Author Archives: rwsmith

The Coal Ash Management Commission

June 24, 2014. The Senate’s coal ash bill has  been approved by two  committees and goes to the Senate floor for a vote today.  Given the N.C. General Assembly’s desire to  adjourn soon after  July 1, the bill will need to make its way through the House quickly to become law.  An earlier post provided a broad outline of Senate Bill 729; although there may be amendments on the floor today, the basic structure of the bill  seems to be set.

The earlier post generally described the  9-member Coal Ash Management Commission created by the bill, but more on the  unusual nature of the proposed  commission below:

♦ Why a new commission? When Republican senators raised this question in committee, the  bill sponsor  suggested a need to restore public confidence.  The Coal Ash Management Commission would have the power to overrule decisions made by the Department of Environment and Natural Resources (DENR) on closure of coal ash impoundments, suggesting a lack of confidence in DENR. But Senate Bill 729   gives  commission members with  very general knowledge and experience the ability to second guess such technical decisions as  the relative risk posed by  a  coal ash impoundment ( based on  groundwater contamination,  surface water pollution, threat of structural failure and other factors) and compliance with  laws governing closure. [See the earlier post for  more  on the makeup of the commission. ]

♦  One of the criteria for commission  approval of a closure plan would be  “that the benefits to the public health, safety, and welfare; the environment; and natural resources outweigh the negative impacts on electricity costs and reliability”.  In effect, the bill allows the commission to disapprove a closure plan based on a cost-benefit analysis  that considers  the impact on electric rates and  electric service.  One problem will be the lack of expertise on the commission to do a very complex cost-benefit analysis, but the provision  seems odd for other reasons.  First, cost only becomes a factor when the individual closure plan comes to the commission for review — after   the electric utility has proposed a closure plan based on alternatives identified in the law; after public comment on the proposed plan; and following DENR approval of the plan as consistent with the law.

Since the commission will  review and approve closure plans individually for each impoundment, the analysis of impacts on electric rates and electric service will  be difficult at best. The total cost of closing all  33 coal ash impoundments  in the state may  affect electric rates  — if the N.C. Utilities Commission allows the utility to pass some or all of those costs to consumers. It will be much harder to evaluate the impact of a closure plan for an individual impoundment on rates and electric service.  The cumulative cost of closing the coal ash impoundments  and any impact on electric service will also largely be  a function of the law  rather than individual closure decisions. The bill  sets the timetable  for eliminating use of wet coal ash impoundments; identifies the allowable  closure methods;  and sets closure deadlines  based on risk factors listed in the bill.  Individual closure plans have to fit within the framework  set by the legislature.

The greatest impact the commission could have on total cost would be through prioritizing  impoundments for closure. Since the bill allows  low risk impoundments to be closed by capping the coal ash in place  (which is much less expensive than removing the ash for disposal in a landfill),  putting more sites in the low risk category  also reduces total closure costs. But for very good reasons the bill does not make cost a factor in prioritizing impoundments for closure.

Given all of that,  the commission will have a very limited ability to affect the impact of closure  on electric rates and electric service. By the time a closure plan reaches the commission, the issues will be much  narrower. The priority for closure of the impoundment would already be set, determining the  closure options.   For a high risk impoundment, the alternatives  would be removing the ash for disposal elsewhere; moving the ash temporarily and creating a coal ash landfill on site (under standards set in the law);  or removing and treating the ash for beneficial reuse.  In  that narrow context, the commission could  tilt an individual closure decision in the direction of lower cost to the utility — although that would also require the commission to second-guess DENR’s evaluation of the environmental and public health impacts of the closure alternatives.

The commission’s decision to disapprove a closure plan could be appealed by either the electric utility or any other “person aggrieved” by the decision. (That may include DENR, since the department will not be  the decision-maker.)  Otherwise,  the electric utility would presumably have to revise the closure plan and go through another round of public comment and DENR review. Nothing in the bill suggests that the commission can change a closure plan.

♦ There doesn’t seem to be any precedent for  giving a citizen commission in one department of state government the power to overrule a decision made by another department.  The Coal Ash Management Commission would be part of the Department of Public Safety, but have the authority to override  decisions made by DENR under solid waste laws implemented by DENR’s Division of Waste Management and rules adopted by the Environmental Management Commission. Aside from the potential for conflict and confusion given the number of state agencies in the mix, the arrangement sets up an interesting situation on appeal of closure decisions. Since the Coal Ash Management Commission would  make the final  decisions  on prioritization and approval of  closure plans,  the commission would also have to respond to appeals of those decisions.  Although much of the technical work may have been done by DENR staff, DENR would not have responsibility for defending the decision.  Instead, DENR could be a party to the appeal.

♦ On a purely political level,  the  process for making appointments to the commission has already created a controversy.  A majority of  commission (6 of the 9 members) would be appointed by legislative leaders and commissioners would elect the chair and vice-chair.  Such strong legislative influence over an executive branch agency would be unusual. Other state commissions  have appointees divided between the governor and legislative leaders, but generally  the governor has a clear majority of the appointments and also appoints the chair.   As reported in the Raleigh News and Observer’s Under the Dome,  Governor Pat McCrory does not necessarily appreciate the idea of  legislative leaders controlling the Coal Ash Management Commission.

Recycling Wastewater for Drinking Water — Without a Permit

June 19, 2014. In one of many quick changes over the last few legislative days, Senate Bill 163 (“Protect Landowner’s Water Rights”)  entered the telephone booth of the House Environment Committee yesterday and emerged as an entirely different bill entitled “Reclaimed Water as Source Water”.  The House adopted the new version of S 163 today,  making a significant change to state water quality  and drinking water laws with little debate.

The bill endorses the use of highly treated wastewater, classified under  state water quality rules as “reclaimed” water, to supplement drinking water supplies.  The policy makes sense  under the right conditions.  Treated wastewater  already indirectly supplements  drinking  water supplies; many wastewater treatment plants discharge to streams and rivers that also serve as  water supply sources for downstream communities. State reclaimed water rules also allow direct  use of reclaimed water for many non-potable purposes, including  landscape irrigation, easing demand on the drinking water supply.

Senate Bill 163,  as adopted by the House, goes further and  for the first time allows reclaimed wastewater to be used to directly supplement a drinking water supply. The problem — the bill appears to allow a water system to add reclaimed wastewater to a drinking water reservoir without a water quality permit.  If that is the  effect of the bill, it represents a significant change in the way the state protects the quality of drinking water supplies and  likely conflicts with the federal Clean Water Act.

Under the bill,   “notwithstanding any other provision of law, a local water supply system may combine reclaimed water with source water treated to provide potable water supply”  in an impoundment controlled by  the  water system.  The bill does not define “impoundment”,   but under state drinking water rules an “impoundment” means a reservoir.  That interpretation would also be consistent with  other  Senate Bill 163 language describing the addition of reclaimed water  as occurring before the water goes to the water treatment plant.

