Tag Archives: Regulatory Reform

N.C. Environmental Legislation 2015: The Bills

October 12, 2015.   The legislative session finally ended  in the wee hours of September 30 and changes to state  environmental laws continued to be in play until the very end.   Several of the provisions discussed below were enacted as part of  House Bill 765 (the Regulatory Reform Act of 2015) which has not yet been signed by the Governor. H 765 contains too many pieces to completely catalog here; some have been  very controversial.  The other bills referenced in the post have already become law.

Not a complete list, but some of the most significant changes affecting the environment:

“AG-GAG” LEGISLATION.   House Bill 405  allows an employer to take legal action against an employee who:  a.  takes photographs, makes recordings, or copies records; b. in a nonpublic area of the workplace; c.  without permission;  and d. uses those documents “against the interest of the employer”.   H 405 allows  the employer to sue the employee for monetary damages,  including legal fees and a $5,000 per day penalty. Animal welfare activists have characterized these kinds of  bills  as “ag-gag” legislation intended to prevent documentation of animal cruelty at agricultural operations.  House Bill 405,  however,  does not just affect agricultural workers or documentation of animal cruelty. The restrictions could also affect employee efforts to document ongoing environmental violations such as improper disposal of hazardous substances. See an earlier post for more on the implications of H 405. Note: Governor Pat McCrory vetoed H 405, but the General Assembly overrode the veto to allow the bill to become law.

FRACKING.  One of the final bills of the session, Senate Bill 119,  severely limits local regulation of  hydraulic fracturing (“fracking”) operations.  First, a little background. 2014 legislation prevented local governments from banning fracking altogether, but G.S. 113-415.1 allowed  cities and counties to continue to apply ordinances applicable  to all development in the jurisdiction — such as zoning and stormwater ordinances —  to fracking operations.  The state’s Mining and Energy Commission had authority to override a  local ordinance that had the effect of precluding natural gas exploration and development.

Senate Bill 119 rewrites the  2014 law to invalidate all local ordinances that directly regulate fracking, preempting ordinances that go beyond or conflict with state standards for hydraulic fracturing operations.  The bill also allows the oil and gas operator to challenge the application of  more general local ordinances (such as zoning and stormwater ordinances) to fracking operations.  These challenges go to the state  Oil and Gas Commission (which has replaced the Mining and Energy Commission in regulating oil and gas operations). The Commission will  decide “whether or to what extent to preempt the local ordinance to allow for the regulation of oil and gas exploration, development, and production activities”.  The  2015 amendments clearly  give the Oil and Gas Commission very broad power to preempt even general development ordinances. Preemption does not require a finding that the ordinance precludes natural gas exploration and development or conflicts with state standards.  As long as the natural gas operator has received  state/federal permits, the bill seems to direct the Commission to preempt application of general development ordinances to fracking operations if the Commission finds that fracking

…will not pose an unreasonable health or environmental risk to the surrounding locality and that the operator has taken or consented to take reasonable measures to avoid or manage foreseeable risks and to comply to the maximum feasible extent with applicable local ordinances.

STATE ENVIRONMENTAL POLICY ACT. For over 40 years, the State Environmental Policy Act  (SEPA) has required environmental review of  projects involving expenditure of public funds or use of public lands.   An earlier post provides some background on SEPA.   House Bill 795  limits  environmental  review under SEPA to projects that:  1.  involve expenditures of $10 million or more in public funds;  or 2. affect 10 acres or more of public lands and result in permanent changes to the landscape.  The  new thresholds mean many public projects with potentially significant impacts will be exempt from SEPA review. For projects that still require SEPA review,  House Bill 795 narrows  the scope of review to  direct project impacts — excluding indirect impacts  and the combined effects of  similar projects. The final version of the bill made some exceptions to these changes as applied to interbasin transfers (the movement of water from one river basin to another for water supply).   All interbasin transfer  proposals will continue to require SEPA review without regard to the amount of public money or public land  involved and the scope of review will include direct, indirect and cumulative impacts.

In an ironic twist, H 795  requires the Department of Environmental Quality (DEQ)  to create a  new environmental review process for water/wastewater infrastructure projects that receive loans from the Drinking Water Revolving Loan Fund or the Clean Water Revolving Loan Fund.  Federal rules  require  those projects to go through an environmental review equivalent to review under the National Environmental Policy Act.  Eliminating SEPA review  for smaller revolving loan projects had the  unintended  effect  of shifting the projects back into a lengthier federal environmental review process. In short, legislators liberated the projects from SEPA  only to create a SEPA-like environmental review process to avoid the still worse fate of federal review. The entire debate over H 795 indicated a  lot of  confusion about how SEPA works and the likely impact of the bill.  See another post for more on the misconceptions about SEPA that seemed to shape H 795.

LOCAL ENVIRONMENTAL ORDINANCES.   The legislature also  took aim at local environmental ordinances. Section 2 of  House Bill 44 includes a somewhat opaque provision barring local governments from enforcing “voluntary” state environmental rules. The words “voluntary” and “rule”  do not generally exist in the same space;  a rule, by definition is not voluntary.  The provision  may really be intended to stop local implementation of stormwater ordinances adopted to comply with the  Jordan Lake water quality rules.  Section 2  applies not just to local implementation of  the elusive  “voluntary” state rule, but also to implementation of state rules that have been repealed; rules that have been adopted, but are not yet in effect; or rules that are “temporarily or permanently held in abeyance”. The Jordan Lake rules fall into the last category as a result of earlier legislation delaying state implementation of the rules.

The new provision affects both issuance of new development permits and enforcement of conditions on permits that have already been issued. Barring enforcement of conditions on  previously issued permits  has implications for both developers and local governments.  The questions that immediately come to mind (using the Jordan Lake stormwater requirements as an example): Can development already permitted under the Jordan Lake stormwater standards  move ahead without meeting any stormwater requirements?  or Will the development require a modified permit to reflect  stormwater standards that might have applied prior to local adoption of the Jordan Lake stormwater ordinances?

Section 13 of House Bill 44 limits local government authority to adopt riparian buffer requirements.  The bill defines “riparian buffer”  to mean any setback from surface waters —  which could include a setback imposed for flood control.  But much of the provision has been written to refer specifically to  riparian buffers for the protection of water quality.   Under the bill, a local government cannot adopt and enforce a riparian buffer ordinance for water quality protection  that  goes beyond requirements of state or federal law (or the conditions of a state or federal permit) unless the Environmental Management Commission approves the ordinance.

The bill also requires riparian buffers affecting  residential lots  to be shown on the subdivision plat. And an unusual provision addresses development projects that meet riparian buffer requirements by designating buffers as common area or open space:

When riparian  buffers are placed outside of lots in portions of a subdivision that are designated as common areas or open space and neither the State nor its subdivisions holds any property interest in that riparian buffer area, the local government shall attribute to each lot abutting the riparian buffer area a proportionate share [of the buffer area] ….for purposes of development-related regulatory requirements based on property size, including, but not limited to, residential density and nonresidential intensity calculations and yields, tree conservation purposes, open space or conservation area requirements, setbacks, perimeter buffers, and lot area requirements.

Allocating buffers designated as common area to adjacent property owners for purposes of meeting development standards may create some complications for developers.  Instead of allowing common area buffers to be used to offset density limits (or other requirements) for the development as a whole, the bill requires the benefits to go to  individual  lot owners. For example,  a lot owner may be able to build on a greater percentage of the platted lot because a proportional share of the adjacent buffer would be counted toward the lot area. But whatever flexibility the lot owner gains will be lost to the developer who  can no longer use the riparian buffer common areas to offset  built-on area (for example)  throughout the development as a whole.

