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House | July 1, 2014 | Committee Room | Environment and Natural Resources Appropriations

Full MP3 Audio File

We call the environment committee to order. I’d like to thank our sergeant at arms today, Bill Bass, Charlie Goodman, David Collins, Bill Morris, BH Pile and Carl Morello. Thank you for the job you do. We have some pages with us today. We have Tristan Adams from Lincoln County, Jason Saine is the sponsor. Please stand up when we call your name. Jay Spires from Iredell County, Robert Brawley. Harrison Bryant from Alexander County, Mark Hollo. Emily Callicutt from Montgomery County, Justin Burr. Sam Ness from Nash County Jeff Collins. Emily Gage from Polk County, Chris Whitmire. Morgan Warren from Rowan County, Representative Harry Warren. Thank you for being here today. Today we’re going to let staff go through the bill to start with. Then we’ll hear from the sponsors and we’ll take comments from the committee. This is going to be a discussion only bill. Okay would you like to make an opening comment, Representative ?? [SPEAKER CHANGES] If I could, I was just going to set the table. But I am going to do exactly what you’re recommending. [SPEAKER CHANGES] Okay, we’ll let you help set the table, how’s that. [SPEAKER CHANGES] And Mr. Chairman, while he’s coming up to set the table may I make a comment? [SPEAKER CHANGES] Yes, you may. [SPEAKER CHANGES] He may be setting the table, but I want everybody to know that Representative McGrady helped plan all the utensils that are going on the table. He’s done a ton of hard work on this and while we are using and starting, we had the Governor’s blueprint, and we’ve had the addition from the Senate. I want people to understand that McGrady has put his heart and soul in this and we appreciate that. [SPEAKER CHANGES] Representative Hager, would you like to comment? [SPEAKER CHANGES] Just want to echo what Representative Simmons said. Representative McGrady has worked long and hard with Representative Catlin on this issue, being the experts in the room. I understand it’s Senator Apodaca’s bill. He preferred not to be here today, to allow Representative McGrady to handle it. [SPEAKER CHANGES] Mr. Chairman, thank you to my colleagues for their comments. I guess that means if it all works out right, I get some credit and if it doesn’t, you know who to blame. Seriously though, standing up here in the place of Senator Apodaca is a tough act to follow. We may come from the same city and I don’t know what our respective weight is, but I’m sure we’ve got some other things in common although I’m not exactly sure what those are right now. What I wanted to do is just set the table. I’m going to ask staff, the bill that’s before us is not obviously a House bill. And we were not involved in, intimately involved in its preparation. I can’t really speak to all the reasons why the Senate made some set of decisions they did. I can probably speculate as to some and may in some places. I think the bottom line though is the goal for all of us were the same. And as Representative Samuelson pointed out, I think you need to look at this as a process. The Governor took the first good step, and on top of that the Senate has built its bill and it’s the next step. And I, from my perspective it exceeds my expectations, in terms of the specificity that the Senate has given, and the timelines it set. The goals are obvious here. We want to stop creating new coal ash ponds. And that, the Governor and the Senate both do. We want to dewater the ponds that are out there. That gets us a long way towards not continuing pollution of ground water or surface water, potential surface water. We want to set a timetable for evaluating what’s out there. We don’t know everything yet. Duke power, Duke energy doesn’t know everything about these ponds yet. There’s more study that needs to be done, and even if we tried to immediately start moving tomorrow, it would take many years to clean up the problem that has come about over many decades. We then want to, having made an evaluation, we want to close the coal ash ponds and pits down, and then we want to clean them up. The one piece of the Senate bill that surprised me just

...because of the way it was set up, but not surprise me in terms of what it was trying to do, was the establishment of the Coal Ash Management Commission. Again, I don't know what exactly the Senate was thinking to here, but I think the expectation was that perhaps the department didn't have the credibility to act on this and there needed to be some independent entity that had responsibility for coal ash management. Some independent entity that would stand behind DNR. DNR would be making recommendations based on information provided by Duke and others, but ultimately the responsibility for making these decisions about when things were going to be cleaned up, how they were going to be cleaned up. All the high level decisions would be made by an independent body. I think that's what the Senate had in mind. It's a creative solution to the problem that I also perceived as to how we make sure that this gets done in a timetable that the House and the Senate want to put in place. I think right there I'm just going to stop and turn it over to Mr. Hudson and Ms. McGinnis to take us through the respective parts of the bill, Mr. Chairman. [SPEAKER CHANGES] Thank you, Representative McGrady. Before we do that I want to make an announcement. We were going to be meeting this evening, 30 minutes after session in this same room. If you have amendments they need to be in by staff by the end of session today. And now we'll turn it over to staff to go through the bill. Representative Samuelson. [SPEAKER CHANGES] Just one other thing. There will be a PCS, I just wanted to confer a PCS released before that meeting? [SPEAKER CHANGES] Yes, there will. Jeff, if you'd like to go through the bill. [SPEAKER CHANGES] Thank you, Mr. Co-Chair. As you can see from the bill before you, this is the third edition of Senate Bill 729. It's almost 50 pages. It has a 2 page long title. It's a complicated bill so me and my colleagues, Jennifer McGinnis and Heather Finnelle will walk you through the bill. Ms. Finnelle will talk to you about the cost recovery provisions and the regulatory fee in the bill. Ms. McGinnis will talk to you largely about prioritization of the coal ash ponds and the different closure methods, as well as new regulations for structural fill in those large structural fill sites. I'm going to talk to you about the Coal Ash Commission, ground water and surface water protections, and dam safety provisions. So with that, I'll get started. You can skip over the first two pages, which are the long title of the bill, to the second part of page 3. This is the provisions for comprehensive measurement of coal combustion residuals. There's some miscellaneous provisions in this new part. The most important probably being the definitions. These terms are, some of them are new and will be used throughout the discussion of this bill. The most important one that I want to bring your attention to is over on page 4. This is coal combustion residual surface impoundments. These are the coal ash ponds, we'll probably be referring to them as impoundments or ponds throughout a discussion, so we don't have to keep repeating that mouthful. One thing I'd point out about the definition, if you look down on line 16 it says "coal combustion residual surface impoundments shall only include impoundments owned by a public utility as defined in the utility statute" so essentially this is confining most of the bill to the impoundments owned by Duke Energy. There are other industrial facilities in the state that have impoundments that might be otherwise caught under this definition, but that limitation on the ownership of the impoundment should only include those owned by Duke. Over on the next page, you'll see the Coal Ash Management Commission. This is the commission that Representative McGrady referred to. This is a nine-member commission, three appointments by the President Pro Tempore, three appointments upon recommendation of the President Pro Tempore. The appointments made by the Senate. Three by the House upon recommendation of the Speaker and three by the Governor. The first three are upon recommendation of the President Pro Tempore. The first one is a resident of the state, the second one is a person having special training or scientific expertise...

In waste management, including solid waste disposal, hauling or beneficial use, and the third is a licensed physician or a person with experience in public health. The next three are upon recommendation of the speaker. This is a member of a non-governmental conservation interest. A person actively employed by or recently retired from an industrial manufacturing facility and a person with expertise in determining and evaluating the costs associated with electricity generation and establishing the rates associated with electricity consumption. The last three are the Governor’s appointments. A person with experience in economic development, a member of an electric co-op and a person with experience in science or engineering. If you’ll turn over to the next page, you’ll see in the middle of that page the powers and duties of this commission. Those are to review and approve the classifications of the coal ash ponds as required in the provisions that Miss McGinnis will discuss later. Also to review and approve the closure plans for those ponds. Again, Miss McGinnis will discuss those in detail. And also to review and make recommendations on all the provisions of this new part and to report back to the General Assembly on those recommendations. There’s a provision here for staffing this commission. This commission will have five full time staff to help it with its duties. Miss Fennell will talk about those in a little more detail later. Over on the next page, page 7 on line 10, administrative location of this commission. So this is where the commission would be administratively housed. It is in the division of emergency management, in the department of public safety but note that the last sentence of that sub-section says the commission shall exercise all its powers and duties independently and shall not be subject to the supervision, direction or control of the division or department. So although the commission is administratively housed in that department, it will be acting independently. The next new section in this part, expedited permit review, this closure process for the impoundments will require new permitting of different types for different types of permits, be they land fill permits, water quality permits, because of the deadlines throughout the act, there’s some concern about all of this being accomplished in a timely manner, so this provides for the department doing expedited review of the permits necessary to conduct the activities as required by this part. Over on the next page, page 8, is a provision for preemption of certain local government ordinances that might also regulate coal ash management. This language is similar to language that’s already in the hazardous waste statutes as well as the hydraulic fracturing statutes. Basically provides that local ordinances can’t place restrictions on coal ash management that aren’t contained in this part or that conflict or are inconsistent in any manner with the provisions of this part. It also provides for reviewing local government ordinances that may have general applicability that could impact coal ash management and would direct the environmental management commission to look at whether or not those types of general applicability ordinances should also either be limited or preempted by this act. The next sections are over on page 10. One provides for federal preemption. This recognizes that the USEPA is currently working on rules for coal ash management. They are under court order to issue those rules, adopt those rules by the end of this year. So this recognizes that those rules may be coming out and to the extent that this part conflicts with those rules, those rules or any other federal law in this area would control. The next new section provides for rule making, by the environmental management commission to implement the provisions of this part. The next new section, this is 138 309.208, this is an important section because it starts setting out some of the deadlines for changing management of coal ash in the state. The first deadline is today, July 1 2014, and it would prohibit the construction or new or expansion of existing coal ash ponds. The next is for October 1 of this year. This would prohibit the disposal of coal ash into impoundments at facilities

