19910326 Ver 1_Court Case Correspondence_19950519

r
G'?c"`FO
95
^?sc/FN?FS
JIJI

SETTLEMENT
?AD
1
ayrtnU; S.Y
n
MAY
VV f; ..,
The State of North. Carolina and the City of VirgiM8 -Beach, Virginia
agree to settle the disputes and disagreements between them regarding the Lake
Gaston pipeline project on the terms and conditions set forth herein:
1. Maximum withdrawals for southeastern Virginia through the
pipeline. The maximum amount of water that can' be withdrawn from the Roanoke
River Basin through the Lake Gaston pipeline for southeastern Virginia is 60 million
gallons per day ("mgd").
2. Water for northeastern North Carolina. Virginia Beach agrees that
North Carolina will have an option to connect to the Lake Gaston.pipeline at any
time for the purpose of transporting up to 15 mgd of raw water through the Lake
Gaston pipeline for water supply to northeastern North Carolina communities (the
"North Carolina communities") under the following conditions:
a. Connection. The water would be made available to North
Carolina at reasonably convenient locations agreeable to Virginia Beach and North
Carolina.
b. Cost. No direct or indirect costs of such connection or of
the transport of such water through the Lake Gaston pipeline, or of the use of such
water, would be paid by Virginia Beach. The North Carolina communities would
pay a pro rata share of all operation and maintenance costs of the Lake Gaston
pipeline project based on actual use.
DOC #12119868

y
C. Permits. All permits, consents, licenses;, approvals,
waivers, contractual agreements or other permissions (collectively, permits")
required for the connection, transport or use of such water would be obtained by
the North Carolina communities.
d. Reasonable assistance. Virginia Beach would provide all
reasonable assistance in connection with any application or request by North
Carolina or the North Carolina communities for the permits necessary for the
transport or use of such water.
e. No reduction in Virginia supply. Any water from the Lake
Gaston pipeline which is made available to North Carolina will be in addition to the
60 mgd permitted for use by Virginia Beach and other southeastern Virginia
communities; and water would be made available to North Carolina only to the
extent it obtains such permits as are necessary to transport additional water
through the Lake Gaston pipeline.
f. Limitations on delivery. At any time that Virginia Beach's
ability to make actual withdrawals from Lake Gaston for use by Virginia Beach and
other southeastern Virginia communities is restricted or limited in any way as a
result of this settlement or for any other reason, withdrawals for the North Carolina
communities would be restricted or limited by the same percentage and in the
same way.
g. Impossibility or interruption of performance Virginia
Beach would not be obligated to make such water available to the North Carolina
2
DOC #121198e8

communities if Virginia Beach were prevented from making such water available by
law, regulation, order of a court, contractual agreements (existing as of March 30,
1995 and disclosed to North Carolina prior to April 5, 1995), necessary
maintenance, act of God or any other physical or legal factor making performance
impossible. Virginia Beach would have no liability to North Carolina, the North
Carolina communities or any of their customers on account of an interruption in
water supply for any reason beyond the reasonable control of Virginia Beach.
3. No sales outside regon The purpose of the Lake Gaston pipeline
is to supplement the existing water supplies of southeastern Virginia, which
Virginia Beach represents are insufficient to meet the needs of the region.
Accordingly, Virginia Beach, Chesapeake and any other community receiving water
from the Lake Gaston pipeline will not resell water taken through the pipeline or
any other water to any entity outside southeastern Virginia (i.e., Virginia Beach,
Chesapeake, Norfolk, Portsmouth, Suffolk, Isle of Wight, Southampton County and
Franklin) or northeastern North Carolina, except in response to bona fide
emergencies in communities, along the pipeline route. For these purposes, and
throughout this settlement, a community receiving water shall mean a community
that receives and uses water supply from the pipeline and does not mean a
community such as Norfolk that may wheel or treat Lake Gaston water through its
system, but does not use such water for its own water supply.