ENVIRONMENTAL AUDIT PRIVILEGE/SELF-DISCLOSURE IMMUNITY.  Two of the most important changes to state environmental law can be found in House Bill 765  (the Regulatory Reform Act of 2015). The bill creates a new privilege for information a company gathers on its own environmental violations, preventing use of the information in a civil case. (The privilege does not apply in a criminal prosecution.)   The bill also grants immunity from civil penalties and fines for environmental violations voluntarily disclosed to state regulators.  Supporters of the bill believe these protections will encourage companies to conduct environmental audits to identify and correct environmental violations more quickly.

The bill excludes certain types of information from the audit privilege (such as data required to be reported under state and federal law). Although the  bill  creates some exceptions to the audit privilege, most of the exceptions require state regulators to show the violator deceptively withheld information or failed to correct violations in a timely way — which may be difficult without access to the audit information itself. H 765 protects environmental audit information from use  in both civil penalty cases and in actions to compel cleanup of environmental contamination.

Although less clear, the  bill may also shield environmental audit information from a private plaintiff seeking compensation for personal injury or property damage caused by an environmental violation.   The section of the bill creating the audit privilege says flatly that the audit information “is privileged and, therefore, immune from discovery and is not admissible as evidence in civil or administrative proceedings”. That section of the bill does not limit the privilege to  environmental enforcement cases brought by the state.  On the other hand, the section of the bill  on  revocation of the audit privilege has been written only to allow the “enforcement agency” to ask a court to revoke the audit privilege.  The bill needs to be clarified in one direction or the other — either the privilege applies only to state enforcement actions or it applies to other civil actions and the opportunity to ask for revocation of the privilege  should  be broader.

The self-disclosure immunity provisions in H 765  grant immunity from civil penalties and fines based on voluntary disclosure of the violation.  The bill sets conditions that must be met to make a self-disclosure “voluntary”.  The final version of the bill also put limits on  how often a person (or company) can claim self-disclosure  immunity — no more than once every two years; twice in a five-year period; and three times in a ten-year period.  The bill never defines “civil penalties and fines”, leaving some questions about the breadth of the immunity being granted.  For example, the bill is silent on whether “civil penalties and fines” includes natural resource damages. (An example would be  fish kill damages assessed as a result of a wastewater spill.)

For a more detailed comparison to past DENR and present U.S. Environmental Protection Agency enforcement policies on self-disclosed violations, see an earlier post.  Note: EPA has long opposed statutory audit privilege out of concern that  withholding information from regulators will  hamper effective environmental enforcement.

RISK-BASED REMEDIATION. House Bill 765 also makes changes to state laws allowing the person responsible for environmental  contamination (the “responsible party”) to do a partial cleanup of  groundwater and soil contamination by relying on land-use controls to limit future exposure to contamination that remains on the site.  The biggest changes:

♦  Sites where contamination has migrated onto adjacent properties would become eligible for risk-based cleanup.  Existing law requires  contamination that has migrated off the property where it originated to be remediated to “unrestricted use standards”  — meaning  levels safe for any possible land use without reliance on land use controls to prevent exposure to contamination.  That effectively means remediation of contaminated groundwater to meet  state groundwater standards. Risk-based cleanup of contamination on adjacent properties had not been allowed because of the additional complications of managing exposure to those contaminants on property the responsible party does not control. H 765  makes  a risk-based cleanup on adjacent property possible with the property owner’s permission. The cleanup would have to meet the same remediation standards applied to the  source site  with an additional stipulation that the remediation plan cannot cause contaminant levels on the adjacent property to actually increase.

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

♦ H 765 adds new categories to an existing statutory list of sites excluded from these particular  risk-based remediation provisions.  The new exclusions cover coal ash disposal sites and animal waste management systems.

♦ The bill creates a separate risk-based remediation program for above-ground petroleum storage tanks (ASTs). The AST program closely follows  the model of the basic risk-based remediation statute, but imposes lower fees on the person responsible for cleanup.

WHAT DIDN’T HAPPEN AFTER ALL.  Other high profile (and controversial) changes came and went as the legislation session wound down. Among the proposals discarded for now:

Broad changes to riparian buffer rules.  Proposals to significantly roll back riparian buffer requirements for nutrient sensitive waters fell away in negotiations between the House and Senate.  Instead, House Bill 44 requires a study of the buffer rules, including ways to reduce regulatory burden on owners of property platted before their adoption.  The legislature did enact a few limited changes to buffer requirements.  House Bill  44 directs the Environmental Management Commission  to allow case-by-case modification of the requirement to maintain woody vegetation in riparian buffers  if the landowner shows that  alternative measures will provide equal or greater water quality protection. House Bill 765  alters  state stormwater rules to  (among other things)  allow more intensive development in riparian buffers along shellfish waters, outstanding resource waters and high quality waters if stormwater  from the development is collected, treated and discharged through the vegetated buffer. The provision doesn’t put any upper limit on the amount of impervious surface allowed in the area previously known as a buffer, so it isn’t clear how much vegetated buffer will remain to discharge the stormwater through.

Repeal of state fees supporting electronics recycling programs. The repeal proposed by the Senate turned into a legislative study of electronics recycling.

♦  Repeal or significant  rollback  of the state’s Renewable Energy Portfolio standard.  Efforts to freeze the REPS standard at 6% of retail sales failed. (Although not before popping up in multiple bills.)

♦  LImits on the state Environmental Management Commission’s authority to adopt federal air quality standards. The proposal could have put North Carolina’s delegated Clean Air Act program at risk. In the end, the General Assembly settled for a provision prohibiting the state air quality program from enforcing federal standards for wood heaters. The provision doesn’t have any real effect since  EPA has never delegated enforcement of the  standard for wood heaters to the states.

The  next session of the N.C. General Assembly convenes on April 25, 2016.

Confession is Good for the Soul

August 6, 2015.  Back to an issue mentioned briefly in earlier posts on regulatory reform legislation — efforts to  make environmental audits confidential and to extend immunity from penalties to environmental violators who self-report violations. In an environmental audit, a business or industry reviews its own operations for compliance with environmental standards.  The N.C. Senate has made several attempts to enact legislation  protecting the confidentiality of  audit reports  and provide immunity for violations identified in an audit and voluntarily reported to state regulators.

The most recent version of an  environmental audit privilege/immunity  provision appears in the Senate version of House Bill 765.  That bill is now in a conference committee to work out differences between the House and the Senate.  The Senate provision has two parts:

1. The bill  creates an audit “privilege”  to prevent  state regulators from obtaining  or using an audit report in  environmental enforcement. The privilege does not apply in a criminal investigation, but In practice only  the most egregious, intentional violations would be referred for criminal prosecution. Agencies rely almost entirely  on civil penalty assessments to enforce environmental standards and the bill would prevent use of a company’s environmental audit report in a penalty  case. The  audit privilege does not cover Information the company has a legal obligation to report to the state or  information independently discovered by state regulators. The bill also excludes other kinds of information  from the privilege (such as records gathered  before or after the certified dates of the audit and information deliberately withheld from an audit report.)

2.  The bill offers immunity from civil penalties to a violator who voluntarily discloses an environmental violation to state regulators. (The bill does limit how often a company can claim immunity based on a self-reported violation.) Immunity would not extend to a criminal prosecution.  To be considered  “voluntary”, the  disclosure must meet specific criteria.  If there is a legal obligation to report the violation, disclosure would not be considered voluntary and the violator could not receive immunity.  Other criteria in the bill condition immunity on  prompt disclosure of the violation and timely action to correct the violation. See the text of the bill for a complete list of the  factors  used to distinguish voluntary disclosures from disclosures that would not qualify for immunity.

One way to understand  the scope of the Senate proposal may be to compare it  to an existing Department of Environment and Natural Resources (DENR) self-disclosure policy that has been in place since 2000 and to the  U.S. Environmental Protection Agency’s enforcement policy on self-disclosed violations.

