A BILL TO BE ENTITLED
AN ACT to direct the environmental review commission to study issues related to the transfer of water from one river basin to another river basin and the allocation of surface water resources and to Amend the laws governing the transfer of water from one river basin to another river basin.
The General Assembly of North Carolina enacts:
SECTION 1.(a)  The Environmental Review Commission, with the assistance of the Department of Environment and Natural Resources, shall study the allocation of surface water resources and their availability and maintenance in the State, including issues related to the transfer of water from one river basin to another and the withdrawal of water for consumptive use.  The Commission shall evaluate the benefits of establishing formal and informal procedures for negotiating transfers of water from one river basin to another.  The Commission shall also study and recommend measures to:  (i) ensure that the purposes of the Regional Water Supply Planning Act of 1971, as set out in G.S. 162A-21, are fulfilled; (ii) provide for a comprehensive system for regulating surface water withdrawals for consumptive and nonconsumptive uses; (iii) provide for the establishment of a statewide plan for water resources development projects;  (iv) provide for adequate resources for the Department so that it may develop and implement a comprehensive approach to water resources management; (v) ensure that all State laws regulating water resources are consistent with and fully integrated into the comprehensive system for regulating surface water withdrawals and the statewide plan for water resources development projects; and (vi) ensure that potential interstate conflicts related to water resources are avoided or minimized.  In the conduct of this study, the Environmental Review Commission may employ independent consultants as provided in G.S. 120‑32.02 and G.S. 120‑70.44.  The Environmental Review Commission may submit an interim report to the 2008 Regular Session of the General Assembly and shall submit a final report of its findings and recommendations, including any legislative proposals, to the 2009 General Assembly.
SECTION 1.(b)  The Division of Water Resources of the Department of Environment and Natural Resources, in consultation with the Environmental Review Commission, shall prepare a revised map entitled "Major River Basins and Sub‑basins in North Carolina".  The revised map shall be prepared as a recommended replacement for the map referenced in G.S. 143‑215.22G.  The revised map shall define the extent to which any river basin that encompasses any river that flows from another state into North Carolina or that flows from North Carolina into another state extends into an adjacent state.  The Environmental Review Commission shall recommend a revised map and a conforming legislative proposal to amend the definition of "river basin" set out in G.S. 143‑215.22G to the  2008 Regular Session of the General Assembly.
SECTION 2.  G.S. 143‑215.22I is repealed.
SECTION 3.  Part 2A of Article 21 of Chapter 143 of the General Statutes is amended by adding a new section to read:
"§ 143‑215.22L.  Regulation of surface water transfers.
(a)	Certificate Required. – No person, without first obtaining a certificate from the Commission, may:
(1)	Initiate a transfer of 2,000,000 gallons of water or more per day from one river basin to another.
(2)	Increase the amount of an existing transfer of water from one river basin to another by twenty‑five percent (25%) or more above the average daily amount transferred during the year ending 1 July 1993 if the total transfer including the increase is 2,000,000 gallons or more per day.
(3)	Increase an existing transfer of water from one river basin to another above the amount approved by the Commission in a certificate issued under G.S. 162A‑7 prior to 1 July 1993.
(b)	Exception. – Notwithstanding the provisions of subsection (a) of this section, a certificate shall not be required to transfer water from one river basin to another up to the full capacity of a facility to transfer water from one basin to another if the facility was in existence or under construction on 1 July 1993.
(c)	Notice of Intent to File a Petition. – An applicant shall prepare a notice of intent to file a petition that includes a nontechnical description of the applicant's request and an identification of the proposed water source. Within 90 days after the applicant files a notice of intent to file a petition, the applicant shall hold at least one public meeting in the source river basin upstream from the proposed point of withdrawal, at least one public meeting in the source river basin downstream from the proposed point of withdrawal, and at least one public meeting in the receiving river basin to provide information to interested parties and the public regarding the nature and extent of the proposed transfer and to receive comment on the scope of the environmental documents. Written notice of the public meetings shall be provided at least 30 days before the public meetings. At the time the applicant gives notice of the public meetings, the applicant shall request comment on the alternatives and issues that should be addressed in the environmental documents required by this section. The applicant shall accept written comment on the scope of the environmental documents for a minimum of 30 days following the public meetings. Notice of the public meetings and opportunity to comment on the scope of the environmental documents shall be provided as follows:
(1)	By publishing notice in the North Carolina Register.
