Category Archives: Waste

EPA’s Coal Ash Rule Part II: North Carolina

January 8, 2015.   The  previous post  described the basics of the federal coal ash rule. An earlier post provided an overview of the N.C. Coal Ash Management Act of 2014. The next question:  How will the two work together? Although the EPA rule does not require states to adopt and enforce the minimum federal standards, many states (like North Carolina) already regulate coal ash disposal and a direct conflict with federal rules would be problematic.

Based on  a quick review,   N.C. landfill  standards seem to match up fairly well to the federal standards  for coal ash landfills.  A  few  — such as separation from groundwater (4 ft. under state rules versus 5 ft. under the federal rule) — will need to be amended to meet minimum federal requirements.  N.C. law mandates an end to disposal of coal ash in surface impoundments, so N.C. has no standards for construction of new impoundments comparable to those in the EPA rule. But since states can be  more restrictive,  the federal rule  will not require  a change in state policy on use of surface impoundments for coal ash disposal.  The federal rule will overlap with state law in a few areas related to existing coal ash impoundments, including requirements for inspection and record-keeping; structural integrity standards;  closure;  and post-closure care.

A  detailed side-by-side comparison of state and federal requirements will be needed to identify all of the state standards that may require amendment to be consistent with minimum federal standards. This post will focus on two aspects of the federal rule that could have a significant impact on implementation of the North Carolina law — provisions on beneficial use of coal ash  and  timelines for closure of existing impoundments. This analysis is based on the prepublication version of the rule.   If EPA makes  wording changes before publication of the final rule in the Federal Register to correct errors or clarify ambiguous language,  those editorial changes may affect interpretation of the rule.

BENEFICIAL USE. The N.C. Coal Ash Management Act of 2014  (Session Law 2014-122) allows  use of coal ash in structural fill, including reclamation of  surface mines. The law also sets strict standards for large structural fill projects (defined as those using more than 8,000 tons per acre or more than 80,000 tons total of unencapsulated coal ash). The N.C. law  put a one year moratorium on approval of smaller  structural fills to study the adequacy of existing rules for those projects.

The EPA rule  seems to disfavor structural fill projects, defining “beneficial use” to exclude  structural fill/landscape projects using 12,400 tons or more of unencapsulated coal ash unless: 1. the project involves no more risk of release to the environment than use of  conventional  material;  or 2. releases to the environment will meet all environmental and public health benchmarks. The rule makes an exception  for highway projects, deferring to  the Federal Highway Administration’s technical standards for use of coal ash in road projects.  Setting  coal mining to the side (to be regulated under a different law), the EPA rule also defines “beneficial use” of coal ash to exclude disposal in  “sand mines, gravel pits and other quarries”. The federal rule treats placement of coal ash in a surface mine as  disposal rather than beneficial use and requires those projects to meet coal ash landfill standards.

Implications for North Carolina:

♦  The federal requirement that a project using 12,400 total tons or more of unencapsulated coal ash  demonstrate  no greater risk of release to the environment than use of other fill material will add a step not currently required  to permit a  structural fill project under state law.

♦ The  12,400 ton  threshold  potentially affects some projects classified as  small structural fills under the N.C. law (< 8,000 tons per acre or < 80,000 tons total).  Although  Session Law 2014-122   requires  a study of the standards  for  small structural fill projects, the law still allows those projects to be “deemed permitted” based on meeting those standards.  To be “deemed permitted”,  the developer must  submit certain information to DENR in advance but the project does not require an individual permit. The study required under Session Law 2014-122  will now need to consider how the new federal requirement affects both the approval process and the standards for large and small structural fill projects.

♦ New N.C.  standards for large structural fill projects  are very similar to the EPA minimum standards for  coal ash landfills,  although the EPA rule has more stringent standards in a few respects — such as the minimum separation from groundwater.  N.C.’s closure/post-closure requirements for large structural fills also closely match the federal requirements for closure/post-closure care at coal ash landfills. A more detailed comparison will be needed, but  it appears that N.C. would need to make only a few changes in state standards for large structural fill projects to make those standards consistent with the federal minimum  standards for coal ash landfills.

