20051457 Ver 1_Proposed 95M Cleveland Cnty Reservoir makes waves_20130928

CLEVELAND COUNTY: Proposed $95M Cleveland County reservoir
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Pransed $95M Cleveland County reservoir makes
•' • waves
Published: September 28, 2013
N.C. Rep. Tim Moore.
N.C. GENERAL ASSEMBLY
By Rob Christensen — rhristensen @newsobserver.com
CLEVELAND COUNTY — The proposed $95 million John Cline Reservoir is still nothing more than some lines
on a map in rural Cleveland County, an hour west of Charlotte.
But it has created some powerful political waves in Raleigh, where it has received special attention in the
legislature and in the Department of Environment and Natural Resources.
In some cases, lawmakers have had a personal interest. One powerful lawmaker is an attorney for the water
authority pushing the project, while another has done work for a real estate company that hopes to benefit from
the lake.
The proposed reservoir has become one of the first major environmental test cases since Republicans won
control of state government in January. For environmentalists, the reservoir project is an example of Republicans
using political pressure to bend the rules to try to build an unneeded dam that could benefit real estate
development interests.
For reservoir backers, the fight is about trying to move forward on a much - needed project that has been stymied
for years by government regulators and environmentalists.
The case is being closely watched – not only because it involves some of the most powerful political players in
the state – but because of the implications it might have for future dam and reservoir projects across North
Carolina.
The reservoir has been proposed since at least 2000, although the idea has been talked about since at least
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1988. It is being put forward by a local government entity called Cleveland County Water, a water authority that
serves 57,000 mainly rural residential customers in four counties in North Carolina and South Carolina. The
authority wants to dam the First Broad River, covering 1,400 acres of forest and farmland and destroying 24 miles
of stream, six acres of wetland and roughly 10 homes.
The authority has pushed for the reservoir, noting that the region has suffered from drought conditions that
prompted mandatory water restrictions in 2002.
The project has attracted land developers, who have bought up options for possible construction of lakeshore
homes if the reservoir is ever built.
The project must be approved by the Army Corps of Engineers and by DENR, which oversees the Clean Water
Act for the federal government. The Corps is the lead agency in analyzing an environmental impact statement
and in selecting "the least environmentally damaging practical alternative" to provide water supplies.
Both federal and state regulators have voiced skepticism about whether the reservoir is needed. A consultant's
study prepared in August 2011 for both the Corps and Cleveland County Water found there were far cheaper
alternatives, including purchasing water from the towns of Forest City, Kings Mountain or Shelby. The Forest City
alternative would cost $51.2 million; the Shelby alternative would cost $45.3 million.
Environmentalists also say that the Cline Reservoir is not needed for water and that the dam is being driven by
economic - development interests.
"The fundamental problem with this project is it is unnecessary," said D.J. Gerken of Asheville, a senior attorney
for the Southern Environmental Law Center, which opposes the reservoir. "It is really an economic - development
project disguised as a water - supply project.... I think there is an aspiration that it will be the next Lake Norman."
Backers of the project — having already spent $1.7 million on studies — are frustrated. They argue a reservoir is
the best way to help provide a stable water supply and ensure the future of a county that has seen a lot of hard
times. The region has never recovered from the closing of numerous textile mills and has a 10.4 percent
unemployment rate.
"Trust me, we don't want to take on an $80 million to $100 million debt," said Clyde "Butch" Smith, manager of
Cleveland County Water. "If there was an alternative to come out cheaper, we would."
Smith argues that water purchased from other towns would be unreliable during a drought and that a reservoir is
the only long -term solution to the county's needs.
"We feel if we had a reservoir it would secure Cleveland County for the next 100 years," Smith said. But he said
trying to get approval has "been a nightmare."
Legislative connections
With the rise in the fortunes of the Republican Party, reservoir supporters have tried to use their connections to
get the project approved.
Smith was appointed to the state Environmental Management Commission by House Speaker Thom Tillis in
2011. The body oversees and adopts rules for DENR. Smith has met with lawmakers and pushed bills that would
affect reservoirs, according to various email messages obtained by the Southern Environmental Law Center.
