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PO Box 1070, Frankfort, KY 40602  Phone 502.875.2428, Fax 502.875.2845

Re: Problems With 1-16-02 Merchant Plant Bill  Posted: January 22, 2002

Kentucky Resources Council, Inc.

Post Office Box 1070

Frankfort, Kentucky 40602

(502) 875-2428 phone (502) 875-2845 fax

e-mail FitzKRC@aol.com

January 22, 2002

To: Representative Jon Draud

From: Tom FitzGerald

Re: Problems With 1-16-02 Merchant Plant Bill

Thank you for considering my concerns with the 1-16-02 PSC staff draft bill. Before turning to the specific problems with the draft, which are numerous and substantive, below are the principles that I have advocated should be in a comprehensive siting bill.

The core principle for the siting bill should be that the effects of merchant plants on the environment and host community are fully evaluated and mitigated. A comprehensive siting bill must include (a) provisions to assure scrutiny and mitigation of the facility impacts, (b) assurance that the proposed operator experience and record of environmental performance is sufficient to enable proper operation and closure of the facility, and (c) that the cumulative effects of the facility are evaluated and mitigated. Such a proposal should:

Against this set of criteria, the proposed bill is sorely lacking.

Specific Comments Concerning Draft Bill

Section 1

a. The appointment of an ad-hoc public member is no assurance of public scrutiny, since the individual may have a direct or indirect interest in the proposed project. More robust public representation is needed on a less ad-hoc basis, in order to assist in development of a public/consumer/community advocate expertise that will not occur on an ad-hoc "retail" basis.

Recommendation: Permanent public membership drawn from environmental/community/consumer perspective, to supplement ad-hoc community member; direct and indirect pecuniary interest limitations on public membership eligibility.

b. Since the PSC has disclaimed interest in managing this process because of a claimed lack of expertise on environmental and social issues, why attach the Board to that agency. Since environmental and community issues will predominate in these siting determinations, attaching the Board to the Natural Resources Cabinet makes more sense.

Recommendation: Attach Board to NREPC for administrative purposes and direct that PSC staff provide support/liason.

c. "Commence to construct" does not prevent substantial disturbance to proposed areas associated with surveying. Since site may contain unknown or unidentified significant cultural, archaeological, or environmental resources, no intrusive land disturbance should be allowed absent scrutiny. Possibility of inadvertent or intentional destruction of such resources, including timber removal, in order to facilitate site approval, must not be encouraged.

Recommendation: require submittal and approval of investigative plan for any properties under consideration for siting, with prior review and approval of extent of and location of roads, drilling areas, etc., and empower Cabinet to approve, and to set by regulation, limits of aggregate amount of area disturbance (including vegetation removal) conducted as part of process of collection of geophysical data collection, surveying, etc.

d. Delete definition of "residential neighborhood," and instead require identification on map of all residential land uses within a defined area (2-miles may be too little). Obtaining such mapped information is not difficult, and individual residences or residential areas of lower density are entitled to the same consideration and protection as more densely populated areas. Further, the base R-4 zoning which is the default density for residential uses, does not have 5 units per acre.

Section 2

a. Subsection (1) exempts replacement of a facility with a "like" facility. There is no place in a controversial regulatory statute for language that has no regulatory meaning. Does "like" mean the same fuel, same rated capacity, same pollution control equipment, same emissions profile?

Recommendation: replace with separate section addressing changes to existing and approved facilities. Any material change in a facility, particularly an existing facility that is materially reconstructing or altering the unit equipment, should be subject to threshold review. Where a change is undertaken in order to meet regulatory requirements or to improve the emissions profile, a streamlined approval at staff level would be appropriate. Where, however, the life of the facility is extended, the ownership and operation of the facility changes, the emissions profile or material conditions of approval of the facility (hours of operations, etc.) change, tiered review is justified.

b. Subsection (1)(a) should include extensive information about the background, experience, and environmental compliance information comparable to that required of regulated mines and waste sources under those programs, including such information about all key personnel (officers, owners of 5% or more).

c. Subsection (1)(b) should include more extensive mapped information on human, cultural and environmental resources. All structures, commercial, industrial, residential, institutional, and a wider range of receptors of concern, including cemeteries, playgrounds, commercial centers, hospitals, nursing homes, etc. should be required to be identified. The 2-mile limitation may, depending on the type of facility, be far too limited.

d. Subsection (1)(c) should require four, not one, public notices, on a weekly basis, and a detailed project description including type of plant, fuels, etc.

e. Subsection (1)(d) should require documentation that the local zoning and planning approvals have been obtained or a statement that such land use is authorized in that zone; not a "certification that it will be in compliance, since that is a representation that the applicant cannot meaningfully make until the approval has been obtained.

f. The 500-foot residential structure, 2,000-foot setback from neighborhoods, cemeteries, historic structures, schools, nursing homes and hospitals is arbitrary and, depending on the type of facility, may be entirely too small a buffer for noise, visual impacts, particulate and other air emissions.

