Author Archives: rwsmith

Making Polluters Pay

March 14, 2018. To follow on the last blogpost, some background on a  polluter’s legal responsibility to pay for environmental damage and limits on the state’s ability to use penalties to fund environmental protection programs.

Scope:  The issue has come up in response to GenX , but this blogpost should not be taken as legal advice with respect to pending or future  GenX litigation.  The blogpost also focuses on what the state can require a polluter to pay under its authority to enforce federal or state environmental laws.  A person harmed by pollution  (such as groundwater contamination) can also sue and ask a court to order compensation for individual injury or property damage. Different legal principles govern those personal injury/property damage cases.

The Prompt. In January, the North Carolina House of Representatives passed House Bill 189  to legislatively address  GenX and other emerging contaminants. In addition to creating a number of studies, the bill proposed to appropriate $2.4 million to the Department of Environmental Quality (DEQ) for wastewater permitting, water quality monitoring, and analysis of emerging contaminants.  Senate President pro Tem Phil Berger had a very negative reaction to the proposed  appropriations:

“[H 189] leaves North Carolina taxpayers holding the bag for expenditures that should be paid for by the company responsible for the pollution, fails to give [the Department of Environmental Quality] authority to do anything they can’t already do and authorizes the purchase of expensive equipment that the state can already access for free.”

The Senate refused to consider the House bill in January, but adopted its own version of H 189 when the legislature reconvened briefly in February. The Senate version included new appropriations, but funds directed to DEQ could only be used for purposes identified in the bill (such as a historical study of the state’s wastewater permitting program). The Senate bill did not allow DEQ to use any of the appropriated  funds for wastewater permitting, compliance inspections, water quality monitoring, or purchase of analytical equipment, suggesting that Senator Berger has held to the  position that the polluter should cover most of the cost of GenX response.  Note: The House and Senate versions of H189 have not been reconciled so no GenX legislation has passed and it is unlikely the legislature will return to the issue again before the next regularly scheduled legislative session in May.

Can the state require a violator  to contribute to the cost of environmental permitting, water quality monitoring, inspections of permitted facilities, or other regular program activities?

No.  The N.C. Constitution (Article 9, Sec. 7) requires that the proceeds of   “all penalties and forfeitures and of all fines collected in the several counties for any breach of the penal laws of the State” must be used exclusively to  support the public school system. In the 1990s, the N.C. Supreme Court ruled that all state civil penalties –including those for environmental violations —  must go to the “school fund”.  In 2005, the court ruled that environmental agencies cannot enter into a settlement agreement that allows a violator to put funds toward a third-party project to conserve natural resources or improve the environment in place of a penalty.  In the court’s eyes, the payment continues to be a “penalty” assessed in response to a specific violation of environmental rules and the money must go the school fund. (The 2005 case on funding of an “environmental enhancement project” as a substitute for a civil penalty is N.C. School Boards Association v. Moore.)

Although the court has not ruled on this specific question,  the same principle seems to apply to requiring a violator to provide funds to support state environmental program activities in place of or in addition to a civil penalty.  Once a payment becomes associated with a specific violation,  the N.C. Supreme Court is likely to view it as  a “penalty” for purposes of the N.C. Constitution.  In that case, the money  would have to go to the public schools rather than to environmental protection programs.

Permit fees can be used to support basic permitting, enforcement, and monitoring activities and many state environmental permitting programs have graduated permit fee schedules based on the type and size of the permitted facility. Making compliance history another factor in setting permit application/renewal fees probably would not conflict with N.C. Constitution — although it also may not generate significant additional revenue for environmental programs.

Can the state require the company responsible for pollution to pay anything other than a civil penalty? 

Yes, but generally only the cost of  response to the specific pollution incident and the environmental harm that it caused:

  1. Natural resource damages. Several state and federal laws allow the state to recover for injury to the state’s natural resources. The compensation goes to the state as trustee for natural resources — such as fish and wildlife  — held by the state for the use of all of its citizens.  A  patchwork of laws allow recovery of natural resource damage; some  apply only to particular kinds of environmental harm (fish kills, for example) or specific types of pollution events (such as an oil spill). The Clean Water Act does not include a  specific provision for natural resource damage caused by a wastewater discharge that does not involve oil or a “hazardous substance”;  most chemicals found in a wastewater discharge, including GenX,  are not EPA-listed hazardous substances.  The federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) allows state natural resource damage claims for harm specifically caused by a  spill of oil or an EPA-listed “hazardous substance”. N.C.  law has a somewhat broader provision that allows  DEQ  to require compensation for natural resource damage caused by any release of pollutants that results in a  fish kill or injury to wildlife.  In  those cases, the  state recovers only  the value of the natural resource lost — not program costs. Under the state law allowing recovery of damages for injury to fish and wildlife,  the amount of damages is based on a Wildlife Resources Commission estimate of the value of the lost fish or wildlife. [N.C. General Statute 143-214.3(7).]
  2. Cost of State response to a spill of oil or an EPA-listed hazardous substance.   N.C. General Statute 143-215.88 allows the state to recover the cost of state response to a spill. An example of state costs would be initial emergency response, such as putting booms in the water to control an oil spill. These are usually costs the state incurs early in spill response when the source of the spill may not be known. Later, the polluter would be expected to carry out the response.
  3. Investigative costs.  Under several state laws, DEQ can recover the costs of investigating a pollution incident. These laws only apply to costs associated with the specific event and not the costs of maintaining DEQ’s ongoing inspection/compliance/pollution monitoring programs.
  4. Measures to eliminate a  threat to public health and safety;  clean-up groundwater and soil contamination; or restore other kinds of environmental damage (such as wetlands disturbance) caused by a violation. Most environmental laws, including the Clean Water Act,  make restoration of environmental harm the responsibility of the violator. Both EPA and the state water quality programs have the authority to seek a court order to stop an unlawful discharge and require the violator to take steps to prevent future unlawful discharges. Under state law, DEQ routinely requires violators to cleanup  groundwater and soil contamination caused by a pollution incident. These expenditures are different from the kind of environmental enhancement or conservation projects struck down in N.C. School Boards Association v. Moore because they are limited to addressing the direct impact of a  specific violation.

What does this mean for funding a better state response to GenX and other emerging contaminants?

The N.C. Constitution does not allow DEQ to use the proceeds of any penalty for violation of environmental laws and rules — or anything that looks like a substitute for a penalty — to support environmental protection programs.  Past N.C. Supreme Court decisions suggest the court would view assessment of environmental program costs against a violator as another form of  penalty that must also go to the public schools. Given the constitutional provision, funds to strengthen the state’s response to emerging contaminants like GenX will largely have to come from state appropriations, permit fees and EPA grants.

New Legislative Activity on GenX

January 12, 2018.  When the N.C. General Assembly convened on January 10, the House unanimously adopted House Bill 189  – a bill described by House members as a first step toward improving the state response to unregulated water pollutants.

GenX and the path to House Bill 189. EPA began studying the effects of perfluorinated compounds (used in products such as firefighting foam, water repellants and Teflon) more than fifteen years ago.  EPA worked with chemical companies to phase-out the two most common compounds, perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS), because of concerns about persistence in the environment and human health risk.   In 2009, Dupont began manufacturing another type of perflourinated compound, GenX, as a replacement for PFOA. The Chemours Company now operates the GenX manufacturing facility in Fayetteville North Carolina which is  located upstream of drinking water intakes for Cape Fear Public Utility Authority (serving Wilmington/New Hanover County) and several smaller water systems.