For DENR’s  existing policy on enforcement discretion for self-reported environmental violations,  see the DENR environmental self-audit policy (1995, updated in 2000).  The longstanding DENR policy differs from the Senate proposal in several ways:

♦ The DENR policy provides guidance to DENR staff on the exercise of enforcement discretion for self-reported violations, but does not  grant  new legal rights to environmental violators. The Senate provision creates a both a new legal privilege (limiting the use of audit information in state enforcement cases) and  statutory  immunity from civil penalties.

♦  In allowing reduction or waiver of  penalties for a self-disclosed violation, the DENR policy assumes full disclosure. Although the policy indicates DENR will not necessarily request the  audit report, the policy  encourages complete disclosure  — including providing the audit report to document  the existence of an internal management system to identify and correct violations. The Senate proposal tilts toward limiting both agency and public access to audit reports rather than encouraging full disclosure.  Nothing in the bill assures DENR access to a full audit report, so  a company could self-report a violation and provide DENR only as much information about the violation as it chooses.  The  one reference in the bill to the public’s right to information concerns information the company voluntarily provides DENR in self-reporting a violation.

♦ Unlike H 765, the DENR policy does not prevent the department from obtaining and  using information in an environmental audit to enforce environmental standards.

♦  The DENR policy does not apply to  investigative costs,   natural resource damages, or to recovery (through penalties) of any economic benefit the company may have realized as a result of the violation.  The Senate provision does not  distinguish between different types of civil penalties and fines, so it isn’t clear whether the immunity provided under  H 765 could also apply to investigative costs and natural resource damage assessments.  Instead of clearly excluding recovery of economic benefit from the grant of immunity, the Senate provision makes “substantial economic benefit” a reason to consider the self-report of a violation involuntary — but puts the burden on the agency to show the company had a substantial economic benefit.

The U.S. Environmental Protection Agency also has a self disclosure policy.  If a violator meets all nine conditions in the policy (including documenting use of an environmental audit or other internal environmental management system to improve compliance), EPA can completely waive penalties above recovery of any economic benefit realized as a result of the violation. If a violator  meets all of the conditions in the policy other than documenting use of  an environmental audit or environmental management system,  EPA can reduce the part of the penalty that exceeds economic benefit recovery by 75%. EPA will not generally  make a  criminal referral of a violation meeting the conditions of the self-disclosure policy;  the conditions  tend to exclude violations likely to result in a criminal referral in any case. The federal policy does not provide legal immunity from penalties;    does not apply to  recovery of any economic benefit realized by the violator; and does not limit EPA’s ability to obtain and  use environmental audit information in either a civil or criminal enforcement action. In fact, EPA’s self-disclosure policy makes a strong statement opposing both legal privilege for environmental audit materials and statutory immunity from penalties as inconsistent with effective enforcement of environmental standards.

So the  H 765 provisions would  go significantly beyond  existing DENR and EPA  self-disclosure policies in  both creating a legal privilege shielding environmental audit reports from use in enforcement cases and  in granting statutory immunity from civil penalties for many self-reported violations. The  immunity provided under  H 765  may also extend to investigative costs; natural resource damages; and  recovery of some economic benefit realized by the violator as a result of the violation.

The Senate proposal recognizes the need for EPA approval of the privilege/immunity provisions as they apply to enforcement of federally delegated environmental programs. As a result, the provision would only go into effect following EPA review.

Regulatory Reform 2015: A New NC Senate Proposal

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Status of Regulatory Reform Legislation

July 15, 2014.   For the last two weeks, substantive bills have been held in committee during  budget negotiations (some would describe this as hostage-taking).  But Senate leaders have signaled an intent to begin moving bills out of committee and to the Senate floor.  Two of the bills waiting for action are regulatory reform bills. An earlier post described Senate Bill 734 (Regulatory Reform Act of 2014) . The House made significant changes to the bill after it came over from the Senate, stripping out all of the environmental provisions. The bill (or what is left of it) is now back in the Senate for a concurrence vote.

The House put  its environmental regulatory reform provisions into a different Senate bill.  Senate Bill 38 came over to the House as an emergency management bill.  The House stripped out the original provisions; inserted some of the environmental provisions from Senate Bill 734; added a few new environmental provisions; and retitled the bill “Amend Environmental Laws”.  Senate Bill 38 has also been returned to the Senate for concurrence.

Key differences between Senate environmental regulatory reform proposals in S 734 and  the House proposals (now in S 38) below; these provisions will  have to be negotiated if the Senate  refuses to simply accept the House changes to both S 734 and S 38.  The Senate had proposed more –and more controversial — environmental provisions, so much of the negotiation will likely focus on Senate provisions left out of the House bill. (References to S 734 below  refer to the Senate version — Edition 3 of the bill on the General Assembly website.)

Senate provisions in controversy:

♦ A new environmental audit privilege and immunity for self-reported violations.  The Senate version of S 734  makes the results of an environmental audit confidential and gives the company immunity from civil penalties for environmental violations voluntarily reported to DENR as a result of an audit. The concept of immunity for self-reporting has some merit. The Senate provision had not been tightly drafted, however, and could allow a facility to avoid  penalties for longstanding, continuing violations by self-reporting under cover of a recent environmental audit.

♦   Limits on citizen appeals of air quality permits.  S 734 proposed  to limit citizen appeals to circumstances involving violation of a national ambient air quality standard.  As noted in the earlier post, this would eliminate citizen appeals of  permits issued  for sources of toxic air pollutants which are regulated under a different section of the Clean Air Act than the six pollutants covered by national ambient air quality standards.

♦   Authority for the Governor to waive environmental impact statements and Coastal Area Management Act  (CAMA) permit review for projects to protect, maintain or rebuild Highway 12 on the Outer Banks. (For  more on  conditions surrounding Highway 12 see  an earlier post.)

♦   A provision allowing a local government to block classification of a stream or river segment   for  water supply under state water quality rules.  State rules protect water supply sources through  in-stream water quality standards and development standards  (such as stormwater controls and stream buffers) in the water supply watershed. The water supply classification  must be approved by the Environmental Management Commission (EMC) before a water intake can be constructed.  The Senate provision intervenes in a conflict between  Caswell County and the towns of Roxboro and Yanceyville   over classification of a segment of the Dan River for water supply.  The EMC approved the Dan River water supply classification in 2012; the proposed water intake would supply Roxboro, Yanceyville and the Town of Milton.  The watershed for the new water supply extends into Caswell County, which had agreed to revise  its ordinances to meet water supply watershed development standards. Political opposition to the watershed ordinance led  Caswell County  to reverse course and petition the EMC to undo the Dan River water supply classification.  The EMC denied the Caswell County request last year.  The provision in S 734  directs the EMC  to grant any  request  to reverse a water supply classification made by an affected local government —  without regard to the effect on water supply.  The provision only applies to requests submitted after January 1 2012 and before the effective date of the provision — in other words, the  Caswell County request.

♦  Elimination of  air quality monitors not required by the U.S. Environmental Protection Agency.   The provision would significantly reduce the number of  state monitors used to assess air quality and demonstrate compliance with federal ambient air quality standards. The origin of the provision has been somewhat mysterious;  the legislator who requested the provision cannot seem to explain why. DENR’s Division of Air Quality has expressed concern about the loss of the monitors.

♦ A provision exempting animal waste lagoons at  dairy farms from closure requirements in state water quality rules. The rules reference closure standards for animal waste management systems developed by the Natural Resource Conservation Service in the U.S. Dept. of Agriculture.  The exemption would apply to waste lagoons constructed before 1967 and in use as recently as 2006.