In 2011, the newly elected GOP legislature moved to revamp how DENR handles water projects. The bill (HB
609), which is now law, encourages DENR to "become a co- applicant for all required federal approvals" for water
supply projects such as reservoirs. It allows DENR to dip into the Clean Water Management Trust Fund, which
was set up to protect watersheds, to help finance reservoir projects. Among the bill's sponsors: Rep. Tim Moore,
a Republican from Kings Mountain and the powerful House Rules Committee chairman, who is also legal counsel
to Cleveland County Water; and Mitch Gillespie, now assistant DENR secretary but then a state representative.
In an email to four Republican lawmakers in December 2011, Smith said the new law would help overcome
opposition by environmental regulators to building dams and reservoirs.
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"This bill has got the attention of the federal agencies," Smith wrote. "If NC issues the (state) permit for the John
Cline Reservoir this will put the Feds in a bind to go against the wishes of the state. Keep up the good work."
Moore said he has been careful not to mix his legal duties and his legislative responsibilities. He said HB 609 set
statewide public policy and that he sought advice over whether there would be a conflict before agreeing to be a
co- sponsor.
Even if he were not legal counsel, Moore said as a citizen he would strongly support the reservoir because it is
badly needed. Moore earns about $20,000 annually as the Cleveland County water authority's part -time attorney
and worked for the board for the past four to five years, Smith said.
"During the drought, it got so bad in 2002, that you could walk across the Broad River and never get your feet
wet," Moore said. "Schools were talking about shutting down. That could happen again tomorrow."
John Skvarla, the DENR secretary, said despite the new laws, "there has been no shift in department policy
regarding drinking water reservoirs due to leadership changes, reorganization or recent legislation." As a result of
HB 609, Skvarla said DENR can help local governments plan their water needs, but he said that doesn't
necessarily mean reservoirs .
"There is no favorite child," Skvarla said, "but it should be noted that due to the cost and time required, reservoirs
are often not the best choice. And steering communities toward reservoir - building when other options are
available would be folly anyway, since the Corps of Engineers would never approve a reservoir unless it were the
best alternative."
While backers were pushing pro- reservoir legislation through the General Assembly, lawmakers were also trying
to pressure the town of Forest City to withdraw its offer to provide water to Cleveland County.
In March 2012, Rep. Mike Hager of Rutherfordton — located in the next county over from Cleveland — appeared
before the Forest City council and told members that if they proceeded with their offer, a bill would be introduced
in the legislature to block the move. Hager, a backer of the reservoir project, is House majority whip and earlier
this month was named by Tillis as co- chairman of the Environmental Review Commission, which evaluates the
actions of all state agencies and boards relating to the environment and makes recommendations regarding
reorganization and consolidation of environmental regulatory agencies. He is also vice chairman of the House
Environment Committee.
According to Forest City council minutes, Hager said that "legislation is being proposed that would prohibit all
water supply alternatives other than a reservoir for Cleveland County" and asked for the board's feedback about
the proposed "local bill to force the Army Corps of Engineers to decide about a reservoir."
The Forest City Town Council responded with a letter reiterating that it is in the "perfect position to partner with
with Cleveland County Water" to provide water. At the meeting, one town commissioner, Dee Dee Bright, labeled
the proposed reservoir "a political lake," according to the minutes.
Hager, in an interview, said he had been approached by then -state Sen. Wes Westmoreland of Shelby, who was
considering introducing such a bill. He said the legislation was aimed at "trying to force the hand of the Corps of
Engineers" but that it was never introduced.
On his 2012 economic disclosure statement, Hager reported receiving in excess of $5,000 from a real estate
venture, John Cline Res. LLC.
Hager, a former engineer for Duke Energy who now does some consulting work for the construction business,
said he did some limited consulting work for John Cline Res., checking on rainfall and river flow in the area for the
Delaware company.
In the months after Cleveland County Water applied for a permit to build a reservoir, four real estate ventures
began snapping up land around the proposed lake. John Cline Res. bought up 374.37 acres; McCarthy First
Broad River, managed by Ohio developer Devin F. McCarthy, bought 162.15 acres; Country Blue Water of
Hendersonville purchased 66.75 acres; and Cherry Mountain Investments of Forest City bought 169.9 acres,
according to records compiled by the Southern Environmental Law Center.
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Smith, the Cleveland County Water manager, kept some of the real estate interests up to date on regulatory and
legislative developments, according to emails obtained by the environmental group.
