Tag Archives: Water Systems

The Legislative Response to GenX

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

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to study water treatment methods to remove GenX from the water supply and $85,000 for ongoing monitoring of water withdrawn from the Cape Fear River.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

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

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

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

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

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

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

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

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

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

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

Environmental Issues in the Courts

October 26, 2014.  Some recent state and federal court decisions dealing with   environmental controversies in North Carolina:

Cape Fear River Watch, et al v. Environmental Management Commission. An earlier post provides background on the issues in the case. In  brief,  several environmental organizations  appealed a 2012 decision by the  N.C.  Environmental Management Commission  (EMC)   interpreting state groundwater rules to give  older, unpermitted waste disposal facilities the same groundwater remediation  options available to  permitted waste disposal facilities. All of the coal ash ponds in N.C would be considered “unpermitted” waste disposal facilities and  Duke Energy intervened in the  Cape Fear River Watch case to support the EMC  decision.

In March, Superior Court Judge Paul Ridgeway reversed part of the  EMC decision. Judge Ridgeway  interpreted groundwater remediation rules to require  facilities permitted before December 30, 1983  to  immediately remove the source of any groundwater contamination.  The decision has significant implications for coal ash ponds and old, unlined landfills where the waste material disposed of in the facility often turns out to be the contamination source. Under Judge Ridgeway’s interpretation of the rules,   waste material causing groundwater contamination would have to be immediately excavated and removed.  Although state rules allow the use of other (potentially less costly) measures to control groundwater contamination,  pre-1984 ash ponds and landfills would not have any option other than removal of the waste.

Duke Energy appealed Judge Ridgeway’s  decision to the N.C. Court of Appeals.  But before the Court of Appeals could take up the case, two things happened to alter the course of the litigation.  First,  the General Assembly enacted legislation  intended to moot the  Ridgeway decision. Section 12 of Session Law 2014-122 (the Coal Ash Management Act of 2014)  amends a groundwater statute to direct the EMC to require remediation of  groundwater contamination at a waste disposal facility without regard to the date  the facility had been permitted.  Legislators acknowledged that the provision was intended to reverse  Judge  Ridgeway’s interpretation of  the groundwater  remediation rules  as applied to facilities permitted before  December 30, 1983. As a practical matter, the new law allows DENR to approve an alternative means of controlling groundwater contamination associated with a  coal ash pond or pre-1984  landfill but does not guarantee approval.

Then,  on October 10, 2014,  the N.C. Supreme Court issued an  order removing  Cape Fear River Watch v. Environmental Management Commission from the Court of Appeals docket  to  the Supreme Court docket.  The Supreme Court removed the case on its own motion, surprising the parties and their lawyers.  (The court  issued similar orders in four other civil cases at around the same time.)  The court’s action  has no recent precedent and little precedent  in the court’s history. The one-paragraph  order offered no explanation for removal of the case to the Supreme Court.  The next step in the Cape Fear River Watch case will now be the filing of briefs in the  N.C. Supreme Court.

City of Asheville v. State of N.C. and Metropolitan Sewerage District of Buncombe County.  In 2013, the General Assembly enacted a law transferring the City of Asheville’s water system to the  Metropolitan Sewerage District of Buncombe County.  Session Law 2013-50,  drafted  to apply only  to the City of Asheville water system,  had the unprecedented effect of transferring the system’s assets  (infrastructure and a 17,000 acre watershed) and debts (over $67 million in water bonds) to a new entity without the city’s consent and without compensation.  Two earlier posts, here and here, provide background on the legislative action and constitutional issues raised by the law.

In June, N.C. Superior Court Judge Howard Manning issued an order concluding that Session Law 2013-50 violated several provisions in the  N.C. Constitution. Among Judge Manning’s findings:

♦ The law violated Article II, Section 24  of the N.C. Constitution which prohibits the General Assembly from adopting  certain types of legislation  to apply in  only one jurisdiction in the state. Judge Manning concluded Session Law 2013-50 violated  constitutional  prohibitions against local acts relating to “health, sanitation or the abatement of nuisances”  and local acts regulating  nonnavigable streams.  Although  Session Law 2013-50 did not mention the City of Asheville or the  Metropolitan Sewerage District of Buncombe County  by name,  it described water systems affected by the law  in a way that only applied to the Asheville system.  As a result, Judge Manning found the law to be an unconstitutional  local act addressing  health and sanitation (operation of a drinking water system) and regulation of nonnavigable streams.

