Monthly Archives: March 2014

A Preview of 2014 Environmental Legislation

March 19, 2014.  On March 12, the N.C. General Assembly’s Environmental Review Commission (ERC) met to hear reports from several  working groups created to follow up on 2013 legislative issues. [The ERC is a joint House/Senate committee that meets between legislative sessions to study and develop  legislation on environmental issues.]  The reports included recommended legislation, but the ERC did not really discuss  the  bill drafts. The ERC will vote on legislative proposals for the  2014 session  in April.  The working group bill drafts   represent a starting point for development of 2014 legislation; the ERC co-chairs indicated a willingness to consider changes to  the  proposals  before voting  on April 3 to approve  a package of  2014  ERC  bills.  With the understanding  bill drafts may change between now and April 3,  legislative proposals presented last week included:

Stormwater.  The Regulatory Reform Act of 2013 (Session Law 2013-413) changed state  stormwater  standards to  treat gravel areas as “pervious” and exclude those areas from the calculation of built-upon area on a development site.  (A pervious surface allows  water to  percolate through  to the soil beneath; an impervious surface –such as a concrete driveway —  does not.) Since the amount of built-upon area determines the level of stormwater control required, developers had asked for exclusion of gravel from the calculation of built-upon area as a way to reduce stormwater requirements. The 2013 regulatory reform provision  also directed the ERC to study state stormwater programs “including how partially impervious surfaces are treated in the calculation of built-upon area under those programs”.

Having successfully lobbied for legislation treating “gravel” as a pervious surface and intending to  push for changes  in the way partially impervious surfaces are counted toward built-upon area, supporters of the 2013 legislation encountered a complication — there was no consensus on  the definition of  “gravel”.  As a result, the ERC stormwater working group  focused  on the  gravel  controversy instead of moving  on to the  issue of partially impervious surfaces.

The working group found that gravel areas may or may not be pervious depending on the size and type of the aggregate material used and the underlying substrate. The draft  bill presented to the ERC would actually undo the 2013 legislative decision to exclude all gravel surfaces from the calculation of built-upon area and  direct the Department of Environment and Natural Resources (DENR)  to contract with N.C. State University for a study of the pervious/impervious qualities of different types of aggregate materials.

Isolated Wetlands. After several bills proposing to repeal  state rules protecting isolated wetlands failed to win passage,  the  General Assembly asked the ERC to study isolated wetlands regulation.  (See an earlier post for more background on the isolated wetlands issue.) Senator Brent Jackson  presented a recommendation for  modification, but not repeal, of state standards for development in isolated wetlands. You can find a copy of the draft legislation here.

The bill would allow developers to disturb a somewhat larger area of isolated wetlands without a water quality permit review.   Current state rules  allow  isolated wetland impacts below specific thresholds to be “deemed permitted” under certain conditions. The proposed legislation would raise those thresholds. West of Interstate 95, the “deemed permitted” threshold would be increased  from 1/10th of an acre to 1/3 of an acre; east of Interstate 95,   the “deemed permitted” threshold would increase from 1/3 of an acre to 1 acre.  (Interstate 95 has long been used as the  dividing line between wetlands-rich eastern counties and piedmont/western counties that have fewer wetlands.)

The bill also proposes to reduce the mitigation required for isolated wetland impacts.  Wetland rules only require mitigation (in the form of wetland creation, wetland restoration or preservation) for impacts to one acre or more of wetlands; for projects requiring mitigation, the rules set  a  2:1 ratio of acres of wetlands mitigation to acres of wetlands impacted by  development.  The 2:1 mitigation ratio  allows for  loss of wetland function and  potential for mitigation failure.  Current  rules also use  a sliding scale of mitigation credits — giving less credit toward meeting the mitigation requirement for preservation of existing wetlands and more credit for creation or restoration of wetlands.  The ERC working group recommendation appears to propose a flat 1:1 mitigation ratio and makes no distinction based on the type of mitigation used.

Local Environmental Ordinances.  An earlier post described legislative efforts to restrain local government adoption of environmental ordinances,  resulting in a one-year moratorium on adoption of  new city and county  environmental ordinances and an ERC study. The ERC working group on local ordinances, led by Rep. Chuck McGrady and Sen. Andrew Brock, found little  actual conflict between state environmental regulations and local ordinances.  The existence of a specific state/local conflict  apparently became the practical guideline for the working group’s proposed  legislation.  The draft bill addresses the one area of conflict the members found — local ordinances on use and application of fertilizer already regulated by the N.C. Department of Agriculture and Consumer Services.

