Energy from The Center for Public Integrity

As EPA delays new coal ash rules, residents turn to the courts for relief

2013-02-22T11:04:38-05:00

Sabrina Mislevy is tired of the odors, the way they “hit” her as she drives by the blue-tinted lake, the way they burn her nose. Like many of her neighbors, Mislevy has grown weary of living near the nation’s largest coal ash pond, Little Blue Run, which straddles the Pennsylvania, West Virginia and Ohio state lines.

In Little Blue Run and beyond, coal ash, waste from the production of electricity, has fouled water supplies and endangered public health. “We want action,” said Mislevy, of Georgetown, Pa., explaining why she has joined some 200 other area residents in launching legal challenges against FirstEnergy Corp., the owner of Little Blue Run.

Her community is just one across the country pursuing legal challenges against coal-ash ponds, landfills and pits — a grassroots onslaught stoked, in part, by slow regulatory action by the Environmental Protection Agency.

Last May at Little Blue Run, residents laid the groundwork for a potential citizens’ suit against FirstEnergy, sending a notice of intent to sue. Calling themselves the Little Blue Regional Action Group, they accused the company of operating its 1,000-acre ash pond “in a manner that may present an imminent and substantial endangerment to human health and the environment.” In December, residents sent another notice to FirstEnergy alleging “additional significant and ongoing violations,” including dirtying a creek that flows into the Ohio River with arsenic and selenium — toxic constituents found in coal ash.

A FirstEnergy spokesman, Mark Durbin, calls the residents’ claims “wholly without merit.”

The pending action and others come as the federal government weighs how to regulate coal ash, one of the nation’s largest refuse streams at 136 million tons a year. Two years after unveiling a plan to regulate coal ash disposal for the first time, the EPA has delayed the rules.

As the agency studies the issue, lawyers and citizens are filing toxic torts and regulatory appeals targeting specific ash sites. More than two dozen such challenges have surfaced in the past year, from Illinois to Nevada to West Virginia. Most of the litigation alleges unlined or partially lined dumps have leaked boron, uranium, chromium, thalium, manganese and other metals, tainting water sources and harming property and health.

“What we need is federal rules,” said Lisa Widawsky, a lawyer at the non-profit Environmental Integrity Project, who represents the Little Blue Run residents. “Until then, we’ll use whatever tools we’ve got.”

EPA Delay, Resident Lawsuits

Some places, like Montana, have encountered a history of litigation. Last fall, environmentalists filed two new suits over coal-ash ponds surrounding the town of Colstrip. There, the ponds have caused such widespread damage to aquifers that they fueled years of claims by residents and ranchers, The Center for Public Integrity reported in 2009. Other places, including Georgia, are witnessing their first coal-ash cases. Still others, such as South Carolina, have seen a wave of legal action targeting ash ponds, some leaching arsenic at levels 300 times safety standards.

“We didn’t want to wait for EPA to act,” said Frank Holleman, who handles the South Carolina suits and who, working with colleagues at the Southern Environmental Law Center, has launched an initiative devoted to the issue.

In the Southeast, he explains, nearly every ash lagoon sits beside a river that serves as drinking water for residents. Yet each has some record of seeping the ash’s dangerous pollutants. “The problems are real,” adds Holleman, who has overseen eight cases in 12 months. “It’s an important time for somebody to start taking action.”

Environmentalists have even mounted a challenge to the EPA. Last April, on behalf of 11 other groups, Earthjustice sued the agency over its stalled process, seeking court intervention to force it to act. Under federal waste law, the groups argue, the EPA has a mandatory duty to review and, if necessary, revise rules every three years. But the agency has not done so for rules governing coal-ash disposal since 2000.

“We’ve seen a real uptick in legal actions over coal ash in the vacuum left by EPA,” said Lisa Evans, the Earthjustice lawyer suing the agency. “Despite inaction on the part of EPA, the damage keeps mounting.”

The EPA announced its proposal to begin regulating the disposal of coal ash in June 2010, presenting two alternatives in a 563-page draft. Under the first option, the agency would classify coal ash as “hazardous” — triggering a series of strict controls for its dumping. The second option would deem coal ash “non-hazardous,” and subject it to less stringent national standards that amount to guidelines for states.

Asked why a decision has yet to be made 32 months later, the EPA, in a one-paragraph statement, said it has received more than 450,000 comments on its proposal. “EPA is following long-established rulemaking procedures and requirements,” the agency wrote, and “will finalize the rule pending a full evaluation of all the information.”

In court records, the EPA maintains it cannot predict when that will happen. “It is not feasible, given the current state of the Agency’s knowledge, to propose a rulemaking schedule,” Suzanne Rudzinski, EPA’s director overseeing the process, said in a filing in the Earthjustice case.

Agency officials intend to consider new, unpublished data, gathered from 495 coal-fired power plants nationwide, for their rulemaking. Obtained by Earthjustice through a public-records request, the data shows hundreds more ash ponds and landfills than previously estimated: The total number of ponds rose more than 60 percent to 1,161, up from 710 in 2010. Imposing a court-ordered deadline to finish reviewing this information, the EPA’s Rudzinski argues, would be “neither scientifically sound, nor legally defensible.”

The utility industry, intervening in the case, echoes the sentiment. “We certainly want regulatory certainty,” said Jim Roewer, of the Utility Solid Waste Activities Group, “but we want to have a good rule that actually works.”

Many lawyers say that, if the EPA had already issued its rules, they would not need to sue now. In some cases, they say, contamination may never have happened.

Take the toxic torts pending in Chesapeake, Va., where a golf course constructed out of coal ash, recycled as “structural fill,” has leaked arsenic and uranium onto nearby properties. Or the notice-of-intent-to-sue letter sent over ash similarly used in about 36 construction sites in Puerto Rico. The EPA’s proposal would ban such un-encapsulated “beneficial uses” without proper protections.

For cases involving ash ponds and landfills, lawyers say, federal regulations would have at least stopped ongoing pollution. The EPA’s proposal features preventative requirements such as composite liners and regular monitoring at these sites. Its toughest option would prohibit wet ponds altogether, the same type of impoundment at issue in lawsuits filed on January 31 by 23 residents in Juliette, Ga.

