During the "short" session of 1998, the General Assembly continued the strong emphasis on the environment begun in the summer of 1997. The main focus continued to be water pollution. Legislation enacted during the 1998 session authorized $800 million in bond financing for water and sewer infrastructure and also set the stage for final implementation of the Neuse River Nutrient Management Strategy-the state's most aggressive attempt to date to curb nutrient pollution, including nutrient pollution from farm and urban runoff. The General Assembly also extended the moratorium on construction and expansion of large swine farms by six months and required large swine integrators to be registered with the state. The trend in environmental law toward more local control and more place-based forms of environmental regulation is evident in several of the 1998 bills. In marked contrast to Congress's difficulty in reauthorizing and adjusting major federal environmental legislation, the General Assembly succeeded in passing the great majority of all environmental bills introduced during the biennial session.

S.L. 1998-154 (H 1529) empowers the N.C. Horse Council to conduct a referendum among horse owners proposing a $2 per ton assessment on commercial horse feed to promote the horse industry. If the fee is approved, the N.C. Department of Agriculture and Consumer Services will be responsible for the promotional effort. If the fee is approved, the council may bring suit to collect unpaid assessments against feed manufacturers or distributors who fail to pay an assessment, but purchasers of commercial horse feed may apply for a refund of an assessment within one year of purchase.

S.L. 1998-134 (H 1617) makes permanent and expands the state income tax credits for 25 percent of the cost of building a facility to compost whole, unprocessed poultry from commercial poultry facilities. The credit may not exceed $1,000 per installation. S.L. 1998-134 is discussed in more detail in Chapter 26 (State Taxation).

S.L. 1998-210 (H 1055) replaces the seed investigation committee with a new five-member Seed Board appointed by the Commissioner of Agriculture. Three of the members will be appointed on recommendation of the director of the agricultural research service, the director of the cooperative extension service, and the president of the seedsmen's association.

The act also provides that seed buyers who believe that they were damaged by failure of seed to perform as labeled or warranted, or by negligence, may file complaints with the Agriculture Commissioner requesting an investigation by the Seed Board. The commissioner must refer these complaints, and requests by dealers, to the Seed Board as an alternative to litigation. The board may hold hearings, seek expert evaluations, make inspections, and make findings and recommendations (which may be binding if so designated by the parties). (As originally introduced, House Bill 1055 would have created a mandatory arbitration process, but this feature was eliminated in the substitute bill that became law.) Seed buyers who fail to make timely requests for investigation by the board may still bring suit for damages against dealers, but recovery will be limited to actual expenditures in cultivating the seed. Thus, these buyers may not recover lost profits.

S.L. 1998-191 (H 1248) creates a Tobacco Settlement Reserve Fund as a restricted reserve in the General Fund to hold funds that the state may receive from any settlement of tobacco litigation until the funds are appropriated by the General Assembly. The act expresses the General Assembly's intent to enact tax relief for farmers and others who depend on tobacco for their livelihood and who receive federal assistance payments later adopted by Congress.

Apples and Christmas Trees. S.L. 1998-177 (S 427) exempts trucks from light traffic road weight limits when they are hauling apples or Christmas trees from the farm to the first processing or packing point. (As originally introduced, Senate Bill 427 would have exempted vehicles carrying wood chips, but a committee substitute replaced this provision with the exemption for trucks transporting apples or Christmas trees.)

Fertilizer, Pesticides, and Agricultural Products. S.L. 1998-165 (S 1285) qualifies North Carolina farmers for exemptions from certain federal regulations relating to the transportation of agricultural products, including fertilizer and pesticides, over local roads between fields of the same farm or within a 150-mile radius of a farm. Without this exemption, farmers would have to meet the same safety training, placarding and emergency response team requirements as intrastate private motor carriers of hazardous material.

S.L. 1998-223 (H 1472) creates in the General Assembly a nineteen-member commission to study the causes of the decline of small family farms and to recommend ways to preserve and promote small family farms. The commission is required to make an interim report to the General Assembly in 1999 and a final report before the convening of the 2000 regular legislative session. The Governor, the Speaker of the House, and the Senate President Pro Tempore appoint eight of the commission's members, and eleven members serve ex-officio.