(2)	By publishing notice in a newspaper of general circulation in:
a.	Each county in this State located in whole or in part of the area of the source river basin upstream from the proposed point of withdrawal.
a1.	Each county in an adjacent state located in whole or in part of the area of the source river basin upstream from the proposed point of withdrawal, up to the point of the last impoundment upstream from the point of withdrawal. This sub‑subdivision shall not apply if there are no impoundments located in the source river basin upstream from the proposed point of withdrawal.
b.	Each county in this State or in an adjacent state located in whole or in part of the area of the source river basin downstream from the proposed point of withdrawal.
c.	Any area in the State in a river basin for which the source river basin has been identified as a future source of water in a local water supply plan prepared pursuant to G.S. 143‑355(l).
d.	Each county in the State located in whole or in part of the receiving river basin.
(3)	By giving notice by first‑class mail or electronic mail to each of the following:
a.	The board of commissioners of each county in this State or any adjacent state that is located entirely or partially within the source river basin of the proposed transfer.
b.	The board of commissioners of each county in this State or any adjacent state that is located entirely or partially within the receiving river basin of the proposed transfer.
c.	The governing body of any public water supply system that withdraws water upstream or downstream from the withdrawal point of the proposed transfer.
d.	If any portion of the source or receiving river basins is located in an adjacent state, all state water management or use agencies, environmental protection agencies, and the office of the governor in each adjacent state upstream or downstream from the withdrawal point of the proposed transfer.
e.	All persons who have registered a water withdrawal or transfer from the proposed source river basin under this Part or under similar law in an adjacent state.
f.	All persons who hold a certificate for a transfer of water from the proposed source river basin under this Part or under similar law in an adjacent state.
g.	All persons who hold a National Pollutant Discharge Elimination System (NPDES) wastewater discharge permit for a discharge of 100,000 gallons per day or more upstream or downstream from the proposed point of withdrawal.
h.	To any other person who submits to the applicant a written request to receive all notices relating to the petition.
(d)	Environmental Documents. – The definitions set out in G.S. 113A‑9 apply to this section. The Department shall conduct a study of the environmental impacts of any proposed transfer of water for which a certificate is required under this section. The study shall meet all of the requirements set forth in G.S. 113A‑4 and rules adopted pursuant to G.S. 113A‑4. An environmental assessment shall be prepared for any petition for a certificate under this section. The determination of whether an environmental impact statement shall also be required shall be made in accordance with the provisions of Article 1 of Chapter 113A of the General Statutes; except that an environmental impact statement shall be prepared for every proposed transfer of water from one major river basin to another for which a certificate is required under this section. The applicant who petitions the Commission for a certificate under this section shall pay the cost of special studies necessary to comply with Article 1 of Chapter 113A of the General Statutes. An environmental impact statement prepared pursuant to this subsection shall include all of the following:
(1)	A comprehensive analysis of the impacts that would occur in the source river basin and the receiving river basin if the petition for a certificate is granted.
(2)	An evaluation of alternatives to the proposed interbasin transfer, including water supply sources that do not require an interbasin transfer and use of water conservation measures.
(3)	A description of measures to mitigate any adverse impacts that may arise from the proposed interbasin transfer.(e)	Public Hearing on the Draft Environmental Document. – The Commission shall hold a public hearing on the draft environmental document for a proposed interbasin transfer after giving at least 30 days' written notice of the hearing in the Environmental Bulletin and as provided in subdivisions (2) and (3) of subsection (c) of this section. The notice shall indicate where a copy of the environmental document can be reviewed and the procedure to be followed by anyone wishing to submit written comments and questions on the environmental document. The Commission shall prepare a record of all comments and written responses to questions posed in writing. The record shall include complete copies of scientific or technical comments related to the potential impact of the interbasin transfer.
(f)	Determination of Adequacy of Environmental Document. – The Commission shall not act on any petition for an interbasin transfer until the Commission has determined that the environmental document is complete and adequate. A decision on the adequacy of the environmental document is subject to review in a contested case on the decision of the Commission to issue or deny a certificate under this section.