House environmental regulatory reform provisions in controversy:

♦ A reduction in the amount of financial assurance required for a construction and demolition debris landfill (from $2 million  — the amount required for municipal solid waste landfills and industrial landfills —  to $1 million).

♦ Two provisions easing regulation of onsite wastewater systems. One would  prevent state regulators from putting certain conditions on approval  of  innovative systems using expanded polystyrene synthetic aggregate particles as the dispersion media. Another eliminates any requirement for an inspection or performance audit to review the performance of modified onsite wastewater systems.

♦  A new requirement for disclosure of mineral, oil and gas rights to prospective purchasers of real property.

♦ The House and  Senate bills have slightly different proposals to reduce state oversight of development  affecting isolated wetlands. The Senate bill would only require an individual water quality permit for activity affecting more than one acre of isolated wetlands. The House bill maintains a distinction that exists in the water quality rules between wetlands in the eastern and western parts of the state, requiring a permit for activity affecting 1/3 acre or more of isolated wetlands west of Interstate 95 and for activity affecting 1acre or more of isolated wetlands east of the interstate. Efforts to limit state protection for isolated wetlands began last year; see an earlier post for more background.

The House also put a number of provisions recommended by the General Assembly’s Environmental Review Commission into Senate Bill 38. The same provisions were introduced in the Senate as freestanding bills and  shouldn’t be in controversy.

2014 Regulatory Reform

May 21, 2014. Yesterday, the Senate Agriculture and Environment Committee approved a 62-page regulatory reform bill that many committee members did not see until it was handed out at the beginning of the committee meeting.  Today, the Senate Finance Committee  gave  Senate Bill 734  (Regulatory Reform Act of 2014) a favorable report and the bill will go to the Senate floor tomorrow for an initial vote. Some of the most significant environmental provisions:

More legislative review of environmental rules.   In 2011, the General Assembly, returning to an idea from the 1980s,  put strict limits on  adoption of state environmental rules that are more stringent than federal rules on the same subject.  The   law  has  exceptions only for rules needed  to address a “serious and unforeseen threat to public health, safety or welfare” and rules required by state law, federal law, state budget policy or a court order.   (An earlier post  talks about  the practical difficulties and policy implications of  chaining  state environment standards so tightly to federal rules.)   Section 1 of Senate Bill  734  goes another step and  requires legislative review of  any  rule adopted under one of the  exceptions, possibly delaying the effective date of the rule for months.   The state’s Administrative Procedures Act normally requires legislative review of a rule only if 10  or more people send letters objecting to the rule.  Under Senate Bill  734,  ten letters of objection would still be needed to  get  legislative review of  a rule change that weakens environmental standards, but  the legislature would  automatically review any rule that  goes beyond minimum federal environmental standards.

Eliminate citizen appeals of toxic air pollution  permits. Sec. 2.2 limits citizen appeals of air quality permits to  decisions  involving a national ambient air quality standard. The problem is that “national ambient air quality standard” does not even cover the universe of federal air quality rules.  National ambient air quality standards cover six pollutants  (carbon monoxide,  lead, nitrogen dioxide, sulfur dioxide, particulates, and ozone) that cause environmental and health problems when levels  reach a certain level in outdoor air.   But the Clean Air Act  also regulates a much longer list of  hazardous air pollutants or “air toxics”  associated with   cancer risk, infertility, birth defects  and other acute environmental and health effects. Mercury and benzene are examples of air toxics.  There are no national ambient air quality standards for air toxics; those pollutants are regulated under a different set of rules that require  a high level of pollution control on every regulated air toxic source. As  written, Senate Bill 734 would   bar  citizen appeals of  air quality permits issued for facilities that emit air toxics.

Emergency Authority to Waive Coastal Development Permits. Sec. 2.5 gives the governor the authority to waive Coastal Area Management Act (CAMA) permits and environmental impact statements  for emergency repairs to a highway “that provides the sole road access to  an incorporated municipality or an unincorporated inhabited area bordering the Atlantic Ocean or any coastal sound, where bridge or road conditions as a result of the events leading to the declaration of the state of emergency pose a substantial risk to public health, safety, or welfare”. The description fits Highway 12 in Dare County — the  perennially endangered road on  Hatteras Island. (See an earlier post for the history – and cost — of maintaining Highway 12.) The idea of waiving state permits for rebuilding damaged segments of Highway 12 after a storm has some appeal — but may not have the desired effect. Aside from eliminating any state review of  project  impacts, waiving the CAMA permit only puts the  U.S. Army Corps of Engineers entirely in  control of the permitting process.

Environmental Audits/ Self-Reporting. Sec. 3.6   of the bill does two significant things: 1. Protects internal company  environmental “audits” from disclosure to regulatory agencies; and 2.  Provides immunity from civil penalties to a company that voluntarily self-reports a violation.

Limited immunity from penalties can make sense if limited to situations where the violator has  self-reported a recent, unintended violation. The Senate Bill 734 audit/self-reporting provision has not been limited to those situations and potentially provides the benefit of confidentiality and immunity to violators who have committed  longstanding, continuing violations of environmental laws. Under the bill, the violator can use a recent environmental audit to cover numerous  past  violations and acquire immunity by “self-reporting” those violations.  Although the bill does not give immunity for willful and intentional violations or violations resulting from criminal negligence, it would deny regulators access to internal environmental audits that may document  the intentional behavior.  In the worst case, the provision could be a gift to violators who gambled for years on their ability to evade enforcement.

It is difficult to ignore the implications for   violations  at coal ash impoundments. Under the bill, a company  inspection of a coal ash impoundment could be treated as  a confidential “environmental audit” and  withheld from state regulators. And the owner/operator of the coal ash impoundment   may  get immunity from civil penalties by  self-reporting violations that had gone on for years.

Other sections of the bill incorporate legislation  recommended by the Environmental Review Commission (described here).  Senate Bill 734 actually goes beyond the ERC recommendation on isolated wetlands and proposes to eliminate permit review of  isolated wetlands impacts of less than an acre in both the eastern and western parts of the state.  The bill  continues a recent pattern of  weakening  open burning  rules by limiting local government authority to regulate open burning.  The bill also proposes to shift rulemaking authority for the waste management and drinking water programs from the Commission for Public Health to the Environmental Management Commission.

A Preview of 2014 Environmental Legislation

March 19, 2014.  On March 12, the N.C. General Assembly’s Environmental Review Commission (ERC) met to hear reports from several  working groups created to follow up on 2013 legislative issues. [The ERC is a joint House/Senate committee that meets between legislative sessions to study and develop  legislation on environmental issues.]  The reports included recommended legislation, but the ERC did not really discuss  the  bill drafts. The ERC will vote on legislative proposals for the  2014 session  in April.  The working group bill drafts   represent a starting point for development of 2014 legislation; the ERC co-chairs indicated a willingness to consider changes to  the  proposals  before voting  on April 3 to approve  a package of  2014  ERC  bills.  With the understanding  bill drafts may change between now and April 3,  legislative proposals presented last week included:

Stormwater.  The Regulatory Reform Act of 2013 (Session Law 2013-413) changed state  stormwater  standards to  treat gravel areas as “pervious” and exclude those areas from the calculation of built-upon area on a development site.  (A pervious surface allows  water to  percolate through  to the soil beneath; an impervious surface –such as a concrete driveway —  does not.) Since the amount of built-upon area determines the level of stormwater control required, developers had asked for exclusion of gravel from the calculation of built-upon area as a way to reduce stormwater requirements. The 2013 regulatory reform provision  also directed the ERC to study state stormwater programs “including how partially impervious surfaces are treated in the calculation of built-upon area under those programs”.

