April 15, 2015. The final bill introduction deadline fell yesterday for bills that don’t affect finance or appropriations, so it is a good time to look at the environmental bills introduced and awaiting action. The General Assembly can also amend environmental laws in the budget bill or by completely rewriting a bill on an entirely different subject, but with that warning in mind:
House Bill 795 SEPA Reform would greatly limit the number of projects requiring an environmental impact statement (EIS) under the state’s Environmental Policy Act (SEPA). Adopted in 1971, SEPA requires an EIS for projects that potentially have a significant environmental impact, need a state approval (such as a permit), and involve either the use of public funds or use of public lands. Unlike its federal counterpart (the National Environmental Policy Act or “NEPA”), the state law has never applied to privately funded development projects no matter how significant the environmental impact. To require an EIS under the state law, there must be public investment ( which could mean either state or local government funding) or use of public land. Typical projects requiring an EIS in the past would be a new wastewater treatment plant; a county landfill; a major development project on state-owned submerged lands; or activities on state parkland.
House Bill 795 proposes to limit SEPA review to projects involving $20 million or more in public funding or land-disturbing activity affecting 20 acres or more of public land. It is difficult to know what percentage of projects required to do an EIS in the past would avoid SEPA review under the amended law, but it is reasonable to assume that many public projects fall below the $20 million threshold. Controversial proposals for use of state parks and tidelands could also avoid SEPA review because — whatever the other impacts of the project — an EIS would only be required for land-disturbing activity that permanently alters the landscape and affects 20 acres or more. For projects that exceed the new size and funding thresholds, House Bill 795 provides additional SEPA exemptions for projects receiving certain types of state approvals. Some of the approvals listed in the bill, such as a certificate of convenience and necessity for a public utility infrastructure project, do not involve any environmental review. (That particular exemption also doesn’t seem to serve a purpose; the “public utilities” that need a certificate of convenience and necessity are by definition not owned or operated by a governmental entity and don’t involve public funds.)
For projects that would still require an EIS under the amended law, the bill also limits the scope of the EIS. Under the bill, the EIS would only describe direct project impacts — eliminating consideration of indirect and cumulative impacts.
Projects exempted from the EIS requirement would still need any necessary environmental permits, but permit reviews tend to be more narrow than an EIS. The EIS looks beyond one set of permitting standards to evaluate the environmental impacts of the project as a whole — which can include consideration of noise, traffic, endangered species, historic sites, and effects on minority and low income communities as well as natural resource impacts. Projects that require a federal permit could still trigger NEPA review; what the state may lose is an opportunity for the same comprehensive review and public input on projects that do not require a federal permit — which may include some landfill projects and inter-basin transfers.
THE OMNIBUS BILLS (AMEND ENVIRONMENTAL LAWS AND REGULATORY REFORM)
In every recent legislative session, the General Assembly has enacted an Amend Environmental Laws bill and a Regulatory Reform bill. Both bills become vehicles for multiple changes to environmental laws. See an earlier post for a description of Senate Bill 453, the Regulatory Reform Act of 2015.
At the moment, House Bill 593 (Amend Environmental Laws-2) only contains provisions amending state law on reimbursement of third-party damage claims by the state’s petroleum underground storage tank (UST) trust funds. (The UST trust funds can reimburse UST owners for up to $1,000,000 in third-party claims for property damage or personal injury resulting from a petroleum release.) The amendments require the UST owner to provide specific documentation of the third party damage claim; add definitions of “third party”, “bodily injury” and “property damage”; and provide more direction on how to calculate compensation for property damage.
It is the nature of both the Regulatory Reform and Amend Environmental Laws bill to pick up baggage as the session goes along. Expect new versions of each bill as the bills move through committee.
Note: This bill is Amend Environmental Laws-2 because House Bill 157 (Amend Environmental Laws) has already been enacted into law as Session Law 2015-1. H 157 generally made uncontroversial and technical changes to solid waste laws, the Coal Ash Management Act and other environmental laws. The one provision in H 157 that created some controversy amended a state law requiring the Environmental Management Commission to adopt air toxics rules for hydraulic fracturing sites.The bill replaced the requirement with language authorizing the EMC to adopt air toxics standards for fracking sites if necessary to protect public health, safety, welfare and the environment.
AIR QUALITY
Senate Bill 303 Protect Safety/Wellbeing of N.C. Citizens prohibits state enforcement of any federal standards for wood heaters used for home heating. The bill is interesting as an example of state legislation intended to nullify a federal standard. In February, EPA adopted updated performance standards for wood heaters. Federal air quality rules have included standards for wood heaters since 1988; the new rule updates the standards to reflect changes in technology and to regulate wood-burning boilers and wood-burning furnaces as well as wood stoves. The revised standards only apply to newly manufactured wood heaters, phase in over several years and do not affect fireplaces (at all) or wood heaters already in use. An EPA fact sheet provides an overview of the rule. Generally, N.C.’s delegated authority to implement Clean Air Act programs requires the state to adopt and enforce federal new source performance standards, but EPA has not delegated enforcement of the wood heater rule to the states.
House Bill 169 Limit Motor Vehicle Inspections eliminates motor vehicle emissions inspections in six counties (Burke, Granville, Haywood, Rutherford, Surry and Wilkes). Forty-eight of N.C.’s 100 counties require annual emissions inspections as part of the state’s plan to meet the federal ozone standard under the Clean Air Act. Recently, the Department of Environment and Natural Resources (DENR) issued a report concluding that emissions inspections could be eliminated in as many as 28-31 counties without violating either the current ozone standard or the stricter ozone standard EPA will finalize by the end of the year. Given the DENR report, expect the number of counties the bill removes from the emission inspection program to increase. Since the emissions inspection program has been used to meet a federal air quality standard, any change by the General Assembly must have EPA approval.