The mass-tort litigation involves two ash ponds — one 750 acres; the other 300 — at the sprawling Robert W. Scherer coal plant, operated by Georgia Power Co. Residents allege the company’s coal ash has “invaded” their homes and exposed them to “extremely toxic and hazardous substances released to the air, soil, and groundwater.” They are suing Georgia Power and additional plant owners for negligence, nuisance and trespass, claiming the ash has made them sick.

Kristal Smith, one of the resident-plaintiffs, says she cannot see Georgia Power’s big ash pond from her yard, “but I know it exists.” Her lawn abuts the plant’s property line. For six years, she has witnessed what she suspects is coal ash: A grayish material often settles onto her porch, her car and her kids’ toys, turning them black.

More than a year ago, Smith, 35, noticed something even more troubling: Her hair was falling out. She changed shampoos and bought over-the-counter medication, but nothing helped. When her scalp grew “really, really red,” as she recalls, she went to a doctor, who performed blood tests. He has ruled out thyroid problems and vitamin deficiencies, but, she said, cannot explain her hair loss.

“It certainly crossed my mind that my hair loss was connected to the . . . coal ash,” said Smith, who uses a steroidal shampoo to stop the thinning. She has learned her next-door neighbor, a vibrant woman in her late ‘20s, has also lost her hair. Other neighbors suffer from a host of health ailments, according to the suits, including nosebleeds, lung cancer, muscle spasms, kidney abnormalities and reproductive problems.

Last year, the state conducted water tests at the community’s request, revealing uranium in the area’s groundwater. Brian Adams, the lawyer representing 100 total residents, says his own testing has shown “alarming” levels of arsenic, lead and boron in many drinking water wells.

Georgia Power disputes the contamination claims. In a two-paragraph statement, the company notes that its testing of drinking water at Plant Scherer, evaluated by state regulators in 2008, has confirmed local water supplies are “safe.” The state’s more recent tests, it wrote, “do not indicate that humans are being or have been exposed to levels of contamination that would be expected to cause adverse health effects.”

The company stresses it is in full compliance with federal and state regulations.

Yet those living near its coal-ash ponds “are really unprotected,” Adams said. Like the EPA, Georgia lacks stringent rules for coal-ash disposal.

In Greene Township, Pa., home to most of Little Blue Run’s 1,700 permitted acres, state regulators boast some of the country’s most comprehensive coal dumping rules. That has not stopped the contamination. In their first legal notice, residents rely on FirstEnergy’s data to allege “widespread” pollution in ground and surface water sources, tracing high levels of arsenic, boron and other toxic constituents to the pond. Their second notice hinges on several samples collected by a resident from a creek, which show pollutants at levels that can pose harm to fish or human health.

Durbin, the FirstEnergy spokesman, said the citizen issues raised “have historically been addressed and are continuing to be addressed by the Pennsylvania Department of Environmental Protection.”

Yet only after the threat of a citizens’ suit emerged did state officials act. Last summer, on the eve of a legal deadline, the state DEP sued FirstEnergy in federal court. The agency then filed a consent decree requiring closure of Little Blue Run. In its court filing, the DEP has characterized its agreement with the company as a proactive step to ensure the ash pond “will not create an imminent and substantial endangerment to health or the environment.”

Under the July 27, 2012, settlement, FirstEnergy must shutter its pond by the end of 2016, and pay an $800,000 fine. The company has agreed to increase its existing monitoring of area water sources; measure air emissions coming off the pond; identify any new seeps creeping off-site; and offer 22 residents an alternate water supply. A federal judge approved the consent decree last December.

Durbin, who describes the agreement as years in the making, suggests it renders moot any future litigation from the residents' second notice. “FirstEnergy takes its environmental obligations very seriously,” he said.

Environmentalists paint the Little Blue Run case as proof their lawsuits can fill the federal regulatory gap. Already, citizen suits have precipitated shutdowns of polluting coal-ash ponds in South Carolina, Maryland and Illinois. While some of these cases ended in settlements with utilities, others, as with Little Blue, prompted state regulators to act.

Such state actions, industry representatives say, show the current system for regulating coal-ash disposal is working. State regulators are doing their jobs, they say, tightening rules and going after problematic dumpsites. “The states aren’t waiting . . . for EPA and its rule to take action,” asserts USWAG’s Roewer.

The sentiment would likely rankle Sabrina Mislevy, who believes her “life would be easier if there were federal regulations.” For her and her neighbors, it does not matter that Little Blue Run will shutter in three years. They still must deal with its well-water contamination and rotten-egg stench. Some residents have grown so tired of living beside the ash pond, they are hiring lawyers and seeking buyouts from FirstEnergy in hopes of fleeing today.

As long as Little Blue Run remains open, Mislevy said, “The future is not bright.”

State settlement boosts monitoring at massive coal ash dump bordering two states

Pennsylvania,United States — 2012-08-01T06:00:01-04:00

Owners of one of the nation’s largest impoundments of the often-toxic byproducts of burning coal must do more to protect residents from groundwater contamination and stop accepting waste by 2016, under an agreement with Pennsylvania regulators.

The pact focuses on FirstEnergy Corp.’s impoundment, known as Little Blue Run, in southwestern Pennsylvania on the West Virginia border.

Pennsylvania’s complaint and settlement, finalized Friday, came 59 days after environmental groups filed a 60-day notice of intent to sue, alleging that dangerous substances were seeping from the impoundment into the water supply.

The groups filing the notice — the Environmental Integrity Project and Public Justice — praised the state Department of Environmental Protection’s action. But they say the settlement came after the agency for years denied the existence of contamination. Indeed, state officials made such claims when the Center for Public Integrity highlighted problems at the site in 2010.

The agency declined an interview request, but said in a written statement, “We believe this will not only make major strides in environmental projects for that area, but also bring peace of mind to many residents who have expressed concerns about the Little Blue Run impoundment.”

The agency’s action appears to be the first time state regulators have determined that an impoundment of the material known as coal ash could pose an “imminent and substantial threat” to people and the environment, Public Justice lawyer Richard Webster said. The legal action comes as a national debate continues over regulation of the coal ash.

“There are hundreds of other sites all over the country, and we really need a way to tackle this in a comprehensive way and not on a piecemeal basis,” Environmental Integrity Project lawyer Lisa Widawsky-Hallowell said. “It calls attention to the need for federal coal ash regulation.”