Ratite Sellers. The 1998 Appropriations Act, S.L. 1998-212 (S 1366), requires sellers of live poultry and ratites (ostriches, emus, and rheas) to register with the Department of Agriculture and Consumer Services and keep records of their operations.

Agricultural Centers and Livestock Facilities. The 1998 Appropriations Act, S.L. 1998-212 (S 1366), exempts agricultural centers and livestock facilities operated by the Department of Agriculture and Consumer Services from the Umstead Act (prohibiting government competition with private business).

The 1998 General Assembly extended the moratorium on construction and expansion of large swine farms by six months, from March 1, 1999 to September 1, 1999. The extended moratorium, like the original one, applies to new or expanded lagoons and waste management systems as well as to new farms, and it applies to both the Moore County and statewide provisions. Its purpose, as before, is to allow time for counties to adopt zoning ordinances, and for the General Assembly to complete and act upon studies. S.L. 1998-188 (H 1480).

The act also addressed a controversial provision of the original moratorium that exempted "innovative" animal waste management systems not employing an aerobic lagoon and approved by DENR. The 1998 General Assembly replaced the innovative systems provision with two more detailed options, one for research projects and the other for systems tested for at least one year in use under climatic conditions and soil characteristics similar to those of the farm seeking an exemption. Both options must be approved by the EMC after consultation with the N.C. State University Animal and Poultry Waste Management Center. Both options set forth a list of evaluation factors for the EMC to follow in considering moratorium exemptions under either option. The EMC must determine that sufficient data exists to establish that the system (1) will eliminate waste discharges to surface and ground water (through direct discharge, seepage or runoff); and (2) will substantially eliminate atmospheric emissions of ammonia, odor emissions detectable beyond the swine farm property, disease transmitting vectors, airborne pathogens, and contamination of soil and groundwater by nutrients and heavy metals. Another feature of the new legislation allows the EMC and DENR to act on a case-by-case basis rather than through rule-making.

S.L. 1998-188 (H 1480) adds a requirement for swine integrators who provide 250 or more animals to a swine farm to be registered by their swine growers with DENR as part of an operations review conducted by the soil and water conservation officials or an inspection conducted by the Division of Water Quality. The grower must notify DENR when the integrator removes the animals or terminates its relationship with the grower. DENR must notify integrators of deficiencies and violations at registered swine farms.

S.L. 1998-179 (H 1490) continues the resolution of submerged lands claims. In 1965, North Carolina began registering, charting, and adjudicating the claims of private persons to submerged lands of the state. This bill continues the efforts to resolve the thousands of claims that resulted. It extends the bar on filing claims by an additional five years (to December 31, 2006) and extends the period for administrative resolution of the claims by an additional five years (to December 31, 2003).

S.L. 1998-221 (H 1402) authorizes the Coastal Resources Commission to adopt temporary rules governing coastal energy facilities until July 1, 2005. This provision addresses the state's concern about plans by a major oil company to renew efforts to drill for oil or gas at the edge of the continental shelf off the North Carolina Outer Banks.

• gives the MFC authority to deny licenses to persons who have not historically worked in a particular fishery if the fishery is subject to a federal fishery management plan that imposes a quota on the state;
• expands the MFC's authority to use temporary rule making to comply with federal management plan changes;
• requires the Governor to make appointments to the MFC consistent with the conflict of interest requirements in the fisheries management grant program [G.S. 113-200(g)];
• increases the MFC's quorum requirement from five to six members; requires that at least one representative of both commercial and recreational fishing interests, other than the chair, be present before the transaction of business; and allows the MFC to reschedule meetings when these new quorum requirements have not been met;
• requires the MFC to consult with regional advisory committees established under G.S. 143B-289.57(e) in preparing fishery management plans and makes various changes in the fisheries management plan process, including authorizing recommendations to the legislature for limited entry;
• authorizes the MFC to recommend in any fishery management plan that the General Assembly create a limited entry system in which only a certain number of fishermen are allowed to participate;
• removes the case-by-case exception discretion of the Director of Marine Fisheries for violations of fisheries proclamations and replaces it with a statutory defense based on failure to receive notice of the proclamation due to a natural disaster or other act of God;
• makes persons who have four or more fisheries violations in a three-year period ineligible for a new or renewed fisheries license and makes numerous changes to marine fisheries licensing statutes that expand the MFC's and Division of Marine Fisheries' powers to regulate the taking of fish;
• creates a procedure for selecting North Carolina's representatives on the Mid-Atlantic Fishery Management Council;
• establishes a Standard Commercial Fisheries License (SCFL) Eligibility Board, exempts the board from the rule-making provisions of the Administrative Procedure Act, and authorizes the board to make eligibility determinations for SCFLs.

