Author Archives: rwsmith

The Future of Watershed-Based Water Quality Rules

June 22, 2016. A controversial water quality provision in the N.C. Senate’s proposed budget would repeal (and perhaps replace –that is less certain) all state rules adopted over the last twenty years to address pollution problems caused by excess nutrients.  Sec. 14.13 in the Senate version of House Bill 1030 further delays full implementation of the Falls Lake and Jordan Lake rules; creates a  $2 million study of nutrient management programs; and repeals all existing water quality rules addressing nutrients pollution effective December 31, 2020.

The Senate Proposal.  The provision requires the state’s Environmental Management Commission (EMC) to adopt new nutrient management rules based on the study results, but repeals all  existing rules at the end of 2020  even if no alternative  rules are in place.  In addition to Jordan Lake  and Falls Lake, the repeal/replace provision would affect water quality rules in the Tar-Pamlico River Basin; the Neuse River Basin; the Catawba River Basin; the Randleman Reservoir watershed; and the endangered species management plan in the Yadkin-PeeDee River’s Goose Creek watershed. It would also apply to any other riparian buffer requirements identified by the Department of Environmental Quality (DEQ).   Still hoping for an alternative to  rules, the Senate budget also appropriates $500,000  to  study use of freshwater mussels to reduce the water quality impact of excess  nutrients.

In most cases, state nutrient management rules also satisfy a federal Clean Water Act requirement to reduce the discharge of a pollutant (in this case nitrogen and/or phosphorus) causing impaired water quality. In North Carolina’s  “nutrient sensitive” river basins and watersheds,  the U.S. Environmental Protection Agency (EPA)  has approved the nutrient reduction targets in state rules as meeting Clean Water Act  requirements.   To achieve the reduction targets, the rules require reductions in nutrient  discharges by wastewater treatment plants and nutrient runoff from agriculture and development activities. Walking away from the nutrient reduction targets has implications for Clean Water Act enforcement and the state’s delegated water quality permitting programs.

Although the Goose Creek rules rely on similar pollution reduction tools (including riparian buffers and stormwater controls),  those rules protect endangered species habitat.  The rules resulted from a lengthy negotiation with the  U.S. Fish and Wildlife Service which has responsibility for enforcing the federal Endangered Species Act. Repeal of the rules would likely bring both U.S. Fish and Wildlife  and EPA into the conversation.

Nothing similar to the Senate provision appears in the House version of the budget or in any other legislation pending in the House.  The two chambers are currently negotiating this (and other) differences between the House and Senate budget bills.

Have the Nutrient Rules Failed? The Senate provision describes the state’s existing nutrient management  programs as failures. In reality, legislation has prevented full implementation of the Falls Lake and Jordan Lake nutrient rules.  The rules that have been fully implemented  — such as those in the Neuse River and Tar River basins — significantly reduced nutrient loading from wastewater discharges, agriculture and stormwater runoff.  In judging the effectiveness of watershed-based strategies, some things to keep in mind: 1.  Population growth and development in the watersheds continued to increase; and 2. Existing nutrient reduction strategies do not address all potential nutrient sources (smaller wastewater treatment plants; failing septic tanks; atmospheric deposition of nitrogen; and soil erosion).

DEQ has tracked the effect of nutrient rules in the Neuse River and Tar-Pamlico River basins; some of the results can be found here.  A  number of independent academic researchers have also studied the Neuse and Tar-Pamlico  river basin rules.  All of the studies confirm that sources covered by the rules significantly reduced their nutrient discharges. Wastewater treatment plants met the goal of reducing nitrogen discharges by 30% from the baseline years even as population and wastewater flows increased. Agriculture met or exceeded the 30% reduction goal for agricultural operations through use of  Best Management Practices. A recent EMC report confirmed  the value of  riparian buffers as part of a watershed-based plan to reduce nutrient runoff from developed areas.

Complicating the picture is the fact that  total  in-stream nutrient concentrations  have not consistently remained below  baseline levels.  A DEQ  study completed in 2008 found that in-stream concentrations of inorganic forms of nitrogen  (nitrates and ammonia) declined at the monitoring sites, but  increases in organic nitrogen offset those reductions.   The rules haven’t  failed; given population growth and increased development in the Neuse and Tar-Pamlico river basins,   nitrogen concentrations would have been higher in the absence of the rules. But the rules have not fully solved the problem of nutrient over-enrichment.

Opposition to the Nutrient Rules.  Opposition has tended to be strongest in the communities on the Haw River arm of the Jordan Lake watershed affected by the Jordan Lake rules. (The Haw River watershed includes the cities of Greensboro and Burlington.) Since EMC adoption of the Jordan Lake rules in 2009,  legislation to repeal or delay implementation of the rules has been introduced every year.  Objections  have focused on the cost of wastewater treatment plant upgrades to meet tighter discharge limits;  expansion of  stormwater programs;  and the development impact of new riparian buffer requirements. To these upstream Haw River communities, the costs have no local benefit; water quality improvements benefit downstream communities. (Although many of the downstream communities have met similar requirements under the Neuse River rules for years to benefit the Neuse River estuary.)

The City of Durham and Durham County, affected by both the Falls Lake and the Jordan Lake rules, also have concerns about the feasibility and cost of meeting nutrient reduction goals.

Also in the background — riparian buffer requirements have long been unpopular with real estate developers and homebuilders in all of the river basins/watersheds where buffers have been part of a nutrient reduction strategy.

DEQ’s Position.   DEQ has not taken a public position on the Senate proposal, but a February presentation by DEQ Assistant Secretary Tom Reeder to the legislature’s Environmental Review Commission questioned the effectiveness of the watershed-based nutrient rules.  Reeder’s presentation tended to emphasize the cost of the nutrient rules and  limited impact on instream nitrogen and phosphorus concentrations.  Asked what alternative to the nutrient management rules would protect the Falls Lake and Jordan Lake drinking water supplies, Reeder responded that drinking water treatment may become more expensive. The presentation suggested little DEQ commitment to defend watershed-based nutrient rules and a willingness to shift the cost of impaired water quality to communities using  Falls Lake and Jordan Lake as drinking water sources. Reeder’s presentation did not  address the impacts of a failure to reduce excess nutrients  on natural resources such as fisheries; recreational use of these rivers, lakes and estuaries; or compliance with the Clean Water Act.

Possible compromises.  Past studies of the Neuse and Tar-Pamlico rules suggest a need to fill gaps in the nutrient strategies, but do not provide a  scientific case for  abandoning watershed-based nutrient reduction strategies. Nearly seven years after final adoption of the Jordan Lake rules, opponents have not identified an alternative approach to protect drinking water  and meet Clean Water Act requirements.

At the same time, the  EMC’s recent riparian buffer report  identified potential buffer rule changes to ease the burden on property owners while maintaining the buffer’s  water quality benefits.  The legislature could also look at the possibility of  authorizing cost-sharing arrangements to allocate some of the upstream cost of water quality improvements to  the  downstream communities that will benefit. The idea surfaced briefly during development of the Falls Lake and Jordan Lake rules, but wasn’t pursued at the time.