The Environmental Protection Agency published a proposed rule to address the handling of coal ash in 2010, but it has yet to be finalized. Many environmentalists believe the rule won’t be released before the coming presidential election, Webster said.

Near Little Blue Run, a 1,700-acre dump that straddles Pennsylvania and West Virginia, residents have long complained of tainted water, dust clouds and foul odors. The area is the final stop for waste after a seven-mile trip by pipeline from the massive Bruce Mansfield power plant in Shippingport, Pa. When the impoundment received its permit in 1974, federal rules didn’t require the use of lining to prevent waste from escaping; current state regulations do.

The state’s complaint says testing near the impoundment revealed toxic substances, including arsenic, in groundwater that flows into nearby streams and is a source for wells.

As part of the agreement, FirstEnergy pledged to increase monitoring of groundwater and air surrounding the dump and to notify the state and take action if contamination was detected. The company also has to stop adding waste to the site by the end of 2016, and it agreed to pay an $800,000 penalty. The company did not respond to a request for comment.

FACT CHECK: Green stimulus sending jobs overseas?

United States — 2012-05-03T11:29:05-04:00

An ad from the conservative Americans for Prosperity distorts the truth about stimulus money for “green jobs” going overseas. The ad, titled “Wasteful Spending,” introduces some new wrinkles to this well-used line of attack.

According to the ad, the stimulus included:

“$1.2 billion to a solar company that’s building a plant in Mexico.” Actually, the loans were to finance a solar ranch built and operated in California. It’s true that the company that got the loans also recently opened a solar-panel manufacturing plant in Mexico, but a company spokeswoman says most of the panels for the stimulus-financed project will be built in its nearby plant in California.
“Half a billion to an electric car company that created hundreds of jobs in Finland.” Actually, the first round of government loans to Fisker Automotive went toward design, engineering, sales and marketing work done in the U.S. It’s true that the cars it has built so far were made in Finland, but a second round of funding has gone for development of a second, less-costly line of cars that the company plans to build in a shuttered GM facility in Delaware.
“And tens of millions of dollars to build traffic lights in China.” Actually, the traffic lights were assembled in the U.S. It’s true that for a time they were put together using LED lights made mostly in Asia, under a waiver the Department of Energy issued in February 2010 — and then rescinded 10 months later after a foreign company expanded its LED traffic light manufacturing facilities in the U.S.

Some other claims in this ad we’ve heard before, such as the absurd allegation that the stimulus did not create any American jobs (when the Congressional Budget Office’s economists state that it created or saved between 1.2 million and and 3.3 million jobs) and the overreaching claim that President Obama has “wasted” $34 billion on investments like Solyndra (when in fact only 2 percent of such loans have gone bad).

The ad begins, “Washington promised to create American jobs if we passed their stimulus. But that’s not what happened. Fact: Billions of taxpayers dollars spent on green energy went to jobs in foreign countries. The Obama administration admitted the truth, that $2.3 billion of tax credits went overseas, while millions of Americans can’t find a job.”

We’ve looked at the claim that “$2.3 billion of tax credits went overseas” a couple of times in the past, most recently in an ad from the American Future Fund. Both the American Future Fund and Americans for Prosperity ads cite a Sept. 9, 2010, story in the Washington Times, which reported that “as much as 80 percent of some green programs, including $2.3 billion of manufacturing tax credits, went to foreign firms that employed workers primarily in countries including China, South Korea and Spain, rather than in the United States.” That story referenced the reporting of Russ Choma, an investigative reporter then working at American University’s Investigative Reporting Workshop, who wrote that companies based overseas were receiving stimulus money to build wind farms in the U.S.

On Sept. 27, 2010, Choma wrote that about $2.38 billion in stimulus money went to foreign developers. But that doesn’t necessarily mean the money did not create jobs in the U.S.

Choma, Sept. 27, 2010: Some of those foreign-owned turbine manufacturers have factories in the United States and some American-owned turbine manufacturers have factories overseas. We simply don’t know where all of the parts were made. We found several specific examples of major wind farms where we know none of the parts were made in the United States.

So while it’s fair to say that the stimulus money likely created some jobs overseas, it’s not fair to say that all of that money went to foreign jobs. That ignores the realities of our global economy, in which some American companies manufacture overseas, and vice versa. The three examples cited in the ad illustrate that point.

Mexican Plant

The ad claims the stimulus included “$1.2 billion to a solar company that’s building a plant in Mexico.” This strings together two largely unrelated facts to create a misleading impression. Here are the facts: SunPower Corp., a company based in San Jose, Calif., applied for a $1.237 billion loan guarantee from the Department of Energy to build a massive solar generating facility in San Luis Obisbo, Calif. SunPower later sold the project to NRG Solar, but SunPower company will still help to construct the 250 MW alternating current PV solar generating facility, called the California Valley Solar Ranch, for NRG.

Last August, SunPower announced that it was opening a solar-panel fabrication plant in Mexicali, Mexico. But it’s a big leap from that to claiming that $1.2 billion of American taxpayer money is being used to fund jobs in Mexico, as the ad implies.

It’s true that some of the solar panels installed in the new California Valley Solar Ranch will come from the new SunPower facility in Mexico, as well as from other SunPower plants in Asia, company spokeswoman Natalie Wymer told us. But the overwhelming majority of solar panels will come from SunPower’s nearby plant in Milpitas, Calif.

Moreover, the solar facility is being built in California, employing some 350 American construction workers for several years, Wymer said. The facility will employ 15 people permanently once the facility begins operations in September.

“The loan guarantee, issued to NRG, does not finance SunPower’s manufacturing facilities or other operations in Silicon Valley, where we manufacture today, Mexicali or anywhere else,” Wymer said. “The SunPower Mexicali facility was a shift from ongoing manufacturing with a partner to our own plant.”

Jobs in Finland

The ad claims the stimulus also included “half a billion to an electric car company that created hundreds of jobs in Finland.” The car company in question is Fisker Automotive, which was awarded more than a half billion dollars worth of loans to make fuel-efficient electric cars. And all of the electric cars built by Fisker so far were manufactured in Finland. That forms the basis of the ad’s claim.

