Tag Archives: Budget

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.

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.)

NC Senate: Proposed 2017 Budget

May 10, 2017.  Some highlights of the state budget proposed by Senate leadership as it affects environmental programs:

Money. The Senate budget continues  a nearly 10-year trend of cuts in environmental programs. An earlier post described some of the impacts of previous  budget cuts that began with the  2008 recession (including a 9% reversion of already-budgeted funds in 2009) and continued after the economy began to recover.

The Senate’s proposed budget for 2017 would reduce state appropriations to the Department of Environmental Quality (DEQ) by nearly $7 million.  That represents a 10% reduction in state appropriations and a 3% reduction in the department’s overall budget (which also includes federal grant funds and permit fees).

The reductions include:

♦ A $3.5 million discretionary cut,  which means DEQ will have to identify  reductions within the department’s operating budget.

♦  A $1 million transfer of funds  to the N.C. Department of Agriculture and Consumer Services (DACS) to challenge an EPA rule defining federal jurisdiction under the Clean Water Act. Under the McCrory administration, DEQ had joined  a number of other states in suing over the federal rule.  The Cooper administration dropped out of the litigation and the Senate provision would fund DACS  to continue the state’s participation in that litigation.

♦ The budget eliminates  56.5 positions from existing DEQ programs:

      32.5 positions in the Division of Environmental Assistance and Customer Service. Those cuts affect non-regulatory waste reduction, recycling,  water/energy efficiency and  permit assistance programs. The cuts would effectively eliminate DEQ programs that work with business/industry to voluntarily reduce waste generation which allows those businesses and industries  to reduce their regulatory burden and save money.

      14 regional office support positions. DEQ’s seven regional offices house frontline permitting and enforcement staff for multiple environmental programs. The legislature has targeted DEQ  regional offices for staff cuts in the past. This provision requires a reduction of an additional 2 positions in each  regional office. It is not clear which DEQ programs would be affected.

      5  administrative positions. The Senate bill  identifies specific jobs for elimination, including  DEQ’s Chief Deputy Secretary,  the Legislative Affairs Program Manager; a communications position; and the last two environment education positions remaining in the department.

      3 positions in the N.C. Geodetic Survey

      1 position in the Land Quality Section of the Division of Energy, Mineral and Land Resources

      1 position in the Division of Marine Fisheries

Policy provisions in the budget bill. The budget bill includes a number of changes in state law or policy related to environmental programs:

♦  Conditions on use of funds the state may receive as a result of the U.S. Environmental Protection Agency’s settlement with Volkswagen for violations of the Clean Air Act (Sec. 13.2 )  The Senate provision sets criteria for use of the funds and requires legislative approval of a DEQ plan for the funds.

♦  A provision  that allows the owners of old landfill sites to avoid environmental cleanup requirements by: 1. Accepting liability for onsite and offsite contamination; and 2. Providing financial assurance for any environmental harm.  There is an exception for property owners who did not receive compensation to accept local government waste for disposal. The provision affects a state program to assess and cleanup contamination associated with landfills and trash dumps that never met standards for solid waste landfills adopted in 1983. (iSec. 13.4).

♦  Changes to laws governing the Marine Fisheries Commission (Sec. 13.17) . The provision reduces the MFC from nine members to seven members and requires a super-majority of five  members to take any action — including adoption of rules. As with most state commissions, current law only requires a simple majority of the MFC to take most actions although a super-majority is required for adoption of fisheries management plans.

♦  A moratorium on wind energy projects (Sec. 24.2). The bill would prevent DEQ from issuing permits for new wind energy projects until December 31. 2020. During the moratorium, the bill would require a study of the impact of wind energy facilities on military operations in the state. Note; the process for approval of wind energy facilities already requires Federal Aviation Administration review and  input from military  installations.

The Federal Budget and North Carolina’s Environment

March 24, 2017.  Last week, the Trump administration released the Trump Budget Blueprint which describes in very general terms the President’s budget proposals for federal agencies.  The Blueprint just opens the debate on the 2018 federal budget.  Congress will significantly influence the final budget and members from both parties have already expressed concern about some of Trump’s proposed budget cuts.   Percentage-wise, the deepest cuts in the Trump Budget Blueprint affect the Environmental Protection Agency.  As background for the coming federal budget debate,  this blogpost looks at the potential impact of the Trump budget plan on key state environmental protection programs.

Based on preliminary reports, the North Carolina Chapter of the Sierra Club provided a guide to the potential impact of the Trump budget the day before actual release of the Budget Blueprint. (Full disclosure — I assisted in preparation of the Sierra Club report.)  For each  major state environmental protection program, the report shows the percentage of the program budget currently funded by federal grants and the impact of cuts identified in the Trump budget plan. The report also provides information on other  DEQ activities supported by  federal grants that may be eliminated under the Trump administration’s  budget plan.

I want to focus on information in the Sierra Club report about impacts to Clean Air Act, Clean Water Act and Safe Drinking Water Act programs in North Carolina.   EPA  has delegated federal permitting and enforcement authority under those laws to the state’s Department of Environmental Quality (DEQ). EPA provides oversight to ensure the state programs meet federal requirements,  but DEQ has responsibility for day to day implementation.  DEQ issues Clean Water Act permits for wastewater discharges; Clean Air Act permits for  air emissions and air pollution control equipment; and Safe Drinking Water Act permits for public water systems.  DEQ also enforces water quality, air quality and drinking water standards.  In return for the state taking on those federal permitting and enforcement responsibilities, EPA provides program implementation or “categorical” grants to partially offset the cost.

