Does NC's Environmental Management Commission have to go through formal administrative rulemaking before signing a cooperative agreement with the federal National Parks Service and Forest Service about reviewing air permits for facilities near Class I federal lands?

Plain-English summary

The federal Clean Air Act designates certain federal lands (large national parks and wilderness areas) as "Class I Areas" entitled to stronger air-quality protection. Under the Prevention of Significant Deterioration (PSD) program, before a major new emissions source can be built, the federal land manager has the right to assess whether the new source would adversely affect "air quality related values" (AQRVs) in the Class I Area. If the FLM demonstrates an adverse impact, the permit cannot be issued.

NC has five Class I Areas (designated in 15A NCAC 2D .0530(c)). NC and the federal land managers responsible for those areas negotiated a Memorandum of Understanding (MOU) about how they would share information and consult on PSD permits. The MOU does not change the underlying substantive standards; it formalizes the consultation process.

Tennessee had already signed the same MOU but conditioned it on at least one other southern Appalachian state joining. The Chair of the EMC's Air Quality Committee asked the AG whether the EMC had to go through rulemaking before signing.

The AG said no. The MOU is not a "rule."

G.S. 143B-24 authorizes cooperative agreements. Each principal state department may, with Department of Administration approval, enter cooperative agreements with the federal government in carrying out its functions. The EMC's air-quality function falls inside that authorization.

The legislature considered and rejected a ban. During the 1998 session, the House rejected SB 1239, which would have barred the Governor and DENR from signing this kind of agreement. The legislature considered the policy question and left the agreement-signing authority intact.

The MOU is not a rule. G.S. 150B-2(8a) defines a "rule" as an agency regulation, standard, or statement of general applicability that implements or interprets law or describes the agency's procedure. The MOU does not fit. It is an internal management statement under G.S. 150B-2(8a)a, addressing how NC and the federal agencies share information and consult on individual permits. It "does not directly or substantively affect the procedural or substantive rights of persons not within the agency."

The PSD substantive requirements are already in the rules. 15A NCAC 2D .0530 (NC's PSD rule) and the federal regulations at 40 CFR 51.166 incorporated by reference establish the substantive PSD requirements. The MOU does not change those. PSD applicants must still comply with the existing rules; the MOU just describes how NC and the FLMs will communicate while processing those applicants' applications.

Information requests are already authorized. The EMC's existing rules let the Director of DAQ request from PSD applicants whatever information is needed to evaluate the application, including AQRV analyses. 15A NCAC 2Q .0304(i); .0507(c); G.S. 143-215.108(c)(5), (d)(1). The MOU does not create any new information-collection authority. It just sets the process by which the State and FLMs share that information.

The opinion is a model statement of the rule-versus-internal-management line in NC administrative law. Cooperative agreements with other governments that do not change substantive or procedural rights of regulated parties are not rules and do not require APA process.

Currency note

This opinion was issued in 1998. 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.

NC has continued to operate under PSD-related MOUs with federal land managers. The Clean Air Act has been amended multiple times since 1998, and federal PSD regulations have evolved. The basic distinction between cooperative agreements and rulemaking remains a fundamental principle of NC administrative law. Anyone analyzing a current PSD permit dispute should pull the current state and federal regulations plus any applicable MOU.

Common questions

Q: What are the five NC Class I Areas?
A: 15A NCAC 2D .0530(c) designates them. Historically: Great Smoky Mountains National Park, Joyce Kilmer-Slickrock Wilderness, Linville Gorge Wilderness, Shining Rock Wilderness, and Swanquarter Wilderness. The federal lands themselves can be larger than the NC portion; the Class I status applies to the area as designated.

Q: Why do federal land managers get a say in NC permits?
A: Because the Clean Air Act gives FLMs an "affirmative responsibility" to protect AQRVs in Class I Areas, and the PSD program requires FLM consultation before a major new source is permitted near a Class I Area. The CAA itself is the source of the FLM's role; the MOU just operationalizes it.

Q: Could a PSD applicant challenge the MOU?
A: They could try, but the 1998 AG opinion forecast that such a challenge would fail. The MOU does not change anything the applicant has to do; it just specifies how NC and the FLM coordinate.

Q: What is an AQRV (air quality related value)?
A: A characteristic of a Class I Area that air quality affects, such as visibility, ecology, vegetation, or wildlife. The FLM identifies AQRVs for each area, and the PSD analysis examines whether a new source's emissions would adversely affect them.

