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NCLM News & Political Report

The N.C. General Assembly adjourned July 26, leaving the Governor to consider many bills that affect environment-related programs. By the numbers, here's how the 2013 Long Session shook out:

  • 104: Legislative days met
  • 1,023: House bills filed
  • 728: Senate bills filed
  • 300: Bills signed by Governor Pat McCrory (as of publication)
  • 1: Bills passed without the Governor's signature (HB 488, the Asheville water system transfer bill)
  • 35: Bills remaining on McCrory's desk (as of publication)
  • 2: Bills vetoed by the Governor (as of publication)
  • 16: Bills vetoed by then-Governor Bev Perdue in 2011
  • 340: Bills in the NCLM bill tracking system
  • 115: Bills marked "critical" or "high" importance
  • 30: NCLM Advocacy Goals set in January
  • 7: NCLM Advocacy Goals achieved in legislative session
  • 700: Number of city officials visiting the General Assembly in the NCLM grassroots program
  • 100: Number of individual legislators who met with city officials via the grassroots program
  • 0: Number of spare hours for the NCLM Governmental Affairs team members during session

While the end of the legislative session created a modicum of breathing room for the League staff, our attention quickly turned to session wrap-up efforts such as our comprehensive End of Session Bulletin, published August 13. This publication contains a status report on the most important bills to cities and towns of this session. It also shows a largely successful session for the League membership, a result directly attributable to the extensive involvement of elected and appointed League members in making personal contacts with their legislators.

Before fully closing the door on the 2013 session, we still await the Governor's signature on several notable bills. Perhaps most importantly, McCrory threatened to veto this session's omnibus regulatory reform bill. Read about the bill and possible outcomes of a veto in "Governor Considers Veto of Omnibus Regulatory Reform Bill," below. Other municipal environment bills needing consideration by the Governor before becoming law are listed in "Environment, Municipal Utilities Bills Become Law; Others Await Governor," below.

Without daily legislative action, the League's legislative advocacy efforts turn to interim legislative committees and studies directed by recent legislation. If the regulatory reform bill becomes law as currently written, the League will likely participate in three studies that could have profound effects on municipal environment programs. One would examine possible limits on cities' abilities to pass environmental ordinances, while another would consider the role professional engineers must play in review of technical plans. A third would catalog the various entities providing water and sewer services in the state and decide whether to consolidate these entities. Read more detail of these studies in "Governor Considers Veto of Omnibus Regulatory Reform Bill," below.

Meanwhile, the League's regulatory advocacy program continues its involvement with state regulators. Significantly, legislators completely remade the N.C. Environmental Management Commission (EMC) via a state budget provision. The new EMC stands at fifteen members, having lost four seats, with nine gubernatorial appointments and six legislative appointments. While the Governor has not yet announced his selected nominees to the board, the legislature selected four members that have previously served on the Commission and another two members that are new. One of the four returning legislative appointments is EMC Chair Benne Hutson, who will retain that leadership role with the new Commission.

The EMC has many tasks ahead of it as a result of legislation that directed rulemaking (read about some of these rulemaking efforts in last month's EcoLINC article, "EMC to See Significant Changes Due to Political Turnover"). Outside of those efforts, the volume of rules affecting cities and towns will likely remain low throughout the remainder of this year due to the massive reorganization effort in the N.C. Division of Water Resources, detailed below in "State Water Programs Begin Substantial Reorganization."


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N.C., EPA Tee Up Water Quality Standards Rules

Against the backdrop of an imminent federal rulemaking on aspects of its water quality standards program, the N.C. Division of Water Resources (DWR) appears poised to take further action on its own review of the state's surface water quality standards. Known as the "triennial review," the state's most recent review began in 2009 and has been delayed by additional rulemaking requirements enacted by the N.C. General Assembly -- most notably, a requirement to complete a fiscal note. Consideration of the proposed standards by the N.C. Environmental Management Commission (EMC) may not proceed until the N.C. Office of State Budget and Management approves the associated fiscal note.

