Tag Archives: Pat McCrory

Separation of Powers Battle, Part II

May 25, 2016.  In response  to the N.C. Supreme Court decision in McCrory v. Berger,  the House of Representatives has approved a bill to reconstitute the Coal Ash Management Commission, the Mining Commission and the Oil and Gas Commission.   The lawsuit largely concerned the constitutionality of  legislative appointments to the commissions, but also challenged  a provision in the Coal Ash Management Act  that made the Coal Ash Management Commission independent  of oversight by any executive branch department.   See an earlier post on the court decision here.

The McCrory v. Berger decision does not state any clear, generally applicable separation of powers rule with respect to organization and appointment of state boards and commissions. (The court so stoutly resists providing any general rule, that the decision may raise more questions than it answers.) But the court clearly held that the General Assembly violated the separation of powers doctrine in the N.C. Constitution by giving the legislature power to appoint a majority of each commission’s members. Senate Bill 71 attempts to cure that separation of powers violation.

The Governor’s Office does not believe the bill resolves the separation of powers issues and has put the legislature on notice that the Governor will file suit again if the new bill becomes law.  In fact, the Governor’s objections have broadened and appear to attack the entire concept of giving executive authority to citizen commissions. The expansive interpretation of McCrory v. Berger adopted by the Governor’s Office would potentially affect many other longstanding commissions, including the Environmental Management Commission.

The Senate Bill 71 response to McCrory v. Berger. The bill  amends laws creating the three commissions at issue in McCrory v. Berger to give the Governor a majority of appointments subject to confirmation by the General Assembly. The bill also  insures that the governor’s appointees  represent a majority of the quorum required for commission action. Senate Bill 71 removes language in the Coal Ash Management Act that made the Coal Ash Management Commission “independent” of  supervision by the Department of Public Safety (where the Commission has been administratively housed) and adds a clause noting the powers and duties of the Secretary of Public Safety — appointed by the Governor — with respect to programs in  the department.

As a backstop, the bill has a provision that transfers the responsibilities of the Coal Ash Management Commission to the existing Environmental Management Commission if Governor McCrory fails to make timely appointments or the reconstituted CAMC becomes the focus of new litigation.

The Governor’s opposition.  The Governor’s Office does not believe the bill resolves the separation of powers issues surrounding appointment and supervision of the three commissions. The Governor’s legal counsel, Bob Stephens,  appeared in a House Committee  to oppose the bill and listed several objections:

  1. The Governor opposes  legislative confirmation of  commission appointees as a new violation of separation of powers.  Legislative confirmation has been the exception rather than the rule in North Carolina, but is required for a few boards and commissions.  State law has long required legislative confirmation of the Governor’s appointees to the N.C. Utilities Commission.  The McCrory v. Berger  decision does not discuss legislative confirmation one way or the other since it was not an issue in the case.  Mr. Stephens did not explain the legal basis for the Governor’s position in committee, but a letter from Mr. Stephens to legislative leaders contends that legislative confirmation inappropriately interferes with the Governor’s appointment power.
  2.  Governor McCrory  objects to provisions giving the Governor authority to remove a commission member only for  misconduct or failure to perform their duties. Stephens argued that the decision in McCrory v. Berger means the governor must have the power to remove governor’s appointees at will.  On this point, the McCrory v. Berger decision itself is unclear.  The court talks about power to remove commission members as necessary for the Governor to effectively supervise commissions with executive powers.  Although the decision can be read to imply that removal for cause may not be sufficient,  the court never  expressly holds the Governor must have power to remove commissioners at will.  Instead, the court treats power to remove as one of several factors  to be considered in determining whether the legislature has inappropriately limited the Governor’s executive authority. The actual holding in the case turns on the number of legislative appointments to each commission.
  3. Governor McCrory does not believe Senate Bill 71  sufficiently  recognizes the Governor’s authority to supervise the Coal Ash Management Commission. The CAMC  has  been administratively housed in the Division of Emergency Management of the  Department of Public Safety, but the 2014 Coal Ash Management Act  included language that put the CAMC outside the supervision and direction of either the Division or the Department. Senate Bill 71 removes the “independence” language and adds a clause noting the statutory authority of the Secretary of Public Safety (which includes supervisory responsibility for programs in the department).  Stephens rejected the changes as insufficient to  give the Governor supervisory control over the CAMC consistent with  McCrory v. Berger, but did not suggest alternative language to the committee.

 Questioning the entire concept of citizen commissions. Yesterday, Mr. Stephens sent a  letter  to House and Senate leaders to express the Governor’s concerns in writing. The letter goes beyond the comments offered in committee and opposes the exercise of executive authority by any citizen commission not entirely within the governor’s  supervision and control.  The Governor interprets McCrory v. Berger to mean the  Governor must have the ability to appoint members without legislative confirmation; remove members at will; and direct commission actions  in much the way the Governor, through cabinet secretaries, directs state agency employees. The letter to Senate President pro tempore Phil Berger and House Speaker Tim Moore rejects the idea of using the existing Environmental Management Commission as a backup for the Coal Ash Management Commission because:

The Environmental Management Commission suffers from the same constitutional defects as the proposed Coal Ash Management Commission. Again, the Governor must have a majority of appointments, the ability to remove his appointees at will and the ability to supervise the day to day activities of the commission.

The letter goes on to argue that commissions with ability to “review and approve” executive agency decisions:

pose an exceptional threat to the Governor’s duty to execute the laws…Some in the General Assembly believe that independent commissions superior to our agencies are a good idea — they serve as a check on the executive branch. But McCrory v. Berger rejects this argument.

That conclusion cannot be found in the McCrory v. Berger decision.  The court  went out of its way to avoid  grand declarations — to the point of leaving a lot of confusion about how to apply the decision beyond the three commissions directly involved in the case. The statement reflects the Governor’s expansive interpretation of McCrory v. Berger and signals an intent to use that interpretation to either eliminate semi-independent citizen commissions or to force a significant change in the role of commissions.

