Category Archives: Groundwater

Risk-Ranking Coal Ash Impoundments

February 12, 2016. The 2014 Coal Ash Management Act, Session Law 2014-122 , required the Department of Environmental Quality (then the Department of Environment and Natural Resources) to propose classifications for coal ash impoundments in the state as High, Intermediate or Low Risk. The risk classification determines both how quickly the impoundment must be closed and whether closure requires removal of the coal ash for beneficial reuse or disposal in a lined landfill. Only Low Risk impoundments can be closed by de-watering and capping the coal ash in place. The General Assembly designated Dan River Steam Station, Riverbend, Asheville and the Sutton Plant as high risk by law; DEQ and the Coal Ash Management Commission have responsibility for classifying the remaining 10 coal ash sites.

Statutory Criteria for Risk Classification. The law, in G.S. 130A-309.211, listed factors to be considered in classifying the impoundments:

(1)        Any hazards to public health, safety, or welfare resulting from the impoundment.

(2)        The structural condition and hazard potential of the impoundment.

(3)        The proximity of surface waters to the impoundment and whether any surface waters are contaminated or threatened by contamination as a result of the impoundment.

(4)        Information concerning the horizontal and vertical extent of soil and groundwater contamination for all contaminants confirmed to be present in groundwater in exceedance of groundwater quality standards and all significant factors affecting contaminant transport.

(5)        The location and nature of all receptors and significant exposure pathways.

(6)        The geological and hydrogeological features influencing the movement and chemical and physical character of the contaminants.

(7)        The amount and characteristics of coal combustion residuals in the impoundment.

(8)        Whether the impoundment is located within an area subject to a 100‑year flood.

(9)        Any other factor the Department deems relevant to establishment of risk.

DEQ’s Proposed Risk Classifications. On January 29, 2016, DEQ released a report providing information to support proposed classifications for most coal ash impoundments. (Several impoundments have temporary classifications pending complete information on impacts to water supply wells.) DEQ has based its risk classifications on three “key factors” — one each for groundwater, surface water and dam safety risks:

♦ Groundwater Risk Factor: The number of people served by water supply wells within 1500 feet and down-gradient of the impoundment’s compliance boundary that are potentially or known to be exposed to groundwater contamination related to the impoundment. DEQ used a scale based on the number of people affected by well contamination: 0 people = Low Risk; 11-20 people = Intermediate Risk and > 30 people = High Risk. Transitional classifications of Low/Intermediate Risk and Intermediate/High Risk cover the gaps between the three basic categories.

♦ Surface Water Risk Factor: The impoundment’s location relative to the 100-year floodplain. Impoundments located outside of the 100-year floodplain or contained by a stream valley embankment with an engineered discharge (such as a spillway) have been classified as Low Risk. Impoundments sited along the run of a river, in the floodplain, and within the 100-year flood level are classified as High Risk.

♦ Dam Safety: Structural integrity and maintenance as reflected in dam safety inspections. Impoundments that received a Notice of Deficiency identifying non-structural deficiencies at the last dam safety inspection have been classified as Intermediate Risk. Impoundments that received a Notice of Deficiency identifying structural deficiencies at the last inspection have been classified as High Risk. One important note — a number of impoundments have a High Risk dam safety rating because of structural deficiencies identified in the last inspection, but DEQ has discounted that factor in the overall facility risk rating by assuming the impoundments will be Low Risk once the structural deficiencies has been corrected.

Other Risk Factors. The DEQ report describes a number of “other considerations” that were not given the same weight in risk classification as the key factors. “Other considerations” for groundwater and surface water risk include significant site conditions such as: toxicity of contaminants exceeding groundwater standards; the extent of groundwater contamination; proximity of coal ash to the water table; potential impact of groundwater contamination on surface waters; location of the impoundment in a stream or drainage way; the water quality classification and use of nearby surface waters; and proximity to a drinking water intake.

How DEQ Arrived at Each Proposed Classification. The exact method DEQ used to arrived at the overall classification for each site is something of a mystery. We know the three “key factors” largely drove the classification because the report tells us that. But there is no explanation of how (or whether) DEQ also used the information on “other considerations” or even how the three key factors were weighted.

Example: Buck Steam Station. Looking in greater depth at the classification of one coal ash facility provides a little more insight into DEQ’s classification decisions. DEQ has temporarily given Buck Steam Station a Low-Intermediate classification until the department receives additional information on impacts to water supply wells. If no well users near Buck Steam Station are affected by contamination associated with the impoundments (or well users have an alternate water source), DEQ intends to classify the Buck impoundments as Low Risk. Well impacts will be the deciding factor in the proposed classification. Buck rated as Low Risk under the key factor for surface water impacts because the impoundments are outside the 100-year flood plain. The three impoundments at Buck rated as High Risk for dam safety, but DEQ assumed the impoundments would be Low Risk once the deficiencies have been corrected.

Looking beyond the three key factors, however, Buck rated as high risk on a number of other groundwater and surface water parameters including: contaminants exceeding state groundwater standards at or beyond the compliance boundary; proximity of coal ash to the water table; and discharge of contaminated groundwater to surface waters. It rated Intermediate risk based on the use of adjacent surface waters (the Yadkin River has been classified for water supply) and proximity to a drinking water intake. On some other parameters related to surface water, Buck Steam Station rated as low or intermediate risk. See pages 92-99 for the entire list of risk ratings for the Buck impoundments.

The Buck classification seems to be fairly representative. Overall, the “other considerations” discussed at great length in the report are irrelevant to DEQ’s proposed classifications. The one exception has to do with groundwater; after focusing the “key factor” for groundwater on impacts to down-gradient water supply wells, DEQ has deferred classification of several sites to get additional information on up-gradient and side-gradient wells. It is also unclear how DEQ weighted different risk levels for the three key factors to arrive at an overall classification. The Cape Fear Steam Station was ranked Low Risk for groundwater (no impacted wells); High Risk for surface water (all of the impoundments are in the 100-year floodplain); and High Risk for half of those impoundments because of dam safety deficiencies. But the facility as a whole received a classification of Intermediate Risk.

There may be more method to the proposed classifications than it appears. It is possible that DEQ weighted the key factors and “other considerations” or viewed some conditions as mitigating others. Since the report does not provide any explanation, it is difficult to know. The Coal Ash Management Act itself did not provide any guidance on how to translate nine statutory criteria into three risk classifications. Normally, that gap would be filled through rulemaking. In the absence of rules (or even a clear explanation in the DEQ report), it is hard to identify the principles underlying the classification decisions. The approach to groundwater risk classification may be particularly controversial since an impoundment that contains a very large volume of coal ash; extends below the water table; has documented groundwater standard violations at or beyond the compliance boundary; and discharges contaminated groundwater to surface water could be classified as Low Risk as long as no existing water supply wells users are affected.