Coal Ash, Contaminated Wells and Providing a Safe Drinking Water Supply

May 31, 2016. The previous post  discussed legislative efforts to resolve the separation of powers conflict still hovering over implementation of the 2014 Coal Ash Management Act. The same piece of legislation, Senate Bill 71,  also attempts to fix other problems that have developed around coal ash cleanup efforts. One of the most significant changes in Senate Bill 71 responds to concerns about contaminated drinking water wells near coal ash ponds.  The final version of Senate Bill 71 approved today by both the House and Senate gives more well owners the certainty of an alternative water supply.  A comparison of Senate Bill 71 to the original Coal Ash Management Act below.

2014 Coal Ash Management Act:

♦ Guaranteed an alternative water supply only to well owners located within 1/2 mile and down-gradient of the coal ash impoundment.  Well testing and groundwater assessment done around the impoundments since 2014  have detected high levels of one or more contaminants associated with coal ash, including hexavalent chromium, in wells located up-gradient or side-gradient of the impoundments. Although groundwater usually follows surface topography, the  underlying geology and human activity can alter the direction of  flow. The alternative water supply provision in the Coal Ash Management Act did not apply to those wells.

♦   The requirement for Duke Energy to provide an alternative water supply was contingent on well sampling showing a contaminant associated with coal ash above the level allowed under state groundwater standards.  The  lack  of a state groundwater standard for some contaminants  (including venadium and hexavalent chromium) led to confusion, conflicting advice to well owners,  and lack of clarity on the standard DEQ would use to require Duke Energy to provide an alternative water source.  For background on the controversy over the groundwater standards see an earlier post here . Many well owners have received bottled water for months because of documented well contamination, but remain uncertain whether DEQ will require Duke Energy to provide a permanent alternative water supply.

♦  The provision on alternate water supply enacted in 2014, G.S. 130A-309.209(c), did not specifically require a permanent solution — such as connection to a public water system — rather than bottled water.

♦ Under the 2014 law, owners of contaminated wells located up-gradient and side-gradient of a coal ash impoundment might receive alternate supplies under the state’s groundwater corrective action rules,.  The rules (referenced in the 2014 Coal Ash Management Act) apply to all groundwater contamination incidents and require a company responsible for groundwater contamination to address health risks created by the contamination.  The  corrective action rules,  however, only apply to a person/company shown to be 1. responsible for contamination that 2. exceeds state groundwater standards. Two years after enactment of the Coal Ash Management Act,  controversy surrounds the standards for some contaminants and groundwater studies have not yet been sufficient to determine whether the coal ash ponds  caused contamination found  in up-gradient and side-gradient wells.

Senate Bill 71:

♦ Requires Duke Energy to provide an alternative water supply to the owner of every well located within 1/2 mile of the compliance boundary surrounding a coal ash pond. (The compliance boundary — either 250 feet or 500 feet from the edge of the impoundment depending on its age — is the point at which exceedance of a state  groundwater standard would be a violation.)

♦  For wells within 1/2 mile of the compliance boundary around an ash pond, alternative water supply would be required without regard to the location of the well in relation to the impoundment (down-gradient, up-gradient or side-gradient) or demonstration of a groundwater standard violation.

♦ The bill also requires Duke Energy to provide alternative water supply to well owners located outside the 1/2 mile perimeter, but located in an area at risk  of contamination because of the projected migration of groundwater contamination.

♦ The bill expressly requires Duke Energy to provide a permanent alternative water supply source and creates a preference for connection to a public water system.  The bill allows  installation of a filtration system instead if extension of a water line would be cost-prohibitive. The State Water Infrastructure Authority would review Duke Energy’s alternative water supply plan for each impoundment site and make the final decision on the type of permanent water supply.

Several things are notable about the Senate Bill 71 approach.   First, the bill  provides  certainty to well owners  that would not have been possible as clearly or as quickly any other way.  But the bill is also a reminder that property owners affected by groundwater contamination from other sources have a longer, more difficult and less certain road to a safe drinking water supply.

Separation of Powers Battle, Part II

May 25, 2016.  In response  to the N.C. Supreme Court decision in McCrory v. Berger,  the House of Representatives has approved a bill to reconstitute the Coal Ash Management Commission, the Mining Commission and the Oil and Gas Commission.   The lawsuit largely concerned the constitutionality of  legislative appointments to the commissions, but also challenged  a provision in the Coal Ash Management Act  that made the Coal Ash Management Commission independent  of oversight by any executive branch department.   See an earlier post on the court decision here.

The McCrory v. Berger decision does not state any clear, generally applicable separation of powers rule with respect to organization and appointment of state boards and commissions. (The court so stoutly resists providing any general rule, that the decision may raise more questions than it answers.) But the court clearly held that the General Assembly violated the separation of powers doctrine in the N.C. Constitution by giving the legislature power to appoint a majority of each commission’s members. Senate Bill 71 attempts to cure that separation of powers violation.

The Governor’s Office does not believe the bill resolves the separation of powers issues and has put the legislature on notice that the Governor will file suit again if the new bill becomes law.  In fact, the Governor’s objections have broadened and appear to attack the entire concept of giving executive authority to citizen commissions. The expansive interpretation of McCrory v. Berger adopted by the Governor’s Office would potentially affect many other longstanding commissions, including the Environmental Management Commission.

The Senate Bill 71 response to McCrory v. Berger. The bill  amends laws creating the three commissions at issue in McCrory v. Berger to give the Governor a majority of appointments subject to confirmation by the General Assembly. The bill also  insures that the governor’s appointees  represent a majority of the quorum required for commission action. Senate Bill 71 removes language in the Coal Ash Management Act that made the Coal Ash Management Commission “independent” of  supervision by the Department of Public Safety (where the Commission has been administratively housed) and adds a clause noting the powers and duties of the Secretary of Public Safety — appointed by the Governor — with respect to programs in  the department.

As a backstop, the bill has a provision that transfers the responsibilities of the Coal Ash Management Commission to the existing Environmental Management Commission if Governor McCrory fails to make timely appointments or the reconstituted CAMC becomes the focus of new litigation.

The Governor’s opposition.  The Governor’s Office does not believe the bill resolves the separation of powers issues surrounding appointment and supervision of the three commissions. The Governor’s legal counsel, Bob Stephens,  appeared in a House Committee  to oppose the bill and listed several objections:

  1. The Governor opposes  legislative confirmation of  commission appointees as a new violation of separation of powers.  Legislative confirmation has been the exception rather than the rule in North Carolina, but is required for a few boards and commissions.  State law has long required legislative confirmation of the Governor’s appointees to the N.C. Utilities Commission.  The McCrory v. Berger  decision does not discuss legislative confirmation one way or the other since it was not an issue in the case.  Mr. Stephens did not explain the legal basis for the Governor’s position in committee, but a letter from Mr. Stephens to legislative leaders contends that legislative confirmation inappropriately interferes with the Governor’s appointment power.
  2.  Governor McCrory  objects to provisions giving the Governor authority to remove a commission member only for  misconduct or failure to perform their duties. Stephens argued that the decision in McCrory v. Berger means the governor must have the power to remove governor’s appointees at will.  On this point, the McCrory v. Berger decision itself is unclear.  The court talks about power to remove commission members as necessary for the Governor to effectively supervise commissions with executive powers.  Although the decision can be read to imply that removal for cause may not be sufficient,  the court never  expressly holds the Governor must have power to remove commissioners at will.  Instead, the court treats power to remove as one of several factors  to be considered in determining whether the legislature has inappropriately limited the Governor’s executive authority. The actual holding in the case turns on the number of legislative appointments to each commission.
  3. Governor McCrory does not believe Senate Bill 71  sufficiently  recognizes the Governor’s authority to supervise the Coal Ash Management Commission. The CAMC  has  been administratively housed in the Division of Emergency Management of the  Department of Public Safety, but the 2014 Coal Ash Management Act  included language that put the CAMC outside the supervision and direction of either the Division or the Department. Senate Bill 71 removes the “independence” language and adds a clause noting the statutory authority of the Secretary of Public Safety (which includes supervisory responsibility for programs in the department).  Stephens rejected the changes as insufficient to  give the Governor supervisory control over the CAMC consistent with  McCrory v. Berger, but did not suggest alternative language to the committee.