Having successfully lobbied for legislation treating “gravel” as a pervious surface and intending to  push for changes  in the way partially impervious surfaces are counted toward built-upon area, supporters of the 2013 legislation encountered a complication — there was no consensus on  the definition of  “gravel”.  As a result, the ERC stormwater working group  focused  on the  gravel  controversy instead of moving  on to the  issue of partially impervious surfaces.

The working group found that gravel areas may or may not be pervious depending on the size and type of the aggregate material used and the underlying substrate. The draft  bill presented to the ERC would actually undo the 2013 legislative decision to exclude all gravel surfaces from the calculation of built-upon area and  direct the Department of Environment and Natural Resources (DENR)  to contract with N.C. State University for a study of the pervious/impervious qualities of different types of aggregate materials.

Isolated Wetlands. After several bills proposing to repeal  state rules protecting isolated wetlands failed to win passage,  the  General Assembly asked the ERC to study isolated wetlands regulation.  (See an earlier post for more background on the isolated wetlands issue.) Senator Brent Jackson  presented a recommendation for  modification, but not repeal, of state standards for development in isolated wetlands. You can find a copy of the draft legislation here.

The bill would allow developers to disturb a somewhat larger area of isolated wetlands without a water quality permit review.   Current state rules  allow  isolated wetland impacts below specific thresholds to be “deemed permitted” under certain conditions. The proposed legislation would raise those thresholds. West of Interstate 95, the “deemed permitted” threshold would be increased  from 1/10th of an acre to 1/3 of an acre; east of Interstate 95,   the “deemed permitted” threshold would increase from 1/3 of an acre to 1 acre.  (Interstate 95 has long been used as the  dividing line between wetlands-rich eastern counties and piedmont/western counties that have fewer wetlands.)

The bill also proposes to reduce the mitigation required for isolated wetland impacts.  Wetland rules only require mitigation (in the form of wetland creation, wetland restoration or preservation) for impacts to one acre or more of wetlands; for projects requiring mitigation, the rules set  a  2:1 ratio of acres of wetlands mitigation to acres of wetlands impacted by  development.  The 2:1 mitigation ratio  allows for  loss of wetland function and  potential for mitigation failure.  Current  rules also use  a sliding scale of mitigation credits — giving less credit toward meeting the mitigation requirement for preservation of existing wetlands and more credit for creation or restoration of wetlands.  The ERC working group recommendation appears to propose a flat 1:1 mitigation ratio and makes no distinction based on the type of mitigation used.

Local Environmental Ordinances.  An earlier post described legislative efforts to restrain local government adoption of environmental ordinances,  resulting in a one-year moratorium on adoption of  new city and county  environmental ordinances and an ERC study. The ERC working group on local ordinances, led by Rep. Chuck McGrady and Sen. Andrew Brock, found little  actual conflict between state environmental regulations and local ordinances.  The existence of a specific state/local conflict  apparently became the practical guideline for the working group’s proposed  legislation.  The draft bill addresses the one area of conflict the members found — local ordinances on use and application of fertilizer already regulated by the N.C. Department of Agriculture and Consumer Services.

The recommended legislation follows  the General Assembly’s  past practice  of preempting  local regulation only when necessary to meet  some overriding state interest. It is not clear how the narrowly drafted bill recommended by the  working group will be received by those pushing for stricter limits on local environmental ordinances.   In 2013, the N.C. Homebuilders Association  lobbied for the much broader restrictions on local authority in Senate Bill 112 (discussed in the earlier post).  Under the approach  proposed  in SB 112,   it would be very difficult for a local government  to adopt a  more stringent  ordinance on a subject already addressed (however narrowly) by state or federal environmental rules. For Senate Bill 112 supporters, the issue may be more about the benefits of  a single, statewide set of minimum development standards  than concern about conflict between state and local  regulation.

Reporting wastewater spills. In response to concerns about delayed public notice of the recent Haw River wastewater spill,  an  ERC working group   proposed to amend the existing notice law. You can find a copy of the draft legislation here.  The amendments would do two things —

1. Clearly require notice to DENR  of any spill of more than 1,000 gallons of untreated wastewater.   (Although notice to DENR can be implied from the existing law,  the statute only talks about published notice.)

2. Reduce the time allowed to provide notice (both to DENR and to the public) from 48 hours to 24 hours after untreated wastewater reaches surface waters.  Based on discussion at the March meeting, the ERC  may consider requiring more immediate notice to DENR.

Review of Engineering Work. North Carolina’s professional engineers (PEs)  have lobbied for several years to limit state review of plans prepared  by  PEs and  to limit the ability of regulators to require  changes to  engineering  plans. The most recent effort  led to language in the Regulatory Reform Act of 2013 (Session Law 2013-413)  requiring a study of state and local review of engineering plans. Section 58 of S.L. 2013-413   directed DENR, the Department of Transportation, the Department of Health and Human Services and local governments to study:

“(iii) the standard scope of review within each permit program, including whether… staff are requiring revisions that exceed statutory or rulemaking requirements when evaluating such permits or plans; [and]

(iv) opportunities to eliminate unnecessary or superfluous revisions that may have resulted in the past from review processes that exceeded requirements under law, and opportunities to otherwise streamline and improve the review process for applications and plans submitted for approval.”

These issues have come up a number of times in recent years and seem to represent several different concerns on the part of private sector engineers: questions about the engineering credentials of state and local permit reviewers; concern about professional liability for changes in engineering design required by  state/local permitting staff; time added to the permitting process; and chaffing at second-guessing of  a PE’s judgment by regulatory staff.

The working group’s legislative proposal,  can be found here. It appears to take a moderate path toward managing the tension between private sector engineers and state/local permitting staff. (A sometimes necessary tension given their different responsibilities.) One interesting part of the proposal has to do with review of innovative systems and designs. The bill  would allow a permitting agency to charge the  applicant for a third-party engineering review of an innovative system if the agency does not have a staff engineer qualified to do the review.  That seems to be a wise approach given past controversies (and litigation) over approval of innovative systems.

Historical note: There have been a number of lawsuits against state and local  permitting agencies based on  approval of  engineered innovative systems that later failed.  One of the largest lawsuits resulted from the failure of a wastewater system serving  dozens of homes in an Orange County subdivision in the 1990s.   The homeowners sued the developer, the engineering firm that designed the system and the private utility managing the system — but also sued the state  based on claims of negligent permitting. The state ultimately settled the lawsuit, paying thousands of dollars in damages to the homeowners.

Coal Ash.  ERC co-chair Rep. Ruth Samuelson  noted the high level of  public interest in coal ash,  but  indicated the ERC would not discuss coal ash  at the March meeting.  Samuelson stressed the need  for deliberation and informed decision-making. The  ERC has only one more scheduled meeting before the General Assembly convenes in May.  At the  April 3 meeting, the ERC will  vote on recommended legislation for the legislation session and there has been no discussion of potential  coal ash legislation.

Limiting Local Environmental Ordinances

Earlier posts here, here, and here talked about regulatory reform in North Carolina and the impact on state environmental standards.    In 2013,  a Senate regulatory reform bill (Senate Bill 112)  also proposed to  significantly limit local government authority to adopt environmental ordinances.  Although  Senate Bill 112  did not pass the House,  the Regulatory Reform Act of 2013 (Session Law 2013-413)  effectively put a one-year moratorium on adoption of  local  environmental ordinances to allow time for a legislative study.  The bill directed the  General Assembly’s  Environmental Review Commission (ERC) to study:

“the circumstances under which cities and counties should be authorized to enact  ordinances    (i) that regulate a field that is also regulated by a State or federal statute enforced by an environmental agency or that regulate a field that is also regulated by a rule adopted by an environmental agency and (ii) that are more stringent than the State or federal statute or State rule.”