GenX has uncertain health and environmental risks and no federal standards exist to guide state permitting and enforcement action. EPA has not adopted a drinking water standard for GenX, identified the compound as a priority water pollutant, or set effluent guidelines for discharge of the chemical under a Clean Water Act wastewater discharge permit (the National Pollutant Discharge Elimination System or “NPDES” permit).  EPA has indicated a  concern that GenX may share some of the environmental and health risks associated with PFOA and PFOS.  GenX is one of many “emerging” or “unregulated” contaminants that can be released to the environment.   An earlier blogpost described the major federal environmental laws touching on manufacture, use and discharge of chemical compounds like GenX and the gaps in those laws.

The path to House Bill 189 began with the 2016 discovery of GenX  in drinking water systems using the Cape Fear River as a water supply source. Later, GenX was also found in private drinking water wells near the Fayetteville facility. Public concern about the health effects of GenX and the adequacy of federal/state regulation of contaminants like GenX created pressure for legislative action.  In August 2017,  the General Assembly  appropriated funds to Cape Fear Public Utility Authority and to UNC-Wilmington to study GenX and water treatment options. The legislation, described here,  made no substantive changes to state law and allocated no funding to programs in the Department of Environmental Quality (DEQ) and the Department of Health and Human Services (DHHS)  responsible for enforcing water quality standards and establishing health guidelines for exposure to environmental contaminants.   The  state House of Representatives, however,  created a Select Committee on River Water Quality to further study the issue of unregulated contaminants between legislative sessions. The substance of House Bill 189 came out of the House select committee’s work.

House Bill 189. The bill does not break new ground in water quality law,  but directs DEQ to undertake several studies that could lead to recommendations for future legislation on unregulated contaminants. The bill also proposes to allocate additional state funds to the issue. Although prompted by GenX,  the bill’s provisions apply more broadly to GenX and other unregulated contaminants. By section:

Sec. 1 Science Advisory Board review of the DHHS process for setting health goals for contaminants and new health goals set by the department. In 2017, DEQ reconstituted the department’s existing Science Advisory Board to provide additional expertise in setting  health goals for exposure to unregulated contaminants. Health goals represent the concentration of a contaminant considered safe for humans based on studies of both immediate, acute effects (such as illness, organ damage, skin irritation or respiratory distress) and long-term effects (primarily increased cancer risk).  H 189 supports DHHS consultation with the Board on health goals and goes further to require  DHHS to notify the Science Advisory Board before issuing a new health goal. The bill then focuses on the process for setting health goals, directing the Science Advisory Board to study the DHHS process and make recommendations. Legislative interest in the process for setting health goals may have arisen from recent controversies over use of health goals to advise property owners on the safety of well water affected by contaminants associated with coal ash. Both legislators and industry representatives have sometimes questioned the scientific basis for a health goal as well as the appropriateness of using a non-regulatory health goal to  guide regulatory decisions such as groundwater cleanup and the obligation to provide alternative water supply. See earlier posts concerning controversy over health goals for contaminants associated with coal ash here and here.

Sec. 2  A study of the Clean Water Act permitting program for wastewater discharges. The bill directs DEQ to study specific issues in the NPDES permitting program: 1. Whether NPDES permit applications require sufficient information about pollutants in the wastewater to be discharged;  2. Monitoring, sampling, and analytical requirements for wastewater dischargers; 3. The process for setting standards or discharge limits for contaminants when there is not an existing state or federal standard; and 4. The timeliness and thoroughness of permit reviews.  A report must be provided to the legislature by April 1, 2018. Parts  2 and 3 of the study likely reflect business/industry interest in the process for setting NPDES  permit conditions. That could lead into a debate over how much DEQ can require through individual permit conditions versus going through a rule making process to set generally applicable permit standards.

Sec. 3. Interstate exchange of information about pollutants entering North Carolina rivers.  DEQ has been directed to better coordinate interstate exchange of information about pollutants entering river basins that  North Carolina shares with neighboring states (West Virginia, Virginia, South Carolina, Georgia, and Tennessee).

Sec. 4. Notice of illegal discharges and the presence of unregulated contaminants in surface waters. This section of the bill creates another DEQ study; this study would focus on: 1.  The adequacy of existing  laws requiring notice of an illegal discharge of untreated waste or wastewater; and 2.  DEQ’s process for informing the legislature and the Environmental Management Commission of the presence of an unregulated contaminant for which no state or federal discharge standard has been set. A report must be provided to the legislature by April 1, 2018.

Sec. 5. Water system liability for the presence of an unregulated contaminant in drinking water. The School of Government at UNC-CH will report to the legislature on the potential civil liability of a water system that distributes water contaminated by a pollutant for which no discharge standard has been set under state or federal law and any difference in liability exposure between public and private water utilities.

Sec. 6. Appropriation of funds to support activities related to unregulated contaminants. H 189 proposes to appropriate just over $1.3  million in one-time funding for  water quality sampling; NPDES permitting; air quality sampling and analysis of atmospheric deposition of GenX; and sampling of groundwater, soil and sediment for GenX and other emerging contaminants. The money would come from unused funds originally appropriated for other purposes, including pilot nutrient management projects in the Jordan Lake watershed.

Sec. 7 Additional funding.  The House proposes to appropriate an additional $479,736 in recurring funds from the state’s General Fund to DEQ for water quality sampling and analysis related to GenX and other unregulated contaminants and $537,000 from the state’s Contingency and Emergency Fund for analytic equipment (presumably a mass spectrometer) to evaluate emerging contaminants.

Impact of H 189. The bill does not set any new legal standards for discharge of unregulated contaminants to North Carolina waters or expand the existing authority of DEQ and DHHS to respond to unregulated contaminants. Instead, the bill mandates several studies that could lay the groundwork for future legislative action. House members stressed that the bill represents just a first step toward improving state response to unregulated contaminants.

Aside from the $537,000 earmarked for the mass spectrometer, the appropriations proposed in H 189 essentially offset another  $1.8 million reduction in the DEQ budget for the 2017-2019 biennium. As a result, the appropriations do not represent an actual increase in DEQ’s budget from 2015-2017 levels. An earlier blogpost noted the impact of past budget cuts on the water quality program.   DEQ  had a two-year backlog of wastewater discharge permit renewals in December 2016 — before the reductions required in the most recent budget. The Chemours permit to discharge wastewater to the Cape Fear River from the Fayetteville Works fell in the category of permits overdue for review and renewal. The GenX controversy has also shown a brighter light on the additional burden on the state water quality program — in expertise, research capability, and analytical equipment — to address a contaminant for which no federal standard has been set.

So the appropriations in H 189 are helpful in offsetting additional DEQ budget cuts, but do not provide a net increase in funding. The appropriations also provide no additional resources to DHHS, which has significant responsibility for assessing and advising on the health impacts of an unregulated contaminant.

Senate response. The Senate adjourned without considering House Bill 189. A statement from Senate President pro tem Phil Berger criticized the bill as ineffective and seemed to oppose the appropriations:

“[H 189] leaves North Carolina taxpayers holding the bag for expenditures that should be paid for by the company responsible for the pollution, fails to give [the Department of Environmental Quality] authority to do anything they can’t already do and authorizes the purchase of expensive equipment that the state can already access for free.”

It isn’t clear which expenditures in H 189 the Senate wants to shift to the polluter or how that could be done. Most of the H 189  appropriations cover basic state water quality monitoring, permitting and compliance work.  NPDES permit fees cover a percentage of permitting costs, but those fees  do not vary based on a facility’s violation history.  The legislature has also tended to view fee increases very skeptically out of concern for the impact on business and industry.  A person responsible for illegally contaminating surface water or groundwater can be held financially responsible for cleanup costs and steps to minimize health impacts (such as providing bottled water to the owner of a contaminated well) , but state  law does not currently require a violator to pay any additional amount toward support of basic regulatory activities.

