Monthly Archives: May 2016

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.