Next Steps. DEQ has scheduled public meetings on the proposed classifications as required under the law. Those meetings will take place in March. The final decisions on classification will be made by the Coal Ash Management Commission. (Assuming the Commission can be reconstituted in time; see an earlier post on the Commission’s inability to act because appointments to the Commission violated the N.C. Constitution.)

N.C. Environmental Legislation 2015: The Budget

October 9, 2015. Now that the General Assembly has adjourned, a look at legislative actions affecting the environment. First, the state budget for 2015-2017.

Among the most significant impacts:

♦ REORGANIZATION. The Clean Water Management Trust Fund and the Natural Heritage Program — originally intended to protect and restore water quality and identify important natural areas — have been separated from the environmental protection programs in the Department of Environment and Natural Resources (DENR). The budget transfers the CWMTF, Natural Heritage Program, Museum of Natural Sciences, state park system, N.C. Aquariums and N.C. Zoo from DENR to a newly organized Department of Natural and Cultural Resources. The move combines conservation and ecological education programs with state historic sites and cultural resources. The new department appears to be organized around management of the programs as public attractions rather than as research and education partners to state environmental protection programs. As a result of the reorganization, DENR becomes the Department of Environmental Quality (DEQ).

Whatever the merits of the move for facilities like the Museum of Natural Science and N.C. Zoo, the Clean Water Management Trust Fund and Natural Heritage Program do not fit the new department’s basic organizing principle. Unlike the “attractions”, the CWMTF and Natural Heritage Program provide no public facilities and exist primarily to protect water quality and identify important natural resources.

The General Assembly created the Clean Water Management Trust Fund (CWMTF) in 1996 to fund projects to prevent water pollution and to restore water bodies already impaired by pollution. CWMTF’s non-regulatory approach complemented water quality rules protecting state waters. Originally, CWMTF grants funded acquisition of riparian buffers to reduce polluted runoff into streams and rivers and extension of sewer lines where failing septic systems threatened surface water quality. In moving CWMTF, the 2015 budget severs its connection with other state efforts to restore and protect water quality. The move follows 2014 legislation diluting the original CWMTF focus on water quality protection by authorizing use of the Trust Fund for acquisition of historic sites and buffers around military bases.

The Natural Heritage Program researches, classifies and inventories the state’s natural resources, including endangered and rare plant and animal species. Information collected by the program can be used to document the conservation value of property and to assess the environmental impacts of projects requiring state and federal environmental permits. The program has a much closer working relationship to the environmental protection programs that remain in DENR than to public attractions like the N.C. Zoo and Aquariums. (Note: The 2013 state budget eliminated the Natural Heritage Trust Fund which had been a source of funding for conservation of important natural areas; the CWMTF has become the funding source for those projects as well.)

♦ LANDFILL PERMITTING. The budget changes landfill permitting, allowing issuance of a single “life of site” permit to cover construction and operation of a landfill that may have a 30-year lifespan. State rules had previously required review and approval of the entire landfill site before construction, but also required each 5 or 10-year phase of the landfill to have a construction and operation permit. Moving to a “life of site” permit reduces the number of permit reviews for each landfill operation, changing the permit fee schedule and cutting funding for the state’s solid waste management program by 20%. The change also reduces state oversight of landfill operations. Landfill construction will continue to be done in phases for economic and practical reasons, but the “life of site permit” eliminates state compliance review for each new phase of the landfill. The change also seems to eliminate the possibility of imposing additional permit conditions for construction or operation of later landfill phases in response to technological developments or new knowledge of risks to groundwater and other natural resources. The budget provision does not set minimum inspection requirements in place of the 5 and 10-year phased permit reviews.

The bill also creates a legislative study of local government authority over solid waste collection and disposal, including ordinances on solid waste collection; fees for waste management services; and potential for privatization. The study suggests the General Assembly may focus next on reducing local solid waste regulation. That will be a somewhat different discussion, since solid waste disposal has long been a local government responsibility so local fees and ordinances have a direct connection to city/county collection and disposal services.

♦ LEAKING PETROLEUM UNDERGROUND STORAGE TANKS. The budget eliminates a state fund for cleanup of petroleum contamination from small petroleum underground storage tanks (USTs) such as home heating oil tanks. The Noncommercial UST Trust Fund has assisted property owners with the cost of soil and groundwater remediation caused by leaks from farm, home and small commercial USTs. The budget allocates additional money to the Noncommercial UST Trust Fund to cover pending claims, but limits use of the Fund to cleanup costs associated with leaks reported to DENR by October 1, 2015. All claims for reimbursement of those costs must be filed by July 1, 2016.

The budget provision also prohibits DENR from requiring removal of petroleum-contaminated soils at noncommercial UST sites that have been classified as low risk. The problem — risk classifications have been based on groundwater impacts; a low-risk classification does not mean that contaminated soils on the property pose no health hazard. Current UST rules require remediation of contaminated soils to levels safe for the intended land use (residential versus nonresidential) without regard to the overall risk classification of the site. Soil remediation standards have been based on the potential health risks associated with exposure to petroleum-contaminated soil. Adverse health effects may include increased cancer risk since petroleum products contain a number of carcinogens. The budget provision may allow petroleum-contaminated soils to remain on residential properties at levels putting children at particular risk of adverse health effects.

♦ JORDAN LAKE WATER QUALITY RULES. The budget allocates another $1.5 million (from the Clean Water Management Trust Fund) to continue the 2013 pilot project to test use of aerators to improve water quality in the Jordan Lake system. The budget also has a special provision further delaying implementation of the Jordan Lake water quality rules for another 3 years or one year beyond completion of the pilot project (whichever is later). The rules had been developed by the state’s Environmental Management Commission to address poor water quality caused by excess nutrients reaching the lake in wastewater discharges or in runoff from agricultural lands and developed areas. See an earlier post here on the 2013 legislation creating the pilot project.

♦ COASTAL EROSION CONTROL. A special provision in the budget also changes state rules on use of sandbag seawalls and terminal groins in response to coastal erosion. State coastal management rules have only allowed use of temporary sandbag seawalls to protect a building facing an imminent threat from erosion. The same rules prohibit construction of the seawall more than 20 feet seaward of the threatened building. (These sandbag seawalls are substantial structures built on the beach in response to oceanfront erosion; the rules do not apply to sandbags used to prevent water from entering a building during a flood event.) The budget bill allows an oceanfront property owner to install a sandbag seawall to align with an existing sandbag structure on adjacent property without showing an imminent erosion threat to any building on their own property. Since the bill allows construction to align with the adjacent sandbag seawall, the new seawall may also be more than 20 feet seaward of any building. The irony here — a property owner may want to install a sandbag seawall in these circumstances out of concern that the adjacent sandbag seawall may itself cause increased shoreline erosion.