Q: What happens if NC and the FLM disagree on a permit?
A: The MOU includes a consultation process for disagreements, but ultimately NC retains "sole authority" to determine when an application is complete and to issue or deny the permit. Both parties retain their rights of appeal under federal and state law.

Q: How does this differ from normal interstate compacts?
A: An interstate compact (like the Southeast Compact for radioactive waste) requires congressional consent and full state legislative ratification. A cooperative agreement under G.S. 143B-24 is more lightweight: agency-level, with Department of Administration approval, and does not require legislative ratification.

Background and statutory framework

The federal Clean Air Act's PSD program is part of how the U.S. preserves air quality in areas that already meet national standards. The PSD rules limit "significant deterioration" of air quality from new and modified sources. Class I Areas get the strongest protection because they include the country's most sensitive wilderness and park resources.

By the 1990s, southern Appalachian air quality was a particular concern, with regional haze and acid deposition affecting visibility and ecosystems in Class I Areas. The relationship between state permitting agencies (which issue PSD permits) and federal land managers (who advocate for Class I Area protection) had at times been adversarial. The MOU was an attempt to formalize cooperative practices and reduce process friction.

The 1998 AG opinion gave the EMC a clean legal basis for signing. The opinion's reasoning has been a stable foundation for NC's use of cooperative agreements across environmental, transportation, and other multi-jurisdictional programs.

Citations

• N.C. Gen. Stat. § 143-215.108(c)(5), (d)(1) (air permit applicant information obligations)
• N.C. Gen. Stat. § 143B-24 (cooperative agreements with federal government)
• N.C. Gen. Stat. § 150B-1 et seq. (Administrative Procedure Act)
• N.C. Gen. Stat. § 150B-2(8a) (definition of rule)
• N.C. Gen. Stat. § 150B-2(8a)a (internal management exception)
• 15A NCAC 2D .0530 (PSD rule)
• 15A NCAC 2Q .0300, .0500 (permitting procedures)
• Clean Air Act § 162(a), 42 U.S.C. § 7472(a) (Class I Area designation)
• Clean Air Act § 165, 42 U.S.C. § 7475 (PSD permit requirements)
• Clean Air Act § 169(1), 42 U.S.C. § 7479(1) (major emitting facility definition)
• 40 CFR 51.166 (federal PSD regulations)

Source

• Landing page: https://ncdoj.gov/opinions/proposed-memorandum-of-understanding-with-federal-land-managers-for-class-i-areas/

Original opinion text

December 4, 1998

Dr. David Moreau
Chairman, Environmental Management Commission
Post Office Box 27687
Raleigh, North Carolina 27611

Advisory Opinion: Proposed Memorandum of Understanding with Federal Land Managers for Class I Areas, N.C.G.S. §§ 143-215.108(c)(5); 143-215.108(d)(1); 150B-2(8a).

Dear Dr. Moreau:

The Chair of the Air Quality Committee has requested an opinion as to whether signing the proposed Memorandum of Understanding ("MOU") with the federal land managers ("FLM's") of National Parks and Wilderness Areas in and around North Carolina would constitute rulemaking under the N.C. Administrative Procedures Act, ("APA"), N.C.G.S. §§ 150B-1, et seq. The MOU allocates various responsibilities between North Carolina and the FLM's regarding the review of applications for permits to construct new or modified facilities whose emissions may affect designated "Class I Areas" managed by those FLM's, under the Prevention of Significant Deterioration ("PSD") provisions of the federal Clean Air Act ("CAA" or "the Act") and Commission rule 15A NCAC 2D .0530. For the reasons which follow, it is our opinion that the execution of the MOU does not require rulemaking by the Environmental Management Commission.

"CLASS I AREAS" UNDER THE CLEAN AIR ACT

The CAA defines Class I Areas to include all National Parks exceeding 6,000 acres, which were in existence on August 7, 1977, and National Wilderness Areas exceeding 5000 acres. CAA § 162(a); 42 U.S.C. § 7472(a). The Commission has designated five National Park and Wilderness Areas of the State as Class I in Commission rule 15A NCAC 2D .0530(c). The proposed MOU would formalize the roles of the State and the FLM's in reviewing permit applications for new or modified facilities which trigger the PSD provisions of the CAA in Title I, Part C of the Act. The PSD permitting is primarily a preconstruction review program. PSD facilities are large stationary sources meeting the definition of "major emitting facility" in CAA § 169(1), 42 U.S.C. § 7479(1), and include any source with the potential to emit 250 tons per year or more of any air pollutant. Section 165(a) of the Act, 42 U.S.C. § 7475(a) states that "[n]o major emitting facility…may be constructed…unless – (1) a permit has been issued…[and various other requirements are satisfied]."

