Tag Archives: Coal Ash

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.

The NC Senate: Budget 2015

June 18, 2015.  Yesterday, the  N.C. Senate  took a first vote to approve a Senate version of House Bill 97  ( 2015 Appropriations Act).   The Senate received H 97 from the House of Representatives on May 22. The Senate  released its  alternative draft of the appropriations bill three days ago and quickly moved H 97  through Senate appropriations committees.  The Senate takes  a very different approach to funding state government than the House, but the Senate version of H 97 also contains many more “special provisions” — changes to existing law that go beyond finance and appropriations.  Some of the more significant environmental provisions in the Senate budget bill  (not by any means a complete list) below.

First, the Senate revisits the organization of state natural resource programs.  Sec. 14.30 of the Senate bill would combine  DENR’s natural resource programs (Division of Parks and Recreation, State Parks, Aquariums, the N.C. Zoo and the Museum of Natural Sciences) with cultural resource programs (such as the Museum of History and state historic sites)  in a new Department of Natural and Cultural Resources.  DENR would become the Department of Environmental Quality. Sec. 14.31  requires the two departments to study  whether  the Albemarle-Pamlico National Estuary Program,  state Coastal Reserves, the Office of Land and Water Stewardship,  the Office of Environmental Education and Public Affairs, the Division of Marine Fisheries and the Wildlife Resources Commission should also be moved to the new Department of Natural and Cultural Resources.

Other changes proposed in the Senate bill by subject (parenthetical descriptions are mine) :

COAL ASH

Sec. 29.18 (Beneficial use of coal ash) requires the Utilities Commission to report to several legislative committees by January 2016 on “the incremental cost incentives related to coal combustion residuals surface impoundment for investor-owned public utilities” including:

(1) Utilities Commission policy on  incremental cost recovery.

(2) The impact of the current policy on incremental cost recovery on utility customers’ rates.

(3) Possible changes to the current policy on incremental cost  recovery  that would promote reprocessing and other technologies that allow the reuse of coal combustion residuals stored in surface impoundments for concrete and other beneficial end uses.

Although a bit opaque, the Senate seems interested in the possibility of allowing electric utilities  to recover (through charges to consumers) the costs associated with making coal ash in surface impoundments available  for beneficial use.  Duke Energy has previously told legislators  that much of the coal ash in North Carolina impoundments  would require additional processing to be usable in concrete manufacturing.

COASTAL ISSUES

Sec. 14.6 (Use of sandbags for temporary erosion control) amends standards installation of sandbags for  erosion control on ocean and inlet shorelines. State rules now allow installation of sandbags only in response to erosion that imminently threatens a structure. The Senate bill allows a property owner to install sandbags to align with existing sandbag structures  on adjacent properties without showing an imminent erosion threat on their own property.

Sec. 14.10I (Strategies to address beach erosion) requires the Division of Coastal Management to study and develop a strategy “preventing, mitigating and remediating the effects of beach erosion”.

ENERGY 

Sec 14.29  (Federal energy grants) prohibits DENR from applying for grants from two federal programs – the State Energy Program Competitive Grant Program and the Clean Energy and Manufacturing Grant Program.

FISHERIES

Sec. 14.8, Sec. 14.10A and Sec. 14.10C  (measures to increase shellfish restoration and cultivation)

Sec. 14.8  directs the Division of Marine Fisheries to work with commercial fishermen,  aquaculture operations, and federal agencies to open additional areas in Core Sound to shellfish cultivation leasing.

Sec. 14.10A  directs DMF and the Division of Coastal Management to cooperate in  development of a new, expedited  CAMA permitting process for oyster restoration projects. The provision  also  authorizes DMF to  issue scientific and educational activity permits to nonprofit conservation organizations engaged in oyster restoration.

Sec. 14.10C Amends G.S. 113-202 to allow a lease for use of the water bottom to also cover fish cultivation or harvest devices on or within 18″ of the bottom. (Devices or structures not resting on the bottom or extending more than 18″ above the bottom will continue to require a water column lease.)

Sec. 14.10F (Joint fisheries enforcement authority) repeals the Division of Marine Fisheries authority to enter into a joint enforcement agreement with the National Marine Fisheries Service. The joint agreement allows DMF  to receive federal funding to enforce federal fisheries regulations in state waters.

