —   Section 108 authorizes EPA to adopt  ambient air quality standards to be met on an area-wide basis and Section 112 allows EPA to regulate listed hazardous air pollutants, like mercury,   by source category.)

DENR’s  presentation to the Energy Policy Council offered some criticism of  EPA’s proposed CO2 standard for  new power plants, but  made a more pointed  attack on the  rule addressing emissions from existing power plants. The presentation both questioned EPA  authority to regulate CO2 emissions from existing power plants under Sec. 111(d)  and the appropriateness of including  transition to  natural gas;  expanded use of nuclear power and renewable energy sources;  and energy efficiency  as elements of the performance standard  for existing coal-fired power plants. This post will likewise focus on the  proposed  existing source rule under Sec. 111(d) and particularly the DENR objections to the rule that need  more context or correction:

DENR Objection:  EPA cannot  use Sec. 111(d) of the Clean Air Act  to set a standard for an existing air pollution source  also regulated  under  Sec. 112  (addressing  hazardous air pollutants) even if the standard proposed under Sec. 111(d) addresses a pollutant that is not regulated under Sec. 112.

Counterpoint:   This seems to be  a more open question that the presentation suggests. When Congress added Sec. 111 to the Clean Air Act in 1990,   the  House  version prohibited  use of Sec. 111(d)  to set standards for existing sources regulated under Sec. 112 and the Senate  version prohibited  its use to set standards for pollutants regulated under Sec. 112.  Both versions became part of the Statutes at Large.  EPA has consistently interpreted Sec. 111(d)  to prohibit  adoption of  existing source standards  for pollutants  regulated under Sec. 112.   (See a paper  by Adam Kushner and Judith Coleman on the background of the  Sec. 111(d) language and  EPA’s interpretation.) Under EPA’s interpretation, Sec. 111(d)  can be used to regulate CO2 emissions from existing coal-fired power plants because CO2 has not been regulated under Sec. 112 as a hazardous air pollutant.

As a policy matter, EPA certainly seems to have the better interpretation; otherwise, the language in Sec. 111(d) would create a loophole preventing regulation of a dangerous air pollutant from an existing  source (in this case, a  power plant) simply because the facility  also emits hazardous  air pollutants regulated under Sec. 112.  If EPA’s interpretation is challenged, the question will be whether the court recognizes the existence of a conflict in the statutory history of Sec. 111(d)  and defers to EPA’s interpretation.

DENR quotes the Natural Resources Defense Council (NRDC) in support of the more restrictive interpretation of Sec. 111(d), but the NRDC comments concerned  an EPA  rule regulating  mercury emissions  from power plants. Since mercury had been listed as a hazardous air pollutant under Sec. 112,  NRDC challenged EPA’s decision to use Sec. 111 instead of  Sec. 112 as the basis for the Clean Air Mercury Rule (CAMR).  NRDC did not argue that EPA lacked authority to  regulate emissions of other pollutants  from the same source  under Sec. 111 and the federal court decision in the CAMR case did not decide that issue.  (The Kushman/Coleman paper notes that the CAMR decision erroneously says that  EPA conceded a lack of authority.)

DENR Objection: Sec. 111(d) cannot be used to regulate pollutants listed under Sec. 108 of the Clean Air Act (42 U.S.C. § 1408).

Counterpoint:  DENR correctly notes that Sec. 111(d) cannot  be used to regulate an air pollutant  already covered by an ambient air quality standard  or  listed for development of an ambient air quality standard under Clean Air Act Sec. 108. But EPA has not adopted an ambient air quality standard for CO2 or listed CO2 under Sec. 108. The  DENR presentation assumes that EPA’s   2009 finding that CO2 (in combination with other greenhouse gasses) endangers public health and welfare  automatically resulted in a  Sec. 108 listing. The 2009 “endangerment” finding was made under Sec. 202 of the Clean Air Act as a necessary first step toward regulating motor vehicle emissions of  greenhouse gasses. But an “endangerment” finding by itself does not cause a pollutant to be listed under Sec. 108. The two are distinct actions.

DENR Objection: Sec. 111(d) requires controls on individual emission sources; the “performance standard”  cannot be met by alternative  CO2 reduction measures (such as energy efficiency and increased use of renewable energy sources) allowed under the proposed EPA rule.

