Monthly Archives: August 2013

Coastal Policy: Messages from Hurricane Sandy

August 27, 2013.  Just in time for the most active hurricane months, a look at Hurricane Sandy recovery:

Rebuilding.   New Jersey   will use  $250 million in federal Sandy disaster relief funds to buy out as many as 1,000 homes in communities like those along the South River and Raritan Bay that have flooded with increasing frequency.  The program aims to buyout entire streets and blocks of buildings in  high risk areas.  This is not a new use of federal disaster relief  funds;  similar buyout programs have been used to remove structures from floodplains in other parts of the U.S. after repeated flood events.

The story on the beaches is different. Both New York and New Jersey opted for quick rebuilding in the beach communities.  Shoreline changes  may have made  reconstruction physically impossible on some beach properties,  but otherwise the  two states decided  to allow beach communities to rebuild basically as they were before the storm. The emphasis on  quick reconstruction overwhelmed any discussion of policy changes  that might lessen damage in future storms.    Even with the push to rebuild, residents of N.Y. and N.J. beach communities have experienced  delays for all of the usual reasons: the need to  cleanup and  restore  basic  public infrastructure;  a wait for insurance payouts;  the need  for additional financing when insurance payouts  fell short; the slow realization that some houses still upright after  Sandy will have to be bulldozed  because of extensive  water damage; and the additional cost of elevating homes to meet federal flood insurance standards.

More on new federal  flood insurance maps and the cost of elevating structures;  beach nourishment projects; and  conflicts over reconstruction (and expansion) of seawalls on the New York and New Jersey oceanfront  below.

Revised FEMA Flood Maps.  The Federal Emergency Management Agency (FEMA) started the 3-5 year process of updating flood insurance rate maps (FIRMs) for  eastern seaboard states before Hurricane Sandy. The maps, which designate high hazard flood zones for purposes of the federal flood insurance program,  had last been updated in the 1980s. A lot has changed since then;  the United States Geological Survey estimates that sea level rise  along the New Jersey coast has risen between 6 and 9 inches  in the last 50  years and stormwater runoff from increased development also contributes to higher flood risk.  FEMA planned to finalize  updated  flood maps for New Jersey and New York in the second half of 2013,   but  issued “advisory” maps in December of 2012 to help property owners make rebuilding decisions after Sandy.

As expected, the new FEMA maps had  larger flood hazard areas, including larger  V-zones; these are areas likely to flood as a result of wave action (“V”  stands for velocity)  where structures require higher and more expensive elevation.   Federal flood insurance standards require structures located in certain high hazard flood zones, such as  V-zones and A-zones (the designation for many coastal areas just landward of the V-zones)   to be elevated above base flood elevation or  pay much higher federal flood insurance premiums. New structures and those  more than 50% damaged must be elevated above the new base flood elevation to  be insured  at all. Elevation can add tens of thousands of dollars in cost; the amount depends on the required height and method used to raise the house.

Shortly before Sandy,  Congress amended  federal flood insurance laws to make the program more financially stable. The Biggert-Waters Flood Insurance Reform Act of 2012 directed FEMA to make flood insurance rates  reflect flood risk and phase out  insurance subsidies for  homes built before the first federal flood insurance  rate maps were adopted in 1975. You can find more information on 2012 changes to the federal flood insurance program here.  The prospect of higher flood insurance rates, elevation of additional homes (including homes predating the flood insurance program) and a major east coast hurricane created a perfect storm of confusion and anxiety.

The larger V-zones shown on the advisory maps  generated a Stop FEMA Now movement  by property owners  concerned about  the cost of elevating their homes  and  higher flood insurance rates.   New Jersey Gov. Chris Christie urged beach communities to take advantage of the FIRM revision process  to provide  FEMA with information to  support  smaller  flood hazard zones. By June of 2013,  FEMA had  modified draft  maps for the New Jersey shoreline. Although the June maps still expand flood hazard areas, FEMA reduced the size of   many of the V-zones  shown on earlier advisory maps. FEMA expects to finalize maps and new flood insurance rates  in 2014. In the meantime, the uncertainty about flood hazard designations and elevation requirements caused some homeowners to delay rebuilding.

