Administration officials have said that they believe efforts to alter the proposed solar installation to minimize pollution will keep it from violating NEPA. On October 7, the Bureau of Land Management cleared the stimulus project for construction. It was one of several massive, renewable energy projects the bureau had “fast-tracked” in order to enable companies to break ground before year’s end, thereby meeting a deadline to collect stimulus dollars.
Past Pollution Records Not A Factor In Most Exemptions
NEPA compliance officers have acknowledged that they couldn’t spend much time on the crush of stimulus applications. About 60 NEPA officers inside Energy were assigned to certify the thousands of categorical exclusions processed over the first 18 months.
Energy officials confirm the officers did not research applicants’ past pollution records; instead, they relied on information volunteered by companies in standard forms outlining their work, budget, and management plans. Applications included a questionnaire, about a dozen pages long, asking about potential effects on the environment, from radioactive waste to special wilderness areas.
An aerial view of Duke Energy’s coal-burning Gallagher Generating Station, in New Albany, Indiana. Duke paid $93 million to settle an air pollution case against the plant last year. Credit: John BlairHistorical violations were almost never a factor.
Didion’s stimulus grant for expanding its ethanol plant in Wisconsin offers a case study.
Less than a month before its approval, a federal judge ruled Didion’s plant had violated the clean-water law multiple times in recent years. In April, the company settled a state lawsuit by paying $1.05 million for 23 air and water claims dating back to 1999.
Today, the Environmental Protection Agency’s compliance database shows Didion receiving 11 violation notices since 2005 — among the most for any Wisconsin company. The agency has labeled it a “high priority violator.”
Nonetheless, Didion’s application to the Energy Department for a stimulus grant and NEPA waiver shows officials never sought — and Didion never disclosed — details of its environmental compliance record. In fact, the company did not answer several questions on the questionnaire.
For instance, the form asked what permits would be required, how solid waste would be hauled, and what emissions would result.
“Summarize the significant impacts that would result from the proposed project,” it said.
Didion left that one blank.
“That’s commonly not filled out by many companies, unfortunately,” explained Mark Lusk, the NEPA officer who approved Didion’s waiver.
Lusk and other officers recognize the “trust factor” inherent in the questionnaires. They try to verify a company’s answers, they say, consulting site maps and databases on soils or floodplains. What matters to them are the permit-related questions, which indicate major or new construction.
In Didion’s case, the company is installing new equipment at its ethanol plant, “things that are easy to do and should not have a negative impact,” Lusk said. He did not see any red flags in Didion’s case, he says, and did not look into the company’s past compliance problems.
Neither did Angela Harshman, the Energy Department employee who handled Didion’s stimulus grant. In a June 22 e-mail, she told the Wisconsin Center that background checks typically encompass “financial capability,” such as past audits, and “information via an environmental questionnaire.” Administration officials say those who monitor the stimulus dollars might flag previous environmental violations — if they involved potential criminal activity.
That would not include Didion’s million-dollar civil penalty to settle its violations.
Dale Drachenberg, the company’s vice president of operations, declined to comment on the stimulus grant and NEPA exemption, instead focusing on the project’s benefits. Didion will use 25 percent less power for every gallon of ethanol it produces, he said in a statement, and will hire 75 construction workers and 10 fulltime employees.
“Since the day we started construction on our ethanol production facility,” he said, “we’ve made innovation and conservation top priorities.”
To Karen Dettman, a neighbor of Didion’s plant in Cambria, Wis., who has lived with its spills and smells, the justification seems more like “green energy at any cost.”
Some NEPA Exemptions Are Conditional
Some of the department’s NEPA exemptions have been conditional, giving polluters initial permission to spend money on researching and developing a technology in a laboratory while leaving the door open for a second environmental analysis when the company breaks ground.
DuPont’s nearly $9 million stimulus project falls into that category.
Energy’s categorical exclusion decision, dated Jan. 29, explains DuPont is cultivating a “commercially viable process” to create seaweed-based biofuel that “offers significant advantages over fossil fuels and ethanol.” The form indicates the NEPA exemption was granted partly because the project entails “bench-scale research,” or experiments in a conventional laboratory setting. And it notes the project’s second phase — field testing described as “involving a 5-10 hectare macroalgae pilot aquafarm” — requires another NEPA decision before DuPont can proceed.
