November 21, 2013.   In North Carolina,  “regulatory reform” has had a strong focus on environmental rules for  nearly twenty years. An earlier post sketched a very broad history of regulatory reform in N.C. starting with the creation of the Rules Review Commission in 1986. But from 1977 into the early 1980s,  the General Assembly  actually had an Administrative Rules Review Committee made up of legislators. The committee tracked the number of rules adopted by state agencies and reviewed rules for statutory authority. I was able to find committee reports from 1979-1983. (After that, the online  trail went cold.)  The reports list all of the rules the committee objected to for lack of statutory authority and how those objections were resolved. Environmental rules didn’t  receive  much   attention from the committee; some of the most common objections concerned rules assessing fees not authorized by law; state agencies creating criminal penalties by rule;  and professional licensing  boards overstepping their authority.

Environmental rules may have had a lower profile simply because of  the times. Congress  had just adopted the major federal environmental protection laws  in the early to mid-1970s —  the Clean Air Act  in 1970, the Clean Water Act  in 1972, the  Safe Drinking Water Act in 1974 and the Resource Conservation and Recovery Act (regulating hazardous waste)  in 1976.  In the 1970s and early 1980s,  state environmental agencies were  adopting rules  needed to run delegated permitting programs under those federal laws: water quality  and air quality standards; drinking water regulations;  hazardous waste permitting rules;  and regulations for petroleum underground storage tanks. Environmental rulemaking may not have been without controversy, but  there was also significant support for environmental programs and for the most part  the General Assembly seemed to let the  regulatory agencies  handle the controversies.

That started to change as water quality rules in particular began to have a greater impact on development activity. The first generation of  environmental permitting rules largely affected local government and  industry.  In the water quality program, local government wastewater treatment plants  and industries directly discharging wastewater to a stream  needed a Clean Water Act permit.    A developer only needed an environmental permit if the project involved filling wetlands or a segment of stream.  As  the state  began to grapple with the impact of development activity on  coastal resources and water quality in the late 1980s, environmental  permitting came to have a much greater effect on developers and private property owners.

By 1984, the state’s Coastal Resources Commission had adopted the first standards for development on the state’s ocean and inlet beaches. Those rules included oceanfront setbacks and restrictions on use of seawalls and jetties to protect oceanfront structures from erosion.  In the late 1980s, the state’s water quality program  began  work on  rules to address high bacteria levels in coastal shellfish waters.  Those  rules included the first state stormwater management requirements for new development projects.  Since then, a  series of water quality initiatives have used stormwater  standards, density limits and  riparian buffers to reduce the impact of polluted runoff from developed areas. A combination of density limits, buffers and stormwater controls became part of the basic water supply watershed program designed to prevent pollution of drinking water supplies. Those same tools became part of the comprehensive water quality strategies to reduce nutrient over-enrichment in the Tar-Pamlico River, Neuse River,  Falls Lake and Jordan Lake.  In the nutrient  strategies,  development standards represented one part of a much larger set of pollution reduction measures  that also  included  tighter controls on wastewater discharges and  best management practices to limit agricultural runoff.

Legislative  Disapproval of  Environmental Rules.  Legislative action on regulatory issues can  take other forms, but tracking disapproval bills gives a fair indication of where legislative attention has been  focused. For the first few years after the General Assembly amended the Administrative Procedure Act to allow for legislative disapproval of rules, virtually all of the disapproval bills concerned environmental rules.  The first disapproval bills introduced in the General Assembly (in 1998) targeted the Neuse River stream buffer rules and the Tar-Pamlico nutrient  rules (which also included buffer and stormwater requirements).   Based on a  search of the General Assembly bill database, legislators introduced bills to disapprove at least 41 state agency rules between 1998 and 2012.   Sixteen of the disapproval  bills  targeted environmental protection rules;  in some cases, a single bill  covered multiple rules. Another four bills proposed to disapprove Wildlife Resource Commission regulations. All of the other regulatory programs in state government (public health, worker safety, building code, occupational licensing boards, food safety, insurance regulation, etc.)  accounted for just another 16 disapproval bills during the same period. (See Legislative Disapproval Bills for a complete  list of the disapproval bills that I  found.)

