By John Mura

Office of the Secretary

Amidst a backdrop of purple lights and a stage full of black, padded chairs waiting to be filled, the 41st annual Governor’s Conference on Energy and the Environment kicked off Thursday, Oct. 19, 2017 inside the Lexington Convention Center, in Lexington, KY.

Almost 300 people registered for the two-day conference, hosted by the Kentucky Energy and Environment Cabinet.

Guests listen at the Lexington Convention Center ballroom during the 2017 Governor’s Conference on Energy and the Environment.

Shortly after 1 p.m., Cabinet Secretary Charles Snavely opened the conference by welcoming participants and introducing the first session of the day, a panel moderated by Kentucky Educational Television host Renee Shaw, that discussed potential legislative issues having to do with energy and the environment. The panel included Senator Jared Carpenter, co-chair, Interim Joint Committee Committee on Natural Resources & Energy; Representative Jim Gooch, co-chair, Interim Joint Committee on Natural Resources & Energy; Tom FitzGerald director, Kentucky Resource Council; Dave Adkisson, president and CEO, Kentucky Chamber of Commerce and Cabinet Secretary Snavely.

Left to right: Tom FitzGerald director, Kentucky Resource Council;  Senator Jared Carpenter, co-chair, Interim Joint Committee on Natural Resources & Energy; panel moderator, Kentucky Educational Television host Renee Shaw; Representative Jim Gooch, co-chair, Interim Joint Committee on Natural Resources & Energy and Dave Adkisson, president and CEO, Kentucky Chamber of Commerce.

Potential funding issues came up in many of the panelists’ comments.

Secretary Snavely said the Cabinet had created efficiency gains by bringing all the agencies in the Cabinet together under one roof, and by working more closely with the Public Service Commission and state Nature Preserves Commission. The question going forward, Snavely said, is how the Cabinet would fund its mission when it reaches the point where it can no longer create efficiency gains.

“I think we’ve reached the point where we have to make a decision,” Secretary Snavely said. “We have to prioritize the services we can provide to the public.”

Tom FitzGerald, noting the effect the state pension shortfall was having on budget issues, agreed. “We are almost at the point, if we have not passed the point, where we are losing the ability to manage delegated programs because we are not able to find any more efficiencies.” FitzGerald said. “It is not an easy time to juggle all those budget issues.”

Dave Adkisson, of the Kentucky Chamber, said the organization had
“four pillars of prosperity.” These included: a healthy, skilled workforce; sustainable state government; 21st century infrastructure; and aggressive job creation. “We’re going to have to look into public-private partnerships,” Adkisson said, referring to the P3 bill that enables such collaborations.

Rep. Gooch added the state cannot afford not make investments that down the road will pay off in growth and job creation.

Panel moderator,Kentucky Educational Television host Renee Shaw and panelists look on as Charles Snavley, Cabinet Secretary for the Energy and Environment speaks.

Later in the afternoon, the assembled audience heard presentations by directors of the Kentucky Department of Natural Resources. Presenting were: Courtney Skaggs, director of the Division of Mine Reclamation & Enforcement, Bob Scott, director of the Division of Abandoned Mine Lands, James Wright, director of the Division of Forestry and Dennis Hatfield, director of the Division of Oil and Gas.

According to Skaggs, the Division of Mine Reclamation & Enforcement currently inspects 1,524 permitees across the state. Five offices across the state handle 17,000 inspections a year. Through the Highway Reduction Initiative, the division has been able reduce 196,000 feet of idled highwall, which represents $105 million in reduced liability, she said.

Courtney Skaggs, director of the Division of Mine Reclamation & Enforcement takes the podium.

Bob Scott took the audience through the workings of the Abandoned Mine Lands division, its Bond Forfeiture Program and the 2016 $30 million, AML Economic and Community Development Pilot Program under which nine projects designed to stimulate economic growth were approved in nine Appalachian counties. During his presentation, Scott pointed to his agency’s shrinking budget. In 2008, the Division received $37.4 million in federal dollars. Last year that number had shrunk to $17.1 million. And this year it is $12.6 million, Scott said.

