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NCLM News & Political Report

Following the elections last fall, both the state executive and legislative branches have put in place their leadership structures. The League has been preparing for this transition for months, beginning outreach to top agency heads in Gov. Pat McCrory's administration and focusing on both new and returning legislative leaders. In addition, the League membership has prioritized developing its top policy goals and partnering with the business community to communicate messages about what it takes to keep our cities the economic engines of the state.

DENR Under McCrory

In his first press conference to announce members of his cabinet, held in December, Gov. McCrory introduced John Skvarla as his Secretary of the Department of Environment and Natural Resources (DENR). Skvarla, an attorney and businessman, comes to the agency after starting businesses in highly regulated industries such as wetlands, stream, and buffer mitigation, aviation, investment banking, and health care.

Like McCrory's other cabinet members, Skvarla promised a primary focus on customer service for the agency. In addition, he stated that DENR would operate with an awareness of economic benefits and costs, and would make decisions with a respect for the diversity of scientific opinion. Skvarla's philosophy toward the agency he now heads was explored in these articles:

In addition to supporting Skvarla's priorities for DENR, McCrory himself stated that water and wastewater infrastructure occupy a place of prime importance in his policy initiatives. Washington Post columnist Neal Pierce profiled McCrory this weekend, writing:

So what's McCrory's top priority as governor? It's infrastructure. "I'm an Eisenhower disciple," he told me. "Infrastructure can play a key role in helping the economy and helping communities, urban and rural alike."

The big issue, he suggests, is to create a 25-year North Carolina infrastructure plan, and not just road building but four broad areas important to both cities and rural areas -- transportation, water, energy and communications. His interest in joint approaches stems from his experience in Charlotte, "where we redid our water and sewer at the same time we expanded transit and road lines."

Gearing up to implement these guiding principles and priorities, Skvarla announced his leadership team last week. Of importance to N.C. cities and towns, former twelve-term state legislator Mitch Gillespie, who resigned his legislative seat early this month, will serve as DENR's Assistant Secretary for the Environment. Gillespie served as co-chair of the House Environment Committee last session and was a leading state environment budget-writer. He now oversees DENR policy development related to water quality, water resources, air quality, coastal development, and land and energy issues.

Read more about Skvarla's leadership team in this announcement. The League looks forward to working with this team.

Legislature Installs Leadership

After swearing-in ceremonies Wednesday, state senators re-elected Sen. Phil Berger (Rockingham) as the chamber's leader, while state representatives re-elected Rep. Thom Tillis (Mecklenburg) as that chamber's leader. Both Berger and Tillis served in the same posts last session and will preside over a legislature where nearly two-thirds of the legislators are freshmen or sophomores. One national magazine profiled these new N.C. legislators as part of a larger nationwide trend in "Newbies Infiltrate State Legislative Chambers" (Governing).

Berger and Tillis have also made appointments to legislative committees, the workhorses of the state legislature. In both chambers, the environment committees will see slightly different leadership. Sen. Andrew Brock (Davie) and Sen. Brent Jackson (Sampson) will lead the Senate Agriculture/Environment/Natural Resources Committee, while Rep. Pat McElraft (Carteret) and Rep. Roger West (Cherokee) will lead the House Environment Committee.

In addition, the House added a new Committee on Regulatory Reform. Led by Rep. Tim Moffitt (Buncombe), this committee has over half of the chamber as committee members and will likely review many environmental provisions.

League Member Action

Just as League staff forms relationships with the leaders listed above, the League urges its members to make introductions with their legislative delegation and share the League's priority goals with them. The League membership will set these priorities at the Advocacy Goals Conference on January 24, the most important opportunity for League members to have a say in the organization's statewide policies. This year, the goals package will include the League's first-ever set of regulatory goals.

In addition, this legislative session, League members will also partner with statewide business leaders who have formed the N.C. Communities and Business Alliance. Alliance members will communicate with legislators about the importance of promoting economic growth in North Carolina's cities and towns. These leaders will take the lead in conversations with legislative leaders regarding policies that can keep N.C. cities and towns as the economic engines of the state.

Read more about the Alliance in "New group formed to push for cities and towns" (News & Observer).

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Legislative Long Session Preview

The General Assembly will move quickly into committee work when it reconvenes January 30, with several environmental proposals ready for introduction.

Political Context

The advance start to this year's lawmaking has been helped by legislative leaders who addressed administrative matters ahead of the full body convening for session. Already, leaders have made committee and room assignments, and committees are authorized to meet prior to the January 30 start for organizational purposes. And for months, legislators have worked with legislative staff to draft proposals for quick introduction once the session begins.

