Category Archives: Water

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

The Uses of a Water Quality Certification: Alcoa

September 9, 2013.   On August 2, 2013, DENR’s Division of Water Resources denied a Section 401 water quality certification for the relicensing of Alcoa’s four hydroelectric dams on the Yadkin River.   (See an  earlier post  for background on  401 Certifications.) The denial letter did not cite any water quality basis for denying the 401 Certification. Instead, the letter  referred to a lawsuit filed the same day by the N.C. Department of Administration  that: 1.  claimed title to the bed of the Yadkin River under the Alcoa dams as public trust land;  and 2. asked the court to   recognized State ownership of the Alcoa dams  based on public trust ownership of the riverbed under the dams.  The significance of the Alcoa 401 Certification denial is that  many projects requiring 401 Certifications are located  in waters that may be covered by the public trust doctrine. The Alcoa  denial raises  some interesting questions about   issuance of  401 Certifications for  activities in rivers and streams in particular.   First, some history on Alcoa’s dams and  the public trust doctrine.

History.  Alcoa operates four dams on the Yadkin River to generate electricity.  Alcoa bought an  unfinished aluminum smelting plant in the town of Badin from a French company in 1915, completed the plant and began operation in 1917 powered by the newly constructed Narrows Dam on the Yadkin River.  As power demand increased, Alcoa  built three more hydroelectric dams on the Yadkin  —  at the Falls (1919),  High Rock (1927)  and Tuckertown (1962).   After Congress strengthened the federal role in permitting hydroelectric power projects,  Alcoa received  a 50-year federal  license to operate the dams (together  known as the “Yadkin Project”) in 1958.  In 2002, Alcoa  began the process of renewing the federal license.

For two years, a group  of North Carolina local governments, state agencies (including DENR), federal  agencies, lakefront homeowners associations, and environmental organizations met  to develop recommended license conditions for the Yadkin Project.  The   group  reached agreement on measures to protect water quality and habitat; provide public access; maintain lake levels and adequate  downstream flows; and create a drought management system for the area affected by the Yadkin Project.  The group submitted the proposed conditions to the Federal Energy Regulatory Commission (FERC) in 2007.  You can find a description of the 2007  relicensing settlement agreement  here.

Shortly after the settlement agreement had been signed,  Alcoa stopped all production at the Badin aluminum works and eliminated the last 30 jobs at the plant.  At its height, the Badin aluminum works employed about 1,000 people, but production had declined over a ten-year period.  As the demand for power at the Badin works lessened, Alcoa  started selling electricity from the Yadkin Project on the wholesale market.  Complete shutdown of the Badin plant set off a backlash. Stanly County, which  did  not sign the relicensing settlement agreement, demanded that Alcoa compensate the county for jobs lost  in the  shut down of the  Badin works and raised concerns about industrial contamination in the area of Alcoa’s Badin plant.  Stanly County  and others opposed to  renewal of Alcoa’s  FERC license  persuaded Gov. Beverly Perdue to intervene in the FERC relicensing and  request transfer of the  Alcoa  license to the State of North Carolina. FERC’s decision on relicensing of the Yadkin Project has now been on hold for several years waiting for the state to make a decision on issuance of a  401 Certification for operation of the dams.

In 2009, DENR   issued a  401 Certification for the Yadkin Project. The certification required   Alcoa to upgrade the hydroelectric generation facilities and make operational changes to improve downstream water quality and  restore flow to streams affected by operation of the dams.  DWQ revoked that  401 Certification in late 2010 after discovering that  information submitted by  Alcoa during the application review  may have been misleading.  After resolving DWQ’s  concerns, Alcoa reapplied for a 401 Certification last  year.   DWQ was  moving toward issuing a new 401 Certification  for the Alcoa dams — there was  a public hearing on a draft 401 Certification  in  May  — when DENR suddenly reversed direction and denied the 401 Certification on August 2, 2013 citing the McCrory administration lawsuit filed the same day. You can find documents related to Alcoa’s recent 401 application (including the denial letter and the complaint in the McCrory administration lawsuit) here.

Public Trust Doctrine. Under ancient law brought to the American colonies from England,  lands under navigable waters are owned by the sovereign and held in trust for the public.  The “public trust doctrine” protects the right of  the public to use the  waters for navigation, fishing, and recreation.  After independence, the states acquired title to public trust lands previously held by the King. Since the state holds lands under navigable waters in trust for the use of the public,  the state rarely transfers ownership of  those lands  outright.  On the other hand, the state  allows many private activities on  state-owned public trust lands — both commercial and non-commercial. Most of the docks, piers, marinas, and fish houses in  coastal waters have been built on state-owned public trust lands.   You will  find  other commercial activities in  coastal waters, rivers and streams including  aquaculture operations,  mining,  commercial recreation facilities,  and  dams (used for various purposes).

The  McCrory administration lawsuit admits  that  Alcoa had state permission to build hydroelectric dams on the Yadkin River. In the late 18th and early 20th century,  the General Assembly allowed a number of companies to build hydroelectric dams and mill dams on state rivers by  special legislation.  It is not clear that the state claimed ownership of the bed of the Yadkin River at the time.  Some early laws authorizing construction of dams on the Yadkin  refer to construction on “non-navigable” sections of the  Yadkin River  and a number of  state court decisions  recognized private ownership  of the bed of the Yadkin River  at  specific locations.   In Rose v. Franklin, 216 N.C. 289, 4 S.E.2d 876 (N.C., 1939), the N.C. Supreme Court noted that the parties to a title dispute admitted that the Yadkin River was a non-navigable stream as it passed through the town of Elkin and found that the plaintiff owned to the center of the river.

Until the 1990s,  court decisions recognized state ownership of lands under: 1. tidal waters (like the waters of the Atlantic Ocean and the coastal bays and sounds); and 2.   other waters that were navigable by sea-going vessels. The second category covered rivers that were below the fall line and deep enough to  be navigated  by large boats.    The public trust cases  appeared to allow private ownership of  the beds of  other rivers and streams,  but recognized a public trust easement on those that could be navigated by  shallow-draft boats or used to float logs downstream.   Decisions like Rose v. Franklin  fit this understanding of the law.

A  1995 N.C. Supreme Court decision, Gwathmey v. State, 464 S.E.2d 674, 342 N.C. 287,   abandoned the use of tidal influence as a factor and stated a simple rule: the public trust doctrine applies to any water body that, in its natural condition, can be navigated by “useful vessels, including small craft used for pleasure”.   It isn’t clear whether  Gwathmey completely abandons the old distinction between waters navigable by sea-going vessels and those  floatable by canoe for purposes of state ownership of the bed. One  problem with the Gwathmey case is that it  involved tidal  waters and marsh where public trust ownership had historically been recognized. The court just substituted one grounds for public trust ownership (navigability) for another (tidal influence).  The decision never  addressed the  impact of the  new rule  on  inland rivers where state courts had  recognized  private ownership of the river bed.  The McCrory administration lawsuit claiming title to the Alcoa dams may require the court to explain how the Gwathmey decision  applies to  interior rivers and streams.

The 401 Certification Decision.  The letter denying the Alcoa 401 Certification offers only one grounds for the denial — the state’s claim of ownership of the Yadkin River bed and the Alcoa dams built there. Citing a water quality rule, 15A NCAC 02H.0502 (f),  the letter says that “signature on the [401] application ‘certifies that the applicant has title to the property, has been authorized by the owner to apply for certification or is a public entity and has the power of eminent domain’. The required ownership certification ensures that the applicant owns the project’s dams and powerhouses and is fully capable of implementing all protections of water quality that may be imposed as conditions in a 401 Certification.”

