When the state issues an NPDES water-quality permit, can the Environmental Management Commission require the applicant to study how the project will combine with other nearby projects (like other hog farms) to impact water quality?

Plain-English summary

In 1996 John Nichols at the Division of Environmental Management (DEM) asked two related questions: whether the EMC could require cumulative-effects analysis from a single NPDES (National Pollutant Discharge Elimination System) permit applicant, and whether the EMC could deny or condition NPDES permits based on cumulative-effects concerns.

The political backdrop was a rulemaking petition driven by concerns about the rapid expansion of hog farms in eastern North Carolina. Each new operation, taken alone, might meet pollution limits. The aggregate effect of dozens or hundreds of operations on a single watershed was a different question. The petition asked the EMC to require applicants to study the broader impact.

Senior Deputy AG Daniel Oakley, Special Deputy AG Kathryn Cooper, and Assistant AG Jill Hickey answered yes to both questions.

Cumulative vs. secondary effects: a clarification. The opinion noted that the rulemaking petition used "cumulative" and "secondary" interchangeably and warned that the two are not synonyms. It recommended the EMC define the terms precisely if it issued rules, and that the DEM tie its information requests to specific impacts with a clear nexus to the permitting decision. Labels alone would not survive arbitrary-or-capricious review under In re Appeal from Civil Penalty (1988).

The information-gathering authority. § 143-215.1(c)(1) (for NPDES permits) and § 143-215.1(d) (for nondischarge permits) allow the EMC to "conduct any inquiry or investigation it considers necessary" before acting on a permit application and to require the applicant to submit information the EMC "considers necessary to evaluate the application." The opinion's reading: the only statutory limit is that the agency consider the information necessary, with the unwritten constraint that the request be objectively reasonable.

The substantive duty. Two specific statutory mandates back this up:

• § 143-215.1(b)(1) requires the EMC 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."
• § 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" and defines cumulative effects as "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."

The second provision is the linchpin for the hog-farm context. Each individual hog farm was "deemed" permitted under § 143-215.1 by 15A N.C.A.C. 2H .0217. That permit-by-rule status meant each farm was a permit decision within the meaning of (b)(2). Requesting cumulative-impact data on the watershed was already a necessary step in complying with the statutory mandate, the opinion noted, and DEM had so determined in a then-pending Office of Administrative Hearings matter.

Authority to deny or condition. § 143-215.1(b)(1) lets the EMC deny a permit or attach conditions when "necessary to effectuate the purposes of [Article 21]." § 143-215.1(b)(4)(a) gives the Commission the power "[t]o grant a permit with such conditions attached as the Commission believes necessary to achieve the purposes of this Article." Article 21's stated purposes include achieving and maintaining "a total environment of superior quality" and preserving and developing the state's water and air resources "in the best interests of all its citizens" (§ 143-211). Conditioning or denying based on cumulative effects fell squarely within those purposes. The opinion added a case-by-case caution: whether any specific condition is justified must be tested against the specific permit application after the agency acts.

Currency note

This opinion was issued in 1996. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. North Carolina's swine-farm permitting regime was substantially restructured after 1996, including a 1997 moratorium on new or expanded operations, the 2007 phase-out of new lagoons under the Swine Farm Environmental Performance Standards Act, the Smithfield Agreement, and various subsequent appellate decisions on cumulative-impact review. Anyone working with NPDES, swine-permit, or cumulative-effects questions today should check the current statutory text, EMC rules, EPA-approved program documents, and recent case law before relying on the 1996 reading.

Background and statutory framework

NPDES is the federal Clean Water Act permitting system (33 U.S.C. § 1342) under which EPA delegates day-to-day permitting to states whose programs meet federal standards. North Carolina's NPDES program is administered by the EMC through the Department of Environment, Health, and Natural Resources (now DEQ). The state's NPDES program runs through Article 21 of Chapter 143, codified at § 143-211 et seq.

By 1996, hog farming had grown explosively in eastern North Carolina. The industry argued that a permit was a permit and that each farm should be evaluated on its own discharge or non-discharge characteristics. Environmental groups and downstream communities argued that the cumulative load on rivers like the Neuse and the New Bern estuary system could not be assessed one farm at a time. The opinion is a procedural answer to that conflict: yes, the EMC can ask cumulative-effects questions of an individual applicant, and yes, it can condition or deny based on the answer.

The phrase the opinion drew the most weight from is § 143-215.1(b)(2): "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." That is a permit-decision-level concept: when the EMC acts on permit A, it must consider that permits B, C, D, and additional similar projects yet to come could add up to violate water quality standards even though A alone might not.

The hog-farm-as-deemed-permit footnote in the opinion was important. 15A N.C.A.C. 2H .0217 (the deemed-permit rule) brought every operation above a threshold into the NPDES framework without an individual permit application. The opinion's reading: those deemed permits are still permit decisions for cumulative-effects purposes, and the agency can require information from applicants even within the deemed-permit framework.

Common questions

Did the EMC have to define "cumulative effects" by rule before applying it?

The opinion suggested the EMC should define the term clearly if it issued rules, and that DEM should tie any specific request to the statute's wording rather than to undefined labels. But the opinion also concluded that the existing statutory authority was sufficient to require cumulative-effects information case by case, without a formal rule, as long as the agency could explain the nexus to the permitting decision.

Could the EMC deny a hog-farm permit purely because too many similar farms already existed in the area?

Yes, if the EMC could find that adding the new permit would, in combination with the existing operations, cause a significant increase in pollution or violate water quality standards. § 143-215.1(b)(1) authorizes the EMC to act on all permits to prevent significant increases in pollution, and (b)(2) requires it to consider cumulative effects of permit decisions. The applicant could challenge the denial as arbitrary if the EMC failed to develop a record showing the cumulative impact analysis.

What if the applicant's project alone met all water-quality standards?

The opinion's reading is that meeting standards alone is not enough if the cumulative effect of similar projects in the area would violate standards. The EMC's duty under (b)(2) runs to the permit decision's place in the broader pattern, not just to the project's individual contribution.

Did this opinion cover non-NPDES permits too?

Yes. § 143-215.1(d) for nondischarge permits gave the EMC the same broad information-gathering authority. The opinion treats nondischarge and NPDES authorities as substantively similar for purposes of the questions asked.

How did courts treat the EMC's information requests?

The opinion cites In re Appeal from Civil Penalty (1988) for the general arbitrary-or-capricious standard. Information requests must be objectively reasonable and tied to a permitting necessity. Litigation in subsequent years over EMC information requests and permit conditions developed the contours of "reasonable" further, particularly in the swine context.

What was the EMC's posture toward hog-farm cumulative-effects requests at the time?

The opinion notes that DEM had already determined in a then-pending OAH matter that requesting information on impacts associated with individual hog farms was necessary to comply with § 143-215.1(b)(2). The AG opinion essentially backstops that administrative position by confirming the statutory authority.

Source

• Landing page: https://ncdoj.gov/opinions/water-quality-permitting/

Citations

• N.C. Gen. Stat. § 143-211
• N.C. Gen. Stat. § 143-215.1
• 15A N.C.A.C. 2H .0217
• In re 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)

Original opinion text

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. § 143-215.1(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. § 143-215.1(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. § 143-215.1(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