♦ It isn’t immediately clear (at least to me)  whether federal treatment of many structural fills  as disposal projects  — landfills by any other name — will have additional implications for developers of structural fill projects and subsequent purchasers of the property for redevelopment.

♦  It appears that disposal of coal ash in surface mines (other than coal mines) will  be required to  meet federal coal ash landfill standards without regard to the amount of coal ash used.

DEADLINES FOR IMPOUNDMENT CLOSURE.  EPA timelines for impoundment closure run from  the effective date of the EPA rule, which will be six months after publication of the final rule in the Federal Register.  To compare state and federal timelines,  this post assumes the federal rule will become effective on August 1, 2015 (which requires publication of the rule by January 31, 2015). The actual publication date  could move the effective date — and the compliance deadlines — forward or backward. The EPA rule also allows for some exceptions and extensions of time to the timelines. The timelines below are intended  to illustrate how the federal rule compares to the N.C. impoundment closure schedule; the timelines cannot be used to predict the closure date for any individual impoundment.

The North Carolina Coal Ash Management Act requires closure of all active and inactive coal ash ponds by December 31 2029, but prioritizes closure based on risk. The  North Carolina  law lists factors to be used in prioritizing impoundments for closure, but  generally leaves the decision on risk classification to the Department of Environment and Natural Resources (DENR) and the Coal Ash Management Commission. (The law itself designates four impoundments as high risk.)

N.C. Impoundment Closure Dates

CLOSURE DEADLINE RISK CATEGORY
December 31, 2018 High Risk
December 31, 2024 Intermediate Risk
December 31, 2029 Low Risk

While the state law provides a straightforward timeline for  closure of each category of impoundments,  it may be a  year before all of the impoundments in the state have been assigned  a risk category.

The EPA rule requires closure of existing impoundments based on specific conditions. The rule gives first priority for closure to “inactive impoundments” and then to unlined impoundments that have caused groundwater violations and active impoundments that do not meet new location and structural integrity standards.  Inactive impoundments have a hard closure deadline.  The other two deadlines follow from  assessing conditions at active impoundments.

EPA Impoundment Closure Dates

CLOSURE DEADLINE BASIS FOR CLOSURE
January 31, 2018 Inactive ImpoundmentsN1
August 1, 2020 or later (based on sampling) Leaking Unlined ImpoundmentsN2
August 1, 2020-January 31, 2024 Nonconforming Active ImpoundmentsN3

N1: “Inactive impoundment” includes any impoundment that stops receiving coal ash  before the federal rule goes into effect ( six months after publication of the final rule).  Inactive impoundments must be closed within three years; otherwise the utility will have to bring the impoundment into compliance with location and structural integrity standards for  existing impoundments and install a groundwater monitoring system.  But see the previous post for  more  on  application of the federal rule to inactive impoundments located at closed  electric generation facilities.

N2: The rule gives impoundment owners 18 months to determine whether an existing impoundment has a liner meeting standards in the rule and up to two years to install a groundwater monitoring system and collect background samples. (The two time periods run concurrently.)  Within six months after detecting a groundwater standard violation for a listed contaminant, an unlined impoundment must stop receiving coal ash and begin closure.  The listed contaminants: antimony, arsenic, barium, beryllium, cadmium, chromium, fluoride, lead, mercury, molybdenum, selenium, thallium, cobalt, lithium, and radium 226 and 228 combined.  Closure must generally be  completed within 5 years.

N.C.’s water quality program began requiring groundwater monitoring around coal ash ponds several years ago and groundwater standard  violations  have already been documented at a number of  impoundments.  The date in the chart reflects the earliest possible 5-year closure deadline based on  the existence of  monitoring data  showing  an  exceedence of a groundwater standard  at the time the federal rule goes into effect. For unlined impoundments that do not already have a groundwater monitoring system, the earliest closure deadline  could be as late as   January 31, 2023. Since groundwater monitoring will be ongoing, it is also possible for closure to be triggered by a groundwater exceedence detected later.

