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Small business takes on big job at Ohio power plants

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Posted at 5:56 AM, May 03, 2021
and last updated 2021-05-05 12:28:17-04

CINCINNATI — Ron Froh added a hunting photo to his Facebook profile in November, prompting a friend to ask where he bagged the 8-point buck.

“I own 2,000 acres in Ohio,” he replied.

That was an understatement.

Ron Froh, CEO of Commercial Liability Partners, made this his Facebook profile photo last November.

Froh, CEO of Missouri-based Commercial Liability Partners LLC, or CLP, has acquired more than 6,000 acres in Ohio by hunting for deals on retired power plants, and assuming the environmental liabilities that go with them. In the process, Froh’s 7-year-old company has become an important player in determining whether Ohio’s abandoned coal plants will fuel the dreams of job creators or turn into environmental nightmares.

“We’ll make sure that we’re very, very careful to do the right thing and we’ll do everything that’s feasible,” Froh told Pierce Township residents at a 2019 public meeting after CLP bought the Walter C. Beckjord Generating Station. “We’re not going to cut any corners.”

Since then, neighbors of the Beckjord plant have sued the limited liability that Froh formed to manage the plant’s remediation and complained to the Ohio EPA about dust clouds rising from coal ash ponds on the southern edge of the site. Last summer, an environmental consultant for Clermont County questioned whether the company’s groundwater monitoring plan is adequate. And this month, Froh’s demolition contractor was ordered by the U.S. Army Corps of Engineers to remove 75 cubic yards of debris from the Ohio River, caused by an implosion that sent much of the plant’s former smokestack into the river.

“It’s not the way I would run a project,” said Clermont County Commissioner David Painter, who worked in environmental remediation for more than 40 years; ten of those were at the former Fernald nuclear processing plant in Crosby Township. “We want a site here that obviously can be re-industrialized, a site where jobs can be re-created here and a site that also protects our groundwater and the Ohio River. I mean, that’s the main concern here.”

As the nation transitions away from coal, the giant plants that once supported small towns are closing and taking with them the highest-paying jobs and biggest source of tax revenue. In the Tri-State region, utility companies have shuttered five coal-fired plants in the past decade and will close two more by 2027. This leaves more questions than answers to the communities left behind. How will the sites be cleaned up? Who is monitoring air quality and drinking water? Will developers move in with new jobs or will the legacy of these coal towns be tainted land and unemployment?

The WCPO 9 I-Team set out to answer those questions in its year-long series, Closed and (Un)disclosed. Once one of the most coal-heavy states, Ohio is now leading the nation in plant closures. Former coal towns are struggling in how to transition away from this declining industry.

In our first stories, the I-Team examined demolition problems at Beckjord and the Killen Generating Station in Adams County. Two workers died in the collapse of a building at Killen as crews prepared it for implosion.

In this story, the I-Team focuses on the owner of the CLP, which owns Beckjord, Killen and two other retired Ohio coal plants: J.M. Stuart Station in Adams County and Muskingum River in Southeast Ohio.

Froh did not respond to more than a dozen attempts to reach him through emails, voicemails, employees and consultants. So, the WCPO 9 I-Team compiled this report using Froh’s public statements about his Ohio investments and public records, including lawsuits, real estate documents, regulatory reports to local, state and federal agencies and securities filings from the utilities that sold plants to CLP.

Here is a summary of what we learned:

  • Limited liability companies affiliated with CLP paid $5.2 million to acquire its four Ohio properties and received $2.7 million so far from the sale of land or timber rights on those properties.
  • CLP convinced the Adams County Board of Revision to erase $142.8 million in real estate value from its tax rolls last year, resulting in a $1.8 million property tax refund for the Killen and Stuart plants. Clermont County refused to reduce Beckjord’s value by $11.7 million. The Ohio Board of Tax Appeals will hear CLP’s appeal this July.
  • The utilities that sold the plants - Duke Energy Corp., American Electric Power (AEP) and Dayton Power & Light affiliate AES Ohio Generation LLC - provided $217.6 million in cleanup funds to CLP as part of their plant sales, according to their annual reports to shareholders and interviews with industry experts.
  • Three of CLP’s Ohio properties had problems during demolition, including structural collapses that killed two people at Killen and one at Muskingum River. At the Beckjord plant, demolition debris has been falling into the Ohio River since October, according to emails and photos obtained by the I-Team.
  • CLP’s Ohio properties include 675 acres where coal ash and other combustion materials are stored in 16 ponds surrounded by earthen dams, according to U.S. EPA records. Five of the 16 units have layers of clay at the bottom. The rest are unlined, making it easier for harmful chemicals like lead, boron, arsenic and sulfate to leach into nearby groundwater.