The CAA confers upon the FLM's responsible for Class I Areas an "affirmative responsibility" to protect "air quality related values" ("AQRV's") for those areas, and to consider whether a proposed PSD facility will have an "adverse impact" on such values. CAA § 165(d)(2); 42 U.S.C. § 7475(d)(2). If the FLM demonstrates to the State's satisfaction that the facility's emissions will have an adverse impact on AQRV's, even though there is no violation of allowable pollutant increments, the Act and the Commission's rules provide that the permit shall not be issued. 15A NCAC 2D.0530(n); CAA § 165(d)(2)(C)(ii); 42 U.S.C. § 7475(d)(2)(C)(ii). However, if the owner of the facility demonstrates to the satisfaction of the FLM, and the FLM so certifies, that the emissions will not have an adverse impact on AQRV's, the permit may be issued even if allowable increments are violated. CAA § 165(d)(2)(C)(iii); 42 U.S.C. § 7475(d)(2)(C)(iii).

THE MEMORANDUM OF UNDERSTANDING

Tennessee and the FLM's for Class I Areas in and around that State have already entered into the same MOU now proposed for North Carolina. The Tennessee MOU expires at the end of 1998 unless another state in the southern Appalachian region also signs it. Although North Carolina has drafted a North Carolina Addendum to the MOU to tailor it more closely to this State's interests, Tennessee has indicated that it will consider execution of the document with that Addendum sufficient to continue the agreement in force.

The principal agreements set forth in the MOU and the North Carolina Addendum may be summarized as follows:

• The State agrees to provide written, pre-application notice to the FLM's of all proposed PSD facilities in North Carolina.
• The State agrees to require an AQRV analysis when requested by the FLM's, and to consult with the FLM prior to making a completeness determination concerning AQRVs. The State retains sole authority to determine when the application is complete. The AQRV analysis may be performed by the State or the permit applicant.
• Where an AQRV analysis is requested, the FLM agrees to furnish the State with pollutant-specific screening level values for AQRV impacts within 30 days of the pre-application meeting. If screening level values are not provided within that time, the State will presume that the FLM's do not believe that the proposed source will have an adverse impact on any Class I Area.
• When the FLM provides screening level values, if preliminary modeling or analysis indicates that the source's potential impact is less than the screening level value, no further modeling or analysis will be required. If the impacts from the source model above the screening level values, then refined modeling or analysis will be performed. If the refined modeling indicates a potential impact greater that the screening level value, the FLM will assess whether the impact is acceptable, based on a number of factors set forth in the MOU. If the impact is below the value, the analysis ends. The State may perform any or all of the required modeling and analysis itself, or request that the permit applicant provide that information. In addition, the State may require the FLM to justify the stringency of any screening level values it furnishes.
• The MOU establishes a consultation process if FLM makes a preliminary adverse impact determination. The final adverse impact determination must be in writing, provided to the State within 30 days of the refined modeling, and include analysis and the basis for the determination. The parties will continue to consult if the State and the FLM disagree over the adverse impact determination. The MOU recognizes that the applicant may use offsets to mitigate an adverse impact. The State does not waive its right to reject the determination and issue the permit, and both parties retain all rights of appeal under federal and state law.
• Any party may terminate its participation in the MOU upon 30 days written notice which includes a statement of the cause for termination.

ENTERING INTO THE MEMORANDUM OF UNDERSTANDING IS NOT RULEMAKING

To determine whether executing the MOU requires rulemaking demands analysis of the definition of "rule" at N.C.G.S. § 150B-2(8a), together with the existing rules governing PSD applications and the statutory authority of the Commission.

In the Executive Organization Act of 1973, the General Assembly expressly authorized the principal State departments, such as DENR, to enter into cooperative agreements with the federal government in carrying out their functions. N.C.G.S. § 143B-24, entitled "Cooperative agreements," provides:

Except as otherwise provided by law, each principal State department may, with the approval of the Department of Administration, enter into cooperative agreements with the federal government, any state government, any agency of the State government, any local government of the State, jointly with any two or more, or severally, in carrying out its functions. [Emphasis added.]

