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League Bulletin

January 19, 2016

Last year ended with welcome news for cities and the officials and employees that make local government tick. A new poll commissioned by the League showed that likely voters in North Carolina have overwhelmingly positive views of city and town government and the services provided at the local level. The poll findings revealed that more than two out of three likely voters in North Carolina approved of the job performance of their city or town government, with 78 percent stating that they were satisfied with the services and amenities provided in their town or city. 

The poll results, detailed here, stood in contrast to rhetoric that N.C. local governments need more state-level control. A deeper look at the poll findings showed that the positive views of local government cut across political lines and the urban-rural divide in the state. Seventy-two percent of Democrats, 69 percent of Republicans and 64 percent of Independents gave positive job approval ratings to their city or town government, while 71 percent of (self-identified) urban dwellers, 70 percent of suburban residents and 67 percent of rural residents viewed the job performance of their city or town positively.

Legislative Primaries, Studies

With only two months in between the end of the historically long 2015 legislative session and the beginning of the filing period for the 2016 legislative elections, many state lawmakers opted not to stand for re-election. In total, 22 of the 170 N.C. legislators will retire after this year, including two state senators who pulled out of their races after initially filing for re-election.

Even as they prepared re-election bids, legislators fired up their interim work with oversight and study committees that began meeting this month. The Environmental Review Commission handles many of the topics and studies of most concern to municipal environmental programs, and at its first meeting last week, the Commission announced the creation of a study group to examine waste management issues, as directed by various 2015 laws. The League will tap local solid waste experts to participate in these discussions. In the next three months, the Commission may also elect to conduct other authorized studies on topics such as piping materials preferences, state stormwater laws, and low-risk coal ash impoundments.

Regulatory Standoff

While legislative activity cooled off as last year wound down, tensions between the State and federal environmental regulators heated up dramatically. First, the top administrator for the U.S. Environmental Protection Agency (EPA) Region 4 sent a warning letter to N.C. Department of Environmental Quality (DEQ) Secretary Donald van der Vaart. The letter stated that North Carolina risked federal takeover of its delegated environmental programs, including the water programs that govern municipal water, wastewater, and stormwater operations. In the letter, EPA Region 4 cited a legal posture adopted by North Carolina in two cases involving air and water permits. EPA alleged that in adopting those legal positions, the State effectively blocked provisions in federal air and water laws that required citizens to be able to challenge state permitting decisions.

DEQ pushed back against EPA last week, writing a response that flipped EPA's arguments back onto the agency: "North Carolina gives its citizens easier access to judicial review when compared to the hurdles in the federal process a citizen must overcome to challenge an air or water permit," van der Vaart wrote. 

In the midst of the back and forth between the two environmental agencies, Governor Pat McCrory appointed Steven Rowlan, Director of Environmental Affairs at Nucor in Charlotte, to the N.C. Environmental Management Commission. As a professional engineer, Rowlan increases the number of Commission members with engineering backgrounds to one-third of the board.

Following a December meeting between League members and top N.C. environment officials, the N.C. Department of Environmental Quality (DEQ) today issued a question-and-answer document that clarified which local governments must comply with recent stormwater legislation, and what they must do to comply. As a result, the 2015 law affects only a narrow number of local stormwater programs, all of them run by county governments.

League members and staff met with N.C. Department of Environmental Quality Secretary Donald van der Vaart and other top agency officials last month to press for answers to outstanding questions about recent stormwater legislation. Legal and technical experts from Morrisville, Charlotte, and Durham laid out the challenges and unanswered questions that they have encountered in implementing some of the new laws, and they stressed the resulting uncertainty faced by the development community. Sec. van der Vaart pledged to the group that his agency would assist communities statewide in determining how to comply with the new laws, resulting in the agency's interpretive statements released today. The League thanks the Secretary and his team for understanding the concerns of cities and working with them to fulfill the legislature's intent.

Most importantly, DEQ clarified that it expected only those local programs operating a state-delegated program to submit information to the agency for review by March 1. Those programs--all of them in counties and not municipalities--were required by last year's regulatory reform bill (section 4.20(c)) to submit to regulators details regarding how they implemented their delegated programs. Most municipal stormwater programs are not delegated by the state; rather, they are required under the federal MS4 stormwater program or other state mandates such as the water supply watershed programs. The Q&A document laid out this rationale for the agency's interpretation:

"We do not believe the session law applies to those local governments who are administering mandatory stormwater programs. Mandatory stormwater programs are those that are required to be implemented locally by federal or state rules and include NPDES Phase I/II, Water Supply Watershed, and Nutrient Sensitive Waters (NSW)...[The new law modifies existing statutory language that was] adopted to allow local governments to request delegation of stormwater programs in areas where the state was implementing a state stormwater program. The provisions of this statutory change do not apply to those local governments that are required to administer a stormwater program under a federal or state rule or permit."