The Froh File

U.S. utilities announced the retirement of more than 500 coal-fired power units since 2010, according to the U.S. Energy Information Administration. That creates a huge market opportunity for companies willing to clean up the mess those units left behind, as defined by the environmental services firm Charrah Solutions Inc.

“We believe there are $75 billion in coal ash remediation opportunities in the U.S.,” the Louisville, Kentucky-based company said in its annual report to shareholders. “We estimate there are over 1,000 legacy ash ponds and landfills, substantially all of which remain to be remediated.”

In Greater Cincinnati, five coal-fired power plants have closed with two more slated to close by 2027. Two St. Louis-based companies have acquired four of those plants. Froh founded one of those companies after working for the other, according to a 2015 lawsuit filed by Environmental Liability Transfer Inc., or ELT.

ELT accused Froh of stealing clients and proprietary information. According to court records, the case was settled after Froh withdrew his young company from a letter of intent he signed to remediate a former pulp mill operated in Shelton, Washington, by Rayonier Advanced Materials, a former ELT customer.

Since then, CLP and ELT have each acquired a half-dozen power plants, according to their websites and published reports. ELT’s portfolio includes Tanner’s Creek Generating Station in Lawrenceburg.

CLP’s website says Froh has “deep technical expertise in matching environmental exposures with appropriate insurance programs” and spent 18 years “customizing liability transfers” in a variety of industries.

Beckjord Generating Station

In 2019, Froh secured a patent with two other men after developing a “waste disposal closure system” for coal ash ponds “that can be utilized at less cost and with greater safety than traditional systems.” One of his fellow inventors on the patent is Alan Briggs, lead civil engineer for Key Environmental Inc. in Pittsburgh, a consulting firm that often files regulatory reports for CLP on groundwater monitoring.

ATON Environmental is another consulting firm that CLP regularly uses. Froh acquired the Fenton, Missouri firm in 2018, boosting CLP’s total employment from five to 15.

Froh has formed at least five different limited liability companies to own and operate his Ohio investments, an approach that was criticized in a 2019 lawsuit by Neighbors Opposed to Pit Expansion Inc., a Clermont County watchdog group formed in the 1980s because of Beckjord pollution problems.

New Richmond Development Corp. LLC “is an underfunded corporate shell” formed to “insulate CLP and its owners from liability,” said the complaint, which accused CLP of violating a 1986 agreement between neighbors and Cincinnati Gas & Electric Co. CLP has asked U.S. District Judge Michael Barrett to dismiss the lawsuit, saying the 1986 agreement expired in 2016.

One of CLP’s corporate affiliates, Kingfisher Development LLC, was incorporated in Puerto Rico, where Froh’s wife said the couple moved three years ago in a Facebook post last November. CLP’s website lists San Juan as its “World Headquarters,” but the mailing address for Kingfisher is 7000 Bahia Beach Blvd. in Rio Grande, Puerto Rico. It’s an oceanfront golf resort with a helipad, spa, nature trails and tennis center that touts its abilities to help buyers avoid U.S. taxes in its marketing materials.

What’s in the deal?

When Duke Energy disclosed “a $105 million payment for the disposal of Beckjord” in its 2018 annual report to shareholders, it didn’t say who got the money. But Ron Froh closed the loop in 2019, when he told Pierce Township residents that his cleanup funding is tied to performance.

“I don’t get paid unless I close the project,” Froh said. “When they sold it to us, they didn’t just leave. They did the right thing. They funded our escrow so we could complete the work and get into a development perspective and create jobs.”

The I-Team asked all three utilities for copies of their sale agreements to Froh’s companies. Dayton Power & Light didn’t respond. AEP and Duke Energy declined to provide the documents. AEP spokesman Scott Blake said every sale is unique, but its contracts tend to be outcome oriented.

