December 19, 2023. The previous post covered significant water quality legislation enacted by the North Carolina General Assembly in 2023. This post briefly summarizes other 2023 environmental legislation.

AIR QUALITY. The legislature put two provisions in the Appropriations Act of 2023 (House Bill 259) to prevent state agencies from adopting rules intended to reduce emissions of greenhouse gasses such as carbon dioxide (CO2) in the state. Other air quality provisions expedite permitting and construction of new or expanded sources of air pollutants.

Prohibit cap and trade programs for CO2 emissions.  House Bill 259, Sec. 12.5,  prohibits any state agency  from requiring electric utilities to participate in a cap and trade program for CO2 emissions. The provision targeted proposed state rules that would have required N.C. electric utilities to  participate in a multi-state cap and trade program (the Regional Greenhouse Gas Initiative) to reduce CO2 emissions. For more on the proposed RGGI rules see an earlier post.   The broadly written 2023 provision prohibits any state cap and trade program for reduction of greenhouse gas emissions from electric utilities.

Prohibit emission standards for new vehicles. A new statute section, G.S. 143-215.107F, prohibits adoption of emissions standards for new motor vehicles including rules intended to increase the number of zero-emission vehicles in North Carolina. The legislation responds to Governor Cooper’s Executive Order 271 which directed the Department of Environmental Quality (DEQ) to  draft rules modeled on  California’s Advanced Clean Truck rule. The California ACT rule requires truck manufacturers to gradually  increase the percentage of zero-emission medium and heavy duty trucks sold in that state over several years.  N.C. DEQ had already completed draft clean truck rules and a regulatory impact analysis estimating the economic costs and benefits of the proposed rules as required by EO 271.  The rules had not yet been presented to the Environmental Management Commission (EMC) to begin the rulemaking process.

The economic impact analysis  for the draft North Carolina clean truck rules showed a significant net economic benefit to the state. The analysis considered two alternative timelines for zero-emission truck goals. Earlier implementation resulted in a net economic benefit to the state of $175.6 million to  $880.5 million (depending on a range of estimated health benefits). Beginning implementation a model year later resulted in a net benefit of $162.3 million to $865.9 million.

Limit the vehicle emission inspection program. Some background — As required by the Clean Air Act, North Carolina has a State Implementation Plan (SIP) for ozone pollution describing how the state will meet the federal ozone standard.  N.C.’s  ozone SIP counts pollution reductions associated with identifying and correcting faulty vehicle emission systems toward meeting the standard. The  U.S. Environmental Protection Agency (EPA)  approved N.C.’s current ozone SIP based on vehicle emission inspections in 19 N.C. counties. The SIP included counties in the emissions inspection program based on the potential for vehicles registered in those counties to contribute to an exceedance of the ozone standard.

The 2023 state law directs DEQ to eliminate emissions inspections in 18 counties and request  EPA  approval of a revised ozone SIP that only requires emissions inspections in Mecklenburg County. The impact of a revised SIP on North Carolina’s ability to meet the ozone standard statewide will likely turn on factors such as the declining percentage of vehicles with older emissions control equipment and increases in low or zero emission vehicles. The law allows one year for DEQ to submit the revised SIP to EPA for approval; EPA then has 18 months to approve or disapprove the revised SIP. Emission inspections will continue to be required  in all 19 counties until EPA approves a revised SIP.

Allow expansion of existing air emissions source without prior permitting. Another provision in House Bill 259 amends G.S. 143-215.108A to allow “the construction (but not operation) of a new air contaminant source, equipment, or associated air cleaning or emissions control devices prior to permit issuance”.  The provision includes exceptions for sources requiring a Prevention of Significant Deterioration (PSD) permit; those covered by specific Clean Air Act sections regulating hazardous air pollutants; and sources in non-attainment areas. Even with the exceptions, it is not clear the provision allows the state to fully comply with Clean Air Act permitting obligations.  Allowing construction of a pollution source without prior review also creates a risk that the facility will invest in equipment that does not meet standards necessary to be permitted for operation.  That creates the  related risk that state permitting staff will be pressured to approve air pollution emission sources  that do not meet operating standards because of the prior investment.

Salary bonuses based on quick processing of Title V permits. Another budget provision creates a program to give salary bonuses to DEQ air quality permitting  staff who process Title V air quality permit applications within specified time frames.  The provision raises ethical questions given the creation of financial incentivizes for permit staff to approve permits more quickly. In  recognition of that concern, the provision directs the EMC  to adopt quality control standards to ensure permit decisions comply with the law. The obvious quality control standard will be consistency with permitting processes and air quality standards. The question will be how to provide adequate oversight of DAQ permit writers to ensure that incentives for quick permit action do not undermine adequate permit review and result in flawed permit decisions.