Note:   The  1980’s-era flood insurance rate maps for N.C. have already been updated thanks to a cooperative effort between the state and FEMA.  In 1999, North Carolina  experienced  the problem of out-of-date flood hazard maps when  Hurricane Floyd caused devastating and unexpected  flooding along coastal rivers and streams. In response, the N.C. General Assembly  created and funded  the N.C. Floodplain Mapping Program. The new state program took on  the technical work needed to update the FIRMs for N.C. under a cooperative agreement with FEMA    By 2008, the first phase of map updates (covering the six coastal river basins)  had been completed and adopted for use in the federal flood insurance program.  As in  N.J.,   more recent N.C. data  confirmed the practical experience of Hurricane Floyd —  because of sea level rise and increased stormwater runoff, larger areas are vulnerable to significant flooding.

Beach Nourishment. In New Jersey,  Hurricane  Sandy  response  means  major beach nourishment and dune construction projects to rebuild eroded beaches. Communities that   had nourished beaches before Sandy clearly fared  better than those  that did not.  Although Sandy  eroded  the   nourished  beaches,  the protective  dunes took the brunt of the storm rather than the oceanfront development behind the dune line.  New Jersey has proposed to rebuild  protective dunes that  existed before Sandy and extend dune construction to additional communities.     The challenges: money,  easements and sand (in shorter supply than many people assume).


Dr. Stewart Farrell and colleagues in the Coastal Research Center at  Stockton College of New Jersey estimate  that between 1985 and 2008 New Jersey beaches received  80 million cubic yards of sand  at a cost of  $800 million (not adjusted for inflation).  The larger beach  nourishment projects  were built by the U.S. Army Corps of Engineers  under a cost-sharing formula with the state. Under the  current  cost sharing formula, federal funds pay   65%  of the cost  for  an authorized federal  “hurricane protection” project to  nourish a beach and build protective dunes; the remainder of the cost is  shared by state and local government.   This year, Congress allocated $5.4 billion to the Corps of Engineers for Hurricane Sandy response.  See  “The Beach Builders” by John Seabrook in the July 22, 2013 issue of The New Yorker magazine for the past and present of beach nourishment on the New Jersey shoreline.

Not surprisingly, the high cost of beach nourishment  periodically causes both Presidents and members of Congress to question the wisdom of investing federal money in projects designed to erode away.  Both Presidents Clinton and George W. Bush attempted to either eliminate or scale back federal funding for beach nourishment.  Pressure to protect valuable real estate, expensive homes and tourism revenue won out.


The landward edge of a  beach nourishment/dune construction project has to be anchored above the mean high water line — which most often means on private property. For federally funded projects, the U.S. Army Corps of Engineers requires an easement for construction from each private property owner affected and puts the responsibility for acquiring the easements on the local government.  Beach towns ( even before Sandy) have sometimes met resistance from  property owners for a variety of reasons —  most often, fear that the easement will  allow public use of their property.  New Jersey’s goal is to  build continuous lines of protective dunes in  Ocean County, Cape May and Atlantic County beach communities.  Easement acquisition has been slow; according to a recent local news story  only half of  the easements needed for the N.J. beach projects have been granted by oceanfront property owners.   (Gov. Christie has made his feelings about that  known.)

Although a local government can use the power of eminent domain to condemn  easements for beach nourishment,   an eminent domain case  related to  an earlier   dune construction   project in  the Borough of Harvey Cedars, N.J. cast a shadow over post-Sandy easement acquisition until very recently.    Harvey and Phyllis Karan opposed construction of the 22-foot storm protection dune in  Harvey Cedars because  it would block the   view from the first floor of their oceanfront house.  The Karans refused to grant an easement for the project and after the Borough acquired an easement on the Karan property by eminent domain in early 2009, the issue of compensation for the easement ended up in court.  The Borough offered the Karans a small amount ($300) to compensate for the impact on their  view; the Karans’ lawsuit asked for $500,000, arguing that construction of the dune (which was completed in 2010) reduced the value of their $1.9 million house by 25%.

When the compensation case went to trial, the judge did not allow the jury to consider any benefit to the Karans from construction of the 22-foot dune. The jury awarded the Karans $375,000 in compensation.  Hurricane Sandy came through while the  Borough’s appeal was pending in the N.J. Supreme Court  —  eroding the dune, but leaving the Karan home largely undamaged.  Hurricane Sandy may well have affected the outcome of the  case by so dramatically supporting the Borough’s argument that the dune project benefited the Karan property.  In July, the New Jersey Supreme Court issued a decision in  Borough of Harvey Cedars v. Karan, 425 N.J. Super. 155 (App. Div. 2012), rev’d and rem’d, ___ N.J. ___ (2013),  reversing the condemnation award   and sending the case back down for a new trial, saying in part:

“The trial court’s charge required the jury to disregard even quantifiable storm-protection benefits resulting from the public project that increased the fair market value of the Karans’ property… [T]he quantifiable decrease in the value of their property — loss of view — should have been set off by any quantifiable increase in its value — storm-protection benefits. The Karans are entitled to just compensation, a reasonable calculation of any decrease in the fair market value of their property after the taking. They are not entitled to more, and certainly not a windfall at the public’s expense.”

