Tag Archives: Budget

2015 in Review — Budget Trends

January 6, 2016. The past year  brought significant changes in environmental laws, environmental rules and funding for environmental protection and conservation.  Sometimes the overall picture only becomes clear at the end.  First, a look  at the impact of 2015 budget decisions on environmental and conservation programs.

TRENDS:

 — Separation of  environmental research, education and conservation programs from environmental protection programs. The state budget moved a number of nonregulatory programs from the Department of Environment and Natural Resources (DENR)  to a new Department of Natural and Cultural Resources. The programs being transferred:  the Division of Parks and Recreation, N.C. Museum of Natural Sciences,  N.C. Aquariums, the  N.C. Zoo, the Natural Heritage Program and the Clean Water Management Trust Fund (CWMTF). The new department  combines those programs with historical and cultural programs previously in the Department of Cultural Resources.    The 2015 reorganization continues a series of  program transfers intended to reduce the state’s  environment agency to just the environmental regulatory programs.  (In previous legislative sessions, the General Assembly transferred  the Division of Forest Resources and the Division of Soil and Water Conservation from DENR to the Department of Agriculture and Consumer Services.)  In some cases, the transfers have  separated regulatory and non-regulatory water quality programs originally intended to work as partners in a common effort.  DENR has now  been renamed the Department of Environmental Quality  or “DEQ”.

—  Reduction in state funding for voluntary efforts to improve and protect water quality.   The General Assembly created the Clean Water Management Trust Fund (CWMTF) in 1996 to fund projects to prevent water pollution and restore water bodies  impaired  by pollution. CWMTF  complemented the water quality regulatory program by providing incentives for voluntary measures such as  preservation of riparian buffers and extension of sewer lines to  areas with failing septic systems.  Since 2008, the General Assembly has reduced  annual appropriations to the Trust Fund by 90%.   In 2014,   legislation diluted the original CWMTF focus on water quality protection by authorizing use of  the Trust Fund for acquisition of historic sites and development buffers around military bases.  In 2013-2014, the General Assembly pulled funding away from the core CWMTF competitive grant program for use in a legislatively mandated pilot project and the 2015 budget earmarks additional funds for the Solar Bee project.  (See an earlier post on Jordan Lake for background on the Solar Bee pilot project.)  The 2015 reorganization has the effect of also moving  the Clean Water Management Trust Fund into a new department with a focus on management of public attractions rather than environmental quality.

—  Disinvestment in  data collection on rare and endangered species.   Since 1985, the  N.C. Natural Heritage Program has researched, classified and inventoried the state’s natural resources, including rare and endangered plant and animal species. Information collected by the program can be used to document the natural resource  value of property donated for conservation purposes and to assess the environmental impacts of development projects.  State agencies  like the Department of Transportation, local governments and private developers have relied on the Natural Heritage Program for information necessary to plan projects and meet environmental standards. Following significant cuts in the previous budget cycle, the 2015 budget reduced funding for the Natural Heritage Program by another 40%.  The program now has a statewide staff of six people. Disinvestment in state collection of information on rare and endangered species will not make the requirements of the Clean Water Act and the Endangered Species Act go away.  Loss of the Natural Heritage Program as a reliable and current source of information may, however, increase the amount of time and money developers  have to invest to comply with those requirements.

—  Less state funding to cleanup petroleum contamination from underground storage tanks/ lower cleanup standards. The budget eliminates a state fund for cleanup of petroleum contamination from small  petroleum underground storage tanks (USTs) such as home heating oil tanks.   The Noncommercial UST Trust Fund has assisted property owners with the cost of soil and groundwater remediation caused by leaks from farm, home and small commercial USTs.  The budget allocates additional money to  cover pending claims, but petroleum releases reported to DEQ after October 1, 2015 will not be eligible for funding.  As a trade off for loss of state assistance with cleanup costs, the budget bill limits the amount of soil remediation DEQ can require. See an earlier post for more on the change in cleanup standards for noncommercial UST sites. Elimination of the Noncommercial UST Trust Fund means that the cost of cleaning up petroleum contamination discovered in the future  will fall entirely on the homeowner, farmer or business.

The budget reduced funding for the Commercial UST Trust Fund  (which helps offset the cost of cleaning up petroleum contamination from larger USTs) by $600,000. The budget also replaced the Commercial UST Trust Fund’s ongoing annual appropriation from the Highway Fund with a one-time appropriation and a requirement for legislative review to determine whether the Commercial UST Trust Fund should be continued. The Commercial UST Trust Fund operates like an environmental insurance program for the owners of large, commercial USTs.  The  existence of the Trust Fund allows commercial UST owners to comply with federal rules requiring  tank owners to have  financial assurance  to cover environmental remediation costs. In the absence of the Commercial UST Trust Fund, tank owners would have to meet those requirements through self-insurance, bonding or purchase of an environmental insurance policy.

— Elimination of transfers from the Highway Fund to environmental programs.  For many years, the General Assembly has earmarked a small percentage of Highway Fund  revenues for environmental programs related to transportation.  The most significant recipients have been the Commercial and Noncommercial UST Trust Funds, DEQ’s  air quality program,  and the Shallow Draft Navigation Dredging Fund.   The 2015 budget replaces Highway Fund transfers to the Commercial UST Trust Fund, the Mercury Pollution Prevention Fund, and DEQ’s air quality program with onetime appropriations and directs legislative appropriations committees  to study whether the transfers — and the programs receiving the transfers — should be continued in the future, funded differently  or eliminated entirely. The transfers represent a significant amount of funding for the Commercial UST Trust Fund  (approximately $13.3 million in 2015) and the air quality program ($7.2 million in 2015). On the other hand, the budget actually increased the transfer from the Highway Fund to the Shallow Draft Navigation Dredging Fund.

— Increased funding  for  oyster cultivation,  water/sewer infrastructure grants, dam safety inspectors, shale gas exploration, coastal dredging and state parks.  A few programs received increased funding for the two-year budget cycle. The largest budget increases went to maintenance dredging of shallow draft navigation channels at the coast ($40 million);  state water/wastewater infrastructure grants for rural and economically distressed communities ($17.4 million);  and the state parks system  ($11 million). The budget also earmarks $500,000 for additional state testing to identify potential shale gas deposits.