An impoundment used as a  public water supply source  would  usually be considered a “water of the state” under water quality laws. Most impoundments  have  been created by damming a river or stream segment to store water for  water supply and continue to release water through the dam to maintain downstream flows.  Wastewater  (even treated wastewater) can only be discharged to a water of the state under a  permit that  insures the discharge  will not result in violation of a water quality standards.  Under G.S. 143-215.1, it is unlawful to:

Cause or permit any waste, directly or indirectly,  to be discharged to or in any manner intermixed with the waters of the State in violation of the water quality standards applicable to the assigned classification.

An impoundment used as a drinking water source has specific water quality standards (adopted in state rules) to protect its  use as a water supply. Discharge of treated wastewater to a water supply source can be allowed,  but only  under permitted limits.  Unfortunately, the “notwithstanding” language in Senate Bill 163  seems to sweep away both the requirements of state  water quality permitting laws and the N.C.  Drinking Water Act.  Nothing in the bill itself requires the addition of reclaimed wastewater to be done under a water quality permit  or in compliance with water quality standards for public water supplies. Instead, the conditions in the bill read like a self-contained set of standards that rely on a 20% limit on the proportion of reclaimed water to total water produced by the impoundment  and a minimum  5-day holding time in the impoundment as a substitute for meeting water quality standards.

If — as it appears — the bill allows discharge of reclaimed water to a “water of the state” without a permit, it also  conflicts with federal  law. Many impoundments that are  “waters of the state”  would also be considered “waters of the United States” under the federal Clean Water Act.  Federal law  makes it unlawful to discharge a pollutant into waters of the United States without a Clean Water Act permit — a requirement that state law cannot waive.

Senate Bill 163 will now go back to the Senate for approval or disapproval of the new  House version of the bill.  If the Senate rejects the House rewrite, the bill will have to go to a conference committee to work out the differences between the two chambers.

If the House did not intend to allow the discharge of treated wastewater to a water supply reservoir without meeting state and federal water quality laws, it would be  helpful to clarify  the bill  before final adoption.

NC Senate Debates New Coal Ash Bill

June 16, 2014. The Senate Agriculture and Environment Committee began debating a revised  version of Senate Bill 729 (Governor’s Coal Ash Action Plan) that makes significant changes to legislation proposed by Governor Pat McCrory. The most important new  provisions  are described below.

End disposal of coal ash in wet impoundments. The bill would prohibit construction or expansion of surface impoundments for disposal of coal combustion residuals (CCRs) after June 30, 2014. The bill requires all electric generating facilities in the state to convert to “dry” fly ash disposal or be retired by December 31, 2018 and to convert to “dry” bottom ash disposal or be retired by December 31, 2019. The bill also sets interim deadlines  for ending CCR disposal and stormwater discharges to surface impoundments at facilities that no longer produce coal combustion residuals.

Groundwater assessment and corrective action. The bill sets timelines for groundwater assessment, survey of drinking water wells, and groundwater corrective action similar to those in the Governor’s Coal Ash Action Plan, but  the bill goes on to  require the corrective action plan to restore groundwater in conformance with the requirements of North Carolina’s groundwater rules. (See, Title 15A NCAC Subchapter 2L).

Structural fill. The bill revises the definition of “structural fill” to allow use of CCRs in mine reclamation and construction of embankments. The bill also sets new standards for structural fill projects. Smaller structural fill projects (those using less than 10,000 tons per acre or less than 100,000  total tons) could be “deemed permitted” without an individual permit review based on meeting design and construction standards set in the bill. For these smaller projects, the bill applies standards  essentially identical to those already in state rules. Larger projects would need an individual permit and be required to meet more stringent design/construction standards including: use of an encapsulating liner system; leachate collection; a cap liner; groundwater monitoring and financial assurance.

In a somewhat confusing turn, the bill then puts a one-year moratorium on some structural fill projects. The moratorium has two  exceptions: 1. projects that meet the new standards for large structural fills (i.e. a liner system, leachate collection, cap liner, groundwater monitoring and financial assurance); and 2. use of CCRs as the base for a public road constructed of asphalt or concrete. As a result, some very large structural fill projects could go forward during the moratorium, but smaller projects would be delayed for additional study of the standards that apply to those projects.

Closure of impoundments. The bill creates a new 9-member Coal Ash Management Commission in the Department of Public Safety and gives the commission final authority over decisions about closure of existing surface impoundments. Six of the nine members would be required to have experience or knowledge of engineering; waste disposal; manufacturing; use of CCRs in structural fill; economic development; and electric co-op management. The other three members would be a state resident (no other qualification required); a doctor or person with public health expertise; and a representative of a conservation organization. More on prioritization and closure:

♦ Prioritization for closure. The bill requires all of the existing coal ash impoundments to be prioritized for closure based on a list of factors in the bill and then ties the risk classification (high, intermediate or low risk) to deadlines for closure and to allowable closure methods.  Although DENR would propose priorities for closure, the Coal Ash Management Commission would make the final decision on prioritization of sites. Since the prioritization factors listed in the bill are not weighted in any way, it is not possible to know how many (or which) sites would fall into each risk category.

♦ Alternatives for closure. Understanding how sites will be prioritized for closure becomes important because low risk sites will be given the option of  dewatering and capping the coal ash in place. The bill also requires the Coal Ash Management Commission to study whether it may be appropriate to allow  some low risk impoundments to  remain in their current condition (without either dewatering or capping) if the CCRs have no contact with groundwater or surface water and the site has returned to a “natural” state. A report on the no further action alternative would be due October 1, 2015. Even if  recommended by the commission, additional legislation would still be needed to authorize use of the alternative.

High and intermediate risk impoundments would have to: 1. convert the surface impoundment to an industrial landfill; or 2. remove all  coal ash to a permitted disposal facility off-site; or 3. remove  all coal  ash for use in structural fill or another beneficial reuse. Conversion to an industrial landfill would require temporary removal and then replacement of the CCRs after bringing the disposal facility up to industrial landfill standards. Those standards generally require installation of a liner system, although  current state rules allow the owner/operator to request approval of a different design that would be equally protective of groundwater. The Senate bill goes beyond existing industrial landfill standards in one way; an industrial landfill created on an impoundment site would require a 300-foot setback from surface waters as compared to the 200-foot setback required for other industrial landfills. The bill also requires high and intermediate risk sites to meet the same closure and post-closure requirements applied to municipal solid waste landfills. Those requirements include post-closure groundwater monitoring and financial assurance.

♦ Role of the Coal Ash Management Commission. The commission would have the final word on both prioritization for closure and approval of closure plans.  The bill  directs the commission to approve  a closure plan only if it finds that the plan meets the requirements of the law; is technologically feasible; “and that the benefits to the public health, safety, and welfare; the environment; and natural resources outweigh the negative impacts on electricity costs and reliability”. Under the last criteria, the commission could reject a closure plan based solely on the cost to the electric utility or impact on reliable power generation. Applying the criteria could be extremely complex and unlike the N.C. Utilities Commission, the new commission will have few resources to put toward cost analysis.  The bill does not require any commission member to have expertise on electric utility cost structures and only authorizes a  staff of four.