Further, Virginia Beach will attempt to obtain the agreement of Norfolk
not to abandon any component of its water system, directly or indirectly because
3
DOC#12119868
of the availability of water from the Lake Gaston Pipeline and not to sell water to
any entity outside of southeastern Virginia (as defined above) or northeastern
North Carolina so long as the Norfolk water system is being used to treat or
transport water from Lake Gaston. During that period, and in the event Norfolk
agrees to the foregoing, North Carolina will not seek the abandonment of Ncrfolk's
withdrawals from the Blackwater and Nottoway Rivers, or from groundwater, or
the reduction of Norfolk's withdrawals from the Blackwater and Nottoway Ravers
eacl-i
r ere uction of groundwater withdrawals below
currently permitted levels.
Nothing in this paragraph 3 is intended to exempt or except any entity
from any law or regulation which applies to i
This settlement shall not become effective until Virginia Beach cbtains
the described agreement from Norfolk, and Virginia Beach, Norfolk and North
Carolina execute a written agreement incorporating such terms.
4. Limitations on withdrawals.
a. Virginia Beach and North Carolina agree that, within two
years of the date of this agreement, and in consultation with the Wilmington, North
Carolina District Corps of Engineers, they will develop a Drought Index which will
take into account meteorological and hydrological data, including but not limited to,
stream flow, rainfall and reservoir levels in Kerr Reservoir. The Drought Index
would provide objective determinations of drought conditions in the Roanoke diver
Basin and would be used to establish a regime which would result in terminations
4
DOC #12119868
of withdrawals, if requested by North Carolina, for periods of 3-9 months during
future droughts of equal or greater severity than the four most severe droughts in
the period of record (1912-1994), but not more frequently. If Virginia Beach and.
North Carolina are unable to agree upon a suitable Drought Index, they will request
the Wilmington, North Carolina District Corps of Engineers to make a binding
determination (final offer arbitration) of the Drought Index in accordance with the
goals and objectives of this paragraph 4. Virginia Beach and North Carolina agree
that any such Drought Index will be, in part, a function of the current operating
practices and downstream release requirements of the Kerr/Gaston/Roanoke Rapids
reservoir systems. Therefore, Virginia Beach and North Carolina agree that, if
significant changes in the operation or downstream release requirements of the
Kerr/Gaston/Roanoke Rapids system occur which would significantly alter the
Drought Index, then Virginia Beach and North Carolina will, in consultation with the
Wilmington, North Carolina District Corps of Engineers, revise the Drought Index to
account for these changes. In addition, North Carolina and Virginia Beach shall
each have the right to reopen the Drought Index for reconsideration (i) on or after
the tenth anniversary of the implementation of the initial Drought Index, the
implementation of any revised Drought Index, or a reopener which does not result
in a revised Drought Index; or (ii) if the operation of the Drought Index causes
withdrawal restrictions three or more times in any ten year period. The purpose of
any reopener of the Drought Index shall be to assure that the Drought Index
accomplishes the same objectives set forth in the first two sentences of this
5
eoc #12119868
paragraph 4a. If either party reopens the Drought Index and the parties are unable
to agree on a revised Drought Index, the matter shall be submitted to the
Wilmington, North Carolina District Corps of Engineers for resolution in accordance
with the standards and procedures set forth in this paragraph 4a.
b. During periods when a flow regime adopted by FERC and/or
by the Corps of Engineers, VEPCO and the North Carolina Wildlife Resources
Commission for striped bass spawning flow augmentation is in effect, Virginia
Beach will use its storage in KeFF Reseivofi, so g as i is available, for striped
bass spawning flow augmentation on the basis of gallon-for-gallon replacement of
the water withdrawn through the pipeline for southeastern Virginia when river
flows are below the applicable limit of the flow regime.
c. Notwithstanding the foregoing, Virginia Beach shall in no
event be subject to greater withdrawal restrictions than those imposed and
enforced by North Carolina on new or additional out-of-basin transfers from the
Roanoke River Basin to locations within North Carolina. For these purposes, if
Virginia Beach's withdrawals are occurring under paragraph 5, new or additional
out-of-basin transfers to locations within North Carolina may only occur if the
North Carolina transferees are subject to the same requirements imposed on
Virginia Beach under paragraph 5.