that have been decommissioned. They’re no longer generating coal ash. The next deadline, December 31st 2018, this is a prohibition on the discharge of storm water into coal ash ponds at decommissioned generating facilities, and December 31st 2019 is a prohibition on the discharge of storm water into coal ash ponds at all facilities, whether they’re generating coal ash or not. The next deadline, this is subsection E. December 31st 2018; this is for electric generating facilities, directing them to convert to disposal of dry fly ash or retirement of the facility. So those facilities have to convert to dry fly ash or retire the facility by December 31st 2018, and then by December 31st 2019, similarly the disposal of dry bottom ash. There has to be a conversion to the disposal of dry bottom ash or the facility has to be retired. The next two sections deal with groundwater and surface water protection and assessment to generate information to help in the classification of the impoundments as to the risk that they pose to water quality. The first one, groundwater assessment and corrective action in drinking water well supply and provision of alternate water supply, this is basically dealing with groundwater, as opposed to the next section, which is surface water. This section begins by requiring groundwater assessment at the coal ash ponds. If you turn over to the top of page 11, it provides that no later than December 31st of this year, the owner of the coal ash ponds, they have to submit a proposed groundwater assessment plan to the department for the department’s review and approval. Basically the assessment plan has to identify all potential receptors around the pond, the contamination that already exists; basically anything to help the owner of the coal ash pond and the department determine if there are groundwater issues at the impoundment. It provides again for review and approval by the department and says that no later than 180 days from the approval of the assessment plan, the owner has to implement the plan, and once the owner implements the plan, they will report the results of that plan back to the department so that they’ll be reporting on any groundwater exceedences that are found. Once they do that, if you look at line 36 on page 11, the legislation provides that no later than 90 days from the submission of the assessment report, again, where there are exceedences, the impoundment owner has to submit a proposed groundwater corrective action plan to the department for its review and approval, and at the bottom of page 11 you’ll see the provision that says the corrective action plan has to provide for the methods of restoring groundwater in conformance with the requirements of subchapter L of chamber 2 of the administrative code. These are the current groundwater cleanup laws, and basically the corrective action plan has to provide for cleaning up groundwater exceedences in accordance with the current state law on groundwater, and then once the plan is approved by the department, the impoundment owner has to implement the plan within 30 days. Subsection C on the middle of page 12; this is for drinking water wells. Basically the idea here is to identify any drinking water wells within half a mile, downgrading of the compliance boundary impoundment that has been contaminated by constituents in the coal ash of the impoundment, and if that occurs, the impoundment owner has to provide an alternate water supply – drinking water supply – within 30 days of the department determining that there’s been a groundwater exceedence in those wells. So again, this is designed to identify and provide alternate drinking water for folks impacted by constituents from the impoundment. Over on page 13, this new section is similar to the one for groundwater, but this one is for surface water discharges. It provides that no later than December 31st of this year, the impoundment owner has to provide a map to the department that identifies all outfalls and discharges from the impoundment, to the department.

and it has to identify whether or not those discharges reached the surface waters of the state. In subsection b of this new section, the impoundment owner has to do an assessment of the discharges from the coal ash pond to determine, again, if they’re reaching the surface waters of the state and to determine if the discharges are causing any violation of water quality standards. If it’s found that there are discharges from the impoundments to the surface waters of the state, the impoundment owner has to develop a corrective action plan and submit that to the department. You’ll see this on the middle of page 14. If the department determines that there is an unpermitted discharge from an impoundment, and the discharge reaches the surface waters of the state, the department notifies the impoundment owner and the impoundment owner has to develop an unpermitted discharge corrective action plan. This plan has to do one of two things to correct the discharge--this is at the bottom of page 14--it either has to eliminate the unpermitted discharge or it has to amend its water quality permit in order to provide for the discharge so that it gets it under the water quality regulations. Those are the two different methods for addressing unpermitted discharges. Finally, over on page 15, for this surface water protection statute there’s also a provision for identifying new discharges, so not only does the impoundment owner have to identify those that are existing, they have to have a plan for inspection so that if any new discharges arise they will know about it and can report it to the department. That basically covers the surface water and groundwater protection provisions for the existing impoundments. I’m going to ask you to flip over to page 36 of the bill. Another component of making sure that these impoundments remain safe while they continue to be in existence is related to their dams, so on page--actually I’m skipping ahead of myself. One of the other things that we have related to reporting of discharges is on page 36. This tightens up some of the reporting requirements to make sure that there are reports of discharges that have to be made to the department within 24 hours and the press release requirements in existing law, those are decreased from 48 hours from the discharge to 24 hours so, again, it’s tightening up some of those reporting times. It’s over on page 38 that you’ll find the provisions strengthening the dam safety laws, as they relate to these impoundment dams. The first provision, section 7, in the middle of page 38, this basically says that if the impoundment owner is going to make emergency repairs to the dam, it has to do so as soon as possible but no later than 24 hours after first knowledge of the necessity of the emergency repairs. Section 7.1 provides for a detailed closure process for the dams of the impoundments. Many of these impoundments are going to be closed, so their dams are no longer going to be operable or no longer are going to be acting as dams. This new section provides a detailed process for the division of energy, minerals and land resources to decommission those dams so that they’re no longer regulated, since they’ll no longer but operating as dams. Over on the top of page 40 these are requirements for the development of emergency action plans for the dams. If any of these dams is classified by the department as high-hazard or intermediate-hazard the dam owner has to develop an emergency action plan and it provides details as to what the emergency action plan has to include. Then, over on page 41 are new requirements for inspections of dams at impoundments. If you look at lines eight and nine on this page you’ll see that the current requirements for general dam inspection is basically the department has to try to provide for inspection of all dams at intervals of approximately five years. This new language considerably tightens that up for dams at impoundments. Basically, the department has to inspect each dam annually. The impoundment owner has to provide for inspection weekly and after storms, to detect any evidence of deterioration, and the impoundment owner also has to hire an independent engineer to do an annual inspection of the dam. That basically gets through the dam safety provisions. There’s some miscellaneous provisions that I’ll go over quickly, towards the end of the bill

Page 42 and several subsequent pages, there are a number of provisions that transfer rule making for solid waste from the commission for public health to the environmental management commission. Most of these are conforming changes, that's why there are so many pages of this. Over on page 46, are changes to compliance boundary provisions. As you may recall from last year's House Bill 74, the journal simply made some changes to the compliance boundary provisions that apply to coal ash ponds as well as other types of facilities in the state. What this provision does is it rolls back some of those changes that were made while leaving some in place. It leaves in place the definitive statement that all these types of facilities, regardless of when they were permitted, have compliance boundaries. And that the compliance boundary can be pushed out to the property boundary if there are multiple continuous properties under common ownership. But, this falls under rules adopted by the management commission, which limit those boundaries to 500 feet or 250 feet depending on when the facility was permitted. So, regardless of where the property boundary is, the compliance boundary can never be pushed out beyond those rule limitations. It also rolls back some limitations that were placed on the environmental management commission as far as what type of corrective action they could require for exceedances of groundwater standards under the compliance boundary. So those are the changes that were made to the compliance boundary, and there's a direction to the environmental management commission to study it's compliance boundary and corrective action rules to make sure that they are clear and internally consistent. There's been some issue as to interpretations of these rules, so we're hopeful that the environmental management commission will study this and bring recommendations back to the journal assembly by the end of this year. There are a couple of other studies that are on the top of page 47. The first is a study direction to the new coal ash management commission. Basically, to study the low priority sites and determine if under certain circumstances those sites might be better left in place and they require no further action or natural attenuation. There's some concerns that for some of these sites, there might actually be more environmental damage if the sites are dug up and that type of remediation is done, rather than just leave the sites in place. This bill doesn't allow for that, but it does direct the coal ash management commission to study that possibility and to see if that type of treatment might also provide for environmental protection of public health safety and welfare and natural resources. And then, the final study is a direction to the department of transportation, and it's basically telling the department to look at additional opportunities for the use of coal ash in construction and maintenance of roads and bridges in the state, and directs the department to report to the environmental review commission by the end of this year. And my final section is over on page 48, this is specifications for use of coal ash products in public procurement. Basically, this provision directs the state construction office, NDOT, to develop recommended technical specifications for using coal ash in either state construction projects, or road construction projects, and then directs them to report to the journal assembly by February 1st of next year on the results of the development on those recommended technical specifications. And I point out at the end of the bill we have a severability clause, if there's a problem with any particular provision and it's held invalid, it won't affect the other provisions. And then the effective date is otherwise provided throughout the act. The act is effective when it becomes law. Now, turn it over to Ms. McGuiness. [SPEAKER CHANGES] Members, we will go back to page 15 of the bill, and as Mr. Hudson indicated, I will review the prioritization and enclosure provisions of the bill with you, and two moratoriums as well. So, at the bottom of page 15, there's a new section in chapter 130a 309.211: Prioritization of Coal Combustion and Surface Impoundment. This provision would require the department of environmental and natural resources to prioritize all coal ash ponds