The Trump Budget Blueprint does not provide detail on many cuts, but specifically proposes a 45% reduction in the EPA categorical grants that support basic state Clean Water Act, Clean Air Act and Safe Drinking Water Act programs. The tables below put the proposed cut in the context of each delegated program’s budget. Some notes on the numbers:

♦ “Total Need” means the complete budget (from all funding sources) for the delegated Clean Air Act, Clean Water Act and Safe Drinking Water Act program.

♦  Both the “total need” and federal funding numbers come from the certified state budget for the 2016-2017 fiscal year.

♦  These numbers only cover the EPA categorical grants for the delegated federal permitting/enforcement programs.  The numbers do not reflect separate federal grants for targeted research or pollution reduction projects like  the Albemarle-Pamlico National Estuary Program. Some of those federal grants reportedly have been targeted for elimination in Trump administration budget plans.

♦ The proposed federal funding cuts shown below are higher than those show for these same programs in the Sierra Club report because the final Trump Blueprint increased the percentage reduction over those reported earlier.

N.C. Clean Air Act Implementation

Total Need Federal Grant % Federally Funded Proposed Federal Funding Cut
$4,854,105 $2,482,845  50% – 45%

Clean Water Act Program Implementation 

Total Need Federal Grant % Federally Funded Proposed Federal Funding Cut
$14,160,554 $6,662,950   50%  -45%

Safe Drinking Water Act Program Implementation 

Total Need Federal Grant % Federally Funded Proposed Federal Funding Cut
$5,870,612 $3,316,895 50% – 45%

In sum: EPA grants provide 50% of the funding for each of the major environmental permitting and enforcement programs delegated to the state under federal law. A 45% reduction in the federal grant would result in a cut of nearly 25% to each of those state programs.  As discussed in an earlier post, many N.C. environmental protection programs have already experienced significant reductions in state funding since 2009-2010. The water quality program has been particularly hard hit.

Deep cuts to the federal grants would force the state to decide whether to make up the loss of federal funds with increased state appropriations from tax revenue or higher permit fees. The alternative would be to accept further erosion of those programs. The question may be particularly acute for the air quality program which is now entirely supported by the federal grant and permit fees.

You can find the entire Sierra Club report here .

NOTE: The original blog post has been revised to more accurately describe the release date for the Sierra Club guide and to note that information on  percentage reductions to these particular programs changed (for the worse) after release of the Sierra Club report. 

The State of the Environment Department: By the Numbers

January 12, 2017. Governor Roy Cooper inherits an environment department that looks very different than it did four years ago. The new Department of Environmental Quality (DEQ) is much smaller in size and scope than the old Department of Environment and Natural Resources (DENR).  Since 2011, legislators have moved conservation and research programs out of the department.  DEQ’s environmental protection programs  lost non-regulatory conservation and research partners like Soil and Water Conservation, Forestry, Parks and Recreation and the Museum of Natural Sciences.

The environmental programs remaining in DEQ also lost a significant number of positions.  The incoming administration will face some immediate challenges in providing timely permit reviews, inspections and compliance assistance with staffing at levels inadequate to respond to an upturn in economic activity.

About the numbers. The numbers below come from information provided by DEQ during the transition between the McCrory and Cooper administrations; reports submitted to the legislature by DENR/DEQ; and legislative budget documents.

Environmental programs experienced some position reductions in  2009-2010 due to recession-driven budget cuts; those cuts tended to focus on vacant positions. Since 2011, the nature of the position cuts have changed.  Instead of setting a budget reduction target and giving the department flexibility to meet it,  the legislature increasingly identified specific positions for elimination or focused cuts on particular programs in the department. Many of the targeted reductions affected water quality programs (including stormwater and sedimentation control) and multi-agency staffing in the department’s seven regional offices.

DEQ by the numbers:

18%   Percentage reduction in water quality and water resources staff.

41% Percentage reduction in water quality/water resources staff in DEQ regional offices. The seven regional offices house staff from multiple DEQ programs. Staff based in the regional offices do initial site visits for permit applications; provide technical assistance; and inspect permitted facilities for their respective programs.  A 2011 budget provision specifically targeted the regional offices for position cuts: 3 administrative positions; 6 positions in the Asheville Regional Office; and another 21 positions among the seven regional offices to be either eliminated or shifted from state funds to another funding source. The cuts in regional office staff came on top of program-specific position cuts, further reducing program staff and limiting the number of staff geographically accessible to the public.

45%   Percentage reduction in state sedimentation program staff since 2008; staffing levels fell from 65 in 2008-2009 to 36.9 in 2015-2016. The sedimentation program implements the state law requiring erosion control measures on active construction sites to prevent sediment from reaching rivers, lakes and streams.

12,000  The number of construction sites the state sedimentation program staff has  responsibility for monitoring.

Every 12-14 Months: Frequency of state inspection of  sedimentation sites based on current staffing levels.