5. Removal of limitations in times of inade uate water su lies in
southeastern Virginia If the operation of paragraph 4 would result in termination
of permitted withdrawals through the Lake Gaston pipeline, Virginia Beach may
6
DOC 12119868
nonetheless continue to make withdrawals through the pipeline in amounts
sufficient to satisfy the demands of the communities receiving water from the Lake
Gaston pipeline that (i) are using all existing water supply systems within their
jurisdiction to the maximum extent practicable; (ii) are using all alternative sources
of water, within or without their jurisdiction, that can be obtained by them at a
total cost (including permitting, construction, treatment and delivery) not greater
than 20% more than the price charged by Norfolk to wheel and treat Gaston
water; (iii) are using emergency and conjunctive use wells within or without their
jurisdiction to the extent that such useY,(a) is consistent with good utility system
practices and applicable state and local permits and approvals, and (b) is not
economically impractical; and (iv) have instituted conservation measures to reduce
water demands. For purposes of this paragraph, "conservation measures" shall be
defined as: requests that citizens voluntarily conserve water; restrictions on
watering lawns and other vegetation, washing vehicles, sidewalks, streets and
other exterior areas; restrictions on operating ornamental fountains, refilling
swimming pools and non-governmental use of fire hydrants; prohibition on serving
water in restaurants except on request; all in the manner described in the
Ordinance adopted by the Virginia Beach City Council on February 11, 1992.
Notwithstanding the foregoing, the failure of any community to meet the
requirements of this paragraph shall not prevent other communities that meet the
requirements of this paragraph from receiving the full benefit of this paragraph.
7
DOC #121198 68
6. Ongoing conservation Virginia Beach and Chesapeake agree to
maintain an active and ongoing conservation program, including education, leak
detection, water system repairs, conservation pricing, retrofit to low flow fixtures,
and like measures; to periodically review new technologies which become
commercially available; and, consistent with and subject to good water utility
system practices, not to waste or imprudently use water.
7. Regional water authority. Virginia Beach, Chesapeake and the
receiving Water from the Lake Gaston pipeline agree to
encourage regional conservation programs and to propose and actively promote the
creation of a regional water authority for the southeastern Virginia region. North
Carolina agrees that Virginia Beach may assign its rinhtc nA 41i
e
this settlement and its Lake Gaston permits to a regional water authority, with the
understanding that the authority would be bound by all the terms of this
settlement.
8. Highway improvements Virginia Beach and Chesapeake will use
their best efforts to expedite federal and state funding of improvements to Route
N - 17 and Route 168 on the Virginia side of the North Carolina border to the same
standard or higher as they exist on the North Carolina side of the border. This
settlement shall not become effective unless North Carolina receives reasonable
assurances from Virginia's U.S. Senators and appropriate Virginia state officials
satisfactory to North Carolina that Routes 17 and 168 will be expeditiously
improved.
8
DOC #12119868
9. Local resources Consistent with Virginia Beach's representation
that the purpose of the Lake Gaston pipeline is to supplement existing water
supplies of southeastern Virginia, Virginia Beach and Chesapeake and all of the
communities receiving water from the Lake Gaston pipeline agree not to abandon,
seek the abandonment, or interfere with the development of any water supplies
which could be used with or in lieu of Lake Gaston, except for legitimate and
unforeseen reasons that would make such a supply impossible or impractical even
if Lake Gaston water were not available.
10. Bi-State Water Advisory Commission The State of North
Carolina and the City of Virginia Beach agree that a Bi-State Water Advisory
Commission should be established. The mission of the Commission would be to
study and monitor the use, conservation and coordination of water resources in
southeastern Virginia, northeastern North Carolina and the Roanoke River Basin, so
as to minimize the impact on the Roanoke River Basin, consistent with the
agreements contained herein, and to make non-binding recommendations to
appropriate governmental bodies concerning the best use of these resources. The
water advisory commission would be comprised of not more than sixteen
members, the Virginia representatives to consist of a representative from each of
the governments of Virginia Beach, Norfolk, Chesapeake, Portsmouth and Suffolk,
and from the Virginia Department of Environmental Quality, the Virginia
Department of Health, and the Hampton Roads Planning District Commission, all to
be appointed by Virginia's Governor, and North Carolina's representatives to
9
DOC #12119668
consist of two persons from northeastern North Carolina and six other persons, all
to be appointed by its Governor, and the Commission will contain an equal number
of representatives from each state. Virginia Beach and Chesapeake also agree that
the southeastern Virginia jurisdictions using water from the Lake Gaston pipeline
shall pay, as part of the cost of the Lake Gaston project, a total of $100,000 per
year until the pipeline is fully operational and, thereafter, $200,000 per year to the
Bi-State Water Advisory Commission to be used by the Commission for hydrilla
control or other purposes to benefit the environment of the Roanoke River Basin,
provided, however, that the $20a,_QOQ payment required of the southeastern
Virginia jurisdictions shall be pro rated to reflect reduced withdrawals caused by
operation of oaraaraphc d nr r A...c.,,..? _
ul
restrictions are in effect. This settlement shall not become effective unless North
Carolina receives a written commitment from the Governor of Virginia to create
and appoint the Commission.
