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Senate | March 11, 2015 | Committee Room | Agriculture/Environment/Natural Resources

Full MP3 Audio File

Thank you for coming out today. It's always lovely to see everyone. And if I could have the pages come forward we're going to do it a little different today. I'd like you to introduce yourself come up to the podium here and introduce yourself. And maybe say a word or two about yourself and where you live and who's sponsoring you. Go ahead, right there. [SPEAKER CHANGES] All right, my name is Sylvia Craig I'm from Holden Beach North Carolina my sponsor is senator Bill Rabon and I'm a senior in high school. [SPEAKER CHANGES] Hi everyone my name is Rachael Bass I live here in Raleigh North Carolina I am a sophomore in high school I'm home schooled and my sponsor is senator John Alexander. [SPEAKER CHANGES] Hi my name is Regan Weights and I'm a home schooled junior in high school I'm here from Raleigh North Carolina and I'm sponsored by senator Barefoot. [SPEAKER CHANGES] Hi I'm Else Stevens I'm from Mooresville North Carolina and I'm a junior at an early college and my sponsor is senator Curtis. [SPEAKER CHANGES] Hi my name is Kevin Woo I'm from Carey and I'm a junior at Cary Academy and my sponsor is senator Phil Berger. [SPEAKER CHANGES] We thank you very much and we appreciate you coming and spending your time with us can we give them a little round of applause. We also have our sergeant and arms Larry Hancock, Ed Kessler, Ed you wanna speak? Okay moving along we want to welcome here today our secretary of the department of environmental and natural resources and I know he has some Diener staff with him also we'd like him to come forward and we're very privileged to have you here today and we appreciate it. Now I think he has some remarks then we're going to use most of our time today to go to questions. So thank you very much. [SPEAKER CHANGES] Thank you senator. First of all I'd like to thank you all for inviting me here it's always a privilege. I hope I don't bore you but I thought I'd give a little bit of an update on who I am so that for those of you that haven't gotten to know me have a little bit of a background or context to which to see me. As you might of read I'm a twenty year veteran in Diener and so I have some knowledge at least in and my background was in air quality before that though I did do some work for the private sector both in the refining and as well as the electric utility business. I am an engineer by training later in life my kids left me I was scared that I would be too bored so I went to law school at night. I'm not sure I would recommend that to anyone now that I've done it. It was a lot more work than I anticipated but I'm glad I'm done. So I do have some, I do have that background as well as far as my vision for Diener it's going to be a very nuts and bolts type of operation. Because of my background your going to see me focus on inspections and enforcement. Your going to see me reduce permit review times because these are our functions in my view. And also have the enjoyment of our natural resources attractions at least a little longer. We all know that the zoo the aquariums and the museums are all great places for people to go and appreciate North Carolina's diverse natural resources. And so I'd like to help and I think it will be further helped by a transfer over to DCR to enhance attendance at those very, very, very .

