Monthly Archives: July 2015

The North Carolina Response to EPA’s Clean Power Plan Rule

July 26, 2015.  In one way, the proposed  U.S. Environmental Protection Agency (EPA) rule to limit carbon dioxide (CO2) emissions from power plants  — expected to be final in August — looks like a typical air quality rule. The Clean Power Plan rule sets state by state reduction goals for a pollutant (CO2) from a particular set of of sources (electric generating facilities).  But the rule takes an unusual and  innovative approach to meeting those goals. The rule identifies  four components  (or “building blocks” in EPA rule-speak ) of a plan to reduce CO2 emissions associated with power generation : 1. reducing power plant CO2 emissions (the traditional Clean Air Act approach); 2. energy efficiency measures; 3. increased  electric generation from renewable energy sources;  and 4. transition of electric generation facilities from coal to natural gas.   In effect, the rule aims to lower CO2 emissions per kilowatt hour used and allows the  states to take credit for CO2 emissions avoided through increased energy efficiency and by shifting electric generation to energy sources with low or no CO2 emissions.

The proposed EPA rule requires each state to submit a plan for meeting its CO2 reduction target by June 30, 2016. The state plan can rely on any or all of the four “building blocks” in the EPA rule; it can also include measures that fall outside those categories as long as the plan achieves the CO2 reduction target for regulated electric generation facilities. If a state fails to develop a plan, EPA can create a federal plan for the state.  An earlier post  provides more detail on the  proposed federal rule.

The McCrory administration has opposed the Clean Power Plan rule in  written comments and in testimony before Congressional committees. In part,  the administration has argued that the Clean Air Act does not authorize EPA to issue  a rule that relies on measures — such as energy efficiency and increased reliance on renewable energy — that go beyond limiting  pollutant emissions from regulated power plants.  Last week,  the practical implications of  that   position became more clear when DENR  Secretary Donald van der Vaart  told a Senate committee that  the McCrory administration intends to resist the flexibility offered under the federal rule and submit a CO2 reduction plan  based entirely on requiring additional CO2 emission reductions at  power plants.

The Secretary’s comments came  as a state Senate committee debated House Bill 571, which requires DENR to develop  a state CO2 reduction plan with the participation of the public and the electric utilities. DENR did not support House Bill 571, but the bill passed the House with a bipartisan majority and the support of  the state’s major electric utilities and environmental organizations. Last Wednesday, the  Senate Agriculture and Environment Committee took up a substitute draft of  H 571 that would prohibit DENR from taking any action or expending any state resources on development of a CO2 reduction plan until all legal challenges to the federal rule had been resolved or until July 1, 2016 (whichever came later).  Asked to comment on the proposed substitute bill,   Secretary van der Vaart  indicated that DENR  would prefer to submit a CO2 reduction plan by June 30, 2016 as required under the federal rule — but a plan based entirely on reducing  power plant emissions.

Based on the Secretary’s statement, the McCrory administration response to the Clean Power Plan rule puts the state in a strange place:

♦  DENR has argued for an interpretation of  the Clean Air Act that would force the federal rule to be more rigid and offer the state less flexibility to meet CO2 reduction targets.   (A number of environmental law experts disagree with this narrow interpretation of EPA authority; the issue will likely have to be settled in court.)

♦  Based on this narrow interpretation of EPA authority, DENR intends to develop a state CO2 reduction plan that relies entirely on further reducing  CO2 emissions from power plants even though existing  state policies have North Carolina on a path to achieve much (if not all)  of the necessary reductions through increased renewable energy generation, greater energy efficiency, and  transition of power plants from coal to natural gas.  Although DENR has not provided an analysis of the state’s ability to meet the state’s CO2 reduction target based on those existing policies, others have. You can find one (an analysis by the Natural Resources Defense Council)  here.