The practice of giving citizen commissions authority  to develop and implement state policy has a long history in North Carolina.  Commissions — rather than the Department of Environmental Quality– adopt most state environmental rules. While checking the executive branch may have been one purpose, commissions also bring a broad range of expertise and practical experience to policy development and implementation. Laws creating the commissions require  members to have backgrounds more diverse than those typically found among the technical staff of a state agency. By law, the Environmental Management Commission  must have members with  backgrounds in business, agriculture, public health, local government, conservation, etc. Members  bring that expertise and experience to bear on environmental policy decisions.  EMC members, like most state commission members, have other full-time jobs;  volunteer their time to the state; and in return receive only reimbursement of travel costs and a very small per diem for meeting days.

Given the different perspectives among commission members and a perch outside state government bureaucracy, commissions will not always see an issue in quite the way a Governor’s political appointees do. Recent friction between the Environmental Management Commission and the Department of Environmental Quality attests to that. On balance, the benefits of bringing citizen commissions into state policy development have outweighed the messiness and occasional friction. The Governor seems to prefer something more like the federal model — where policy development and policy implementation are both firmly under the control of a government agency. The question is whether a separation of powers argument can take him there.

Next steps for Senate Bill 71.  The bill passed the Senate last year as a bill to adjust the terms of Rules Review Commission members. Since the House has stripped out the original Senate bill text and replaced it with something entirely different, the bill now goes back to the Senate for concurrence in the changes.  The bill also makes other substantive changes to the Coal Ash Management Act to be discussed in another blogpost.

The Fate of the Coal Ash Management Commission

March 19, 2016. An earlier post discussed the N.C. Supreme Court decision in McCrory v. Berger. In brief, the court ruled that laws giving the General Assembly  power to appoint a majority of the members of the Coal Ash Management Commission (CAMC) and two other state commissions violated the N.C. Constitution’s provisions on separation of powers.  (See the earlier post for more detail and a link to the court’s opinion.)   The decision means the Coal Ash Management Commission cannot take any further action until the General Assembly amends the CAMC’s  appointment statute  to be consistent with the court’s decision and new appointments are made.  The most likely solution would be to give the Governor power to appoint a majority of the members;  the law could be amended as early as April of this year when the legislature convenes again.

Multiple news outlets have now reported that the McCrory administration has taken steps to effectively disband the Coal Ash Management Commission in advance of the April legislative session.  The Charlotte Observer’s Bruce Henderson reported that the Governor’s Office informed CAMC executive director  Natalie Birdwell  that the commission is “no longer a legal entity”.  The same Charlotte Observer article reports that the move by the Governor’s Office to shut down the commission’s work will dissolve contracts with independent experts retained by the commission to provide an outside review of  the Department of Environmental Quality’s (DEQ) proposed risk classification of coal ash ponds.

A few observations about the Governor’s decision to shut down the Coal Ash Management Commission:

The Governor’s action  wasn’t required by the decision in McCrory v. Berger.  The court did not find anything unconstitutional in the creation of a Coal Ash Management Commission to oversee decisions on closure of coal ash ponds and coal ash disposal.  The court  only held the method of appointing CAMC members  to be  unconstitutional.  The N.C. Supreme Court has found commission appointments statutes unconstitutional in the past and the solution has been to amend the statute to change the appointment scheme.  In 1982, the N.C. Supreme Court  ruled in Wallace v. Bone  that the General Assembly violated the N.C. Constitution’s separation of powers provisions by designating four seats on the N.C. Environmental Management Commission (EMC) for active members of the legislature.  In response, the General Assembly amended the EMC appointments statute to replace the legislators serving on the commission with citizens appointed by the General Assembly.  Nothing in the court’s decision suggested the EMC must be dissolved and that did not happen; nothing in the decision questioned the validity of past EMC actions.  The decision in McCrory v. Berger likewise  does not hold that actions already taken by the Coal Ash Management Commission — such as hiring staff and entering into contracts  for services —  are void or voidable.

Another separation of powers case still pending in  Wake County Superior Court challenges appointments to the Mining and Energy Commission  (MEC) and specifically asks the court to void the MEC’s past rulemaking actions.   But to date, no  court has ruled that the presence of unconstitutionally appointed members invalidates a commission’s  past acts. The MEC case directly  raises the issue for the first time and could lead to a decision affecting future separation of powers cases. In the meantime, the McCrory administration has chosen to go further than the decision in McCrory v. Berger  requires to  undo the existing organizational, staff and contractual arrangements supporting the Coal Ash Management Commission.  (It isn’t clear whether the McCrory administration’s position on the CAMC  would carry over to support for the plaintiffs seeking to invalidate the Mining and Energy Commission’s past rulemaking actions on similar grounds.)

The General Assembly’s next move may depend on continued legislative interest in providing oversight for DEQ’s coal ash decision making.  In 2014, the General Assembly created the Coal Ash Management Commission to provide independent oversight for DEQ decisions related to coal ash disposal and closure of existing coal ash ponds. At the time, legislators expressed concern about relying entirely on DEQ’s judgment because of controversy surrounding early McCrory administration decisions on coal ash enforcement and a pending federal investigation of relationships between state regulators and Duke Energy. The question is whether those concerns still exist and,  if so,  how the legislature will react to the Governor’s unilateral move to disable the commission. The General Assembly can resolve the separation of powers issue and revive the CAMC by simply changing the CAMC appointment provision to  allow the Governor to make a majority of the appointments.