SPECIAL FUNDS

Sec. 14.16  continues a recent trend of eliminating “special funds” that hold fees or other revenue dedicated for a specific purpose outside the state budget’s General Fund. The Senate bill eliminates special funds for mining fees,  stormwater permit fees, and UST soil permitting fees and moves the fee revenue into the General Fund.

STREAM AND WETLAND MITIGATION

Sec. 14.23 (Limiting the state’s role in providing stream, wetland, riparian buffer and nutrient mitigation)  requires DENR’s Division of Mitigation Services to stop accepting fees in lieu of mitigation in the Neuse, Tar-Pamlico and Cape Fear River basins within 30 months.  The provision then allows DENR (with the Environmental Management Commission’s agreement) to also eliminate the state in-lieu fee programs in all other river basins after June 30, 2018.

DENR’s  in-lieu fee program allows a developer to pay  a fee for mitigation  required as a condition of state and federal development permits. DENR  then contracts with private mitigation providers for the necessary mitigation. Payment of the fee transfers responsibility for providing the mitigation from the developer to DENR. Under a Memorandum of Agreement with the U.S. Army Corps of Engineers, the state’s in-lieu fee program can be used to satisfy stream and wetland mitigation required as a condition of federal Clean Water Act permits.

Eliminating  the State in-lieu fee program seems to eliminate the fee-for-mitigation approach as an option for developers. The burden would be back on the developer to find acceptable mitigation through a private mitigation bank or to plan and manage an individual mitigation project.  The change may slow some development projects that can now move  ahead based on the Corps of Engineers’ agreement to accept payments to the state in-lieu fee program as satisfying  federal mitigation requirements.

UNDERGROUND STORAGE TANKS

Sec. 14.16A (Elimination of the Noncommercial UST Trust Fund) phases out the state’s Noncommercial UST Trust Fund which reimburses property owners for the cost of cleaning up contamination from leaking underground petroleum storage tanks. The Noncommercial UST Trust Fund has  benefitted homeowners with soil and groundwater  contamination caused by home heating oil tanks and property owners  with contamination caused by USTs  used to store fuel for personal use — as on a farm. Under the Senate provision, the Noncommercial Fund could only be used for leaks reported before August 1, 2015 and claims for reimbursement filed by July 1, 2016. The Noncommercial Fund  would be eliminated for any petroleum releases  reported or claims made after those dates.

WASTE MANAGEMENT

Sec. 14.20 (Life of site landfill permits) amends G.S. 130A-294 to replace the current  5 or 10 year landfill permits with a “life of site” permit to cover landfill operations from opening to final closure. The provision would require permit review every five years.

Sec. 14.21 (Study of local government authority over waste collection and disposal services) directs the legislature’s Environmental Review Commission to study local authority over solid waste management including local fees; ordinances on waste collection and processing; cost to local government to provide solid waste services; and efficiencies or cost reductions that might be realized through privatization.   Solid waste collection and disposal services are entirely financed and provided by local governments;  many already contract with private entities for waste collection or landfill management.  It isn’t clear what the study might lead to since the legislature doesn’t have a role in  providing or financing local waste management services.

Sec. 14.22  (Privatizing landfill remediation) directs DENR to privatize the assessment and remediation of at least 10 high priority pre-1983 landfill sites. For several years, DENR has received a percentage of the state’s solid waste disposal tax  to fund assessment and cleanup of  contamination associated with landfills and dumps that closed rather than meet environmental standards that went into effect in 1983. Some legislators have expressed concern about the slow pace of remediation (and the resulting high fund balance). Note: Most state-funded remediation programs have a slow ramp-up in spending since it takes time to set up a new program and assess the sites.

WATER QUALITY

Sec. 4.5  (Nutrient management) earmarks $4.5 million from the Clean Water Management Trust Fund for a  DENR study of “in situ strategies beyond traditional watershed controls” to mitigate water quality impairment. The provision specifically mentions impairment by “aquatic flora, sediment and nutrients”, suggesting the study may be a continuation of the legislature’s effort to replace watershed-based nutrient management programs with technological solutions.