Preemption of local ordinances. Using language very similar to the preemption section in the most recent fracking legislation (Session Law 2014-4), the bill would limit the ability of local governments to regulate disposal of CCRs. Although local governments could potentially apply development regulations that apply uniformly to all types of development (such as setbacks and stormwater control standards), the Environmental Management Commission would have the authority to determine whether state law preempts a local ordinance regulation affecting coal ash disposal.

Next steps:  The  Senate Agriculture and Environment Committee did not vote on  the bill today. The committee  noticed another meeting for tomorrow at 11:00 and the bill will be back on the agenda for further discussion and possible amendment then. The bill could go to the Senate floor by the end of the week.

First Legislative Response to CTS Corp. v. Waldburger

June 13, 2014.  The recent U.S. Supreme Court decision in CTS Corp. v. Waldburger  effectively denied the North Carolina plaintiffs the ability to seek compensation for property damage and health problems  caused by contamination of their drinking water wells. As noted in an earlier post, the decision  means that a North Carolina law barring  tort claims filed more than ten years after the last act giving rise to the claim will continue to be a significant obstacle for plaintiffs injured by environmental contamination. [See N.C.G.S. 1-52(16)]

The N.C. House of Representatives quickly responded to the CTS decision with proposed legislation. The House  gutted  a Senate bill on appearance bonds, replacing the original bill language with a provision excluding  some tort claims  “caused or contributed to by the consumption, exposure, or use of water supplied from groundwater contaminated by a hazardous substance, pollutant, or contaminant” from the 10-year  statute of repose in  G.S. 1-52(16).   Yesterday, a  House judiciary committee approved the new version  of Senate Bill 574; with no other committee referrals, the bill can go directly to the House calendar.

The bill would clearly benefit plaintiffs in  some  pending  toxic tort cases  — including  Marines who have  filed suit  over contaminated  drinking water at Camp Lejeune.   Presumably, the bill  intends to preserve the nuisance action filed by the plaintiffs in the CTS case.  The only question may come in interpretation of the bill’s effective date clause; the bill applies the exclusion to a pending  action “if there has been no final disposition with prejudice against that plaintiff issued by a court of competent jurisdiction as to all the plaintiff’s claims for relief to which this act otherwise applies”. The Supreme Court decision in CTS v. Waldburger  confirms the dismissal of the plaintiffs’ entire nuisance action based on the state statute of repose, which would certainly be considered a final disposition. If the intent of the bill is to resurrect the CTS plaintiffs’ claims, the effective date language may need to be clarified.

Unfortunately, the current bill draft does not fix the fundamental problem  created  by a 10-year statute of repose for toxic tort claims because it only provides relief to claimants whose last exposure to  contaminated groundwater occurred on or before June 19, 2013.   The bill  keeps  the 10-year statute of repose for damage claims based on exposure to environmental contamination that continues beyond that date or first occurs after that date. The limited exclusion from the statute of repose sunsets completely in 2023.

The same circumstances that made it impossible for the CTS plaintiffs to bring a damage claim within the 10 year statute of repose still exist — groundwater contamination may only be detected years after the last act that caused the contamination; limited state enforcement resources mean  delays  in fully assessing many contaminated sites; and  some of the health effects of groundwater contamination only develop over decades.  Pending cases don’t represent the universe of environmental contamination injuries in the state. New contamination incidents   continue to be discovered with some regularity as development moves into areas with groundwater contamination from past industrial activity or old waste disposal sites.  As noted in the earlier post, it is not unusual for the last act contributing to property damage or health effects from environmental contamination to have occurred more than a decade before discovery of the problem. As long as those conditions exist,  the  10-year statute of repose will  continue to  prevent people who have been harmed by environmental contamination from seeking compensation for personal injury and property damage.

One more piece of background information. Bloomberg News quoted John Korzen (director of the Appellate Advocacy Clinic at Wake Forest University School of Law, which represented the plaintiffs in the CTS case) as saying that only Connecticut, Oregon, Kansas and North Carolina have generally applicable statutes of repose.

Closing the Courthouse Door on Pollution Victims

June 11, 2014. In a case out of North Carolina, the United State Supreme Court has ruled that a state can  cut off the time allowed for someone injured by environmental contamination to sue the person responsible  —  in many cases, closing off any legal remedy before  the  plaintiff even knows about the contamination and the damage it has caused.  The decision in CTS Corp. v. Waldburger   leaves the plaintiffs in that  case without any recourse against the  company alleged to be responsible for unsafe levels of industrial solvents in their drinking water wells.  But unless either Congress or the N.C. General Assembly acts,  the decision also closes the door on many others injured by  environmental contamination.

The facts (as stated in the lower federal appeals court decision).  CTS operated an electroplating facility on Mills Gap Road in Asheville, N.C. from 1959 to 1985 and used a number of toxic chemicals in the manufacturing processes including trichloroethylene (TCE), cyanide, chromium VI and lead. In 1987, CTS sold much of  the 54-acre site to a realty company that in turn sold  the property for residential development.  Twelve years later,  plaintiffs David Bradley and Renee Richardson learned that their home drinking water well  had high levels of two solvents,  TCE and cis-1, 2-dichloroethane (DCE),  associated with increased cancer risk and other health effects.    In 2011,   Bradley, Richardson and 23 other property owners filed a nuisance action against  CTS   seeking  remediation of  the contamination and damages for current and future harm  including reduced property values and potential health impacts.

The legal issue.   Under North Carolina law, there is a three year statute of limitation for personal injury or property damage claims ( in legalese, “torts”).  The statute of limitation only begins to run after the plaintiff knows or should have known of the injury.  But the same law  bars the filing of a tort  claim more than 10 years  after the  last act of the defendant that gives rise to the damage claim  even if the plaintiff did not know of the injury until later.  This kind of outer limit on  tort claims, known as a “statute of repose”,   cannot be suspended even for good cause.  Although the plaintiffs in the CTS case filed suit within three years after first learning of the well contamination as required by the statute of limitation, CTS Corporation’s  “last act” had been the sale of the Mills Gap Road property in 1987 — 22 years earlier. In federal district court, CTS successfully moved to dismiss  the plaintiff’s nuisance action based on  North Carolina’s 10-year  “statute of repose”.

The issue on appeal was whether the federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA)   preempts  the state’s 10-year “statute of repose”.   CERCLA sets a federal  framework for response to environmental contamination  caused by hazardous substances,  but Congress  elected to rely on state  laws to provide a remedy for individuals harmed by environmental contamination.   Since environmental  contamination can go undetected for long periods of time and cause injury — such as cancer — that only develops  over  decades,  CERCLA provides that the time allowed to bring a  claim under state tort  law only begins to run when the plaintiff learns or should have learned  of the damage or injury.  CERCLA  § 9658  expressly preempts state laws that use a different starting point for time limitations on  toxic tort claims.