Were retired no later than August 1st, 2015 and assessed the risk as to whether they’re high-risk, intermediate-risk or low-risk. They would be looking at the site’s risk to public health safety and welfare, the environment, natural resources and also would be looking at a number of specific factors that are at the top of page 16, and I will run through those quickly. These include any hazards to public health safety or welfare resulting from an impoundment, structural condition or hazard potential of an impoundment, the proximity to surface waters and whether any surface waters are contaminated or threatened by contamination as a result of a pond, information concerning the horizontal and vertical extent of soil and groundwater contamination for all contaminants that are confirmed to be present in groundwater in exceedance of groundwater quality standards, all significant factors affecting contaminant transport, the location and nature of all receptors and significant exposure pathways, the geological and hydrogeological features influencing the movement and chemical and physical character of the contaminants, the amount and characteristics of the coal combustion residuals in the impoundment, and any other factor that the department deemed relevant to the establishment of risk. Again, the department would be using these factors to establish a risk category for each impoundment and give priority to the closure and remediation of impoundments that pose the greatest risk. After the department has evaluated this information, they are directed again by August 1st, 2015 to issue proposed classification for each coal ash pond and then, within 30 days after issuing a proposed classification, the department would be required to public notice that classification and also hold public hearings in each county for each coal ash pond for which risk is assessed. Then, after holding the public hearings and receiving public comment and taking that information into account, the department would be required to submit a proposed classification to the coal ash management commission that Mr. Hudson briefed you on. The commission would then be directed to evaluate all the information that was submitted and any other information they deem relevant, and they’re directed to only approve proposed classification if the commission determines that the classification was developed in accordance with the provisions of this legislation and that the classification accurately reflects level of risk posed by the pond. The commission would then be directed to issue its determination in writing, including findings and support of its determination, and then there would be an appeals process for a final approval under Chapter 150b of the general statutes. After a final classification had been issued for an impoundment, an owner of an impoundment would be required to submit a proposed closure plan for each impoundment and there are specific requirements under the legislation for each level of risk assigned to an impoundment. If you go to the bottom of page 17, you’ll see the requirements for high-risk impoundments. The bill would require that high-risk impoundments be closed as soon as practical, but no later than December 31st, 2019. Those closure plans would need to be submitted by impoundment owners no later than December 31st, 2016. The bill required that, at a minimum, all these ponds be dewatered and then directs that the impoundment owner either a)--and this is on page 18--convert the impoundment to an industrial landfill by removing all the coal combustion residuals and the contaminated soil from the impoundment temporarily, safely storing the residuals on-site and then complying with requirements for such landfills under the statutes and the rules. In particular, the bill would require that these

00:00 have a [??] collection system a closure cap system a composite liner system and otherwise comply with the construction siting and design requirements for industrial landfills under the administrative code with the exception of the buffer required for industrial landfills to surface waters in that regard the bill would require an increased buffer of 300 feet between the converted landfill the waste disposal unit and surface waters the impou or the new landfills would then also be required to close and conforms all the closure requirements for industrial landfills under the administrative code the legislation does however allow the department to authorize disposal of additional coal combustion residuals in addition to those that were originally included in the impoundment if the department determines that the site is suitable for additional capacity and that disposal of the additional coal ash would not pose an unacceptable risk to public health safety welfare the environment natural resources, in addition to that option of converting the impoundment to an industrial landfill the owner of the impoundment could also remove all coal combustion residuals from the impoundment return it to a non erosive and stable condition and send the coal combustion residuals that were removed for disposal into a coal combustion residuals landfill an industrial landfill or [??] solid waste landfill so these are landfills that would be not a former impoundment in landfills located elsewhere in addition the coal combustion residuals that were removed from the impoundment could be used as structure fill or for other beneficial uses in compliance with the law and in a moment I'm going to review for you some significant enhancements to the structure fill requirements that the bill makes next the intermediate risk impoundments these would be required to close in the same manner as the high risk impoundments however they would be given an additional five years to close and would be required to close no later than December 31st 2024 the low risk impoundments would be required to close by December 31st 2029 and those impoundments would allow be allowed to what's known as cap in place so they would need to comply with closure and post closure requirements for landfills and the bill specifies that they would have to maintain install and maintain a cap system they would have to have ground water monitoring they would have to have financial assurance and have post closure maintenance for a period of 30 years like landfills do the bill also currently references [??] collection system and again these impoundments would need to be closed by December 31st 2029 and the departments in addition to these cap in place requirements could also require other measures that would be designed to protect public health safety welfare in the environment including in position of institutional controls the next several pages beginning down at the bottom of page 19 and continuing through page 23 are details that are required to be included in the closure plans to be submitted by the impoundment owners then at the bottom of page 23 the bill requires the department to review these closure plans to insure that they are protective of public health safety welfare in the environment and otherwise comply with requirements of this legislation and then requires the department to take the proposed or the preliminary approval of a closure plan out for public notice and public hearing much like is required for the departments of preliminary prioritization classifications so after the department had taken the proposed closure approved closure plan out to public notice the department would then submit the proposed plan to the collash management commission and the collash.. 05:00

management commission is directed to only approve a closure plan if it determines that the closure plan was developed in accordance with the requirements that I just mentioned to you, and that implementation of the closure plan is technologically feasible and that the benefits to public health, safety and welfare, the environment and natural resources outweigh the negative impacts on electricity costs and reliability. The commission would then be instructed to issue its final determination in writing, including findings in support of its determination, and within 60 days of a closure plan. The bill does authorize parties that are aggrieved by a final decision of the commission to appeal that decision under Chapter 150b of the general statutes. Then, finally, at mid page 25 there is a direction for impoundment owners to implement the plans that are given final approval by the commission. The next provisions in the bill, beginning at line 30 on page 25, are the provisions I referenced a moment ago about structural fill. These provisions have some components of the current rules that govern structural fill but also bring in a host of new requirements. Primarily, the bill makes enhanced requirements for large structural fill projects, and those are projects that have used 10,000 tons per acre of coal combustion residuals or 100,000 tons per project. At the bottom of page 25 it describes permit requirements. Small projects, those projects under the trigger I just mentioned, would operate under a general permit. They would have to submit information for application but they would receive a general permit. The large structural fill projects, however, would have to have an individual permit. The next provisions are on the bottom of page 26. These are the design, construction and citing requirements for projects using coal ash. The first number of requirements, going through line 30 on page 27, are requirements under the existing rule for structural fill projects. The new requirements for large structural fill projects are at the bottom of page 27. These include, in short, liners for these large structural fill projects, leachate collection systems, a cap and groundwater monitoring system. These projects, on page 29 at line 20, would also be required to have financial assurance, much like landfills do, to ensure that sufficient funds are available for facility closure, post-closure care, post-closure maintenance and monitoring, and any corrective action that the department may require, and to satisfy any potential liability for sudden and non-sudden accidental occurrences and subsequent costs incurred by the department in response to an incident of a project. There is direction that these projects have to have post-closure care and monitoring for a period of 30 years. Again, this is the same time period required for landfills. On page 30 there is a description of additional closure requirements for structural fill projects. Again, there would be requirements that they maintain the integrity and effectiveness of their cap system, maintain and operate their leachate collection system and their groundwater monitoring system during the 30-year post-closure care period. On line 31, page 31 there is a requirement for recordation of projects using coal combustion products. These are all projects that use more than 1,000 cubic yards per project. This is a current requirement under the rules and has not been changed by the bill. Beginning at the bottom of page 31 there is an exemption for the Department of Transportation projects. It does allow the Department of Environment and Natural Resources and the Department of Transportation to agree on specific design construction citing operating and closure criteria. This exemption for DoT projects is included in the

