Legal Tides

By Lisa C. Schiavinato, J.D.; Law, Policy and Community Development Specialist, North Carolina Sea Grant; Co-Director, North Carolina Coastal Resources Law, Planning and Policy Center

Wind energy production in ocean and coastal waters is a fledgling industry in the United States. It is the subject of rigorous debate, primarily due to the controversy surrounding the Cape Wind project — a 130-turbine offshore wind facility proposed for Nantucket Sound near Cape Cod, Massachusetts. Cape Wind was the first proposed offshore wind project in the nation, and it began applying for permits in 2001. The project became hotly contested as the federal, state, and local governments began their review, and the project has yet to move beyond the permitting stage. Project review remains ongoing, and Cape Wind anticipates the permitting phase will conclude in 2008, with the facility constructed and operational in 2010.(1)

The national debate on renewable energy and climate change has prompted other states to contemplate offshore wind energy production. Since Cape Wind was proposed, other offshore wind projects have been proposed for waters off the coast of New York, (2) Texas, and Delaware. As more information is gathered regarding offshore wind resources in the United States, and as the technology advances, more coastal states may take a closer look at their own potential to harvest wind resources for everyday energy use.

North Carolina, particularly along its coast, does have strong wind resources in certain areas. (3) Given that offshore wind energy development is an emerging industry in this country, North Carolina may see a proposal for such a project in the future. Although North Carolina currently has no offshore wind development, a recent proposal submitted to the N.C. Utilities Commission for a three-turbine wind facility in coastal Carteret County is causing a stir. (4) Called the Golden Wind Farm, its turbines would generate 4.5 megawatts of electricity that would be sufficient to power approximately 900 homes. (5) The applicant would sell the power to Progress Energy. (6) In response to this proposal, the Carteret County Board of Commissioners adopted a nine-month moratorium on issuing permits to build wind turbines. (7) The applicant for the Golden Wind Farm project acknowledges that the interim moratorium may delay the permitting process, but remains hopeful that the project will not be deterred. (8) The purpose of the moratorium through Dec. 2008 is to allow the county the opportunity to study wind energy technology and its use and regulation in coastal areas throughout the nation. (9)

This article will provide a glimpse into the federal and state legal framework regarding wind energy development in ocean and coastal waters. It also will explore the potential for an offshore wind project to be permitted in the state given the current state of the law, and whether changes in or additions to state law are needed for the state to pursue offshore wind energy development. The article will not discuss the viability of offshore wind as a cost-effective source of energy for coastal North Carolina.

Wind Energy Resources in North Carolina

Studies have shown that North Carolina has wind resources significant enough to make wind energy a viable option for the state, particularly along the Outer Banks. (10) Offshore wind facilities potentially could be constructed in either sounds, state coastal-ocean waters, or in federal ocean waters. Because offshore wind projects include placing permanent structures in public trust waters, federal permits, state permits, or both will be required for construction, operation, and maintenance of the facility. Offhsore wind facilities not only include wind turbines and platforms, but also transmission cables to route energy to land, as well as substations and other associated infrastructure. Dredging and construction activity also would be required. (11) Therefore, even if a wind facility were sited in federal waters, state permits would be required under most circumstances. What follows is an overview of the federal and state laws that likely would apply, should a wind energy development project be proposed off the coast of North Carolina.

Federal Law

At the time the Cape Wind project was proposed, the United States had no policy or regulatory framework regarding wind energy development in federal waters. This was one of the chief criticisms of Cape Wind in the beginning. Commentators remarked on the potential detriments of ad hoc permitting of offshore wind projects, unless the nation addressed the issue. The Energy Policy Act of 2005 (EPAct) addressed offshore wind energy peripherally by vesting authority within the Minerals Management Service (MMS) of the Department of the Interior over renewable energy and alternate uses of the nation’s offshore public lands along the Outer Continental Shelf (OCS). (12) Authority was vested within the MMS because of its environmental, engineering, and regulatory expertise managing energy and mineral resources in federal waters.