In 2013, the General Assembly suspended implementation of watershed-based nutrient management rules in the Jordan Lake watershed and funded a pilot project to test the use of aerators to reduce the impacts of excess nutrients on water quality. Sec. 14.5 allows extension of  the  pilot project contracts for another two years and delays implementation of the Jordan Lake watershed rules an additional two years or one year beyond completion of the pilot project, whichever is later.

Sec. 14.25 (State Assumption of permitting under Section 404 of the Clean Water Act) directs DENR to  hire a consultant to plan and prepare a state application  to assume the  federal permitting program under Section 404 of the Clean Water Act.   Sec. 404 requires a permit to fill waters or wetlands that fall under Clean Water Act jurisdiction. The U.S. Corps of Engineers issues Sec. 404 permits,  but a state can assume Sec. 404  permitting authority under certain conditions.  The U.S. Environmental Protection Agency oversees  404 permitting and would have to approve a state program. In a state that assumes Sec. 404 permitting, EPA retains authority to review  permit applications; a permit cannot be issued over an EPA objection.

Although several states have explored the possibility of assuming Sec. 404 permitting authority, only Michigan and  New Jersey have approved Sec. 404 programs. Individual states have reached different conclusions about the costs and benefits for a number of reasons. One may be cost — there are no federal grant funds to support a state 404 permitting program.   The Clean Water Act also prohibits state assumption of permitting in  tidal waters; water bodies used for interstate and foreign commerce;  and wetlands adjacent to both categories of waters. The U.S. Army Corps of Engineers would continue to have permitting authority in those waters and wetlands.

Sec. 14.26 (Transfer Sedimentation Act implementation to the EMC) eliminates the Sedimentation Pollution Control Commission and transfers responsibility for implementation of the Sedimentation Act to the Environmental Management Commission.

Once the Senate takes a final vote on House Bill 97, the bill goes to a conference committee to resolve the (considerable) differences between Senate and  House versions of the bill.  Few of the environmental provisions described above appear in the House version of the bill — although that doesn’t necessarily mean all of the Senate additions will be opposed by the House in conference negotiations.

N.C. General Assembly: 2015 Environmental Bills

April 15, 2015.   The final bill introduction deadline  fell  yesterday for bills that don’t affect finance or appropriations,  so it is a good time  to look at the environmental bills  introduced and awaiting action. The General Assembly can also amend environmental laws  in the budget bill or by completely rewriting a bill on an entirely different subject, but with that warning in mind:

House Bill 795 SEPA Reform  would  greatly  limit the number of  projects requiring an  environmental impact statement (EIS) under the state’s Environmental Policy Act (SEPA).   Adopted in 1971, SEPA requires an  EIS  for projects that potentially have a significant environmental impact, need a state approval (such as a permit), and involve either the use of public funds or use of public lands.  Unlike its federal counterpart (the National Environmental Policy Act  or “NEPA”), the state law  has never applied to  privately funded development projects no matter how significant the environmental impact. To require an EIS under the state law, there must be public investment ( which could mean either state or local government funding) or use of public land.  Typical projects requiring an EIS in the past would be  a new wastewater treatment plant; a county landfill; a major development project on state-owned submerged lands; or activities on state parkland.

House Bill 795 proposes to  limit SEPA review  to projects involving $20 million or more in public funding or land-disturbing activity affecting 20 acres or more of public land.   It is difficult to know what percentage of projects required to do an EIS in the past would avoid  SEPA review under the amended law, but it is reasonable to assume that many public  projects fall below the $20 million threshold. Controversial proposals for use of state parks and tidelands could also avoid SEPA review because — whatever the other impacts of the project —  an EIS would only be required for land-disturbing activity that permanently alters the landscape and affects 20 acres or more. For projects that exceed the new size and funding thresholds, House Bill 795 provides additional  SEPA exemptions  for projects receiving  certain types of state approvals. Some of the approvals listed in the bill, such as a certificate of convenience and necessity for a  public utility infrastructure project,  do not  involve  any environmental review.  (That particular exemption also doesn’t seem to serve a purpose;   the “public utilities” that need a certificate of convenience and necessity are by definition not owned or operated by a governmental  entity and  don’t involve public funds.)

