Category Archives: Water

Discussion of water pollution, water supply and the law of water rights

Environmental Legislation 2018: Part 1 – The Budget

July 9, 2018. An overview of 2018 state budget provisions affecting the environment:

♦ The budget provides funds to monitor water bodies for GenX and other per- and poly-fluoroalkyl  substances (PFAS). The budget bill also gives the Governor a new authority to stop releases of  PFAS albeit one not very practical to use.  See an earlier post for a detailed description of the GenX budget provisions.

♦ The budget directs up to $2 million to Speedway Motor Sports for environmental remediation at Charlotte Motor Speedway. The state funding will need to  be matched 2:1 by funding from other sources.   Half of the revenue from N.C.’s solid waste disposal tax goes to assess and cleanup contamination associated with landfills that pre-dated 1983 environmental standards for waste disposal; one of these “pre-regulatory” landfills is located in the infield of  Charlotte Motor Speedway.  The law governing the remediation program requires DEQ  to prioritize work on the old landfill sites based on risk to human health and the environment and it isn’t clear how the Charlotte Motor Speedway  ranks under the priority factors.  The budget provision may be intended to accelerate  (sorry!) remediation of the Speedway landfill  by immediately providing state funding, but conditioned on Speedway Motor Sports providing matching funds which  is not normally required under the remediation program. 

♦ The 2018 budget continues the legislature’s recent practice of bypassing the infrastructure  grant program in DEQ to direct water and sewer funds to specific projects.  In the normal grant process, DEQ and the State Water Infrastructure Authority allocate infrastructure funds under priority criteria that take into consideration a number of environmental, public health and financial factors. The budget bill diverts $2.5 million from the competitive  grant program  to projects in the towns of Richlands, Mount Airy,  Bath and Trenton. The amount per project varies from $201,000 to over $1 million.

♦ The budget directs $5 million dollars to Resource Institute, Inc. “to explore opportunities for the development and implementation of emerging techniques that can extend the useful life of beach nourishment projects”. Resource Institute, Inc., a Winston-Salem based non-profit, describes its mission as “[enhancement of] America’s natural resources by restoring streams, rivers and wetlands”. information  on the Resource Institute’s website indicate the nonprofit  largely assists in connecting restoration project sponsors with potential funding sources and planning assistance; the Institute does not appear to directly work on design and construction of restoration projects. 

♦ The  budget bill revisits a 2017  budget provision controlling use of funds from the U.S. Environmental Protection Agency’s  (EPA) settlement of a Clean Air Act enforcement case against  Volkswagen (VW). Under the consent agreement, N.C. could receive over $90 million for air quality projects.  The  2017 state  budget required legislative committee review of DEQ’s proposed plan for use of the money and legislative appropriation of the funds to DEQ through  the state budget process.  (As a practical matter,  that means the legislature would have to act before DEQ could spend any funds designated for North Carolina by the national VW settlement trustee.) The 2018 budget bill adds more detail by directing the State Treasurer to hold the VW funds in a special account until  appropriated by the legislature.  The 2018 provision also adds a new sentence prohibiting  DEQ from releasing  any funds to a third party until the legislature has appropriated the money.  It isn’t clear whether the new sentence requires an individual appropriation for each project (and recipient) under the plan or was simply intended to restate the general requirement for  a lump sum appropriation to DEQ through the state budget process. The difference could be significant since the national VW  settlement trustee must be  assured that DEQ has authority under state law to use the VW settlement funds for the purposes described in the state plan. Some environmental organizations have expressed concern that the provision may undermine N.C.’s eligibility  to receive  VW settlement funds if it is interpreted to mean the legislature could refuse funding to an intended recipient, undermining DEQ’s legal authority to carry out the plan.

♦ The General Assembly again delayed implementation of nutrient reduction rules in the  Falls Lake and Jordan Lake watersheds; both lakes have impaired water quality due to excess nitrogen and phosphorus from wastewater discharges and runoff.   The legislature has repeatedly postponed full enforcement of nutrient reduction rules adopted by the Environmental Management Commission in  2009 (Jordan Lake) and 2011 (Falls Lake). The 2018 budget provision adds at least another year to previous delays in implementation of the Jordan Lake rules; the suspended rules would remain in limbo until completion of a new rulemaking effort that may not begin until 2020.  The provision extends the timeline for beginning work on new Falls Lake rules until 2024 and suspends enforcement of the later stages of the existing Falls Lake rules during that time.  A number of previous posts  —  going back to 2013 —  provide some history of legislative intervention in the regulation of nutrient discharges to the two reservoirs.

♦ Under the disaster relief section of the budget, the legislature provides $3.6 million to restart a program to map landslide hazard areas in western N.C.  The legislature had defunded the landslide mapping program several years ago. (See an earlier post for background on the political death of the landslide mapping program.)

GenX in the State Budget

June 18, 2018. Instead of acting on the GenX bill described in an earlier post, the legislature inserted GenX provisions into the state budget bill (Senate Bill 99). The provisions adopted in the budget differ from those in House Bill 972/Senate Bill 724  in several key ways:

♦ The budget provision expressly makes a Governor’s order appealable through an administration hearing. (The earlier post noted that a Governor’s order would likely be appealable under the state’s Administrative Procedures Act even if the bill did not specifically mention appeal rights.)

♦ Language has been added to c;larify that the grant of new enforcement power to the Governor does not prevent DEQ and the Environmental Management Commission from also using their existing enforcement power under other state laws to address PFAS. The new language eliminates confusion about the impact on DEQ’s ongoing enforcement cases against Chemours and confirms that DEQ can still go directly to court in future enforcement cases if necessary.

♦ The budget provision reduces the funds appropriated to the UNC Environmental Policy Collaboratory from $8 million to  just over $5 million and limits the scope of funded water quality research. Instead of supporting non-targeted monitoring for a broad range of unregulated pollutants, the funds could only be used for monitoring of PFAS.

♦ Funding for monitoring of  Cape Fear Public Utility Authority’s water supply has similarly been limited to monitoring for PFAS.

♦ The budget dropped funding  for additional resources in the Department of Health and Human Services to evaluate health risks associated with unregulated  water contaminants. The earlier House and Senate GenX bills had earmarked over $500,000  for DHHS; under the budget bill, DHHS receives no funding for toxicology and epidemiological study of contaminants in North Carolina’s water supply sources.

Funding proposed for DEQ did not change. DEQ  will receive $1.3 million in new funding related to PFAS contamination, although new staff positions created with the funding must be time-limited rather than permanent. The budget also provides funding for a mass spectrometer to be used in analyzing water samples for PFAS. The budget provision, however,  specifies a particular type of mass spectrometer that does not have as much technical capacity to identify other unregulated contaminants as DEQ had recommended.

The budget provision continues to require a person (or company) responsible for PFAS contamination to provide an alternative water source to the well owner.  The responsibility only exists if releases of the pollutant caused the well contamination. Requiring a causal connection between the pollution release and the well contamination follows the approach taken under existing state groundwater protection rules.  It is different from  2016 coal ash legislation that required Duke Energy to provide alternative water supply to well owners within a 1/2 mille perimeter around every coal ash pond even if coal ash disposal had not been proven to be the cause of the well contamination.

What do the changes mean?  Since the new Governor’s authority can trigger an administrative appeal  (which may  take a year or more to reach a final decision), it doesn’t provide a more direct or effective remedy than DEQ’s existing authority to request a court order. As a result, it isn’t likely the new authority will be used often if at all.

Narrowing the focus of the water quality monitoring funded through the UNC Environmental Policy Collaboratory to PFAS has a mixed effect. Investigation of  PFAS contamination will receive more resources, but none of the appropriated funds will go to identification of other unregulated contaminants in N.C. water supplies.

