June 24, 2014. The Senate’s coal ash bill has been approved by two committees and goes to the Senate floor for a vote today. Given the N.C. General Assembly’s desire to adjourn soon after July 1, the bill will need to make its way through the House quickly to become law. An earlier post provided a broad outline of Senate Bill 729; although there may be amendments on the floor today, the basic structure of the bill seems to be set.
The earlier post generally described the 9-member Coal Ash Management Commission created by the bill, but more on the unusual nature of the proposed commission below:
♦ Why a new commission? When Republican senators raised this question in committee, the bill sponsor suggested a need to restore public confidence. The Coal Ash Management Commission would have the power to overrule decisions made by the Department of Environment and Natural Resources (DENR) on closure of coal ash impoundments, suggesting a lack of confidence in DENR. But Senate Bill 729 gives commission members with very general knowledge and experience the ability to second guess such technical decisions as the relative risk posed by a coal ash impoundment ( based on groundwater contamination, surface water pollution, threat of structural failure and other factors) and compliance with laws governing closure. [See the earlier post for more on the makeup of the commission. ]
♦ One of the criteria for commission approval of a closure plan would be “that the benefits to the public health, safety, and welfare; the environment; and natural resources outweigh the negative impacts on electricity costs and reliability”. In effect, the bill allows the commission to disapprove a closure plan based on a cost-benefit analysis that considers the impact on electric rates and electric service. One problem will be the lack of expertise on the commission to do a very complex cost-benefit analysis, but the provision seems odd for other reasons. First, cost only becomes a factor when the individual closure plan comes to the commission for review — after the electric utility has proposed a closure plan based on alternatives identified in the law; after public comment on the proposed plan; and following DENR approval of the plan as consistent with the law.
Since the commission will review and approve closure plans individually for each impoundment, the analysis of impacts on electric rates and electric service will be difficult at best. The total cost of closing all 33 coal ash impoundments in the state may affect electric rates — if the N.C. Utilities Commission allows the utility to pass some or all of those costs to consumers. It will be much harder to evaluate the impact of a closure plan for an individual impoundment on rates and electric service. The cumulative cost of closing the coal ash impoundments and any impact on electric service will also largely be a function of the law rather than individual closure decisions. The bill sets the timetable for eliminating use of wet coal ash impoundments; identifies the allowable closure methods; and sets closure deadlines based on risk factors listed in the bill. Individual closure plans have to fit within the framework set by the legislature.
The greatest impact the commission could have on total cost would be through prioritizing impoundments for closure. Since the bill allows low risk impoundments to be closed by capping the coal ash in place (which is much less expensive than removing the ash for disposal in a landfill), putting more sites in the low risk category also reduces total closure costs. But for very good reasons the bill does not make cost a factor in prioritizing impoundments for closure.
Given all of that, the commission will have a very limited ability to affect the impact of closure on electric rates and electric service. By the time a closure plan reaches the commission, the issues will be much narrower. The priority for closure of the impoundment would already be set, determining the closure options. For a high risk impoundment, the alternatives would be removing the ash for disposal elsewhere; moving the ash temporarily and creating a coal ash landfill on site (under standards set in the law); or removing and treating the ash for beneficial reuse. In that narrow context, the commission could tilt an individual closure decision in the direction of lower cost to the utility — although that would also require the commission to second-guess DENR’s evaluation of the environmental and public health impacts of the closure alternatives.
The commission’s decision to disapprove a closure plan could be appealed by either the electric utility or any other “person aggrieved” by the decision. (That may include DENR, since the department will not be the decision-maker.) Otherwise, the electric utility would presumably have to revise the closure plan and go through another round of public comment and DENR review. Nothing in the bill suggests that the commission can change a closure plan.
♦ There doesn’t seem to be any precedent for giving a citizen commission in one department of state government the power to overrule a decision made by another department. The Coal Ash Management Commission would be part of the Department of Public Safety, but have the authority to override decisions made by DENR under solid waste laws implemented by DENR’s Division of Waste Management and rules adopted by the Environmental Management Commission. Aside from the potential for conflict and confusion given the number of state agencies in the mix, the arrangement sets up an interesting situation on appeal of closure decisions. Since the Coal Ash Management Commission would make the final decisions on prioritization and approval of closure plans, the commission would also have to respond to appeals of those decisions. Although much of the technical work may have been done by DENR staff, DENR would not have responsibility for defending the decision. Instead, DENR could be a party to the appeal.
♦ On a purely political level, the process for making appointments to the commission has already created a controversy. A majority of commission (6 of the 9 members) would be appointed by legislative leaders and commissioners would elect the chair and vice-chair. Such strong legislative influence over an executive branch agency would be unusual. Other state commissions have appointees divided between the governor and legislative leaders, but generally the governor has a clear majority of the appointments and also appoints the chair. As reported in the Raleigh News and Observer’s Under the Dome, Governor Pat McCrory does not necessarily appreciate the idea of legislative leaders controlling the Coal Ash Management Commission.