The recommended legislation follows  the General Assembly’s  past practice  of preempting  local regulation only when necessary to meet  some overriding state interest. It is not clear how the narrowly drafted bill recommended by the  working group will be received by those pushing for stricter limits on local environmental ordinances.   In 2013, the N.C. Homebuilders Association  lobbied for the much broader restrictions on local authority in Senate Bill 112 (discussed in the earlier post).  Under the approach  proposed  in SB 112,   it would be very difficult for a local government  to adopt a  more stringent  ordinance on a subject already addressed (however narrowly) by state or federal environmental rules. For Senate Bill 112 supporters, the issue may be more about the benefits of  a single, statewide set of minimum development standards  than concern about conflict between state and local  regulation.

Reporting wastewater spills. In response to concerns about delayed public notice of the recent Haw River wastewater spill,  an  ERC working group   proposed to amend the existing notice law. You can find a copy of the draft legislation here.  The amendments would do two things —

1. Clearly require notice to DENR  of any spill of more than 1,000 gallons of untreated wastewater.   (Although notice to DENR can be implied from the existing law,  the statute only talks about published notice.)

2. Reduce the time allowed to provide notice (both to DENR and to the public) from 48 hours to 24 hours after untreated wastewater reaches surface waters.  Based on discussion at the March meeting, the ERC  may consider requiring more immediate notice to DENR.

Review of Engineering Work. North Carolina’s professional engineers (PEs)  have lobbied for several years to limit state review of plans prepared  by  PEs and  to limit the ability of regulators to require  changes to  engineering  plans. The most recent effort  led to language in the Regulatory Reform Act of 2013 (Session Law 2013-413)  requiring a study of state and local review of engineering plans. Section 58 of S.L. 2013-413   directed DENR, the Department of Transportation, the Department of Health and Human Services and local governments to study:

“(iii) the standard scope of review within each permit program, including whether… staff are requiring revisions that exceed statutory or rulemaking requirements when evaluating such permits or plans; [and]

(iv) opportunities to eliminate unnecessary or superfluous revisions that may have resulted in the past from review processes that exceeded requirements under law, and opportunities to otherwise streamline and improve the review process for applications and plans submitted for approval.”

These issues have come up a number of times in recent years and seem to represent several different concerns on the part of private sector engineers: questions about the engineering credentials of state and local permit reviewers; concern about professional liability for changes in engineering design required by  state/local permitting staff; time added to the permitting process; and chaffing at second-guessing of  a PE’s judgment by regulatory staff.

The working group’s legislative proposal,  can be found here. It appears to take a moderate path toward managing the tension between private sector engineers and state/local permitting staff. (A sometimes necessary tension given their different responsibilities.) One interesting part of the proposal has to do with review of innovative systems and designs. The bill  would allow a permitting agency to charge the  applicant for a third-party engineering review of an innovative system if the agency does not have a staff engineer qualified to do the review.  That seems to be a wise approach given past controversies (and litigation) over approval of innovative systems.

Historical note: There have been a number of lawsuits against state and local  permitting agencies based on  approval of  engineered innovative systems that later failed.  One of the largest lawsuits resulted from the failure of a wastewater system serving  dozens of homes in an Orange County subdivision in the 1990s.   The homeowners sued the developer, the engineering firm that designed the system and the private utility managing the system — but also sued the state  based on claims of negligent permitting. The state ultimately settled the lawsuit, paying thousands of dollars in damages to the homeowners.

Coal Ash.  ERC co-chair Rep. Ruth Samuelson  noted the high level of  public interest in coal ash,  but  indicated the ERC would not discuss coal ash  at the March meeting.  Samuelson stressed the need  for deliberation and informed decision-making. The  ERC has only one more scheduled meeting before the General Assembly convenes in May.  At the  April 3 meeting, the ERC will  vote on recommended legislation for the legislation session and there has been no discussion of potential  coal ash legislation.

Understanding the Court’s Coal Ash Order

Note: This post was updated to link to a different site for a copy of the judge’s order after the original source site became unavailable.