You can find the  entire opinion  here.

N. J. officials clearly hope that the Karan decision will persuade more oceanfront property owners to grant easements for the shore protection projects rather than hold out for large compensation awards.

Seawalls, Revetments and Groins (Oh my!).  Duke University geologist Orrin Pilkey  has often used the New Jersey shoreline as the  living illustration of  the damaging effects of seawalls, revetments and groins on ocean beaches– loss of the recreational beach,  obstruction of public access, and increased erosion on  nearby properties.  Pilkey  made “New Jerseyization” the description of  a choice to sacrifice the beach to use of engineered structures to protect buildings. (You can find a good introduction to the  different types of erosion control structures on  the Surfrider Foundation’s   Beachapedia website. The Surfrider Foundation has opinions on the subject, but the descriptions and illustrations are straightforward and factual. )

Both New York and  New Jersey  have permitted construction of oceanfront erosion control structures to protect public and private property.  Based on the rules currently in place, New York seems to have fewer restrictions.  On paper  (sometime practical application looks different), New York coastal policies appear to tilt in favor of permitting an erosion control structure unless it would affect particularly sensitive natural resources such as wetlands.     Unlike New Jersey,  New York does not require an applicant for a  seawall permit to first show that other approaches will not work.  New Jersey rules seem to reflect greater skepticism about use of erosion control structures on the ocean beach.  In terms of publicly funded beach protection projects, New Jersey  has  focused on beach nourishment as the preferred public response to  post-Sandy shoreline erosion.

Both states have  dealt with post-Sandy controversies related to oceanfront seawalls.  Before Hurricane Sandy, Ocean City (N.J.) had a seawall made up of boulders 18 feet high. After the hurricane, Ocean City rebuilt and extended the seawall   to the boundary with the adjacent town of Matoloking.  Matoloking, which lost about 150 feet of beach in Hurricane Sandy,  sees the extended seawall as a threat to the beach nourishment and dune construction project in Matoloking –potentially  increasing erosion of the protective  dunes Matoloking hopes to build.

In Southhampton N.Y., billionaire hedge fund managers built sheet steel and rock barriers oceanward of their homes under permits  to replace or repair structures that existed before Hurricane Sandy.  Fast track permits issued by the N.Y. Department of Environmental Protection allowed the property owners to  build structures larger than those that existed before Sandy, but without notice to neighbors or the local government. A New York Times  story described one of the new structures as being built with boulders the size of Volkswagons.   Surprised  local officials have expressed  concern about the impact of these large structures on the beach, as waves reflect off the structures and increase beach erosion.

Although the tide seems to have  turned  against use of seawalls, groins and revetments on the oceanfront in recent years, past decisions to permit  those kinds of  structures still echo through the Sandy recovery.

Legislative Wrap-Up V: Miscellaneous

August 14, 2013. Bits and pieces of environmental legislation (air quality, coastal development, sedimentation, renewable fuels tax credit). Many of the provisions discussed below were adopted as part of House Bill 74 (Regulatory Reform Act of 2013), which the Governor has not yet signed into law. The Governor has until August 25th to sign or veto  a bill adopted at the end of the legislative session; if the Governor takes no action, the bill becomes law without his signature.

Appeals of  Air Quality and Water Quality Permits

House Bill 74 (Regulatory Reform Act of 2013) includes two separate provisions that shorten the time for a third party  to appeal an air quality or water quality permit from 60 days to 30 days. (See Section 29 and Section 53.) The time for an applicant to appeal a permit decision has always been 30 days, but a third party (such as  a neighbor, local government or community organization) fell under the  60-day appeal period set in the state’s Administrative Procedures Act . The challenge for third parties is that the appeal period begins to run when the applicant gets notice of the permit decision — not when the third party receives notice.