Senator Berger’s statement indicated the Senate may take up legislation related to GenX in the next regular legislative session that begins in May.

GenX: The State Enforcement Case

November 14, 2017.  An earlier post discussed some of the issues surrounding detection of a perflourinated compound known as GenX  in the Cape Fear River and in water systems using the river as a drinking water source. On September 7, 2017, the  Department of Environmental Quality (DEQ)  issued a Notice of Violation and filed a legal complaint against the Chemours Company alleging violations of the federal Clean Water Act and state groundwater rules related to GenX. This post looks at the specific allegations in the state enforcement case.  ( A copy of the entire complaint can be found on  DEQ’s GenX  webpage.)

One piece of background information —  Dupont  began manufacturing GenX at the Fayetteville Works in 2009, but transferred the operation and associated environmental permits to the Chemours Company in 2015.  The sequence of events surrounding GenX begins under Dupont management, but the enforcement case names only the Chemours Company — the current owner and permit holder — as defendant.

The enforcement case against Chemours makes two basic claims:

1. Chemours violated the Clean Water Act by discharging GenX to the Cape Fear River under a water quality permit that did not authorize any discharge of GenX.  The state claims neither Dupont nor Chemours  told DEQ that wastewater discharged from the Fayetteville Works to the Cape Fear River would contain GenX and other perflourinated compounds.   According to the complaint,  state water quality staff  understood that the GenX manufacturing plant opened in 2009 would use a “closed loop” system and dispose of all wastewater off-site.   In fact,  a consent agreement between the U.S. Environmental Protection Agency (EPA) and Dupont under the Toxic Substances Control Act (TSCA)  only allowed manufacture of GenX  under conditions requiring Dupont to effectively eliminate GenX from both the wastewater discharge and air emissions associated with the manufacturing process.

The complaint alleged that Chemours,  in applying for its most recent National Pollutant Discharge Elimination System (NPDES) permit under the Clean Water Act,  did not tell DEQ that other operations at the Fayetteville Works generated wastewater containing GenX as a byproduct. (The implication is that Dupont had also failed to disclose the presence of GenX  as a byproduct when applying for earlier water quality permits.) Chemours discharged wastewater from those operations to the Cape Fear River.

DEQ alleges Chemours violated the Clean Water Act by failing to tell state permit writers that  wastewater from the Fayetteville Works contained GenX (and other perflourinated compounds) and by discharging GenX  to the Cape Fear River under an NPDES permit that did not authorize discharge of those compounds.

2. Chemours  violated state groundwater standards.    According to the DEQ complaint,   Chemours’ hazardous waste permit has required groundwater monitoring since at least 2003 and included sampling for PFOA (the older perflourinated compound replaced by GenX ).  After detection of PFOA  in the Cape Fear River in 2015, DEQ required supplemental groundwater monitoring to determine whether groundwater at the Fayetteville Works could be the source. It isn’t clear from the complaint whether the hazardous waste permit required monitoring for PFOA from the beginning and expanded the scope in 2015 or first required PFOA in 2015. DEQ did not specifically require monitoring for GenX until August of 2017. The initial sampling detected GenX in 13 of 14 monitoring wells on the grounds of the Fayetteville Works.

Under state rules, the  groundwater  standard for any contaminant that does not  occur naturally is the lowest measurable level  (the “practical quantification level” or “PQL”) unless the rules set a higher standard based on evaluation of health and environmental risk. Since GenX does not occur naturally and state rules set no other standard, the allowable concentration of GenX would be the PQL of 10 nanograms/liter (equivalent to 10 parts per billion).  The 2017 monitoring detected levels of GenX ranging from 519 ng/ltr to 61,300 ng/ltr. All five wells located adjacent to the Cape Fear River had levels of GenX exceeding 11,800 ng/ltr. DEQ found the test results documented widespread groundwater contamination on the Fayetteville Works site exceeding  both the 10 ng/ltr groundwater standard and the threshold for human health effects  identified by the state Dept. of Health and Human Services (140 ng/ltr level).

Status of the enforcement case.  The DEQ complaint asked, in part, that Chemours immediately stop any discharge of GenX and related compounds to the Cape Fear River.  On September 8, 2017 (the day after filing the enforcement case), DEQ entered into an agreement with Chemours to resolve the discharge issue. Under a partial consent agreement,  Chemours agreed to continue voluntary measures undertaken early in the summer to prevent discharge of process wastewater containing GenX to the Cape Fear River.  The partial consent agreement also required Chemours to take similar steps to prevent discharge of two other perflourinated compounds from the “single source of significance” of those compounds at the Fayetteville Works.

The partial consent agreement did not resolve all potential violations at the Fayetteville Works.  The consent agreement did not address any of the groundwater standard violations alleged in DEQ’s September 7, 2017 complaint. DEQ also expressly reserved the right to take additional enforcement action in the event of future unpermitted discharges or violations associated with other chemicals. In fact, DEQ issued a new Notice of Violation to Chemours today based on a previously unreported spill at the Fayetteville Works. That NOV  alleges that Chemours violated its NPDES permit by failing to notify DEQ of an October 6, 2017 spill of dimer acid flouride ( a precursor to GenX) from the manufacturing line.

Still to come. With respect to the groundwater violations, DEQ’s September complaint asked the court to order Chemours to:

♦ Remove, treat or control any source of perflourinated compounds at the Fayetteville Works that could contribute to groundwater contamination. Consistent with state groundwater rules, that  would need to be done under a plan approved by DEQ.

♦ Fully assess the extent of groundwater contamination and develop a plan to address the groundwater contamination. (Again, both the assessment and corrective action plans would be subject to DEQ approval).

It does not appear that Chemours has an approved groundwater assessment plan yet and the groundwater corrective action plan can only be developed once the assessment has been done. In the meantime, DEQ has directed Chemours to provide an alternative source of drinking water to 50 households near the Fayetteville Works whose water supply wells have been contaminated by perflourinated compounds.

DEQ’s September complaint focused on actions necessary to stop the  discharge of GenX to the Cape Fear River and address groundwater contamination,  but state law also authorizes DEQ to assess civil penalties for these violations. The maximum civil penalty for each violation of state water quality laws or rules is $25,000 and if a violation continues over a period of time, state law  authorizes DEQ to assess daily penalties.  (N.C. General Statute 143-215.6A.) The actual penalty amount per violation depends on a number of factors set out in the law, including the extent of harm and whether the violation was intentional. In the case of a continuing violation, DEQ would also have to decide what time period merits daily penalties. DEQ usually develops the penalty assessment separately from legal action to obtain compliance and has not yet proposed penalties for the Chemours violations.