By forcing the Coal Ash Management Commission to start over, the Governor’s action may make it impossible for the commission to meet its first critical deadline –risk classification of coal ash ponds. The Coal Ash Management Act gave the CAMC final authority to determine the appropriate risk classification of each coal ash pond; the risk classification will determine how quickly the ash pond must be closed and whether the coal ash must be excavated and disposed of in a lined landfill. Only coal ash ponds classified as Low Risk can be closed out by dewatering and capping the ash in place.  Under the law, the CAMC must make a final decision on risk classification of a coal ash pond within 60 days after DEQ sends the commission a proposed risk classification. If the commission does not act within 60 days, DEQ’s proposed risk classification becomes the final classification by default.

Timelines in the law will  require DEQ to submit proposed classifications for all of the coal ash ponds to the  Coal Ash Management Commission by mid-May.  Some proposed classifications may be ready sooner. Even if  new appointments to the CAMC can be made under an amended appointments statute by that time, the Governor’s action means the newly appointed commission will have to reassemble a staff, re-engage consultants and revive basic  operating systems to function.  Unless the General Assembly extends the time for the CAMC to review and act on proposed risk classifications,  the DEQ proposed classifications may become final by default before the commission can act.

After the ash ponds have been classified, the next major set of CAMC decisions under the Coal Ash Management Act  involve approval of final closure plans for each coal ash pond.  The closure plans determine whether coal ash will be excavated and removed from the site or capped in place and  includes approval of technical specifications for final disposal of coal ash. The closure plan may also involve approval of a beneficial reuse project as an alternative to landfill disposal. The law directs the CAMC to make the final decision on  approving a final closure plan based on a recommendation from DEQ.  The law again gives the CAMC a limited time to act on each recommended closure plan; if the commission does not act within the time allowed, DEQ’s recommended closure plan becomes final by default.

If the General Assembly does not intervene to protect the Coal Ash Management Commission’s ability to carry out its responsibilities, the practical result could be a significant change in the way the Coal Ash Management Act works. Delaying the commission’s ability to act in time to affect DEQ’s decisions on closure of coal ash ponds will have the practical effect of ceding all  decision-making back to DEQ.  The original concept of providing  independent oversight of those decisions through the Coal Ash Management Commission will be lost.

Appointments to Environment/Energy Commissions Violated N.C. Constitution

February 1, 2016. On January 29, 2016, the N.C. Supreme Court issued a decision in McCrory v. Berger — a lawsuit filed  by Governor Pat McCrory  to challenge the constitutionality of two recent state laws that created new executive branch commissions dominated by legislative appointees. The ruling in the Governor’s favor means the three commissions cannot act until the General Assembly changes the statutes governing commission appointments.

Background. The lawsuit concerned appointments to the Coal Ash Management Commission,  the Oil and Gas Commission,  and the Mining Commission. The Coal Ash Management Act of 2014  gave the Coal Ash Management Commission authority to (among other things) make final decisions on closure of coal ash impoundments.  The 2014 Energy Modernization Act eliminated the  Mining and Energy Commission (created in 2012) and divided its regulatory responsibilities  between a new Oil and Gas Commission and a reconstituted Mining Commission. In each case, the legislature gave itself the power to appoint a majority of the commission members.

The lawsuit filed by Gov. McCrory argued the legislative appointments violated the N.C. Constitution. In March of 2015, a special panel of three superior court judges ruled in the Governor’s favor, concluding that the N.C. Constitution bars legislative appointments to commissions that have executive authority. “Executive authority” generally means authority to implement existing laws as distinct from legislative authority to adopt new laws.   See an earlier post  on the superior court decision.

N.C. Supreme Court opinion. The N.C. Supreme Court opinion disagrees with the superior court decision on one key point — the Supreme Court ruled that the N.C. Constitution does not entirely bar the legislature from making appointments to executive branch commissions.  The court interpreted the Constitution’s “appointments clause” to allow the legislature to make appointments to statutorily-created offices including commission seats. The court ruled, however, that  legislative appointments to the Coal Ash Management Commission,  Oil and Gas Commission  and Mining Commission violated the separation of powers clause in Art. I, § 6 of the N.C. Constitution,  which requires that  “[t]he legislative, executive, and supreme judicial powers of the State government shall be forever separate and distinct from each other.”

The court concluded that the appointments scheme for the three executive branch  commissions interfered with the Governor’s constitutional duty to insure that state laws are faithfully executed:

In light of the final executive authority that these three commissions possess, the Governor must have enough control over them to perform his constitutional duty. The degree of control that the Governor has over the three commissions depends on his ability to appoint the commissioners, to supervise their day-to-day activities, and to remove them from office.

The court pointed to three factors that combined to create an unconstitutional legislative  interference with the Governor’s executive powers and responsibilities:

1. Each commission has authority to take final executive action  (i.e., the Coal Ash Management Commission has the final authority to prioritize coal ash ponds for closure and approve final closure plans);

2. The legislature appointed a majority of the members to each commission; and

3. The legislature limited the Governor’s ability to remove commission members by allowing removal only for cause (such as misconduct).

The implication of the decision is that a separation of powers violation has occurred when all three conditions exist.  The court included a footnote specifically suggesting that the outcome may be different with respect to a body like the Rules Review Commission that exercises a different kind of authority.

The court refused to address another separation of powers issue raised in the case. The Governor  argued that the legislature also violated separation of powers  by statutorily directing the Coal Ash Management Commission (CAMC)  to operate “independently” of the executive department where it is housed.  (Legislation creating the CAMC placed the commission under the Department of Public Safety.) The Supreme Court held the issue had been mooted by the portion of its decision ruling appointments to the CAMC unconstitutional.  The issue could come up again if the  legislature changes the appointments statute in response to the court’s decision,  but leaves the “independence” provision  in place.