Department of Environmental Quality Secretary Donald van der Vaart (center) meets with League members and staff   

Discussions regarding government funding of water and wastewater infrastructure took center stage for state policymakers numerous times over the past two months. The most high-profile support came from Governor Pat McCrory during a kick-off event for the $2 billion Connect NC Bond package earlier this month, while a top state legislator also publicly stressed the importance of public water and wastewater systems for business recruitment in the state.

Connect NC Bond

More than 450 people joined McCrory and legislative leaders at a Connect NC Bond rally two weeks ago. (Read League coverage of the event here.) The kick-off event came a couple of weeks after the League's Executive Committee voted to endorse and support the bond initiative. 

If approved by voters in March, the bonds would provide $310 million in water and sewer system assistance to local water systems, the largest such state investment in water infrastructure since a previous state bond that passed over fifteen years ago. In authorizing the bond vote, the N.C. General Assembly directed $100 million to an existing state grant fund. The remaining two-thirds of the amount would go to two state infrastructure funds as seed money for new state revolving funds administered by the State Water Infrastructure Authority. Unlike the more-familiar federal state revolving funds for drinking water and clean water, these state revolving funds would have more streamlined application procedures and different allowable expenditures. In addition, they would not be subject to annual congressional approval, as with the federal funds.

Importantly, dedicating the bond proceeds to establish a homegrown revolving loan fund would ensure a growing source of water infrastructure funding for decades to come; state officials told League staff members that they estimated the $210 million investment from the bond would grow to $450 million over twenty years.

Legislative EDGE Committee

The importance of state support for water and wastewater infrastructure came out as well in discussions by members of the Joint Legislative Economic Development & Global Engagement Oversight Committee two weeks ago. The committee, dedicated to examining policies that further job growth in the state, began its work this interim by brainstorming ways the state could encourage job growth in rural areas.

In a presentation to the committee, economic development consultant Ted Abernathy noted that investments in infrastructure -- like those that municipalities typically make with water, sewer and transportation projects -- were often at the top of business' lists of considerations when choosing where to build or expand. Senate Majority Leader Harry Brown emphasized this point, saying state officials may need to focus more on water and sewer system development as a means of promoting economic development in rural areas of the state. "You've got to get infrastructure in the ground to make a difference," he said.

A discussion by an environmental legislative panel examining Duke Energy coal ash ponds and the clean-up around them veered into the topic of overall drinking water safety Wednesday, including that of the state's public water systems. The focus on local drinking water systems by the Environmental Review Commission (ERC) came after state environmental regulators at the N.C. Department of Environmental Quality (DEQ) expressed frustration that state health officials set water pollutant standards for private drinking water wells around Duke Energy power plants at much more stringent levels than the standards set by the U.S. Environmental Protection Agency (EPA) for public water systems. 

The standards discussed at the committee meeting affected two substances, hexavalent chromium and vanadium. Both substances occur naturally in North Carolina soil and rock, and can also be a byproduct of industrial processes such as burning coal for power production. In particular, vanadium occurs at naturally higher levels in the "slate belt" of N.C. soils extending north from Charlotte.

Last year, DEQ officials strongly disagreed with the standards methodology used by the N.C. Department of Health and Human Services (DHHS), as reported by the News & Observer. In North Carolina, officials with DHHS regulate private drinking water wells while DEQ regulates and permits public water systems like those operated by cities and towns. The DHHS methodology resulted in an extremely conservative level of acceptable hexavalent chromium and vanadium concentrations in well water. As a result of the conservative DHHS standards, 400 well owners were advised not to drink their water last year. However, only twelve of those wells exceeded the acceptable safety limits set by EPA for public water systems--and those exceedances were for lead and arsenic, not hexavalent chromium or vanadium. One affected well owner, the private water company Aqua NC, wrote a strongly-worded response last year that criticized the agencies' actions.