 Questioning the entire concept of citizen commissions. Yesterday, Mr. Stephens sent a  letter  to House and Senate leaders to express the Governor’s concerns in writing. The letter goes beyond the comments offered in committee and opposes the exercise of executive authority by any citizen commission not entirely within the governor’s  supervision and control.  The Governor interprets McCrory v. Berger to mean the  Governor must have the ability to appoint members without legislative confirmation; remove members at will; and direct commission actions  in much the way the Governor, through cabinet secretaries, directs state agency employees. The letter to Senate President pro tempore Phil Berger and House Speaker Tim Moore rejects the idea of using the existing Environmental Management Commission as a backup for the Coal Ash Management Commission because:

The Environmental Management Commission suffers from the same constitutional defects as the proposed Coal Ash Management Commission. Again, the Governor must have a majority of appointments, the ability to remove his appointees at will and the ability to supervise the day to day activities of the commission.

The letter goes on to argue that commissions with ability to “review and approve” executive agency decisions:

pose an exceptional threat to the Governor’s duty to execute the laws…Some in the General Assembly believe that independent commissions superior to our agencies are a good idea — they serve as a check on the executive branch. But McCrory v. Berger rejects this argument.

That conclusion cannot be found in the McCrory v. Berger decision.  The court  went out of its way to avoid  grand declarations — to the point of leaving a lot of confusion about how to apply the decision beyond the three commissions directly involved in the case. The statement reflects the Governor’s expansive interpretation of McCrory v. Berger and signals an intent to use that interpretation to either eliminate semi-independent citizen commissions or to force a significant change in the role of commissions.

The practice of giving citizen commissions authority  to develop and implement state policy has a long history in North Carolina.  Commissions — rather than the Department of Environmental Quality– adopt most state environmental rules. While checking the executive branch may have been one purpose, commissions also bring a broad range of expertise and practical experience to policy development and implementation. Laws creating the commissions require  members to have backgrounds more diverse than those typically found among the technical staff of a state agency. By law, the Environmental Management Commission  must have members with  backgrounds in business, agriculture, public health, local government, conservation, etc. Members  bring that expertise and experience to bear on environmental policy decisions.  EMC members, like most state commission members, have other full-time jobs;  volunteer their time to the state; and in return receive only reimbursement of travel costs and a very small per diem for meeting days.

Given the different perspectives among commission members and a perch outside state government bureaucracy, commissions will not always see an issue in quite the way a Governor’s political appointees do. Recent friction between the Environmental Management Commission and the Department of Environmental Quality attests to that. On balance, the benefits of bringing citizen commissions into state policy development have outweighed the messiness and occasional friction. The Governor seems to prefer something more like the federal model — where policy development and policy implementation are both firmly under the control of a government agency. The question is whether a separation of powers argument can take him there.

Next steps for Senate Bill 71.  The bill passed the Senate last year as a bill to adjust the terms of Rules Review Commission members. Since the House has stripped out the original Senate bill text and replaced it with something entirely different, the bill now goes back to the Senate for concurrence in the changes.  The bill also makes other substantive changes to the Coal Ash Management Act to be discussed in another blogpost.

Regulating Renewable Energy Away?

May 11, 2016.  North Carolina’s General Assembly has been engaged in an internal battle over state renewable energy policy since 2013. That year, Republican legislators first introduced a bill to repeal the state’s renewable energy portfolio standard; the REPS law requires electric utilities to gradually increase the amount of power generated from renewable sources such as wind, solar and waste combustion. (For more on the REPS issue, see earlier posts here and here.)  The 2013 REPS repeal bill failed; similar bills to repeal or significantly limit the REPS requirement have been introduced every year since without success. Opponents of renewable energy subsidies did succeed in eliminating a state tax credit for renewable energy projects effective December 31, 2015.

In the just-convened 2016 legislative session, opposition to renewable energy has taken a new form — a  bill to put significant regulatory constraints on development of renewable energy projects. Senate Bill 843 (Renewable Energy Property Protection) expands an existing wind energy permitting law to cover other types of renewable energy facilities and adds new permitting requirements and regulatory standards.  Key provisions in Senate Bill 843:

Scope.  The bill applies to most renewable energy facilities other than hydroelectric plants, including solar,  wind and  waste-to-energy combustion projects. The proposed permitting standards do not apply to solar panels installed on single-family homes or to  “biomass resources”.  Since the bill only excludes solar installations on  single-family homes, the new permitting standards presumably apply to solar panels installed on commercial and institutional buildings (such as schools and churches) as well as utility-scale solar projects. It isn’t clear what the exclusion for  “biomass resources” means;  the term could be applied to plant-based fuels as well as combustion of animal waste.

Additional steps in the permitting process. Those steps include: 1. a  pre-application meeting with state regulators at least 120 days before submission of the permit application; 2. submission of pre-application project information 45 days before the meeting; and 3. notice of the pre-application meeting to federal regulatory agencies (such as the U.S. Army Corps of Engineers) and to “any other party [DEQ] deems relevant”. The bill also expands an existing wind energy permitting requirement  for a “scoping” meeting 60 days before application to all renewable energy projects —  even though the new pre-application meeting  and the scoping meeting seem to involve the same participants and much of the same information. See G.S. 143-215.118.

Addition of new standards for denial of renewable energy permits. The existing law setting standards for issuing or denying wind energy projects would be amended to cover all renewable energy projects and to add  two new grounds for permit denial. The new permit denial standards:

♦ Operation of the facility would cause ambient noise levels to exceed 35 decibels at the property line.

♦ The applicant failed to meet new financial assurance requirements for decommissioning the facility.

See the existing text of  G.S. 143-215.120 for the existing permit denial standards.

Setback and buffer requirements for wind and other renewable energy facilities. All wind and other renewable energy facilities would have to be sited 1 1/2 miles from the property line of an adjacent property. For comparison,  some examples of property line setback requirements for other state-permitted facilities and activities are shown below.

Facility/Activity Property Line Setback
Oil and gas production (including wells and drilling waste storage)  0 ft
Major air pollutant sources  0 ft
Land application sites for septage  50 ft
Hazardous waste landfills  200 ft
Swine house or  swine waste lagoon  500 ft

A quick search did not turn up an existing  state-imposed property line setback of greater than  500 feet.