Wonderful institutions that we have here in North Carolina, sometimes we forget how blessed we are to have the kind of natural resources that we do have. So that’s by way of a little bit of an introduction. I thought before we got into any specifics I wanted to – just because of the announcement that was made yesterday, I thought I’d go ahead and give you an update. We did levee a large fine yesterday to Duke Energies, Sutton Facility, the amount was a little over 25 million dollars, and that was for violations of ground water, North Carolina standards of ground water. And I know some of you all have been reading in the papers about the various fines, penalties, I don’t know how to characterize the Department of Justices, 100 million dollar settlement, I’ll just call it for want of a better word. It’s sometimes confusing to understand what it is that Duke is being fined for, and I can just tell you that there are a lot of regulatory programs involved, there are Federal Clean Water Act issues, as I said there are North Carolina ground water issues, and of course there was the criminal investigation that went along in parallel. So it’s sometimes difficult to keep them separate, but yesterday was North Carolina’s enforcement for one facility, for ground water standards under our laws. So with that, we can certainly talk about anything that you’ve got, and if I can’t answer it, I will make sure that either the person that is here, in fact what I will do is maybe run by who we’ve got here, in case you all don’t know, I’ve got my deputy secretary, John Evans. He looks like Steve Jobs. His pay scale’s not the same. Tom Reeder, is our Assistant Secretary. Some of you may have met him from time to time. I’ve got Matt Docum, who is our legislative liaison, along with Brad Knott, he is very tall. Our communication representative is Chrystal Feldman, and I’ve got Linda Culpepper from solid waste, I’ve got Mike Abracinski from air quality, I’ve got Michael Ellison, from the EEP, Tracy Davis, and Jay Zimmerman, who is now the new Tom Reeder, is that right? Okay. We’ve done introductions, if I haven’t missed anyone. If you have any questions, we can certainly begin. [SPEAKER CHANGES] I think we have Chairman Cook. [SPEAKER CHANGES] Hi, thanks for coming and joining us today. I’m curious, 25 million dollars is pretty big bucks. How did you come to that figure, and if you could put it in perspective, I don’t know, but I’ve heard that the largest fine in the past was like five million. That seems like an awful big chunk. Was this so egregious? [SPEAKER CHANGES] The procedures that we follow in assessing penalties are pretty well established and I think the main reason that you’re seeing a fine that’s as large as this is because we have so much data, for one. We have more than—this fine is meant to cover I think over a five year period, and most notably, we have so much data that we were able to identify periods of continuous daily violations, whereas in the past, you’ll see typically penalties are based on individual discreet violations. Once you add, for example, if we have a period that shows three months of continuous violations, that 90 times what might be charged for a single day, if you see what I’m saying. So we had so much information that it was clear that there were violations going on every day, and once you start running up the numbers, I think that the total number of violations was over 5,000. So that’s where you get the number. Now, from other factors that we take into account is the impact, and this is a large area that was impacted. Necessarily, it’s a large operation, and when you have a large environment --

Impact then you, you can have a large five. So I hope you have some understanding but that, we followed our assessment procedures with those, with those additional nuances. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] I'm not sure how this works. This fine will be paid out of stockholder money or will it come out of the pockets of the consumers of electricity? [SPEAKER CHANGES] And, and that's a job, that's a question that I'd, I'll have to defer to the utilities commission. That's not, it's not our, that's not our say. [SPEAKER CHANGES] Senator Bingham. [SPEAKER CHANGES] Thank you madam chairman. Along those same lines, I did hear you mention, and I don't even know how much you'll be able to even speak to this. I don't know if this is gonna be an appeal or, or not but you did say something about criminal. What, did I hear that correctly? [SPEAKER CHANGES] That was part of the United States attorney's investigation. We did not have anything to do with that, and I think that was, in fact, we haven't even seen the, the document that has been, that has been referred to in the press, but that's a question for the US attorney's office, indeed. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] Mister secretary, I do have a question that, it's on a little different subject, but it's about our impaired lakes, and I know that we've had some in lake mitigation going on at Jordan Lake, and I know that the SolarBees were put in a little late this year, because there's some federal I guess permits we didn't get in time. How is that going and do we need more time with that? I think we need at least a couple of summers if not three, so where are we on that? [SPEAKER CHANGES] Yes, yes, ma'am. The, the, I just want to point out that North Carolina in so many ways is a leader in environmental protection. We are one of the only states that are, that is investigating in lake mitigation, and we can talk at length about that, but in the particular instance of SolarBees, we are concerned that the fact that they came in so late in the summer last year would, would argue that we may need an extension possibly, because