Senate President Pro Tempore Phil Berger (Rockingham) and House Speaker Thom Tillis (Mecklenburg) have outlined several priorities that will likely grab headlines and the attention of legislators. In the first days and weeks of session, those leaders have promised proposals to mandate identification for voters and to address a large shortfall in the state's unemployment insurance system. Overall, both leaders promise extended discussions on tax reform, education reform, regulatory reform, and Medicaid funding.

Environment Bills = Regulatory Reforms

The League expects many environment-related bills to be introduced against that political backdrop. Following the trends of the last legislative session, many of the environment proposals may be packed together into conglomerate bills or promoted as regulatory reforms. Legislative leaders have made media statements suggesting that most regulatory reforms will come from the state's business community.

In addition, at least in the House of Representatives, many environment proposals will likely receive consideration by the new House Committee on Regulatory Reform instead of a path through the House Environment Committee. The reg reform committee has 64 members -- over half of the 120-member chamber -- while the environment committee has 23 members.

Anticipated Environment Proposals

Likely environment proposals of interest to N.C. cities and towns include:

Water supply. Throughout last fall, a legislative environment panel called the Environmental Review Commission (ERC) examined many topics under the umbrella of water supply. [Read reports of these meetings in this October 2012 EcoLINC article and this December 2012 EcoLINC article.] Importantly, the ERC may propose bill language on any topic related to the environment. Generally, such proposals stem from presentations received by the commission during its meetings in between legislative sessions.

With a stated goal of having a more assured water supply in the state, the ERC discussion last fall centered on:

  • Broadening the uses of reclaimed water
  • Encouraging leak detection audits
  • Requiring more efficient use of water
  • Considering the role of ecological flow
  • Enabling private investment in water infrastructure
  • Utilizing interconnections to enhance stability of supply

Crucially, the ERC also received information about the L&S Water Power v. Piedmont Triad Regional Water Authority case. Just after the ERC discussion of this suit, which has large implications for public water supply rights, the N.C. Supreme Court issued a ruling stating that it would not issue an opinion in the case. That action leaves the law extremely unsettled. However, several ERC members stated a preference for addressing this uncertainty at the legislative level. They also expressed concern for the general lack of strong riparian water rights for public water supplies, a top water supply concern of the League membership as well. [Read more background on the case in this December 2012 EcoLINC article.]

A workgroup of League members on the Regulatory Action Committee examined the issue from a municipal perspective and provided feedback to legislators for incorporation into a bill this session. In December, then-Rep. Mitch Gillespie (R-McDowell) cautioned that due to the complex nature of this topic, passage of any bill may take all session.

Jordan Lake Rules. Some League members subject to the Jordan Lake Rules, led by Greensboro Mayor Robbie Perkins, have worked with a group of developers and realtors to suggest changes to the rules. The League expects these changes to apply to the new development and existing development stormwater portions of the nutrient management strategy for the lake. Generally, these changes are expected to ease implementation for the affected cities and development interests.

For more background, read "Cities will ask legislature for Jordan Lake Rules changes" and "Jordan Lake Rules changes recommended" in the Burlington Times-News.

Coastal stormwater rules. The Wilmington Star-News reported that coastal legislators have formed a bipartisan caucus to discuss issues of interest to coastal legislators. Generally, a legislative caucus serves as a voting bloc on issues of concern to its members. The article mentioned the possibility of caucus members seeking changes to the state's coastal stormwater rules.

Landfill permit fee timing. The ERC's package of recommended legislation for this session includes an adjustment to the state's landfill permit fee schedule. The adjustment became necessary in light of a law passed in 2012 allowing a ten-year landfill permit option.

State support for regional water system. The ERC's package of recommended legislation for this session addresses the state's liability when assisting local governments with applications for new water supply reservoirs. Previous state law instructed the state to become a co-applicant of a local government applying for permits for a reservoir, upon the local government meeting specific conditions. Legislators worried, however, about unintended liability from the state becoming a co-applicant. This proposal removes the co-applicant language and instead requires the state to provide full support of any reservoir project once the local government meets certain conditions and agreement with the state.

Sedimentation/erosion control local delegation appeals. The ERC's package of recommended legislation for this session contains a clarification of the recently-revised N.C. Administrative Procedures Act. This clarification would direct appeals of a decision made by a locally-delegated sedimentation/erosion control program to that local government rather than state superior court.

Sedimentation/erosion control financial assurance. The ERC briefly discussed an item that would require financial assurance such as a surety bond for all land-disturbing projects over twenty acres. The assurance would be held by the state or a locally-delegated sedimentation/erosion control program until a contractor had established permanent ground cover on the site. However, citing potential controversy over this proposal, the ERC declined to include the measure in its legislative recommendations. Legislators indicated two House members had an interest in introducing the bill on their own.

