Category Archives: Water

Discussion of water pollution, water supply and the law of water rights

Challenging Environmental Permits

November 17, 2015.  The  U.S. Environmental Protection Agency (EPA) recently warned the  North Carolina Department of Environmental Quality (DEQ) about the possible consequences of inappropriately restricting  citizen appeals of  Clean Water Act (CWA)  and Clean Air Act (CAA) permits.  For news reports  on EPA’s  letter to DEQ Secretary Donald van der Vaart see the N.C. Coastal Review here and the Raleigh News & Observer here. The EPA letter of October 30, 2015 expressed concern about  two recent  cases in which an administrative law judge  ruled in favor of DEQ without conducting a full hearing on the permit appeal.  In each case, the judge  concluded that conservation organizations challenging a state-issued permit failed to show the permit decision “substantially prejudiced” their rights — a threshold requirement under state law.  EPA believes the decisions conflict with federal laws and rules that guarantee the right of citizens to appeal Clean Water Act and the Clean Air Act permits.  EPA noted that the conflict could jeopardize North Carolina’s delegated authority to issue federal water quality and air quality permits. This post will focus on the permitting programs involved in the cases that caught EPA’s attention   —  Clean Air Act operating permits for  large air pollutant sources  (Title V permits) and Clean Water Act wastewater discharge  permits  (National Pollutant Discharge Elimination System or “NPDES” permits).

Delegation of Clean Air Act and Clean Water Act permitting.  EPA has authority to issue both Title V permits and NPDES permits, but Congress also allowed EPA to  delegate permitting authority to a state with an approved permitting program.  All 50 states have approved Title V permitting programs; 46 of the 50 states have approved NPDES permitting programs. N.C. has long had delegated permitting authority  for  both programs. Delegation gives the state some flexibility in program implementation and allows permit applicants to  interact with state rather than federal staff on permitting and enforcement issues.

Requirements for approval of a delegated program.  The  CAA, CWA  and rules adopted by EPA set  standards for state program approval.  Basically, the standards require a state program to include requirements and protections consistent with  federal law.  After initial approval, the state must continue to meet those standards; otherwise,  EPA can withdraw program approval and take over permitting in the state.  EPA’s October 30, 2015 letter concerned the requirement for state programs to provide opportunity for judicial review of permit decisions.

The federal rule on NPDES program approval, 40 CFR 123.30,  requires the state to provide an opportunity for judicial review of final permit decisions comparable to review available in federal court for a federal  NPDES permit decision. The rule goes on to say:

A State will not meet this standard if it narrowly restricts the class of persons who may challenge the approval or denial of permits (for example, if only the permittee can obtain judicial review, if persons must demonstrate injury to a pecuniary interest in order to obtain judicial review, or if persons must have a property interest in close proximity to a discharge or surface waters in order to obtain judicial review.)

A similar requirement applies to Title V permitting programs delegated to states under the Clean Air Act.  Under  40 CFR 70.4 (b)(3)(x),  a state Title V program must:

Provide an opportunity for judicial review in State court of the final permit action by the applicant, any person who participated in the public participation process provided pursuant to § 70.7(h) of this part, and any other person who could obtain judicial review of such actions under State laws.

Note that “any person who participated in the public participation process”  could mean literally  anyone who commented during the public notice and comment period before issuance of the permit.

The North Carolina cases that attracted EPA’s attention. The EPA letter mentioned two recent N.C. permit appeals —

♦   N.C. Coastal Federation, et al v. N.C. DENR, Division of Air Quality and Carolinas Cement Company LLC (appeal of the air quality permit issued to Carolinas Cement Company for a cement plant near Wilmington known as the Titan plant). In a series of three  appeals,  four conservation organizations challenged the initial air quality permit for the  Titan plant issued in 2012 and two sets of permit modifications approved in 2013.  State law allows any “person aggrieved” by a permit decision to file a petition for a hearing; the petition for hearing must include “facts tending to establish that the agency …. has deprived the petitioner of property, has ordered the petitioner to pay a fine or civil penalty, or has otherwise substantially prejudiced the petitioner’s rights”. (G.S. 150B-23). In effect, the law requires a petitioner to identify some harm.

