Monthly Archives: December 2019

2019 Legislation: Environmental and Energy Laws

December 27, 2019. A  short list of environmental and energy law changes compared to recent years:

Fisheries.   As interest in  shellfish aquaculture has increased, so have concerns about the impact of the rapidly evolving aquaculture industry on water recreation and navigation.  Senate Bill 648   creates a new framework for management of aquaculture operations by allowing the Division of Marine Fisheries (DMF) to designate  “shellfish aquaculture enterprise areas” where water bottom and water column leases can be issued for shellfish aquaculture. Similar to water use zoning, the concept gives DMF the ability to direct shellfish operations toward areas already approved for the purpose instead of  simply responding to a lease application for any location of the applicant’s choosing.

The bill has some weaknesses. It doesn’t provide guidance on siting shellfish aquaculture enterprise areas.  The bill requires notice and a public hearing prior to designation of an aquaculture enterprise area, but relies on the limited notice requirements in existing statutes authorizing individual bottom and water column leases. Those existing public notice provisions in G.S. 113-202 (bottom leases)  and G.S. 113-202.1 (water column leases) only require notice by newspaper publication.  The statutes do not require direct notice to either the local government or to  owners of property along the affected shoreline.

Senate Bill 648 also creates a pilot project for shellfish aquaculture leasing in Pamlico Sound while imposing  moratoria on approval of new open-water shellfish aquaculture leases in  New Hanover County and Bogue Sound. At the same time, the bill makes it possible for DMF to approve operations to grow seed oysters and clams in marinas (which under existing shellfish rules have been closed to any type of shellfish propagation), which may relieve some pressure for new open water aquaculture leases.

Water Quality.  House Bill 812  (Nutrient Offset Amendments) provides more flexibility in projects to mitigate nutrient loading from wastewater dischargers. The amendments allow nutrient offsets for  permitted NPDES discharges to be provided EITHER  in the same hydrologic area (the current requirement) OR  at a location downstream of the discharge, but upstream of the water body subject to regulations to address excess nutrient loading. For stormwater and other nutrient sources, the law continues to require nutrient offsets in the same hydrologic area.

Section 3 of House Bill 206  (Various Transportation Changes)  requires the EMC to exempt a broader range of airport-associated development from the Neuse River riparian buffer rules. The Neuse buffer rules require vegetated buffers along streams in the Neuse River basin as a tool for reducing nutrient runoff  and excess nutrient loading to downstream estuaries. Since airport facilities also have to meet Federal Aviation Administration siting criteria,  current EMC rules exempt certain aviation-related facilities from buffer requirements and allow others to impact the buffer with mitigation.

Under the existing EMC rule,   “airport facilities” allowed to impact the buffer include structures directly related to aviation operations such as runways, terminals, maintenance buildings, administrative buildings, onsite airport parking, navigation markers,  and beacons.  The EMC rules do not exempt satellite facilities such as off-site parking or hotels, rental car facilities and other commercial development. H 206 directs the EMC to revise and broaden the definition of  “airport facility” in the rules to allow the riparian buffer exemption to apply to development of those airport-associated commercial facilities.

On-Site Wastewater.  Regulations on siting and design of on-site wastewater systems (such as septic systems) have both a public health and environmental protection purpose. The rules exist to prevent direct exposure to untreated wastewater and contamination of groundwater and nearby rivers, streams and lakes.  House Bill 268 (Amend On-Site Wastewater Laws) is a somewhat mis-titled bill that actually disapproves more than 40 rules concerning on-site wastewater systems  and reclaimed water systems amended by the Commission for Public Health in 2018. The bill may be one of the broadest exercises of the legislature’s power to disapprove agency rules since the legislature claimed that  authority under the State’s Administrative Procedure Act.

Legislative disapproval means the amended rules cannot go into effect;  prior versions of the rules remain in place in the meantime. The bill creates a task force to report back to the legislature in February 2020 on rules to replace those amended in 2018.  One purpose of the  task force (as set out in the bill ) is to make recommendations “to prevent the implementation of rules and ordinances and enforcement against the use of on-site wastewater treatment and dispersal systems in non-sewered areas of the State”.  

The disapproval bill responded to concerns from homebuilders and realtors that the amended rules will make it more difficult to develop some areas using onsite wastewater systems. In part, the controversy seems to be a continuation of past conflicts over how easy (or hard) it should be to approve innovative onsite wastewater systems for use in areas that are not appropriate for a conventional septic tank system. 

Renewable Energy.  House Bill 329 (Renewable Energy Amendments) makes several relatively minor changes to energy laws.  Section 1 of the bill exempts electric vehicle charging stations from the definition of “public utility” as long as the owner simply resells electricity supplied by a regulated public utility. Otherwise, sale of  electricity by a charging station could lead to  regulation of the facilities by the N.C. Utilities Commission under laws applied to Duke Energy and other electricity providers.

