A BILL TO BE ENTITLED
AN ACT to amend the law governing the regulation of interbasin transfers and to direct the department of justice and the department of environment and natural resources to study whether there is a need for an interstate compact to mediate any future interstate water supply issues.
The General Assembly of North Carolina enacts:
SECTION 1.  Part 2A of Article 21 of Chapter 143 of the General Statutes is amended by adding a new section to read:
"§ 143‑215.22F.  Legislative intent.
The General Assembly declares that water resources of the State and common law riparian rights are subject to regulation by the State. The waters of the State are a natural resource owned by the State in trust for the public and subject to the State's sovereign power to plan, regulate, and control the withdrawal and use of these waters, under applicable State law, in order to protect the public health, safety, and welfare. Further, the general welfare and public interest require that water resources of the State be put to reasonable beneficial use to the fullest extent to which they are capable, subject to reasonable regulation, in order to conserve and protect these resources, prevent waste of the resource, provide for protection of the ecosystem, ensure navigability where appropriate, promote sustainable economic development, and to provide and maintain conditions which are conducive to the development and reasonable use of the State's water resources. In order to provide legal security for water rights within the constraints provided in this Part, the Part establishes a certificate program that makes an interbasin transfer a matter of legal record entitled to legal protection. 
The surface waters of the State require integrated planning and management. North Carolina's rivers and streams flow long distances and support natural aquatic ecosystems, while providing many communities economic, social, and environmental benefits. The State is responsible for maintaining these water resources for the maximum physical and economic benefit of the people while sustaining a safe yield and a respect for natural systems, including all waters of the State. The State shall preserve minimum flows and levels in water sources as necessary to protect the designated uses of those water sources and support aquatic ecosystems by reserving such waters from allocation."
SECTION 2.  G.S. 143‑215.22G reads as rewritten:
"§ 143‑215.22G.  Definitions.
In addition to the definitions set forth in G.S. 143‑212 and G.S. 143‑213, the following definitions apply to this Part.
(1)	"Quasi‑judicial hearing" means a hearing held in accordance with the standards and procedures for contested case hearings under Article 3A of Chapter 150B of the General Statutes.
(1a)	"River basin" means any of the following river basins designated on the map entitled "Major River Basins and Sub‑basins in North Carolina" and filed in the Office of the Secretary of State on 16 April 1991. The term "river basin" includes any portion of the river basin that extends into another state. Any area outside North Carolina that is not included in one of the river basins listed in this subdivision comprises a separate river basin. 
a.	1‑1	Broad River.
b.	2‑1	Haw River.
c.	2‑2	Deep River.
d.	2‑3	Cape Fear River.
e.	2‑4	South River.
f.	2‑5	Northeast Cape Fear River.
g.	2‑6	New River.
h.	3‑1	Catawba River.
i.	3‑2	South Fork Catawba River.
j.	4‑1	Chowan River.
k.	4‑2	Meherrin River.
l.	5‑1	Nolichucky River.
m.	5‑2	French Broad River.
n.	5‑3	Pigeon River.
o.	6‑1	Hiwassee River.
p.	7‑1	Little Tennessee River.
q.	7‑2	Tuskasegee (Tuckasegee) River.
r.	8‑1	Savannah River.
s.	9‑1	Lumber River.
t.	9‑2	Big Shoe Heel Creek.
u.	9‑3	Waccamaw River.
v.	9‑4	Shallotte River.
w.	10‑1	Neuse River.
x.	10‑2	Contentnea Creek.
y.	10‑3	Trent River.
z.	11‑1	New River.
aa.	12‑1	Albemarle Sound.
bb.	13‑1	Ocoee River.
cc.	14‑1	Roanoke River.
dd.	15‑1	Tar River.
ee.	15‑2	Fishing Creek.
ff.	15‑3	Pamlico River and Sound.
gg.	16‑1	Watauga River.
hh.	17‑1	White Oak River.
ii.	18‑1	Yadkin (Yadkin‑Pee Dee) River.
jj.	18‑2	South Yadkin River.
kk.	18‑3	Uwharrie River.
ll.	18‑4	Rocky River.
(1b)	"Safe yield" means the amount of water that can be continuously withdrawn from a source water body without adverse effects to water quality and aquatic habitat during 7Q10 conditions, as defined in G.S. 130A‑295.01.