♦  Relying  entirely on lowering power plant emissions could  make meeting the CO2 reduction target more difficult and more costly for electric utilities and consumers. Again, DENR has not provided a comparative analysis of the cost of relying entirely on power plant pollution controls versus  a comprehensive CO2 plan that takes credit for energy efficiency measures, renewable energy generation and transitioning power plants from coal to natural gas.

Most states have started planning to meet the  CO2 reduction targets. Even in coal-producing states where political opposition to the EPA rule tends to be highest,  state air quality agencies have begun sketching out CO2 reduction scenarios in case the rule survives the expected legal challenges. Only one state — Oklahoma — has prohibited its environmental agency from developing a plan. A recent Washington Post story  reported that even coal-dominated states like Kentucky seem confident of meeting the  CO2 reduction target thanks in part to recent investments in renewable energy generation. It isn’t clear that any state other than North Carolina has decided to develop a plan based solely on CO2 reductions at coal-fired power plants.

Which leaves something of a public policy mystery. A state with significant advantages in renewable energy, energy efficiency and already on the road to transitioning power plants from coal to natural gas seems to have settled on a policy that throws those advantages away. Instead of working with electric utilities, consumers and environmental organizations to develop the most cost-effective  CO2 reduction plan for the state, DENR intends  to unilaterally develop a plan based entirely on reducing power plant emissions.  It isn’t clear why or what that policy choice could cost the state.

Note: The Senate committee approved the substitute draft of House Bill 571 on Wednesday, but offered to continue talking to DENR about the content of the bill. The bill was pulled off the Senate calendar last Thursday; when the bill  reappears on the Senate calendar, there may be amendments as a result of the ongoing discussions.

Update: The original post has been revised to make it clear that state CO2 reduction plans can also rely on measures other than those covered by the  four “building blocks” identified in the EPA rule.

Regulatory Reform 2015: A New NC Senate Proposal

July 13, 2015. Before leaving for the Fourth of July holiday, the N.C. Senate turned a minor House bill into a vehicle for major changes to environmental rules.  The Senate had already proposed changes to environmental standards in a regulatory reform bill (Senate Bill 453) that has not yet passed the Senate; in individual Senate environmental bills; and in the Senate budget bill.  The House has not yet voted on many of the earlier Senate proposals. The Senate version of House Bill 765  may be the most aggressive regulatory reform legislation to date —  putting constraints on air quality rules; creating new immunity from environmental enforcement actions; reducing air quality monitoring; changing laws on remediation of contaminated property; and  proposing outright repeal of the state’s electronics recycling law. In response to DENR concerns, the Senate delayed some proposed changes to stormwater and environmental permitting requirements to allow for study.  Reportedly, the floor amendments adopted by the Senate eliminated DENR objections to the remainder of the bill which continues to have far-reaching implications for state environmental policy:

Sec. 1.4 allows a state agency to automatically recover attorneys fees from a person who unsuccessfully challenges a state action on environmental grounds. A citizen or organization challenging a state construction project or an environmental permitting decision could be at significant financial risk —  a risk that would not be shared by citizens challenging state actions for other reasons.

Sec. 4.2 repeals the state law requiring computer and television manufacturers  to pay fees that support local electronics recycling programs. It isn’t clear that all of the city and county electronics recycling programs could survive the loss of state recycling fee revenue. State law would continue to prohibit disposal of discarded televisions and computers in landfills; the question is whether there would continue to be electronics recycling programs in all 100 counties.

Sec. 4.7 makes changes to state laws allowing risk-based remediation of environmental contamination. A risk-based remediation allows the person responsible for the contamination (the “responsible party”) to do a partial cleanup of  groundwater and soil contamination by relying on land-use controls to limit future exposure to contaminated soils or groundwater remaining on the site.  The biggest changes:

1. Sites where contamination has already migrated onto adjacent properties would become eligible for a risk-based cleanup.  Existing law  does not allow a risk-based cleanup if contamination has migrated off the property where it originated  because of the additional complication of managing exposure on property the responsible party does not control. The Senate provision allows a  responsible party  to do a risk-based cleanup on adjacent property with the property owner’s permission. The provision does not require land use controls on the adjacent property to prevent future exposure to remaining contamination — normally a necessary condition of a risk-based cleanup. Existing remediation standards may allow DENR to disapprove a risk-based cleanup unless the entire area has appropriate land use controls, but the new Senate provision on risk-based cleanup of adjacent property is silent on the issue.