Should another offshore wind project be proposed in federal waters, other federal agencies — such as the U.S. Army Corps of Engineers, U.S. Fish and Wildlife Service, and NOAA Fisheries — also would be involved in the review process to relay their expertise. Federal laws that may apply include, but are not limited to, the National Environmental Policy Act (NEPA), Clean Water Act (CWA), Clean Air Act (CAA), Endangered Species Act (ESA), Marine Mammal Protection Act (MMPA), Migratory Bird Treaty Act (MBTA), Rivers and Harbors Act (RHA), Outer Continental Shelf Lands Act (OCSLA), and Coastal Zone Management Act (CZMA). Below is a brief overview of a few of the federal laws that likely would apply to a wind project sited in federal waters.

The NEPA was passed in 1969 and requires the federal government to take into account environmental impacts when issuing permits to allow federal actions. When a federal action is proposed, the lead federal agency conducts an Environmental Assessment to determine whether the project’s impacts are significant enough to warrant a full Environmental Impact Statement (EIS), which requires more rigorous review. This more rigorous review includes an analysis of alternatives to the project that would have fewer impacts than the original proposal. Such a review also would discuss why these alternatives were eliminated from consideration during the NEPA process. If the lead agency determines instead that a proposed project will not have a significant impact on human health or the environment, then a Finding Of No Significant Impact, or FONSI, is issued. However, it is likely the impacts of a proposed offshore wind project would be deemed significant enough to warrant a full EIS, given the nature and scope of this type of project. The requirement of preparation of an EIS triggers analysis under other federal laws as well, such as the ESA, CWA, and RHA. The additional laws that may apply to a proposal for an offshore wind energy project are discussed below.

The CZMA was passed in 1972 “to preserve, protect, develop, and where possible, to restore or enhance” the nation’s coastal resources. (13) The CZMA encourages participation of coastal states and provides financial and technical assistance as incentives. For a state that wishes to participate, it must first develop a coastal management plan that defines permissible land and water uses within that state’s coastal zone. This plan is then submitted to the National Oceanic and Atmospheric Administration for approval. Once an approved state plan is in place, federal activities or project proposals that require a federal permit can be subject to the Consistency provision of the CZMA. The Consistency provision requires an activity to be “consistent” with the enforceable policies of the affected state’s coastal management plan. (14) If the affected state determines the activity is “inconsistent” with its coastal management plan, then the state may negotiate conditions in order for the activity to be deemed consistent. However, if negotiations cannot be reached and the inconsistency determination remains, then the applicant may appeal the state’s decision to the Secretary of the Department of Commerce, who has the authority to override the state. (15) However, unless the Secretary of Commerce overrides the state’s objection, federal agencies are unable to issue to the applicant any necessary federal licenses or permits. (16)

A wind energy development project sited in federal waters likely would involve the leasing of submerged lands from the federal government. (17) Coastal states only have jurisdiction over submerged lands up to three geographical miles. (18) If a party wishes to lease submerged lands beyond this limit (e.g., to construct and operate a wind energy development facility), then a submerged- lands lease from the Department of the Interior is needed. (19) The U.S. Army Corps of Engineers has jurisdiction over navigable waters of the United States, and Section 10 of the RHA requires a permit for structures or work in or affecting those waters. (20) An offshore wind project by its very nature would require structures to be built over navigable waters, and thus, a Section 10 permit would be needed. An offshore wind project likely would involve impacts to protected species. If so, review under the ESA, MBTA, and MMPA also would be needed. Additional review would be required if a project would affect fisheries or essential fish habitat. (21)

North Carolina Law

There is no North Carolina statutory or regulatory framework currently in place that governs offshore wind energy. However, there are current statutes that may apply and permits that may need to be obtained. This section presents an overview of potentially relevant states laws, including the Coastal Area Management Act (CAMA), North Carolina Environmental Policy Act (NCEPA), North Carolina Dredge and Fill Act, North Carolina Public Utilities Act, and North Carolina Archives and History Act. However, it is not clearcut which law would control the permitting process.