Current rule full suite governing structural fill projects. On page 32 at the top, there is a requirement for the department to inventory and inspect certain structural fill projects. This requires DENR to no later than July 1 2015, inventory all structural fill projects with a volume of 10,000 cubic yards or more. And inspect those at least annually. And then report on those findings. There’s a specific direction in the structural fill provisions that would require the environmental management commission to amend their rules to reflect these enhanced requirements and make changes accordingly. At mid-page 32, beginning at line 19, these are the provisions that require closure of specific coal ash ponds. They are the impoundments located at Dan River Steam Station, River Bend Steam Station, Ashville Steam Electric Generating Plant, and the Sutton Plant. These impoundments would all be required to close by August 1, 2019 and they would be required to close by removing all the coal ash from the impoundments, and transfer that coal ash for disposal in industrial land fill, coal combustion residuals landfill or municipal solid waste landfill, or the coal combustion products could be used in structural fill or other beneficial use in accordance with requirements of the act. Next, on page 33 are a series of definitions. The most notable here is a change to the definition of solid waste, which would bring in wet coal ash, which is historically not been included in the definition of solid waste, and it would be wet coal ash that would be destined for disposal. Wet coal ash that is destined for beneficial use would not be brought into the definition of solid waste, and that would be termed coal combustion products. Next, some moratoriums. Mid-page 34, first there would be a moratorium on projects using coal ash as structural fill, until August 1, 2015, in order to allow DENR and the ENC to study this issue. There are however two significant exemptions to this moratorium, projects where the structural fill would have a baseliner, a leach aid collection system, a cap liner, ground water monitoring system, and where the operator establishes financial assurance would be allowed to move forward despite the moratorium. Also, structural fill projects where the coal ash is used as the base or sub-base of a concrete or asphalt paved road constructed under the authority of a public entity. Again, there’s instruction that any use of structural fill that would be allowed under these exemptions of the moratorium would have to proceed in a manner that complied with the provisions of this legislation and during the period of the moratorium, again, DENR and the ENC would be required to review both the rule suites that govern structural fill and beneficial use. Also the changes that are made by this legislation, as far as structural fill for large projects and all projects generally, and to evaluate whether those rules and the statutory changes are sufficiently protective of public health, safety, welfare, the environment and natural resources. They would also be looking at additional opportunities for the use of coal ash as structural fill, that would reduce the volume of disposal to land fills, monitor any actions of the USEPA regarding the use of coal ash as structural fill, and then they would be directed to jointly report to the ERC no later than January 15, 2015 with their findings and recommendations. Section 4E on page 35, line 32 would require all electric generating facilities owned by a public utility that produce coal ash

To issue a request for proposals, on or before December 31, 2014, that RFP would be for the conduct of a market analysis for the concrete industry and other industries that might beneficially use coal ash. Also an examination of all innovative technologies that might be applied to diminish, recycle, reuse or mitigate the impact of existing and newly generated coal ash. And also the feasibility and advisability of installation of technology to convert existing and newly generated coal ash to commercial grade coal ash. The electric generating facilities would be required to present the materials and information received in response to the RFP, and assess the materials and information and include a forecast of specific actions to be taken in response to these materials to the ENC and the coal ash management commission no later than August 1, 2016. Next there is at the bottom of page 35, section 5A, is another moratorium. This is on the construction of new or expansion of existing coal combustion residual landfills. These are the landfills that were authorized in 2007 that some people refer to as stack landfills or nested landfills. These are landfills for the disposal of coal ash that are sited on top of former impoundments. Again, the expansion of these landfills or construction of new landfills of this type would be prohibited until August 1, 2015 to allow DENR to evaluate these landfills, to assess their risk to public health, safety and welfare, and the environment and natural resources, and particularly the impoundments located beneath the landfills. DENR would be required to report to the ERC no later than January 15, 2015 on its findings and recommendations on this study. And now Miss Fennell will describe the last provisions of the legislation. [SPEAKER CHANGES] Thank you. I’m going to briefly go through the cost recovery, the fee and the appropriations in the bill. If you’ll turn back to page 3, section 1, this prohibits certain cost recovery. This prohibits cost recovery related to unlawful discharges from the impoundments into the service waters of the state. Section 2 is a moratorium on future cost recovery for any cost related to coal combustion residuals that were not included in the utilities last rate case. This moratorium is effective until January 15, 2015, and this does not include the fuel rider. The yearly proceeding that is just the fuel clause. [SPEAKER CHANGES] Mr. Chairman, over here. Miss Fennell. [SPEAKER CHANGES] Representative ?? [SPEAKER CHANGES] Could Miss Fennell give the page numbers as she goes through? [SPEAKER CHANGES] If you’d give? [SPEAKER CHANGES] Yes. [SPEAKER CHANGES] Page 3. [SPEAKER CHANGES] Yes sir, page 3. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] So the purpose of the moratorium is to study the disposition of the coal combustion residual impoundments, including any finer rules adopted by the USEPA. And now I’m going to flip to page 47, which is section 15A of the bill. And this is the new regulatory fee. This is very similar to the regulatory fee that the General Assembly adopts each year in its budget. But this regulatory fee is only imposed on the North Carolina jurisdictional revenues of each public utility with a coal combustion impoundment. This fee will go to defer the cost of coal ash management and it will be appropriated as provided in sections 15C and 15D. Section 15C provides that DENR will have 25 positions to carry out the duties that Mr. Hudson and Miss McGinnes described. And section 15D provides that the coal ash management commission will be granted 5 positions, and executive director, 2 analysts, a technician, and 1 administrative position. Section 15E also provides that the fee for the coal ash management commission as well as the commission itself will actually have a sunset. The fee will expire for quarters beginning April 1, 2030 and the commission itself actually expires July 1, 2030. And that is all. [SPEAKER CHANGES] Questions and comments from the committee? Representative Brisson. [SPEAKER CHANGES] Thank you, Mr. Chair. In I guess this is our introduction day officially for coal ash ponds. But I know there’s a lot of information that was given here in this 50 page

Bill, but one thing that I was trying to understand and I kept, not sure if the coal ash ponds were operating with the permits, the issued permits in the past and if there was any kind of monitoring system. And it just basically, listening to the staff present the bill as more of a study guideline for the upcoming appointed commission. Is that right or? I know some of it is stated as the laws that’s got to be determined particularly on the floor coal ash pond that be cleaned up and removed by 2019. But I don’t know how we can set dates and not knowing yet what we’re going to do with it when we get it loaded up, and where we’re going to [SPEAKER CHANGES] Would you like staff to? [SPEAKER CHANGES] Mr. Chairman, I’ll admit I’m not sure I understand the question. [SPEAKER CHANGES] That’s because there was a lot of questions into one. [SPEAKER CHANGES] Representative Brisson, do you want to try that question again? [SPEAKER CHANGES] I will. I guess the first part of the question was the coal ash ponds operating permits issued for the coal ash ponds in the past? Was there any kind of monitoring required by whoever issued the permits? Then basically, another part of the question is, is this basically study guidelines for the upcoming appointed commission that we’re asking to report back to us within the next nine months, and then how are we setting close down dates and removal dates? At the end of this section by requiring that all coal ash be removed and not knowing or having any kind of recommendations what we’re going to do with it. [SPEAKER CHANGES] Representative Samuelson. [SPEAKER CHANGES] Mr. Chairman, I think most would be something that DENR could answer, particularly on the first part about the permits and the monitoring. In terms of study guide for the commission, I would say I think it’s more than that, I think it’s got far more direction than that. And then on the third one about the plans, I think that’s also something DENR could answer. [SPEAKER CHANGES] I think Jeff’s got an answer for the first part. Jeff. [SPEAKER CHANGES] I was actually going to defer to the department as well. Just to say that there are permits for the facilities and there is some monitoring in place for them as well but the department can speak to that in more detail. [SPEAKER CHANGES] Okay could someone from the department address that? State your name. [SPEAKER CHANGES] Yes sir, Mr. Chair. I’m Tom Reeder, the director of the division of water resources. We basically have an NPDS permit on these facilities right now that covers the actual discharge. We do have some basic monitoring around the ponds, ground water monitoring, to give us some idea of the level of contamination, but nothing to the extent that would be required in this legislation and I mean we would need to have this information that would be gleaned from the studies and the assessment required in this legislation to make informed, thoughtful, scientifically based decisions on the actual threat of these facilities to the public health and the environment, and to develop a list that would allow us to prioritize their removal. [SPEAKER CHANGES] Follow up, Representative Brisson. [SPEAKER CHANGES] So I guess if I understood Mr. Reeder, is that right? That we really don’t know what it contains and, the toxic acids or anything else. We haven’t had, I guess we’re just caught everybody by surprise. Evidently we’re not monitoring to make sure overflows or whatever when this occurred, over on the ?? River. So I’m not sure but I hadn’t really heard about coal ash a lot until this breakdown at ?? River so I’m not sure how we’re going to get it corrected and clean it all up in four years, when we don’t have