—  Eliminating special fund accounts for environmental permit fees.  For many years, the General Assembly created  “special fund” accounts in the DEQ  budget for permit fees. The special fund accounts existed to insure fee revenue would be used only to support the permitting program; for example,  mining permit fees went into the Mining Fund to be used exclusively to support the mining program.  These special funds were “non-reverting” accounts which means any fee revenue unspent at the end of the state fiscal year rolled over into the next fiscal year budget for the permitting program instead of reverting to the state’s General Fund.  Business and industry tended to support creation of special fund accounts to insure permit fees didn’t subsidize unrelated state government activities. In 2015, the General Assembly continued a several-year trend of eliminating special fund accounts and shifting fee revenue in those accounts to the General Fund budget.   This year, the General Assembly eliminated special fund accounts for mining fees, stormwater fees, and soil remediation fees.   State law still requires DEQ to use the fee revenue to support the permit program that generated the fees,  but any unused funds will revert to the state’s General Fund at the end of the fiscal year. Once reverted to the General Fund, the legislature can appropriate the fee revenue for any purpose.

RESULTS:

1. A smaller, more strictly regulatory,  environment agency.

2. A reduced state commitment to voluntary water quality improvement projects and collection of information on rare and endangered species.

3. A smaller state role in cleanup of environmental contamination from privately owned petroleum underground storage tanks. (A role that may shrink further depending on the results of legislative review of the Commercial UST Trust Fund in 2016.)

4. Increased legislative control over fee revenues generated by environmental permitting programs.

5. Uncertainty about future funding for air quality programs and the Commercial UST Trust Fund.

6. Increased state investment in  programs potentially affecting economic development  such as state parks, water and sewer infrastructure,  maintenance of navigation channels, shale gas exploration, and oyster cultivation.

N.C. Environmental Legislation 2015: The Budget

October 9, 2015. Now that the General Assembly has adjourned, a look at legislative actions affecting the environment. First, the state budget for 2015-2017.

Among the most significant impacts:

♦  REORGANIZATION.   The Clean Water Management Trust Fund and the Natural Heritage Program — originally intended to protect and restore water quality and identify important natural areas — have been separated from the environmental protection programs in the Department of Environment and Natural Resources (DENR). The budget transfers the CWMTF, Natural Heritage Program, Museum of Natural Sciences, state park system, N.C. Aquariums and N.C. Zoo from DENR to a newly organized Department of Natural and Cultural Resources. The move combines conservation  and ecological education programs with state historic sites and cultural resources. The new department appears to be organized around management of the programs as public attractions rather than as research and education partners to state environmental protection programs.  As a result of the reorganization, DENR becomes the Department of Environmental Quality (DEQ).

Whatever the merits of the move for facilities like the Museum of Natural Science and N.C. Zoo,  the Clean Water Management Trust Fund and Natural Heritage Program do not  fit the new department’s basic organizing principle. Unlike the “attractions”,  the  CWMTF and Natural Heritage Program provide no public facilities and exist primarily to protect  water quality and identify important natural resources.

The General Assembly created the Clean Water Management Trust Fund (CWMTF) in 1996 to fund projects to prevent water pollution and to restore water bodies already impaired  by pollution.   CWMTF’s  non-regulatory approach complemented water quality rules  protecting state waters.  Originally,   CWMTF grants funded acquisition of riparian buffers to reduce polluted runoff into streams and rivers and  extension of sewer lines where failing  septic  systems threatened surface water quality.  In moving CWMTF, the 2015 budget severs its connection with other state efforts to restore and protect water quality.  The move follows 2014  legislation diluting the original CWMTF  focus on  water quality protection by authorizing use of the Trust Fund for acquisition of historic sites and buffers around military bases.

The  Natural Heritage Program researches, classifies and inventories the state’s natural resources, including endangered and rare plant and animal species. Information collected by the program can be used to document the conservation value of property and to assess the environmental impacts of projects requiring state and federal environmental permits.  The program has a much closer working relationship to the environmental  protection programs that remain in DENR than to public attractions like the N.C.  Zoo and Aquariums. (Note: The 2013 state budget eliminated the Natural Heritage Trust Fund which had been a source of funding for conservation of important natural areas;   the CWMTF  has become the funding source for those projects as well.)

♦  LANDFILL PERMITTING. The budget changes landfill permitting, allowing issuance of a single “life of site” permit to cover construction and operation of a landfill that may have a 30-year lifespan.  State rules had previously  required review and approval of the entire landfill site before construction, but also required each 5 or 10-year phase of the landfill to have a construction and operation permit.  Moving to a “life of site” permit  reduces the number of permit reviews for each landfill operation, changing the permit fee schedule and cutting funding for the state’s solid waste management program by 20%.  The change also reduces state oversight of landfill operations.  Landfill construction will continue to be done in phases for economic and practical reasons,  but the “life of site permit” eliminates state compliance review for each new  phase of the landfill.   The change also seems to eliminate the possibility of imposing additional permit conditions for construction or operation of later landfill phases in response to  technological developments  or new knowledge  of  risks to groundwater and other natural resources. The  budget provision does not set minimum inspection requirements in place of the 5 and 10-year phased permit reviews.

The bill also creates a legislative study of local government authority over solid waste collection and disposal, including ordinances on solid waste collection;  fees for waste management services; and potential for privatization.  The study suggests the General Assembly may focus next on reducing local solid waste regulation.  That will be a somewhat different discussion, since solid waste disposal has long been a local government responsibility so  local fees and ordinances have a direct connection to city/county collection and disposal services.

♦  LEAKING PETROLEUM UNDERGROUND STORAGE TANKS. The budget eliminates a state fund for cleanup of petroleum contamination from small  petroleum underground storage tanks (USTs) such as home heating oil tanks.   The Noncommercial UST Trust Fund has assisted property owners with the cost of soil and groundwater remediation caused by leaks from farm, home and small commercial USTs.  The budget allocates additional money to the Noncommercial UST Trust Fund to cover pending claims, but  limits use of the Fund to  cleanup costs associated with leaks reported to DENR by October 1, 2015.  All claims for reimbursement of those costs must be filed by July 1, 2016.

The budget provision also prohibits DENR from requiring removal of petroleum-contaminated soils at noncommercial UST sites that have been classified as low risk.  The  problem —  risk classifications  have been based on groundwater impacts;  a low-risk classification does not mean that contaminated soils on the property pose no health hazard. Current UST  rules require remediation of contaminated soils to levels safe for the intended land use (residential versus nonresidential) without regard to the overall risk classification of the site.  Soil remediation standards have been based on the potential health risks associated with exposure to petroleum-contaminated soil. Adverse health effects may include increased cancer risk since petroleum products contain a number of carcinogens. The budget provision may allow petroleum-contaminated soils to remain on residential properties at levels putting children at particular risk of adverse health effects.