Removal of the DHHS funding leaves the department with extremely limited staff resources to evaluate human health risk when regulatory agencies or researchers identify a new unregulated contaminant in a water supply source.

Status. Governor Cooper vetoed the budget bill on several grounds. The House and Senate have overridden the veto, allowing the bill — including the revised GenX provisions — to  become law.

GenX Legislation and Unintended Consequences

May 18, 2018. Yesterday, the N.C. House and Senate introduced identical bills in another attempt to legislatively address the impact of GenX (a perflourinated compound) on the Cape Fear River and drinking water wells. See an earlier post for background on the GenX issue. In September of 2017,  the Department of Environmental Quality (DEQ) filed a lawsuit against  The Chemours Company under existing water quality laws and reached a partial consent order that requires Chemours to end all wastewater discharges of GenX to the river from its Fayetteville facility.  The consent order reserves DEQ’s right to ask the court to order Chemours to take additional actions related to GenX groundwater contamination and other violations. DEQ has also reviewed Chemours’ air emissions, which may be another source of  surface and groundwater contamination as GenX  returns to the ground in rainwater. Based on monitoring results, DEQ  has notified Chemours  of an intent to modify the plant’s air quality permit. Copies of documents related to the enforcement actions  can be found on DEQ’s Chemours enforcement webpage.

The two new bills, House Bill 972 and Senate Bill 724, appropriate money to address GenX and other per- and poly-fluoroalkyl substances (PFAS),  but also change environmental enforcement law and require specific steps to address GenX groundwater contamination.   This post focuses on the possible unintended consequences of provisions in the bill that affect environmental enforcement and remediation.

Section 1 of each bill creates a specific enforcement provision for contamination caused by GenX or other PFAS by adding a new paragraph to an existing enforcement law, G.S. 143-215.3,    authorizing  the Governor to order a facility to stop operations resulting in release of GenX or other PFAS. Although the intent may be to provide a quick response to PFAS pollution, the provision may actually slow or undercut DEQ’s ability to pursue enforcement actions against Chemours or a future source of PFAS pollution.

Under existing water and air quality laws,  DEQ can direct a facility to stop an illegal wastewater discharge or emission of air pollutants by issuing a Notice of Violation or compliance letter. If the violator fails to comply within the time allowed or DEQ believes the violation creates an imminent threat, DEQ can file a lawsuit and ask for a court-enforced  injunction requiring compliance.  Last year, DEQ used that authority (see G.S. 143-215.6C)  to file an action in superior court against Chemours. The lawsuit has already resulted in a partial consent order to  end all wastewater discharges of GenX to the Cape Fear River. Since then, DEQ has continued to investigate the scope of GenX groundwater contamination and has issued compliance letters to Chemours requiring initial steps to address sources of groundwater contamination (such as stormwater drainage). DEQ has the ability to go back to court if Chemours fails to follow through. As the permitting agency DEQ can also address both water and air quality impacts by changing the terms of the Chemours’ permits. DEQ has already notified Chemours of the department’s intent to modify the facility’s air quality permit, presumably to reduce air emissions of GenX.

The new  provision in H972 and S724 would allow the Governor to issue an administrative order to shut down releases of GenX or other PFAS. On its face, a Governor’s order sounds like a quicker and more direct way to stop the release of these pollutants. In reality, any order could be appealed in an administrative hearing and the administrative law judge has the power to prevent  the order from going into effect until there has been a final decision on the appeal. Although the bills don’t mention the possibility of an administrative appeal, the state’s Administrative Procedures Act (APA) creates that right. (See G.S. 150B-23 for the law on appealing state actions.)  An administrative appeal can take as much as a year, slowing enforcement.  Under existing water and air quality enforcement laws, DEQ can go directly to court for an injunction instead of issuing an order potentially leading to an administrative appeal hearing.

The new provision  raises questions about both the path forward on existing Chemours enforcement actions and the impact on future state enforcement actions in response to release of  PFAS from other facilities.

With respect to DEQ’s ongoing Chemours enforcement actions, one question is whether the  legislature intends the new provision to be the exclusive remedy for Chemours’ violations, overriding DEQ’s ability to go directly to the courts for an injunction. In the absence of clear legislative language to the contrary, courts can interpret more recent and more specific laws to override earlier and more general laws.  The risk would be that a court may interpret the new enforcement provision specifically addressing PFAS pollution to override existing  but more general water/air quality enforcement laws.  At the very least, the legislation needs to be clear about the relationship between the Governor’s new power and DEQ’s existing authority to go directly to court for an injunction.  If the new provision becomes the only enforcement path, the legislation could slow rather than accelerate enforcement against Chemours.

There may also be a need to harmonize the Governor’s power with DEQ’s permitting authority under the Clean Water Act and Clean Air Act.  An order affecting wastewater discharges or permitted air emissions will likely require modification of facility permits. Under federal delegations of permitting authority to DEQ,  significant modification of a permit usually triggers requirements for public notice and EPA review.

The new provision also limits issuance of a Governor’s order in several ways that don’t apply when DEQ exercises its existing water quality and air quality enforcement authority:

♦  An order could only be issued for a  facility that has an NPDES (wastewater discharge) permit.  The order could not be used for a completely unpermitted source or to address air emissions causing PFAS  pollution if the source doesn’t  also have an NPDES permit.

♦ An order could not be issued  unless the facility had received more than one Notice of Violation in the previous two years.

♦ DEQ has to make  efforts to eliminate the unauthorized discharges for at least a year before an order can be issued.

The conditions were clearly written to cover Chemours. But if a PFAS pollution problem arises at another facility, the provision could hamstring DEQ’s ability to act unless and until all three  conditions have been met. Again, this creates a significant problem if the new provision becomes the only enforcement remedy for addressing PFAS pollution.

Many of the concerns raised by Section 1 could be addressed by clarifying that existing environmental enforcement laws/rules implemented by DEQ continue to apply, making the new provision an additional tool rather than the only remedy for PFAS pollution. Even then, it may  be necessary to provide guidance on how issuance of a Governor’s order affects both pending and future DEQ enforcement actions under those existing laws.

This section of H972 and S724  has a sunset date of December 31, 2020, which means it would be automatically repealed on that date unless the legislature acts to extend it.

Sec.4(a) Directs DEQ to develop a plan to assess and remediate groundwater and surface water contamination associated with PFAS. Again, the legislation doesn’t explain how the provision affects DEQ’s existing authority especially with respect to groundwater contamination. State groundwater rules require the person who caused the contamination to develop under DEQ supervision – and pay for – a plan to assess and remediate groundwater contamination. The bill language does not mention state groundwater rules or the polluter’s responsibility for assessment and remediation; it appears to put the entire responsibility for an assessment and remediation plan on DEQ.   This is likely another unintended result that could be fixed by cross-referencing  existing rules describing the polluter’s responsibility for assessment and remediation.

As a practical matter,  this is a bigger issue for groundwater assessment and remediation than for surface water pollution.  DEQ can often assess surface water impacts by taking in-stream samples and eliminate the impact by simply stopping or reducing the discharge.   Determining the extent of groundwater contamination and implementing a groundwater cleanup plan can be much more time, labor and money-intensive.