Of the 16  bills to disapprove environmental  rules, ten concerned water quality rules.  The list  includes the Neuse River  buffer rules, the Tar-Pamlico River nutrient rules, coastal stormwater rules, rules classifying streams as trout waters or Outstanding Resource Waters,  water quality standards for municipal storm sewer systems,  and the Falls Lake and Jordan Lake nutrient management strategies. That list of water quality rules includes  the most debated (and negotiated) environmental rules adopted in the last 15 years, addressing some of the state’s most complicated water quality  problems. One common thread  is that all of those regulations  use development standards as one tool to address a water quality problem. The other common (and related) factor is that all encountered opposition from realtors,  developers, and owners of waterfront property.

Amending the APA to make environmental rulemaking more difficult. There has also been an effort to make environmental rulemaking more difficult by putting limits or requirements on environmental rules that don’t apply to other kinds of regulations. In 2005, the General Assembly  amended G.S. 150B-21.4 ( fiscal notes on rules) to require a special fiscal analysis of environmental rules — and only environmental rules — affecting state highway projects. The change responded in part to expansion of   stormwater  requirements,  which affected state highway projects as well as conventional building projects.

In 2009, several House and Senate bills proposed to put a moratorium on  rulemaking by the state’s Environmental Management Commission (the citizen commission  that adopts air quality and water quality rules).  House Bill 1335 actually passed the House and received a favorable report from a Senate committee before being pulled off the Senate floor without a vote.  But the 2011 Regulatory Reform Act, Session Law 2011-398, picked up the effort to restrain environmental rulemaking  and put new  limits on environmental rules that do not apply to other state rules.   G.S. 150B-19.3 prevents a state environmental agency from adopting a rule that is more stringent than a corresponding  federal environmental rule except in very limited circumstances.  As a practical matter,  the new law  will  be much more difficult to apply than legislators may have expected. Many federal environmental rules  provide  a framework for regulation rather than comprehensive standards and permitting procedures, making the “more stringent than” comparison difficult to impossible — although it should provide fertile ground for argument.  More about the policy implications of handcuffing state environmental regulations to federal rules in  a future  post.

The focus on environmental regulations continued in the  2013 Regulatory Reform Act, Session Law 2013-413.  The  most recent  legislation requires review of existing rules every ten years causes rules to automatically expire if the review does not occur. Although the review requirement  applies  to all state regulatory programs, the legislation specifically directs the  Rules Review Commission to schedule existing state water quality and wetland rules for the first round of review in 2014. The legislation also puts a one-year moratorium  on adoption of local government ordinances that address environmental issues  covered  by state and federal environmental rules. During that year,  the legislature’s Environmental Review Commission will study local government authority to adopt environmental ordinances. Like the 2011 limitation on state environmental rules, the moratorium on local ordinances almost certainly has some unintended consequences. More about that in a future  post as well.

Why has regulatory reform come to focus so heavily on water quality rules?   In one way, water quality rules seem  to be an odd focus for so much regulatory reform activity since federal requirements drive so many of the rules.  But while  federal law requires the state to  reduce  pollution causing impaired water quality  (like the nutrient problems in the Tar Pamlico River, Neuse River, Falls Lake and Jordan Lake), federal rules do not dictate the remedy.  The legislative disapproval bills have targeted the remedy —  a comprehensive strategy that reduces direct discharges of the pollutant (from wastewater treatment plants and industrial dischargers) and indirect runoff from agriculture and developed areas.

In these instances, things happening under the banner of “regulatory reform” are not so much about eliminating unnecessary and burdensome regulations. It is really about how the state will  solve complicated environmental problems and whether  the burden of pollution reduction will be shared by all of the sources contributing to the problem.  Since  2013  legislation also delayed further implementation of the Jordan Lake rules to  convene a  legislative study committee on Jordan Lake water quality (see Session Law 2013-395), the current General Assembly will have  a chance to  struggle with  those questions.