For projects that would still require an EIS under the amended law, the bill also limits the scope of the EIS.  Under the bill,  the EIS would only describe direct project impacts — eliminating consideration of indirect and cumulative impacts.

Projects  exempted from the EIS requirement would still need  any necessary environmental permits, but permit reviews tend to be more narrow than an EIS. The EIS looks beyond one set of permitting standards to evaluate the environmental impacts of the project as a whole — which can include consideration of noise, traffic, endangered species, historic sites, and effects on minority and low income communities as well as natural resource impacts. Projects that require a federal permit could still trigger NEPA review; what the state may lose is an opportunity for the same comprehensive review and public input on projects that do not require a federal permit —  which may include some landfill projects and inter-basin transfers.

THE OMNIBUS BILLS (AMEND ENVIRONMENTAL LAWS AND REGULATORY REFORM)

In every recent legislative session, the General Assembly has enacted an Amend Environmental Laws bill  and a Regulatory Reform bill. Both bills become vehicles  for multiple changes to environmental laws. See an earlier post for a description of Senate Bill 453, the Regulatory Reform Act of 2015.

At the moment, House Bill 593 (Amend Environmental Laws-2) only  contains provisions amending  state law on reimbursement of third-party damage claims by the state’s petroleum underground storage tank (UST)  trust funds.  (The UST trust funds can reimburse UST owners for up to $1,000,000 in third-party claims for property damage or personal injury resulting from a petroleum release.)  The amendments require the UST owner to provide specific documentation of the third party damage claim; add definitions of “third party”, “bodily injury” and “property damage”;  and provide more  direction on how to calculate  compensation for  property damage.

It is the  nature of  both the Regulatory Reform and Amend Environmental Laws bill to pick up baggage as the session goes along.  Expect new versions of each bill  as the bills move through committee.

Note: This bill is Amend Environmental Laws-2 because  House Bill 157 (Amend Environmental Laws) has already been enacted into law as Session Law 2015-1. H 157 generally made uncontroversial and technical changes to solid waste laws, the Coal Ash Management Act and other environmental laws. The one provision in H 157 that  created some controversy amended a state law requiring the Environmental Management Commission to adopt air toxics rules for hydraulic fracturing sites.The bill replaced the requirement with language authorizing the EMC to adopt  air toxics  standards for fracking sites  if necessary to protect public health, safety, welfare and the environment.

AIR QUALITY

Senate Bill 303  Protect Safety/Wellbeing of N.C. Citizens  prohibits state enforcement of any federal standards for wood heaters used for home heating.  The bill  is interesting as an example of  state legislation intended to nullify  a federal standard.  In February, EPA adopted updated performance standards for wood heaters. Federal air quality rules have included standards for wood heaters since 1988; the new rule updates the standards to reflect changes in technology and to  regulate  wood-burning boilers and wood-burning furnaces as well as wood stoves.   The  revised  standards only apply to newly manufactured wood heaters, phase in over several years and do not affect fireplaces (at all) or wood heaters already in use.  An EPA fact sheet provides an overview of the rule.  Generally, N.C.’s delegated authority to implement Clean Air Act programs  requires the state  to adopt and enforce federal new source performance standards, but EPA has not delegated enforcement of the wood heater rule to the states.

House Bill 169  Limit Motor Vehicle Inspections  eliminates motor vehicle emissions inspections in six counties  (Burke, Granville, Haywood, Rutherford, Surry and Wilkes). Forty-eight of N.C.’s 100 counties require annual emissions inspections as part of the state’s plan to meet the  federal ozone standard under the Clean Air Act. Recently, the Department of Environment and Natural Resources (DENR) issued a  report concluding that emissions inspections could be eliminated in as many as 28-31 counties without  violating either the current ozone standard or the stricter ozone standard EPA  will  finalize by the end of the year. Given the DENR report, expect the number of counties  the bill removes from the emission inspection program to increase.  Since the emissions inspection program has been used to meet a federal air quality standard, any change by the General Assembly must have EPA approval.