The  rule applies to  all 401 applicants, raising the question of what will  now be required of applicants proposing development in public trust waters or in rivers and streams where public trust ownership may be in question.   It  is not a standard that seems to have been applied before to projects  on rivers and streams– even in the very recent past.  Just one month earlier, DENR waived a 401 Certification for the proposed Cleveland County dam without requiring the county to  show ownership of the bed of the First Broad River or obtain state permission to apply for a federal Clean Water Act permit  to build a dam.  Beyond dam construction,   a  401 Certification may be required for other commercial activities like in-stream mining; aquaculture;  construction of recreation facilities;  and  water intake structures for industry or agriculture.  Having invoked the requirement for Alcoa’s hydroelectric dams, DENR will need to  explain how the requirement applies to other applicants and permit holders:

— Does the standard set in the Alcoa denial letter apply to all  projects  in navigable  waters that require a 401 Certification?  This is not a trick question;  the letter indicates that  ownership  or  some form of state permission  will be necessary to satisfy DENR that  the applicant  has  sufficient control over  a project  on public trust lands  to  meet water quality conditions on a 401 Certification.

— What  will an applicant have to do to show  private ownership of land under a river or stream? Deciding whether a river or stream is navigable can require a boat trip — literally.  Answering the question of public trust ownership  will be  further complicated by uncertainty about how  the Gwathmey decision  applies to  rivers (or parts of rivers)  that  had  never been considered navigable by sea-going vessels.  In the past, many of those riverbeds had been recognized as  private property subject to a public trust easement for  navigation.

— Without proof of private ownership of the river or stream bed, what  kind of  state permission will be needed?  In the 19th and early 20th century, the General Assembly  often authorized activities in rivers and streams by special legislation  — as it did for  construction of  hydroelectric dams on the Yadkin River.  The state issues leases and easements in public trust lands for some purposes, but  those   programs developed fairly late in the 20th century and have been used for the most part in coastal waters.  The easement criteria in G.S. 146-12  lend themselves more readily to piers and docks  than to more intensive uses such as mining or dam construction.

In something of a reverse of the Alcoa 401 denial,  the state has   often relied on environmental permits as the vehicle for approving  activities in public trust waters.  Under G.S. 146-12, issuance of a  Coastal Area Management Act (CAMA) permit for development in  coastal waters  also  gives  the applicant a state  easement.  (The State Property Office  has an opportunity to review those CAMA applications.)   Outside the coastal counties, it is hard to find consistent application of the easement requirement.  For projects that don’t require a CAMA permit,  there will likely be more uncertainty about  public trust ownership and a less well-trod  path to state approval if the state does own the submerged lands.

— What standards will be applied in granting or denying state permission for activities on public trust lands?  The McCrory administration lawsuit suggests an intent to tie Alcoa’s operation of the Yadkin dams to generate electricity for sale on the wholesale market to compensation for use of the public trust resources.  Outside of leases to mine on  submerged lands, state law has not generally taxed  revenue from commercial  use of public trust resources.

— What happens when Congress has given a federal agency authority  to permit an  activity in navigable waters?  Under the Federal Power Act, FERC  has the authority to license hydroelectric projects in navigable waters of the United States. The U.S. Army Corps of Engineers has authority to permit other types of structures in navigable waters under the  Rivers and Harbors Act of 1899 and  issues Clean Water Act permits to fill navigable waters.  The Section 401 Certification has generally served as the state approval for  federally permitted projects in navigable waters. I don’t know that  the state has previously required a separate easement or lease. I also don’t know whether the federal  agencies believe any other state approval is needed given  Congressional authority  to permit these activities in navigable waters.

Many questions. The answers will be interesting.

The Uses of a Water Quality Certification: Cleveland County Reservoir

September 3, 2013.  First a disclaimer: This post will be the first of  a series  on two recent decisions by the Department of Environment and Natural Resources (DENR)  on water quality certifications requested under  Section 401 of the Clean Water Act.   Both  decisions  have been appealed; these posts should not be taken as legal advice to  parties  in these or other cases.

This post explains  how  Section 401  of the Clean Water Act works  and describes DENR’s decision to waive the 401 Certification for a Cleveland County reservoir project. The next  post will cover DENR’s denial of a 401 Certification for Alcoa’s hydroelectric dams on the Yadkin River. The last  post in the series will  talk about the implications of the  Cleveland County and Alcoa decisions for  DENR’s water quality certification program.  Individually, the decisions are unprecedented; together, the decisions send a very confusing message about DENR’s implementation of Section 401 of the  Clean Water Act.

First, a little background on water quality certifications. Under Section 401 of the Clean Water Act, an applicant for a federal license or permit that involves any discharge to navigable waters   must  provide the federal  agency with a certification that the activity  will comply with the water quality standards of the state where the project will be built.  Examples of a “discharge” include piping  wastewater  to a stream or river;  putting fill material in the water to build a structure like a dam or bulkhead; and releasing water through a hydroelectric dam.  A number of  federal permits can trigger the need for a “401 Certification”; the most common may be permits under Section 404 of the Clean Water Act to  fill navigable waters;  permits issued under Section 10 of  the Rivers and Harbors Act of 1899  for structures in navigable waters; and Federal Energy Regulatory Commission (FERC) licenses  to build or operate  hydroelectric dams.

One important thing to know about a 401 Certification: the state water quality  review does not simply duplicate the federal  permitting process.  The federal  permit decision often focuses on one part of the  project and may or may not include consideration of water quality impacts.  Under Section 401 of the Clean Water Act,   the state is charged to look at all of the  activity’s   water quality impacts — including impacts beyond the scope of the federal permit — in deciding whether  the activity will meet water quality standards.  The U.S. Supreme Court  confirmed  the broad scope of a state  401 Certification  in  PUD #1 of Jefferson County v. Washington State Dept. of Environmental Quality, 114 S.Ct. 1900, 128 L.Ed.2d 716 (1994).    The state rarely stamps a 401 application “approved” as submitted. More often, the  state’s 401 Certification identifies operating conditions and mitigation measures needed to prevent  a water quality violation. The federal permit then incorporates  the state’s water quality conditions and mitigation requirements.

Cleveland County Reservoir.   Cleveland County has been  trying to get a  Section 404 permit from the U.S. Army Corps of Engineers to  dam the First Broad River and create a reservoir since at least 2005.  To  issue a  Section 404 permit,   the Corps of Engineers has to find that there is no less environmentally damaging alternative that can  meet the project’s intended purpose. Cleveland County has  argued that the reservoir project is necessary to supply drinking water for the county, but the  Corps of Engineers has not been persuaded that a reservoir is the least environmentally damaging alternative.  There appear to be other drinking water sources available to Cleveland County —  including the purchase of water from existing water systems with excess supply.

The Corps expressed  concerns about the Cleveland County reservoir project from the beginning, but entered into an agreement with the county describing how a  federal permit application would be processed.  An early step would have to be preparation of an Environmental Impact  Statement (EIS) in consultation with the Corps of Engineers to satisfy  the National Environmental Policy Act (NEPA).  Since 2005,  little progress has been made on the federal permit application and EIS, but in late April Cleveland County sent DENR’s Division of Water Quality an application for a 401 Certification for the reservoir project.

