Fall out from Duke Energy's coal-ash spill continues

Published by MAC on 2014-04-24
Source: News & Record, AP, Bloomberg

McCrory's coal ash plan is roiling debate in his own party

18 April 2014

Taft Wireback

News & Record

The Governor's Proposal

Unveiled earlier this week, Gov. Pat McCrory's "Comprehensive Coal Ash Action Plan" would:

• Require the state Department of Environment and Natural Resources to create a priority list for closing "all active and inactive" coal ash ponds.

• Call on the pond owner (Duke Energy) to submit "a schedule for beginning closure" at each plant with such ponds.

• Require such a plan for the Dan River ash ponds in Eden within 90 days after passage of new ash-pond law.

• Mandate similar closure plans for ponds near three other troubled plant sites (Asheville, Riverbend and Sutton facilities) 60 to 90 days after new law.

• Ensure Duke closes ponds at Dan River and the other three sites by removing the ash to "a lined structural fill, a lined landfill, or an alternative disposition" approved by regulators.

• Allow other ponds to be closed by excavating submerged coal ash, capping it with an "engineered cover system" such as impermeable clay, a blend of those two approaches or other methods "equally or more effective at protecting water quality."

• Require heightened safety monitoring near ash ponds while they exist, including more monitoring of nearby ground- and surface-water quality; stiffer rules for detecting and reporting leaks, stepped-up dam safety and engineering inspections.

• Drop an earlier provision in state law that exempted the ash ponds from some aspects of the state's dam safety rules.

Gov. Pat McCrory miffed some leaders in his own party earlier this week when he unveiled what he termed a "comprehensive plan" for dealing with the state's coal ash crisis.

Key Republican legislators said they got no meaningful advance notice of the plan, which at least one thought went too easy on Duke Energy in some areas.

What do you think about the divide over McCrory's plan?

"We received a phone call late Wednesday," said state Sen. Tom Apodaca, chairman of the influential Senate Rules Committee. "It really would have been helpful if it had been given to us in advance, so we could have been prepared."

After being in office nearly 18 months, McCrory should have a better grasp of how things work in Raleigh and how proposals become law, Apodaca said.

Both houses of the General Assembly would have to approve any changes to current laws governing the ponds before they could take effect.

Apodaca was assigned weeks ago by senate President Pro Tem Phil Berger of Rockingham County to lead the way in crafting legislation tackling the same coal ash issues as those covered by the governor's new proposal. Apodaca has been working with fellow Republicans in the state House - also controlled by the GOP - to develop a joint approach to tightening state laws that address all 33 of Duke's coal ash ponds.

"We had no notice anything was coming," added state Rep. Chuck McGrady of Hendersonville, one of the House Republicans working with Apodaca. "Frankly, we thought we were working with (the administration), but this surprised us. There was no consultation."

Coal ash zoomed into the headlines statewide after the Feb. 2 spill of 30,000 to 39,000 tons of the toxic material from a storage pond at the retired Dan River Steam Station in Eden.

Duke has only begun cleaning up a 70-mile stretch of the Dan River dotted with deposits of the mucky gray waste. The company announced recently that it already spent about $15 million on the task.

The remainder of that work and what happens at Duke's other ash ponds likely will emerge as a hot political topic for the General Assembly's short session that convenes May 14.

McCrory's new proposal drew criticism almost immediately from environmental groups for taking it too easy on the utility, especially in not setting firm deadlines for closing the utility's ash ponds and for disposing of their waste.

But the governor's approach is not specific or demanding enough for Apodaca, either.

"Our legislation will mandate that the dangerous, wet ash ponds be done away with, and within a short period of time," Apodaca said about the bill he and his legislative colleagues are assembling.

Apodaca said he and the other GOP legislators have yet to settle on a deadline for eliminating the most serious coal ash threats, but five years would be a good target.

"I think it's critical that we have an end date," said Apodaca, who represents Buncombe, Henderson and Transylvania counties.

McGrady echoed Apodaca's unease with the Wednesday afternoon surprise: "It just doesn't feel like a collaborative effort."

State House Speaker Thom Tillis tapped McGrady and several other Republican state representatives to work on coal ash regulation, including the possibility of streamlining the legislative process by developing a bill with Apodaca that both houses could support.

McGrady and several other GOP representatives working on coal ash received a briefing on McCrory's new plan Thursday from DENR officials, said McGrady, vice chairman of the House Environment Committee and a former president of the national Sierra Club.

He did not want to go into detail about what the legislators said at the meeting with DENR Secretary John Skvarla about being caught off guard the day before: "Let's say it was a testy start to the meeting ... I think Secretary Skvarla understood how irritated people are."

