AQ_F_0800107_20100506_PRMT_FacPrmtLtr

Huddleston, Betsy
From: Garald Cottrell [[e-mail]]
Sent: Thursday, May 06, 2010 2:11 PM
To: Huddleston, Betsy
Cc: Ken Kinsley
Subject: FW: Emissions reference info for Perdue project
Attachments: image003.jpg; image002.jpg; Example#1.pdf; Example#2.pdf; Example#3.pdf; Example#
4.pdf; Example#5.pdf
Betsy
Please see Ken's response summary below and the attached emissions summaries for prior installations to support our
revised permit application data.
Thanks main and please call with any questions.
Thank You
Garald B. Coffrell
General Manager
■'� �fLLO`-
Energy Solutions Grove
360-750-3583 Ph 1 360-750-3483 Fax [phone] Cell I [e-mail]
2525 W. Firestone Lane, Vancouver, WA 98660-1 182 HQ
1836 Eastchester Drive, Suite 108, High Point, NC 27265 Divisional Office
From: Ken Kinsle
Y
Sent: Thursday, May 06, 2010 1:25 PM
To: Garald Cottrell
Subject: Emissions reference info for Perdue project
Garald;
Please see the attached. Although we always have emissions guarantees associated with our wood-fired boiler systems,
we generally do not receive copies of the final test reports. Generally it is just a phone call from the customer advising us
that our guarantee levels have been met. We have pulled from our available files some examples from the northwest
and southeastern USA.
1. EXAMPLE #1: Report from source test from example Wellons boiler system in Vicksburg Mississippi.
Particulate at 21.21b per hour/70MM btu hr heat input =0.30#/mm btu
CO at 3.741b per hour/70MM btu hr heat input= 0.054#/mm btu.
2. EXAMPLE#2: Report data from source test from example Wellons boiler system in Riddle, Oregon.
This unit is equipped w/an ESP so is not representative for Perdue regarding particulate.
CO at 21.31b per hour/225MM btu per hour heat input = 0.1#/mm btu.
3. EXAMPLE #3: Report data from source test from example Wellons boiler system in Chiloquin, Oregon.
Particulate shown at 0.09 gr/dscf @ 12%CO2 (approx 0.22#/mm btu).
CO shown at 92ppm (approx 0.1#/mm btu).
4. EXAMPLE #4: Report data from source test from example Wellons boiler system in Morton, Mississippi.
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Particulate shown at 0.171# n btu.
CO shown at 0.255#/mm btu.
S. EXAMPLE #S: report data from source test from example Wellons boiler system in Glenwood, Arkansas.
This unit is equipped w/an ESP so is not representative for Perdue regarding particulate.
CO shown at 0.035#/mm btu heat input.
Although these examples show that the actual test results vary, the results reported from the numerous Wellons boiler
installations allow us to be confident that the Wellons boiler systems being provided for the Perdue site will meet the
emissions levels used in the permit application.
Ken Kinsley
Kenneth T. Kinsley
Vice� LL
r� ent-6NS s o
360-750-3505 Ph 1 360-750-3405 Fax I [e-mail]
2525 W. Firestone Lane, Vancouver, WA 98660-1 182
www.wellons.com
2

F NV I rC)NMt-7 NTAL MON I TOR I NG L ABORATOR I E . I NC .
P.O. Box 655 ' 224 Hwy 51 Ngrth
! Ridgefand, Mississippi 39157
856-3092
c Jurnc 14 9
Suk,J c;t : A,hd--..rson Tu 1 1 ey - Wa 1 t e?rsv i l l e Mill
we) j ons wood w;s:,te hoi 1 er
�j
On June 7 , 1 989 . Fnv i r nnment6 i Mon I for i ng Labo. rrator i es
c:onducteri an a i r emi S5 ions test for Anderson Tul l cy' s
Walter,;vine Mill in Vicksk)ur(3, MisP, issig)pi . Testing was
performeej to cletermine emissions of partictllatp, oxides of
nitrogen , arcl carbon monoxide from the newly 1 nstr:a 1 l ed
We I Ions wo,',d waste bolter in accordance with regUi remeri s of
the Mis:sisslppl Bureau of Pollution Control .
. 1
kcsults of i•e:sting Indicate:
PJ1T t i Cu I iAt4" . . . . . . . . . . . 1 3F) gr/dscf 2 1 . 2 #/hr
NCGx . . . . . . . . . . 133 Pr)m 17 . 3 #/hr
( CC) . . . . . . . . . . 47 prim 3 . 74 #/hr-
The± testing project was coordinated by Mr . Parker Hall of
Anderson Tu 1 1 ey. Mr . Dan McLeod of the Mississippi bureau
_ of Po 1 1 ut:i on Control was present to c�hservel boiler opergt i on
and test I ng. 0anny Russell of Env i ronmfanta i Monitoring
Laborator i es w.i s responsible for tkle collection anti aria l ys I s
of the samples . Custody of samples was iinvited to Mr ,
Russell .
FO1 1 taw 1 r1< r '
port of the test .
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REPORT OF PARR I CI11_A1-E/NOX/CO/ EMISSIONS TEST
FOR ANDERSON TOLLEY - WALT't R$V I L-L.F M;I I. L
� # WELI.ONS WOOD WASTE BOILER
# V I CKb-8UP(;, M I,5S I r.,3 l pp 1
JUNE 7, 19.89
CONI EN T>
' 1 . 0 Test Resu1'!:.s
ral,e 1
2.0 5OurCe Description
f 3. 0 Test Procedures
�! z
4. 0 Do.-to Reciuc.t ion 3
5. 0 Ncamenr.; l.9YUre 7
,1 <
6.0 C 1 i by at.ion g
7. 0 APPend i ces : 9
a. Sampling and Analytical Datrj
h. ` Cal lbrat:ion Daka
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REPORT CERTIF[CAT[ON
I cortIfy ttlnt I have examined the inform%c�tion
submitted herein, and bast,d LIPon my inquiries of those
directly. rn,ponsible for obtaining the data or- Upon my
i
! d i rc,r_t, .aCr4U I S i t f on c>f the data, I t,el i evc the Sul?mi ttrd
irrf0rm0ti0n 13 true, accurate and comp1Este.
Signed
Daniel G. Russell
-----------------------------------
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! : 0 Tests Resu I t.s : The fo I Jowl n5) table Presents the mea•surE'd
flc>w ParrimetErs and test results for emissions samples t: ken on
Juno,,, 7. 1989, for Anderson Tu l l ey's new Wet lops wood waste bo l Ter
at. the Wa)ttrsvl I in Hi I I in Vicksbur!3. Mlssisj,Tppf .
-==A■axs=s:J Y.a�===S=¢aa=�=====G=:xs�saw3sasalat=:GccaeSRSRit=Z-2YSIDitC=x====-'_--'
Run. No. . . .. . . . . . 1 t 2 1 3 { avg.
Date . .. . . . . . . . .t. . . . . . . . . . . . . . .. . 1 06-07-89 ; 06-07-89 1 06-"07-89 ; ------ ;
time start . . ? . . . . . . . . . . . . . . . . . : 1406 1620 1738 ------
Time end . . . 1 1512 ; 1721 ; i9..27 ------ ;
aSc.4r Zug 2a a===e:=S==eS=vcacaSes=DxIO2Sx====ai�caLCLS�s�=lggSst�a�aolo
PARTICULATE EMISSIONS ; #/hr. 1 22.2 1 23.3 48. 1 21 .2
---------------- '--------- '--- -- - f
PARTICULATE EM,IS$TQNS ; gr./dsef ; . 138 ,--_. 149-- { - .120w r . 136-` '
NQx-EMISSIONS-----____'-�/h�-_-__-i -17.5 � __;$_4__..� `15.9 _-'_--1.7-�-_
_ .
-EMISSIONS - ..
-____ 1_ r- _-, --^131 '----------
1 __-127 -1- - -^
NOx Ps:�n 141 65 '
CQ`EMISSIONS- -- _- ;_#/hr,_-_.._;__---3.95^-�---
4.23 -`'-^13.05 - 1 ~-3.74---�
} -- -- ----- - --------
-_
CO EMISSIONS ;_
` HEAT-INPUT------4-----;-mmBtu/hr 1- - -72---�-------4----;-_ ' -_-•__;-•-------•--►
I 6 = ^94 70 ;
__:..- _-w____-
,.__ _ --- -----_--_1---------•-1---------- ------ ----------
VOLUMETRIC FLOWRATE ; ac.•fm 1 36935 ; 35516 ; 34074
---------------�;:_T__+----- ---
.» -{ -------;---------- __------- ----------
VOLUMETRIC FLOW ATE ; d5cfm ; 18653 1 18180 1 17501
---------------- 1----------1------ ----7- ---- --------- '
VELOCITY ft./sec. ; 49..0 ; 47.1 ; 45.2 ; 47. 1
-a_- •---------------'-------- '
----,--- ------'----------;---- ------1- --- -'
STACK TEMPERATURE ; degrees F ; 383 ; 372 ; 354 ; 370 ;
-- ------ ;----------_' ____-----'
_ -1.._--------MOISTURE '
i % i 19.4 ; 19.4 1 20.9 1 19.9 {
__..__ -----;7.i sok i net i c; 104+ ~�--- 1+l5ww { __102--_�--- 103-^
SAMPLE RATE '
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ouo1��.,:,00 •� .,.,� men ��- o..,.. NU. 611b , 1
ACT. 20 6 ' 8:22AV '
Li.c uy uL� 10:42a vid Rossmen 5032 505 p.3
E--�Alp 10I C--
CO-GEN II,LLC, Riddle, Oregon,Weilons Boller(EU 1-6LR), 8
November 12, 2002
3. SUMMARY OF RESULTS -3.1 Table(s)of Results
Table 1
Weilons Boiler Test Results
Test Date: Nov. 12,2002 Units Run 1 Run 2 Run 3 Average
Start Time 07:44 10:09 12:36
End Time 09:49 11:19 14:44
Sampling T'Qne minutes 120 120 120 120
Sampling Results
Particulate,total, actual - gr/scfd 0.011 0.0074 0.010 0.0095
Total, @ 12°/6 CO2 gr/sdd 0.012 0.0084 0.011 0.01 i
Rabe lb/hr 6.5 4.2 5.6 5.4 ST'
Steam Production Basis lb/103 lb stm 0.048 0.031 0.041 0.040 t-r
Heat Input Basis 1b1106 to 0,027 0.019 0.025 0.024
Per>;ent"Back Half' % 24.4 21.8 18.3 21.5
Opacity % 0 0 0 0
Sample Volume dscf 74.0 75.8 72.1 74.0
Sample Weight, Toted m9 53 37 46 45
Percent Isokinetic % 97 97 98 97
02 % 9.5 9.8 9.9 9.7
CO2 % 10.9 10.6 10.5 10.7
CO PPMV 92 71 58 74
Rate lbmr 27.1 202 16.7 21.3 S T-
Stearn Production Basis lb/103 lb stm 0.20 0.15 0.12 0.16 LI-
NO, ppmv 110 116 113 113
Rate Ib/hr 53.4 54.2 53.3 53.6. ST
Steam Production Basis Ib/103 lb stm 0.40 0.40 0.39 0.40 LT
TGOC (propane basis) ppmv-C3He 0.27 0.36 1.2 0.59
Rate lb-C3HAr 0.13 0.16 0.52 0.27 Sr
Stearn Production Basis Ib-C31-1s/103 lb 51m 0,00094 0.0012 0.0038 0.0020 Cr
DRAFT
""" HORIZON ENGINEERING �•�

a00 5. 2G06 8:220': "; t>LJLI;�*U�Ua . � L bM 00; � , U. 6 12 6 P. 2
i;ca ua uc' ius 4ea yid Rossman 5032!_ 305 p.4
CO-GEN It, LLC, Riddle, Oregon,Weilons Boller(EU 1-8LR), 9
November 12,2002
Table 1
Wellons Boiler Test Results
Test Date: Nov. 12,2002 Units Run 1 Run 2 Run 3 Average
Source Parameters
Flow Rate (Actual) acf/min 129,000 121,000 122,000 124,000
Flow Rate (8tandard) dacf/min 67,800 65.400 65,600 66,300
TenVerature OF 362 369 380 360
Moisture % 17.0 16.1 14.8 15.6
Process/Production Data
Stearn Rate 103 Ib/hr 135.2 135.2 135.5 135.3
Multicione Pressure Drop Inches H2O 2.0 2.0 1.5 1.8
Fuel Moisture % 51 45 43 46
'UR AF &
"""' HORIZON ENGINEERING

R Alk' ASSOCIA TES, INC.
ENVIRONMENTAL CONSULTANTS
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WTD INDUSTRIES J
Crater Lake Lumber 1
j Chiloquin, OR
WELLONS BOILER i
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October 26, 1989 }
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Submitted by
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B W R A S S O C I A T E S, I N C.
Environmental Consultants
P.O. SOX 4577
MEDFORD, OREGON 97501-0182
(503) 779-2646
r
it
�- 3-)" -'"'= - MiEDFORD: ORE GON 97501-01R2 6 [phone]

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TABLE OF CONTENTS
1. Certification Sheet
2. Introduction
3. Summary of Results
4. Source Operation
5. Sampling and Analysis Procedures
6. Appendix
6.1. Particulate And Gas Sampling Calculations
6.2. Field Data
6.3. Laboratory Analysis
6.4. Production Data and Certification
6. 5. Calibration and Quality Assurance Data
6.6. Sample Point Determination & Location
6.7. Related Correspondence
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1. C E R T I F I C A T I O N S H E E T
WTD INDUSTRIES
Crater Lake Lumber
Chiloquin, OR
Project t89-168B
I hereby certify that the sampling and analytical procedures and data
presented in this report are authentic and accurate.
Reviewed by:
I hereby certify that the testing details and conclusions reported
herein are, to the best of my knowledge, accurate and valid.
BWR`Assocz es, Inc.
Oregon Registry #00042 FM
Board of Engineering Examiners.
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E M I S S I O N T E S T R E P O R T
WTD INDUSTRIES
Crater Lake Lumber
Chiloquin, OR
WELLONS BOILER
2. INTRODUCTION:
2.1. Test Purpose: The purpose of the test was to determine the status
of compliance with air contaminant discharge limits as imposed by
the operating permit for the source.
2.2. Test Location: The test location was in the discharge stack of
the multiclone serving the Wellons fuel cell boiler.
2.3. Test Dates: All field testing was performed on the 26th day of
October, 1989 by BWR test personnel: Mark W. Bailey, Eugene A.
Wellman, and Howard D. Nelson.
2.4. Pollutants Tested: Test samples were obtained for the
determination of the concentrations of particulate matter, Carbon
Monoxide, and Oxides of Nitrogen present in the exhaust gas
stream.
2.5. Observers Names:
2.5. 1. Agency Observers: None
2.5.2. Industry Observers: Barry Diskin, Engineer
WTD Industries
Dick Hune, 'Field Engineer
Wellons
3. SUMMARY OF RESULTS:
3.1. Emission Results:
3.1.1. Particulate Emission Results: Average of 3 replicate
samples.
Average Stack Temperature F 240
Average Stack Moisture % 21
Average Stack Velocity fpm 4000
Average Stack Flow dscfm 27500
Average Grain Load gr/dscf .09
Corrected gr/dscf 0 12% CO2 .09
Mass Emissions lbs/hr 22
Isokinetic Sampling Rate % 102
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3. 1.2. Gaseous Emission Results: Average of 3 replicate samples.
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Oxygen Concentration % vol. 8.2
Carbon Dioxide Conc. % vol. 12. 50
Oxides of Nitrogen ppm 101
lbs/hr 20
Carbon Monoxide ppm 92
lbs/hr 11
3.2. Discussion:
Particulate concentrations were within the permitted levels of .1
gr/dscf @ 12% CO2. In order for the particulate emission levels
to meet their 13.9 lbs/hr Limit, the unadjusted grainloading would
have had to come in at .06 gr/dscf with the measured flows.
3.3. Allowable Emissions:
3.3.1 . Allowable Particulate Emissions: As stipulated in the
August 3, 19BB discharge permit, the allowable emissions
from this source are .1 gr/dscf @ 12% CO2, 13.9 lbs/hr of
particulate matter.
3.3.2. Allowable Gaseous Emissions: As stipulated in the August
3, 1988 discharge permit, the allowable gaseous pollutants
from this source are as follows:
NOx: 49.6 tons/yr
CO: 36.5 tons/yr
3.4. Particulate Process Data:
3. 4. 1 . Rated Production Capacity: 6D,000 lbs steam/hr @ 725 PSI ,
800 degrees F.
3.4.2. Production Rate: During the testing, production rates
were measured as follows:
Run 01 50,400
Run #2 52,200
Run N3 53,400
Average 52,000
3.4. 3. This is equivalent to 87% of the rated capacity of the
plant as stated in the manufacturers specifications. (See
Appendix 6.4 for Production Data and Certification. )
3.5. Description of Collected Samples:
3.5.1 . Filter Appearance: Dark Gray
3.5.2. Appearance of Impinger Contents: Clear
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NOV b ' `3F1 16: 44 FhC 1 :-HNIH
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I , 0 teat Besultsr The following tables P
resent the ipoavur4d
floe paramotera and tees results for eirissions samples taken on
July 2, 1990, tar Internatlonal Paper Company's W&"Ona boiler at
the lumber pill in NOrtOA, 1[iesissippl.
Run.so. .........................I 1 } 2 ( .3 ; AVG
Date ................. 07-02-90 ( 07-02-90 ( 07-02-90 }
rime start 09$4 } I120 ! 1247 ( �—
ri.ma and .........................} 1057 ( 1222 ( 1350 } -�
PARTXCUZaArR Xfi=ffX0M ( 4/hr. I 17.6 } 23.7 ( 15.3
PARTI'G'o"rZ Mers8I0" ( gr./dacf .077 I .090 ( .083 ! .074 *t
_ t�.__ 1----- -!__.._------I
pAx7zcULAT3F Amssraffs ( 4/sot situ i .17s } .240 ( .156 ( .171 *}
—! /hs'. } 25.7-( 30 6! 19.6�t+ 25.3
[� }
� 1 2I8 (� 257 I 170 } 215
f
co wassrom t PPm ! !
00 =aBsZUA8 ( #/sat Rtu ( .255 w}«--.310 ' .199 i .255
mox mrssXON8 } /�. ( 27.9 } 20.2- ( 2I.I { 21.0 1
Nux ( 213 } 103 ( I Y S t 109 }
now stl1ssx0mg 1 i/a ,eta i .218 1 .201 t .214 } .219
99 I�jM�I
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uxRr nwor ( ass sits/1sr } 100 (
SKlLU![[ETRre Pr.Diilu m ( aafm 45703 t ♦6' 554 i 45473--i 45874- --�
VDLUKRTRrc FL0 Mrff ( dscfm ! 26984 ( 27335 ( 26529 26946 }
VSrocr='i' } it./sec. ( 20.0 ( 20.3 19.9 ( 20.1
}� ��5 �t I t
ST1lC1C S�tPBJtJl2'0'RK ( degrees P } 269 292 T64 f}
xozsrQRB ( t 17,6 ( 18.7 ( 19.2 ( 18-5
SAMPLE RArg t�isoklaetic( 102�( -103 ( 104+ ( 103
• A soot blowing cycle vas perfored during the second run- The average
emissions are calculated vith the time voIghted contribution of Run No. 2.
** TOTAL PAGE. 005 **

E YY41PPGL:� S
REPORT OF _
PM/CO/NOx/VOC EMISSIONS TESTS
FOR
BEAN LUMBER COMPANY
WELLONS WOOD WASTE BOILER
Glenwood,Arkansas
July 23 and 24, 1997
PERMIT NO, 189-AR-1 CSN: 55-0017
Bean Lumber Company
Post Office Box 200
Glenwood,Arkansas 71943
contact: Frank Taylor
h: 870/356-4165
The Teaford Company
Post Office Box 407
Alpharetta,Georgia 30009
Contact:Jim Teaford
ph:770/475-5250
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Performed By:
Environmental Monitoring Laboratories
Ridgeland,Mississippi
<601/856-3092->