♦ JORDAN LAKE WATER QUALITY RULES. The budget allocates another $1.5 million (from the Clean Water Management Trust Fund) to continue the 2013 pilot project to test use of aerators to improve water quality in the Jordan Lake system. The budget also has a special provision further delaying implementation of the Jordan Lake water quality rules for  another 3 years or one year beyond completion of the pilot project (whichever is later). The rules had been developed by the state’s Environmental Management Commission to address poor water quality  caused by  excess nutrients reaching the lake in wastewater discharges or in  runoff from agricultural lands and developed areas. See an earlier post  here on the  2013 legislation creating the pilot project.

♦ COASTAL EROSION CONTROL.   A special provision in the budget also changes state rules on use of sandbag seawalls and terminal groins in response to coastal erosion.  State coastal management rules have only allowed use of  temporary sandbag seawalls to protect a building facing an imminent threat from erosion. The same rules prohibit construction of the seawall more than 20 feet seaward of the threatened building. (These sandbag seawalls are substantial structures built on the beach in response to oceanfront erosion; the rules do not apply to sandbags used to prevent water from entering a building during a flood event.) The budget bill allows an oceanfront property owner to install a sandbag seawall to align with an existing sandbag structure on adjacent property without showing an imminent erosion threat to any building on their own property.  Since the bill allows construction to align with the adjacent sandbag seawall, the new seawall  may  also be more than 20 feet seaward of any  building. The irony here — a property owner may want to install a sandbag seawall in these circumstances  out of concern that the adjacent sandbag seawall may itself cause increased shoreline erosion.

The budget bill also increases the number of terminal groin structures that can be permitted at the state’s ocean inlets from four to six and identifies New River Inlet for location of two of the additional structures. See an earlier post  for more on earlier legislation allowing construction of terminal groins as a pilot project. Note: No terminal groins have been completed under the original pilot program, so the state does not yet have any data on the actual impacts of these structures.

♦ RENEWABLE ENERGY TAX CREDIT.  The budget bill allows the state’s 35% tax credit for renewable energy projects to sunset on December 31, 2015. A separate bill provides a “safe harbor” for renewable energy projects already substantially underway by that date. Those projects may qualify for a one-year extension of the tax credit. See Senate Bill 372 for more on conditions that apply to the safe harbor extension.

The NC Senate: Budget 2015

June 18, 2015.  Yesterday, the  N.C. Senate  took a first vote to approve a Senate version of House Bill 97  ( 2015 Appropriations Act).   The Senate received H 97 from the House of Representatives on May 22. The Senate  released its  alternative draft of the appropriations bill three days ago and quickly moved H 97  through Senate appropriations committees.  The Senate takes  a very different approach to funding state government than the House, but the Senate version of H 97 also contains many more “special provisions” — changes to existing law that go beyond finance and appropriations.  Some of the more significant environmental provisions in the Senate budget bill  (not by any means a complete list) below.

First, the Senate revisits the organization of state natural resource programs.  Sec. 14.30 of the Senate bill would combine  DENR’s natural resource programs (Division of Parks and Recreation, State Parks, Aquariums, the N.C. Zoo and the Museum of Natural Sciences) with cultural resource programs (such as the Museum of History and state historic sites)  in a new Department of Natural and Cultural Resources.  DENR would become the Department of Environmental Quality. Sec. 14.31  requires the two departments to study  whether  the Albemarle-Pamlico National Estuary Program,  state Coastal Reserves, the Office of Land and Water Stewardship,  the Office of Environmental Education and Public Affairs, the Division of Marine Fisheries and the Wildlife Resources Commission should also be moved to the new Department of Natural and Cultural Resources.

Other changes proposed in the Senate bill by subject (parenthetical descriptions are mine) :

COAL ASH

Sec. 29.18 (Beneficial use of coal ash) requires the Utilities Commission to report to several legislative committees by January 2016 on “the incremental cost incentives related to coal combustion residuals surface impoundment for investor-owned public utilities” including:

(1) Utilities Commission policy on  incremental cost recovery.

(2) The impact of the current policy on incremental cost recovery on utility customers’ rates.

(3) Possible changes to the current policy on incremental cost  recovery  that would promote reprocessing and other technologies that allow the reuse of coal combustion residuals stored in surface impoundments for concrete and other beneficial end uses.

Although a bit opaque, the Senate seems interested in the possibility of allowing electric utilities  to recover (through charges to consumers) the costs associated with making coal ash in surface impoundments available  for beneficial use.  Duke Energy has previously told legislators  that much of the coal ash in North Carolina impoundments  would require additional processing to be usable in concrete manufacturing.

COASTAL ISSUES

Sec. 14.6 (Use of sandbags for temporary erosion control) amends standards installation of sandbags for  erosion control on ocean and inlet shorelines. State rules now allow installation of sandbags only in response to erosion that imminently threatens a structure. The Senate bill allows a property owner to install sandbags to align with existing sandbag structures  on adjacent properties without showing an imminent erosion threat on their own property.

Sec. 14.10I (Strategies to address beach erosion) requires the Division of Coastal Management to study and develop a strategy “preventing, mitigating and remediating the effects of beach erosion”.

ENERGY 

Sec 14.29  (Federal energy grants) prohibits DENR from applying for grants from two federal programs – the State Energy Program Competitive Grant Program and the Clean Energy and Manufacturing Grant Program.

FISHERIES

Sec. 14.8, Sec. 14.10A and Sec. 14.10C  (measures to increase shellfish restoration and cultivation)

Sec. 14.8  directs the Division of Marine Fisheries to work with commercial fishermen,  aquaculture operations, and federal agencies to open additional areas in Core Sound to shellfish cultivation leasing.

Sec. 14.10A  directs DMF and the Division of Coastal Management to cooperate in  development of a new, expedited  CAMA permitting process for oyster restoration projects. The provision  also  authorizes DMF to  issue scientific and educational activity permits to nonprofit conservation organizations engaged in oyster restoration.

Sec. 14.10C Amends G.S. 113-202 to allow a lease for use of the water bottom to also cover fish cultivation or harvest devices on or within 18″ of the bottom. (Devices or structures not resting on the bottom or extending more than 18″ above the bottom will continue to require a water column lease.)

Sec. 14.10F (Joint fisheries enforcement authority) repeals the Division of Marine Fisheries authority to enter into a joint enforcement agreement with the National Marine Fisheries Service. The joint agreement allows DMF  to receive federal funding to enforce federal fisheries regulations in state waters.