Arguing that the levels set by state health officials for the wells were unrealistic, DEQ Assistant Secretary Tom Reeder noted in his comments to legislators last week that seventy percent of U.S. public drinking water systems would be out of compliance if the DHHS standards applied to those systems, including several in North Carolina. Legislators responded that the different standards, and results from them, were likely confusing to the public. Read their comments, as well as those by a leading public health expert stating that she would drink the well water around Duke's plants, in "Legislators probe conflicting messages on water drinking-safety standards" (News & Observer).

The science on acceptable public drinking water standards for hexavalent chromium is more established than that for vanadium, which is still being studied by EPA. In the absence of federal drinking water standards for that substance, only a handful of states have chosen to set limits for vanadium. Reeder presented information (slide 15) showing that those southeastern states that have set their own limits for vanadium chose levels at many orders of magnitude less stringent than the level chosen by DHHS.

Going forward, DEQ and DHHS would continue to work jointly to provide accurate information to well owners regarding the safety of their drinking water, Reeder told legislators. The ERC could also choose to make recommendations for legislation in the upcoming short session to clarify the roles of DHHS and DEQ in regulating public and private drinking water sources.

Following passage last year of legislation (section 4.1) authorizing cities and businesses to proactively audit their environmental operations and self-report violations to regulators, the State continued to wait on federal approval of the program this month. In an update to a state legislative environment committee last week, N.C. Department of Environmental Quality (DEQ) Chief Deputy Secretary John Evans said that the agency had submitted a request to the U.S. Environmental Protection Agency (EPA) for the go-ahead on this program, but had not yet received a response. The legislation, modeled on informal self-audit policies in place for decades at both DEQ and EPA, required EPA approval before becoming effective.

The self-audit legislation would apply to any entity regulated by federal, state, and local environmental laws. Municipal operations regulated by the State and federal governments include water, wastewater, stormwater, and solid waste programs. In addition, when cities undertake redevelopment of contaminated properties, or when they seek to develop a new water supply, a host of state and federal environmental regulations apply to those activities as well. On the other hand, state and federal laws force cities to become regulators that oversee environmental compliance of private developers and other businesses that discharge wastewater into public sewer systems. Therefore, cities would be affected by this new self-audit program both as regulated entities and as regulators.

Cities as Regulated Entities

The new law would confer benefits to those undertaking a self-audit program in two ways. First, it would grant the regulated entity, such as a wastewater system, a "privilege" in legal proceedings. This privilege would prevent disclosure of the contents of the self-audit during any legal action, and it would also allow people that participated in the audit to avoid testifying during those legal actions. However, the law contained several exceptions to this privilege, including documents created to intentionally avoid compliance with environmental laws, documents related to a criminal prosecution, or documents already required to be reported to state and federal regulators.

Taking advantage of the privilege may prove difficult for cities and towns. Because cities are public entities, they must comply with all state laws related to public records. Absent a legal action under which a city could assert this privilege, it is unclear whether a city could claim the privilege and withhold the contents of an audit when subject to a public records request. Further, because state law cannot trump federal law, the privilege would not extend to any legal proceedings initiated by EPA itself or asserted by third parties under citizen lawsuit provisions in laws like the federal Clean Water Act.

The second benefit to regulated entities under this self-audit law comes with the law's immunity provisions. Broadly, these provisions would allow the regulated entity to avoid penalties such as fines and other enforcement actions, if the regulated entity complied with all aspects of the self-audit law. Chiefly, to enjoy immunity, the regulated entity must voluntarily disclose to regulators any violations of environmental laws that it discovered during the self-audit. In turn, the regulating agency must then certify that the violation was corrected within a reasonable amount of time. The law would place limits on the number of times a regulated entity could claim the benefit of immunity from enforcement.

Cities as Regulators

As regulators, cities must ensure that developers comply with environmental laws such as sedimentation and stormwater regulations, and they must also regulate the contents of industrial wastewater discharged into their sewer systems by businesses. Because the law specifically listed "units of local government responsible for the enforcement of environmental laws" as a type of regulator who must adhere to the self-audit program, any of the developers and businesses regulated by cities may assert the privilege and immunity provisions of this new law when dealing with the city.