James Wright told listeners that among the chief duties of the Division of Forestry are forest conservation, fire prevention and pest control. Kentucky is 48 percent wooded, Wright said, with 12.4 million acres of woodland. Of those, 88 percent are owned by private landowners, he said. Foresters work with private landowners to accomplish the division’s goals, he said, which include stewardship, timber harvest compliance, forest health, urban and community forestry, public outreach, nursery operations, state forest management.

Dennis Hatfield, director of the Division of Oil and Gas, told the audience that the division regulates all phases of oil and gas production in the state. It protects citizens and encourages the conservation and valuable use of this resource.

Kentucky’s first well was drilled in 1818, he said. Currently the state is 18^th in the nation in natural gas production and 20^th in nation in crude oil production. Oil production peaked in the 1950s and 1960s and wells currently produce about 2.8 million barrels per year. Natural gas production peaked from 2009 to 2013 and wells now produce about 240 billion cubic feet per year, he said.

Chandu Visweswariah, PhD, president & CEO of Utopus Insights, Inc. followed with a session during which he spoke about the digitization of energy and how to prepare for a massive transformation of energy delivery and usage.

A recent survey ranked states by their ability to be transformative, he said. Kentucky ranked 46^th out of 50 states. He said states that ignored experiential trends would do so at their own peril. “The future is coming at us faster than ever,” Visweswariah said. “We’ve had a great ride with coal but things are changing and are we prepared for this rapidly changing future?”

The time will come, he said, when the digital industry will disrupt the energy industry. Tipping points are created by favorable economics and followed by mass adoption. Over the next six years, he said, there would be such tipping points and he asked if the state was setting up the right incentives to compete for businesses that wanted resources such as wind and solar.

Day Two of the conference saw both the theoretical and the practical, endingwith a call to action by Gov. Matt Bevin.

Travis Kavulla, commissioner of the Montana Public Service Commission, led off the morning with a talk on utility regulation and better ways for commissions to interact with regulated utilities.

Kavulla spoke about investor-owned utilities and how the Clean Power Plan allowed them to profit on capital investments and how that provided an incentive to spend more. He said he is urging commissions that regulate such utilities to make those utilities “behave like a business”.

“Investor-owned utilities get paid a shareholder return associated with the risk of their investments,” Kavulla said. “They shouldn’t be absolved of that risk. Stand up to deals that appear to be compromises but aren’t. Put utilities on a budget.”

Kenneth Wagner, Senior Advisor for Regional and State Affairs, U.S. EPA, then spoke about the changing emphasis at the agency.

“What is true environmentalism?” he asked. “This country has always taken the view that we are stewards of all of the great natural resources with which we’ve been blessed. Timber, oil, natural gas, coal, all of those things.…we’ve been good stewards of the land while we’ve grown our economy.

“The previous administration went away from this and changed to the idea that the only way to protect the natural environment was to put a fence around it. To leave the oil in the ground. To leave coal in the ground. Don’t manage forests. That was a departure from what we’ve previously done in this country.

“The (prior) administration has taken the view that industry leaders, the regulated community, landowners, ranchers, farm owners were really adversaries rather than partners in which we can together clean up the air, provide cleaner water, and clean up the land”.

EPA Administrator Scott Pruitt, in contrast, believes in managing and using the natural resources to feed the hungry, to provide food to those who need it, to use raw materials to build society, and to provide power to those who need power, Wagner said. This means making sure that these natural resources are available to generations of generations.

“It’s a false narrative to believe that you can’t be pro-environment and pro a growing an economy and a healthy economy,” Wagner said.

Wagner said that the perception that the agency is being torn down has been created by a sensational media. “It’s not our job to pick winners and losers,” he said. “It’s our job to provide regulatory certainty, to allow industry leaders like you to know what the line is, to be able to allocate your resources, and then know what it is to comply with these environmental regulations.”

Kenneth Wagner, Senior Advisor for Regional and State Affairs, U.S. EPA.