On March 6, 2014,  a  Superior Court judge issued an order reversing part of a 2012 declaratory ruling  by the N.C.  Environmental Management Commission (EMC) concerning regulation of coal ash ponds under state groundwater rules. The declaratory ruling case began in October of 2012 — before the Clean Water Act citizen suits of 2013 and the recent Dan River spill — as a request for an interpretation of state groundwater rules as applied to the coal ash ponds. The declaratory ruling request (filed on behalf of Cape Fear River Watch, Sierra Club, and Western N.C. Alliance) asked the EMC to  rule on three issues:

1. Operators of coal ash  ponds with Clean Water Act discharge permits first issued on or before December 30, 1983 must take corrective action (such as assessment and remediation) when their activity causes a groundwater standard violation — even if the violation occurs inside the compliance boundary around the ash pond;

2. Operators of coal ash  ponds with Clean Water Act discharge permits first issued on or before December 30, 1983 must take immediate action to remove sources of contamination causing a groundwater standard violation; and

3. These same requirements apply to owners of coal ash ponds that are closed and inactive.

Two background notes. State  rules recognize the possibility that waste disposal may cause groundwater contamination.  The rules generally only require corrective action at a permitted waste disposal site  if the waste disposal activity has caused a groundwater standard violation beyond a defined compliance boundary.  Corrective action can include assessment of the extent of contamination, steps to contain or reduce ongoing contamination and groundwater remediation. Landfills built to modern (post-1983) solid waste management standards have a  groundwater compliance boundary  of  250 feet around the perimeter of the waste disposal area or the property  line, whichever is closer.   Older facilities (like the coal ash ponds) generally have a  500-foot groundwater compliance boundary. See a previous post for  more on groundwater compliance boundaries.

December 30, 1983  becomes significant because state rules treat waste disposal sites that first received Clean Water Act permits on or before that date as unpermitted facilities.  (More about the logic of that assumption as applied to ash ponds later.) The rules require a different response to groundwater contamination found at an unpermitted waste disposal  site  as opposed to a permitted facility — presumably because newer facilities  have been built to more environmentally protective standards.

Judge Ridgeway’s Decision. On the first issue, Judge Ridgeway  agreed with the EMC, concluding that state rules only require corrective action if the waste disposal activity causes a violation of groundwater standards beyond the compliance boundary  around the disposal site.  Exceedence of a groundwater standard within the compliance boundary does not require corrective action except in extraordinary circumstances.  Although consistent with past EMC and DENR interpretations,  Judge Ridgeway’s decision leans heavily on new groundwater legislation adopted as part of the Regulatory Reform Act of 2013. (See the  earlier post for  more on the 2013 legislation.) According to the judge’s order, all of the parties to the declaratory ruling case  agreed that the 2013 legislation mooted the compliance boundary issue.

On the other hand, Judge Ridgeway decided the second issue (concerning immediate removal of the source of groundwater contamination) in favor of the petitioners. The  judge  relied on state rules  treating waste disposal  facilities first permitted under the Clean Water Act on or before December 30, 1983 differently from those permitted later.    The rules  classify  older facilities   as  unpermitted  and  a groundwater standard violation at an unpermitted waste disposal site triggers a requirement to immediately remove the source(s) of contamination.    All of the coal ash ponds in the state  first received a Clean Water Act discharge permit before December 30, 1983.

Treating the ash ponds as unpermitted waste disposal  facilities  is  key to the  judge’s ruling  that  the utility companies must immediately remove the contamination source at any ash pond that has caused a groundwater standard violation beyond the compliance boundary.   Removal of the source of groundwater contamination associated with  a coal ash pond clearly has huge implications, since the  primary  source of contamination is the coal ash itself. Under the rules, a groundwater standard violation at a permitted waste disposal facility  may require corrective action, but not  necessarily  removal of  waste causing the contamination.

Judge Ridgeway disposed of the third issue by briefly noting that the laws  and  rules don’t distinguish between active and inactive waste disposal facilities.

Potential confusion.  Judge Ridgeway’s order seems to treat  coal ash ponds as permitted waste disposal sites in deciding the first issue  and as unpermitted waste disposal sites in deciding the  second. The 2013 legislation the judge relies on  to decide  the first issue  clearly  applies to waste disposal systems that require an individual permit under either  water quality or waste management laws. The  new statute language  limiting the EMC’s power to require corrective action  inside the compliance boundary  begins with these words: “When operation of a disposal system permitted under this section results in an exceedance of the groundwater quality standards…”

It seems clear that the 2013 legislation can only benefit operators of waste disposal facilities holding individual  water quality or waste management permits.  Having given  coal ash ponds the benefit of the new law on the first issue, the judge does not explain why the  coal ash ponds are treated as unpermitted waste disposal  facilities in deciding the second.  The judge relies on  state rules that predate the 2013 legislation to identify the kind of corrective required at the ash ponds even though  the new law  also addresses  corrective action —  without making any distinction based on the permitting history of the facility:

“(k) Where operation of a disposal system permitted under this section results in exceedances  of the groundwater quality standards at or beyond the compliance boundary established under subsection (i) of this section, exceedances shall be remedied through cleanup, recovery, containment, or other response as directed by the Commission.”