N3:  The federal rule allows up to three years from the effective date of the rule for a utility to demonstrate compliance with new standards for existing, active impoundments. An impoundment  found not to meet the standards must stop receiving coal ash within six months and start the closure process. The 5-year closure deadline  runs from the date the utility determines that an existing impoundment does not meet the  standards. So the earliest closure deadline (for impoundments determined to be nonconforming at the time the federal rule goes into effect) would be  between August 1, 2020 and January 31, 2021.   The latest possible closure deadline  (for a utility that takes the full three years to assess compliance with the standards) would be between  August 1, 2023 and  January 31, 2024. The rule allows for an extension of time under specific circumstances.

 Several things to note:

♦  The federal rule could push a significant number of N.C. impoundments to closure within the next 3-9 years  based on the number of inactive impoundments and  an additional number  of active impoundments that may not meet  federal  location/structural integrity standards or have groundwater standard violations for listed contaminants. By comparison, the N.C. rule would allow 10-15 years for closure of all but the most high risk impoundments.

♦  One way  to  reconcile the state’s  risk-based priorities for closure with the federal rule  would be to base the state’s high risk classification on factors  (such as groundwater contamination) that will drive early closure of existing impoundments under the federal rule. Since DENR has not yet developed guidelines for risk classification of impoundments, there will be an opportunity to take the federal rule into consideration.

♦  The EPA rule requires final closure of  inactive impoundments within three years. As of spring 2014, Duke Energy identified 16 of the 32 impoundments in  North Carolina as inactive.   Twelve of the sixteen are  located at the site of a closed  coal-fired  power plant.  Given the complexity  of the federal rule as applied to inactive impoundments at closed generating plants — and some degree of confusion within the federal rule itself (see the previous post)  — it isn’t immediately clear how many of North Carolina’s inactive impoundments will be affected by the early closure deadline. Depending on the final interpretation of the federal rule, a significant number of N.C. impoundments could be required to complete closure within the next three years.

CONCLUSION. In a number of ways,  North Carolina has a stronger overall framework for regulating coal ash disposal than the federal rule provides. But there are a few areas where North Carolina will need to  decide how to reconcile state and federal requirements to avoid  conflicts. Otherwise, electric utilities could be in compliance with the North Carolina program but still vulnerable to citizen suits for enforcement of the federal requirements.

EPA’s Coal Ash Rules: Part 1 (The Basics)

December 23, 2014. Staring down a court-ordered deadline, EPA released a final coal ash rule on Friday. Happy Holidays!

Some basic things to know about the federal rule:

♦ This  federal rule sets minimum standards for disposal of  coal combustion residuals (more commonly called “coal ash”), but other state and federal regulations will continue to apply to coal ash disposal as well. The most significant may be the federal Clean Water Act and state water quality standards; the federal Comprehensive Environmental Response, Compensation and Liability Act  (“CERCLA”) which addresses liability for remediation of contaminated property; state landfill regulations; state groundwater protection standards; and requirements of North Carolina’s 2014 Coal Ash Management Act.

♦ As expected, EPA decided to regulate coal ash as solid waste rather than hazardous waste. “Solid waste” covers everything from household trash to nonhazardous industrial waste and discarded construction materials. Although coal ash often contains toxic heavy metals such as selenium, EPA  concluded that the low concentration of hazardous substances in coal ash did not justify applying  hazardous waste regulations to coal ash disposal.  