Section 2 requires the Environmental Management Commission (EMC) to establish a new regulatory program “to govern (i) the management of end-of-life photovoltaic modules and energy storage system batteries and (ii) decommissioning of utility-scale solar projects and wind energy facilities” by January 1, 2022.  The bill lists a number of issues for the EMC to consider in developing rules, including whether system components have the characteristics of hazardous waste and preferred methods of end of life management (i.e., reuse, recycling, or disposal as solid waste).

Section 3  amends the law governing how the N.C. Utilities Commission  sets avoided cost rates for an electric utility’s purchase of power from a small power producer. The law, G.S. 62-156,  generally takes into consideration the electric utility’s need for additional capacity and the availability/reliability of energy provided by the small power producer.  The law already provides an alternative mechanism for determining capacity need with respect to energy purchased from swine and poultry operations with waste-to-energy systems by reference to G.S. 62-133.8. The 2019 amendment extends special treatment with respect to capacity need to certain small hydroelectric projects (those with total capacity less than or equal to 5 MW). In effect, the change appears to lock in the renewal of existing power purchase agreements between electric utilities and small hydropower producers that were in effect as of July 27, 2017.

Boards and Commissions.  Senate Bill 381  (Boards and Commissions) amended the appointment statutes for the Clean Water Management Trust Fund Board and for the Parks and Recreation Trust Fund Board to give the Governor a majority of appointments to those boards.  S 381 continues a series of  legislative acts necessary to comply with the 2016 N.C. Supreme Court decision in McCrory v. Berger.  In that decision, the court  held that the Governor must have the power to appoint a majority of the members of any board or commission that exercises executive authority. See an earlier post  for more about the court’s decision.

S 381 also amended the Clean Water Management Trust Fund statutes to expressly give the Fund authority to accept FEMA funds for hazard mitigation and to disperse funds for projects to reduce flood risk.

Vetoed Bills.  For the first time since 2011, the legislature lacked a veto-proof majority in both chambers.  As a result, a  number of bills containing provisions related to environmental protection remain in limbo because the legislature has not yet voted to override Governor Cooper’s veto. The legislature could attempt to override those vetoes in 2020. The content of the vetoed bills will be discussed in a separate post.

Environmental Budget Cuts in NC: 2008-2018

December 12, 2019.  On December 5, the Environmental Integrity Project (a national nonprofit organization) issued a report on state funding for environmental protection programs. The report, The Thin Green Line,  looks at staffing levels and funding for environmental programs between 2008 and 2018 in the lower 48 states.

In addition to providing funding and position numbers for each state, the report profiles five states — including North Carolina.  During the period covered by the report, N.C. environmental programs experienced one of the highest levels of cuts to both operating budgets and staff in the country. The legislature made significant reductions even as the state’s population grew, the overall state budget increased and the state faced new environmental challenges.

Before highlighting  the findings related to North Carolina, a note about the report’s methodology.  The report compares  2018 funding levels to both 2008 dollars and inflation-adjusted 2008 dollars.  The percentage increase or decrease in funding calculated for each state represents the change from inflation-adjusted 2008 funding.

Funding and position numbers only reflect resources for environmental protection programs;  the report did not include parks and recreation or fish and wildlife agencies. Budget numbers do not include infrastructure programs, such as the drinking water and wastewater loan and grant programs. The report excluded the capital spending because it varies year to year depending on grant cycles and does not support  basic pollution control activities such as permitting, inspections and compliance actions.

Key findings related to North Carolina’s environmental protection programs:

♦ Adjusted for inflation, N.C. environmental programs experienced a 34% reduction in operating funds between 2008 and 2018.

 2008 Funding   Inflation Adjusted 2008  Funding   2018 Funding
 $116 million  $136 million   $90 million

♦ During the same period, staff levels in N.C. environmental protection programs fell by 35%, from 1,051 in 2008 to 675 in 2018.

♦ As environmental protection programs experienced significant cuts, the total state budget actually grew by 8%.

The level of reduction in  both operating funds and staff put North Carolina among only six states nationwide that experienced  reductions of greater than 30%. A number of states increased funding and staff.

The North Carolina profile in the EIP report notes that the reductions occurred against a backdrop of ongoing problems associated with large animal operations; the need to address pollution at coal ash disposal sites; repeated flood events; and vulnerability to sea level rise.  The report does not mention another resource intensive environmental issue that arose during this time period — water pollution associated with emerging contaminants such a GenX and other per- and polyfluoroalkyl substances (PFAS).

A January 2017  post on this blog provided a snapshot of some of the program level impacts of budget reductions by the end of 2016. The EIP report picks up on one of the impacts mentioned then — the backlog of water pollution permits  and permit renewals awaiting state review. As noted in the EIP report, permitting backlogs can create pressure to issue approvals without sufficient review.  The report doesn’t mention another problem — facilities may continue to operate under permit conditions that do not reflect current environmental standards.