SPECIAL FUNDS

Sec. 14.16  continues a recent trend of eliminating “special funds” that hold fees or other revenue dedicated for a specific purpose outside the state budget’s General Fund. The Senate bill eliminates special funds for mining fees,  stormwater permit fees, and UST soil permitting fees and moves the fee revenue into the General Fund.

STREAM AND WETLAND MITIGATION

Sec. 14.23 (Limiting the state’s role in providing stream, wetland, riparian buffer and nutrient mitigation)  requires DENR’s Division of Mitigation Services to stop accepting fees in lieu of mitigation in the Neuse, Tar-Pamlico and Cape Fear River basins within 30 months.  The provision then allows DENR (with the Environmental Management Commission’s agreement) to also eliminate the state in-lieu fee programs in all other river basins after June 30, 2018.

DENR’s  in-lieu fee program allows a developer to pay  a fee for mitigation  required as a condition of state and federal development permits. DENR  then contracts with private mitigation providers for the necessary mitigation. Payment of the fee transfers responsibility for providing the mitigation from the developer to DENR. Under a Memorandum of Agreement with the U.S. Army Corps of Engineers, the state’s in-lieu fee program can be used to satisfy stream and wetland mitigation required as a condition of federal Clean Water Act permits.

Eliminating  the State in-lieu fee program seems to eliminate the fee-for-mitigation approach as an option for developers. The burden would be back on the developer to find acceptable mitigation through a private mitigation bank or to plan and manage an individual mitigation project.  The change may slow some development projects that can now move  ahead based on the Corps of Engineers’ agreement to accept payments to the state in-lieu fee program as satisfying  federal mitigation requirements.

UNDERGROUND STORAGE TANKS

Sec. 14.16A (Elimination of the Noncommercial UST Trust Fund) phases out the state’s Noncommercial UST Trust Fund which reimburses property owners for the cost of cleaning up contamination from leaking underground petroleum storage tanks. The Noncommercial UST Trust Fund has  benefitted homeowners with soil and groundwater  contamination caused by home heating oil tanks and property owners  with contamination caused by USTs  used to store fuel for personal use — as on a farm. Under the Senate provision, the Noncommercial Fund could only be used for leaks reported before August 1, 2015 and claims for reimbursement filed by July 1, 2016. The Noncommercial Fund  would be eliminated for any petroleum releases  reported or claims made after those dates.

WASTE MANAGEMENT

Sec. 14.20 (Life of site landfill permits) amends G.S. 130A-294 to replace the current  5 or 10 year landfill permits with a “life of site” permit to cover landfill operations from opening to final closure. The provision would require permit review every five years.

Sec. 14.21 (Study of local government authority over waste collection and disposal services) directs the legislature’s Environmental Review Commission to study local authority over solid waste management including local fees; ordinances on waste collection and processing; cost to local government to provide solid waste services; and efficiencies or cost reductions that might be realized through privatization.   Solid waste collection and disposal services are entirely financed and provided by local governments;  many already contract with private entities for waste collection or landfill management.  It isn’t clear what the study might lead to since the legislature doesn’t have a role in  providing or financing local waste management services.

Sec. 14.22  (Privatizing landfill remediation) directs DENR to privatize the assessment and remediation of at least 10 high priority pre-1983 landfill sites. For several years, DENR has received a percentage of the state’s solid waste disposal tax  to fund assessment and cleanup of  contamination associated with landfills and dumps that closed rather than meet environmental standards that went into effect in 1983. Some legislators have expressed concern about the slow pace of remediation (and the resulting high fund balance). Note: Most state-funded remediation programs have a slow ramp-up in spending since it takes time to set up a new program and assess the sites.

WATER QUALITY

Sec. 4.5  (Nutrient management) earmarks $4.5 million from the Clean Water Management Trust Fund for a  DENR study of “in situ strategies beyond traditional watershed controls” to mitigate water quality impairment. The provision specifically mentions impairment by “aquatic flora, sediment and nutrients”, suggesting the study may be a continuation of the legislature’s effort to replace watershed-based nutrient management programs with technological solutions.

In 2013, the General Assembly suspended implementation of watershed-based nutrient management rules in the Jordan Lake watershed and funded a pilot project to test the use of aerators to reduce the impacts of excess nutrients on water quality. Sec. 14.5 allows extension of  the  pilot project contracts for another two years and delays implementation of the Jordan Lake watershed rules an additional two years or one year beyond completion of the pilot project, whichever is later.

Sec. 14.25 (State Assumption of permitting under Section 404 of the Clean Water Act) directs DENR to  hire a consultant to plan and prepare a state application  to assume the  federal permitting program under Section 404 of the Clean Water Act.   Sec. 404 requires a permit to fill waters or wetlands that fall under Clean Water Act jurisdiction. The U.S. Corps of Engineers issues Sec. 404 permits,  but a state can assume Sec. 404  permitting authority under certain conditions.  The U.S. Environmental Protection Agency oversees  404 permitting and would have to approve a state program. In a state that assumes Sec. 404 permitting, EPA retains authority to review  permit applications; a permit cannot be issued over an EPA objection.

Although several states have explored the possibility of assuming Sec. 404 permitting authority, only Michigan and  New Jersey have approved Sec. 404 programs. Individual states have reached different conclusions about the costs and benefits for a number of reasons. One may be cost — there are no federal grant funds to support a state 404 permitting program.   The Clean Water Act also prohibits state assumption of permitting in  tidal waters; water bodies used for interstate and foreign commerce;  and wetlands adjacent to both categories of waters. The U.S. Army Corps of Engineers would continue to have permitting authority in those waters and wetlands.

Sec. 14.26 (Transfer Sedimentation Act implementation to the EMC) eliminates the Sedimentation Pollution Control Commission and transfers responsibility for implementation of the Sedimentation Act to the Environmental Management Commission.

Once the Senate takes a final vote on House Bill 97, the bill goes to a conference committee to resolve the (considerable) differences between Senate and  House versions of the bill.  Few of the environmental provisions described above appear in the House version of the bill — although that doesn’t necessarily mean all of the Senate additions will be opposed by the House in conference negotiations.

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: Effect on Environmental Programs

July 24, 2013: Today, both the Senate and the House will take final votes on the compromise state budget.