The budget bill also increases the number of terminal groin structures that can be permitted at the state’s ocean inlets from four to six and identifies New River Inlet for location of two of the additional structures. See an earlier post for more on earlier legislation allowing construction of terminal groins as a pilot project. Note: No terminal groins have been completed under the original pilot program, so the state does not yet have any data on the actual impacts of these structures.

♦ RENEWABLE ENERGY TAX CREDIT. The budget bill allows the state’s 35% tax credit for renewable energy projects to sunset on December 31, 2015. A separate bill provides a “safe harbor” for renewable energy projects already substantially underway by that date. Those projects may qualify for a one-year extension of the tax credit. See Senate Bill 372 for more on conditions that apply to the safe harbor extension.

Environmental Issues in the Courts

October 26, 2014. Some recent state and federal court decisions dealing with environmental controversies in North Carolina:

Cape Fear River Watch, et al v. Environmental Management Commission. An earlier post provides background on the issues in the case. In brief, several environmental organizations appealed a 2012 decision by the N.C. Environmental Management Commission (EMC) interpreting state groundwater rules to give older, unpermitted waste disposal facilities the same groundwater remediation options available to permitted waste disposal facilities. All of the coal ash ponds in N.C would be considered “unpermitted” waste disposal facilities and Duke Energy intervened in the Cape Fear River Watch case to support the EMC decision.

In March, Superior Court Judge Paul Ridgeway reversed part of the EMC decision. Judge Ridgeway interpreted groundwater remediation rules to require facilities permitted before December 30, 1983 to immediately remove the source of any groundwater contamination. The decision has significant implications for coal ash ponds and old, unlined landfills where the waste material disposed of in the facility often turns out to be the contamination source. Under Judge Ridgeway’s interpretation of the rules, waste material causing groundwater contamination would have to be immediately excavated and removed. Although state rules allow the use of other (potentially less costly) measures to control groundwater contamination, pre-1984 ash ponds and landfills would not have any option other than removal of the waste.

Duke Energy appealed Judge Ridgeway’s decision to the N.C. Court of Appeals. But before the Court of Appeals could take up the case, two things happened to alter the course of the litigation. First, the General Assembly enacted legislation intended to moot the Ridgeway decision. Section 12 of Session Law 2014-122 (the Coal Ash Management Act of 2014) amends a groundwater statute to direct the EMC to require remediation of groundwater contamination at a waste disposal facility without regard to the date the facility had been permitted. Legislators acknowledged that the provision was intended to reverse Judge Ridgeway’s interpretation of the groundwater remediation rules as applied to facilities permitted before December 30, 1983. As a practical matter, the new law allows DENR to approve an alternative means of controlling groundwater contamination associated with a coal ash pond or pre-1984 landfill but does not guarantee approval.

Then, on October 10, 2014, the N.C. Supreme Court issued an order removing Cape Fear River Watch v. Environmental Management Commission from the Court of Appeals docket to the Supreme Court docket. The Supreme Court removed the case on its own motion, surprising the parties and their lawyers. (The court issued similar orders in four other civil cases at around the same time.) The court’s action has no recent precedent and little precedent in the court’s history. The one-paragraph order offered no explanation for removal of the case to the Supreme Court. The next step in the Cape Fear River Watch case will now be the filing of briefs in the N.C. Supreme Court.

City of Asheville v. State of N.C. and Metropolitan Sewerage District of Buncombe County. In 2013, the General Assembly enacted a law transferring the City of Asheville’s water system to the Metropolitan Sewerage District of Buncombe County. Session Law 2013-50, drafted to apply only to the City of Asheville water system, had the unprecedented effect of transferring the system’s assets (infrastructure and a 17,000 acre watershed) and debts (over $67 million in water bonds) to a new entity without the city’s consent and without compensation. Two earlier posts, here and here, provide background on the legislative action and constitutional issues raised by the law.

In June, N.C. Superior Court Judge Howard Manning issued an order concluding that Session Law 2013-50 violated several provisions in the N.C. Constitution. Among Judge Manning’s findings:

♦ The law violated Article II, Section 24 of the N.C. Constitution which prohibits the General Assembly from adopting certain types of legislation to apply in only one jurisdiction in the state. Judge Manning concluded Session Law 2013-50 violated constitutional prohibitions against local acts relating to “health, sanitation or the abatement of nuisances” and local acts regulating nonnavigable streams. Although Session Law 2013-50 did not mention the City of Asheville or the Metropolitan Sewerage District of Buncombe County by name, it described water systems affected by the law in a way that only applied to the Asheville system. As a result, Judge Manning found the law to be an unconstitutional local act addressing health and sanitation (operation of a drinking water system) and regulation of nonnavigable streams.

♦ The law violated Article I, Section 19 by transferring the Asheville water system to a different entity without the city’s consent and without any rational basis. Article I, Section 19, known as the “law of the land” clause of the N.C. Constitution, has been interpreted to require both due process and equal protection. Judge Manning found Session Law 2013-50 violated the clause by depriving the City of Asheville of property without any rational basis, suggesting a due process violation and expressly finding a denial of equal protection.

♦ Other sections of Judge Manning’s order concluded that Session Law 2013-50 violated Article I, Section 19 and Article 1, Section 35 (a broad reservation of rights) by taking city-owned property and by doing so without providing compensation for the property.

One key to the court’s decision: operation of a water system is considered to be a proprietary rather than a governmental function. Proprietary functions don’t involve peculiarly governmental powers and could also be carried out by a nongovernmental entity. Other examples of proprietary functions would be operation of an electric utility, a recreational facility or a sports venue. With respect to proprietary functions, Judge Manning concluded that local governments have the same constitutional protection against uncompensated taking of property as a nongovernmental entity.

Judge Manning’s order did not address the city’s argument that the law also unconstitutionally interfered with contracts between the city and bondholders. The state, throughout the Attorney General’s Office, indicated an intent to appeal the decision to the N.C. Court of Appeals. A final decision by the appeals court would not be expected for about a year.