Unlike state and federal regulators, however, cities conduct their regulatory activities because state and federal permits require them to enforce these environmental laws. If cities do not properly regulate others, under these permits, they can be subject to penalties themselves. Therefore, the immunity provision of this law in particular could pose a risk to cities whose permits require them to undertake enforcement actions that the immunity provision in turn allows regulated entities to avoid. If EPA approves North Carolina's self-audit program, cities must work with their regulators to ensure that they remain in compliance with their own permits.

A top N.C. Department of Transportation official told legislators two weeks ago that he would bring back recommendations to them regarding how to reduce delays in road projects caused by utility line relocations. Mike Holder, DOT's chief engineer, was encouraged to do so by legislators who expressed concern during a legislative transportation committee meeting that delays by private utility companies drove up the cost of public infrastructure projects. 

The same DOT issues cited by Holder have also been a major cause of delays in municipal water, wastewater, and street projects, so these discussions may represent an avenue to address similar concerns held by local utilities. Such delays cost cities and towns millions of dollars each year. League and DOT representatives will meet this week to discuss possible legislative proposals.

In his presentation, Holder told legislators that waiting on utilities to relocate their under- and above-ground lines is the largest source of delays in DOT projects. Holder also pointed to other peer states in the Southeast that reported frustrations with this necessary aspect of building public infrastructure. He said DOT planned to draw on best practices in those states (slides 22-25), including allowing early access to utility companies for small projects, requiring DOT contractors to obtain and incorporate utility work schedules into the overall project schedule, and hosting regular meetings with utility companies to update them on upcoming projects in their service territories.

Any recommendations would return to the Joint Legislative Transportation Oversight Committee, which meets on the first Friday of each month during the legislative interim. The next meeting of this committee is February 5.

Top state regulators agreed last week to solicit formal public comment on a large package of stormwater rules that would affect cities and towns. The N.C. Environmental Management Commission (EMC) gave a green light for public comment to a proposal brought forward after several years of stakeholder involvement. Four municipal stormwater experts represented the League in these stakeholder discussions, which focused on defining technical standards for stormwater control measures as well as creating a fast-track permitting option for these devices (read background on this initiative in "Minimum Design Criteria Team Begins Work," April 2014 EcoLINC). The EMC expected to receive public comment on this proposal through April 17.

In addition to incorporating new standards and the fast-track program into state rules, the package considered by the EMC also includes a substantial reorganization of existing stormwater rules, detailed on this website. This reorganization was prompted by the "review of rules" process, a legislative mandate requiring state agencies to review and potentially change their rules every ten years. Notably, however, this package did not include stormwater rules contained in other areas of the administrative code, such as those governing development in the Neuse, Tar-Pam, Jordan, Falls, Randleman, Goose Creek, and Catawba watersheds. It also did not contain changes to stormwater rules that were part of the water supply watershed program. The rules changes to those sections of the administrative code will come in a parallel effort slated for EMC discussion in March.

While the reorganization of stormwater rules did not contain many substantive or objectionable changes to existing rules, the new technical standards for stormwater control measures and the fast-track program represented months of negotiation between stakeholders such as private-sector engineers, state regulators, and local governments.

In addition to the input provided by the League's representatives in these negotiations, League affiliate organization the Storm Water Association of North Carolina provided detailed advance comments to the EMC prior to its vote last week. As a result of those comments, the EMC made positive changes to the proposal to limit the length of time between government approval of a stormwater control measure and the government's receipt of plans showing how the measure was actually constructed (also called "as-built" documents). This change will go a long way toward giving local governments the tools they need to make sure these stormwater measures continue to operate for years after construction. Under their federal stormwater permits, cities and towns are generally required to ensure these devices function in perpetuity.

In a related action last week, EMC Chair Gerard Carroll named EMC Commissioner J.D. Solomon as the group's hearing officer for this rulemaking. A private-sector engineer with numerous municipal clients, Commissioner Solomon participated in the years-long stakeholder group that negotiated the technical standards and fast-track program proposals. His participation in that stakeholder group came before his appointment to the EMC last year.

The N.C. Building Code Council (BCC) advanced changes to the state plumbing code last month that would further guide how to allow furnace condensate to drain from residences into municipal wastewater systems. The proposed additions to the plumbing code (page 7) came after a 2015 law required public wastewater systems to accept liquid condensate from residential heating and cooling systems.

Historically, the condensate, or liquid that results from the operation of residential heating and cooling units, is drained outside the house. However, with the increased installation of new high efficiency units that produced more condensate, drain lines off these units have frozen in the winter, resulting in a shut-off of heat for homes and broken drainage lines. These problems led to a legislative push last year for the liquid to be piped into a residential unit’s wastewater drainage system.