♦  The law violated Article I, Section 19 by transferring the Asheville water system to a different entity without the city’s consent and without any rational basis. Article I, Section 19, known as the “law of the land” clause of the N.C. Constitution, has been interpreted to require both due process and equal protection. Judge Manning found Session Law 2013-50 violated the clause by depriving the City of Asheville of property without any  rational basis, suggesting a due process violation and expressly finding a denial of equal protection.

♦ Other sections of  Judge Manning’s  order concluded that Session Law 2013-50 violated Article I, Section 19 and Article 1, Section 35 (a broad reservation of rights) by taking city-owned property and by doing so without providing compensation for the property.

One key to the court’s decision:  operation of a  water system is considered to be a proprietary rather than a governmental function. Proprietary functions don’t involve peculiarly governmental powers and could also be carried out by a nongovernmental entity. Other examples of proprietary functions would be  operation of an electric utility, a recreational facility  or a sports venue.   With respect to proprietary functions,  Judge Manning concluded that  local governments have  the same constitutional protection against  uncompensated taking of property as a nongovernmental entity.

Judge Manning’s order did not address the city’s argument that the law also unconstitutionally interfered with contracts between the city and bondholders.  The state, throughout the Attorney General’s Office, indicated an intent to appeal the decision to the N.C. Court of Appeals. A final decision by the appeals court would not be expected for about a year.

Erica Y. Bryant, et al v. United States, 11th Circuit Court of Appeals, October 14, 2014.  The plaintiffs  had sued the United States government seeking compensation for health problems allegedly caused by exposure to contaminated drinking water at the Camp Lejuene Marine Corps Base near Jacksonville,  North Carolina.  A recent U.S. Supreme Court decision in another North Carolina groundwater contamination case, Waldberger v.  CTS, Inc.,   held that the state’s 10-year statute of repose barred a lawsuit alleging injury and property damage caused by groundwater contamination filed more than 10 years after the  last act contributing to the contamination —  even though the plaintiffs first learned of the contamination much later.  (You can find more on the Waldberger decision in an earlier post. The same post also includes additional background on the contamination problem at Camp Lejuene.)

The N.C. General Assembly responded to the  Waldberger decision  by enacting a law excluding claims for property damage and personal injury related to contaminated groundwater from the 10-year statute of repose. See Session Law 2014-17.  The law was written to apply to both pending cases and cases filed after its enactment. In the Bryant decision, however, the 11th Circuit Court of Appeals ruled that the new law could not retroactively apply to pending cases. The appeals court treated the 10-year statute of repose as a sort of property interest benefitting (in this case) the U.S. government. The court ruled  that the state legislature could not retroactively remove that benefit.  The decision turned, in part, on the court’s conclusion that Session Law 2014-17 changed rather than clarified the state’s prior law.

The 11th Circuit decision seems to leave the Camp Lejeune plaintiffs without any legal remedy for long-term health effects allegedly caused by exposure to the contaminated drinking water.

Recycling Wastewater for Drinking Water — Without a Permit

June 19, 2014. In one of many quick changes over the last few legislative days, Senate Bill 163 (“Protect Landowner’s Water Rights”)  entered the telephone booth of the House Environment Committee yesterday and emerged as an entirely different bill entitled “Reclaimed Water as Source Water”.  The House adopted the new version of S 163 today,  making a significant change to state water quality  and drinking water laws with little debate.

The bill endorses the use of highly treated wastewater, classified under  state water quality rules as “reclaimed” water, to supplement drinking water supplies.  The policy makes sense  under the right conditions.  Treated wastewater  already indirectly supplements  drinking  water supplies; many wastewater treatment plants discharge to streams and rivers that also serve as  water supply sources for downstream communities. State reclaimed water rules also allow direct  use of reclaimed water for many non-potable purposes, including  landscape irrigation, easing demand on the drinking water supply.

Senate Bill 163,  as adopted by the House, goes further and  for the first time allows reclaimed wastewater to be used to directly supplement a drinking water supply. The problem — the bill appears to allow a water system to add reclaimed wastewater to a drinking water reservoir without a water quality permit.  If that is the  effect of the bill, it represents a significant change in the way the state protects the quality of drinking water supplies and  likely conflicts with the federal Clean Water Act.

