Kentucky Resources Council, Inc.
Post Office Box 1070
Frankfort, Kentucky 40602
(502) 875-2428 phone (502) 875-2845 fax
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:
regulate the siting and operation of proposed merchant plants utilizing fossil fuels or solid waste fuels and all associated service and transmission facilities;
apply to all electricity generation facilities not otherwise reviewed for environmental compatibility by the Public Service Commission or the Federal Energy Regulatory Commission (i.e. those electricity generating plants generating and selling wholesale power);
involve review and concurrence by the Natural Resources and Environmental Protection Cabinet, and with input from other state and federal resource agencies (i.e. Kentucky and U.S. fish and wildlife and park agencies, etc.) and the public;
be weighted towards location of projects utilizing existing utility infrastructure rather than requiring new construction or upgrading of transmission capability;
include adequate notice and a meaningful opportunity to be heard by the public concerning the proposed project and all potential health, safety and environmental concerns;
assess the direct, indirect and cumulative impacts of the proposed electricity generating facility and associated service and transmission facilities and structures, including impacts on farmland and the production of food, fuel and fiber; attainment and maintenance of air quality standards; surface and groundwater quality and water supply, and protection of the hydrologic balance;
evaluate the public health, safety and environmental impacts of the proposal, including changes in property values, community perception, effects on the pattern and types of development of surrounding and nearby properties, effects on the cost and availability of public services and facilities, and the ability to host the proposed facility while still protecting fully the health, safety and welfare of the host community.
Respect local planning and existing development. Where the community has adopted zoning and planning, no certificate could be applied for absent final determination by the local community that the proposal was consistent with local land-use plans and applicable zoning. Where the community has not adopted planning and zoning, a local public hearing would be required to be held in addition to the hearing before the siting board for purposes of providing information and soliciting public comment would be required, and an ordinance evidencing local government support for the project would be required. The law would underscore that these facilities are not exempt utilities within the meaning of KRS Chapter 100.
evaluate alternatives, including other locations, and other technologies and investments (including demand-side investments), that would satisfy the project purposes.
require the applicant to address these criteria, and to demonstrate that it possesses the necessary allowances for oxides of sulfur and nitrogen, and for other criteria pollutants as might limit the emissions from the plant, in order to support operation of the facility at the rated capacity. Absent such a demonstration, the application shall not be accepted for processing.
require the applicant to demonstrate, and the PSC to find, that the operation of the facility will not adversely affect the existing electricity transmission system or interfere with the capacity of regulated utilities to serve native load requirements.
require the applicant to demonstrate the financial, technical and management capability to construct and operate the proposed facility.
The use of general obligation or industrial revenue bonds to support financing of private merchant plants would be clearly precluded.
Issuance of a certificate of compatibility would be contingent on a successful demonstration by the applicant and a finding by the Commission, with concurrence by the Natural Resources and Environmental Protection Cabinet, that all identified adverse impacts of the proposed facility, (including environmental, economic, social and system impacts), will be fully offset and mitigated.
The certificate of compatibility would provide that (as has been provided for permits under other regulatory programs in the state) if a continuous program of facility construction has not begun in earnest within six months after permit issuance, the certificate will lapse.
No approval would be given to an applicant unless it demonstrated sufficient experience and appropriate regulatory record, and financial resources to properly construct and operate the facility.
No approval would be given to an applicant who has outstanding unabated violations of air, waste and water laws or whose record of performance does not demonstrate a likelihood that the facility will be operated in compliance with law.
Against this set of criteria, the proposed bill is sorely lacking.
Specific Comments Concerning Draft Bill
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.
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.
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
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.
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.
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.