Erica Y. Bryant, et al v. United States, 11th Circuit Court of Appeals, October 14, 2014. The plaintiffs had sued the United States government seeking compensation for health problems allegedly caused by exposure to contaminated drinking water at the Camp Lejuene Marine Corps Base near Jacksonville, North Carolina. A recent U.S. Supreme Court decision in another North Carolina groundwater contamination case, Waldberger v. CTS, Inc., held that the state’s 10-year statute of repose barred a lawsuit alleging injury and property damage caused by groundwater contamination filed more than 10 years after the last act contributing to the contamination — even though the plaintiffs first learned of the contamination much later. (You can find more on the Waldberger decision in an earlier post. The same post also includes additional background on the contamination problem at Camp Lejuene.)

The N.C. General Assembly responded to the Waldberger decision by enacting a law excluding claims for property damage and personal injury related to contaminated groundwater from the 10-year statute of repose. See Session Law 2014-17. The law was written to apply to both pending cases and cases filed after its enactment. In the Bryant decision, however, the 11th Circuit Court of Appeals ruled that the new law could not retroactively apply to pending cases. The appeals court treated the 10-year statute of repose as a sort of property interest benefitting (in this case) the U.S. government. The court ruled that the state legislature could not retroactively remove that benefit. The decision turned, in part, on the court’s conclusion that Session Law 2014-17 changed rather than clarified the state’s prior law.

The 11th Circuit decision seems to leave the Camp Lejeune plaintiffs without any legal remedy for long-term health effects allegedly caused by exposure to the contaminated drinking water.

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.

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.

NC Senate Debates New Coal Ash Bill

June 16, 2014. The Senate Agriculture and Environment Committee began debating a revised version of Senate Bill 729 (Governor’s Coal Ash Action Plan) that makes significant changes to legislation proposed by Governor Pat McCrory. The most important new provisions are described below.

End disposal of coal ash in wet impoundments. The bill would prohibit construction or expansion of surface impoundments for disposal of coal combustion residuals (CCRs) after June 30, 2014. The bill requires all electric generating facilities in the state to convert to “dry” fly ash disposal or be retired by December 31, 2018 and to convert to “dry” bottom ash disposal or be retired by December 31, 2019. The bill also sets interim deadlines for ending CCR disposal and stormwater discharges to surface impoundments at facilities that no longer produce coal combustion residuals.

Groundwater assessment and corrective action. The bill sets timelines for groundwater assessment, survey of drinking water wells, and groundwater corrective action similar to those in the Governor’s Coal Ash Action Plan, but the bill goes on to require the corrective action plan to restore groundwater in conformance with the requirements of North Carolina’s groundwater rules. (See, Title 15A NCAC Subchapter 2L).

Structural fill. The bill revises the definition of “structural fill” to allow use of CCRs in mine reclamation and construction of embankments. The bill also sets new standards for structural fill projects. Smaller structural fill projects (those using less than 10,000 tons per acre or less than 100,000 total tons) could be “deemed permitted” without an individual permit review based on meeting design and construction standards set in the bill. For these smaller projects, the bill applies standards essentially identical to those already in state rules. Larger projects would need an individual permit and be required to meet more stringent design/construction standards including: use of an encapsulating liner system; leachate collection; a cap liner; groundwater monitoring and financial assurance.

In a somewhat confusing turn, the bill then puts a one-year moratorium on some structural fill projects. The moratorium has two exceptions: 1. projects that meet the new standards for large structural fills (i.e. a liner system, leachate collection, cap liner, groundwater monitoring and financial assurance); and 2. use of CCRs as the base for a public road constructed of asphalt or concrete. As a result, some very large structural fill projects could go forward during the moratorium, but smaller projects would be delayed for additional study of the standards that apply to those projects.

Closure of impoundments. The bill creates a new 9-member Coal Ash Management Commission in the Department of Public Safety and gives the commission final authority over decisions about closure of existing surface impoundments. Six of the nine members would be required to have experience or knowledge of engineering; waste disposal; manufacturing; use of CCRs in structural fill; economic development; and electric co-op management. The other three members would be a state resident (no other qualification required); a doctor or person with public health expertise; and a representative of a conservation organization. More on prioritization and closure:

♦ Prioritization for closure. The bill requires all of the existing coal ash impoundments to be prioritized for closure based on a list of factors in the bill and then ties the risk classification (high, intermediate or low risk) to deadlines for closure and to allowable closure methods. Although DENR would propose priorities for closure, the Coal Ash Management Commission would make the final decision on prioritization of sites. Since the prioritization factors listed in the bill are not weighted in any way, it is not possible to know how many (or which) sites would fall into each risk category.

♦ Alternatives for closure. Understanding how sites will be prioritized for closure becomes important because low risk sites will be given the option of dewatering and capping the coal ash in place. The bill also requires the Coal Ash Management Commission to study whether it may be appropriate to allow some low risk impoundments to remain in their current condition (without either dewatering or capping) if the CCRs have no contact with groundwater or surface water and the site has returned to a “natural” state. A report on the no further action alternative would be due October 1, 2015. Even if recommended by the commission, additional legislation would still be needed to authorize use of the alternative.

High and intermediate risk impoundments would have to: 1. convert the surface impoundment to an industrial landfill; or 2. remove all coal ash to a permitted disposal facility off-site; or 3. remove all coal ash for use in structural fill or another beneficial reuse. Conversion to an industrial landfill would require temporary removal and then replacement of the CCRs after bringing the disposal facility up to industrial landfill standards. Those standards generally require installation of a liner system, although current state rules allow the owner/operator to request approval of a different design that would be equally protective of groundwater. The Senate bill goes beyond existing industrial landfill standards in one way; an industrial landfill created on an impoundment site would require a 300-foot setback from surface waters as compared to the 200-foot setback required for other industrial landfills. The bill also requires high and intermediate risk sites to meet the same closure and post-closure requirements applied to municipal solid waste landfills. Those requirements include post-closure groundwater monitoring and financial assurance.

♦ Role of the Coal Ash Management Commission. The commission would have the final word on both prioritization for closure and approval of closure plans. The bill directs the commission to approve a closure plan only if it finds that the plan meets the requirements of the law; is technologically feasible; “and that the benefits to the public health, safety, and welfare; the environment; and natural resources outweigh the negative impacts on electricity costs and reliability”. Under the last criteria, the commission could reject a closure plan based solely on the cost to the electric utility or impact on reliable power generation. Applying the criteria could be extremely complex and unlike the N.C. Utilities Commission, the new commission will have few resources to put toward cost analysis. The bill does not require any commission member to have expertise on electric utility cost structures and only authorizes a staff of four.