S 843 also requires wind and renewable energy facilities to be setback from all easements and rights of way for a state road or municipal street by a distance equal to 2 1/2 times the height of a wind turbine. Some wind turbines proposed in N.C. have a tower height of around 300 feet and total height (based on extension of one blade straight up)  of nearly 500 feet, resulting in a  road setback of 800-1250 feet.

New requirements for decommissioning a renewable energy facility, including financial assurance for decommissioning. The bill requires the owner/operator of a wind or renewable energy facility to remove all equipment and buildings and return the site to predevelopment conditions within one year after ceasing operation. The requirement seems to be unprecedented as applied to a utility or commercial development project.  To the extent existing laws include reclamation  or closure standards, the standards generally focus on eliminating specific safety hazards (appropriately closing abandoned wells); taking steps to prevent environmental degradation (capping closed landfills)  and restoring disturbed areas to provide stability and prevent erosion.  State permitting programs  do not normally require the owner/operator to return a site to pre-development conditions by removing buildings and equipment.

S 843  also makes the owner/operator responsible for “properly recycling each piece of equipment used in the facility”.  State law already prohibits landfill disposal of specific types of waste such as aluminum cans, scrap tires and computer equipment. (See G.S. 130A-310 for a complete list of materials banned from landfill disposal.)  S 843 appears to go much further and require recycling of all equipment used in a renewable energy facility.  The recycling requirement for renewable energy facilities looks particularly burdensome by comparison to a 2013 state law allowing  demolition debris from a decommissioned electric generation station to be buried on site. See G.S. 130A-301.3.

Strict liability for damages caused by construction, maintenance, operation, decommissioning, disassembly or demolition of a renewable energy facility. The bill would impose strict liability on the owner/operator of a renewable energy facility. “Strict liability” means the owner/operator  could be held liable for personal injury or property damage caused by the activity even if the damage was not the result of  intentional misconduct, negligence, or violation of any regulatory standard. Strict liability  can also deny the  owner/operator the benefit of some usual defenses against a damage claim — such as the defense that the injured person caused or contributed to their own injury. Usually,  strict liability is reserved for inherently dangerous activities where it provides an incentive for extra caution on the part of the person engaged  in the activity.  Very few  N.C. laws create strict liability for personal injury or property damage;  one applies to   owners of dangerous dogs and another makes parents responsible for damage caused by their minor child.   A few laws create a sort of limited strict liability.  For example, state law generally assumes a  hydraulic fracturing operation  will be liable for contamination of a water supply located within 5,000 feet of a natural gas well. But in that case, the presumption of liability only applies to one type of injury  occurring in a very specific  set of circumstances  — not to all injury or damage caused by a  fracking operation.

Taken together, the provisions in Senate Bill 843 treat renewable energy facilities as a serious threat to public safety and the environment.

A Proposal: Insure owners of wells near coal ash sites aren’t exposed to greater health risks as a result

April 18, 2016. An earlier post discussed the confusion over “do not drink” advisories issued — and later withdrawn —  for  a number of wells near coal ash sites.  There continues to be confusion among legislators, state agencies and the public about the correct response to high levels of hexavalent chromium (Cr-6) and vanadium in drinking water wells near coal ash impoundments. This post attempts to  clarify some misconceptions and offers a proposal.

First, a clarification about individual contaminant standards.  Some legislators understood presentations by the  Department of Environmental Quality (DEQ) and the Department of Health and Human Services (DHHS)  to mean that there are multiple, inconsistent standards for a contaminant. In fact,  the state uses one standard for each contaminant to determine health risk and require groundwater remediation. But as the earlier post explained, the standard may come from Safe Drinking Water Act standards  or state groundwater rules.  Drinking water standards address a narrow set of contaminants  likely to be found in public water systems; groundwater standards  cover a broader range of extremely hazardous substances that may become a health threat because of a specific pollution incident.

State groundwater rules list health-based concentration limits for many hazardous substances, but also recognize that a pollution incident may involve a contaminant that does not yet have a groundwater standard.  For those contaminants, the rules set the default standard at “non-detect” —  any detectable concentration of the contaminant would be a violation. But the rules also create a process for setting  an interim groundwater standard that would allow concentrations above detection levels based on an evaluation of health risk.  DHHS used that process  to develop the interim standards for vanadium and hexavalent chromium (CR-6) that  led to  “do not drink” advisories for  a number of wells near coal ash facilities.

Gaps in the changing state response.  DEQ and DHHS offered a two-part explanation for withdrawal of the “do not drink” letters. The two points and some additional context for each:

  1. Levels of vanadium and Cr-6 in the wells do not violate state or federal drinking water rules.  Since there is no drinking water standard for either vanadium or Cr-6, this is true as far as it goes.  But the lack of a drinking water standard does not imply safety.  State and federal agencies have never relied solely on drinking water standards to make decisions about mitigation of health risks at contaminated sites  because drinking water standards do not cover many extremely hazardous substances.  That is why the process for asking DHHS to set interim state groundwater standards  exists. The question should be whether concentrations of vanadium and Cr-6  in the wells represent a significant additional health risk that can be minimized by either providing an alternative water source or remediating the groundwater.
  2. A number of large N.C. public water systems also do not meet the DHHS interim standards for vanadium and Cr-6.  The implication has been that the well water is as safe as water supplied to customers of public water systems.  In recent weeks, media and public interest organizations have looked more closely at the levels of vanadium and Cr-6 in public water systems as compared to the wells near coal ash facilities.   Although some N.C. water systems exceed the DHHS interim standards for vanadium or hexavalent chromium, most  water systems appear to meet the DHHS standards. A WRAL news story includes a chart showing both maximum and average concentrations of Cr-6 in public water systems across the state here.  DHHS set the interim standard for Cr-6 at 0.07 parts per billion, representing a 1:1 million cancer risk over a lifetime. WRAL’s analysis found that only about one-third of N.C.’s public water systems have average concentrations of Cr-6 exceeding 0.07 ppb.  More importantly, those public water systems come much closer to meeting the  DHHS standard than a number of the tested wells. The public water systems with the highest average concentrations of Cr-6 had concentrations less than half that of some wells tested near Buck Steam Station.

A proposal:  Issuance of health advisories and steps to provide alternative water supply to well owners should be based on comparative health risk.

The discussion of health advisories issued to well owners around coal ash sites has become focused on whether  public water systems meet the DHHS recommended standards for vanadium and Cr-6.  That is the wrong question. Many (most) North Carolina water systems meet the DHHS standards;  those that do not still provide water that is safer than water in a number of the tested wells. Environmental remediation programs exist in part to reduce  health risks created by a pollution incident.  To the extent well owners will be exposed to greater health risk as a result of groundwater contamination, the additional risk should be eliminated or minimized to the extent possible.  The question is not whether all public water systems meet the DHHS standards. The question is whether groundwater pollution has exposed these well owners to greater health risk — and one way to answer that question is to compare contaminant levels in the well water to the nearest public water system. If the public water system provides water with lower contaminant concentrations that translate into lower additional cancer risk and less risk of acute toxicity, the well owner should be provided with advice on the higher risk of drinking the well water.  And any person responsible for the contamination should be required to provide an alternative water source.