Air Quality

Local Transportation Mitigation Ordinances.  House Bill 74 ( Regulatory Reform Act)  prohibits local governments from  using a fine or penalty to enforce  certain types of ordinances to reduce the air quality impacts of commuting by car. Section 10.1(a) of the bill adds a new statute section, G.S. 160A-204  (entitled Transportation impact mItigation ordinances prohibited):

“No city may enact or enforce an ordinance, rule, or regulation that  requires an employer to   assume financial, legal, or other responsibility for of the impact of his or her employees’ commute or transportation to or from the employer’s workplace , which may result in the employer being subject to a fine, fee, or other monetary, legal, or negative consequences.”

Section 10.1(b) adds a new G.S. 153A-145.1 that applies the same prohibition to counties.  A  Durham  ordinance requiring large employers to have a plan to reduce commuter miles traveled by employees may be an example of the kind of ordinance the legislation would  affect. The Durham ordinance allows the employer to choose a number of different approaches to reduce commuting by car, including: work-at-home policies; incentives for car-pooling; creation of company van pools; and shower facilities for employees who bike to work.

There was little discussion of the provision as House Bill 74 moved toward adoption,  but the same language appeared in a different House bill titled  Local carbon footprint ordinances (House Bill 677). The  title suggests that lawmakers  linked transportation mitigation ordinances to climate change policy.  In reality, these ordinances mostly have to do with reducing ozone pollution to  meet federal air quality standards.  As much as 70% of the ozone pollution in urban areas comes from motor vehicle emissions and reducing vehicle miles traveled is one way to keep motor vehicle emissions down.  The Durham ordinance talks specifically about the need to reduce nitrogen oxide emissions that contribute to high ozone levels.  Many of the state’s urban areas will be hard-pressed to meet tighter federal air quality standards for ozone while continuing to grow. Failing to meet the ozone standard (“nonconformity” in Clean Air Act language) has significant economic consequences, including loss of federal highway funds and inability to permit new industrial development.  The language in House Bill 74 does not  eliminate the authority for these kinds of  ordinances,  but it  will  make the ordinances difficult to enforce and possibly reduce their effectiveness as a tool to maintain ozone  conformity  in the state’s major metropolitan areas.

Repeal of Heavy Duty Diesel Rules for 2008 and Later Vehicles. Section 25 of House Bill 74 directs the Environmental Management Commission to repeal rule 15A NCAC 02D.1009 (Model Year 2008 and Subsequent Model Year Heavy Duty  Vehicle Requirements) by December 1, 2013. The rule was adopted  by the Environmental Management Commission in 2004 and required model year 2008 and later heavy-duty diesel vehicles to meet California emissions standards. The U.S. Environmental Protection Agency has allowed California to adopt more strict motor vehicle emissions standards than those in federal rules and a number of states have adopted California standards by reference. The EMC adopted the California heavy duty diesel standard because lawsuits delayed the federal standard for several years.  With a final  federal standard  for heavy duty diesel engines in place,  the state rule has become unnecessary. (The final  federal  standard turned out to be  nearly identical to the California standard that the EMC adopted by reference in 2004.)

Open Burning.  Section 28 of House Bill 74 makes a significant change to rules for open burning. Until now, open burning for land-clearing or right of way maintenance has only been allowed on the site being cleared unless the debris was taken to be burned in an air curtain burner,  (Air curtain burners or “fireboxes” provide better control of  smoke and particulate pollution than open burning of woody debris.) The new provision allows land-clearing debris to be transported off-site for open burning and allows that burn site to be used  up to  four times a year. The bill  requires an off-premises open burn to maintain the same setback distance from occupied structures as an  on-site open burn — 500 feet.  The impact on  nearby residents and building occupants may be different, however, if  the off-premises open burn site is used  more often.  The bill also exempts these off-site open burning locations from requirements that would otherwise apply to waste disposal site for land-clearing debris.

Air Quality Permit Terms. Section 29 of House Bill 74 sets the permit term for  most state-issued air quality permits  at eight years.   The term for  an air quality permit issued under Title V of the Clean Air Act  continues to be no more than  five years as required by federal law.

Coastal Development

Ocean and Inlet Erosion Control.  For over thirty years, state coastal policies  generally barred use of hard erosion control structures (like seawalls, jetties and groins) on ocean and inlet shorelines.  In  2011, Session Law 2011-387  made the first significant change in that policy by authorizing  DENR to permit  a limited number of   “terminal groins” under strict conditions.  A terminal groin is an erosion control structure built perpendicular to the shoreline and at the end of a section of beach. Terminal groins are sometimes used to stabilize an inlet shoreline. This year, Senate Bill 151  made several changes to the 2011 law. One of the most significant is a change in the definition of  ”terminal groin” to include projects that involve installation of “one or more” groin structures  or a single groin with  ”a number of smaller supporting structures”.

