Raleigh, N.C. — H.S. Allen had something of a mess on his hands.
For about 18 months, he had been the manager of the Greenfield Mineral Water Co. in Wilmington, delivering water in 5-gallon glass jugs to customers across the city.
The state had given the company's well a clean bill of health years earlier when it analyzed the water. But as Allen learned in a letter from the North Carolina Board of Health, state law required both monthly testing of water samples and an annual tax based on sales.
Because the company "never kept any particular accurate set of books" Allen said, that calculation would be hard to come by.
An occasional series on the evolution of the state’s role in protecting natural resources while promoting business growth.
"There is absolutely no intention on our part to violate a state law regarding the taxes,” Allen wrote to state officials, “and the writer is trying to get up figures as nearly as possible showing the gross amount received from the sale of this water."
The correspondence, dated October 1921, addressed one of North Carolina's earliest environmental regulations, designed to protect the health of the public's water supply.
Even then – five years before lawmakers created the state's first conservation agency – regulations caused tensions between the business community and government officials seeking to enforce rules.
This tension only continued as environmental regulation evolved to what it is today.
State tracks use of 'fish, forestry and fur'
When a new administration took over the Department of Environment and Natural Resources under Gov. Pat McCrory in 2013, environmental advocates raised an alarm over a change in the agency's mission statement.
While recognizing a primary mission of protecting the environment, it also adopted a three-part philosophy that included a commitment to customer service over operating as a "bureaucratic obstacle of resistance." Some saw that as code for relaxed enforcement actions against polluters.
Susan Wilson, an Asheville water quality regulator, cited the change in a fiery resignation letter to DENR Secretary John Skvarla in the fall.
"I see no reason to continue here because my own mission – to assist all citizens and protect those that don't have a voice – would be compromised," Wilson wrote.
Yet, since their earliest iterations, proto-regulatory agencies have long had a focus on "promoting commerce and industry."
That very phrase was written into the 1925 state law that created the Department of Conservation and Development, which took over the duties of the State Geological and Economic Survey and the preservation of forests and state lands.
Groups like these, says Richard Whisnant, a law professor at the University of North Carolina's School of Government, were focused on tracking how best to use natural resources like minerals, "fish, forestry and fur."
While some public safety components such as water testing were housed in other agencies like the Board of Health, it took decades for the North Carolina legislature to adopt formalized controls on pollution itself.
"You've got two threads going. One was about resources: how we extract them and where they are," Whisnant, who specializes in environmental law and policy, said. "On the other side, you did have some state agencies concerned with controlling the results of that extraction."
When problems emerge, so does regulation
By 1950, other states in the Southeast, such as South Carolina, Alabama and Mississippi, had already adopted laws to control and remedy pollution. But for years in North Carolina, similar measures had been narrowly defeated by lawmakers in the General Assembly.
A 1950 Q&A published by the State Stream Sanitation and Conservation Committee addressed one of the legislature's top concerns – the impact on business – head on. "Under the proposed bill it is felt that the program would not be a barrier to the continued industrial expansion in North Carolina, but would make more sites available for industrial development through the protection of our water resources," the committee memo said.
When a law finally passed in 1951, it was in response to a growing awareness of pollution in the state's waterways.
For the most part, Whisnant said, that reactionary pattern of regulation hasn't changed much.
"I don't think that makes us unique, but certainly, when it comes to regulating productive activity, typically it's when a problem emerges," Whisnant said.
Algae blooms in the 1960s and 1970s in waterways such as the Neuse River and the Chowan River in eastern North Carolina prompted strategies to control nutrients in runoff. A 1995 spill of hog waste in Onslow County led lawmakers and regulators to find ways to tighten restrictions on massive pork producers.
Amid these disaster responses, however, Whisnant said there was also a move to a more methodical process.
"Once you started in the '70s and '80s staffing up DENR with engineers and scientists who did know how these systems work, they began to understand there were things you can do proactively to prevent problems," Whisnant said.
Pendulum swings against stiffer environmental rules
But that growth in staffing – and environmental rules – has had its opponents.
Whisnant, who served as general counsel at the agency in the 1990s, said the decade began with pushback from those subject to the regulations, bristling at what they called overreach.
"My whole career, there's been a battle going on in what you might call 'the reformation of the regulatory regime,'" Whisnant said.
Lisa Martin, now a lobbyist for North Carolina Home Builders Association, worked as a regulator at what was then the Department of Environment, Health and Natural Resources for about six years in the 1990s.
"One of the factors, the reasons that I left, is that it was impossible to be reasonable anymore," Martin said. "It went from a balance of economic and environmental security to 'environment at all costs.'"