2 Years. The average time required to issue  a Clean Water Act wastewater discharge permit. (The National Pollutant Discharge Elimination System or “NPDES” permits.)

42%  The percentage of industrial discharge NPDES permits that have expired and not yet been renewed with updated permit conditions.

34%  The percentage of major municipal NPDES permits that are expired and need renewal.

20% Reduction in Division of Coastal Management staff since 2010. DCM  issues permits for major development projects affecting coastal resources; supports public beach access projects;  and manages the state’s coastal reserve sites for research and education activities.

40% Reduction in core Division of Marine Fisheries staff since 2011. (The figure does not reflect the Shellfish Sanitation staff moved into DMF from the Division of Environmental Health in 2012.)

27.9 Administrative positions eliminated department-wide since 2015. (Budget, purchasing, IT, personnel, and public information staff.)

9%    Percentage of DEQ’s authorized positions that are currently vacant (161). By comparison, the much larger Department of Environment and Natural Resources had only 40 unfilled positions in the summer of 2012.

3  Programs or services entirely eliminated through budget cuts since  2009:  the Neuse River Rapid Response Team (provided response to fish kills and pollution incidents in the Neuse River); the Office of Environmental Education; and the Division of Water Quality’s well drilling team (drilled monitoring wells used to investigate groundwater quality/quantity).

Some of the consequences. Loss of staff has already lengthened some  permitting times and the department’s permitting programs are not in a good position to respond to increased development activity as the economy continues to improve. Staff reductions have also affected DEQ’s ability to provide compliance assistance and enforce environmental laws. The U.S. Environmental Protection Agency (EPA) has expressed concern about the failure of federally delegated programs in DEQ to follow the department’s enforcement policy.  EPA has also questioned the  adequacy of the state’s stormwater program.

2016 Legislative Session in Review: The Budget

July 7, 2016. A few notes on how the General Assembly allocated state funds for the environment.

A New Trend Toward Funding Environmental Studies at UNC-CH   The legislature directed (and in most cases funded) the University of North Carolina at Chapel Hill to study  or convene stakeholder groups on  environmental and natural resource policies rather than assigning those projects to the Department of Environmental Quality (DEQ)  or to a legislative study committee:

♦  The budget directs UNC to create a North Carolina Policy Collaborative  to “facilitate the dissemination of the policy and research expertise of UNC for practical use by State and local government”. The Collaborative will focus on research related to natural resource management, including “research related to the environmental and economic components of the management of the natural resources within the State of North Carolina and of new technologies for habitat, environment and water quality improvement.” The legislature appropriated $1 million to the UNC Board of Governors for the N.C. Policy Collaborative for the 2016-2017 fiscal year.

♦ A UNC-led stakeholder group will study efforts to “ecologically restore and achieve economic sustainability” the state’s shellfish aquaculture industry.  The budget provision directs the UNC-Chapel Hill Chief Sustainability Officer (Brad Ives, former Assistant Secretary in DEQ) to lead the stakeholder group. The legislature did not appropriate funds for the effort.

♦ The budget creates a new study of water quality programs to reduce nutrient pollution focused on the Falls Lake and Jordan Lake nutrient reduction strategies. See an earlier post for more detail on the substance of this  budget provision and the effect on enforcement of the Falls Lake and Jordan Lake water quality rules. The legislation gives the UNC-CH Chief Sustainability Officer responsibility for this study as well and provides funding  at $500,000 per year for six years. (The budget provision allocates an additional $1.3 million to DEQ in 2016-2017 to  study  in situ technologies to reduce nutrient impacts.)

These represent unusually large and extended state investments in environmental studies. The combined UNC/DEQ  appropriations for environmental research, collaboration and water quality studies total  $2.8 million just for FY 2016-2017. The UNC nutrient study will be  funded at $500,000 per year for  another five years beyond that. By comparison,  the legislature appropriated only $100,000  for a one-year study of another high profile environmental issue —  hydraulic fracturing — in 2011-2012.  Another reference point may be the annual budget of  $4.1 million for the state’s  non-point source water pollution program; the 2016-2017 appropriations for environmental studies represent 2/3 of the annual operating budget for the non-point source water pollution program.

Earmarked Funds for Water and Wastewater Infrastructure.  Most new funding  for DEQ’s Water Infrastructure Division to support local government water and wastewater projects has been earmarked for specific projects. Of the approximately  $18.8 million in water/wastewater funding added to DEQ’s  2016-2017 budget, the legislature directed approximately $16.6 million to the following projects:

$400,000 to an unnamed municipality  (population < 100) for wastewater improvements needed to eliminate illegal wastewater discharges.

$1,000,000 to Duplin County for improvements to the on-site wastewater system at an elementary school

$700,000 to the Town of Fontana Dam for wastewater system upgrades

$14.5 million to fund extension of water lines to cities and counties in an as-yet unformed Regional Water and Sewer Authority intended to include Guilford County, Rockingham County and one or more municipalities. If the Regional Water and Sewer Authority is not formed by June 30, 2017, the funds revert back to the state’ General Fund. (In other words, the funds cannot be allocated to other water and wastewater projects.)