The U.S. Supreme Court decision. The Fourth Circuit Court of Appeals  concluded  that  CERCLA § 9658 preempts both  statutes of limitation and statutes of repose, allowing the plaintiff’s lawsuit against CTS to go forward. The U.S. Supreme Court (after a long discussion of  the differences between statutes of limitation and statutes of repose and the history of CERCLA § 9658) reversed the  appeals court decision and held that CERCLA § 9658 only preempts statutes of limitation.  As a result, North Carolina’s  10-year statute of repose bars property owners near the CTS site from suing the company for  contamination of their drinking water wells. One of the two dissenting U.S. Supreme Court justices, Stephen Breyer, noted the clear implication of the CTS decision, saying that it

 allows those responsible for environmental contamination…to escape liability for the devastating harm they cause, harm hidden from detection for more than 10 years. Instead of encouraging prompt identification and remediation of toxic contamination before it can kill, the Court’s decision gives contaminators an incentive to conceal the hazards they have created until the repose period has run its full course.

Others affected by the CTS decision.   There have been a number of contamination incidents in North Carolina that follow the pattern of late discovery and delayed understanding of human health effects. Two examples:

U.S. Marine Corps Base Camp Lejeune.  In 1982, the Marine Corps discovered  that drinking water from two of the eight water treatment plants on base had high levels of contaminants.   The Tarawa Terrace water system had high levels of  the dry-cleaning solvent PCE (perchloroethylene or tetrachloroethylene).  PCE has been associated with increased cancer risk;   kidney and liver damage; and  reproductive effects.  (The PCE came from an off-base dry-cleaner that had improperly handled its waste.)    The Agency for Toxic Substances and Disease Registry (ATSDR) has estimated that PCE concentrations in water produced by the Tarawa Terrace water treatment plant exceeded the current federal drinking water standard for much of the 30-year period between  November 1957-February 1987. The most contaminated wells were shut down in February 1985.

In 1985,  Camp Lejeune  also  confirmed contamination in wells supplying  the  Hadnot Point water treatment plant.  The primary contaminant was TCE,  but testing also showed elevated levels of  PCE, benzene and other chemical compounds  produced by degradation of TCE.   The Hadnot Point well contamination came from several different sources —  leaking petroleum underground storage tanks, industrial  spills, and old waste disposal sites. ATSDR  has estimated that water from the Hadnot Point system  exceeded current drinking water standards  for at least one contaminant  from  August 1953 until  January 1985.

Between 500,000 and 1 million Marines and family members may have been exposed to contaminated drinking water at the base before the contaminated wells were shut down in 1985.  Information about the contamination and its possible health effects developed slowly.   ATSDR just published the results of a health  study  of Camp Lejeune Marines on February 19, 2014. The study, reported in Environmental Health,  found a 10% higher incidence of certain cancers among Marines stationed at Camp Lejeune  between 1975-1985 as compared to Marines stationed at Camp Pendleton during the same time period.

Nearly 30 years went by between the initial contamination of the Camp Lejeune wells and discovery of the contamination in 1982. Another 30 years  passed between closure of the most contaminated wells and development of information  on  the potential health effects on a large, but transient, population of service members and their families.  Given the many different parties potentially involved — the owners and operators of several different contamination sources and the Marine Corps  as the water system operator — it may be difficult to pinpoint the timing of every “last act” contributing to injury.  But given the 60-year history of events at Camp  Lejeune, the CTS decision may well remove any legal remedy for Marines harmed by the drinking water contamination.

Stony Hill Road TCE Contamination, Wake Forest. In 2005, the Wake County Health Department found TCE in a drinking water well serving a home on Stony Hill Road in Wake Forest.  DENR’s Division of Water Quality tested six nearby wells, but  found no additional contamination.  The the  one contaminated well was closed and DENR  shifted its efforts to finding the person (or company) responsible for the contamination. Soil tests suggested that a property next door to the one contaminated well  had been the  source of the TCE contamination; two  circuit board assembly companies had operated on the property.  When DENR received no response to repeated requests  for the   owner  to  assess the extent of the groundwater contamination coming from the property,  DENR initiated another round of state well  testing in 2012. The 2012 tests revealed another contaminated well, triggering a broader  well testing program carried out with the help of the U.S. Environmental Protection Agency. The 2012 tests  ultimately found TCE in 21 residential wells; 14 wells  had levels of TCE over the federal drinking water standard.

Seven years had passed between identification of the first contaminated well on Stony Hill Road and confirmation that  contamination had spread to nearly two dozen other wells.  Since the 2005 testing found only one contaminated well located immediately next door  to the likely contamination source, Stony Hill Road had been considered low risk and fell down the list of hazardous sites competing for  the attention of  DENR’s  Inactive Hazardous Sites program. The state’s Inactive Hazardous Sites Act, N.C. General Statute 130A-310 et seq.,  also has weaknesses that  make it possible for a polluter to simply wait  — taking no action to fully assess and remediate contamination until DENR forces the issue through an enforcement order.  Given limited state resources and a need to prioritize sites based on known risk,  ten years can easily go by before  a contamination incident is fully assessed.

Response to the CTS decision. The U.S. Supreme Court decision dealt with a narrow issue — interpretation of  the CERCLA provision on statutes limiting the time to file a damage claim based on environmental contamination. Seven justices concluded that Congress had not intended for the provision to affect state statutes of repose; the two dissenting justices disagreed.  Congress has the power to make the intent of the federal law more clear and remove any doubt about the impact on statutes of repose. Closer to home, the N.C. General Assembly has the power to amend state law to remove the 10-year limitation on damage claims arising out of environmental contamination. Otherwise, North Carolina citizens will continue to be caught in a Catch-22 — too few state resources to insure  that people potentially damaged by environmental contamination will  know  in time to use the legal remedies available and state laws that encourage polluters to wait until the clock runs out.

N.C. House Budget 2014: Environment

June 10, 2014. An earlier post described how the N.C. Senate’s proposed budget would affect environmental programs. The N.C. House released its budget proposal today. Here are some of the areas of agreement (likely to survive in the final budget) and disagreement (potential negotiating points.

Agreement:

♦  Diversion of  interest income from a number of special funds managed by the Department of Environment and Natural Resources (DENR) to the state’s General Fund where the revenue can be used for other purposes.  Many of the special funds were created to  pay for  cleanup of environmental contamination and have been chronically underfunded. See the earlier post on the Senate budget for more detail on the special funds affected by the change.

♦ Higher fees for commercial fishing licenses; recreational fishing  licenses involving use of commercial gear;  shellfish licenses; and fish dealer licenses.

♦ Appropriation of approximately $1.8 million for 23 additional positions in DENR to address coal ash sites.

