SC Lawyer, November 2010, #5. Protecting South Carolina Water: The Surface Water Withdrawal Act.

• Author: By Sen. Robert W. Hayes Jr. and Randolph R. Lowell

South Carolina Lawyer

2010.

SC Lawyer, November 2010, #5.

Protecting South Carolina Water: The Surface Water Withdrawal Act

South Carolina LawyerNovember 2010Protecting South Carolina Water: The Surface Water Withdrawal ActBy Sen. Robert W. Hayes Jr. and Randolph R. Lowell In recent years South Carolinians have experienced a heightened sensitivity to the availability and use of water. For example, South Carolina has experienced several severe droughts in the last 10 years. Moreover, South Carolina has initiated litigation in the United States Supreme Court with its neighbor North Carolina over the availability of water, spurred by water withdrawals in the Catawba-Wateree river system. Water issues with Georgia are in a slow boil, particularly in the Lower Savannah river system.

To help South Carolinians protect the future viability of this natural resource and to place South Carolina in a better position vis-a-vis its neighboring states, after several years of negotiating, the General Assembly enacted the South Carolina Surface Water Withdrawal, Permitting, Use and Reporting Act (Act) at the end of session in June 2010, effective on January 1, 2011. S.452, Act No. 247 of 2010.

Overview

Surface water is "all water that is wholly or partially within the State, including the Savannah River, or within its jurisdiction, which is open to the atmosphere and subject to surface runoff, including, but not limited to, lakes, streams, ponds, rivers, creeks, runs, springs, and reservoirs." S.C. Code Ann. § 49-4-20(27). The Act creates a permitting process for both existing and new surface water withdrawers.

A threshold amount of three million gallons of surface withdrawn during any one month from a single intake, or multiple intakes under common ownership within a certain distance of one another, triggers the permitting requirements. By way of example, an Olympic-size swimming pool typically contains approximately a half million gallons of water. The next step is the promulgation of accompanying regulations to give the Act full effect. The Department of Health and Environmental Control (DHEC), with input from the Department of Natural Resources (DNR) on technical environmental issues, is responsible for promulgating the accompanying regulations and for granting the surface water withdrawal permits authorized by the Act.

The Act exempts certain individuals from the permitting requirements, and it requires the issuance of permits to certain individuals. Exempt persons include water withdrawals associated with mining, agriculture and hydropower. S.C. Code Ann. § 49-4-30. Existing surface water withdrawers essentially are grandfathered and need only submit an application for a surface water withdrawal permit, which DHEC must issue at the highest of several defined levels. S.C. Code Ann. § 49-4-70(B). Whereas before the passage of this Act one needed only register to withdraw surface water, there is now the necessity of obtaining a permit to legally withdraw surface water within 180 days of the effective date of the implementing regulations.

There are six main types of surface water withdrawals under the Act:

1. Exempt surface water withdrawals;

2. Registered surface water withdrawals; 3. Nonconsumptive surface water withdrawals; 4. Existing surface water withdrawals; 5. Interbasin transfers of water; and 6. New surface water withdrawals. Most persons under the Act are subject to a reporting requirement, which requires an annual report due prior to February 1 of each year setting forth the quantity of surface water withdrawn as measured by an approved method. S.C. Code Ann. § 49-4-50. However, the annual report is not required if the surface water withdrawals are being reported as part of a permit condition for another permit.

Exempt surface water withdrawals

Exempt from this requirement of the Act are eight categories of water usages. S.C. Code Ann. § 49-4-30. These categories are: 1. Withdrawals associated with mining operations undertaken pursuant to the South Carolina Mining Act; 2. Emergency withdrawals; 3. Withdrawals from farm ponds that are for agricultural purposes; 4. Withdrawals from ponds situated entirely on private property and supplied only by diffuse surface water or springs completely situated on private property; 5. Naturally occurring evaporation from impoundments; 6. Withdrawals for the purpose of wildlife habitat management; 7. Special purpose districts withdrawing surface water from ponds completely situated on special purpose district property and supplied only by diffuse surface water springs completely situated on special purpose district property; and 8. Withdrawals relating to hydropower generation. These users are exempt from permitting requirements as well as the registration and reporting requirements of the Act. However, users withdrawing surface water for hydropower generation are still subject to annual reporting requirements.