It is possible that Judge Ridgeway saw no conflict between the new law on corrective action and existing groundwater rules  on corrective action at  older facilities, but the decision does not explain how he reconciled the  two.

Permitted or unpermitted and  does it matter? There may well be an appeal of Judge Ridgeway’s  decision.  By assuming the coal ash ponds have a different permitting status for purposes of the two major issues in the case, the decision awards each side a win and a loss. It is conceivable that at least one party to the case would prefer two wins.

The permitted/unpermitted conflict  just emphasizes again the peculiar regulatory status of coal ash ponds. EMC rules treating pre-December 30, 1983 waste disposal sites as “unpermitted” makes perfect sense  in the context of truly unauthorized waste disposal sites or  older landfills that closed rather than meet new standards for  solid and hazardous waste disposal that went into effect in 1983.  It makes less sense as applied to coal ash ponds that largely fell under the jurisdiction of the Utilities Commission until 2009 and never had an  obligation to comply with solid and hazardous waste regulations.   In fact, the coal ash ponds continued to operate for decades after 1983  — subject only to Clean Water Act permits for discharges from the ponds — with the acquiescence of both state and federal policy makers.  That only began to change in 2009 after the TVA ash spill drew more attention to the risks.  Then,  the state somewhat increased environmental oversight for the ponds — but  failed to  enact comprehensive coal ash disposal legislation  much less demand  immediate closure of the ash ponds.

Since coal ash ponds  operated  outside of  most  environmental regulatory programs for  years,  existing laws and rules don’t fit either operation or closure of the ash ponds very well. As badly as the state needs a solution to the problems surrounding coal  ash ponds, Judge Ridgeway’s order in itself is not likely to be the answer.  A solution will require standards for coal ash disposal;  a process for safe closure of coal ash ponds;  priorities for closure;  and  assessment of environmental damage and ongoing risk at existing facilities. It’s going to require legislation.

The Dan River Coal Ash Spill and Environmental Policy

March 3, 2014.  The February 2 coal ash spill at Duke Energy’s Dan River steam station (see an earlier post for more on the spill) puts some recent and still pending environmental policy decisions in a  new light.

Preventing state environmental programs from adopting standards “more stringent than” federal standards.  In 2011, the General Assembly prohibited environmental agencies  from adopting a rule  “that imposes a more restrictive standard, limitation, or requirement than those imposed by federal law or rule, if a federal law or rule pertaining to the same subject matter has been adopted”. You can find the statute (G.S. 150B-19.3)  here.   The increasing evidence of water quality problems associated with coal ash  ponds may test those limits on state regulation —

♦  The question is whether  new state rules on  coal ash disposal or closure of existing coal ash ponds would be considered  “more stringent” than existing  federal rules.  Federal rules exempt  coal ash from regulation as a hazardous waste, but include ash as a “solid waste” and set minimum standards for solid waste landfills. On the other hand, coal ash ponds aren’t considered solid waste landfills so the solid waste rules don’t apply.  Federal  Clean Water Act rules  regulating  stormwater and wastewater discharges apply to the ponds, but nothing in the existing  federal rules requires  a coal ash pond to meet  construction standards  to minimize groundwater impacts or obligates  the utility company to move coal ash from a pond to a disposal facility with less environmental risk. Given that landscape — federal rules  address some, but not all,  concerns about coal ash disposal — can state environmental programs fill the gaps by imposing additional requirements without specific statutory authority?

♦ The exceptions in G.S. 150B-19.3 are inadequate to get ahead of an environmental  problem that poses a long-term risk, but  not a   “sudden, unforeseen” threat.  Few of the problems associated with coal ash ponds would be considered sudden or unforeseen. Both federal and state regulators have long known that  unlined ash ponds pose  some  risk of groundwater contamination. The massive spill at  TVA’s Kingston plant in 2008  focused attention on the possibility of  structural failure of a coal ash  impoundment.  The U.S. Environmental Protection Agency  has been working on federal  coal ash disposal regulations off and on for over ten years because of these and other concerns. As obvious as the problems surrounding coal ash disposal have now become, the exceptions in G.S. 150B-19.3 don’t seem to give environmental agencies a way to address those problems through rulemaking.

♦  If state agencies  need  additional  statutory authority   to adopt  state rules that go beyond current federal regulation of coal ash disposal,  rulemaking could not begin until after the 2014 legislative session that  begins in mid-May.  Rule adoption often takes two years. The other alternative would be  for the General Assembly itself to set standards for coal ash disposal through legislation. Legislation can move much more quickly than rulemaking, but the last effort to enact state legislation on coal ash  failed due to opposition from the utility companies. See  this  post for more information on  earlier state legislation and  a link to the 2009 coal ash disposal bill.