But there’s more to this story.

The Fisker loans came in two parts. The first part, according to a statement from Dan Leistikow, a spokesman for the Department of Energy, was a $169 million loan guarantee to support the development of Fisker’s first luxury electric car, called the Karma. The company has made about 1,400 of them so far (and sold 800 for about $97,000 apiece), all of them assembled in Finland. But the Department of Energy and Fisker insist the government loan money was spent exclusively in the United States “to support the engineers who developed the tools, equipment and manufacturing processes for Fisker’s first vehicle, the Fisker Karma.” According to Fisker officials, that work was done in Fisker’s U.S. facilities, including its headquarters in Irvine, Calif.,”which has 700 employees and plans to continue hiring.”

Fisker has raised over $1 billion in private equity, Fisker spokesman Roger Ormisher told us. That private money was used to finance the manufacture the cars in Finland, he said, while the DOE loan was used exclusively in the U.S. for engineering, design and marketing, and sales. That supported more than 600 jobs in the U.S., he said.

“All of the DOE loan money that we got for the Karma project had to be spent in America,” Ormisher said.

It’s possible that DOE money used to fund operations in the U.S. allowed private investment to concentrate on overseas manufacturing. But it would be simply inaccurate to claim that all of that $169 million funded jobs overseas. Moreover, a number of American suppliers were used to make parts that were assembled in Finland, Ormisher said, creating about 1,500 jobs. Last year, Fisker officials estimated more than 45 percent of the components of the Karma were manufactured by about 40 U.S. suppliers.

In addition to the $169 million, the DOE approved a much larger, $359 million loan to help Fisker develop a lower-priced version of its car, called the Nina. The plan is to build those cars at a shuttered General Motors factory in Delaware. That project has hit some snags. In February, amid delays to the project, Fisker let go 26 employees from the Delaware factory.

However, Fisker still plans to move forward with the car, and the “first option” is still to build them at the factory in Delaware, Ormisher said. If it moves forward, the plant could employ up to 2,500 workers. A prototype of the car, renamed the Atlantic, was unveiled recently, but a launch date was not announced.

To date, Fisker has drawn down $193 million of the $529 million in government loan guarantees, Ormisher said. Fisker has been negotiating with DOE since last May regarding the future of this second part of the funding.

Traffic lights in China

Last, the ad claims the stimulus included “tens of millions of dollars to build traffic lights in China.” The Department of Energy did spend tens of millions through the stimulus to build and install energy efficient traffic lights around the U.S. Back in February 2010, the department granted a waiver to the stimulus’ Buy American requirement with regard to the LED lights that go inside traffic signals after the assistant secretary for Energy Efficiency and Renewable Energy (EERE) determined there was insufficient availability in the U.S. to meet demand. A Pittsburgh Tribune Review investigation found most of those components were being purchased from Asia.

However, that waiver was withdrawn on Dec. 1, 2010, after the EERE learned that at least one manufacturer of LED traffic signals relocated some of its manufacturing from Mexico to the U.S., and that the plant had the capability to satisfy the demand from stimulus fund recipients. In November 2010, the Department of Energy reported that Dialight Corp., an LED lighting manufacturer with U.S. corporate offices in Farmingdale, N.J., and a parent company based in the U.K., invested nearly $3 million to renovate its production facility in Roxboro, N.C. The Roxboro plant hired 100 people to engineering, management and direct labor positions.

‘Wasted’?

The ad concludes that “President Obama wasted $34 billion on risky investments.” In the background is a banner for Solyndra.

As we reported recently, the Energy Department has committed $34.7 billion to nearly 40 green projects under low-interest loan programs, according to information published on its website. Two of them — Solyndra ($535 million) and Beacon Power Co. ($43 million) — have filed for bankruptcy, according to a March 12 report by the Government Accountability Office. What, if anything, the U.S. government gets back from the Solyndra deal is up to the bankruptcy court. It looks as if DOE may get back as much as 70 percent of its loans to Beacon. Still, worst-case senario, the government is out a total of $578 million on those two deals. That’s less than 2 percent of the total program, so it’s a stretch to claim the entire $34 billion has been “wasted.”

Americans for Prosperity announced it is spending $6.1 million to air the ad in eight battleground states: Colorado, Florida, Iowa, Michigan, Nevada, New Mexico, Ohio and Virginia.

– Robert Farley

IMPACT: Environmental groups sue EPA over lack of coal ash regulation

2012-04-09T09:14:51-04:00

Environmental groups sued the Environmental Protection Agency in federal court Thursday over the EPA’s failure to regulate disposal of toxic coal ash.

“Politics and pressure from corporate lobbyists are delaying much needed health protections from coal ash,” Lisa Evans, a lawyer with Earthjustice, a nonprofit environmental law firm, said in a statement. “As we clean up the smokestacks of power plants, we can’t just shift the pollution from air to water and think the problem is solved. The EPA must set strong, federally enforceable safeguards against this toxic menace.”

Coal ash is the collective term for the solid remnants left over from the burning of coal at more than 500 power plants nationwide. It contains compounds such as arsenic, chromium, lead and mercury, which have been linked to cancer, birth defects, gastrointestinal illnesses and reproductive problems.

A 2009 investigation by the Center for Public Integrity revealed the havoc that coal ash has wreaked near ponds, landfills, and pits where it is dumped. Even the EPA has identified 63 “proven or potential damage cases” in 23 states where coal ash has tainted groundwater or otherwise harmed the environment. But critics say no meaningful federal regulations have been put in place.

The issue gained renewed attention after a dam holding billions of gallons of coal ash collapsed in eastern Tennessee in December 2008, destroying houses and water supplies and dirtying a river. Following the spill, EPA Administrator Lisa Jackson pledged to set federal standards.

The EPA unveiled a proposal in May 2010 with two options. Under the tougher of the two, the agency would classify coal ash as “hazardous,” triggering a series of strict controls for its dumping. Under the second option, the EPA would deem coal ash “non-hazardous” and merely set guidelines for the states.

Hundreds of people showed up at public hearings and sent in hundreds of thousands of comments on the proposal. But the EPA has yet to announce a final rule.

Thursday’s lawsuit seeks to speed up the process by forcing the EPA to take action under the Resource Conservation and Recovery Act, which requires that hazardous waste disposal regulations be routinely updated.

