Procrastination or Immediate Action: Implications of the North Carolina Supreme Court’s Ruling on the Coal Ash Cleanup Process

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BY: Allison Persinger, Guest Contributor

Editor’s Note: The Campbell Law Observer has partnered with Judge Paul C. Ridgeway, Resident Superior Court Judge of the 10th Judicial District, to provide students from his Law and Public Policy seminar the opportunity to have their research papers published with the CLO.  The following article is one of many guest contributions from Campbell Law students to be published over the summer.

On March 16, 2015, the North Carolina Supreme Court heard arguments in Cape Fear River Watch v. North Carolina Environmental Management Commission, a case revolving around the processes employed and the amount of time that Duke Energy should have to address contamination events.  If the justices elect to issue their own opinion on the matter, there are two likely avenues they will take.  The Court will either side with Superior Court Judge Ridgeway by declaring that Duke Energy must take “immediate action” to identify the source of contamination to prevent potential groundwater pollution, or the Court will allow the clean up to proceed on a schedule imposed by the Coal Ash Management Commission.  These decisions would have differing, but equally significant, impacts on public welfare and safety by determining the speed at which environmental cleanup occurs and thus, the severity of environmental issues resulting from coal ash.

The Coal Ash Spill

The motivation for various nonprofit groups, such as Cape Fear River Watch, the Sierra Club, and the Western North Carolina Alliance, to file suit in this case against Duke Energy can be traced to the coal ash spill that occurred on February 2, 2014.  Beginning in 1968, Duke increased its production of coal-powered electricity, which resulted in excessive amounts of coal ash that was later stored in specially constructed coal ash ponds.  Although the EPA has refused to classify coal ash as hazardous waste, it does contain hazardous substances, such as mercury and arsenic.  The spill in February was the result of a broken pipe three feet under a 27-acre coal ash pond that allowed the ash to escape into the Dan River.  Initial estimates of the discharged coal ash were as high as 82,000 tons, although later reports placed the figure closer to 39,000 tons.  The Department of Energy and Natural Resources (DENR) determined a second, smaller pipe was leaking about twelve days after the initial leak, which was not repaired until almost a week later.

On February 6, 2014, DENR reported that samples taken from the Dan River showed normal water quality that met state regulations, although copper levels were elevated.  Several days later, DENR admitted that it made a mistake in this report and that arsenic, iron, and aluminum levels were all above average.  The North Carolina Department of Health and Human Services cautioned North Carolina residents against swimming in the Dan River.  Most troubling is the fact the Dan River supplies communities in both North Carolina and Virginia with drinking water, although officials maintained the water was safe to drink at all times after the spill.

Duke Energy continues to assert their commitment to the Dan River cleanup efforts and vows to use this as an opportunity to raise their safety standards “even higher.”  In fact, Duke claims they have taken measurable steps towards prevention, such as removal of coal ash deposits, long-term monitoring and sampling of water quality, restoring the Dan River to its pre-spill condition, and the dedication of $1.5 million to the area from the Water Resources Fund.  Despite Duke’s monitoring of the Dan River, many concerns still remain over the approach going forward and the lack of a plan to ensure further coal ash spill disasters do not happen.

Without further action regarding coal ash pits, a disaster of this magnitude runs the high risk of happening again.  Duke currently maintains 33 coal ash ponds in North Carolina that contain a total of 100 million tons of accumulated coal ash, with some pits being actively used while others sit dormant.  To fix these coal ash pits, Duke is faced with a host of costly propositions, such as excavating the waste to a lined landfill at a cost of $8 billion, lining the bottom and top of the ponds, or covering the top of the ponds.

Various Interest Groups File Suit

In a timely decision a little more than a month after the spill, a Wake County Superior Court judge ruled on a petition seeking judicial review from a declaratory ruling rendered by the Environmental Management Commission (“EMC”) regarding corrective action to be taken to clean up coal ash pits.  Judge Ridgeway sided with the environmental advocacy groups in determining that Duke Energy must take “immediate action” to eliminate sources of contamination, and the company appealed to the North Carolina Supreme Court.