Restoration of Funds for Commercial UST Cleanups and the Water and Air Quality Account:  Some  transportation-related environmental programs have long been funded by a small portion of the state’s gas tax.  Those programs include the Commercial Underground Storage Tank Fund, (which pays to clean up petroleum contamination from leaking underground storage tanks at convenience stores, gas stations and other businesses) and the N.C. air quality program. In 2015, the legislature replaced the on-going gas tax allocation to these two  programs with a one-time appropriation and ordered a program review.  The main purpose of the review was to look at the diversion of gas tax money from the Highway Fund to non-highway uses — a legislative concern for several years. The 2016 budget restores the gas tax allocation to both programs, putting them back on a stable (although not necessarily adequate)  funding source.

2015 in Review — Budget Trends

January 6, 2016. The past year  brought significant changes in environmental laws, environmental rules and funding for environmental protection and conservation.  Sometimes the overall picture only becomes clear at the end.  First, a look  at the impact of 2015 budget decisions on environmental and conservation programs.

TRENDS:

 — Separation of  environmental research, education and conservation programs from environmental protection programs. The state budget moved a number of nonregulatory programs from the Department of Environment and Natural Resources (DENR)  to a new Department of Natural and Cultural Resources. The programs being transferred:  the Division of Parks and Recreation, N.C. Museum of Natural Sciences,  N.C. Aquariums, the  N.C. Zoo, the Natural Heritage Program and the Clean Water Management Trust Fund (CWMTF). The new department  combines those programs with historical and cultural programs previously in the Department of Cultural Resources.    The 2015 reorganization continues a series of  program transfers intended to reduce the state’s  environment agency to just the environmental regulatory programs.  (In previous legislative sessions, the General Assembly transferred  the Division of Forest Resources and the Division of Soil and Water Conservation from DENR to the Department of Agriculture and Consumer Services.)  In some cases, the transfers have  separated regulatory and non-regulatory water quality programs originally intended to work as partners in a common effort.  DENR has now  been renamed the Department of Environmental Quality  or “DEQ”.

—  Reduction in state funding for voluntary efforts to improve and protect water quality.   The General Assembly created the Clean Water Management Trust Fund (CWMTF) in 1996 to fund projects to prevent water pollution and restore water bodies  impaired  by pollution. CWMTF  complemented the water quality regulatory program by providing incentives for voluntary measures such as  preservation of riparian buffers and extension of sewer lines to  areas with failing septic systems.  Since 2008, the General Assembly has reduced  annual appropriations to the Trust Fund by 90%.   In 2014,   legislation diluted the original CWMTF focus on water quality protection by authorizing use of  the Trust Fund for acquisition of historic sites and development buffers around military bases.  In 2013-2014, the General Assembly pulled funding away from the core CWMTF competitive grant program for use in a legislatively mandated pilot project and the 2015 budget earmarks additional funds for the Solar Bee project.  (See an earlier post on Jordan Lake for background on the Solar Bee pilot project.)  The 2015 reorganization has the effect of also moving  the Clean Water Management Trust Fund into a new department with a focus on management of public attractions rather than environmental quality.

—  Disinvestment in  data collection on rare and endangered species.   Since 1985, the  N.C. Natural Heritage Program has researched, classified and inventoried the state’s natural resources, including rare and endangered plant and animal species. Information collected by the program can be used to document the natural resource  value of property donated for conservation purposes and to assess the environmental impacts of development projects.  State agencies  like the Department of Transportation, local governments and private developers have relied on the Natural Heritage Program for information necessary to plan projects and meet environmental standards. Following significant cuts in the previous budget cycle, the 2015 budget reduced funding for the Natural Heritage Program by another 40%.  The program now has a statewide staff of six people. Disinvestment in state collection of information on rare and endangered species will not make the requirements of the Clean Water Act and the Endangered Species Act go away.  Loss of the Natural Heritage Program as a reliable and current source of information may, however, increase the amount of time and money developers  have to invest to comply with those requirements.

—  Less state funding to cleanup petroleum contamination from underground storage tanks/ lower cleanup standards. The budget eliminates a state fund for cleanup of petroleum contamination from small  petroleum underground storage tanks (USTs) such as home heating oil tanks.   The Noncommercial UST Trust Fund has assisted property owners with the cost of soil and groundwater remediation caused by leaks from farm, home and small commercial USTs.  The budget allocates additional money to  cover pending claims, but petroleum releases reported to DEQ after October 1, 2015 will not be eligible for funding.  As a trade off for loss of state assistance with cleanup costs, the budget bill limits the amount of soil remediation DEQ can require. See an earlier post for more on the change in cleanup standards for noncommercial UST sites. Elimination of the Noncommercial UST Trust Fund means that the cost of cleaning up petroleum contamination discovered in the future  will fall entirely on the homeowner, farmer or business.

The budget reduced funding for the Commercial UST Trust Fund  (which helps offset the cost of cleaning up petroleum contamination from larger USTs) by $600,000. The budget also replaced the Commercial UST Trust Fund’s ongoing annual appropriation from the Highway Fund with a one-time appropriation and a requirement for legislative review to determine whether the Commercial UST Trust Fund should be continued. The Commercial UST Trust Fund operates like an environmental insurance program for the owners of large, commercial USTs.  The  existence of the Trust Fund allows commercial UST owners to comply with federal rules requiring  tank owners to have  financial assurance  to cover environmental remediation costs. In the absence of the Commercial UST Trust Fund, tank owners would have to meet those requirements through self-insurance, bonding or purchase of an environmental insurance policy.