♦ The federal rule has been adopted under sections of the Resource Conservation and Recovery Act (RCRA) that authorize EPA to adopt minimum standards for disposal of solid waste. As interpreted by EPA, those sections of RCRA do not authorize federal permitting requirements or federal enforcement.  So while the EPA rule sets minimum federal standards for disposal of coal ash,  EPA will  not enforce the standards or require states to adopt and enforce the standards.  If a state choses to incorporate the federal standards into state rules, the state can take enforcement action under state law. Otherwise, the only enforcement of the new federal standards will be through citizen suits. As EPA acknowledged, reliance on self-enforcement and citizen suits creates a higher than usual level of regulatory uncertainty for the electric utilities.  Without a federal or state agency as intermediary, utilities may find it difficult to predict either the filing or the outcome of an enforcement case.

Note:  Existing N.C. laws and rules already incorporate many of the minimum federal design and location standards for coal ash landfills.  N.C. has also long required permits for those landfills. As a result, N.C. already has a regulatory structure that, with only minor amendments, could be used to enforce the new federal standards.

♦ Unlike N.C.’s 2014 Coal Ash Management Act, the federal rule does not directly require electric utilities to phase out the use of  surface impoundments for disposal of coal ash. Instead, the rule sets location and design standards for new, expanded and existing coal ash impoundments. New impoundments and expansions of existing impoundments will require liners. Although the EPA rule does not require existing impoundments to be retrofitted with liners, an unlined impoundment must stop receiving coal ash and move toward final closure within six months after groundwater monitoring detects an exceedence for a listed contaminant. (The rule allows 30 months to install a groundwater monitoring system and gather sample data, so a closure based on groundwater impacts may come only after several years of continued use.)

The rule seems to give the owner of an existing impoundment the option of avoiding the new standards by ending coal ash disposal in the impoundment within six months after publication of the final EPA rule in the Federal Register. Ending disposal within the six-month window makes the impoundment an “inactive impoundment” category under the rule. Inactive impoundments do not have to meet the new standards, but must close within 30 months after publication of the final EPA rule. (But see the next bullet point on uncertainty about how broadly the EPA rule applies to inactive impoundments.)

♦ The EPA rule clearly applies to inactive impoundments at facilities still generating electricity (even if the power plant no longer burns coal).  It is not clear whether the rule also applies to inactive impoundments still maintained by an active electric utility on the site of a shuttered electric generation plant. The Dan River Steam Station impoundment would fit into that category. Some EPA statements suggest the rule only applies to inactive impoundments located at active electric generation plants. That would mean the closure requirements in the rule would not apply to impoundments at idled electric generation facilities like the Dan River plant.  But conflicting statements in the rule preamble and the wording of the rule itself could also support an interpretation that the rule applies to inactive impoundments owned by an active electric utility without regard to the location of the impoundment. Some additional clarification by EPA would be helpful.

♦ The EPA rule treats placement of coal ash in surface mines (such as sand pits, gravel pits and quarries) as solid waste disposal — not as a beneficial use. As a result, disposal in a surface mine will have to meet the federal standards for a coal ash landfill. The rule also  casts a somewhat jaundiced eye on other large-scale uses of coal ash for structural fill and landscaping. With the exception of use in road construction, the rule would not consider use of more than 12,400 tons of un-encapsulated coal ash to be a beneficial use unless it presents no greater risk of release to the environment than use of other materials or will meet  all benchmarks for protection of the environment and public health.  Without those assurances, the application of coal ash would be regulated under the federal rule as solid waste disposal rather than beneficial use.

♦ The EPA rule does not set any performance standards for projects that qualify as beneficial use under the federal definition. Instead, EPA has deferred to the states and to federal agencies that have already adopted technical standards for use of coal ash in federally-funded projects (such as highway construction).

The EPA rule includes detailed standards for design and location of coal ash landfills and impoundments; groundwater monitoring; remediation; structural integrity; and final closure of landfills and impoundments. Part II will look at the effect of the EPA rule on implementation of N.C.’s Coal Ash Management Act.

N.C. Coal Ash Bill Becomes Law

September 24, 2014. On September 20, Senate Bill 729 (the Coal Ash Management Act) became law without the Governor’s signature. Governor Pat McCrory had expressed concern that a provision in the bill giving legislators the majority of appointments to the new Coal Ash Management Commission violated the constitutional doctrine of separation of powers. Rather than  veto the bill, the governor allowed the bill to become law without his signature and signaled an intent to ask the N.C. Supreme Court for an advisory opinion on the constitutionality of the appointments provision.