An EPA spokesperson said in a statement that the agency is still reviewing the lawsuit but "is aware of the concerns around coal ash" and "is committed to protecting people’s health and the environment in a responsible manner."

The EPA has already proposed a "historic" regulation of coal ash and "will finalize the rule pending a full evaluation of all the information and comments the Agency received on the proposal,” the statement said.

Audit cites risk in DOE loan program

2012-03-12T19:07:19-04:00

A new audit of the Department of Energy’s $34 billion loan guarantee program said the agency doesn’t always follows its own rules in awarding the highly coveted funding, creating risk in an effort already hindered by breakdowns.

The audit by the Government Accountability Office carries fresh relevance amid the bankruptcies of two of the first three firms to land the government’s green energy funding: Solyndra Inc. and Beacon Power Corp.

“What we found was problems in how they followed their process and in some cases deviated from the process without a clear explanation why,” Frank Rusco, the GAO auditor who wrote the report, said in an interview. “This has gotten the program in trouble in the past and certainly raises questions that are hard for them to answer.”

The GAO report, the latest to spotlight vulnerabilities in the way DOE awards public money, details just how selective the loan pool is.

Of 460 applicants, the GAO found, the Energy Department awarded loan guarantees to 7 percent and committed to 2 percent more. To date, the investigative arm of Congress said, the department has issued $15 billion in guarantees and committed to $15 billion more.

The GAO scrutinized 13 winning applications in detail. Of those, it found, the Energy Department did not follow its written procedures at least once in 11 of the 13 cases.

“DOE did not always follow its own process for reviewing applications and documenting its analysis and decisions, potentially increasing the taxpayer’s exposure to financial risk from an applicant’s default,” the GAO found. “It also has not completely documented its analysis and decisions made during reviews, which may undermine applicants’ and the public’s confidence in the legitimacy of its decisions.”

Private lenders who finance energy projects told GAO the loan program’s review process “was generally as stringent as or more stringent than their own,” the report said.

Yet the process wasn’t always followed, the auditor found.

The Energy Department, in a written response to the audit, said it has strengthened its management and recordkeeping, creating a “state-of-the-art” system.

“The Department managed to build and continuously improve an organization that has succeeded in making an unprecedented level of clean energy investments while maintaining standards that are as high or higher than major financial institutions in the United States,” wrote David G. Frantz, acting executive director of the Loan Programs Office.

The loan portfolio, Frantz said, includes two biomass projects, three geothermal power plants, a dozen solar power generation projects and four wind power projects.

For the government, and the loan recipients, the stakes are high. The $34 billion loan guarantee pool was created to help finance innovative clean tech projects that may not otherwise land funding in the private market. Done well, advocates say, the program helps spur green energy projects — from solar panels to wind farms to electric cars — that create jobs and aid the environment.

Yet the program has been hindered by missteps from the start. Solyndra, chosen as the first recipient of an Obama administration green energy loan guarantee, was granted a conditional green light before all due diligence was in hand, The Center for Public Integrity and ABC News reported last year. The company’s bankruptcy last fall cast a harsh spotlight on the way DOE picks its winners, and created a political vulnerability for President Obama.

A GAO audit released in 2010, exploring the same loan guarantee program, found that the Energy Department “treated applicants inconsistently, favoring some and disadvantaging others.”

The new audit said the Energy Department lacked “a consolidated system for documenting and tracking its progress in reviewing applications.”

Auditors said it took months to gather all the paperwork they sought.

“Omitting or poorly documenting reviews reduces the (Loan Guarantee Program’s) assurance that it has treated applicants consistently and equitably and, in some cases, may affect the LGP’s ability to fully assess and mitigate project risks,” the GAO concluded.

Fukushima disaster anniversary finds U.S. nuclear regulation debate still raging

Japan — 2013-01-23T13:01:05-05:00

One year ago on Sunday, an earthquake off the coast of Japan and the resulting tsunami triggered a month-long partial meltdown of the Fukushima Daiichi Nuclear Power Station. In the days leading up to the anniversary of the crisis, advocates and opponents of nuclear power are squaring off in a fight over the lessons U.S. regulators should learn from the disaster.

But both sides are making policy recommendations without a full accounting of the facts. The most definitive, independent study of the disaster isn’t due to be released for months.

In one corner, and at one press conference this week, advocates at the industry-funded Nuclear Energy Institute were eager to highlight the “diverse and flexible” response operators of America’s 104 reactors are taking to improve their disaster preparedness. NEI is touting the $100 million the industry is investing in some 300 additional emergency pumps, generators, and batteries that it says could be used to keep the pools that spent fuel rods are kept in from overheating like they did in Japan.

An initiative approving the investments was unanimously approved by the U.S. industry’s chief nuclear officers last month. The FLEX strategy, as NEI calls it, commits American companies operating nuclear energy facilities to buy or enter into contract for additional plant-specific emergency equipment to be kept in and around the fuel containment structures by the end of March.

“If nuclear power plants lose power from the grid and other sources, the additional portable equipment will provide power and water to maintain key safety functions — reactor core cooling, used fuel pool cooling and containment integrity,” said Tony Pietrangelo, NEI’s senior vice president, in a press release.

In the other corner, the Union of Concerned Scientists, a watchdog group generally opposed to nuclear energy, is warning that industry might be rushing to implement ineffective safeguards in an effort to fend off more stringent prescriptions by the Nuclear Regulatory Commission.

“The NRC needs to tell the industry in no uncertain terms that it is purchasing FLEX equipment at its own risk,” the report says. UCS wants regulators to study the effectiveness of NEI’s plan versus that of French nuclear regulators, who require the use of more expensive — and potentially more durable — “hard core” emergency equipment.

In the U.S, requiring additional safety equipment is one of 11 post-Fukushima rules changes that were recommended by an agency task force in July. Under consideration are rules to increase monitoring of flooding and seismic risks, to include radiation monitoring in emergency plans, and to clarify what it called the agency’s “patchwork” of voluntary guidelines and rules that govern severe, unexpected, Fukushima-type disasters.

Others are weighing in with their own reports pegged to the Fukushima anniversary, including nuclear energy opponents at Greenpeace and supporters at the Heritage Foundation. In its report, the Carnegie Endowment for International Peace says that the disaster was preventable, a claim disputed by official Japanese government studies.

