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

HB 540 is in the House Rules Committee  Posted: February 18, 2002

This analysis is being provided today to House leadership. HB 540 is in the House Rules Committee, and could be heard sometime this week. KRC believes that the bill needs substantial strengthening in order to meaningfully address the community and environmental impacts of siting of "merchant" power plants.


Kentucky Resources Council, Inc.

Post Office Box 1070

Frankfort, Kentucky 40602

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

e-mail fitzKRC@aol.com

February 18, 2002

WHAT IS NEEDED TO CONTROL POWER PLANT SITING:

House Bill 540 HCS is a start but needs to be stronger

Why Is A Siting Bill Needed?

Because the decision to site an electricity generating facility presents potentially significant adverse environmental consequences that, left unchecked, may interfere with other land uses, economic development, and attainment and maintenance of air and water quality.

The generation of electricity, particularly where fossil fuels (coal/oil/gas) are combusted or thermally processed to generate power, represents a significant capital investment for the investors, ratepayers or public entities proposing the plant.

So too, the siting, construction, operation, maintenance and closure of the power plant represents a commitment of community and environmental quality and resources and is a matter of significant interest and legitimate concern for the public, including those in the "host" neighborhood, community, city, county, state and region. While the extent of impacts of a facility varies with the size of the plant, level of technological controls, fuel composition and fuel configuration, and other facility-specific issues, there are common issues of concern that must be addressed "up front" : air pollution, waste disposal, water use and water discharge, groundwater contamination, transportation, and land use compatibility.

Kentucky has adequate generating capacity and an adequate process for planning to meet future needs of Kentuckians for power. Our transmission capacity is adequate to serve our "native load." While there is nothing inherently wrong about manufacturing a product in state for export, electricity is not merely another "commodity." Each of these "merchant" power plants represents a long-term commitment that has environmental and community consequences, and those consequences must be reviewed in a coherent manner and must be mitigated to the extent possible in order to assure that the public interest is protected. In the words of one power industry observer. "these power plants do not sit lightly on the landscape."

For new units that are proposed by regulated utilities, there is already process of justifying the need for the facility and demonstrating that it is the least cost alternative. The Public Service Commission review process includes a recommendation of "environmental compatibility" by the Natural Resources & Environmental Protection Cabinet, yet that review lacks meaningful standards and has been largely a "rubber stamp" of facilities provided that they will meet permit limits under air, waste and water laws.

Isn't compliance with permit limits sufficient? Why Do We Need A Siting Bill?

There are a number of areas that are known to be of concern at a local, regional and state level for which there are not currently state limitations. A siting bill is needed to allow a more comprehensive review of all impacts of a facility and to assure that appropriate conditions are imposed where needed, even where the state has no current limit, such as noise, lighting, transportation conflicts, groundwater protection.

What are the issues of concern to the Council with the proposed House Committee Substitute 2 to House Bill 540?

1. The scope of the bill is too narrow, since it appears to exclude power plants that have begun any land disturbance (even a ceremonial shovel turning) even if they do not have all permits.

Solution: The bill must include all new power plants unless they have been fully permitted at the federal, state and local government level and with bona fide construction underway. For those plant holding all permits and under construction, a siting review should be required to determine if impacts are adequately mitigated and reasonable mitigation measures should be required consistent with the status of the facility (i.e. relocation and redesign would not be reasonable but yet many low-cost mitigation measures could be incorporated in many cases).

2. The use of fixed setbacks, particularly where they are arbitrarily chosen and bear no relation to the extent of the impacts of the proposed plant, is a poor surrogate for on-site mitigation. For example, under the bill, one residence has a 500-foot setback, but if the house has four neighbors, the setback increases six-fold. The effect will be that rural counties with no zoning or planning will become likely targets for new plants.

Solution: Each facility must adequately mitigate its noise, lighting, dust, emissions, and other environmental impacts, and assure compatibility at the boundary of the plant property, through use of in-plant design, construction, location, and mitigation measures to lessen impacts in order to avoid nuisance impacts and environmental pollution. Minimum setbacks maybe used as a default but must be appropriately set and capable of modification up or down as needed to fully mitigate impacts.