The Superior Court Decision

Cape Fear River Watch and a host of other environmental groups sought review by the Superior Court on the EMC’s interpretation of a rule promulgated by the EMC.  Plaintiffs initially requested the EMC to construe its 2L Rule to require immediate action to eliminate the source of contamination when an undesirable substance is detected that exceeds groundwater quality standards.  They argued that the immediate action was required prior to and separate from the duty to propose and implement a plan of action to restore the quality of the contaminated groundwater. In other words, the owner of the coal ash pond (Duke Energy) would have to take immediate, affirmative steps to stop the contamination and then propose a plan to deal with the harmful effects of that contamination.  The Commission ruled against this interpretation of the 2L Rule, instead finding that the four action items in the rule were not listed in order of priority and “immediate action” means action appropriate to the circumstances.

When the case made its way to Superior Court, Judge Ridgeway examined the surrounding provisions in the rule to consider the EMC’s argument that certain provisions in the rule after the four requirements temper the “immediate action” requirement.  The judge rejected this argument, finding that the later provisions were more general, and therefore, under rules of statutory construction, could not supplant the more specific portion of the rule requiring “immediate action.”  In a complex decision, Judge Ridgeway ruled that it was “plainly erroneous and inconsistent” for the EMC to interpret the rule as requiring anything other than immediate action to eliminate the source of contamination.

The Appeal to the North Carolina Supreme Court

Duke Energy appealed to the Supreme Court, requesting that the case be remanded to Superior Court with instructions to dismiss the issue as moot.  ¹ Duke’s reply brief shows that their argument rests on two primary points. First, the Coal Ash Management Act, passed after the Superior Court ruling, on August, 20, 2014, contains legislation on the specific issue presented in the appeal and thus, moots the controversy.  ² The second argument pertains to the lack of deference given to the EMC’s interpretation of the 2L Rule. ³

Duke first argues that the “comprehensive” coal ash legislation completely changes the application of the 2L Rule as it relates to coal ash ponds. ⁴  They allege that the Act explicitly eliminates any “immediate action” prior to assessing the cause and extent of the pollution. ⁵ In fact, by Duke’s reasoning, the Act allows DENR to first contemplate an investigation and plan for groundwater remediation before any action at all must be taken.  ⁶ Additionally, the Act requires fourteen sites to be closed, with four “high priority” sites to be closed by 2019. ⁷  By modifying the 2L Rule and requiring coal ash ponds to be closed and the cleanup of contamination, the Act moots the issue at bar. ⁸

Duke makes another argument that the Superior Court erred by failing to give more weight to the EMC’s ruling because their interpretation of the 2L Rule was not plainly erroneous or inconsistent with the regulation. ⁹ The 2L Rule does not explicitly state that the four requirements, including the “immediate action” provision, must be implemented in sequential order or separately. ¹⁰ Duke further alleges that the EMC’s interpretation is consistent with the realities of corrective action. ¹¹

Using much of Judge Ridgeway’s analysis and logic, Plaintiff environmental groups, in a largely defensive argument, contend that the Superior Court ruling correctly interpreted the 2L Rule to give effect to its plain meaning. ¹² Plaintiffs also argued the correct standard was applied in Superior Court because the EMC created an “error of law,” thus subjecting its interpretation to de novo review. ¹³ In what may likely be the most important argument, Plaintiffs argue that the litigation, as it relates to closed and inactive coal ash disposal ponds, is not mooted by recent legislation. ¹⁴

Cape Fear River Watch argues that the Act is not intended to preempt the more strict 2L Rule, but rather serves only to impose minimum standards for closure on all coal ash pits. ¹⁵ The Act’s changes only extend to sites that have active permits, not those that have inactive permits. ¹⁶  Because the 2L Rule still applies to closed and inactive facilities that no longer have permits, a live controversy still remains and the case is not moot. ¹⁷

Implications of Likely Supreme Court Holdings

Regardless of the party the Supreme Court sides with, the ruling will have far-reaching effects that extend past the case at bar.  The Court has the power to determine the actions that Duke Energy will take in the present and in the future to ensure that all 33 of its coal ash pits in North Carolina are not a threat to public safety.  The Court’s refusal to require “immediate action” in determining sources of contamination may allow Duke to sit on their hands in the event of another coal ash spill.