Differences:

♦ The House provides no funding for acquisition of property around Oregon Inlet and Highway 12 on the Outer Banks — the largest new appropriation ($15 million) in the environmental section of the Senate budget. See the earlier post for more on the Senate’s special budget provision  on use of those funds.

♦ The House budget provides no funding for another Senate priority– resources for DENR to do  additional geologic/geophysical analysis of shale  basins in the state;  digitize existing data on shale gas resources;  perform chemical analysis on  gas wells; and  market the state’s shale gas resources to oil and gas companies.

♦ A special provision in the Senate budget specifically prohibits the state Division of Marine Fisheries from entering into a joint enforcement agreement with the National Marine Fisheries Service. The House budget directs the Division of Marine Fisheries to do exactly that.  (A joint enforcement agreement would authorize state marine patrol officers to enforce federal as well as state fisheries regulations and make the state eligible for federal funding to support joint enforcement activities. The idea has long been opposed by the state’s commercial fishermen.)

♦ The budget adopted in 2013 required DENR to combine the Division of Water Quality with the Division of Water Resources and identify $2 million in savings as a result of the reorganization. The House has proposed to modify that provision by allowing DENR to meet the $2 million  “management flexibility” reduction department-wide rather than through cuts to the water programs alone. It isn’t clear how much impact the change would have; DENR has already made significant cuts to the water programs and early on indicated an intent to reduce the water quality/water resources budget by double the $2 million required by the budget provision.

N.C. Senate Budget 2014: Environment

The most significant changes:

Oregon Inlet. The single largest allocation of new money ($15 million) would fund an effort to acquire  federal lands surrounding Oregon Inlet and the erosion-threatened  segment of N.C. Highway 12 on Hatteras Island.  The lands targeted for acquisition now make up parts of  Cape Hatteras National Seashore and Pea Island National Wildlife Refuge.  The newly acquired lands would be designated as a state park, but the special budget provision tied to the funding describes the purpose of the acquisition as managing “existing and future transportation corridors” on the Outer Banks.  An earlier post describes the cost (as of 2013) of maintaining Highway 12  in the face of high erosion rates and inlet movement.

Continuing  erosion and storm damage have  made it increasingly difficult to maintain Hwy  12 within the  original right of way.  Going outside the right of way means working on federal lands. The National Park Service and federal wildlife refuge  managers have worked with the state to reach agreement on a number of  previous Hwy 12 maintenance and relocation projects, but conditions have now deteriorated to the point that future projects could involve much more significant impacts to lands in the national seashore and wildlife refuge. Some of the proposed maintenance and relocation options for Hwy 12 also conflict with  the conservation purposes  of the federal  lands.  Management plans for national seashore and wildlife refuge give high priority to maintaining a natural, unobstructed shoreline and  protecting wildlife habitat.

The bill directs the state Department of Administration to begin negotiating an agreement to acquire the federal lands by purchase or exchange of state land for federal land. If efforts to negotiate an agreement fail, the bill directs the department to begin  efforts to acquire the lands by condemnation next year,  Not surprisingly,  the budget provision allows use of some of the funding for litigation expenses. The budget cobbles together the $15 million allocation by transferring a total of  $7 million  from two specific  DENR  fund accounts ($3.5 miilion from each);  appropriating $5 million in new money;  and earmarking an additional $3 million in capital reserves.  One of the two DENR fund accounts  appears to be a Marine Fisheries fund for license revenue;  the budget provision identifies the  fund by  number and  title (the “Advanced License Sales Fund”).

The bill also has language (similar to a provision in the Senate regulatory reform bill) authorizing the Governor to  waive  state coastal development permits and environmental impact statements for projects needed to maintain transportation access to Hatteras Island. As noted in an earlier post, waiver of state environmental review may not actually shorten the permitting process –the Governor’s action cannot affect  federal permits needed for the Hwy 12 projects  and  the state and federal permit reviews have been coordinated for many years to streamline  review. On the other hand, waiving state permits for the project will remove any influence the state might otherwise have on the federal permitting process — taking state environmental permitting staff out of the negotiation entirely,

Coal  Ash. The Senate has proposed to appropriate $1.75 million to DENR to support activities related to regulation of coal ash, including 23 new staff positions. The staff positions would be allocated among the Division of Energy, Mineral and Land Resources (7 total positions – 2 in stormwater and  5 in  dam safety); Division of Waste Management (2 positions); Division of Water Resources (8 positions) and the DENR Secretary’s Office (6 positions). Funding is contingent on passage of Senate Bill 725 (Governor’s Coal Ash Management Act) or similar legislation,

Shale Gas.  The Senate budget appropriates an additional $1.17 million dollars for shale gas activities. Most of the funding ($973,324) would be used for additional geological and geophysical analysis of the shale basins in the state. The remaining funds have been identified for marketing and promoting  the state’s shale gas resources ($100,000); digitizing data ($50,000); and doing more chemical analysis of gas wells  ($50,000).

Transferring Interest Income from DENR Special Funds. DENR has a number of interest-bearing special funds. Some were created to provide a  source of revenue for conservation programs; others receive a combination of fees and tax revenues to fund cleanup of environmental contamination. The Senate budget would transfer all of the interest earned by these funds to the state’s General Fund, reducing the funds available for the originally intended purpose and allowing the legislature to reallocate the interest income for other uses. The conservation  funds affected include the Clean Water Management Trust Fund; the Marine and Estuarine Resources Conservation Fund; the Ecosystem Restoration Fund; the Parks and Recreation Trust Fund; and  the N.C. Marine Resource Fund.

The environmental cleanup funds affected by the transfer of interest income include the Dry-Cleaning Solvent Cleanup Fund;  the Commercial Underground Storage Tank Fund;  the Non-Commercial Underground Storage Tank Fund;  the Inactive Hazardous Sites Fund; the Bernard Allen Emergency Drinking Water Fund;  and a fund supporting the state  Brownfields program for redevelopment of contaminated sites.  Some of the special funds receive revenue from fees and taxes  imposed on a particular commercial activity (such as dry-cleaning and operation of petroleum underground storage tanks)  to address contamination associated with the activity. The proposed transfer would  allow use of the interest income on those fees and taxes for unrelated purposes.

The state Brownfields program (which assists in the redevelopment of contaminated sites)  operates entirely on federal  funds and fees paid by the prospective developers.  The program receives no state appropriations, so the special fund provides the only source of operating funds.  A number of the  environmental cleanup funds (including the Commercial UST Fund) have been chronically underfunded and transfer of the interest income will only further reduce the resources available for assessment and cleanup of contamination.

Marine Fisheries. It is hard to find a plan behind the many changes to the marine fisheries budget. The bill increases a significant number of commercial and recreational fishing  license fees and fees for fish dealers, while slightly  reducing  fees for commercial fishing vessels.  The budget reduces  funding for fisheries conservation by transferring interest income from several special funds to the General Fund and transferring $3.5 million from one  license fee fund account to  a fund  to acquire property on the Outer Banks.  At the same time, the bill eliminates  appropriations for  the At-Sea Observers program (necessary under a state-federal agreement keep some N.C. fisheries open by monitoring the impact on  endangered sea turtles) and shifts  the costs of the program to license fee revenue.  The bill also directs a portion of the higher commercial fishing fees to a new  Commercial Fisheries Resource Fund. The result of all of the moving pieces seems to be higher fees, reduced appropriations, and at the same time a transfer of fisheries fee revenue to other purposes.