Money (Summary)

Although  the  total budget for the Department of Environment and Natural Resources (DENR) appears to  grow, the final budget bill actually cuts the DENR budget for existing programs by  5% over the two-year budget period.  The reductions are not evenly distributed; water quality and water resource programs will take the largest cuts — at least 12.4 % compared to the 2012 budget for those programs.

The apparent increase in the DENR budget  mostly  comes from  moving money for programs being transferred into DENR from other departments (such as the State Energy Office); creation of  a new grant program for water and wastewater infrastructure; and replacement of dedicated funding sources with year to year appropriations.

The overall 5% reduction does not  include the reduction in funds  available to  the Parks and Recreation Trust Fund by shifting deed stamp tax revenue to the General Fund and replacing the dedicated funding with an  appropriation. See an earlier post  for more detail on the amount of revenue that the deed stamp tax had generated for the Parks and Recreation Trust Fund and Natural Heritage Trust Fund.

More detail below.

Department-wide spending reductions: The budget bill requires the Department of Environment and Natural Resources to reduce department spending by 2% from 2012 spending levels ( just over  $2.227 million department-wide).  DENR  can decide where to reduce spending to meet the 2% target. DENR’s 2012  budget already represented a nearly  40%  reduction from 2008 spending levels as a result of budget cuts in earlier years.

Other Reductions: In addition to the department-wide reduction of 2%, the budget makes additional cuts to specific programs. The largest of the targeted reductions requires  DENR to cut an additional $2 million out of the budget for water resources and water quality programs in the second  year of the  two-year budget  (2014-2015). That represents a 12.4% reduction from 2012  funding for water quality and water resource programs. The budget assumes the additional savings can be found by combining water resource and water quality programs into a single division. See an earlier post for more on the water quality/water resource budget cut.

Elimination of dedicated funding sources: The budget eliminates a number of dedicated funding sources for environmental protection and conservation programs, including the earmark of revenue from the state’s deed stamp tax for parks and recreation. All revenue from the deed stamp tax will go to the General Fund and the legislature will appropriate money for parks and recreation on a year to year basis. The budget also eliminates dedicated funding sources for the Bernard Allen Emergency Drinking Water Fund, the Solid Waste Management Trust Fund and the Inactive Hazardous Sites Fund.   Replacing dedicated  revenue from the deed stamp tax with an appropriation significantly reduces funds available for parks and conservation programs.

Clean Water Management Trust Fund: $10.4 million is appropriated for the Clean Water Management Trust Fund in 2013-2014 and $13.6 million in 2014-2015.

At-Sea Observer Program (Division of Marine Fisheries): The budget provides a one-time appropriation of $1.1 million to monitor the number of endangered sea turtles caught  in commercial fishing nets. The sea turtles, which  are protected under the federal  Endangered Species Act, sometimes get caught in gill nets  used by commercial flounder fishermen. The  monitoring program  is required as a part of an agreement between the state Division of Marine Fisheries and the  National Marine Fisheries Service that allows North Carolina commercial fishermen to continue to use gill nets.

Program increases: The  budget increases funding for shale gas and offshore energy staff (+$400,000) and  for  investigation of hazardous waste contamination (+ $250,000).

Grant Funds for Water/Wastewater Infrastructure: The General Assembly appropriates $3.5 million in 2013-2014 and $5 million in 2014-2015 for water and wastewater infrastructure grants. The new grant program partially offsets the fact that the budget provides zero funding for  infrastructure grants  through the N.C. Rural Economic Development Center.

Programs Eliminated: The budget eliminates the  Fisheries Resource Grant Program,  Sustainable Communities Task Force, Uwharrie Regional Resource Commission,   Adopt a Trail program, and the Division of Water Quality’s Groundwater Investigation Unit well drilling services.

Jordan Lake Cleanup

$1.35 million from the 2013-2014 appropriation for the Clean Water Management Trust Fund is earmarked for a pilot project to test the use of technology to improve water conditions in Jordan Lake. The appropriation appears to be partner to Senate Bill 515 which (as amended in the House) delays further implementation of the Jordan Lake rules for three years to test technology  to  reduce the water quality impacts of nutrient pollution. The budget bill describes the technology to be tested very specifically and appears intended to  direct the funds to a particular product.  The bill exempts the pilot project from normal state contract procedures, which means DENR will not be required to advertise for bids.

Environment Commissions

The budget bill includes changes in appointments to the state’s major environmental regulatory commissions — the  Environmental Management Commission (water quality, air quality and water resource rules) and the Coastal Resources Commission (coastal development rules).  The bill reduces the  number of members on each commission, but the most significant change gives Governor McCrory and current legislative leadership an opportunity to replace nearly all of the members immediately. Terms for  all  Environmental Management Commission (EMC)  members will end July 31, 2013.    Four Coastal Resources Commission (CRC)  members will continue to serve until June 30, 2014 (the specific seats on the commission  are identified in the bill); the terms of  all other CRC members will end July 31, 2013. Until now, members of both commissions served staggered terms of four or six years. Each new governor and legislature had an opportunity to appoint new members as their terms ended. The changes will recreate the staggered appointments, but only after giving the current governor and legislature  unprecedented power to replace all  of the members of each commission.

The final language on EMC appointment includes conflict of interest language intended to address conflict of interest requirements in federal law.

Noncommercial Underground Storage Tanks

The bill changes state law to require owners of  noncommercial underground petroleum storage tanks to pay a deductible of $1,000 and a 10% co-payment for environmental cleanup  if the tank leaks. The bill caps the total contribution required from the tank owner at $2,000 for the combined deductible and co-payment.  Until now, the state’s Noncommercial Underground Storage Tank Trust Fund paid the full amount of cleaning up soil and groundwater contamination from a noncommercial tank and the tank owner only paid for removal of the leaking tank. (“Noncommercial” tanks include home heating oil tanks and farm or residential motor fuel storage tanks that hold less than 1,100  gallons.)

Reorganization

Conservation Programs:  Clean Water Management Trust Fund staff will be transferred to DENR. The bill eliminates the Natural Heritage Trust Fund (NHTF) and amends the CWMTF statute to allow that fund to be used for conservation projects previously funded by the Natural Heritage Trust Fund.  Existing NHTF obligations  will be honored and any remaining funds will be transferred to the  Clean Water Management Trust Fund.

Water/Wastewater Infrastructure Programs: The budget creates a new Division of Water Infrastructure in DENR by combining existing staff for the Drinking Water State Revolving Fund and   Clean Water State Revolving Fund and  transferring some number of infrastructure staff from the Community Development Block Grant program in Department of Commerce. (The actual number to be negotiated between the two departments.)  Infrastructure grant and loan decisions will be made by a new Water Infrastructure Authority.