The  bonus provision doesn’t neatly align with existing Title V permitting practices in North Carolina. The legislation is written as if each facility’s Title V permit application (or renewal) is handled by an individual permit writer as part of a single facility-wide permit review. In reality, the Title V permitting process has adapted to industry needs by dividing review of multiple pollution sources at a single facility among  permit staff who specialize in those sources and associated pollution controls. Review of the different pollution sources can also move on different tracks, allowing some to be approved more quickly than others. It remains to be seen whether shifting to the model of permit review necessary to implement the bonus program (review of all sources at a facility in a single review) will actually benefit  permit applicants.

The new provision gives the EMC authority to exclude an individual DAQ employee from the bonus program based on  overall permitting performance. Doing so would have implications under state personnel law that have not yet been discussed.

Set permit processing times for Title V permits. House Bill 259, Section 12.11,  also amends G.S. 143-215.108(d)(2) to set new timelines for DAQ to act on an application for modification of  a Title V permit. The law now requires DAQ to issue, deny or publish for public comment a complete application for a  minor modification of a Title V permit within 90 days. It requires DAQ to issue, deny or publish for comment a complete application for a major modification of a Title V permit within 270 days.  The provision also repeals language in G.S. 143-215.108 that extended the time allowed to act on a Title V permit if the EPA Administrator objected to issuance of the permit.

Create Title V permit exemption for “non-major” research and development activities. Another  provision in Sec. 12.11 directs the EMC to create a Title V permit exemption for “non-major research and development activities”  consistent with a 1995  EPA  white paper on streamlining Title V applications.  In part, the white paper describes how permitting agencies should evaluate a research and development activity under Title V. The paper reflects EPA’s  assumption that many  R & D activities are independent of manufacturing operations and standing alone would not be major pollution sources that would trigger Title V permitting. But the paper also notes that R & D  activities co-located with manufacturing and contributing to the facility’s total air emissions would need to be included in the Title V permit. In other words, the paper doesn’t create an exemption; it describes how permitting agencies should apply Title V  to different types of R & D facilities.

The language of the new state provision misses the nuance of the white paper and requires the EMC to develop a Title V exemption for research and development activities. On the other hand, it directs the new EMC  rules to include “allowance levels and minor permit modification thresholds” that would allow a permitted Title V facility to cover R & D activity by giving DAQ notice of a minor permit modification. That language seems to describe a streamlined process for modifying a Title V permit rather than a Title V permit exemption. The EMC will need to sort out the actual intent of the law in the rulemaking process.

SOLID WASTE

Disposal of lithium- ion batteries. House Bill 600, Section 19, amends G.S. 130A-309.10(f) to prohibit landfill disposal and incineration of lithium-ion batteries. The legislation also directs DEQ to study whether it is appropriate to allow landfill disposal of some lithium-ion batteries based on the size of the battery.

Disposal of photovoltaic cells and components. The same section of House Bill 600 amends G.S. 130A-309.10 by adding a new subsection that prohibits disposal of photovoltaic cells in an unlined landfill. Under the new provision, all photovoltaic cells and  components that cannot be recycled must be disposed of in a lined municipal or industrial landfill rather than an unlined construction and demolition debris landfill.

GENERAL

Require permits to include statutory or regulatory authority for conditions. House Bill 600, Section 13, adds a new statute section (G.S. 143B-279.4A) requiring DEQ to include in every permit the statutory or regulatory authority for each permit condition. Since the new statute provision has been added to  Chapter 143B (which describes DEQ’s responsibilities as a department), it appears to apply to all DEQ permitting programs.

Prohibit denial of a permit based on failure to obtain another permit, authorization, or certification.  House Bill 259, Section 12.10, adds a new statute section (G.S. 143B-279.18) that prohibits DEQ from denying a permit based on the permit applicant’s failure to obtain another permit, authorization or certification unless that is required by state or federal law.  This provision also appears to apply to all DEQ permit decisions.

Define “administratively complete” for purposes of permit review. Another provision in House Bill 259 adds a definition of “administratively complete” to G.S. 143-213 to describe a permit application that is sufficiently complete to trigger permit processing timelines in statute:

(1) The term “administratively complete” means that all information required by statute, regulation, or application form has been submitted to the Department for the purpose of processing a permit application.

The definition applies wherever the term is used in Chapter 143 Article 21 (Water and Air Resources), Article 21A (Oil Pollution and Hazardous Substance Control), and Article 21B (Air Pollution Control).