Bevin cabinet helped utility companies save money at the public’s expense, judge says

In a sharply worded rebuke, a Franklin Circuit Court judge delivered a blow to the Bevin administration's efforts to cut environmental red tape.

In a ruling made public Wednesday, Judge Phillip Shepherd overturned 2017 regulations that dramatically limited state and public involvement in what electric utilities must do to get permission to construct new landfills or ponds for storing toxic coal-combustion wastes.

He found that state officials failed to offer any justification for their actions while concluding that the Energy and Environment Cabinet's sole basis was, "arguably," to help electric utilities cut their costs. If not managed properly, he wrote, coal-burning wastes "can pose a great threat to public health and the environment."

They've been a safety and pollution issue for years, especially in Kentucky, a state that has produced among the largest volumes nationally of this byproduct.

Shepherd, who once served as the top environmental regulator in Kentucky, concluded that the cabinet's "regulatory changes ... are not supported by any rational basis or substantial evidence."

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Cabinet spokesman John Mura said state officials were reviewing the decision and offered no further immediate comment.

A spokeswoman from Louisville Gas and Electric, a co-defendant in the case, said company officials were disappointed. Liz Pratt, the spokeswoman, said the state's coal-burning waste rule changes ensured consistency between the state and federal regulations and allowed Kentucky’s regulated utilities "to shut down the existing coal ash ponds in the most cost-effective manner."

The lawsuit was filed by Kelley Leach, who is represented by the Kentucky Resources Council and its director, attorney Tom FitzGerald. FitzGerald had argued that "the cabinet was not required by state or federal law to eliminate the current permitting process, and the cabinet's replacement of a thorough permit review with a one-page permit application makes a mockery of the permitting process."

Leach has been objecting to a large coal ash landfill LG&E plans to build near his property in Trimble County.

The ruling — if it survives any potential appeal — is a victory for citizens who want a say in how ash dumps or ponds are located and constructed. It's a defeat for the cabinet, which had insisted that the new rules were actually more stringent.

Coal-burning wastes have been shown to contaminate water, blow in the wind and catastrophically collapse when improperly stored, such as the disaster in 2008 in Kingston, Tennessee, which devastated a community and led to a $1 billion cleanup.

The state's new rules came in the aftermath of tougher federal standards on coal-ash management but relied heavily on electric utilities to carry them out on their own, cutting out a lot of public and agency scrutiny.

Shepherd, in his ruling, noted that one of the cabinet's longtime top officials had, during the previous Beshear administration, actually made a strong case for retaining agency and public involvement during the permit process for new landfills and ash ponds.

Writing to the U.S. Environmental Protection Agency, the cabinet's R. Bruce Scott in 2010 argued that "a system of detailed technical inspection, application submittal, application review, public notice and final permit" was "essential to eliminate misunderstandings between the consultant, owner or operator, the department, neighbors and the general public."

Shepherd called that a "compelling" statement of support for a permit process that the new regulations had rejected.

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Kentucky officials previously have said they considered their new regulations an improvement that strengthened environmental protections for the massive amounts of coal-burning wastes that coal-fired power plants produce.

Cabinet Secretary Charles Snavely, named in the lawsuit, earlier wrote an op-ed piece explaining the state's position. In it, Snavely said the idea was to "eliminate redundancies and inconsistencies between overlapping state and federal rules that could cause confusion."

Shepherd found that the state had succeeded to cut red tape. Utilities seeking to construct landfills or ponds in the past would have to fill out 26 pages with 50 attachments and subject their plans to agency scrutiny with extensive public information procedures before approval. Such requirements in the new system are "virtually eliminated," replaced by a one-page form to a public notice, he wrote.

In January 2017, Courier Journal citing public records reported that the Bevin administration weakened Kentucky's proposed rules for the state's electric utilities after months of back and forth with an organization representing those very same utilities.

Shepherd criticized the agency for that, too. "Unfortunately, during the course of its regulatory development, the cabinet chose to limit its input to stakeholders from the utility industry."

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He wrote there was no evidence cabinet officials, before they filed their regulatory proposal, ever sought any advice from "technical, engineering, scientific, environmental or citizens groups."

A proposal on the same matter from the former Beshear administration in late 2015 would have retained regulators' involvement in reviewing permits for new coal ash landfills and storage ponds — and public input into decisions about their location and design, according to documents provided to Courier Journal under the Kentucky open records law.

James Bruggers: 502-582-4645; jbruggers@courier-journal.com; Twitter: @jbruggers; Support strong local journalism by subscribing today: www.courier-journal.com/jamesb.