it really doesn't, I don't think we're gonna learn what we need to learn in a single season, so we would like to consider, if, possibly getting some kind of a window, at least two years, to fully investigate that technology. Now, having said that, my preface was not for, for nothing. I think we also would like to, to consider other in lake mitigation technologies. There are, there are a number, and we think it makes sense to, to look at those as well. On one hand, I may ask for an extension, but on the other hand I, I might, I think it would be the right thing to keep our options open where different technologies are concerned. [SPEAKER CHANGES] Are there other questions? Senator Rabin. [SPEAKER CHANGES] Back to the Duke issue for a minute, actually the, the coal ash issue, the protection of the water from. With all that's happened, do we still have the same safeguards in place that would prevent it from happening, or have we fixed those so that we don't have to wait until a catastrophic event happens, and then take action. [SPEAKER CHANGES] And that's really a great question. So much has been written that I think is somewhat confusing about the whole threat of coal ash. It, it's really, it's really multiple threats, and one is the threat to groundwater, which is initiated by this administration early on, but the other is, and there is also, in fact a surface water threat, but the one you're referring to is wholly different. That, that's a catastrophic failure of, of the structure itself, and of course, there was, there was certainly a much larger instance of such a catastrophic failure in the mid 2000s at ?? where they had a breach of, of a dam spilling

100 times as much coal ash, but, but your point is, well, okay, it's catastrophic, but we have engineers, we have techniques, we have ways of, of estimating how good our structures are, and absolutely after this event at Dan River, our folks have been working extremely hard in, in investigating all such possible breaches at the existing coal ash facilities, and we've run cameras up pipes, we've investigated the dams themselves, and I think, I think without, without trying to offer my personal guarantee, which is not worth very much, we very much feel like we're in a better shape now than we were five years ago or seven years ago. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Yeah, a quick follow up. So I understand that we're taking steps but a lot that we hear deals with the toxicity of coal ash. Okay? Just how toxic is it in what quantity before it gets to be to the, oh my gosh we have a problem area? [SPEAKER CHANGES] Right, and, and, for years, for more than 50 years, there has been this question at the state and the federal level. The EPA refers to coal ash as, as a low risk but a high volume instance, where you've got maybe an individual bucket of coal ash is what it is, but when you've got 150 million tons, it's a wholly different threat. And so when you have such large quantities sitting in the ground, and in some cases exposed to groundwater, you're gonna see the kind of violations we see at Sutton, and, and yes, it can be a real threat. Some people have, you'll see heuristically of people buying coal ash as a soil benefaction technique for their gardens, and of course that's a very small quantity and shouldn't be confused with the kind of large bodies of coal ash we're talking about at these facilities. So yes, it's a real threat. It's a threat to groundwater, it can be a threat to surface water and, and as we saw at Dan River, it can be a great threat in a structural catastrophic sense. [SPEAKER CHANGES] Senator Jackson? [SPEAKER CHANGES] Thank you, madam chairman, and I want to commend you on the way that you handled our pages. I think that was the first time I'd ever seen that. I thought that was very good. Mister Secretary, welcome. Good to see you again, sir. I'd like, I got a couple of questions on the Duke issue and then I want to move into another subject. You mentioned the Duke finds were over a five year period. Could you explain that a minute? [SPEAKER CHANGES] The data that the assessment was based on spanned a long period of time, a much longer period of time than typically an assessment might be taken. And, and again, we had a lot more data, and there were multiple constituents that we found were violating the groundwater standard. I think there were a total of seven different constituents. So when you add all those up, that's when you get the kind of number we're talking about. [SPEAKER CHANGES] Follow up, madam chairman. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] So, and, and I do stand corrected. You did not say finds, you did say data. I apologize for misspeaking there. So are you saying that you have been licking at this for five years to have collected this data, and then a follow up to that would be, did we do anything proactive as far as running the cameras up the pipes and that type of things prior to this bill? [SPEAKER CHANGES] I can't really speak for the prior administration. There were certainly indications after the TVA disaster that, that would have alerted kind of alerted us, alerted the state and others to the kind of, to the kind of work that we undertook in North Carolina since Dan River. But, and I think the, without getting into the US attorney's case, there were some additional considerations in Dan River that I can't speak to. Yes, monitoring has been going on for the groundwater issue for many years. I don't know why action wasn't taken in the previous administration, but as I said, very quickly after taking office, Governor McCrory was interested in pursuing groundwater