Existing State Limits on Local Authority.  In North Carolina, cities and counties only have the authority granted to them by state law. But even where the General Assembly has clearly given local governments authority to act,  there are existing  limits on exercise of local regulatory authority.  For example, local ordinances  must be consistent with state law.  Cities and counties have no authority to enforce an ordinance that requires an action that would be illegal under state law or make compliance with state law difficult.  The reverse is also true — a local ordinance cannot make an act unlawful if state law clearly makes  it  lawful. But “consistent” does not mean identical and many state laws allow local governments to adopt  ordinances that go beyond  minimum state standards.

The  General Assembly can also  claim the exclusive  authority  to regulate a particular subject at the state level.  The state expressly preempts local regulation by  adopting  legislation  that  clearly   prohibits or limits adoption of local ordinances on  the same subject.  For example,  N.C. General Statute 130A-293  prohibits cities and counties from adopting ordinances regulating  transportation, storage and disposal of hazardous waste or  prohibiting construction of hazardous waste facilities.  The same statute, however,   allows local governments to apply zoning and land use ordinances  to hazardous waste facilities to the same extent  those ordinances apply to other land uses.   A general zoning or land use ordinance will not be preempted under the law unless DENR  finds that the ordinance would prohibit construction of a hazardous waste facility  needed to “serve the interests of the citizens of the State as a whole”.  The law preempts some local authority, but attempts to strike a balance between the state’s need for hazardous waste facilities and local  land use decisions.

Courts most often find that the state has implicitly preempted local government authority on a particular subject  when  a comprehensive  state regulatory  scheme forecloses the possibility of  local standards. In 2001, the N.C. Court of Appeals ruled that Chatham County could not set standards for siting swine farms because detailed state standards for siting  large animal operations (including swine farms) indicated an intent to have a single, consistent set of state standards. See Craig v. County of Chatham, 143 N.C. App. 30, 545 S.E.2d 455 (N.C. App., 2001).

In short, the General Assembly  can  preempt local regulation of a particular subject  by  saying so outright or by adopting a comprehensive state regulatory program that crowds out  local regulation.  Whether express or implied, preemption  has been directed to individual regulatory issues and only  when  necessary  because of some overriding state interest.  That may be the need for uniform regulation or  to prevent local governments from excluding unpopular land uses that serve a necessary purpose.

 Changing the balance between state and local authority.   The  approach proposed in Senate Bill 112 would completely change the balance between state and local decision-making. Instead of  assuming  local ordinances can  reflect  local  conditions and values, Senate Bill 112  would only allow a  local government to go beyond minimum federal and state environmental standards  in extraordinary circumstances.  The  circumstances listed in the bill included unique local conditions; a serious threat to health, safety and welfare; a requirement of federal or state law; and ordinances needed to qualify for discounted federal flood insurance rates.  But  even those exceptions would require approval by a super-majority of the local governing board (3/4 members) and by the Department of Environment and Natural Resources.

The risk of gaps in  nuisance, environmental and health standards.  Since federal, state and local programs don’t have the same scope, an overly broad preemption  of local environmental ordinances would leave significant gaps:

Some of the most fundamental responsibilities of local government predate state and  federal environmental laws.  Those  laws have been built  on the foundation of local nuisance, public health and land use ordinances — not to replace them.  Local governments have long had the responsibility to address nuisance conditions and regulate  land use. State and federal environmental standards  came  later and while those standards sometimes  touch on   the same subjects,  they do not  substitute for local  zoning, subdivision, nuisance, and health ordinances.    To use one example   cited   in legislative discussions last session — a city stormwater ordinance  to control nuisance flooding doesn’t become unnecessary because the  state has adopted  stormwater rules to protect water quality.  Preempting local ordinances without having a comprehensive set of state standards to  put in their place  could  leave significant holes in protection of public health, safety and the environment.

Local governments need ordinances to  manage local water, sewer,   stormwater  and waste disposal infrastructure.   To give one example, state and federal environmental rules  regulate sewer systems and wastewater treatment plants to prevent  water pollution,  but  don’t address grease disposal that may cause a sewer line to become blocked.  A local ordinance  regulating  grease disposal could easily be considered “more stringent” than federal and state standards.  The General Assembly will also find that many  local governments have ordinances  on waste collection,  waste disposal and  connection to local water and sewer systems.   Although federal and state rules  touch on some aspects of those infrastructure systems, many  local ordinances have no parallel in federal or state rules — because federal and state agencies have no  direct responsibility for providing those services and managing the infrastructure. Under the approach proposed in Senate Bill 112,  local ordinances  needed for operation and maintenance of environmental infrastructure could be prohibited unless justified under one of the exceptions in the bill and approved by the state.

Different communities have different values in terms of land use and development activity.  Many local development ordinances could be considered to overlap federal and state  “environmental” standards.   Overly broad preemption of local standards for land use and development activity would  eliminate the ability of citizens to shape their own community.  If local officials act contrary to the wishes of their constituents, they can be voted out of office.  It will be much more difficult for the residents of Wilmington, Cary, Charlotte and Siler City to have a say in how their  communities develop if much of that power shifts to officials in Raleigh and Washington D.C.

What  will be the guiding principle for further limiting local authority?  Given the different roles of local, state and federal  regulations,  very broad preemption of more stringent local environmental ordinances will create significant controversy — controversy about what it means for a local ordinance to be “more stringent”;  controversy about what should be considered an “environmental” ordinance;  and controversy about justification  of  more stringent local standards.  What seems to be missing from the debate so far is some new guiding principle for limiting local authority that could be used to answer those questions. Until now, the General Assembly has shaped local authority through  laws granting specific powers to cities and counties and  by preempting local authority when necessary to promote some broader state interest. If that set of operating principles changes, some new principle will need to be stated.

Note:  In January, the full Environmental Review Commission heard a brief discussion of the issue.   On February 17, 2014,  the ERC’s City and County Ordinance Working Group will  hear public comment in a meeting at  3:30 in Room 414 of the Legislative Office Building.

Regulatory Reform and the Environment III: The Future

December 4, 2013. Two earlier posts  looked at  the history of regulatory reform in North Carolina and regulatory reform’s  focus on environmental rules.  The current General Assembly has continued  to work on regulatory reform in general and  limiting environmental rules in particular.  Regulatory reform legislation adopted by the N.C. General Assembly since 2011  reflects two basic  ideas: 1. Some number of agency rules are simply unnecessary and should be repealed;  and 2.  If  a federal  environmental standard exists, state and local environmental rules should not go beyond the federal requirement except in extraordinary circumstances. More about the  assumptions behind  recent regulatory reform efforts below.

Assumption: State agencies have unnecessary and overly burdensome rules that should be repealed. There will always be a need to review, update and in some cases repeal outdated rules, but it is not clear that rooting out “unnecessary” rules can  do much to turn down the political heat over regulations. It isn’t for lack of trying. In October 2010, Governor Beverly Perdue issued an executive order on regulatory reform.   Executive Order 70    invited citizens to identify overly burdensome and unnecessary rules and  directed state agencies to  do  an internal review to identify unnecessary and outdated rules.   In 2011, the General Assembly’s  Regulatory Reform Committee   invited the public to identify “outdated,  unnecessary, unduly burdensome, or vague rules…that are an impediment to private sector job creation”  in a series of public meetings. The  legislature also amended the state’s Administrative Procedures Act in 2011 to put the rules review process created under Executive Order 70 into  law.  G.S. 150B-19.2 

The earlier post on the history of regulatory reform describes the somewhat underwhelming results of both efforts to root out unnecessary and overly burdensome rules.  Although state agencies identified several hundred unnecessary rules  through the internal review required under Executive Order 70 , most of those rules related to programs that no longer existed or had been superceded by new standards.  Since the rules were no longer being enforced, repeal  did nothing to ease complaints about regulatory burden. On the other hand, rules identified by citizens as unnecessary or unduly burdensome often turned out to be required  by  state or federal law or the result of a significant  policy  debate and unlikely candidates for  a politically painless  repeal.