2. The bill removes existing statute language that limits risk-based remediation to contaminated sites reported to DENR  before the risk-based remediation law went into effect in 2011, allowing   lower-cost, risk-based remediation as an alternative for future pollution events.

Sec. 4.9 changes a state law providing incentives for redevelopment of contaminated property (or “brownfields”).  The state Brownfields Redevelopment Act uses the term “prospective developer” to describe a person eligible for liability protection and economic incentives under the law.  The term excludes anyone who caused or contributed to the contamination. The Senate proposes to redefine the term to cover a  “bona fide prospective purchaser”, a “contiguous landowner” and an “innocent landowner” as defined in the federal Small Business Liability Relief and Brownfields Redevelopment Act (amending the Comprehensive Environmental Response, Compensation and Liability Act or “CERCLA”). In CERCLA, the terms describe categories of landowners who have acquired  property contaminated by hazardous substances, but have no legal liability for the contamination. Generally, the definitions cover landowners who acquired the property after the contamination occurred and have no relationship to a person (or company) responsible for the contamination.

All of the federal definitions referenced in the Senate provision concern liability for “hazardous substance” contamination as defined in CERCLA. CERCLA defines “hazardous substance” to include a specific list of compounds and unlisted substances with similar characteristics.  The definition also excludes some substances  — most notably petroleum and natural gas products — with similar health and environmental risk. (Other federal laws address contamination caused by petroleum spills and leaks.)

In  redefining  “prospective developer” based on CERCLA terms, the Senate provision also eliminates language in the existing definition that excludes a person who caused or contributed to contamination on the site. The question is whether those changes, in combination,  could give a property owner responsible for contamination unrelated to a CERCLA  “hazardous substance”   liability protection and other benefits under the state Brownfields law. That result would be inconsistent with the original intent of the Brownfields Redevelopment Act and undermine the state’s ability to require cleanup of environmental contamination.

Sec. 4.14  would allow private engineers to self-permit onsite wastewater systems (such as septic systems), eliminating the need for a local health department permit.  (The provision does not affect wastewater systems that discharge to the land surface or to rivers, lakes and streams; those systems require permits from DENR.)  The property owner’s engineer would have to give the local health department a notice of intent to construct the wastewater system and a final post-construction report, but the engineer would be completely responsible for design and installation.  The provision also allows the engineer to use wastewater system technology that has not been approved by the State “at the engineer’s discretion”.

In place of health department enforcement of on-site wastewater standards, the bill puts the burden on the property owner to sue the engineer or soil scientist if the wastewater system fails.  The risk to the property owner is that problems may develop several years after installation, leading to an expensive fight over the  cause of the failure  — bad engineering; inappropriate siting; improper installation; or lack of maintenance. Treating a failed wastewater system as a problem strictly between the engineer or soil scientist and property owner also overlooks the possible impact on other property owners and the public.  A septic system located too close to a water supply well may contaminate the well; a failing wastewater system can contribute pollutants to already stressed streams and lakes. Although the bill requires the engineer to give notice of the proposed construction to the local health department,  it isn’t clear that the provision allows the health department to prevent installation of an engineer-approved system however poorly designed or improperly sited.

Sec.4.15 changes state review of applications for innovative or experimental onsite wastewater systems. For the most part,  the bill  seems to replace state approval of experimental waste treatment systems with reliance on national certification of the technology.

Sec. 4.18 reduces  state protection of isolated wetlands by limiting the application of state water quality permitting rules  to basin wetlands and bogs — excluding other isolated wetlands from environmental protection. DENR has identified seven other categories of isolated wetlands: Coastal Isolated Wetlands, Seep, Hardwood Flat, Non-Riverine Swamp Forest, Pocosin, Pine Savanna, and Pine Flats.  Note: “isolated wetlands” are wetlands that do not have any connection to surface waters that fall under federal Clean Water Act jurisdiction.