Marine Fisheries Appeals Panel. A special provision in the 1998 Appropriations Act, S.L. 1998-212 (S 1366), provides that, beginning November 1998, the Marine Fisheries Appeals Panel must rotate the location of its meetings among its three districts, the northern, central and southern coast.

Mason's Inlet. Another special provision in S.L. 1998-212 permits New Hanover County to undertake the relocation of Mason's Inlet, with the concurrence of DENR, but prohibits use of direct state-appropriated funds for channel realignment.

Oregon Inlet Stabilization. The 1998 Appropriations Act, S.L. 1998-212, creates a new Oregon Inlet Stabilization Study Commission to continue studying and to report on stabilizing Oregon Inlet.

S.L. 1998-76 (H 1433) extends the final reporting date of the study of the organization of environmental health programs to February 1, 1999. It also expands the study (which is conducted by the General Assembly's Environmental Review Commission) to include the organization and functions of all of the state boards, commissions and advisory councils having jurisdiction over environmental, public health, and natural resources programs. The act specifically mentions a study of the possibility of having a single commission over all of these programs, an idea which for many years has been informally discussed at and around the legislature.

S.L. 1998-126 (H 1462) requires the Health Services Commission to adopt rules that require septic tank systems designed to treat 3000 gallons per day or less of sewage to use an effluent filter to reduce total suspended solids entering the drain field and an access device for each compartment of the tank for inspection and maintenance either by means of an opening in the top of the tank or a riser assembly, including an appropriate cover. The requirements are imposed directly on the manufacturers. The commission was required to adopt temporary rules by December 1, 1998, that became effective January 1, 1999.

S.L. 1998-123 (S 138) allows an alternative procedure for dissolving a sanitary district that has no indebtedness, the territory of which has been entirely annexed to a city, and which has not provided any water or sewer service for at least five years. The procedure is apparently tailored to a situation in one particular county, but it could apply more broadly.

S.L. 1998-136 (S 1171) is the product of legislative concerns about the impact of setbacks established by administrative rule for drinking water wells upon state-licensed institutions, such as foster homes in family residences. On the one hand, the well rules in 15A N.C.A.C. 18A.1720 have long required minimum setback distances for drinking water wells from various buildings, septic tank fields, surface waters, animal feedlots, and the like, in order to protect public health. Most of the setbacks are 50 feet or 100 feet, but setbacks for wells constructed prior to July 1, 1993, may be as low as 25 feet (for example, from building foundations). On the other hand, some potentially valuable foster family homes (especially proposed homes that must meet the tighter standards) have been discouraged or prevented from being qualified by these setbacks.

S.L. 1998-136 addresses these competing values in two ways. First, it substitutes for mandatory setback distances between building foundations and institutions located in single-family dwellings a risk-based determination as a condition of licensing. Thus, it calls for well testing to meet pesticide, nitrate, and bacteria standards established by the Health Services Commission. Registered sanitarians or other qualified health officials are required to collect the samples and examine the well location for health hazards. Second, the Health Services Commission was required to adopt a temporary rule by January 1, 1999, providing specific standards for waiving the existing setbacks for families and institutions located in single-family dwellings.

S.L. 1998-132 (S 1354) authorizes a referendum on the issuance of $800 million in state general obligation bonds for water and sewer projects, and a separate referendum on the issuance of $200 million in bonds for natural gas projects. Both referenda were approved by the state's voters on November 3, 1998.

The act establishes a new State Infrastructure Council within the Department of Environment and Natural Resources (DENR) to coordinate strategic planning for water and wastewater projects.

The act also raises the maximum amount of water and sewer loans to any single unit of local government in a fiscal year from $3 million to $8 million and raises the maximum amount of water and sewer grants in a fiscal year from $1 million to $3 million.