(g)	Petition. – An applicant for a certificate shall petition the Commission for the certificate. The petition shall be in writing and shall include all of the following:
(1)	A description of the facilities to be used to transfer the water, including the location and capacity of water intakes, pumps, pipelines, and other facilities.
(2)	A description of all the proposed consumptive and nonconsumptive uses of the water to be transferred.
(3)	A description of the water quality of the source river and receiving river, including information on aquatic habitat for rare, threatened, and endangered species; in‑stream flow data for segments of the source and receiving rivers that may be affected by the transfer; and any waters that are impaired pursuant to section 303(d) of the federal Clean Water Act (33 U.S.C. § 1313(d)).
(4)	A description of the water conservation measures used by the applicant at the time of the petition and any additional water conservation measures that the applicant will implement if the certificate is granted.
(5)	A description of every source of water within the receiving river basin, including surface water impoundments, groundwater wells, reinjection storage, and purchase of water from another source within the river basin, that is a practicable alternative to the proposed transfer that would meet the applicant's water supply needs. The description of water sources shall include sources available at the time of the petition for a certificate and any planned or potential water sources.
(6)	A description of water transfers and withdrawals registered under G.S. 143‑215.22H or included in a local water supply plan prepared pursuant to G.S. 143‑355(l) from the source river basin, including transfers and withdrawals at the time of the petition for a certificate and any planned or reasonably foreseeable transfers or withdrawals.
(7)	A demonstration that the proposed transfer, if added to all other transfers and withdrawals required to be registered under G.S. 143‑215.22H or included in any local water supply plan prepared pursuant to G.S. 143‑355(l) from the source river basin at the time of the petition for a certificate, would not reduce the amount of water available for use in the source river basin to a degree that would impair existing uses, pursuant to the antidegradation policy set out in 40 Code of Federal Regulation § 131.12 (Antidegradation Policy) (1 July 2006 Edition) and the statewide antidegradation policy adopted pursuant thereto, or existing and planned consumptive and nonconsumptive uses of the water in the source river basin. If the proposed transfer would impact a reservoir within the source river basin, the demonstration must include a finding that the transfer would not result in a water level in the reservoir that is inadequate to support existing uses of the reservoir, including recreational uses.
(8)	The applicant's future water supply needs and the present and reasonably foreseeable future water supply needs in the source river basin. The analysis of future water supply needs shall include agricultural, recreational, industrial, and hydropower uses. Local water supply plans prepared pursuant to G.S. 143‑355(l) for water systems in the source river basin shall be used to evaluate the projected future water needs in the source river basin that will be met by public water systems.
(9)	The applicant's water supply plan prepared pursuant to G.S. 143‑355(l). If the applicant's water supply plan is more than two years old at the time of the petition, then the applicant shall include with the petition an updated water supply plan.
(10)	Any other information deemed necessary by the Commission for review of the proposed water transfer.
(g1)	Settlement Discussions. – Within 30 days after an applicant files a petition under this section, the Commission shall appoint a mediation officer. The mediation officer may be a member of the Commission, an employee of the Department, or a neutral third party but shall not be a hearing officer under subsections (e) or (i) of this section. The mediation officer shall make a reasonable effort to initiate settlement discussions between the applicant and all other interested parties. Evidence of statements made and conduct that occurs in a settlement discussion conducted under this subsection, whether attributable to a party, a mediation officer, or other person shall not be subject to discovery and shall be inadmissible in any subsequent proceeding on the petition for a certificate. The Commission may adopt rules to govern the conduct of the mediation process.
(h)	Draft Determination. – Within 90 days after the Commission determines that the environmental document prepared in accordance with subsection (d) of this section is adequate or the applicant submits its petition for a certificate, whichever occurs later, the Commission shall issue a draft determination on whether to grant the certificate. The draft determination shall be based on the criteria set out in this section and shall include the conditions and limitations, findings of fact, and conclusions of law that would be required in a final determination. Notice of the draft determination shall be given as provided in subsection (c) of this section.
