The Neuse River Buffer Rules Alter Land Values in North Carolina

Recently, a series of government regulations have been adopted by the North Carolina Environmental Management Commission (the "EMC") in response to the well known fish kills which have occurred in the Neuse River primarily in and around the New Bern/Craven County area. Referred to collectively as the Neuse River Management Strategy (the "NRMS"), these regulations seek, among other things, to reduce by 30% the total amount of nitrogen entering the Neuse River Basin. While most of the NRMS are proposed regulations, and therefore, are not effective until this year, one portion of the NRMS was adopted as a temporary rule on July 22, 1997. As a temporary rule, this regulation became effective immediately on July 22, 1997. The regulation is commonly referred as the Neuse River Buffer Rule ("NRBR").

The NRBR is premised upon scientific research, which suggests that the existence of a forest buffer along a waterbody is an excellent method for reducing the amount of nitrogen entering waterbodies and for preserving its ecology and biology. Therefore, the EMC adopted a rule which mandates the preservation of a fifty (50) foot wide forest buffer on all sides of any water body, including intermittent streams, located in the Neuse River Basin (See Figure A).

The NRBR has the effect of potentially rezoning property to a conservation buffer district, in which virtually no uses are allowed. This could effect a large percentage of a person's property or only a portion of a person's property but a portion in a location which substantially diminishes the entire property's value. Unlike many types of conservation buffer regulations, the NRBR does not allow for:

1. permits and mitigation allowing intrusion into the NRBR for limited purposes,
2. the transfer of density or development credits, or
3. credits which encourage the establishment of forest buffers or Best Management Practices in areas not within the scope of NRBR in exchange for limited intrusion into other areas within the scope of the NRBR.

In short, the NRBR lacks flexibility and is an "all or nothing" regulation.

The impact of the NRBR is just beginning to be felt by landowners, lenders, real estate professionals and the real estate community. As the NRBR continues to evolve, it will impact many others, including the typical homeowner. As the real estate community and the general public begin to recognize the transfer of private property rights for the public's good triggered by the NRBR, the value of real estate will be substantially altered. This alteration in property rights and values has enormous implications for landowners, lenders and the real estate community.

I. The Scope of the Neuse Buffer Rules.

A. Waterbodies

The Neuse River Basin encompasses 6192 square miles in 19 North Carolina counties and is the third largest river basin in North Carolina. Figure B shows the size and location of the Neuse River Basin.

The NRBR apply to any "waterbody" which had "forest vegetation" within thirty (30) feet of the edge of the waterbody as of July 22, 1997. A waterbody includes:

1. intermittent streams,
2. perennial streams,
3. lakes,
4. ponds, and
5. estuaries "as indicated on the most recent versions of United States Geological Survey topographic maps or other site-specific evidence."

USGS topographic maps have proved to be rather unreliable. Frequently, the maps will show a "blue line or area" on property where no waterbody exists and other times not show a "blue line or area" where a water body clearly exists. Therefore, the Division of Water Quality has increasingly relied upon " other site-specific evidence." Consequently, jurisdictional delineations for the NRBR have become uncertain and unpredictable.

While some delineations are clear, many fall into a grey area. For example, a perennial stream that carries water a majority of the year or year round is clearly a covered waterbody. A closer call is the difference between an "intermittent stream" (which is protected) and a ditch or a stormwater channel (which are not). None of these terms are defined by the NRBR. All three of these areas carry water and only flow for a portion of the year, and thus, the differences are sometimes slight and quite subjective. The Division of Water Quality has created a "checklist" of approximately a dozen characteristics that, in its opinion, distinguishes these drainage ways.

B. Forest Vegetation

"Forest vegetation" has been defined by the EMC to be:

the plants of an area which grow together in disturbed or undisturbed conditions in various wooded plant communities in any combination of trees, saplings, shrubs, vines and herbaceous plants. This includes mature and successional forests as well as cutover stands.

Therefore, if a "waterbody" is present on a tract of property and the area within 30 feet of the edge of the water body was not seeded in grass, paved or graveled as of July 22, 1997, it is likely to have "forest vegetation" and is regulated by the NRBR.