(2)	"Surface water" means any of the waters of the State located on the land surface that are not derived by pumping from groundwater.
(3)	"Transfer" means the withdrawal, diversion, or pumping of surface water from one river basin and discharge of all or any part of the water in a river basin different from the origin. However, notwithstanding the basin definitions in G.S. 143‑215.22G(1), the following are not transfers under this Part:
a.	The discharge of water upstream from the point where it is withdrawn.
b.	The discharge of water downstream from the point where it is withdrawn."
SECTION 3.  G.S. 143‑215.22I reads as rewritten:
"§ 143‑215.22I.  Regulation of surface water transfers.
(a)	Certificate:  Required for Interbasin Transfer. – No person, without first securing 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 July 1, 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 July 1, 1993.
(b)	Certificate:  Exception for Certain Facilities. – 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 existing or under construction on July 1, 1993.
(c)	Petition. – An applicant for a certificate shall petition the Commission for the certificate. The petition shall be in writing and shall include 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 the proposed uses of the water to be transferred.
(3)	An assurance of the efficient use of the water and the avoidance of waste, the water conservation measures used by the applicant at the time of application and any additional water conservation measures that will be implemented by the applicant if the certificate is granted.
(4)	The applicant's water supply plan and 25‑year population projections, as appropriate. In calculating the population projections, the Commission shall identify overlaps in the projected population growth of water plans and ensure that the population figures for any overlapping service areas are counted only once. 
(5)	An itemized report detailing the source, volume, and maximum permitted capacity of all existing, permitted, reasonably foreseeable and other proposed water withdrawals and interbasin transfers from the source river basin as well as detailing every existing, planned, and potential source of water within the receiving river basin, including, without limitation, existing and potential new surface water impoundments, groundwater wells, reinjection storage, and potential expansions of any of the foregoing, as well as any other technically feasible technology.
(6)	A determination of whether the proposed interbasin transfer and existing, permitted, reasonably foreseeable, and other proposed withdrawals are within the safe yield of the source water body.
(7)	A letter of support from each upstream and downstream public water supplier, including each water supplier in downstream states that make withdrawals from the source water body stating that the proposed interbasin transfer will not negatively affect existing water users and is consistent with local water supply plans.
(8)	The most recent information available from the Division of Water Quality of the Department concerning the water quality of the source river basin and the receiving river basin including, without limitation, any information on any segments of either basin that are deemed impaired under section 303(d) of the Clean Water Act, that are the subject to a total maximum daily load (TMDL) limitation, or would have their assimilative capacity impaired by the proposed interbasin transfer and other transfers listed in subsection (6) of this section or their ability to support habitat listed in subsection (9) of this section, and also including information from any other federal, state, regional, local, or interstate body having jurisdiction over the water quality of either basin.
(9)	The most recent information available from the Wildlife Resources Commission concerning aquatic habitat for rare, threatened, and endangered species in the source river basin and the receiving river basin.
(10)	Any other information deemed necessary by the Commission for review of the proposed water transfer.
(c1)	Notice of Petition for Certificate. – When the Commission receives notice from a person that the person intends to submit a petition for a water transfer, the Commission shall provide that notice to the parties listed in subsection (d) of this section within 30 days of its receipt by the Commission. The notice shall be forwarded to the parties by the Commission in the same manner as provided by subsection (d) of this section. The purpose of the notice is to inform interested parties at the earliest reasonable time of a potential transfer and to allow for full discussion, and, if necessary, mediation regarding a proposed transfer before significant economic resources have been committed to the proposed transfer.
(d)	Public Hearing Requirement; Notice. – Except as provided in subsection (e1) of this section, upon receipt of the petition, the Commission shall hold a public hearing on the proposed transfer after giving at least 30 days' written notice of the hearing as follows:
(1)	By publishing notice in the North Carolina Register.
(2)	By publishing notice in a newspaper of general circulation in the following areas:
a.	Areas of the river basin that withdraw water from the source water body both upstream and downstream from the point of withdrawal.b.	Areas that are not currently withdrawing water from the source water body but that identify the source water body as a water source for future needs in a local water supply plan submitted to the Department pursuant to G.S. 143‑355(l).