Preemption of local ordinances. Using language very similar to the preemption section in the most recent fracking legislation (Session Law 2014-4), the bill would limit the ability of local governments to regulate disposal of CCRs. Although local governments could potentially apply development regulations that apply uniformly to all types of development (such as setbacks and stormwater control standards), the Environmental Management Commission would have the authority to determine whether state law preempts a local ordinance regulation affecting coal ash disposal.

Next steps: The Senate Agriculture and Environment Committee did not vote on the bill today. The committee noticed another meeting for tomorrow at 11:00 and the bill will be back on the agenda for further discussion and possible amendment then. The bill could go to the Senate floor by the end of the week.

First Legislative Response to CTS Corp. v. Waldburger

June 13, 2014. The recent U.S. Supreme Court decision in CTS Corp. v. Waldburger effectively denied the North Carolina plaintiffs the ability to seek compensation for property damage and health problems caused by contamination of their drinking water wells. As noted in an earlier post, the decision means that a North Carolina law barring tort claims filed more than ten years after the last act giving rise to the claim will continue to be a significant obstacle for plaintiffs injured by environmental contamination. [See N.C.G.S. 1-52(16)]

The N.C. House of Representatives quickly responded to the CTS decision with proposed legislation. The House gutted a Senate bill on appearance bonds, replacing the original bill language with a provision excluding some tort claims “caused or contributed to by the consumption, exposure, or use of water supplied from groundwater contaminated by a hazardous substance, pollutant, or contaminant” from the 10-year statute of repose in G.S. 1-52(16). Yesterday, a House judiciary committee approved the new version of Senate Bill 574; with no other committee referrals, the bill can go directly to the House calendar.

The bill would clearly benefit plaintiffs in some pending toxic tort cases — including Marines who have filed suit over contaminated drinking water at Camp Lejeune. Presumably, the bill intends to preserve the nuisance action filed by the plaintiffs in the CTS case. The only question may come in interpretation of the bill’s effective date clause; the bill applies the exclusion to a pending action “if there has been no final disposition with prejudice against that plaintiff issued by a court of competent jurisdiction as to all the plaintiff’s claims for relief to which this act otherwise applies”. The Supreme Court decision in CTS v. Waldburger confirms the dismissal of the plaintiffs’ entire nuisance action based on the state statute of repose, which would certainly be considered a final disposition. If the intent of the bill is to resurrect the CTS plaintiffs’ claims, the effective date language may need to be clarified.

Unfortunately, the current bill draft does not fix the fundamental problem created by a 10-year statute of repose for toxic tort claims because it only provides relief to claimants whose last exposure to contaminated groundwater occurred on or before June 19, 2013. The bill keeps the 10-year statute of repose for damage claims based on exposure to environmental contamination that continues beyond that date or first occurs after that date. The limited exclusion from the statute of repose sunsets completely in 2023.

The same circumstances that made it impossible for the CTS plaintiffs to bring a damage claim within the 10 year statute of repose still exist — groundwater contamination may only be detected years after the last act that caused the contamination; limited state enforcement resources mean delays in fully assessing many contaminated sites; and some of the health effects of groundwater contamination only develop over decades. Pending cases don’t represent the universe of environmental contamination injuries in the state. New contamination incidents continue to be discovered with some regularity as development moves into areas with groundwater contamination from past industrial activity or old waste disposal sites. As noted in the earlier post, it is not unusual for the last act contributing to property damage or health effects from environmental contamination to have occurred more than a decade before discovery of the problem. As long as those conditions exist, the 10-year statute of repose will continue to prevent people who have been harmed by environmental contamination from seeking compensation for personal injury and property damage.

One more piece of background information. Bloomberg News quoted John Korzen (director of the Appellate Advocacy Clinic at Wake Forest University School of Law, which represented the plaintiffs in the CTS case) as saying that only Connecticut, Oregon, Kansas and North Carolina have generally applicable statutes of repose.

Closing the Courthouse Door on Pollution Victims

June 11, 2014. In a case out of North Carolina, the United State Supreme Court has ruled that a state can cut off the time allowed for someone injured by environmental contamination to sue the person responsible — in many cases, closing off any legal remedy before the plaintiff even knows about the contamination and the damage it has caused. The decision in CTS Corp. v. Waldburger leaves the plaintiffs in that case without any recourse against the company alleged to be responsible for unsafe levels of industrial solvents in their drinking water wells. But unless either Congress or the N.C. General Assembly acts, the decision also closes the door on many others injured by environmental contamination.

The facts (as stated in the lower federal appeals court decision). CTS operated an electroplating facility on Mills Gap Road in Asheville, N.C. from 1959 to 1985 and used a number of toxic chemicals in the manufacturing processes including trichloroethylene (TCE), cyanide, chromium VI and lead. In 1987, CTS sold much of the 54-acre site to a realty company that in turn sold the property for residential development. Twelve years later, plaintiffs David Bradley and Renee Richardson learned that their home drinking water well had high levels of two solvents, TCE and cis-1, 2-dichloroethane (DCE), associated with increased cancer risk and other health effects. In 2011, Bradley, Richardson and 23 other property owners filed a nuisance action against CTS seeking remediation of the contamination and damages for current and future harm including reduced property values and potential health impacts.

The legal issue. Under North Carolina law, there is a three year statute of limitation for personal injury or property damage claims ( in legalese, “torts”). The statute of limitation only begins to run after the plaintiff knows or should have known of the injury. But the same law bars the filing of a tort claim more than 10 years after the last act of the defendant that gives rise to the damage claim even if the plaintiff did not know of the injury until later. This kind of outer limit on tort claims, known as a “statute of repose”, cannot be suspended even for good cause. Although the plaintiffs in the CTS case filed suit within three years after first learning of the well contamination as required by the statute of limitation, CTS Corporation’s “last act” had been the sale of the Mills Gap Road property in 1987 — 22 years earlier. In federal district court, CTS successfully moved to dismiss the plaintiff’s nuisance action based on North Carolina’s 10-year “statute of repose”.

The issue on appeal was whether the federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) preempts the state’s 10-year “statute of repose”. CERCLA sets a federal framework for response to environmental contamination caused by hazardous substances, but Congress elected to rely on state laws to provide a remedy for individuals harmed by environmental contamination. Since environmental contamination can go undetected for long periods of time and cause injury — such as cancer — that only develops over decades, CERCLA provides that the time allowed to bring a claim under state tort law only begins to run when the plaintiff learns or should have learned of the damage or injury. CERCLA § 9658 expressly preempts state laws that use a different starting point for time limitations on toxic tort claims.