(i)	Public Hearing on the Draft Determination. – Within 60 days of the issuance of the draft determination as provided in subsection (h) of this section, the Commission shall hold public hearings on the draft determination. At least one hearing shall be held in the affected area of the source river basin, and at least one hearing shall be held in the affected area of the receiving river basin. In determining whether more than one public hearing should be held within either the source or receiving river basins, the Commission shall consider the differing or conflicting interests that may exist within the river basins, including the interests of both upstream and downstream parties potentially affected by the proposed transfer. The public hearings shall be conducted by one or more hearing officers appointed by the Chair of the Commission. The hearing officers may be members of the Commission or employees of the Department. The Commission shall give at least 30 days' written notice of the public hearing as provided in subsection (c) of this section. The Commission shall prepare a record of all comments and written responses to questions posed in writing. The record shall include complete copies of scientific or technical comments related to the potential impact of the interbasin transfer.
(j)	Final Determination: Factors to be Considered. – In determining whether a certificate may be issued for the transfer, the Commission shall specifically consider each of the following items and state in writing its findings of fact and conclusions of law with regard to each item:
(1)	The necessity and reasonableness of the amount of surface water proposed to be transferred and its proposed uses.
(2)	The present and reasonably foreseeable future detrimental effects on the source river basin, including present and future effects on public, industrial, economic, recreational, and agricultural water supply needs, wastewater assimilation, water quality, fish and wildlife habitat, hydroelectric power generation, navigation, and recreation. Local water supply plans prepared pursuant to G.S. 143‑355(l) that affect the source river basin shall be used to evaluate the projected future water needs in the source river basin that will be met by public water systems. Information on projected future water needs that is more recent than the local water supply plans may be used if the Commission finds the information to be reliable. The determination shall include a specific finding as to measures that are necessary or advisable to mitigate or avoid detrimental impacts on the source river basin.
(3)	The cumulative effect on the source major river basin of any water transfer or consumptive water use that, at the time the Commission considers the petition for a certificate is occurring, is authorized under this section, or is projected in any local water supply plan that has been submitted to the Department in accordance with G.S. 143‑355(l).
(4)	The present and reasonably foreseeable future beneficial and detrimental effects on the receiving river basin, including present and future effects on public, industrial, economic, recreational, and agricultural water supply needs, wastewater assimilation, water quality, fish and wildlife habitat, hydroelectric power generation, navigation, and recreation. Local water supply plans prepared pursuant to G.S. 143‑355(l) that affect the receiving river basin shall be used to evaluate the projected future water needs in the receiving river basin that will be met by public water systems. Information on projected future water needs that is more recent than the local water supply plans may be used if the Commission finds the information to be reliable. The determination shall include a specific finding as to measures that are necessary or advisable to mitigate or avoid detrimental impacts on the receiving river basin.
(5)	The availability of alternatives to the proposed transfer, including the potential capacity of alternative sources of water, the potential of each alternative to reduce the amount of or avoid the proposed transfer, probable costs, and environmental impacts. The determination shall include a specific finding as to why the applicant's need for water cannot be satisfied by alternatives within the receiving basin, including unused capacity under a transfer for which a certificate is in effect or that is otherwise authorized by law at the time the applicant submits the petition. The determination shall include a specific finding as to whether a current water source of the applicant is no longer available due to depletion or contamination. The determination shall consider the extent to which access to potential sources of surface water or groundwater within the receiving river basin are unavailable as a result of the operation of other provisions of law that restrict the use of those potential sources. The determination shall consider the feasibility of the applicant's purchase of water from other water suppliers within the receiving basin and of the transfer of water from another sub‑basin within the receiving major river basin. Except in circumstances of technical or economic infeasibility or adverse environmental impact, the Commission's determination as to reasonable alternatives shall give preference to alternatives that would involve a transfer from one sub‑basin to another within the major receiving river basin over alternatives that would involve a transfer from one major river basin to another major river basin.(6)	If applicable to the proposed project, the applicant's present and proposed use of impoundment storage capacity to store water during high‑flow periods for use during low‑flow periods and the applicant's right of withdrawal under G.S. 143‑215.44 through G.S. 143‑215.50.
(7)	If the water to be withdrawn or transferred is stored in a multipurpose reservoir constructed by the United States Army Corps of Engineers, the purposes and water storage allocations established for the reservoir at the time the reservoir was authorized by the Congress of the United States.