u"woNmE JL L _ 41TORIN(i >4.eABYi RA� tiA�i.b.. ES, INC.
).Boz 655 0 624 Ridgewood Road phone: [phone]
'geland.Mississippi 39158 fax : [phone]
August 10, 1997
Subject: Bean Lumber Company - Glenwood, Arkansas
PERMIT NO. 189-AR-I CSN: 55-0017
On July 23 and 24, 1997, Environmental Monitoring Laboratories performed air emissions testing for
Bean Lumber Company in Glenwood, Arkansas. Testing was performed at the request of the Jim
Teaford of The Teaford Company to determine particulate (PM), total hydrocarbon (VOC), carbon
monoxide (CO), and oxides of nitrogen (NOx) emissions from the Wellons boiler in accordance with
requirements of the Arkansas Department of Pollution Control and Ecology
Results of the test:
pounds/hr #/MM Btu concentration
PARTICULATE 1.13 0.006 0.003 gr/dscf
CO 7.03 0.035 40 ppm
NOx 41.09 0.206 140 ppm
VOC as Carbon 0.006 0.00003 0.1 ppm
The testing project was supervised by Mr. Frank Taylor of Bean Lumber Company and was
coordinated by Mr. Jim Teaford of the Teaford Company. Danny Russell' of Environmental
Monitoring Laboratories was responsible for sample collection and analysis and report preparation.
Sample custody was limited to Mr. Russell.. Mr. Brent Parker of the ADPC&E was present to
witness testing. Danny Russell of Environmental Monitoring Laboratories was responsible for
sample collection and analysis and for report preparation. Sample custody was limited to Mr.
Russell. Following is a report of the test.
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REPORT /S02NOC/COfNOx EMISSIONS TEST F(
BEAN LUMBER COMPANY
WOOD WASTE BOILER
GLENWOOD,ARKANSAS
JULY 23 AND 24, 1997
CONTENTS
1.0 TEST RESULTS page 1
2.0 SOURCE DESCRIPTION 2
3.0 TEST PROCEDURES 2
4.0 DATA REDUCTION 3
5.0 NOMENCLATURE 6
6.0 CALIBRATION 7
7.0 APPENDICES: g
A. Field and Laboratory Data
B. Calibrations
C. Data Log
REPORT CERTIFICATION
I certify that I have examined the information submitted herein, and
based upon my inquires of those responsible for obtaining the data
or upon my direct acquisition of data, I believe the submitted
information is true,accurate and complete.
Signed
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Daniel G. Russell
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1.0 Test Results: The following table presents the measured flow parameters and
test results for emissions testing done on July 23 and 24, 1997, for the Wellons'wood waste
boiler at Bean Lumber Company in Glenwood, Arkansas.
RunNo. ..................................... t 2 3 4 AVG.
Date ........................................... 7/23/97 7/24/97 7/24/97 7/24/97 -------
Time Start ................................. 1740 1041 1317 1552
Time End ................................... 1941 1243 1521 1753
PARTICULATE EMISSIONS Whr 1.15 1.32 1.18 .0.88 1.13
PARTICULATE EMISSIONS gr/dscf 0.003 0.004 0.003 0.003 0.003
PARTICULATE EMISSIONS #/MM Btu 0.006 0.007 0.006 0.004 0.006
CO EMISSIONS Whr 6.12 7.46 8.10 6.44 7.03
CO EMISSIONS ppm 33 43 43 36 40
CO EMISSIONS #/MM Btu 0.030 0.039 0.039 0.033 0.035
NOx EMISSIONS Whr 43.94 40.68 41.13 38.59 41.09
NOx EMISSIONS ppm 143 144 133 1132 140
NOx EMISSIONS #/MM Btu 0.217 0.214 0.196 0.196 0.206
VOC EMISSIONS #/hr 0.005 0.009 0.007 0.005 0.006
VOC EMISSIONS ppm o.l 0.1 0.1 '0.1 0.1
VOC EMISSIONS #/MM Btu 0.00002 0.00005 0.00003 0.00002 0.00003
HEAT INPUT MM Btu/hr 202.63 189.97 209.37 196.47 199.61
VOLUMETRIC FLOWRATE acfm 84288 78141 84071 86578 81769
VOLUMETRIC FLOWRATE dscfm 42902 39496 43131 46719 41562
VELOCITY ft./sec. 47.4 43.9 47.2 45.3 45.9
STACK TEMPERATURE "F 338 339 338 338 338
MOISTURE % 22.1 22.8 21.7 22.9 22.4
SAMPLE RATE % isokinetic 98 96 96 96 y7

NCDENR
North Carolina Department of Environment and Natural Resources
Division of Air Quality
Beverly Eaves Perdue,Governor Dee Freeman, Secretary
B. Keith Overcash, P.E.,Director
March 18, 2010
.......TO.:-.-...................................Doi:Wd.lK-.van der-Vaar ........ ........................................
Chief, Permits Section
FROM: B. Keith Overcash, P.
-------............- ........
SUBJECT: Senate Bill 3 Implemen±atl.on Issues
Senate Bill 3 (SB3) (Session Law 2007-397)contains a requirement for any biomass combustion
process that is otherwise not subject to the Best Available Control Technology(BACT) requirements
of the Prevention of Significant Deterioration (PSD)program and that is determined to be a"new
renewable energy facility" to meet BACT. This requirement is referred to as SB3 State BACT. To
date, according to the North Carolina Utilities Commission (NCUC) there have been approximately 10
facilities with biomass combustion processes certified as"new renewable energy facility[i6s]." See
Session Law 2007-397 (N.C.G.S. §62-2(g)).
SB3 defines "new renewable energy facility"as a facility that either
a. Was placed into service on or after I January 2007.
b. Delivers or has delivered electric power to an electric power supplier pursuant to a
contract with NC GreenPower Corporation that was entered into prior to I January
2007.
C. Is a hydroelectric power facility with a generation capacity of 10 megawatts or less that
delivers electric power to an electric power supplier.
It is not clear from the language of SB3 when a"new renewable energy facility"must"meet BACT."
Under the PSD program, BACT is a preconstruction requirement. However,under the definition of
"new renewable energy facility," facilities can be determined to be"new renewable energy facilit[ies]"
simply by having a contract with NC Green Power prior to 2007. Similarly, the NCUC has
determined.that even facilities that have been operational for many years can, for the purposes of SB3,
be found to have been "placed into service"after January 2007. As a result of the definition of"new
renewable energy facility" it is not reasonable to construe the SB3 State BACT as a precoristruction
requirement. This memorandum establishes an implementation schedule for those facilities that are
subject to S133 State BACT,
The Division of Air Quality will notify,in writing, any facilities potentially subject to the SB3 State
BACT requirement. The facility will be given 30 days to confirm the applicability of SB3 State BACT
1641 Mail Service Center,Raleigh,North Carolina 27699-1641 One
2728 Capital Blvd.,Raleigh,North Carolina 27604 NorthCarolina
Phone: [phone]/FAX [phone]/Internet: www.ncai'r.org
NaturallY
An Equal Opportunity/Affirmative Action Employer-50%Recy.cled/10%Post Consumer Paper

March 18, 2010
Re: Senate Bill 3 Implementation Issues
Page 2 of 2
or demonstrate that S133 is not applicable. Within 90 days following the NCDAQ's written
confirmation of S133 State BACT applicability, the facility shall submit a permit application that
includes a SB3 State BACT analysis for each air pollutant that will be emitted as a result of the
combustion of biomass from the designated emissions unit. Any facility that submits an
administratively complete application.shall be deemed to be in compliance with the SB3 State BACT
requirement until such time the NCDAQ either: 1) issues a permit with S133 State BACT emission
limits, or 2)issues a letter stating that the facility's existing permit contains emission limits meeting
--- ---AIEDAQ-s->S133 State-BA-GT reelui-rernent"—f-the-facili;t-y-must..make-physical-oraperational-changes-to—............-----
achieve compliance with the S133 State BACT emission limits (e.g. install emission control systems),
the permit will include an implementation schedule allowing up to,but not exceeding 12 months from
the date of permit issuance to comply with the limits. If the facility is unable to meet the S133 State
BACT)imp wit if the-l2=mon�i pe-dod,fie-'acilitywill-be-nth out uftompliw=-w th-SBA_._._.--------..._...
State BACT.
c: Sheila Holman
Mike Abraczinskas
John Evans
William Willets

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2007
SESSION LAW 2007-397
SENATE BILL 3
AN ACT TO: (1) PROMOTE THE DEVELOPMENT OF RENEWABLE ENERGY
AND ENERGY EFFICIENCY IN THE STATE THROUGH IMPLEMENTATION
OF A RENEWABLE ENERGY AND ENERGY EFFICIENCY PORTFOLIO
STANDARD (REPS), (2) ALLOW RECOVERY OF CERTAIN NONFUEL
UTILITY COSTS THROUGH THE FUEL CHARGE ADJUSTMENT
PROCEDURE, (3) PROVIDE FOR ONGOING REVIEW OF CONSTRUCTION
COSTS AND FOR RECOVERY OF COSTS IN RATES IN A GENERAL RATE
CASE, (4) ADJUST THE PUBLIC UTILITY AND ELECTRIC MEMBERSHIP
CORPORATION REGULATORY FEES, (5) PROVIDE FOR THE PHASEOUT
OF THE TAX ON THE SALE OF ENERGY TO NORTH CAROLINA FARMERS
AND MANUFACTURERS, AND (6) ALLOW A TAX CREDIT TO
CONTRIBUTORS TO 501(C)(3) ORGANIZATIONS FOR RENEWABLE
ENERGY PROPERTY.
The General Assembly of North Carolina enacts:
SECTION 1. G.S. 62-2(a)reads as rewritten:
"§ 62-2. Declaration of policy.
(a) Upon investigation, it has been determined that the rates, services and
operations of public utilities as defined herein, are affected with the public interest and
that the availability of an adequate and reliable supply of electric power and natural gas
to the people, economy and government of North Carolina is a matter of public policy.
It is hereby declared to be the policy of the State of North Carolina:
(8) To cooperate with other states and with the federal government in
promoting and coordinating interstate and intrastate public utility
service and reliability of public utility energy supply;-and
(9) To facilitate the construction of facilities in and the extension of
natural gas service to unserved areas in order to promote the public
welfare throughout the State and to that end to authorize the creation
of expansion funds for natural gas local distribution companies or has
districts to be administered under the supervision of the North Carolina
Utilities Commission: and
10 To promote the development of renewable ener and energy
efficiency through the implementation of a Renewable Energy and
Energy Efficiency Portfolio Standard (REPS) that will do all of the
following:
a Diversify the resources used to reliably meet the energy needs
of consumers in the State.
b. Provide greater energy securily through the use of indigenous
energy resources available within the State.
C. Encourage private investment in renewable energy and energy
efficiency.
d. Provide improved air quality and other benefits to ener
consumers and citizens of the State."