On other issues and this is a result on that. Remember this is simply a penalty that holds Duke accountable for those violations but as you all know and you all had such an integral role in the actual fixing of the problem was initiated through the Coal Ash Management Act. And when the focus, the original focus was to fix the problem which the Coal Ash Management Act will do, this is now holding Duke accountable for those violations, so this is purely a penalty. [SPEAKER CHANGES] Thank you, Mr. Sert. Follow up Madam Chairman. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Thank you again, Mr. Secretary for those answers. Me being from the private sector, I find those fines a little offensive. A little excessive. I’m just curious, based off the TVA spill, would the fines be, you mentioned it was 100 times greater than this, would that mean those fines would have been $250 million? [SPEAKER CHANGES] Again, I just wanna point, and I’m speaking beyond, if you’re referring to the $100 million that was assessed or settled or however you want to characterize that, you know, that, I have to say that was in a context of criminal violations. I don’t think TVA had any of those so there are distinctions between those two scenarios. [SPEAKER CHANGES] Follow up, Madam Chairman. I wanna change the subject Madam Chairman. I think I’ve made my point of how I feel about fines. You know, we’re supposed to be customer friendly here. In 2013 this committee or the NER committee directed DNR to look into working to talk with the Wilmingtion Corps of Engineers on allowing the adjacent hocks to be used and what land in stream mitigation. What is the progress? Where are we at on that? [SPEAKER CHANGES] The answer that we received is a no, negative, and that it I think unfortunate. We believe that we’ve got a robust mitigation system here in North Carolina both through our own EEPE as well as the private mitigation banks. I think that we need to consider other means to allow a more flexible protection, mechanism to protect the environment and we could discuss some of those. [SPEAKER CHANGES] Follow up Madam Chair. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Well being we’re on this subject what are some of the policy changes that you maybe would suggest or even be request to so we could, you know, use the private mitigation banks moreso than we’re currently using them. [SPEAKER CHANGES] Well, you know, our EEP, the program was developed when we had a fledgling or immature private mitigation banking system here in North Carolina. Since that time, since the development of EEP we’ve now got a robust and more mature industry that is available. In study after study that looks into the environmental outcome of the use of private mitigation banks it’s always been shown to be optimal, superior, and so we feel like one option might be to consider removing EEPs from certain river basins to allow the private mitigation banks to be the, to pick up the work that we think they can do that and it will apparently because of the treatment that the Corps has been giving us, that they will then be able to use credits from adjacent hocks if I didn’t misspeak there. Is that more or less correct? Michael Ellison says it’s more or less correct. [SPEAKER CHANGES] Thank you, Mr. Chairman, I have two more follow ups if I may. [SPEAKER CHANGES] Now, Senator Jackson, okay sug, go ahead. [SPEAKER CHANGES] Thanks sug, thank you sug. You do know this is recorded don’t you sug. Yeah, all the way to China as Senator Hartsell just reminded me. I got just two quick questions concerning the full reform permitting process. Do you think our state should petition the corps of engineers and EPA for us to take over that process. [SPEAKER CHANGES] Well, I think that’s a very, that’s a very interesting proposition. I would add a few points in that regard. One is North Carolina probably has one of the most comprehensive and robust

401 programs. The 401 procedure does support a 404 permaning process but I believe North Carolina's 401 program is such that it provides some synergy with a state implementation under 404. So what I'm trying to say is there may be some ability for us to combine those as what your suggesting. I think there are other advantages to having a 404 program in house and primarily because they're our wetlands and we feel we have a very strong program to take over such an important program. But it would take some study it would take an application and it would probably also entail some additional resources to augment our 401 staff. [SPEAKER CHANGES] Final follow up madam Chairman. [SPEAKER CHANGES] Final follow up. [SPEAKER CHANGES] Thank you. If we were to do this could you sort of maybe walk me through the first three steps of how we would petition the feds in takin over the 404 programs [SPEAKER CHANGES] Right, the first step would be to actually prepare an application and the application process is extensive. We would probably suggest that we seek outside help in developing such an application. And it'll take probably at least a year. And of course when we undertake such an effort we'll have to show we have the ability to follow up the application with a robust program. If successful if the EPA does in fact approve the application then we would have to augment our staff somewhat to combine a 401, 404 effort. And we think we can do that we think we have the personnel and the expertise but we would have to look at budget issues at that time. [SPEAKER CHANGES] Thank you Mr Secretary, thank you madam Chairman for your patience. [SPEAKER CHANGES] Okay Senator McGuiness. [SPEAKER CHANGES] Thank you madam Chairperson and Mr. Secretary thank you for being with us here today. I live in rural North Carolina some areas so rural that we don't get the Sunday News and Observer till the following Tuesday. So from time to time we get decrees down from Raleigh here that take a