One other note.  Section 2 of the bill authorizes DEQ to order a person responsible for contaminating a drinking water well with GenX or another PFAS to provide a permanent alternative water supply to the well owner. The language looks very similar to the alternative water supply  provision in 2016 coal ash legislation.   The difference: the coal ash provision required Duke Energy to provide an alternative water supply  to every well owner within 1/2 mile of a coal ash impoundment; the GenX provision applies to individual wells on a case by case basis.  DEQ would need to order Chemours to provide alternative water supply to an individual well owner based on data linking the well contamination to Chemours as the source.  Again, the GenX provision doesn’t mention existing state groundwater rules that already require the person who caused groundwater contamination to  “mitigate any hazards resulting from exposure to the pollutants” and restore groundwater to meet state standards.  (15A NCAC 2L.0106).  On a quick review, the GenX alternative water supply provision seems to be consistent with  existing state groundwater rules but does not necessarily provide a speedier path to alternative water supply.  In either case, the burden is on the state to establish the cause and effect link between Chemours’ activity and contamination of individual wells.

Making Polluters Pay

March 14, 2018. To follow on the last blogpost, some background on a  polluter’s legal responsibility to pay for environmental damage and limits on the state’s ability to use penalties to fund environmental protection programs.

Scope:  The issue has come up in response to GenX , but this blogpost should not be taken as legal advice with respect to pending or future  GenX litigation.  The blogpost also focuses on what the state can require a polluter to pay under its authority to enforce federal or state environmental laws.  A person harmed by pollution  (such as groundwater contamination) can also sue and ask a court to order compensation for individual injury or property damage. Different legal principles govern those personal injury/property damage cases.

The Prompt. In January, the North Carolina House of Representatives passed House Bill 189  to legislatively address  GenX and other emerging contaminants. In addition to creating a number of studies, the bill proposed to appropriate $2.4 million to the Department of Environmental Quality (DEQ) for wastewater permitting, water quality monitoring, and analysis of emerging contaminants.  Senate President pro Tem Phil Berger had a very negative reaction to the proposed  appropriations:

“[H 189] leaves North Carolina taxpayers holding the bag for expenditures that should be paid for by the company responsible for the pollution, fails to give [the Department of Environmental Quality] authority to do anything they can’t already do and authorizes the purchase of expensive equipment that the state can already access for free.”

The Senate refused to consider the House bill in January, but adopted its own version of H 189 when the legislature reconvened briefly in February. The Senate version included new appropriations, but funds directed to DEQ could only be used for purposes identified in the bill (such as a historical study of the state’s wastewater permitting program). The Senate bill did not allow DEQ to use any of the appropriated  funds for wastewater permitting, compliance inspections, water quality monitoring, or purchase of analytical equipment, suggesting that Senator Berger has held to the  position that the polluter should cover most of the cost of GenX response.  Note: The House and Senate versions of H189 have not been reconciled so no GenX legislation has passed and it is unlikely the legislature will return to the issue again before the next regularly scheduled legislative session in May.

Can the state require a violator  to contribute to the cost of environmental permitting, water quality monitoring, inspections of permitted facilities, or other regular program activities?

No.  The N.C. Constitution (Article 9, Sec. 7) requires that the proceeds of   “all penalties and forfeitures and of all fines collected in the several counties for any breach of the penal laws of the State” must be used exclusively to  support the public school system. In the 1990s, the N.C. Supreme Court ruled that all state civil penalties –including those for environmental violations —  must go to the “school fund”.  In 2005, the court ruled that environmental agencies cannot enter into a settlement agreement that allows a violator to put funds toward a third-party project to conserve natural resources or improve the environment in place of a penalty.  In the court’s eyes, the payment continues to be a “penalty” assessed in response to a specific violation of environmental rules and the money must go the school fund. (The 2005 case on funding of an “environmental enhancement project” as a substitute for a civil penalty is N.C. School Boards Association v. Moore.)

Although the court has not ruled on this specific question,  the same principle seems to apply to requiring a violator to provide funds to support state environmental program activities in place of or in addition to a civil penalty.  Once a payment becomes associated with a specific violation,  the N.C. Supreme Court is likely to view it as  a “penalty” for purposes of the N.C. Constitution.  In that case, the money  would have to go to the public schools rather than to environmental protection programs.

Permit fees can be used to support basic permitting, enforcement, and monitoring activities and many state environmental permitting programs have graduated permit fee schedules based on the type and size of the permitted facility. Making compliance history another factor in setting permit application/renewal fees probably would not conflict with N.C. Constitution — although it also may not generate significant additional revenue for environmental programs.

Can the state require the company responsible for pollution to pay anything other than a civil penalty? 

Yes, but generally only the cost of  response to the specific pollution incident and the environmental harm that it caused:

  1. Natural resource damages. Several state and federal laws allow the state to recover for injury to the state’s natural resources. The compensation goes to the state as trustee for natural resources — such as fish and wildlife  — held by the state for the use of all of its citizens.  A  patchwork of laws allow recovery of natural resource damage; some  apply only to particular kinds of environmental harm (fish kills, for example) or specific types of pollution events (such as an oil spill). The Clean Water Act does not include a  specific provision for natural resource damage caused by a wastewater discharge that does not involve oil or a “hazardous substance”;  most chemicals found in a wastewater discharge, including GenX,  are not EPA-listed hazardous substances.  The federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) allows state natural resource damage claims for harm specifically caused by a  spill of oil or an EPA-listed “hazardous substance”. N.C.  law has a somewhat broader provision that allows  DEQ  to require compensation for natural resource damage caused by any release of pollutants that results in a  fish kill or injury to wildlife.  In  those cases, the  state recovers only  the value of the natural resource lost — not program costs. Under the state law allowing recovery of damages for injury to fish and wildlife,  the amount of damages is based on a Wildlife Resources Commission estimate of the value of the lost fish or wildlife. [N.C. General Statute 143-214.3(7).]
  2. Cost of State response to a spill of oil or an EPA-listed hazardous substance.   N.C. General Statute 143-215.88 allows the state to recover the cost of state response to a spill. An example of state costs would be initial emergency response, such as putting booms in the water to control an oil spill. These are usually costs the state incurs early in spill response when the source of the spill may not be known. Later, the polluter would be expected to carry out the response.
  3. Investigative costs.  Under several state laws, DEQ can recover the costs of investigating a pollution incident. These laws only apply to costs associated with the specific event and not the costs of maintaining DEQ’s ongoing inspection/compliance/pollution monitoring programs.
  4. Measures to eliminate a  threat to public health and safety;  clean-up groundwater and soil contamination; or restore other kinds of environmental damage (such as wetlands disturbance) caused by a violation. Most environmental laws, including the Clean Water Act,  make restoration of environmental harm the responsibility of the violator. Both EPA and the state water quality programs have the authority to seek a court order to stop an unlawful discharge and require the violator to take steps to prevent future unlawful discharges. Under state law, DEQ routinely requires violators to cleanup  groundwater and soil contamination caused by a pollution incident. These expenditures are different from the kind of environmental enhancement or conservation projects struck down in N.C. School Boards Association v. Moore because they are limited to addressing the direct impact of a  specific violation.

What does this mean for funding a better state response to GenX and other emerging contaminants?

The N.C. Constitution does not allow DEQ to use the proceeds of any penalty for violation of environmental laws and rules — or anything that looks like a substitute for a penalty — to support environmental protection programs.  Past N.C. Supreme Court decisions suggest the court would view assessment of environmental program costs against a violator as another form of  penalty that must also go to the public schools. Given the constitutional provision, funds to strengthen the state’s response to emerging contaminants like GenX will largely have to come from state appropriations, permit fees and EPA grants.

New Legislative Activity on GenX

January 12, 2018.  When the N.C. General Assembly convened on January 10, the House unanimously adopted House Bill 189  – a bill described by House members as a first step toward improving the state response to unregulated water pollutants.