Among other requirements, the proposed rules advanced by the BCC after last month's public hearing would require installation in accordance with a furnace manufacturer's instructions through an indirect waste pipe. The proposed rules also would require backflow prevention devices to be installed when the furnace was located in a crawl space.

Although not addressed by the BCC rulemaking, potential issues of concern with wastewater systems being required to accept this liquid included (1) the low pH of the condensate; and (2) the increased volume of water requiring treatment, which could take up needed capacity in the wastewater system and be a detriment to the system's efficiency. Requiring wastewater systems to accept this liquid, especially if large numbers of connections were requested, could create concerns for municipal wastewater systems.

If the rules proceed along the expected timeline and receive a necessary sign-off by the state Rules Review Commission, the BCC anticipates the new plumbing code provisions to become effective in June.

A state scientific panel looking at how to measure nutrient impairment in state waters, the Scientific Advisory Council, received information last month on eight different indicators against which to measure the health of waters, including chlorophyll-a, dissolved oxygen, pH, water clarity, and aquatic health; it will narrow that list down for future nutrient control regulations...A workgroup that included League representatives last week continued its work to devise more accurate standards for measuring pollutant removal of stormwater control measures than the current generic 85% TSS standard...In a case that could directly affect N.C. wastewater utilities that disposed of biosolids through land application, Duke Energy Carolinas asked the federal Fourth Circuit Court of Appeals last month to determine whether the Clean Water Act regulated pollutant discharges to surface waters that originated in groundwater...And in yet another court ruling that supported biosolids disposal using land application procedures, the top Pennsylvania court ruled last month that land application is part of normal agriculture activities...EPA sent a proposal for White House review late last fall that would allow electronic notice of any proposed NPDES permit changes or renewals...Duke Energy Carolinas asked FERC last month to extend its recently-awarded 40-year hydropower license on the Catawba River for another ten years, in exchange for further land conservation efforts by the company...In a win for local governments, in its omnibus transportation bill passed into law last month, Congress authorized recipients of any WIFIA loan funds to utilize tax-exempt bond proceeds to fund the remainder of project costs...EPA countered a lawsuit filed against it by the state of Maine, in which the state argued that states have the primary authority and responsibility to write their own water quality standards, by proposing its own federal water quality standards for the state...Similarly, EPA announced in November that it planned to move ahead with promulgating copper and cadmium water quality standards for Oregon after disapproving the state’s standards three years ago...The federal agency also announced in November that it would formally propose revisions to its NPDES governing program in February, after receiving comment on and revising the revisions over the past few years...EPA also continued its push to further regulate hydraulic fracturing activities by indicating it would propose a rule by August that would disallow these operations from sending wastewater to publicly-owned wastewater treatment plants...And finally, EPA planned to publish in December its fourth list of drinking water contaminants that it will propose for regulatory review, just before the Obama administration ends.

  • Blue Ribbon Commission to Study the Building and Infrastructure Needs of the State, January 25, 1:00 pm, 643 Legislative Office Building, Raleigh
  • Joint Administrative Procedure Oversight Committee, February 2, 9:30 am, 544 Legislative Office Building, Raleigh
  • Joint Legislative Economic Development and Global Engagement Oversight Committee, February 4, 9:00 am, 643 Legislative Office Building, Raleigh
  • Joint Legislative Transportation Oversight Committee, February 5, 9:00 am, 1228/1327 Legislative Building, Raleigh
  • Environmental Review Commission, February 10, 9:00 am, 544 Legislative Office Building, Raleigh
  • Environmental Management Commission, February 16, 12:30 pm, Archdale Building Ground Floor Hearing Room, Raleigh
  • Joint Administrative Procedure Oversight Committee, March 1, 9:30 am, 544 Legislative Office Building, Raleigh
  • State Water Infrastructure Authority, March 4, 9:00 am, NC Rural Economic Center, 4021 Carya Drive, Raleigh
  • Environmental Review Commission, March 9, 9:00 am, 544 Legislative Office Building, Raleigh
  • Environmental Management Commission committees, March 9, 9:00 am, Archdale Building Ground Floor Hearing Room, Raleigh
  • Environmental Management Commission, March 10, 9:00 am, Archdale Building Ground Floor Hearing Room, Raleigh
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