State Energy Office: The State Energy Office moves from the Department of Commerce to DENR.

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).

House v. Senate Budget on Environmental Policy

June 15, 2013: A comparison of the House and Senate budget bills continued (again, not a comprehensive list).

Policy and organization changes the House and Senate agree on; these also have related   money provisions:

●  Transfer the State Energy Office from the Department of Commerce to the Department of Environment and Natural Resources.

●  Move Clean Water Management Trust Fund staff into the Department of Environment and Natural Resources. (There are  differences in the way the House and the Senate would organize the conservation trust funds after the transfer.)

●    Allow the state Division of Marine Fisheries to enter into a  joint  enforcement agreement with the National Marine Fisheries Service.  Under the agreement,  the  state marine patrol would receive federal  funds  to enforce  federal  fisheries regulations in federal waters.

●  Require owners of small, noncommercial underground petroleum storage tanks (such as home heating oil tanks and on-farm gasoline storage tanks) to pay a $1,000 deductible and a 10% copay for assessment and cleanup of a spill or leak. Currently, the state’s Noncommercial UST Trust Fund pays the full cost of assessment and cleanup; the tank owner only pays for removal of the leaking tank.

Things to be resolved in conference:

●  How to  fund conservation and parks. The Senate budget transfers all revenue from the deed stamp tax (which has been dedicated to the Parks and Recreation Trust Fund and the Natural Heritage Trust Fund) to the state’s General Fund and then appropriates a smaller amount for parks and conservation programs  supported by the trust funds. The House budget continues to dedicate revenue from the deed stamp tax  to trust funds for parks and conservation — 75%  to the Parks and Recreation Trust Funds (no change) and 25% to the Clean Water Management Trust Fund (eliminating the Natural Heritage Trust Fund).

●   Elimination of the Uwharrie Regional Resources Commission. The House budget bill proposes to repeal the Uwharrie Regional Resources Act, which would have the effect of eliminating the Uwharrie Regional Resources Commission.  The Commission was created largely to advocate for and support a state  takeover of the Alcoa hydropower plants on the Yadkin River.

●  Creation of a new Oregon Inlet Land Acquisition Task Force to study the possibility of acquiring federal lands on either side of Oregon Inlet for purposes of building jetties to stabilize Oregon Inlet.  See an earlier post on the Senate  proposal here.

●   Changes to board and commission appointments. The Senate put changes to the Environmental Management Commission and Coastal Resources Commission appointment statutes into  the budget bill. The House budget bill does not include anything on board and commission appointments, but  a separate House  bill (House Bill 1011) has very similar language.

●  Whether to continue to dedicate some tax revenues to specific programs or bring all revenue into the General Fund to be allocated by the legislature on a year to year basis. The Senate budget  reclaims revenue from a number of  special taxes for the state’s General Fund and replaces the dedicated funding from those taxes with year to year appropriations  — generally at lower funding levels.   I have already talked about the Senate proposal to transfer deed stamp tax revenue to the  General Fund. The Senate budget does the same thing with  the scrap tire disposal tax, the white goods disposal tax and a portion of the solid waste disposal tax. Those taxes now directly support  recycling, waste reduction,  and solid waste management programs.  The Senate budget  transfers the  revenue from those waste disposal taxes to the  General Fund to be allocated by the legislature.  That diversion of tax revenue raises a bit of a bait and switch issue. The taxes were originally justified as necessary to pay for appropriate waste disposal and recycling;  transferring revenue from the disposal taxes to the General Fund weakens that link.

House v. Senate Budget on Funding for Environmental Programs

June 15, 2013: The N.C. House has adopted a  budget bill, giving a  better  picture of the shape a final state budget may take. Next step will be a conference committee to resolve the differences between the House and Senate budgets; the compromise bill that comes out of the conference committee then has to be approved by both the House and the Senate to become final. The time available to reach a compromise — two weeks; the new state fiscal year  begins July 1. (If an agreement can’t be reached by July 1, the legislature usually adopts a “continuing resolution” that allows state agencies to continue to function under a temporary spending plan.)

You can usually assume that budget cuts, appropriations and  policy provisions  that are the same in the House and Senate budget bills will also  be in the final budget bill.  This post focuses on decisions about  money — program cuts and appropriations; another post will talk about policy differences in the two budget bills.  Overall, the House budget makes somewhat smaller reductions to programs in the Department of Environment and Natural Resources than the Senate budget. (An earlier post explains why the Senate budget — which at first glance seems to increase the DENR budget — actually cuts the budget for existing  programs.)  The list below is not comprehensive; you can find the entire House version of the budget bill (Senate Bill 402) on the General Assembly website.

Some of the funding decisions the House and Senate budget bills agree on:

●   End the Sustainable Communities Task Force and eliminate the one position in DENR that supports the Task Force. (The task force worked on guidelines for transportation, housing, open space and other development policies to support neighborhoods and communities.)

●  Provide more funding and up to four new positions to support the Mining and Energy Commission’s work on shale gas regulation

●   Make additional reductions in the state  program to restore shellfish habitat and rebuild the state’s oyster fishery (already significantly cut in earlier budget years).

●  Provide $1.1 million in one-time funding for observers to monitor the impact of commercial fishing  practices  on endangered sea turtles. The “at sea” observer program  is required under an agreement between the state and the U.S. Fish and Wildlife Service (which enforces the Endangered Species Act)  to keep the gill net fishery open.

●   Eliminate funding for the Adopt a Trails program.

●   Fund two new positions in the Division of Waste Management to  investigate areas with known groundwater contamination and

●  Appropriate $3.5 million for the Noncommercial UST Trust Fund.  The Fund pays to  cleanup petroleum leaks and spill from small, noncommercial underground storage tanks (such as home heating oil tanks and on-farm gasoline tanks.)

● Provide state match money to draw down federal funds for the drinking water and wastewater revolving loan funds. (The two revolving loan funds make very low interest loans available to local government water and sewer systems for infrastructure improvements.)

● Eliminate state appropriations for the N.C. Biofuels Center.

●  Eliminate state funding for Partnership for the Sounds (a private, nonprofit organization that promotes environmental education, ecology-based tourism, and sustainable development in the Albemarle-Pamlico region).

● Cut operating funds for the N.C. Zoo, but provide new money to repair and replace the Zoo trams.