Several amendments were proposed in the Senate to mitigate the secondary costs of growth that often occur with the extension of water and sewer lines into previously undeveloped areas and the inefficiency of many small systems when larger, regional systems would adequately serve the public. As a result of these amendments, the act calls for "special emphasis" (in the form of increased points in the state revolving loan fund and grant programs) for projects that have regional approaches, that offer water reuse and conservation, that involve creative planning, that reduce the overall volume of effluent, and that are consistent with the state's water supply watershed protection program. The act prohibits the use of water bond proceeds to build water and sewer infrastructure in the most protected water supply watersheds (WS-I) and in the critical area of most other water supply watersheds (WS-II, III, and IV).

The act is also notable because it allows counties to apply for water and wastewater loans on behalf of rural schools located in the county and allows a portion ($105 million) of the clean water bond proceeds to be distributed by a nonprofit corporation, the Rural Economic Development Center, even though most of the bond proceeds (like all past state public water and sewer financing) are administered through state agencies.

The 1998 Appropriations Act, S.L. 1998-212 (S 1366), appropriates $47.4 million of the 1997-98 General Fund credit balance to the Clean Water Management Trust Fund Reserve.

S.L. 1998-166 (H 900) appropriates $7,432,412 in nonrecurring funds to DENR for state matching funds for federal wastewater assistance and water supply assistance projects and $11,150,000 for state matching funds for federal water resources projects, including the widening and deepening of the Wilmington State Port and repayment of the state's share of costs for the B. Everett Jordan Lake water supply project.

S.L. 1998-66 (S 1203) authorizes the city of Charlotte to continue to levy stormwater fees in order to support previously issued revenue bonds, notwithstanding the prohibition against two units levying stormwater fees on the same area within a county.

The 1998 Appropriations Act, S.L. 1998-212 (S 1366), contains the following appropriations for agricultural programs.

• The act appropriates $1.5 million for a loan program for small family-owned farms that are unable to get loans elsewhere. The Department of Agriculture and Consumer Services (the department) is required to adopt rules governing the program. The program will be administered by the N.C. Rural Rehabilitation Corporation.
• The act creates a new Farmland Preservation Pilot Program by appropriating $250,000 to the North Carolina Farmland Preservation Trust Fund, established in G.S. 106-744 and administered by the Commissioner of Agriculture and Consumer Services, for the purchase of agricultural conservation easements pursuant to Article 61 of G.S. Chapter 106.

• The act appropriates $1 million to the department for a fair and exhibition center in Duplin County.

• The act creates special non-reverting funds within the department for the agricultural centers at Williamston and Lumberton, to hold receipts from gifts, grants and naming rights to facilities. These funds must be used for operation of the centers.

• The act appropriates $150,000 for grants to local nonprofit farmer markets, and $150,000 for grants to local agricultural fairs, to be administered under departmental guidelines.

• The act appropriates $170,000 to the Natural Resources Leadership Institute.

• The act appropriates $200,000 for a sustainable acquaculture study by the Institute of Marine Sciences.

The 1998 Appropriations Act, S.L. 1998-212 (S 1366), contains several provisions that address animal waste management directly. Section 29A.11(d) increases the annual permit fees for animal waste management systems from $100 to $150 for systems with a design capacity of 100,000 to 800,000 pounds steady state live weight, and from $200 to $300 for larger systems. It also directs DENR to use these fees to cover costs of administration.

Section 13.5 of S.L. 1998-212 directs the Department of Agriculture and Community Services to use $1.5 million of its appropriated funds to make grants to family-owned dairy farms with fewer than 300 dairy for purchase of animal waste management equipment, but not for maintenance or enlargement of aerobic lagoons.

S.L. 1998-24 (S 124) makes numerous changes in the tax on white goods (refrigerators, washing machines, and similar appliances). The act reduces the excise tax levied by G.S. 105-187.21 on the sale of new white goods to $3, effective July 1, 1998. Under the former law, the tax was $5 if the new white good did not contain chlorofluorocarbon refrigerants and $10 if it did. The act also amends G.S. 105-187.24 to provide that 8 percent, rather than 5 percent, of the net proceeds of the tax will go to the Solid Waste Management Trust Fund and that 72 percent, rather than 75 percent, of the proceeds will be distributed to counties to assist them with the disposal of white goods.