(3)	By giving notice by first‑class mail to each of the following:
a.	A person who has registered under this Part a water withdrawal or transfer from the same river basin where the water for the proposed transfer would be withdrawn.
b.	A person who secured a certificate under this Part for a water transfer from the same river basin where the water for the proposed transfer would be withdrawn.
c.	A person holding a National Pollutant Discharge Elimination System (NPDES) wastewater discharge permit exceeding 100,000 gallons per day for a discharge located upstream and downstream from the proposed withdrawal point of the proposed transfer.
d.	The board of county commissioners of each county that is located entirely or partially within the river basin that is the source of the proposed transfer.
e.	The governing body of any public water supply system that withdraws water upstream and downstream from the withdrawal point of the proposed transfer.
(4)	By providing notice to persons and state agencies in adjacent states that withdraw water upstream and downstream from the withdrawal point of the proposed transfer to the same extent and in the same manner that the adjacent state provides notice to North Carolina citizens and State agencies with regard to a proposed water transfer in the adjacent state.
(e)	Content of Notice. – The notice of the public hearing shall include a nontechnical description of the applicant's request and a conspicuous statement in bold type as to the effects of the water transfer on the source and receiving river basins. The notice shall further indicate the procedure to be followed by anyone wishing to submit comments on the proposed water transfer.
(e1)	Quasi‑Judicial Hearing. – An applicant or any person or entity described in subdivision (d)(3) of this section may request that a quasi‑judicial hearing be held regarding the petition in lieu of the public hearing. The request for the quasi‑judicial hearing shall be submitted to the Commission no later than 20 days before the date the public hearing is scheduled.
(e2)	Petition:  No Consideration if Exceeds Safe Yields. – The Commission shall not consider a petition for a transfer from a river basin if the sum of the authorized withdrawals and transfers from the source river basin exceeds the combined safe yields of the source water bodies in the source river basin.
(f)	Certificate:  Criteria. – 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 with regard to each item:
(1)	The necessity, reasonableness, and beneficial effects 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, and agricultural water supply needs, wastewater assimilation, water quality, fish and wildlife habitat, hydroelectric power generation, navigation, and recreation. Local water supply plans that affect the source major river basin shall be used to evaluate the projected future municipal water needs in the source major river basin and to determine whether the proposed interbasin transfer will have a detrimental impact on the future water supplies of local governments that make withdrawals from the source water body.
(2a)	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 application 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).
(3)	The detrimental effects on the receiving river basin, including effects on water quality, wastewater assimilation, fish and wildlife habitat, including wetlands, navigation, recreation, and flooding.
(4)	Reasonable alternatives to the proposed transfer, including their probable costs, and environmental impacts.
(4a)	Mitigation measures are examined and committed to be implemented in the certificate to ensure that the detrimental effects to the source river basin under subsection (2) and to the receiving river basin under (3) are avoided to the maximum extent feasible.
(5)	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.
(6)	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.
(7)	Any other facts and circumstances that are reasonably necessary to carry out the purposes of this Part.
(f1)	Certificate:  Required Assessments. – The following assessments shall be prepared as required by this subsection for any petition for a certificate under this section:
(1)	An environmental assessment as defined by G.S. 113A‑9(1) 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. 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. The environmental assessment or environmental impact statement shall include an evaluation of the applicant's ability to meet the applicant's water supply needs from sources that do not require an interbasin transfer and through the use of water conservation measures. The environmental assessment or environmental impact statement shall include an evaluation of measures to mitigate any damage that may arise from the proposed interbasin transfer. The environmental assessment or environmental impact statement shall be completed and made available to the public at least 30 days before the public hearing required by subsection (d) of this section.
(2)	An economic impact assessment shall be prepared for any petition for a certificate under this section. The economic impact assessment shall include a review of the benefits and negative impacts on the local and regional economy of both the source river basin and the receiving river basin.
(3)	A social impact assessment shall be prepared for any petition for a certificate under this section. The social impact assessment shall include a review of the recreational and agricultural uses of both the source river basin and the receiving river basin.
(4)	A groundwater aquifer assessment shall be prepared for any petition for a certificate under this section. The assessment shall determine what impact that the transfer may have on groundwater resources and how the transfer may modify the timing and rate of aquifer recharge in the river basin. 
(5)	An impoundment assessment shall be prepared for any petition for a certificate under this section. The assessment shall include an evaluation of the impact the transfer may have on water supplies provided by surface water resources that are collected or held in reservoirs or other impoundments, whether the transfer may modify the water table of those impoundments, and if so, the timing and rate required to replenish the water supply in the impoundments and return them to a safe water table level.