House Bill 172 Fracking – Protecting the Public requires the Environmental Management Commission to adopt rules establishing best management practices and  leak detection and repair standards to  minimize air emissions from natural gas operations. The bill approaches the related problems of wasted natural gas and  air pollution by focusing on  ways  to minimize unintended releases resulting from leaky equipment or inefficient practices during exploration, development, production, processing and compression of the natural gas.

House Bill 571 Implementation of Carbon Dioxide Regulations requires DENR  to begin work on a plan to comply with new federal regulations reducing carbon dioxide (CO2) emissions from power plants. EPA’s Clean Power Plan rule sets a CO2 reduction goal for each state, but states have flexibility in the mix of power plant emission reductions, renewable energy generation, and energy efficiency measures used to meet the goal.  Find  more background on the federal rule here. Each state  must  submit a plan for meeting its   CO2 reduction goal by June 2016, although EPA can extend the deadline if the plan needs legislative approval or relies on a multi-state strategy.  DENR does not appear to have any effort underway to develop a plan. Instead, DENR has both  questioned the legal basis for the federal rule and urged EPA to delay implementation until lawsuits  challenging the rule  have been resolved. House Bill 571 appears to be intended to push DENR to begin  work  on a CO2 reduction plan and do it in a way that provides for  input from both stakeholders and the public.

COAL ASH

House Bill 448 Extend Coal Ash Structural Fill Moratorium  The Coal Ash Management Act of 2014 put new, stricter standards in place for large projects using coal ash as structural fill .  ( “Large” means > 8,000 tons per acre or > 80,000 tons total).   But the law made few change to existing standards for smaller structural fill projects. Instead, the 2014 bill put a moratorium on permitting smaller structural fill projects  until August 1, 2015 to allow time for DENR and the Environmental Management Commission to study the standards for those projects.  The law required a report back  to the General Assembly by January 15, 2015.  The EMC discussed an interim report in  January,  but the interim  report didn’t address the adequacy of existing structural fill standards for small projects. The interim report indicated that a final report would be released in April; it doesn’t appear that a final report has been issued yet.  In the absence of a report on the adequacy of the existing structural fill standards and recommendations, House Bill 448 would extend the moratorium on permitting smaller projects until August 1, 2016.

COASTAL ISSUES

House Bill 151 Property Insurance Ratemaking Reform is not strictly speaking an environmental bill, but deals with use of models projecting catastrophic losses as a result of a hurricane or other natural disaster in setting property insurance rates. The bill would continue to allow use of models, but would require the results of more than one model to support a property insurance rate change.  The bill is interesting given the longstanding tension between the economic benefits of coastal development and the externalized costs of building in natural hazard areas.

House Bill 302 Strengthen Oyster Industry  requires the Division of Marine Fisheries to study the state’s shellfish lease and franchise programs and make recommendations for changes necessary to increase shellfish  aquaculture on the North Carolina coast. The bill also expands on existing law requiring DMF to plan and construct  oyster sanctuaries in the  Albemarle and Pamlico Sounds; sets new civil penalties for interference with oyster cultivation; and makes other changes designed to increase oyster production. State funding for creation of oyster habitat has seen a steep decline in recent years; some additional resources will likely be needed to make the oyster sanctuary program a reality.

House Bill 346 Counties/Public Trust Areas extends to counties the  authority to enforce local ordinances in public trust areas and particularly on the state’s ocean beaches.  Municipalities already have this authority.

CONTAMINATED SITES

Senate Bill 301 DOT/Purchase of Contaminated Land would exempt the N.C. Department of Transportation from a law enacted in 2013 that  effectively prohibited state agencies from purchasing property with environmental contamination.  As noted in a earlier post about the 2013 law,  the General Assembly may not have realized the far-reaching effects.   Environmental contamination is widespread and state policies allowing polluters to do limited, “risk-based” remediation of groundwater contamination mean the contamination will persist well into the future. The 2013 law exempted the UNC system campuses from the restriction; NCDOT has asked for the same exemption — presumably because the law makes acquisition of property for highway construction more difficult.

INFRASTRUCTURE

Senate Bill 397 Open and Fair Competition Water and Wastewater would prevent a state or local government from “preferring” one type of piping material  for use in a  water, sewer or stormwater infrastructure project receiving state funds.  I don’t know the story behind the bill,  but usually legislation attempting to  change a state agency’s policy about  use of a particular product or system has been introduced in response to complaints by  a  vendor.