Under the bill,   “notwithstanding any other provision of law, a local water supply system may combine reclaimed water with source water treated to provide potable water supply”  in an impoundment controlled by  the  water system.  The bill does not define “impoundment”,   but under state drinking water rules an “impoundment” means a reservoir.  That interpretation would also be consistent with  other  Senate Bill 163 language describing the addition of reclaimed water  as occurring before the water goes to the water treatment plant.

An impoundment used as a  public water supply source  would  usually be considered a “water of the state” under water quality laws. Most impoundments  have  been created by damming a river or stream segment to store water for  water supply and continue to release water through the dam to maintain downstream flows.  Wastewater  (even treated wastewater) can only be discharged to a water of the state under a  permit that  insures the discharge  will not result in violation of a water quality standards.  Under G.S. 143-215.1, it is unlawful to:

Cause or permit any waste, directly or indirectly,  to be discharged to or in any manner intermixed with the waters of the State in violation of the water quality standards applicable to the assigned classification.

An impoundment used as a drinking water source has specific water quality standards (adopted in state rules) to protect its  use as a water supply. Discharge of treated wastewater to a water supply source can be allowed,  but only  under permitted limits.  Unfortunately, the “notwithstanding” language in Senate Bill 163  seems to sweep away both the requirements of state  water quality permitting laws and the N.C.  Drinking Water Act.  Nothing in the bill itself requires the addition of reclaimed wastewater to be done under a water quality permit  or in compliance with water quality standards for public water supplies. Instead, the conditions in the bill read like a self-contained set of standards that rely on a 20% limit on the proportion of reclaimed water to total water produced by the impoundment  and a minimum  5-day holding time in the impoundment as a substitute for meeting water quality standards.

If — as it appears — the bill allows discharge of reclaimed water to a “water of the state” without a permit, it also  conflicts with federal  law. Many impoundments that are  “waters of the state”  would also be considered “waters of the United States” under the federal Clean Water Act.  Federal law  makes it unlawful to discharge a pollutant into waters of the United States without a Clean Water Act permit — a requirement that state law cannot waive.

Senate Bill 163 will now go back to the Senate for approval or disapproval of the new  House version of the bill.  If the Senate rejects the House rewrite, the bill will have to go to a conference committee to work out the differences between the two chambers.

If the House did not intend to allow the discharge of treated wastewater to a water supply reservoir without meeting state and federal water quality laws, it would be  helpful to clarify  the bill  before final adoption.

May Day at the General Assembly: Environmental Bills

May Day: An ancient celebration of spring.  “Mayday” : an international distress call. 

There will be lots of activity on significant environmental legislation today at the N.C. General Assembly:

Renewable Energy.  Rep. Mike Hager will attempt to revive House Bill 298 repealing the state’s renewable energy portfolio standard (REPS). Earlier posts on the REPS bill can be found here and here. The bill will be back in the House Public Utilities and Energy Committee at noon. A  motion to approve the bill failed in the same committee last week by a 5-vote margin, but the committee never voted to disapprove the bill.  A  story by John Murawski in today’s Raleigh  News and Observer suggests little change in the lineup for and against the bill. Conservative political organizations (including Americans for Prosperity) and anti-tax crusader Grover Norquist continue to push for repeal of the renewable energy standard as part of a national political strategy that has little to do with the costs and benefits of  repeal  in  North Carolina. Some key House lawmakers  still  oppose the bill because the renewable energy standard has brought new private investment and jobs to the state. A Senate version of the  REPS repeal bill  (Senate Bill 365) will get a first hearing in the Senate Finance Committee today. Rarely does an issue so clearly require a legislator to choose between the state’s interest and a position being promoted  by national political organizations.

Regulatory Reform. Senate Bill 612 (Regulatory Reform Act of 2013) will be up for a floor vote in the Senate this afternoon.  See an earlier post on bill language essentially repealing Neuse and Tar Pamlico River buffer requirements and a  more recent  post about  a provision requiring  environmental agencies to repeal state rules that are more stringent than federal regulations on the same subject. (Putting those two proposals in the same bill is interesting all by itself since the Neuse and Tar Pamlico buffer rules are critical parts of  federally required and federally approved state plans to reduce nutrient pollution in the two river systems. It appears that even a federal requirement may not be enough to save environmental rules in some cases.)