The act makes several significant changes in the distribution of the tax proceeds to counties and the purposes for which counties may spend these funds. New G.S. 130A-309.87 requires each county, in its Annual Financial Information Report to the Local Government Commission, to provide information about the tonnage of white goods scrap metal collected, revenue credited to its white goods account, expenditures from the account, and the balance in the account. Effective January 1, 1999, a county is ineligible to receive a distribution of proceeds from the white goods tax unless the undesignated balance in its account for the previous fiscal year is less than 25 percent of the tax proceeds it received in that year. The act amends G.S. 130A-309.82 to provide examples of the types of expenditures a county may make from the tax proceeds: capital improvements to manage discarded white goods, operating costs associated with the management of discarded white goods, and the cleanup of illegal white goods disposal sites. If a capital expenditure or operating expense is only partially related to the management of discarded white goods, a county may use the tax proceeds to finance a percentage of the costs equal to the percentage of the use of the improvement or expense directly related to the management of discarded white goods.

The act sets the expiration date of the tax on July 1, 2001, and on that date G.S. 130A-309.81(b), which authorizes local governments to charge disposal fees for the disposal of white goods, becomes effective.

G.S. 153A-15 provides that in certain counties the board of commissioners must consent to the acquisition of any land in the county by a unit of local government that is located wholly or partly outside the county. Counties have used this authority to prohibit the acquisition or condemnation of land for use as a solid waste facility that will be owned by another unit of government. S.L. 1998-110 (H 1591) adds Carteret, Chatham, Jones, and Orange to the list of counties to which this statute applies. This brings the total number of counties covered by the statute to eighty-one.

In the wake of major fish kills in 1995, the Governor directed the Secretary of the Department of Environment and Natural Resources (DENR) to strengthen the rules for water quality protection and improvement in the Neuse river basin. In response, the Environmental Management Commission (EMC) and the Division of Water Quality in DENR, along with other interested stakeholders, developed a set of rules, called the Neuse River Basin Nutrient Sensitive Waters Management Strategy, which was adopted by the Environmental Management Commission. 15A N.C.A.C. 2B.0233. The rules sought a 30 percent reduction in the nitrogen delivered by the river to the estuary. Among the many complexities and notable points about the Neuse Rules, as they have been called, are that they were among the first rules with significant fiscal impact to make their way through the 1995 amendments to the Administrative Procedures Act's rule-making process and that they call for preservation of streamside buffers throughout the river basin-a major move by the state to protect water quality through restrictions on the use of land. Their potential importance is also heightened by the state's position that the Neuse Rules, once they were finalized, would be a model for nonpoint source and nutrient pollution prevention throughout the rest of the state.

House Bill 1402 began as a bill to overturn the Neuse Rules under the new "legislative veto" provisions of the 1995 rule-making changes. G.S. 150B-21.3(b). After months of negotiation, the bill was amended to allow the Neuse Rules to take effect, with some revisions, while requiring more changes and negotiations before final approval of a management strategy for the Neuse river basin.

S.L. 1998-221 (H 1402) disapproves, in part, the Neuse Rules adopted by the EMC but allows the EMC's Neuse Rules to remain in effect as a temporary rule subject to certain legislative changes until a new EMC rule becomes effective. The legislative changes to the EMC's Neuse Rules required by S.L. 1998-221 are described below.

Presence of Surface Waters. S.L. 1998-221 requires that the presence of surface waters in the Neuse river basin be determined presumptively by reference to the most recent versions of the soil survey maps prepared by the U.S. Department of Agriculture or the 7.5 minute quadrangle maps prepared by the U.S. Geologic Survey. In the event of a question as to the accuracy of these maps with respect to the presence of surface water, the act provides for determination by the Director of the DENR Division of Water Quality, which is subject to administrative review pursuant to G.S. Ch. 150B, and final decision by the EMC.

Headwaters Exclusion. An earlier version of House Bill 1402 excluded from the requirements of the EMC rule any segment of an intermittent stream that drains an area of twenty-five acres or less, but this provision was removed prior to enactment of S.L. 1998-221.

Definition of "Forest Vegetation." S.L. 1998-221 defines "forest vegetation" as vegetation consisting of trees and woody perennial plants with associated herbaceous vegetation in conjunction with a defined surface layer consisting of leaves, branches and other plant material and including mature and successional forest areas and cutover areas.