A major question is whether an offshore wind project would fall under the jurisdiction of CAMA or the state Public Utilities Act. This question seems to depend on the definition of “development” set forth in CAMA, which would require a permit from the Coastal Resources Commission (CRC) if a proposed project will be located in an Area of Environmental Concern. (22) “Development” is defined as:

Any activity in a duly designated area of environmental concern… involving, requiring, or consisting of the construction or enlargement of a structure; excavation; dredging; filling; dumping; removal of clay, silt, sand, gravel or minerals; bulkheading, driving of pilings; clearing or alteration of land as an adjunct of construction; alteration or removal of sand dunes; alteration of the shore, bank, or bottom of the Atlantic Ocean or any sound, bay, river, creek, stream, lake, or canal; or placement of a floating structure in an area of environmental concern identified in G.S. 113A-113(b)(2) or (b)(5). (23)

The statute then lists exceptions to the definition of “development.” One important exception is “work by any utility and other persons for the purpose of construction of facilities for the development, generation, and transmission of energy to the extent that such activities are regulated by other law or by present or future rules of the State Utilities Commission…” (24) It is possible that an offshore wind project may not be considered “development” under CAMA, if it is regulated by the State Utilities Commission. However, the likelihood of this is arguable. The italicized part of the “development” exception contains a qualification that the exception applies when pertinent activities are regulated by other law or by present or future rules of the State Utilities Commission. Given that the Utilities Commission does not currently have rules in place to govern alternative energy facilities in ocean or coastal waters, it is possible the CRC still may have authority to require that a proposal to place such facilities in Areas of Environmental Concern comply with existing CRC rules. (25)

If an offshore wind project proposal were to fall under CAMA, the applicant would need to obtain a CAMA permit from the CRC. It would be considered a major development requiring a CAMA “major development permit.” (26) In order to obtain the permit, an applicant would be required to file an application and submit the appropriate fee to the Department of Environment and Natural Resources (DENR) and designated local official if seeking a permit from a county or municipality. (27) Because any such facility would be located in estuarine or ocean waters, which are navigable waters of the United States, it also would need federal permits.

A CAMA permit is generally sufficient if the following permits are necessary: to dredge and fill, for easements to fill, or for water quality certification. Moreover, an offshore wind facility potentially could impact underwater historical artifacts, such as shipwrecks. The N.C. Department of Cultural Resources has the authority to adopt rules to preserve or protect shipwrecks, vessels, cargoes, tackle, and underwater archaeological artifacts to which the state has title. (28) While the legislation does authorize permits to explore or salvage such underwater artifacts, (29) there is no indication of any permit that may be obtained for their destruction.

NCEPA authorizes municipalities to require environmental impact statements by ordinance. (30) Such ordinance requirements, however, will not be needed for those who have completed a comparable document at the state level. (31) Furthermore, an offshore wind facility would be subject to an easement or a lease of state-owned submerged lands. (32)

The Need for a North Carolina Policy on Wind Energy Development

North Carolina could consider developing a management strategy to address offshore wind energy development. The General Assembly attempted to address renewable energy during the 2007 legislative session when House Bill 1821 was introduced. House Bill 1821, if passed into law, would vest authority over the siting of wind energy facilities within DENR. (33) However, as of June 2008 this bill has not been referred out of committee. The proposed legislation is limited in scope because it does not cover all forms of alternative energy facilities placed in coastal and ocean waters, and more comprehensive legislation would be beneficial to the state.

Despite the temporary moratorium on wind turbines in Carteret County, the proposal for the Golden Wind Farm may lead to the proposal of more projects. The Golden Wind Farm proposal already has sparked discussion and criticism. Residents that live near the proposed site have expressed aesthetic concerns, particularly because the project would be located near a scenic highway. (34) Carteret County commissioners have placed a nine-month moratorium on issuing permits for wind turbines until a study on wind energy technology is completed. (35)

The proposal for the Golden Wind Farm, although not an offshore project, highlights the need for North Carolina to consider a comprehensive policy regarding wind energy development. Today, land-based wind energy facilities have been proposed. Tomorrow may bring proposals for offshore wind energy facilities in North Carolina’s sounds or ocean waters. It is important for North Carolina to formulate policy on offshore wind before such a project is proposed, so the state will have a better road map on how to address the issues and potential impacts on North Carolina’s ocean and coastal resources and its communities. Moreover, having regulations in place at the earliest possible stage would provide meaningful policy guidance to the CRC and provide a regulatory framework that could encourage (or discourage) investment in specific projects. Furthermore, if a project is proposed for siting in federal waters, any North Carolina wind energy facility regulations or restrictions also would be applicable to it. The state also would benefit from incorporating these regulations into its coastal management plan. The benefit is that North Carolina would then be in a position to review projects proposed for federal waters, based on the Consistency authority granted to coastal states by the CZMA. This would ensure that North Carolina’s interests are fully protected, even in a federal leasing or permit process for a wind energy project that would impact the state’s coastal communities and resources.

