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League Bulletin

January 13, 2015

State lawmakers officially begin a new legislative session tomorrow, although they will devote their time and energies almost exclusively to selecting chamber leaders that day and then organizing further during a two-week break before the business of policymaking begins in earnest. Some key legislators and legislative insiders are predicting the pace of legislation may not be as fast as in the previous few years.

The budget, transportation funding, economic development and Medicaid reform are likely to top lawmakers' to-do list. The League's Governmental Affairs team will be focused on advocating for replacement revenue for the business privilege license tax, the restoration of historic preservation tax credits, competitive economic development tools, transportation funding that benefits the state and municipalities, and the many other Municipal Advocacy Goals approved by League members.

As for environmental issues, legislative headlines will likely continue to be dominated by coal ash and hydraulic fracturing, but there has been recent indications that lawmakers may introduce more nutrient legislation. Last week, Rep. Larry Yarborough, a Person County freshman member, gave an interview in which he stated that his primary goal this session was to delay or reduce the impact of the Falls Lake watershed nutrient management rules. In addition, N.C. Division of Water Resources Director Tom Reeder stated at last week's N.C. Environmental Management Commission meeting that he has been led to believe  the legislature will give direction regarding nutrient strategies for lakes. Reinforcing those statements, League staff has heard rumors for months that there may be legislative interest to consider a nutrient proposal.

On the regulatory front, the N.C. Department of Environment and Natural Resources (DENR) starts 2015 with a new leader. At the end of 2014, Governor Pat McCrory announced his decision to appoint Don van der Vaart as Secretary of DENR, replacing former DENR Sec. John Skvarla, who transitioned to Secretary of Commerce. Sec. van der Vaart comes from within DENR and his experience should be an advantage as DENR continues through the expansive periodic review of rules process mandated by HB 74 Regulatory Reform Act of 2013. With the 2B, 2H, 2T, and 2U water-related rules already through the rule review process, DENR plans an extensive stakeholder process to assist in preparing any changes to the rules prior to readoption. The League already provided preliminary input on this process, and the larger stakeholder process will likely begin in February and extend through the summer.

In addition, as 2014 came to a close, the U.S. Environmental Protection Agency (EPA) notified DENR of its final decision regarding North Carolina's 2014 impaired waters list -- known as the 303(d) list. With that final determination, EPA maintained its original decision to add 51 additional water body-pollutant combinations to the state's list, despite League and state regulators' opposition. DENR should soon announce its methodology to determine which waters will be placed on the state's 2016 impaired waters list; the Department had previously delayed its decision regarding the state's 2016 listing methodology, stating it would wait until 30 days after EPA made its final decision.

The N.C. Environmental Management Commission (EMC) voted Thursday to send its proposed consolidated buffer mitigation rule out for public comment. The League supported these changes to buffer mitigation (and previous rulemaking attempts) because they would ease the ability of cities and developers to compensate for disturbances made to buffer zones along bodies of water. In addition, the changes should result in more mitigation projects taking place in both urban and rural areas.

At Thursday's meeting, the N.C. Division of Water Resources (DWR) staff presented to the EMC the many benefits of the proposed rule, a reworking of a temporary rule now in effect. Staff listed the following benefits of the proposal: that it was easier to understand, provided for consistency across basin/watersheds, increased flexibility for compliance, and increased the number of sites and options for buffer mitigation. In addition, in a move important to cities and developers that seek to undertake mitigation in areas set back from waterways that also contain sewer easements, this latest proposal eliminates the need for a 30-foot sewer easement minimum width.

Buffer Mitigation History

Buffer mitigation is a state program that generally requires protection of nearby waters when activities affect a stream on or adjacent to a development site. However, previous program requirements were often too strict to allow buffer mitigation in urbanized areas. For example, one former program element required a tract with a minimum of 50-foot buffers on either side of a stream. In urban areas, finding such wide swaths of uninterrupted land posed great challenges.

The League and other stakeholders worked for many years with state regulators on this set of rules, which was prompted by a 1999 law that directed the State to expand buffer mitigation options. That effort culminated in language that allowed more mitigation in urban areas, among other measures. However, the rule approved by the EMC in 2013 received 10 letters of objection, triggering a requirement for legislative review and putting the rulemaking on hold.

Proposed Rule

This current rulemaking was mandated in SL 2014-95, a law that redirected the 15-year agency effort to update the State's buffer mitigation rules. It did so by requiring state regulators to adopt temporary rules “substantively identical” to those contained in the April 10, 2014 Consolidated Buffer Mitigation Rule Stakeholder Report, which was prepared in 2014 by private mitigation banking interests and state agency staff.