Soon after receiving the Cleveland County  application on May 2, DENR’s water quality  staff  concluded that the application was incomplete; among other things, the application  did not identify mitigation  for stream and wetland impacts.  The state also has an  environmental  law  similar to NEPA.   The state Environmental Policy Act (SEPA)  requires an  EIS before  a state agency approves a project involving: 1. expenditure of public money or use of public land; and 2. the potential for significant impacts on the environment.  See N.C.G.S. 113A-4.  Although the Cleveland County reservoir project met all of the SEPA triggers,  the county did not submit an EIS with the permit application –another reason to find the application incomplete.  (Usually,  the state and federal reviews  are  coordinated so a single  EIS can be used for both. )

Although water quality staff  decided that the Cleveland County application was incomplete,  DENR  did not notify  Cleveland County of deficiencies in the application. On the other hand, DENR    did not  acknowledge the application as complete and  publish  notice of the application as required under federal law. After the  early  exchange  of emails among DENR staff about the incomplete application,  radio silence (at least in terms of email communication) for several weeks. Then, on  July 2, 2013 the new  director of DENR’s reorganized water programs, Tom Reeder,  sent a letter  to Cleveland County  waiving the requirement for a 401 Certification on the reservoir project. The letter gave one reason: under state rules, DENR  must act on an application for a  401 Certification within 60 days or the certification is waived. (See 15A NCAC 02H.0507.

You can find  DENR documents on the Cleveland County reservoir project, including the waiver letter,   here. (Be prepared to try  the link more than once; the connection sometimes sends an error message.)

Several things about DENR’s decision on the Cleveland County 401 Certification:

—  DENR has always interpreted the  60-day time period in state rules as  starting when DENR receives a complete application for the 401 Certification and in this case it seems clear that the Cleveland County application was not complete.

— The Clean Water Act  only assumes the 401 Certification has been waived if the state fails to act within  one year after receiving a 401 application.

— Starting the review time based on an incomplete application is inconsistent with DENR’s past interpretation of the rule and inconsistent with DENR’s  application of the rule to other projects currently under review.

— Given the inconsistency with past interpretation, current practice  and the absence of any effort to put the Cleveland County application through a normal 401 Certification review,  DENR seems to have made a deliberate decision to waive the state’s 401 authority for this particular project. The waiver did not happen by operation of  either state or federal law.

—  A deliberate waiver of a 401 Certification appears to have  no precedent in the N.C. water quality program and means the state has  forfeited the opportunity to influence permit conditions and  mitigation requirements for the Cleveland County reservoir project to protect water quality.

—  Other applicants will  question the  criteria for  a state waiver of the 401 Certification.  (The City of Raleigh, which has also proposed a controversial reservoir project, has already asked for a copy of the Cleveland County waiver letter.) Unfortunately, the waiver letter raises more questions than it answers, since it cites the 60-day rule to waive the 401 Certification for an incomplete application.

On August 21, 2013, Southern Environmental Law Center (SELC) sent a letter asking the U.S. Environmental Protection Agency  to designate the  area  of the First Broad River in Cleveland County proposed for reservoir construction as unsuitable under Section 404(c) of the Clean Water Act. Since then, SELC has filed an appeal of the state’s waiver of the 401 Certification on behalf of American Rivers.

Legislative Wrap-Up IV: Water and Wastewater Infrastructure

August 10, 2013. Appropriations, reorganization of infrastructure funding agencies and a bit of micromanagement.

INFRASTRUCTURE FUNDING

State Grants.  The General Assembly appropriated a small amount for grant programs that fund  water and wastewater projects. The figures in the chart below reflect the total appropriation for each agency  minus funds used for staff and operating costs.  Only the Department of Environment and Natural Resources (DENR) grant funds are restricted to water and wastewater projects; the Commerce and Clean Water Management Trust Fund (CWMTF) grant funds  can be  used for other purposes as well.  (More detail  on the scope of those grant programs below.)  The   N.C. Rural Economic Development Center, which has been the  largest source of water and wastewater infrastructure grants, received no new appropriations.

Grant Appropriations (in millions)
Agency 2013-2014 2014-2015
DENR $3.5  $5
Commerce $10.8 $12.3
 CWMTF $ 9.2 $12.4
Rural Center 0 0

 

The Rural Center.  During the legislative session, debate over the future of the N.C. Rural Economic Development Center  overshadowed discussion of  state infrastructure needs.  In 1987, the  N.C. General Assembly created the Rural Center as a nonprofit corporation to support economic development and infrastructure projects in rural areas.  The Rural Center’s economic development grant program sometimes funded water or sewer infrastructure to support a particular economic development project, but a separate program – the Clean Water Partners – existed specifically to help rural areas fund water and wastewater projects. For the last ten years, the Rural Center has been the largest  source of water and wastewater grants to local governments. (The drinking water and wastewater revolving loan funds managed by DENR continue to be the largest source of public funding  overall, but poorer rural communities cannot always afford to take on even low interest debt.)

The Governor’s budget proposed to significantly cut the Rural Center budget (from $16.5 million to $6 million) and the Senate’s proposed budget appropriated no funds to the Rural Center. The House continued to support funding the Rural Center until the State Auditor released an audit report critical of the salary and benefits package for  Rural Center director Billy Ray Hall and questioning the adequacy of grant oversight.  Coming at a key point in budget negotiations, the audit report appeared to tip the balance;  the final budget provided no appropriations to the Rural Center. The Rural Center continues to hold some funds from previous years as well as funds already committed to projects in progress.  Release of funds had been frozen following the release of the audit report,  but the McCrory administration has been reviewing Rural Center grant decisions and  last week Secretary of Commerce Sharon Decker announced that $17.5 million in new, previously approved Rural Center grants will be released to grant recipients.  Oversight of outstanding Rural Center grants will be transferred  to a new Rural Economic Development Division in the Department of Commerce.

New or Modified  Infrastructure Grant Programs. In place of funding for the Rural Center, the General Assembly created two new infrastructure grant programs — a DENR grant program for water and wastewater infrastructure and a rural economic development grant program in the Department of Commerce.  The General Assembly also created a  Water Infrastructure Authority in DENR and a Rural Infrastructure Authority in Commerce to make decisions about grant awards. The provisions creating the two new authorities and setting the criteria for grant awards can be found in the final budget bill, Senate Bill 402.

A few things to note about the appropriations shown in the chart above:

▪ The DENR grant program, which is the smallest of the three, can only be used for water and wastewater infrastructure grants.

▪ The Dept. of Commerce  rural economic development  funds can be used for a number of different types of economic development projects; there is no specific set-aside for water and wastewater infrastructure. The budget provision that goes along with the appropriation also refers to both loans and grants without specifying how the funds will be divided between loans and grants.

▪ The Clean Water Management Trust Fund  appropriation represents the total  amount  available for  CWMTF grant awards.  In the past, most CWMTF grants went to stream/wetland restoration, stormwater management and riparian buffer protection; a small percentage of grants went to wastewater projects needed to address a specific water quality problem.   The new state budget consolidates CWMTF and the Natural Heritage Trust Fund which means that an even larger variety of projects  (including acquisition of buffers around military bases) will be competing for the limited funds.

Note: By comparison to the small amount of funding provided in the current budget , the N.C. Rural Economic Development Center and the Clean Water Management Trust Fund combined to issue  approximately $160 million in grants to rural and economically distressed communities for water and sewer infrastructure in 2008.   Because of the recession and state budget shortfalls, the amount of funding dropped in recent years; In 2011-2012, budget cuts had reduced the amount of water and wastewater grants awarded by the two programs to just over $20 million total.  Since appropriations to CWMTF and to the new Rural Economic Development Division in Commerce do not  set aside a specific amount for water and wastewater infrastructure, it is difficult to know how much will be available in the 2013-2015 budget cycle. Only the very small amount appropriated to the new DENR grant program ($3.5 million in 2013-14 and $5 million in 2014-15) is assured of going to water and wastewater infrastructure grants.

WATER SYSTEMS

Asheville:  The General Assembly approved  House Bill 488, which   transfers the City of Asheville  water system to the Metropolitan Sewerage District of Buncombe County (MSD).   The City of Asheville immediately  got a temporary restraining order to stop the transfer while  it challenges the legislation in court.