 Some of the things that are different and will need to be worked out in the conference committee:

● Funding for the  Clean Water Management Trust Fund. The House funds CWMTF through appropriations  and a new allocation of  25% percent of the deed stamp tax.   The Senate budget  eliminates all funding for CWMTF, creating a new Land and Water Conservation Fund that is a hybrid of CWMTF and the Natural Heritage Trust Fund.

● The House appropriates $3.6 million for maintenance dredging in shallow draft navigation channels,  funded by an allocation from the Highway Fund.

● The House budget increases a number of fishing license and  permit fees;  the increased fee revenue would fund the at-sea observer program in 2014-2015 and later years.

● The Senate eliminates all funding for the N.C. Rural Economic Development Center and gives $4 million  to DENR for a new water and sewer infrastructure grant program to take the place of a similar program now run by the Rural Center. The House budget continues to fund the Rural Center.

● The Senate eliminates state  funding for the N.C  Museum of Forestry  in Whiteville and proposes to sell the museum to either the town or to Columbus County for $1. The House budget continues state funding for the museum.

The Senate Budget and the Environment: Policy

May 21, 2013

Like all budget bills, the  Senate budget bill released on Sunday evening  makes  a number of changes to environmental laws — some related to the budget and some not. Here is a quick outline:

Conservation and Parks Programs

Section 14.3 creates a new Water and Land Conservation Fund by combining the Clean Water Management Trust Fund with the Natural Heritage Trust Fund.  The statutes creating the Natural Heritage Trust Fund  would be repealed. Staff of the Clean Water Management Trust Fund would move to DENR and the combined staff of CWMTF and the Natural Heritage Program  would work under an executive director appointed by the DENR Secretary. The existing Clean Water Management Trust Fund Board and Natural Heritage Trust Fund Board would be replaced by a new Water and Land Conservation Authority made up of nine members; appointments would be divided equally among the Governor, Speaker of the House and the President Pro Tempore of the Senate. The bill gives the Authority power to both develop criteria for grant awards and to make grant decisions.

Section 14.4(a)  reduces the  size of  the Parks and Recreation Authority from fifteen members  to nine.   Appointments  would be divided equally among the Governor, the Speaker of the House and  the President Pro Tempore of the Senate. Section 14.4(b) ends the terms of all current members of the Authority on June 30, 2013 to allow  for appointment of new members.

Bernard Allen Memorial Emergency Drinking Water Fund

Section 14.14  makes a number of changes to the law creating the Bernard Allen Memorial Emergency Drinking Water Fund. The fund was created in  2006 to  pay  for well testing in areas with suspected groundwater contamination and to provide a clean water supply to low income residents with contaminated drinking water wells. The changes, recommended by the Department of Environment and Natural Resources, do three things: 1. Allow  more frequent retesting of wells in areas where groundwater contamination may be migrating; 2.  Increase (from $10,000 to $50,000) the amount that may be spent per home  to provide  a new, clean  water supply. (The  increase is largely intended  to allow DENR to contribute more funding toward water line extensions that can be too expensive for a local water systems to do alone.);  and 3. Give priority to groundwater contamination that is manmade rather than naturally occurring.

Noncommercial Petroleum Underground Storage Tanks

Section 14.15 amends the law governing the state’s  Noncommercial Underground Storage Tank Trust Fund. The Noncommercial Fund pays the full cost of assessing and cleaning up groundwater and soil contamination from noncommercial petroleum underground storage tanks (such as home heating oil or farm supply tanks). The owner of the leaking  tank pays only to have the leaking tank removed. The changes  proposed by the Senate would for the first time require both a $1,000 deductible and a 10% co-pay by the owner of the tank.  The Senate budget  also appropriates $3.5 million to the Noncommercial Fund.

Water and Wastewater Infrastructure Funding

Section 14.21  creates a new Division of Water Infrastructure in DENR and a Water Infrastructure Authority. The new division would  combine the infrastructure loan  programs under the Drinking Water State Revolving Fund (now in the Division of Water Resources) and the Clean Water State Revolving Fund (now in the Division of Water Quality)  and  add  a grant program. The Appropriations/Base Budget Committee Report  describes the grants  as  “planning and supplemental” grants to local governments for drinking water and wastewater projects. The budget allocates $3.2 million in 2013-14 and $4.7 million in 2014-15 for the grant program. Note: Creation of the DENR water infrastructure grant program  seems to be related to Section 15.27 which eliminates all new state funding for the  N.C. Rural Economic Development Center.  In recent years, the Rural Center has received the only state grant funds for water and sewer infrastructure. The Rural Center funds have been  awarded through two different water and sewer grant programs –one for planning and supplemental grants and  another for  economic development projects. The Senate budget appears to divide the existing Rural Center grant programs between the proposed DENR Division of Water Infrastructure (which would award planning and supplemental grants) and  the new Division of Rural Economic Development in the Department of Commerce (which would make water and sewer grants for economic development projects). In an odd twist, Section 15.23 leaves it to the two cabinet secretaries (DENR and Commerce) to work out an agreement  to divide staff  in the Community Development Block Grant program (now in Commerce) between DENR’s Water Infrastructure Division and the Commerce Rural Economic Development Division.

Appointments to Environmental Commissions

Section 14.23  has the Senate changes to the makeup of the Environmental Management Commission (EMC). The language appears to be identical to language in  the failed House/Senate compromise on Senate Bill 10. Like earlier Senate versions of the EMC reorganization, the  budget bill  repeals  conflict of interest language now in the EMC appointments law. See an earlier  post about  the controversy over removal of that language.

Section 14.24  has Senate changes to the makeup of the Coastal Resources Commission. Again, the language appears to be very similar to the  last version of  Senate Bill 10. One thing that appears to be missing is the language requiring members of the CRC to either live or own property in the coastal area. That could be an oversight; sometimes language gets lost when legislative staff tries to cut and paste a provision from one bill to another.

Section 14.25 changes membership of the Coastal Resources Advisory Council. This language seems to match language in Senate Bill 10.

Oregon Inlet Jetties

Section 15.24 creates a 13-member  Oregon Inlet  Land Acquisition Task Force to look at the possibility of acquiring the land on either side of Oregon Inlet from the federal government “to preserve Oregon Inlet and to develop long-term management solutions for preserving and enhancing the navigability of Oregon Inlet.”  In short, the purpose of the Task Force  will be to  revisit the now ancient conflict over construction of jetties at Oregon Inlet. The federal government owns the land on either side of the inlet. Those lands are managed by the National Park Service (Cape Hatteras National Seashore) and the U.S. Fish and Wildlife Service ( Pea Island National Wildlife Refuge) .  Federal management plans for the  wildlife refuge and national  seashore do not allow construction of  permanent erosion control structures on the shoreline, making federal approval of the jetty project unlikely.  This is the latest chapter in a very old story that is  partly about  environmental policy and the effect of jetties on ocean shorelines and partly about money.  If you are interested in  more  information on the possible costs, benefits and environmental impacts of the Oregon Inlet jetty project,  the most recent analysis may have been a 2002 General Accounting Office report .