3. The siting review process should be limited to unregulated "merchant" units.

Solution: Since regulated units are already subject to review under the certificate of necessity and convenience process, what is needed for regulated units is not a second review process, but instead meaningful standards for what constitutes "environmental compatibility."

For unregulated "merchant" plants, a siting review process is needed to apply those standards of disclosure, analysis and review to assure environmental compatibility.

Additionally, for counties with planning and zoning, KRS 100.324 must be clarified to assure that merchant plant siting is subject to planning and zoning approvals. For those many counties and cities for which there is no current zoning and planning, the siting review must assess and determine community compatibility as well as environmental compatibility.

4. The siting review board lacks adequate public involvement. Under the 2nd House Committee Substitute to HB 540, the 7-member board includes two "ad-hoc" members that will change with each power plant - one being the planning commission head or county judge/mayor; the second, an individual appointed by the Governor.

Solution: Effective public involvement requires permanent membership by the public. The Board should be enlarged to include a seat for the Environmental Quality Commission designee, a designee from the Attorney General's office, and an appointee designated from a list prepared by non-profit organizations involved in environmental protection and land use planning.

Longer term, the creation of an office of community and consumer advocacy that would participate as a watchdog in utility-related matters on behalf of non-commercial and non-industrial consumers and the public, should be established.

5. The siting process should not be "gamed" to favor certain types of companies or certain projects.

Solution: Eliminate provisions favoring or exempting certain types of facilities in order to make the process equally applicable.

6. The standards for approval and information requested are inadequate. The level of review of the impacts of the projects has been weakened from the 1st Committee Substitute when they needed strengthening instead.

Solution: Strengthen the standards to assure a sound decision based on full disclosure and analysis, including:

* analysis of all impacts on air, land, water resources, compatibility with land uses and local ordinances governing pollution and nuisances, and an integrated environmental and public health risk assessment. The Assessment must valuate impacts on property values, on the pattern and types of development of surrounding and nearby properties, and the ability of the host community to provide public services and still protect fully the health and welfare of the public and the environment.

Electric Cooperatives are already required by the Rural Utilities Service to undergo an environmental analysis under the National Environmental Policy Act, considering alternatives and impacts of the proposed action. Facilities utilizing federal monies likewise undergo NEPA review. The level of analysis and assessment of reasonable alternatives used to support an environmental impact statement should support the "environmental compatibility" review and apply evenly across the board among regulated and merchant units.

The standards for approval of a site are the heart of the bill. Approval of a site should be contingent on finding, and imposition of enforceable conditions to assure:

- that the environmental and community impacts of the proposed facility have been mitigated so as to prevent adverse effects on the public health, safety and the environment

- that co-location at an existing facility is infeasible;

- that all federal, state and local laws will be followed;

- that the individual and cumulative effects of the proposed facility have been mitigated to a level necessary to avoid adverse effects on the health and welfare of the public and the environment;

- that the applicant possesses the necessary allowances for emissions of oxides of nitrogen and sulfur;

- that the applicant possesses the financial, technical and managerial capacity to construct and operate the facility;

- that no other feasible alternatives exist, including other locations, technologies and investments (including demand-side controls) that would satisfy the project purposes with less impact;

- That if a continuous program of facility construction has not begun in earnest within two years after siting approval, the certificate will lapse.

- and that for any emissions of criteria or toxic air pollutants, the facility has fully offset new emissions of ozone-precursor compounds and air toxics by enforceable credits obtained from existing sources.

How Does House Committee Substitute 2 Differ From the Prior Draft?

House Committee Substitute 2 differs from the earlier House Committee Substitute in:

- Placing co-generation facilities back under the siting bill (HCS 1 had exempted them;

- Altering the manner in which the local government ad-hoc member is selected;

- allowing waivers "for good cause" of any setbacks, without defining what is good cause;

- removing much of the detail of what environmental and community impact analysis is required, including eliminating the integrated risk assessment;

- removing the requirement that the applicant for siting hold all necessary permits.

Rather than strengthening the bill, the second House Committee substitute weakened the environmental review process and created a waiver from already-weak setback provisions. If the Patton Administration seeks public support for a siting process, in order to level the playing field between regulated and merchant plants, HB 540 must be amended to make it a stronger, more comprehensive, more meaningful review process.



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