Given the breadth of the terms "waterbody" and "forest vegetation", the NRBR applies to nearly every tract of nonurban property unless the tract is small and located on a hill. The NRBR may apply to intensely developed urban properties as well, if the property owner had not completely grassed or paved the area within 30 feet of a stream or other waterbody as of July 22, 1997. Therefore, the scope of the NRBR significantly exceeds the jurisdictional boundaries of wetlands and waters of the United States, as established under the Clean Water Act.

I. Activities Prohibited and Allowed in Riparian Areas Protected by the NRBR and Exemptions.

A. Activities Prohibited and Allowed in Protected Riparian Areas.

If the NRBR applies, then the riparian area within 50 feet of any edge of the waterbody is protected. For example, if the stream is five (5) feet wide and is located within a tract of property, then a protected corridor 105 feet wide is created. The protected riparian area is divided into two subparts or zones. Zone 1 is the 30-foot strip adjacent to the waterbody and Zone 2 is the outer 20-foot strip.

"Zone 1 is intended to be an undisturbed area of forest vegetation." Accordingly, nearly every land disturbing activity or use in Zone 1 is prohibited. Activities allowed in Zone 1 are limited to:

1. natural regeneration of forest vegetation,
2. selective cutting of individual trees no closer than 10 feet to the waterbody,
3. horticultural and silvacultural practices to maintain the trees,
4. removal of damaged, dead, dangerous or diseased trees, and
5. ongoing agricultural operations.

Zone 2 is intended to "consist of a dense ground cover composed of herbaceous or woody species which provides for diffusion and infiltration of runoff and filtering of pollutants." Similar to Zone 1, nearly every land disturbing activity or use in Zone 2 is prohibited. In addition to the five (5) limited activities permitted in Zone 1, two (2) additional activities are allowed in Zone 2:

1. periodic mowing and removal of timber, nuts and fruits provided the riparian area is not compromised, and
2. management of forest vegetation to minimize shading on land outside of Zone 2.

B. Exemptions

The following uses are exempt from the NRBR:

1. ditches and manmade conveyances other than modified natural streams,
2. ponds and lakes for agricultural uses which are not part of a natural drainageway, and
3. water dependent structures.

Other uses may be exempt if "no practical alternative exists." These include:

1. crossings for roads, utilities, bridges, airport facilities; and
2. stormwater management facilities and utility construction or maintenance corridors located in Zone 2 under certain conditions.

In short, if the NRBR applies to a waterbody located on a tract of property, then use of the 50-foot wide strip adjacent to the edge of the waterbody has been transferred to the public for its use and enjoyment in order to protect Neuse River water quality and to achieve the legislatively mandated goal of a 30% reduction of the total amount of nitrogen entering into the Neuse River.

I. Implications and Conclusions.

Unrecognized by most property owners, lenders and real estate professionals, a conservation buffer was instantaneously created by operation of law on virtually every medium to large sized tract of nonurban property located in the Neuse River Basin on July 22, 1997. This transfer of rights to the public for the public's good has had and will have a substantial impact on land values.

Pending in the North Carolina General Assembly is a bill to rescind the NRBR; however, most observers believe that the NRBR will remain. With that, legislative or EMC action may lessen the uncertainty regarding whether a particular drainage channel is an intermittent stream or a storm water channel. Further, other adjustments in the NRBR are likely to occur as it is continues to be implemented. At the same time, it is likely that the NRBR will be used as a prototype regulation and will be extended to the Tar-Pamlico Basin and others sensitive river basins.

The Neuse River is an important resource for everybody in the Basin and most people believe that it should be protected for the common good. Therefore, the real question is not whether protection of the River is an appropriate public policy. Instead, the real questions relate to the structure and implementation of the policy. As currently written, the NRBR lacks sensitivity to basic human nature.

To achieve an overall goal of a 30% reduction of the total amount of nitrogen entering the River, the State needs to build widespread public support. If many people's first encounter with the NRMS is dealing with the NRBR as it is currently written, public support will wane. The public will be more cooperative and will abide by a policy which provides incentives for good design and land use planning. Unfortunately, the NRBR neither encourages Best Management Practices, nor permits innovative designs which allow appropriate use of private property while preserving and protecting the River. The enforcement costs (both direct and indirect) for a policy which does not encourage voluntary compliance will be substantial. Simply, there is some truth in the adage that "you catch more flies with honey than vinegar."

*article courtesy of Triangle Business Journal.