The Asheville water system conflict raises a number of interesting legal issues.  Article II, Section 24 of the  N.C. Constitution prohibits the General Assembly from adopting  legislation relating to “health, sanitation or the abatement of nuisances”  that applies to only one  local jurisdiction. Since water system operation probably fall into  all three categories, the Constitution seems on its face  to prohibit  the  General Assembly from reaching down to make decisions related to an individual water system. Legislators frequently try to draft around the  restrictions on “local” legislation by using language that appears to be  general, but in fact only describes a single city or county.  You will not find any mention of the City of Asheville or the  Metropolitan Sewerage District of Buncombe County  in House Bill 488  – the bill avoids naming the parties by using a   description of the areas affected that happens to only apply to one city and one sewerage district in the state.  The City of Asheville lawsuit argues that the description is so specific to Asheville that the bill violates the N.C. Constitution.

The other interesting question is whether the constitution limits the General Assembly’s power to transfer ownership of city-owned property.  A 1913 N.C. Supreme Court decision, Asbury v. Town of Albemarle, suggests that operation of a water system is a proprietary rather than a governmental function.   A proprietary function is something  that can  be done by a private entity and doesn’t require the exercise of powers unique to government.  Operating a water system   would be considered a propriety function because water systems can be operated by private entities, including investor-owned water utilities.  The Asbury decision says that legislation affecting a town’s proprietary functions falls under the same constitutional limitations that apply to legislation affecting the operations of a private corporation.   Although the General Assembly has broad power to control a city or county’s governmental  functions, the court concluded that it cannot  “at its will, take away the private property of a [municipal] corporation or change the uses of its private funds acquired under the public faith.”

The question is how North Carolina courts will apply the Asbury case today and to a somewhat different fact situation. The case is still cited as good law, but a lot has happened since 1913.

Durham:  Senate Bill 315 requires the City of Durham to annex and extend water service to the site of a  proposed development in southern Durham County  that is now beyond the city limits. Efforts to legislatively force extension of water lines to the proposed 751 South development began in 2012 (see  Senate Bill 382). Durham had refused the developer’s  request for water service in part because of   the high cost of extending a water line to the project and providing other municipal services.  Senate Bill 382 popped up in the last few days of the 2012 legislative session and failed to make it through. This session,  Senate Bill 315 made a few additional concessions to the City of Durham by allowing the City to delay providing other municipal services (such as police and fire protection) to the area for ten years following the annexation.

Note: The original post has been updated to make it clear that the Department of Commerce appropriation for rural infrastructure may be awarded as either loans or grants.

Reorganization and Review of N.C. Water Programs

August 7, 2013. An earlier post talked about reported plans for reorganization of water programs in the Department of Environment and Natural Resources and legislation directing DENR to combine the Division of Water Resources and the Division of Water Quality.  Since then,  DENR’s plans have become public and the General Assembly  adopted budget provisions related to the reorganization. On  August 1, 2013,  Secretary John Skvarla announced that all of the stormwater programs in the Division of Water Quality would move to the Division of Mineral, Energy and Land Resources effective that same day and the remaining water quality programs would become part of a reorganized Division of Water Resources. You can find the press release here.

Stormwater. Transfer of the stormwater programs significantly  changes the responsibilities of the Division of Mineral, Energy and Land Resources.  The Division of Water Quality  managed a number of different state and federal stormwater programs, including: a state coastal stormwater  program  designed to protect shellfish waters from bacterial contamination;  stormwater control requirements associated with the Neuse River, Tar-Pamlico River, Falls Lake and Jordan Lake nutrient strategies;  federal  stormwater programs (delegated to the state by EPA)  that issue permits for municipal and industrial stormwater discharges and for  stormwater generated by active construction sites. The Division of Energy, Mineral and Land Resources (DEMLR)  has no stormwater experience other than a supporting role in  construction stormwater  permitting   (through the DEMLR sedimentation program)  and no experience managing  federal  Clean Water Act programs. Taking on a much broader range of stormwater programs and responsibility for delegated federal programs could make for a steep learning curve.

Transfer of the stormwater programs to DEMLR separates NPDES stormwater permitting from NPDES permitting for wastewater discharges.  (National Pollutant Discharge Elimination System — or “NPDES”– permits are the federal  Clean Water Act permits required for discharge of pollutants to surface waters.)  The move also separates programs that  work together to reduce pollution loading to water bodies — like Falls Lake and the Neuse River estuary — that have become impaired by  pollutants coming from both point sources and nonpoint sources.

One  footnote on the stormwater move — legislation  that directs DENR to combine programs in the Division of Water Quality and the Division of Water Resources  assumes that  stormwater programs will remain in the reorganized Division of Water Resources.  The section of House Bill 74 (Regulatory Reform Act) that directs DENR to  reorganize the water programs also makes changes in a number of water quality laws to reflect the reorganization and substitutes  “Division of Water Resources” for “Division of Water Quality”   in state stormwater laws. I am guessing that reflects a lapse in communication rather than a conflict between DENR and the General Assembly – but in the short term, several state laws seem to  identify the Division of Water Resources as the stormwater permitting agency.

Other Water Quality Programs.  Remaining Division of Water Quality (DWQ) programs will move into the reorganized Division of Water Resources (DWR) under director Tom Reeder. The state budget  attached a $2 million budget reduction to the water program reorganization.  Using the reorganization to cut programs and people has risks. After four years of budget cuts, it will be difficult to reduce the combined water programs by another 12.4%  without hurting critical functions. In reality,  there has been little overlap in the activities of the two divisions; DWQ had responsibility for water pollution programs and DWR focused on water supply  — quantity rather than quality. It is not clear that the additional budget reduction will leave the state with effective water quality and water supply programs.  DENR will also need to be sure program  cuts don’t threaten its  ability  to meet federal requirements for delegated permitting authority under the Clean Water Act and Safe Drinking Water Act.   Those  requirements go beyond simply having people to issue permits. In addition to  meeting regulatory and planning standards set in federal law,  the federal grant agreements  link to specific performance measures for  state permitting and compliance activities. The earlier post on reorganization proposals talked about some of the  program requirements linked to delegation of Clean Water Act permitting.

A July  video  message from Division of Water Resources director, Tom Reeder,  to  staff in the Water Resources and Water Quality divisions provides some insight into  next steps for the water  programs.  New information about the reorganization was limited, although Reeder said the new organization of around 700 employees would have fewer managers (and no deputy director).  After briefly talking about the reorganization, Reeder described plans for a review of water programs and rules that will begin right away and be completed by the end of December. The purpose of the review goes beyond identifying duplication of programs in the newly combined divisions. Reeder describes it as an effort to eliminate rules and programs that  are overly burdensome or  ineffective.

In the  video, Reeder  specifically mentions riparian buffer rules as a program area needing review. It isn’t clear whether  that means minor adjustments or wholesale revision of the buffer rules, but  the  buffer rules are a good example of  one potential pitfall in  the review process — some rules are part of larger water quality strategies and  the burdens and benefits need to be looked at in that context. Buffer rules put an additional burden on real estate developers and property owners, but  using  buffers  as part of a broader  nutrient reduction strategy can   lower  the  cost  to  other nutrient sources  (including municipal wastewater treatment plants and agricultural operations).  Continuing to balance the burden among point and nonpoint sources will be particularly important where buffer rules rules account for some of the  load reduction required to meet an  EPA-approved Total Maximum Daily Load for impaired waters.

The Division of Water Resources has formed an outside involvement committee to help with the review of water programs and rules. You can find the Reeder video on YouTube. Discussion of the reorganization and review of water rules begins around the 7-minute mark.