Meanwhile, the most in-depth, independent investigation of the crisis isn’t due to be released until this summer. After the Japanese government issued an interim report in December that left the ultimate responsibility for the disaster ambiguous, Rebuild Japan Initiative Foundation, a think tank founded by former newspaper editor and respected intellectual Yoichi Funabashi, set to work.

His team of 30 university professors, lawyers, and journalists has received no money from the government and claims to be funded by businesses and individuals not directly connected to the crisis. They’ve spent over six months interviewing more than 300 people, including top regulators and former Prime Minister Nato Kan.

And next year, the United Nations Scientific Committee on the Effects of Atomic Radiation is expected to issue its first global and independent assessment of the Japanese nuclear disaster. It will give an analysis of radiation dosages among citizens who lived nearby the Daiichi reactors and forecast health risks for them in the coming decades, according to UNSCEAR Chairman Wolfgang Weiss.

While neither of these larger, independent studies is likely to settle the debate over what regulators here should learn from Fukushima, an early preview of Rebuild Japan Initiative Foundation’s report suggests that it is likely to lend support for the more stringent, cohesive policies supported by UCS.

Regulators and the operator “were astonishingly unprepared, at almost all levels, for the complex nuclear disaster that started with an earthquake and tsunami,” the authors wrote in its final chapter, which was published last week in the academic journal Bulletin of the Atomic Scientist. Given this finding and the increasing proliferation of reactors, they predict that “risks associated with the peaceful use of nuclear energy are certain to increase.”

Energy-backed firms award bonuses, file bankruptcy

2012-10-05T12:04:27-04:00

President Obama’s Department of Energy financed a fleet of green energy companies that later fell into bankruptcy — but not before the firms doled out six-figure bonuses and payouts to top executives, a Center for Public Integrity and ABC News investigation found.

Take, for instance, Beacon Power Corp., the second recipient of an Energy Department loan guarantee in 2009. In March 2010, the Massachusetts energy storage company paid cash bonuses of $259,285 to three executives in part due to progress made on the $43 million energy loan, Securities and Exchange Commission records show. Last October, Beacon Power filed for Chapter 11 bankruptcy.

Ener1 subsidiary EnerDel, maker of lithium-ion battery systems, landed a $118.5 million energy grant in August 2009. About one-and-a-half years later, Vice President Joe Biden toured a company plant in Indiana and heralded its taxpayer-supported expansion as one of the “100 Recovery Act Projects That Are Changing America.”

Two months after Biden’s visit, corporate parent Ener1 paid $725,000 in bonuses to three executives — including $450,000 to then-CEO Charles Gassenheimer, who led Biden on the tour. This January, Ener1 filed for Chapter 11 bankruptcy protection.

At least two other firms that benefited from Energy Department funding — one a $500,000 grant, the other a $535 million loan guarantee — handed out hefty payouts to executives and later went bankrupt.

The Department of Energy, asked about the payments examined by the Center and ABC, said it is troubled by the practice and intends to convey that message to loan recipients.

"We don’t begrudge companies or their executives for their success, but it is irresponsible for executives to be awarded bonus compensation when their workers are losing their jobs,” said department spokeswoman Jen Stutsman. “We take our role as stewards of taxpayer dollars very seriously, and as such, we will make clear to loan recipients our view that funds should not be directed toward executive bonuses when the rest of the company is facing financial difficulty.”

The bonuses and bankruptcies come against a growing wave of trouble for companies financed with Energy Department dollars. Of the first 12 loan guarantees the department announced, for instance, two firms filed for bankruptcy, a third has faced layoffs and a fourth deal never closed.

The nonprofit Citizens Against Government Waste counts nearly 20 government-backed energy companies that have run into financial trouble ranging from layoffs to losses to bankruptcies. An outside consultant hired by the White House said the Energy Department’s loan pool includes $2.7 billion in potentially risky loans and suggests the agency hire a “chief risk officer” to help minimize problems.

To watchdogs, the pattern of firms awarding bonuses only to file for bankruptcy raises questions about how well the Energy Department chose its winners, and how thoroughly it kept an eye on them once selected.

“Giving a bonus to the executives under these circumstances is rewarding failure with our money with no chance of getting it back,” said Leslie Paige, spokeswoman for the nonpartisan Citizens Against Government Waste.

“Taxpayers need some representation here. They didn't really get it.”

The setbacks have intensified the glare on the president’s environmental mission, already under scrutiny following the collapse of Solyndra Inc., the first recipient of an Obama green energy loan.

Solyndra, bankruptcy records show, was among the companies to dole out thousands in executive payments — in its case, just months prior to its late August collapse and early September bankruptcy. As a criminal investigation and House inquiry continue into the company’s implosion, the government must navigate bankruptcy proceedings in hopes of recovering a piece of its $535 million investment.

In interviews, executives with companies backed by public dollars defended the payments as proper. Some said bonuses were granted for work done in a previous year, before financial storm clouds had fully developed, and that the executive cash infusions were sometimes linked to broad corporate milestones.

One company executive said the Energy Department explicitly allows for federal funds to be used to pay out executive bonuses.

DOE does not set salaries and benefits of companies it backs, “but we do closely scrutinize all of the expenses submitted by the companies before they are reimbursed to ensure that taxpayer dollars are being used appropriately,” said spokeswoman Stutsman. “Funds are paid out as the work is actually completed.”

Secretary Steven Chu declined an interview request. The department has long defended the green energy movement as a way for government to help spur development of cutting edge products that aid the environment and economy. Sometimes, they say, investments in potential game-changing technologies simply don’t work. The potential default rate, they say, is within the parameters set by Congress.

Yet some members of Congress — already concerned about lucrative paydays at bankrupt Solyndra — say they’re particularly troubled that failed companies, backed by Energy Department funds, would pay bonuses at all.

“Any company that's going into bankruptcy or any executive that ran a company into bankruptcy shouldn’t be getting bonuses in the first place,” said Sen. Charles Grassley, R-Iowa, former chairman of the Senate Finance Committee. “In the case where there might be federal grants or federal loans, I would be very concerned.”