(g)	Certificate:  Weight of Evidence; Burden of Proof; Expiration. – The applicant has the burden of proof to rebut the presumption in subsection (m) of this section and to satisfy the provisions of this subsection. A certificate shall be granted for a water transfer if the applicant establishes and the Commission concludes by a preponderance of the evidence based upon the findings of fact made under subsection (f) of this section that: (i) the benefits of the proposed transfer outweigh the detriments of the proposed transfer, and (ii) the detriments have been or will be mitigated to a reasonable degree. The conditions necessary to ensure that the detriments are and continue to be mitigated to a reasonable degree shall be attached to the certificate in accordance with subsections (h) and (h1) of this section.
A certificate granted under this section shall expire 10 years from the date of its issuance and may be modified during that time as provided by this section. A certificate may be renewed under this section, but the sum of the period of time for which the original certificate was issued and the period of time for each renewal of the certificate shall not exceed 40 years. The procedure for renewal shall be the same as for the petition for the original certificate.
A certificate issued under this section is valid only for the applicant to whom the certificate was granted and is not transferable.
(g1)	Certificate:  Mandatory Grounds for Denial. – Notwithstanding subsection (g) of this section, the Commission shall not grant a certificate of transfer if:
(1)	The proposed interbasin transfer will supply more than five percent (5%) of the water used by the applicant;
(2)	The sum of the proposed transfer and the authorized withdrawals and transfers from the source river basin exceeds the combined safe yields of the source water bodies in the source river basin;
(3)	The sum of the proposed transfer and the authorized withdrawals and transfers of the petitioner exceeds the projected water use included in the petitioner's most recent water supply plan submitted to the Department pursuant to G.S. 143‑355(l); or
(4)	The Commission determines that a better option is available for addressing the water supply needs than the proposed water transfer or that there are additional mitigation measures that could be undertaken to ensure that the detrimental effects to the source river basin or the receiving river basin are minimized.
(h)	Certificate:  Authority to Grant, Revise, Deny. – The Commission may respond to a petition under this section with any of the options outlined by this section, provided that any option adopted by the Commission protects the source river basin. The Commission may grant the certificate in whole or in part, revise the certificate as provided by this section and grant the revised version of the certificate, or deny the certificate. The Commission, on its own motion or at the request of another party who shall be affected by the transfer, may consider options not included in the petition and accompanying documentation for the certificate and in lieu of the certificate as originally proposed in the petition, may grant a revised version of the certificate that incorporates any of those options  The Commission may also grant a certificate with any conditions attached that the Commission believes are necessary to achieve the purposes of this Part. The conditions may include mitigation measures proposed to minimize any detrimental effects of the proposed transfer and measures to protect the availability of water in the source river basin during a drought or other emergency. 
(h1)	Certificate:  Mandatory Conditions. – Any certificate issued under this section shall include all of the following conditions and provisions:
(1)	The certificate shall indicate the maximum amount of water that may be transferred. The certificate shall also indicate the daily maximum amount that may be transferred. No person shall transfer an amount of water that exceeds either of those amounts in the certificate.
(2)	While the certificate shall indicate the maximum transfer amounts as provided by subdivision (1) of this subsection, the certificate shall be issued to provide the amount of water anticipated to be needed for the next two years and shall include a sliding scale that sets out the increments that the water transfer may be increased, and further provide that the increase shall be allowed only as needed.
(3)	The certificate shall include a condition that the amount of an interbasin transfer is subject to reduction during periods of drought and that the time frame for implementing the reduction shall occur before citizens along the basin are required to adopt mandatory conservation restrictions. The certificate shall also include a drought management plan for both the source river basin and the receiving river basin that specifies how the transfer shall be managed to protect the source river basin during drought conditions.
(4)	If the withdrawal point for a water transfer is located on an impoundment, the certificate shall not authorize a transfer of water that would cause:
a.	A reservoir level to drop below minimum water level; or
b.	A reservoir to be unable to release the minimum in stream flow required by the Federal Energy Regulatory Commission or another agency's applicable jurisdictional requirements. The Commission may consider relevant modeling data or other applicable data from a reservoir owner in analyzing the prohibitions set out in this subdivision.
