Utilities look to ‡ˆ¢‘ˆ •ˆŠ˜„—Œ’‘
At the request of Arizona’s biggest utilities, state regulators seek control of pollution disposal program
State environmental regulators want to take control of a program overseeing the disposal of toxic coal ash — and are seeking to do so at the behest of Arizona’s biggest coal burners just as the Biden administration rolls out a new pollution enforcement program.
Environmental advocacy groups fear a state takeover is synonymous with weakened enforcement, and they question what they describe as a cozy relationship between state officials and powerful utilities they are supposed to regulate.
Documents obtained by The Arizona Republic show a monthslong back-and-forth between the state and utilities sharing information about the coal-waste program. An initial draft of the proposal even included a provision to block residents from filing lawsuits over violations, though the state has since said that was a mistake.
Sandy Bahr, director of the Grand Canyon Chapter of the Sierra Club, said the request was the most “blatant” play to polluters she’s seen in nearly three decades working in environmental advocacy.
“We all should be outraged that an agency, whose mission is to protect the environment, that they are again looking out for the big polluters instead of the public, the waters and other resources of the state,” Bahr said.
The Arizona Department of Environmental Quality, or DEQ, contends that it is better able to enforce the coal ash program, which is currently run by the U.S. Environmental Protection Agency.
“We all should be outraged that an agency, whose mission is to protect the environment, that they are again looking out for the big polluters instead of the public, the waters and other resources of the state.”
Sandy Bahr
Director of the Grand Canyon Chapter of the Sierra Club
“While ADEQ has no direct interest in preventing lawsuits, we do have the best interests of utility ratepayers — who ultimately would bear the costs of legal challenges — in mind.”
Caroline Oppleman
Arizona Department of Environmental Quality spokesperson in an email
Gov. Doug Ducey’s office suggested that a state takeover aligns with his preference for local control.
DEQ outlined its proposal in its 537page budget request sent to Ducey’s office in September. The department wants $566,000 from the state’s tax collections and fees to start up and manage the coal program in house.
The request comes as federal environmental regulations are reevaluated alongside the change of administrations at the White House. Former President Donald Trump rolled back environmental protections, while his successor Joe Biden immediately took steps to reinstate more restrictive laws.
Among those, EPA will soon implement the first-ever federal permit and enforcement program for coal ash disposal that Arizona utilities must comply with, unless the state takes over first. The EPA expects to finalize the permit program in January, though delays are possible.
Just three states — Oklahoma, Georgia and Texas — run their own coal ash programs, according to the EPA. Coal ash is produced by burning coal in power plants, and it contains pollutants like mercury, cadmium and arsenic that can taint the water supply and air if not disposed of properly. The waste often is stored in landfills or ponds.
Breaches can have catastrophic consequences. The nation’s biggest coal ash spill sent coal sludge into nearby rivers and across a 300-acre swath of land when a dike broke at the Kingston Fossil Plant in Tennessee in 2008. At least 25 clean-up workers died and another 250 were sickened in the decade after the spill, according to a court ruling workers won against a company managing the recovery effort.
Arizona has four operating coal plants: Cholla Power Plant in Navajo County, Springerville Generating Station and Coronado Generating Station both in Apache County, and the Apache Generating Station in Cochise County.
Ducey and the Arizona Legislature have to sign off on the program and funding before it would take effect, as would the EPA. Ducey will propose a budget for his final year in office in January, using agencies’ budget requests as a starting point to craft the state’s spending plan.
An error in the proposal?
Advocates said they fear lax oversight and the loss of the ability to take action if the state fails at enforcement. The latter concern stems from what DEQ calls inaccurate information erroneously included in the initial budget request.
The first public version of DEQ’s budget request said citizens — and by extension, environmental advocacy groups — could not file lawsuits against utilities for coal waste violations if Arizona takes over the program.
The utilities that requested DEQ take authority over coal ash did so through an ad hoc group called AUG, or Arizona Utility Group. They include Arizona Public Service Co., Salt River Project, Tucson Electric Power Co. and the rural cooperatives.
When asked why the state would want to prevent lawsuits against private companies, including Arizona’s politically powerful and deep-pocketed utilities, DEQ said it made a mistake and lawsuits would not be pre-empted.
“While ADEQ has no direct interest in preventing lawsuits, we do have the best interests of utility ratepayers — who ultimately would bear the costs of legal challenges — in mind,” DEQ spokesperson Caroline Oppleman said in an email, even as the agency confirmed lawsuits could still be filed if the state takes control.
The department updated its budget request, removing the language about lawsuits, after responding to questions from The Republic.
The state says it could better enforce rules for coal ash waste if it takes the reins from the EPA. Local staff who know Arizona best would oversee permits and enforcement, Oppleman said. She noted the state has more information online and community liaisons who could better involve the public in oversight. DEQ’s program would have to be at least as strict as federal rules.
Yet some are concerned that the state would not sufficiently police polluters, and that Ducey — who has strived to cut red tape across government — would approve a regulatory program the state doesn’t have the manpower to enforce.
Two state auditor general reports released last month fan concerns about DEQ’s enforcement capacity. One report said DEQ did not comply with certain conflict-of-interest requirements, like requiring employee disclosures.