The Fate of the Coal Ash Management Commission

March 19, 2016. An earlier post discussed the N.C. Supreme Court decision in McCrory v. Berger. In brief, the court ruled that laws giving the General Assembly  power to appoint a majority of the members of the Coal Ash Management Commission (CAMC) and two other state commissions violated the N.C. Constitution’s provisions on separation of powers.  (See the earlier post for more detail and a link to the court’s opinion.)   The decision means the Coal Ash Management Commission cannot take any further action until the General Assembly amends the CAMC’s  appointment statute  to be consistent with the court’s decision and new appointments are made.  The most likely solution would be to give the Governor power to appoint a majority of the members;  the law could be amended as early as April of this year when the legislature convenes again.

Multiple news outlets have now reported that the McCrory administration has taken steps to effectively disband the Coal Ash Management Commission in advance of the April legislative session.  The Charlotte Observer’s Bruce Henderson reported that the Governor’s Office informed CAMC executive director  Natalie Birdwell  that the commission is “no longer a legal entity”.  The same Charlotte Observer article reports that the move by the Governor’s Office to shut down the commission’s work will dissolve contracts with independent experts retained by the commission to provide an outside review of  the Department of Environmental Quality’s (DEQ) proposed risk classification of coal ash ponds.

A few observations about the Governor’s decision to shut down the Coal Ash Management Commission:

The Governor’s action  wasn’t required by the decision in McCrory v. Berger.  The court did not find anything unconstitutional in the creation of a Coal Ash Management Commission to oversee decisions on closure of coal ash ponds and coal ash disposal.  The court  only held the method of appointing CAMC members  to be  unconstitutional.  The N.C. Supreme Court has found commission appointments statutes unconstitutional in the past and the solution has been to amend the statute to change the appointment scheme.  In 1982, the N.C. Supreme Court  ruled in Wallace v. Bone  that the General Assembly violated the N.C. Constitution’s separation of powers provisions by designating four seats on the N.C. Environmental Management Commission (EMC) for active members of the legislature.  In response, the General Assembly amended the EMC appointments statute to replace the legislators serving on the commission with citizens appointed by the General Assembly.  Nothing in the court’s decision suggested the EMC must be dissolved and that did not happen; nothing in the decision questioned the validity of past EMC actions.  The decision in McCrory v. Berger likewise  does not hold that actions already taken by the Coal Ash Management Commission — such as hiring staff and entering into contracts  for services —  are void or voidable.

Another separation of powers case still pending in  Wake County Superior Court challenges appointments to the Mining and Energy Commission  (MEC) and specifically asks the court to void the MEC’s past rulemaking actions.   But to date, no  court has ruled that the presence of unconstitutionally appointed members invalidates a commission’s  past acts. The MEC case directly  raises the issue for the first time and could lead to a decision affecting future separation of powers cases. In the meantime, the McCrory administration has chosen to go further than the decision in McCrory v. Berger  requires to  undo the existing organizational, staff and contractual arrangements supporting the Coal Ash Management Commission.  (It isn’t clear whether the McCrory administration’s position on the CAMC  would carry over to support for the plaintiffs seeking to invalidate the Mining and Energy Commission’s past rulemaking actions on similar grounds.)

The General Assembly’s next move may depend on continued legislative interest in providing oversight for DEQ’s coal ash decision making.  In 2014, the General Assembly created the Coal Ash Management Commission to provide independent oversight for DEQ decisions related to coal ash disposal and closure of existing coal ash ponds. At the time, legislators expressed concern about relying entirely on DEQ’s judgment because of controversy surrounding early McCrory administration decisions on coal ash enforcement and a pending federal investigation of relationships between state regulators and Duke Energy. The question is whether those concerns still exist and,  if so,  how the legislature will react to the Governor’s unilateral move to disable the commission. The General Assembly can resolve the separation of powers issue and revive the CAMC by simply changing the CAMC appointment provision to  allow the Governor to make a majority of the appointments.

By forcing the Coal Ash Management Commission to start over, the Governor’s action may make it impossible for the commission to meet its first critical deadline –risk classification of coal ash ponds. The Coal Ash Management Act gave the CAMC final authority to determine the appropriate risk classification of each coal ash pond; the risk classification will determine how quickly the ash pond must be closed and whether the coal ash must be excavated and disposed of in a lined landfill. Only coal ash ponds classified as Low Risk can be closed out by dewatering and capping the ash in place.  Under the law, the CAMC must make a final decision on risk classification of a coal ash pond within 60 days after DEQ sends the commission a proposed risk classification. If the commission does not act within 60 days, DEQ’s proposed risk classification becomes the final classification by default.

Timelines in the law will  require DEQ to submit proposed classifications for all of the coal ash ponds to the  Coal Ash Management Commission by mid-May.  Some proposed classifications may be ready sooner. Even if  new appointments to the CAMC can be made under an amended appointments statute by that time, the Governor’s action means the newly appointed commission will have to reassemble a staff, re-engage consultants and revive basic  operating systems to function.  Unless the General Assembly extends the time for the CAMC to review and act on proposed risk classifications,  the DEQ proposed classifications may become final by default before the commission can act.

After the ash ponds have been classified, the next major set of CAMC decisions under the Coal Ash Management Act  involve approval of final closure plans for each coal ash pond.  The closure plans determine whether coal ash will be excavated and removed from the site or capped in place and  includes approval of technical specifications for final disposal of coal ash. The closure plan may also involve approval of a beneficial reuse project as an alternative to landfill disposal. The law directs the CAMC to make the final decision on  approving a final closure plan based on a recommendation from DEQ.  The law again gives the CAMC a limited time to act on each recommended closure plan; if the commission does not act within the time allowed, DEQ’s recommended closure plan becomes final by default.

If the General Assembly does not intervene to protect the Coal Ash Management Commission’s ability to carry out its responsibilities, the practical result could be a significant change in the way the Coal Ash Management Act works. Delaying the commission’s ability to act in time to affect DEQ’s decisions on closure of coal ash ponds will have the practical effect of ceding all  decision-making back to DEQ.  The original concept of providing  independent oversight of those decisions through the Coal Ash Management Commission will be lost.

To Drink or Not to Drink: A Change in Advice for Well Owners


March 17, 2016. In 2015,  the N.C. Division of Public Health (Department of Health and Human Services) sent letters advising the owners of  369  wells located near coal ash ponds not to drink their well water because of elevated levels of vanadium and chromium-6.  Last week, the Division of Public Health sent letters to those same well owners to withdraw the “do not drink” advisory.  Some questions and answers on the conflicting advice below.

What are vanadium and chromium-6 (Cr-6)? Both elements occur naturally in the environment and can be found in coal ash. Both may  be concentrated in the air or in groundwater as a result of industrial activities.  Inhalation of Cr-6 (or hexavalent chromium) has been associated with increased risk of lung cancer. In 2010,  the U.S. Environmental Protection Agency  began a new health study to determine whether ingestion of  Cr-6  in drinking water increases other types of cancer risk. The Erin Brokovitch story of hexavalent chromium contamination in the town of Hinkley, California raised public awareness of Cr-6 as a public health issue. In Hinkley, Pacific Gas & Electric  had used Cr-6 as an additive in cooling water for a natural gas compression station. The  Cr-6 percolated into groundwater from unlined ponds used to store the cooling water, contaminating the town’s drinking water supply. (Levels of Cr-6 in  Hinkley’s groundwater were exponentially higher than concentrations found  in North Carolina  wells.)

