Monthly Archives: August 2014

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.