Environmental Law and Policy from a North Carolina Point of View

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 Se-

nate 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 environ-

mental 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, Aquari-

ums, the N.C. Zoo and the Museum of Natural Sciences) with cultural resource programs (such as the Mu-

seum 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 Fish-

eries 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 sur-

face 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 avail-

able 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 re-

sponse 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 Pro-

gram.

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 opera-

tions, 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 ex-

tending 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 Gen-

eral Fund.

STREAM AND WETLAND MITIGATION

Sec. 14.23 (Limiting the state’s role in providing stream, wetland, riparian buffer and nutrient mitiga-

tion) 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 devel-

opment projects that can now move ahead based on the Corps of Engineers’ agreement to accept pay-

ments 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 con-

tamination 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 reim-

bursement 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 al-

ready 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 legis-

lators 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 impair-

ment. 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 Michi-

gan 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 permit-

ting 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 Pollu-

tion 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 provi-

sions 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.

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This entry was posted in Coal Ash, Coastal Development, Energy, General Observations, Nutrient Pollution,

Parks, Waste, Water, Wetlands and tagged Budget, Coal Ash, Jordan Lake, Nutrient Pollution, UST, Waste Dis-

posal, Wetlands on June 18, 2015 [http://www.smithenvironment.com/the-nc-senate-budget-2015/] .