What is the power of an agency rule? The longstanding canard is that a rule has the force of law, just like a statute. So, for example, rules can alter the common law:

Where an agency has the authority to act, its rules and regulations have the binding effect of statutes and may accordingly alter the common law. Taylor v. Superior Motor Co., 227 N.C. 365, 367, 42 S.E.2d 460, 461 (1947) (noting that “proper regulations authorized under the Act have the binding effect of law,” because such regulations “are the tools used to effectuate the policy and purposes of the Act.”)

In re Declaratory Ruling by NC Comm’r of Insurance Regarding 11 N.C.A.C. 12.0319, 134 N.C. App. 22, 30 (1999).

Similarly, the view has long and generally been that agencies are bound by their own rules, since the rules are, essentially, just like statutes. See, e.g., Snow v. Board of Architecture, 273 N.C. 559 (1968); 2 Am. Jur.2d Administrative Law § 350 (1962) (“Procedural rules are binding upon the agency which enacts them as well as upon the public of the agency, and the agency does not, as a general rule, have the discretion to waive, suspend, or disregard in a particular case a validly adopted rule so long as such rule remains in force.”).

But here’s another conundrum about rules: they don’t always get treated with the same legal respect as statutes, despite what some court opinions say, and what the Administrative Procedures Act seems to imply about them.

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It’s impossible to grasp modern American environmental law without some understanding of administrative law–the law that limits and empowers governmental agencies (like U.S. EPA and N.C.’s Department of Environmental Quality). One of the primary ways that executive branch agencies carry out their work is through “rulemaking.” Rulemaking is the process for establishing rules (“regulations”) that have the force of law. Rules and regulations are at the center of many, if not most, of the current controversies over environmental law. So it’s important to understand how and why rules get made–what the “rules for rulemaking” are. The practicing environmental lawyer needs this understanding to advise clients every day, and the person interested in reform of environmental law and policy needs at least a general understanding of the rulemaking process in order to be effective.

So in this and a few followup posts, I will discuss some problems in the way that rules are authorized in North Carolina (and elsewhere, but my focus is on the Tarheel state).  I have structured this discussion as “canards, conundrums and conclusions” and I will present three canards, more than three conundrums and a few conclusions.

Canard: 1. a groundless rumor or belief. 2. (French) ‘duck,’ from Old French caner ‘to quack

My three canards–things that are widely believed to be true about the legislative authority for and power of rules–are these:

• Authority for rulemaking is rarely in question and easily found; more critical is whether there are “adequate guiding standards” for the particular rule that’s created
• Rules have the same legal power as statutes; for example, they bind the agency as well as persons outside the agency; they can change the common law; and they can’t be waived or disregarded by the agency that made them
• Rulemaking processes should be consistent from authorization to judicial review

These three propositions are not actually “groundless,” as the definition above implies, but they are taken almost as gospel by most administrative lawyers. In fact, when you scratch their surface just a little, the conundrums pop right up.

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2015 was another big year in changes, almost entirely deregulatory changes, in North Carolina’s environmental laws. The General Assembly’s first ratified bill of the session, S.L. 2015-1 (“Amend Environmental Laws”), was an assortment of changes to such diverse programs as coal ash cleanup, solid waste generally, and air toxics. Among the General Assembly’s last ratified bills was S.L. 2015-264 (misleadingly entitled a “technical corrections bill as recommended by the General Statutes Commission”) with a section appearing after midnight in the waning hours of the session, for the first time, with no prior committee review or public debate, that attempts to prohibit any local government regulation of oil and gas exploration, development and production. Between these two bookends, against the backdrop of Volkswagen’s admission that it faked its emission results on millions of supposedly “Clean Diesel” cars worldwide, were dozens of provisions affecting nearly all facets of N.C. environmental law. I have summarized these provisions in this framework:

1. Changes that reduce public environmental information
2. Changes that allow more pollution, or more development in environmentally sensitive areas.
   • Air
   • Water
   • Land
3. Environmentally protective changes
4. Environmental finance
5. Matters in limbo and miscellany

If Volkswagen, listed as recently as 2013 as “best in class” on Dow Jones’ Sustainability Index, was actually willing to blatantly defraud consumers and federal regulators, what are the odds that smaller, less well capitalized companies will self-regulate properly when it comes to environmental externalities?

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In 2011, a story appeared that seemed to capture the essence of the N.C. legislative leadership’s feelings about DENR, the State environmental and natural resource regulatory agency. The story, first attributed to Speaker of the House Tom Tillis, said that an Appropriations Commitee co-chair, Rep. Mitch Gillespie, had drawn a bullseye on his legislative office window so that it lined up with his view of the Archdale Building, long time DENR headquarters. The story’s intrigue deepened when Rep. Gillespie left the legislature in 2012 to join Gov. Pat McCrory’s administration as an Assistant Secretary …. of DENR. By most accounts, Rep. Gillespie did a fine job while at DENR, as one might expect after his years of paying close attention to environmental issues and asking good questions on the legislative Environmental Review Commission.