Counterpoint: This again appears to be a much more open question than the presentation would suggest. EPA’s proposed rule gives states the flexibility to use measures other than  pollution  controls on existing power plants in developing the “standard of performance”  required under Sec. 111(d).  EPA identifies four “building blocks” : increased efficiency at existing  coal-fired units; transition  from coal to natural gas;  greater reliance on nuclear energy and renewable energy sources; and management of electricity demand.   There may well be a debate over what can be considered a “standard of performance” under Sec. 111, but the question has not been settled. A number of legal scholars endorsed a similarly broad interpretation of the “standard of performance” under Sec. 111  well before release of the proposed EPA rule.  (You can find a  2011 discussion  paper on compliance flexibility under Sec. 111  here.)

EPA’s interpretation is also entitled to deference where Congress has not clearly required (or barred) a particular approach to implementation. The federal court decision cited by  DENR  as rejecting  pollution trading under Sec. 111, ASARCO, Inc. v. EPA,   was effectively overruled by the later U.S. Supreme Court decision in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc.,  467 U.S. 837 (1984).    In Chevron, the court upheld  EPA’s interpretation of “stationary source” to encompass all of the emission sources at a facility  –  an outcome  contrary to the earlier ASARCO decision-- giving industry the flexibility to modify individual sources at a facility within a facility-wide emissions cap.   The Chevron decision also made a very clear statement about deference to agency interpretation: “When a challenge to an agency construction of a statutory provision, fairly conceptualized, really centers on the wisdom of the agency’s policy rather than whether it is a reasonable choice within a gap left open by Congress, the challenge must fail”.  EPA’s interpretation of the  “standard of performance” language in Sec. 111 to allow greater compliance flexibility and lessen the regulatory burden on electric utilities should be entitled to the same deference.

Whatever the strength or weakness of DENR’s legal analysis of the proposed CO2 rule for existing coal-fired power plants,  the fact of the critique certainly sends a message. It suggests that the McCrory administration may intend to  oppose the proposed rule whether the impact on North Carolina will be positive or negative.

Status of Regulatory Reform Legislation

July 15, 2014.   For the last two weeks, substantive bills have been held in committee during  budget negotiations (some would describe this as hostage-taking).  But Senate leaders have signaled an intent to begin moving bills out of committee and to the Senate floor.  Two of the bills waiting for action are regulatory reform bills. An earlier post described Senate Bill 734 (Regulatory Reform Act of 2014) . The House made significant changes to the bill after it came over from the Senate, stripping out all of the environmental provisions. The bill (or what is left of it) is now back in the Senate for a concurrence vote.

The House put  its environmental regulatory reform provisions into a different Senate bill.  Senate Bill 38 came over to the House as an emergency management bill.  The House stripped out the original provisions; inserted some of the environmental provisions from Senate Bill 734; added a few new environmental provisions; and retitled the bill “Amend Environmental Laws”.  Senate Bill 38 has also been returned to the Senate for concurrence.

Key differences between Senate environmental regulatory reform proposals in S 734 and  the House proposals (now in S 38) below; these provisions will  have to be negotiated if the Senate  refuses to simply accept the House changes to both S 734 and S 38.  The Senate had proposed more –and more controversial — environmental provisions, so much of the negotiation will likely focus on Senate provisions left out of the House bill. (References to S 734 below  refer to the Senate version — Edition 3 of the bill on the General Assembly website.)

Senate provisions in controversy:

♦ A new environmental audit privilege and immunity for self-reported violations.  The Senate version of S 734  makes the results of an environmental audit confidential and gives the company immunity from civil penalties for environmental violations voluntarily reported to DENR as a result of an audit. The concept of immunity for self-reporting has some merit. The Senate provision had not been tightly drafted, however, and could allow a facility to avoid  penalties for longstanding, continuing violations by self-reporting under cover of a recent environmental audit.

♦   Limits on citizen appeals of air quality permits.  S 734 proposed  to limit citizen appeals to circumstances involving violation of a national ambient air quality standard.  As noted in the earlier post, this would eliminate citizen appeals of  permits issued  for sources of toxic air pollutants which are regulated under a different section of the Clean Air Act than the six pollutants covered by national ambient air quality standards.

♦   Authority for the Governor to waive environmental impact statements and Coastal Area Management Act  (CAMA) permit review for projects to protect, maintain or rebuild Highway 12 on the Outer Banks. (For  more on  conditions surrounding Highway 12 see  an earlier post.)