Implications.  The three commissions directly named in the case cannot act until the legislature changes the unconstitutional appointment provisions and new appointments are made.  The Coal Ash Management Commission (CAMC) began meeting in 2014, but has not met since the March 2015 superior court decision that first ruled appointments to the CAMC unconstitutional. In the meantime, other pieces of the Coal Ash Management Act have moved  forward; a newly appointed CAMC will need to catch up.  The Oil and Gas Commission took over implementation of state laws on oil and gas development from the Mining and Energy Commission, so the court’s ruling could delay decisions related to hydraulic fracturing.

Two other pending lawsuits  raising similar separation of powers issues may be affected by the McCrory v. Berger decision. The N.C. State Board of Education sued to challenge Rules Review Commission authority over rules adopted by the Board.  The Board of Education raises several constitutional issues, including a separation of powers violation based on the fact that all Rules Review Commission members are legislative appointees.   The McCrory v. Berger footnote about the Rules Review Commission seems to caution against assuming the court would also find  RRC  appointments to violate separation of powers.   The footnote suggests that the Rules Review Commission’s specific function — to review and object to rules adopted by executive branch agencies — may put it in a different category than the commissions addressed in McCrory v. Berger.

Another pending separation of powers case  in Wake County Superior Court challenges the constitutionality of appointments to the Mining and Energy Commission (MEC). The MEC  seems to fit the McCrory v. Berger template: the commission had authority to take executive actions; the legislature made a majority of commission appointments; and the Governor only had the power to remove a commission member for cause. But the case also presents an additional question: Are actions taken by an unconstitutionally appointed commission void? Over a two-year period, the MEC developed and adopted state rules for hydraulic fracturing.  Plaintiffs in the MEC case (Haw River Assembly and a Lee County property owner) have asked the Wake County judge to rule appointments to the MEC unconstitutional and  void the rulemaking actions already taken by the commission.  The superior court judge had delayed hearing the MEC case until the N.C. Supreme Court issued a decision in McCrory v. Berger. While the Supreme Court decision now provides a roadmap for addressing the separation of powers issue, it doesn’t provide any guidance on how a separation of powers violation affects past commission actions.

N.C. Coal Ash Bill Becomes Law

September 24, 2014. On September 20, Senate Bill 729 (the Coal Ash Management Act) became law without the Governor’s signature. Governor Pat McCrory had expressed concern that a provision in the bill giving legislators the majority of appointments to the new Coal Ash Management Commission violated the constitutional doctrine of separation of powers. Rather than  veto the bill, the governor allowed the bill to become law without his signature and signaled an intent to ask the N.C. Supreme Court for an advisory opinion on the constitutionality of the appointments provision.

In the meantime,  Senate Bill 729  — now Session Law 2014-122 — makes a number of  immediate changes to state law  and sets in motion a  15-year  process for remediating and then closing thirty-three existing coal ash impoundments. An earlier post provided an overview of the  final bill and now attention will turn to implementation.

 NEAR TERM 

  • Effective October 1, 2014 the law prohibits utilities from building new impoundments or expanding existing impoundments for disposal of coal ash.
  • Also effective October 1, 2014, the law  prohibits use of impoundments at closed electric generating facilities for coal ash disposal. The provision prevents a utility from transporting coal ash from an active generation plant to a closed facility for disposal in an impoundment.
  • By October 1, 2014, the utilities must submit a survey to the Department of Environment and Natural Resources (DENR) identifying all drinking water wells within 1/2 mile down-gradient of an impoundment.
  • The law requires the utilities to submit groundwater assessment plans  and  maps showing discharges to surface waters (both permitted and unpermitted) for all 33 impoundments by December 31,  2014.  The maps and groundwater assessment plans represent the first in a series of steps leading to remediation of  groundwater contamination around the impoundments and elimination of unpermitted discharges to surface waters.
  • S.L. 2014-122 sets much more stringent standards for use of coal ash in large structural fill projects and puts a moratorium on smaller structural fill projects to study appropriate standards for those projects.  (“Structural fill” projects involve the use of coal combustion residuals as fill material to level a construction site, build up a road bed, or otherwise change site elevation before construction.) The new standards include setbacks from surface waters and drinking water wells; a requirement for synthetic liners and a leachate collection system; a four-foot separation between the lowest level of fill and groundwater; financial assurance; and standards for closure.
  • Amendments to the state Dam Safety Act require dam owners to  prepare an emergency action plan for each high and intermediate risk impoundment. (The provision applies to all impoundments regulated under the Dam Safety Act and not  just coal ash impoundments.)
  • Dam Safety Act amendments also set minimum requirements for inspection of coal ash impoundment by the utilities   (weekly and following storms) and by DENR  (annually).
  • A new fee imposed on electric utilities that own coal ash impoundments will fund regulatory activities at DENR and the new Coal Ash Management Commission. The law authorizes use of the revenue to create  5 positions in the Department of Public Safety to support the Coal Ash Management Commission and 25 new positions in DENR.
  • S.L. 2014-122 amends state law  to require notice to DENR of any wastewater spill to  surface waters  as soon as practicable, but no more than 24 hours after the spill reaches surface waters.  The law also shortens the time allowed to provide notice to the public  from 48 hours to 24 hours.
  •  S.L. 2014-122 repeals most of a controversial 2013 regulatory reform provision on groundwater remediation by eliminating statutory language that: 1.  created a presumption that the groundwater compliance boundary around a waste disposal site should be at the property boundary;  and 2. limited DENR’s ability to require measures within the compliance boundary to control groundwater contamination. A provision in the same section of  S.L. 2014-122  created a new controversy, however, by reversing a recent superior court decision interpreting state groundwater remediation rules. (For an explanation of the controversy, see the earlier post.)
  • The law creates new civil and criminal penalties for violation of laws related to management of coal ash.