The U.S. Supreme Court decision. The Fourth Circuit Court of Appeals concluded that CERCLA § 9658 preempts both statutes of limitation and statutes of repose, allowing the plaintiff’s lawsuit against CTS to go forward. The U.S. Supreme Court (after a long discussion of the differences between statutes of limitation and statutes of repose and the history of CERCLA § 9658) reversed the appeals court decision and held that CERCLA § 9658 only preempts statutes of limitation. As a result, North Carolina’s 10-year statute of repose bars property owners near the CTS site from suing the company for contamination of their drinking water wells. One of the two dissenting U.S. Supreme Court justices, Stephen Breyer, noted the clear implication of the CTS decision, saying that it

allows those responsible for environmental contamination…to escape liability for the devastating harm they cause, harm hidden from detection for more than 10 years. Instead of encouraging prompt identification and remediation of toxic contamination before it can kill, the Court’s decision gives contaminators an incentive to conceal the hazards they have created until the repose period has run its full course.

Others affected by the CTS decision. There have been a number of contamination incidents in North Carolina that follow the pattern of late discovery and delayed understanding of human health effects. Two examples:

U.S. Marine Corps Base Camp Lejeune. In 1982, the Marine Corps discovered that drinking water from two of the eight water treatment plants on base had high levels of contaminants. The Tarawa Terrace water system had high levels of the dry-cleaning solvent PCE (perchloroethylene or tetrachloroethylene). PCE has been associated with increased cancer risk; kidney and liver damage; and reproductive effects. (The PCE came from an off-base dry-cleaner that had improperly handled its waste.) The Agency for Toxic Substances and Disease Registry (ATSDR) has estimated that PCE concentrations in water produced by the Tarawa Terrace water treatment plant exceeded the current federal drinking water standard for much of the 30-year period between November 1957-February 1987. The most contaminated wells were shut down in February 1985.

In 1985, Camp Lejeune also confirmed contamination in wells supplying the Hadnot Point water treatment plant. The primary contaminant was TCE, but testing also showed elevated levels of PCE, benzene and other chemical compounds produced by degradation of TCE. The Hadnot Point well contamination came from several different sources — leaking petroleum underground storage tanks, industrial spills, and old waste disposal sites. ATSDR has estimated that water from the Hadnot Point system exceeded current drinking water standards for at least one contaminant from August 1953 until January 1985.

Between 500,000 and 1 million Marines and family members may have been exposed to contaminated drinking water at the base before the contaminated wells were shut down in 1985. Information about the contamination and its possible health effects developed slowly. ATSDR just published the results of a health study of Camp Lejeune Marines on February 19, 2014. The study, reported in Environmental Health, found a 10% higher incidence of certain cancers among Marines stationed at Camp Lejeune between 1975-1985 as compared to Marines stationed at Camp Pendleton during the same time period.

Nearly 30 years went by between the initial contamination of the Camp Lejeune wells and discovery of the contamination in 1982. Another 30 years passed between closure of the most contaminated wells and development of information on the potential health effects on a large, but transient, population of service members and their families. Given the many different parties potentially involved — the owners and operators of several different contamination sources and the Marine Corps as the water system operator — it may be difficult to pinpoint the timing of every “last act” contributing to injury. But given the 60-year history of events at Camp Lejeune, the CTS decision may well remove any legal remedy for Marines harmed by the drinking water contamination.

Stony Hill Road TCE Contamination, Wake Forest. In 2005, the Wake County Health Department found TCE in a drinking water well serving a home on Stony Hill Road in Wake Forest. DENR’s Division of Water Quality tested six nearby wells, but found no additional contamination. The the one contaminated well was closed and DENR shifted its efforts to finding the person (or company) responsible for the contamination. Soil tests suggested that a property next door to the one contaminated well had been the source of the TCE contamination; two circuit board assembly companies had operated on the property. When DENR received no response to repeated requests for the owner to assess the extent of the groundwater contamination coming from the property, DENR initiated another round of state well testing in 2012. The 2012 tests revealed another contaminated well, triggering a broader well testing program carried out with the help of the U.S. Environmental Protection Agency. The 2012 tests ultimately found TCE in 21 residential wells; 14 wells had levels of TCE over the federal drinking water standard.

Seven years had passed between identification of the first contaminated well on Stony Hill Road and confirmation that contamination had spread to nearly two dozen other wells. Since the 2005 testing found only one contaminated well located immediately next door to the likely contamination source, Stony Hill Road had been considered low risk and fell down the list of hazardous sites competing for the attention of DENR’s Inactive Hazardous Sites program. The state’s Inactive Hazardous Sites Act, N.C. General Statute 130A-310 et seq., also has weaknesses that make it possible for a polluter to simply wait — taking no action to fully assess and remediate contamination until DENR forces the issue through an enforcement order. Given limited state resources and a need to prioritize sites based on known risk, ten years can easily go by before a contamination incident is fully assessed.

Response to the CTS decision. The U.S. Supreme Court decision dealt with a narrow issue — interpretation of the CERCLA provision on statutes limiting the time to file a damage claim based on environmental contamination. Seven justices concluded that Congress had not intended for the provision to affect state statutes of repose; the two dissenting justices disagreed. Congress has the power to make the intent of the federal law more clear and remove any doubt about the impact on statutes of repose. Closer to home, the N.C. General Assembly has the power to amend state law to remove the 10-year limitation on damage claims arising out of environmental contamination. Otherwise, North Carolina citizens will continue to be caught in a Catch-22 — too few state resources to insure that people potentially damaged by environmental contamination will know in time to use the legal remedies available and state laws that encourage polluters to wait until the clock runs out.

Understanding the Court’s Coal Ash Order

Note: This post was updated to link to a different site for a copy of the judge’s order after the original source site became unavailable.

On March 6, 2014, a Superior Court judge issued an order reversing part of a 2012 declaratory ruling by the N.C. Environmental Management Commission (EMC) concerning regulation of coal ash ponds under state groundwater rules. The declaratory ruling case began in October of 2012 — before the Clean Water Act citizen suits of 2013 and the recent Dan River spill — as a request for an interpretation of state groundwater rules as applied to the coal ash ponds. The declaratory ruling request (filed on behalf of Cape Fear River Watch, Sierra Club, and Western N.C. Alliance) asked the EMC to rule on three issues:

1. Operators of coal ash ponds with Clean Water Act discharge permits first issued on or before December 30, 1983 must take corrective action (such as assessment and remediation) when their activity causes a groundwater standard violation — even if the violation occurs inside the compliance boundary around the ash pond;

2. Operators of coal ash ponds with Clean Water Act discharge permits first issued on or before December 30, 1983 must take immediate action to remove sources of contamination causing a groundwater standard violation; and

3. These same requirements apply to owners of coal ash ponds that are closed and inactive.

Two background notes. State rules recognize the possibility that waste disposal may cause groundwater contamination. The rules generally only require corrective action at a permitted waste disposal site if the waste disposal activity has caused a groundwater standard violation beyond a defined compliance boundary. Corrective action can include assessment of the extent of contamination, steps to contain or reduce ongoing contamination and groundwater remediation. Landfills built to modern (post-1983) solid waste management standards have a groundwater compliance boundary of 250 feet around the perimeter of the waste disposal area or the property line, whichever is closer. Older facilities (like the coal ash ponds) generally have a 500-foot groundwater compliance boundary. See a previous post for more on groundwater compliance boundaries.