Funds for MEC out-of-state trips. When updating the ERC on the activities of the Mining & Energy Commission (MEC), MEC Chair Jim Womack indicated that he would likely request additional funds from legislators to pay for out-of-state travel for MEC members and to bring in outside experts to assist the MEC. The MEC formed in July and is tasked with writing the state's rules to govern the practice of natural gas extraction.

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Displeased, Commissioners Take More Time on Impaired Waters List

In their first opportunity to review changes to the method by which the state evaluates waters for impairment, state environmental regulators expressed disappointment at the lack of detail and directed staff members back to the drawing board Wednesday.

Members of the N.C. Environmental Management Commission (EMC) had hoped a document the N.C. Division of Water Quality (DWQ) employed to evaluate stream conditions for impairment -- called the "use assessment methodology" -- would contain more detail and description than previous versions, including clear instructions on how entities like public owned treatment works (POTWs, or municipal wastewater treatment plants) could submit their own data for consideration.

"This is the most critical water quality decision the division makes," said Commissioner Benne Hutson. "It affects POTWs, development, and industry. I am at a loss as to why this document doesn't solicit data."

Public Comment Not Addressed

Other commissioners joined Hutson in wondering why the use assessment methodology contained so few changes from previous versions, especially in light of public comments submitted last fall by organizations such as the League. In delaying a vote on the methodology until their March meeting, EMC members asked DWQ staff to, at the very least, respond to the public comments offered.

This opportunity for public comment and EMC review of the methodology had been a top regulatory priority of the League, which had pressed for this change for over eighteen months. Previously, decisions regarding the methodology were made by DWQ staff members without guidance or input from the EMC and with only limited comment from the public. The EMC had decided in November to oversee development of this document for the first time.

The use assessment methodology is critical because the decisions made pursuant to that methodology can place waters on the state's 303(d) list, named after Section 303(d) of the federal Clean Water Act. The 303(d) list is updated every two years. For each two-year cycle, the federal law requires states to evaluate the health of their waters and “list” those exhibiting impairments. Impaired waters most often become subject to a “water pollution diet” for the affected watershed, usually in the form of a Total Maximum Daily Load (TMDL). Local governments, as the holders of wastewater and stormwater discharge permits, bear responsibility for reducing their discharges to waters under a TMDL – often a costly requirement.

Given the consequences of having a water body included on the 303(d) list in a municipality's jurisdiction, the League had urged a public forum to discuss the adequacy of the use assessment methodology. State regulators use the methodology along with water quality data and standards to determine whether or not waters are impaired.

Other Desired Changes

The EMC's long discussion of the methodology found commissioners reiterating their vision for the document. Generally, they asked DWQ staff to present a methodology that was easily accessible, comprehensive, and transparent. In addition to referring to changes suggested in the public comments they received, commissioners asked staff to address these other components of the methodology:

  • The strategy for data collection and sampling
  • Specific information on how entities can collect and submit their own data for use in DWQ listing decisions
  • The process for de-listing a water body segment
  • Clarification on whose data is used for listing decisions based on fish consumption advisories
  • How stream lengths, called "assessment units" in the methodology, are determined
  • How conflicting data are evaluated

State staff explained the lack of detail in the proposed use assessment methodology as a deliberate move to send the U.S. Environmental Protection Agency, which reviews the 303(d) list but not the methodology, a bare-bones document. However, DWQ Director Chuck Wakild told commissioners that the staff would respond to the commissioners' concerns by March, conducting outreach to EMC members and stakeholders in the meantime. The League will work with DWQ staff in the coming months to explain its top-priority changes for the methodology.

Read more about the League's campaign to secure EMC oversight of the methodology in these past articles:

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Federal Courts Stay the Course in Stormwater Rulings

Two high-profile federal court decisions in the past month left current interpretations of stormwater law intact, though future actions are possible in both cases.

Va. Judge to EPA: No Stormwater Flow TMDLs

A Virginia federal district court rejected arguments early this month by the U.S. Environmental Protection Agency (EPA) that it had authority under the federal Clean Water Act (CWA) to regulate the flow of stormwater as a pollutant. In a direct, unambiguous opinion, the court stated that because stormwater flow was not defined as a "pollutant" in the CWA, EPA could not regulate flow as a surrogate for sediment. Unlike flow, sediment is a defined pollutant under the CWA.