Legislative Wrap-up I: Water Quality

July 30, 2013:  A summary of legislative action on water quality-

Budget-  The final budget directs the Department of Environment and Natural Resources (DENR) to combine programs in the Division of Water Quality (DWQ)  and the Division of Water Resources DWR) and reduces the budget for the reorganized programs by $2 million.  The $2 million cut amounts to a 12.4% reduction to the combined programs. The budget also make two specific  program cuts  that reduce appropriations for water resource and water quality programs by another $735,257.  Total reductions may go even  higher than $2.7 million if water resource/water quality  programs also share in the  2% department-wide reduction required by  the final budget.   Although both the Division of Water Resources and the Division of Water Quality deal with water, the two have very different responsibilities and little overlap in functions; it  will be  difficult for  the reorganized programs to absorb another 12.4 % cut  without hurting program delivery.

Division of Water Quality (DWQ) has responsibility for preventing and reducing water pollution in the state’s rivers, lake, streams and groundwater supplies.  By delegation of authority from the U.S. Environmental Protection Agency, DWQ  issues federal Clean Water Act permits to wastewater and stormwater  dischargers. DWQ also issues state water quality permits for animal waste management systems, injection wells, and for land application of waste.

Division of Water Resources monitors water supply – the amount of water in rivers, lakes, streams and aquifers rather than its quality. DWR has responsibility for state and local water supply planning; drought monitoring and drought response; and approval of  water transfers from one river basin to another (for example, taking water from an intake on the Neuse River to provide drinking water to a city  in the Cape Fear River basin).  The Public Water Supply section in DWR enforces the federal Safe Drinking Water Act, which regulates drinking water systems to ensure that the water coming out of the tap is safe to drink.

Both divisions have river basin planning programs –  DWR water supply plans  use data on water use to model for future water supply  and DWQ  water quality plans track data on pollutant levels,  identify sources of  pollution and provide a foundation for addressing water  quality  problems.  The two types of planning complement each other, but neither can take the place of the other.  It will be important to continue to have strong water quality and water supply planning programs if the state is to have a scientific and technical basis for good water policy decisions.

The budget will test DENR’s  ability to continue to deliver good science, timely permit reviews, compliance assistance, and enforcement with fewer resources. The department will also have to keep an eye on the effect of reduced state appropriations on  federal grants supporting programs in the two divisions. The state receives a significant amount of  federal grant money to support activities required under the delegated Clean Water Act and Safe Drinking Water Act programs.  Those grants require a certain level of state “match” money — which is often provided in the form of state-funded positions in those programs.

Jordan Lake –  Legislation delays further implementation of the Jordan Lake Nutrient Strategy for three years  (Senate Bill 515).  The General Assembly had already delayed  the original Jordan Lake compliance dates for reducing  the amount of  nitrogen and phosphorus in wastewater discharges (until 2016) and for implementing new development stormwater programs (until 2014). The practical effect of the bill will be to  push those dates out three more years.  A number of local governments in the Jordan Lake watershed have already started implementing  local stormwater ordinances and can continue with those programs. The purpose of the delay is to allow the state to “[explore]  other measures and technologies to improve the water quality of the Lake”.  A related budget provision  earmarks   $1.35 million from the 2013-2014 appropriation for the Clean Water Management Trust Fund  for a pilot project to test the use of technology to improve water quality in Jordan Lake.   The budget provision describes the technology to be tested very specifically in three pages of bill text and seems  to direct funds to a particular product.  Both in committee and on the floor of the House, legislators identified the technology as SolarBee— a technology used to aerate water tanks and raw water reservoirs.  The bill exempts the pilot project from normal state contract procedures, which means DENR will not be required to advertise for bids.

Prospects for the success of the pilot project are already in doubt. A  prominent North Carolina scientist, Professor Emeritus Kenneth H. Reckhow of Duke University, has said that aeration technologies are not effective in large water bodies like Jordan Lake.  Even if the  technology can improve in-lake conditions, the U.S. Environmental Protection Agency  has put the state on notice that  in-lake treatment cannot substitute for pollution reductions required under the Clean Water Act (7_10_2013 Letter to Rick Glazier re B Everett Jordan Reservoir TMDL-1).  If EPA holds to that position, the technology  will fail its primary purpose — which is to relieve upstream communities in the Jordan Lake watershed  of the need to  invest in wastewater treatment plant upgrades and stormwater controls on new development.

Groundwater (and possibly coal ash) – Section 46  of  House Bill 74 (Regulatory Reform Act)  seems to narrow DENR’s ability to address groundwater contamination caused by a permitted waste disposal site.  When the state issues a  permit for land application of  waste or for  waste disposal in a landfill, the permit sets a groundwater compliance boundary. Some degree of groundwater contamination will be allowed inside the compliance boundary,   but the permit holder cannot cause groundwater  standards to be violated outside the compliance boundary.   The new language in House Bill 74  continues to allow the Environmental Management Commission (EMC) to set compliance boundaries by rule and by permit, but creates  a presumption that the compliance boundary will be the property line. (By comparison, landfill permits have  generally set the groundwater compliance boundary at 250 feet from the actual waste disposal area.)

The bill then goes on to limit the circumstances in which  DENR can require  “cleanup, recovery, containment, or other response” to groundwater contamination inside the compliance boundary. Before requiring any action inside the compliance boundary, DENR would have to show that the groundwater contamination: 1. has already caused a violation of water quality standards in nearby surface waters or can reasonably be predicted to cause a water quality standard violation; 2. presents an imminent threat to the environment or to public health and safety; or 3.causes a violation of groundwater standards in bedrock (which seems to mean contamination of deep groundwater).

The presumption that the property line will be the compliance boundary  will likely create pressure on the EMC to allow much larger compliance boundaries  than in the past. Expansion of the compliance boundary carries with it the possibility of  larger areas of groundwater contamination. The new law also makes it more difficult for  DENR   to require  a permit holder to take action inside the compliance boundary –even to contain or reduce the flow of contaminated groundwater off site.   DENR could only require steps to contain contaminated groundwater by showing that the groundwater contamination had caused –or will cause — a specific water quality violation or an imminent threat to health, safety or the environment. The fact that the contamination has moved beyond the compliance boundary (and perhaps already migrated off  the property and toward a river or lake) will not be enough. The clear risk will be that  acting only  after a problem already exists will create a larger and more expensive problem to remedy in the future.

The provision appears to be linked to an ongoing controversy and threatened litigation over groundwater contamination and seeps from ponds where coal-fired power plants have disposed of coal ash. The Catawba Riverkeeper has filed a notice of intent to sue under the Clean Water Act over contamination from two coal ash disposal sites — a  Duke Energy  coal ash pond associated with the Riverbend Steam Station and a Progress Energy coal ash pond in Asheville. The Duke Energy coal ash pond is located on the banks of Mountain Island Lake and near a water intake for the City of Charlotte.  Monitoring around the coal ash pond has detected contaminants in groundwater that exceed groundwater standards, but the Division of Water Quality has not yet decided whether corrective action will be necessary. The Riverkeeper’s complaint claims that contaminants from the coal ash are reaching the lake in seepage from the impoundment and through a groundwater connection to the lake. The House Bill 74 language means that groundwater violations alone –even beyond the compliance boundary — would not necessarily require  steps  to  contain  an ongoing flow of contaminated groundwater to the lake.  DENR would first have to show that the groundwater contamination is causing or will cause an actual water quality standard violation in the lake or  an imminent threat to health, safety or the environment.

Regulatory Reform – More on regulatory reform in a later post, but House Bill 74 includes a requirement that agencies review and readopt existing rules of “substantive public interest”   every ten years.  The bill defines “substantive public interest” so broadly that it will  cover  every environmental rule of any real substance. The state’s Rules Review Commission will set the initial schedule for review of rules, but the bill directs the commission to schedule surface water and wetland standards for review in the first round of rule review.