...evidently we hadn't been monitoring. It hadn't been on them important, real important issue to us. Kind of on the back burner until the misfortune happened. Now we're going to correct it very quickly and panic type mode. Make panic decisions. And my experience with making decisions with a panic most of the time comes out with a not good decision. [SPEAKER CHANGES] Representative Hager, do you want to make a comment on that? [SPEAKER CHANGES] Thank you, Mr. Chairman. I'd like to ask Tom Reiter a question, if you don't mind. [SPEAKER CHANGES] Go ahead. [SPEAKER CHANGES] Mr. Reiter, we have NPDS permits on all the ponds, I understand. Can you tell the committee what NPDS stands for? [SPEAKER CHANGES] Certainly, yes sir. NPDS is National Pollutant Discharge Elimination System. And basically, all these ponds have a discharge to surface waters of the state because they fill up and overflow and there has to be some discharge. So those permits are primarily concerned with regulating that discharge that goes into surface waters of the state and making sure it does not impact our water quality standards. I'd also just like to address something Representative Brisson said. I mean there's no panic here. The timelines that we have to do these assessments, I think, are pretty reasonable that are contained in this legislation. Andy they will. I mean, we have an idea of what the constituents of these ponds are and what the level...a rudimentary idea of what the level of ground water contamination is right now. But, I mean, these assessments that we have in this legislation that were originally in the Governor's proposal will allow us to get this very detailed scientific information that we need to make really well informed decisions about the future of these ponds. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Thank you, Mr. Reiter. I think that some things that Representative Brisson brought forth were really true. We've been in this business in North Carolina, as far as I know, for getting close to 100 years now. I know River Bend Station was built in the '20's and we're getting close to that into 2000 right now. I think that we've been in this situation for almost a century now and we've progressed to where we are. We're at the point where we're going to handle this situation. We're at the point where we have a bill before you that I think goes a long way in handling that situation better than any other legislatures have done in the previous century. This sets the precedence for the national issue that we know are coming in other states. At the end of the day, if you looked through it, it puts restrictions on future ash disposal. It puts restrictions on wet disposals. It puts restrictions on what you can and can't do with ash. How do you dispose of the four you're going to dispose of? It's a pretty encompassing bill. So, Mr. Reiter, I'd say that I think this is the start of a national issue. This legislature is the one that has started this conversation and I'm proud of the bill that Representative McGrady's brought forth and Senator Apodaca has authored in the Senate and I think moving forward you'll see a slightly better bill coming out of the PCS. [SPEAKER CHANGES] Representative Iler. [SPEAKER CHANGES] Thank you, Mr. Chairman. I guess this is for the bill handlers, but it may be for the staff. The biggest overall concern is I've seen one of these plants in detail near where I live, but I haven't seen all 33. I'm aware there's a prioritization feature in the bill. But one size obviously doesn't fit all and prioritization will be key, I think. Two things I'd like to ask if we are now satisfied or going to be satisfied once we have the final legislation. Are we going to be satisfied that the permitting, if you got to close one of these in five years, will the permitting take two years, four years, how much time will they have to actually do the work once all the permits are obtained? Are we going to be satisfied that's going to be workable? And secondly, I understand 100 different companies and individuals have come forward with different solutions, chemical mitigation, to some of the heavy metals and arsenic and so forth that's in this. They can chemically mitigate some of this. Is anything in this bill, can we be satisfied there's nothing in this bill that's going to prevent whoever comes up with the plans from utilizing all solutions? Not just moving and will it preclude chemical solutions and other solutions that may come forward as part of the plan? [SPEAKER CHANGES] Representative Hager? [SPEAKER CHANGES] Thank you, Mr. Chairman. I thank Representative Iler. Thank you for your question. What we tried to do in this bill and what Representative McGrady has done an excellent job of is putting these ponds in risk levels. High risk, medium risk, low risk. In looking at those and seeing...

?? River. We know that’s an issue we’ve got to fix. We know River Bend is an issue of high risk. So we’ve tried to categorize these things, and realize that it can’t be one solution for everything. There’s medium risk and low risk that will go too. So as we move forward in working with the department, I think we’ll determine those as we move forward. But we wanted to get the more higher risk ones in the bill. So we can start working towards that way. And I think there’s an expedited DENR permitting process in here too that will help that situation, to keep using up a lot of that time for permitting, and to allow the actual work to get done. [SPEAKER CHANGES] Representative Harrison. [SPEAKER CHANGES] Mr. Chairman. There’s one other part of his question on the timeline, if I may. One thing that we recognized when it came over from the Senate is that same question of are these timelines workable? And so we hope, and I’ll clarify on the PCS. The PCS, part of the reason we wanted to go ahead and go over this bill is because the PCS is solidly based on what’s before you and you have to understand what’s before you to understand some of the changes that will come out in the PCS. And one of them has to do with making sure that the timelines are workable. So we have looked at that, and hopefully our suggestion will work. If not, we’re open to others. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] That satisfies me, Senator Graham, on the first part. The second part, as far as the solutions that may be out there, of all kinds, was relocation or chemicals or something that we may not have even heard about yet. Does this preclude any of those possible solutions from those plants? [SPEAKER CHANGES] Representative Samuelson. [SPEAKER CHANGES] Mr. Chairman, part of that in there, one of the things I did sit in with the Senate’s presentation and they’re big on the reuse. The beneficial reuse, so they have put provisions in there. They also as I recall and staff correct me if I’m wrong, there’s a study in there and part of addressing the timelines is also acknowledging what’s the impact of new developments that come out as a result of the fact that for the first time in the history of the country, people are actually really seriously looking at this. [SPEAKER CHANGES] Sorry, Representative Harrison, you’ve got the floor. [SPEAKER CHANGES] Thank you, Mr. Chair. I have a couple of questions if I could be recognized for a series of questions. Thanks to Representative McGrady and Representative Hager for their work on this. I have a lot of concerns about this bill. I think it can be tightened up so I’m glad to hear we’ll have a PCS in the afternoon that hopefully will address a lot of my concerns but I have some specific questions that the staff or perhaps DENR, so if I understand it, DENR is going to prepare that prioritization list that will be presented on August 1, 2015. I hope I’ve read that right. I’m wondering if in the closure plans that are proposed by DENR, does the proposed commission get to veto a plan based on the fact that it may cost too much? I don’t know if that’s a staff, legislative staff or DENR staff question. [SPEAKER CHANGES] Can staff answer that question? [SPEAKER CHANGES] Yes. Cost is a factor that they’ll be looking at on the closure plans. If you go to page 25, again it says the commission will only approve the closure plan if it determines that the closure plan was developed in accordance with the legislation, implementation of the plan, according to the closure plan schedule is technologically feasible and that the benefits to the public health, safety and welfare, the environment and natural resources outweigh the negative impacts on electricity costs and reliability. So it is a factor in their evaluation of the plan. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Yes sir. I am trying to understand, we had a proposed bill that would as of I think August 1, immediately ban any future disposal of coal ash, and I’m trying to understand this timeline that’s in the bill. Do I read that correctly, that I guess Duke has until December 31, 2019 for disposition of coal ash? I saw there’s an earlier timeline on storm water but I’m just trying to understand that one. [SPEAKER CHANGES] Jeff, can you answer that one? [SPEAKER CHANGES] You are looking at the correct series of dates. Unlike the legislation that you introduced, it had just a single date for all forms of coal ash. This recognizes that there’s certain different types of ash and other things that would be disposed of in the impoundments, and gives them different dates at a later time. [SPEAKER CHANGES] Follow up. [SPEAKER CHANGES] Yes sir. Do I understand that the bill allows for DENR to issue a permit that