Are there drinking water standards for vanadium and  Cr-6? There is no federal drinking water standard for vanadium.   The U.S. Environmental Protection Agency has adopted a drinking water standard for total chromium of 100 parts per billion (ppb);  the standard covers combined concentrations of chromium-3 (a nutritional element found in plant material) and chromium-6.  Water systems required to meet federal Safe Drinking Water Act standards monitor  total chromium levels, but not necessarily  Cr-6. Nationally, only the State of California  has adopted a specific drinking water standard for Cr-6. In 2014, after  years of  study prompted by the Hinkley contamination,  California adopted a standard of 10 parts per billion for Cr-6 in drinking water — 1/10th the concentration allowed under the federal drinking water standard for total chromium.

How are  N.C. groundwater standards different from  federal drinking water standards?  In part,  the two sets of standards serve different purposes. Drinking water standards adopted by U.S. EPA under the Safe Drinking Water Act only apply to the treated water that public water systems  provide to their customers.  Under the law, “public water system” means any system providing water to 15 or  more connections or to 25 or more people whether the system is  operated by a local government or a for-profit water utility.  Federal drinking water standards do not apply to privately owned water supply wells serving individual homes or businesses.

N.C.’s  groundwater standards are used to identify unsafe levels of groundwater contamination;  set goals for groundwater remediation; and advise well owners on use of water from affected wells.  Most N.C. groundwater standards track the federal drinking water standard for the same contaminant, but in a few cases the state has adopted a more stringent groundwater standard or has adopted a groundwater standard for a contaminant that has no corresponding drinking water standard.  Leading up to the well testing around coal ash ponds, N.C. had no groundwater standard for vanadium and no specific standard for Cr-6. although the state had a groundwater standard of 10 ppb for total chromium (more stringent that the 100 ppb drinking water standard for total chromium.)

How does N.C. set groundwater standards?  The N.C. Environmental Management Commission has adopted state groundwater standards as rules. Since existing groundwater standards may not address every potential contaminant,  the rules also create a process for developing  a temporary  standard  — an Interim Maximum Allowable Concentration or “IMAC” —  to address an unregulated contaminant.  Epidemiologists in the N.C. Division of Public Health generally develop a recommended IMAC based on review of human health effects such as toxicity and increased cancer risk.

Why did the  Division of Public Health send “do not drink” letters in 2015 based on  vanadium and chromium-6?   Since no state groundwater standard or federal drinking water standards existed for vanadium and  Cr-6, DEQ  asked the Division of Public Health to develop interim groundwater standards (the IMACs described above)  to be used in assessing wells around the coal ash ponds. Division of Public Health calculated a standard of 0.07 ppb for Cr-6 and 0.3 ppb for vanadium.  In each case, the deciding factor was the concentration associated with an  incremental increase in cancer risk. The table below shows the IMAC standard compared to the federal Safe Drinking Water Act standard and the N.C. groundwater standard.

Contaminant Fed. Drinking Water Standard N.C. Groundwater Standard IMAC
Vandadium No standard No standard 0.3 ppb
C.hromium-6 None –Total Cr 100 ppb None – Total Cr 10 ppb 0.07 ppb

Why did Division of Public Health withdraw the “do not drink” letters?  None of the  well owners who received “do not drink” letters  based solely on the vanadium and Cr-6 IMAC standards have well water that would violate Safe Drinking Water Act standards for a public water system.  DEQ has reported that 70% of public water systems in the U.S. exceed the IMAC standards set by Division of Public Health, including several large public water systems in North Carolina. (The information, provided in a report to the legislature’s Environmental Review Commission,  did not indicate how many of those systems exceeded the IMAC standard for vanadium versus Cr-6. You can find the entire DEQ presentation to the Commission  here.)

The gap between the IMAC standards and Safe Drinking Water Act standards meant that well  owners were being advised not to drink water that meets current drinking water standards and could lawfully be provided to customers of a  public water system.   As a practical matter, that also  means the well owners may not have access to an alternative water supply of any better quality  since  the nearest public water system also may not meet the IMAC standards.

None of this  means the analysis done by the Division of Public Health in developing the IMACs was wrong. Environmental and public health standards change with additional knowledge; the fact that the U.S. Environmental Protection has undertaken a new health study of Cr-6 in particular suggests some question about the adequacy of the  federal drinking water standard based solely on total chromium.  The standards adopted by EPA and the states also sometimes involve compromise between the most protective health-based standard and the practicalities (and cost) of meeting that standard.

Making Sense of a Coal Ash Penalty

March 8, 2016.   The  civil penalty for  groundwater violations around Duke Energy’s Sutton Plant in New Hanover County has taken several unprecedented  twists and turns.  This post looks at the  $25 million civil penalty for groundwater contamination at the Sutton Plant that became a $7 million civil penalty for groundwater violations at all 14 coal ash sites in the state and then a $7 million civil penalty just for the Sutton violations.

Groundwater Enforcement 101.   The Department of Environmental Quality (DEQ) can order remediation of groundwater contamination and assess civil penalties for violation of the state’s  health-based groundwater standards.  Some contaminants (like arsenic) occur naturally; if natural  “background” levels of the contaminant exceed the state standard, the background level becomes the standard. State rules allow for some exceedence of  groundwater standards within the footprint of a waste disposal facility, but set a “compliance boundary” around the facility where the  standards must be met.  Coal ash ponds permitted before 1983 must meet groundwater standards within 500 feet of the ash pond; those  permitted later have a  250-foot compliance boundary.

To assess a civil penalty for coal ash contamination,  DEQ  must show: 1. Contaminants in the groundwater exceed the state standard (which may require determining background levels if the contaminant occurs naturally); 2. Exceedences occur at or beyond the compliance boundary; and 3. Coal ash  caused or contributed to the contamination. State law caps the maximum penalty for a single groundwater violation  at  $25,000.  In setting the specific penalty amount within the cap, DEQ considers a number of penalty factors including the extent of environmental harm;  whether the violation was intentional; and any compliance costs the violator may have avoided.  Since  DEQ can assess daily penalties for continuing violations, the total civil penalty may exceed $25,000  if a violation continues over a period of time.

Now a Little Coal Ash History. The state originally permitted  coal ash ponds as wastewater treatment systems. The ponds receive, treat and discharge  process wastewater and sometimes stormwater.  A coal ash pond functions like  the  settling basins used  in other wastewater treatment systems; the coal ash settles out of the  wastewater slurry,  reducing pollutants in the top layer of pond water.  The utility then discharges wastewater  from the top of the pond to a river, stream or lake under a  Clean Water Act Permit —  the  National Pollutant Discharge Elimination System (or “NPDES”)  permit.  NPDES permits  protect surface water from pollution; since groundwater was never the focus, the  permits  historically required very limited groundwater monitoring around coal ash ponds.

In response to pressure for national coal ash disposal standards,  companies operating coal-fired power plants began a program of voluntary groundwater monitoring in 2006 and provided results to the state.   (As a voluntary program, the power companies alone decided what contaminants to monitor for and where to put monitoring wells.) By  2009,  state water quality officials had become so concerned about the utilities’ groundwater data  that the Division of Water Quality  (DWQ) moved  to put stronger  groundwater monitoring conditions on NPDES permits for coal ash ponds as the permits came up for renewal.  The new permit conditions made monitoring for specific contaminants mandatory and required  DWQ approval of the monitoring plan so monitoring wells would be appropriately placed to identify violations at the compliance boundary.

