April 24, 1996
Representative John M. Nichols North Carolina General Assembly House of Representatives State Legislative Building Raleigh, NC 27601-1096
Re: Advisory Opinion: Water Quality Permitting; G.S. 143-215.1
Dear Representative Nichols:
On March 5, 1996 we received your letter expressing concern about the rulemaking petition filed with the Environmental Management Commission (EMC) which seeks to require hog processing facilities to prepare an analysis of indirect, secondary and cumulative impacts associated with the issuance of a National Pollutant Discharge Elimination System (NPDES) permit for the facility. Specifically, you requested an opinion on the following questions: 1) whether an analysis of secondary impacts can be required for privately funded NPDES projects; and 2) whether the Environmental Management Commission has the legal authority to deny or condition NPDES permits based on indirect, secondary impact concerns. We have rephrased the questions based on language in the water quality statutes, and answer both inquiries in the affirmative as discussed below.
1) May an analysis of the cumulative effects of projects be required for privately funded NPDES projects?
Your questions, and much of the current debate over the extent to which the EMC may seek secondary impact information from a single permit applicant, have used the word "secondary" interchangeably with the word "cumulative." We do not believe the two are necessarily synonymous, and prefer the express statutory language. The rulemaking petition that has engendered your inquiry contains no definition of the term "secondary impacts", but it does list some examples of the type of impacts the permit applicant must review. It will be up to the EMC to determine the exact parameters of this concept if it develops rules in this area, and prior to that it will be up to the Division of Environmental Management (DEM), in considering permit applications, to determine the need for and scope of its investigation. Having noted this initial concern, we move to the specific authorities of the EMC to seek information from permit applicants.
The EMC has the authority to issue all water quality permits, including NPDES permits,
N.C.G.S. § 143-215.1, and has made appropriate delegations to the DEM Director. For purposes of this opinion, the authority of each are equal. The authority to request and gather information in the permitting process is broad. N.C.G.S. § 143-215.1(c)(1), pertaining to NPDES permits, provides that the EMC "may conduct any inquiry or investigation it considers necessary" before acting on a permit application and may require an applicant to submit information it "considers necessary to evaluate the application." N.C.G.S. § 143-215.1(d), pertaining to nondischarge permits, confers the same broad authority upon the EMC to require information from the permit applicant. The only statutory limitation upon the EMC’s authority to request information is that the EMC consider the information necessary. Thus, if the EMC or the DEM considers information on secondary impacts associated with the proposed permitted activity to be necessary, N.C.G.S. § 143-215.1(c)(1) would permit the agencies to require such information. However, both agencies should focus on the nature of the information they seek and its nexus to a permitting decision, rather than using labels which do not define what is meant. Further, the agencies should place fair and rational limits on their information needs because the request must be objectively reasonable to repel challenges that it is arbitrary or capricious. See, e.g., In the Matter of Appeal from Civil Penalty, 92 N. C. App. 1, 373 S. E. 2d 572 (1988), rev`d on other grounds, 324 N. C. 373, 379 S. E. 2d 30 (1989).
While the lack of a definition of what one may consider a "secondary impact" to be hampers our ability to provide a precise legal answer to your question, it is clear the above authorities support EMC and DEM inquiries in this general area. Additional statutory support for the principle that the EMC may seek information as to the impacts associated with the activity for which a NPDES permit is sought, as well as for the principle that the EMC can condition or deny NPDES permits based on impacts associated with the permitted activity, is found at N.C.G.S. §§ 143-215.1(b)(1). The EMC is required to "act on all permits so as to prevent…any significant increase in pollution of the waters of the State from any new or enlarged sources." N.C.G.S. § 143215.1(b)(1)(emphasis added). Information on cumulative or secondary impacts, if defined with a reasonable nexus to the permitting program, would enable the EMC to evaluate the increases in pollution from new or enlarged sources and to act on the pending NPDES permit application or on future permits so as to prevent any significant increase in pollution of the waters of the State.
In the specific case of the hog industry, N.C.G.S. § 143-215.1(b)(2) also provides additional support for the principle that the EMC can request this type of information and can condition NPDES permits based on the cumulative effects associated with the permitted activity. N.C.G.S. § 143-215.1(b)(2) requires the EMC to:
act on all permits so as to prevent violation of water quality standards due to the cumulative effects of permit decisions. Cumulative effects are impacts attributable to the collective effects of a number of projects and include the effects of additional projects similar to the requested permit in areas available for development in the vicinity.
Because each individual hog farm is "deemed" permitted pursuant to N.C.G.S. § 143-215.1 by 15A NCAC 2H .0217, such permits are permit decisions within the meaning of N.C.G.S. § 143215.1(b)(2). In fact, requesting information on the impacts associated with these individual hog farms has already been determined by DEM to be a necessary step in complying with the statutory mandate of N.C.G.S. § 143-215.1(b)(2), in a matter currently pending in the Office of Administrative Hearings. In our opinion, the EMC and the DEM may properly evaluate the cumulative effects of a decision to grant a NPDES permit to a hog processing facility while considering any necessary information related to the granting of that NPDES permit application.
2) Does the Environmental Management Commission have the legal authority to deny or condition NPDES permits based on cumulative effect concerns?
The North Carolina General Statutes also provide that the EMC may condition or deny NPDES permits when necessary to effectuate the purposes of Article 21. The relevant statutory provisions are as follows: No permit shall be denied and no condition shall be attached to the permit, except when the Commission finds such denial or such conditions necessary to effectuate the purposes of this Article. N.C.G.S. § 143-215.1(b)(1).
The Commission shall have the power: a. To grant a permit with such conditions attached as the Commission believes necessary to achieve the purposes of this Article. N.C.G.S. § 143215.1(b)(4)(a).
The only limitation upon the EMC’s power to condition or deny permits contained in these statutory provisions is that the EMC believe the condition or denial necessary to achieve the purposes of Article 21. The purposes of Article 21 are, inter alia, "to achieve and maintain for the citizens of the State a total environment of superior quality" and to preserve and develop the State’s water and air resources "in the best interests of all its citizens". N.C.G.S. § 143-211. Thus, where the EMC or the DEM deems it necessary for the preservation and development of the State’s air and water resources to condition or deny a NPDES permit because of cumulative effects of the permitted activity, the statutes generally provide that authority. With respect to a particular permit application, the question of whether the EMC or the DEM exceeded its statutory authority in imposing conditions or denying a permit based on cumulative effects or other information it has obtained through its permittting investigation must be determined on a case by case basis after the agency acts on the permit application. This determination would depend upon the requirements the permit conditions imposed and whether they were necessary to achieve the purposes of Article 21 of the General Statutes.
We hope this is responsive to your questions. Please contact Jill Hickey or Kathryn Cooper if you have additional questions or feel that clarification is necessary.
Daniel C. Oakley Senior Deputy Attorney General
Kathryn Jones Cooper
Special Deputy Attorney General
Jill B. Hickey Assistant Attorney General