The text of the proposed permanent rule is very similar to the temporary rule that became effective October 24, but includes restructuring and changes to improve clarity and consistency. In addition, the language was broadened to include means of financial assurance beyond just a completion bond.

Public notice of the rule will begin January 26, with public comments accepted until April 17. Read previous coverage of the League's involvement in these buffer rules in "EMC Approves Rules that Assist Buffer Mitigation in Urban Areas," June 2013 EcoLINC.

In a discussion regarding relatively non-controversial stormwater permitting rules for the oil and gas extraction industry, the N.C. Environmental Management Commission (EMC) struggled last week with broader issues related to including actual permit terms in rules, specifically wrestling with the need for predictability in permits balanced against the ease of implementation for regulated parties. This discussion arose because the N.C. Rule Review Commission (RRC) objected to one of the EMC-adopted stormwater oil and gas rules on the grounds that a portion of the EMC-approved rule differed substantially from the rule language that was taken to public notice. The N.C. Administrative Procedures Act requires rulemaking agencies to re-notice and conduct further public hearings when making "substantial" changes to rules after the initial public comment period.

The rule at issue originally gave staff of the N.C. Department of Environment and Natural Resources (DENR) the ability to establish record-keeping, self-inspection, and self-reporting permit requirements related to stormwater. However, as a result of feedback received through the comment period, the EMC adopted a rule that instead included the specific permit requirements, eliminating some agency staff discretion by placing the permit terms in the rules themselves. Because the RRC objected to the rule as a "substantial" change from the originally-noticed language, the EMC had the option of addressing the objection in one of two ways, either:

  • providing public notice of the more specific rule language it adopted at its November meeting and receiving public comments on this updated language for a further 60 days, or
  • modifying the previously-adopted rule to remove the added language and go back to the language it originally provided for public notice.

Permit Conditions from Staff or in Rules?

EMC Chair Benne Hutson noted that the issue of how to proceed with this specific rule raised the larger question of whether the EMC wanted all permit terms written into regulations, or if instead the EMC preferred to give DENR staff the discretion to set specific permit terms on a more ad hoc basis. In the discussion, various commissioners noted that while there was a benefit to having a standard that may be modified based on a situation's specifics, they recognized that most of the regulated community preferred a predictable outcome from regulation, which entailed knowing what was expected to be written in permits.

Commissioners also recognized the potential for their decision to set a precedent for future rulemakings and asked division directors present at the meeting for input. N.C. Division of Water Resources Director Tom Reeder noted that it would be impossible to put all permit requirements into rules, while N.C. Division of Waste Management Director Linda Culpepper said clarity and consistency needed to be balanced with flexibility. Commissioner Steve Tedder, a former state water quality regulator, commented that the subject matter of some rules may require more specificity that was tailored to individual permitees' circumstances. Further, he said that while the oil and gas extraction industry may desire more predictability through permit terms being included in rules, if the EMC followed that course of action, it would not necessarily set a precedent for other future rulemakings.

The EMC concluded its discussion by deciding to adopt the original rule language that did not include specific permit requirements, which avoided a re-notification of the rule.

The U.S. Environmental Protection Agency (EPA) announced its revisions to the national ambient air quality standards (NAAQS) for ozone in November and proposed changes were published in the Federal Register December 17. These changes were of particular interest to League members because if an area exceeds air quality limits--and is consequently designated as being in "nonattainment"--then the federal air law can reduce federal transportation funding for local governments.

NAAQS Background

The Clean Air Act (CAA) requires EPA to set NAAQS for ozone (the main component in urban smog) and five other pollutants considered harmful to public health and the environment. In addition, it requires EPA to periodically review the standards to ensure that they provide adequate health and environmental protection. The federal law also requires EPA to update those standards as necessary, a process which led to the latest proposed changes. The NAAQS are used to determine what areas are in nonattainment, meaning they do not meet federal air quality standards for ozone. Then, EPA sets nonattainment boundaries based on recommendations from the states. The designation can have important implications for growth and development because it gives EPA the authority to review proposed highway projects and long-range transportation plans.

Effect on Transportation Funding

As mentioned, attaining NAAQS affects transportation funding. In tandem with the requirement for all areas to attain the air quality standards, the CAA also contains a transportation conformity requirement for these areas. With this second requirement, the CAA promotes a goal of ensuring that federal funding and project approval decisions go to transportation activities that are consistent with the law's air quality goals. The conformity process applies to metropolitan transportation plans, transportation improvement programs (TIPs), and projects funded or approved by the Federal Highway Administration (FHWA) or the Federal Transit Administration (FTA) in areas that do not meet or previously have not met air quality standards for ozone or the five other pollutants.