In the meantime,  Senate Bill 729  — now Session Law 2014-122 — makes a number of  immediate changes to state law  and sets in motion a  15-year  process for remediating and then closing thirty-three existing coal ash impoundments. An earlier post provided an overview of the  final bill and now attention will turn to implementation.

 NEAR TERM 

  • Effective October 1, 2014 the law prohibits utilities from building new impoundments or expanding existing impoundments for disposal of coal ash.
  • Also effective October 1, 2014, the law  prohibits use of impoundments at closed electric generating facilities for coal ash disposal. The provision prevents a utility from transporting coal ash from an active generation plant to a closed facility for disposal in an impoundment.
  • By October 1, 2014, the utilities must submit a survey to the Department of Environment and Natural Resources (DENR) identifying all drinking water wells within 1/2 mile down-gradient of an impoundment.
  • The law requires the utilities to submit groundwater assessment plans  and  maps showing discharges to surface waters (both permitted and unpermitted) for all 33 impoundments by December 31,  2014.  The maps and groundwater assessment plans represent the first in a series of steps leading to remediation of  groundwater contamination around the impoundments and elimination of unpermitted discharges to surface waters.
  • S.L. 2014-122 sets much more stringent standards for use of coal ash in large structural fill projects and puts a moratorium on smaller structural fill projects to study appropriate standards for those projects.  (“Structural fill” projects involve the use of coal combustion residuals as fill material to level a construction site, build up a road bed, or otherwise change site elevation before construction.) The new standards include setbacks from surface waters and drinking water wells; a requirement for synthetic liners and a leachate collection system; a four-foot separation between the lowest level of fill and groundwater; financial assurance; and standards for closure.
  • Amendments to the state Dam Safety Act require dam owners to  prepare an emergency action plan for each high and intermediate risk impoundment. (The provision applies to all impoundments regulated under the Dam Safety Act and not  just coal ash impoundments.)
  • Dam Safety Act amendments also set minimum requirements for inspection of coal ash impoundment by the utilities   (weekly and following storms) and by DENR  (annually).
  • A new fee imposed on electric utilities that own coal ash impoundments will fund regulatory activities at DENR and the new Coal Ash Management Commission. The law authorizes use of the revenue to create  5 positions in the Department of Public Safety to support the Coal Ash Management Commission and 25 new positions in DENR.
  • S.L. 2014-122 amends state law  to require notice to DENR of any wastewater spill to  surface waters  as soon as practicable, but no more than 24 hours after the spill reaches surface waters.  The law also shortens the time allowed to provide notice to the public  from 48 hours to 24 hours.
  •  S.L. 2014-122 repeals most of a controversial 2013 regulatory reform provision on groundwater remediation by eliminating statutory language that: 1.  created a presumption that the groundwater compliance boundary around a waste disposal site should be at the property boundary;  and 2. limited DENR’s ability to require measures within the compliance boundary to control groundwater contamination. A provision in the same section of  S.L. 2014-122  created a new controversy, however, by reversing a recent superior court decision interpreting state groundwater remediation rules. (For an explanation of the controversy, see the earlier post.)
  • The law creates new civil and criminal penalties for violation of laws related to management of coal ash.

The law also requires a number of actions over the next year intended to  expand beneficial uses of coal ash. The most unusual provision requires the electric utilities  to issue a request for proposals by December 31, 2014 for:

(i) the conduct of a market analysis for the concrete industry and other industries that might beneficially use coal combustion residuals and coal combustion products; (ii) the study of the feasibility and advisability of installation of technology to convert existing and newly generated coal combustion residuals to commercial-grade coal combustion products suitable for use in the concrete industry and other industries that might beneficially use coal combustion residuals; and (iii) an examination of all innovative technologies that might be applied to diminish, recycle or reuse, or mitigate the impact of existing and newly generated coal combustion residuals.