GenX and the path to House Bill 189. EPA began studying the effects of perfluorinated compounds (used in products such as firefighting foam, water repellants and Teflon) more than fifteen years ago.  EPA worked with chemical companies to phase-out the two most common compounds, perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS), because of concerns about persistence in the environment and human health risk.   In 2009, Dupont began manufacturing another type of perflourinated compound, GenX, as a replacement for PFOA. The Chemours Company now operates the GenX manufacturing facility in Fayetteville North Carolina which is  located upstream of drinking water intakes for Cape Fear Public Utility Authority (serving Wilmington/New Hanover County) and several smaller water systems.

GenX has uncertain health and environmental risks and no federal standards exist to guide state permitting and enforcement action. EPA has not adopted a drinking water standard for GenX, identified the compound as a priority water pollutant, or set effluent guidelines for discharge of the chemical under a Clean Water Act wastewater discharge permit (the National Pollutant Discharge Elimination System or “NPDES” permit).  EPA has indicated a  concern that GenX may share some of the environmental and health risks associated with PFOA and PFOS.  GenX is one of many “emerging” or “unregulated” contaminants that can be released to the environment.   An earlier blogpost described the major federal environmental laws touching on manufacture, use and discharge of chemical compounds like GenX and the gaps in those laws.

The path to House Bill 189 began with the 2016 discovery of GenX  in drinking water systems using the Cape Fear River as a water supply source. Later, GenX was also found in private drinking water wells near the Fayetteville facility. Public concern about the health effects of GenX and the adequacy of federal/state regulation of contaminants like GenX created pressure for legislative action.  In August 2017,  the General Assembly  appropriated funds to Cape Fear Public Utility Authority and to UNC-Wilmington to study GenX and water treatment options. The legislation, described here,  made no substantive changes to state law and allocated no funding to programs in the Department of Environmental Quality (DEQ) and the Department of Health and Human Services (DHHS)  responsible for enforcing water quality standards and establishing health guidelines for exposure to environmental contaminants.   The  state House of Representatives, however,  created a Select Committee on River Water Quality to further study the issue of unregulated contaminants between legislative sessions. The substance of House Bill 189 came out of the House select committee’s work.

House Bill 189. The bill does not break new ground in water quality law,  but directs DEQ to undertake several studies that could lead to recommendations for future legislation on unregulated contaminants. The bill also proposes to allocate additional state funds to the issue. Although prompted by GenX,  the bill’s provisions apply more broadly to GenX and other unregulated contaminants. By section:

Sec. 1 Science Advisory Board review of the DHHS process for setting health goals for contaminants and new health goals set by the department. In 2017, DEQ reconstituted the department’s existing Science Advisory Board to provide additional expertise in setting  health goals for exposure to unregulated contaminants. Health goals represent the concentration of a contaminant considered safe for humans based on studies of both immediate, acute effects (such as illness, organ damage, skin irritation or respiratory distress) and long-term effects (primarily increased cancer risk).  H 189 supports DHHS consultation with the Board on health goals and goes further to require  DHHS to notify the Science Advisory Board before issuing a new health goal. The bill then focuses on the process for setting health goals, directing the Science Advisory Board to study the DHHS process and make recommendations. Legislative interest in the process for setting health goals may have arisen from recent controversies over use of health goals to advise property owners on the safety of well water affected by contaminants associated with coal ash. Both legislators and industry representatives have sometimes questioned the scientific basis for a health goal as well as the appropriateness of using a non-regulatory health goal to  guide regulatory decisions such as groundwater cleanup and the obligation to provide alternative water supply. See earlier posts concerning controversy over health goals for contaminants associated with coal ash here and here.

Sec. 2  A study of the Clean Water Act permitting program for wastewater discharges. The bill directs DEQ to study specific issues in the NPDES permitting program: 1. Whether NPDES permit applications require sufficient information about pollutants in the wastewater to be discharged;  2. Monitoring, sampling, and analytical requirements for wastewater dischargers; 3. The process for setting standards or discharge limits for contaminants when there is not an existing state or federal standard; and 4. The timeliness and thoroughness of permit reviews.  A report must be provided to the legislature by April 1, 2018. Parts  2 and 3 of the study likely reflect business/industry interest in the process for setting NPDES  permit conditions. That could lead into a debate over how much DEQ can require through individual permit conditions versus going through a rule making process to set generally applicable permit standards.

Sec. 3. Interstate exchange of information about pollutants entering North Carolina rivers.  DEQ has been directed to better coordinate interstate exchange of information about pollutants entering river basins that  North Carolina shares with neighboring states (West Virginia, Virginia, South Carolina, Georgia, and Tennessee).

Sec. 4. Notice of illegal discharges and the presence of unregulated contaminants in surface waters. This section of the bill creates another DEQ study; this study would focus on: 1.  The adequacy of existing  laws requiring notice of an illegal discharge of untreated waste or wastewater; and 2.  DEQ’s process for informing the legislature and the Environmental Management Commission of the presence of an unregulated contaminant for which no state or federal discharge standard has been set. A report must be provided to the legislature by April 1, 2018.

Sec. 5. Water system liability for the presence of an unregulated contaminant in drinking water. The School of Government at UNC-CH will report to the legislature on the potential civil liability of a water system that distributes water contaminated by a pollutant for which no discharge standard has been set under state or federal law and any difference in liability exposure between public and private water utilities.

Sec. 6. Appropriation of funds to support activities related to unregulated contaminants. H 189 proposes to appropriate just over $1.3  million in one-time funding for  water quality sampling; NPDES permitting; air quality sampling and analysis of atmospheric deposition of GenX; and sampling of groundwater, soil and sediment for GenX and other emerging contaminants. The money would come from unused funds originally appropriated for other purposes, including pilot nutrient management projects in the Jordan Lake watershed.

Sec. 7 Additional funding.  The House proposes to appropriate an additional $479,736 in recurring funds from the state’s General Fund to DEQ for water quality sampling and analysis related to GenX and other unregulated contaminants and $537,000 from the state’s Contingency and Emergency Fund for analytic equipment (presumably a mass spectrometer) to evaluate emerging contaminants.

Impact of H 189. The bill does not set any new legal standards for discharge of unregulated contaminants to North Carolina waters or expand the existing authority of DEQ and DHHS to respond to unregulated contaminants. Instead, the bill mandates several studies that could lay the groundwork for future legislative action. House members stressed that the bill represents just a first step toward improving state response to unregulated contaminants.

Aside from the $537,000 earmarked for the mass spectrometer, the appropriations proposed in H 189 essentially offset another  $1.8 million reduction in the DEQ budget for the 2017-2019 biennium. As a result, the appropriations do not represent an actual increase in DEQ’s budget from 2015-2017 levels. An earlier blogpost noted the impact of past budget cuts on the water quality program.   DEQ  had a two-year backlog of wastewater discharge permit renewals in December 2016 — before the reductions required in the most recent budget. The Chemours permit to discharge wastewater to the Cape Fear River from the Fayetteville Works fell in the category of permits overdue for review and renewal. The GenX controversy has also shown a brighter light on the additional burden on the state water quality program — in expertise, research capability, and analytical equipment — to address a contaminant for which no federal standard has been set.

So the appropriations in H 189 are helpful in offsetting additional DEQ budget cuts, but do not provide a net increase in funding. The appropriations also provide no additional resources to DHHS, which has significant responsibility for assessing and advising on the health impacts of an unregulated contaminant.

Senate response. The Senate adjourned without considering House Bill 189. A statement from Senate President pro tem Phil Berger criticized the bill as ineffective and seemed to oppose the appropriations:

“[H 189] leaves North Carolina taxpayers holding the bag for expenditures that should be paid for by the company responsible for the pollution, fails to give [the Department of Environmental Quality] authority to do anything they can’t already do and authorizes the purchase of expensive equipment that the state can already access for free.”