may allow for the continued seepage of some of these potential toxins. [SPEAKER CHANGES] Under the surface water discharge identification, assessment and corrective action statute, it provides for two methods of corrective action. You have to either eliminate the discharge or you have to bring it under the NPDES permit that Mr. Reader referenced earlier. If they brought it under the permit, and the discharge was allowed to continue and reach surface waters, that would be in violation of the federal Clean Water Act so I don’t think the scenario you’re describing would be allowed. [SPEAKER CHANGES] If I could follow-up on that. On the groundwater testing, and this is just really a reflection of my ignorance on this, I was reading an article in the Salisbury Post about Buck Steam Station issues and the different methodology for testing. The fact that the EPA has a newer model that’s showing that some are exceeding safe levels. What is the standard for the groundwater testing, it might be for Mr. Reader, and is it the industry that’s doing this testing or is DENR going to be doing the monitoring and the testing on the ground water? [SPEAKER CHANGES] Mr. Reader. [SPEAKER CHANGES] Thanks sir. We do all of our testing based on our groundwater 2L standards, which were approved and designed to be protective of the consumption of the water for human health, so that’s what we compare all the samples we take for. [SPEAKER CHANGES] If I could follow-up. What I’m reading is something called EPA 218.7 testing that might reveal a higher level. Does that make any sense to you? [SPEAKER CHANGES] Mr. Reader. [SPEAKER CHANGES] Are you talking about for mercury? [SPEAKER CHANGES] I thought it’s talking about chromium-6 but it might be mercury. [SPEAKER CHANGES] It might be for chromium. I’d have to take a look at that to be sure, but our 2L standards, our groundwater standards, are completely protective of human health so that’s what we measure everything against. [SPEAKER CHANGES] I’m not going to dwell on this too much but I have another follow-up please, Mr. Chair. I’m concerned about the structural fill section, and I think I’m confused, because it looks like there’s a moratorium but then it seems like there’s an exemption if it’s less than 10,000 tons or 100,000 tons per site. I think I’m trying to get an understanding of that because it seems that if we’re exempting it from any liner requirement, because I believe Jennifer said that those less than 10,000 would be given a general permit, which I think means no liner, no monitoring. Clarify that for me please. [SPEAKER CHANGES] Jennifer. [SPEAKER CHANGES] No, that’s not correct. There’s a moratorium but the only projects that would be exempt from the moratorium are the large structural fill projects, or small structural fill projects if they want to put in a liner, a leachate collection system, a cap and financial assurance, and then also the base of the paved roads by a public entity. So only those projects that have a liner, a cap, a leachate collection system and financial assurance, other than the paved roads, can move forward under the moratorium. [SPEAKER CHANGES] If I could follow-up on that. Is the small structural the 1,000 ton figure that I saw in there? What’s considered small, I guess? [SPEAKER CHANGES] I think that you’re thinking of the recordation requirement. That’s just a recordation requirement for everything and it’s current law. [SPEAKER CHANGES] Follow-up? [SPEAKER CHANGES] Yes sir. There was a lot of discussion in the Senate on the using ?? to dispose of and there was some concern about that, so is that in this proposal and do those mines have to have lining? [SPEAKER CHANGES] Yes, it is in this proposal and I would note that the Senate, on the floor, made a change to the definition of mines so that only open-pit mines that are included in the definition for structural fill. Structural fill does allow mines to be reclaimed, coal ash to be used to reclaim mines, but those are only open-pit or surface mines. Just like any other large structural project, if you’re using more than 10,000 tons per acre or 100,000 tons per project, you’re going to have to have a liner, a cap, a leachate collection system, groundwater monitoring and financial assurance so, yes, they’re using over 100,000 tons, which sounds like a lot but really isn’t. [SPEAKER CHANGES] Follow-up? [SPEAKER CHANGES] If you have less than 10,000 tons or 100,000 tons per area you don’t need to have a liner? Is that what you’re saying? [SPEAKER CHANGES] If you’re less than 10,000 tons per acre then you don’t have to have a liner.

Representative Carney. [SPEAKER CHANGES] Thank you, Mr. Chairman. My first question is probably one for you, for point of order, just for my clarification maybe. This is a Senate bill before us. We know there's a House bill out there. We have House members presenting the Senate bill, is that correct? [SPEAKER CHANGES] That's correct. [SPEAKER CHANGES] So is there, is the PCS a combination now? Are we going to be dealing with a combination of a House bill and a Senate bill? This is not just for me but other people that are probably listening in, the confusion of what we're doing here. [SPEAKER CHANGES] I think I'll let Mr. McGrady answer that. Representative McGrady. [SPEAKER CHANGES] Yeah, the reason we wanted to go through the Senate bill was just as the Senate bill biult on the Governor's plan, the House bill will build upon the Senate plan. [SPEAKER CHANGES] House PCS- [SPEAKER CHANGES] House PCS will build upon the Senate bill and so to understand the House PCS many, I would say most, of the provisions that we anticipate in the House PCS are reflected right here in this Senate bill themselves. It's the same process trying to deal with the same issues, some changes in some numbers but it's really built on what you've got here. So if you understand the Senate bill, Representative Carney, you're going to have a very good base to understand the House PCS. [SPEAKER CHANGES] Okay, follow-up. [SPEAKER CHANGES] Follow-up. [SPEAKER CHANGES] And thank you for that. So we're getting an overview of a Senate bill, we're going to get a House PCS bill this afternoon when we come back, you have stated that if we want amendments, Mr. Chairman, to this bill and then we're going to vote this afternoon on this bill or the House bill? [SPEAKER CHANGES] May I? [SPEAKER CHANGES] We have a, Representative Samuelson. [SPEAKER CHANGES] You make, I thought that's what he was trying to clarify. The PCS, it will be a House PCS, to this Senate bill. It will be mostly like what you have in front of you with some tweaks. [SPEAKER CHANGES] And follow-up, Mr. Chair. [SPEAKER CHANGES] Follow-up. [SPEAKER CHANGES] I understand that. So, but you said, Mr. Chairman, that amendments have to be in for this part, we're going to get a PCS this afternoon and we can't do amendments to that before the end of session is my question? If we're going to vote this afternoon will there be an opportunity for amendments to the PCS? [SPEAKER CHANGES] Representative Samuelson. [SPEAKER CHANGES] The PCS will go out as soon as this is over so that you'll have time and then, I know the notice said 15 minutes after session it was, we were actually intending 30 minutes after to give people a little extra time to work on it. [SPEAKER CHANGES] Thank you. [SPEAKER CHANGES] So you will see the PCS when this meeting's over. [SPEAKER CHANGES] Right. May I ask one more question- [SPEAKER CHANGES] Follow-up. [SPEAKER CHANGES] -then about the one before us. Is there, and maybe to the PCS sponsors, is there, in this bill, a clarification of who will pay for these four plants that are closing? [SPEAKER CHANGES] There is not a decision as to who will pay. There is a moratorium in terms of Duke Energy being able to recoup it's cost related to the four sites and anything else. But no, that decision is not in the Senate bill nor in the anticipated House PCS. [SPEAKER CHANGES] Follow-up. [SPEAKER CHANGES] One follow-up. Well that is the number one question, that I think the public has very simplified drilled down, of who is paying for this. So when will that determination be made, at what point in time? [SPEAKER CHANGES] If the Senate bill were to become law, or the House PCS, that question would be left to the Public Utility Commission if and when Duke sought to recoup the costs of any of the things that were mandated in this bill. [SPEAKER CHANGES] Mr. Chairman. [SPEAKER CHANGES] Any other- [SPEAKER CHANGES] May I add to that? [SPEAKER CHANGES] Representative Samuelson. [SPEAKER CHANGES] And, as you mentioned, there's a moratorium on new rate cases for this for a while and, as we understand and as we've seen with Utilities Commission rate cases, it's going to be a while before the costs are actually incurred for them to need to. So there will be other sessions and other opportunities for people to look at that. I just remind everybody we're the first state in the nation to do this and we're trying to make sure