11. Other uses of Lake Gaston
a. Virginia Beach agrees not to seek any special regulations,
legislation or stricter discharge standard for Pea Hill Creek than would apply to
other similar waters of the Commonwealth of Virginia.
b. Virginia Beach agrees not to interfere with recreational
uses of Lake Gaston such as swimming, boating, snorkeling, fishing, or other
recreational activities on Lake Gaston or to petition any other agency to seek such
restrictions.
10
DOC #12119868
C. Virginia Beach and North Carolina acknowledge that
Virginia Beach has previously agreed with Brunswick County, Virginia that Virginia
Beach will not unreasonably oppose any discharge permits into Lake Gaston.
12. No opposition by North Carolina Within 10 days after this
settlement becomes effective, North Carolina shall withdraw its opposition to
VEPCO's FERC application (provided it is modified in accordance with this
settlement). Within 10 days after a FERC order approving VEPCO's modified
application becomes final, North Carolina shall withdraw all opposition to the Lake
Gaston project, including its appeal of the Secretary of Commerce's CZMA
decision, and its request and support for Judge Britt's injunction in the Eastern
District of North Carolina, and Virginia Beach and North Carolina shall jointly file a
motion to the Fourth Circuit to vacate as moot Judge Britt's order denying motion.
to modify injunction and to dismiss Virginia Beach's appeal. North Carolina further
agrees that it will not in the future oppose, seek or take any action to restrict,
directly or indirectly, Virginia Beach's withdrawals from Lake Gaston permitted by
this settlement. This settlement shall not become effective unless Virginia Beach
receives a commitment from VEPCO to modify its FERC application in accordance
with this settlement.
13. Reservation of right by Virginia Beach to commence a
condemnation proceeding: Virginia Beach reserves the right to commence a
condemnation proceeding of VEPCO property. Notwithstanding paragraph 12, in
the event Virginia Beach commences a condemnation proceeding of VEPCO
11
Doc #12119868
property, North Carolina reserves the right to oppose Virginia Beach's action or
support the opposition of others to such action. The parties shall be bound by the
provisions of this settlement notwithstanding any judgment in such a
condemnation proceeding.
14. Federal agency obligations North Carolina and Virginia Beach
recognize that various Federal agencies, including NOAH, FWS, NMFS, and EPA,
remain obligated to carry out their respective statutory and regulatory
respoRsi
ibilities. The Bepaitinents of justice an Commerce have expressed
support for the efforts of North Carolina and Virginia Beach to resolve their dixspute
over the Lake Gaston project, and are seeking to facilitate, to the maximum extent
practicable, resolution of the dispute.
15. Agreement by Chesapeake and the Corps This settlement shall
not become effective unless: 1) it is agreed to by ordinance of the City Council of
the City of Chesapeake; and 2) paragraphs 4 and 18 are agreed to, in writing, by
the United States Army Corps of Engineers.