The law also requires a number of actions over the next year intended to  expand beneficial uses of coal ash. The most unusual provision requires the electric utilities  to issue a request for proposals by December 31, 2014 for:

(i) the conduct of a market analysis for the concrete industry and other industries that might beneficially use coal combustion residuals and coal combustion products; (ii) the study of the feasibility and advisability of installation of technology to convert existing and newly generated coal combustion residuals to commercial-grade coal combustion products suitable for use in the concrete industry and other industries that might beneficially use coal combustion residuals; and (iii) an examination of all innovative technologies that might be applied to diminish, recycle or reuse, or mitigate the impact of existing and newly generated coal combustion residuals.

LONGER  TERM

S.L. 2014-122 gives  the impoundments at four coal-fired plants (Dan River Steam Station, Riverbend Steam Station, Asheville Steam Electric Generating Plant and the Sutton Plant) priority for final closure. The law then directs DENR to classify  the other 10 impoundment sites in the state based on risk by the end of 2015. Under  the law,  final closure of impoundments classified as high or intermediate risk will require removal of all coal ash for disposal in a lined industrial landfill (on or off-site) or for  beneficial reuse. Impoundments classified as low risk  have the additional closure option of capping the coal ash in place as long as the closure plan includes measures that will prevent groundwater contamination beyond the compliance boundary.

S.L. 2014-122 sets final closure deadlines based on the risk classification — December 31, 2019 for high risk impoundments; December 31, 2024 for intermediate risk impoundments and December 31, 2029 for low risk impoundments.

OPPORTUNITIES AND PITFALLS

S.L. 2014-122 marks a real and significant change in environmental policy — forcing a transition away from use of wet impoundments for coal ash disposal and toward more protective methods of disposal and safe reuse.   In support of that policy decision, the law provides statutory timelines  for assessment, remediation and final closure of all 33 impoundments and  new resources for state oversight.

Even with resources to implement S.L. 2014-122, it will be difficult to hold to the timelines in the law without an ongoing commitment on the part of the General Assembly, DENR and the electric utilities. Any number of bureaucratic and technical problems could delay or derail implementation of the law.  (The thirty new positions authorized under the bill do not magically appear  when the bill becomes law — getting from legislative authorization of a new position to having a person  on the job  usually  takes months.) The goals of the law won’t be met if the state too easily gives in to unnecessary delays.

Decisions on remediation; classification of impoundments for closure; and approval of closure plans will present a different kind of challenge. There will be an inevitable tension between the utilities’ desire to keep the  cost of compliance  low and the state’s responsibility to protect  groundwater and surface water resources. The bill creates another potential source of tension by giving the new Coal Ash Management Commission  — not DENR — the authority to make final decisions on classification of impoundments and approval of closure plans. The Commission will have a very small staff and the law does not require any commission member to have expertise in  groundwater hydrology or water quality  –  likely to be critical in prioritizing sites for closure and approving closure plans.  With good luck and the right appointments, the arrangement  might work; or it could  lead to  conflict and overly politicized decision-making.

The McCrory Administration Remakes the N.C. Water Quality Program

June 25, 2013:   The N.C. water quality program has been innovative, award-winning and a frequent target of complaints — complaints about  excessive regulation and complaints about poor customer service. The complaints probably result in part from the reach of water quality rules. Over the last 15-20 years,  water quality programs have expanded to address pollution that gets to rivers and streams indirectly —  in runoff from parking lots, roads, lawns and agricultural activities, for example. The expanded scope of the water quality program responded to specific state water quality problems and a new (beginning in the 1990s)  federal focus on “nonpoint sources”.  (The term “nonpoint source” distinguishes these indirect sources of water pollution  from “point sources”, such as pipes and ditches,  that directly discharge waste to rivers, lakes and streams.) In the 1970s and 1980s, the Division of Water Quality  mostly regulated municipal wastewater systems and industrial discharges to rivers and streams.  A simple subdivision development only needed a water quality permit if the  construction involved filling a wetland or stream.  Since the 1990s,  water quality rules have had a much greater effect on real estate development, agriculture, and even the activities of individual property owners.  Any regulatory program that touches so many citizens and activities will generate controversy and complaints — some legitimate and  others not.

The McCrory administration has begun moving toward a major reorganization of the  water quality programs in DENR’s Division of Water Quality (DWQ). It is not yet clear what the state’s water quality program will look like in the end or even what the McCrory administration wants to achieve,  but Secretary John Skvarla has been publicly and harshly critical of the Division of Water Quality’s customer service. Word has  started to get out about  first  steps in reorganization of the division.  Both the division director and deputy director  have recently  taken new assignments;  former director Chuck Wakild  will retire in August.  Reports are that the first reorganization move will be to transfer all  stormwater programs from the Division of Water Quality  to the Division of Energy, Mineral and Land Resources effective  August 1 2013.  The transfer will have a big impact — the Division of Water Quality now manages a number of different state and federal stormwater programs.  State stormwater programs include coastal stormwater  rules designed to protect the quality of shellfish waters and stormwater requirements associated with the Neuse River, Tar-Pamlico River, Falls Lake and Jordan Lake nutrient rules. Federal  stormwater programs  (Clean Water Act programs delegated to the state by EPA)  issue permits for municipal and industrial stormwater discharges and construction stormwater permits for active construction sites.

The Division of Energy, Mineral and Land Resources (DEMLR)  has no stormwater experience  (other than a supporting role in  DWQ’s issuance of construction stormwater permits)  and no experience managing  federal  Clean Water Act programs. Taking on the stormwater programs will greatly increase the portfolio of a division already struggling to meet the enormous workload associated with shale gas rule making.  The move will also separate  federal  stormwater programs from other federal Clean Water Act permitting programs delegated to DWQ, requiring a bit more effort to coordinate water quality strategies that require control of both point and nonpoint pollution sources. It appears that the remaining DWQ  programs will become part of an expanded Division of Water Resources.