Throughout the 1990s, the complaints of some regulated groups started getting traction with lawmakers.
Ryke Longest, director of the Environmental Law and Policy Clinic at Duke University’s law school, spent about 14 years with the state Department of Justice starting in 1993, mostly aiding the environmental agency in litigation and rule-making. It was an era that countered the expanding environmental rules and agency staffing of the 1980s.
"Somewhere during the 1990s, that started to change. I would say certain areas continued to have more stringent environmental rules from the 1990s and beyond," Longest said. "Other programs started to have a relaxing of environmental regulations, primarily with cleanups."
Part of this, Longest said, was a change in approach toward so-called "risk-based corrective action" – the greater the impact on actual people, the more money would be allocated to fix the problem.
Martin says the bad blood between DENR and industry continued well into the early 2000s.
"It became this mentality of 'Let's just regulate everything possible until someone complains about it and the legislature has to step in,'" Martin said. "Instead of engaging the regulating community, it became about whipping them into position."
Robin Smith, who worked as DENR's assistant secretary for the environment from 1999 to 2012, doesn't see it that way.
"I think there are particular interest groups who started feeling a particular pinch from water quality rules beginning in the '90s," Smith said. "That was because, before that time, there was very little regulation that affected development."
The interactions between businesses and environmental regulators are also complicated by the price tag – one that could spike higher in the event of major pollution.
"A lot of the reaction right now on what's perceived as over-regulation is the awareness that you've got this group of scientists and engineers who are thinking about these issues more proactively and trying to prevent problems from happening," Whisnant said. "That means costs for the regulated industries."
Do no harm
When Dexter Matthews retires as director of the Division of Waste Management in June, it will be after spending 30 years as an employee of the agency now known as DENR. His career has spanned reorganizations that drastically changed the structure of the agency, as well as six different governors, including Republican Gov. Jim Martin.
During that time, Matthews said he's seen all of the administrations emphasize the balancing act between providing technical assistance to permit applicants and taking enforcement actions in different ways.
When McCrory moved into the Executive Mansion ahead of Matthews' final years with DENR, he said he was aware of the agency's reputation among industries and business.
"There was a general impression by many of the regulated community that the department was not being as helpful as it could be," Matthews said. "I think the leadership came in with the view that they could do better in that particular area."
He said the rewritten 2013 mission statement won't undermine strong enforcement from the agency. But the bottom line, he said, is getting polluters to follow environmental rules.
"If you maintain a high compliance rate and you're doing that through assistance, isn't that what you're trying to do?" Matthews said.
That results-based focus is what Lisa Martin said has been missing from the agency in its dealings with industries like the home builders.
"I would like to think that this new administration is simply running it like a business," Martin said. "They have a goal or a product, and you keep retooling if it's not doing what it's supposed to."
Ultimately, she said that means veering away from a regulatory philosophy of "environment at all costs" to one of "do no harm."
But Molly Diggins, director of the Sierra Club's North Carolina chapter, says philosophies like these aren't always effective.
"(The) tension that's always been there is whether or not states succeed by raising their sights and reaching for the stars or by lowering the bar in a race to the bottom," Diggins said. "Do we compete with our neighbors about being better or being more lax?"
Given the complex nature of modern environmental issues, Duke's Longest said, the risk is returning to a more reactionary approach to regulation.
"The premise that we only regulate the environment by emergency does not bode well for us," Longest said. "Not everything gives us that kind of warning."
McCrory 'inexorably linked' to regulation outcomes
Although Whisnant said it's entirely possible for the agency to keep up enforcement and compliance with an increased emphasis on customer service, it also carries other risks.
He said regulators have to feel empowered to make calls on enforcement amid a more "friendly" regulatory environment.
"It's fraught with risk to inject more politicization. That means (the administration is) going to own whatever comes out of DENR in the next few years in a way they may not be happy with," Whisnant said. "To me, that makes the administration inexorably linked with the outcomes they're getting."
Diggins says these consequences are "no longer theoretical."
She points to the February spill of 40,000 tons of coal ash into the Dan River near Eden as a chance to create a greater dialogue around regulations in the state.
"To my mind, the coal ash spill was a tremendous leadership opportunity for the governor," Diggins said. "I think, so far, they have missed the opportunity, but that can change at any time."
But to truly evaluate the agency's performance – to find out just how well DENR is balancing the tensions between the regulators and the regulated – Whisnant said you have to go beyond the headlines.
"The fair way to evaluate that is not to look at the tiny handful of cases that get written up in the press," Whisnant said. "The fair way to evaluate it is to look at the hundreds of things that go on every day and don't make it to the public level of notoriety and see how that's changed."