Footnotes

1. Cape Wind, “Cape Wind Timeline,” at http://www.capewind.org/article26.htm (accessed February 1, 2008).
2. However, the project for Long Island Sound, proposed by the Long Island Power Authority, was terminated in August 2007 due to cost. Harrington, Mark, LIPA Chief Kills Wind Farm Project, Newsday, August 23, 2007, at http://www.newsday.com/business/ny-bzwind0824,0,7647935.story (accessed February 8, 2008).
3. See NC Solar Center, “Coastal Wind Initiative,” at http://www.ncsc.ncsu.edu/programs/the_coastal_wind_initiative.cfm (accessed February 1, 2008).
4. Wade Rawlins, Coastal Wind Farm Proposed, The News & Observer, February 6, 2008, at http://www.newsobserver.com/news/story/926691.html (accessed February 6, 2008).
5-6. Id.
7. Book, Sue, Carteret Commissioners Adopt Moratorium On Windmills, The Sun Journal, March 3, 2008,
at http://www.newbernsj.com/news/wind_38676___article.html/county_moratorium.html (accessed April 1, 2008).
8-10. Id.
11. To learn more about how a wind turbine works, visit the U.S. Department of Energy, “How Wind Turbines Work,” at http://www1.eere.energy.gov/windandhydro/wind_how.html (accessed February 1, 2008). To learn more about how an offshore wind facility works, visit British Wind Energy Association, “How An Offshore Wind Farm Works,” at http://www.bwea.com/offshore/how.html (accessed February 1, 2008).
12. 43 U.S.C. § 1337.
13. 16 U.S.C. § 1452.
14. 16 U.S.C. § 1456.
15-16. Id.
17. For transmission cables and other support that pass over state submerged lands, state permits would be needed.
18. See Submerged Lands Act, 43 U.S.C. §§ 1311-1314. The exceptions to this rule are Texas and he west coast of Florida. Their jurisdiction extends out nine geographical miles because these states had established their jurisdictions over a larger area before statehood. 43 U.S.C. §1312.
19. The EPAct gave the Department of the Interior the authority to develop and implement an alternative energy and alternate use program. See Pub. L. No. 109-58, 119 Stat. 868 (codified in 26 U.S.C. and 42 U.S.C.). See also OCS Alternative Energy and Alternate Use Programmatic Final EIS at http://ocsenergy.anl.gov/index.cfm.
20. 33 U.S.C. § 403.
21. See generally Magnuson-Stevens Fishery Conservation and Management Act, 16 U.S.C. § 1801 et seq. See also essential fish habitat regulatory guidelines, 50 C.F.R. § 600.
22. See N.C. Gen. Stat. § 113A-118.
23. N.C. Gen. Stat. § 113A-118(5)(a).
24. N.C. Gen. Stat. § 113A-118(5)(b)(3) (emphasis added).
25. Id.
26. A “major development” means “any development which requires permission, licensing, approval, certification or authorization in any form from the Environmental Management Commission, the Department of Environment and Natural Resources, the Department of Administration, the North Carolina Mining Commission, the North Carolina Pesticides Board, the North Carolina Sedimentation Control Board, or any federal agency or authority; or which occupies a land or water area in excess of 20 acres; or which contemplates drilling for or excavating natural resources on land or under water; or which occupies on a single parcel a structure or structures in excess of a ground area of 60,000 square feet.” N.C. Gen. Stat. § 113A-118(d). See also N.C. Gen. Stat. § 113A-118(a).
27. N.C. Gen. Stat. § 113A-119.
28. N.C. Gen. Stat. § 121-123 (2007); According to N.C. Gen. Stat. § 121-122 (2007), the state has title to “all bottoms of navigable waters within one marine league seaward from the Atlantic seashore measured from the extreme low watermark; and the title to all shipwrecks, vessels, cargoes, tackle, and underwater archaeological artifacts which have remained unclaimed for more than 10 years lying on the said bottoms, or on the bottoms of any other navigable waters of the State, is hereby declared to be in the State of North Carolina, and such bottoms, shipwrecks, vessels, cargoes, tackle, and underwater archaeological artifacts shall be subject to the exclusive dominion and control of the State.”
29. N.C. Gen. Stat. § 121-125.
30. N.C. Gen. Stat. § 113A-8(a).
31. N.C. Gen. Stat. § 113A-8(b).
32. N.C. Gen. Stat. §§ 146-11 and 146-12.
33. H.B. 1821, Gen. Assem., 2007 Sess. (N.C. 2007) is entitled “An Act to Establish a System of Permits to be Issued by the Department of Environment and Natural Resources for the Siting of Medium and Large Energy Systems and to Require Operators of these Wind Energy Systems to Obtain a Permit to Site their Wind Energy Systems.”
34. Book, supra note 7.
35. Id.