The Senate Budget and the Environment: Money

May 20, 2013: Last night the North Carolina Senate put out a draft budget. The new version of Senate Bill 402 has the budget bill text — which includes both  legislative provisions related to the budget and other non-budget things that the Senate wants. (More about those in another post.) A detailed overview  of the budget numbers can be found in the report of the Senate Appropriations/Base Budget Committee. Here is a quick take on the how the Senate budget would affect environmental programs. 

Overview of  DENR Budget Cuts

Although the Senate’s proposed  budget shows  a 40% increase in the budget for the Department of Environment and Natural Resources (DENR), the budget actually reduces funding for existing DENR programs in three ways:

1, The budget cuts funding department-wide by  $2,277,894  (2%), allowing DENR to decide where to take the reductions.

2. The budget  then takes an additional $2,055,782 in cuts to individual programs and funds. Some of the specific reductions include

— Elimination of  funding for the Sustainable Communities Task Force

— Reduction or elimination of funding for some programs in the Division of Marine Fisheries

— Reduction in funding for the Adopt-a-Trail Program

— A cut in operating funds for the N.C. Zoo

3. The budget significantly reduces funding dedicated to parks and conservation by shifting revenue from the real estate excise tax (the deed stamp tax) to the state’s General Fund.  By law, the deed stamp tax is now dedicated to the Parks and Recreation Trust Fund and the Natural Heritage Trust Fund to be used for  conservation, parks acquisition and improvement of park facilities.  The budget repeals the law that dedicates deed stamp tax revenue for those purposes and replaces the tax revenue with appropriations  at much lower levels. (More detail below.)

 Funding  for Conservation and Parks

The Senate budget proposes to do two significant things. First, it combines the Clean Water Management Trust Fund (CWMTF) and  DENR’s  Natural Heritage Trust Fund into a new Land and Water Conservation Fund. Then, the budget bill repeals the state law that  dedicates revenue from the deed stamp tax to conservation and parks projects and makes both the new Land and Water Conservation Fund and the  Parks and Recreation Trust Fund dependent on appropriations. The budget appropriates  $12 million for the Land and Water Conservation Fund and $11 million for the  Parks and Recreation Trust Fund; the $23  million total represents a reduction of about 65% compared to  2011 funds earmarked for  CWMTF,  the Natural Heritage Trust Fund and the Parks and Recreation Trust Fund combined. According to a N.C. Department of Revenue report,  the deed stamp tax generated $63.5 million in revenue in 2010-2011 to be divided between the Parks and Recreation Trust Fund  (75%) and the Natural Heritage Trust Fund (25%).  The Clean Water Management Trust Fund received a 2011 appropriation of  $11.25 million. Together, the deed stamp tax and CWMTF appropriation represented $74 million in total funding  for land and water conservation projects and parks.    Although the General Assembly  diverted money from both the Parks and Recreation Trust Fund and the Natural Heritage Trust Fund over the last four years because of budget shortfalls (so the full amount could not be used),   the  Senate budget permanently eliminates the deed stamp tax as a  dedicated funding source  to make much smaller appropriations through the budget process.

Programs that Receive Increased Funding

Much  of the apparent  increase in DENR’s budget comes from transfer of programs from other departments. For example, the State Energy Office and the Grassroots Science Museum pass-through grants would move to DENR from the Department of Commerce and the existing state funding would follow those programs.  Other  “new” appropriations really shift existing DENR activities from a dedicated  funding  source  to appropriations – generally at the same or lower funding levels.  In addition to the deed stamp tax, the list of dedicated funding sources diverted to the General Fund and replaced by appropriations includes the scrap tire disposal tax, the white goods disposal tax, and a portion of the solid waste disposal tax.

Actual increases in funding for existing or expanded DENR programs would go to:

— The Division of  Energy, Mineral and Land Resources to support the Mining and Energy  Commission; pay membership dues in the Southern States Energy Board (an organization of southern states supporting energy development) ;  market  North Carolina shale gas resources and do additional geological sampling and data collection on the state’s shale gas resource.

— Creation of a new water and wastewater infrastructure program that combines the existing drinking water and wastewater revolving loan programs with  new grant funding for local water and sewer needs.   The appropriation includes funding for a new Assistant Secretary for Infrastructure, a new division director position and funding for a water and sewer database as well as $3.2 million in grant funding for 2013. (The amount increases to $4.7 million for 2014.)

— A program to monitor the impact of  gill net fishing on endangered sea turtles (required as part of an agreement with federal agencies under the Endangered Species Act).

— Two new positions in the Division of Waste Management to evaluate groundwater contamination  that may threaten water supply wells.

—  Repair and replacement of trams at the North Carolina Zoo.

DENR Budget Bottom Line:

Reductions to existing programs: $4,333,676 or approximately – 4%  (not including reductions in funding to the Clean Water Management Trust Fund, Natural Heritage Trust  Fund and Parks and Recreation Trust Fund)

Loss of a dedicated funding source for conservation and parks resulting in a reduction of approximately 65% from the amount of  funding provided by deed stamp tax revenue.  

Proposed cuts come on top of  a 40% reduction in the DENR budget since January 2009 (including reductions in both operating funds and trust funds).

Increases to existing programs:  $6,200,000 (this figure does not include appropriations that simply replace dedicated funding sources eliminated in the  proposed budget or replace funds taken on a one-time basis  last year).  Most of the new funding — $4,000,000 —  goes to the  reorganized  water infrastructure program for two high level management positions,  a water and sewer database and grants to local governments.

Other apparent increases in the DENR budget involve the  movement  of money to follow the transfer of programs and positions from other state agencies or to fill gaps created by eliminating dedicated funding sources for DENR programs.   Six positions and $1.7 million in operating funds come to DENR with transfer of the State Energy Office from the Department of Commerce. Over $2 million would be transferred from Commerce for pass-through grants to the Grassroots Science Museums.   Appropriations also take the place of revenue from the white goods, scrap tire, and solid waste disposal taxes; those tax revenues would go to the General Fund to be appropriated by the legislature.