2014 Regulatory Reform

May 21, 2014. Yesterday, the Senate Agriculture and Environment Committee approved a 62-page regulatory reform bill that many committee members did not see until it was handed out at the beginning of the committee meeting.  Today, the Senate Finance Committee  gave  Senate Bill 734  (Regulatory Reform Act of 2014) a favorable report and the bill will go to the Senate floor tomorrow for an initial vote. Some of the most significant environmental provisions:

More legislative review of environmental rules.   In 2011, the General Assembly, returning to an idea from the 1980s,  put strict limits on  adoption of state environmental rules that are more stringent than federal rules on the same subject.  The   law  has  exceptions only for rules needed  to address a “serious and unforeseen threat to public health, safety or welfare” and rules required by state law, federal law, state budget policy or a court order.   (An earlier post  talks about  the practical difficulties and policy implications of  chaining  state environment standards so tightly to federal rules.)   Section 1 of Senate Bill  734  goes another step and  requires legislative review of  any  rule adopted under one of the  exceptions, possibly delaying the effective date of the rule for months.   The state’s Administrative Procedures Act normally requires legislative review of a rule only if 10  or more people send letters objecting to the rule.  Under Senate Bill  734,  ten letters of objection would still be needed to  get  legislative review of  a rule change that weakens environmental standards, but  the legislature would  automatically review any rule that  goes beyond minimum federal environmental standards.

Eliminate citizen appeals of toxic air pollution  permits. Sec. 2.2 limits citizen appeals of air quality permits to  decisions  involving a national ambient air quality standard. The problem is that “national ambient air quality standard” does not even cover the universe of federal air quality rules.  National ambient air quality standards cover six pollutants  (carbon monoxide,  lead, nitrogen dioxide, sulfur dioxide, particulates, and ozone) that cause environmental and health problems when levels  reach a certain level in outdoor air.   But the Clean Air Act  also regulates a much longer list of  hazardous air pollutants or “air toxics”  associated with   cancer risk, infertility, birth defects  and other acute environmental and health effects. Mercury and benzene are examples of air toxics.  There are no national ambient air quality standards for air toxics; those pollutants are regulated under a different set of rules that require  a high level of pollution control on every regulated air toxic source. As  written, Senate Bill 734 would   bar  citizen appeals of  air quality permits issued for facilities that emit air toxics.

Emergency Authority to Waive Coastal Development Permits. Sec. 2.5 gives the governor the authority to waive Coastal Area Management Act (CAMA) permits and environmental impact statements  for emergency repairs to a highway “that provides the sole road access to  an incorporated municipality or an unincorporated inhabited area bordering the Atlantic Ocean or any coastal sound, where bridge or road conditions as a result of the events leading to the declaration of the state of emergency pose a substantial risk to public health, safety, or welfare”. The description fits Highway 12 in Dare County — the  perennially endangered road on  Hatteras Island. (See an earlier post for the history – and cost — of maintaining Highway 12.) The idea of waiving state permits for rebuilding damaged segments of Highway 12 after a storm has some appeal — but may not have the desired effect. Aside from eliminating any state review of  project  impacts, waiving the CAMA permit only puts the  U.S. Army Corps of Engineers entirely in  control of the permitting process.

Environmental Audits/ Self-Reporting. Sec. 3.6   of the bill does two significant things: 1. Protects internal company  environmental “audits” from disclosure to regulatory agencies; and 2.  Provides immunity from civil penalties to a company that voluntarily self-reports a violation.

Limited immunity from penalties can make sense if limited to situations where the violator has  self-reported a recent, unintended violation. The Senate Bill 734 audit/self-reporting provision has not been limited to those situations and potentially provides the benefit of confidentiality and immunity to violators who have committed  longstanding, continuing violations of environmental laws. Under the bill, the violator can use a recent environmental audit to cover numerous  past  violations and acquire immunity by “self-reporting” those violations.  Although the bill does not give immunity for willful and intentional violations or violations resulting from criminal negligence, it would deny regulators access to internal environmental audits that may document  the intentional behavior.  In the worst case, the provision could be a gift to violators who gambled for years on their ability to evade enforcement.

It is difficult to ignore the implications for   violations  at coal ash impoundments. Under the bill, a company  inspection of a coal ash impoundment could be treated as  a confidential “environmental audit” and  withheld from state regulators. And the owner/operator of the coal ash impoundment   may  get immunity from civil penalties by  self-reporting violations that had gone on for years.

Other sections of the bill incorporate legislation  recommended by the Environmental Review Commission (described here).  Senate Bill 734 actually goes beyond the ERC recommendation on isolated wetlands and proposes to eliminate permit review of  isolated wetlands impacts of less than an acre in both the eastern and western parts of the state.  The bill  continues a recent pattern of  weakening  open burning  rules by limiting local government authority to regulate open burning.  The bill also proposes to shift rulemaking authority for the waste management and drinking water programs from the Commission for Public Health to the Environmental Management Commission.

2014 Shale Gas Legislation

Note: The original  post has been updated to reflect the fact that a new bill draft presented in committee today added a section authorizing the issuance of permits for hydraulic fracturing effective July 1, 2015. 

May 20, 2014: In what has become an annual rite of spring, the N.C. Senate has introduced another bill on oil and gas exploration and development. Some highlights of Senate Bill 786 (Energy Modernization Act):

Fracking Rules. The bill extends the deadline for  adopting rules on hydraulic fracturing from October 1, 2014 to January 1, 2015. The extension gives the Mining and Energy Commission   (MEC) more  time to  consider public comment on draft rules and finalize the standards.  The bill  also  exempts the fracking rules from Administrative Procedure Act provisions that would otherwise prevent the rules from going into effect until mid-June 2016. The changes would allow  the rules to become effective in 2015 (assuming the legislature approves the rules) .

Allow Issuance of Permits for Hydraulic Fracturing Beginning July 1, 2015. A new version of the bill presented in committee today added a section authorizing the Dept. of Environment and Natural Resources to begin issuing permits for natural gas production using horizontal drilling and hydraulic fracturing on July 1, 2015.  Shale gas legislation enacted in previous legislative sessions had prohibited issuance of permits until the state had rules in place to regulate hydraulic fracturing. This provision authorizes DENR to begin issuing permits on a date certain without regard to the status of the proposed rules.