By Joseph Kalo, Graham Kenan Professor of Law
Co-Director, NC Coastal Resources Law, Planning and Policy Center

The increasing number of dockominium-style marinas in North Carolina’s inner coastal waters troubles many people because the marketing of these developments gives the appearance of either the improper sale of, or the granting of, exclusive rights to public trust waters to private entities and people. The ultimate goal of a dockominium marina is, by one legal device or another, to transfer the exclusive right to use a particular boat slip within the dockominium marina to individual boat owners. Prices for dockominium slips vary based on footage. In North Carolina, reported prices can reach as much as $90,000 for larger slips, not including annual maintenance and other fees. Elsewhere along the east coast, the prices and fees are even higher.

Dockominiums come in many different sizes and shapes. Some dockominiums may be created through a conversion of an existing marina.1 Others may be new construction. A number of the dockominiums are marinas built in connection with an adjacent planned community or subdivision. A dockominium may lie over public trust waters, or it may be built over an upland area that has been dug out and connected to public trust waters.2 The latter type of dockominium does not raise questions about the sale or granting of exclusive rights to public trust waters. In that situation, water bottom is not public trust submerged land, and title remains in private hands.

Title to the dockominium piers, ancillary structures and facilities, and usually the adjacent shoreline frontage will be held by the dockominium operator, which may be a separate business entity or a non-profit corporation, such as a sailing club or the planned community’s property owners’ association. The typical purchaser of a slip in a dockominium development receives the exclusive right to use a particular slip and rights in common with other slip owners to the use of the other dockominium common areas.

Riparian Rights: The Foundation for Dockominiums

The underlying legal foundation for a dockominium is based on the existence of riparian rights. The owner of the dockominium structure owns the adjacent riparian shoreline. With ownership of the riparian shoreline normally comes the qualified right to erect piers from the shore to have access to water deep enough to navigate in a sound, tidal river or creek or other navigable waterbody. The right is qualified because it is subject to such rules and regulations as the General Assembly prescribes3 and because Section 146-12 of the North Carolina General Statutes requires that an easement be obtained from the N.C. Department of Administration for any marina placed in public trust waters after October 1, 1995.

Is the Riparian Right to “Pier Out” Severable in North Carolina?

With piers, of course, comes the incidental right to moor boats in the slips that lie over public trust waters. In reality, it is this incidental right to moor a boat in a particular slip that is being transferred to a purchaser as an exclusive right, and this is where the legal issue arises. If the purchaser of a dockominium slip does not hold title to any of the adjacent riparian land, then she or he is not a riparian owner. Normally, only riparian owners have and can exercise riparian rights. Thus, the sale of a dockominium slip without a grant of some title to adjacent riparian land would present the question — may the right be severed and transferred in whole or part to someone who does not own any riparian land?
In a majority of states, such a severance is permissible. However, in some states the riparian right to erect piers for access to navigable waters cannot be transferred except by transfer of title to riparian land. In other words, the right to “pier out” belongs only to an owner of riparian land, and only that owner can exercise this right.