♦   A provision allowing a local government to block classification of a stream or river segment   for  water supply under state water quality rules.  State rules protect water supply sources through  in-stream water quality standards and development standards  (such as stormwater controls and stream buffers) in the water supply watershed. The water supply classification  must be approved by the Environmental Management Commission (EMC) before a water intake can be constructed.  The Senate provision intervenes in a conflict between  Caswell County and the towns of Roxboro and Yanceyville   over classification of a segment of the Dan River for water supply.  The EMC approved the Dan River water supply classification in 2012; the proposed water intake would supply Roxboro, Yanceyville and the Town of Milton.  The watershed for the new water supply extends into Caswell County, which had agreed to revise  its ordinances to meet water supply watershed development standards. Political opposition to the watershed ordinance led  Caswell County  to reverse course and petition the EMC to undo the Dan River water supply classification.  The EMC denied the Caswell County request last year.  The provision in S 734  directs the EMC  to grant any  request  to reverse a water supply classification made by an affected local government —  without regard to the effect on water supply.  The provision only applies to requests submitted after January 1 2012 and before the effective date of the provision — in other words, the  Caswell County request.

♦  Elimination of  air quality monitors not required by the U.S. Environmental Protection Agency.   The provision would significantly reduce the number of  state monitors used to assess air quality and demonstrate compliance with federal ambient air quality standards. The origin of the provision has been somewhat mysterious;  the legislator who requested the provision cannot seem to explain why. DENR’s Division of Air Quality has expressed concern about the loss of the monitors.

♦ A provision exempting animal waste lagoons at  dairy farms from closure requirements in state water quality rules. The rules reference closure standards for animal waste management systems developed by the Natural Resource Conservation Service in the U.S. Dept. of Agriculture.  The exemption would apply to waste lagoons constructed before 1967 and in use as recently as 2006.

House environmental regulatory reform provisions in controversy:

♦ A reduction in the amount of financial assurance required for a construction and demolition debris landfill (from $2 million  – the amount required for municipal solid waste landfills and industrial landfills —  to $1 million).

♦ Two provisions easing regulation of onsite wastewater systems. One would  prevent state regulators from putting certain conditions on approval  of  innovative systems using expanded polystyrene synthetic aggregate particles as the dispersion media. Another eliminates any requirement for an inspection or performance audit to review the performance of modified onsite wastewater systems.

♦  A new requirement for disclosure of mineral, oil and gas rights to prospective purchasers of real property.

♦ The House and  Senate bills have slightly different proposals to reduce state oversight of development  affecting isolated wetlands. The Senate bill would only require an individual water quality permit for activity affecting more than one acre of isolated wetlands. The House bill maintains a distinction that exists in the water quality rules between wetlands in the eastern and western parts of the state, requiring a permit for activity affecting 1/3 acre or more of isolated wetlands west of Interstate 95 and for activity affecting 1acre or more of isolated wetlands east of the interstate. Efforts to limit state protection for isolated wetlands began last year; see an earlier post for more background.

The House also put a number of provisions recommended by the General Assembly’s Environmental Review Commission into Senate Bill 38. The same provisions were introduced in the Senate as freestanding bills and  shouldn’t be in controversy.

The N.C. House on Coal Ash

July 7, 2014. Last week, the N.C. House approved a  revised version of Senate Bill 729 (Coal Ash Management Act of 2014).  See the 5th edition of the bill on the General Assembly website.   The bill now goes to a conference committee to resolve differences between the House and Senate  bills.   There is little or no disagreement between the House and Senate on the most important requirements of S729.  Usually — although not always —  uncontroverted sections of a bill appear in the final bill.   Only a handful of the House changes  are likely to meet opposition from the Senate and some of those have more political than policy significance.   Under Senate rules,  the  conferees can consider any change  germane to the original bill. House rules allow conferees to consider provisions not in controversy between the two chambers to the extent the Senate rules allow, but require entirely new provisions to go back through a House committee before adoption of the conference report. In any case, comparison of the Senate and House bills should give a fairly clear picture of  the final bill.

 House/Senate Agreement. The House and Senate agree on:

♦  Barring electric utilities from recovering the cost of addressing an illegal discharge to surface waters from a CCR impoundment through a rate case.

♦  Timelines for  assessing all  CCR impoundment sites for groundwater contamination and unpermitted discharges to surface waters. House and Senate bills also have identical  corrective action requirements based on existing state groundwater rules.

♦  Deadlines for final closure of CCR impoundments.   Both bills have the same  deadlines for  converting all N.C. coal-fired power plants from wet to dry ash handling; ending disposal of ash in wet impoundments;  and completing final closure of all 33 CCR impoundments in the state. The bills require final closure of  all impoundments by the end of  2029, but set earlier deadlines for closure of high and intermediate risk impoundments. (Final closure  involves dewatering the impoundments  and taking additional steps — which may include removal of the CCRs from the site — to prevent future groundwater and surface water contamination.)