As the McCrory administration  moves forward with reorganization plans, a few things to watch for and think about:

— Will the reorganized programs have enough  staff to  review permits, inspect  projects,  enforce  environmental  laws and meet federal grant requirements? Even in the construction stormwater program where there has long been a cooperative agreement between DWQ and DEMLR’s sediment program,  merging staff from the two divisions does not yield a single program with enough staff to meet its responsibilities under state and federal law.  Budget cuts in the sedimentation program over the last five years have take too great a toll.  The temptation to use reorganization as a way to cut positions will be great; it should only be done if the new organization can continue to meet all of its state and federal responsibilities. The same holds true for transfer of DWQ programs to the Division of Water Resources; some programs in the two divisions  appear to do similar things, but in reality have very different purposes.  Reorganization decisions will need to keep those different  program functions in mind.  Staffing levels also affect the federal grants that support much of the water quality program;  state-funded staff positions provide much of the required state match for federal grant dollars and at a certain point eliminating state-funded positions jeopardizes the federal funding.

— Will reorganization decisions maintain all of the functions needed to meet Clean Water Act requirements?  Permits are only a small part of the state’s federal Clean Water Act responsibilities. The state must also have an ongoing water quality planning program  that regularly reviews water quality standards; identifies rivers, lakes and streams that are not meeting water quality standards;   develops  plans to improve water quality; and develops best management practices to reduce nonpoint source pollution.

The Division of Water Quality’s water quality planning program provides much of the information and analysis needed to meet the planning requirements of the Clean Water Act.  Planning programs may appear less critical than permitting, but the planning program provides the monitoring data needed to evaluate the effectiveness of water quality rules, pinpoint pollution problems,  and develop the right solution. A planning program that meets federal requirements is also necessary for the state to  have a delegated Clean Water Act permitting program.

— Will the reorganization maintain the expertise needed to evaluate water quality trends, find solutions to impaired water quality, provide good advice to permit applicants, and advocate the state’s position on water quality policy to EPA? Many water quality programs (especially the delegated federal programs) are very complex. Water quality staff need to understand both the science and the law to help permit applicants through the process. There are also times that EPA and the state will disagree on an issue that affects a Clean Water Act permitting program;  DENR will need the knowledge and experience to make a case for the state’s position.

— Will changes that affect federal Clean Water Act programs require EPA approval? The answer  will depend on what kind of changes are made (to organization structure, staffing and program functions)  and how the existing program description approved by EPA was written. Generally, program changes have to be submitted to EPA for approval along with a certification by the Attorney General that the water quality program continues to meet requirements of the Clean Water Act.

N.C. has made tremendous gains in water quality over the last 20 years. Some of the more visible signs of progress have been better management of swine waste, innovative approaches to stormwater control, creation of GIS tools to better predict stream and wetland impacts, and development of river-basin water quality plans that provide a big picture of water quality conditions, threats and trends. One of the real challenges of environmental protection programs is that success often means avoiding a problem — success is the swine waste lagoon that doesn’t fail, the fish kill that doesn’t happen, drinking water supplies unaffected by algae. The challenge for the McCrory administration will be to improve what needs to be improved in the state’s water quality programs without undermining their effectiveness. Water supply will be key to the state’s economic future — and the quality of the water is as important as the quantity.

Note: A new version of House Bill 94 (Amend Environmental Laws) came up in the Senate Agriculture and Environment Committee this  morning. The bill included a new section that directs DENR to combine the Division of Water Quality with the Division of Water Resources.  The senator presenting the bill indicated that DENR had asked for the reorganization authority, but the details of the bill language do not match up with reported plans for moving the stormwater programs to the Division of Energy, Mineral and Land Resources.  The version of House Bill 94 approved by the committee shifts the stormwater programs to the Division of Water Resources with other water quality programs. Either the DENR plan has changed or the bill needs a little more work.

The Governor’s Budget: A Low Priority for Water and Wastewater Infrastructure?

The  infrastructure  needed to provide wastewater disposal and safe drinking water (treatment plants, pipelines, pump stations and intakes) may not be glamorous, but it is critical to public health, environmental protection and economic development. Since 2008-2009,  state grants  to help local governments  pay for  environmental infrastructure  have fallen  off a cliff.  In Governor McCrory’s proposed budget, infrastructure grant funding  hits  bottom.

In 2008, the N.C. Rural Economic Development Center and the Clean Water Management Trust Fund (CWMTF)  issued a total of approximately $160 million in grants to rural and economically distressed communities for water and sewer infrastructure.  In the 2011-2012 fiscal year  (July 1-2011-June 30 2012),  state budget cuts had reduced the amount granted by the two programs to just over $20 million. (Note: Most CWMTF grant awards go to stream/wetland restoration, stormwater management and riparian buffer protection.  The state law creating the CWMTF only allows  grants for wastewater infrastructure needed to address a specific water quality problem.)

It isn’t clear  that  the two programs will have any  water and wastewater infrastructure grants to give in FY 2013-2014.   Governor Pat McCrory’s proposed budget  makes significant cuts to both agencies — reducing total appropriations for the CWMTF to $6.75 million in the first year of the biennium ($0 in the second year) and cutting the total Rural Center Budget from $16.6 million to $6 million. Given the other demands on those agencies, the budgeted amounts  do not allow for much — if any — future infrastructure funding.

The state has not issued bonds for water and sewer infrastructure since an $800 million bond issue in 1999; all of those funds had been committed by 2004.  Once the bond funds had been exhausted, direct appropriations to CWMTF and the Rural Center became the  only  source of state grant funding for water and  wastewater system improvements. The other major sources of  infrastructure funding  have been the Drinking Water and  Clean Water  revolving loan funds  managed by the Department of Environment and Natural Resources (DENR).  A much  smaller  amount of federal funding for infrastructure  comes through community development programs in the  Department of Commerce.