In an action led by the Virginia Department of Transportation, plaintiffs challenged EPA's controversial approach to stormwater-related water body clean-up plans, or Total Maximum Daily Loads (TMDLs). EPA's approach, also adopted in 2011 by N.C. state regulators, based this TMDL on stormwater flow as a surrogate for sediment. While EPA implemented this novel approach without challenge in a TMDL in Connecticut, the agency was successfully challenged in two Missouri cases.

In addition, perhaps because of the successful objections to these TMDLs, guidance on the stormwater flow TMDL approach is currently stalled, awaiting review by the White House Office of Management & Budget. When EPA originally released this guidance in 2010, the League and other groups objected, partly by arguing that because stormwater flow was not a pollutant with a water quality standard, it could not legally form the basis of a TMDL.

In the Virginia case, rebuffing EPA, the court stated that under the CWA, a TMDL must be based on a specific pollutant, in this case, sediment. "If sediment level is truly 'a function of' the amount of stormwater runoff, as EPA claims, then the TMDL could just as easily be expressed in terms of sediment load," the court wrote. 

In rejecting the stormwater flow TMDL approach, the court directed EPA to modify the Virginia TMDL consistent with the decision. However, EPA could instead decide to appeal the case. Regardless of the case's chances for appeal, the decision could impact aspects of EPA's planned national post-construction stormwater rulemaking, expected later this year. This decision may also impact the permit terms EPA could choose to include in municipal separate storm sewer system (MS4) permits.

Read more about North Carolina's attempts to impose similar regulations on the Little Alamance Creek:

News coverage of the Virginia court decision:

Supremes Refuse to Hold L.A. County Liable for Upstream Discharges

The U.S. Supreme Court also shot down another attempt to impose stricter stormwater regulations in a decision released days after the Virginia opinion. In the unanimous opinion, the Court ruled that downstream MS4 permit-holders are not liable for upstream stormwater discharges to a water body, which are then transferred downstream, all the while staying within that single water body.

The National League of Cities joined the League of California Cities and the California State Association of Counties in arguing against an interpretation that such movement of water constituted a "transfer" from one water body to another -- and therefore, an action subjecting permit-holders to further clean-up liabilities.

While the Court issued a narrow opinion, the parties raised many different issues the Court chose to ignore in its final opinion. Specifically, the Court did not rule on whether an MS4 permit-holder may be held liable for exceedances of water quality standards when its own monitoring revealed such exceedances within waters controlled by the permit-holder. Such issues could be litigated in future cases.

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Regulatory Briefs

DWQ announced a public comment period and hearing schedule for the flexible buffer mitigation rules package, with hearings in Raleigh and Winterville and written comment accepted through March 18...The EMC approved limited changes to the state's groundwater quality standards, hinting at a future rulemaking action to inject flexibility into the standards-setting process...DWQ once again delayed presentation of the triennial review fiscal note to the EMC...Taking the lead on providing support for writing regulations to allow the practice of hydraulic fracturing in the state, the Division of Energy, Mineral, and Land Resources (DEMLR) announced that it would convene a stakeholder group later this month, including municipal representatives, to discuss water quality regulations...Beginning in March, EMC members will receive a report every two months informing members of water and air "permits of interest"...A N.C. Superior Court judge found enough indication of evidence that the four-million-hen Rose Acre Farms poultry facility discharged nitrogen from feathers and dust into nearby waters to order an evidentiary hearing by a state administrative law judge that would determine whether a water quality permit was needed...DWR will begin its five-year assessment of the Central Coastal Plain Capacity Use Area in March, a process that is anticipated to be controversial...A S.C. appeals court has denied Duke Energy a Section 401 water quality permit, jeopardizing Duke's ability to renew its 50-year FERC license and control the flow of water through its lakes and dams on the Catawba River, including in North Carolina...EPA released a final interpretive memo that allows water utilities to distribute their Consumer Confidence Reports electronically...Environmentalists lost their bid to force EPA to revise its nationwide wastewater secondary treatment standards to include nutrient controls...EPA issued its revised total coliform rule, setting first-ever drinking water standards, sampling requirements, and public notification procedures for E. coli; guidance is expected later this year...Environmental groups have filed a suit in state Superior Court seeking to reverse a December EMC ruling that Duke Energy has the benefit of a groundwater compliance boundary around its coal ash ponds; the ruling also implicated the ability of cities to use compliance boundaries on land application and other sites...DENR has updated its permit tracking system, which includes all data connected with water quality and other permits, to feature an easy-to-use map of all permits in the system...For the first time, EPA has indicated a willingness to open an existing stormwater consent decree to allow green infrastructure practices in lieu of "gray infrastructure" such as piping and tunnels, allowing the Washington, D.C. stormwater utility to conduct research into green infrastructure techniques.
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