♦   Priority  for closure. Both the House and the Senate  direct DENR to give four  impoundments  highest priority for closure (Riverbend, Asheville, Dan River and Sutton). Like the Senate, the House voted down a number of amendments attempting to add sites to the immediate closure list. Both bills direct DENR and the Coal Ash Management Commission to prioritize the other 10 CCR impoundment sites for closure based on risk. Neither  bill  provides guidance  on how to translate  risk factors listed  in the bill  into high, intermediate and low risk classifications. Uncertainty about how the risk factors will be used to  prioritize impoundments for closure has caused concern on the part of both the electric utilities and environmental organizations since risk classification also determines the allowable closure methods.

♦  The link between prioritization for closure and the method of final closure.  Under both House and Senate bills,  high and intermediate risk impoundments  must  be closed by permanently  removing the coal combustion residuals from the impoundment for disposal in a permitted facility; removing the CCRs for use in structural fill or another beneficial reuse  allowed under the law; or temporarily moving and storing the CCRs  for disposal in an industrial landfill to be built on the old impoundment site.  Both  bills allow low risk impoundments to be closed by  capping the CCRs in place under closure standards that apply to municipal solid waste landfills.

Duke Energy  has openly worried  about the number of impoundments  that may be classified   as high or  intermediate risk and require  more costly closure plans. Environmental organizations see no assurance in either bill that “low risk” impoundments will necessarily be appropriate for capping in place.

♦ Giving the Coal Ash Management Commission final authority to approve  prioritization of impoundments for closure and the final closure plan for each impoundment. Under both bills, the commission would be  directed to approve a closure plan based on consistency with the law; technological feasibility; and a determination that “benefits to public health, safety, and welfare; the environment; and natural resources outweigh the negative impacts on electricity costs and reliability”.  The last part of the standard — weighing public benefits against impact on electricity costs and reliability — suggests that even a technologically feasible closure plan  approved by DENR as consistent with the law  could be disapproved by the commission based on the impact to electric utilities. The bill  doesn’t  seem to set any  minimum  requirement for protection of public health, safety, the environment and natural resources  to put a floor under the commission’s weighting of public benefits versus utility costs.

♦ Expanding “structural fill” use of CCRs to include mine reclamation, construction of embankments, and greenscapes. Existing state rules allow use of CCRs as fill material to support  a building foundation or other structure (such as a  roadbed or airport runway). Both the Senate and House bills  expand the concept of “structural fill” to include  uses unrelated to  construction, such as reclamation of open pit mines;  embankments; and  greenscapes.  The idea of using CCRs  as  fill material for an open pit mine  would be a particularly significant departure from past structural fill uses because of the volume and depth of the fill project.

♦ More stringent standards for large structural fill projects. New standards require liners; leachate collection systems; financial assurance;  groundwater monitoring; and establish setbacks from surface waters, wetlands, water supply wells and other features.  As noted  below,  the bills differ on the dividing line between large projects and smaller structural fill projects that will be deemed permitted under less protective standards.

♦  A moratorium on new structural fill projects that do not meet the more stringent standards for large projects and a moratorium on construction of coal combustion product landfills on top of old CCR impoundments  under standards in  the 2007 Solid Waste Act. The  structural fill moratorium will be linked to a DENR study of structural fill and other beneficial uses of CCRs. The bills also require a study of the 2007 coal combustion product landfill standards.

♦  Earlier notice  to DENR and to the public when untreated wastewater is discharged to surface waters,  picking up on  a recommendation of the legislature’s Environmental Review Commission. This provision would apply  to all wastewater spills and not just  spills  associated with CCR impoundments

♦  Requiring  an emergency action plan for high hazard and intermediate hazard dams. The emergency action plans would be required for both CCR impoundments and other dams regulated under the state Dam Safety Act.   The House and Senate also  agree on specific inspection requirements for CCR impoundments and a  process for decommissioning CCR impoundments under the Dam Safety Act.

♦  Assessment of a fee on electric utilities that own CCR impoundments to fund DENR and Coal Ash Management Commission activities under the law.

♦  Transfer of rulemaking authority for state solid waste programs from the Commission for Public Health to the Environmental Management Commission.