Registered and nonconsumptive water withdrawals

Registered surface water withdrawers, or persons making surface water withdrawals for agricultural uses, are allowed, although not required, to obtain surface water withdrawal permits. S.C. Code Ann. § 49-4-20(23), -35. While registered surface water withdrawers have fewer requirements than new surface water withdrawers, their withdrawals are limited to the registered amount and these withdrawers must report annually. Existing registered withdrawers may withdraw up to the highest historical amount or intake design value. S.C. Code Ann. § 49-4-35(B). New agricultural users seeking to register must report a proposed withdrawal amount to DHEC, which is subject to approval as to "whether that quantity is within the safe yield for that water source at the time of the request." S.C. Code Ann. § 49-4-35(C).

Similarly, the Act places minimal requirements on nonconsumptive users. S.C. Code Ann. § 49-4-40. Nonconsumptive users are persons who withdraw surface water "in such a manner that it is returned to its waters of origin within the boundaries of contiguous property owned by the surface water withdrawer with no or minimal changes in water quantity." S.C. Code Ann. § 49-4-20(16). What constitutes a minimal change will be the subject of debate, and the implementing regulations should provide more guidance on what constitutes a minimal change. The Act requires DHEC to issue nonconsumptive users permits for surface water withdrawals, provided that the nonconsumptive users submit a proper application identifying the point of withdrawal, the maximum withdrawal amounts and the point of return of the water. Additionally, nonconsumptive users are subject to the annual reporting requirements.

Existing surface water withdrawals

Existing surface water withdrawers have 180 days from the effective date of the Act's implementing regulations to apply for a permit. The permit application fee for an existing user is $1,000. DHEC must issue an initial permit that authorizes the person to continue to withdraw surface water at the greatest of (1) historically withdrawn levels, (2) permitted capacity, (3) an amount necessary to meet bonding requirements or (4) for a publicly owned water utility, the safe yield of the utility's existing or permitted water supply only reservoir. S.C. Code Ann. § 49-4-70(B)(1). Notably, the permitting criteria applicable to new permits does not apply to initial permit applications from existing users provided the withdrawal does not exceed that greatest amount. However, the Act provides that an existing surface water withdrawer can draw an amount greater than that for which the permit provides by making a request to DHEC and satisfying the new permit criteria.

Interbasin transfers

An interbasin transfer (IBT)-the withdrawal of water from one basin and output into a different basin-is subject to the requirements imposed by the Act. Existing interbasin transfer permits remain effective after January 1, 2011, and interbasin transfer permit holders are treated as existing surface water withdrawers and are subject to the same criteria for existing surface water withdrawers when renewing permits. If renewed before January 1, 2014, to prevent expiration, then the interbasin transfer permit must be renewed for at least the water withdrawal amount in the expiring permit. Renewals of interbasin permits after this date must be issued for the quantity in the expiring permit unless DHEC can show by a preponderance of the evidence that such quantity is not necessary to meet the permittee's future need. S.C. Code Ann. § 49-4-70(C). New interbasin transfers are treated as new surface water withdrawers, and DHEC must hold public hearings concerning new surface water withdrawals for interbasin transfers. S.C. Code Ann. § 49-4-90(A). In a simplistic sense, the surface water permitting regime implemented under the Act is just an expansion of the prior permitting process for IBT permits.