Compensatory Mitigation Fees. The act allows persons to remove riparian buffers in the Neuse river basin by paying fees or donating property to a program created by the EMC. To qualify for this compensatory mitigation program, a person must demonstrate that he or she has attempted to avoid and minimize the loss of riparian buffer and that there is no practical alternative to the loss of the buffer. Compensatory mitigation is available only for loss of riparian buffer along an intermittent stream. The act also creates a new Riparian Buffer Restoration Fund as a nonreverting fund within DENR to hold compensatory mitigation fees.

Delegation of Riparian Buffer Protection Requirements to Local Governments. The act authorizes and creates procedure for delegation of implementation and enforcement of riparian buffer protection requirements to units of local government in the Neuse river basin that have the power to regulate land use and authorizes the EMC to adopt rules to implement this provision.

Recognition of Vested Development Rights. The act provides that the temporary and final Neuse Rules do not apply (1) to any development with respect to which there are vested rights recognized or established under G.S. 153A-344(b), 153A-344.1, 160A-385(b), or 160A-385 prior to July 22, 1997, or (2) to any development with respect to which there are vested rights under the common law that were recognized or established before the act's effective date if the EMC has issued a certification pursuant to G.S. 143B-282(a)(1)u (a "401 certification" under the federal Clean Water Act). The act prohibits the EMC from adopting rules that confer or restrict a vested right and notes the intent of the legislature that this section apply only to the particular circumstances that are the subject of this act, not to establish a precedent as to the application of vesting for other local government zoning or environmental programs.

Requirements for the New EMC Rule. The act requires the EMC to adopt a new rule (first as a temporary rule, then as a permanent rule) for the Neuse river basin. The new EMC rule must

• establish a method for determining the presence of surface waters that is scientifically valid, easily understandable, efficient, consistent, reliable, and cost effective;
• provide a means for resolving disputes with respect to issues involving the determination of the presence of surface waters;
• establish methods to determine the landward extent of zones within protected riparian buffers appropriate to different regions of the basin;
• exclude certain drainage areas along intermittent streams from riparian buffer requirements;
• define forest vegetation;
• establish exemptions and permitted uses within riparian areas; and
• establish criteria to determine whether there is a practical alternative to the loss of riparian buffer.

Stakeholder Advisory Committee. The act requires that the new EMC rule be developed with the assistance and advice of a stakeholder advisory committee consisting of twenty-three members representing interests specified in the statute.

EMC Review and Reports on Rule Implementation. The act requires the EMC to review implementation of the Neuse Nutrient Sensitive Management Strategy, including progress toward the 30 percent nitrogen reduction goal set forth in Chapter 572 of the 1995 Session Laws, and the effect of the strategy on regulated parties, and to report the results of its review to the Environmental Review Commission by December 1, 2000, and December 1, 2001. The act also requires DENR and the EMC to report jointly to the Environmental Review Commission on progress in implementing the act on or before December 1, 1998, and March 1, 1999, and requires quarterly status reports by DENR to the Environmental Review Commission on all water discharge and animal waste permit holders, the number of inspections, and any violations found.

Sediment Control Plans Consistent with Riparian Buffer Requirements. S.L. 1998-221 amends G.S. 113A-54.1(c) and 113A-61(b1) to require the Director of the DENR Division of Land Resources and any authorized local government to disapprove an erosion control plan that would result in violation of the Neuse river basin riparian buffer requirements.

Temporary Rule Deadlines. The act authorizes the EMC to adopt temporary rules to implement the act until July 1, 1999, and authorizes the Sedimentation Control Commission to adopt temporary rules to implement the required changes to sediment control plans until July 1, 1999.

Donations of Real Property. The act authorizes DENR to accept donations of real property and interests in real property that are riparian buffers or will be used to restore, create, enhance, or maintain riparian buffers to protect water quality. The act requires the EMC to establish riparian buffer maintenance and restoration goals that are consistent with the 30 percent nitrogen reduction goal of 1995 N.C. Sess. Laws, Ch. 572.

S.L. 1998-138 (S 1373) is another bill enacted under the new provisions of the Administrative Procedures Act allowing legislative veto of agency rules. This act disapproves the EMC's amendments to the Tar-Pamlico River Basin Rules (15A N.C. Admin. Code 2B.0316) but allows them to be readopted by the EMC as temporary rules. However, the act prohibits the new temporary rules from redesignating the water supply categorization of the Tar River from WS-IV to WS-V, as had been done in the original amendments.

