Charles Case Hunton & Williams LLP ccase@hunton.com (919) 899-3045 Presentation by Intervenors Duke Energy and Progress Energy to the Environmental Management Commission Raleigh, N.C. December 3, 2012 Charles Case Hunton & Williams LLP ccase@hunton.com (919) 899-3045

Intervenors & their interests Duke Energy and Progress Energy own and operate coal ash storage facilities Those facilities are regulated by DENR under the groundwater (2L) rules The declaratory ruling request would significantly alter this established regulatory scheme, per the affidavit submitted with Intervenors’ memorandum

Intervenors’ Position re the Request Intervenors urge the EMC: Confirm DENR’s and AG’s interpre-tation and application of 2L Rules If change is needed in the 2L Rules, initiate rule-making with notice and comment, to allow participation by stakeholders and time for appropriate consideration

Nature of Request, if granted Request not really “clarification,” rather effort to fundamentally alter DENR’s 28-year interpretation of 2L corrective action provisions, including: 1984 adoption of “perimeter of compliance” and established perimeter for pre-1984 facilities 1989 renamed as “compliance boundary” and kept perimeter for pre-1984 facilities 1993 adoption of current §.0106 corrective measures language at issue in the Request The 2L Rules as applied are clear

Impact of Ruling, if granted Significant likelihood that it would lead to similar efforts to alter application of 2L Rules to other, similarly regulated facilities This possibility has created serious concern by regulated entities and groups, none of whom own or operate coal ash ponds the following having submitted written statements that are attached to Intervenors’ memorandum

Entities providing statements of concern about the Request:

Entities providing statements of concern about the Request:

Entities providing statements of concern about the Request:

Entities providing statements of concern about the Request:

Entities providing statements of concern about the Request:

Entities providing statements of concern about the Request:

Concerned Entities’ Facilities/Activities Examples of their facilities: Solid waste landfills and POTWs Industrial wastewater lagoons Animal and agricultural ponds and lagoons If EMC thinks change needed in 2L Rule interpretation along lines of Request, should afford full opportunity through rule-making, with notice and comment

Petitioners’ Claim: DENR misread rule Petitioners claim their “correct” reading can be found in the “clear” and “unambiguous” language of the 2L Rules However, it is only “clear” that Petitioners disagree with DENR’s longstanding interpretation and application of the 2L Rules Proper interpretation of 2L Rules not found in claims of “clear” language, but rather in well-accepted principles for interpreting rules

Principles for Interpreting Rules Must read rule as a whole (“in pari materia”) Take in account the rule’s language, overall policies and purpose(s), history, and structure Give meaning to every single provision Refuse any interpretation that fails to give meaning to any of the rule’s provisions (avoid “reading a provision out of the rule”) Petitioners acknowledge – but fail to follow – these rules, incorrectly arguing that answer is in “clear meaning” of isolated 2L Rule terms

Petitioners Misconstrue §.0106(c) Petitioners claim the plain meaning compels DENR to require “immediate” corrective action for 2L exceedance “whether or not groundwater quality standards have been exceeded at or beyond a compliance boundary around the lagoon,” by which they imply unqualified mandate of: Immediate physical removal of ash required Timely initiation of corrective measures not enough

Petitioners Misconstrue §.0106(c) In fact, §.0106(c)(4) gives guidance on schedule for corrective action: Facility must implement approved corrective action plan “in accordance with a schedule established by” DENR, and DENR should “consider any reasonable schedule proposed by the person submitting the plan” Contrary to Request, §.0106(c) does not override these other provisions providing direction on the implementation of corrective action under 2L

Petitioners Misconstrue §.0106(c) Petitioners’ claim or implication that §.0106(c) requires immediate removal of material is contrary to other provisions in §.0106(c) and other 2L Rules: §.0106(f)(3) and §.0106(l)(1) allow “treatment and control” of the source of groundwater pollution; §.0106(f)(2) also allows “abatement, containment or control of the migration of contaminants” §.0106(f) says these corrective actions can occur “prior to or concurrent with” with §.0106(c) assessment

Petitioners Ignore other 2L Rules §.0107(a) explicitly provides a compliance boundary for pre-1984 permitted facilities incorporated into 2L Rules in 1984 and not changed for the 28 years since, including 1993 amendments on which Petitioners rely §.0102(3) clarify compliance boundary to define the area “at and beyond which groundwater quality standards may not be exceeded” §.0103(a) general policy for “feasible and necessary” corrective action

2009 AG Opinion The opinion applied correct interpretative standard in reading 2L Rules in pari materia Upheld DENR’s interpretation and application of the 2L Rules and their corrective action requirements in §.0106 as correctly providing flexibility to ensure groundwater standards are met and groundwater protected at or outside the compliance boundary Avoided writing out parts of 2L Rules, including §.0107(a), §.0102(3), §.0103, and parts §.0106

Petitioners Ignore Waste Rules Petitioners claim “DENR has misinterpreted its groundwater regulations to exclude coal ash ponds that are no longer active but are contaminating groundwater”; however DENR: has not excluded coal facilities from 2L Rules simply interprets its solid waste rules such that a closed coal ash lagoon with an active NPDES permit can be reauthorized as a solid waste disposal site

Intervenors’ Conclusions The Commission should confirm the long-standing and consistent interpretation and application of the 2L Rules by DENR in accordance with the guidance provided by the AG. If EMC instead believes that some change is required in the wording, interpretation or application of the 2L Rules, or if further clarification of the 2L Rules is needed, Intervenors urge the Commission to initiate rule-making to examine those issues