Grants provided through the Rural Center and CWMTF have filled needs that cannot  be met by the  DENR  revolving loan funds alone. Congress created the  state revolving funds (SRFs)  to help local governments meet the cost of complying  with Clean Water Act and Safe Drinking Water Act requirements — not to meet  all local infrastructure  needs. Both  the Drinking Water SRF and the Clean Water SRF (which funds wastewater projects)  are largely  capitalized by federal grants to the state. ( Each  federal  grant  requires a 20% state match.)    There are at least two major gaps in SRF funding:

1.  Under federal rules, the  SRFs  must be used to meet drinking water and water quality standards; generally,  SRF loans cannot be used for projects (such as water and sewer line extensions)   to serve new development projects.

2. All of the SRF awards are made in the form of loans and some low income communities  have a very limited ability to  take on more debt. In the last few years (starting with federal stimulus funding for water and sewer projects in 2009), many  SRF loans have included some amount of principal forgiveness — but the local government still has to qualify for the loan.

Grant funds provided through the CWMTF and the Rural Center  fill those gaps. Rural and economically distressed communities  can  reduce their  debt burden by using a grant as  part of a larger  project  funding package that also includes loan funds.  There has been  debate in recent years about how much state infrastructure funding should be made available as grants versus loans,  but  the mix  needs to include some amount of grant funding  for economically distressed communities and emergency projects.

The CWMTF and Rural Center grant programs also make funds available for  infrastructure projects that  are not eligible for SRF loans.  The  Rural Center’s Economic Infrastructure Program funds infrastructure needed to serve  new economic development projects —  such as extension of  water and sewer lines  to an industrial park. Many of those projects would not qualify for an SRF loan. The Rural Center has also provided grants for extension of water lines to  homes with contaminated drinking water wells. Making those projects happen can be very difficult since a water line extension to serve a small number of homes far from an existing line can be  prohibitively  expensive to the local government. In several cases,  grant funds from the Rural Center helped make those projects possible.

The state’s population continues to grow.  Existing water and sewer infrastructure continues to age.  Water and sewer service continues to be a necessary condition for much economic development.   A 2004  report issued as part of the Rural Center’s  Water 2030 Initiative  estimated that North Carolina communities would need  $15 billion  to cover  water and wastewater infrastructure needs between 2005 and  2030.  The most recent  needs survey of North Carolina  water and wastewater systems (used by Congress to predict demand on the state revolving loan funds) reached a similar estimate  —  $16 billion over the next 20 years.  Although  70% of the water and sewer projects in the state are funded by private borrowing,  a significant number of communities  rely  on  a combination of low interest loans and state grants to upgrade aging infrastructure and plan for growth.

The Governor’s  budget provides state match money needed for the next  round of federal  SRF awards, but eliminating funding for  state water and sewer infrastructure grants should not be an unintended casualty  of the budget process.

 

 

The Highway and the Sea

Highway 12  extends from mainland Dare County south  across Oregon Inlet (by way of the Bonner Bridge) to Hatteras Island.    The road travels  through Cape Hatteras National Seashore and Pea Island National Wildlife Refuse before reaching the Village of  Rodanthe at the southern end of the island.    At  several points, the island narrows to a ribbon between the Atlantic Ocean and brackish ponds in the wildlife refuge.

Highway 12 to Hatteras aerial

Photo credit: County of Dare / Foter.com / CC BY-NC-SA

For decades, the state  has cleared, relocated, rebuilt and repalred storm-damaged sections of  the Hatteras Island highway. On March  19  2013, N.C. Gov. Pat McCrory issued an executive order  again declaring  a state of emergency  for  N.C. Highway 12 to allow use of state and federal emergency funds to repair Hurricane Sandy damage on Hatteras.  Repair costs for the most recent damage have been estimated at $8-10 million.

In 2010, the state  made  a commitment  to perpetually maintain Highway 12 as the main transportation link to Hatteras Island — without  assurance that it is technically possible and without  knowing the cost.  The commitment was  sealed   when the N.C. Department of Transportation (NCDOT)  decided  to replace the aging Bonner Bridge over Oregon Inlet  with a new bridge built in a parallel location.  Bonner Bridge carries Highway 12 from mainland Dare County across Oregon Inlet to Hatteras Island;  unless Highway 12  continues south on Hatteras Island,  traffic coming off the new  Bonner Bridge  will have nowhere to go.

In making the Bonner Bridge replacement decision, NCDOT looked at a number of other alternatives — including a sound-side bridge that would connect to Hatteras Island at the island’s midpoint (rather than bringing traffic directly south from Nags Head) and expanded ferry service in place of a bridge.   NCDOT cited a number of reasons for choosing  a new Oregon Inlet bridge and maintenance of Highway 12 as the preferred  transportation access to Hatteras Island —     including  the high cost of a sound-side bridge.  But it is also clear that  Dare County citizens  and local government officials   pushed  for continued road access from mainland Dare County to  Hatteras Island.

As  the state was deciding to go all in to  continue the historic road  access to Hatteras Island,  a combination of storm damage and shoreline erosion was  making it increasingly difficult — and expensive — to  keep  Highway 12 open.   In 2003, Hurricane Isabel breached Hatteras Island – creating a  small  inlet connecting the Atlantic Ocean to the waters of Pamlico Sound behind the island.  NCDOT  filled the Hurricane Isabel breach, but when the area breached again in  2011  NCDOT  built  a temporary bridge over the new inlet.   The storm that reopened the Isabel breach, Hurricane Irene, also opened  a second breach  to the south. The most recent damage occurred in October of 2012 when Hurricane Sandy overwashed the temporary bridge and  caused the highway to buckle and overwash  in  several places south of the temporary bridge.

Hwy 12_Oct 2012_Mirlo Beach

Highway 12 at Mirlo Beach (October 2012). Photo: The Virginian Pilot.