N.C. Triennial Review

Recent media reports discussed the state's triennial review delay and suggested that while DWR awaited final approval of the fiscal note, it may go forward with a public hearing on the state's current water quality standards. If held as reported, this public hearing would not serve as part of the formal rulemaking process the state must follow to approve the triennial review proposed standards. The media reports pegged the public hearing date as early as October ("DENR four years behind on Clean Water Act rules," Charlotte Observer).

At a minimum, the EMC planned to receive an update on the state's triennial review process at its September 12 meeting, though no vote is scheduled for that meeting.

The triennial review is a process mandated by the federal Clean Water Act (CWA) that directs states to review their surface water quality standards every three years. A highly technical scientific process, the review accounts for updated toxicological studies and other research regarding aquatic health in surface waters. In this most recent review, North Carolina has proposed changes to certain metals standards such as cadmium, chromium, nickel, silver, and zinc, as well as other measured parameters such as chlorophyll-a.

Municipalities holding National Pollutant Discharge Elimination System (NPDES) wastewater discharge permits must adhere to surface water quality standards. A complex mathematical exercise translates the standards into permit limits, taking into account the metals and other substances a wastewater system receives from homes and industries that discharge into its collection system. The assumptions made in those calculations determine whether or not a wastewater system (1) must make upgrades, or (2) can accept more wastewater connections from industries and other customers such as residences and businesses.

Under the CWA, if a state fails to uphold its triennial review responsibilities, the U.S. Environmental Protection Agency (EPA) may impose water quality standards for that particular state. In March, the Chapel Hill office of the Southern Environmental Law Center urged EPA to exercise this authority in North Carolina. In a letter to EPA, the group listed the impediments it saw that prevented the state from conducting a timely triennial review: "In sum, the North Carolina General Assembly has passed the Regulatory Reform Act of 2011, proposed another [regulatory reform] law, and reduced DWQ's budget and manpower -- legislative actions that, collectively, are contributing to the State's continued violation of non-discretionary terms of the Clean Water Act and are hampering DWQ's ability to comply with the Clean Water Act. They effectively ensure that North Carolina will not be able to complete a timely triennial review."

So far, EPA has not indicated it would step in and write North Carolina's water quality standards.

The League has been deeply involved in this state effort since it began in 2009 and will continue to advocate for changed implementation policies throughout the triennial review rulemaking process. Read more about past League member efforts in "Triennial Review Action to Pick Up in New Year" (November 2012 EcoLINC article). 

EPA Water Quality Standards Rulemaking

Meanwhile, EPA will likely publish its proposed water quality standards rulemaking language in the next few weeks. This rulemaking will address how EPA expects states such as North Carolina to write and implement their water quality standards. Under the CWA, "water quality standards" are legally binding provisions of law that describe the desired condition, or level of protection, of a waterbody. These standards represent the foundation of the CWA's water quality programs and consist of:

  1. Designated uses of a water body, such as recreation, water supply, aquatic life, or agriculture.
  2. Water quality criteria to protect designated uses, such as the metals criteria discussed above as part of North Carolina's ongoing triennial review.
  3. Antidegradation policies that maintain and protect existing uses and high quality waters from pollutant discharges that unnecessarily degrade those waters.
  4. General policies to address program implementation issues.

This rule package, underway since late 2009, will likely address all four aspects of water quality standards listed immediately above. It finally received approval by the White House Office of Management and Budget (OMB) late last month. Approval by OMB was the last step the agency needed before publishing the rule language. While the proposed language is not yet known, EPA offered insights into the areas it intended to address with this rulemaking during a series of public listening sessions in 2010. Those topics included:

  • Antidegradation: Currently, no established standard exists for EPA to follow when reviewing state water quality standards' antidegradation measures. Therefore, EPA will likely propose that states adopt their antidegradation methods in rule, following minimum requirements expected in this rulemaking. This aspect of the rulemaking would likely draw the heaviest criticism from industry groups such as the wastewater industry, who argue that the CWA does not give EPA the authority to set minimum requirements for states in setting this aspect of their water quality standards.
  • Administrator’s determination: EPA included this element in the rulemaking to clarify the parameters of an "administrator's determination" of when it must step in to write a state's water quality standards in the absence of state action. Industry groups generally support this clarification.
  • Uses. This component of the rulemaking would clarify EPA’s minimum expectations for designated uses.
  • Variances: Under general opposition from wastewater industry interests, this provision would establish a regulatory structure and transparency for use of variances states grant to dischargers. Industry groups have stated a preference for variances to be determined at the state and not federal level, given that variances often address local conditions.
  • Triennial Reviews: EPA indicated that this portion of the rulemaking would strengthen the triennial review requirements for solicitation of public comment. In addition, it would clarify EPA's evaluation of a state's triennial review to ensure that the resulting water quality standards were sufficiently protective of the waters' designated uses.
  • Reflect Court Decisions: The rulemaking would also likely include several provisions to respond to issues that continue to be litigated in courts: the definition of a "water quality standard;" requirements for states to include public participation records when submitting their triennial review packages to EPA; and a requirement for EPA approval of compliance schedules that are often included in a discharger's NPDES permit. Wastewater industry interests have indicated strong disagreement with the compliance schedule approval idea.

Read more background on this rulemaking at EPA's water quality standards rulemaking website.


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Governor Considers Veto of Omnibus Regulatory Reform Bill

Soon after the N.C. General Assembly adjourned at the end of July, Governor Pat McCrory indicated he was giving serious consideration to a veto of HB 74 Regulatory Reform Act of 2013. The bill, the last in a string of comprehensive environmental reform bills considered by lawmakers in this year's session (and the only one ratified), contained numerous provisions affecting municipalities. McCrory specifically mentioned provisions related to landfill rules and local billboard regulations as areas of concern for him.

Under the N.C. Constitution, a Governor has thirty days after adjournment of the General Assembly to sign a bill, veto it, or let it become law without his signature. This year, the thirty-day clock runs out on August 25. As of this publication date, McCrory had not taken any action on HB 74. Should he choose to veto it, he must call legislators back to Raleigh for a special session to consider a veto override.

The state constitution directs such a special session to take place no later than 40 days after the legislature's adjournment. This year, the last date a special session could take place is September 4. Legislators could choose not to reconvene -- and therefore not pursue a veto override vote -- in which case the bill would not become law. Alternatively, legislators could send the Governor a petition signed by three-fifths of the members of each chamber saying the special session was unnecessary, which would keep the bill alive for a veto override in the next legislative session that begins in May 2014.

Until McCrory takes one of the three actions listed above, HB 74 is not law. If and when it becomes law, the League will produce a comprehensive analysis of the provisions with significant impacts to municipal operations. Below, we offer details of the final ratified version of the bill.

Provisions Changed from Previous Reform Bills

As in past years, this year's wide-ranging regulatory reform bill was one of the last to be negotiated and gain legislators' approval. With a vote by the House on the last day of session, HB 74 passed both chambers of the General Assembly. The bill contained different language for certain provisions that had been included in previous regulatory reform bills considered by one or both chambers, including these of primary importance to cities and towns:

  • City environment ordinance-making restrictions. This provision changed dramatically each time it made an appearance in a regulatory reform bill. Initially, the provision prevented cities from passing any ordinance "more stringent than" a corresponding federal or state law. Over time, the provision narrowed to environment ordinances, and a mere two weeks from the end of session, it included exceptions to the prohibition such as when a city acts to protect public health, safety, and welfare. For months, the League worked extensively with legislators to transform this language from its extremely problematic original form. The final approved provision set up a legislative study of the issue while putting in place a de facto moratorium on enacting any environment ordinance that "regulates a field" also addressed by state and federal laws until October 1, 2014. The only way such an ordinance could be enacted was if all council members present and voting affirmatively vote to approve it. The League recognizes that this process will likely still impact cities and towns, but this final version represents a vast improvement over the bill's initial form. This provision was promoted by the state's development interests; read their perspective in this blog post.
  • Engineer review of technical designs. In response to objections by the League and affected state agencies such as the N.C. Department of Environment and Natural Resources and the N.C. Department of Transportation, an earlier proposal that would have required a professional engineer to review and seal changes to any technical plans that constituted the practice of engineering was turned into a two-part study. In the first phase of the study, local governments would work with the affected state agencies to identify current review practices and the role professional engineers play in review of technical plans. For local governments, technical plans needing review can include the sedimentation/erosion control and stormwater control components of development plans, or water distribution and wastewater collection line plan review, among others. The results of the local government/state agency study are due to the legislative Environmental Review Commission (ERC) by January 1. Then, in preparation for the short session of the legislature that begins in May, the ERC will further study the issue and make any recommendations for legislative changes. The League and its members will assist with this study as requested.
  • Study of water/sewer providers. While new to the regulatory reform bill, the language included in HB 74 was identical to that filed by Rep. Tim Moffitt in HB 814 Study Water & Sewer Service Districts. This provision would direct an ERC study of the entities that provide water and sewer service in the state, including sanitary districts, water and sewer authorities, metropolitan water districts, metropolitan sewerage districts, county water and sewer districts, and any other similar organizations that provide water and sewer. The primary focus of the study would examine whether, and to what extent, the number of these entities should be reduced or consolidated. The ERC would report its findings and any recommendations for legislation to the 2014 General Assembly. The League and its members will assist with this study as requested.

Unchanged Provisions from Previous Reform Bills

Most of the language in HB 74 remained unchanged from previous version of the regulatory reform bills. We list environment provisions of interest to cities and towns below in the order they appeared in the bill, and you may refer to this July 2013 EcoLINC article for further discussion of each topic.

  • Review of rules
  • Administrative Procedure Act revisions
  • Reclaimed water irrigation setbacks
  • Local sedimentation/erosion control appeals
  • Projects on contaminated property
  • Brownfields redevelopment
  • Groundwater compliance boundaries
  • Gravel is not impervious
  • Third-party challenges to water quality permits
  • Repeal pervious parking lot requirements
  • Combine DWR and DWQ

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State Water Programs Begin Substantial Reorganization

At the initiative of both the N.C. Department of Environment and Natural Resources (DENR) and the N.C. General Assembly, the state's water programs have undertaken a substantial reorganization effort. This effort includes transfer and consolidation of various water programs, as well as shifts in program personnel.

Transfer & Consolidation

Beginning August 1, all of the state's stormwater programs were transferred and consolidated in DENR's Division of Energy, Mineral, and Land Resources (DEMLR). Until this consolidation, DEMLR had responsibility for implementing the state's sedimentation and erosion control program. Now, the Division will also oversee all federally-mandated stormwater quality programs, including those that issue permits to municipalities. This move reassigned 30 state stormwater staff based in the Raleigh central office as well as the state regional offices.

Also beginning August 1, the remaining functions of the former Division of Water Quality and Division of Water Resources merged into one program, called the Division of Water Resources (DWR). In a video message to DWR employees, Division Director Tom Reeder stated the primary purpose for the consolidation was to increase the water programs' effectiveness and efficiency. Reeder also emphasized the environmental benefits to result from considering water quality and quantity issues in a more holistic manner. This agency-produced FAQ document provided further information on the merger.

In his video message, Reeder also previewed some of the initial tasks to face the newly-combined division, beginning with a review of all programs and rules currently implemented by Division staff. He said this "program review" would include:

  • Looking at all existing state water quality rules, with the aim of compiling a list of all unnecessary rules for the N.C. Environmental Management Commission, the state's environmental regulatory body, by December 31. This initiative also responded to a potential legislative directive for a comprehensive review of the state's water quality rules included in HB 74 Regulatory Reform Act of 2013; read about the Governor's possible veto of this bill in "Governor Considers Veto of Omnibus Regulatory Reform Bill," above.
  • Eliminating any programs determined to be unnecessary or not of benefit to the environment.
  • Limiting new rulemaking initiatives only to those required by state or federal law, until the Division completes its program review.
  • Receiving input on program and rule implementation from stakeholders such as the League through an "Outside Involvement Committee." That group will begin meeting in September.