The petitions for hearing noted that members of the four conservation organizations live, work, boat and fish  in the area  around  the Titan plant site and argued that air emissions and mercury deposition from the plant would affect their quality of life, health and recreational activities.  In each of the three cases, the administrative law judge agreed the petitioners were “persons aggrieved” by the permit decision but nevertheless ruled that petitioners failed to show the permit decision substantially prejudiced their rights.  The most recent  decision also concluded that the two earlier administrative decisions settled the question of petitioners’ failure to show substantial prejudice so the issue would not be reconsidered in the context of the last permit modification. The decision has been appealed to the N.C. Court of Appeals.

♦ Pamlico-Tar River Foundation and N.C. Coastal Federation v. N.C. DENR, Division of Water Resources and Martin Marietta Materials Inc. (appeal of an NPDES permit to discharge wastewater from a Martin Marietta quarry to Blounts Creek).   The two organizations appealing the permit submitted affidavits that the wastewater discharge would interfere with  members’ use and enjoyment of the waters of Blounts Creek for fishing and  recreation; hamper education and environmental restoration efforts undertaken by the organizations; and affect the economic interests of two organization members operating water-related businesses on Blount’s Creek.  The administrative law judge’s decision dismissed the permit appeal on the grounds that the petitioners were not “persons aggrieved” by the permit decision and had failed to show substantial prejudice to their rights. A Beaufort County superior court judge overruled this decision and sent the permit appeal back to the administrative law judge.

EPA clearly believes the restrictive decisions on standing in these cases conflict with the very broad right to judicial review of permitting decisions under the Clean Water Act and Clean Air Act.  A DEQ  statement in response to media questions about the October 30 letter characterized the EPA concerns as a misunderstanding of state law. In each case, the judges’ rulings had come at the request of DEQ.

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.

N.C. Environmental Legislation 2015: The Budget

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

Among the most significant impacts:

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

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

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

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

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

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

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

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

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

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

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

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

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.

The Battle Over Riparian Buffers

June 22, 2015. An earlier post  described  changes to state  buffer rules proposed in House Bill 760 (Regulatory Reform Act of 2015).  Last week, the North Carolina Senate put its own set of buffer changes into House Bill 44 (Local Government Regulatory Reform). The buffer provisions added by the Senate look very different from those approved by the House in H 760.

First, the purpose of  riparian buffer rules. In several areas of the state,  water quality rules limit clearing, grading and development activity within 50 feet of  rivers, lakes and streams. For the most part, the state buffer rules responded to water pollution problems caused by excess nutrients.   A  number of large fish kills,  including a 1995  fish kill in the Neuse River estuary that lasted more than three months and killed tens of millions of fish,  prompted  nutrient rules for the lower Neuse River and the Tar-Pamlico River basin.  The rules required stream buffers to  reduce  nutrient runoff and also put stricter limits on wastewater discharges of nitrogen and phosphorus.  More recently, similar nutrient problems led the Environmental Management Commission (EMC) to adopt  buffer rules for the  Falls Lake  and Jordan Lake watersheds.  State buffer rules also apply to the main stem of the Catawba River  and in the  Randleman Reservoir watershed to prevent development of nutrient problems. The rules  require a 50-foot vegetated buffer —  Zone 1  (the first 30 feet back from the water) has undisturbed natural vegetation;  Zone 2  can be graded and replanted.

In Section 13 of House Bill 44, the Senate proposes to  shrink the riparian buffer required under the Neuse River rules from 50 feet to 30 feet and allow more  disturbance within 30 feet of the water.  The  Senate bill then directs DENR and the Environmental Management Commission  to “implement all other rules adopted by the Commission for the protection and maintenance of existing riparian buffers for nutrient sensitive waters”  in the same way until the beginning of the 2016 legislative session. The implications:

♦ Stream  buffers on waters already stressed by excess nutrients will be significantly narrowed; it isn’t clear whether the narrower buffer will be as effective in reducing polluted runoff.

♦  The Senate provision allows grading, clearing and revegetation of the entire 30-foot buffer.