SECTION 2.(a) Article 7 of Chapter 62 of the General Statutes is amended
by adding a new section to read:
62-133.7. Renewable Enera and Energy Efficiency Portfolio Standard (REPS).
a Definitions. —As used in this section:
'Combined heat and 12ower system means a system that uses waste
heat to produce electricity or useful, measurable thermal or mechanical
energy at a retail electric customer's facility.
'Demand-side management' means activities, programs, or initiatives
undertaken by an electric power supplier or its customers to shift the
timing of electricity use from peak to nonpeak demand periods.
'Demand-side management' includes, but is not limited to, load
management, electric system a ui ment and operating controls direct
load control, and interruptible loa .
'Electric power supplier' means a public utility, an electric membership
corporation, or a munici alily that sells electric power to retail electric
power customers in the fate.
nergy efficient measure' means an equipment, ph sical or program
change implemented after 1 January 2007 that results in less energy
used to erform the same function. 'Energy efficient measure'
includes, but is not limited to, energy_produced from a combined heat
and power system that uses nonrenewable energy resources. 'Energy
efficiency measure' does not include demand-side management.
'New renewable energyfty' means a renewable energy f acility that
either:
a. Was placed into service on or after 1 January 2007.
b. Delivers or has delivered electric power to an electric power
supplier pursuant to a contract with NC GreenPower
Corporation that was entered into prior to 1 January 2007.
C.
Is a hydroelectric power facility with a generation capacity_of
10 megawatts or less that delivers electric power to an electric
power supplier.
'Renewable energy certificate' means a tradable instrument that is
equal to one megawatt hour of electricity or equivalent energy
supplied by a renewable energy facility. new renewable energy
face ity, or reduced by implementation of an energy efficiency measure
that is used to track and verify compliance with the requirements of
this section as determined by the Commission. A 'renewable energy
certificate' does not include the related emission reductions, including,
but not limited to, reductions of sulfur dioxide, oxides of nitrogen,
mercury, or carbon dioxide.
'Renewable energy facility' means a facility, other than a hydroelectric
power facility with a generation capacity of more than 10megawatts,
that either:
a. Generates electric power by the use of a renewable energy
resource.
b. Generates useful, measurable combined heat and power derived
from a renewable energy resource.
C. Is a solar thermal energy facility.
'Renewable energy resource' means a solar electric, solar thermal,
wind hydropower, geothermal or ocean current or wave energy
resource, a biomass resource, including agricultural waste, animal
waste wood waste sent pul12ing liquors, combustible residues
combustible liquids, combustible gases, energy crops or landfill
methane; waste heat derived from a renewable energy resource and
used to produce electricity or useful, measurable thermal energy at a
Page 2 Session Law 2007-397 SL2007-0397

retail electric customer's facility; or hydrogen derived from a
renewable energy resource. 'Renewable energy resource' does not
include peat, a fossil fuel, or nuclear energy resource.
Renewable Energy and Energy Efficiency Standards (REPS) for Electric
Public Utilities. —
Each electric public utilijy in the State shall be subject to a Renewable
Enera and E-nergy Efficiency Portfolio Standard PS according to
the following schedule:
Calendar Year REPS Requirement
2012 3% of 2011 North Carolina retail sales
2015 6% of 2014 North Carolina retail sales
2018 10% of 2017 North Carolina retail sales
2021 and thereafter 12.5% of 2020 North Carolina retail sales
An electric public utilijy mgy meet the requirements of this section b
any one or more of thefollowing:
a. Generate electric power at a new renewable energy facility.
b. Use a renewable enera resource to generate electric power at a
generating facility other than the generation of electric power
rom waste heat derived from the combustion of fossil fuel.
C. Reduce energy consumption throu h the implementation of an
energy efficiency measure-, provided, however, an electric
public utility subject to the provisions of this subsection may
meet up to twen -five percent (25%) of the requirements of
this section through savings due to iIn lementation of energy
efficiency measures. Beginning in calendar year 2021 and each
year thereafter, an electric Dublic utilijy mqy meet up to fort
percent (40%) of the requirements of this section through
savings due to implementation of energy efficiency measures.
d. Purchase electric power from a new renewable energy facility.
Electric power urchased from a new renewable energy facili
located outside the geographic boundaries of the State sha 1
meet the requirements of this section if the electric power is
delivered to a public utility that provides electric power to retail
electric customers in the State, provided, however, the electric
public utility shall not sell the renewable energy certificates
created pursuant to this paragraph to another electric public
utilli
e. Purchase renewable energy certificates derived from in-State or
out-of-state new renewable energy facilities. Certificates
derived from out-of-state new renewable energy facilities shall
not be used to meet more than twenty-five percent (25%) of the
requirements of this section rovided that this limitation shall
not apply to an electric public utili with less than 150,000
North Carolina retail jurisdictional customers as of 31
December 2006.
f. Use electric power that is supplied by a new renewable energy
facility or saved due to the implementation of an energy
efficiency measure that exceeds the requirements of this section
for any calendar year as a credit towards the requirements of
this section in the following calendar year or sell the associated
renewable energy certificates.
(c) Renewable Energy and Ener v Efficiency Standards (REPS) for Electric
MembershiD Corporations and Municipalities. —
(� Each electric mem -,r--hil2 co oration or municipality that sells
electric power to retail electric power customers in the State shall be \
SL2007-0397 Session Law 2007-397 Page 3

subject to a Renewable Energy and Energy Efficiency Portfolio
Standard (REPS) according to the following schedule:
Calendar Year REPS Requirement
2012 3% of 2011 North Carolina retail sales
2015 6% of 2014 North Carolina retail sales
2018 and thereafter 10% of 2017 North Carolina retail sales
An electric membership corporation or municipality may meet the
requirements of this section by any one or more of the following
a. Generate electric power at a new renewable energy fac litv.
b. Reduce energy consumption through the implementation. of
demand-side management or energy efficiency measures.
C. Purchase electric power from a renewable energy facility or a
hydroelectric power facility, provided that no more than thiM
percent 30%) of the requirements of this section may be met
with hydroelectric power, including allocations made by the
Southeastern Power Administration.
d. Purchase renewable energy certificates derived from in-State or
out-of-state renewable energy facilities. An electric power
su lier subject to the re uirements of this subsection mgy use
certificates derived from out-of-state renewable energy facilities
to meet no more than twen -five percent (25/o) of the
requirements of this section.
e. Acquire all or part of its electric power through a wholesale
purchase power agreement with a wholesale supplier of electric
power whose portfolio of supply and demand options meets the
requirements of this section.
f. Use electric power that is supplied by a new renewable energy
facility or saved due to the implementation of demand-side
management or energy efficiency measures that exceeds the
requirements of this section for any calendar year as a credit
towards the requirements of this section in the following
calendar year or sell the associated renewable energy
certificates.
Compliance With REPS Requirement Through Use of Solar Energy
Resources. — For calendar year 2018 and for each calendar year thereafter, at least
two-tenths of one percent ( .2%) of the total electric power in kilowatt hours sold to
retail electric customers in the State, or an equivalent amount of energy, shall be
supplied by a combination of new solar electric facilities and new metered solar thermal
energy facilities that use one or more of the following applications: solar hot water,
solar absorption cooling, solar dehumidification, solar thermally driven refrigeration,
and solar industrial process heat. The terms of anv contract entered into between an
electric power sul2plier and a new solar electric facilily or new metered solar thermal
energy facilAy sha 1 be of sufficient length to stimulate development of solar energy:
rovided the Commission shall developaprocedure to determine if an electric ower
supplier is in compliance with the rovisions of this subsection if a new solar a ectric
face ity or a new metered solar thermal energy facility fails to meet the terms of its
contract with the electric Dower supplier. As used in this subsection 'new' means a
facilily that was first placed into service on or after 1 January 2007. The electric power
su liers shall comply with the re uirements of this subsection according to the
following schedule:
Calendar Year Requirement for Solar Energy Resources
2010 0.02%
2012 0.07%
2015 0.14%
2018 0.20%
Page 4 Session Law 2007-397 SL2007-0397

i
(e) Compliance With REPS Requirement Through Use of Swine Waste
Resources. — For calendar year 2018 and for each calendar year thereafter, at least
two-tenths of one percent 0.2%) of the total electric power in kilowatt hours sold to
retail electric customers in the State shall be supplied, or contracted for supply in each
Year, by swine waste. The electric power suppliers, in the aggregate, shall comply
the requirements of this subsection according to the following schedule:
Calendar Year Requirement for Swing Waste Resources
2012 0.07%
2015 0.14%
2018 0.20%
(f) Compliance With REPS Requirement Through Use of Poultry Waste
Resources. — For calendar year 2014 and for each calendar year thereafter, at least
900,000 megawatt hours of the total electric power sold to retail electric customers in
the State shall be supplied, or contracted for suI2121.y in each year, bX poultrywaste
combined with wood shavings, straw, rice hulls, or other bedding material. The electric
power suppliers, in the aggregate, shall comply with the requirements of this subsection
according to the following_schedule:
Calendar Year Requirement for Poultry Waste Resources
2012 170,000 megawatt hours
2013 700,000 megawatt hours
2014 900,000 megawatt hours
Control of Emissions. — As used in this subsection, Best Available Control
Technolop-y (BACT) means an emissions limitation based on the maximum de ree a
reduction in the emission of air pollutants that is achievable for a facility, taking into
account energy, environmental, and economic impacts and other costs. A biomass
combustion process at any new renewable energyfacility that delivers electric power to
an electric power supplier shall meet BACT. The Environmental Management
Commission shall determine on a case-by-case basis the BACT for a facility that would
not otherwise be required to comply with BACT pursuant to the Prevention of
Significant Deterioration (PSD) emissions program. The Environmental Management
Commission may adopt rules to implement this subsection. In adopting rules the
Environmental Management Commission shall take into account cumulative and
secondary impacts associated with the concentration of biomass facilities in close
proximity to one another. In adopting rules the Environmental Management
Commission shall provide for the manner in which a facility that would not otherwise
be required to comply with BACT pursuant to the PSD emissions programs shall meet
the BACT requirement.
Cost Recovery and Customer Charges. —
(1) For the purposes of this subsection, the term 'incremental costs' means
all reasonable and prudent costs incurred by an electric power supplier
to:
a. Comp1v with the requirements of subsections b c d e
and fl of this section that are in excess of the electric power
supplier's avoided costs other than those costs recovered
ursuant to G.S. 62-133.8.
b. Fund research that encourages the development of renewable
energy, energy efficient or improved air qualitX, 12rovided
those costs do not exceed one million dollars ($1,000,000) per
year.
c. Comply with any federal mandate that is similar to the
requirements of subsections (b), (c),(d), (e), and (f) of this
section that exceed the costs that the electric power supplier
would have incurred under those subsections in the absence of
the federal mandate.
SL2007-0397 Session Law 2007-397 Page 5

it
it
All reasonable and prudent costs incurred by an electric power supplier
to .comply with any federal mandate that is similar to the requirements
of subsections (b), (c), (d), (e), and (fl of this section, including, but
not limited to the avoided costs associated with a federal mandate that
exceeds the avoided costs that the electric ower su lier would have
incurred pursuant to subsections (b), (c), (d), (e), an of this section
in the absence of the federal mandate, shall be recovered by the
electric power su lier in an annual rider charge assessed in
accordance with the schedule set out in subdivision (4) of this
subsection increased by the Commission on a pro rata basis to allow
for full and complete recovery of all reasonable and prudent costs
incurred to comply with the federal mandate.
Except as provi ed in subdivision (2) of this subsection, the total
annual incremental cost to be incurred by an electric power supplier
and recovered from the electric power supplier's retail customers shall
not exceed an amount equal to the per-account annual charges set out
in subdivision (4) of this subsection applied to the electric power
supplier's total number of customer accounts determined as of 31
December of the previous calendar year. An electric power supplier
shall be conclusively deemed to be in compliance with the
requirements of subsections (b), (c), (d), (e), and ( of this section if
the electric power supplier's total annual incremental costs incurred
equals an amount equal to theper-account annual charges set out in
subdivision (4) of this subsection applied to the electric power
supplier's total number of customer accounts determined as of 31
December of the previous calendar year. The total annual incremental
cost recoverable by an electric power supplier from an individual
customer shall not exceed the per-account charges set out in
subdivision (4) of this subsection except as these charges may be
adjusted in subdivision(2) of this subsection.
An electric power supplier shall be allowed to recover the incremental
costs incurred to comply with the requirements of subsections (b), (c),
(d), (e), and (f) of this section and fund research as provided in
subdivision (1) of this subsection through an annual rider not to exceed
the following per-account annual charges:
Customer Class 2008-2011 2012-2014 2015 and thereafter
Residential per account $10.00 $12.00 $34.00
Commercial per account $50.00 150.00 $150.00
Industrial per account $500.00 $1,000.00 $1,000.00
The Commission shall adopt rules to establish a procedure for the
annual assessment of the per-account charges set out in this subsection
to an electric public utility's customers to allow for timely recovery of
all reasonable and prudent costs of compliance with the requirements
of subsections (b), (c), (d), (e), and (fl of this section and to fund
research as provided in subdivision (1) of this subsection. The
Commission shall ensure that the costs to be recovered from individual
customers on a per-account basis pursuant to subdivisions (2) and (3)
of this subsection are in the same proportion as the per-account annual
charges for each customer class set out in subdivision (4) of this
subsection.
Q Ado tion of Rules. — The Commission shall adopt rules to implement the
provisions of CIS, section. In developing rules, the Commission shall:
Page 6 Session Law 2007-397 SL2007-0397