But with Gov. McCrory’s signature on the 2015 Budget Bill, S.L. 2015-241, on September 18, DENR went away. It became the “Department of Environmental Quality.” Several of its formerly important functions were transferred to other departments. Over the last twenty-five years, the erosion in size and power of North Carolina’s main environmental agency has been so striking as to count as “defenestration,” with Rep. Gillespie’s office window bullseye adding a new layer of meaning to that term. But the erosion really began in the late 1990s, during the administration of Gov. Jim Hunt.

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(Above: Change in extreme precipitation events in southeastern U.S., from National Climate Assessment 2014).

Whatever your take on projections of sea level rise and global temperature increases (I’m extremely worried: these things are happening and we are responding much like the 2014 UNC Tarheel football defensive unit responded to threats, which is to say, hardly at all), and whatever your beliefs about the likelihood of future droughts in the southeast (I don’t think the data support any confident predictions one way or the other), it’s hard to ignore the trend to increased extreme precipitation events (see banner image above). The graph shows percent changes in the annual amount of precipitation falling in very heavy events, defined as the heaviest 1% of all daily events from 1901 to 2012. The far right bar is for 2001-2012. In recent decades there have been increases nationally, with the largest increases in the Northeast, Great Plains, Midwest, and Southeast. Changes are compared to the 1901-1960 average. (Figure source: NOAA NCDC / CICS-NC).

This trend makes the law and policy of stormwater management more important than ever before in this country, region and state.

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Back in the early days of the Coastal Area Management Act, North Carolina locked in a policy position regarding permitted uses of property next to water: the uses had to be “water dependent” or else they were not permitted.  This policy was based on some science that showed water pollution increased significantly the more there were commercial and industrial uses next to the water.  Some restaurateurs along the historic river walk in Wilmington chafed at that policy, and so in the mid-1990s I found myself walking beside the lower Cape Fear River with Joan Weld and Linda Rimer, then the two assistant secretaries for natural resources and environment in the State.  The capable division director of the Division of Coastal Management, Roger Shecter, presented the thinking underlying the policy.  But we agreed with the restaurant owners: it was better for the environment to get people back around the water, where they could enjoy the fruits of decades of regulatory efforts to clean up our rivers.

Our heads are round so thought can change direction.  ~Allen Ginsberg

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What’s your favorite place to sit back and listen to the world? Mine is the porch of an old log cabin up in the Blue Ridge. The greatest thing about that place is that it sits high up over a stream as it drops through a steep gorge–high up, but still close enough to hear the water flowing and falling, constantly, soothingly. That movement of water through our world is absolutely fundamental to life as we know it.  That’s one reason that the sound of a mountain stream or of ocean waves (or in their absence, an urban fountain or garden water feature) is so deeply satisfying to humans. But that incessant movement of water also makes it hard to fit into traditional, naive notions of property rights. In two earlier posts, I discussed some ways in which water, especially groundwater and stormwater,  challenge and extend our understanding of property.  Now let’s consider surface water when it is collected into streams, rivers and lakes, again focusing on the law of North Carolina (which is very similar to the law of most eastern states in the U.S.).  In this entry I’ll refer to water collected into streams, rivers and lakes as “surface water” even though there is a lot more to be said about “diffuse” surface water, aka “stormwater,” but that must await Part 3.

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A part of the waste map that gets less public attention these days than in the 1980s and 1990s, hazardous and radioactive waste are primarily regulated at the federal and state levels of government. The relative lack of media attention to these wastestreams so far in the 2000s and 2010s should not obscure their importance to the structure of environmental law in the United States. The large body of federal and state laws that regulate hazardous waste management has been central in forming the general public understanding of how environmental law works as a “command and control” system. Ironically, the national and state successes in getting hazardous and radioactive waste problems off of the front page of the newspapers blogs and off of television news has, in my opinion, also contributed to the lack of awareness of how useful, important, and yes, efficient government regulation can be.

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This is the way the question often comes to me–who owns it?–as a way of asking either who controls water in NC (for beneficial purposes) or who is responsible for it when it does harm (e.g., flooding). Framing the question this way is an unsurprising reflection of the importance of property rights in American law. And property rights do matter for water law. But water, the great solvent, has a way of dissolving preconceptions about ownership of property and forcing anyone who really cares to reexamine their understanding of ownership itself. Things, like water, that are always moving, often in mysterious ways, and that are so vital to us that we can’t imagine life without them, just don’t fit well in simple definitions of “property.” To make matters especially complicated for water, the law has come to treat its ownership very differently as it moves through the eternal cycle in which it always moves: from ocean to sky, back to earth as rain (“stormwater”) or snow, then either infiltrating into the ground (groundwater) or into streams and lakes (surface water), and then passing through myriad human channels, including our own bodies, on its way back to the sea. In this post, I will outline the way NC law treats ownership of groundwater–probably our biggest and ultimately most important store of freshwater.

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