♦  Changes to the Neuse River buffer rule would be permanent, but  changes to buffer rules on other nutrient sensitive waters expire at the beginning of the next legislative session in May 2016.  (Although nothing in the bill suggests the Senate actually  intends to allow those buffer rules to return to their current form  in 2016.)

♦  Whatever happens in 2016, temporarily  reducing riparian buffer requirements on nutrient sensitive waters could set off a frenzy of buffer clearing during the one year interim.

♦ Since the provision only applies to  buffer rules adopted by the EMC  “for nutrient sensitive waters”,  buffer rules adopted for  Randleman Reservoir and  the main stem of the Catawba River  would be unchanged.

The Senate  and  House also differ on the method for measuring riparian buffers on coastal wetlands. The Senate provision (in Section 14 of House Bill 44) requires all coastal wetlands  — even those regularly flooded on the tides — to be considered  part of the riparian buffer.  The change would potentially allow clearing, grading and development activity up to the edge of a regularly flooded  coastal wetland.  H 760 requires the riparian buffer on a coastal wetland to be measured from the normal water level,  likely preventing use of regularly flooded wetlands as the buffer.

The House quickly voted not to accept the Senate changes to House Bill 44; the bill  has been sent to a conference committee to work out the differences.  The Senate has not yet taken up  H 760.  Legislative conferees can sometimes color outside the lines, but as things now stand the choice seems to be between:  1. Maintaining existing 50-foot riparian buffer requirements, but exempting a large number of  properties from the rules entirely (the House proposal in H 760);  or 2. Reducing the riparian buffer from 50 feet to 30 feet on nutrient sensitive waters and allowing grading, clearing and revegetation in the entire buffer  (the Senate proposal in H 44).

Note on Goose Creek: Buffer rules for the Goose Creek watershed protect habitat for a federally listed endangered species. The rules, which were negotiated with the U.S. Fish and Wildlife Service,  require broader buffers than those on nutrient sensitive waters. The Senate buffer provisions in H 44 do not affect the Goose Creek rules.  The buffer exemption in H 760 could apply in the  Goose Creek watershed, which may undo the negotiated agreement with U.S. Fish and Wildlife.

The NC Senate: Budget 2015

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

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

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

COAL ASH

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

(1) Utilities Commission policy on  incremental cost recovery.

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

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

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

COASTAL ISSUES

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

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

ENERGY 

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

FISHERIES

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

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

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

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

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

SPECIAL FUNDS

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

STREAM AND WETLAND MITIGATION

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

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

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

UNDERGROUND STORAGE TANKS

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

WASTE MANAGEMENT

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

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

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

WATER QUALITY

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

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

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

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

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

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

Reforming Riparian Buffers Out of Existence

May 7, 2015.  Yesterday, the N.C. House approved House Bill 760 (Regulatory Reform Act of 2015) after adopting several amendments. House Bill 760 has  attracted a lot of media attention because of  the renewable energy provisions.  Less attention has been paid to part of the bill that will significantly weaken use of riparian buffers to reduce water pollution.

An earlier post  described the original riparian buffer provisions in House Bill 760. By amendment,  the House changed the provision on measurement of riparian buffers adjacent to coastal wetlands.  The new language requires the buffer to be measured from the normal water level, recognizing that some coastal wetlands regularly flood on the tides. The bill continues to have confusing language on  local government authority  to adopt riparian buffer ordinances outside of the river basins and watersheds covered by state buffer rules. Amendments  improved those provisions a bit,  but I am not sure even the amended bill  allows for all of the circumstances in which a local government may need to adopt a buffer ordinance to meet state and federal environmental standards.

But in what may be the most under-discussed section  of House Bill 760, the bill  still creates an exceptionally broad exemption from riparian buffer rules that apply in the state’s nutrient impaired river basins and watersheds. None of the amendments  to House Bill 760 narrowed the scope of the  buffer exemption.  In  areas covered by state nutrient sensitive waters (NSW)  buffer rules, the bill exempts all tracts of land platted before the buffer rules went into effect — even if the property could be developed for its intended purpose in compliance with the buffer requirement. (There are already exemptions and variances that cover previously platted lots that cannot be developed in full compliance with the buffer requirement.) The only condition on the exemption:

Other than the applicable buffer rule, the use of the tract complies with either of the following:

a. The rules and other laws regulating and applicable to that tract on the effective date for the applicable buffer rule set out in subsection (a) of this section.

b.The current rules, if the application of those rules to the tract was initiated after the effective date for the applicable buffer rule by the unit of local government with jurisdiction over the tract and not at the request of the property owner.