Although Senate Bill 151 keeps the 2011 limit on the total number of terminal groin projects permitted coast-wide (four), the new definition of “terminal groin” no longer matches the definition used by the U.S. Army Corps of Engineers. Expanding the term to include multiple groins as part of a single project means the law potentially authorizes projects well beyond the scope of a “terminal groin”. Senate Bill 151 also makes it easier  to get a terminal groin  permit by eliminating the need for the applicant to show that: 1.  the project is necessary to protect imminently threatened structures;  and 2. other shoreline stabilization measures  would not be successful. More background on the terminal groin issue and S.L. 2011-387 can be found here.

Local Authority in Public Trust Areas. Another section of Senate Bill 151 clarifies  local government authority to address nuisance conditions on the beach and prevent (or remove) obstructions in public trust areas of the beach. The clarification became necessary because of  a N.C. Court of Appeals decision in Town of Nags Head v. Cherry  that held only the state can take action to  remove a structure on the public trust beach. See an earlier post for background on the Nags Head case.

Notice of CAMA Minor Development Permits.  Section 30 of House Bill 74 eliminates the requirement for newspaper notice of Coastal Area Management Act (CAMA) minor development permits. Notice will still be provided to any person or organization requesting notice of permit applications and by posting a notice at the site of the proposed development. Note: Under CAMA, “minor development”   can still be a significant  construction project.   CAMA  defines “major development”  to include any project that  requires another state or federal approval; occupies an  area of more than 20 acres; involves drilling for or excavating natural resources; or  occupies a structure(s) with a footprint of 60,000 square feet or more. All other development projects are considered “minor development”. As a practical matter, most projects that disturb an acre or  more will be “major development” because of the need for a sedimentation plan approval.

Note: As of  now, Senate Bill 151 has not been signed by the Governor and so has not yet become law.

Sedimentation Act

Local Sediment Programs. The Sedimentation Pollution Control Act  allows  DENR to delegate enforcement of the law to approved local sedimentation programs and many cities and counties have local programs. Section 33 of House Bill 74 resolves a recent question about  the role of the state’s Office of Administrative Hearings (OAH) in appeal of a civil  penalty assessed by a local program for violation of the Sedimentation Act. The bill makes it clear that those appeals  will be decided by the local government  under  the appeal process set out in the local sedimentation program ordinance. Appeals will not go to the Office of Administrative Hearings.

Tax Credit for Renewable Fuel Processing Facilities

House Bill 112 (Modifications to 2013 Appropriations Act)  extends  the tax credit available for facilities built to process renewable fuel. The sunset date for the renewable fuel processing tax credit, G.S. 105-229.16D,  had already been extended several times. Last year, the General Assembly extended the tax credit to facilities in service by January 1, 2014.  Section 11.2 of  House Bill 112 extends the tax credit to facilities in service by January 1, 2017 as along as the developer  signs a letter of commitment with the N.C. Secretary of Commerce by September 1, 2013 and begins construction by December 31, 2013.

Legislative Wrap-Up IV: Water and Wastewater Infrastructure

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


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

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


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

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

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

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

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

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

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

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


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

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

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

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

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

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

Reorganization and Review of N.C. Water Programs

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

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

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

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

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

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

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

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

Legislative Wrap-Up III: Solid Waste, Hazardous Waste and UST

August 5, 2013. Highlights of legislation on solid waste, hazardous waste and petroleum underground storage tanks.


STATE PURCHASE OF CONTAMINATED PROPERTY: One section of house Bill 74 (Regulatory Reform Act)  prohibits state agencies and the community colleges from buying property with contamination without first getting permission from the Governor and Council of State.  (The Council of State is made up of the elected heads of state departments, such the Attorney General, Commissioner of Agriculture, Insurance Commissioner, State Treasurer, etc.). To receive permission, the agency would have to show that state General Fund appropriations would not be used for the purchase. An earlier post, written when similar language first appeared in another bill, talks about the implications. The difference from the earlier version — the final provision does not apply to the UNC system campuses.