House Bill 172 Fracking – Protecting the Public requires the Environmental Management Commission to adopt rules establishing best management practices and leak detection and repair standards to minimize air emissions from natural gas operations. The bill approaches the related problems of wasted natural gas and air pollution by focusing on ways to minimize unintended releases resulting from leaky equipment or inefficient practices during exploration, development, production, processing and compression of the natural gas.
House Bill 571 Implementation of Carbon Dioxide Regulations requires DENR to begin work on a plan to comply with new federal regulations reducing carbon dioxide (CO2) emissions from power plants. EPA’s Clean Power Plan rule sets a CO2 reduction goal for each state, but states have flexibility in the mix of power plant emission reductions, renewable energy generation, and energy efficiency measures used to meet the goal. Find more background on the federal rule here. Each state must submit a plan for meeting its CO2 reduction goal by June 2016, although EPA can extend the deadline if the plan needs legislative approval or relies on a multi-state strategy. DENR does not appear to have any effort underway to develop a plan. Instead, DENR has both questioned the legal basis for the federal rule and urged EPA to delay implementation until lawsuits challenging the rule have been resolved. House Bill 571 appears to be intended to push DENR to begin work on a CO2 reduction plan and do it in a way that provides for input from both stakeholders and the public.
COAL ASH
House Bill 448 Extend Coal Ash Structural Fill Moratorium The Coal Ash Management Act of 2014 put new, stricter standards in place for large projects using coal ash as structural fill . ( “Large” means > 8,000 tons per acre or > 80,000 tons total). But the law made few change to existing standards for smaller structural fill projects. Instead, the 2014 bill put a moratorium on permitting smaller structural fill projects until August 1, 2015 to allow time for DENR and the Environmental Management Commission to study the standards for those projects. The law required a report back to the General Assembly by January 15, 2015. The EMC discussed an interim report in January, but the interim report didn’t address the adequacy of existing structural fill standards for small projects. The interim report indicated that a final report would be released in April; it doesn’t appear that a final report has been issued yet. In the absence of a report on the adequacy of the existing structural fill standards and recommendations, House Bill 448 would extend the moratorium on permitting smaller projects until August 1, 2016.
COASTAL ISSUES
House Bill 151 Property Insurance Ratemaking Reform is not strictly speaking an environmental bill, but deals with use of models projecting catastrophic losses as a result of a hurricane or other natural disaster in setting property insurance rates. The bill would continue to allow use of models, but would require the results of more than one model to support a property insurance rate change. The bill is interesting given the longstanding tension between the economic benefits of coastal development and the externalized costs of building in natural hazard areas.
House Bill 302 Strengthen Oyster Industry requires the Division of Marine Fisheries to study the state’s shellfish lease and franchise programs and make recommendations for changes necessary to increase shellfish aquaculture on the North Carolina coast. The bill also expands on existing law requiring DMF to plan and construct oyster sanctuaries in the Albemarle and Pamlico Sounds; sets new civil penalties for interference with oyster cultivation; and makes other changes designed to increase oyster production. State funding for creation of oyster habitat has seen a steep decline in recent years; some additional resources will likely be needed to make the oyster sanctuary program a reality.
House Bill 346 Counties/Public Trust Areas extends to counties the authority to enforce local ordinances in public trust areas and particularly on the state’s ocean beaches. Municipalities already have this authority.
CONTAMINATED SITES
Senate Bill 301 DOT/Purchase of Contaminated Land would exempt the N.C. Department of Transportation from a law enacted in 2013 that effectively prohibited state agencies from purchasing property with environmental contamination. As noted in a earlier post about the 2013 law, the General Assembly may not have realized the far-reaching effects. Environmental contamination is widespread and state policies allowing polluters to do limited, “risk-based” remediation of groundwater contamination mean the contamination will persist well into the future. The 2013 law exempted the UNC system campuses from the restriction; NCDOT has asked for the same exemption — presumably because the law makes acquisition of property for highway construction more difficult.
INFRASTRUCTURE
Senate Bill 397 Open and Fair Competition Water and Wastewater would prevent a state or local government from “preferring” one type of piping material for use in a water, sewer or stormwater infrastructure project receiving state funds. I don’t know the story behind the bill, but usually legislation attempting to change a state agency’s policy about use of a particular product or system has been introduced in response to complaints by a vendor.
RENEWABLE ENERGY
The General Assembly’s internal debate over renewable energy development continues. In 2013, the Republican majority in the General Assembly split over attempts to repeal both the Renewable Energy Portfolio Standard (REPS) and the state’s tax credit for investment in renewable energy projects. In the end, a bipartisan majority declined to repeal the incentives for renewable energy development — in large part, because renewable energy had become one of the bright spots in the state’s economic recovery. See an earlier post on the end of the 2013 fight over the REPS.
This session, one focus is on the scheduled sunset of the renewable energy tax credit on January 1, 2016. There are bills in both the House and the Senate to extend the tax credit; House Bill 454 extends the tax credit until January 1, 2021 and Senate Bill 329 extends the tax credit to January 1, 2020. Opponents of the tax credit have introduced a bill, Senate Bill 372, that essentially retains the existing January 1, 2016 sunset, but provides a “safe harbor” for investors who have made substantial outlays on projects not in service by the sunset date. Those taxpayers would have an additional year (until January 1, 2017) to claim the tax credit.
UPDATE: House Bill 681 would sunset the REPS requirement early, ending in 2018 with a standard requiring 6% of retail sales of electricity to be generated from renewable sources. The current law requires that electric public utilities generate 12.5% of retail sales from renewable energy source by 2021 and thereafter.