In its three-page questionnaire, DuPont reports that the project carries environmental risks, such as the use of “hazardous or toxic materials,” “additional chemical storage,” and “additional waste handling capabilities.”
“Does the proposed project have highly uncertain and potentially significant environmental effects or involve unique or unknown environmental risks?” the form asked.
DuPont checked “yes.”
Energy officials say they believe there was little risk in the first phase, and the second NEPA decision, which is now pending, will hinge on whether DuPont meets required milestones set for its initial lab work.
In a statement, DuPont stresses the company “has not applied for an environmental exclusion” for the project’s second phase, but rather is “following the necessary process set forth by the Department of Energy.” It states, “Each project that we work on includes, by our own policy, a comprehensive and individualized product stewardship program.”
That’s little consolation to environmental advocates who have long fought DuPont, and who believe the chemical giant can’t be trusted.
“It makes no sense to have environmental protection laws if we are going to circumvent them and exempt companies from having to follow them, especially companies like DuPont with long histories of pollution violations,” said Rick Abraham, a consultant who helped the United Steelworkers uncover high levels of the toxic chemical C8 in water supplies in a half dozen states with DuPont plants.
Such distrust is grounded in years of epic pollution battles. Kiger, the 62-year-old teacher who lives about a mile from a DuPont plant in West Virginia, remembers the day when a one-page letter arrived at his home from the local water service warning that traces of an “unregulated chemical” — C8 — had been found in the drinking water.
Tracing C8 to DuPont’s plant, which has used the chemical to make Teflon products since the 1950s, the letter called it “persistent” and “slow to be eliminated from the blood stream of people,” yet stated DuPont “is confident these levels are safe.”
“It was incredible,” recalled Kiger, who became a lead plaintiff in the first of three class-action lawsuits filed by West Virginia, Ohio, and New Jersey residents alleging DuPont’s C8 had contaminated their water. His suit ended in a $108 million settlement paid by the company to clean up six water districts and conduct a health study of 80,000 people.
Internal DuPont documents uncovered in the litigation triggered an EPA enforcement case in 2004 that would yield a record-breaking civil penalty. The documents showed DuPont had tracked C8 in neighboring water supplies at levels beyond its own safety standard years before Kiger received his letter. By December 2005, DuPont had settled the EPA case by paying $16.5 million for eight toxic substances and hazardous waste violations dating back to the early 1980s.
Two years later, the company agreed to pay nearly $70 million in penalties and remediation to resolve air-pollution claims against four of its sulfuric acid plants in four states. In April 2009, EPA pursued DuPont on allegations it illegally dumped mercury from a polymer fiber facility, imposing a $59,000 fine.
None of these violations were raised in DuPont’s November 2009 stimulus questionnaire. The office that awarded the company its grant and NEPA exemption has since revised its form to ask about “any notices of violations … related to health, safety, or the environment within the last three years.”
To Kiger, whose neighbors are still suing DuPont alleging ongoing C8 pollution, the NEPA exemption seems like another way for the company to game the system.
“That’s like giving a kid a piece of candy and telling him you cannot eat it,” he said.
Are “Smart Grid” Exemptions Smart?
The most sweeping NEPA exemptions, however, went to cover all grant recipients in the $4.5 billion smart grid program to make electrical grids more efficient. And they have created one of the most dramatic ironies in the debate over the administration’s strategy.
On March 26, EPA regulators filed a 72-page decree in a Kansas federal court formalizing a $500 million settlement of charges that Westar Energy had caused 16 years of unpermitted emissions of smog and haze, one of the Obama administration’s biggest air pollution victories.
That same day, the Energy Department signed yet another agreement with Westar, granting it millions in stimulus dollars for a smart grid project in its home state. The money — delivered on March 29 — came with a NEPA exemption.
Westar executives say Energy’s process for approving the company’s NEPA waiver involved a “comprehensive” questionnaire and “a fairly detailed analysis” of their smart grid project, known as “SmartStar,” which has yielded 12 jobs so far while saving others.