BROWNFIELDS:  The state’s Brownfields program provides tax benefits and environmental liability protection to a developer who is willing to clean up and redevelop a contaminated site.  (The person responsible for causing the contamination cannot benefit from the Brownfields program.) Redevelopment is done under an agreement with DENR’s Division of Waste Management that identifies the intended new use of the site and spells out what the developer needs to do to make the site safe for that intended use.  The General Assembly made two changes to the Brownfields program:

— Until now, a site with petroleum contamination from a leaking underground storage tank was not eligible for a Brownfields agreement.  House Bill 789 removes that restriction; a site that could otherwise quality for a Brownfields agreement will not be made ineligible because of a petroleum release.  UST sites had been excluded from the Brownfields program largely because of concern that tax incentives would be inappropriate for sites where the cleanup of contamination is already subsidized by taxpayers through the Commercial UST Trust Fund. The restriction had the unintended result of complicating efforts to redevelop large industrial sites where a UST release may have been just one of several sources of contamination.

— A provision in House Bill 74  exempts local governments from a minimum acreage requirement  (25 acres) for a local government Brownfields project if the developer already has a Brownfields agreement approved by DENR.


FEES FOR LANDFILL PERMITS: House Bill 135 adjusts the fee schedule for landfill permits to match the options for five or ten year permits approved by the legislature in 2012.

ON-SITE DISPOSAL OF DEMOLITION DEBRIS: House Bill 706 (Preserve Landfill Space) allows for on-site disposal of demolition debris from manufacturing facilities and decommissioned electric generating stations. The bill exempts disposal of these materials from landfill standards and allows the debris to be buried on site under environmental standards set in the bill. Hazardous waste in the debris must still be disposed of under standards set in state and federal hazardous waste rules.

LANDFILL PERMITTING STANDARDS: Senate Bill 328 (Solid Waste Reform Act of 2013), which proposed to change many of the landfill permitting standards adopted by the General Assembly in 2007,  never got to a vote in the House.  Some of the less controversial pieces of Senate Bill 328  were adopted as part of  House Bill 74 (Regulatory Reform Act) just before the end of the legislative session. The changes adopted as part of  House Bill 74 include:

● Elimination of the requirement for a buffer between a landfill and state gamelands designated or acquired by the Wildlife Resources Commission after July 1 2013.  For gamelands designated before that date, the buffer will continue to be 1 mile  although  an exception was created for one proposed  construction and demolition debris landfill. That landfill will only be required to have a 500 foot buffer from a gameland designated before July 1, 2013. Based on the description in the bill, Jones County apparently will be the site of the C & D landfill that will benefit from the exception.  The bill does not change the buffers required between a landfill and a  National Wildlife Refuge (5 miles) or  state park (2 miles).  Note: The Jones County exception had been enacted as a separate bill (Senate Bill 24)  early in the session. The language was later added to House Bill 74 with the other solid waste permitting changes and modified to make it consistent with the final language in House Bill 74 on gameland buffers.

● Replacement of the 2007 requirement for annual cleaning of leachate collection lines with a requirement for video inspection of the lines every five years and cleaning as needed.

● A change to a long-standing rule requiring that vehicles used to haul solid waste must be leak-proof.  Under the bill, DENR must immediately begin to apply a different standard – that the vehicle be “designed and maintained to be leak-resistant according to industry standards”.  The Commission for Public Health is directed to amend the 1988 rule to reflect the change.

● A change in the definition of “leachate” to exclude liquid that adheres to the tires of vehicles leaving a landfill or solid waste transfer station.

CRITERIA FOR ASSESSING SOLID WASTE PENALTIES:  Sec. 49 of House Bill 74 sets more specific criteria for assessing civil penalties for violation of solid waste laws and rules. The criteria used are very similar to  criteria used in the water quality and air quality statutes.

LOCAL SOLID WASTE PLANS: House Bill 321 eliminates the requirement for each local government to have a 10-year solid waste management plan.  State law will continue to require annual reporting by each local government on the amount of solid waste generated and disposed of;   participation in recycling programs; programs for disaster debris, white goods disposal, scrap tires disposal; and other information on solid waste management.  A controversial provision that would have intervened in a  legal dispute between Union County and the operator of a C & D landfill in the county was removed before final adoption. (Background on the dispute can be found here.)