The agency will be governed by three key principles enunciated by Administrator Pruitt, he said: adherence to the rule of law; process; and federalism.

“And science,” Wagner said, “is the backbone and the foundation of all we do. Everything we do should be protective of human health and protective of the environment.”

Kentucky Department of Environmental Protection Commissioner Aaron Keatley then led a panel discussion “Celebrating Our Past, Investing in Our Future.” The three topics explored were drinking water, wastewater and brownfields.

On the panel were Kenneth Wagner, Senior Advisor for Regional and State Affairs, U.S. EPA; Trey Glenn, Regional Administrator, U.S. EPA; John Bevington, Deputy Director for Business Development, KY Cabinet for Economic Development (CED); Kate Shanks, Director of Public Affairs, KY Chamber of Commerce; Tony Hatton, Deputy Commissioner KY DEP and Pete Goodmann, Director, Division of Water, KY DEP.

From left to right: Kentucky Department of Environmental Protection Commissioner Aaron Keatley; Kenneth Wagner, Senior Advisor for Regional and State Affairs, U.S. EPA; Trey Glenn, Regional Administrator, U.S. EPA; John Bevington, Deputy Director for Business Development, KY Cabinet for Economic Development (CED); Kate Shanks, Director of Public Affairs, KY Chamber of Commerce and Pete Goodmann, Director, Division of Water, KY DEP.

When potentially investing billions of dollars, the mitigation of risk is companies’ focus, said John Bevington, Deputy Director for Business Development, Kentucky CED.

Trey Glenn, Regional Administrator, U.S. EPA, said it was a high priority of the agency to work with states to find realistic solutions to these blighted properties. “Communication is the key,” Glenn said. “A working relationship with the states is something we’re very focused on.”

In a video shown that preceded the discussion, it was pointed out that for every $1 spent on remediating a brownfields site, there is a $16 economic benefit. “We’ve had 178 sites come through since the program has been in existence,” Hatton said. “Most of these sites don’t have a viable responsible party. There is a need to identify funding streams so you can go out and move forward.”

Kenneth Wagner, of the EPA, said the agency had a team and had established 42 action items and practical reforms to streamline the brownfields redevelopment process.

The panel’s next subject was drinking water.

Pete Goodmann, Director of the Division of Water, gave an overview of how Kentucky went from having about 1,200 public water systems in the early 1990s, serving 80 percent of the state’s population to having fewer than 400 public water systems serving 95 percent of the population.

Panelists agreed that having sound drinking water and wastewater systems was an essential part of attracting and keeping businesses.

“You can do everything right in a community and get your utilities wrong, water and wastewater and you’re off the list,” said Kate Shanks, Director of Public Affairs, Kentucky Chamber of Commerce.

And with the figure of $62 billion quoted as needed just to maintain the aging drinking water system, a creative solution must be found, all agreed.

John Bevington, Deputy Director for Business Development, Kentucky CED, said communities have a hard time spending millions of dollars on infrastructure on the hope of attracting industry and jobs.

“It’s hard for communities with all of the other expenses that they have…to say let’s spend tens of millions of dollars on this water system proactively for something that may or may not happen two or three years down the road,” Bevington said. “But the point of the matter is a community needs to look at what their business plan is and determine what risks they’re willing to take for their future.”

The discussion then turned to the state of wastewater infrastructure in the Commonwealth. The EPA’s Wagner praised the DEP for its regionalization efforts, noting only two states in the country had successfully regionalized their wastewater operations: Alabama and Kentucky.

With this system also needing $6.2 billion in the future to maintain its operations, Wagner said a continued push for funding was important. “We have to continue to push the president, continue to push Congress to understand the need of small systems,” he said. “We need to provide support for public private partnership.”

Said Goodmann: “It’s about managing the existing assets you have. You are going to incur that cost now or later, so you do the asset management plan and you make the investment. In 2017-2018, you have lot more buying power than 2030 dollars. Getting ahead of that cost curve is a smart thing.”