Sec. 4.19 allows more development to be considered “low density” under coastal stormwater rules, raising the low density limit from 12% built-upon area to 24% built-upon area. The significance of the change is that low density projects do not require engineered stormwater controls. The bill also eliminates one trigger for compliance with coastal stormwater rules — the addition of 10,000 square feet or more of built-upon area as part of a non-residential development.  The Senate provision would trigger coastal stormwater standards for both residential and non-residential projects based on the need for a sedimentation plan (required for disturbance of one acre or more) or a Coastal Area Management Act permit. Before adoption, the Senate amended the effective date for Sec. 4.19 in response to DENR concerns about the coastal stormwater changes. The provision would go into effect on July 1 2016 to allow for study in the interim.

Sec. 4.24 requires repeal of the state’s heavy duty vehicle idling rules. The rule, 15A NCAC 2D.1010, limits excessive idling of heavy duty vehicles as another way to reduce the impact of vehicle emissions on air quality.

Sec. 4.25 requires the state Division of Air Quality to remove air quality monitors that are not specifically required by the U.S. Environmental Protection Agency. The provision would significantly reduce the number of air quality monitors used to assess air quality and demonstrate compliance with federal ambient air quality standards.

Sec. 4.30 deals with mitigation of stream impacts  permitted under Sec. 404 of the Clean Water Act. Under Sec. 404,  many projects involving deposition of fill material in surface waters  require a federal permit. In most states,  the U.S. Army Corps of Engineers issues the 404 permits. The Clean Water Act requires an applicant for a  404 permit to provide the Corps with a certification (under Sec. 401 of the Act) that the project will be consistent with state water quality standards.  The Senate provision affects state issuance of the 401 Certification in two ways. First, it prevents DENR from using the 401 Certification to put stream mitigation conditions on a project impacting less than 300 feet of stream without making specific findings — even if the mitigation requirement simply matches mitigation required under the federal 404 permit. The provision also limits state requirements for stream mitigation to a 1:1 ratio of stream impact to mitigation provided; in some cases, that will result in less mitigation than the Corps will require for the 404 permit. Since the permit applicant will have to meet federal mitigation conditions in any case, the reason for these new restrictions on parallel state mitigation conditions isn’t clear.

Sec. 4.31 completely eliminates state mitigation requirements for isolated streams (that is, streams that fall outside federal Clean Water Act permitting jurisdiction).

Sec. 4.37 makes changes to riparian buffer rules. The provision requires the buffer on an intermittent stream to be measured from the center of the stream rather than normal high water level. The most significant change allows unlimited development in a riparian buffer as long as the project complies with state stormwater requirements. The change appears as an amendment to a stormwater statute and does not directly refer to riparian buffer rules adopted by the Environmental Management Commission. Other bills that propose changes to riparian buffer requirements specifically list the rules affected — such as the Neuse River and Jordan Lake rules.  Since this provision makes no reference to the riparian buffer rules, it may be intended to apply only to buffers required under the state’s minimum stormwater standards and local stormwater ordinances. It isn’t clear.

The bill also includes several provisions that appeared earlier in other Senate bills. Sec. 4.1 makes another run at putting environmental audit/self-disclosure immunity into state law. The Senate had included those same provisions in Senate Bill 453; see an earlier  post for more detail. Sec. 4.3 and Sec. 4.4 repeat limitations on state adoption and enforcement of federal air quality standards already approved by the Senate in Senate Bill 303; see previous posts  here and here.

The extensive Senate changes to House Bill 765 mean the bill now goes back to the House for a vote on concurrence. If the House refuses to accept all of the Senate changes, the bill goes to a conference committee. The General Assembly will be back in session this week, but it isn’t clear what priority the House will give H 765.