LONGER  TERM

S.L. 2014-122 gives  the impoundments at four coal-fired plants (Dan River Steam Station, Riverbend Steam Station, Asheville Steam Electric Generating Plant and the Sutton Plant) priority for final closure. The law then directs DENR to classify  the other 10 impoundment sites in the state based on risk by the end of 2015. Under  the law,  final closure of impoundments classified as high or intermediate risk will require removal of all coal ash for disposal in a lined industrial landfill (on or off-site) or for  beneficial reuse. Impoundments classified as low risk  have the additional closure option of capping the coal ash in place as long as the closure plan includes measures that will prevent groundwater contamination beyond the compliance boundary.

S.L. 2014-122 sets final closure deadlines based on the risk classification — December 31, 2019 for high risk impoundments; December 31, 2024 for intermediate risk impoundments and December 31, 2029 for low risk impoundments.

OPPORTUNITIES AND PITFALLS

S.L. 2014-122 marks a real and significant change in environmental policy — forcing a transition away from use of wet impoundments for coal ash disposal and toward more protective methods of disposal and safe reuse.   In support of that policy decision, the law provides statutory timelines  for assessment, remediation and final closure of all 33 impoundments and  new resources for state oversight.

Even with resources to implement S.L. 2014-122, it will be difficult to hold to the timelines in the law without an ongoing commitment on the part of the General Assembly, DENR and the electric utilities. Any number of bureaucratic and technical problems could delay or derail implementation of the law.  (The thirty new positions authorized under the bill do not magically appear  when the bill becomes law — getting from legislative authorization of a new position to having a person  on the job  usually  takes months.) The goals of the law won’t be met if the state too easily gives in to unnecessary delays.

Decisions on remediation; classification of impoundments for closure; and approval of closure plans will present a different kind of challenge. There will be an inevitable tension between the utilities’ desire to keep the  cost of compliance  low and the state’s responsibility to protect  groundwater and surface water resources. The bill creates another potential source of tension by giving the new Coal Ash Management Commission  — not DENR — the authority to make final decisions on classification of impoundments and approval of closure plans. The Commission will have a very small staff and the law does not require any commission member to have expertise in  groundwater hydrology or water quality  –  likely to be critical in prioritizing sites for closure and approving closure plans.  With good luck and the right appointments, the arrangement  might work; or it could  lead to  conflict and overly politicized decision-making.

N.C. Enacts Coal Ash Legislation

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

What Senate Bill 729  Does:

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

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

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

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

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

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

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

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

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

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

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

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

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

Weak Points:

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

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

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

Controversies:

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

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

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

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

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

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

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

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

Coal Ash Legislation Hits the Wall

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

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

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

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

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

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

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

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

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.

The Coal Ash Management Commission

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

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

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

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

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

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

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

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

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

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

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.

N.C. Senate Budget 2014: Environment

The most significant changes:

Oregon Inlet. The single largest allocation of new money ($15 million) would fund an effort to acquire  federal lands surrounding Oregon Inlet and the erosion-threatened  segment of N.C. Highway 12 on Hatteras Island.  The lands targeted for acquisition now make up parts of  Cape Hatteras National Seashore and Pea Island National Wildlife Refuge.  The newly acquired lands would be designated as a state park, but the special budget provision tied to the funding describes the purpose of the acquisition as managing “existing and future transportation corridors” on the Outer Banks.  An earlier post describes the cost (as of 2013) of maintaining Highway 12  in the face of high erosion rates and inlet movement.

Continuing  erosion and storm damage have  made it increasingly difficult to maintain Hwy  12 within the  original right of way.  Going outside the right of way means working on federal lands. The National Park Service and federal wildlife refuge  managers have worked with the state to reach agreement on a number of  previous Hwy 12 maintenance and relocation projects, but conditions have now deteriorated to the point that future projects could involve much more significant impacts to lands in the national seashore and wildlife refuge. Some of the proposed maintenance and relocation options for Hwy 12 also conflict with  the conservation purposes  of the federal  lands.  Management plans for national seashore and wildlife refuge give high priority to maintaining a natural, unobstructed shoreline and  protecting wildlife habitat.