The Legislative Response to GenX

September 10, 2017. At the end of its most recent one-week session, the N.C. General Assembly added GenX  provisions to an existing bill,  House Bill 56  (Amend Environmental Laws),  and passed the bill with little discussion.  Section 20 of H 56:

  1. Amends the state budget to give $185,000 to Cape Fear Public Utility Authority (CFPUA) — $100,000 to study water treatment methods to remove GenX from the water supply and $85,000 for ongoing monitoring of water withdrawn from the Cape Fear River.
  2. Allocates $250,000 to UNC-Wilmington to “identify and quantify GenX and measure the concentration of the chemicals in the sediments of the Cape Fear River, the extent to which the chemical biodegrades over time or bioaccumulates within local ecosystems, and what risk the contaminant poses to human health”. The provision requires a final report from these studies by April 1, 2018.
  3. Directs UNC-Chapel Hill to develop a proposal to (i) identify and acquire digital environmental monitoring and natural resource data and digitize analog data;  (ii)  create an online, searchable public database of  water quality permits, permit applications, and supporting documents; and (iii)  create a system for electronic filing of permit applications. The provision also directs UNC-CH to study the feasibility of housing the database at UNC rather than with the permitting agencies in the Department of Environmental Quality (DEQ).
  4. Requires DEQ to report back to the legislature if the department has not issued a Notice of Violation to any person or company for discharge of GenX into the Cape Fear River by
    September 8.

The bill does not allocate any additional funding to either DEQ or the Department of Health and Human Services (DHHS). Governor Cooper had requested $2.5 million for the two departments to provide more resources for water quality monitoring; inspection of permitted facilities; permitting (and particularly elimination of the backlog in permit renewals); and development of health advisories for unregulated contaminants. Instead, DEQ  faces a $1.8 million budget reduction for 2017-2018, continuing a trend of repeated cuts to the department’s budget over the last 10 years. (See an earlier blogpost for the effect of those budget reductions.)

How will House Bill 56 affect efforts to address GenX?  The bill supports efforts by Cape Fear Public Utility Authority to identify treatment systems capable of removing GenX  from the water; increase water quality monitoring; and learn more about the impact of  GenX. Much of the funding would offset the cost of efforts already underway by CFPUA.

Cape Fear Public Utility Authority had begun pilot testing use of granular activated carbon and ion exchange systems to remove  GenX from the water several weeks before. The $100,000 appropriation to study water treatment alternatives could reimburse CFPUA for past and future expenses incurred in the pilot testing. The funding would not be sufficient to actually upgrade water treatment in the water systems affected by  GenX contamination. 

Cape Fear Public Utility Authority had also entered into a one-year  contract  with UNC-Wilmington for just under $65,000  to analyze raw water and treated water samples  for additional perflourinated compounds  and to advise the utility on water treatment. House Bill 56 does not specifically describe the intent of the $85,000 appropriation for water supply monitoring, but the funds could cover the existing CFPUA/UNC-W contract. (The water quality monitoring would supplement, but not replace,  monitoring done by the Department of Environmental Quality.)

The $250,000 in funding directed to UNC-Wilmington to study GenX  would support new research and could generate important information about persistence of GenX in the environment and public health risk. The 6-month timeframe for the study, however, allows only  a very short  time to gather data and reach conclusions.

The UNC-Chapel Hill feasibility study for a digitized public database of water quality permit information would be the first step in a very long term project.   Creating a permitting database outside the permitting agency will raise a number of  legal, practical, policy and funding issues:  how to protect confidential information in permit applications (such as trade secrets);  cost of digitizing analog data and creating a new database; and the complications of maintaining  a database (or databases) to meet the very different needs of permit writers and the public.  Whatever the outcome of the study, the benefits of increased public access to permitting databases would likely be far in the future and require funding not provided in House Bill 56. [Note: Currently, anything in the permit file that is not protected by state confidentiality laws can be obtained through a public records request.]

What has been left undone?  None of the funding in the bill would go toward keeping GenX and other unregulated contaminants out of the Cape Fear River and other water supply sources. Only state and federal regulators can adopt water quality standards for the Cape Fear River and set permit limits for the discharge of GenX and other emerging contaminants to the river; local water systems do not have that power.

The bill does not address the lack of resources in DEQ and DHHS to evaluate the health and environmental risk of compounds like GenX before contamination of a water supply causes a crisis. GenX issue is only the most recent of several controversies over unregulated contaminants in North Carolina water supplies. Just within the last four years, the state has faced similar concerns about hexavalent chromium in drinking water wells and 1,4 dioxane in the Haw River. In each instance, state agencies had to develop guidance on safe levels of the contaminant in the absence of a clear federal standard and decide how to use the risk analysis in state permitting and enforcement decisions.

The weakness of the GenX response in House Bill 56 is that it reacts to water supply contamination without taking steps to prevent it. Once a contaminant has entered a water supply source, water systems — and their customers — shoulder the financial burden of using technology to reduce contamination to safe levels through water treatment. The bill also focuses narrowly on GenX rather than the broader problem of emerging contaminants affecting state water supplies. Nothing in the bill strengthens the state’s ability to detect other emerging contaminants in water supply sources; enforce water quality permit conditions; or assess health and environmental risk.

Next steps. As of today, the Governor had not yet signed or vetoed House Bill 56; the Governor’s decision could be affected by any number of provisions in the bill beyond those responding to GenX.  DEQ has taken an enforcement action against Chemours based on both discharge to GenX to the Cape Fear River and detection of GenX in groundwater on the site. (More about the enforcement action in the next blogpost.)

The Laws in the Background of the GenX Issue

August 21, 2017.  In  June, residents of southeastern North Carolina learned of a previously unknown contaminant in the Cape Fear River;  a study undertaken by an N.C. State University researcher documented the presence of the perflourinated compound  known as “GenX” in a report published in December 2016. The river provides drinking water for Wilmington-New Hanover County and other water systems.

The U.S. Environmental Protection Agency (EPA) began studying the effects of perfluorinated compounds used in firefighting foam, water repellants, Teflon, and other products more than fifteen years ago.  EPA worked with chemical companies to phase-out the two compounds most commonly used, perfluorooctanoic acid (PFOA) and perfluorooctanesulfonic acid (PFOS), because of concerns about persistence in the environment and human health risk.  In 2000, 3M Corporation announced a phaseout of PFOS. Under a 2006 agreement with EPA, eight companies committed to phase out PFOA by 2015. In 2009, Dupont began manufacturing GenX,  a chemically distinct perflourinated compound,  at its Fayetteville plant as a replacement for PFOA. (The Chemours Company, a Dupont spin-off, now operates the Fayetteville plant.)

The discovery of an unregulated chemical with uncertain health and environmental risks in a water supply source created a high level of concern in the affected communities. It has also drawn attention to gaps in the safety net of federal environmental regulations with implications for all unregulated contaminants in water supplies.  In many ways, the GenX controversy parallels the earlier controversy in North Carolina over hexavalent chromium (a contaminant associated with coal ash) in drinking water wells. In each case, the absence of a federal standard —  or EPA’s failure to update a standard based on current science —  left the state struggling to evaluate health risk and develop an appropriate regulatory standard.

A number of news organizations have provided detailed coverage of the GenX controversy and Cape Fear Public Utility Authority posts key documents and monitoring results online . This post will focus on the key federal laws involved and the  gaps in those laws that the state may need to fill. Although I will use the GenX issue as an example, this blogpost should not be interpreted as an assessment of legal claims or liabilities associated GenX contamination in the Cape Fear River.

Toxic Substances Control Act (TSCA). EPA regulates manufacture and importation of chemicals under the  Toxic Substances Control Act of 1976. Two of the key requirements of the law:

♦ Section 5 requires manufacturers to give  EPA notice before manufacturing a new chemical. (EPA maintains a Toxic Substances Inventory of previously approved chemicals.)  Based on review of information submitted with the notice, EPA may  find the new chemical is “not likely to represent an unreasonable risk” and approve manufacture. But if EPA doesn’t have sufficient information to evaluate environmental and health effects or if the lack of information creates an unreasonable risk of harm, EPA can issue an order requiring additional testing or limiting release of the chemical to the environment. Concern that GenX may have risks similar to those already associated with PFOA and PFOS caused EPA to enter  a 2009 consent order that (among other conditions) required Dupont to effectively eliminate release of GenX in wastewater and air emissions from the  manufacturing operation.