North Carolina follows the minority rule and does not permit severance. Although the issue has never been directly decided by the North Carolina Supreme Court, it has stated in its 1903 decision Shepard’s Point Land Co. v. Atlantic Hotel that:

This Court has held that “riparian rights being incidental to land abutting navigable waters cannot be conveyed without a conveyance of such land…”4

This principle is buttressed by language of General Statute Section 146-12, requiring easements for structures placed in public trust waters, such as dockominiums. In 1995, the General Assembly made significant changes to Section 146-12, adding Subsection 146-12(g), among other provisions. Section 146-12(g) provides that:

[t]he terms of each easement [granted] shall provide that the easement:

(1) is appurtenant to specifically described, adjacent riparian or littoral property and runs with the land.

The use of this particular, and presumably carefully chosen, language effectively prohibits any severance of the riparian right. Under generally accepted property law principles, an “appurtenant” easement that “runs with the land” is a right that attaches only to the described riparian or littoral property and passes only with a legal transfer of title to the property to which it is appurtenant. Such easements by their very nature are not severable. Therefore, as to dockominiums constructed in public trust waters, as a matter of common law and statutory law, there cannot be a legitimate transfer to purchasers of slips in the dockominium of the riparian right to pier out. That means it is impermissible for a developer to sell a unit in a condo along with a particular slip in an adjacent dockominium when the owner of the condo does not hold title to any riparian shoreline. Such a transfer would be an invalid attempt to sever riparian rights, and the purchaser would not obtain any “title” to the slip.

Dockominium Legal Structure: Avoiding the Severance Issue

Although it may not be legally permissible to sever the riparian right to pier out, there are a number of ways to structure a dockominium to sidestep the severance issue, so long as the ownership of the marina facility is tied to the ownership of some adjacent riparian land. Creative real estate lawyers are using all of them.

For example, if a sailing club is formed to own the adjacent riparian land and the marina, it may assign to individual members the exclusive right to a particular slip. This right could then be transferred with the transfer of the club membership. Another method is to put title to the shoreline and the marina in a property owners’ association, which is part of a larger residential development, such as a condominium complex. Owners of units within the larger development, as members of the property owners’ association, could be assigned exclusive rights of use to particular slips. The right to use the slip would then pass with the passage of title to the condominium unit. A third means is to carve out a narrow strip of riparian land adjacent to the marina. Each purchaser would be granted an undivided interest as a “tenant in common” in the adjacent riparian land and the marina facility. Each “tenant” would be given exclusive rights to a particular slip.

In each situation, no severance occurs. In the first instance, each slip “owner” is a member of the club that owns the adjacent riparian land and the marina, and they continue to possess all the associated riparian rights. The use of a particular slip is a right of membership and does not involve any transfer of title. In the second situation, the property owners’ association operates much like the sailing club. In the third situation, each “tenant in common” is legally considered to be the owner of the riparian land, with all the rights of riparian ownership. The right to use a particular slip involves an accepted legal means of allocating among co-owners the rights to use co-owned property. Finally, the same result could be accomplished through the use of a long-term lease by the owner of the dockominium facility. The lease would grant the right to use a particular dockominium slip to the lessee for the term of the lease.

In each example, the exclusive right to use a particular slip in the dockominium ends up with the “purchaser.” Which legal device is used may depend on a number of business factors such as marketing strategies, financing considerations, insurance, and linkage to associated upland residential development. Consequently, despite appearances otherwise, these forms of dockominiums do not involve a legally improper sale or grant of exclusive rights to purchasers. Large profits may be made by the dockominium developers, but these developments fit firmly within accepted, traditional principles of North Carolina property law.

The Easement Fee Structure: Does It Violate the Exclusive Emoluments Clause?

Despite the legality of the various forms of dockominiums, the appearance persists of private interests profiting from the sale of exclusive rights to areas of public trust waters.