It isn’t clear which expenditures in H 189 the Senate wants to shift to the polluter or how that could be done. Most of the H 189  appropriations cover basic state water quality monitoring, permitting and compliance work.  NPDES permit fees cover a percentage of permitting costs, but those fees  do not vary based on a facility’s violation history.  The legislature has also tended to view fee increases very skeptically out of concern for the impact on business and industry.  A person responsible for illegally contaminating surface water or groundwater can be held financially responsible for cleanup costs and steps to minimize health impacts (such as providing bottled water to the owner of a contaminated well) , but state  law does not currently require a violator to pay any additional amount toward support of basic regulatory activities.

Senator Berger’s statement indicated the Senate may take up legislation related to GenX in the next regular legislative session that begins in May.

GenX: The State Enforcement Case

November 14, 2017.  An earlier post discussed some of the issues surrounding detection of a perflourinated compound known as GenX  in the Cape Fear River and in water systems using the river as a drinking water source. On September 7, 2017, the  Department of Environmental Quality (DEQ)  issued a Notice of Violation and filed a legal complaint against the Chemours Company alleging violations of the federal Clean Water Act and state groundwater rules related to GenX. This post looks at the specific allegations in the state enforcement case.  ( A copy of the entire complaint can be found on  DEQ’s GenX  webpage.)

One piece of background information —  Dupont  began manufacturing GenX at the Fayetteville Works in 2009, but transferred the operation and associated environmental permits to the Chemours Company in 2015.  The sequence of events surrounding GenX begins under Dupont management, but the enforcement case names only the Chemours Company — the current owner and permit holder — as defendant.

The enforcement case against Chemours makes two basic claims:

1. Chemours violated the Clean Water Act by discharging GenX to the Cape Fear River under a water quality permit that did not authorize any discharge of GenX.  The state claims neither Dupont nor Chemours  told DEQ that wastewater discharged from the Fayetteville Works to the Cape Fear River would contain GenX and other perflourinated compounds.   According to the complaint,  state water quality staff  understood that the GenX manufacturing plant opened in 2009 would use a “closed loop” system and dispose of all wastewater off-site.   In fact,  a consent agreement between the U.S. Environmental Protection Agency (EPA) and Dupont under the Toxic Substances Control Act (TSCA)  only allowed manufacture of GenX  under conditions requiring Dupont to effectively eliminate GenX from both the wastewater discharge and air emissions associated with the manufacturing process.

The complaint alleged that Chemours,  in applying for its most recent National Pollutant Discharge Elimination System (NPDES) permit under the Clean Water Act,  did not tell DEQ that other operations at the Fayetteville Works generated wastewater containing GenX as a byproduct. (The implication is that Dupont had also failed to disclose the presence of GenX  as a byproduct when applying for earlier water quality permits.) Chemours discharged wastewater from those operations to the Cape Fear River.

DEQ alleges Chemours violated the Clean Water Act by failing to tell state permit writers that  wastewater from the Fayetteville Works contained GenX (and other perflourinated compounds) and by discharging GenX  to the Cape Fear River under an NPDES permit that did not authorize discharge of those compounds.

2. Chemours  violated state groundwater standards.    According to the DEQ complaint,   Chemours’ hazardous waste permit has required groundwater monitoring since at least 2003 and included sampling for PFOA (the older perflourinated compound replaced by GenX ).  After detection of PFOA  in the Cape Fear River in 2015, DEQ required supplemental groundwater monitoring to determine whether groundwater at the Fayetteville Works could be the source. It isn’t clear from the complaint whether the hazardous waste permit required monitoring for PFOA from the beginning and expanded the scope in 2015 or first required PFOA in 2015. DEQ did not specifically require monitoring for GenX until August of 2017. The initial sampling detected GenX in 13 of 14 monitoring wells on the grounds of the Fayetteville Works.

Under state rules, the  groundwater  standard for any contaminant that does not  occur naturally is the lowest measurable level  (the “practical quantification level” or “PQL”) unless the rules set a higher standard based on evaluation of health and environmental risk. Since GenX does not occur naturally and state rules set no other standard, the allowable concentration of GenX would be the PQL of 10 nanograms/liter (equivalent to 10 parts per billion).  The 2017 monitoring detected levels of GenX ranging from 519 ng/ltr to 61,300 ng/ltr. All five wells located adjacent to the Cape Fear River had levels of GenX exceeding 11,800 ng/ltr. DEQ found the test results documented widespread groundwater contamination on the Fayetteville Works site exceeding  both the 10 ng/ltr groundwater standard and the threshold for human health effects  identified by the state Dept. of Health and Human Services (140 ng/ltr level).

Status of the enforcement case.  The DEQ complaint asked, in part, that Chemours immediately stop any discharge of GenX and related compounds to the Cape Fear River.  On September 8, 2017 (the day after filing the enforcement case), DEQ entered into an agreement with Chemours to resolve the discharge issue. Under a partial consent agreement,  Chemours agreed to continue voluntary measures undertaken early in the summer to prevent discharge of process wastewater containing GenX to the Cape Fear River.  The partial consent agreement also required Chemours to take similar steps to prevent discharge of two other perflourinated compounds from the “single source of significance” of those compounds at the Fayetteville Works.

The partial consent agreement did not resolve all potential violations at the Fayetteville Works.  The consent agreement did not address any of the groundwater standard violations alleged in DEQ’s September 7, 2017 complaint. DEQ also expressly reserved the right to take additional enforcement action in the event of future unpermitted discharges or violations associated with other chemicals. In fact, DEQ issued a new Notice of Violation to Chemours today based on a previously unreported spill at the Fayetteville Works. That NOV  alleges that Chemours violated its NPDES permit by failing to notify DEQ of an October 6, 2017 spill of dimer acid flouride ( a precursor to GenX) from the manufacturing line.

Still to come. With respect to the groundwater violations, DEQ’s September complaint asked the court to order Chemours to:

♦ Remove, treat or control any source of perflourinated compounds at the Fayetteville Works that could contribute to groundwater contamination. Consistent with state groundwater rules, that  would need to be done under a plan approved by DEQ.

♦ Fully assess the extent of groundwater contamination and develop a plan to address the groundwater contamination. (Again, both the assessment and corrective action plans would be subject to DEQ approval).

It does not appear that Chemours has an approved groundwater assessment plan yet and the groundwater corrective action plan can only be developed once the assessment has been done. In the meantime, DEQ has directed Chemours to provide an alternative source of drinking water to 50 households near the Fayetteville Works whose water supply wells have been contaminated by perflourinated compounds.

DEQ’s September complaint focused on actions necessary to stop the  discharge of GenX to the Cape Fear River and address groundwater contamination,  but state law also authorizes DEQ to assess civil penalties for these violations. The maximum civil penalty for each violation of state water quality laws or rules is $25,000 and if a violation continues over a period of time, state law  authorizes DEQ to assess daily penalties.  (N.C. General Statute 143-215.6A.) The actual penalty amount per violation depends on a number of factors set out in the law, including the extent of harm and whether the violation was intentional. In the case of a continuing violation, DEQ would also have to decide what time period merits daily penalties. DEQ usually develops the penalty assessment separately from legal action to obtain compliance and has not yet proposed penalties for the Chemours violations.