long time to get there but specifically I run in my business into old abandoned fuel tanks on farms and abandoned service stations. And I know there was a fund at one time a tank fund for participating in removal of those but I also remember I think that there also had to be some registration or participation or something like that and my question is is there any opportunity to give relief or assistance to those that find an abandoned tank on their property or their farm they might have purchased sometime? [SPEAKER CHANGES] I'm going to have to defer that to our expert Linda. [SPEAKER CHANGES] ?? We would look at the eligibility of farm tanks and usually from the tank standards where they pay fees and to assist them that's once they're eligible to get reimbursement to release. But we would be glad to work with you one on one and ?? situation and what your eligibility might be. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] If it is unregistered that is more problematic for us than the ones that are registered because there is a pathway for this particular Excuse me, I'm sorry, particular situations we're running into are where we have an abandoned service station and it's been abandoned for thirty or forty years and there was no registration placed. Is there any opportunity for relief for those folks? [SPEAKER CHANGES] We will look into that perhaps there is some interest in space remediation applying to those types of situations is being explored. Working with farm bureau as well as with other interested parties on ?? be glad to work with people. [SPEAKER CHANGES] Thank you very much, thank you. [SPEAKER CHANGES] Senator Bryant. [SPEAKER CHANGES] I have one question but now I have two I think I looked it up. Can you tell me I just want to know what 404 is. I think it's something to do with water [SPEAKER CHANGES] Yes I'm sorry

I got the first section of the Clean Water Act, the federal law, we implemented in conjunction with the Corps. Right now, the Corps actually has the majority of the review responsibility. It ultimately does go through the EPA and is primarily for wetlands protection. [SPEAKER CHANGES] Thank you. Followup? Secretary van der Vaart, have I got that right? [SPEAKER CHANGES] Yes, you did. [SPEAKER CHANGES] I’m Angel Bryant and I represent Nash, Wilson, Halifax, Vance and Warren counties. Nice to meet you, I just wanted you to have a context about the specs. [SPEAKER CHANGES] Absolutely, thank you very much. [SPEAKER CHANGES] Several of my constituents from varying points of views have contacted me about the federal Clean Power Plan, I think they’re calling it. And some states, I think FL, GA, SC, VA, surrounding us, the agencies, their state agencies have facilitated public comment sessions to help give input or feedback into these developing regulations or proposed regulations. Are we considering anything of that sort or what are we doing in relation to that. [SPEAKER CHANGES] Yeah, that’s a great question. I am not familiar with what those states are doing. Obviously, this is previous to any kind of rule making in NC. This is a federal proposed rule and so the normal course of business is for those kind comments to go into the federal government. We do have a document online that describes what we think about the program. It’s actually sometimes referred to the Clean Power, sometimes it’s referred to as Section 111 D, which refers to the section under the Clean Air Act that they’re propagating this under. And so there’s a lot of information that people can obtain, and it’s a massive undertaking. We can talk about it as much as you would like, but I would think, depending on what the particular interests of your constituents might be, they should first go to our website and see if the answers might be there. Otherwise, of course, they can contact us. [SPEAKER CHANGES] Chairman Brock. [SPEAKER CHANGES] Thank you Madam Chair. Long time no see, I just got through another meeting. Last year, ??02:26 submitted a report or had a report on base load versus non base load generation. Can you speak to that for a little bit? [SPEAKER CHANGES] Yes, and that report is undergoing review right now at the governor’s office. Without you saying it, I will go ahead and ask for forgiveness because we are tardy right now, but we will get it to you as soon as we get that approved. It’s a fairly detailed, we’re calling it a snapshot of NC’s energy profile. It includes a discussion about the Clean Power Plan that Sen. Bryant just discussed. It includes our current state of our renewable energy profile portfolio standing, and it also talks about developments that have gone on in the power generation and electricity generation and energy market since the time of the renewable energy portfolio standard. [SPEAKER CHANGES] Followup, any idea when you’re gonna have it? When you’re gonna submit the report? [SPEAKER CHANGES] I was hoping you were going to avoid chiding me. I chided myself already, but I’m sorry, right now it’s a review process out of my control, but it should be, it should be pretty quick. [SPEAKER CHANGES] Okay, I should’ve asked that when we were budgeting your money. I saw, sorry, didn’t want to separate the two, but going back to the EPA and the clean power and other regulations coming down from Washington with 111 D, could you inform the committee about how some of those things are impacting NC? And I will say almost unfairly because some of the things we did before, well other states we measured on their change, we’ve already changed and we will not be able to meet those requirements by the EPA. [SPEAKER CHANGES] Right, and it is a very complicated rule. It is in proposal right now, so it is likely to change, which would be in my opinion a good thing. I am to appear next week in front of...