As required by the CAA, the N.C. Division of Air Quality (DAQ) develops a State Implementation Plan (SIP), which describes how North Carolina will keep the air clean enough so that the state does not violate the NAAQS. In the SIP, the State estimates emissions from factories, power plants, dry cleaners, bakeries, construction equipment, lawn equipment, biogenics, vehicles and other sources. To assure that the sources do not violate the standards, the law limits how much certain sources can pollute. If the emissions for an area exceed the limits established in the SIP, then under the transportation conformity requirement, federal money cannot be spent to fund transportation projects in that area. In North Carolina, the State and municipalities share responsibilities for building and maintaining transportation infrastructure such as roads and bridges.

Ozone Standard: Current and Proposed

NAAQS include both primary and secondary standards. Primary standards set limits to protect public health, including the health of at-risk populations such as people with pre-existing heart or lung disease, children, and older adults. Secondary standards set limits to protect public welfare, including protection against visibility impairment, damage to animals, crops, vegetation, and buildings.

In the recently-noticed standard, EPA proposed creating tougher limits by reducing both the primary and secondary standard within a range of 65-70 parts per billion (ppb) over an 8-hour average. The current standard is 75 ppb. 

EPA last updated ozone standards in 2008, lowering the allowable level from 80 ppb to 75 ppb measured over 8 hours. North Carolina created air quality plans for controlling ozone in nonattainment areas and achieved the desired result; DAQ staff indicated that the whole state is currently in attainment based on the 2008 standard of 75 ppb and 2012-2014 data.

However, some North Carolina counties' current ozone levels (indicated in the map below) could exceed EPA's proposed standard, depending on where the standard falls in the proposed range. For example, if EPA chose to set the ozone standard at 65 ppb, many areas of the state would be pulled into nonattainment. However, only Mecklenburg County would be considered in nonattainment if the new standard was set at 70 ppb. EPA does not plan to promulgate the actual standard until October at the earliest. 

EPA projects that the vast majority of U.S. counties will meet the proposed standards by 2025 with rules and programs that are currently in place or under way. EPA will make attainment or nonattainment designations for any revised standards by October 2017. Those designations would be based on 2014-2016 air quality data, which DAQ staff indicated bodes well for North Carolina because the state's ozone levels will continually improve with the passage of time.

The 90-day comment period ends March 17, 2015, and EPA projects that the final standards will be signed by October 1. 

In early January, DWR gave public notice of a proposed surface water reclassification to change a section of the Cape Fear River from Class SC to Class SC Sw Swamp (Sw), with the comment period ending March 3...A public hearing was held last week regarding the Cary-Apex requested interbasin transfer certificate modification, which requests authorization to transfer up to 33 million gallons of water per day from the Haw River basin to the Neuse River basin and the Cape Fear River basin, an amount which was consistent with the Jordan Lake Partnership’s 2014 “Triangle Regional Water Supply Plan,” addressing the region's water supply needs through 2060...After a presentation regarding the allocation of water in Jordan Lake, the EMC Water Allocation committee requested that DWR staff bring a list of impediments to other water supply alternatives to its March meeting...The full EMC adopted an interim report on the beneficial reuse of coal ash and directed staff to send it to the ERC, as required by 2014 legislation...In an attempt to determine the extent of groundwater contamination at the state’s 32 coal ash ponds, DWR invited residents with water supply wells near Duke Energy’s facilities to participate in a program to have their wells tested...Additionally, EPA proposed new rules regarding how power companies must dispose of coal ash, proposing technical requirements for landfills and surface impoundments under Subtitle D of the RCRA...A federal district judge rejected environmentalists' request to immediately seek a ruling in state court in a case aiming to block North Carolina from issuing novel Clean Water Act (CWA) permits for air emissions of feather and farm dust, allowing Rose Acre Farms to proceed with the suit in federal court...EPA extended the deadline for public comment on its proposed rule to require dental offices to remove 99 percent of dental amalgam from wastewater discharges from December 22 to February 20...In addition, EPA sent its final rule imposing requirements on states' water quality standards to the White House OMB for prepublication review, which included requirements related to antidegradation, variance procedures, designated uses, and actions EPA can take in determining if a state's rules are inadequate...Recently, environmentalists sued EPA for approving Florida's water quality standards to prevent degradation, arguing that baseline data of water quality conditions must be collected in order for EPA to rationally consider the state's actions...As chair of the Senate Committee on Environment and Public Works, U.S. Senator James Inhofe expressed his hopes to block EPA regulations, including the CWA jurisdictional rule, through votes under the Congressional Review Act.