Trade Secrets. The Senate wades back into the controversial issue of  “trade secrets”.  In 2013, oil and gas industry giant Halliburton lobbied both the Mining and Energy Commission (MEC) and the legislature to allow the industry to withhold  “trade secret” information about chemicals used in hydraulic fracturing  from state regulators unless needed to respond to an emergency.  Earlier posts describe the previous (failed) attempts to legislatively resolve the tension between protecting trade secrets and making timely information available to doctors and first responders in an emergency.

Senate Bill 786  would require oil and gas companies to disclose  all of the chemicals used in hydraulic fracturing fluid to DENR, but protect  trade secret information from public disclosure.  The trade secret information would be maintained  by the State Geologist (a position in DENR) and protected from public disclosure under confidentiality provisions in the N.C. Public Records Act.  The bill would allow the State Geologist to provide the information to emergency  or medical personnel  if  needed to respond to an emergency. Up to this point, the bill follows a  common approach to balancing protection of trade secret information  with  emergency response needs.

The new controversy concerns penalties in the bill for unauthorized disclosure of  oil and gas industry trade secrets. First, the bill allows the owner of  the trade secret to require a doctor or fire chief receiving the information for emergency response purposes  to enter into a confidentiality agreement that may set out remedies  for breach of the agreement including “stipulation of a reasonable pre-estimate of likely damages”.  Without any further explanation of how the stipulation would be used, it  sounds  like a stipulated penalty that could make it unnecessary for the company  to establish  actual economic damages in court.

The bill also makes unauthorized disclosure of an oil and gas industry trade secret  by any person  a Class I felony if the person knew  the information was a trade secret. (Class I felonies carry a presumptive sentence of 4-6 months — but you may be eligible for community service or supervised probation.)  By contrast,  current state law protecting trade secrets does not impose a  criminal penalty for  unauthorized disclosure, unauthorized acquisition or even unauthorized use of trade secret information.  G.S. 66-154  provides civil remedies and allows recovery only of “actual damages…measured by the economic loss or the  unjust enrichment caused by misappropriation of a trade secret”.  Aside from  questions about the  reasonableness of the penalties proposed in Senate Bill 786,  it is clear that the bill creates  much more severe penalties for disclosure of  oil and gas industry trade secrets  than state law imposes for  unauthorized disclosure or use of  other types of trade secrets.

Well Drilling Fees.  The bill reduces the well drilling fee from $3,000 per well to $3,000 for the first well and $1500 for additional wells on the same well pad.

Notice of Oil and Gas Activity. Section 11  of Senate Bill 786 adds a new requirement that the company holding lease rights for oil and gas must provide 30 days notice to the owner of the surface property  before starting exploration, development and production activity.

Pre-Drill Water Testing/Presumption of Liability for Contamination. Section 12  of the bill would  amend the law requiring pre-drilling tests of water supply sources located within  5,000 feet of the  proposed wellhead by limiting the testing to water supplies within a  one-half mile (2,640-foot) radius  around the proposed wellhead.  A corresponding change to G.S. 113-421 would reduce  the area  where  a presumption of oil/gas operator liability for water supply contamination would apply — from  the current 5,000 feet to the same 1/2 mile radius around the wellhead. 

Restrictions on Local Ordinances Prohibiting Oil and Gas Activity.  Section 13  of the bill repeals any past local acts  or resolutions of the General Assembly prohibiting well siting, horizontal drilling or hydraulic fracturing  in specific localities. The bill then preempts local ordinances that have the effect of prohibiting oil and gas exploration and production,  horizontal drilling and hydraulic fracturing. An  oil/gas operator  could challenge a local ordinance as preempted under the law by filing a petition with the Mining and Energy Commission.   The bill creates a presumption that general  development  conditions in local zoning and land use ordinances   (such as buffers, setbacks and stormwater requirements) will continue to be valid unless the MEC  finds otherwise. To preempt a local ordinance, the MEC  would have to find that: 1. The ordinance would prohibit oil and gas activities; 2. The oil/gas operator has received all  necessary state and federal approvals (unless the only reason for denial was inconsistency with the local ordinance); 3. Local residents and elected officials had an adequate opportunity to participate in the permitting process; and 4. The oil and gas activities will not pose  “an unreasonable health or environmental risk” to the surrounding locality,  the operator will take reasonable measures to reduce foreseeable risks, and the operator will comply with local ordinances to the maximum extent feasible. This section of the bill seems to be modeled on a similar preemption  law concerning  the  siting of hazardous waste facilities.

Ban on subsurface Injection of drilling wastes.   The N.C. Senate has previously proposed to amend an existing state law prohibiting underground injection of waste to allow subsurface disposal of oil and gas drilling waste.  The earlier proposals ran into strong opposition from members of the Mining and Energy Commission as well as the public. In Section 14, Senate Bill 786 abandons the effort to authorize subsurface disposal of drilling waste and instead reinforces the existing prohibition on underground injection of waste found in G.S. 143-214.2.

Compliance review for oil and gas permit applicants. Section 14 also creates an environmental compliance review  for oil and gas permit applicants. The compliance review will cover at least the previous five years.  For business entities, the compliance review  will extend to any parent company, subsidiary, or other affiliated entity; a partner, officer, director, member or managing director; and any other person with a direct or indirect interest in the company (other than a minority shareholder in a publicly traded corporation).  The bill allows DENR to deny an oil and gas  permit based on a past history of significant or repeated violation of statutes, rules, orders or permit conditions.

Trespass.  The bill protects workers collecting seismic or other geophysical data from trespass claims as long as they do not physically enter private land without consent. Seismic surveys  use  sound waves to  characterize subsurface geology and identify potential oil and gas reserves. The survey team generates  sound waves  on one side of the  target area  (by setting off small explosive charges or using trucks specially outfitted to create vibrations); geophones record the waves on the other side of the target. The intent of the bill is to prevent trespass claims based on movement of  the seismic waves under surface properties  the workers do not physically enter. The  company conducting the  seismic testing  would still be liable for any physical or property damage caused  to the surface property.

Severance Tax. Section 16 of the bill creates a new severance tax for oil and gas.  Others with expertise in severance  taxes  and oil/gas industry revenues will have to provide the in-depth analysis. One quick observation:  The bill  appears to prohibit cities and counties from imposing any taxes on the oil and gas industry other than property taxes.

Miscellaneous. In a provision unrelated to oil and gas, the bill caps city and county property tax revenue at an 8% increase over revenue received the previous year.

The bill requires  a number of new studies, including a  feasibility study for  a liquified natural gas export terminal on the N.C. coast.

Beyond Coal Ash – Other Environmental Bills

For those of you making scorecards and tracking sheets for  2014 legislation, a list of other bills on energy and the environment filed  so far; some  bills have already  been  introduced in both chambers:

Environment. The first six bills listed below   were recommended by the House/Senate Environmental Review Commission (ERC).    The last, House Bill 1105,  came out of a House/Senate legislative study commission on land development.