In this act, as in S.L. 1998-221, the legislature appears to have arrived at a method for "fine-tuning" administrative rule making: formally disapproving rule changes but allowing reinstatement of the rules subject to legislatively prescribed conditions.

Under S.L. 1998-161, parties who are responsible for underground storage tanks (USTs) may get reimbursement for the costs of any additional risk assessment information required by the state, without regard to the payment of "deductibles" by the responsible party. However, the act sets out a list of five prerequisites for risk assessment compensation:

1. timely reporting of a release,
2. initial site characterization,
3. a determination by the state that additional assessment work is required,
4. pre-approval of the work, and
5. payment by the responsible party of any costs required other than the deductibles.

The act also allows payment from the Commercial and Noncommercial Funds for connection of third parties to public water systems if DENR determines that connection of the third party to public water is a cost-effective measure. The act also provides that the Environmental Management Commission may adopt rules requiring preapproval from DENR for reimbursement of certain types of cleanup costs. The 1998 amendments further provide that owners of commercial tanks must comply with spill and overfill protection and corrosion protection requirements, in addition to the release detection requirements already required, before obtaining or renewing their annual permit, and that assignments of claims for reimbursement of tank cleanups are not prohibited by G.S. 143-3.3, which normally prevents assignments of claims against the state.

S.L. 1998-161 also limits the spill reporting requirement for petroleum tanks to spills of twenty-five gallons or more, or spills that cannot be cleaned up within twenty-four hours, or spills that cause a sheen on nearby surface water. Other provisions of the act provide that lenders are protected under the state tank program by incorporation of the federal lender liability protection provisions of 40 C.F.R. Part 280, Subpart I, and that rules adopted for commercial tanks do not apply to certain farm or residential tanks nor to home heating oil tanks used by four or fewer households. The act also deletes the provisions of G.S. 143-215.94E(e) concerning reimbursement of "necessary and reasonable" costs.

The EMC must adopt temporary rules to implement the act by October 1, 1999, despite the provisions of G.S. Ch. 150B concerning temporary rules. (The Office of Administrative Hearings has interpreted G.S. Ch. 150B to allow six months as the normal limit for temporary rules enacted to implement recent acts of the General Assembly.)

Nitrogen and Phosphorus Limits for Existing Wastewater Plants. A special provision in the 1998 Appropriations Act, S.L. 1998-212 (S 1366), requires the EMC to establish a schedule of dates between January 1, 1998, and January 1, 2003, by which existing wastewater treatment plants must comply with nitrogen and phosphorus limits in the Clean Water Responsibility Act, S.L. 1997-458.

Wastewater Discharge into Other Nutrient Sensitive Waters. Another special provision in S.L. 1998-212 allows the EMC to extend the required compliance date for wastewater treatment facilities discharging to nutrient sensitive waters where nitrogen is not the nutrient of concern. This issue was raised by an ambiguity in the 1997 Clean Water Act with respect to the surface waters to which nitrogen discharge limits would apply. The special provision for extended compliance dates in S.L. 1998-212 requires facilities subject to the provision to model the impacts of their nutrient discharges and to meet several general requirements, such as compliance with other water quality standards and meeting the antidegradation policy of the Environmental Protection Agency.

Neuse and Tar-Pamlico Rapid Response Teams. The 1998 Appropriations Act, S.L. 1998-212, requires that members of the Neuse and Tar-Pamlico Rapid Response Teams, set up by DENR in the face of massive fish kills in 1995 and 1996, assist in routine water monitoring when they are not responding to emergencies or citizen complaints. DENR is required to evaluate the deployment of these teams.

Upper Neuse Watershed Management Plan. The 1998 Appropriations Act allocates $300,000 in state funds to the Upper Neuse River Basin Association to assist in development of a cooperative, comprehensive, integrated state-local watershed management plan for the upper Neuse river basin, which may serve as a model for other basins in following the coalition approach of G.S. 143-214.14(g).

Neuse River Modeling Project. The 1998 Appropriations Act provides funding for the continuation of the Neuse River Modeling Project (ModMon) by the Water Resources Research Institute.

Water Quality Fees. Following a multiyear study and negotiation among stakeholders on the need for fee increases, the 1998 Appropriations Act increases and adds new fees for many water quality programs.