LOCAL SOLID WASTE FEES: House Bill 74 also amends the statutes that allow cities and counties to charge fees for solid waste disposal. The new language allows a local government to charge a surcharge for solid waste received from another local government jurisdiction. Unlike the fees charged to residents for waste disposal, revenue from the surcharge does not have to used for landfill operations; the surcharge can be used for any purpose or activity  the local government has authority to fund.


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.)

Note on House Bill 74:  Many of the changes in law described here appear in House Bill 74. The Governor has not yet signed the bill and expressed  concern about some parts of the bill — including the solid waste provisions — in a press conference at the end of the legislative session. The Governor has until August 25 to sign H 74, veto the bill,  or allow it to become law without his signature.

Legislative Wrap-Up II: Energy

August 2, 2013: Highlights of energy legislation.

Shale Gas/Hydraulic Fracturing. This is one area where the big news may be the legislative proposals that failed. The Senate adopted two controversial  shale gas provisions, but neither passed the House. Legislation adopted in 2012 effectively put a moratorium on hydraulic fracturing  by prohibiting issuance of permits until  the Mining and Energy Commission adopted rules and the  General Assembly acted to specifically allow permitting.  The N.C. Senate had always wanted to set a specific date for permitting to begin and tried again this year in Senate Bill 76 (the Domestic Energy Jobs Act). The version of the bill that came out of the Senate repealed the 2012   language  and authorized the Department of Environment and Natural Resources to begin issuing permits for hydraulic fracturing on March 1,  2015 without any further legislative action.  The House had concerns about the change. After back and forth on alternative language and  intensive lobbying in the  last  days of the legislative session, the final bill kept the permitting moratorium in place.

The other controversial Senate proposal  had to do with disclosure of information on chemicals used in hydraulic fracturing fluid. The Senate  intervened on behalf of the oil and gas industry when energy giant Halliburton expressed concern about a chemical disclosure rule drafted by the Mining and Energy Commission. The commission’s draft rule requires drilling companies to disclose all chemicals used in hydraulic fracturing fluid to the Department of Environment and Natural Resources, but allows DENR to keep any trade secret information confidential. You can find more about the chemical disclosure rule and trade secret protection in this post.   In an effort to make the rule more acceptable to the oil and gas industry, the Senate adopted language directing the Mining and Energy Commission to revise the rule to allow  drilling operators to withhold information on trade secret chemicals unless DENR needed the information to respond to environmental damage or a specific health problem.  In the face of significant opposition,   the Senate  modified the language to allow   state regulators  to review information on trade secret chemicals at the same time the drilling company  disclosed  other chemicals used in the fracturing fluid. The revised language did not allow DENR  to actually receive  information on trade secret chemicals — the department could only review  information  that remained  in the drilling company’s possession.  In the final  days of the legislative session, the  bill containing the Senate  language died and the restriction on chemical disclosure died with it.  Failure of the legislation allows the Mining and Energy Commission  to move ahead with the original draft rule on chemical disclosure.

The final version of Senate Bill 76 signed by the Governor included a number of  less controversial changes related to shale gas and hydraulic fracturing:

– Rules adopted by the Mining and Energy Commission are exempted from the  requirement for a fiscal analysis. State law  generally  requires every proposed rule that has an economic impact of $1 million or more (based on the total impact on everyone affected by the rule)  to be accompanied by a  fiscal analysis.

–  Minor changes in the makeup of the MIning and Energy Commission.

– Three new studies to look at:  1. creation of a coordinated permitting process that will allow issuance of a single environmental permit for all oil and gas exploration and production activities; 2. the appropriate level of severance tax for oil and gas resources; and 3. implementation of  the 2012 registration requirement for people involved in  purchase or lease of property for oil and gas exploration and development.

– Technical amendments to an existing law allowing the state to limit the total amount of oil and gas produced in the state (G.S. 113-394).

–  New criteria for setting the amount of  the reclamation bond required for oil and gas activities and a process for either the drilling company or the property owner to appeal the bond amount.

LEED Certification.  House Bill 628 (Protect/Promote Locally Sourced Building Materials) was signed into law after a major rewrite in the Senate.  The  original House bill would have prohibited state building projects from seeking Leadership in Energy and Environmental Design (LEED) certification under U.S. Green Building Council standards because few North Carolina forestry operations meet standards necessary to earn LEED credit for sustainable wood products. You can find more explanation of the controversy over sustainable forest practices and the LEED standard here.  The Senate rewrote the bill to allow construction of state projects under “green” building standards that  give credit for use of local building materials — which LEED standards do.   The  final bill also calls  for study of the energy efficiency standards for state buildings that were adopted in 2007.