RENEWABLE ENERGY

The General Assembly’s internal debate over renewable energy development continues. In 2013,  the Republican majority in the General Assembly split over attempts to repeal both the Renewable Energy Portfolio Standard (REPS) and the state’s tax credit for investment in renewable energy projects. In the end, a bipartisan majority declined to repeal the incentives for renewable energy development — in large part, because renewable energy had become one of the bright spots in the state’s economic recovery. See an earlier post on the end of the 2013 fight over the REPS.

This session, one focus is on the scheduled sunset of the renewable energy tax credit on January 1, 2016. There are bills in both the House and the Senate to extend the tax credit;  House Bill 454  extends the tax credit until January 1, 2021 and Senate Bill 329 extends the tax credit to January 1, 2020.  Opponents of the tax credit have introduced a bill, Senate Bill 372, that essentially retains the existing January 1, 2016 sunset,  but provides a “safe harbor” for investors who have made substantial outlays on projects not  in service  by the sunset date. Those taxpayers would have an additional year  (until January 1, 2017) to claim the tax credit.

UPDATE:  House Bill 681 would sunset the REPS requirement early, ending in 2018  with a  standard requiring  6% of retail sales of electricity to be generated from renewable sources. The current law requires that  electric public utilities generate 12.5% of retail sales from renewable energy source by 2021 and thereafter.

Fighting for Control of Environmental Policy

April 8, 2015.   In  North Carolina, most  environmental regulations  are adopted by commissions; the  members serve on a voluntary basis and receive only travel expenses and a minimal  per diem. Serving on a commission is like jury duty — for four years and with homework.   Of the major environmental commissions, the  Environmental Management Commission (EMC) adopts air quality, water quality, solid waste and hazardous waste regulations;  the  Coastal Resources Commission regulates coastal development;  and the Mining and Energy Commission regulates mining and onshore energy exploration and development.  The Department of Environment and Natural Resources (DENR)  provides staff support to the commissions,  but the commissions act independently  in adopting environmental rules.  DENR itself has very limited rulemaking authority.

The Governor and  legislative leaders  are currently battling for control of the commissions.  For  decades,  laws creating boards and commissions either gave the Governor exclusive  power to appoint the members  or gave  the Governor a majority of appointments and divided remaining appointments between the state House and Senate.  Since  2010,  the General Assembly has moved to increase legislative influence over the  commissions.  In the last three years, several laws creating new commissions have given the legislature a majority of the appointments.    Reflecting both legislative interest and emerging issues,  the new environment commissions have responsibilities at the crossroads of environmental regulation and energy development.

In 2012, the General Assembly created the Mining and Energy Commission to develop hydraulic fracturing rules. The commission  has eight legislative appointees, three ex officio members (who serve by virtue of holding a specific position — such as the chair of  N.C. State University’s Minerals Research Laboratory Advisory Committee) and only four  Governor’s appointees.  In 2014, the General Assembly continued the practice in creating  the Coal Ash Management Commission to address coal ash contamination;  an Oil and Gas Commission to regulate onshore and offshore energy production;  and a newly constituted Mining Commission.    All three of the new commissions are dominated by legislative appointees.

Late last year, Republican Governor Pat McCrory  filed suit to challenge the constitutionality of provisions in the Coal Ash Management Act of 2014  (creating the Coal Ash Management Commission) and the Energy Modernization Act of 2014  (creating  the  Oil and Gas Commission and Mining Commission). Two former governors, Republican Jim Martin and Democrat Jim Hunt, joined as plaintiffs. In part, the case challenged the  legislature’s authority to appoint a majority of the members serving on executive branch commissions as an unconstitutional  violation of separation of powers. The  lawsuit also raised some lesser separation of powers issues that I won’t go into here.