— Elimination of transfers from the Highway Fund to environmental programs.  For many years, the General Assembly has earmarked a small percentage of Highway Fund  revenues for environmental programs related to transportation.  The most significant recipients have been the Commercial and Noncommercial UST Trust Funds, DEQ’s  air quality program,  and the Shallow Draft Navigation Dredging Fund.   The 2015 budget replaces Highway Fund transfers to the Commercial UST Trust Fund, the Mercury Pollution Prevention Fund, and DEQ’s air quality program with onetime appropriations and directs legislative appropriations committees  to study whether the transfers — and the programs receiving the transfers — should be continued in the future, funded differently  or eliminated entirely. The transfers represent a significant amount of funding for the Commercial UST Trust Fund  (approximately $13.3 million in 2015) and the air quality program ($7.2 million in 2015). On the other hand, the budget actually increased the transfer from the Highway Fund to the Shallow Draft Navigation Dredging Fund.

— Increased funding  for  oyster cultivation,  water/sewer infrastructure grants, dam safety inspectors, shale gas exploration, coastal dredging and state parks.  A few programs received increased funding for the two-year budget cycle. The largest budget increases went to maintenance dredging of shallow draft navigation channels at the coast ($40 million);  state water/wastewater infrastructure grants for rural and economically distressed communities ($17.4 million);  and the state parks system  ($11 million). The budget also earmarks $500,000 for additional state testing to identify potential shale gas deposits.

—  Eliminating special fund accounts for environmental permit fees.  For many years, the General Assembly created  “special fund” accounts in the DEQ  budget for permit fees. The special fund accounts existed to insure fee revenue would be used only to support the permitting program; for example,  mining permit fees went into the Mining Fund to be used exclusively to support the mining program.  These special funds were “non-reverting” accounts which means any fee revenue unspent at the end of the state fiscal year rolled over into the next fiscal year budget for the permitting program instead of reverting to the state’s General Fund.  Business and industry tended to support creation of special fund accounts to insure permit fees didn’t subsidize unrelated state government activities. In 2015, the General Assembly continued a several-year trend of eliminating special fund accounts and shifting fee revenue in those accounts to the General Fund budget.   This year, the General Assembly eliminated special fund accounts for mining fees, stormwater fees, and soil remediation fees.   State law still requires DEQ to use the fee revenue to support the permit program that generated the fees,  but any unused funds will revert to the state’s General Fund at the end of the fiscal year. Once reverted to the General Fund, the legislature can appropriate the fee revenue for any purpose.

RESULTS:

1. A smaller, more strictly regulatory,  environment agency.

2. A reduced state commitment to voluntary water quality improvement projects and collection of information on rare and endangered species.

3. A smaller state role in cleanup of environmental contamination from privately owned petroleum underground storage tanks. (A role that may shrink further depending on the results of legislative review of the Commercial UST Trust Fund in 2016.)

4. Increased legislative control over fee revenues generated by environmental permitting programs.

5. Uncertainty about future funding for air quality programs and the Commercial UST Trust Fund.

6. Increased state investment in  programs potentially affecting economic development  such as state parks, water and sewer infrastructure,  maintenance of navigation channels, shale gas exploration, and oyster cultivation.

N.C. Environmental Legislation 2015: The Budget

October 9, 2015. Now that the General Assembly has adjourned, a look at legislative actions affecting the environment. First, the state budget for 2015-2017.

Among the most significant impacts:

♦  REORGANIZATION.   The Clean Water Management Trust Fund and the Natural Heritage Program — originally intended to protect and restore water quality and identify important natural areas — have been separated from the environmental protection programs in the Department of Environment and Natural Resources (DENR). The budget transfers the CWMTF, Natural Heritage Program, Museum of Natural Sciences, state park system, N.C. Aquariums and N.C. Zoo from DENR to a newly organized Department of Natural and Cultural Resources. The move combines conservation  and ecological education programs with state historic sites and cultural resources. The new department appears to be organized around management of the programs as public attractions rather than as research and education partners to state environmental protection programs.  As a result of the reorganization, DENR becomes the Department of Environmental Quality (DEQ).

Whatever the merits of the move for facilities like the Museum of Natural Science and N.C. Zoo,  the Clean Water Management Trust Fund and Natural Heritage Program do not  fit the new department’s basic organizing principle. Unlike the “attractions”,  the  CWMTF and Natural Heritage Program provide no public facilities and exist primarily to protect  water quality and identify important natural resources.

The General Assembly created the Clean Water Management Trust Fund (CWMTF) in 1996 to fund projects to prevent water pollution and to restore water bodies already impaired  by pollution.   CWMTF’s  non-regulatory approach complemented water quality rules  protecting state waters.  Originally,   CWMTF grants funded acquisition of riparian buffers to reduce polluted runoff into streams and rivers and  extension of sewer lines where failing  septic  systems threatened surface water quality.  In moving CWMTF, the 2015 budget severs its connection with other state efforts to restore and protect water quality.  The move follows 2014  legislation diluting the original CWMTF  focus on  water quality protection by authorizing use of the Trust Fund for acquisition of historic sites and buffers around military bases.