The conditions  don’t narrow the exemption  much — if at all.  Enforcing (a)  requires someone in the present to  determine whether use of the property complies with laws and rules in effect as much as 15 years ago.  And (b) appears to be the “Get Out of Jail Free” card that allows a property owner to claim the exemption based on meeting all current local ordinances other than the buffer rule. Unless  I am missing something, the property owner can just opt out of the riparian buffer requirement as long as a development project meets other current standards.

The exemption applies whether the riparian buffer rules are enforced by the state or by a local government with  delegated authority to enforce the  buffer requirements.  The exemption also seems to apply to both undeveloped properties and to properties already developed and currently in compliance with the buffer requirements.  If so, owners of developed properties would be free to clear vegetation and create new encroachments in the buffer. (Failure of the bill to distinguish between developed and undeveloped properties in applying the exemption criteria may have led to some unintended consequences —  although the exemption language is so aggressively broad,  I am not sure that is the case.)

The buffer  rules are  part of  broader  water quality restoration plans designed to meet  federal Clean Water Act requirements. The Clean Water Act requires the state  to adopt a Total Maximum Daily Load (TMDL) —  a cap —  for any pollutant causing impaired water quality. A number of state  water bodies, including the Neuse River estuary, Falls Lake and Jordan Reservoir,   have had impaired water quality due to excess nitrogen and phosphorus.   For those river basins and watersheds, the nutrient management rules provide the underpinning  for  TMDLs that set nitrogen and phosphorus reduction targets.

North Carolina ‘s longstanding  policy has been to share the burden of pollution reduction among all of the major nutrient sources so the rules include tighter controls on wastewater dischargers; measures to reduce the amount of nitrogen and phosphorus leaving agricultural lands; and stormwater controls and riparian buffer requirements to reduce nutrient runoff from developed areas.  Each set of nutrient management rules reflects a long negotiation  involving  all of the  interests  affected — local governments, agriculture, landowners, real estate developers, environmental organizations — to balance the pollution reduction burden.

The House Bill 760 buffer exemption has the potential to upset the balance of the nutrient management plans and jeopardize the state’s ability to meet nutrient reduction targets in the TMDLs.  Understanding the impact of the exemption will require the answers to a number of questions yet to be asked or answered in the legislative debate:

1.  How many properties in each nutrient sensitive  river basin or watershed potentially qualify for the exemption and what percentage of riparian area  could be affected?

2.  How much nutrient reduction has the Division of Water Resources credited to protection of the riparian buffers in the approved TMDLs?

3.   Would the exemption affect the state’s ability to meet nutrient reduction goals for these impaired water bodies?

4.  Would the state have to ask for more nutrient reductions from other sources (such as wastewater treatment plants and agricultural operations) to make up the difference?

The bill now goes to the Senate, which has more often been the starting point for legislation to  limit use of stormwater controls and riparian buffers to restore water quality in impaired waters.

2015 Environmental Bills — Part II

April 17, 2015. A continuation of the previous post. Not a complete list, but hopefully  most of the significant bills.

Amend Environmental Laws.  In the category of you just can’t have too many — there are actually three “Amend Environmental Laws” bills this session (so far).  As noted in the previous post, House Bill 157 (Amend Environmental Laws) has already been enacted into law and House Bill 593 (Amend Environmental Laws-2)  amends  laws allowing reimbursement for third-party damage claims as a result of leaking petroleum storage tanks. I missed House Bill 576 (Amend Environmental Laws-1); at the moment, the bill  amends  solid waste laws to allow  the white goods tax (currently used by local governments to manage discarded refrigerators and other large appliances) to also be used for programs to manage discarded electronic devices.    Amend Environmental Laws-1 may also pick up additional provisions as it moves through committee.