(5)	The granting of a certificate does not convey a property right to a permittee regarding a water transfer amount. The Commission shall expressly reserve the right to decrease a transfer amount based upon prevailing conditions. Further, any right to a water transfer allowed by a certificate granted under this section is subordinate to the water supply needs of the communities in the source river basin.
(i)	Increase in Interbasin Transfer Existing on July 1, 1993. – In cases where an applicant requests approval to increase a transfer that existed on July 1, 1993, the Commission shall have authority to approve or disapprove only the amount of the increase. If the Commission approves the increase, however, the certificate shall be issued for the amount of the existing transfer plus the requested increase. Certificates for transfers 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.
(j)	Temporary Transfer. – 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 G.S. 143‑215.22I(d)(3) 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 in approving a temporary transfer under this subsection. In considering whether to approve a temporary transfer, the Secretary shall consider only the actual need for water and shall not consider water uses resulting from water sales entered into as a profitable enterprise by an entity. If the Secretary approves a temporary transfer under this subsection, the Secretary shall specify binding 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. A temporary transfer may be renewed no more than two times after the initial approval.
(k)	Compliance With Federal Law. – The substantive restrictions and conditions 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.
(k1)	Monitor Quantity of Water Withdrawals. – Any person who receives a certificate under this section shall file with the Commission on the first of each month, a report stating the quantity and use of the water withdrawn and transferred during the previous month. The report shall be made on a form approved by the Commission. The quantity of water that is withdrawn and transferred may be determined in any of the following manners:
(1)	Flow meters accurate to within ten percent (10%) of calibration.
(2)	The rated capacity of the pump in conjunction with the use of an hour meter, electric meter, or log.
(3)	The rated capacity of the cooling systems.
(4)	A standard or method employed by the United States Geological Survey in determining a quantity of surface water withdrawn; or
(5)	Another method found to provide reliable water withdrawal data approved by the Commission.
(l)	Future Water Needs Plan:  Requirement and Implementation. – When any transfer for which a certificate was issued under this section equals 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 ninety percent (90%) of the maximum amount authorized in the certificate, the applicant shall begin implementation of the plan submitted to the Department.
(m)	Public Policy Statement. – It is the public policy of the State to maintain, protect, and enhance water quality within North Carolina. To that end, there is a presumption that a certificate for an interbasin transfer shall not be granted unless the applicant can show that there are no water sources available within the applicant's watershed, that the interbasin transfer is necessary to protect and promote public health, and that there is no other reasonable alternative to the requested transfer. 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 1997 Edition) and the statewide antidegradation policy adopted pursuant thereto.  It is also the public policy of this State that any interbasin transfer granted under this section shall be based on the actual use and water supply need of an area and shall not include consideration of water sales that are used to generate revenue.
(n)	Certificate:  Authority to Modify After Granted. – The Commission may modify any certificate granted for an interbasin transfer if the Commission determines that:
(1)	The cumulative impact of existing, permitted, and proposed withdrawals has exceeded or will exceed the safe yield of the source water body;
(2)	The cumulative impact of existing, permitted, and proposed withdrawals has caused or contributed to or will cause or contribute to the deterioration of water quality in either the source river basin or the receiving river basin; or
(3)	The projections of population growth, water supply, or water demand upon which the certificate for the interbasin transfer was granted were inaccurate."
SECTION 4.  The Department of Justice and the Department of Environment and Natural Resources shall jointly study the need to negotiate an interstate compact with adjoining states that have a river basin that drains into or from North Carolina to mediate and cooperatively resolve water supply disputes that may arise from interbasin transfers and consumptive water uses in river basins that are shared by North Carolina and those states.  The Attorney General and the Secretary of Environment and Natural Resources shall report the findings and recommendations of the study and any proposed legislation required to implement the recommendations to the 2007 General Assembly, 2008 Regular Session.
SECTION 5.  This act is effective when it becomes law and applies to any petition for a certificate or for the modification of a certificate for an interbasin transfer that is acted on by the Environmental Management Commission on or after that date, provided that the procedural requirements contained in G.S. 143‑215.22I(c), (d), (e), and (e1), as enacted or modified in this act, apply to any petition for a certificate or for the modification of a certificate for an interbasin transfer (including one that must be resubmitted on remand after hearing) that is submitted to the Environmental Management Commission on or after that date.