2019 Legislation: Environmental and Energy Laws

December 27, 2019. A  short list of environmental and energy law changes compared to recent years:

Fisheries.   As interest in  shellfish aquaculture has increased, so have concerns about the impact of the rapidly evolving aquaculture industry on water recreation and navigation.  Senate Bill 648   creates a new framework for management of aquaculture operations by allowing the Division of Marine Fisheries (DMF) to designate  “shellfish aquaculture enterprise areas” where water bottom and water column leases can be issued for shellfish aquaculture. Similar to water use zoning, the concept gives DMF the ability to direct shellfish operations toward areas already approved for the purpose instead of  simply responding to a lease application for any location of the applicant’s choosing.

The bill has some weaknesses. It doesn’t provide guidance on siting shellfish aquaculture enterprise areas.  The bill requires notice and a public hearing prior to designation of an aquaculture enterprise area, but relies on the limited notice requirements in existing statutes authorizing individual bottom and water column leases. Those existing public notice provisions in G.S. 113-202 (bottom leases)  and G.S. 113-202.1 (water column leases) only require notice by newspaper publication.  The statutes do not require direct notice to either the local government or to  owners of property along the affected shoreline.

Senate Bill 648 also creates a pilot project for shellfish aquaculture leasing in Pamlico Sound while imposing  moratoria on approval of new open-water shellfish aquaculture leases in  New Hanover County and Bogue Sound. At the same time, the bill makes it possible for DMF to approve operations to grow seed oysters and clams in marinas (which under existing shellfish rules have been closed to any type of shellfish propagation), which may relieve some pressure for new open water aquaculture leases.

Water Quality.  House Bill 812  (Nutrient Offset Amendments) provides more flexibility in projects to mitigate nutrient loading from wastewater dischargers. The amendments allow nutrient offsets for  permitted NPDES discharges to be provided EITHER  in the same hydrologic area (the current requirement) OR  at a location downstream of the discharge, but upstream of the water body subject to regulations to address excess nutrient loading. For stormwater and other nutrient sources, the law continues to require nutrient offsets in the same hydrologic area.

Section 3 of House Bill 206  (Various Transportation Changes)  requires the EMC to exempt a broader range of airport-associated development from the Neuse River riparian buffer rules. The Neuse buffer rules require vegetated buffers along streams in the Neuse River basin as a tool for reducing nutrient runoff  and excess nutrient loading to downstream estuaries. Since airport facilities also have to meet Federal Aviation Administration siting criteria,  current EMC rules exempt certain aviation-related facilities from buffer requirements and allow others to impact the buffer with mitigation.

Under the existing EMC rule,   “airport facilities” allowed to impact the buffer include structures directly related to aviation operations such as runways, terminals, maintenance buildings, administrative buildings, onsite airport parking, navigation markers,  and beacons.  The EMC rules do not exempt satellite facilities such as off-site parking or hotels, rental car facilities and other commercial development. H 206 directs the EMC to revise and broaden the definition of  “airport facility” in the rules to allow the riparian buffer exemption to apply to development of those airport-associated commercial facilities.

On-Site Wastewater.  Regulations on siting and design of on-site wastewater systems (such as septic systems) have both a public health and environmental protection purpose. The rules exist to prevent direct exposure to untreated wastewater and contamination of groundwater and nearby rivers, streams and lakes.  House Bill 268 (Amend On-Site Wastewater Laws) is a somewhat mis-titled bill that actually disapproves more than 40 rules concerning on-site wastewater systems  and reclaimed water systems amended by the Commission for Public Health in 2018. The bill may be one of the broadest exercises of the legislature’s power to disapprove agency rules since the legislature claimed that  authority under the State’s Administrative Procedure Act.

Legislative disapproval means the amended rules cannot go into effect;  prior versions of the rules remain in place in the meantime. The bill creates a task force to report back to the legislature in February 2020 on rules to replace those amended in 2018.  One purpose of the  task force (as set out in the bill ) is to make recommendations “to prevent the implementation of rules and ordinances and enforcement against the use of on-site wastewater treatment and dispersal systems in non-sewered areas of the State”.  

The disapproval bill responded to concerns from homebuilders and realtors that the amended rules will make it more difficult to develop some areas using onsite wastewater systems. In part, the controversy seems to be a continuation of past conflicts over how easy (or hard) it should be to approve innovative onsite wastewater systems for use in areas that are not appropriate for a conventional septic tank system. 

Renewable Energy.  House Bill 329 (Renewable Energy Amendments) makes several relatively minor changes to energy laws.  Section 1 of the bill exempts electric vehicle charging stations from the definition of “public utility” as long as the owner simply resells electricity supplied by a regulated public utility. Otherwise, sale of  electricity by a charging station could lead to  regulation of the facilities by the N.C. Utilities Commission under laws applied to Duke Energy and other electricity providers.

Section 2 requires the Environmental Management Commission (EMC) to establish a new regulatory program “to govern (i) the management of end-of-life photovoltaic modules and energy storage system batteries and (ii) decommissioning of utility-scale solar projects and wind energy facilities” by January 1, 2022.  The bill lists a number of issues for the EMC to consider in developing rules, including whether system components have the characteristics of hazardous waste and preferred methods of end of life management (i.e., reuse, recycling, or disposal as solid waste).

Section 3  amends the law governing how the N.C. Utilities Commission  sets avoided cost rates for an electric utility’s purchase of power from a small power producer. The law, G.S. 62-156,  generally takes into consideration the electric utility’s need for additional capacity and the availability/reliability of energy provided by the small power producer.  The law already provides an alternative mechanism for determining capacity need with respect to energy purchased from swine and poultry operations with waste-to-energy systems by reference to G.S. 62-133.8. The 2019 amendment extends special treatment with respect to capacity need to certain small hydroelectric projects (those with total capacity less than or equal to 5 MW). In effect, the change appears to lock in the renewal of existing power purchase agreements between electric utilities and small hydropower producers that were in effect as of July 27, 2017.

Boards and Commissions.  Senate Bill 381  (Boards and Commissions) amended the appointment statutes for the Clean Water Management Trust Fund Board and for the Parks and Recreation Trust Fund Board to give the Governor a majority of appointments to those boards.  S 381 continues a series of  legislative acts necessary to comply with the 2016 N.C. Supreme Court decision in McCrory v. Berger.  In that decision, the court  held that the Governor must have the power to appoint a majority of the members of any board or commission that exercises executive authority. See an earlier post  for more about the court’s decision.

S 381 also amended the Clean Water Management Trust Fund statutes to expressly give the Fund authority to accept FEMA funds for hazard mitigation and to disperse funds for projects to reduce flood risk.

Vetoed Bills.  For the first time since 2011, the legislature lacked a veto-proof majority in both chambers.  As a result, a  number of bills containing provisions related to environmental protection remain in limbo because the legislature has not yet voted to override Governor Cooper’s veto. The legislature could attempt to override those vetoes in 2020. The content of the vetoed bills will be discussed in a separate post.