Provide for the monitoring of compliance with and enforcement of the
requirements of this section.
Include a procedure to modi or delay the provisions of subsections
(b)(c), (d), (e), and (f) of this section in whole or in part if the
Commission determines that it is in the public interest to do so. The
Procedure adopted pursuant to this subdivision shall include a
requirement that the electric power supplier demonstrate that it made a
reasonable effort to meet the requirements set out in this section.
(3) Ensure that energv credited toward compliance with the provisions of
this section not be credited toward any other purpose, including
another renewable energy portfolio standard or voluntary renewable
energy purchase program in this State or an other state.
Establish standards for interconnection of renewable energy facilities
and other nonutility-owned generation with a veneration cQacityof 10
megawatts or less to an electric ublic utili 's distributions stem,
Provided, however, that the Commission shall adopt, if appropriate
federal interconnection standards.
(5) Ensure that the owner and operator of each renewable energy facilily
that delivers electric ower to an electric 2ower supplier is in
substantial compliance with all federal and state laws, regulations. and
rules for the protection of the environment and conservation of natural
resources.
(6) Consider whether it is in the public interest to adopt rules for electric
public utilities for net metering of renewable energy facilities with a
eneration macity of one megawatt or less.
Develop procedures to track and account for renewable energy
certificates, including ownership of renewable energy certificates that
are derived from a customer owned renewable energy facility as a
result of any action by a customer of an electric power supplier that is
independent of a programs onsored bv the electric power supplier.
(j) Report. — No later than 1 October of each year, the Commission shall submit
a report on the activities taken by the Commission to implement, and by electric power
suppliers to comply with, the requirements of this section to the Governor, the
Environmental Review Commission and the Joint Legislative ti itv Review
Committee. The report shall include any public comments received regarding direct
secondary, and cumulative environmental impacts of the implementation of the
reciuirements of this section. In developing the-report, the Commission shall consult
with the Del2artment of Environment and Natural Resources."
SECTION 2.(b) The Commission shall submit the first report required by
G.S. 62-133.70), as enacted by subsection (a) of this section, no later than 1 October
2008.
SECTION 2.(c) G.S. 14313-282(a) reads as rewritten:
"(a) There is hereby created the Environmental Management Commission of the
Department of Environment and Natural Resources with the power and duty to
promulgate rules to be followed in the protection, preservation, and enhancement of the
water and air resources of the State.
The Commission may establish a procedure for evaluating renewable
energy technolo ies that are or are proposed to be employed as part
of a renewable energy facility, as defined in G.S. 62-1 3. - establish
standards to ensure that renewable energy technologies do not harm
the environment, natural resources, cultural resources or public health
safety, or welfare of the State; and, to the extent that there is not an
environmental re ulatory program, establish an environmental
regulatory program to implement these protective standards."
SL2007-0397 Session Law 2007-397 Page 7

SECTION 3. If the federal government imposes requirements similar to
those set out in G.S. 62-133.7 on electric power suppliers in the State, the Utilities
Commission shall determine the applicability of federal and State requirements so as to
apply the more stringent requirements except to the extent that State requirements may
be specifically preempted by federal law. The Commission shall adopt rules to establish
a procedure as an alternative to the procedure set out in G.S. 62-133 to annually adjust
the rates of electric public utilities to allow timely recovery of all reasonable costs of
compliance with the federal and State requirements pursuant to G.S. 62-133.7(h), as
enacted by Section 2 of this act. In adopting rules to establish the procedure, the
Commission shall incorporate the provisions of this act in accordance with this section
and the public interest.
SECTION 4.(a) Article 7 of Chapter 62 of the General Statutes is amended
by adding a new section to read:
1 62-133.8. Cost recovery for demand-side manazement and enerey efficiency
measures.
(a) ieTl—d—efinitions set out in G.S. 62-133.7 apply to this section. As used in this
section, 'new,' used in connection with demand-side management or energy efficiency
measure means a demand-side management or energy efficiency measure that is
adopted and implemented on or after 1 January 2007 including subsequent changes and
modifications.
Each electric power supplier shall implement demand-side management and
energy efficiency measures and use supply-side resources to establish the least cost mix
of demand reduction and generation measures that meet the electricity needs of its
customers. An electric membership co oration or municipalfty that qualifies as an
electric power sup limier may satisfy t e requirements of this section through its
purchases from a wholesale supplier of electric power that uses supply-side resources
and demand-side management to meet all or a portion of the supply needs of its
members and their retail customers and that by aggregating and promotin
demand-side management and energy efficiency measures for its members, meets the
requirements of this section.
cJ Each electric power supplier to which G.S. 62-110.1 applies shall include an
assessment of demand-side management and energy efficiency in its resource plans
submitted to the Commission and shall submit cost-effective demand-side management
and energy efficiency options that require incentives to the Commission for approval.
The Commission shall upon petition of an electric public utility, gQprove an
annual rider to the electric public utility's rates to recover al reasonable and prudent
costs incurred for adoption and implementation of new demand-side management and
new energy efficiency measures. Recoverable costs include, but are not limited to, all
capital costs, including cost of capital and depreciation expenses, administrative costs,
implementation costs, incentive payments to program participants, and operatingcosts.
osts.
In determining the amount of any rider, the Commission:
Shall allow electric public utilities to capitalize all or a portion of those
costs to the extent that those costs are intended to produce future
benefits.
May approve other incentives to electric public utilities for adopting
and implementing new demand-side management and energy
efficiency measures. Allowable incentives may include:
a. Appropriate rewards based on the sharing of savings achieved
by the demand-side management and energy efficiency
measures.
b. Appropriate rewards based on capitalization of a percentage of
avoided costs achieved by demand-side management and
energy efficiency measures.
C. Any other incentives that the Commission determines to be
appropriate.
Page 8 Session Law 2007-397 SL2007-0397

(e) The Commission shall determine the appropriate assignment of costs of new
demand-side management and energy efficiency measures for electric public utilities
and shall assign the costs of the programs only to the class or classes of customers that
directly benefit from the proms
(�f None of the costs of new demand-side management or energy efficiency
measures of an electric power supplier shall be assi ned to an industrial customer that
notifies the industrial customer's electric power supplier that, at the industrial customer's
own expense, the industrial customer has implemented at any time in the past or, in
accordance with stated, quantified goals for demand-side management and energy
efficiency, will iml2lemenf alternative demand-side management and energy efficient
measures and that the industrial customer elects not to participate in errand-side
management or energy efficiency measures under this section. The electric power
_suupplier that provides electric service to the industrial customer, an industrial customer
that receives electric service from the electric power supplier, the Public Staff, or the
Commission on its own motion, may initiate a complaint proceeding before the
Commission to challenge the validi1y of the notification of non artici ation. The
rocedures set forth in G.S. 62-73 6%74 and 62-75 shall govern any such complaint.
he provisions of this subsection shall also Uply to commercial customers with
significant annual usage at a threshold level to be established by the Commission.
(g) An electric public utility shall not charge an industrial or commercial
customer for the costs of installing demand-side management equipment on the
customer's premises if the customer provides at the customer's expense equivalent
demand-side management equipment.
(1) The Commission shall adol2t rules to iml2lement this section.
Di The Commission shall submit to the Governor and to the Joint Legislative
Utility Review Committee a summary of the proceedings conducted pursuant to this
section during the preceding two fiscal years on or before 1 September of
odd-numbered ears."
SECTION 4.(b) The Utilities Commission shall submit the first report
required by G.S. 62-133.8(i), as enacted by subsection (a) of this section, no later than 1
September 2009.
SECTION 4.(c) The Utilities Commission shall prepare an analysis of
whether rate structures, policies, and measures, including decoupling, in place in other
states and countries that promote a mix of generation involving renewable energy
sources and demand reduction should be implemented in this State. The Commission
shall submit this analysis to the Governor, Environmental Review Commission, and the
Joint Legislative Utility Review Committee no later than 1 September 2008.
SECTION 5. G.S. 62-133.2 reads as rewritten:
"§ 62-133.2. Fuel and fuel-related charge adjustments for electric utilities.
(a) The Commission i shall permit an electric utilities Dublic utility that
generates electric power by fossil fuel or nuclear fuel to charge man increment
or decrement as a rider to their- its rates for changes in the cost of fuel uh6e f 4e
and fuel-related costs used in providing its North
Carolina customers with electricity from the cost of fuel and the Ate! ^^""meat ^�
and fuel-related costs
established in the electric public utility's previous general rate case on the basis of cost
per kilowatt hour.
a 1 As used in this section, 'cost of fuel and fuel-related costs' means all of the
following:
(1) The cost of fuel burned.
The cost of fuel transportation.
3 The cost of ammonia, line, limestone, urea dibasic acid sorbents and
catalysts consumed in reducin or treating emissions.
(4) The total delivered noncapacity related costs including all related
transmission charges of all purchases of electric power by the electric
SL2007-0397 Session Law 2007-397 Page 9