The Legislative Response to GenX

September 10, 2017. At the end of its most recent one-week session, the N.C. General Assembly added GenX  provisions to an existing bill,  House Bill 56  (Amend Environmental Laws),  and passed the bill with little discussion.  Section 20 of H 56:

  1. Amends the state budget to give $185,000 to Cape Fear Public Utility Authority (CFPUA) — $100,000 to study water treatment methods to remove GenX from the water supply and $85,000 for ongoing monitoring of water withdrawn from the Cape Fear River.
  2. Allocates $250,000 to UNC-Wilmington to “identify and quantify GenX and measure the concentration of the chemicals in the sediments of the Cape Fear River, the extent to which the chemical biodegrades over time or bioaccumulates within local ecosystems, and what risk the contaminant poses to human health”. The provision requires a final report from these studies by April 1, 2018.
  3. Directs UNC-Chapel Hill to develop a proposal to (i) identify and acquire digital environmental monitoring and natural resource data and digitize analog data;  (ii)  create an online, searchable public database of  water quality permits, permit applications, and supporting documents; and (iii)  create a system for electronic filing of permit applications. The provision also directs UNC-CH to study the feasibility of housing the database at UNC rather than with the permitting agencies in the Department of Environmental Quality (DEQ).
  4. Requires DEQ to report back to the legislature if the department has not issued a Notice of Violation to any person or company for discharge of GenX into the Cape Fear River by
    September 8.

The bill does not allocate any additional funding to either DEQ or the Department of Health and Human Services (DHHS). Governor Cooper had requested $2.5 million for the two departments to provide more resources for water quality monitoring; inspection of permitted facilities; permitting (and particularly elimination of the backlog in permit renewals); and development of health advisories for unregulated contaminants. Instead, DEQ  faces a $1.8 million budget reduction for 2017-2018, continuing a trend of repeated cuts to the department’s budget over the last 10 years. (See an earlier blogpost for the effect of those budget reductions.)

How will House Bill 56 affect efforts to address GenX?  The bill supports efforts by Cape Fear Public Utility Authority to identify treatment systems capable of removing GenX  from the water; increase water quality monitoring; and learn more about the impact of  GenX. Much of the funding would offset the cost of efforts already underway by CFPUA.

Cape Fear Public Utility Authority had begun pilot testing use of granular activated carbon and ion exchange systems to remove  GenX from the water several weeks before. The $100,000 appropriation to study water treatment alternatives could reimburse CFPUA for past and future expenses incurred in the pilot testing. The funding would not be sufficient to actually upgrade water treatment in the water systems affected by  GenX contamination. 

Cape Fear Public Utility Authority had also entered into a one-year  contract  with UNC-Wilmington for just under $65,000  to analyze raw water and treated water samples  for additional perflourinated compounds  and to advise the utility on water treatment. House Bill 56 does not specifically describe the intent of the $85,000 appropriation for water supply monitoring, but the funds could cover the existing CFPUA/UNC-W contract. (The water quality monitoring would supplement, but not replace,  monitoring done by the Department of Environmental Quality.)

The $250,000 in funding directed to UNC-Wilmington to study GenX  would support new research and could generate important information about persistence of GenX in the environment and public health risk. The 6-month timeframe for the study, however, allows only  a very short  time to gather data and reach conclusions.

The UNC-Chapel Hill feasibility study for a digitized public database of water quality permit information would be the first step in a very long term project.   Creating a permitting database outside the permitting agency will raise a number of  legal, practical, policy and funding issues:  how to protect confidential information in permit applications (such as trade secrets);  cost of digitizing analog data and creating a new database; and the complications of maintaining  a database (or databases) to meet the very different needs of permit writers and the public.  Whatever the outcome of the study, the benefits of increased public access to permitting databases would likely be far in the future and require funding not provided in House Bill 56. [Note: Currently, anything in the permit file that is not protected by state confidentiality laws can be obtained through a public records request.]

What has been left undone?  None of the funding in the bill would go toward keeping GenX and other unregulated contaminants out of the Cape Fear River and other water supply sources. Only state and federal regulators can adopt water quality standards for the Cape Fear River and set permit limits for the discharge of GenX and other emerging contaminants to the river; local water systems do not have that power.

The bill does not address the lack of resources in DEQ and DHHS to evaluate the health and environmental risk of compounds like GenX before contamination of a water supply causes a crisis. GenX issue is only the most recent of several controversies over unregulated contaminants in North Carolina water supplies. Just within the last four years, the state has faced similar concerns about hexavalent chromium in drinking water wells and 1,4 dioxane in the Haw River. In each instance, state agencies had to develop guidance on safe levels of the contaminant in the absence of a clear federal standard and decide how to use the risk analysis in state permitting and enforcement decisions.

The weakness of the GenX response in House Bill 56 is that it reacts to water supply contamination without taking steps to prevent it. Once a contaminant has entered a water supply source, water systems — and their customers — shoulder the financial burden of using technology to reduce contamination to safe levels through water treatment. The bill also focuses narrowly on GenX rather than the broader problem of emerging contaminants affecting state water supplies. Nothing in the bill strengthens the state’s ability to detect other emerging contaminants in water supply sources; enforce water quality permit conditions; or assess health and environmental risk.

Next steps. As of today, the Governor had not yet signed or vetoed House Bill 56; the Governor’s decision could be affected by any number of provisions in the bill beyond those responding to GenX.  DEQ has taken an enforcement action against Chemours based on both discharge to GenX to the Cape Fear River and detection of GenX in groundwater on the site. (More about the enforcement action in the next blogpost.)

The Laws in the Background of the GenX Issue

August 21, 2017.  In  June, residents of southeastern North Carolina learned of a previously unknown contaminant in the Cape Fear River;  a study undertaken by an N.C. State University researcher documented the presence of the perflourinated compound  known as “GenX” in a report published in December 2016. The river provides drinking water for Wilmington-New Hanover County and other water systems.

The U.S. Environmental Protection Agency (EPA) began studying the effects of perfluorinated compounds used in firefighting foam, water repellants, Teflon, and other products more than fifteen years ago.  EPA worked with chemical companies to phase-out the two compounds most commonly used, perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS), because of concerns about persistence in the environment and human health risk.  In 2000, 3M Corporation announced a phaseout of PFOS. Under a 2006 agreement with EPA, eight companies committed to phase out PFOA by 2015. In 2009, Dupont began manufacturing GenX,  a chemically distinct perflourinated compound,  at its Fayetteville plant as a replacement for PFOA. (The Chemours Company, a Dupont spin-off, now operates the Fayetteville plant.)

The discovery of an unregulated chemical with uncertain health and environmental risks in a water supply source created a high level of concern in the affected communities. It has also drawn attention to gaps in the safety net of federal environmental regulations with implications for all unregulated contaminants in water supplies.  In many ways, the GenX controversy parallels the earlier controversy in North Carolina over hexavalent chromium (a contaminant associated with coal ash) in drinking water wells. In each case, the absence of a federal standard —  or EPA’s failure to update a standard based on current science —  left the state struggling to evaluate health risk and develop an appropriate regulatory standard.

A number of news organizations have provided detailed coverage of the GenX controversy and Cape Fear Public Utility Authority posts key documents and monitoring results online . This post will focus on the key federal laws involved and the  gaps in those laws that the state may need to fill. Although I will use the GenX issue as an example, this blogpost should not be interpreted as an assessment of legal claims or liabilities associated GenX contamination in the Cape Fear River.

Toxic Substances Control Act (TSCA). EPA regulates manufacture and importation of chemicals under the  Toxic Substances Control Act of 1976. Two of the key requirements of the law:

♦ Section 5 requires manufacturers to give  EPA notice before manufacturing a new chemical. (EPA maintains a Toxic Substances Inventory of previously approved chemicals.)  Based on review of information submitted with the notice, EPA may  find the new chemical is “not likely to represent an unreasonable risk” and approve manufacture. But if EPA doesn’t have sufficient information to evaluate environmental and health effects or if the lack of information creates an unreasonable risk of harm, EPA can issue an order requiring additional testing or limiting release of the chemical to the environment. Concern that GenX may have risks similar to those already associated with PFOA and PFOS caused EPA to enter  a 2009 consent order that (among other conditions) required Dupont to effectively eliminate release of GenX in wastewater and air emissions from the  manufacturing operation.