On March 16, 2015,  a special three-judge panel of Superior Court judges ruled in the governors’ favor in a far-reaching decision that has implications for all of the  commissions involved in environmental policy.   A copy of the court’s order in McCrory v. Berger can be found  here.  Several things to note about the decision:

1. Although the  lawsuit challenged the constitutionality of legislators appointing a majority of the members of a commission with administrative responsibilities, the decision goes further and concludes that it is unconstitutional for the General Assembly to appoint any members of a  commission that exercises “executive” authority.

2. The decision has broader implications than even the judges recognized.   First,  the judges assumed that the Governor appointed all  EMC  members until 2013;  in reality,   the legislature had  appointed at least one-third of the EMC members for decades.  The judges also mistakenly concluded that authority to regulate energy development and mining had rested entirely in the Governor’s appointees to the old Mining Commission and DENR officials  until 2014.   In fact, a 2012 law gave most regulatory authority over onshore energy development and mining to a Mining and Energy Commission also composed largely of legislative appointees.  Those errors caused the judges to mistakenly conclude  that appointees of the Governor  controlled implementation of laws  governing coal ash disposal, energy exploration and development,  and mining until very recently.

The judges’ misunderstanding of the  reality  before  2013-2014 suggests  they may not have fully appreciated the impact of their decision. The practice of making legislative  appointments to the environment commissions has been  longstanding and well-entrenched. Calling into question the constitutionality of commissions with legislative appointees has implications far beyond three commissions too recently created to have taken any significant action.  Which leads to the next problem–

3. The judges did not discuss how the ruling might affect the validity of actions taken by an unconstitutionally appointed commission.  Of the three commissions directly at issue in  the case, two (the Oil and Gas Commission and the new Mining Commission)  do not officially come into being until July 1 2015.  The Coal Ash Management Commission began meeting in  2014, but has not taken any action beyond submitting preliminary reports to the General Assembly.  But a number of other commissions with legislative appointees have made significant regulatory decisions for years.

In January,  Southern Environmental Law Center filed a  lawsuit on behalf of the Haw River Assembly and an individual Lee County property owner separately  challenging  the constitutionality of the Mining and Energy Commission on separation of powers grounds. The lawsuit  explicitly asked  the court to void hydraulic fracturing rules adopted by the MEC based on the constitutional violation. That case is still pending. The EMC, which has had legislatively appointed members for decades,  has been responsible for the entire body of state air quality and water quality rules.

One note– When the N.C. Supreme Court decided in Wallace v. Bone (1982) that the N.C. Constitution did not allow sitting legislators to also  serve  on the Environmental Management Commission, the court did not void EMC actions in which legislative members had participated.  There is probably an inverse relationship between the number of past actions potentially affected and the likelihood that a court will void past actions based on a separation of powers violation.

4. The most immediate impact of the ruling may be on implementation of the Coal Ash Management Act. The General Assembly gave the Coal Ash Management Commission the power to make critical decisions about closure of coal ash impoundments. Under the law, the commission –rather than DENR — will make final decisions prioritizing  coal ash impoundments for closure and approving closure plans. Those decisions will affect both the pace of closure and the environmental impacts. Because of the  ruling in McCrory v. Berger, the Coal Ash Management Commission canceled a planned meeting for March and finds itself in  limbo.

The next critical point in implementation of the Coal Ash Management Act  will come in early 2016 when the Coal Ash Management Commission should  receive DENR’s recommendations on prioritizing coal ash impoundments for closure.   Timelines in the law anticipate a final decision by the commission within 60 days after receiving the DENR recommendations. It isn’t clear that the legal issues  surrounding the commission will be resolved by then. One immediate question  will be  how to keep moving forward on implementation of the Coal Ash Management Act  until those issues have been settled.

Next steps — Legislative leaders have appealed the decision in McCrory v. Berger to  the N.C. Court of Appeals.

Regulatory Reform 2015 — The Senate Bill

March 26, 2015. The Senate has introduced the first regulatory reform bill of the 2015 session – an annual rite of spring. Senate Bill 453 includes a number of environmental provisions. The most significant:

Another attempt to  create an  environmental audit privilege and immunity for violations reported as a result of an audit.  The audit and self-reporting provisions in the bill appear to be identical to those proposed by the Senate in  2014, but not included in the final  Regulatory Reform Act of 2014. See an earlier  post  about the 2014 regulatory reform bill for a description of the environmental audit/self reporting provisions making a reappearance in 2015.