McCrory fared pretty well in an initial assessment of his plan Wednesday from state Rep. Pricey Harrison, a Democrat from Greensboro who focuses heavily on environmental issues. Harrison initially said it sounded like a good start, although it needed to be tougher in several important areas.

But like her Republican counterparts, Harrison only had the governor's news release to review at that point. After looking at the actual details in a document she didn't receive until Wednesday evening, Harrison changed her mind.

The plan in its entirety treats Duke Energy too gingerly, repeating too much of the language from a letter Duke Energy's president, Lynn Good, wrote last month, describing how utility executives think the coal ash threat should be tackled, Harrison said.

"A lot of what's in there seems to follow what Duke says its own plan would be," Harrison said about the administration's proposal.

Other parts of the full McCrory proposal echo a so-called "sweetheart" court settlement that the DENR proposed as a way of sidestepping efforts by environmental groups to make Duke Energy pursue more aggressive cleanups at some of its plants that have problems with coal ash ponds, Harrison said.

McCrory and the DENR's staff did not mean to offend anybody by blindsiding legislators or by encroaching on their authority, said Drew Elliott, the DENR's communications director.

They view Wednesday's proposal as a starting point open to change by the legislators, but still as a good baseline to help guide legislators' deliberations, Elliott said.

"This particular plan was something DENR had worked on and the governor wanted to get it in front of the legislature so they could consider it as soon as they convened," Elliott said. "We're not ruling anything out at this point."

Elliott acknowledged the plan contains details that repeat some of what Duke has promised to do in cleaning up its ash ponds and others that might sound similar to the proposed court order that DENR later rescinded.

The administration simply wanted to write Duke's cleanup promises into a state statute to "hold them to it with the force of law," Elliott said.

He said language harkening back to the abortive court order stemmed from the fact that "the same staff experts within DENR worked on the consent order and on the proposed legislation as well."

"It's the same people looking at the same problem, so it's not surprising to get some of the same answers," he said.

Apodaca said he also wanted more specifics in the McCrory plan about Duke plants near Asheville, Charlotte and Wilmington, with ash ponds that he called the "most volatile."

McCrory's proposal names a similar list of ash ponds for early action, but does not include a timetable for closing them out.

"Those ash ponds must be removed, done away with and moved off site. ... We want them gone," Apodaca said, adding that the material should be disposed of only in a landfill specially designed for handling such waste.

Duke already has committed to permanently closing its two Eden ash ponds and removing their waste to a lined landfill or for use as "structural fill" in building projects.

---

Duke: Coal ash spill won't affect bottom line

By Micheal Biesecker and Mitch Weiss

The Associated Press

17 April 2014

CHARLOTTE, N.C. -- Duke Energy told shareholders Thursday that cleanup costs resulting from its massive coal ash spill into the Dan River won't have a material effect on the $50 billion company's bottom line.

The nation's largest electric company said in a regulatory filing with the U.S. Securities and Exchange Commission that it had spent $15 million so far on plugging the collapsed pipe at its Eden power plant that triggered a Feb. 2 spill and polluted 70 miles of the Dan River with toxic sludge. The company has also begun the process of trying to dredge some of the spilled ash from the river.

Duke said it can't yet assess what costs may result from new laws affecting how the company handles the ash at its 33 coal ash dumps in North Carolina, or from future legal claims, litigation or environmental fines.

Duke's statement to investors came a day after North Carolina Gov. Pat McCrory unveiled a proposal he touted as strengthening government oversight of the state's coal ash dumps. But the governor's plan didn't address the key issue of what will happen to Duke's ash pits.

McCrory said his plan would result in the "conversion or closure" of the dumps and close legal loopholes that allowed the nation's largest electricity company to avoid cleaning up groundwater contamination leaching from unlined ash pits at 14 coal-fired power plants across the state.

All of Duke's ash pits are along the state's rivers and lakes - and the governor's plan doesn't force the company to move them.

Instead, it allows Duke to study the issue and set a timetable for how to eventually close the waste dumps.

Environmentalists on Thursday sharply criticized McCrory's plan, saying it doesn't go far enough.

They also said language in the governor's plan contains some of the same wording included in a recently scrapped consent order between Duke and the state Department of Environment and Natural Resources.

"Some of the language was copied verbatim. This shows the close coordination between Duke Energy and state regulators," said Frank Holleman, a senior attorney for the Southern Environmental Law Center.