December 30, 1983 becomes significant because state rules treat waste disposal sites that first received Clean Water Act permits on or before that date as unpermitted facilities. (More about the logic of that assumption as applied to ash ponds later.) The rules require a different response to groundwater contamination found at an unpermitted waste disposal site as opposed to a permitted facility — presumably because newer facilities have been built to more environmentally protective standards.

Judge Ridgeway’s Decision. On the first issue, Judge Ridgeway agreed with the EMC, concluding that state rules only require corrective action if the waste disposal activity causes a violation of groundwater standards beyond the compliance boundary around the disposal site. Exceedence of a groundwater standard within the compliance boundary does not require corrective action except in extraordinary circumstances. Although consistent with past EMC and DENR interpretations, Judge Ridgeway’s decision leans heavily on new groundwater legislation adopted as part of the Regulatory Reform Act of 2013. (See the earlier post for more on the 2013 legislation.) According to the judge’s order, all of the parties to the declaratory ruling case agreed that the 2013 legislation mooted the compliance boundary issue.

On the other hand, Judge Ridgeway decided the second issue (concerning immediate removal of the source of groundwater contamination) in favor of the petitioners. The judge relied on state rules treating waste disposal facilities first permitted under the Clean Water Act on or before December 30, 1983 differently from those permitted later. The rules classify older facilities as unpermitted and a groundwater standard violation at an unpermitted waste disposal site triggers a requirement to immediately remove the source(s) of contamination. All of the coal ash ponds in the state first received a Clean Water Act discharge permit before December 30, 1983.

Treating the ash ponds as unpermitted waste disposal facilities is key to the judge’s ruling that the utility companies must immediately remove the contamination source at any ash pond that has caused a groundwater standard violation beyond the compliance boundary. Removal of the source of groundwater contamination associated with a coal ash pond clearly has huge implications, since the primary source of contamination is the coal ash itself. Under the rules, a groundwater standard violation at a permitted waste disposal facility may require corrective action, but not necessarily removal of waste causing the contamination.

Judge Ridgeway disposed of the third issue by briefly noting that the laws and rules don’t distinguish between active and inactive waste disposal facilities.

Potential confusion. Judge Ridgeway’s order seems to treat coal ash ponds as permitted waste disposal sites in deciding the first issue and as unpermitted waste disposal sites in deciding the second. The 2013 legislation the judge relies on to decide the first issue clearly applies to waste disposal systems that require an individual permit under either water quality or waste management laws. The new statute language limiting the EMC’s power to require corrective action inside the compliance boundary begins with these words: “When operation of a disposal system permitted under this section results in an exceedance of the groundwater quality standards…”

It seems clear that the 2013 legislation can only benefit operators of waste disposal facilities holding individual water quality or waste management permits. Having given coal ash ponds the benefit of the new law on the first issue, the judge does not explain why the coal ash ponds are treated as unpermitted waste disposal facilities in deciding the second. The judge relies on state rules that predate the 2013 legislation to identify the kind of corrective required at the ash ponds even though the new law also addresses corrective action — without making any distinction based on the permitting history of the facility:

“(k) Where operation of a disposal system permitted under this section results in exceedances of the groundwater quality standards at or beyond the compliance boundary established under subsection (i) of this section, exceedances shall be remedied through cleanup, recovery, containment, or other response as directed by the Commission.”

It is possible that Judge Ridgeway saw no conflict between the new law on corrective action and existing groundwater rules on corrective action at older facilities, but the decision does not explain how he reconciled the two.

Permitted or unpermitted and does it matter? There may well be an appeal of Judge Ridgeway’s decision. By assuming the coal ash ponds have a different permitting status for purposes of the two major issues in the case, the decision awards each side a win and a loss. It is conceivable that at least one party to the case would prefer two wins.

The permitted/unpermitted conflict just emphasizes again the peculiar regulatory status of coal ash ponds. EMC rules treating pre-December 30, 1983 waste disposal sites as “unpermitted” makes perfect sense in the context of truly unauthorized waste disposal sites or older landfills that closed rather than meet new standards for solid and hazardous waste disposal that went into effect in 1983. It makes less sense as applied to coal ash ponds that largely fell under the jurisdiction of the Utilities Commission until 2009 and never had an obligation to comply with solid and hazardous waste regulations. In fact, the coal ash ponds continued to operate for decades after 1983 — subject only to Clean Water Act permits for discharges from the ponds — with the acquiescence of both state and federal policy makers. That only began to change in 2009 after the TVA ash spill drew more attention to the risks. Then, the state somewhat increased environmental oversight for the ponds — but failed to enact comprehensive coal ash disposal legislation much less demand immediate closure of the ash ponds.

Since coal ash ponds operated outside of most environmental regulatory programs for years, existing laws and rules don’t fit either operation or closure of the ash ponds very well. As badly as the state needs a solution to the problems surrounding coal ash ponds, Judge Ridgeway’s order in itself is not likely to be the answer. A solution will require standards for coal ash disposal; a process for safe closure of coal ash ponds; priorities for closure; and assessment of environmental damage and ongoing risk at existing facilities. It’s going to require legislation.

The Dan River Coal Ash Spill and Environmental Policy

March 3, 2014. The February 2 coal ash spill at Duke Energy’s Dan River steam station (see an earlier post for more on the spill) puts some recent and still pending environmental policy decisions in a new light.

Preventing state environmental programs from adopting standards “more stringent than” federal standards. In 2011, the General Assembly prohibited environmental agencies from adopting a rule “that imposes a more restrictive standard, limitation, or requirement than those imposed by federal law or rule, if a federal law or rule pertaining to the same subject matter has been adopted”. You can find the statute (G.S. 150B-19.3) here. The increasing evidence of water quality problems associated with coal ash ponds may test those limits on state regulation —

♦ The question is whether new state rules on coal ash disposal or closure of existing coal ash ponds would be considered “more stringent” than existing federal rules. Federal rules exempt coal ash from regulation as a hazardous waste, but include ash as a “solid waste” and set minimum standards for solid waste landfills. On the other hand, coal ash ponds aren’t considered solid waste landfills so the solid waste rules don’t apply. Federal Clean Water Act rules regulating stormwater and wastewater discharges apply to the ponds, but nothing in the existing federal rules requires a coal ash pond to meet construction standards to minimize groundwater impacts or obligates the utility company to move coal ash from a pond to a disposal facility with less environmental risk. Given that landscape — federal rules address some, but not all, concerns about coal ash disposal — can state environmental programs fill the gaps by imposing additional requirements without specific statutory authority?