Recommendation: The site suitability should rest on a demonstration, based on modeling and data from existing sources utilizing similar designs, of no adverse effect within the facility property, so that at the property line, noise, dust, emissions and other impacts will be within appropriate levels. The appropriate and necessary setbacks should be the result of the analysis, not an arbitrary number drawn out of thin air prior to individualized analysis of the facility.

Also, a single house should be entitled to the same protection as a cluster of houses. Use of setbacks rather than in-plant mitigation for impacts is a low-tech non-solution.

Finally, the suggestion that setbacks are not needed where there is already a unit ignores the degree of new impacts that a new facility might have. Where co-location occurs, a cumulative assessment of total impacts must be made and a determination of appropriateness of siting should evaluate that cumulative off-site impact.

g. Subsection (f) through (k) (P. 4) fails to identify in sufficient detail the analyses that should be conducted by the applicant to support the Cabinet's assessment of environmental compatibility, and should include much more detail concerning such information and analyses. These details are critical to the success of this process, and are too important to be left to regulation. The level of information requested in the draft all but guarantees a superficial assessment of the effects and impacts of a proposed facility. The documentation should parallel that of an environmental impact statement under NEPA, including all effects (direct, indirect and cumulative) on air, land, water, ecological and human resources and all reasonable alternatives to the proposed facility, including alternative technology, demand management and siting.

Recommendation: Revise to provide more specificity concerning data elements and analyses required to support siting consideration.

h. The idea in subsection (l)(p. 5) of a majority of the Board determining whether fees are sufficient is unnecessary. Either the fees are or aren't going to be sufficient, based on workload projections and other costs of analysis. An estimate should be made with a provision to "true up" the numbers as needed when the assessment reaches certain points or at the end of the process.

Subsection (2) should include a determination of administrative completeness, meaning that the Board finds that all information necessary to begin technical review as outlined in the law has been provided. After that determination of administrative completeness, the technical review clock should begin to run, and should be stopped at the time that technical deficiency letters are sent, until resubmission of the information.

i. The criteria in subsection (2) for facility approval are inadequate, since it fails to incorporate the principle of no adverse effect, and instead appears to allow approval of a facility that will have appreciable negative environmental or community impacts (as long as permit limits are met) provided that the board thinks the economic benefits are high enough.

j. The bill should not give the Board the authority to "consider the policy" of using coal in making a siting decision. You subsidize fuels, if you believe it appropriate, through economic incentives and tax policies, not by allowing approval of new power plants that might cause adverse human and environmental impacts because you want to advance coal's fortunes as a utility fuel. The criteria in subsection (3) has no place in a siting bill.

k. Any proposed transfer of ownership or control or managerial responsibility to a different entity should be subject not only to review as provided in Section 2(4) by the Board, but also should be subject to public notice and opportunity to comment. The commitments and obligations contained in any facility approval or permit is only as good and solid as the person or entity operating it.

Section 3

Hearing procedures should conform to PSC standards and also comply with KRS Chapter 13B in areas where the PSC has no applicable standards. Public notice of the hearing date of as little as 7 days is inadequate. Hearings should be held locally and in the evening, in order to accommodate public involvement.

Subsection (3) should clarify who is to receive notice, and who is to be named as a party defendant in any appeal, and should further clarify the standard of review, whether review is on the record, and other important procedural issues to assure a predictable appellate process, including the possibility of a grant of temporary relief without bond of the siting decision, similar to that allowed for mining permits

Section 4

Inclusion of regulated utility facilities under a review process is supported; however it is more appropriate that those facilities be reviewed by the PSC and that the standards for demonstrating environmental compatibility contained in this bill be cross-referenced.

Section 5

The data submittal and analyses associated with review and approval of transmission lines for merchant facilities should be revised to meet the concerns outlined above concerning the scope and detail of review. The approval of local planning and zoning entities or determination that the proposed line is an acceptance use within the proposed zones for the line location should also be required as part of the application. The approval standards for this section need to be strengthened as well.

Under subsection (3) a hearing should be available on request by the public for the line location. What is a "material issue of relevant fact" is far too subjective a standard for determining whether a hearing on a matter as locally significant as dedicated of land area as a utility transmission corridor. Also, where an applicant applies for a facility siting approval, it should be required to identify and propose all necessary and appurtenant transmission lines for approval at that time, and not be permitted to segment the transmission line issue.

Section 6 & 7

These appear to be ok at first glance, but I will need to consider further whether the language is broad enough to address concerns regarding interconnections and system constraints. I concur with the principle that native load obligations should be protected.

Section 8

The language concerning the completeness of the application and the timing should be revised as suggested above.

That concludes my review of the bill. Please let me know if you need anything further.

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