“We would say these 10 things need to be completed before the project is considered complete and final,” Blake said. “I don’t know if there’s a draw process or if at the end there is a lump sum payment.”

American Electric Power got some protection against liability when a CLP affiliate sold 165 acres of the Muskingum River plant to the Southeastern Ohio Port Authority in January so the land can be redeveloped as an industrial park. The $1.2 million sale contract requires the port authority and all future owners to “release and forever discharge AEP Generation Resources … from any and all past, current and future contingent liability” for “any pollution conditions associated with the property.” It also required CLP to purchase a $2 million insurance policy to cover “pollution legal liability” for five years.

Real estate records from Clermont, Adams and Washington counties show money flowed both ways in three of the four transactions. CLP affiliate Muskingum River Development LLC paid the most, $2.8 million for 28 parcels totaling 990 acres, while Kingfisher Development paid $1.3 million for the Killen property and $1.1 million for Stuart. The Beckjord property sold for “no money,” according to an affidavit filed by a Duke Energy attorney that enabled the transaction to avoid a conveyance fee on the transfer of property.

Killen Generating Station

Even though CLP subsidiaries are listed as the owner in public records and press releases about the sales, they don’t have complete control over the land.

Real estate records from Clermont County show CLP is listed as a debtor to Duke Energy, which has the right to intervene in the event of material breaches in construction/demolition agreements signed by CLP. Three CLP plants – Beckjord, Killen and Stuart – have deed restrictions, or Environmental Covenants, that prohibit the property’s use for residential development or agriculture and prevents groundwater from being extracted from the sites.

But one central element of every deal is the transfer of environmental liabilities away from the utilities that operated the plants, said Travis Miller, a Morningstar analyst who follows the utility industry.

“For the company to even be able to put those words in an SEC document, there has to be a reasonable assurance that it would no longer have that liability,” Miller said. “So, that would get down to the contract language.”

With those liabilities, buyers typically receive the cleanup funds that utilities collected from customers over the life of each power plant, Miller said. While those payments can reach more than $100 million, they may not be enough to cover the cost of remediation.

“Your profits really are in reselling that land,” Miller said. “You can break even on the demolition if you end up with a piece of land that you can lease.”

‘How clean is clean?’

Froh told Pierce Township residents the Beckjord plant could free up 300 acres for industrial development.

“We’ll have to move some of the infrastructure around a little bit and make some changes, but we’re well on our way, I think, to what we think will be a very robust industrial property,” he said. “Again, we’re looking for the right type of end use. That’s really important that we create the best tax base, the best jobs.”

To get there, Froh said, he would need the approval of the Ohio EPA.

“All those ponds will be addressed,” he said. “We’ve got plans for them. We’re going through the science. We’re going through the design. It will be vetted through the state. Everything will be done with the state’s approval. We don’t do anything without Ohio EPA approval.”

How much that costs will depend on how clean regulators want the site, said Painter, who managed environmental remediation projects that cost billions of dollars.

“Action levels are everything,” Commissioner Painter said. “How clean is clean?”

In North Carolina, Duke Energy has estimated it will cost $4 billion by 2030 to remediate six of its plants that have a combined nine ash ponds.

The Tarheel state has the nation’s most stringent cleanup requirements, thanks to a 2014 spill that dumped 39,000 tons of coal ash from a Duke Energy property into the Dan River. State officials ordered the utility to remove all coal ash instead of capping and covering ash ponds in unlined storage units.

The U.S. EPA established rules to regulate coal ash in 2015, but they don’t apply to two of CLP’s Ohio plants because Beckjord and Muskingum River closed before the rule took effect. However, a 2018 court ruling ordered the EPA to draft new rules to regulate the so-called “legacy ponds” at long-dormant plants. Until those new rules are drafted, Painter said, the Ohio EPA is the final arbiter of whether CLP’s cleanup plan is adequate at Beckjord.