♦ Section 8 of TSCA requires chemical manufacturers and distributors to inform EPA of any information the company obtains that would reasonably support a conclusion that a chemical presents a substantial risk of injury to health or the environment.  In 2005, EPA used Section 8 of TSCA to assess a penalty against Dupont for withholding information the company had on the environmental and health effects of PFOA. That EPA action ultimately led to the phaseout of PFOA and development of alternatives like GenX.

Regulatory Gaps –TSCA covers chemicals manufactured or imported into the United States. It does not apply to a chemical by-product of a manufacturing or industrial process.  The TSCA  consent order for GenX limits release of GenX to the environment by the manufacturer,  but not the discharge of GenX  unintentionally created as a result of an unrelated manufacturing or industrial process. As a result, TSCA can’t address all contaminant sources. The TSCA review process also puts EPA in the position of constantly chasing the next generation of potential contaminants.

Safe Drinking Water Act. EPA has adopted national drinking water standards for 88 contaminants. Public water systems must monitor for those contaminants and insure that   water delivered to its customers meets the national standard for each regulated contaminant. Given the number of compounds used in manufacturing or produced as a by-product of industrial activities, national drinking water standards clearly do not exist for many contaminants. EPA has not adopted a  drinking water standard for GenX or any other perfluorinated compounds. EPA has issued a health advisory for PFOA and PFOS (combined) of 70 parts per trillion based on longterm exposure, but a health advisory is not an enforceable drinking water standard. EPA has also said that the PFOA/PFOS  health advisory does not apply to other perflourinated compounds like GenX.  

EPA continues to study the need for a national drinking water standard for perflourinated compounds.  Under the Safe Drinking Water Act, EPA’s decision will be based on: likelihood the contaminants will be found in drinking water; the health effects; and the technical/economic feasibility of treating the water to reduce any health risk. It isn’t clear whether EPA will propose a drinking water standard for PFOA/PFOS and the decision to develop a standard for next generation alternatives like GenX would be even further in the future.

Regulatory Gaps —  EPA has not adopted a national drinking water standard for every contaminant that may be detected in a water source or in a public water system; some existing drinking water standards do not reflect the most recent science.  In the absence of a drinking water standard, an EPA  health advisory can provide guidance to the states on safe levels but health advisories  do not exist for all contaminants.  Many of the environmental and human health risks associated with PFOA and PFOS have been known for 10-15 years, but EPA has not yet proposed a drinking water standard and only issued a health advisory based on long-term exposure in 2016. In the absence of a national drinking water standard or health advisory, presence of significant levels of a contaminant in water supplies may require the state to develop a benchmark for safe drinking water.

Clean Water Act.  The Clean Water Act protects surface waters like lakes and rivers by requiring a permit to discharge waste to those waters.   National Pollutant Discharge Elimination System  (NPDES) permits allow wastewater treatment plants and industries  to discharge wastewater meeting specific pollutant limits. Like other states, North Carolina has assumed responsibility for issuance of NPDES permits in the state.

EPA has set technology-based wastewater limits for individual categories of industries, including chemical plants. But those limits do not cover all pollutants or every possible waste stream.  In the absence of an existing EPA limit or when faced with a new type of waste stream, the state permit writer must set a limit on a case-by-case basis based on factors set out in the Clean Water Act. That puts responsibility on the state water quality agency to determine the appropriate limits for these unregulated pollutants.

Regulatory Gaps — Existing state and federal water quality standards and guidelines for permitting wastewater discharges do not address every potential pollutant. In the absence of federal effluent guidelines for a particular pollutant, the burden will be on the state water quality permitting agency to look at any existing information on the environmental and health effects to set a permit limit.

The challenge for the state. These federal laws create frameworks for approval of the  manufacture and use of chemicals; release  of chemicals to the environment in wastewater; and protection of  drinking water sources.  But the EPA standards adopted under those laws are not comprehensive and often lag behind the emergence of new contaminants or evolving science on risk.  When an unregulated contaminant affects a drinking water source, the responsibility for dealing with the immediate environmental and public health concerns falls on the state.

2017 NC Legislative Session in Review: The Budget

July 16, 2017. A few notes on the final state budget which became law following legislative override of the Governor’s veto.

Funding for Environmental Protection Programs. The final budget continues a 7-year trend of annual reductions in environmental protection programs. (See an earlier post  describing the impact of those earlier reductions.) The most significant new cuts to programs in the Department of Environmental Quality (DEQ)  affect:

     Energy Programs. The budget takes almost $1 million from energy programs. The budget reduces pass-through funding for university-based energy centers from around $1 million to a total of $400,000 divided equally between centers at Appalachian State University and North Carolina A& T University. North Carolina State University’s Clean Energy Technology Center will receive no funding. The budget also eliminates 3 of 5 positions in DEQ’s Energy Office.

     Regional Offices/Division of Environmental Assistance and Customer Service.  DEQ’s seven   regional offices house frontline permitting, compliance and technical assistance staff for multiple environmental programs including water quality, water resources, air quality and waste management. Since 2011, the legislature has made the regional offices a particular target  for reductions in positions and funding. The 2017 budget reduces appropriations supporting DEQ’s  Division of Environmental Assistance and Customer Service by $500,000 and requires DEQ to meet the cut in part by eliminating one position in each of the seven regional offices. The Division of Environmental Assistance and Customer Service is a non-regulatory program that provides technical assistance to businesses on water conservation, energy efficiency, waste reduction and other measures to improve environmental compliance.

Conservation Funding. Most funding for conservation programs, such as the Clean Water Management Trust Fund and the Parks and Recreation Trust Fund now go through the Department of Natural and Cultural Resources budget. The Department of Agriculture and Consumer Services also manages some conservation funds through the Farmland Preservation Trust, which purchases conservation easements on agricultural lands. Conservation funding in both departments generally remained stable. The legislature increased funding for the Clean Water Management Trust Fund and the Parks and Recreation Trust Fund, earmarking a combined  $1 million of the increase for an acquisition project on Archer’s Creek (Bogue Banks). The budget also allocates an additional $2.6 million to the Wildlife Resources Commission for acquisition of gamelands and an additional $2 million to the Farmland Preservation Trust Fund.

Surprisingly, the budget did not include state funds to match a federal Department of Defense (DOD) challenge grant of $9.2 million to acquire conservation lands to provide buffers around military installations. DOD announced award of a Readiness and Environmental Protection Integration (“REPI”) grant to North Carolina earlier this year for acquisition of buffers around the Dare County Bombing Range and endangered species habitat near Camp Lejeune.  The federal award  anticipated a state contribution of an additional $10.1 to be put toward the projects.  The final state budget failed to earmark any funding for the state match. The  Clean Water Management Trust Fund and other state conservation agencies could provide some  of the state match, but in the absence of a legislative earmark the REPI projects would be competing with other applications for those grant funds.

Special provisions. As usual, the budget bill (Senate Bill 257 ) includes a number of “special provisions” that  change existing law. Those include:

     Air quality. The budget allows DEQ to use fees from automobile emissions inspections to support any part of the air quality program. Previously, inspection fee revenue could only be used to implement the automobile inspection and maintenance program. In the past, the legislature has tilted toward keeping inspection and maintenance fees as low as possible while still providing adequate reimbursement to inspection stations. The 2017 provision  divorces the fees from the needs of the vehicle inspection and maintenance program for the first time.

The budget also requires legislative approval of DEQ’s plan to use approximately $90 million the state will receive from the Environmental Protection Agency’s  national settlement of an air quality enforcement case against Volkswagen.  (The case concerned  VW’s installation of software to defeat vehicle emissions control systems.) Funds from the settlement will be divided among the states and must be spent for purposes specifically allowed under the EPA settlement agreement.  The agreement gives states a number of options and the legislature clearly wants to influence DEQ’s decision about use of the funds.