Another report said DEQ has been out of compliance for between seven and 29 years by not setting standards for eight groundwater pollutants and was not testing water as required by statute. The department said staff retirements and a lack of funding were to blame. DEQ has earmarked $400,000 for water quality monitoring, and said in an official response to the audit that the department would update the water standards when more funding is available.
“The utilities know that there’s a climate that is very friendly to what they want,” Bahr said.
DEQ, however, said it had updated and implemented conflict of interest rules to better identify where there might be problems, and Oppleman said the agency “has the expertise and will add capacity” to oversee coal ash pollution, too.
And a spokeswoman for APS, Jill Hanks, said the utility is “in full compliance with federal CCR (coal-ash) regulations and the support for a state permitting program has nothing to do with avoiding litigation.”
Utilities requested the change
The Republic requested communications between the utilities and DEQ under the Arizona Public Records Law, and found a cooperative and months-long effort to bring the coal pollution program under state control.
In fact, DEQ forwarded a reporter’s questions and the agency’s responses to APS just 15 minutes after sending them to The Republic, the records show. DEQ says that was a courtesy that is given to other agencies and stakeholders.
In a March 17 email, APS manager of environmental support Anne Carlton wrote to ADEQ Director Misael Cabrera and shared a letter from the utilities that supported the state taking over the coal-ash program.
“We appreciate the department’s commitment to excellence in moving this matter forward,” the letter said. “We are confident that local control of the program will improve efficiencies and provide positive outcomes for the environment and human health.”
Sowj Chintalapati, deputy director of waste programs at DEQ, wrote the utilities on Aug. 15, telling them DEQ would make the request to take over coal ash regulation and asking for a meeting with the utilities.
The APS official responded by asking if the company could review the department’s request before the meeting.
An environmental watchdog group called the Energy and Policy Institute, which has tracked utility issues in Arizona previously, also requested documents discussing the program from DEQ.
Joe Smyth, research and communications manager for Energy and Policy Institute, said the records, which include a lunch appointment between an APS employee and the DEQ director, show an unusually close relationship between the utilities that produce coal waste and the agency that regulates them.
DEQ says the lunch was merely two people who knew each other from previous jobs discussing APS’s “aggressive clean energy goals, breakthroughs in battery technology” and personal matters.
“The pernicious influence that especially the largest utilities in Arizona have on policymakers and regulators in the state is well known,” Smyth said. “This new set of records shows a really close working relationship between staff at the Arizona Department of Environmental Quality and major utilities in the state, particularly APS, and the ability of the utilities to get good access and, it looks like, the decisions they want from the environmental regulator.”
Some of the records obtained by The Republic show utility officials educating DEQ officials on the basics of how coalash ponds are regulated and how they post their inspections online.
“It is interesting that they don’t know that sort of thing already, yet they (DEQ) want to take on the program,” Smyth said.
He said the records show that utilities put a large effort into helping DEQ take over the coal ash regulation because, he believes, they feel it will result in less stringent regulation.
“I think the utilities likely believe DEQ is more likely to give them a pass,” he said. “It’s pretty blatant. They think they will get better treatment from DEQ than from EPA.”
Forthcoming decisions about coalash regulation could have large implications for utilities, Smyth said.
Some coal-ash ponds around the country may require relocation under the new federal rules, which could cost millions, although it is unclear if Arizona’s plants would have to relocate their ponds, he said.
This isn’t the first time that connections between utilities, in particular APS, and the Ducey administration
have drawn concern.
APS, its parent company and its employees donated sums of six-figures to the state Republican Party in 2018, spent thousands to elect Ducey, and poured millions into efforts to put candidates onto the Arizona Corporation Commission, which sets the rules for public utilities. Ducey put Don Brandt, the former CEO of APS’s parent corporation Pinnacle West Capital Corp., on the board that oversaw his 2015 inauguration.
Ducey spokesman C.J. Karamargin said the governor’s budget proposal was still under review, and wouldn’t say if taking over the coal program would get the funding DEQ requested. But speaking generally, Karamargin said the spending plan would reflect Ducey’s preference for local control.
“It is our belief that it results in better environmental outcomes, and the services that result from it are consistent and expedited for Arizona businesses,” he said.
Karamargin said he rejected the idea that campaign contributions from the utilities or ceremonial appointments would influence policy.
“We work with them closely all the time to ensure that Arizonans are well served, their utilities are being provided and regulations are being followed,” Karamargin said.
Utilities argue for local control Arizona utilities involved in the request said they want local control, not to skirt environmental regulations.
“State permitting ensures that local regulators, with specific and deep expertise as to the local environment and local business operations, are responsible for environmental compliance assurance and enforcement for Arizona utilities instead of U.S. EPA, located in offices in San Francisco or Washington, D.C.,” Hanks, the APS spokeswoman, said.
APS, SRP and TEP officials all said their coal-ash disposal facilities are in compliance with federal regulations. TEP spokesman Joseph Barrios said the utility “expects to remain in compliance even after new oversight guidelines are enacted.”
“It’s important to remember that a state oversight program would need to be at least as stringent as a federal oversight program,” he said.