Pete Goodmann, Director, Division of Water, KY DEP speaks.

The discussion portion of the day was capped by a 30-minute talk by Gov. Matt Bevin and an exhortation by him to both Cabinet employees and those associated with the Cabinet to continue to make Kentucky “sparkle.”

“You’re all here for the same issue,” Gov. Bevin said. “We want clean water. We want clean air. We want an environment that is not only good for ourselves but also is sustainable for our children and grandchildren. We also want an environment that’s conducive to doing business and creating opportunity and jobs for people so people can stay here.

Governor Matt Bevin takes center stage.

“And where is that balance between what some might want and what others might want and yet what is ultimately practical? I’ve been trying as best I can to shepherd this state forward.”

Kentuckians are blessed, Gov. Bevin said, with resources that other states don’t have, including two coal seams. “How do we marshal those resources? How are we going to be good stewards of those resources?”

“They’re building new coal-fired power plants in Europe right now, including in Germany and in places that are conceived as being these forward, green futuristic renewable types of places. Why are they doing that? Because they want the lights to come on when they flip the switch. And a couple of winters ago, when they had a brutally cold winter and they had rolling brownouts, people were not too happy with that.”

Coal is important to this state, to this region, Gov. Bevin said. And while the future energy landscape may be different than it is today, the bridge – out of necessity – will be built largely out of coal, he said. “You don’t just flip one thing and turn another one on.”

Gov. Bevin said he is a big fan of alternative energy sources, but not if it has to be subsidized in order to compete with other forms of energy. “And to that end, I think we need to balance all these things. It isn’t to say we don’t develop technology. But for all those who will tell you this particular source is dead, or that particular source is dead or the future is going to be comprised of this, that or the other thing, I would caution all of you to be objective and observant.

“What is the reality? The world is demanding more electricity than ever. Simultaneously we’re becoming more efficient than ever.”

He praised Cabinet Secretary Charles Snavely as a “guy who gets it.”

“He doesn’t have a knee-jerk response to things,” Gov. Bevin said. “He comes with not only the character but the competence. Decades of understanding. And I hope you find in him somebody who’s responsive.”

Energy and Environment Cabinet Secretary, Charles Snavely (left) and Governor Matt Bevin (right) shake hands.

An awards luncheon followed on Friday afternoon during which 10 awards were given out to those individuals or businesses honored for preserving and enhancing this beautiful state of ours through energy efficiency, soil conservation, mine land reclamation, farmland stewardship or innovation.

Awards given out at the luncheon included:

• The Kentucky Heritage Land Conservation Fund Stewardship Award given by the Kentucky State Nature Preserves Commission and presented to Oldham County Fiscal Court.
• The Outstanding Kentucky Forest Steward Award given by the Division of Forestry and presented to Jerry and Portia Brown.
• The Excellence in Reclamation Award given by the Division of Abandoned Mine Lands and by the Division of Reclamation and Enforcement and presented to the Peter Cave Mining Company.
• The 2017 Department for Natural Resources Award for Excellence in Safety, given by the Department for Natural Resources and presented to the Survant Mine, owned by Armstrong Coal Company, Inc., Madisonville, KY.
• The KY EXCEL Champion Award, given by the Department of Environmental Protection and presented to Sekisui S-Lec America.
• The Environmental Pacesetter Award, given by the Department for Environmental Protection and presented to L’Oréal USA Manufacturing, of Florence, KY.
• The Resource Caretaker Award, given by the Department of Environmental Protection and presented to the Marker’s Mark Environmental Team.
• The Kentucky Excellence in Energy Leadership Award, given by the Department of Energy Development and Independence and presented to the Kentucky Army National Guard and Department of Military Affairs.
• The Kentucky Excellence in Energy Leadership Award, given by the Department of Energy Development and Independence and presented to Owensboro Health Regional Hospital.
• The Secretary’s Award, given by the Office of the Secretary of the Energy and Environment Cabinet and presented to Toyota Motor Manufacturing, Kentucky, Inc.

Photos by Lanny Brannock.