Miscellaneous – This post only covers the most significant water quality legislative. House Bill 74 contains a number of other minor changes, including technical amendments to the laws on permitting animal waste management systems and an exemption from riparian buffer requirements for agricultural ponds.

Failed Water Quality Legislation – One major change did not happen. The N.C. Homebuilders Association had pushed legislation to eliminate state water quality permitting requirements for wetlands that do not fall under federal Clean Water Act permitting jurisdiction. An earlier post provides some background on the difference between federal and state wetlands jurisdiction.  The language first appeared in a Senate farm bill (Senate Bill 638), but was dropped from the bill once it reached the House. The Senate agreed to the change — possibly because farmers already have broad exemptions from wetland permitting requirements. During the last few days of the legislative session, the exemption language popped up again  in a Senate committee substitute for House Bill 938. The House sent the bill to committee and never took it up for a concurrence vote. The bill will still be eligible for consideration next year when the General Assembly reconvenes in May.

Compromise Budget Significantly Cuts Water Quality/ Water Resource Programs

July 22, 2013:  The House and Senate have released a compromise budget proposal to be voted on by both chambers this week. The budget comes in two pieces: 1. The report on continuation, expansion and capital budget (the “money report”) shows the proposed changes up or down in appropriations for state agencies. The money report also shows funds set aside for state capital improvement projects. You can find a copy of the money report here; 2. The conference committee report on the budget bill (Senate Bill 402) has the text of statute changes being adopted as part of the budget. Some of the statute changes are needed because of appropriations decisions; others pop up in the budget bill  for more strategic reasons and have very little relationship to budgeting. Another post will provide an overview of budget decisions affecting environmental programs. This post focuses on one of the most significant — the reorganization of water quality and water resources programs and a large budget cut associated with the reorganization.

The money report shows a $2 million cut to water quality and water resource programs beginning the second year of the biennium (2014-2015)  from  savings to be realized by combining the Division of Water Quality (DWQ) and the Division of Water Resources (DWR). The $2 million dollar reduction represents 12.4% of state appropriations to programs in the two divisions in 2012 and comes on top of a department-wide budget reduction of 2% also required in the compromise budget. An earlier post talked about DENR’s plans to reorganize the state’s water quality programs and anticipated some reduction in positions as part of the reorganization. The questions raised in the earlier post become more important given the magnitude of the cut proposed in the budget bill.

The challenge comes from the fact that the two divisions do very different things.  The Division of Water Quality  has responsibility for  the quality of water in rivers, lakes, streams and aquifers. DWQ develops and enforces state  water quality standards. DWQ also carries out federal Clean Water Act  programs, including permitting programs for wastewater discharges, stormwater discharges and development activities affecting streams and wetlands.  The Division of Water Resources deals with water quantity — the amount of water available in rivers, lakes, streams and underground aquifers;  water supply planning;   drought response;  and regulation of  public water systems. Functions of the two divisions  intersect at points (and there may well be some efficiencies there), but do not overlap. The kind of data needed to monitor water quality in a river is different from the data needed to  understand the volume of water in the same river. Water supply planning and water quality planning are not exactly the same thing – it may well make sense to marry the two, but the marriage will only work  if there are still  sufficient resources to look at both water quality and quantity. After four years of budget cuts, it will be difficult to achieve the  12.4% reduction required in the budget without compromising either the level of service provided to permit applicants or water quality/water supply monitoring and planning activities.

When the earlier post was written in June, the word on the street had been that DENR planned to transfer all of the state’s stormwater programs to the Division of Energy, Mineral and Land Resources (DEMLR) effective August 1 and move remaining Division of Water Quality programs into the Division of Water Resources. About the time word began to get out about the department’s reorganization plans, the Senate put language in House Bill 94  (and later in House Bill 74)  directing DENR to combine the Division of Water Quality and Division of Water Resources. The Senate language seemed to anticipate that stormwater programs would  go to the Division of Water Resources with other DWQ programs. (Both bills made changes to a number of state stormwater statutes to substitute “Division of Water Resources” for “Division of Water Quality”.)  Those bills are still waiting for final action and until that happens, there may be lingering questions about exactly what form the reorganization will take.

See the earlier post  for  more about the implications of moving stormwater programs to the Division of Energy, Mineral and Land Resources. Whatever the final configuration of the state’s water quality programs, the budget cut will be a challenge. The  sedimentation pollution control program  in  DEMLR  (the only water quality -related program in that division)  has already been decimated by budget cuts  that  reduced sedimentation program staff by 35% over  the last four years. As the  number of sedimentation program staff declined, the number of  open construction sites  to be monitored for sedimentation and erosion control did not.  (“Open” construction sites includes sites actively under construction  and sites where construction stopped before completion of the project.) There are now 40 state sedimentation staff to manage an inventory of 8,000 open construction sites across the state. The gap between open  construction sites and state staff to enforce the Sedimentation Pollution Control Act will only become larger as new development activity picks up.  There are no efficiencies left to wring out of  the sedimentation program and it isn’t clear that DWQ  stormwater programs  could help given other state and federal stormwater responsibilities.

The question for DENR is whether any combination of programs can absorb the additional reduction without damaging essential water quality programs. After the budget reductions of the last four years, can the department continue to do all of the things required for delegated Clean Water Act and Safe Drinking Water Act programs, maintain water quality and water supply planning functions, enforce the state Sedimentation Pollution Control Act, and provide good customer service with  another  12.4% budget cut targeting water quality and water resources programs?

NOTE: The original post was modified to make it clear that the $2 million cut begins in the second year of the biennium (2014-2015).

Jordan Lake and EPA Action to Reduce Nutrient Pollution

July 18, 2013:  As things now stand, Senate Bill 515 (Jordan Lake Water Quality Act)  will either repeal the state’s water quality rules  for Jordan Lake (Senate version) or delay implementation of the rules for another three years to investigate technologies that may reduce water quality  problems  caused by nutrient pollution (House version). With the bill still under consideration, some background on how issues of nutrient pollution are playing out nationally and where N.C. stands.

The Clean Water Act requires the state to  reduce  pollutants that cause water quality violations in a lake or stream by adopting a Total Maximum Daily Load (TMDL) for the pollutants causing the problem. In September of 2007, EPA approved the state’s Jordan Lake nutrient strategy as the TMDL for the lake. The nutrient strategy identifies the  amount  of  nitrogen and phosphorus  that  can be absorbed by the lake  without violating water quality standards and then allocates  nitrogen and phosphorus  reductions among all of the major  sources contributing nutrients to the lake to reach the target level. Sources include wastewater treatment plants, large industrial facilities that discharge wastewater, stormwater from developed areas, and agricultural activities. The part of the Jordan Lake strategy setting the maximum  level of nitrogen and phosphorus consistent with meeting water quality standards  represents the heart of the TMDL required under the federal Clean Water Act.   An earlier post  links to  a July 10, 2013 letter from EPA’s Acting Administrator for Region 4, Stan Meiburg,  saying  that EPA does not believe that  either delay or repeal of the Jordan Lake rules relieves the state of the obligation to achieve the pollution reductions called for in the  approved TMDL.

If a state fails to act on a TMDL, EPA has the ability to impose a federal TMDL.  The Jordan Lake rules share the burden of reducing nutrient  loading to the lake more broadly than EPA  could do under a federal TMDL, which would have to be focused on  federally permitted wastewater discharges.  The result would be an  increased burden on local governments and industries that discharge wastewater because the pollution reductions would no longer be shared by stormwater and agricultural sources that do not require federal permits. EPA also  accepted the  state’s timeline  for  implementing  pollution reduction measures for Jordan Lake. The original Jordan Lake rules allowed between four  years and nearly ten years  for implementation of different parts of the nutrient reduction strategy;  those timelines have already been  extended several  years by earlier legislation. A federal TMDL would likely have a shorter implementation time.