     Solid Waste. The budget shifts $1 million from a fund for assessment/cleanup of contamination caused by old, unlined  landfills to the City of Havelock to be used for “repurposing” property previously owned by a recycling company.  (See Sec. 13.3) Phoenix Recycling operated on property just beyond the city limits, but closed in 2000 as a result of environmental violations.  In 2012, the City of Havelock received a state grant to assess environmental contamination on the property. In 2015, Havelock’s city manager advised the town council that if the city acquired the property, it could be eligible for up to $550,000 in federal “Brownfield” grant funds under an EPA program to support cleanup and redevelopment of contaminated sites.  In 2016, the city acquired the property and annexed it into the city.  It isn’t clear whether the city ever applied for the federal Brownfields grant. The 2017 budget provision would instead provide state funding for redevelopment of the property. A Progressive Pulse blogpost provides a good overview of how the earmarking of these funds for the Phoenix Recycling property will reduce funds available to cleanup other, higher priority contaminated sites.

Another provision (Sec. 13.4) allows the owner of an old, unlined landfill site to exclude the property from a state program to cleanup contamination  from  “pre-1983” landfills.  (Modern standards for solid waste landfills went into effect in 1983).  Under the provision, the owner can remove property from the state cleanup program by accepting liability for any contamination and providing financial assurance to address contamination. Financial assurance would not be required if the landfill had received solid waste from a local government (which was often the case). This is a very odd provision in several ways:

♦ Under current law, DEQ has responsibility for assessment and cleanup of pre-1983 landfill sites;  revenue from a statewide solid waste disposal tax pays for the remediation. Under the new provision, a property owner would  waive state responsibility for cleanup and potentially accept environmental liability they might not otherwise have.

♦ The provision has not been restricted to sites that present a low environmental  risk; the only limitations seem to be the property owner’s willingness  to take on the liability and ability to provide financial assurance if required.

♦ The provision describes the opt-out as a “suspension” of the state cleanup program for as long as the person owns the property. That clearly means the state itself would not undertake any assessment or cleanup activity on the site, but the law does not suspend enforcement of state groundwater standards and other environmental remediation requirements. Those programs normally seek remediation by the person(s) responsible for the contamination; under the new provision, the property owner  must volunteer for the liability whether they contributed to the contamination or not.

♦  The implication of a “suspension” is that the state may again have responsibility for the site if it changes ownership in the future. Suspending environmental remediation until a change of ownership could simply delay necessary cleanup activities without regard to environmental risk.

It isn’t clear why a property owner would ever choose to do this.

The budget bill also requires a study of DEQ’s use of revenue from the solid waste disposal tax. The opt-out in Section 13.4  may be a hint of additional changes to the solid waste disposal tax and the state cleanup program for pre-1983 landfills.

     Water Quality: Nutrient Pollution.  The (now annual) budget provision concerning nutrient management strategies directs DEQ to use $1.3 million to test use of algaecides and phosphorus-locking technologies as an alternative to state rules imposing tighter wastewater limits and stormwater controls to address excess nutrients  in  Falls Lake and Jordan Lake. Those rules have been temporarily suspended by the legislature.  (For background on the nutrient rules, see a previous post;  the proposal for an automatic sunset  of the nutrient rules described in the earlier  blogpost was ultimately replaced by legislation further delaying implementation of the rules and a university-based study.)  Based on discussion in committee, legislators had a specific technology developed by a North Carolina-based company in mind.

The Federal Budget and North Carolina’s Environment

March 24, 2017.  Last week, the Trump administration released the Trump Budget Blueprint which describes in very general terms the President’s budget proposals for federal agencies.  The Blueprint just opens the debate on the 2018 federal budget.  Congress will significantly influence the final budget and members from both parties have already expressed concern about some of Trump’s proposed budget cuts.   Percentage-wise, the deepest cuts in the Trump Budget Blueprint affect the Environmental Protection Agency.  As background for the coming federal budget debate,  this blogpost looks at the potential impact of the Trump budget plan on key state environmental protection programs.

Based on preliminary reports, the North Carolina Chapter of the Sierra Club provided a guide to the potential impact of the Trump budget the day before actual release of the Budget Blueprint. (Full disclosure — I assisted in preparation of the Sierra Club report.)  For each  major state environmental protection program, the report shows the percentage of the program budget currently funded by federal grants and the impact of cuts identified in the Trump budget plan. The report also provides information on other  DEQ activities supported by  federal grants that may be eliminated under the Trump administration’s  budget plan.

I want to focus on information in the Sierra Club report about impacts to Clean Air Act, Clean Water Act and Safe Drinking Water Act programs in North Carolina.   EPA  has delegated federal permitting and enforcement authority under those laws to the state’s Department of Environmental Quality (DEQ). EPA provides oversight to ensure the state programs meet federal requirements,  but DEQ has responsibility for day to day implementation.  DEQ issues Clean Water Act permits for wastewater discharges; Clean Air Act permits for  air emissions and air pollution control equipment; and Safe Drinking Water Act permits for public water systems.  DEQ also enforces water quality, air quality and drinking water standards.  In return for the state taking on those federal permitting and enforcement responsibilities, EPA provides program implementation or “categorical” grants to partially offset the cost.

The Trump Budget Blueprint does not provide detail on many cuts, but specifically proposes a 45% reduction in the EPA categorical grants that support basic state Clean Water Act, Clean Air Act and Safe Drinking Water Act programs. The tables below put the proposed cut in the context of each delegated program’s budget. Some notes on the numbers:

♦ “Total Need” means the complete budget (from all funding sources) for the delegated Clean Air Act, Clean Water Act and Safe Drinking Water Act program.

♦  Both the “total need” and federal funding numbers come from the certified state budget for the 2016-2017 fiscal year.

♦  These numbers only cover the EPA categorical grants for the delegated federal permitting/enforcement programs.  The numbers do not reflect separate federal grants for targeted research or pollution reduction projects like  the Albemarle-Pamlico National Estuary Program. Some of those federal grants reportedly have been targeted for elimination in Trump administration budget plans.

♦ The proposed federal funding cuts shown below are higher than those show for these same programs in the Sierra Club report because the final Trump Blueprint increased the percentage reduction over those reported earlier.

N.C. Clean Air Act Implementation

Total Need Federal Grant % Federally Funded Proposed Federal Funding Cut
$4,854,105 $2,482,845  50% – 45%

Clean Water Act Program Implementation 

Total Need Federal Grant % Federally Funded Proposed Federal Funding Cut
$14,160,554 $6,662,950   50%  -45%

Safe Drinking Water Act Program Implementation 

Total Need Federal Grant % Federally Funded Proposed Federal Funding Cut
$5,870,612 $3,316,895 50% – 45%

In sum: EPA grants provide 50% of the funding for each of the major environmental permitting and enforcement programs delegated to the state under federal law. A 45% reduction in the federal grant would result in a cut of nearly 25% to each of those state programs.  As discussed in an earlier post, many N.C. environmental protection programs have already experienced significant reductions in state funding since 2009-2010. The water quality program has been particularly hard hit.

Deep cuts to the federal grants would force the state to decide whether to make up the loss of federal funds with increased state appropriations from tax revenue or higher permit fees. The alternative would be to accept further erosion of those programs. The question may be particularly acute for the air quality program which is now entirely supported by the federal grant and permit fees.

You can find the entire Sierra Club report here .

NOTE: The original blog post has been revised to more accurately describe the release date for the Sierra Club guide and to note that information on  percentage reductions to these particular programs changed (for the worse) after release of the Sierra Club report.