The EIP report notes that even as many states cut environmental programs,  Congress reduced staff levels at EPA by 16% and cut EPA’s operating budget by 17% (nearly $1 billion a year).  In combination, the federal and state budget/staff reductions make effective and timely environmental enforcement much more difficult.

The full report can be found on the Environmental Integrity Project website at https://www.environmentalintegrity.org.

2019 Legislation: The Budget

December 4, 2019.  The 2019 legislative session was distinguished by its slow pace and  lack of movement on significant legislation until very late in the session. The session finally ended in late October — and then reconvened to take up redistricting.  

The session failed to produce a comprehensive two-year budget. Governor Cooper vetoed the budget bill passed by the two chambers (H 966).  Although the House voted to override the veto, the Senate has not taken an override vote. In the absence of a comprehensive budget bill,  the legislature adopted several smaller appropriation bills to provide continued funding for state agencies.  House Bill 111 (Session Law 2019-242) provided base-budget funding for a number of state agencies, including the Department of Environmental Quality (DEQ).

The irregular budget process means fewer details on spending;  the appropriations bills generally focus on top-line numbers. There is no equivalent of the joint appropriations committee report that always accompanies the budget bill to provide  detailed information on funding/staff changes at the program level.

DEQ Top Line Budget Numbers:  The table below compares 2018 budget numbers for DEQ to the funding included in H 111 for the 2019-200 fiscal year. Note: “Receipts” includes both fees and grant funding.  “Appropriated” funds  represent monies allocated to DEQ by the legislature from the state’s general fund for the 2019-2020 fiscal year; that figure can include both continuing program funding and one-time appropriations for a specific purpose.

Receipts    Appropriated       Total
2018: $154,234,668 2018 $95,647,490    2018: $249,882,158
2019: $114,576,705 2019: $114,576,705  2019: $193,918,082
  (-$39,657,963)         (-$16,306,113)  (-$55,964,076)

The figures show an overall reduction of $55, 964,076 in funding for DEQ programs by comparison to 2018 numbers — around 20%. The reduction reflects a $39,657,963 reduction in receipts and a reduction of $16,306,113 in state appropriated funding. The level of funding also falls nearly $20 million short of the funding provided in the vetoed budget bill.

The drop in receipts likely reflects in part the normal timing of grant cycles rather than an unusual reduction in funding. Otherwise, the fact that H 111 only funds the “base budget” — the cost of maintaining current funding levels for ongoing operations — accounts for the difference.  As a continuation budget, H 111 appropriated no new money on either a one-time or continuing basis.

Additional Appropriations. Several other bills include additional appropriations for particular purposes, many related to disaster relief.

Senate Bill 429 (Disaster Recovery) appropriates $8 million to DEQ for disaster-related water and wastewater infrastructure projects, cleanup, coastal management planning and dam safety activities. Another $11.5 million will go into DEQ’s Coastal Storm Mitigation Fund to offset the cost of beach and dune restoration projects. A local government can receive up to $2.5 million  in project funding and the provision waives local cost sharing.

Other funds appropriated in Senate Bill 429:

$2 million to UNC’s N.C. Policy Collaboratory to study flooding in Eastern North Carolina and measures to increase resiliency in flood-prone communities. The provision requires the Collaboratory to develop a flooding and resiliency implementation plan and report back to the legislature’s Emergency Management Oversight Committee by December 1, 2020.

$1 million to the Wildlife Resources Commission for removal of derelict and abandoned vessels from coastal waters.

$3 million in new funding to DEQ  for grants to Surry County for three infrastructure projects. These appropriations do not appear to be disaster-related.)

House Bill 200  (2019 Storm Recovery) includes $17.6 million in state matching funds needed to draw down the next award of federal grants for the Clean Water State Revolving Fund and the Drinking Water Revolving Loan Fund. Those state/federal revolving loan programs provide low and zero-interest loans to local governments for water and wastewater treatment systems.

Off the Table (For Now).  The unresolved conflict over House Bill 966 means that several provisions in the budget bill have fallen off the table at least for the time being. House Bill 966 appropriated about $15 million in new money for water/wastewater infrastructure. It also directed infrastructure funding to specific projects — including a $15 million project in King, N.C.  and $5.1 million in funding for infrastructure projects in other communities.

H 966 had included another provision redirecting $2 million from a DEQ fund to address contamination associated with poly- and perflourinated (PFAS) compounds such as GenX to a number of unrelated projects.  Over  $800,000 of the PFAS funding would have been used to extinguish a conservation easement in a Burlington park that had generated mitigation credits for N.C. Department of Transportation projects. (That provision was described in an earlier post.)

For the time being, the new infrastructure funding will not be available and funds in the PFAS Recovery Fund will remain dedicated to that purpose.