Sec. 4.3 of the bill  eliminates several environmental reporting requirements.  Most of the reports to be eliminated  have become unnecessary, but the bill  also proposes to  repeal  the requirement for DENR to report  on  environmental  permit processing times.  The report on One-Stop and Express Permitting, under G.S.  143B-279.15, has  allowed legislators to track permitting times in DENR programs that issue development permits.  Given the legislature’s strong interest in environmental permitting, the report  seems an odd candidate for repeal.

Sec. 4.4   would allow more construction of sandbag seawalls and revetments on the oceanfront.  Under coastal management rules,  sandbags can only be used if the building on the property is actually threatened by erosion and the sandbags must be installed within 20 feet of the building’s foundation. The bill removes both limitations. It would allow an oceanfront property owner to build a sandbag seawall  if there is a similar sandbag structure on the adjoining lot even if the  building  on their own lot is not threatened by erosion. The bill also  allows the  sandbags to be installed further seaward of the building foundation without putting a  limit on how far seaward the sandbags can be placed.

Sec. 4.6, 4.7 and 4.8 eliminate reports on electronics recycling;  Sec. 4.9 calls for a study of the electronics recycling program.   By eliminating the reporting requirements, the state would lose information on the volume of electronics being  recycled annually. The study language suggests some legislative concern about the current electronics recycling program without identifying any specific problem.

Sec. 4.12  expands liability protection for the owners of contaminated property in a way that may shield some polluters from cleanup responsibility. The bill amends the  state Brownfields redevelopment  law  (which provides incentives  for redevelopment of  contaminated property) to make “brown fields redeveloper” in state law mean the same thing as “bona fide prospective purchaser” under a federal law regulating hazardous substances.  The Senate bill  would also repeal existing language in state law that does not allow  a person  who caused or contributed to  the contamination to receive liability protection and other benefits under the state Brownfields Act.

The  changes  could be a problem because the definition of “bona fide prospective purchaser” in the federal  law (the Comprehensive Environmental Response, Compensation  and Liability Act  or “CERCLA”)   has been defined to mean a property owner who  innocently purchased property contaminated by a “hazardous substance”.  Under  CERCLA, “hazardous substance”  refers to a specific list of chemicals associated with  acute or chronic health effects;  simple possession of  a threshold quantity of one of the listed chemicals  may trigger a federal reporting requirement.  The CERCLA “hazardous substance” list is not intended to cover all  pollutants and contaminants that may  cause harm  if released to the environment.  For example, petroleum products are excluded from the federal definition of a “hazardous substance” although  gasoline  leaked into soil and groundwater presents both a health and environmental risk.

The Senate Bill 453 change could  allow  a property  owner  who actually caused  environmental contamination to get  liability protection and other benefits under the state Brownfields law  (such as reduced property taxes) just by showing the contamination was not caused by a  hazardous substance regulated under CERCLA. That   could seriously undermine state remediation programs and give undeserved benefits to people who actually caused environmental contamination and should have an obligation to clean it up.

Note: The change may have implications for coal ash sites, although that seems to be a more complicated question. Some of the constituents of coal ash are listed “hazardous substances” under federal law. But  the U.S. Environmental Protection Agency’s  decision to regulate coal ash as a solid waste rather than a hazardous waste may take coal ash itself out of the category of “hazardous substances”.  Although it is not entirely clear, it is possible that the Senate Bill  453 change would allow a utility to take advantage of the state Brownfields  law to get  liability protection  on a coal ash site.

EPA’s Coal Ash Rule Part II: North Carolina

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

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

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

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

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

Implications for North Carolina:

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

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

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

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

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

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

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

N.C. Impoundment Closure Dates

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

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

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

EPA Impoundment Closure Dates

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

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

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

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

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

 Several things to note:

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

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

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

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

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

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

Some basic things to know about the federal rule:

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

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

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

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

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

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

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

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

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

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

Environmental Issues in the Courts

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

N.C. Coal Ash Bill Becomes Law

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

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

 NEAR TERM 

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

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

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

LONGER  TERM

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

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

OPPORTUNITIES AND PITFALLS

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

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

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