[SPEAKER CHANGES] This because of essentially the, the Clean Smokestacks Act, which was passed some years ago, our utility mix has been-has dramatically changed. And this has also been enhanced and provided, facilitated by the, the revolution in America in terms of natural gas production through hydraulic fracturing. It has provided for a much, much, much greater production of natural gas, and therefore the price has come down and it's allowed our utility to shift generation from coal plants, particularly old and inefficient coal plants to far more efficient combined cycle and natural gas power plants. And so what we've seen is a dramatic retiring of some of our older coal plants, and that has provided for a reduction in our greenhouse gas emission rates, so much so that I think if this continues we'll be able to meet the president's commitment of a 30% reduction since 2005. Getting back to your question unfortunately, though, the rule that, that the EPA proposed, first of all doesn't use a 2005 baseline. And it is in my opinion far beyond the authority that the EPA has under the Clean Air Act. So we will, it may be premature, hopefully it's premature to, to say that the proposed rule will actually go in as final. But we have grave concerns. [SPEAKER CHANGES] Follow up? [SPEAKER CHANGES] Just a follow up and a little bit on a different topic. But ?? said about what-speaking of the rules and regulations through EPA and overstepping their bounds. This goes to a comment you made earlier in your presentation about how North Carolina is number one in environmental protection. But when we're looking at recruiting jobs and industries to North Carolina, two industries or two companies that have moved to North Carolina almost did not come here because of almost, I don't want to say arbitrary but more, just plain random environmental regulations. And what flexibility, one of the CEOs told me we had a worse regulatory environment in North Carolina than in California. That's not a good way to sell the state when the CEOs are talking to one another. What flexibility would you have, either in ending or recommendations you would make to the General Assembly to changing some of that culture or some of those arbitrary regulations? And also what flexibility you have as far as using some of the funds from fees that we collect? We can do the funds later in budget, but we'll do the policy one here. [SPEAKER CHANGES] I'd certainly like to talk to whoever believes our regulatory structure is so draconian as to compare us unfavorably with California. At the same time, we do believe, I believe very strongly that environmental protection is, is one of our major core functions. I do believe that, that a lot of the rules that we implement are federally based and so we have limited flexibility. I do also think that the EPA from time to time has, as they necessarily must at the federal level, lost sight of the abilities of states to be able to implement these programs in a more judicious fashion. But I think we also, and I've said this before. I think that we have rules that probably still need to be written. We probably have rules that need to be gotten ridden of, and we have rules that need to continue to be enforced. It's a dynamic, it's a dynamic challenge to protect the environment and it forces us to continually review our rules and our procedures. [SPEAKER CHANGES] I have Senator Bingham and then Senator Alexander now, Senator. [SPEAKER CHANGES] Madame Chairman, I think ?? Senator Alexander. [SPEAKER CHANGES] Senator Alexander. [SPEAKER CHANGES] Thank you Senator Bingham, sir I know we've got kind of a mess with Fall-with, with Jordan, and I salute you in your efforts in trying to get those little gadgets to clean it up and I hope you're successful with it. I'm also concerned with Falls Lake, can you give me an update as to what is the condition of Falls Lake? What efforts are being made to keep Falls Lake from becoming another Jordan?