The bill directs the state Department of Administration to begin negotiating an agreement to acquire the federal lands by purchase or exchange of state land for federal land. If efforts to negotiate an agreement fail, the bill directs the department to begin  efforts to acquire the lands by condemnation next year,  Not surprisingly,  the budget provision allows use of some of the funding for litigation expenses. The budget cobbles together the $15 million allocation by transferring a total of  $7 million  from two specific  DENR  fund accounts ($3.5 miilion from each);  appropriating $5 million in new money;  and earmarking an additional $3 million in capital reserves.  One of the two DENR fund accounts  appears to be a Marine Fisheries fund for license revenue;  the budget provision identifies the  fund by  number and  title (the “Advanced License Sales Fund”).

The bill also has language (similar to a provision in the Senate regulatory reform bill) authorizing the Governor to  waive  state coastal development permits and environmental impact statements for projects needed to maintain transportation access to Hatteras Island. As noted in an earlier post, waiver of state environmental review may not actually shorten the permitting process –the Governor’s action cannot affect  federal permits needed for the Hwy 12 projects  and  the state and federal permit reviews have been coordinated for many years to streamline  review. On the other hand, waiving state permits for the project will remove any influence the state might otherwise have on the federal permitting process — taking state environmental permitting staff out of the negotiation entirely,

Coal  Ash. The Senate has proposed to appropriate $1.75 million to DENR to support activities related to regulation of coal ash, including 23 new staff positions. The staff positions would be allocated among the Division of Energy, Mineral and Land Resources (7 total positions – 2 in stormwater and  5 in  dam safety); Division of Waste Management (2 positions); Division of Water Resources (8 positions) and the DENR Secretary’s Office (6 positions). Funding is contingent on passage of Senate Bill 725 (Governor’s Coal Ash Management Act) or similar legislation,

Shale Gas.  The Senate budget appropriates an additional $1.17 million dollars for shale gas activities. Most of the funding ($973,324) would be used for additional geological and geophysical analysis of the shale basins in the state. The remaining funds have been identified for marketing and promoting  the state’s shale gas resources ($100,000); digitizing data ($50,000); and doing more chemical analysis of gas wells  ($50,000).

Transferring Interest Income from DENR Special Funds. DENR has a number of interest-bearing special funds. Some were created to provide a  source of revenue for conservation programs; others receive a combination of fees and tax revenues to fund cleanup of environmental contamination. The Senate budget would transfer all of the interest earned by these funds to the state’s General Fund, reducing the funds available for the originally intended purpose and allowing the legislature to reallocate the interest income for other uses. The conservation  funds affected include the Clean Water Management Trust Fund; the Marine and Estuarine Resources Conservation Fund; the Ecosystem Restoration Fund; the Parks and Recreation Trust Fund; and  the N.C. Marine Resource Fund.

The environmental cleanup funds affected by the transfer of interest income include the Dry-Cleaning Solvent Cleanup Fund;  the Commercial Underground Storage Tank Fund;  the Non-Commercial Underground Storage Tank Fund;  the Inactive Hazardous Sites Fund; the Bernard Allen Emergency Drinking Water Fund;  and a fund supporting the state  Brownfields program for redevelopment of contaminated sites.  Some of the special funds receive revenue from fees and taxes  imposed on a particular commercial activity (such as dry-cleaning and operation of petroleum underground storage tanks)  to address contamination associated with the activity. The proposed transfer would  allow use of the interest income on those fees and taxes for unrelated purposes.

The state Brownfields program (which assists in the redevelopment of contaminated sites)  operates entirely on federal  funds and fees paid by the prospective developers.  The program receives no state appropriations, so the special fund provides the only source of operating funds.  A number of the  environmental cleanup funds (including the Commercial UST Fund) have been chronically underfunded and transfer of the interest income will only further reduce the resources available for assessment and cleanup of contamination.