public utility, that are subject to economic dispatch or economic
curtailment.
The capacity costs associated with all purchases of electric power from
qualifying cop-eneration facilities and quali ing small power
production facilities, as defined in 16 U.S.C. & 796, that are subject to
economic dis atch bv the electric ublic utili .
(6) Except for those costs recovered pursuant to G.S. 62-133.7(h), the total
delivered costs of all purchases of power from renewable energy
facilities and new renewable energy facilities pursuant to
G.S. 62-133.7 or to comply with an federal mandate that is similar to
the requirements of subsections (b), (c). (d), (e), and (f) of
G.S. 62-133.7.
The fuel cost coml2onent of other purchased power.
Cost of fuel and fuel-related costs shall be a lusted for any net gains or
losses resulting from any sales by the electric public utility of fuel and
other fuel-related costs components
(9) Cost of fuel and fuel-related costs shall be adjusted for an net gains or
losses resulting from any sales by the electric publ ic utility of
b - roducts Rroduced in the generation process to the extent the costs
of the inputs leading to that by-product are costs of fuel or fuel-related
costs.
a2 For those costs identified in subdivisions (4), (5), and (6) of subsection (al)
of t is section, the annual increase in the aggregate amount of these costs that are
recoverable by an electric public utility pursuant to this section shall not exceed two
percent (2%) of the electric public utility's total North Carolina retail jurisdictional gross
revenues for the preceding calendar year. The costs described in subdivisions (4) (5),
and (6) of subsection (a ) of f this section shall be recoverable from each class of
customers as a separate component of the rider as follows:
For the costs described in subdivision (4) of subsection (al) of this
section, the specific component for each class of customers shall be
determined by allocating these costs among customer classes based on
the electric public utility's North Carolina energy usage for the prior
year, as determined by the Commission, until the Commission
determines how these costs shall be allocated in a general rate case for
the electric public utility commenced on or after 1 January 2008.
For the costs described in subdivisions(5) and (6) of subsection (al) of
this section the s ecific com onent for each class of customers shall
be determined by allocating ese costs among customer classes based
on the electric public utility's North Carolina peak demand for the
prior Year, as determined by the Commission, until the Commission
determines how these costs shall be allocated in a general rate case for
the electric public utility commenced on or after 1 January 2008.
a3 Notwithstanding subsections (al) and (Q. of this section, for an electric
pub is utility that has fewer than 150,000 North Carolina retail jurisdictional customers
as of 31 December 2006, the costs identified in subdivisions (1), (2), (6), and (7) of
subsection (al) of this section and the fuel cost component, as may be modified by the
Commission, of electric power purchases identified in subdivision (4) of subsection (al)
of this section shall be recovered through the increment or decrement rider approved by
the Commission ursuant to this section. For the costs identified in subdivision (6) of
subsection (al) of this section that are incurred on or after 1 January 2008, the annual
increase in the amount of these costs shall not exceed one percent (1%) of the electric
public utility's total North Carolina retail jurisdictional gross revenues for the preceding
calendar year. These costs described in subdivision (6) of subsection (al) of this section
shall be recoverable from each class of customers as a separate component of the rider.
For the costs described in subdivision (6) of subsection (al) of this section, the �ecific
Page 10 Session Law 2007-397 SL2007-0397

component for each class of customers shall be determined by allocating these costs
among customer classes based on the electric public utility's North Carolina peak
demand for the prior year, as determined by the Commission, until the Commission
determines how these costs shall be allocated in a general rate case for the electric
public utility commenced on or after 1 January 2008.
(b)
ip-we- by fossil a. Md. Commission shall onduct a hearing
within 12 months of teach electric public utility's last general rate case order an&to
determine whether an increment or decrement rider is required to reflect actual changes
in the cost of fuel and fuel-related costs
over or under the cost of fuel and fue -related costs on a -'-watt-hour basis in base
rates established in the electric public utility's last preceding general rate case.
Additional hearings shall be held on an annual basis but only one hearing for each seek
electric public utility may be held within 12 months of the last general rate case.
(c) Each electric public utility shall submit to the Commission for the hearing
verified annualized information and data in such form and detail as the Commission
may require, for an historic 12-month test period, relating to:
(1) D,,..,.hased Cost of fuel and fuel-related costs used in each
generating facility owned in whole or in part by the utility.
(2) Fuel procurement practices and fuel inventories for each facility.
3 Burned cost of fuel used in each generating facility.
4 Plant capacity factor for each generating facility.
5 Plant availability factor for each generating plant.
6) Generation mix by types of fuel used.
7) Sources and fuel cost component of purchased power used.
(8) Recipients of and revenues received for power sales and times of
power sales.
(9) Test period U4'^••lao � ourkilowatt-hour sales for the utility's total
system and on the total system separated for North Carolina
jurisdictional sales.
(10) Procurement practices and inventories for: fuel burned and for
ammonia, lime, limestone, urea, dibasic acid, sorbents, and catalysts
consumed in reducing or treating emissions.
11 The cost incurred at each generating facility of fuel burned and of
ammonia, lime, limestone, urea, dibasic acid, sorbents, and catalysts
consumed in reducing or treating emissions.
12 Any net gains or losses resulting from any sales by the electric public
utility of fuel or other fuel-related costs components.
13 Any net gains or losses resulting from any sales by the electric public
utility of by-products produced in the generation process to the extent
the costs of the inputs leading to that by-product are costs of fuel or
fuel-related costs.
(d) The Commission shall provide for notice of a public hearing with reasonable
and adequate time for investigation and for all intervenors to prepare for hearing. At the
hearing the Commission shall receive evidence from the utility, the publie ,Public
Staff, and any intervenor desiring to submit evidence, and from the public generally. In
reaching its decision, the Commission shall consider all evidence required under
subsection (c) of this section as well as any and all other competent evidence that may
assist the Commission in reaching its decision including changes in the file'
ost of fuel consumed and fuel-related costs that occur within a
reasonable time, as determined by the Commission, after the test period is closed. The
Commission shall incorporate in its€eekost of fuel and fuel-related costs determination
under this subsection the experienced over-recovery or under-recovery of reasonable
SL2007-0397 Session Law 2007-397 Page 11

costs of fuel and fuel-related costs-e*penses prudently incurred during the test period,
based upon the prudent standards set pursuant to subsection (d 1) of this section, in
fixing an increment or decrement rider. Upon request of the electric public utility, the
Commission shall also incorporate in this determination the experienced over-recovery
or under-recoveKy of costs of fuel and fuel-related costs through the date that is 30
calendar days prior to the date of the hearing, provided that the reasonableness and
prudence of these costs shall be subject to review in the utility's next annual hearing
pursuant to this section. The Commission shall use deferral accounting, and consecutive
test periods, in complying with this subsection, and the over-recovery or under-recovery
portion of the increment or decrement shall be reflected in rates for 12 months,
notwithstanding any changes in the base fuel cost in a general rate case. The burden of
proof as to the correctness and reasonableness of the charge and as to whether the cost
of fuel elar-ges and fuel-related costs were reasonably and prudently incurred shall be
on the utility. The Commission shall allow only that portion, if any, of a requested cost
of fuel and fuel-related costs adjustment that is based on adjusted and reasonable cost of
�fuel ea rises-and fuel-related costs prudently incurred under efficient management and
economic operations. In evaluating whether cost of fuel expenses and fuel-related costs
were reasonable and prudently incurred, the Commission shall apply the rule adopted
pursuant to subsection (ckl- (dl) of this section. To the extent that the Commission
determines that an increment or decrement to the rates of the utility due to changes in
the cost of fuel and fuel-related costs over
or under base fuel costs established in the preceding general rate case is just and
reasonable, the Commission shall order that the increment or decrement become
effective for all sales of electricity and remain in effect until changed in a subsequent
general rate case or annual proceeding under this section.
(d 1) Within one year after ratification of this act, for the purposes of setting fuel
cost of fuel and fuel-related costs rates, the Commission shall adopt a rule that
establishes prudent standards and procedures with which it can appropriately measure
management efficiency in minimizing feel-cost of fuel and fuel-related costs.
(e) If the Commission has not issued an order pursuant to this section within 4- 9
180 days of a utility's submission of annual data under subsection (c) of this section, the
utility may place the requested cost of fuel and fuel-related costs adjustment into effect.
If the change in rate is finally determined to be excessive, the utility shall make refund
of any excess plus interest to its customers in a manner ordered by the Commission.
(
f) Nothing in this section shall relieve the Commission from its duty to consider
the reasonableness of fiaepesesthe cost of fuel and fuel-related costs in a general
rate case and to set rates reflecting reasonable feel-expeasescost of fuel and fuel-related
costs pursuant to G.S. 62-133. Nothing in this section shall invalidate or preempt anv
condition adopted by the Commission and accepted by the utility in any proceeding that
would limit the recovery of costs by anv electric public utility under this section.
(g) ,On 1 July of every
odd-numbered )ear, the Utilities Commission shall provide a report to the Joint
Legislative Utility Review Committee summarizing the pfeeedufes
conducted pursuant to o.S. 62 '33 4this section during the preceding two years."
SECTION 6. G.S. 62-110.1 reads as rewritten:
"§ 62-110.1. Certificate for construction of generating facility; analysis of
long-range needs for expansion of *'6eTfacilities; ongoing review of
construction costs; inclusion of al2proved construction costs in rates.
(a) Notwithstanding the proviso in G.S. 62-110, no public uti ity or of er person
shall begin the construction of any steam, water, or other facility for the generation of
electricity to be directly or indirectly used for the furnishing of public utility service,
even though the facility be for furnishing the service already being rendered, without
first obtaining from the Commission a certificate that public convenience and necessity
requires, or will require, such construction.
Page 12 Session Law 2007-397 SL2007-0397