J.M Stuart Station

“The most environmentally protective option would be find a place close by, maybe even a place on the property, where you could build a new, lined landfill that meets all of the location restrictions of the federal rule,” said Abel Russ, senior attorney for the Washington D.C.-based Environmental Integrity Project. That means “it’s not in a flood plain, it’s not on a fault line, it’s not built on top of soluble bedrock that might create a sinkhole and it’s at least 5 feet above the aquifer and lined according to the EPA guidelines. You put all the ash in there. It could be basically contained. And you can leave it there and it won’t contaminate the groundwater.”

But that’s not what CLP’s New Richmond Development Corp. has proposed at Beckjord. Instead, NRDC is relocating coal ash from the oldest pond on the site – Pond A – to another unlined pond on the south side of the Beckjord property, Pond C. It’s also building a new well to divert water contaminated by Pond A away from Clermont County’s water wells. The plant’s former owners installed a similar well in 1993, after high levels of sulfate were discovered in the Ohio River Valley Aquifer, where the Pierce Union Batavia Treatment Plant pulls drinking water from wells north of the Beckjord plant.

Froh called his plan for Pond A “a huge win for the community” in his 2019 appearance at Pierce Township’s administration building.

“By removing all the source material completely from Pond A, there is no chance for any more impact from Pond A,” he said.

Not everyone agrees with that assessment.

“Putting it in another unlined pond is not a good solution,” said Russ. “It’s like, you know, if I tell my kids to clean the room and they shove all their toys under the bed. It looks better but it hasn’t accomplished anything.”

An environmental consultant hired by Clermont County also identified flaws in Froh’s strategy last July.

“A significant ongoing source of sulfate remains in the silty clay soil” beneath Pond A, said the July 10 report by Terran Corp., based in Beavercreek. “It will be decades before the silty clay stops leaching high sulfate mass into the aquifer.”

The report also questioned whether NRDC’s environmental consultant knows enough about ground water flow south of Pond A to predict whether Beckjord’s three other ash ponds are contributing to the sulfate plume.

Sulfate is a problem for a few reasons, said Russ, a toxicologist who runs the Center for Applied Environmental Science for the Environmental Integrity Project. Not only does sulfate smell bad and cause diarrhea, but it can also signal the presence of more harmful coal ash chemicals.

“Boron is a developmental toxicant,” Russ said. “That’s probably at the leading edge of the plume. It causes testicular atrophy in mice. It can cause low birth weight in mice. There are some carcinogens in coal ash, like arsenic, which doesn’t seem to be at super high concentrations at the site, but it’s something to keep an eye on. Lithium is a neurotoxin. Cobalt causes heart and blood problems, molybdenum can cause gout.”

CLP’s most recent ground water quality report in January said “boron was detected in the range of 0.049 mg/L to 7.5 mg/L and appears to correlate with sulfate.”

The EPA hasn’t defined how much boron is unsafe. But it has issued a health advisory saying “exposure to boron in drinking water at concentrations of 4 mg/L for one day” is “not expected to cause any adverse effects in a child,” according to the federal Agency for Toxic Substances and Disease Registry.

The Ohio EPA issued a permit in October, allowing Froh’s company to install the new interceptor well. It also requires the company to develop groundwater tests “adequate to monitor the extent of the sulfate” contamination and demonstrate that “public drinking water wells in the Pierce/Union/Batavia wellfield of Clermont County Water Resources are protected.”

Three renderings show how the sulfate plume changed at the Beckjord plant between 2009 and 2019.

In December, an attorney for Clermont County signaled that Ohio EPA’s approach doesn’t go far enough. Columbus attorney Scott Doran told the U.S. EPA that Ohio doesn’t have enough regulatory authority to ensure that “groundwater contaminated by coal ash residuals will not migrate offsite.” Unless that changes, Doran said, the county will be forced to install a $24 million treatment system or “discontinue use of this critical water supply.”

The EPA has not responded to the I-Team’s questions about Froh’s Ohio projects.

Painter said Clermont County is “doing everything that we can to pressure EPA, to give them data, to show them where we believe it needs to go.” And in the meantime, he’s calling on Froh to re-engage with stakeholders in the project, including Pierce Township, the village of Newtown and Clermont County.

“It all starts with just sitting down at the table and making sure everybody’s needs are met,” Painter said. “That hasn’t happened and there’s a real need for it to happen.”