House/Senate Differences.  Some of the more significant differences that will need to be resolved in conference between the two chambers:

♦  The length of a moratorium on cost recovery for expenses related to CCR impoundment assessment, remediation and closure.   The Senate moratorium would end on January 15, 2015; the House extends the moratorium to December 31, 2016.

♦  Makeup and organization of the Coal Ash Management Commission.  The General Assembly would continue to make a majority of appointments to the 9-member commission, but the  House bill gives the Governor  authority to appoint the chair.   The House also made very minor changes to criteria for appointment to the commission. One of the most significant differences between the House and Senate  may  be the administrative location of the commission. The Senate put the commission under the Department of Public Safety; the House  moved the commission under the Department of Environment and Natural Resources.

♦  A shorter deadline for providing alternative drinking water supply when a CCR impoundment causes well contamination. Both the Senate and the House require the electric utility to provide an alternative water supply  when a water supply well has become unsafe because of groundwater contamination associated with a  CCR  impoundment. The House bill added a requirement that  an alternative supply of drinking water must be provided within 24 hours after DENR confirms that contaminants associated with a CCR impoundment have caused exceedance of  a groundwater standard in  a drinking water well. Alternative water supply for other purposes must be provided within 30 days consistent with the Senate bill.

♦   More alternatives for final closure of  “low risk” CCR impoundments.   The  House bill  allows low risk impoundments to be closed using any of  the methods approved for high and intermediate risk impoundments (removal of ash for landfill disposal; removal of ash for beneficial reuse;  or conversion of the impoundment to an industrial landfill)  or  by capping the coal ash in place under standards for closure of a municipal solid waste (MSW)  landfill. The Senate  restricted closure of low risk impoundments  to the “cap in place” option.

♦  Opportunity for electric utilities to request  a variance from CCR impoundment closure deadlines.  The Senate and House bills  have the same deadlines for final closure of CCR impoundments, but the House bill allows the Secretary of Environment and Natural Resources to grant variances from the deadlines. To get a  variance the electric utility must show that : “compliance with the deadline cannot be achieved by application of best available technology found to be economically reasonable at the time and would produce serious hardship without equal or greater benefits to the public”.   The variance standard  requires a cost-benefit calculation  that weighs cost to the electric utility against the public health and environmental benefits of closure.  In that respect, it is similar to the standard for Coal Ash Management Commission approval of closure plans.  As a standard for granting variances from environmental or public health rules, it is unusual in not requiring any minimum level of protection for  public health, safety and natural resources.  There  seems to be no floor under the Secretary’s authority to give  greater weight to electric utility cost than to the public benefit of closure. The provision also puts no limit on the  extension of time allowed by variance.

♦  The threshold for requiring more stringent structural fill standards.  The House bill lowers  the threshold between structural fill projects that will be deemed permitted and those requiring an individual permit under more stringent standards. Under the House bill, any project using 8,000 tons or more  of coal combustion residuals per acre or  a total of 80,000 tons or more for a single project would trigger an individual permit under more protective standards. The Senate bill set the thresholds at 10,000 tons or more per acre and 100,000 tons or more total.

♦ Addition of  a criminal enforcement provision. The House added a criminal enforcement provision, making it a Class 2 misdemeanor (maximum penalty of $10,000) to make a false statement, representation or certification in any application, report or other document required under the law.

♦  Protecting some information in Dam Safety Emergency Action Plans.  The House bill adds a confidentiality provision  excluding “sensitive public security information” from disclosure under the state’s Public Records Act. The bill specifically protects information that is protected from disclosure under Federal Energy Regulatory Commission rules as “Critical Energy Infrastructure Information”.

♦  Groundwater Compliance Boundaries: The Senate bill repeals  most of a 2013 regulatory reform provision  concerning groundwater compliance boundaries around permitted waste disposal sites. For an explanation of the 2013  legislation, see an earlier post. The Senate  bill   repeals everything except a provision clarifying that each individually permitted waste disposal site should have a groundwater compliance boundary without regard to the date the facility first received a water quality permit. The House  adds new language on groundwater corrective action to the Senate provision.

According to one House bill sponsor, the new corrective action language  intends to reverse a recent superior court decision concerning remediation of groundwater contamination caused by CCR impoundments.  Superior Court Judge Paul Ridgeway reversed a declaratory ruling by the  Environmental Management Commission (EMC) interpreting the  groundwater corrective action rule,  15A NCAC 2L.0106, as applied to CCR impoundments.  Judge Ridgeway concluded that the rule does not give older waste disposal systems  (those first permitted under water quality laws before 1984) the alternative of treating or controlling the groundwater contamination source.  Judge Ridgeway  interpreted the rule to require immediate removal of the contamination source in every case involving groundwater contamination associated with a pre-1984 waste disposal  system.