There was also a proposal in 2009 for a senior living development in the reservoir area, which then -state Sen.
Debbie Clary was helping to market, according to her quotes in The Shelby Star.
Clary, who resigned from the legislature in January 2012, was asked by Smith in several emails to keep track of a
bill that would make it easier to get approval to build reservoirs, even though she was not a registered lobbyist for
Cleveland County Water in 2012. Smith reports that Debbie Clary and Tim Moore "have come through" on the bill,
according to an April 29, 2012, email obtained by the Southern Environmental Law Center.
State permit waived
Even with the passage of pro - reservoir legislation, the Cline reservoir still did not have its permits from either the
Corps of Engineers or from DENR.
Backers said that Dee Freeman, DENR secretary under Democratic Gov. Bev Perdue, opposed the project.
"If you are looking at it from the standpoint of the taxpayer, there are less costly alternatives to building the lake,"
Freeman said in a recent interview. "And from the environmental point of view, there are more preferred
alternatives than to destroy the stream beds and wetlands and all that comes from flooding."
The reservoir backers hoped the November elections would provide them with the political punch they needed in
Raleigh and in Washington to get the project approved.
"We feel like this election in November, NC is going Republican and if that's the case we will get the 401 (DENR)
permit," wrote Smith in an Aug. 6, 2012, memo. "When (Mitt) Romney takes office in January, I hope this will
change the Corp, EPA and others their way of thinking."
Although GOP presidential candidate Mitt Romney did not win, Pat McCrory was elected governor, and
Republicans took control of DENR.
On May 2, Cleveland County Water submitted its application for the Cline Reservoir project. Shortly after, DENR's
staff concluded that the application was incomplete, did not identify mitigation for stream and wetland impacts, did
not list streams or creeks impacted by construction and did not include an environmental impact statement.
But in July, DENR informed Cleveland Water that it would waive its requirement for a state permit. That meant the
only thing the project backers need is approval from the U.S. Army Corps of Engineers.
Freeman, the former DENR secretary, called the waiver "quite extraordinary." Jennifer Frye, special projects
manager for the Corps in Wilmington, said she had never heard of it being done previously.
Thomas Reeder, director of DENR's division of water resources, said while the waiver may be unprecedented for
a project of this size, it was both a reasonable move and a legal option under the Clean Water Act.
Reeder said the project has already cost the ratepayers of Cleveland County $1.7 million and will probably cost
them an additional $500,000 to $1 million to complete an environmental impact statement for the Corps. Reeder
said it is a near - certainty, based on numerous meetings with the various parties, that the Corps will reject the
Cline Reservoir and that Cleveland Water will then take the Corps to court.
"This thing is going to drag out I would say another five to 10 years, at the very least, before it's resolved one way
or the other," he said.
Reeder said he got together with his boss, Gillespie, and told him, "I don't see any value added for the state to get
involved in the middle of this whole process."
Reeder said he had never received any pressure from the legislature or from Smith to grant the waiver and that
he would have made the same recommendation with a different set of players involving different political parties.
An appeal to the EPA
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The Southern Environmental Law Center has appealed to the acting regional EPA administrator in Atlanta, writing
that "in response to undue political pressures, the Division of Water Quality has completely abrogated its
responsibilities under section 401 of the Clean Water Act to evaluate whether the proposed reservoir is consistent
with state quality standards."
The law center has also appealed the decision by DENR to the state Office of Administrative Hearings.
Reeder was quizzed about whether there was any political pressure involved in the decision at a meeting of the
Environmental Management Commission held this month in Raleigh. Among other things, he was asked whether
Smith, the EMC member and the general manager of Cleveland County Water, had applied any pressure. Reeder
said no.
Smith, too, said the charges of political pressure have been blown out of proportion. He said he has only met
Hager once in his life. He said Moore "stayed out of it."
"If I was in a lineup," Smith said, "Thom Tillis couldn't pick me out of it.'
But Ron McCollum, a land owner in northern Cleveland County who has been fighting the project for years,
remains skeptical. When he looks out at the edge of his property, he doesn't see any water but says he does see
plenty of political intrigue.
"It's become obvious to us that this is not about water in Cleveland County," McCollum said.
Christensen: 919- 829 -4532
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