The  Natural Heritage Program researches, classifies and inventories the state’s natural resources, including endangered and rare plant and animal species. Information collected by the program can be used to document the conservation value of property and to assess the environmental impacts of projects requiring state and federal environmental permits.  The program has a much closer working relationship to the environmental  protection programs that remain in DENR than to public attractions like the N.C.  Zoo and Aquariums. (Note: The 2013 state budget eliminated the Natural Heritage Trust Fund which had been a source of funding for conservation of important natural areas;   the CWMTF  has become the funding source for those projects as well.)

♦  LANDFILL PERMITTING. The budget changes landfill permitting, allowing issuance of a single “life of site” permit to cover construction and operation of a landfill that may have a 30-year lifespan.  State rules had previously  required review and approval of the entire landfill site before construction, but also required each 5 or 10-year phase of the landfill to have a construction and operation permit.  Moving to a “life of site” permit  reduces the number of permit reviews for each landfill operation, changing the permit fee schedule and cutting funding for the state’s solid waste management program by 20%.  The change also reduces state oversight of landfill operations.  Landfill construction will continue to be done in phases for economic and practical reasons,  but the “life of site permit” eliminates state compliance review for each new  phase of the landfill.   The change also seems to eliminate the possibility of imposing additional permit conditions for construction or operation of later landfill phases in response to  technological developments  or new knowledge  of  risks to groundwater and other natural resources. The  budget provision does not set minimum inspection requirements in place of the 5 and 10-year phased permit reviews.

The bill also creates a legislative study of local government authority over solid waste collection and disposal, including ordinances on solid waste collection;  fees for waste management services; and potential for privatization.  The study suggests the General Assembly may focus next on reducing local solid waste regulation.  That will be a somewhat different discussion, since solid waste disposal has long been a local government responsibility so  local fees and ordinances have a direct connection to city/county collection and disposal services.

 LEAKING PETROLEUM UNDERGROUND STORAGE TANKSThe budget eliminates a state fund for cleanup of petroleum contamination from small  petroleum underground storage tanks (USTs) such as home heating oil tanks.   The Noncommercial UST Trust Fund has assisted property owners with the cost of soil and groundwater remediation caused by leaks from farm, home and small commercial USTs.  The budget allocates additional money to the Noncommercial UST Trust Fund to cover pending claims, but  limits use of the Fund to  cleanup costs associated with leaks reported to DENR by October 1, 2015.  All claims for reimbursement of those costs must be filed by July 1, 2016.

The budget provision also prohibits DENR from requiring removal of petroleum-contaminated soils at noncommercial UST sites that have been classified as low risk.  The  problem —  risk classifications  have been based on groundwater impacts;  a low-risk classification does not mean that contaminated soils on the property pose no health hazard. Current UST  rules require remediation of contaminated soils to levels safe for the intended land use (residential versus nonresidential) without regard to the overall risk classification of the site.  Soil remediation standards have been based on the potential health risks associated with exposure to petroleum-contaminated soil. Adverse health effects may include increased cancer risk since petroleum products contain a number of carcinogens. The budget provision may allow petroleum-contaminated soils to remain on residential properties at levels putting children at particular risk of adverse health effects.

♦ JORDAN LAKE WATER QUALITY RULES. The budget allocates another $1.5 million (from the Clean Water Management Trust Fund) to continue the 2013 pilot project to test use of aerators to improve water quality in the Jordan Lake system. The budget also has a special provision further delaying implementation of the Jordan Lake water quality rules for  another 3 years or one year beyond completion of the pilot project (whichever is later). The rules had been developed by the state’s Environmental Management Commission to address poor water quality  caused by  excess nutrients reaching the lake in wastewater discharges or in  runoff from agricultural lands and developed areas. See an earlier post  here on the  2013 legislation creating the pilot project.

♦ COASTAL EROSION CONTROL.   A special provision in the budget also changes state rules on use of sandbag seawalls and terminal groins in response to coastal erosion.  State coastal management rules have only allowed use of  temporary sandbag seawalls to protect a building facing an imminent threat from erosion. The same rules prohibit construction of the seawall more than 20 feet seaward of the threatened building. (These sandbag seawalls are substantial structures built on the beach in response to oceanfront erosion; the rules do not apply to sandbags used to prevent water from entering a building during a flood event.) The budget bill allows an oceanfront property owner to install a sandbag seawall to align with an existing sandbag structure on adjacent property without showing an imminent erosion threat to any building on their own property.  Since the bill allows construction to align with the adjacent sandbag seawall, the new seawall  may  also be more than 20 feet seaward of any  building. The irony here — a property owner may want to install a sandbag seawall in these circumstances  out of concern that the adjacent sandbag seawall may itself cause increased shoreline erosion.

The budget bill also increases the number of terminal groin structures that can be permitted at the state’s ocean inlets from four to six and identifies New River Inlet for location of two of the additional structures. See an earlier post  for more on earlier legislation allowing construction of terminal groins as a pilot project. Note: No terminal groins have been completed under the original pilot program, so the state does not yet have any data on the actual impacts of these structures.

♦ RENEWABLE ENERGY TAX CREDIT.  The budget bill allows the state’s 35% tax credit for renewable energy projects to sunset on December 31, 2015. A separate bill provides a “safe harbor” for renewable energy projects already substantially underway by that date. Those projects may qualify for a one-year extension of the tax credit. See Senate Bill 372 for more on conditions that apply to the safe harbor extension.

