Cape Fear River Watch v. N.C. Envtl. Mgmt. Comm'n

• Decision Date: 11 June 2015
• Docket Number: No. 373A14.,373A14.
• Citation: 772 S.E.2d 445,368 N.C. 92
• Parties: CAPE FEAR RIVER WATCH, Sierra Club, Waterkeeper Alliance, and mountaintrue (f/k/a western north carolina alliance), Petitioners v. NORTH CAROLINA ENVIRONMENTAL MANAGEMENT COMMISSION, Respondent, and Duke Energy Carolinas, LLC and Duke Energy Progress, Inc., Respondent–Intervenors.
• Court: North Carolina Supreme Court

368 N.C. 92

772 S.E.2d 445

CAPE FEAR RIVER WATCH, Sierra Club, Waterkeeper Alliance, and mountaintrue (f/k/a western north carolina alliance), Petitioners

v. NORTH CAROLINA ENVIRONMENTAL MANAGEMENT COMMISSION, Respondent,andDuke Energy Carolinas, LLC and Duke Energy Progress, Inc., Respondent–Intervenors.

No. 373A14.

Supreme Court of North Carolina.

June 11, 2015.

Southern Environmental Law Center, by Austin D. Gerken Jr., Amelia Y. Burnette, J. Patrick Hunter, and Frank Holleman, for petitioner-appellees.

Roy Cooper, Attorney General, by Mary L. Lucasse and Jennie Wilhelm Hauser, Special Deputy Attorneys General, for respondent-appellant.

Womble Carlyle Sandridge & Rice, LLP, Charlotte, by James P. Cooney III ; and Hunton & Williams, LLP, Charlotte, by Charles D. Case, Matthew F. Hanchey, Frank E. Emory, Jr., and Brent A. Rosser, for respondent-intervenor-appellants.

ERVIN, Justice.

The substantive issue before us in this case is whether the trial court erred by reversing a portion of a declaratory ruling issued by the North Carolina Environmental Management Commission (Commission) on 18 December 2012 relating to the application of the Commission's groundwater protection rules codified at Title 15A, Subchapter 2L, "Groundwater Classification and Standards," of the North Carolina Administrative Code, to coal ash lagoons. See 15A NCAC 2L.0101.0417 (June 2014) [hereinafter Groundwater Rules]. In view of our conclusion that the General Assembly's enactment of Chapter 122 of the 2014 North Carolina Session Laws¹ supersedes the rule at issue in this appeal with respect to coal ash lagoons located at facilities with active permits, see Act of Aug. 20, 2014, ch. 122, 2014 5 N.C. Adv. Legis. Serv. 77 (LexisNexis) [hereinafter Chapter 122], we vacate the trial court's order and remand this case to the trial court with instructions to dismiss petitioners' appeal from the Commission's declaratory ruling on mootness grounds.

The present case stems from a dispute over the manner in which certain regulatory requirements should be applied to coal ash lagoons that received operating permits before 30 December 1983.² At the time at which the present proceeding was commenced, unlined coal ash lagoons existed at fourteen coal-fired electric generating facilities located in North Carolina. These coal ash lagoons contained the residue from the combustion of coal used to generate electricity. These residual materials consisted of a mixture of water, coal combustion by-products, and other waste.³ All fourteen of the power generation facilities at issue in this case operate subject to National Pollutant Discharge Elimination System ("NPDES") permits that were originally issued by the North Carolina Department of Environment and Natural Resources ("DENR") and are subject to Groundwater Rules that have been adopted by the Commission. According to groundwater samples taken from monitoring wells located on the properties on which the coal ash lagoons are located, levels of contamination that exceed the relevant groundwater standards have been reported near some lagoons associated with the coal-fired generating facilities at issue in this proceeding.

Section .0106 of Title 15A, Subchapter 2L of the North Carolina Administrative Code

describes the corrective actions required when "groundwater quality has been degraded." 15A NCAC 2L.0106 [hereinafter Rule .0106]. According to Rule .0106(c), which applies to sites that are either unpermitted or "deemed not permitted" pursuant to Rule .0106(e)(4) at which groundwater contamination exceeds authorized levels:

Any person conducting or controlling an activity which has not been permitted by the Division and which results in an increase in the concentration of a substance in excess of the standard, other than agricultural operations, shall:

(1) immediately notify the Division of the activity that has resulted in the increase and the contaminant concentration levels;

(2) take immediate action to eliminate the source or sources of contamination;

(3) submit a report to the Director assessing the cause, significance and extent of the violation; and

(4) implement an approved corrective action plan for restoration of groundwater quality in accordance with a schedule established by the Director or his designee. In establishing a schedule the Director, or his designee shall consider any reasonable schedule proposed by the person submitting the plan.