Efforts to limit state review of engineered plans and drawings.  North Carolina’s professional engineers (PEs)   have lobbied for several years to limit state review of plans prepared  by  PEs and to constrain the ability of regulatory staff to require  changes to  engineering  plans. The most recent effort  led to language in the Regulatory Reform Act of 2013 (Session Law 2013-413)  requiring a study of state and local review of engineering plans. Section 58 of S.L. 2013-413  requires DENR, the Department of Transportation, the Department of Health and Human Services and local governments to study:

“(iii) the standard scope of review within each permit program, including whether… staff are requiring revisions that exceed statutory or rulemaking requirements when evaluating such permits or plans; [and]

(iv) opportunities to eliminate unnecessary or superfluous revisions that may have resulted in the past from review processes that exceeded requirements under law, and opportunities to otherwise streamline and improve the review process for applications and plans submitted for approval.”

The history and recent failure of the Dan River stormwater pipe reinforces the value of having a second, objective review of engineering plans and decisions.  The  early decision by utility company engineers (before state regulation) to expand the ash pond over a metal stormwater pipe and the apparent failure to plan for maintenance of the pipe likely contributed to the spill.   In the aftermath of the February spill, it became clear that current Duke Energy staff  did  not know how the stormwater pipe had been constructed — incorrectly  assuming that  the entire stormwater pipe was concrete.    Even in real time response to the Dan River spill, Duke Energy  and  DENR  engineering staff  sometimes reacted very differently to the same information. Duke Energy did a camera inspection of  a second, smaller stormwater pipe at the Dan River site to check its condition.  According to news reports,  Duke Energy staff  planned no immediate action based on the results of the camera inspection other than continued monitoring.  A state dam safety engineer who looked at the same video showing  leaks and pooling of water in the  pipe concluded that  the  second  pipe could also be discharging coal ash to the Dan River. Water quality testing  confirmed high levels of arsenic in discharges from the pipe and the dam safety program ordered Duke to close the second pipe within 10 days.  When an error carries potentially high risks or costs,  review of engineering plans and decisions can be critical — simply because  state and local environmental staff will look at the same situation through different eyes.

Note: The Study of Review of Engineering Work has been submitted to the legislature’s Environmental Review Commission and the General Assembly could consider legislation on state/local review of engineering plans in the upcoming legislative session.

Limiting DENR’s ability to order steps to contain groundwater contamination. The Regulatory Reform Act of 2013 also does two significant things to limit (or defer) steps to contain or cleanup groundwater contamination: 

♦ The law makes the property line  the presumed “compliance boundary” for groundwater contamination caused by a permitted waste disposal facility  (including  a  coal ash pond).  State rules allowed for some exceedence of groundwater standards near a waste disposal area, but generally put  the compliance boundary at 250 feet around the footprint of the facility or  at the property line whichever is closer.  Causing an exceedence of  groundwater standards beyond the compliance boundary violates the permit. The new law  presumes  groundwater contamination associated with a waste disposal facility  can be allowed to migrate to the property boundary — including any  adjoining  property in the same ownership. The law does not change existing compliance boundaries set by permit, but sends a strong message about future permit terms  and regulatory requirements. The change would potentially allow the owner of a waste disposal facility to contaminate a much greater area of groundwater without any obligation to remediate. Using the property line as the compliance boundary also leaves little safety margin to protect the groundwater rights of  nearby  property owners.

♦ The law  limits DENR’s ability to require the operator of a permitted waste disposal facility to take steps to remediate or contain groundwater contamination within the compliance boundary. The law ties DENR’s hands until the contamination has migrated beyond the compliance boundary unless DENR can show that:

(1)   The contamination has already caused a water quality violation in adjoining classified waters  or a violation “can be reasonably predicted to occur”;

(2)  The contamination poses an imminent threat to the environment, public health, or safety;

(3)  The contamination will cause a violation of any standard in groundwater occurring in the bedrock, including limestone aquifers, unless  the violation has no  potential to adversely affect a water supply well.

At the very least, DENR will have to meet a significant new burden before directing the owner of a waste disposal facility to take steps to prevent further migration of groundwater contamination.  It appears that clear evidence of groundwater contamination  moving  offsite — affecting another property owner’s groundwater  — will not be enough by itself to allow DENR to require steps to contain the contamination.  DENR  will have to  demonstrate that  groundwater standards will be violated. In the worst case, the horse will be well out of the barn before the state can act.