♦ Section 8 of TSCA requires chemical manufacturers and distributors to inform EPA of any information the company obtains that would reasonably support a conclusion that a chemical presents a substantial risk of injury to health or the environment.  In 2005, EPA used Section 8 of TSCA to assess a penalty against Dupont for withholding information the company had on the environmental and health effects of PFOA. That EPA action ultimately led to the phaseout of PFOA and development of alternatives like GenX.

Regulatory Gaps –TSCA covers chemicals manufactured or imported into the United States. It does not apply to a chemical by-product of a manufacturing or industrial process.  The TSCA  consent order for GenX limits release of GenX to the environment by the manufacturer,  but not the discharge of GenX  unintentionally created as a result of an unrelated manufacturing or industrial process. As a result, TSCA can’t address all contaminant sources. The TSCA review process also puts EPA in the position of constantly chasing the next generation of potential contaminants.

Safe Drinking Water Act. EPA has adopted national drinking water standards for 88 contaminants. Public water systems must monitor for those contaminants and insure that   water delivered to its customers meets the national standard for each regulated contaminant. Given the number of compounds used in manufacturing or produced as a by-product of industrial activities, national drinking water standards clearly do not exist for many contaminants. EPA has not adopted a  drinking water standard for GenX or any other perfluorinated compounds. EPA has issued a health advisory for PFOA and PFOS (combined) of 70 parts per trillion based on longterm exposure, but a health advisory is not an enforceable drinking water standard. EPA has also said that the PFOA/PFOS  health advisory does not apply to other perflourinated compounds like GenX.  

EPA continues to study the need for a national drinking water standard for perflourinated compounds.  Under the Safe Drinking Water Act, EPA’s decision will be based on: likelihood the contaminants will be found in drinking water; the health effects; and the technical/economic feasibility of treating the water to reduce any health risk. It isn’t clear whether EPA will propose a drinking water standard for PFOA/PFOS and the decision to develop a standard for next generation alternatives like GenX would be even further in the future.

Regulatory Gaps —  EPA has not adopted a national drinking water standard for every contaminant that may be detected in a water source or in a public water system; some existing drinking water standards do not reflect the most recent science.  In the absence of a drinking water standard, an EPA  health advisory can provide guidance to the states on safe levels but health advisories  do not exist for all contaminants.  Many of the environmental and human health risks associated with PFOA and PFOS have been known for 10-15 years, but EPA has not yet proposed a drinking water standard and only issued a health advisory based on long-term exposure in 2016. In the absence of a national drinking water standard or health advisory, presence of significant levels of a contaminant in water supplies may require the state to develop a benchmark for safe drinking water.

Clean Water Act.  The Clean Water Act protects surface waters like lakes and rivers by requiring a permit to discharge waste to those waters.   National Pollutant Discharge Elimination System  (NPDES) permits allow wastewater treatment plants and industries  to discharge wastewater meeting specific pollutant limits. Like other states, North Carolina has assumed responsibility for issuance of NPDES permits in the state.

EPA has set technology-based wastewater limits for individual categories of industries, including chemical plants. But those limits do not cover all pollutants or every possible waste stream.  In the absence of an existing EPA limit or when faced with a new type of waste stream, the state permit writer must set a limit on a case-by-case basis based on factors set out in the Clean Water Act. That puts responsibility on the state water quality agency to determine the appropriate limits for these unregulated pollutants.

Regulatory Gaps — Existing state and federal water quality standards and guidelines for permitting wastewater discharges do not address every potential pollutant. In the absence of federal effluent guidelines for a particular pollutant, the burden will be on the state water quality permitting agency to look at any existing information on the environmental and health effects to set a permit limit.

The challenge for the state. These federal laws create frameworks for approval of the  manufacture and use of chemicals; release  of chemicals to the environment in wastewater; and protection of  drinking water sources.  But the EPA standards adopted under those laws are not comprehensive and often lag behind the emergence of new contaminants or evolving science on risk.  When an unregulated contaminant affects a drinking water source, the responsibility for dealing with the immediate environmental and public health concerns falls on the state.

The NC Attorney General’s Office and Environmental Protection

August 14, 2017. The final budget adopted by the N.C. General Assembly on June 22  included a surprise reduction of just over $10 million in the budget for the state Attorney General’s Office (AGO).  Legislative leaders added the cut during  final budget negotiations between the two chambers. The budget bill  limits the Attorney General’s ability to meet the “management flexibility reduction” in a way that will require all of the cuts to be taken from administrative and legal services. The Attorney General’s Office has only 24 administrative positions, so most of the reduction will have to be met by reducing legal services — the lawyers and paralegals who represent state agencies and handle appeals of criminal convictions on behalf of local district attorneys.  Earlier this month, Attorney General Josh Stein announced that the AGO will meet $7 million of the $10 million cut by eliminating 45 positions; shifting additional legal services positions to funding provided by the state agencies the attorneys represent; and handling fewer appeals of criminal convictions. Stein has said that he cannot meet the remaining $3 million in budget reductions and asked the legislature to restore that amount to the AGO budget.

House and Senate leaders responded that the Attorney General has sufficient resources to meet his constitutional and legal responsibilities.   In an August 3  Associated Press story, Emery Dalesio reported that House Speaker Tim Moore suggested the legislature may shift responsibility for civil cases out of the AG’s Office :

House Speaker Tim Moore said lawmakers are considering legislation to let agencies hire their own in-house lawyers for civil matters, shifting that work from Stein’s office. But Stein has enough money to handle criminal cases, Moore said. “He has adequate resources, very adequate resources to take care of those issues,” the Republican from Kings Mountain said.

A look at what this means for environmental protection —

Background for the new budget cuts:  Under state law (G.S. 114-2), the Attorney General has a duty to represent state agencies in both civil and criminal cases.  Environmental protection programs rely heavily on civil enforcement; only a very small percentage of cases can be referred for criminal prosecution because of specific aggravating factors.  The 45 positions already identified for elimination by AG Stein include three positions in the Environmental Division of the AGO —  two paralegals and a water quality attorney.  If the legislature refuses to give any relief on the remaining $3 million in cuts, additional positions in the Environmental Division may be lost.  All of these new cuts  come on top of significant reductions over the previous four years. Between 2012 and the end of 2016,  the Environmental Division of the AGO lost 11 lawyer positions — seven as a result of legislative action and four contract positions DEQ did not renew in 2016.

The kind of civil cases the Attorney General’s Office handles for environmental agencies:

♦   Civil penalty collections.  Environmental agencies rely on civil penalty assessments as the most common enforcement response to violations ranging from illegal dumping and improper handling of hazardous waste to unpermitted air pollution sources. The AGO represents DEQ in civil actions to collect unpaid penalties.  Lack of an effective collection program undermines environmental compliance, sending a signal that there may be no real penalty for violation.  An example of a civil penalty case:

— In 2007, DEQ’s  Division of Waste Management assessed a large penalty ($553,225) against EQ Industrial Services for violations preceding and possibly contributing to an explosion and fire at the company’s hazardous waste handling facility in Apex  that forced the evacuation of 17,000 people.

♦  Civil lawsuits to stop an ongoing environmental violation; require cleanup of environmental contamination; or to seek reimbursement of state cleanup costs.  Examples:

— The 2013 lawsuit against Duke Energy to require the company to take action to prevent groundwater contamination and unpermitted discharges from coal ash stored at the Riverbend Steam Station in Gaston County and several other coal-fired power plants.