we do it as responsibly as possible. [SPEAKER CHANGES] Representative Insko. [SPEAKER CHANGES] Thank you Mr. Chairman. The question that came up several times as I worked through this bill was, is there anything in this bill, or are there other bills that exist or other plans that exist, that deal with the environmental impact now. We’re going to not do the first cleanup for five years and finally at the end it’ll be 20 years I think, so are there provisions for responses to the environmental impacts that go on meanwhile? [SPEAKER CHANGES] Representative Hager. [SPEAKER CHANGES] Thank you Mr. Chairman. Representative, thank you very much and if staff would cover the well piece in here, the water identification piece, Mr. Hudson would be fine doing it if that’s okay with you Mr. Chairman. [SPEAKER CHANGES] That’s fine. [SPEAKER CHANGES] I was actually going to reference that and also the groundwater and surface water protection pieces. Those are for the impoundments as they are now, so they have to do assessment plans, they have to be approved by the department. They have to give the information generated from those plans to the department and then they have to take corrective action, whether it be eliminating the surface water discharges, cleaning up groundwater under the 2L rules or providing alternative drinking water supply for drinking water wells that have experienced contamination. [SPEAKER CHANGES] Follow-up Representative Insko? [SPEAKER CHANGES] No, thanks. I’m just reviewing those sections. [SPEAKER CHANGES] Representative Luebke. [SPEAKER CHANGES] Thank you Mr. Chairman. I want to say first that I’d agree with Representative Carney that, for people statewide, the number one question is whether they as consumers of Duke Energy are going to be asked to pay for the cleanup of the four sites. My question is, and I believe it’s for Representative Samuelson who spoke a moment ago, you said that, before we decide whether the consumer should pay for the cleanup or not, we have to see how expensive it is to do the cleanup and I’m wondering if I heard you wrong. [SPEAKER CHANGES] Representative Samuelson. [SPEAKER CHANGES] I believe you did hear me wrong. I was simply trying to say that, in order to determine what a cost would be, that’s part of the whole process. I personally have felt like the utilities commission and the public staff need to be able to look at this. I’m not personally convinced that it’s something right now we need to step in and make that decision on, but I won’t be here next year in the long session. I’m sure there will be others who will discuss it, but I did not say that it was based on what the cost was. I was simply implying that process is one that takes that long. [SPEAKER CHANGES] Follow-up? [SPEAKER CHANGES] My observation on all of this is that we can, as the general assembly right now, make a decision that says the public shall not bear the cost of the cleanup of these four sites. That is something that we can do before there’s any of the detailed studies that have been mentioned and I just urge the committee to do just that, to require that Duke Energy not be able to recover from consumers the cost of cleanup. Thank you. [SPEAKER CHANGES] Any other questions for the committee? If not, we have some public speakers wanting to address the committee. We’ll call them in the order that they signed up. You’ll have three minutes. The first one’s Molly Diggins with the Sierra Club. State your name. [SPEAKER CHANGES] Thank you Mr. Chairman, members of the committee. I’m Molly Diggins, the state director of the North Carolina chapter of the Sierra Club. Sierra Club has over 55,000 members and supporters in North Carolina and we appreciate the opportunity to speak today. Addressing our state’s coal ash crisis is undoubtedly a great challenge. As you know, North Carolina has 33 coal ash ponds at 14 sites across the state. These are little more than unlined pits in close proximity to our state’s waterways. Earlier this year, the governor started the conversation by putting forward the administration’s plan. The Senate has moved us substantially forward with a comprehensive measure that includes many important and positive components. We thank the Senate for their leadership in bringing us to this point, and especially for the aggressive timelines in the bill, and we thank Representative Samuelson, Hager and McGrady.

for listening to our concerns about the bill as we headed into this morning’s committee meeting. The House now has before it a tremendous opportunity to get the job done, to finish the work that the Governor and the Senate have begun. The single most important challenge before the House is to make changes to ensure that the coal ash at all of the coal ash sites is permanently isolated from surface and groundwater. As currently written, the Senate bill only offers that written assurance for four sites. The Senate bill lacks clear standards to ensure that the outcome at the other sites meets that goal, which I think everyone supports, but we also know there is a difference between good intentions and statutes, and so today we call upon the House Environment Committee to add standards to the Senate Bill to ensure the closure of so-called low risk sites will accomplish what the bill is represented and intended to do, to remove the threat from our waterways. All methods of closures must be demonstrated to be as effective as removing the ash from the site. Without this change, there is a real danger that the bill before you will not live up to its promise and that it will not remove the threat of coal ash to our waters and communities. Again, the House now has before it and today the opportunity to in fact make this bill a model for the nation. We look forward to working with you to achieve that outcome. Thank you. [SPEAKER CHANGES] Thank you. Next we have Donna Lisenby – am I saying that right? – with the Waterkeepers Alliance. [SPEAKER CHANGES] Yes sir. Good morning. My name is Donna Lisenby and I am the Global Coal Campaign Coordinator for Waterkeeper Alliance. I am also the Watauga Riverkeeper from Watauga County, North Carolina, and prior to that I was the Catawba River keeper and worked throughout the Catawba river basin for ten years. My goal is to work with all North Carolina river keepers on coal issue, and we began in 2010 working with our French Broad River keeper to address coal ash issues at the Asheville plant and brought litigation there. We continued, and our Catawba River keeper addressed coal ash leaking contamination problems at the river bin facility and brought litigation there, and then thirdly we brought litigation on the Sutton plant in partnership with our Cape Fear River keeper. Those three plants are the ones named in this Senate bill, and the only other one named for immediate cleanup and guaranteed cleanup is Dan River, where the pipe failed and there was a spill. This bill, from the perspective of the Waterkeepers, is not adequate to address the challenge of cleaning up coal ahs ponds in North Carolina. I have been on these sites and investigated most of them. I have collected well water samples, seep samples and surface water samples since 2010. I have tested fish, sediment and water across North Carolina since 2010 at these sites. I know firsthand that they are leaking and polluting water in this state with arsenic, lead, cadmium, chromium and many other pollutants. It needs to be addressed immediately. My colleague Lisa Evans called the Senate bill the tallest midget at the circus. We are relying on the House of Representatives to increase the stature of this bill, to make sure that it adequately addresses the leaking, polluting, contaminated coal ash ponds across the state of North Carolina. Let me say to you this: Based on my direct experience with all our Waterkeepers, there is no low-risk coal ash pond in the state of North Carolina. Not one. Specifically, the most recent investigations I’ve conducted in partnership with our Yadkin River keeper and our Cape Fear River keeper are at the Cape Fear plant and at the Buck plant. We tested wells at the Buck facility and residences within a thousand feet of the coal ash ponds there, and we found hexavalent chromium in those wells using the most current EPA method, EPA method 218.7, for determining the amount of hexavalent chromium in water, a test that is not required in North Carolina or used in North Carolina currently to determine compliance with groundwater standards.

[0:00:00.0] At cape two we found the Coal-Ash pump dams, correct, they are poorest and most unsafe dams in the state of North Carolina. This bill does not require immediate cleanup at these two extraordinarily crudest sites. So, we urge you to address the deficiencies in this bill and we urge you to make it a much taller and more robust that will fix the problem, thank you Sir. [SPEAKER CHANGES] Representative Brawley is recognized. [SPEAKER CHANGES] I would like to ask Miss. ___[00:34] a question if I may? What did you first document liking from these ponds? [SPEAKER CHANGES] In 2010, Hartwell Carson, the French Broad Riverkeeper and I can take you to ___[00:46] investigation at the ___ Facility. [SPEAKER CHANGES] Next we have Mary Asbel from the Southern Environmental Law Center. [SPEAKER CHANGES] Good morning, thank you Representative West, my name is Mary McLain Asbel and I’m from the Southern Environmental Law Center. I appreciate everything that house is doing on this bill and it’s great to see such interest in this important bill, it’s wonderful to see so many extra members in the meeting and to see so many members of the public. I’m sure there had been more people here if they had been more access to this fast schedule. We really thank the house for studying this issue, investigating this issue and for listening to the citizens of North Carolina on this issue. I thank the bill drafters for doing those three things. But now, are you really gonna rush this bill through in a couple of hours why? You can do this right and earn the thanks and respect of your constituents, the people who drink from below all of these sides or you can drop this ball in here from them the rest of the year or the rest of the decade. I urge you to make this bill stronger and more protective of North Carolina citizens and water and it’s simple as mistaken to Miss. Lissome suggest. You can simply require that all of these 33 sides must achieve isolation from ground water and surface water. Please protect North Carolina citizens and drinking water, thank you. [SPEAKER CHANGES] Thank you. Next we have Henry Baton with the ___[02:28] County. State your name and refer. [SPEAKER CHANGES] Thank you Mr. Chairman I’m Henry Baton with ___[02:35] root supply company in Charlotte. I’m a consumer of Coal-Ash. Representative McGrady said is four objectives will stop creating new ponds, do water existing ponds establish a timetable, close ponds and clean them up and I think that’s a value and effort but unfortunately in my opinion the bill doesn’t go far enough. It adequately adjust the whole issue and it’s entirety that promotes capping in place in which I need fly ash and I don’t wanna kept in place that I can’t get through it, it promote structural fill and the challenge with structural fill for me is we are going from one hole to another and that’s not reused, it promotes the study of reuse of beneficiation, the technology exist I’m not exactly sure what we need to study and it promotes the study by the DOT the user consumer ash frankly there is 3% of the roads are concrete now, we have built them or I haven’t that other companies have my firm doesn’t do that, that we do may concrete going vertically and it’s the same thing, you can consume this ash from a DOT standpoint the bill should stipulate the DOT implemented two payment system and reflect that the payment, that the investment in those payments are the lowest cost option, it’s already been proven over the last four years concretes are lower cost option but apparently economics within the DOT or not consideration and many states have already done this successfully, very successfully and North Carolina be in the ninth largest coal producing state, we have to consume it rather than bury it. And it represents the single largest new market for this ash that exist today, Duke is come on the newspaper saying that they are looking for new ash markets, you drive on it everyday, it exist in the state from the beneficial reuse the technology exist, I notices I came in there is two marketers in the room both of them have technology that exist today to beneficially reuse it. I would encourage you to ask them to come up and talk to you about it. And the bill has to require… [0:04:59.9] [End of file…]