(8)	Any other facts and circumstances that are reasonably necessary to carry out the purposes of this Part.
(k)	Final Determination: Information to be Considered. – In determining whether a certificate may be issued for the transfer, the Commission shall consider all of the following sources of information:
(1)	The petition.
(2)	The environmental document prepared pursuant to subsection (d) of this section.
(3)	All oral and written comment and all accompanying materials or evidence submitted pursuant to subsections (e) and (i) of this section.
(4)	Information developed by or available to the Department on the water quality of the source river basin and the receiving river basin, including waters that are identified as impaired pursuant to section 303(d) of the federal Clean Water Act (33 U.S.C. § 1313(d)), that are subject to a total maximum daily load (TMDL) limit under subsections (d) and (e) of section 303 of the federal Clean Water Act, or that would have their assimilative capacity impaired if the certificate is issued.(5)	Any other information that the Commission determines to be relevant and useful.
(l)	Final Determination: Burden and Standard of Proof; Specific Findings. – The Commission shall grant a certificate for a water transfer if the Commission finds that the applicant has established by a preponderance of the evidence all of the following:
(1)	The benefits of the proposed transfer outweigh the detriments of the proposed transfer. In making this determination, the Commission shall be guided by the approved environmental document and the policy set out in subsection (s) of this section.
(2)	The detriments have been or will be mitigated to the maximum degree practicable.
(3)	The amount of the transfer does not exceed the amount of the projected shortfall under the applicant's water supply plan after first taking into account all other sources of water that are available to the applicant.
(4)	There are no reasonable alternatives to the proposed transfer.
(m)	Final Determination: Certificate Conditions and Limitations. – The Commission may grant the certificate in whole or in part, or deny the certificate. The Commission may impose any conditions or limitations on a certificate that the Commission finds necessary to achieve the purposes of this Part. The conditions and limitations shall include any mitigation measures proposed by the applicant to minimize any detrimental effects within the source and receiving river basins. In addition, the certificate shall require all of the following conditions and limitations:
(1)	A water conservation plan that specifies the water conservation measures that will be implemented by the applicant in the receiving river basin to ensure the efficient use of the transferred water. The water conservation plan shall provide for the mandatory implementation of water conservation measures by the applicant that equal or exceed the most stringent water conservation plan implemented by a public water system that withdraws water from the source river basin.
(2)	A drought management plan that specifies how the transfer shall be managed to protect the source river basin during drought conditions or other emergencies that occur within the source river basin. This drought management plan shall include mandatory reductions in the permitted amount of the transfer based on the severity and duration of a drought occurring within the source river basin and shall provide for the mandatory implementation of a drought management plan by the applicant that equals or exceeds the most stringent water conservation plan implemented by a public water system that withdraws water from the source river basin.
(3)	The maximum amount of water that may be transferred on a daily basis, and methods or devices required to be installed and operated that measure the amount of water that is transferred.
(4)	A provision that the Commission may amend a certificate to reduce the maximum amount of water authorized to be transferred whenever it appears that an alternative source of water is available to the certificate holder from within the receiving river basin, including, but not limited to, the purchase of water from another water supplier within the receiving basin or to the transfer of water from another sub‑basin within the receiving major river basin.
(5)	A provision that the Commission shall amend the certificate to reduce the maximum amount of water authorized to be transferred if the Commission finds that the applicant's current projected water needs are significantly less than the applicant's projected water needs at the time the certificate was granted.
(6)	Except as provided in this subdivision, a provision that the applicant will not resell the water that would be transferred pursuant to the certificate to another public water supply system. In the case of a petition where the applicant proposes to furnish water to another public water supply system within the receiving river basin, the Commission may approve a certificate that contemplates the resale if each jurisdiction included within the regional water supply system is a co‑applicant for the transfer and will be subject to all the terms, conditions, and limitations made applicable to the primary applicant.
(n)	Administrative and Judicial Review. – Administrative and judicial review of a final decision by the Commission on a petition for a certificate under this section shall be governed by Chapter 150B of the General Statutes.