The idea  that  state environmental rules  can simply track federal regulations  really misreads  federal environmental law. Senate Bill 612  assumes that federal agencies have adopted environmental regulations that can be simply picked up and applied by the state and that isn’t the case. Federal regulations alone would not, in most cases, be enough to make for a functioning   environmental permitting program  — or one that actually responds to the state’s needs.   All federal environmental laws  assume — and in many cases require —  that individual states will tailor the  federal  program to  address conditions in the state. (Since you won’t find estuaries in Arizona, that state’s Clean Water Act program does not look like  North Carolina’s program.)  This misunderstanding of the relationship between federal law and state environmental  rules means the most likely outcome of the Senate Bill 612 repeal requirement  will be conflict and confusion. It is unclear why the Senate chose to use a sledge-hammer rather than focus regulatory reform efforts on issues actually raised by citizens in comments to the Joint Committee on Regulatory Reform or through the rule review process  created  in G.S. 150B-19.2.

Water System Management.  House Bill 488 (transferring the Asheville water system to the Buncombe County Metropolitan Sewer District)  has come out of a conference committee to resolve differences between House and Senate versions of the bill. See an earlier post for background on the Asheville controversy.   The Senate has approved the conference report; the conference report does not appear on today’s House calendar yet, but could be added. Note: The Buncombe County MSD  had a major sewer spill yesterday;  the details (such as cause and the total amount of raw sewage spilled to the French Broad River)  are not yet clear. The spill caused me to look at House Bill 488 again and it turns out that the bill does not condition transfer of the Asheville water system on the MSD’s compliance with environmental standards or on actual transfer of the water system’s operating permit to the MSD.

Regulatory Reform 3.0

April 29, 2013:  Last Thursday, the N.C. Senate’s Committee on Commerce approved a new version of Senate Bill 612 (Regulatory Reform Act of 2013) — the third in a series of “regulatory reform” bills developed since Republicans gained control of both houses of the General Assembly in the 2011. The bill may be on the Senate calendar tonight.

The bill attempts too  much  to describe in one post, but  the  most significant provisions would  repeal stream buffer requirements in the Neuse River and Tar-Pamlico River basins  and  require  repeal or modification of any state rule  that “imposes a more restrictive standard, limitation, or requirement” than a federal law or rule on the same subject. ( See an earlier post  for more detail on the  Senate Bill 612 stream buffer language.) The idea of prohibiting  state agencies from adopting rules (particularly environmental rules) that  go beyond minimum  federal requirements has been around for awhile. The Regulatory Reform Act of 2011     ( Session Law 2011-398 )  prohibited  state environmental  agencies — and only environmental agencies — from adopting  more restrictive standards or requirements  than federal rules on the same subject.   The  law had 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.  Even then, the General Assembly had an eye on existing rules as well. The same legislation directed all state agencies to provide the 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.)

The Regulatory Reform Act of 2012 (Session Law 2012-187)    did  not follow up on the reports  submitted in the fall of 2011.  Senate Bill 612 also ignores the information submitted by state agencies in 2011. Instead of using the 2011 reports to focus regulatory reform efforts, Senate Bill 612 directs state environmental agencies — and only environmental agencies —  to  repeal or modify any rule that exceeds minimum federal requirements unless the rule fits under one of  the exceptions set out in the 2011 legislation for new rules.  The bill  also takes away the authority of  city and county governments to adopt local ordinances that go beyond state and federal environmental standards.

It isn’t clear how   legislators  mean to interpret the Senate Bill 612 provisions. Even the most detailed federal environmental regulations (like those adopted by EPA under the Clean Air Act and Safe Drinking Water Act) have gaps that need to be filled by state rules.  Federal regulations often lack  detail on program implementation, such as record-keeping and monitoring  requirements. Sometimes the gaps are more substantive; environmental and public health issues of great concern  in North Carolina have not always been national priorities.  Most  federally delegated or authorized  environmental programs  operate under federal regulations  that are much  less detailed than  the Clean Air Act and Safe Drinking Water Act standards. The  state’s  water quality,  solid waste and coastal management programs  all operate under federal  laws  that  create  a framework for state regulatory programs, but  for the most part leave development of specific environmental standards to the state.  For those programs, it will be  difficult to directly compare state rules to federal regulations and determine what is more or less stringent.

So,  the Senate Bill 612 language  raises a number of questions:

— Where fairly detailed federal  standards  exist, would the bill require repeal of state rules that address gaps in the federal regulations?   Or can state rules go beyond  federal regulations to  describe the content of a complete permit application or establish specific  monitoring  and record-keeping requirements?