Apart from the Jordan Lake TMDL, North Carolina finds itself on the wrong side of EPA’s national policy on  permitting  nutrient discharges to all lakes and streams. EPA’s longstanding position has been that states need numerical in-stream or in-lake standards for nutrients. That would involve setting a nitrogen and phosphorus standard for each water body in the state and using those  standards to  set  permit  limits  for wastewater discharges.  The N.C.  Division of Water Quality (DWQ)  has resisted the push for numerical nitrogen and phosphorus standards. N.C.’s water quality program has supported use of  the existing  chlorophyll-a standard as a better indicator of  nutrient impairment and one less likely to  put an unnecessary burden on wastewater treatment plants and industrial dischargers.

So while  a number of states have adopted numerical nutrient standards, North Carolina has not.  (Note: DWQ and the Environmental Management Commission are due to report to EPA soon on the state’s progress on  nutrient standards.) EPA has not yet forced the issue here, but EPA has directly intervened in several other states to either press for state adoption of nutrient standards or to actually impose federal nutrient standards. In Florida, EPA  adopted federal nutrient rules for some Florida waters in 2010 and proposed additional rules in 2012.  A November 2012 EPA  document provides a history of EPA actions on nutrient standards in Florida. (Florida has since adopted state nutrient standards that EPA has approved.) EPA has also pushed several midwestern states to adopt numerical nutrient standards. Just last month, EPA ordered the state of Minnesota to  tighten nutrient limits on wastewater discharge permits  or risk having EPA take over the water quality permitting program.  See an article in Governing magazine  for an overview of the EPA action in Minnesota.

In deciding how to ease the financial and regulatory burden of  the  Jordan Lake rules, the state needs to be  mindful of  Clean Water Act requirements and  EPA’s possible response. So far, EPA has  allowed North Carolina  a great deal of flexibility  to address  nutrient pollution and has not pressed the issue of numerical nutrient standards.  It is likely that EPA  has  given some deference to the state’s good faith efforts to  develop  solutions  – like the Jordan Lake nutrient strategy — tailored to the state’s  needs. But nationally, EPA has also shown a willingness to intervene directly to enforce the Clean Water Act in the face of state inaction on nutrient problems.

There  are ways  to ease the burden of nutrient reduction on upstream communities without completely walking away from the need to reduce  nutrient pollution. One  idea (which actually came up in  development of the Falls Lake and Jordan Lake rules)  is creation of  a  cost-sharing plan so downstream communities that benefit from upstream pollution controls would  help offset the cost. There may also be modifications to the Jordan Lake rules that could ease the burden on upstream local governments without abandoning the goal of reducing nutrient pollution.  Putting state energy into improving the Jordan Lake rules and exploring innovative financing of pollution controls  would be consistent with the Clean Water Act and less likely to provoke direct EPA action. If  N.C. completely steps back from the commitment to reduce nutrient loading to Jordan Lake,  the state may lose  the ability to create a solution that  meets the state’s interests.

Delaying the Jordan Lake Rules

July 11, 2013: The House Environment Committee  took up a proposed committee substitute for Senate Bill 515 (Jordan Lake Water Quality Act).  An earlier  post  (written as the bill made its way through the Senate)  provides some background on the Jordan Lake rules. The Senate bill  proposed to repeal the rules and  study alternative solutions to the lake’s  water quality problems. At the time, Senate  bill sponsors suggested that a technological solution to the Jordan lake nutrient pollution could make additional  investment in upstream pollution controls unnecessary.

Instead of repealing the rules, the  bill approved by the House Environment Committee today delays further implementation of the Jordan Lake rules until July 1 2016.  It  allows DENR and local governments in the Jordan Lake watershed to continue with programs  already underway, but otherwise extends compliance deadlines  by another three years — affecting the timelines for upgrading wastewater treatment plants and  development of local stormwater  programs.  Discussion in committee  made it clear that legislators still hope for a technological solution  to  substitute for  the upstream pollution  reductions required under the Jordan Lake rules.   Senator Rick Gunn told House members that separate legislation would create a legislative study and provide $2 million in funding for a pilot project to test technology  and “best practices” to improve water quality in Jordan Lake.  In response to a question, Senator Gunn indicated that the funding would come out of the existing appropriation for the Clean Water Management Trust Fund. (The actual appropriation to Clean Water Management Trust Fund is still in question since differences between the House and Senate budget bills have not been resolved.)

Although the bill itself does not identify a particular technology,  one committee member mentioned  Solar Bee — a technology used to aerate water tanks and lakes. Since the new bill draft  does not include language actually describing the study or the pilot project, it is not clear how broadly the legislature will look for technological solutions to Jordan Lake’s pollution problems.

The vote to approve the bill in committee was surprisingly close and at least two Republican members spoke against the bill.  Some  of the opposition focused on  the proposal to take  $2 million from the already diminished Clean Water Management Trust Fund budget to pay for the pilot project. There was also  concern that the pilot project may direct state money to a single technology.

Although less radical than the Senate version, the House bill still sets up an unnecessary choice between  reducing pollution coming from sources upstream of Jordan Lake or using technology to improve conditions in the lake. However effective a technology may be, it is unlikely to  offset  increasing levels of  nitrogen and phosphorus flowing downstream into the lake. The only certain thing about the  bill is that it  will allow  three more years of development in the upper watershed without comprehensive stormwater controls and three more years without tighter nitrogen and phosphorus limits on  wastewater discharges.  The three year delay in implementing the rules does not maintain the status quo — it allows nitrogen and phosphorus loading to Jordan Lake to  increase. In the end,  delay may  also  increase the cost of addressing the water quality problem.

In the meantime, the U.S. Environmental Protection Agency has responded to a question from Rep. Rick Glazier about the impact of Senate Bill 515 on the state’s delegated Clean Water Act program. A July 10, 2013 letter from  EPA’s Acting  Administrator in Region 4, Stan Meiburg,  makes two important points:

1.  In more blunt language than you will often find in an EPA letter,  Meiburg  expressly  says that federal law does not allow use of treatment technology as a substitute for actually reducing the pollutants being discharged to Jordan Lake. When  a water body   cannot meet a  water quality standard, the  Clean Water Act requires the state to limit  discharges of the pollutant causing the  problem  to levels that will  eliminate the  violation.  In Clean Water Act terms, the  state must set  a “total maximum daily load” (TMDL) for the pollutant. The TMDL  acts as  a cap; each individual wastewater treatment plant or industrial discharger  feeding into the impaired water body  has  a permit limit  for the TMDL pollutant and  the sum of all the permitted discharges  cannot exceed the cap.

2.  Since the state’s Jordan Lake nutrient strategy is the federally approved TMDL for Jordan Lake, Meiburg makes it clear that EPA  expects the state to continue implementing the nitrogen and phosphorus reductions in the nutrient strategy whatever happens legislatively. That means EPA will hold the state to the total level of nitrogen and phosphorus reductions called for in the Jordan Lake rules.  If EPA finds that the state has failed to  carry out  some part of the strategy  — such as stormwater controls on new development —  EPA will expect the state to offset the loss of those nitrogen and phosphorus reductions by increasing the reductions from other nutrient sources.

The full text of the letter:  7_10_2013 Letter to Rick Glazier re B Everett Jordan Reservoir TMDL-1

House Environment was the only committee referral for  Senate Bill 515, so the new version of the bill will next go to the House floor. If approved, the bill will have to go back to the Senate for concurrence in the changes made by the House.