The consent order would have allowed Duke to resolve violations at two coal ash dumps - one in Ashville, the other near Charlotte - by paying a $99,000 fine with no requirement that the company clean up its pollution. It had been reached months before the Feb. 2 spill focused public attention on Duke's history of polluting groundwater with its leaky, unlined coal ash dumps.

In an email, Drew Elliot, a spokesman for the state environmental agency, acknowledged that the language in the governor's bill and consent order are similar, but said that is not unusual.

He said the government agencies, such as the Environmental Protection Agency, take similar steps when they prepare remediation plans.

Environmentalists are pushing McCrory's administration to use what they say is the state's existing legal authority to require Duke to haul more than 100 million tons of the toxic ash away from waterways to lined landfills licensed to handle hazardous waste. Coal ash contains numerous chemicals that are harmful to people and wildlife, including arsenic, mercury and lead.

In a letter to the state last month, Duke CEO Lynn Good said the company would remove the ash from its dumps at the Dan River plant and another plant while the company studies options at its remaining sites. Among those options is draining contaminated water from the pits and then covering the remaining ash with soil and giant tarps.

McCrory worked at Duke for more than 28 years before retiring to launch an unsuccessful campaign for governor in 2008. He has denied that his administration gave any special treatment to his former employer.

But Holleman said there is some irony in the governor asking the public to trust state regulators and Duke.

"This is crazy. The governor is saying we should trust DENR and Duke. Yet they're both appearing before a federal criminal grand jury about their coal ash activities," he said.

Federal prosecutors have issued at least 23 subpoenas seeking records and grand jury testimony as part of a criminal investigation into the state's oversight of Duke's coal ash dumps.

Holleman said the governor's bill fails to set clear deadlines and strict environmental and public health standards that Duke would need to meet.

For example, there are no deadlines for initiating or completing closure of ash pits, or for sampling wells within a half-mile from coal ash sites.

In general, most deadlines are left to the discretion of Duke; the few deadlines that are mentioned include a clause that allows state regulars to waive the deadline, Holleman said.

Donna Lisenby, Global Coal Campaign Coordinator for Waterkeeper Alliance, agreed.

"This is just another blatant example of the governor completely ignoring the voters and tax payers of North Carolina by making a gratuitous attempt to exempt his former employer from any real or meaningful requirements to clean up their toxic ash ponds," she said.

---

Duke Investors Urged to Reject Directors on Coal-Ash Spill

By Jim Polson

Bloomberg News

14 April 2014

Duke Energy Corp. shareholders should vote against four board members for lapses that led to a February coal-ash spill that fouled a North Carolina River, the California Public Employees’ Retirement System and New York City Comptroller Scott Stringer said.

The four directors -- G. Alex Bernhardt Sr., James B. Hyler Jr., James T. Rhodes and Carlos Saladrigas -- "have failed to fulfill their obligations of risk oversight as members of a committee overseeing health, safety, and environmental compliance at the company," Anne Simpson, senior portfolio manager for Calpers, and Stringer wrote in a letter (DUK:US) filed with the U.S. Securities and Exchange Commission today.

About 39,000 tons of ash spilled from a pond at a shuttered coal-fired power plant near Eden, North Carolina, on Feb. 2, triggering investigations and subpoenas. The incident, the third-largest coal-ash spill in the U.S., coated 70 miles (113 kilometers) of the Dan River, according to the letter.

A federal grand jury is probing the state's oversight of the company's 33 coal-ash ponds in North Carolina. Governor Pat McCrory, a former Duke employee, has asked the company to remove coal from riverbanks to prevent a recurrence.

The state regulator, the Department of Environmental and Natural Resources, last month cited Duke for violating pollution permits when it pumped 61 million gallons of coal-ash pond wastewater into a tributary of the Cape Fear River. The state is also seeking to revive lawsuits filed last year over pollution from ponds at two plants. Duke has denied the permit violations.

‘Deafening Silence'

Calpers and the New York City pension funds own a combined 3.9 million shares in Duke. The Charlotte, North Carolina-based company had no immediate comment on the letter.

"The board's silence has been deafening in the lead up to and aftermath of the Dan River spill," Stringer, a Democrat, wrote in an e-mail. " We intend to hold accountable those directors most responsible for these costly oversight failures."

The annual meeting is scheduled for May 1. Bernhardt has been on the board for 23 years and Rhodes for 12. Saladrigas and Tyler, who both joined as part of Duke's acquisition of Progress Energy Inc., have been board members for 13 and 6 years, respectively.

Duke, the largest U.S. utility owner, rose 0.3 percent to $72.06 at the close in New York. The shares have gained 2.3 percent since news of the spill became public, the worst performance on the 13-company Standard & Poor's 500 Electric Utility Index.