Brad Loveless, the company’s environmental director, describes the activities much like Energy officials: “It’s our basic, standard, above-ground upgrade,” he said. The department stresses that Westar’s project will make the electrical grid more efficient, thereby reducing the need for coal-fired power.
Westar’s questionnaire, dated August 2009, suggests the work has at least one environmental impact. The company reports it will handle “small amounts of mercury” contained in 1,750 old electric meters, recycling the toxic metal “as a universal waste.”
Loveless and fellow executives say they never discussed Westar’s past environmental violations with Energy officials during the process. According to department employees, every smart grid project was subject to a blind evaluation, meaning the NEPA officer did not know a company’s name or other identifying information.
Meanwhile, EPA was trumpeting its settlement with Westar. In February 2009, the agency sued Westar alleging the company had evaded permit requirements under the federal Clean Air Act, from 1994 to 1997, causing more than a decade of unauthorized air emissions at a coal plant outside Topeka.
Company executives say the five claims of air violations at the plant have no bearing on a stimulus project located in another region of the state. Westar “has never agreed with EPA’s contention,” they argue; it settled with the agency because it was already investing millions of dollars in scrubbers to curb air pollution at the plant.
“There’s a reasonable approach to considering a company’s record in the grant and waiver process, but that record should be looked at holistically,” said Westar’s Jim Ludwig. “I think we’ve clearly passed any kind of threshold.”
Yet the fact that Westar would be freed from environmental oversight so soon after it was penalized under the clean-air law has left some residents in disbelief.
“They haven’t proved they have the communities and their responsibilities for pollution as a top priority,” said Gary Anderson, a 67-year-old retired accountant who lives downwind from the company’s coal plant. “I don’t think we should leave it up to Westar to do what’s right.”
Before Gulf Spill, BP Refinery Won Stimulus Grant
BP’s ill-fated Texas City refinery — site of that deadly 2005 explosion — has also managed to qualify for a NEPA exemption for the first phase of a stimulus project. Under the grant, industrial gas maker Praxair has led an experiment to capture carbon emissions from the refining process and store them underground in nearby oil fields, to both enhance peak-oil production and reduce greenhouse gases linked to global warming.
In October 2009, the Energy Department awarded $1.5 million to Praxair for preliminary planning and data collection. The company, which was to construct carbon-compression facilities, brought in pipeline operator Denbury Resources as a partner to “potentially purchase the CO2,” as its August 2009 application states. BP was to provide land and “necessary utility infrastructure” at its refinery.
At the time — just eight months before the disastrous oil spill in the Gulf of Mexico — BP was set to be fined an unprecedented $50.6 million by federal regulators for failing to fix safety hazards contributing to the 2005 refinery blast, which killed 15 workers and injured 170. The penalty would mean the oil giant had violated its criminal plea agreement over the incident. Denbury, too, was facing repeated notices of violations for a series of small pipeline spills, one of which yielded a $12,500 fine in 2008.
The department awarded the stimulus money for initial design and engineering work, as well as field testing for what would become a demonstration site for carbon capture. It granted Praxair the NEPA exemption in November 2009 for the project’s first phase, leaving open the possibility that an environmental review might be required if the project proceeded to a second phase.
In its questionnaire, Praxair estimates its early work would produce 10,000 pounds of non-hazardous “lab or sampling waste.”
Praxair declined to comment on the Texas City refinery’s record of environmental and safety violations, stating that the NEPA exemption was for an engineering study only. It did not pursue phase two because, Praxair explained, “the risks and uncertainties were not commensurate with potential benefits of the project at this time.” BP, for its part, stresses that it provided Praxair with the information it needed to complete its stimulus application for the first phase. “BP has had no further involvement,” said Scott Dean, a company spokesperson. And Robert Cornelius, director of operations for Denbury, told the Center, “We do take environmental compliance very seriously.” He attributed Denbury’s past fines to its practice of buying oil fields in disrepair, explaining that the company has invested $3.5 million in new equipment to prevent future spills.
Energy employees insist they would have conducted some form of an environmental review if the project had continued. In April, the company failed to apply for additional stimulus money to move into the next phase.
Still, the mere fact that the refinery received any stimulus money and a NEPA exemption alarms some involved in earlier battles with the refinery. “I wouldn’t let Charles Manson date my daughter, even if they claimed he was rehabilitated,” said Brent Coon, the Texas lawyer who represented victims of the BP refinery fire. “And BP can’t be taken by the government at its word.”