Renewable Energy.  Legislation to repeal the state’s Renewable Energy Portolio Standard  died.   With the support of a number of conservative political organizations — including Americans for Prosperity — House Bill 298 and Senate Bill 365 (both titled the Affordable and Reliable Energy Act)  proposed to repeal the 2007 state law requiring major electric utilities to generate an increasing percentage of power from renewable energy sources.  An earlier post talked about the politics of the renewable energy standard and  the practical problem the bill presented for Republican  legislators. The tension between the practical (jobs) and the political (conservative opposition to  subsidies for renewable energy) played out in both the House and the Senate.  In the end, neither bill got all of the committee approvals needed to get to  a floor vote.

The General Assembly adopted legislation setting up a permitting program for  wind energy projects (House Bill 484). The bill largely responds to concerns about the potential impact of wind turbines on military training  activities in the coastal area. Two onshore coastal wind projects already proposed for the coastal area had generated questions about interference with radar and risk to pilots flying low-level military training routes.  Aside from establishing environmental criteria for permitting wind turbines, the bill requires DENR to provide notice of  the permit application to commanders at  nearby military installations and to the Federal Aviation Administration. The bill makes interference with military operations a basis for denying  a wind energy permit.

The final budget for 2013-2015  eliminated state funding for the N.C. Biofuels Center. The General Assembly created the Biofuels Center in 2007 to  encourage  biofuels production in N.C. using  non-food crops.  The Biofuels Center set a goal of replacing 10% of the state’s imported petroleum with homegrown biofuels. To develop biofuels production, the Biofuels Center made grants to support biofuels research and to develop pilot  projects.  Late in July, the N.C. Biofuels Center board decided that it would not be practical to continue operations without state funding; the  Center will  close by the end of October and unused grant money will be returned to the state.

Offshore Energy.  Senate Bill 76 also addressed offshore energy production. One section of the  bill creates a plan for allocating revenue from offshore energy production off the N.C. coast. The first $250 million in royalties to the state would go into an Offshore Emergency Fund to be used for emergency response and cleanup in case of an offshore oil or gas spill. Any royalties to the state beyond the first $250 million would go largely to the General Fund (75%); the remaining 25% would be divided among the Highway Trust fund (5%), the Community College System (5% for programs to train students in fields related to energy development), DENR (5% for coastal projects), the UNC system (5% for energy-related research and development); State Ports Authority (3% for ports infrastructure associated with energy production); and Department of Commerce (2% to recruit energy-related industries to the state).

Note: Offshore oil and gas production would almost certainly occur in federal waters beyond the three-mile limit of state jurisdiction. North Carolina will not receive any royalties from offshore production in federal waters unless Congress specifically authorizes revenue-sharing with the state.

The bill also encourages  the Governor to negotiate a regional energy compact with the states of Virginia and South Carolina to develop a regional strategy for offshore energy production in the three-state region. The General Assembly directs Governor McCrory to work with his counterparts in those states to encourage the U.S. Department of Interior to amend the national 2012-2017 Five Year Leasing Plan to include leasing for oil and gas exploration and development in waters of the Atlantic Ocean off the VA-NC-SC coast.

Energy Policy Act.  Senate Bill 76  makes significant changes to the state’s Energy Policy Act (the Act begins at G.S. 113B-1). The changes  generally run in the direction of  reducing  the emphasis on energy efficiency and renewable energy and increasing  the emphasis on job creation.   The amended Energy Policy Act has more to say about expanding development of all energy sources – including natural gas and nuclear power — and much less about energy conservation.  The bill changes the makeup of the Energy Policy Council (an advisory board created to guide state energy policy) along the same lines:

– The seat on the Council for a person  with experience in alternative fuels or biofuels becomes a seat for a representative of  an investor-owned natural gas utility.

–  The seat designated for a person  with experience in energy efficient building design or construction  becomes a seat for  an energy economist.

–  The seat on the Council for a person with experience in renewable energy becomes a seat for an industrial energy consumer.

The General Assembly also consolidated state energy programs in the Department of Environment and Natural Resources. The budget bill moves the State Energy Office (which has largely carried out federally funded energy efficiency programs) from the Department of Commerce to DENR. Senate Bill 76  moves the Energy Policy Council, which had also been under the Department of Commerce,   to DENR. The Council will be  staffed by the Division of Mineral, Energy and Land Resources.