Tag Archives: Offshore Drilling

Budget Cuts in the N.C. Coastal Management Program

January 30, 2014.  Caught between state and federal budget reductions, the state’s Division of Coastal Management (DCM) eliminated five positions effective  December 31, 2013 including the land use planning director and federal consistency coordinator.  DCM carries out the state’s Coastal Area Management Act (CAMA)  — a joint state-local program to reduce  property damage and injury from coastal hazards; protect public access to the state’s beaches and waterways;  and manage the impacts of  development on sensitive coastal resources.  With the support of Republican Governor Jame Holshouser, the N.C. General Assembly adopted CAMA in 1974 shortly after  Congress enacted the federal Coastal Zone Management Act  to encourage creation of state coastal resource protection programs.  Over the next several decades,  North Carolina became a national leader in coastal policy even as   the state’s  coastal counties experienced an explosion of development activity.

DCM was forced to eliminate these two positions and three others (the Assistant Director for Permitting and Enforcement,  an IT support position and a policy analyst)  after several years of state and federal budget reductions. Federal grant funding under the Coastal Zone Management Act had been flat for over a decade while salaries, benefits and indirect costs increased. The last federal funding cycle  reduced the state grant by 5.9%. At the same time, state appropriations  have dropped  35% since 2009 and permit receipts  fell by  approximately  30%  as the recession slowed development activity.

More on the impact of eliminating the land use planning and coastal consistency positions:

Land Use Planning Director. One  goal of the Coastal Area Management Act  was to plan coastal development with an eye toward conditions that make the coastal area uniquely hazardous and uniquely productive. To work, it had to be a joint state-local effort and CAMA made local land use planning a key part of the state’s coastal management program.  Budget  cuts in previous years  forced the elimination of a long-standing DCM grant program that provided  financial assistance to coastal cities and towns for land use planning.  Ongoing budget cuts have now made it necessary to eliminate the  CAMA land use planning director. The director supervised  DCM’s  planning efforts and worked directly with local government planners.    Supervisory responsibilities for the  planning program has  shifted to DCM’s policy director.

Federal Consistency Coordinator. The federal Coastal Zone Management Act requires federal  activities affecting  the coastal area to be consistent “to the maximum extent practicable” with the state’s approved coastal management  program.  (To be enforced through the CZMA consistency requirement, a state program must be approved  by the  Office of Coastal Resource Management in the National Oceanic and Atmospheric Administration.) The approved North Carolina coastal management program  includes development standards adopted under CAMA, but also includes local land use  policies, water quality standards, and other state laws and rules concerning coastal resources.   As a practical  matter, the federal consistency requirement  gives the state an opportunity to review and comment on proposed federal activities and federal permit decisions affecting the North Carolina coast.   In many cases, federal consistency review is the only  way  the state  can influence the federal action.

You can find a list of  the types of federal actions and permits DCM  reviews  here.    North Carolina has most often used  consistency review to request accommodation for state needs rather than to block a federal action entirely.  The state used consistency review  to press the U.S. Army Corps of Engineers to put sand from federal navigation dredging projects back on N.C. beaches rather than dumping the sand offshore.  In 1991,  the U.S. Secretary of Interior upheld a North Carolina consistency objection to a federal  permit that would have allowed  Mobil Oil  to deposit drilling waste from an exploratory well onto a commercially important fishing ground off the Atlantic coast. The CZMA consistency requirement also became one of the most important legal tools in North Carolina’s  unsuccessful effort to prevent Virginia from constructing  a pipeline to take water from Lake Gaston to  the City of Virginia Beach.

Loss of the federal consistency coordinator comes at a particularly bad time given the increased  activity around  coastal energy development.  Offshore oil and gas  development  most often occurs in federal waters that are beyond the state’s jurisdiction. (Under the Outer Continental Shelf Lands Act, state jurisdiction  only extends  3-miles from shore.)  Without  direct permitting or enforcement authority,  the  state’s only influence over offshore energy activities may be through  consistency review of federal lease and permit decisions.  Since those federal decisions can advantage or disadvantage the different Atlantic coast states, even supporters of offshore oil and gas development may need a way to advocate for North Carolina interests.  Consistency review  also gives the state an  opportunity to influence  federal leases and permits for  onshore and offshore wind energy facilities.

In both 2012 and 2013, the General Assembly  funded new positions in  DENR’s Division of Energy, Mineral and Land Resources to support work on energy development.   At the same time,  DCM budget cuts have resulted in the loss of a position critical to the state’s influence on offshore energy development activities.    As of January 1, 2014,  federal consistency review  will be divided between two DCM staff  who  review  CAMA major development permits. If activity around offshore energy development  continues to pick up,  the state will need to  reinvest in the federal consistency process to have a voice in how that development happens.

Postcards From the Coast: Offshore Drilling

March 6, 2013

First,  a postcard from Raleigh to the coast — While fracking has used up most of the oxygen in recent  discussions of  state energy policy, offshore energy development has  taken on new political life.   The sections of Senate Bill 76 dealing with shale gas production have gotten more attention, but the bill also revives  legislative proposals on offshore  energy  development that did not survive  the 2011-2012 session. These sections of the bill apply to all kinds of offshore energy generation (including ocean  wind  turbines), but the bill clearly intends to  signal support for  offshore oil and gas drilling.

In Section 7, Senate Bill 76 proposes a way to divide up state revenue received from  offshore energy  production.   Whatever the merits of the Senate plan  — and it seems designed to promise money for every good thing possible —  it is not certain that the state will ever receive revenue from offshore  energy  production.   The United States has had no experience with  offshore wind turbines and the economics of ocean wind energy make it  an unlikely revenue  source.  Most oil and gas drilling sites are in federal  waters outside the limits of state jurisdiction;  all revenue from drilling in federal waters goes to the  United States  treasury unless Congress authorizes  revenue sharing with the   states.   Gulf Coast states benefit from a federal formula for sharing revenue from production in the Gulf of Mexico and something similar would be needed to allow  Atlantic coast states to receive revenue from production along the eastern seaboard.  Assuming Congress allows revenue sharing for Atlantic coast oil and gas production, the benefit to North Carolina  will depend on where  drilling  occurs and how  the revenue sharing formula works.

Note: The U.S. Department of Interior is not currently issuing offshore oil and gas leases in Atlantic coast waters.  Under the department’s  5- year lease plan, no Atlantic coast leases will be offered until 2018 at the earliest.

The bill also encourages the Governor to negotiate an interstate offshore energy compact with the governors of Virginia and South Carolina. As described in the bill, the purpose of the compact would largely be to lobby for earlier issuance of  oil and gas leases  off  the  east coast of the United States; revenue sharing for Atlantic coast states; and quicker permitting of offshore oil and gas activities.

Although Senate Bill 76 has not yet become law, Governor McCrory has already checked off two  items on the bill’s to-do list. Governor McCrory   joined the governors of South Carolina and Virginia in sending a letter to the President’s nominee for Secretary of the Interior, Sally Jewell,   urging her to  open east coast waters for oil and gas drilling  sooner.  A February 14 press release  issued by Gov. McCrory’s office includes excerpts from the letter and a link to the full text of the letter.

The following week, Governor McCrory joined the governors of Alaska, Louisiana, Texas, Virginia, Mississippi, Alabama, and South Carolina   as a new member of the Outer Continental Shelf Governor’s coalition.  The coalition advocates for more offshore leasing, quicker permitting of offshore oil and gas operations, and revenue sharing for all states with offshore energy production.

Senate Bill 76 has passed the Senate; the bill will go through three House committees (Commerce, Environment and Finance) before reaching the House floor.