Beneficial reprocessing. That’s the only way concrete can use it. From their technology, or how they’re processing ash, it makes it impossible to reuse. If they’ll adopt the technologies that exist today we can consume it. Thank you. [SPEAKER CHANGES] Thank you. Next we’ll have George Everett from Duke Energy. [SPEAKER CHANGES] Mr. Chairman. [SPEAKER CHANGES] Representative. [SPEAKER CHANGES] I would quickly acknowledge that reuse of coal ash is critical. We don’t have enough places to put it if we wanted to. I would recommend actually the senate bill to you on that, in that regard. If you go back, for example, there are numerous areas in the senate bill that touch on the reuse issue, aside from its use as structural fill, but specifically on pages 48 and 49 and so I would urge you to look at the bill. It’s got pretty good, strong, new provisions that were added by the Senate related to the use of coal ash in concrete, in roads and in other ways and really is strongly supportive of new technology, if it becomes available, to deal with the coal ash issue. [SPEAKER CHANGES] Thank you Representative McGrady. Go ahead George, you’ve got the floor. [SPEAKER CHANGES] Thank you Mr. Chairman. Members of the committee, my name is George Everett. I work for Duke Energy. We appreciate the chance to be here today to talk to you about coal ash. This is not something new to the company, of course. The spill on February 2nd certainly focused everybody’s attention on material that we’ve stored on our sites for 80 years, so to think that we’ve not paid attention to coal ash, and the department has not paid attention to coal ash, is a misnomer. We certainly understand the focus today and we want to help address this issue in a responsible way. We have permits on these sites to manage this coal ash in ponds. The water from those ponds is discharged, under permit, to the waters of the state. We sample those waters to detect any problems, as does the state. In 2006, Duke and Progress Energy first volunteered to put monitoring wells around these ponds to determine what’s happening to the ground water, voluntarily. One of the first utilities in the country to do that. Eventually, those requirements were added to our permits, so we have good data on what’s happening to the ground water. In addition, we in the agency have tested wells, drinking water wells, around these facilities and certainly where we think we’ve impacted anybody’s water supply we take action to correct that, so I just wanted to get those remarks on the record. Let me say one other thing: Since the merger with Progress Energy, Duke and Progress together have 14 sites where we have coal plants in the state. In the last five years we’ve retired half of those sites. We have no ash being produced there, so we have a record of moving forward to eliminate the generation of ash period. The ash that we do continue to generate, we’ve changed the process to handle it dry and put it in lined landfills permitted by the state. In terms of this legislation, I would just say to you we’re looking for two things: a rational approach to prioritizing the site and doing the right cleanup at each site. As others have mentioned, every site is different but we have a lot to do. We’ve got to do the studies outlined in the bill to determine any impacts on the site. We’ve got to rank those sites. Not only does the department rank those sites, they then pass that to the new commission. The commission has to hold hearings. After they’re ranked, we have to submit a closure plan to the department, who moves it to the commission, who has hearings on the closure plan. We then have to get a permit for that activity. We just need time to do it. We’ll do it right. Thank you. [SPEAKER CHANGES] Thank you Mr. Everett. Next we have Jay Rouse with NC Electric Co-op.

Thank you Mr. Chairman. My name is Jay Rouse. I work on behalf of the 26 electrical cooperatives of North Carolina. Most of you saw my members when they came through town last week and I think most of them sincerely expressed their concern about the cost of the cleanup. I applaud the efforts of the Senate and the House in drilling down in this effort and focusing on the cost because, ultimately, it is going to flow to the consumer. We are wholesale customers of Duke Energy and those costs will flow to us, so everything that is done that is based on science and fact is good. The choices that will be made can help minimize and keep the cost as low as possible. I just want to say thank you on behalf of the co-ops. Thank you. [SPEAKER CHANGES] Thank you, Mr. Rouse. Next we have Gary Salamido with the NC Chamber. Gary, are you here? Next we have Bob Stephens with the governor’s office. Bob, if you’d come up here you can address the committee from up here. [SPEAKER CHANGES] Thank you again. My name is Bob Stephens. I am the general counsel for Governor McCrory. Two statements by way of background: I don’t do this very often, so I hope the fact that I am here today will suggest to you the seriousness that the governor views the one comment that I want to put before you for your consideration. Second statement by way of background is, I’m not here to talk about the substance of the bill. I believe the governor believes that this does build on his platform properly, there’s perhaps some technical changes that need to be made, but here’s what I want to talk to you about: this bill creates a coal commission. That commission, in our view, performs an executive branch function and let me tell you, I know everybody knows this but it’s important for me to say it for the record, we have in our state constitution the premise of separation of powers and, very simply, what that means is the legislature, you folks, pass the laws, the executive branch carries out the laws, and the judicial branch interprets the laws. This coal commission performs an executive branch function. It is appointed, unfortunately, six by the legislature and only three by the governor. That, in our opinion, and based on our research, violates the provisions of separation of powers and I would encourage you to look at that again, to look at how the appointment process. I have no problem with the commission. I have no problem with the commission at all. I simply would encourage you and ask you to look again at the appointment process for this commission. The appointments need to be made by the executive branch to a body that will carry out the executive branch function. Thank you Mr. Chairman. [SPEAKER CHANGES] Thank you. Representative Hager, do you have a question? [SPEAKER CHANGES] Yes, I do. Mr. Stephens, I happened to take a picture of section eight of our constitution about appointments in the executive branch. Let me read it to you, see where I may be confused at. It says the governor shall nominate and, by with all advice and consent of the majority of Senate, appoint all officers whose appointment are not otherwise provided for. Is that the section you’re talking about? [SPEAKER CHANGES] No, I’m not. I’m talking about separation of powers, which is in article I. There’s no question that the legislature creates commissions all the time, the legislature makes appointments to commissions all the time. Representative, that’s not a problem. You have to look at what the body does that has been created. What does it do? Is it an advisory committee? If so, I think the legislature makes the appointments, can decide how the appointments ought to be made, under the section you just read. On the other hand, if it is a body that performs, that actually carries out the law, in this case the coal ash commission will review

[0:00:00.0] …Classification of the ___[00:04] and then it will review and approve closer plans. Now, that’s carrying out the law that is carrying out the law and ballots. [SPEAKER CHANGES] Follow up Representative Harris. [SPEAKER CHANGES] Mr. Steve that I guess you probably figure out and respectively disagree. We does things all the time like the Mine and Energy Commission, Utility Commission, the Board of Governors will point all these votes. Mine and Energy Commission… [SPEAKER CHANGES] And the Governor… [SPEAKER CHANGES] Yeah, and we approve it, Mine and Energy Commissions are the one we have done here recently, would you consider that a violation of separate powers? [SPEAKER CHANGES] I do consider that and by the Utility Commission as you mentioned does all the Government employments, the confirmation we are not I don’t have an issue with confirmation. That’s clearly said out in the constitution that if this body decides that appointments need to be confirmed and that is certainly you are right, I agree with you. [SPEAKER CHANGES] Mr. Chairman just a re-follow up. [SPEAKER CHANGES] Mr. Steve I think, yeah I would pull this body and I think it’s probably the responsibility this budget continue to do as we have done before, I think we have all rights to be point on Mine and Energy Commission as we do in Ash-Management Commission and I thank that we will have the further discussions on this. [SPEAKER CHANGES] Yeah, I understand this and thank you very much. [SPEAKER CHANGES] Thank you Mr. Steve, if the questions from the committee comments, if not we will adjourn the committee we will see you 15 minutes after session today. Okay, I forward you the notice 01:15 we will make it to 30, 45 anyway. [0:01:51.8] [End of file…]