Contaminated Sites. House Bill 748 (Establish Contamination Source Removal/Disposal Bd) creates a new full-time  (salaried) board to take over DENR’s responsibility for cleanup of contamination at pre-1983 landfills and other contaminated sites. The “pre-1983 landfills” are unlined waste disposal  sites — in some cases,   simply  dumps –that stopped operating before 1983 to avoid having to comply with federal standards for waste disposal facilities.  Many have groundwater contamination.  A 2007  state law  gave DENR responsibility for assessing and remediating the sites. Many of the landfills had been operated by local governments, so the 2007 legislation freed local governments of the potential environmental liability in return for a state solid waste disposal tax to fund cleanup.  House Bill 748  expresses concern about the slow pace of remediation.  It will be interesting to get more of the back story on the bill.  The concern may be as much about unspent funds earmarked for the cleanup as it is about unremediated contamination;  a  pot of money always attracts attention.  Reality is that contaminated sites require a  lot of assessment work before actual cleanup can begin.  Most  state-funded remediation programs have had a slow start up before making significant outlays for remediation.

Also,  a note that  House Bill 639 (Risk-based Remediation Amends) proposes the same amendments to remediation laws that appear in the Senate regulatory reform bill. You can find a description of those provisions in an earlier post.

Fracking. House Bill 773 would strengthen  requirements for public disclosure of chemicals used in hydraulic fracturing fluid.

Riparian Buffers. House Bill 760 is the  House regulatory reform bill.  The environmental provisions include significant changes to state laws allowing use of riparian buffers to protect water quality. It isn’t clear exactly how broad the bill’s restrictions on local government buffer ordinances are intended to be.  The bill amends a law written to allow  state delegation of riparian buffer programs under the nutrient sensitive waters (NSW) rules to local government, but  some of the bill language could be interpreted to prohibit local adoption of riparian buffer ordinances for any other purpose:

Units of local government may impose restrictions upon the use of riparian areas as defined in 15A NCAC 02B.0202 only within river basins where riparian buffers are required by the State.

Local riparian buffer ordinances  are sometimes adopted in response to other  state/federal water quality mandates  — such as Phase II stormwater permit conditions, water supply watershed regulations and endangered species management plans. So a local buffer ordinance may be needed to meet a water quality standard or  permit condition, but  not specifically required under state rules applicable to the entire river basin.  Assuming  the bill did not intend to prohibit use of riparian buffer ordinances to meet  other state and federal water quality mandates, it would be helpful to make that clear.

In  areas covered by the NSW buffer rules, the bill exempts residential lots platted before the buffer rules went into effect — even if the property could be developed for its intended purpose in compliance with the buffer requirement. (There are already exemptions and variances that cover previously platted lots that cannot be developed in full compliance with the buffer requirement.)  The buffer  rules are  part of  broader  water quality strategies designed to meet  federal Clean Water Act requirements. The Clean Water Act requires the state  to adopt a Total Maximum Daily Load (TMDL) –in effect, a cap —  for any pollutant causing impaired water quality. A number of state  water bodies, including the Neuse River and Falls Lake,  have impaired water quality due to excess nutrients  — particularly nitrogen and phosphorus.   The nutrient management rules provide the regulatory  underpinning  for  TMDLs that set nitrogen and phosphorus reduction targets for  those  rivers and lakes.    The rules include  riparian buffer requirements as a critical  tool in reducing the amount of nitrogen and phosphorus that runs off the land into surface waters. One question may be whether such a broad exemption from the buffer rules will allow the state to meet the federally-approved TMDLs.

The bill would also require that riparian buffers on shorelines bordered by coastal wetlands or marshland be measured from the waterward edge of the wetland. The term “coastal wetland” includes both wetlands that regularly flood on the tides and wetlands that flood on wind tides and seasonal high tides.  Under the provision, the “buffer” would often consist of wetlands with a frequent, direct  connection to coastal waters;  in some cases,  the buffer would effectively be in the water. The change would seem to defeat the purpose of having a buffer to allow polluted runoff to infiltrate through the soil rather than go directly into the water.