— A 2016 consent agreement with Flextronics International requiring the company to fully investigate the extent of groundwater contamination affecting residential wells in a Wake Forest subdivision and do any necessary environmental remediation.  The small circuit board assembly company that caused the solvent contamination had been sold and the original owners had no assets.  AGO lawyers identified Flextronics International as another legally responsible party based on its acquisition of the smaller company and its environmental liabilities.

♦  Civil lawsuits challenging state environmental policies and individual permitting decisions.   Examples:

— A  lawsuit by the State of South Carolina asking the federal courts to allocate water in the Catawba River and Yadkin River between the two states. The lawsuit responded to N.C. decisions on water use within the state, but affecting downstream flows to S.C.

—  The conflict between the State of North Carolina and Alcoa over rights to the bed of the Yadkin River. The case came out of Alcoa’s application for a state water quality approval necessary to renew the company’s  hydropower license on the Yadkin.

— A lawsuit by oceanfront property owners seeking the closure of beach access walkways near their homes and claiming the right to exclude the public from the dry sand beach seaward of their property.

The bottom line. Loss of legal representation in civil cases would  weaken the state’s ability to  protect public health and natural resources critical to the state’s economy. Loss of the legal expertise necessary to identify and hold responsible  the people who cause  environmental contamination shifts the cost of contamination to taxpayers.  In the absence of an alternative — and funded — plan to provide an equivalent level of legal services, the reduction in the AGO’s budget could significantly undermine environmental protection.

2017 NC Legislative Session in Review: The Budget

July 16, 2017. A few notes on the final state budget which became law following legislative override of the Governor’s veto.

Funding for Environmental Protection Programs. The final budget continues a 7-year trend of annual reductions in environmental protection programs. (See an earlier post  describing the impact of those earlier reductions.) The most significant new cuts to programs in the Department of Environmental Quality (DEQ)  affect:

     Energy Programs. The budget takes almost $1 million from energy programs. The budget reduces pass-through funding for university-based energy centers from around $1 million to a total of $400,000 divided equally between centers at Appalachian State University and North Carolina A& T University. North Carolina State University’s Clean Energy Technology Center will receive no funding. The budget also eliminates 3 of 5 positions in DEQ’s Energy Office.

     Regional Offices/Division of Environmental Assistance and Customer Service.  DEQ’s seven   regional offices house frontline permitting, compliance and technical assistance staff for multiple environmental programs including water quality, water resources, air quality and waste management. Since 2011, the legislature has made the regional offices a particular target  for reductions in positions and funding. The 2017 budget reduces appropriations supporting DEQ’s  Division of Environmental Assistance and Customer Service by $500,000 and requires DEQ to meet the cut in part by eliminating one position in each of the seven regional offices. The Division of Environmental Assistance and Customer Service is a non-regulatory program that provides technical assistance to businesses on water conservation, energy efficiency, waste reduction and other measures to improve environmental compliance.

Conservation Funding. Most funding for conservation programs, such as the Clean Water Management Trust Fund and the Parks and Recreation Trust Fund now go through the Department of Natural and Cultural Resources budget. The Department of Agriculture and Consumer Services also manages some conservation funds through the Farmland Preservation Trust, which purchases conservation easements on agricultural lands. Conservation funding in both departments generally remained stable. The legislature increased funding for the Clean Water Management Trust Fund and the Parks and Recreation Trust Fund, earmarking a combined  $1 million of the increase for an acquisition project on Archer’s Creek (Bogue Banks). The budget also allocates an additional $2.6 million to the Wildlife Resources Commission for acquisition of gamelands and an additional $2 million to the Farmland Preservation Trust Fund.

Surprisingly, the budget did not include state funds to match a federal Department of Defense (DOD) challenge grant of $9.2 million to acquire conservation lands to provide buffers around military installations. DOD announced award of a Readiness and Environmental Protection Integration (“REPI”) grant to North Carolina earlier this year for acquisition of buffers around the Dare County Bombing Range and endangered species habitat near Camp Lejeune.  The federal award  anticipated a state contribution of an additional $10.1 to be put toward the projects.  The final state budget failed to earmark any funding for the state match. The  Clean Water Management Trust Fund and other state conservation agencies could provide some  of the state match, but in the absence of a legislative earmark the REPI projects would be competing with other applications for those grant funds.

Special provisions. As usual, the budget bill (Senate Bill 257 ) includes a number of “special provisions” that  change existing law. Those include:

     Air quality. The budget allows DEQ to use fees from automobile emissions inspections to support any part of the air quality program. Previously, inspection fee revenue could only be used to implement the automobile inspection and maintenance program. In the past, the legislature has tilted toward keeping inspection and maintenance fees as low as possible while still providing adequate reimbursement to inspection stations. The 2017 provision  divorces the fees from the needs of the vehicle inspection and maintenance program for the first time.

The budget also requires legislative approval of DEQ’s plan to use approximately $90 million the state will receive from the Environmental Protection Agency’s  national settlement of an air quality enforcement case against Volkswagen.  (The case concerned  VW’s installation of software to defeat vehicle emissions control systems.) Funds from the settlement will be divided among the states and must be spent for purposes specifically allowed under the EPA settlement agreement.  The agreement gives states a number of options and the legislature clearly wants to influence DEQ’s decision about use of the funds.

     Solid Waste. The budget shifts $1 million from a fund for assessment/cleanup of contamination caused by old, unlined  landfills to the City of Havelock to be used for “repurposing” property previously owned by a recycling company.  (See Sec. 13.3) Phoenix Recycling operated on property just beyond the city limits, but closed in 2000 as a result of environmental violations.  In 2012, the City of Havelock received a state grant to assess environmental contamination on the property. In 2015, Havelock’s city manager advised the town council that if the city acquired the property, it could be eligible for up to $550,000 in federal “Brownfield” grant funds under an EPA program to support cleanup and redevelopment of contaminated sites.  In 2016, the city acquired the property and annexed it into the city.  It isn’t clear whether the city ever applied for the federal Brownfields grant. The 2017 budget provision would instead provide state funding for redevelopment of the property. A Progressive Pulse blogpost provides a good overview of how the earmarking of these funds for the Phoenix Recycling property will reduce funds available to cleanup other, higher priority contaminated sites.

Another provision (Sec. 13.4) allows the owner of an old, unlined landfill site to exclude the property from a state program to cleanup contamination  from  “pre-1983” landfills.  (Modern standards for solid waste landfills went into effect in 1983).  Under the provision, the owner can remove property from the state cleanup program by accepting liability for any contamination and providing financial assurance to address contamination. Financial assurance would not be required if the landfill had received solid waste from a local government (which was often the case). This is a very odd provision in several ways:

♦ Under current law, DEQ has responsibility for assessment and cleanup of pre-1983 landfill sites;  revenue from a statewide solid waste disposal tax pays for the remediation. Under the new provision, a property owner would  waive state responsibility for cleanup and potentially accept environmental liability they might not otherwise have.

♦ The provision has not been restricted to sites that present a low environmental  risk; the only limitations seem to be the property owner’s willingness  to take on the liability and ability to provide financial assurance if required.

♦ The provision describes the opt-out as a “suspension” of the state cleanup program for as long as the person owns the property. That clearly means the state itself would not undertake any assessment or cleanup activity on the site, but the law does not suspend enforcement of state groundwater standards and other environmental remediation requirements. Those programs normally seek remediation by the person(s) responsible for the contamination; under the new provision, the property owner  must volunteer for the liability whether they contributed to the contamination or not.