— In programs that operate under a federal framework for regulation that  leaves  specific standard-setting largely to the state agency (with federal oversight),  will Senate Bill 612 require repeal of  types of standards and requirements not specifically  identified  in the   federal regulations?   Will  the state’s water quality program, for example,  be limited to using regulatory  tools provided under the Clean Water Act (such as wastewater discharge permits) to solve  a water pollution problem? Or can the program continue to address all major water pollution sources and use innovative approaches not contemplated in the federal rules?

— Does the exception for rules addressing a  “serious and unforeseen threat to public health, safety and welfare”    allow state rules to go beyond minimum federal requirements because of particular conditions  in the state or in response to concerns that may not have come up in development of the federal regulation? Or will the General Assembly take the position that if EPA doesn’t think putting a petroleum underground storage tank (UST)  near a drinking water well is a problem, then it must not be a problem?

The  2011 DENR report  to the Joint Legislative Committee on Regulatory Reform identified a number of state environmental rules that go beyond the requirements of  federal rules on the same subject. From a quick review, I found some examples of state rules that may have to be repealed under Senate Bill 612 :

● State waste management rules  requiring minimum separation from groundwater for land application of septage (to prevent groundwater contamination) and maximum slopes for land application sites (to prevent runoff to surface waters).

● State rules requiring water systems to  treat drinking water with excessive levels  of iron and manganese; both can cause discoloration of skin and teeth, as well as odor and taste problems.  Federal rules have only “advisory” standards for manganese and iron and do not require water systems to provide treatment to improve the water quality.

● State rules requiring a public water system to notify  the  owner  if routine water system monitoring  finds  a drinking water standard violation or high levels of fecal coliform bacteria in a water sample from a building. Federal rules only require water systems to provide notice to customers  if the water system overall violates Safe Drinking Water Act standards. Since  a water system can  exceed drinking water  standards at some number of  individual monitoring locations without  being in violation as a system (the exact number varies depending on the size of the water system and number of monitoring sites), the federal rules do not require the water system to notify  individual  property owners of  a problem  confined to a particular site. The state notice rule was adopted in 2006 after complaints that local water systems did not notify  citizens of high lead  levels in their drinking water after it was detected in routine water systems monitoring.

● Rules  prohibiting  location of a petroleum  underground storage tank (UST) within  100 feet from a  well serving the public or within 50 feet of any other well used for human consumption.

● Rules requiring setbacks for land application of all wastewater residuals (both sewage sludge and other solids  from wastewater treatment) and setbacks for disposal of coal combustion byproducts. The  rules include setbacks from property lines, public and private drinking water supplies, other water supply wells, and surface waters.

● Limits on emissions of  three toxic air pollutants (arsenic, beryllium and chromium)  by   industrial, medical, hazardous waste and sewage sludge incinerators.

It isn’t clear that these are the kind of “regulatory reforms”  that the General Assembly actually wants to see.

You can find the full report at:  http://www.ncdenr.gov/c/document_library/get_file?uuid=00ccda5a-8c0d-4579-a7d5-f0af4b1474f3&groupId=2444522

Note: Why the General Assembly believes  environmental rules  to be a greater burden on North Carolina citizens than other types of regulation will be  a subject for another day.

The N.C. General Assembly, Water System Operator

The N.C. General Assembly seems to be increasingly tempted to intervene in the operation of local — and particularly municipal — water and sewer systems. Is  this a good idea?

Last year,   Senate Bill 382  tried to  require the City of Durham to extend water service to a  development project outside the city limits.    Senate Bill 382  started  legislative life as  a tax bill, but in  the last few days of the 2012  legislative session  it became the  vehicle for  a House proposal to  legislatively approve a water line extension for a specific development project. (Durham had  refused the developer’s  request for water service in part because of   the high cost of extending a water line to the project.) Senate Bill 382 ultimately failed, but local conflicts over water service  continue to tempt legislators to intervene.

This year, three western legislators have introduced  a bill that would force the City of Asheville to turn its  water system over to the Metropolitan Sewerage District of Buncombe County (MSD).  You will not find any mention of the City of Asheville or the  Metropolitan Sewerage District  by name –the bill avoids naming the parties by using a generic description that happens to only apply to them — but  House Bill 488 is the latest in a series of skirmishes over control of  the Asheville water system.  The history behind the Asheville water system conflict is  long and complicated, but — as in Durham — some amount of the friction has to do with the relationship between water service and development.