As DWQ began adding monitoring conditions to permits,  the senior manager in DWQ’s groundwater protection program issued a  memo  explaining how the program would take enforcement actions based on the new groundwater monitoring data. The memo applied to any facility that had operated for a long period of time before being required to do groundwater monitoring.  It  implicitly recognizes that imposing groundwater monitoring conditions  after many years of facility operation may result in immediate detection of groundwater exceedences — giving the operator little opportunity to prevent  a violation. The memo did not completely foreclose  the possibility of a civil penalty for groundwater violations at these facilities, but indicated that  DWQ  may not issue a Notice of Violation (the first step to a penalty) as long as the operator responded to state requests for assessment and clean up of any contamination.

The Sutton Plant Civil Penalty. The Sutton Plant’s wastewater system, consisting of two coal ash ponds built in 1971 and 1984, has had an NPDES  permit since 1977.    For most  of the system’s history,  the  permit only required monitoring for a  limited number of  groundwater quality parameters —  groundwater level, pH, Arsenic, Iron, Total Dissolved Solids, Chlorides and Selenium.   When DWQ renewed the Sutton Plant’s NPDES permit in 2011,  the new permit required monitoring of  additional contaminants (including boron, thallium, and manganese) under a state-approved monitoring plan designed to detect exceedences at the compliance boundary.  In March 2015,  DEQ assessed a record $25 million civil penalty for groundwater violations around the Sutton Plant. The civil penalty  covered a number of different groundwater standard violations over varying periods of time. The earliest violations identified in the assessment  document  dated back to 2009 (for boron) and 2010 (for thallium).    Most of the violations  (for iron, arsenic, selenium, manganese and total dissolved solids)  dated from 2012 or 2013. To reach the  $25 million assessment, DEQ  assessed either $1,000 or $5,000  per day (from initial detection to the assessment date) for each contaminant that exceeded state groundwater standards.

A Big — and Short-Lived — Settlement. Duke Energy  appealed the penalty and several months later  DEQ agreed to a settlement reducing the civil penalty to $7 million.  The most notable thing about the September 2015 settlement agreement was not the penalty reduction, but the fact that the settlement would have resolved all groundwater violations (known or discovered in the future) around all 14 Duke Energy coal ash impoundment sites in the state.  Southern Environmental Law Center (SELC),  on behalf of several environmental organizations, challenged the settlement agreement in court. SELC’s appeal did not contest  the penalty reduction for the Sutton violations, but argued  Administrative Law Judge Phil Berger, Jr. had no authority to approve a settlement agreement affecting issues beyond the Sutton civil penalty.  SELC particularly complained that the settlement agreement affected other coal ash enforcement cases without notice to the parties in those cases — including organizations represented by SELC.  Those enforcement cases dealt with specific actions required of Duke Energy to  address groundwater contamination around coal ash ponds at multiple sites.

Key provisions in the September 2015  DEQ-Duke Energy   settlement agreement

♦ Duke Energy agreed to pay a civil penalty  of $7 million and accelerate groundwater remediation at the Sutton, Asheville, Belews Creek and H.F. Lee plants. The settlement agreement did not set a timeline for the accelerated remediation.

♦ DEQ agreed to dismiss groundwater enforcement cases already pending in superior court related to the Sutton Plant and the Asheville Steam Station. See the SELC appeal of the settlement agreement for more on the relationship between the settlement agreement and pending enforcement cases.

♦ DEQ agreed not to issue Notices of Violation,  notices requiring assessment or remediation, civil penalty assessments or to  take any other enforcement actions against Duke Energy based on groundwater conditions “at any of the Duke Energy Sites” as long as Duke Energy complied  with requirements of the Coal Ash Management Act related to groundwater assessment, remediation and closure of the coal ash basins. Under the agreement, the “Duke Energy Sites” included all 14 coal ash sites across the state.

♦ DEQ agreed not to change groundwater monitoring conditions in existing or future NPDES permits for the coal ash ponds unless required by  court order;  a federal or state law; a rule; or in response to an immediate threat to public health.  Under the agreement, an “immediate threat to public health” had to involve something more than violation of a  health-based groundwater standard.  In effect, the settlement prevented DEQ from using its permitting authority to requiring monitoring for additional contaminants.

♦ DEQ agreed not to use groundwater monitoring data collected under either the NPDES permit conditions or under provisions in the Coal Ash Management Act for any purpose other than classification and closure of the coal ash ponds. In other words, DEQ agreed not to use groundwater monitoring data for enforcement purposes.

Reversing Direction.  In February, Superior Court Judge Paul Ridgeway held a hearing  on SELC’s objections to the Sutton settlement agreement.  Persuaded that the settlement agreement  affected the other enforcement  cases already before him,  Judge Ridgeway indicated an intent to take jurisdiction over the settlement agreement unless Judge Berger  narrowed the scope of his order in the Sutton civil penalty case.   Charlotte Business Journal has  reported  that Judge Berger later issued a revised order at the request of DEQ and Duke Energy.   According to the article, the settlement agreement between Duke Energy and DEQ did not change, but the  order  approving the settlement has been expressly limited to the Sutton civil penalty case.  (I have not been able to find the  revised order  on either the Office of Administrative Hearings  or DEQ website.)  As a result, the $7 million civil penalty now covers only  groundwater violations at the Sutton Plant.

Signs and Portents? DEQ made several unusual decisions in assessing and then settling the Sutton civil penalty case:

The  original $25 million civil penalty for the Sutton groundwater violations broke from past enforcement practices.  State programs  rarely impose daily penalties for newly discovered groundwater violations. Daily penalties are usually reserved for willful, intentional violations and for violators who  fail to quickly address contamination once it has been detected.  DEQ didn’t cite either of those aggravating factors in assessing the original $25 million Sutton penalty.  To reach the $25 million total, DEQ assessed a penalty of either $1,000 or $5,000 a day (depending on the contaminant) from the date of detection to the date of assessment.  (The contamination persists today and will until coal ash on the site has been removed, which everyone understands will require more time.)  The question is whether DEQ’s very aggressive penalty for the Sutton violations indicates a change in enforcement policy that may affect  other groundwater cases.

There doesn’t seem to be any precedent for DEQ agreeing –as it did in the original Sutton settlement — to limit its own permitting and enforcement authority to settle a civil penalty case.  State agencies often settle  civil penalty cases for a lower penalty amount. In the Sutton settlement, DEQ  also agreed not to change groundwater monitoring conditions on Duke Energy’s NPDES permits except in very narrow circumstances. Most of those circumstances required  some outside force  — federal law, a court order — to compel the change. In effect, DEQ  gave up the ability to use its permitting authority to  require monitoring for additional contaminants. The department also agreed not to issue Notices of Regulatory Requirements (orders for assessment and remediation of contamination)  or take  new enforcement actions against Duke Energy based on coal ash contamination at the 14 sites in N.C. The settlement agreement was conditioned on Duke Energy complying with provisions in the Coal Ash Management Act on  groundwater assessment and corrective action, but those requirements assume application of state groundwater regulations. It isn’t clear why DEQ would agree to give up use of normal groundwater enforcement tools like the Notice of Regulatory Requirements. Limits on DEQ use of groundwater data for enforcement purposes could have affected the state’s ability to address  groundwater problems discovered later.

