Rep. Chuck McGrady, R-Henderson, listens during a recent meeting of the House Environment Committee. Kirk Ross/Carolina Public Press

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RALEIGH — Rep. Chuck McGrady, R-Henderson, says the legislature and the McCrory administration are in negotiations on legislation to reconstitute a coal-ash oversight commission that was shut down earlier this year by after a lengthy legal fight over the commission’s makeup.

A bill creating a new commission was expected to be introduced at noon today in the House Rules Committee, but that meeting was canceled.

McGrady said Wednesday morning that the bill was pulled at the request of the governor. “Talks between the Governor and the legislature will continue,” McGrady said in an email to Carolina Public Press.

In a statement emailed out late Friday, McGrady announced that he would introduce legislation to re-create the commission, which was charged with making final decisions on the decommissioning and remediation of coal ash basins. The commission, he said, was set up as another layer of oversight to review recommendations on what to do with each site from the Department of Environmental Quality.

“The legislature wanted an independent body to consider DEQ’s decisions on which coal-ash ponds must be cleaned up first and how they would be cleaned up,” McGrady said in the statement. “I am working closely with Senate leadership to move the legislation in advance of DEQ issuing its initial decisions so the newly reconstituted Commission will have the ability to review them.”

Coal Ash Management Commission history

McGrady was the House’s lead negotiator and one of the main authors of coal-ash legislation passed in the wake of the February 2, 2014, Dan River spill, in which a failed drainage pipe emptied two massive coal ash basins in the river at a retired Duke Energy plant near Eden.

The legislation that followed, the Coal Ash Management Act of 2014, set up a system for classifying and remediating 14 sites throughout the state, many of them, including sites in Asheville and Rutherford County, also located adjacent to major rivers. Many of those bodies of water provide drinking water to substantial populations as the French Broad River does for Western North Carolina and the Broad River flowing out of Rutherford County does for parts of upstate South Carolina.

While much of the work managing the coal-ash effort falls under the purview of the state’s Department of Environmental Quality, the legislation also created the Coal Ash Management Commission as a separate entity housed under the Department of Public Safety. The commission was a mix of nine appointees with specific areas of expertise such as waste management, public health and electric power generation. Six of its members were appointed by the legislature and three by the governor.

During hearings on the legislation, Gov. Pat McCrory’s chief counsel Robert Stephens, told legislators that the commission would oversee executive branch actions and its appointees should not be skewed toward the legislative branch. Stephens said during the hearings that the administration would consider legal action. It was one of the few open objections the McCrory administration would raise about the bill, which passed near the end of the 2014 short session after months of negotiation between the Senate and House.

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In late November 2014, the Coal Ash Management Commission was sworn in and conducted its inaugural meeting. The day before, the governor made good on his promise and filed a lawsuit challenging the authority of the new commission. The suit, which also challenged two other commissions with similar balances of executive and legislative appointees, argued that the three commissions violate the separation of powers clause in the North Carolina Constitution. McCrory was joined in the action by two former governors, Democrat Jim Hunt and Republican Jim Martin.

Although the legislative leadership opted to fight the challenge, the Coal Ash Management Commission conducted just one more meeting before a three-judge panel ruled in  McCrory’s favor in March 2015. In January 2016, the state Supreme Court affirmed that ruling, siding with the governors in a 6-1 decision.

On March 11, Stephens sent a letter on behalf of the governor to Michael Jacobs, the chair of the Coal Ash Management Commission to announce the shutdown of the commission.

“This letter to advise you that as a result of the Supreme Court’s decision, the Commission no longer exists as a legal entity and does not have any legal authority to take any further legal action,” Stephens said in the letter. “It cannot and should not attempt to exercise any of the powers and duties assigned to it by the Coal Ash Management Act or otherwise. The Commission can neither be convened nor can it meet.”

Politics of oversight

The governor’s move did not sit well with environmental groups and some legislators, who said the outcome should not be solely left to DEQ. The Sierra Club and the Southern Environmental Law Center put out a joint statement calling for an independent review of the plans for each site.

Rep. Pricey Harrison, a Guilford County Democrat who was critical of the state’s oversight of coal ash prior to the Dan River spill, said she also thinks it unwise to leave decisions on how to remediate the 32 coal ash basins just to DEQ.