Most CCR impoundments fall into the pre-1984 category and the Ridgeway decision  seems to require immediate removal of coal combustion residuals that are the source of groundwater contamination beyond the compliance boundary.  See this post for more on Judge Ridgeway’s decision. Since the  rule  applies to all waste disposal sites first permitted before  1984,  Judge Ridgeway’s decision  has  also created  concern among local governments  because of the potential impact on some county and municipal waste disposal sites.

It isn’t possible  to fully analyze the  implications of the House language as compared to the  current groundwater corrective action rule;  the Senate provision; and Judge Ridgeway’s order in this post.   But House bill sponsors have clearly  indicated an intent to reverse  the part of the Ridgeway  decision requiring  the owner of a pre-1984 waste disposal facility to immediately remove a source of groundwater contamination that has migrated beyond the groundwater compliance boundary and allow greater flexibility in measures used to  address ongoing groundwater contamination.

Ecological Flows: Round 3

June 30, 2014. Last week, the House approved a new  version of  House Bill 1057 (originally a study of interbasin transfer issues).  The House  added a new section requiring the Environmental Management Commission (EMC) to study the method used for establishing minimum stream flows necessary to protect stream ecology  — or “ecological flows”. In the meantime, the bill would prevent the Department of Environment and Natural Resources (DENR) from developing river basin hydrologic models based on the recommendations of an ecological flow study just completed in late 2013 — work the  General Assembly itself directed in 2010 legislation.

The state’s Division of Water Resources (DWR) has been  working on  river basin hydrologic models for more than a  decade. The models turn information like  water volume; seasonal flow;  user demand (such as drinking water intakes); and permitted wastewater discharges  into a tool for predicting how water supply will  respond  to different conditions.  Federal relicensing of North Carolina’s hydropower dams prompted development of some of the earliest hydrologic models;  those models became  the basis for new hydropower license conditions.  DWR has completed models  for most of the state’s major river basins; the piece missing from the models has been a placeholder for  water needed to maintain aquatic ecosystems.

State and federal permit reviews for large water supply projects  (like reservoirs and new drinking water intakes) have long required analysis of impacts on aquatic life as well as downstream water users. The analysis has generally been done by the permit applicant on a project by project basis.   Session Law 2010-143 required DENR to characterize the ecology of the state’s river basins; identify the flow needed to maintain the integrity of those ecosystems;  and incorporate the “ecological flow” into each  river basin hydrologic model.     S.L. 2010-143 did not give the “ecological flow” component any regulatory effect; the law simply set in motion a process for looking more systematically at the impact of stream flows on aquatic ecosystems. Even though the law had no immediate regulatory impact,  it immediately encountered opposition from some municipalities  – led by the City of Raleigh —  out of concern that development of ecological flows would  lead to greater limits on public water supply projects.

As required under S.L. 2010-143,  DENR  convened a science advisory board to  recommend a  method for identifying the minimum stream flow necessary to maintain ecosystem integrity in each of the state’s river basins.  The science advisory board included representatives of agriculture, local government, electric utilities, conservation organizations and both state and federal regulatory agencies. The advisory board’s 2013 report titled “Recommendations for Estimating Flows to Maintain Ecological Integrity in Streams and Rivers in North Carolina” just became available in November 2013. The report recommends a   minimum “flow-by” (the percentage of  flow that remains in a stream after allowing for withdrawals ) of 80-90%.  Based on the recommendation, DENR intends  to use 85% flow-by as a planning tool, but will not  change  existing permitted flows or individually determined flow regimes.  DENR  has also indicated  that  more data will be needed before implementing other recommendations in the report. You can find a DWR presentation on use of the science advisory board’s report here .

House Bill 1057  appears to reject outright the work done by the science advisory board and requires the  EMC to do a new review of methods used to establish ecological flows — again based on the provisions of  S.L. 2010-143. The bill also allows the EMC to  create another scientific advisory panel. It isn’t clear what would be accomplished other than a further delay in consideration of ecological needs in river basin wear supply modeling.

In some ways, the ecological flows controversy parallels the earlier (successful) effort to limit use of sea level rise projections in state planning.  Opposition to possible policy changes no longer waits for the actual policy discussion — instead, the opposition has organized to limit use of the  underlying scientific or technical information.