(b) For the purpose of subsections (a),(c), and (d) of this section, "public utility"
shall include any electric membership corporation operating within this State, and the
term public utility service shall include the service rendered by any such electric
membership corporation.
(c) The Commission shall develop, publicize, and keep current an analysis of the
long-range needs for expansion of facilities for the generation of electricity in North
Carolina, including its estimate of the probable future growth of the use of electricity,
the probable needed generating reserves, the extent, size, mix and general location of
generating plants and arrangements for pooling power to the extent not regulated by the
Federal —Energy Re ug latory Commission and other arrangements with other
utilities and energy suppliers to achieve maximum efficiencies for the benefit of the
people of North Carolina, and shall consider such analysis in acting upon any petition
by any utility for construction. In developing such analysis, the Commission shall
confer and consult with the public utilities in North Carolina, the utilities commissions
or comparable agencies of neighboring states, the Federal Rem Energy Regulatory
Commission, the Southern Growth Policies Board, and other agencies having relevant
information and may participate as it deems useful in any joint boards investigating
generating plant sites or the probable need for future generating facilities. In addition to
such reports as public utilities may be required by statute or rule of the Commission to
file with the Commission, any such utility in North Carolina may submit to the
Commission its proposals as to the future needs for electricity to serve the people of the
State or the area served by such utility, and insofar as practicable, each such utility and
the Attorney General may attend or be represented at any formal conference conducted
by the Commission in developing a plan for the future requirements of electricity for
North Carolina or this region. In the course of making the analysis and developing the
plan, the Commission shall conduct one or more public hearings. Each year, the
Commission shall submit to the Governor and to the appropriate committees of the
General Assembly a report of its analysis and plan, the progress to date in carrying out
such plan, and the program of the Commission for the ensuing year in connection with
such plan.
d) In acting upon any petition for the construction of any facility for the
generation of electricity, the Commission shall take into account the applicant's
arrangements with other electric utilities for interchange of power, pooling of plant,
purchase of power and other methods for providing reliable, effieieI4 and
economical electric service.
(e) As a condition for receiving such eei4i f a a certificate, the applicant shall
file an estimate of construction costs in such detail as the Commission may require. The
Commission shall hold a public hearing on each sueh-application and no certificate shall
be granted unless the Commission has approved the estimated construction costs and
made a finding that sue4-construction will be consistent with the Commission's plan for
expansion of electric generating capacity. A certificate for the construction of a coal or
nuclear facility shall be granted only if the applicant demonstrates and the Commission
finds that energy efficiency measures; demand-side management; renewable energy
resource generation; combined heat and power generation; or any combination thereof,
would not establish or maintain a more cost-effective and reliable generation system and
that the construction and operation of the facili is in the public, mterest. In makin2 its
determination, the Commission shall consider resource and fuel diversi and
reasonablya nticipated future operating costs. Once the Commission grants a certificate,
no vublic uti itv shall cancel construction of a aenerating unit or facilfty without
approval from,t a Commission based upon a finding that the construction is no longer
in the public interest.
ej Upon the request of the public utility or upon its own motion, the
Commission may review the certificate to determine whether changes in the probable
future growth of the use of electricity indicate that the public convenience and necessity
require modification or revocation of the certificate. If the Commission finds that
SL2007-0397 Session Law 2007-397 Page 13

completion of the generatingf acility is no longer in the public interest, the Commission
may modify or revoke the certificate.
and * estifna4es the e "*'^ ^*1iV11. The public utility s all
submit a progress report and an revision in the cost estimate for the construction
approved under subsection (e) oft is section during each year of construction. Upon the
request of the public utilily or upon its own motion, the Commission may conduct an
ongoing review of construction of the facility as the construction proceeds. If the
Commission approves any revised construction cost estimate and finds that incurrence
of the cost oft at portion of the construction of the facility under review was reasonable
and prudent, the certificate shall remain in effect. If the Commission disapproves any
part of the revised cost estimate or finds that the incurrence of the cost of that portion of
the construction of the facility then under review was unreasonable or imprudent, the
Commission may modify or revoke the certificate.
The public utili. shall recover through rates in a general rate case conducted
pursuant to G.S. 62-133 t e actual costs it has incurred in constructing a generating
acility in reliance on a certificate issued under this section as provided in this
subsection, unless new evidence is discovered (i) that could not have been discovered
by due diligence at an earlier time and (ii) that reasonably tends to show that a previous
determination by the Commission that a material item of cost was just and reasonable
and prudently incurred was erroneous. If the Commission determines that evidence has
been submitted that meets the requirements of this subsection, the public utility shall
have the burden of proof to demonstrate that the material item of cost was in fact just
and reasonable and prudently incurred.
When a facility has been completed, and the construction of the
facility has been subject to ongoing review under subsection M of this
section the reasonable and pnicient costs of construction approved b
the Commission during the ongoing review shall be included in the
public utility's rate base without further review by the Commission.
(22) If a facility_has not been completed, and the construction of the facility
has been subject to ongoing review under subsection (f) of this section,
the reasonable and prudent costs of construction approved by the
Commission during the ongoing Yreview shall be included in the public
utility's rate base without further review by the Commission.
If a facility is under construction or has been completed and the
construction of the facility has not been subject to ongoing review
under subsection (fl of this section, the costs of construction shall be
included in the public utili 's rate base if the Commission finds that
the incurrence of these costs is reasonable and prudent.
If the construction of a facility is cancelled, including cancellation as a result
of modification or revocation of the certificate under subsection(el) of this section, and
the construction of the facility has been subject to ongoing review under subsection (fl,
absent newly discovered evidence .(i) that could not have been discovered by due
diligence at an earlier time and (ii) that reasonably tends to show that a previous
determination by the Commission that a material item of cost was just and reasonable
and prudently incurred was erroneous the public utility shall recover through rates in a
eneral rate case conductedpursuant to G.S. 62-133 the costs of construction approved
v the Commission during the ongoing review that were actually incurred prior to
cancellation, amortized over a reasonable time as determined by the Commission. In the
general rate case the Commission shall make any adjustment that may be required
because costs of construction previously added to the utility's rate base pursuant to
subsection (fl) of this section are removed from the rate base and recovered in
accordance with this subsection. AnX costs of construction actual incurred but not
previously approved by the Commission, shall be recovered only if they are found by
Page 14 Session Law 2007-397 SL2007-0397

the Commission to be reasonable and prudent. If the Commission determines that
evidence has been submitted that meets the requirements of this subsection, the public
utility shall have the burden of proof to demonstrate that the material item of cost was
lust and reasonable and prudently incurred.
M) If the construction of a facility is cancelled, including cancellation as a result
of the modification or revocation of the certificate under subsection (el) of this section,
and the construction of the facility has not been subject to ongoing review under
subsection (f) of this section, the public utility shall recover through rates in a general
rate case conducted pursuant to G.S. 62-133 the costs of construction that were actually
incurred prior to the cancellation and are found bX the Commission to be reasonable and
prudent, amortized over a reasonable time as determined by the Commission. In the
general rate case the Commission shall make any ad'ustment that ma be required
because costs of construction previously_added to the utility's rate base pursuant to
subsection (fl) of this section are removed from the rate base and recovered in
accordance with this subsection.
(g) The certification requirements of this section shall not apply to a
nonutility-owned generating facility fueled by renewable energy resources under two
megawatts in capacity or to persons who construct an electric generating facility
primarily for that person's own use and not for the primary purpose of producing
electricity, heat, or steam for sale to or for the public for compensation; provided,
however, that such persons shall, nevertheless, be required to report to the Utilities
Commission the proposed construction of such a facility before beginning construction
thereof."
SECTION 7. Article 6 of Chapter 62 of the General Statutes is amended by
adding two new sections to read:
1 62-110.6. Rate recovery for construction costs of out-of-state electric generating
facilities.
(a) The Commission shall, upon petition of a public utility, determine the need
for and, if need is established, approve an estimate of the construction costs and
construction schedule for an electric generating facility in another state that is intended
to serve retail customers in this State.
(121 The petition may be filed at any time after an aRplication for a certificate or
license for the construction of the facility has been filed in the state in which the facility
will be sited. The petition shall contain a showing of need for the facility, an estimate of
the construction costs, and the proposed construction schedule for the facility.
(c) The Commission shall conduct a public hearing to consider and determine the
need for the facility and the reasonableness of the construction cost estimate and
proposed construction schedule. If the Commission finds that the construction will be
needed to assure the provision of adequate public utility service within North Carolina
the Commission shall approve a construction cost estimate and a construction schedule
for the facility. In making its determinations under this section, the Commission may
consider whether the state in which the facility will be sited has issued a certificate or
license for construction of the facility and gRproved a construction cost estimate and
construction schedule for the facility. The ommission shall issue its order not later
than 180 da s after the public uti ity files its petition.
G.S. 62-110.1(D shall apply to the construction cost estimate determined by
the Commission to be a ro riate and the actual costs the public utili incurs in
constructing the facility sal be recoverable through rates in a general rate case
pursuant to G.S. 62-133 as provided in G.S. 62-110.1( 1).
(e) If the construction of a facility is cancelled, the public utility shall recover
through rates in a general rate case conducted pursuant to G.S. 62-133 the costs of
construction that were actually incurredprior to the cancellation and are found b the
Commission to be reasonable and prudent, as provided in subsections (Q) and ( ) of
G.S. 62-110.1.
162-110.7. Proiect development cost review for a nuclear facility.
SL2007-0397 Session Law 2007-397 Page 15

(a) For purposes of this section, "project development costs" mean all capital
costs associated with a potential nuclear electric generating facility incurred before (i)
issuance of a certificate under G.S. 62-110.1 for a facili!y located in North Carolina or
(ii) issuance of a certificate by the host state for an out-of--state facility to serve North
Carolina retail customers, including. without limitation, the costs of evaluation, design,
engineering, environmental analysis and permitting, early site permitting, combined
operating license permitting, initial site preparation costs, and allowance for funds used
during construction associated with such costs.
b At any time prior to the filing of an application for a certificate to construct a
potential nuclear electric generatin facility, either under G.S. 62-110.1 or in another
state for a facility to serve North Carolina retail customers, a public utility may_request
that the Commission review the public utility's decision to incur project development
costs. The public utility shall include with its request such information and
documentation as is necessary to support a roval of the decision to incur proposed
project develol2ment costs. The Commissions all hold a hearing regarding the request.
The Commission shall issue an order within 180 days after the public utility files its
request. The Commission shall approve the public utility's decision to incur ro'ect
development costs if the public utility demonstrates by a preponderance of evidence that
the decision to incur project development costs is reasonable and Rrudent, L2rovided,
however, the Commission shall not rule on the reasonableness or prudence of specific
ro'ect develo ment activities or recoverability of s ecific items of cost.
(cc) All reasonable and prudent project development costs, as determined by the
Commission incurred for the potential nuclear electric generating facili shall be
included in the public utility's rate base and shall be fully recoverable through rates in a
general rate case 12roceedin ursuant to G.S. 62-133.
l� If the public utility is allowed to cancel the project, the Commission shall
permit the public utility to recover all reasonable and prudently incurred project
develo ment costs in a general rate case proceedin ursuant to G.S. 62-133 amortized
over a period equal tote period during which the costs were incurred, or five years_
whichever is greater."
SECTION 8. G.S. 62-133(b) reads as rewritten:
"(b) In fixing such rates, the Commission shall:
(1) Ascertain the reasonable on inal cost of the public utility's property
used and useful, or to be used and useful within a reasonable time after
the test period, in providing the service rendered to the public within
the State, less that portion of the cost whie4i-that has been consumed by
previous use recovered by depreciation
in the GeSt Of the- nllhlir, IRA]
the Commission-eensWer-s sue w'„ ife ;n the-ptiblie interest and
:??f@SSttF -tahn3eiial Stta 11A e 2 „+2 acili#'in Alma; , ,1•;� + +
t#e-PeieflS-e€f> ppl (11�}-e€ i� ,tiem x ense. In
addition, construction work in progress may be included in t e cost of
the public utili 's prope under any of the following, circumstances:
a. To the extent the ommission considers inclusion in the vublic
interest and necessary to the financial stability of the utility in
question, reasonable and i)rudent expenditures for construction
work in progress mqy be included subject to the provisions of
subdivision 4a of this subsection.
b. For baseload electric generating facilities reasonable and
prudent expenditures shall be included pursuant to subdivisions
Page 16 Session Law 2007-397 SL2007-0397