What Does it Mean?  Assuming Judge Berger’s revised order has set much of the Sutton settlement agreement aside, the Sutton case is mostly  interesting as an insight into DEQ’s enforcement decision-making. It is hard to identify a consistent principle that would explain both  DEQ’s very aggressive use of civil penalty power in the first instance and DEQ’s willingness to  give up significant permitting and enforcement authority  to settle the  case. The question is whether the Sutton decisions  were peculiar to it or have broader implications.

Risk-Ranking Coal Ash Impoundments

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

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

(1)        Any hazards to public health, safety, or welfare resulting from the impoundment.
(2)        The structural condition and hazard potential of the impoundment.
(3)        The proximity of surface waters to the impoundment and whether any surface waters are contaminated or threatened by contamination as a result of the impoundment.
(4)        Information concerning the horizontal and vertical extent of soil and groundwater contamination for all contaminants confirmed to be present in groundwater in exceedance of groundwater quality standards and all significant factors affecting contaminant transport.
(5)        The location and nature of all receptors and significant exposure pathways.
(6)        The geological and hydrogeological features influencing the movement and chemical and physical character of the contaminants.
(7)        The amount and characteristics of coal combustion residuals in the impoundment.
(8)        Whether the impoundment is located within an area subject to a 100‑year flood.
(9)        Any other factor the Department deems relevant to establishment of risk.

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

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

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

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

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

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

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

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

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

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

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

Appointments to Environment/Energy Commissions Violated N.C. Constitution

February 1, 2016. On January 29, 2016, the N.C. Supreme Court issued a decision in McCrory v. Berger — a lawsuit filed  by Governor Pat McCrory  to challenge the constitutionality of two recent state laws that created new executive branch commissions dominated by legislative appointees. The ruling in the Governor’s favor means the three commissions cannot act until the General Assembly changes the statutes governing commission appointments.

Background. The lawsuit concerned appointments to the Coal Ash Management Commission,  the Oil and Gas Commission,  and the Mining Commission. The Coal Ash Management Act of 2014  gave the Coal Ash Management Commission authority to (among other things) make final decisions on closure of coal ash impoundments.  The 2014 Energy Modernization Act eliminated the  Mining and Energy Commission (created in 2012) and divided its regulatory responsibilities  between a new Oil and Gas Commission and a reconstituted Mining Commission. In each case, the legislature gave itself the power to appoint a majority of the commission members.

The lawsuit filed by Gov. McCrory argued the legislative appointments violated the N.C. Constitution. In March of 2015, a special panel of three superior court judges ruled in the Governor’s favor, concluding that the N.C. Constitution bars legislative appointments to commissions that have executive authority. “Executive authority” generally means authority to implement existing laws as distinct from legislative authority to adopt new laws.   See an earlier post  on the superior court decision.

N.C. Supreme Court opinion. The N.C. Supreme Court opinion disagrees with the superior court decision on one key point — the Supreme Court ruled that the N.C. Constitution does not entirely bar the legislature from making appointments to executive branch commissions.  The court interpreted the Constitution’s “appointments clause” to allow the legislature to make appointments to statutorily-created offices including commission seats. The court ruled, however, that  legislative appointments to the Coal Ash Management Commission,  Oil and Gas Commission  and Mining Commission violated the separation of powers clause in Art. I, § 6 of the N.C. Constitution,  which requires that  “[t]he legislative, executive, and supreme judicial powers of the State government shall be forever separate and distinct from each other.”

The court concluded that the appointments scheme for the three executive branch  commissions interfered with the Governor’s constitutional duty to insure that state laws are faithfully executed:

In light of the final executive authority that these three commissions possess, the Governor must have enough control over them to perform his constitutional duty. The degree of control that the Governor has over the three commissions depends on his ability to appoint the commissioners, to supervise their day-to-day activities, and to remove them from office.

The court pointed to three factors that combined to create an unconstitutional legislative  interference with the Governor’s executive powers and responsibilities:

1. Each commission has authority to take final executive action  (i.e., the Coal Ash Management Commission has the final authority to prioritize coal ash ponds for closure and approve final closure plans);

2. The legislature appointed a majority of the members to each commission; and

3. The legislature limited the Governor’s ability to remove commission members by allowing removal only for cause (such as misconduct).

The implication of the decision is that a separation of powers violation has occurred when all three conditions exist.  The court included a footnote specifically suggesting that the outcome may be different with respect to a body like the Rules Review Commission that exercises a different kind of authority.

The court refused to address another separation of powers issue raised in the case. The Governor  argued that the legislature also violated separation of powers  by statutorily directing the Coal Ash Management Commission (CAMC)  to operate “independently” of the executive department where it is housed.  (Legislation creating the CAMC placed the commission under the Department of Public Safety.) The Supreme Court held the issue had been mooted by the portion of its decision ruling appointments to the CAMC unconstitutional.  The issue could come up again if the  legislature changes the appointments statute in response to the court’s decision,  but leaves the “independence” provision  in place.

Implications.  The three commissions directly named in the case cannot act until the legislature changes the unconstitutional appointment provisions and new appointments are made.  The Coal Ash Management Commission (CAMC) began meeting in 2014, but has not met since the March 2015 superior court decision that first ruled appointments to the CAMC unconstitutional. In the meantime, other pieces of the Coal Ash Management Act have moved  forward; a newly appointed CAMC will need to catch up.  The Oil and Gas Commission took over implementation of state laws on oil and gas development from the Mining and Energy Commission, so the court’s ruling could delay decisions related to hydraulic fracturing.

Two other pending lawsuits  raising similar separation of powers issues may be affected by the McCrory v. Berger decision. The N.C. State Board of Education sued to challenge Rules Review Commission authority over rules adopted by the Board.  The Board of Education raises several constitutional issues, including a separation of powers violation based on the fact that all Rules Review Commission members are legislative appointees.   The McCrory v. Berger footnote about the Rules Review Commission seems to caution against assuming the court would also find  RRC  appointments to violate separation of powers.   The footnote suggests that the Rules Review Commission’s specific function — to review and object to rules adopted by executive branch agencies — may put it in a different category than the commissions addressed in McCrory v. Berger.

Another pending separation of powers case  in Wake County Superior Court challenges the constitutionality of appointments to the Mining and Energy Commission (MEC). The MEC  seems to fit the McCrory v. Berger template: the commission had authority to take executive actions; the legislature made a majority of commission appointments; and the Governor only had the power to remove a commission member for cause. But the case also presents an additional question: Are actions taken by an unconstitutionally appointed commission void? Over a two-year period, the MEC developed and adopted state rules for hydraulic fracturing.  Plaintiffs in the MEC case (Haw River Assembly and a Lee County property owner) have asked the Wake County judge to rule appointments to the MEC unconstitutional and  void the rulemaking actions already taken by the commission.  The superior court judge had delayed hearing the MEC case until the N.C. Supreme Court issued a decision in McCrory v. Berger. While the Supreme Court decision now provides a roadmap for addressing the separation of powers issue, it doesn’t provide any guidance on how a separation of powers violation affects past commission actions.