The  Regulatory Reform Act of 2013 (Session Law 2013-413 ) takes  a  new  approach,  requiring state agencies to review and readopt all existing rules every ten years.  If a rule is not reviewed   on the schedule set by the state’s Rules Review Commission, the rule automatically expires. (Rules needed to carry out a delegated federal program  will not automatically expire,  but  still have to be reviewed and readopted.)   Continuing its preoccupation with environmental rules, the General Assembly directed the  Rules Review Commission to schedule state water quality standards and wetland rules for the first round of review in 2014.  Ten-year review and readoption  may one day settle into a manageable  routine,  but several potential pitfalls  lie ahead:

— Given N.C.’s lengthy rulemaking process,  a 10-year  readoption  schedule could lead to constant churning and little certainty for either regulators or the public.  Nothing in Session Law 2013-413 shortens the process for readoption of an existing rule, so the agency would need to go through all of the usual rule adoption steps: public notice, fiscal analysis, review by the Rules Review Commission, and  possible legislative disapproval.  The Falls Lake nutrient rules took about five years from beginning to effective date and the rules include some requirements that phase-in even later.  Streamlining the process for readoption and starting the ten-year review period at full implementation of a rule (rather than adoption)  could reduce the churning.

— Review and readoption of rules will be even  more disruptive if it is used to constantly revisit policy decisions rather than simply identify outdated, unnecessary rules. The fact that the General Assembly targeted water quality and wetland rules for the first round of review and readoption suggests  a policy agenda.  Public statements by the director of  the state’s water quality programs,  Tom Reeder,   indicate that  the Department of Environment and Natural Resources has already put  stream buffer and  wetland rules  — repeatedly targeted by development interests — in the spotlight for the first round of water quality rule review.

— Complex sets of rules have to be reviewed together. Stream buffer rules, for example,  have  generally been adopted as part of  a larger plan to solve a specific water quality problem. Federal law requires the state to  reduce  pollution causing impaired water quality  (like the nutrient problems in Falls Lake and Jordan Lake), but federal rules do not dictate  the solution.    North Carolina ‘s longstanding  policy has been to create  a solution that shares the burden of pollution reduction among all of the major pollution sources (wastewater treatment plants, industrial dischargers, agricultural runoff and development activity).  In most cases, the final rules also represent a long negotiation process.  Using rule review  to respond to one  interest group could shift  more of the regulatory burden and cost  of pollution reduction to others.  A piecemeal approach to regulatory reform carries the risk of making complex environmental protection programs less effective and less equitable, but no less politically charged.

— The interrelationship of rules has practical implications.  According to Tom Reeder, the legislative  mandate  to review surface water standards and wetland rules in 2013 also  draws in two additional sets of rules.   Mr. Reeder expects the 2014 water quality rule review  to  involve  395 rules.

— Rule review comes without any additional staff resources. The massive water quality rule review will create a new workload for a water quality staff still shrinking under budget cuts and reorganization decisions. Mr. Reeder has already suggested that  rule review may further delay  revisions to state water quality standards  needed to  comply with federal  Clean Water Act requirements.

Assumption: State and local environmental standards should not go beyond federal standards except in extraordinary circumstances.

The Regulatory Reform Act of 2011     ( Session Law 2011-398 )  prohibited  state environmental  agencies — and only environmental agencies — from adopting  a more restrictive standard than a corresponding federal rule.   The  law has exceptions  for  rules to address a “serious and unforeseen threat to public health, safety or welfare” and rules required by state law, federal law, state budget policy or a court order. The same legislation directed all state agencies to provide the General Assembly’s Joint Select Regulatory Reform Committee  with a list of existing rules and indicate for each rule whether the rule was mandated by federal law and whether the  rule was more stringent than an analogous federal regulation. (The session law defined analogous to mean that a federal rule regulated the same conduct or activity.)

An earlier post (originally written about a 2013  Senate  bill)  provides examples of state environmental rules that go beyond  the  corresponding  federal rule.  (The examples come from the 2011 DENR report to the Select Regulatory Reform Committee.)  The post also notes some of the  difficulties in  limiting state environmental rules to  federal standards.  At the most basic level, it turns out to be harder than legislators may think to even figure out whether a state rule is “more stringent” than a corresponding federal rule. It is rarely as easy as comparing two numerical standards; in many cases, federal rules set a framework and goals in the expectation that the state will fill in the detail.  Another  problem is that  federal environmental  statutes and rules set a floor rather than a ceiling on environmental protection — a floor based on national priorities  rather than state needs.   Finally, federal rules rarely   include all of the administrative pieces needed for  a complete environmental protection program. Since the states actually carry out most of these programs, Congress and EPA  left the states a good bit of  flexibility  in setting up permitting and enforcement programs.

Having put limits on new  state environmental rules in 2011, the 2013 General Assembly took on local environmental ordinances.  Session Law 2013-413 puts a one year moratorium on adoption of new local environmental ordinances regulating issues addressed by state or federal environmental rules. An earlier post goes into more detail about the temporary  limit on local environmental ordinances. The one-year moratorium actually represents a compromise to allow time for the legislature’s Environmental Review Commission to look at the appropriate scope of local government authority to adopt environmental standards. The N.C. Senate had proposed to permanently restrict adoption of local environmental ordinances.

Even the one-year moratorium may be a problem for local government.  A number of cities and counties operate environmental infrastructure (like water and wastewater treatment systems) under state-issued permits that require the local government to put  environmental protection measures in place by ordinance.

Behind all of this lies a genuine concern about the layering of federal, state and local requirements. Citizen comments  clearly indicate confusion about where environmental standards come from and how different requirements  fit together.  In spite of everyone’s best efforts, the overlay of federal  rules, state rules  and local ordinances don’t always fit together perfectly.  Conflicts  get  resolved, but the property owner caught up in an unintended consequence of overlapping standards will be understandably frustrated in the meantime.

Which is all to say that there are good reasons to look at the intersection of federal, state and local environmental standards. It is just not as easy as waiving away everything other than the standard adopted by the highest level of government.

Regulatory Reform and the Environment II: Targeting Environmental Rules

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.

Regulatory Reform and the Environment I: A Brief History

November 8, 2013.

In 2013, the N.C. General Assembly adopted another round of “regulatory reform” legislation.   Session Law 2013-413 ( House Bill 74 , Regulatory Reform Act of 2013)  comes in the  third decade of regulatory reform activity in North Carolina.  One thing has been clear from the beginning — regulatory reform  has a strong focus on  environmental standards.   Regulatory reform  as a reaction against environmental  rules  has become so  clear  that it is worth looking at the reasons as well as the result.

Later posts will talk about the reason for the focus on environmental standards and new limitations on  state and local environmental standards. But first, a brief history of regulatory reform in N.C. (seen through the lens of environmental rules) to understand  the starting point for those reforms.

 Legislative Control Over Rulemaking.  The history of modern regulatory reform in North Carolina probably begins around 1986 when the General Assembly took the first steps toward exercising more legislative control over rulemaking.  State agencies  can only adopt rules if the  legislature grants that authority, but then the tension begins —  state agencies that adopt rules work for the governor and not for the legislature.  Although laws adopted by the General Assembly grant rulemaking authority and set the boundaries around rule adoption, the legislature  does not  directly control what happens from there.

In 1986, the General Assembly took the first step toward exercising more control over rules by creating the state’s  Rules Review Commission (RRC).   The 10- member commission, appointed by legislative leaders,  reviews all new state  rules — from water quality standards to nursing home  regulations. New rules (or amendments of existing rules) cannot go into effect until approved by the  commission under four standards:

1.   Is there statutory authority for the rule? (Does state law  give the agency that adopted the rule the  power to adopt that kind of rule?)