New surface water withdrawals

Surface water withdrawals occurring after January 1, 2011, are considered new withdrawals. In order to obtain a surface water withdrawal permit from DHEC, the application must state the place and proposed use of the surface water withdrawn, the quantity of surface water proposed for withdrawal, and the estimated ratio between water withdrawn and consumptive use of the water withdrawn. S.C. Code Ann. § 49-4-80. The new permit application fee is $7,500. The Act defines consumptive use of water as "any use of water which is not a nonconsumptive use," meaning that the withdrawers are not returning the water to its place of origin with no or minimal changes in water quantity. See S.C. Code Ann. § 49-4-20(16). In order to determine whether to grant the permit to the applicant, DHEC must determine whether the intended use and quantity of water the applicant is proposing are reasonable.

Determining the reasonableness of the proposed withdrawal is the most comprehensive and complex section of the Act, and it is the portion of the Act most likely to trigger litigation. DHEC must utilize a nine-part test to determine if the applicant's proposed water use is reasonable. S.C. Code Ann. § 49-4-80(B)(1)-(9). Among other requirements, DHEC must determine the minimum instream flow or minimum water level and the safe yield for the surface water source at the location of the proposed surface water withdrawal. The Act defines minimum instream flow as "the flow that provides an adequate supply of water at the surface water withdrawal point to maintain the biological, chemical, and physical integrity of the stream." S.C. Code Ann. § 49-4-20(14).

Establishing the criteria for minimum instream flow was the most controversial component of the legislation. Now that the dust has settled, minimum instream flow is a variable number determined by DHEC in consultation with DNR and accounting for "the needs of downstream users, recreation, and navigation and that flow is set at forty percent of the mean annual daily flow for the months of January, February, March, and April; thirty percent of the mean annual daily flow for the months of May, June, and December; and twenty percent of the mean annual daily flow for the months of July through November for surface water withdrawers [with withdrawal points located on a surface water segment not downstream of and not influenced by a licensed or otherwise flow controlled impoundment]." S.C. Code Ann. § 49-4-20(14). Those percentages represent a floor. Downstream use requirements may be added onto these "20-30-40" numbers to establish a minimum flow. For surface water withdrawal points located on a surface water segment downstream of and influenced by a licensed or otherwise flow-controlled impoundment, the minimum instream flow shall be specified in the license by the appropriate government agency, such as by the Federal Energy Regulatory Commission for downstream users behind a dam.

Safe yield is "the amount of water available for withdrawal from a particular surface water source in excess of the minimum instream flow or minimum water level for that surface water source. Safe yield is determined by comparing the natural and artificial replenishment of the surface water to the existing or planned consumptive and nonconsumptive uses." S.C. Code Ann. § 49-4-20(25). Modeling may be used to assist in determining the safe yield. If DHEC decides to perform stream flow modeling, the Act requires DHEC to consult with DNR in determining which stream flow modeling devices should be utilized to quantify the stream flow at the proposed withdrawal point.

One of two results is likely once DHEC makes the determinations as to safe yield and minimum instream flow: either DHEC will notify the applicant that a supplemental water supply is necessary or it will determine that such measures are not required. A supplemental water source is "a source of water different from the source of permitted withdrawal that will be used when an adequate amount of water is unavailable for withdrawal from the permitted source." S.C. Code Ann. § 49-4-20(26). Supplemental water sources can include ground water wells, aquifer storage and recovery projects, water storage facilities, drought contingency ponds, and connections to other water providers. Generally, the applicant must add a supplemental water source to satisfy the permit criteria. Once DHEC makes the decision that the applicant's surface water use is reasonable, it is required to issue the surface water withdrawal permit to the applicant.

DHEC must also issue public notice pursuant to the guidelines the Act lists. Within 30 days of receiving an application to begin surface water withdrawal or significantly increase water withdrawal, in addition to its usual public notice procedures, DHEC must publish notice of the application in a newspaper circulated statewide and in the most widely circulated newspaper in the affected area of the surface water withdrawal applicant. The permit application must also be published on DHEC's website. S.C. Code Ann. § 49-4-80(K)(1). A public hearing will be held if a minimum of 20 citizens request a public hearing within 30 days of the public notice. DHEC must hold such a hearing within 90 days of the public notice at a location near the site of the proposed surface water withdrawal.