The Coal Ash Management Commission

June 24, 2014. The Senate’s coal ash bill has  been approved by two  committees and goes to the Senate floor for a vote today.  Given the N.C. General Assembly’s desire to  adjourn soon after  July 1, the bill will need to make its way through the House quickly to become law.  An earlier post provided a broad outline of Senate Bill 729; although there may be amendments on the floor today, the basic structure of the bill  seems to be set.

The earlier post generally described the  9-member Coal Ash Management Commission created by the bill, but more on the  unusual nature of the proposed  commission below:

♦ Why a new commission? When Republican senators raised this question in committee, the  bill sponsor  suggested a need to restore public confidence.  The Coal Ash Management Commission would have the power to overrule decisions made by the Department of Environment and Natural Resources (DENR) on closure of coal ash impoundments, suggesting a lack of confidence in DENR. But Senate Bill 729   gives  commission members with  very general knowledge and experience the ability to second guess such technical decisions as  the relative risk posed by  a  coal ash impoundment ( based on  groundwater contamination,  surface water pollution, threat of structural failure and other factors) and compliance with  laws governing closure. [See the earlier post for  more  on the makeup of the commission. ]

♦  One of the criteria for commission  approval of a closure plan would be  “that the benefits to the public health, safety, and welfare; the environment; and natural resources outweigh the negative impacts on electricity costs and reliability”.  In effect, the bill allows the commission to disapprove a closure plan based on a cost-benefit analysis  that considers  the impact on electric rates and  electric service.  One problem will be the lack of expertise on the commission to do a very complex cost-benefit analysis, but the provision  seems odd for other reasons.  First, cost only becomes a factor when the individual closure plan comes to the commission for review — after   the electric utility has proposed a closure plan based on alternatives identified in the law; after public comment on the proposed plan; and following DENR approval of the plan as consistent with the law.

Since the commission will  review and approve closure plans individually for each impoundment, the analysis of impacts on electric rates and electric service will  be difficult at best. The total cost of closing all  33 coal ash impoundments  in the state may  affect electric rates  – if the N.C. Utilities Commission allows the utility to pass some or all of those costs to consumers. It will be much harder to evaluate the impact of a closure plan for an individual impoundment on rates and electric service.  The cumulative cost of closing the coal ash impoundments  and any impact on electric service will also largely be  a function of the law  rather than individual closure decisions. The bill  sets the timetable  for eliminating use of wet coal ash impoundments; identifies the allowable  closure methods;  and sets closure deadlines  based on risk factors listed in the bill.  Individual closure plans have to fit within the framework  set by the legislature.

The greatest impact the commission could have on total cost would be through prioritizing  impoundments for closure. Since the bill allows  low risk impoundments to be closed by capping the coal ash in place  (which is much less expensive than removing the ash for disposal in a landfill),  putting more sites in the low risk category  also reduces total closure costs. But for very good reasons the bill does not make cost a factor in prioritizing impoundments for closure.

Given all of that,  the commission will have a very limited ability to affect the impact of closure  on electric rates and electric service. By the time a closure plan reaches the commission, the issues will be much  narrower. The priority for closure of the impoundment would already be set, determining the  closure options.   For a high risk impoundment, the alternatives  would be removing the ash for disposal elsewhere; moving the ash temporarily and creating a coal ash landfill on site (under standards set in the law);  or removing and treating the ash for beneficial reuse.  In  that narrow context, the commission could  tilt an individual closure decision in the direction of lower cost to the utility — although that would also require the commission to second-guess DENR’s evaluation of the environmental and public health impacts of the closure alternatives.

The commission’s decision to disapprove a closure plan could be appealed by either the electric utility or any other “person aggrieved” by the decision. (That may include DENR, since the department will not be  the decision-maker.)  Otherwise,  the electric utility would presumably have to revise the closure plan and go through another round of public comment and DENR review. Nothing in the bill suggests that the commission can change a closure plan.

♦ There doesn’t seem to be any precedent for  giving a citizen commission in one department of state government the power to overrule a decision made by another department.  The Coal Ash Management Commission would be part of the Department of Public Safety, but have the authority to override  decisions made by DENR under solid waste laws implemented by DENR’s Division of Waste Management and rules adopted by the Environmental Management Commission. Aside from the potential for conflict and confusion given the number of state agencies in the mix, the arrangement sets up an interesting situation on appeal of closure decisions. Since the Coal Ash Management Commission would  make the final  decisions  on prioritization and approval of  closure plans,  the commission would also have to respond to appeals of those decisions.  Although much of the technical work may have been done by DENR staff, DENR would not have responsibility for defending the decision.  Instead, DENR could be a party to the appeal.