“It was easy to fix in the legislation so I think the governor acted precipitously in disbanding (the commission),” Harrison said in a recent interview with Carolina Public Press.  “I think that very few people in this state have confidence in DEQ right now. It’s just been one thing after another.”

She said the recent controversy over well-water advisories has further eroded trust in the department’s decision making. The governor’s long association with Duke Energy and the increasingly pro-business moves by the department is troubling, Harrision said.

“It doesn’t give me a lot of confidence about what that means for protecting the neighbors of those coal ash ponds,” Harrison said.

DEQ Assistant Secretary Tom Reeder, the former head of the state Division of Water Quality and the administration’s point man on coal ash, said he did not know how the legislature would handle changes to the Coal Ash Management Act. He said DEQ has an adequate budget in place and is prepared to manage the closure and remediation of the sites.

“Our biggest priority is coal ash, dealing with the coal ash problem,” he said in a recent interview. “I spend 50 to 75 percent of my time worried about coal ash.”

Under the 2014 law, the Asheville site near Arden and the three other sites classified as critical must be cleaned up by 2019. Last year, the legislature granted Duke Energy some leeway on the Asheville timetable, since work would would have to be coordinated with the plant’s conversion to natural gas.

The exact type of remediation and the timetable for the other sites has yet to be settled pending DEQ’s final set of recommendations. Prior to the governor’s lawsuit those recommendations would have gone to the Coal Ash Management Commission for review and could not have gone forward without the commission’s approval.

Reeder said DEQ is ready to move ahead on the plans once the recommendations are set.

“We won’t have any problem meeting our responsibilities,” he said.

Who will spend the money?

Also involved in the negotiation with the legislature is a request by DEQ for an additional $5 million to cover the costs of outside counsel working on coal ash litigation.

At a preliminary budget review last week, DEQ general counsel Sam Hayes said the amount of discovery involved in litigation with Duke Energy necessitated bringing in outside firms. He said the four legal actions on the coal ash sites deemed critical by the state, including the Asheville site,  had cost more that $800,000. Another suit that ultimately resulted in a $7 million fine against the company for contamination in New Hanover County had cost $1.5 million in legal fees.

“We have a host of litigation with Duke Energy regarding coal ash remediation,” Hayes told legislators. “We’re projected to spend at least $5 million ongoing and a lot of that is for discovery.”

In an email response to Carolina Public Press, McGrady said he wanted to understand more about the request and DEQ’s decision to end a contract for legal services with the North Carolina Department of Justice.

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“I will need to be convinced about the need for extra money for litigation, particularly in light of the administration (acting) to sever its ties with the Attorney General’s staff, which was handling routine legal matters and some litigation,” McGrady said.

DEQ’s initial statements surrounding the termination of the DOJ contract were critical of DOJ’s work on environmental issues and came at a time when the McCrory administration was increasingly at odds with Attorney General Roy Cooper, a Democrat who hopes to unseat the Republican governor in the fall.

Last week, DEQ officials stressed that the $5 million request was not connected to the DOJ contract in any way and would be solely used to handle the rising costs of the coal-ash litigation against Duke Energy. DEQ spokesperson Crystal Feldman said Friday that funds are needed because Duke appears to be willing to devote “almost limitless” resources in defending itself in the coal-ash cases.

Whether the legislature is successful in reconstituting the Coal Ash Management Commission, the governor’s decision to close it left loose threads for legislators to tie up, not the least of which is roughly $600,000 the commission was to receive from a fee collected from Duke Energy revenues.

Rep. Jimmy Dixon, R-Duplin, a co-chair of the House Appropriations Committee on Agriculture and Natural and Economic Resources, said the legislature is constitutionally obligated to use the collected fees for their intended purpose. But since the commission has been disbanded, he said, the money hasn’t been able to be allocated.

“There’s nowhere to put it,” he said. “We have very limited choices. We’re not going to redirect it. We’re not going to abuse the constitutional mandate for it, diverting the means  for which it was generated to start with.”

McGrady said the money issue must be dealt with whether a new commission is formed or not.

“At a minimum, we need to determine where the monies that went to the Coal Ash Commission are going,” McGrady said. “My view is that those monies should only used for coal ash.”

Kirk Ross

Based in the Triangle, Kirk Ross is the capital bureau chief for Carolina Public Press. Contact him at kross@carolinapublicpress.org.

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