♦  The implication of a “suspension” is that the state may again have responsibility for the site if it changes ownership in the future. Suspending environmental remediation until a change of ownership could simply delay necessary cleanup activities without regard to environmental risk.

It isn’t clear why a property owner would ever choose to do this.

The budget bill also requires a study of DEQ’s use of revenue from the solid waste disposal tax. The opt-out in Section 13.4  may be a hint of additional changes to the solid waste disposal tax and the state cleanup program for pre-1983 landfills.

     Water Quality: Nutrient Pollution.  The (now annual) budget provision concerning nutrient management strategies directs DEQ to use $1.3 million to test use of algaecides and phosphorus-locking technologies as an alternative to state rules imposing tighter wastewater limits and stormwater controls to address excess nutrients  in  Falls Lake and Jordan Lake. Those rules have been temporarily suspended by the legislature.  (For background on the nutrient rules, see a previous post;  the proposal for an automatic sunset  of the nutrient rules described in the earlier  blogpost was ultimately replaced by legislation further delaying implementation of the rules and a university-based study.)  Based on discussion in committee, legislators had a specific technology developed by a North Carolina-based company in mind.

Limiting Appeals of Environmental Permits

June 19, 2017.  Last week, the N.C. Senate retitled  House Bill 374, a  labor law technical corrections bill,  as  the “Business Freedom Act” and (among other things) added a provision making it significantly more difficult for a citizen, community or environmental organization to challenge an environmental permit. The provisions in Section 12 of H 374 would affect appeals of any environmental permit, certification, or other approval issued by the Department of Environmental Quality or the Environmental Management Commission. Those approvals include permits for  wastewater discharges, wetland/stream impacts, and new air pollution sources;  inter-basin transfers;  coastal development permits;  and many other activities with environmental consequences.

WHAT THE PROVISION DOES 

H 374  limits the ability of a person to challenge an environmental permit in three ways:

  1.  Only a person who submitted a comment before the permit was issued could appeal the permit. Even a person actually harmed by the permitted activity, making them  a “person aggrieved” who would otherwise have appeal rights under the state’s Administrative Procedures Act,  would be barred from appealing unless they commented during the permit review. That means individuals or organizations appealing environmental permits will face a  hurdle not required for appeal of other state actions. The provision puts citizens appealing environmental permits  at a significant practical disadvantage since a comment period may range from as few as 15 days to  60 days and the notice of opportunity to comment may not reach everyone directly affected by the permit decision.
  2.  An issue could not be raised in the appeal unless it had been  specifically identified in a comment to the agency before issuance of the permit. Comments are submitted in response to either a permit application or a draft permit – not the final permit decision. Limiting the appeal to issues raised in a comment means there may be no opportunity to challenge permitting errors that only  become clear when the final permit has been issued. The limited exception in the bill for circumstances where the person “could not have raised a particular basis prior to the decision” would simply  start a new round of argument over whether an issue could or could not have been raised prior to the permit decision.
  3. The administrative hearing would be limited to  evidence in the record of the permit decision (such as the permit application,  permit agency documents, and public comments). Permit appeals are heard by an administrative law judge (ALJ) who conducts a hearing and issues a decision in the case. The  ALJ’s decision can then be appealed in  the state courts. H 374  would not allow the ALJ to consider new evidence in an environmental permitting case; the decision could only be based on materials in the permit record. (The  bill has a narrow exception for information unavailable when the permit decision was made.) The provision seems to  exclude even testimony necessary to explain documents in the permit file. Most of the material in the permit record will be information provided by the applicant or generated by the permitting agency. Other parties to an appeal would rarely be able to gather all possible supporting evidence for an appeal within a 15-60 day comment period.    Under  current  law (which would continue to apply to other types of administrative hearings) ,  a party can introduce any evidence relevant to the issues in the hearing. 

THE PROBLEMS

Fairness.  I can’t say whether these restrictions rise to the level of creating a constitutional due process or equal protection problem.  But the provision clearly treats a citizen harmed by an environmental permit differently than a citizen harmed by any other kind of state action.  The obstacles presented by H 374 affect every stage of the administrative appeal. A person granted an administrative appeal hearing may then find it impossible to raise issues and introduce evidence critical to the appeal. The cumulative restrictions in H 374 could greatly restrict access to the courts on environmental permitting controversies by  making  it more difficult to get a hearing and then limiting the evidence that could go into the hearing record for review by the courts. 

Violation of federal rules for environmental permitting programs delegated to the states. The new restrictions on environmental permit appeals – particularly limits on standing to appeal — seem to violate the terms under which  federal permitting programs have been delegated to the state. N.C. has delegations under all of the major federal environmental permitting laws including the Clean Water Act, Clean Air Act and Safe Drinking Water Act. Under those delegations, the Department of Environmental Quality issues federal permits that would otherwise be issued by the U.S. Environmental Protection Agency. Federal rules require states with delegated permitting programs to  provide an opportunity for judicial review of the final permit decision that is comparable to review available under federal law.

For example, Clean Water Act delegation rules require the state program to provide an opportunity for judicial review that is “the same as that available to obtain judicial review in federal court of a federally-issued [wastewater discharge]  permit”. The rule expressly says “[a] State will not meet this standard if it narrowly restricts the class of persons who may challenge the approval or denial of permits”. (40 CFR §123.30.) Similar provisions appear in rules for delegation of other federal environmental permitting programs. (An earlier post about a different permit appeal controversy also  cites the federal rule on judicial review of Clean Air Act permits.)

Under federal law, any person “suffering legal wrong because of agency action or adversely affected or aggrieved by agency action… is entitled to judicial review” of an environmental permitting decision. 5 U.S.C. § Section 702. An administrative appeal is the first and necessary step for judicial review under state law. By imposing new conditions on a citizen’s ability to  file an administrative appeal,   House Bill 374 could prevent a person  harmed by a permitting decision from obtaining  judicial review they would be entitled to under federal law.  That appears to violate federal rules for delegated environmental permitting programs.

The  limits in H 374  on issues and evidence introduced at hearing also mean state judicial review will be much narrower than  federal judicial review of an environmental permit. Appeal of an EPA-issued Clean Water Act permit goes through a federal administrative hearing where new evidence can be introduced. The record of the federal administrative hearing — including testimony and new evidence — can then be considered by a court. Under H 374, appeal of a state-issued Clean Water Act permit would be based  solely on the original permitting materials, limiting the evidence a court could consider on judicial review.  As a result, the scope of judicial review under H 374 would be narrower than review available under federal law.

The Senate changes to House Bill 374, including the environmental appeal provision, go back to the House for approval. House agreement to the Senate changes would send the revised bill to the Governor.  If the House fails to agree to the Senate changes, a conference committee of Senators and House members would be appointed to work out the differences between the two.

President Trump’s Budget: State Environment Programs

June 9, 2017.   Now that the Office of Management and Budget (OMB) has released detailed budget documents, the impact of President Trump’s proposed  budget has become more clear.  In addition to eliminating some federal grants altogether  (see an earlier post), the President’s budget would significantly reduce federal funds supporting basic state environmental protection programs. The tables below have  been based on the percentage reduction to each  federal grant category proposed in the President’s budget as applied to the certified 2016-2017 state budget for the corresponding program.  Additional detail not available in OMB documents comes from a budget analysis   prepared by the Environmental Council of States (an organization of state environment officials).