(o)	Certain Preexisting Transfers. – In cases where an applicant requests approval to increase a transfer that existed on 1 July 1993, the Commission may approve or disapprove only the amount of the increase. If the Commission approves the increase, the certificate shall be issued for the amount of the preexisting transfer plus any increase approved by the Commission. A certificate for a transfer approved by the Commission under G.S. 162A‑7 shall remain in effect as approved by the Commission and shall have the same effect as a certificate issued under this Part. A certificate for the increase of a preexisting transfer shall contain all of the conditions and limitations required by subsection (m) of this section.
(p)	Emergency Transfers. – In the case of water supply problems caused by drought, a pollution incident, temporary failure of a water plant, or any other temporary condition in which the public health requires a transfer of water, the Secretary of Environment and Natural Resources may grant approval for a temporary transfer. Prior to approving a temporary transfer, the Secretary shall consult with those parties listed in subdivision (3) of subsection (c) of this section that are likely to be affected by the proposed transfer. However, the Secretary shall not be required to satisfy the public notice requirements of this section or make written findings of fact and conclusions of law in approving a temporary transfer under this subsection. If the Secretary approves a temporary transfer under this subsection, the Secretary shall specify conditions to protect other water users. A temporary transfer shall not exceed six months in duration, but the approval may be renewed for a period of six months by the Secretary based on demonstrated need as set forth in this subsection.
(q)	Relationship to Federal Law. – The substantive restrictions, conditions, and limitations upon surface water transfers authorized in this section may be imposed pursuant to any federal law that permits the State to certify, restrict, or condition any new or continuing transfers or related activities licensed, relicensed, or otherwise authorized by the federal government. This section shall govern the transfer of water from one river basin to another unless preempted by federal law.
(r)	Planning Requirements. – When any transfer for which a certificate was issued under this section equals or exceeds eighty percent (80%) of the maximum amount authorized in the certificate, the applicant shall submit to the Department a detailed plan that specifies how the applicant intends to address future foreseeable water needs. If the applicant is required to have a local water supply plan, then this plan shall be an amendment to the local water supply plan required by G.S.143‑355(l). When the transfer equals or exceeds ninety percent (90%) of the maximum amount authorized in the certificate, the applicant shall begin implementation of the plan submitted to the Department.
(s)	Statement of Policy. – It is the public policy of the State to maintain, protect, and enhance water quality within North Carolina. It is the public policy of this State that projected future water needs in a receiving river basin are subordinate to projected future water needs in a source river basin. Further, it is the public policy of the State that the cumulative impact of transfers from a source river basin shall not result in a violation of the antidegradation policy set out in 40 Code of Federal Regulations § 131.12 (1 July 2006 Edition) and the statewide antidegradation policy adopted pursuant thereto.
(t)	Fee. – An applicant for a certificate under this section shall pay a fee of ten thousand dollars ($10,000) to the Commission for processing a petition for a certificate. The applicant shall pay the fee at the time the applicant submits the petition for a certificate to the Commission."
SECTION 4.  G.S. 113A‑8.1 reads as rewritten:
"§ 113A‑8.1.  Surface water transfers.
An environmental assessment shall be prepared for any transfer for which a petition is filed in accordance with G.S. 143‑215.22L. The determination of whether an environmental impact statement is needed with regard to the proposed transfer shall be made in accordance with the provisions of this Article."
SECTION 5.  G.S. 143‑215.6A(a)(9) reads as rewritten:
"(9)	Is required, but fails, to apply for or to secure a certificate required by G.S. 143‑215.22L, or who violates or fails to act in accordance with the terms, conditions, or requirements of the certificate."
SECTION 6.(a)  Except as provided in subsection (b) of this section, this act becomes effective when it becomes law and applies to any petition for a certificate for a transfer of surface water from one river basin to another river basin first made on or after that date.
SECTION 6.(b)  For a petition for a certificate for transfer of surface water from one river basin to another river basin to supplement ground water supplies in the fifteen counties designated as the Central Coastal Plain Capacity Use Area under15A NCAC 2E .0501, this act becomes effective 1 January 2011.  Prior to 1 January 2011, a petition for a certificate for transfer of surface water from one river basin to another river basin to supplement ground water supplies in the fifteen counties designated as the Central Coastal Plain Capacity Use Area shall be considered and acted upon by the Environmental Management Commission pursuant to the procedures and standards set out in G.S. 143-215.22I on 1 July 2007.