Marine Fisheries. It is hard to find a plan behind the many changes to the marine fisheries budget. The bill increases a significant number of commercial and recreational fishing  license fees and fees for fish dealers, while slightly  reducing  fees for commercial fishing vessels.  The budget reduces  funding for fisheries conservation by transferring interest income from several special funds to the General Fund and transferring $3.5 million from one  license fee fund account to  a fund  to acquire property on the Outer Banks.  At the same time, the bill eliminates  appropriations for  the At-Sea Observers program (necessary under a state-federal agreement keep some N.C. fisheries open by monitoring the impact on  endangered sea turtles) and shifts  the costs of the program to license fee revenue.  The bill also directs a portion of the higher commercial fishing fees to a new  Commercial Fisheries Resource Fund. The result of all of the moving pieces seems to be higher fees, reduced appropriations, and at the same time a transfer of fisheries fee revenue to other purposes.

2014 Legislative Session Begins With Coal Ash

Today opened the 2014 “short” session of the N.C. General Assembly. The main purpose of the off-year short session is to make adjustments in the two-year budget adopted by the legislature in the first year of the biennium.  In addition to appropriation  and revenue bills, the legislature can  take up any bill that passed  one chamber of the legislature in 2013 and bills recommended by interim special committees or study committees.  

One of the first bills introduced in the short session turned out to be a coal ash bill.  Given concerns about environmental problems associated with coal ash impoundments in the state (described here  and here),  a bill had been expected. The bill  surprisingly turned out to be  identical to  Governor Pat McCrory’s  “Comprehensive Coal Ash Action Plan”. The governor’s legislative proposal  initially received a  chilly reception from lawmakers, but has  new life as Senate Bill 729  (“Governor’s Coal Ash Action Plan”).  An earlier post analyzing  the Governor’s proposal for coal ash legislation also describes Senate Bill 729.

The bill  sets aggressive timelines for assessment and remediation of groundwater contamination around the existing  coal ash ponds.  The bill also requires Duke Energy to take steps to find and eliminate unpermitted discharges from ash  impoundments to surface waters.

The bill does not set a hard date for transition away from wet disposal of coal ash, but directs the Department of Environment and Natural Resources (DENR) to prioritize  existing coal ash impoundments for closure.  There is no deadline for completing  closure  of all 33 ash impoundments. The bill itself puts  four Duke Energy impoundment sites  at the top of the priority list for closure — Riverbend (located near Charlotte’s drinking water source);  the Asheville plant;  the Dan River plant; and  the Sutton plant near Wilmington. The Asheville site  has already been linked to contamination of a private drinking water well.  Groundwater contamination near the Sutton plant has required closure of several public water supply wells.

The bill identifies three methods for closing an ash impoundment  — capping the ash in place; removing the ash to an off-site disposal facility (such as a landfill); and  a hybrid approach that would involve consolidating the ash into a smaller footprint before installing an engineered cap. The bill provides only one  very broad standard for closure:  the closure method should result in restoration of contaminated groundwater to the  state groundwater standards to the extent  economically and technically feasible. There are no technical standards for the individual closure methods and no criteria  for selecting the appropriate closure method for an individual  site.

The bill  remains silent on standards for  future coal ash disposal, although it amends state law to classify coal ash removed from an impoundment as solid waste.  Presumably that means ash removed from an  impoundment during  closure  would have to be disposed of under the solid waste laws — most likely in a landfill. The option of using coal ash as structural fill on a construction site would still be available, although the bill puts a temporary “moratorium” on large scale structural fill sites. (Projects using less than 5,000 cubic yards of coal ash for fill would not be affected.)

The Senate had always been expected to  move first on coal ash legislation, but state House members have their own ideas about regulation of coal ash.  Senate Bill 729  just starts the   coal ash debate in the legislature.