Id. .0106(c). On 10 October 2012, Cape Fear River Watch, Sierra Club, Waterkeeper Alliance, and Western North Carolina Alliance filed a request that the Commission issue a declaratory ruling clarifying the application of the Groundwater Rules to coal ash lagoons. More specifically, petitioners requested the Commission to make the following rulings:

a) Operators of coal ash lagoons with NPDES permits first issued on or before December 30, 1983, must take corrective action pursuant to 15A N.C. Admin. Code 2L.0106(c) when their activity results in an increase in the concentration of a substance in excess of groundwater quality standards, whether or not groundwater quality standards have been exceeded at or beyond a compliance boundary around the lagoon;

b) Operators of coal ash lagoons with NPDES permits first issued on or before December 30, 1983, must take immediate action to eliminate sources of contamination that cause a concentration of a substance in excess of groundwater quality standards, in advance of their separate obligation to propose and implement a corrective action plan for the restoration of groundwater quality contaminated by those sources; and

c) Operators of closed and inactive coal ash lagoons must implement corrective action as unpermitted activities pursuant to 15A N.C. Admin. Code 2L.0106(c) when they cause an increase in the concentration of a substance in excess of groundwater quality standards.

After the filing of this request for a declaratory ruling and a decision by petitioners and DENR to enter into certain stipulations relating to relevant facts, the Commission granted an intervention petition filed by Duke Energy Carolinas, LLC and Carolina Power & Light Company, an indirect subsidiary of Duke Energy Corporation, d/b/a Progress Energy Carolinas ("Duke"). After reviewing the record and hearing oral argument from counsel for the parties at a 3 December 2012 meeting, the Commission issued a declaratory ruling on 18 December 2012, concluding, in pertinent part, that:

16. Activities that do not meet the requirements of 2L.0106(e), including those permitted prior to December 30, 1983, are deemed unpermitted and are subject to the requirements of 2L.0106(c) applicable to persons conducting or controlling an activity (other than agricultural operations) that has not been permitted and which results in an increase in the concentration of a substance in excess of the standard.

17. The corrective action requirements in 2L.0106(c)(1) through (4) are not prioritized, and the immediate action to eliminate the source or sources of contamination requires responsible parties and the Division to follow the detailed procedures set forth in the entirety of the 2L Groundwater Rules. 18. The specific corrective actions enumerated in 15A NCAC 2L.0106(f)(1) through (4) that are required to be undertaken, including a site assessment and a corrective action plan for the abatement, containment or control of migration of any contaminants, require a reasonable amount of time to accomplish. The "immediate action" contemplated by 15A NCAC 2L.0106(c)(2) is action appropriate to the circumstances evaluated in the context of the 2L Groundwater Rules.

On 8 January 2013, petitioners filed a petition seeking judicial review of the Commission's declaratory ruling in Superior Court, Wake County, in which they claimed that the Commission had misconstrued the applicable regulations and erroneously failed to construe the applicable regulations in the manner contended for by petitioners in their original request for declaratory relief. After the submission of legal memoranda from the parties, the trial court heard oral argument on 26 August 2013 concerning the issues raised by petitioners' request for a declaratory ruling. On the same day, Duke submitted a supplemental brief informing the trial court about the enactment of Chapter 413 of the North Carolina Session Laws three days earlier. See Act of July 26, 2013, ch. 413, Sec. 46, 2013 N.C. Sess. Laws 1752, 1783–84 [hereinafter Chapter 413].⁴ According to Duke, the enactment of Chapter 413 rendered moot the first of the three rulings that petitioners sought to have the trial court make. In response, petitioners submitted a supplemental brief in which they acknowledged that the first ruling that they had requested the Commission to make had been rendered moot by the enactment of Chapter 413.

On 6 March 2014, the trial court entered an order determining that portions of the Commission's decision were "plainly erroneous and inconsistent with the regulation." More specifically, the trial court found that the first request contained in petitioner's original request for a declaratory ruling had, as the parties agreed, been rendered moot by the enactment of Chapter 413;⁵ reversed the Commission's decision with respect to petitioners' second request for a declaratory ruling and concluded that, in the event of a violation of the applicable groundwater rules by an unpermitted entity, "immediate action" must be taken to "eliminate sources" of the contamination that caused the violation; and dismissed petitioners' claim with respect to the third request for declaratory relief set out in their original petition relating to unpermitted coal ash disposal sites on the grounds that petitioners had, in fact, prevailed on that issue before the Commission given that the Commission's "[r]uling concurs with [petitioners'] interpretation." The Commission and Duke noted an appeal to the Court of Appeals from that portion of the trial court's order relating to the...