House Bill 1081 (Senate Bill 765)  addresses several  concerns about  state and local permit review of engineering plans.  An engineer submitting an innovative design proposal to a state or local permitting agency will have the opportunity to elevate the  permit review to a supervising engineer.  The bill also allows the permitting agency to charge the applicant for a third-party engineering review if the agency does not have a staff engineer qualified to review the innovative design.  The bill makes other less significant changes. The bill requires  permit reviewers to clearly distinguish necessary design changes  from suggested changes and  cite the law or rule that makes a design change necessary for permit  approval. The bill also directs permitting agencies to review working job titles for permit reviewers  to insure only PEs have “engineer” job titles. For more on the history of these proposals, see an earlier post.

House Bill 1057 (Senate Bill 757)  requires the Department of Environment and Natural Resources (DENR) to study several  issues related to transfer of water from one river basin to another  or “interbasin transfer” (IBT):  1.  Whether  temporary and emergency interbasin transfers, including transfers to relieve water shortages caused by drought, should be regulated differently  than long-term interbasin transfers; 2. Whether interbasin transfers between river sub-basins should be regulated differently  than interbasin transfers between major river basins. and 3. Whether there are types of interbasin transfers that should be exempt from state approval or  other regulatory requirements.

Interbasin transfers  usually  involve piping water from a drinking water source in one river basin to  a water system in another, although some large water systems cross river basin boundaries  and need an IBT just to serve  system customers. An  IBT  of  2 million gallons per day or more requires a certificate of approval from the Environmental Management Commission (EMC). Rather than using the boundaries of the  17 major state river basins,  the  IBT law requires  a certificate for any transfer among  38 sub-basins.  Over the last seven years, a series of legislative changes have made the IBT approval process increasingly difficult.   The House and Senate IBT bills signal an interest in reexamining some of the restrictions.

House Bill 1058 (Senate Bill 756) directs the General Assembly’s Program Evaluation Division (PED) to study: 1.  the benefits of combining water and sewer systems into larger, regional entities; 2. potential incentives for systems to merge; and 3. the possibility of  allowing one system to apply for grants  on behalf of  a less efficient  system  based on a commitment to purchase, interconnect  or enter into a joint management agreement with the less efficient system. The idea of encouraging merger of  small water systems and wastewater  systems into larger, more efficient utilities  has popped up in just about every legislative session for a decade or more.  The biggest obstacles tend to be local resistance and the financial burdens  associated with the takeover of  a small, inefficient system often badly in need of capital investment.  The last of the three PED study issues (allowing one system to apply for grants on behalf of a system targeted for takeover) may be focused on removing the financial disincentives.

Senate Bill 737 (Amend Isolated Wetlands Regulation). “Isolated wetlands”  fall outside the federal Clean Water Act permitting program for wetland impacts because the wetlands do not have a connection to navigable waters.  (Congress adopted the Clean Water Act  under its  authority to regulate interstate commerce and  limited federal regulatory jurisdiction to navigable waters used in interstate commerce.)   In response to pressure from realtors and developers to eliminate state  protection of isolated wetlands,  S737  allows additional  impacts  to isolated wetlands without  prior state permit review.  State water quality rules  now allow  development impacts  to  isolated wetlands below specific thresholds to be “deemed permitted”.  S737 raises those thresholds from 1/10th of an acre to 1/3 of an acre west of Interstate 95 and from 1/3 of an acre to 1 acre east of Interstate 95.  (I-95 has long been used as the  dividing line between the wetter eastern counties and drier piedmont/western counties.)  DENR has expressed concern that raising the  threshold to 1 acre east of I-95 will effectively eliminate review of projects impacting isolated wetlands in the eastern part of the state. S737 also reduces the amount of mitigation required for isolated wetland impacts (from a 2:1 ratio to 1:1) and eliminates the  practice of giving more mitigation credit for creation or restoration of wetlands  than  for preservation of existing wetlands.

Senate Bill 738 (Clarify Gravel Under Stormwater Laws). In 2013, the N.C. Homebuilder’s Association successfully lobbied for legislation directing  the state stormwater  program to  treat gravel areas as “pervious” (meaning the surface allows water to percolate through to the soil beneath) and exclude  them  from the calculation of built-upon area on a development site.  The amount of built-upon area determines the level of stormwater control required for the project, so excluding gravel areas from the calculation  potentially  reduces stormwater costs.  The 2013  provision  (included in  Session Law 2013-413)  also directed the ERC to study “how partially impervious surfaces are treated in the calculation of built-upon area under [the stormwater] programs”.    Ironically, the ERC study found: 1.  no consensus on  the definition of  “gravel”; and 2. evidence that permeability is a function of several factors, including the nature of the substrate and method of installation as well as the surface material itself.  Instead of further weakening stormwater control requirements,   the  ERC bill recommends repeal of the 2013  provision declaring  gravel areas to be pervious and  funds a study of the permeability of different surface materials to be done by the North Carolina State University Department of Biological and Agricultural Engineering.

Senate Bill 734  (Authority to Adopt Certain Ordinances).  The  Regulatory Reform Act of 2013 (Session Law 2013-413)  put  a one-year moratorium on local environmental  ordinances and directed the ERC  to study  local authority to adopt environmental ordinances. The  moratorium/study  provision represented a compromise  between the House and the Senate after the Senate  passed  a bill (Senate Bill 112) putting significant restrictions on local environmental ordinances.

An ERC working group looked at the issue  of local authority through the lens of actual conflict between local ordinances and state or federal environmental  rules.  The legislators identified only one  conflict — local ordinances on use of fertilizers regulated by the N.C. Department of Agriculture and Consumer Services.  Based on the working group recommendation, the ERC  proposed  a limited bill addressing state  versus  local authority to regulate fertilizer use. The bill also  directs  DENR and the Department of Agriculture to  report back in  November 2014  and again one year later on any  local ordinances that  “impinge on or interfere with” state rules.  Supporters of S112   almost certainly want something more.  It seems clear the intent of S112 was to prevent  local government from imposing  additional environmental requirements on developers  and not simply  to avoid conflict with state rules.

House Bill 1105  amends the section of the  state Sedimentation Pollution Control Act that allows DENR to delegate  authority to a local sedimentation program. The amendment transfers responsibility for enforcement of previously approved erosion and sedimentation control plans from DENR to the local government when DENR approves a local program.

Energy

House Bill 1055   would appropriate a total of  $5 million to North Carolina State University and UNC-Charlotte  for research on renewable energy, energy storage, and coal ash reuse.  The bill sponsor,  Rep. Mike Hager,  spent much of the 2013 session   in an unsuccessful effort  to repeal  the state’s renewable energy portfolio standard (REPS).  (You can find the first of several  posts on the 2013 REPS repeal bill here.)  Some of the 2013 combatants  have already signaled an intent to  continue the battle for  repeal  of the REPS standard.    That  very fresh legislative history makes  Rep. Hager’s  proposal to  fund research on renewable energy  somewhat surprising.

Senate Bill 786, (The Energy Modernization Act).  The bill proposes so  many changes to state law on  oil and  gas exploration and development that it merits a separate  post. (To follow.)