The Cost

In the last 25 years, the state has spent over $23 million (in state and federal funds) to repair the most threatened sections of Highway 12  on Hatteras Island.  That figure does not include  the  additional $8-10 million  needed to repair the October 2012 Hurricane Sandy damage.   (WRAL News  has compiled  a  25-year history of repair costs for the Hatteras Island sections of Highway 12  from information provided by NCDOT.)   The raw numbers don’t tell the whole story – the highway has experienced catastrophic  storm damage at an accelerating pace in the last few years.  Of the   $23 million spent since 1987, 75% was spent  in the last 10 years.

5-year costs in thousands of dollars.

The chart  shows Highway 12 repair costs for each five-year period since 1987. It does not include the costs of repairing the 2012 Hurricane Sandy damage; the most conservative estimate of Sandy repair costs ($8 million) would  bring  total  repair costs  since August of 2011 to more than $20 million. The costs also don’t include  long-term work needed to  keep  Highway 12 open  as the Hatteras Island shoreline continues to change. NCDOT has identified a number of erosion “hotspots” and possible breach locations  along the 12.5 mile section of highway between the Bonner Bridge landing and Rodanthe. The options under study include permanently  bridging the most threatened sections of the highway within its existing right of way. That approach could  put  bridged sections of Highway 12  hundreds of feet  offshore  within a few years as the island  itself continues to erode and migrate toward the mainland.

Replacing Bonner Bridge has been estimated to cost between $265 and $315 million (in 2006 dollars).  When you add the cost of  addressing the erosion hotspots and areas at risk of breaching  on Highway 12   south of  the  Bonner Bridge landing , the total cost of  maintaining road access from the Dare County mainland  to  Rodanthe  may be as high as $1.5 billion (also in 2006 dollars). The actual costs are unknown;  the final NCDOT/ Federal Highway Administration decision documents  for the Bonner Bridge  replacement  project  left  specific decisions about how to stabilize Highway 12 on Hatteras Island to be made in the future.

Right now, it all has the feel of decision-making avoided. Inertia will carry the state  along a path of  maintaining a highway in the sea  unless state leaders look again at the most basic questions:

1. What is the purpose of Highway 12 on Hatteras Island  — to provide safe access on and off the island or to maintain a  road from  mainland Dare County to Hatteras Island? The two are not  the same.

2. Can the state — at any reasonable cost — maintain   Highway 12 between Oregon Inlet and Rodanthe as the Hatteras Island shoreline continues to erode and migrate toward the mainland?

3. Is there another way to provide transportation access on and off the island that can more easily adapt as the Hatteras Island shoreline changes?

The NCDOT decision  to replace the Bonner Bridge in a  parallel location  and permanently maintain Highway 12 on Hatteras Island has been appealed by two wildlife organizations. That  appeal is pending in federal district court.  NCDOT’s evaluation of options for maintaining Highway 12 on Hatteras Island is ongoing.

 

 

Postcards From the Coast: Offshore Drilling

March 6, 2013

First,  a postcard from Raleigh to the coast — While fracking has used up most of the oxygen in recent  discussions of  state energy policy, offshore energy development has  taken on new political life.   The sections of Senate Bill 76 dealing with shale gas production have gotten more attention, but the bill also revives  legislative proposals on offshore  energy  development that did not survive  the 2011-2012 session. These sections of the bill apply to all kinds of offshore energy generation (including ocean  wind  turbines), but the bill clearly intends to  signal support for  offshore oil and gas drilling.

In Section 7, Senate Bill 76 proposes a way to divide up state revenue received from  offshore energy  production.   Whatever the merits of the Senate plan  — and it seems designed to promise money for every good thing possible —  it is not certain that the state will ever receive revenue from offshore  energy  production.   The United States has had no experience with  offshore wind turbines and the economics of ocean wind energy make it  an unlikely revenue  source.  Most oil and gas drilling sites are in federal  waters outside the limits of state jurisdiction;  all revenue from drilling in federal waters goes to the  United States  treasury unless Congress authorizes  revenue sharing with the   states.   Gulf Coast states benefit from a federal formula for sharing revenue from production in the Gulf of Mexico and something similar would be needed to allow  Atlantic coast states to receive revenue from production along the eastern seaboard.  Assuming Congress allows revenue sharing for Atlantic coast oil and gas production, the benefit to North Carolina  will depend on where  drilling  occurs and how  the revenue sharing formula works.

Note: The U.S. Department of Interior is not currently issuing offshore oil and gas leases in Atlantic coast waters.  Under the department’s  5- year lease plan, no Atlantic coast leases will be offered until 2018 at the earliest.

The bill also encourages the Governor to negotiate an interstate offshore energy compact with the governors of Virginia and South Carolina. As described in the bill, the purpose of the compact would largely be to lobby for earlier issuance of  oil and gas leases  off  the  east coast of the United States; revenue sharing for Atlantic coast states; and quicker permitting of offshore oil and gas activities.

Although Senate Bill 76 has not yet become law, Governor McCrory has already checked off two  items on the bill’s to-do list. Governor McCrory   joined the governors of South Carolina and Virginia in sending a letter to the President’s nominee for Secretary of the Interior, Sally Jewell,   urging her to  open east coast waters for oil and gas drilling  sooner.  A February 14 press release  issued by Gov. McCrory’s office includes excerpts from the letter and a link to the full text of the letter.

The following week, Governor McCrory joined the governors of Alaska, Louisiana, Texas, Virginia, Mississippi, Alabama, and South Carolina   as a new member of the Outer Continental Shelf Governor’s coalition.  The coalition advocates for more offshore leasing, quicker permitting of offshore oil and gas operations, and revenue sharing for all states with offshore energy production.

Senate Bill 76 has passed the Senate; the bill will go through three House committees (Commerce, Environment and Finance) before reaching the House floor.