The NC Senate: Budget 2015

June 18, 2015.  Yesterday, the  N.C. Senate  took a first vote to approve a Senate version of House Bill 97  ( 2015 Appropriations Act).   The Senate received H 97 from the House of Representatives on May 22. The Senate  released its  alternative draft of the appropriations bill three days ago and quickly moved H 97  through Senate appropriations committees.  The Senate takes  a very different approach to funding state government than the House, but the Senate version of H 97 also contains many more “special provisions” — changes to existing law that go beyond finance and appropriations.  Some of the more significant environmental provisions in the Senate budget bill  (not by any means a complete list) below.

First, the Senate revisits the organization of state natural resource programs.  Sec. 14.30 of the Senate bill would combine  DENR’s natural resource programs (Division of Parks and Recreation, State Parks, Aquariums, the N.C. Zoo and the Museum of Natural Sciences) with cultural resource programs (such as the Museum of History and state historic sites)  in a new Department of Natural and Cultural Resources.  DENR would become the Department of Environmental Quality. Sec. 14.31  requires the two departments to study  whether  the Albemarle-Pamlico National Estuary Program,  state Coastal Reserves, the Office of Land and Water Stewardship,  the Office of Environmental Education and Public Affairs, the Division of Marine Fisheries and the Wildlife Resources Commission should also be moved to the new Department of Natural and Cultural Resources.

Other changes proposed in the Senate bill by subject (parenthetical descriptions are mine) :

COAL ASH

Sec. 29.18 (Beneficial use of coal ash) requires the Utilities Commission to report to several legislative committees by January 2016 on “the incremental cost incentives related to coal combustion residuals surface impoundment for investor-owned public utilities” including:

(1) Utilities Commission policy on  incremental cost recovery.

(2) The impact of the current policy on incremental cost recovery on utility customers’ rates.

(3) Possible changes to the current policy on incremental cost  recovery  that would promote reprocessing and other technologies that allow the reuse of coal combustion residuals stored in surface impoundments for concrete and other beneficial end uses.

Although a bit opaque, the Senate seems interested in the possibility of allowing electric utilities  to recover (through charges to consumers) the costs associated with making coal ash in surface impoundments available  for beneficial use.  Duke Energy has previously told legislators  that much of the coal ash in North Carolina impoundments  would require additional processing to be usable in concrete manufacturing.

COASTAL ISSUES

Sec. 14.6 (Use of sandbags for temporary erosion control) amends standards installation of sandbags for  erosion control on ocean and inlet shorelines. State rules now allow installation of sandbags only in response to erosion that imminently threatens a structure. The Senate bill allows a property owner to install sandbags to align with existing sandbag structures  on adjacent properties without showing an imminent erosion threat on their own property.

Sec. 14.10I (Strategies to address beach erosion) requires the Division of Coastal Management to study and develop a strategy “preventing, mitigating and remediating the effects of beach erosion”.

ENERGY 

Sec 14.29  (Federal energy grants) prohibits DENR from applying for grants from two federal programs – the State Energy Program Competitive Grant Program and the Clean Energy and Manufacturing Grant Program.

FISHERIES

Sec. 14.8, Sec. 14.10A and Sec. 14.10C  (measures to increase shellfish restoration and cultivation)

Sec. 14.8  directs the Division of Marine Fisheries to work with commercial fishermen,  aquaculture operations, and federal agencies to open additional areas in Core Sound to shellfish cultivation leasing.

Sec. 14.10A  directs DMF and the Division of Coastal Management to cooperate in  development of a new, expedited  CAMA permitting process for oyster restoration projects. The provision  also  authorizes DMF to  issue scientific and educational activity permits to nonprofit conservation organizations engaged in oyster restoration.

Sec. 14.10C Amends G.S. 113-202 to allow a lease for use of the water bottom to also cover fish cultivation or harvest devices on or within 18″ of the bottom. (Devices or structures not resting on the bottom or extending more than 18″ above the bottom will continue to require a water column lease.)

Sec. 14.10F (Joint fisheries enforcement authority) repeals the Division of Marine Fisheries authority to enter into a joint enforcement agreement with the National Marine Fisheries Service. The joint agreement allows DMF  to receive federal funding to enforce federal fisheries regulations in state waters.

SPECIAL FUNDS

Sec. 14.16  continues a recent trend of eliminating “special funds” that hold fees or other revenue dedicated for a specific purpose outside the state budget’s General Fund. The Senate bill eliminates special funds for mining fees,  stormwater permit fees, and UST soil permitting fees and moves the fee revenue into the General Fund.

STREAM AND WETLAND MITIGATION

Sec. 14.23 (Limiting the state’s role in providing stream, wetland, riparian buffer and nutrient mitigation)  requires DENR’s Division of Mitigation Services to stop accepting fees in lieu of mitigation in the Neuse, Tar-Pamlico and Cape Fear River basins within 30 months.  The provision then allows DENR (with the Environmental Management Commission’s agreement) to also eliminate the state in-lieu fee programs in all other river basins after June 30, 2018.