One long-standing issue  has to do with  water rates  for Asheville water system customers who live outside the city limits.  Asheville is the only city in the state prohibited by law from charging water customers outside the city a higher rate — a common practice of other municipalities.  (Higher rates may be used to recover higher costs of providing the service or to offset some of the additional taxes paid  by in-town customers.) Just as friction over a development decision  led to the Durham controversy, the history of the Asheville water system  includes a  thread of  concern about the city’s  ability to use water system decisions to influence  development outside the city. Until last year, extension of water and sewer service gave cities a strong basis for forced  annexation and fear of annexation seems to have created some of the tension  between Asheville and surrounding areas.  Although the annexation process has changed,  cities like Durham and Asheville can still find themselves in conflict with developers and county officials over  development conditions tied to extension of city services or (as in the Durham case)  denial of  service  to a new development outside the city limits.  In short, decisions about extension of water and sewer service  touch two hot buttons —   money  and regulation of new development.

These conflicts have a  very direct connection to environmental protection. Water and sewer  systems are creatures of environmental and public health regulation;  environmental protection programs fund water and sewer infrastructure in many North Carolina communities.   Like many other cities,  Asheville and Durham have the challenge of  expanding water service to accommodate new development  while also maintaining or replacing the aging  infrastructure  that serves existing residents.   The land use regulations sometimes attached to extension of water and sewer service can  provide a number of environmental protection benefits, but maintaining the  fiscal health of a water system has its own environmental  value. Decisions about when and how to extend water or sewer service can have significant  financial  implications; a financially strained system will have much more difficulty providing the maintenance needed to meet public health standards and avoid environmental damage.

To run  a water or sewer system responsibly, local officials   sometimes  have to make controversial decisions about service, rates and financing.  It becomes even harder to make  a tough decision knowing the General Assembly may step in and reverse it.    Forcing the transfer of infrastructure from a city without providing for compensation — as in the case of Asheville — particularly sends the wrong message to cities  that need to invest in water or wastewater infrastructure.  Legislation affecting the  capital assets of a water or sewer system also carries the additional risk of  undermining planning and financing for system improvements.

These bills  raise another question — is it in the General Assembly’s power to force an extension of water and sewer service or to divest a city of its water system.? The answer isn’t clear to me. Local governments are  subdivisions of the state — the General Assembly can change municipal boundaries and expand or contract the authority of cities. It is less clear that the General Assembly can directly intervene in decision-making about a water and sewer system without circumscribing local government authority. In 2012, Senate Bill 382 attempted to compel an expansion of the Durham water system without actually changing the law governing the City of Durham’s authority to operate a water system. House Bill 488 directs the City of Asheville  to transfer ownership of its  water infrastructure also without  changing state laws  authorizing cities to own and operate water and sewer utilities. (The sections of House Bill 488 that require the transfer of property from Asheville to the MSD  do not amend existing statutes governing local government water and sewer systems.   The sections of the bill that enact new  statutes to cover the operation of metropolitan water and sewer districts allow, but do not require,  transfers of property between cities or counties and a district.)

Article II, Section 24 of the  N.C. Constitution prohibits the General Assembly from adopting a piece of legislation relating to “health, sanitation or the abatement of nuisances”  that applies  to  only one local jurisdiction. Since water systems fall into  all three categories, the Constitution seems on its face  to prohibit  the  General Assembly from reaching down to make decisions related to an individual water system. Legislators frequently try to draft around the Constitutional restrictions on local acts by using language that appears to be generic, but in fact only describes a single city or county. At some point, the fiction simply becomes too strained.

For  constitutional law junkies: Since state law treats cities as “persons” for many purposes, can city property be taken (even by the State) without compensation? Would the U.S. Supreme Court consider a city to be a “person” under the Fifth Amendment’s just compensation clause? A research project for another day.

The Governor’s Budget: A Low Priority for Water and Wastewater Infrastructure?

The  infrastructure  needed to provide wastewater disposal and safe drinking water (treatment plants, pipelines, pump stations and intakes) may not be glamorous, but it is critical to public health, environmental protection and economic development. Since 2008-2009,  state grants  to help local governments  pay for  environmental infrastructure  have fallen  off a cliff.  In Governor McCrory’s proposed budget, infrastructure grant funding  hits  bottom.