Stormwater. On the face of it,  House Bill 141 (Stormwater/Flood control) authorizes cities to use existing stormwater management programs to address flood risk by purchasing properties at high risk of flooding, elevating existing structures, and retrofitting  structures to reduce flood risk. The bill seems  intended to allow  cities in more populated counties to expand the purpose of existing stormwater programs to include flood management as well as water quality protection.  (The bill would limit the new authority to cities in a county with a population of 910,000 or greater and at least one city with a population of 500,000 or greater.)  One possible pitfall  — the bill could be interpreted as limiting the authority of other North Carolina towns and cities  to take similar actions through flood hazard mitigation projects.  For example, the small coastal town of Belhaven  has done a major flood hazard mitigation project  to elevate structures in areas repeatedly flooded due to hurricanes.   House Bill 141 may need to be clarified to avoid undermining cities and towns’  existing authority  to reduce flood hazards.

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.

N.C. Enacts Coal Ash Legislation

August 21, 2014.  After two weeks of drama in which the House and Senate had a falling out over one critical provision  and threatened to adjourn without voting on a final bill, the N.C. General Assembly enacted coal ash legislation by strong bipartisan margins in both chambers.  The  final bill now goes to Governor Pat McCrory for signature.  Senate Bill 729  follows eighteen months of controversy over the environmental impacts of the 33 coal ash impoundments located at 14  electric generating facilities  in North Carolina and the McCrory administration’s response to the problems.   Coal ash became an urgent  legislative priority after  a stormwater pipe under an  impoundment in Rockingham County ruptured and spilled more that 30,000 tons of coal ash into the Dan River. (Earlier posts on N.C. coal ash impoundments  and the Dan River spill here and here.)

What Senate Bill 729  Does:

♦ Sets timelines for  conversion from  wet to dry ash handling;  an  end to deposition of  coal combustion residuals (CCRs)  in wet impoundments; and final closure of  all 33 impoundments under  environmental standards.  Nothing in existing state or federal law otherwise requires any of those actions. Under current law, the state  can take enforcement action  to require a utility to address  unpermitted  wastewater  discharges or groundwater standard violations associated with an impoundment, but it is more difficult to effect comprehensive policy change through individual enforcement cases.

Under prior N.C. law, CCRs in a wet impoundment had been considered “wastewater residuals” and  exempt from the state’s solid waste disposal laws.  Senate Bill 729   requires CCRs removed from a wet impoundment  to be disposed of as solid waste.  Unless put to an approved reuse, the  bill requires disposal in a landfill that meets the most current standards  for  industrial landfills (including a liner system, leachate collection,  groundwater monitoring, and financial assurance).

♦  Sets  timelines for groundwater assessment and remediation  for all 33 CCR impoundments.  The state would otherwise have to seek assessment and remediation through enforcement cases. Even in response to enforcement action, existing state  rules generally allow the person (or company) responsible for the contamination to propose a schedule for assessment and remediation.

[Note:  In  litigation over  how state groundwater remediation rules apply to  pre-1984 CCR impoundments, a superior court judge recently interpreted the rules to require “immediate” removal of  coal ash causing  groundwater contamination beyond the compliance boundary. Senate Bill 729 reverses that decision;  see  “Controversies” below.]

♦ Requires the utilities to  identify drinking water wells within one-half  mile down-gradient of each CCR impoundment; test  wells potentially affected by groundwater contamination from the impoundment;  and provide  an alternative water supply if  testing finds a contaminant associated with  CCRs at levels exceeding the groundwater standard.  Under existing law, DENR can use enforcement authority to require a person responsible for groundwater contamination  to  identify and test wells for contamination.  Enforcement actions  focus on conditions at individual sites and the groundwater assessments tend to be more incremental, gradually working out from the known source of contamination and continuing  only as far as testing  shows high levels of contamination. The  comprehensive requirements of Senate Bill 729 may provide more information on well contamination more quickly.

The bill requires the utilities to provide  alternative water supply to any well owner whose drinking water well shows high levels of a contaminant associated with coal combustion residuals.  Without this kind of statutory remedy, a well owner may have to sue for damage to the water supply well — bearing both the upfront costs of  litigation and the burden of proving the impoundment caused the  well contamination. Senate Bill 729  requires  the electric utilities to provide an alternative drinking water supply within 24 hours  and alternative water supply for other purposes (such as bathing) within thirty days based  simply on data showing  that the well water exceeds the  groundwater standard for any constituent associated with CCRs.