Surface water withdrawal permit requirements

The surface water withdrawal permits DHEC issues must include: 1. The location of the permittee's intake facility used or constructed to make withdrawals pursuant to the permit; 2. The amount of water that may be withdrawn; 3. The amount of water to be discharged back into the surface water body and location of the discharge; 4. The volume of supplemental water supply, if needed; 5. The minimum instream flow at the point of withdrawal; 6. The minimum instream flow triggers that will determine if the permittee's withdrawal must be reduced; 7. The stream flow that will be used to notify the applicant of starting the reduction of withdrawal; 8. The date upon which the permit expires; and 9. A clear statement that the terms and conditions of the permit are subject to the provisions of the South Carolina Drought Response Act. S.C. Code Ann. § 49-4-100(A)(1)-(9). According to the Act, permits are valid for a period of time which "represent[s] the economic life of any capital investments made by the permittee necessary to carry out the permittee's use of the withdrawn water." S.C. Code Ann. § 49-4-100(B). Permits will last for 20, 30 or 50 years, depending on whether the permittee is a new or existing surface water withdrawer and on the amount of time necessary for a governmental body to retire bonds issued to finance the construction of the intake and discharge systems.

Notably, there will be a gap between the effective date of the Act (January 1) and the effective date of the implementing regulations, which are not anticipated to be submitted to the General Assembly for approval before April. In the interim period between January 1 and the effective date of the regulations, such as in the case of existing water withdrawers who must file an application no later June 30, 2011, the statutorily required information must be submitted to DHEC even in the absence of a formal application or regulation. These provisional applications will be accepted by DHEC and may be amended or supplemented to provide additional information pursuant to the implementing regulations.

Permittees must maintain "an operational and contingency plan" to keep an adequate water supply available if the water flow drops below the minimum instream flow for that particular water stream segment. S.C. Code Ann. § 49-4-160. A key component of these plans is the identification of supplemental water sources. This plan is considered an enforceable condition of the permit and controls when the actual flow is less than the minimum instream flow. S.C. Code Ann. § 49-4-160. For existing surface water users, the plan need only contain "appropriate industry standards for water conservation." S.C. Code Ann. § 49-4-70(B)(2).

Permittees do not possess property rights in the permits; instead, they possess a usufructuary right to withdraw and use the surface water pursuant to the terms and conditions of the permit. S.C. Code Ann. § 49-4-110. Additionally, possessing a surface water withdrawal permit does not prevent the permittee from having to obtain other permits or approvals under other laws or existing agreements. However, possession of the permit does protect the permittee from civil actions arising from the permitted activity. S.C. Code Ann. § 49-4-110(B). For example, a nuisance or negligence action is barred against a permittee in compliance with the surface water withdrawal permit. A private action can only be maintained if a violation of the permit is shown.

DHEC also possesses the authority to modify, suspend or revoke a surface water withdrawal permit if one of several conditions occur. S.C. Code Ann. § 49-4-120(A)(1)-(4). These situations include:

1. The permittee withdrawing amounts in excess of the limits specified by the permit; 2. The permittee misrepresenting material facts on his application; 3. The permittee ceasing to withdraw surface water for at least 36 months; or 4. A permanent change in the natural conditions resulting in the permitted withdrawal endangering human health or the environment.

Surface water withdrawers or interested persons challenging the issuance or denial of a surface water withdrawal permit by DHEC must bring their challenge first to the DHEC Board and then to the Administrative Law Court (ALC). S.C. Code Ann. § 44-1-60. ALC determinations are appealable to the S.C. Court of Appeals.

Conclusion

The Act moves South Carolina into the realm of "regulated riparianism," whereby the use of surface water is subject to permitting. This regulatory system should help protect and preserve this natural resource for future generations and aid in future discussions with our neighboring states about how to best govern and utilize this resource for everyone.

Robert W. Hayes Jr. is an attorney with the Hayes Law Firm in Rock Hill and a senator from District 15. Randolph R. Lowell is an attorney with Willoughby and Hoefer, PA in Columbia.