Grassley added: “The purpose of our grants for energy or almost any other grant of government is for the purpose of innovation. It's not for the purpose of feathering the nest of a private company executive.”

Bruce Kogut, director of the Sanford C. Bernstein Center for Leadership and Ethics at the Columbia Business School, said it is not uncommon for corporate bonuses to be awarded when executives meet key achievement milestones.

“The problematic issue,” professor Kogut said, is giving out bonuses “near the time of bankruptcy.”

Solyndra executives, bankruptcy records show, pocketed thousands in payments just months before the company dismissed 1,100 workers. At least 17 company executives received two sets of payments — ranging from $37,000 to $60,000 each payment — on the same days in April and July 2011. The insider payments, reported last year in the San Jose Mercury News, came as the company catapulted toward bankruptcy in early September. A Solyndra spokesman did not reply to interview requests.

Solyndra’s crash last August put a sharp focus on the selection process the Energy Department follows in awarding taxpayer dollars. The administration backed the upstart firm despite concerns even from some government officials worried about Solyndra’s financial viability, email records show. And, energy officials committed to the financing before all due diligence was in hand.

Bankruptcies and bonuses

Not as well-known are three other firms backed by Energy Department dollars — ranging from $500,000 to $118.5 million — that also suffered financial downturns. As with Solyndra, each corporate entity rewarded executives prior to its bankruptcy filing.

One example: Ener1, whose subsidiary EnerDel won the $118.5 million Energy Department grant in 2009 to help expand its manufacturing plant. The company also received supportive write-ups on the DOE website.

Vice President Biden’s January 2011 visit to the company’s Greenfield, Indiana, plant was part of the government’s “White House to Main Street Tour.”

“This Administration is forging a new path forward by making sure America doesn't just lead in the 21st Century, but dominates in the 21st Century,” Biden said after a tour with Ener1 CEO Gassenheimer. "We're not just creating new jobs — but sparking whole new industries that will ensure our competitiveness for decades to come — industries like electric vehicle manufacturing."

A White House report listed the EnerDel project as No. 67 among the “100 Recovery Projects that are Changing America.”

In March 2011, Gassenheimer was awarded a $450,000 bonus, SEC records show. Two other Ener1 executives pocketed bonuses of $225,000 and $50,000 for a total payout of $725,000.

In January 2012, one year after Biden’s visit, Ener1 filed for bankruptcy, citing $73.9 million in assets and $90.5 million in debts.

Energy officials noted that while the bonuses were paid to executives from Ener1, the government grant went to a subsidiary called EnerDel, which was not part of the bankruptcy case. But the two are closely related — bankruptcy records show EnerDel now provides all of the employees for the parent company. And the distinction is new for the Energy Department — a press release touting Biden’s visit referred to the parent company Ener1 as the recipient of administration support, not EnerDel.

Gassenheimer, reached for an interview, said he could not comment. He is no longer with Ener1.

A company spokesman said the bonuses were paid through Ener1, the corporate holding company, not EnerDel. DOE said the subsidiary’s project is on schedule, and an Ener1 spokesman said the battery company aims to get back on its feet through reorganization.

Beacon Power’s bonuses were specifically linked to executives’ progress in landing the company’s $43 million Energy Department loan guarantee in 2009.

Securing the loan was among the measures used to establish how much executives would pocket in bonuses, company SEC filings show. “The DOE loan application was approved by the credit review board, making us the first public company and the second of 16 applicants to receive the commitment,” the document notes.

President and Chief Executive Officer F. William Capp received a $133,256 cash bonus in March 2010. Two other company officials pocketed combined bonuses that month of $126,029.

In an interview, Capp said the company’s pay structure was reasonable and that executives took pay cuts in a bid to help Beacon Power survive.

“The record is clear on that. The executives have not enriched themselves,” Capp said. “We all agreed to take a 20 percent reduction in pay just to make the funds last longer in order to keep the team together. There’s hardly been self-enrichment.”

Last week regulators approved Beacon Power’s sale to an equity firm that should help it repay $25 million of the $39 million Beacon had drawn down from the loan. The company, under new ownership, plans to continue operating the 20-megawatt flywheel energy storage plant in Stephentown, New York, a project the department said would “ensure the reliable delivery of renewable energy to the electricity grid.” It hopes to build a second plant in Pennsylvania.

Capp blamed the bankruptcy on a variety of factors, including government fears about restructuring loans after Solyndra filed for bankruptcy. His firm, he said, got swept up in “Hurricane Solyndra.”

‘It all happened so quickly’

Other energy companies struggled in the storm.

Among them: SpectraWatt, a New York state manufacturer of silicon solar cells. In 2009, SpectraWatt secured a $500,000 grant from the DOE’s National Renewable Energy Laboratory Photovoltaic Technology Pre-Incubator program. In March 2010, U.S. Labor Secretary Hilda L. Solis and a local congressman toured the company’s Hudson Valley Research Park in Hopewell Junction, N.Y., highlighting the wave of coming green jobs.

“President Obama and I understand and believe that the first thing we have to do to turn the economy around is provide American families with good jobs,” the labor secretary said, according to a SpectraWatt press release. “That is why we are committed to investing in greening our economy.”

Yet, not long after, the company’s momentum suddenly halted.

Last August, SpectraWatt filed for Chapter 11 bankruptcy protection.

“It all happened so quickly,” Richard J. Haug, SpectraWatt’s President and COO, said in an interview. The company’s innovative technology, he said, butted up against changing market and pricing conditions, competition from the Chinese — and the fact that some early investors did not follow through.

“They couldn’t locate any new money,” he said. “It was very disappointing.”

While the DOE’s early grant supported research and development, Haug said, a later funding request was denied. Last March, he said, the company laid off its workforce and effectively shut down. “It became increasingly difficult for us to make any more money. By the end of 2010 we basically dropped down to a cash level … that by March we would be out of business,” Haug said.

In March, the big payouts began. Five company executives, including Haug, received six-figure payments in late March or early April 2011, bankruptcy records show. The five “insider payments” totaled more than $745,000.

Haug said the payouts were not bonuses, but accrued vacation and pay for executives that had been spelled out in severance agreements. “There were no golden parachutes,” he said. “This was a very straightforward very honest group of people. I’d go to work with them again anytime.”