Personnel Changes

Particularly with the consolidation of the state water quality and quantity programs into DWR, significant personnel changes will result from this reorganization.

Reeder's video message emphasized that the Division's new organizational structure was still under development and would not likely be completed until the end of the year. However, he did note that DWR would not have a deputy director, a decision consistent with more limited staffing of DENR Secretary John Skvarla's office, and he said the new organization would have less managers than at present. He also predicted many employees would assume different job responsibilities as a result of the Division's reorganization.

Beyond these structural changes to the Division, reductions in staffing levels are likely to come as a result of cuts directed by legislators in the state budget. First, legislators handed DENR a $2 million budget cut. Skvarla may choose where within the agency to apply those cuts. Second, on top of the overall agency cuts, the legislature pulled an additional $2 million from DWR's FY14-15 budget. This sum represents a 12.4% reduction from the Division's 2012 spending levels.

Other personnel changes could result from a nearly 600% increase in the number of "exempt" positions within DENR and DWR. Job protections, such as a requirement to demonstrate just cause before firing employees, do not apply to exempt positions. Earlier this month, Skvarla alerted employees whose positions were newly designated as exempt, writing, "I see this designation of your position as exempt as a badge of distinction of which you should be proud." He also told an audience yesterday that any changes associated with this reorganization would not further burden the agency.

According to the Office of State Personnel, a majority of these positions were classified as exempt because they were managerial positions. To that end, of the 167 exempt positions in the agency, 146 are designated as managerial and 21 exempt positions are designated as policy positions.

The capitol press has reported on these moves at DENR:


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Environment, Municipal Utilities Bills Become Law; Others Await Governor

Numerous environment and municipal utilities bills profiled in previous editions of EcoLINC have now become law. We list these bills below and provide links to the League's bill tracking system, where you can read the bill text and recent vote history of the bill. You may also view a comprehensive overview of this legislation in the League's End-of-Year Bulletin, published August 13.

Water Supply

 

Stormwater

 

Wastewater

 

Utility Operations

 

Regulatory Reform

 

Awaiting Action by Governor

Under the N.C. Constitution, a Governor has thirty days after adjournment of the N.C. General Assembly to sign a bill, veto it, or let it become law without his signature. This year, the thirty-day clock runs out on August 25. As of this publication date, McCrory had not taken any action on the following environment and municipal utilities bills that were ratified by the General Assembly:


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Regulatory Briefs

With a new system called "e-payment," DENR will now accept electronic payment for NPDES stormwater and wastewater, municipal collection system, and land application permit fees...EPA has also moved to the digital age, proposing a long-anticipated rulemaking to require electronic NPDES reporting with a comment period running through October 28 and final approval expected in June...In two related actions aiming to assert public ownership rights of the Yadkin River, the state sued aluminum company Alcoa to determine ownership of the submerged lands under the river and denied Alcoa a needed 401 water quality certification to operate its hydroelectric dams on the river...By a 59-40 margin, the U.S. Senate confirmed Gina McCarthy as new EPA Administrator last month...EPA released a new stormwater calculator that estimates the annual amount of rainwater and frequency of runoff from a specific site anywhere in the country...To continue educating local governments and the development community about low-impact development stormwater designs, the state will host an LID conference March 26-27...Applications for the next funding cycle of the Clean Water State Revolving Fund are due September 3...The U.S. Geological Survey has reported that 80% of U.S. streams studied by the agency have at least one "altered" biological community in the stream, following similar results from an EPA survey earlier this year...EPA continues to delay its study on the health effects of hydraulic fracturing on drinking water, pushing the draft release date to the end of next year and final report in September 2016.
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NCLM and State Government Environmental Meetings & Events