2.   Is the rule clear and unambiguous?

3.   Is the rule necessary?

4.  Did the state agency  meet all of the rulemaking requirements set out in  the  N.C.  Administrative Procedures Act ( such as publishing notice of the  draft  rule; allowing public comment;  and providing a fiscal analysis if the rule  imposes significant costs).

The Rules Review Commission has had a significant impact on rule writing — pushing agencies to make rule language more clear, explain terms, and  eliminate  conflicts  within rules.  But perhaps to the surprise of the General Assembly, the RRC has found very few rules that exceed agency rulemaking  authority.   Early on, the RRC also decided not to second-guess the necessity of an agency  rule given the special expertise needed to make that judgment — expertise most often found in the citizen commissions and state agency staff  given authority to adopt the rule.

In 1995, the General Assembly  took another step to  increase legislative control over the rulemaking process. (Perhaps because creation of the Rules Review Commission did not stop agencies from adopting rules that created political pain for legislators.)  Session Law 1995-507  delayed all new rules  and rule amendments from going into effect until the 31st day of the next legislative session that started at least 25 days after  Rules Review Commission  approval of the rule. The idea was to allow time for legislators to file a bill to disapprove the rule. If a legislator filed a disapproval bill within the first 30 days of session, the rule remained in limbo until either the General Assembly took action on the bill or the legislative session ended.    Since that approach  delayed many uncontroversial rules  — including rules benefiting the people being regulated —  the General Assembly  modified the law in 2003 to only  delay a rule for legislative review if  the Rules Review Commission received at least 10 letters of objection to the rule.

There are no criteria for legislative disapproval of a rule beyond the need to get enough votes  to pass both  houses of the General Assembly and survive a veto.

Considering the Cost of Rules. Also in 1995, the General Assembly began to require state agencies to provide a fiscal analysis of any rule with a substantial economic impact. At the time, “substantial economic impact” meant  $5 million in costs per year to comply with the rule.  (The  dollar figure represents a statewide total of  the cost to every person, business or institution required to comply with the rule.) Since then, fiscal analysis requirements have become more demanding; the threshold for a fiscal analysis is now $1 million. State agencies also have to look specifically at the fiscal impact of new rules on local government. Environmental agencies must  do an additional  analysis of the cost that new environmental rules add to state highway projects.

Agency Reform of the Rulemaking Process. On a different track, state environmental agencies began to experiment with a different kind of rulemaking  reform.  Solutions to  complex  environmental problems can affect  local governments, developers, agriculture, property owners,  communities  and industry.   In the 1990s,  North Carolina’s  environmental programs began to ask for more input on rule development from these and other interested parties very early in the rulemaking process. The state’s Administrative Procedures Act only requires a state agency to put a draft rule out for public review and comment after the rule has been  written.   But over the last 15-20  years, DENR environmental programs have increasingly used advisory groups representing  business, industry, agriculture, local government and environmental organizations  to  actually develop draft rules.

Every controversial set of  water quality rules  adopted in recent years (municipal stormwater rules;  the Jordan Lake and Falls Lake nutrient rules; coastal stormwater rules) has been  the product of “stakeholder” groups that influenced the development of the  rules from first draft through final adoption. Since many of these rules  require a balancing of the burdens and benefits of pollution reduction among many different parties,  the water quality program in particular  moved toward something that in practice looked very much like negotiated rulemaking.

Legislative regulatory reform efforts have never acknowledged the agency-driven change in rulemaking and in some ways work against it.  Ironically,  some negotiated  rules have become   the focus of legislative disapproval bills. One reason may be that  stakeholder negotiations  can  even  out the influence of participants who  otherwise do not have equal political power.   That sometimes means that  more powerful interests do not feel bound by the result and  try to use political influence to alter the outcome in  the legislature.  (Few disapproval bills have resulted in legislative repeal of a rule, but a number of major environmental regulations have been modified by legislation.)

The Search for Burdensome and Unnecessary Rules.  Late in 2010, Governor Beverly Perdue issued Executive Order 70 on rulemaking.  The executive order set out  rulemaking principles, but also  created a process for identifying  burdensome and unnecessary rules. Under Executive Order 70, the Office of State Budget and Management (OSBM) set up a website to  allow any citizen to identify a rule for change or repeal.  OSBM sent comments that seemed to have merit to the appropriate state agency for response.

In 2011, the new Republican majority in the General Assembly created a joint legislative committee on regulatory reform. The  Regulatory Reform Committee set out to receive input on “outdated,  unnecessary, unduly burdensome, or vague rules and rulemaking procedures that are an impediment to private sector job creation”  in a series of public meetings across the state.

In the end, efforts  to  find and eliminate  unnecessarily burdensome rules probably had less impact than expected for a number of reasons:

—  Comments often concerned  individual pieces of more comprehensive regulatory programs and pulling one thread would unravel a larger fabric.  For example, a number of comments have suggested eliminating or limiting  stormwater and stream buffer  rules  in  the   Neuse River basin, the Tar-Pamlico River basin and the  Jordan Lake watershed where  excess nutrients (nitrogen and phosphorus)  have  caused algal blooms and fish kills.  Since buffers and  stormwater controls reduce  nutrient run off from  developed areas, those rules became part of  larger water quality strategies  to meet  EPA-approved nutrient reduction targets required under the Clean Water Act.  The comprehensive nutrient strategies also put tighter controls on wastewater treatment plants and required agricultural operations to take steps to reduce agricultural runoff.   Eliminating stormwater and buffer requirements  won’t  make the nutrient reduction targets go away. It  just means that the pollution reductions from developed areas would have to be  made up by additional reductions from other nutrient sources  — potentially increasing the cost to agriculture, industry and municipal wastewater systems.

None of this means that existing  rules are sacred and cannot be changed. It does mean that looking  at a rule in isolation carries the  risk of  relieving one  person’s pain  at the cost of creating a greater hardship to someone else.

— Some rule comments had to do with program implementation  (such as overlapping agency authority and inconsistent rule interpretation) rather than  the content of rules.

—   Many comments  turned out to be about federal requirements, state laws and local government ordinances rather than state agency rules.  The layering of federal, state and local requirements clearly creates confusion and some degree of frustration among the public.  But as it turns out, a complaint about a state rule may not be about a state rule at all.

—  In the Regulatory Reform Committee’s public  meetings, comments supporting environmental standards often  matched or even outnumbered complaints about environmental rules. Legislators also heard comments on a  number of perhaps unexpected issues.  (Legalization of marijuana comes to mind.)

You can find copies of the annual  Executive Order  70 reports prepared by the Office of State Budget and Management here. The reports include a brief summary of  each public comment that merited further review. The legislative Regulatory Reform Committee never  released  a complete record of public comments received by the committee and never produced a formal report.

Recap. Going into the regulatory reforms of 2011- 2013, the rulemaking landscape in North Carolina looked something like this:

—  For almost 30 years,  the  legislatively appointed Rules Review Commission has had the ability to stop state agency rules that exceed the  authority actually granted by the General Assembly.

— Since 1995 , the General Assembly has had the power to disapprove an agency   rule for any reason (or for no reason at all).

—  Fiscal analysis required for proposed rules has increased, although the resources available to do fiscal and economic analysis have not.

— Environmental programs have unofficially reformed the rulemaking process, creating something  that closely resembles negotiated rulemaking on  large, complex environmental problems.   But  negotiated rulemaking  doesn’t fit legislative assumptions about what rules are and how rulemaking  decisions are made, so some  regulatory reform efforts  undermine  those efforts.

NEXT: The regulatory reform movement’s focus on environmental standards and the most recent turn in regulatory reform .