S.L. 1998-168 (S 1299) revisits the interbasin transfer law of 1993, which has become a vehicle for imposing ever-increasing planning and regulatory requirements on water withdrawals and interbasin transfers for public and private water supply projects in North Carolina. This year's additions to these requirements fall into three categories: public policy statements, planning requirements, and regulatory requirements.

Public Policy. The act adds to the general policy statement for North Carolina's water and air programs in G.S. 143-211 a declaration of the state's public policy to "maintain, protect and enhance water quality." It then spells out a policy that the cumulative impact of transfers from a source river basin shall not result in a violation of the anti-degradation policy set forth in federal and state regulations. Hitherto, anti-degradation policy has been restricted to water pollution control activities. This expansion of the state's public policy into water withdrawals parallels a United States Supreme Court decision that expanded state water quality certifications to include water use implications as well as water quality standards. PUD No. 1 of Jefferson County v. Washington Department of Ecology, 511 U.S. 700, 128 L. Ed. 2d 716 (1994).

Planning Requirements. The act requires the Environmental Management Commission (EMC) to consider cumulative impacts of transfers in and out of river basins in developing water quality management plans for each of the state's seventeen major river basins. It imposes deadlines for water supply plans previously without deadlines: January 1, 2000 for the state water supply plan and January 1, 1999 for local water supply plans. It eliminates a provision that made mandatory local planning contingent on the availability of state technical assistance. It also requires that local plans reflect their reliance on water transfers. The act reduces the threshold for registering water withdrawals and transfers with the EMC from one million gallons per day (gpd) to 100,000 gpd. Withdrawals and transfers of less than one million gpd for agricultural production, however, are exempted from registration. This change comes full circle from the origins of water use regulation in North Carolina. The state's earliest water use law, a 1950s statute (former G.S. 113-8.1), required irrigators to obtain permits from the state, a requirement that was repealed in the 1960s to "clear the deck" in anticipation of more comprehensive regulation. It is interesting that the water use that was thought to be most in need of regulation in an earlier time is now treated as the only exception from a water use registration requirement.

Regulatory Requirements. The act requires the EMC to use local water supply plans in evaluating future needs of a river basin from which a transfer of water is proposed. It requires that any request for EMC approval of a transfer be accompanied by an environmental assessment, and that any EMC certification approving a transfer include a drought management plan. It requires that the EMC consider the cumulative effects of all water transfers from a river basin when it addresses any requested individual transfer. It requires any transferor to submit a plan for meeting future water needs when a transfer reaches 80 percent of its approved amount, and to begin carrying out the plan when the level reaches 90 percent.

The 1998 Appropriations Act, S.L. 1998-212 (S 1366), amends North Carolina's state income tax credit for donation of conservation easements. This legislation is discussed in detail in Chapter 26 (State Taxation).

S.L. 1998-172 (H 1260) authorizes political subdivisions of the state to adopt local floodplain management regulations within their planning jurisdiction. Local floodplain ordinances may regulate all types and uses of buildings or structures located in flood hazard areas identified by local, state, and federal agencies and may include provisions governing substantial improvements, substantial damage, cumulative substantial improvements, lowest floor elevation, protection of mechanical and electrical systems, foundation construction, anchorage, acceptable flood resistant materials, and other measures the political subdivision deems necessary considering the characteristics of its flood hazards and vulnerability. Local floodplain regulations are not subject to approval by the Building Code Commission or any other state agency.

The 1998 Appropriations Act, S.L. 1998-212, directs DENR to study the feasibility of including a portion of the Cullasaja River that borders the Nantahala National Forest in the state Natural and Scenic River System.

S.L. 1998-99 (H 1415) amends the Sedimentation Pollution Control Act to require the protection of exposed surfaces subject to runoff within fifteen working days or thirty calendar days after completion of any phase of construction and to extend the length of time for stop work orders to from three to five days.

Conservation Reserve Enhancement Rules. S.L. 1998-165 (S 1285) authorizes the state Soil and Water Conservation Commission to adopt temporary rules to implement the Conservation Reserve Enhancement Program.

Federal Conservation Reserve Enhancement Program. S.L. 1998-221 (H 1402) amends G.S. 143-215.74, the State Agricultural Cost Share Program, to limit to 75 percent the level of state funding for farm practices funded under the Conservation Reserve Enhancement Program (CREP).