♦ Requires the utilities to inspect all CCR impoundments;  report on all wastewater discharges (permitted and unpermitted) ;  and take action to eliminate unpermitted discharges to surface waters on a timeline set in the law. DENR has existing authority to take enforcement action in response to an unpermitted discharge of wastewater to surface waters, but would  normally have to take those actions on a site by site basis. Senate Bill 729 may prompt earlier identification and correction of the violations.

♦  Establishes stricter design, construction and siting standards for large projects  using coal ash as fill for construction projects and puts a moratorium on smaller structural fill projects. (Any project using more than 8,000 tons of coal ash per acres or more than 80,000 tons  total will be considered a “large” structural fill.) Existing  state rules  governing use of coal ash as structural fill have significant gaps. The new law fills a number of those gaps by requiring large structural fill projects to be lined;  have leachate collection systems;   monitor for groundwater impacts and provide financial assurance.  The bill also  establishes new siting criteria for large structural fills, including  setbacks from streams, wetlands, wells and property boundaries.

The bill puts a one-year moratorium on smaller structural fill projects while DENR studies  the adequacy of standards for those projects. The bill allows for two exceptions to the moratorium on small structural fills: 1. voluntary compliance with the new, stricter standards applied to large structural fill projects; or 2. use of CCRs as structural fill for a  public road  project.

♦ Amends the state Dam Safety Act to require Emergency Action Plans for all  high or intermediate hazard dams (including CCR impoundments) and  sets specific inspection requirements for CCR impoundments.

♦ Amends water quality laws to require  earlier notice to DENR and to the public following a wastewater spill that reaches surface waters. Prior law had been unclear about notice to DENR and allowed 48 hours  for notice to the public. Senate Bill 729 requires notice to DENR as soon as practicable  (and no later than 24 hours after the spill reaches surface waters) and to notify the  public within 24 hours. The new notice requirements apply to all wastewater spills and not just those associated with CCR impoundments.

♦ Repeals  much  of a 2013 regulatory reform provision dealing with groundwater contamination. Senate Bill 729   repeals two significant parts of the 2013 law: 1. a  presumption that the groundwater compliance boundary should be at the property line;  and 2.  restrictions on  DENR’s ability to require action inside the compliance boundary to control  groundwater contamination. (See the section on groundwater legislation  in an earlier post  for  more explanation of  what the 2013 provision did and Senate Bill 729 now undoes.)

♦ Imposes a new fee on electric utilities that own CCR impoundments to support implementation of the law. The bill allocates funds for 25 new  positions in DENR to work on coal ash and 5 positions in the Department of Public Safety to support the Coal Ash Management Commission.

Weak Points:

Creating a  new Coal Ash Management Commission in the Department of Public Safety with  authority to overrule DENR decisions on prioritization of impoundments for closure and approval of closure plans — but without the expertise or staff support to make those decisions. The Department of Public Safety has no experience with implementation of state and federal environmental laws and the bill authorizes a small staff of five to support all of the commission’s activities.  Commission appointment criteria do not require any member to have expertise in  groundwater hydrology or water quality  –  likely to be critical in prioritizing sites for closure and approving closure plans.

The bill provides few guiding standards for classifying impoundments based on risk. Risk classification will be one of the most important decisions required under the law  because the classification determines whether coal ash has to be removed from the site or can potentially be capped in place. The bill lists a number of factors to be considered, but provides no guidance on how to translate the  factors into high, intermediate and low risk classifications. Existing state programs that use similar classification systems to guide remediation work  have gone through rulemaking to  adopt specific criteria for defining high, intermediate and low risk. In the absence of rulemaking, the lack of legislative guidance could lead to inconsistent and arbitrary decision-making. Senate Bill 729   identifies four sites for immediate closure and in debating the bill a number of legislators questioned  the basis for prioritizing those four over others with similar environmental problems. Those kinds of question aren’t going to go away when the prioritization process shifts over to DENR and the new commission.