♦ The exceptions in G.S. 150B-19.3 are inadequate to get ahead of an environmental problem that poses a long-term risk, but not a “sudden, unforeseen” threat. Few of the problems associated with coal ash ponds would be considered sudden or unforeseen. Both federal and state regulators have long known that unlined ash ponds pose some risk of groundwater contamination. The massive spill at TVA’s Kingston plant in 2008 focused attention on the possibility of structural failure of a coal ash impoundment. The U.S. Environmental Protection Agency has been working on federal coal ash disposal regulations off and on for over ten years because of these and other concerns. As obvious as the problems surrounding coal ash disposal have now become, the exceptions in G.S. 150B-19.3 don’t seem to give environmental agencies a way to address those problems through rulemaking.

♦ If state agencies need additional statutory authority to adopt state rules that go beyond current federal regulation of coal ash disposal, rulemaking could not begin until after the 2014 legislative session that begins in mid-May. Rule adoption often takes two years. The other alternative would be for the General Assembly itself to set standards for coal ash disposal through legislation. Legislation can move much more quickly than rulemaking, but the last effort to enact state legislation on coal ash failed due to opposition from the utility companies. See this post for more information on earlier state legislation and a link to the 2009 coal ash disposal bill.

Efforts to limit state review of engineered plans and drawings. North Carolina’s professional engineers (PEs) have lobbied for several years to limit state review of plans prepared by PEs and to constrain the ability of regulatory staff to require changes to engineering plans. The most recent effort led to language in the Regulatory Reform Act of 2013 (Session Law 2013-413) requiring a study of state and local review of engineering plans. Section 58 of S.L. 2013-413 requires DENR, the Department of Transportation, the Department of Health and Human Services and local governments to study:

“(iii) the standard scope of review within each permit program, including whether… staff are requiring revisions that exceed statutory or rulemaking requirements when evaluating such permits or plans; [and]

(iv) opportunities to eliminate unnecessary or superfluous revisions that may have resulted in the past from review processes that exceeded requirements under law, and opportunities to otherwise streamline and improve the review process for applications and plans submitted for approval.”

The history and recent failure of the Dan River stormwater pipe reinforces the value of having a second, objective review of engineering plans and decisions. The early decision by utility company engineers (before state regulation) to expand the ash pond over a metal stormwater pipe and the apparent failure to plan for maintenance of the pipe likely contributed to the spill. In the aftermath of the February spill, it became clear that current Duke Energy staff did not know how the stormwater pipe had been constructed — incorrectly assuming that the entire stormwater pipe was concrete. Even in real time response to the Dan River spill, Duke Energy and DENR engineering staff sometimes reacted very differently to the same information. Duke Energy did a camera inspection of a second, smaller stormwater pipe at the Dan River site to check its condition. According to news reports, Duke Energy staff planned no immediate action based on the results of the camera inspection other than continued monitoring. A state dam safety engineer who looked at the same video showing leaks and pooling of water in the pipe concluded that the second pipe could also be discharging coal ash to the Dan River. Water quality testing confirmed high levels of arsenic in discharges from the pipe and the dam safety program ordered Duke to close the second pipe within 10 days. When an error carries potentially high risks or costs, review of engineering plans and decisions can be critical — simply because state and local environmental staff will look at the same situation through different eyes.

Note: The Study of Review of Engineering Work has been submitted to the legislature’s Environmental Review Commission and the General Assembly could consider legislation on state/local review of engineering plans in the upcoming legislative session.

Limiting DENR’s ability to order steps to contain groundwater contamination. The Regulatory Reform Act of 2013 also does two significant things to limit (or defer) steps to contain or cleanup groundwater contamination:

♦ The law makes the property line the presumed “compliance boundary” for groundwater contamination caused by a permitted waste disposal facility (including a coal ash pond). State rules allowed for some exceedence of groundwater standards near a waste disposal area, but generally put the compliance boundary at 250 feet around the footprint of the facility or at the property line whichever is closer. Causing an exceedence of groundwater standards beyond the compliance boundary violates the permit. The new law presumes groundwater contamination associated with a waste disposal facility can be allowed to migrate to the property boundary — including any adjoining property in the same ownership. The law does not change existing compliance boundaries set by permit, but sends a strong message about future permit terms and regulatory requirements. The change would potentially allow the owner of a waste disposal facility to contaminate a much greater area of groundwater without any obligation to remediate. Using the property line as the compliance boundary also leaves little safety margin to protect the groundwater rights of nearby property owners.

♦ The law limits DENR’s ability to require the operator of a permitted waste disposal facility to take steps to remediate or contain groundwater contamination within the compliance boundary. The law ties DENR’s hands until the contamination has migrated beyond the compliance boundary unless DENR can show that:

(1) The contamination has already caused a water quality violation in adjoining classified waters or a violation “can be reasonably predicted to occur”;

(2) The contamination poses an imminent threat to the environment, public health, or safety;

(3) The contamination will cause a violation of any standard in groundwater occurring in the bedrock, including limestone aquifers, unless the violation has no potential to adversely affect a water supply well.

At the very least, DENR will have to meet a significant new burden before directing the owner of a waste disposal facility to take steps to prevent further migration of groundwater contamination. It appears that clear evidence of groundwater contamination moving offsite — affecting another property owner’s groundwater — will not be enough by itself to allow DENR to require steps to contain the contamination. DENR will have to demonstrate that groundwater standards will be violated. In the worst case, the horse will be well out of the barn before the state can act.

SmithEnvironment Blog

Environmental Law and Policy from a North Carolina Point of View

Category Archives: Groundwater

Risk-Ranking Coal Ash Impoundments

N.C. Environmental Legislation 2015: The Budget

Environmental Issues in the Courts

N.C. Enacts Coal Ash Legislation

The N.C. House on Coal Ash

NC Senate Debates New Coal Ash Bill

First Legislative Response to CTS Corp. v. Waldburger

Closing the Courthouse Door on Pollution Victims

Understanding the Court’s Coal Ash Order

The Dan River Coal Ash Spill and Environmental Policy

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