Buying Contamination

July 10, 2013:  The Senate version of  House Bill 94 (Amend Environmental Laws) makes so many changes to environmental statutes, that  I just focused on language in Section 16  that requires Council of State approval before any  state agency (including the UNC campuses and community colleges)  can buy property with known contamination.   (Note: The Council of State consists of the Governor and other individually  elected heads of state agencies such as the Attorney General, Commissioner of Labor, Commissioner of Agriculture and State Treasurer.)  Approval would be given only if  the agency  has a plan to use funds other than state General Fund appropriations for the purchase. See  Edition 4 of House Bill 94 for the Senate version of the bill.

The bill has already passed both chambers and is now in conference to resolve differences between the House and Senate versions.  The language on purchase of contaminated sites was not in the House version of the bill, but I do not know whether this is an area of controversy between  House and Senate conferees.

On its face,  the restriction appears to be common sense — why should state funds be used to buy contaminated property that may be expensive to clean up? In practice,  completely avoiding property with contaminated groundwater  may be more difficult  than legislators realize. It also bumps right into the General Assembly’s repeated endorsement of limited, “risk-based” cleanup of groundwater contamination because of the lower remediation cost.

Some background —

Tens of thousands of  properties across the state (urban and rural) have groundwater contamination. Most of the contamination came from past industrial and commercial uses, such as leaking underground petroleum storage tanks at gas stations, solvent contamination from dry-cleaning operations, old dump sites, and miscellaneous chemical spill or disposal sites. Some resulted from agricultural pesticide use. Recent reports from the Department of Environmental and Natural Resources provide some numbers:

372 dry-cleaning sites with known solvent contamination

3,071 chemical spill, chemical disposal and unlined waste dump sites

26,625 reported petroleum releases (17,816 from commercial underground storage  tanks and 8,809 from noncommercial tanks, such as home heating oil or farm tanks)

These kinds of  problems are so common that it  will be difficult for state facilities and university campuses to expand without bumping into some kind of contamination. Groundwater monitoring wells have been installed near several buildings in the state government complex in downtown Raleigh — including the legislative  building —  because of groundwater contamination that most likely came from a dry cleaner that once operated near the current site of the Nature Research Center.  The  numbers provided in DENR’s reports to the General Assembly only represent the sites that state regulators already know about. New reports of contamination  come in  with some frequency as property is developed or redeveloped.

Many of the state’s  remediation  programs do not require complete cleanup of groundwater contamination, allowing some level of contamination to remain as long as it does not affect drinking water supplies or create some other health or environmental hazard. By law, both the underground storage tank and dry-cleaning solvent cleanup programs use a “risk-based” cleanup approach that  often  allows some level of groundwater contamination  to remain after remediation is completed. Cleanup reduces the  groundwater contamination enough to eliminate any immediate hazard.  Risk to drinking water supplies can sometimes be eliminated by abandoning drinking water wells and  connecting  to a local water system. But in the end, the groundwater will continue to have some level of  contamination for many years.

The General Assembly has recently expanded the kind of contaminated sites eligible for “risk-based” cleanup to also include  industrial sites. Although few companies have taken advantage of the opportunity to do a risk-based cleanup yet, adding industrial sites to those eligible for “risk-based” cleanup will likely increase the number of  contaminated sites where  remediation will not completely eliminate groundwater contamination. (Ironically, the definition of “contamination” used in the bill comes out of the risk-based remediation law for industrial sites.)

Through the  Brownfields Redevelopment Program, state law actually encourages redevelopment of contaminated sites and can allow the new owner/developer to avoid  some cleanup costs. If the person  who caused the contamination has the financial ability  to do a clean up,  that person continues to be responsible for most remediation. Even if the original polluter does not have the financial ability to cleanup the contamination (or cannot be found), the brownfields redevelopment laws provide liability protection to the new owner and allow  a “risk-based” cleanup of any contamination. A number of local governments and developers have used the brownfields program to make idle, blighted industrial sites productive again.

Without modification, the Senate language may be too restrictive to allow for necessary expansion of state facilities and community college/university campuses.  It also causes the General Assembly to bump  into its own policies on cleanup of environmental contamination.  On the one hand,  the General Assembly has consistently moved to increase use of risk-based cleanups that allow some level of groundwater contamination to remain for many years after  remediation is done. On the other hand,  the proposed Senate language tries to avoid state purchase of property with any contamination at all. Those two policies may not be reconcilable.

Removing State Protection for Isolated Wetlands

June 26, 2013: An earlier post talked briefly about a section of Senate Bill 638 (N.C. Farm Act  of 2013) that would eliminate water quality protection for isolated wetlands by excluding wetlands that fall outside federal Clean Water Act jurisdiction from the definition of “waters of the state”. Although the language has changed somewhat, the bill approved by the Senate last month still has the effect of removing water quality protection from wetlands that fall outside federal permitting jurisdiction.  The limit on federal jurisdiction has nothing to do with the value of the wetland — it has to do with how the U.S. Constitution divides responsibility between the  federal  government and the states. Congress’ authority to regulate interstate commerce has been the constitutional basis for federal environmental laws, so Clean Water Act permitting programs only apply to navigable waters (including tributaries and wetlands connected to those waters). Wetlands that have no connection  to navigable waters  fall entirely under state jurisdiction. Section 20 of Senate Bill 638 (as it passed the Senate)  would remove state protection for those “isolated” wetlands and allow the wetlands to be filled, excavated or used for waste disposal without a water quality permit.

As noted in the earlier post, the wetlands provision appears in a farm bill but developers may get most of the benefit. Since then, I have looked back at the state’s isolated wetlands rules and found that most (and possibly all) agricultural activities are already exempt.  The isolated wetlands permitting rule, 15A NCAC 2H.1301, has a list of exemptions from the permit requirement and the first is for  “[a]ctivities that are described in 15A NCAC 02B .0230”.  The activities described in 15A NCAC 02B.0230 include:

     (1)  normal, on-going silviculture, farming and ranching activities such as plowing, seeding,   cultivating,minor drainage and harvesting for the production of food, fiber and forest products, or upland soil and water conservation practices…

(2)  maintenance, including emergency reconstruction of recently damaged parts, of currently serviceable structures such as dikes, dams, levees, groins, riprap, breakwaters, causeways, and bridge abutments or approaches, and transportation structures, and other maintenance, repairs or modification to existing structures as required by the NC Dam Safety Program;

(3)  construction and maintenance of farm or stock ponds or irrigation ditches.  In addition, new pond construction in designated river basins with riparian buffer protection regulations also must comply with relevant portions of those regulations;

(4)  maintenance of drainage ditches, provided that spoil is removed to high ground, placed on top of previous spoil, or placed parallel to one side or the other of the ditch within a distance of 20 feet and spoils are placed in a manner that minimizes damages to existing wetlands; and ditch maintenance is no greater than the original depth, length and width of the ditch;

(5)  construction of temporary sediment control measures or best management practices as required by the NC Sediment and Erosion Control Program on a construction site…; and

(6)  construction or maintenance of farm roads, forest roads, and temporary roads for moving mining equipment where such roads are constructed and maintained in accordance with best management practices…

The existing agricultural exemptions are so broad, that it is difficult to think of anything that may still be a problem for farmers — but at the very least an amendment intended to protect agricultural activity could be much narrower than the language adopted by the Senate. Having easily passed the Senate, the bill is now in the House where the path has become a little rockier. It appears that the N.C. Homebuilders Association has been lobbying hard for the provision, but a new version of the bill approved by a House Judiciary subcommittee this morning dropped the wetland language. The bill now goes to the House floor; an effort to amend the bill to restore language excluding isolated wetlands from water quality permitting requirements is likely.