Requiring “Immediate action”

If the Court interprets the 2L Rule to require “immediate action” to discover the source of the contamination, this will be a win not only for environmental groups, but also for the general public.  The significance of requiring “immediate action” is driven home when the current realities of Duke’s waste storage practices and the high likelihood of groundwater contamination are considered.  The company currently keeps this harmful waste in unlined pits with no real barrier between the groundwater beneath. Considering the lack of a boundary, it is highly conceivable that the waste from the ponds could easily leak into groundwater. The coal ash spill of 2014 demonstrated how one faulty piece of infrastructure can result in a massive spill involving thousands of tons of pollutants pouring into a river that supplies a town with drinking water.

Finding an “immediate action” requirement ensures that Duke quickly springs into action when pollutant levels over a safe threshold are detected.  This clearly spells out that there is no time for creating a plan, consulting with DENR, or other variations of feet dragging that may occur.  Duke must act immediately to identify the source of the contamination and to stop it, which will prevent the contamination from spreading and potentially permeating groundwater beneath the pits.

When considering the amount of contact that the public has with both groundwater and rivers that may be affected by contamination from coal ash pits as well as economic implications from pollution, the need for reading “immediate action” into the Rule becomes vital.  Not only may drinking water be affected by contamination, but the public may be exposed to contaminated water through actual contact.  Several Plaintiffs argued to the Supreme Court that contaminated water also affected them economically.  A member of the Sierra Club is concerned about the potential pollution of rivers by Duke’s coal pits because she owns a kayak-instruction business that operates on a river that is adjacent to a coal ash pit. ¹⁸ She claimed that her very livelihood was tied to the river, and that due to the coal ash pits, the river had a reputation as being dirty. ¹⁹ A member of Cape Fear River Watch also expressed concerns about the cleanliness of the river, as he runs a charter boat business and doubts that people will pay to take a ride on a contaminated river. ²⁰

Allowing the Creation of a Plan, Investigation, and Assessment Prior to Action

If the Supreme Court allows DENR to investigate and/or assess the contamination prior to action, it could take months or longer for Duke to take action.  This is a dangerous path to travel when contaminants are actively escaping out of a coal ash pit. The longer Duke takes to locate the source and begin remedial efforts, the higher the chance those contaminants have to infiltrate rivers and other water supplies.

Of further concern is the fact that these activities that occur prior to taking action seemingly have no timeline attached.  Duke and DENR are free to create plans and investigate with no sense of urgency because there is no authority in place to demand that plan creation and investigation take place within a certain amount of time.  In their brief filed with the Supreme Court, Duke admits that when DENR has required assessment and corrective action prior to “immediate action,” the “immediate action” has sometimes taken place years after the contamination was first reported. ²¹ An illustrative example is provided in one instance where contamination was identified as early as 2004, yet DENR did not instruct that party to take “immediate action” until 2012. ²²

Considering Duke’s track record when it comes to maintaining environmentally safe coal ash pits and the monetary aspect of taking action to stop leaks or to repair faulty equipment, Duke is unlikely to take any meaningful steps to correct potential contamination issues unless forced by law or by the direness of the situation.  Interpreting the 2L Rule in this manner will provide Duke with permission to unnecessarily delay and waste time in locating contamination sources when time is of the essence.

Conclusion

 The public interest in clean drinking water, safe and clean rivers, and economic opportunities far outweighs Duke’s interest in taking time to assess the contamination and creating a plan before taking an active role in addressing the pollution.  If Duke intends to treat their coal ash waste in a primitive and unsafe manner, they should have to deal with the consequences and immediately address the problem source when an inevitable leak occurs.

Allison Persinger is a 2015 graduate of Campbell Law School. She can be reached by email at aepersinger0623@email.campbell.edu