Thus, the Secretary of DENR may, in the exercise the foregoing authority, execute the cooperative agreement with the FLM's on behalf of the State, with the approval of the Department of Administration. Significantly, in its recently concluded session, the Legislature declined to bar the Governor and DENR from entering into this and similar agreements with the federal government and other States regarding air quality permitting. On October 29, 1998, the House rejected SB 1239, captioned "An Act to Prohibit the Governor and [DENR] from Signing a Memorandum of Understanding Regarding the Permitting of Air Emission Sources, and to Authorize the Environmental Review Commission to Consider Issues Related to Entering into such an Agreement."

Further, there is no requirement that an agency must conduct rulemaking prior to entering into a cooperative agreement with the federal government pursuant to N.C.G.S. § 143B-24, or that the agency codify the agreement into the agency's rules. A cooperative agreement such as the MOU is not a "rule" under the definition in N.C.G.S. § 150B-2(8a), which defines a "rule" as "any agency regulation, standard, or statement of general applicability that implements or interprets an enactment of the General Assembly or Congress or a federal regulation, or that describes the procedure or practice requirements of an agency." Instead, the MOU falls within the statutory exclusions from the definition of a rule, as it is a statement by the agency concerning only its internal management which "does not directly or substantively affect the procedural or substantive rights of persons not within the agency." N.C.G.S. § 150B-2(8a)a. The MOU is a cooperative agreement and as such its procedures for managing and sharing information apply only to the State and the FLM's. Moreover, the requirements applicable generally to sources of emissions applying for permits under the PSD program, including the ability to require necessary information from applicants, are already codified in the Commission's rules in 15A NCAC 2D .0530 ("Prevention of Significant Deterioration").

15A NCAC 2D .0530(h) provides that the owner or operator of the sources to which the Commission's PSD rules apply must follow the procedures and requirements for applying for a permit contained in either 15A NCAC 2Q .0300 or .0500. Under those provisions, if the permitting authority determines that the information submitted by the applicant is insufficient to evaluate the application, the Director of the Division of Air Quality ("DAQ") may request that the applicant provide any other information that the Director considers necessary to evaluate the source's application and its air pollution abatement equipment. 15A NCAC 2Q .0304(i) or .0507(c); N.C.G.S. §§ 143-215.108(c)(5) and (d)(1). 15A NCAC 2D .0530(g) specifically provides that PSD applicants must comply with certain federal permitting requirements contained in 40 CFR 51.166, including 40 CFR 51.166(n), which requires that: "the owner or operator of a proposed source or modification shall submit all information necessary to perform any analysis or make any determination required under procedures adopted under this section." 40 CFR 51.166(n)(1). In addition, 40 CFR 51.166(n)(3) requires that "the owner or operator shall provide information on: (i) The air quality impact of the source or modification, including meteorological and topographical data necessary to estimate such impact. . . ." Finally, 15A NCAC 2D.0530(q)(1) provides that DAQ's notice to the FLM for PSD applications "shall include a copy of all information relevant to the permit application including an analysis provided by the source of the potential impact of the proposed source on visibility." It is clear that the Commission has promulgated rules that empower the Director to request from applicants for PSD permits all information necessary to evaluate the application for air quality impacts on the State's Class I areas, including an AQRV analysis.

The procedures set forth in the MOU, which the State would agree to follow in sharing information with the FLM'S about the potential impact of proposed PSD sources on Class I Areas, are consistent with the procedures currently found in 15A NCAC 2D .0530 (and the provisions of 40 CFR 51.166 incorporated therein by reference) for processing applications from PSD sources. No new substantive or procedural requirements are placed upon the PSD sources by execution of the MOU. The MOU recognizes that the AQRV analysis may be conducted by either the State or the permit applicant, and the North Carolina Addendum specifies that the State retains sole authority over the whether the application is deemed complete and thus ripe for processing.

In summary, for the foregoing reasons, it is our opinion that the execution of the MOU does not require rulemaking by the Environmental Management Commission.

Thank you for your opinion request. We hope this analysis is useful to you.

signed by:

Daniel C. Oakley
Senior Deputy Attorney General

Francis W. Crawley
Special Deputy Attorney General

J. Allen Jernigan
Special Deputy Attorney General