Underlying this perception is the easement fee structure the General Assembly created in 1995 when it amended Section 146-12. Under the statutory fee structure, the fee for a 50-year easement is $1,000 per acre of “footprint coverage.”5 Therefore, if a marina occupies 10 acres of public trust waters, the maximum fee for a 50-year easement is $10,000.

However, in reality the state collects even less. The amount of the “riparian credit” would be deducted from that fee. The riparian credit is calculated by multiplying the linear number of feet of shoreline by a factor of 54. Consequently, if the shoreline associated with the dockominium was 500 feet, the credit would be $27,000. Thus, the fee for the easement would be nothing! Owners of marinas in existence prior to Oct. 1, 1995 were not even required to obtain an easement. Section 146-12(c) made such easements purely voluntary. And, at the time Section 146-12 was amended, there was not much incentive to obtain one.6 It is not surprising then, with dockominium slip prices being so high and the easement fee so low, that there is a perception of private profiteering surrounding dockominiums.

It has been suggested that the low fees for easements may violate the North Carolina Constitution’s Exclusive Emolument Clause. This clause states that: No person or set of persons is entitled to exclusive or separate emoluments or privileges from the community but in consideration for public services.7

The argument is that the below market-value fee for a marina easement over state-owned public trust lands constitutes the granting of an exclusive privilege to use State property, without either a public benefit or fair compensation being paid to the State. However, under the modern test for exclusive emoluments used by the North Carolina courts, the easements granted under Section 146-12 would not be unconstitutional. In Emerald Isle v. State, the Court stated that a statute does not create an exclusive emolument if:

(1)the exemption is intended to promote the general welfare rather than the benefit of the individual and (2) there is a reasonable basis for the legislature to conclude the granting of the exemption serves the public interest.8

Section 146-1, which is the first Section in the subchapter of which Section 146-12 is a part, provides the rationale for the granting of easements under Section 146-12. Section 146-1 states:

[T]he State is unable to provide the necessary access for its citizens to exercise public trust rights and, therefore, recognizes the role that publicly and privately owned piers, docks, wharves, marinas, and other structures located in or over State-owned lands covered by navigable waters generally serve in furthering public trust purposes.

Based on existing case law, the courts are likely to defer to this statement by the General Assembly that Section 146-12 easements, by increasing access to public trust waters, promotes the general welfare rather than the interests of marina owners. One could argue that if the State’s goal is to provide the public with access to public trust waters, the State should require all marinas to provide some slip space available for general public use. However, on the other hand, even wholly private marinas aid in providing some of the necessary access that the State is unable to provide itself. Therefore, the granting of low fee easements to private marina facilities is, in fact, in exchange for some public service and not a violation of the Exclusive Emoluments Clause.

What Can Be Done to Assure the Public Adequate Compensation for Use of Public Trust Waters?

Earlier this year, in its final report to the General Assembly, the North Carolina Waterfront Access Study Committee recommended that “the General Assembly re-examine and reformulate the State’s public trust submerged lands easement fee structure.”9 Such a re-examination is needed to ensure that the public, as represented by the State, is fully and fairly compensated by those making private use and profit from public trust assets. Such an examination is needed before even more dockominiums are constructed. As to those already in existence, until the easements expire, the political and policy choice has already been made.

Footnotes

1. Wayfarer Cove, located 12 miles up the Neuse River from Oriental, North Carolina, contains a dockominium created by renovating an existing marina.

2. The River Dunes development located where Broad Creek flows into the Neuse River contains a 400-slip dockominium created in this fashion.

3. See, e.g. Walker v. N.C. Department of Environment, Health, and Natural Resources, 111 N.C. App. 851 (1993).

4. 132 N.C.. 517, 541 (1903). The Shepard’s Point Court was quoting from an earlier decision in Zimmerman v. Robinson, 114 N.C. 39, 19 S.E. 102 (1894 ).

5. Allocated on a yearly basis, the developer of a dockominium would pay $20.00 for each acre of public trust waters occupied or enclosed by the marina facilities.

6. The deadline for submission of applications for voluntary easements was October 1, 2001.

7. North Carolina Constitution, art. I, Section 32.

8. 320 N.C. 640, 654 (1987)

9. Waterfront Access Study Committee Final Report,
April 13, 2007, p. 29.