North Carolina Legislature Reins In State Environmental Agency

July 8, 2011

State Rules Can Be No More Stringent than Federal Rules

Responding to longstanding complaints that North Carolina’s tougher environmental rules put local businesses at a competitive disadvantage with businesses in other states, the legislature prohibited DENR from adopting any “rule that imposes a more restrictive standard or limitation than those imposed by federal law or rule” except in very limited circumstances, such as a serious and unforeseen threat to public health and safety. The law appears to only apply prospectively, meaning that more restrictive standards already on the books will stay there, although there will be arguments about that.

We’ll Make the Rules, Not You

Where existing DENR rules were unnecessarily hampering business, the legislature passed laws changing those rules. These included:

  • A law encouraging the reuse of gray water and prohibiting local governments from banning the use of cisterns and rain barrel collection systems.
  • A law allowing the use of cathodically protected steel underground storage tanks, directly overruling a decision by the state’s Environmental Management Commission made earlier this year.
  • A law requiring that part of the state’s underground storage tank cleanup trust fund be used on sites where the party responsible for the leak does not have the money to perform.

Not Your Job Anymore

Using its budget power, the General Assembly completely abolished DENR’s Division of Environmental Health. Nearly ten other DENR programs were transferred to other agencies. In addition, the Petroleum Underground Storage Tank Trust Fund Council and the Small Business Environmental Advisory Panel were eliminated.

Risk-Based Corrective Action at Industrial Sites

Historically, the use of risk-based clean ups (where more contamination is left in place and risks are managed by land use restrictions) have only been allowed at leaking gas tank sites or Brownfields sites. Trying to prevent spending on “unnecessary remediation” that could better be used on “new development . . . and other activities that maintain and enhance North Carolina’s competitive position in the world,” the House and Senate passed legislation allowing for the use of risk-based clean ups at all contaminated industrial sites. The impact of this law is likely to be limited as it only applies to sites where the contamination has not migrated and is not likely to migrate onto neighboring properties and will be implemented by DENR’s Inactive Hazardous Sites Branch which has never shown that it has the ability to make meaningful risk-based decisions.

State’s Wetlands Monopoly Takes a Hit

The General Assembly also revised the state’s wetlands mitigation program, revising it so it more closely complies with the 2008 Federal Mitigation Rule by establishing a preference for mitigation bank credits in almost all cases. The law continues the policy of transferring responsibility for restoring ecosystems like wetlands from governments to privately capitalized firms operating in a market with competitive pricing instead of the historic state monopoly using mandated prices.

It Ain’t Over Yet

The North Carolina legislature also passed a major regulatory reform bill to balance job creation and environmental protection. This legislation:

  • Prohibited DENR from using policies and guidance documents as if they were rules.
  • Only allowed future rules that were expressly authorized by federal or state law.
  • Made administrative law judge decisions final and not just recommendations to be accepted or rejected by DENR.

Governor Perdue vetoed this bill. The legislature reconvenes on July 13 and goes into full session on July 25 at which time it may override the veto.