In 2008, the N.C. Rural Economic Development Center and the Clean Water Management Trust Fund (CWMTF)  issued a total of approximately $160 million in grants to rural and economically distressed communities for water and sewer infrastructure.  In the 2011-2012 fiscal year  (July 1-2011-June 30 2012),  state budget cuts had reduced the amount granted by the two programs to just over $20 million. (Note: Most CWMTF grant awards go to stream/wetland restoration, stormwater management and riparian buffer protection.  The state law creating the CWMTF only allows  grants for wastewater infrastructure needed to address a specific water quality problem.)

It isn’t clear  that  the two programs will have any  water and wastewater infrastructure grants to give in FY 2013-2014.   Governor Pat McCrory’s proposed budget  makes significant cuts to both agencies — reducing total appropriations for the CWMTF to $6.75 million in the first year of the biennium ($0 in the second year) and cutting the total Rural Center Budget from $16.6 million to $6 million. Given the other demands on those agencies, the budgeted amounts  do not allow for much — if any — future infrastructure funding.

The state has not issued bonds for water and sewer infrastructure since an $800 million bond issue in 1999; all of those funds had been committed by 2004.  Once the bond funds had been exhausted, direct appropriations to CWMTF and the Rural Center became the  only  source of state grant funding for water and  wastewater system improvements. The other major sources of  infrastructure funding  have been the Drinking Water and  Clean Water  revolving loan funds  managed by the Department of Environment and Natural Resources (DENR).  A much  smaller  amount of federal funding for infrastructure  comes through community development programs in the  Department of Commerce.

Grants provided through the Rural Center and CWMTF have filled needs that cannot  be met by the  DENR  revolving loan funds alone. Congress created the  state revolving funds (SRFs)  to help local governments meet the cost of complying  with Clean Water Act and Safe Drinking Water Act requirements — not to meet  all local infrastructure  needs. Both  the Drinking Water SRF and the Clean Water SRF (which funds wastewater projects)  are largely  capitalized by federal grants to the state. ( Each  federal  grant  requires a 20% state match.)    There are at least two major gaps in SRF funding:

1.  Under federal rules, the  SRFs  must be used to meet drinking water and water quality standards; generally,  SRF loans cannot be used for projects (such as water and sewer line extensions)   to serve new development projects.

2. All of the SRF awards are made in the form of loans and some low income communities  have a very limited ability to  take on more debt. In the last few years (starting with federal stimulus funding for water and sewer projects in 2009), many  SRF loans have included some amount of principal forgiveness — but the local government still has to qualify for the loan.

Grant funds provided through the CWMTF and the Rural Center  fill those gaps. Rural and economically distressed communities  can  reduce their  debt burden by using a grant as  part of a larger  project  funding package that also includes loan funds.  There has been  debate in recent years about how much state infrastructure funding should be made available as grants versus loans,  but  the mix  needs to include some amount of grant funding  for economically distressed communities and emergency projects.

The CWMTF and Rural Center grant programs also make funds available for  infrastructure projects that  are not eligible for SRF loans.  The  Rural Center’s Economic Infrastructure Program funds infrastructure needed to serve  new economic development projects —  such as extension of  water and sewer lines  to an industrial park. Many of those projects would not qualify for an SRF loan. The Rural Center has also provided grants for extension of water lines to  homes with contaminated drinking water wells. Making those projects happen can be very difficult since a water line extension to serve a small number of homes far from an existing line can be  prohibitively  expensive to the local government. In several cases,  grant funds from the Rural Center helped make those projects possible.

The state’s population continues to grow.  Existing water and sewer infrastructure continues to age.  Water and sewer service continues to be a necessary condition for much economic development.   A 2004  report issued as part of the Rural Center’s  Water 2030 Initiative  estimated that North Carolina communities would need  $15 billion  to cover  water and wastewater infrastructure needs between 2005 and  2030.  The most recent  needs survey of North Carolina  water and wastewater systems (used by Congress to predict demand on the state revolving loan funds) reached a similar estimate  —  $16 billion over the next 20 years.  Although  70% of the water and sewer projects in the state are funded by private borrowing,  a significant number of communities  rely  on  a combination of low interest loans and state grants to upgrade aging infrastructure and plan for growth.

The Governor’s  budget provides state match money needed for the next  round of federal  SRF awards, but eliminating funding for  state water and sewer infrastructure grants should not be an unintended casualty  of the budget process.