♦ On a purely political level,  the  process for making appointments to the commission has already created a controversy.  A majority of  commission (6 of the 9 members) would be appointed by legislative leaders and commissioners would elect the chair and vice-chair.  Such strong legislative influence over an executive branch agency would be unusual. Other state commissions  have appointees divided between the governor and legislative leaders, but generally  the governor has a clear majority of the appointments and also appoints the chair.   As reported in the Raleigh News and Observer’s Under the Dome,  Governor Pat McCrory does not necessarily appreciate the idea of  legislative leaders controlling the Coal Ash Management Commission.

Recycling Wastewater for Drinking Water — Without a Permit

June 19, 2014. In one of many quick changes over the last few legislative days, Senate Bill 163 (“Protect Landowner’s Water Rights”)  entered the telephone booth of the House Environment Committee yesterday and emerged as an entirely different bill entitled “Reclaimed Water as Source Water”.  The House adopted the new version of S 163 today,  making a significant change to state water quality  and drinking water laws with little debate.

The bill endorses the use of highly treated wastewater, classified under  state water quality rules as “reclaimed” water, to supplement drinking water supplies.  The policy makes sense  under the right conditions.  Treated wastewater  already indirectly supplements  drinking  water supplies; many wastewater treatment plants discharge to streams and rivers that also serve as  water supply sources for downstream communities. State reclaimed water rules also allow direct  use of reclaimed water for many non-potable purposes, including  landscape irrigation, easing demand on the drinking water supply.

Senate Bill 163,  as adopted by the House, goes further and  for the first time allows reclaimed wastewater to be used to directly supplement a drinking water supply. The problem — the bill appears to allow a water system to add reclaimed wastewater to a drinking water reservoir without a water quality permit.  If that is the  effect of the bill, it represents a significant change in the way the state protects the quality of drinking water supplies and  likely conflicts with the federal Clean Water Act.

Under the bill,   “notwithstanding any other provision of law, a local water supply system may combine reclaimed water with source water treated to provide potable water supply”  in an impoundment controlled by  the  water system.  The bill does not define “impoundment”,   but under state drinking water rules an “impoundment” means a reservoir.  That interpretation would also be consistent with  other  Senate Bill 163 language describing the addition of reclaimed water  as occurring before the water goes to the water treatment plant.

An impoundment used as a  public water supply source  would  usually be considered a “water of the state” under water quality laws. Most impoundments  have  been created by damming a river or stream segment to store water for  water supply and continue to release water through the dam to maintain downstream flows.  Wastewater  (even treated wastewater) can only be discharged to a water of the state under a  permit that  insures the discharge  will not result in violation of a water quality standards.  Under G.S. 143-215.1, it is unlawful to:

Cause or permit any waste, directly or indirectly,  to be discharged to or in any manner intermixed with the waters of the State in violation of the water quality standards applicable to the assigned classification.

An impoundment used as a drinking water source has specific water quality standards (adopted in state rules) to protect its  use as a water supply. Discharge of treated wastewater to a water supply source can be allowed,  but only  under permitted limits.  Unfortunately, the “notwithstanding” language in Senate Bill 163  seems to sweep away both the requirements of state  water quality permitting laws and the N.C.  Drinking Water Act.  Nothing in the bill itself requires the addition of reclaimed wastewater to be done under a water quality permit  or in compliance with water quality standards for public water supplies. Instead, the conditions in the bill read like a self-contained set of standards that rely on a 20% limit on the proportion of reclaimed water to total water produced by the impoundment  and a minimum  5-day holding time in the impoundment as a substitute for meeting water quality standards.

If — as it appears — the bill allows discharge of reclaimed water to a “water of the state” without a permit, it also  conflicts with federal  law. Many impoundments that are  “waters of the state”  would also be considered “waters of the United States” under the federal Clean Water Act.  Federal law  makes it unlawful to discharge a pollutant into waters of the United States without a Clean Water Act permit — a requirement that state law cannot waive.

Senate Bill 163 will now go back to the Senate for approval or disapproval of the new  House version of the bill.  If the Senate rejects the House rewrite, the bill will have to go to a conference committee to work out the differences between the two chambers.

If the House did not intend to allow the discharge of treated wastewater to a water supply reservoir without meeting state and federal water quality laws, it would be  helpful to clarify  the bill  before final adoption.