Energy officials noted that their early investment in SpectraWatt was relatively small compared to other project financing. Late last year, the company held auctions to sell off its plant and property.

In recent weeks, several other companies backed by DOE dollars have encountered deep financial woes.

At least six Energy Department loan and grant recipients — from electric car maker Fisker Automotive to electric-car battery maker A123 Systems to Colorado-based Abound Solar — have laid off workers or suffered financial woes. Those setbacks come on top of the companies that have already filed for bankruptcy.

Administration officials, from Obama on down, say they continue to support the green energy mission. “There were going to be some companies that did not work out,” Obama told reporters in October, after Solyndra’s meltdown. “All I can say is the Department of Energy made these decisions based on their best judgments.”

TransCanada, developer of controversial pipeline, boosts lobbying spending

TransCanada Corporation — 2013-01-23T13:01:05-05:00

TransCanada, the pipeline company pushing the recently rejected Keystone XL project, spent $410,000 on federal lobbying during the last three months of 2011 – a new quarterly high for the company.

The total is $20,000 more than TransCanada spent in the previous quarter and nearly double the $220,000 it spent in the second quarter of 2011. Altogether, the company paid $1.33 million on lobbying in D.C. last year.

The lobbying total is small considering what was at stake. TransCanada was seeking State Department approval of the proposed 1,702-mile-long Keystone XL pipeline. The $7 billion project would have connect Canadian tar sands deposits to Texas refineries.

On Jan. 18, President Barack Obama denied the company's permit request. But the company quickly vowed to reapply, which suggests its surge of lobbying spending may continue in 2012.

TransCanada officials met with Republican lawmakers Monday to push for the pipeline. House Speaker John Boehner (R-Ohio) even had “folks from Keystone management as his guests at last night’s [State of the Union speech],” according to Brookings Institution's Stephen Hess.

Republican Rep. Lee Terry of Nebraska has proposed legislation to streamline approval of TransCanada's next application. The North American Energy Access Act (H.R. 3548) would move authority for Keystone XL from the State Department to the Federal Energy Regulatory Commission – even though FERC's director of energy projects said at a hearing this morning that his agency lacks the authority to regulate pipelines.

Boehner has also considered reviving the pipeline fight by linking the project's approval to the upcoming payroll tax cut extension.

As the Center for Public Integrity has reported, TransCanada had already been lobbying heavily for the pipeline project in D.C. and Nebraska, the state most concerned about possible leaks. The pipeline would have crossed directly through Nebraska's environmentally sensitive Sandhills region.

The project continues to draw protests from environmentalists, primarily because of concerns about climate change. Refining gasoline from tar sands produces more climate warming greenhouse gases than processing conventional crude oil.

Keystone XL pipeline rejection a setback for Canadian tar sands development

Canada — 2013-01-23T13:01:04-05:00

The Obama administration's decision to reject a pipeline that would have carried crude from Canada’s tar sands deposits to Texas oil refineries isn’t likely to end investment in the carbon-rich fuel, industry analysts say.

In killing the controversial Keystone XL pipeline, President Obama blamed congressional Republicans, who he said “forced this decision” by requiring an expedited 60-day review of the pipeline as a provision of the recent payroll tax extension.

Obama also reaffirmed his support for domestic oil and gas exploration and expanding fossil fuel infrastructure. “In the months ahead, we will continue to look for new ways to partner with the oil and gas industry to increase our energy security,” he said.

But industry analysts question this rationale. “If your objective is improving our energy security, then Keystone should have been built,” said Sarah Emerson, president of Energy Security Analysis, Inc., an energy forecasting firm.

Environmentalists have reason to temper their excitement over the pipeline's defeat. They opposed pipeline builder TransCanada's project because of fears about spills and the climate-change implications of refining tar sands, which give off more carbon dixoide than traditional crude oil. But Obama threw his support behind additional U.S. drilling. And analysts say production of tar sands in Canada will continue.

“Is it a setback? Yes,” Emerson said. “Does it spell the end of the oil sands development? No.”

She predicts that America’s northern neighbor will go forward with a stalled pipeline to its Pacific coast. “I suspect that [Canada looks] at this as a rejection and they’ll say ‘OK, well, you don’t want our oil? We’ll sell it to China.’”

Investors in Canada’s tar sands, who had been closely following the Keystone battle, are not likely to pull out just yet. “I don’t know exactly what kind of message this sends, just because it’s an election year,” said Jacob Correll, a commodities analyst at Summit Energy, a consulting firm. “There’s still money to be made.”

Coal ash spills into Lake Michigan after bluff collapse

Michigan,United States — 2011-11-02T12:11:49-04:00

A cascade of coal ash, dirt and mud fell into the shore of Lake Michigan yesterday after a large section of bluff collapsed beside the We Energies Oak Creek Power Plant in Milwaukee County, Wisconsin. It is unknown how much coal ash fell from the pile, but the spill left behind a debris field about 120 yards long, the Milwaukee-Wisconsin Journal Sentinel reports.

"Based on our land use records it is probable that some of the material that washed into the lake is coal ash," We Energies spokesman Barry McNulty told the Journal Sentinel. "We believe that was something that was used to fill the ravine area in that site during the 1950s. That's a practice that was discontinued several decades ago."

As iWatch News has previously reported, coal ash is the leftover residue from burning coal that is known to contain neurotoxins like lead and mercury and the carcinogens such as arsenic. In a series of investigations, iWatch News has examined the lack of federal oversight of the waste and its affects on communities near coal ash dump sites.

House Republicans championed legislation in mid-October that would strip the Environmental Protection Agency of its ability to regulate coal ash and give regulatory authority to the states — a move that would shift authority away from the EPA and reduce federal regulations that Republicans say are burdensome.The Obama administration has voiced opposition to the House legislation, calling it “insufficient to address the risks associated with coal ash disposal and management.”

The Lake Michigan spill is similar to a dam break at a Tennessee Valley Authority power plant in 2008, where 1.1 billion gallons of coal slurry was dumped across hundred of acres — killing nearby wildlife and damaging homes.

The cause of the Wisconsin bluff collapse is still unknown. None of the 100 or so nearby workers were injured in the spill, and clean-up has already begun. U.S. Coast Guard Lt. j.g. Brian Dykens called it a “freak accident.”