16. Options to terminate settlement All obligations of North Carolina
and Virginia Beach required hereunder, and all obligations and commitments
obtained hereunder from other persons or parties, shall expire and be of no force
and effect if FERC approves VEPCO's application on a basis materially different
from the terms of this settlement and North Carolina concludes and declares in
writing to Virginia Beach that the differences are adverse to its interests. All
obligations of Virginia Beach and North Carolina required hereunder, and all
12
DOC #72119868
obligations and commitments obtained hereunder from other persons or parties,
shall expire and be of no force and effect if FERC denies or approves VEPCO's
application on a basis materially different from the terms of this settlement and
Virginia Beach concludes and declares in writing to North Carolina that the
differences are adverse to its interests and does not accept the final FERC
approval. If FERC's approval of VEPCO's application is materially different from
this settlement and Virginia Beach does not terminate the settlement but seeks
rehearing or judicial review of FERC's approval, North Carolina agrees to support
actively Virginia Beach's efforts to secure modifications to FERC's approval so that
it is consistent in all respects with this settlement. -
17. Interstate Compact. Virginia Beach, Chesapeake, and North
Carolina agree to use their best efforts to cause the enactment of an interstate
compact between North Carolina and Virginia which would provide that no new or
increased out-of-basin transfers of water in addition to those described in
paragraphs 1 and 2 could be made from the Roanoke River Basin at any point
above the Roanoke Rapids Dam without the consent of each state, except that up
to 20 mgd of such additional out-of-basin transfers could be made from locations
in North Carolina to locations in North Carolina without the consent of Virginia.
For the purposes of this compact, transfers from the Roanoke River Basin to a
localilty that straddles the Roanoke River Basin and another river basin will not be
considered out-of-basin transfers so long as the water transferred is used within
the locality and substantially returned to the Roanoke River Basin. This settlement
13
DOC #12119868

shall not become effective unless and until (i) the Virginia General Assembly and
the North Carolina General Assembly have enacted and the Governor of Virginia
has signed into law legislation enabling such interstate compact, and (ii) the United
States Senators from Virginia and North Carolina have agreed to support the
interstate compact.
18. Dispute resolution North Carolina and Virginia Beach will
request that the U.S. District Court for the District of Columbia enter a consent
order in North Carolina v. Brown ordering compliance with this settlement, and
retaining jurisdiction over North Carolina and Virginia Beach for purposes of this
settlement. In the event that a dispute arises between North Carolina and Virginia
Beach near Thn ;pt ?r t +' t l
Ia sl e!e !I l.11 .^? :?! l.I?rll I/.I, ISO 11.11 Slid -
T'-r ? ? c? ? ? v c ,
hereof, such disputes shall be submitted to the Wilmington, North Carolina District
Engineer of the United States Army Corps of Engineers for an expedited non-
judicial preliminary resolution (the "preliminary resolution"). The parties will accept
and abide by the preliminary resolution until it is superseded by a preliminary
injunction or permanent resolution of the dispute by a court, which dispute shall be
considered de novo and not as an appeal of the preliminary resolution. The Corps
of Engineers shall not be sued in or otherwise made a party to such litigation. The
preliminary resolution may be enforced by a preliminary injunction. The parties
agree that this settlement is made in the District of Columbia and that any judicial
action to resolve any dispute arising under this settlement may be brought only in
the U.S. District Court for the District of Columbia.
14
DOC#12119868
Y
19: COOperation to effectuate settlement North Carolina and Virginia
Beach agree to cooperate and to execute and file all documents and pleadings and
take such other actions as necessary to effectuate the terms of this settlement,
with the objective that the FERC process and construction and operation of Lake
Gaston pipeline project proceed as expeditiously as possible.
20. Effective date. This settlement shall become effective on the
date that the last agreement and/or commitment required under paragraphs 3, 8,
10, 12, 15 and 17 is obtained, but it shall not become effective unless such
agreements and commitments are obtained within 60 days after executio-h of this
settlement; provided, however, that each party shall attempt to obtain, and
cooperate with the other in obtaining, such agreements and commitments prior to
such date. Upon receipt by Virginia Beach of each such agreement or
commitment, it shall be submitted to North Carolina and North Carolina shall
promptly indicate to Virginia Beach whether it agrees that such agreement or
commitment satisfies the terms of this settlement.
DOC #12119868
15
r
The State of North Carolina and the City of Virginia Beach, Virginia
indicate their agreement to the terms and conditions set forth herein by the
signatures below of their respective representatives.
The State of North Carolina
Date: By
Jonathan B. Howes, Secretary
Department of Environment,
Health and Natural Resources
By
Alan S. Hirsch
SnPria? flans it D#nrr,e r_`,. ,.?
The City of Virginia Beach, Virginia
Date:
By
James K. Spore, City Manager
By
Leslie L. Lilley
City Attorney
16
DOC x12119868