DENR’s  in-lieu fee program allows a developer to pay  a fee for mitigation  required as a condition of state and federal development permits. DENR  then contracts with private mitigation providers for the necessary mitigation. Payment of the fee transfers responsibility for providing the mitigation from the developer to DENR. Under a Memorandum of Agreement with the U.S. Army Corps of Engineers, the state’s in-lieu fee program can be used to satisfy stream and wetland mitigation required as a condition of federal Clean Water Act permits.

Eliminating  the State in-lieu fee program seems to eliminate the fee-for-mitigation approach as an option for developers. The burden would be back on the developer to find acceptable mitigation through a private mitigation bank or to plan and manage an individual mitigation project.  The change may slow some development projects that can now move  ahead based on the Corps of Engineers’ agreement to accept payments to the state in-lieu fee program as satisfying  federal mitigation requirements.

UNDERGROUND STORAGE TANKS

Sec. 14.16A (Elimination of the Noncommercial UST Trust Fund) phases out the state’s Noncommercial UST Trust Fund which reimburses property owners for the cost of cleaning up contamination from leaking underground petroleum storage tanks. The Noncommercial UST Trust Fund has  benefitted homeowners with soil and groundwater  contamination caused by home heating oil tanks and property owners  with contamination caused by USTs  used to store fuel for personal use — as on a farm. Under the Senate provision, the Noncommercial Fund could only be used for leaks reported before August 1, 2015 and claims for reimbursement filed by July 1, 2016. The Noncommercial Fund  would be eliminated for any petroleum releases  reported or claims made after those dates.

WASTE MANAGEMENT

Sec. 14.20 (Life of site landfill permits) amends G.S. 130A-294 to replace the current  5 or 10 year landfill permits with a “life of site” permit to cover landfill operations from opening to final closure. The provision would require permit review every five years.

Sec. 14.21 (Study of local government authority over waste collection and disposal services) directs the legislature’s Environmental Review Commission to study local authority over solid waste management including local fees; ordinances on waste collection and processing; cost to local government to provide solid waste services; and efficiencies or cost reductions that might be realized through privatization.   Solid waste collection and disposal services are entirely financed and provided by local governments;  many already contract with private entities for waste collection or landfill management.  It isn’t clear what the study might lead to since the legislature doesn’t have a role in  providing or financing local waste management services.

Sec. 14.22  (Privatizing landfill remediation) directs DENR to privatize the assessment and remediation of at least 10 high priority pre-1983 landfill sites. For several years, DENR has received a percentage of the state’s solid waste disposal tax  to fund assessment and cleanup of  contamination associated with landfills and dumps that closed rather than meet environmental standards that went into effect in 1983. Some legislators have expressed concern about the slow pace of remediation (and the resulting high fund balance). Note: Most state-funded remediation programs have a slow ramp-up in spending since it takes time to set up a new program and assess the sites.

WATER QUALITY

Sec. 4.5  (Nutrient management) earmarks $4.5 million from the Clean Water Management Trust Fund for a  DENR study of “in situ strategies beyond traditional watershed controls” to mitigate water quality impairment. The provision specifically mentions impairment by “aquatic flora, sediment and nutrients”, suggesting the study may be a continuation of the legislature’s effort to replace watershed-based nutrient management programs with technological solutions.

In 2013, the General Assembly suspended implementation of watershed-based nutrient management rules in the Jordan Lake watershed and funded a pilot project to test the use of aerators to reduce the impacts of excess nutrients on water quality. Sec. 14.5 allows extension of  the  pilot project contracts for another two years and delays implementation of the Jordan Lake watershed rules an additional two years or one year beyond completion of the pilot project, whichever is later.

Sec. 14.25 (State Assumption of permitting under Section 404 of the Clean Water Act) directs DENR to  hire a consultant to plan and prepare a state application  to assume the  federal permitting program under Section 404 of the Clean Water Act.   Sec. 404 requires a permit to fill waters or wetlands that fall under Clean Water Act jurisdiction. The U.S. Corps of Engineers issues Sec. 404 permits,  but a state can assume Sec. 404  permitting authority under certain conditions.  The U.S. Environmental Protection Agency oversees  404 permitting and would have to approve a state program. In a state that assumes Sec. 404 permitting, EPA retains authority to review  permit applications; a permit cannot be issued over an EPA objection.

Although several states have explored the possibility of assuming Sec. 404 permitting authority, only Michigan and  New Jersey have approved Sec. 404 programs. Individual states have reached different conclusions about the costs and benefits for a number of reasons. One may be cost — there are no federal grant funds to support a state 404 permitting program.   The Clean Water Act also prohibits state assumption of permitting in  tidal waters; water bodies used for interstate and foreign commerce;  and wetlands adjacent to both categories of waters. The U.S. Army Corps of Engineers would continue to have permitting authority in those waters and wetlands.

Sec. 14.26 (Transfer Sedimentation Act implementation to the EMC) eliminates the Sedimentation Pollution Control Commission and transfers responsibility for implementation of the Sedimentation Act to the Environmental Management Commission.

Once the Senate takes a final vote on House Bill 97, the bill goes to a conference committee to resolve the (considerable) differences between Senate and  House versions of the bill.  Few of the environmental provisions described above appear in the House version of the bill — although that doesn’t necessarily mean all of the Senate additions will be opposed by the House in conference negotiations.