The bill authorizes  the Coal Ash Management Commission to issue variances from the impoundment closure deadlines, although the final version of the bill  allows only one variance of no more than three years for an individual impoundment.

Controversies:

In debate on the final bill, Democratic lawmakers again raised concerns about  the impact on ratepayers if  utilities  try to recover assessment and cleanup costs in a rate case. Senate Bill 729 prevents  utilities from recovering costs associated with an illegal spill (like the one on the Dan River), but only puts a  brief moratorium on recovery of  costs associated with assessment, cleanup and closure of coal ash impoundments.  The moratorium ends January 15, 2015 — before the utilities are likely to have incurred significant costs.  Some  legislators  would clearly prefer to leave the cost recovery issue entirely to the N.C. Utilities Commission; others  suggested  the General Assembly will  have time to revisit the cost recovery issue next session.

A number of environmental organizations have criticized the bill for potentially allowing use of capping in place to close impoundments that have CCRs  in  close proximity to  groundwater. This  issue  nearly derailed the bill completely  as House and Senate conferees tried to reach agreement on a final bill.     Both House and Senate versions of the bill required removal of CCRs from impoundments classified as high or intermediate risk.  Although worded differently, both versions of the bill allowed low risk impoundments to be closed by dewatering the coal ash and  installing an impermeable clay cap over the ash under standards  applied to closure of solid waste landfills  — the practice known as  “capping in place”.   Neither version of the bill  addressed  the concern  that a “low risk” impoundment may  be in close proximity to groundwater, allowing  CCRs to be a continuing source of groundwater contamination even after installation of a cap.

House  members  raised the issue for the first time in conference and proposed  new language to bar  “capping in place” if any part of the impoundment was located below the seasonal high water table. See an earlier post for more on the conflict between House and Senate conferees and the cost concern in the background of  debates over capping in  place. The final bill did not include the language proposed by House conferees, but added a sentence  barring approval of  a “cap in place” closure

…unless the Department finds that the proposed closure plan includes design measures to prevent, upon the plan’s full implementation, post-closure exceedances of groundwater quality standards beyond the compliance boundary that are attributable to constituents associated with the presence of the impoundment.

The new language would allow the utilities to cap in place  CCRs  in close proximity to groundwater as long as the closure plan  includes other measures (such as engineered groundwater remediation systems) to  prevent groundwater standard violations  beyond the compliance boundary.   The language clearly does not provide as high a level of protection  as a separation between the  coal ash  and groundwater — but  would   be consistent  with existing state  rules allowing DENR to approve a groundwater remediation plan based on use of engineered systems  to treat or control the contamination source and prevent groundwater violations beyond the compliance boundary. The question may be the level of confidence in DENR’s review and approval of remediation measures and the utilities’ commitment to long-term maintenance of remediation systems.

A final (related) controversy has to do with  language in Senate Bill 729  to   overrule a recent superior court decision interpreting state groundwater rules to impose more rigid remediation requirements  on waste disposal systems permitted before 1984. An earlier  post discusses the issue and Judge Ridgeway’s decision (now on appeal to the N.C. Court of Appeals) in more detail. In brief, the judge interpreted  state rules to require  immediate removal of the contamination source at any pre-1984 waste disposal site where contamination has caused a exceedance of a groundwater standard beyond the compliance boundary.   At a waste disposal facility, the contamination source usually turns out to be the waste disposed of in the facility  — which  could  be garbage  put in  a landfill or coal ash placed in an impoundment. The judge’s interpretation does not allow the alternative of using engineered groundwater remediation systems to treat or control the source of contamination at these older facilities — something the rules  allow for newer  facilities.

Senate Bill 729 reverses the effect of Judge Ridgeway’s decision by requiring groundwater remediation rules to be applied consistently to all waste disposal facilities without regard to the date of permitting.  Legislative intervention  seemed to be driven  by  some combination of concern about completely foreclosing the possibility of capping coal ash in place  and the impact of the decision on county and municipal waste disposal sites permitted before 1984.

The bill now sits  on the Governor’s desk, waiting for signature or veto.