April 30, 2015. In a late evening vote, the N.C. House voted yesterday to put significant limits on a 1971 state law requiring an environmental impact statement (EIS) for projects that involve expenditure of public funds or use of public lands. An earlier post on House Bill 795 provides some background on the State Environmental Policy Act (SEPA) and the first version of the bill. The version approved by the House last night had been amended to lower the thresholds for requiring an EIS from those in the original bill; now, expenditures of $10 million in public funds or activities affecting 5 acres or more of public lands will require environmental review. Another amendment to House Bill 795 excludes interbasin transfers (the movement of water from one river basin to another for water supply) from the new SEPA thresholds. All IBT proposals will continue to require SEPA review, although other provisions in House Bill 795 mean the scope of review will be narrowed to just direct project impacts — excluding indirect impacts and the combined effects of similar water withdrawals.
House Bill 795 has also been amended to require the Department of Environment and Natural Resources (DENR) to create a new environmental review process for water/wastewater infrastructure projects that fall below the new public expenditure threshold, but receive loans from the Drinking Water Revolving Loan Fund or the Clean Water Revolving Loan Fund. In committee last week, House members heard from DENR (apparently for the first time) that eliminating SEPA review could have the seriously unintended consequence of shifting those projects into a federal environmental review process. Federal monies provide much of the capital for the revolving loan funds and federal rules require funded projects to go through an environmental review equivalent to review under the National Environmental Policy Act (NEPA). SEPA had provided N.C. projects with a streamlined alternative to NEPA review; now, DENR will have to reinvent an environmental review process for projects that fall below the new SEPA thresholds.
The circle legislators traveled to liberate revolving loan projects from SEPA only to create a similar environmental review process to avoid the even worse fate of federal review reflects the amount of confusion surrounding House Bill 795. Debate on the bill has revealed so many misconceptions about SEPA and so little information about the effect of the law that it isn’t clear what problem legislators are trying to solve.
First, some misconceptions about the State Environmental Policy Act that seem to be affecting legislative debate:
SEPA requires environmental review every time someone turns a shovel on a state project (as one of the bill sponsors suggested.) In reality, the law has a number of exemptions and state agencies can adopt rules exempting additional categories of projects that have minimal impacts. DENR has an entire set of SEPA “minimum criteria” rules that allow many state and local projects with minor impacts to go ahead without SEPA review. Projects that don’t qualify for an exemption can often do a brief Environmental Assessment to show the project has no significant environmental impacts, avoiding the time and cost of a full Environmental Impact Statement.
SEPA review delays major highway projects. Legislators debating House Bill 795 often mentioned road projects. The executive director of the N.C. Chamber of Commerce (which made SEPA reform its top legislative priority this session) wrote an op-ed using the long, tangled path to final approval of plans to replace the Bonner Bridge over Oregon Inlet as an example of a SEPA horror story. The problem with that example — SEPA had nothing to do with environmental review of the Bonner Bridge replacement project. Like every major road project in the state that needs federal permits or receives federal highway funds, the Bonner Bridge project required review under the National Environmental Policy Act. Severely limiting environmental review under SEPA may mean less review of small road projects funded entirely by state and local government; it will not change environmental review of major highway projects in the state.
Environmental permitting makes SEPA review unnecessary. House Bill 795 supporters suggest the increase in environmental permitting programs since adoption of SEPA makes the law less necessary. Some permit reviews can take a broad look at environmental impacts, making a SEPA review unnecessary; that has been the basis for some exemptions already in the law. (Projects permitted under the state’s Coastal Area Management Act do not require SEPA review.) But many environmental permits only look at one kind of environmental impact and do not provide a comprehensive environmental review.
An air toxics permit review leads to limits on emission of toxic air pollutants, but does not evaluate the facility’s broader environmental impacts — or even answer the basic question of whether it makes sense to put a facility emitting toxic air pollutants in a particular place. In debating House Bill 795, several legislators mentioned controversy over the proposed Titan Cement plant near Wilmington which raised exactly this issue. Citizens wanted the state to delay issuance of air quality permits for the Titan project until an EIS had been completed. One concern was that even highly controlled mercury emissions from the plant could be too much given the plant site’s close proximity to the Cape Fear River (which already has elevated mercury levels).
SEPA also requires review of environmental impacts earlier in project planning — before the state or local government agency has entirely committed to a single site or project design. That allows the possibility of changing direction based on information from the environmental review. By the time a permit application is submitted, decisions about location and project design have already been made.
SEPA review slows economic development and job creation. The N.C. Chamber of Commerce made this argument in support of the bill, but never gave a real example. First, it is important to remember that SEPA does not apply to purely private development projects no matter how great the environmental impact. (You can take that as either a fine quality in the law or a serious flaw depending on your point of view.) No manufacturing plant, shopping center, residential subdivision, or commercial development will — by itself — require review under SEPA. Sometimes, state or local government economic incentives for a project trigger SEPA review. Most financial incentives (like tax credits) don’t have that effect because the incentives don’t involve an actual public expenditure on the development project. The Titan Cement project involved a question about whether a particular type of state incentive package triggered SEPA review. The kind of economic incentive that may lead to SEPA review more often involves a local government agreement to provide dedicated infrastructure for the development project — such a sewer line or access road.
Given the brief consideration given the bill, the number of misconceptions surrounding the existing law, and the failure to identify a specific problem to be solved, the SEPA reforms in House Bill 795 seem haphazard and unfocused. The bill isn’t likely to solve a problem if the problem hasn’t been identified. Legislators who assume House Bill 795 will speed highway and reservoir projects will be disappointed; those projects will still require federal NEPA review. Arbitrarily drawing a new line for SEPA review based on project cost will exempt some projects that have significant environmental impacts since cost and environmental impact are not the same thing. At the moment, there is a significant risk that House Bill 795 will make SEPA less useful in circumstances where it is most needed without solving any particular problem for the bill supporters.
The bill now goes to the Senate.