“At some point,” he said, “you have to recognize you cannot rehabilitate the offender.”
Temporary Construction Does Not Raise Red Flags
One thing that Energy officials say would disqualify any stimulus project from getting a NEPA exemption is new construction. Yet the department has spared Duke Energy’s $21.8 million wind-storage battery project — and its construction and installation work — from having to undergo an environmental review.
Energy’s categorical exclusion decision, dated March 16, explains Duke is constructing “a concrete pad to place four (4) tractor-trailer sized batteries upon,” each of which will store wind-generated power for existing turbines at the company’s Notrees Windpower Plant, in Goldsmith, Texas. The form indicates the NEPA waiver is partly for “R&D or pilot facility construction,” and lays out a restriction: “Keep all temporary roadway work near substation.”
Duke and Energy officials alike describe such work as benign: The container-like batteries will enable the company to distribute wind power during peak electrical demand, says Duke’s Greg Efthimiou. Pozzuto, the NEPA officer who approved the exemption, notes that the firm’s wind farm sits on a remote patch of disturbed land, the substation and turbines already in place.
“It’s essentially the same thing as a few tractor trailers pulling up to a restaurant,” he said, “and parking there for a while.”
In its questionnaire, dated August 2009, Duke estimates that the battery-storage unit “is approximately the size of 20 18-wheeler truck beds,” and acknowledges that “some land adjacent to the substation temporarily would be affected.” It stresses, “Any environmental impacts will be limited to this small footprint.”
To Duke and Energy officials, the stimulus dollars will help enhance the company’s renewable energy operations, thus reducing its coal plants’ environmental footprint. Some environmental advocates, on the other hand, cannot forget that Duke has spent the past 10 years contesting two of the biggest air-pollution cases in the nation.
In December 2000, the EPA sued Duke, alleging it had refurbished eight plants in North and South Carolina without proper permits, spewing illegal haze, smog, and soot for years. The suit has yielded multiple technical rulings, including one in 2007 from the U.S. Supreme Court. Company executives and lawyers involved in the suit agree Duke has been cleaning up the plants, largely because of a state law forcing it to do so.
Duke has fought equally hard in a second suit involving six plants in Indiana and Ohio owned by Cinergy, which merged with Duke in 2006. After a decade of legal twists, a jury in 2008 ruled against one of the plants. In a 59-page opinion, dated May 2009, a federal judge blasted Duke for what he called its “apparent inability to appreciate the relevance of the regulatory scheme and the jury’s verdict” by failing to cut the plant’s emissions following the verdict.
The judge ordered the company to shut down the facility, yet Duke appealed. On October 12, a federal appellate court reversed the jury verdict, ruling that Duke’s Cinergy had not been required to obtain permits under state regulations at the time. According to the appellate ruling, the reversal comes even though renovations at the plant had increased air pollution — and even though the state had amended its regulations to require a permit for such renovations — because federal regulators had yet to approve those amendments. Meanwhile, when the company lost another jury verdict over a second Indiana plant last year, it agreed to settle the air pollution violations by paying $93 million in penalties and remediation costs.
Company executives point out that the EPA originally claimed 55 air violations, yet has prevailed on six. And throughout the litigation, they say, Duke has invested $5 billion in scrubbers and cut the coal plants’ pollution by 70 percent.
“Our record on reducing emissions speaks for itself,” said Duke’s Tom Williams, “and we will continue to reduce emissions over time.”
Duke officials confirm the department did not discuss the air-pollution cases, or any environmental compliance issues, before clearing the wind storage project from NEPA.
“You cannot let something Duke Energy did at a plant in another state and on another issue hold up this particular project,” Pozzuto explained.
To Kerwin Olson, of the Indiana-based Citizens Action Coalition, the company’s aggressive defense of the air-pollution cases seems reason enough. “All Duke Energy does is fight regulations and work to remove environmental and health protections,” he said. “They do little to nothing to clean up.”
Kate Golden, staff writer at the Wisconsin Center for Investigative Journalism, contributed to this article.
http://www.publicintegrity.org/articles/entry/2565/