The President has proposed a 30% reduction in grants to the states to carry out federal Clean Water Act, Clean Air Act and Safe Drinking Water Act permitting and enforcement programs. The proposed budget makes significant cuts in funding to  support federal environmental protection programs delegated to the states, although not at the level  in the “skinny budget”. OMB budget documents now  show  a 30% reduction in those state grants.  Since federal grants provide 50% of the total funding for North Carolina’s Clean Water Act, Clean Air Act and Safe Drinking Water Act  programs,  a 30% cut in those federal grants would create a  big hole in budgets for state permitting and enforcement.  The result (by comparison to certified state budget for 2016-2017):

N.C. Clean Air Act Implementation (Permitting and Enforcement)
Total Need Federal Grant Federally Funded President’s Budget Program Impact
 $4,854,105  $2,482,845       50%   -30%  -$744,853 (15%)
Clean Water Act  Implementation (Permitting and Enforcement)
Total Funding Federal Grant Federally Funded President’s Budget Program Impact
$14, 160,554 $6,662,950        50%              -30%       – $1,998,885 (14%)
Safe Drinking Water Act Implementation (Permitting and Enforcement)
Total Funding Federal Grant Federally Funded President’s Budget Program Impact
  $5,870, 612         $ 3,316,895      > 50%      -30%    – $1,459,433 (25%)

The President’s budget makes significant cuts to funding for programs addressing hazardous waste and petroleum contamination.

Superfund.  The federal Superfund program addresses contaminated sites nationwide that pose the greatest risk to human health. The U.S. Environmental Protection Agency takes the lead on assessment and cleanup of those “national priority” sites. North Carolina has around  40 designated Superfund sites contaminated by pesticides, solvents and other hazardous substances. (For more information,  see the EPA list  of N.C. Superfund sites.)  The President’s budget proposes to cut funding for Superfund cleanups  by 30%.

Petroleum underground storage tanks (USTs): The budget significantly cuts federal  grants to address past petroleum contamination and to regulate  USTs to prevent future contamination. As a geographically large and  rural state, North Carolina has nearly 20,000 properties contaminated by petroleum leaks from gas station or convenience store gas pumps.   The President’s budget appears to reduce federal funds to assess and cleanup up past contamination  by 30%. The budget entirely eliminates grant funds to support state regulatory programs enforcing  federal standards to prevent future UST leaks.  

“Brownfields” redevelopment. The federal Brownfields program supports cleanup and redevelopment of contaminated properties. EPA makes grants for individual redevelopment projects and provides grants to state programs promoting cleanup and redevelopment of contaminated properties. Brownfields grants can be particularly important to redevelopment of urban areas that might otherwise be under-utilized because of concerns about environmental contamination and liability. The President’s budget  cuts direct federal Brownfields grants by 14% and reduces grants to state Brownfields programs by 30%. North Carolina’s Brownfields program — supported entirely by developer fees and federal grant funds —  has leveraged over  $10 billion in private development since 1997.

President Trump’s Budget: Zero-Funding Energy and Environment Programs

May 31, 2017. President Trump’s proposed budget would completely eliminate a number of environmental programs. Some of those programs fund state activities to protect against environmental harm, increase energy efficiency, build water/sewer infrastructure and respond to natural disasters. Below, some of the programs zero-funded under the President’s budget*:

EMERGENCY RESPONSE

Federal Emergency Management Agency (FEMA) flood zone mapping/flood risk analysis. As part of the federal flood insurance program, FEMA maps flood zones along rivers, streams and ocean shorelines.  Flood zone maps have to be updated as shorelines respond to subsidence or sea level rise and upland development increases runoff.  The federal flood insurance program uses the maps to set flood insurance rates; the maps also affect state and local construction standards in flood hazard areas. The President’s budget assumes flood zone mapping should be funded by the residents of flood hazard areas and by state governments.

Emergency food and housing grants. FEMA provides grants to states for  emergency food and housing needs following natural disasters. The grant funds would be eliminated as duplicative of other programs; federal budget documents also indicate these needs should largely be a  state responsibility.

ENERGY

Energy Star Program.  The  Energy Star program (developed by the Department of Energy and the Environmental Protection Agency) rates household appliances for energy and water efficiency.  Energy Star ratings on high efficiency washers, dryers, dishwashers, refrigerators and other appliances allow consumers to compare energy/water usage and potential cost savings over the life of the appliance. The President’s budget assumes that this kind of consumer rating program can and should be provided by the private sector.

Weatherization Assistance Program. This Department of Energy  program provides grants to the states to weather-proof housing for low-income residents. The weatherization program’s goals are to increase energy efficiency and reduce energy bills for low income homeowners.

State Energy Program funds. These Department of Energy grants support state energy initiatives, including programs to increase the energy efficiency of state buildings and infrastructure.

COASTAL PROGRAMS

Coastal Zone Management Act Grants. National Oceanic and Atmospheric Administration (NOAA) grants support state coastal management programs. A NOAA grant provides about 50% of the funding for North Carolina’s coastal program, which regulates development affecting significant coastal resources such as coastal wetlands, public trust waters, and ocean/inlet shorelines.

National Estuarine Research Reserves. NOAA also provides significant funding for coastal natural areas set aside for conservation, research and education. North Carolina  has four Estuarine Research Reserves: Currituck Banks, Rachel Carson, Zeke’s Island and Masonboro Island. NOAA  grants provide about 75% of the funding for management of the N.C. Estuarine Research Reserve sites.

Sea Grant.   The federal Sea Grant program supports university-based coastal research and extension services in 33 states and territories on the coasts and Great Lakes. North Carolina’s Sea Grant program, based at North Carolina State University,  provides scientific, engineering and legal expertise on coastal issues including wetlands protection, aquaculture, and shoreline stabilization. You can find a description of N.C. Sea Grant programs and activities here.

WATER/WASTEWATER INFRASTRUCTURE

Rural Water/Wastewater Disposal Program. This Department of Commerce program provides  water and sewer grants to rural communities.  The President’s budget would eliminate the program as duplicative of infrastructure loans provided through the larger Clean Water and Drinking Water State Revolving Fund (SRF)  programs.  Unlike the SRF programs, however, the Rural Water and Wastewater Disposal Program provides grants that can  be used to support rural economic development.  SRF loans must be used to upgrade existing water and sewer systems to meet Clean Water Act and Safe Drinking Water Act  standards; the loans cannot be used to extend a water or sewer system just to serve new economic development.

ENVIRONMENTAL PROTECTION AGENCY

♦ Geographic environmental restoration programs.  The President’s budget eliminates funding for a number of regional water quality restoration programs. Most of the programs involve coordination among states and the federal government to solve pollution problems in multi-state water bodies like Chesapeake Bay and the Great Lakes.

Chemical Safety Board.   The Chemical Safety Board — made up of independent experts —  investigates chemical accidents and releases. In North Carolina,  the Chemical Safety Board has investigated and identified the cause of several incidents, including the 2006 explosion and fire at a hazardous waste facility in Apex that forced the evacuation of 16,000 people.

♦ BEACH program. This EPA program provides  grants to support state monitoring of beach water quality during the swimming season. In North Carolina, the Division of Marine Fisheries receives  BEACH funding to support the state’s Recreational Water Quality Program. The state program  tests the water quality at  240 swimming areas weekly between April 1 and October 31. The water quality monitoring allows the agency  to warn the public — and if necessary close a beach for swimming — if  bacteria reaches unsafe levels.

* Based on budget documents released by the Office of Management and Budget and informed by additional analysis provided by the Environmental Council of States (an organization of state environmental officials.)