2 or(3) of G.S. 62-110.1(fl), whichever applies, subject to the
provisions of subdivision (4a) of this subsection.
(la) Apply the rate of return established under subdivision (4) of this
subsection to rights-of-way acquired through agreements with the
Department of Transportation pursuant to G.S. 136-19.5(a) if
acquisition is consistent with a definite plan to provide service within
five years of the date of the agreement and if such right-of-way
acquisition will result in benefits to the ratepayers. If a right-of-way is
not used within a reasonable time after the expiration of the five-year
period, it may be removed from the rate base by the Commission when
rates for the public utility are next established under this section.
(2) Estimate such public utility's revenue under the present and proposed
rates.
(3) Ascertain such public utility's reasonable operating expenses,
including actual investment currently consumed through reasonable
actual depreciation.
(4) Fix such rate of return on the cost of the property ascertained pursuant
to subdivision (1) of this subsection as will enable the public utility by
sound management to produce a fair return for its shareholders,
considering changing economic conditions and other factors,
includinp-, but not limited to, the inclusion of construction work in
progress in the utility's property under sub-subdivision b. of
subdivision (1) of this subsection, as they then exist, to maintain its
facilities and services in accordance with the reasonable requirements
of its customers in the territory covered by its franchise, and to
compete in the market for capital funds on terms whio}rthat are
reasonable and whie-h-that are fair to its customers and to its existing
investors.
(4a) Require each public utility to discontinue capitalization of the
composite carrying cost of capital funds used to finance construction
(allowance for funds) on the construction work in progress included in
its rate based upon the effective date of the first and each subsequent
general rate order issued with respect to it after the effective date of
this subsection; allowance for funds may be capitalized with respect to
expenditures for construction work in progress not included in the
utility's property upon which the rates were fixed. In determining net
operating income for return, the Commission shall not include any
capitalized allowance for funds used during construction on the
construction work in progress included in the utility's rate base.
(5) Fix such rates to be charged by the public utility as will earn in
addition to reasonable operating expenses ascertained pursuant to
subdivision (3) of this subsection the rate of return fixed pursuant to
subdivisions (4) and (4a) on the cost of the public utility's property
ascertained pursuant to subdivisions (1) and (la) of this subsection."
SECTION 9.(a) The percentage rate to be used in calculating the public
utility regulatory fee under G.S. 62-302(b)(2) is twelve one-hundredths of one percent
(0.12%) for each public utility's North Carolina jurisdictional revenues earned during
each quarter that begins on or after 1 July 2007.
SECTION 9.(b) The electric membership corporation regulatory fee
imposed under G.S. 62-302(bl) for the 2007-2008 fiscal year is two hundred thousand
dollars ($200,000).
SECTION 10.(a) G.S. 105-164.4(a)(li) is repealed.
SECTION 10.(b) G.S. 105-164.4(a)(If reads as rewritten:
SL2007-0397 Session Law 2007-397 Page 17

"(a) A privilege tax is imposed on a retailer at the following percentage rates of
the retailer's net taxable sales or gross receipts, as appropriate. The general rate of tax is
four and one-quarter percent (4.25%).
(If) The rate of two and eighty-three-hundredths percent (2.83%) applies to
the sales price of electricity ae�,,.ihe,4 :n +U. gIihd .,.^iep ~a that is
measured by a separate meter or another separate devise-device and
sold to a commercial laundry or to a pressing and dry-cleaning
establishment for use in machinery used in the direct performance of
the laundering or a Dressing,and cleaning service.
ID food, he�i dwelli
as
Z'-Ze,;4*7s':4n1"use is er- is net subjeet to the rate
b. Re eaa eri
E
d�3`e-lea �este��e -for. use ,:,.� ._ , __ +i;
­ssiag and
l
SECTION 10.(c) G.S. 105-164.4(a) is amended by adding a new
subdivision to read:
"(a) A privilege tax is imposed on a retailer at the following percentage rates of
the retailer's net taxable sales or gross receipts, as appropriate. The general rate of tax is
four and one-quarter percent (4.25%).
dh The rate of one and eight-tenths percent (1.8%) applies to the sales
price of electricity described in this subdivision and measured by a
separate meter or another separate device:
a. Sales of electricity to manufacturing industries and
manufacturing_plants for use in connection with the operation of
the industries and plants.
b. Sales of electricity to farmers to be used by them for any
farming_purposes other than preparing food, heating dwellings,
and other household u oses."
SECTION 10.(d) G.S. 105-164.4(a)(lj), as enacted by subsection (c) of this
section, reads as rewritten:
"(1 j) The rate of ° ne and four-tenths
percent (1.4%)applies to the sales price of electricity described in this
subdivision and measured by a separate meter or another separate
device:
a. Sales of electricity to manufacturing industries and
manufacturing plants for use in connection with the operation of
the industries and plants.
b. Sales of electricity to farmers to be used by them for any
farming purposes other than preparing food, heating dwellings,
and other household purposes."
SECTION 10.(e) G.S. 105-164.4(a)(1j), as enacted by subsection (c) of this
section and amended by subsection(d) of this section, reads as rewritten:
.,d fe +o.,+i.� ent ( n of
"(lj The rate of �-�� �o eight-tenths percent
jr-
0.8% applies to the sales price of electricity described in this
subdivision and measured by a separate meter or another separate
device:
Page 18 Session Law 2007-397 SL2007-0397

a. Sales. of electricity to manufacturing industries and
manufacturing plants for use in connection with the operation of
the industries and plants.
b. Sales of electricity to farmers to. be used by them for any
farming purposes other than preparing food, heating dwellings,
and other household purposes."
SECTION 10.(f) G.S. 105-164.4(a)(1j), as enacted by this section, is
repealed.
SECTION 10.(g) G.S. 105-164.13(1) reads as rewritten:
"§ 105-164.13. Retail sales and use tax.
The sale at retail and the use, storage, or consumption in this State of the following
tangible personal property and services are specifically exempted from the tax imposed
by this Article:
Agricultural Group.
(1) Any of the following items sold to a farmer for use by the farmer in the
planting, cultivating, harvesting, or curing of farm crops or in the
production of dairy products, eggs, or animals. A "farmer" includes a
dairy operator, a poultry farmer, an egg producer, a livestock farmer, a
farmer of crops, and a farmer of an aquatic species, as defined in
G.S. 106-758.
a. Commercial fertilizer, lime, land plaster, plastic mulch, plant
bed covers, potting soil, and seeds.
b. Farm machinery, attachment and repair parts for farm
machinery, and lubricants applied to farm machinery. The term
"machinery" includes implements that have moving parts or are
operated or drawn by an animal. The term does not include
impplements operated wholly by hand or motor vehicles required
to be registered under Chapter 20 of the General Statutes.
C. A horse or mule.
d. Fuel."
SECTION 10.(h) G.S. 105-164.13 is amended by adding two new
subdivisions to read:
"§ 105-164.13. Retail sales and use tax.
The sale at retail and the use, storage, or consumption in this State of the following
tangible personal property and services are specifically exempted from the tax imposed
by this Article:
lb ElectricAy sold to a farmer to be used for an farmingose other
than preparing food, heating dwellings, and other house old purposes.
56 Fuel and electricity sold to a manufacturer for use in connection with
the operation of a manufacturing facility."
SECTION 10.(i) Subsections (a), (b), and (c) of this section become
effective 1 October 2007 and apply to sales occurring on or after that date. Subsection
(d) of this section becomes effective 1 July 2008 and applies to sales occurring on or
after that date. Subsection (e) of this section becomes effective 1 July 2009 and applies
to sales occurring on or after that date. Subsections (f), (g), and (h) of this section
become effective 1 July 2010 and apply to sales occurring on or after that date. The
remainder of this section is effective when it becomes law.
SECTION 11.(a) G.S. 105-187.41 reads as rewritten:
"§ 105-187.41. Tax imposed on piped natural gas.
SL2007-0397 Session Law 2007-397 Page 19

(a) Scope. — An excise tax is imposed on piped natural gas received for
consumption in this State. This tax is imposed in lieu of a sales and use tax and a
percentage gross receipts tax on piped natural gas.
(b) Rate. —The tax rate is set in the table below. The tax rate is based on monthly
therm volumes of piped natural has received by the end-user of the gas. If an end-user
receives piped natural gas that is metered through two or more separate measuring
devices, the tax is calculated separately on the volume metered through each device
rather than on the total volume metered through all measuring devices, unless the
devices are located on the same premises and are part of the same billing account. In
that circumstance, the tax is calculated on the total volume metered through the two or
more separate measuring devices.
Monthly Volume of Rate Per Therm
Therms Received
First 200 $.047
201 to 15,000 .035
15,001 to 60,000 .024
60,001 to 500,000 .015
Over 500,000 .003
(c) Gas City Exemption. — The tax imposed by this section does not apply to
piped natural gas received by a gas city for consumption by that city or to piped natural
gas delivered by a gas city to a sales or transportation customer of the gas city.
Reduced Rate. — Piped natural gas received by a manufacturer for use in
connection with the operation of a manufacturingfacility or by a farmer to be used for
any farming u ose other than preparing food heating dwellings, and other household
purposes is taxable at a reduced rate as provided in this subsection. To be eligible for
the reduced tax rate a person must have a manufacturer's certificate or a farmer's
certificate issued under G.S. 105-164.28A. A person who uses piped natural gas for an
unauthorized u ose is liable for any tax due on the gas.
Monthly Volume of Rate Per Therm
Therms Received
First 200 $.032
201 to 15,000 .024
15,001 to 60,000 .016
60,001 to 500,000 .010
Over 500.000 .002"
SECTION 11.(b) G.S. 105-187.41(d), as enacted by subsection (a) of this
section, reads as rewritten:
"(d) Reduced Rate. — Piped natural gas received by a manufacturer for use in
connection with the operation of a manufacturing facility and by a farmer to be used for
any farming purpose other than preparing food, heating dwellings, and other household
purposes is taxable as provided in this subsection. To be eligible for the reduced tax
rate, a person must have a manufacturer's certificate or a farmer's certificate issued
under G.S. 105-164.28A. A person who uses piped natural gas for an unauthorized
purpose is liable for any tax due on the gas.
Monthly Volume of Rate Per Therm
Therms Received
First 200 $-.032.025
201 to 15,000 -0�4.019
15,001 to 60,000 -.04-6.013
60,001 to 500,000 .04-0.008
Over 500,000 -.002.002"
SECTION 11.(c) G.S. 105-187.41(d), as enacted by subsection (a) of this
section and amended by subsection(b) of this section, reads as rewritten:
"(d) Reduced Rate. — Piped natural gas received by a manufacturer for use in
connection with the operation of a manufacturing facility and by a farmer to be used for
Page 20 Session Law 2007-397 SL2007-0397

any farming purpose other than preparing food, heating dwellings, and other household
purposes is taxable as provided in this subsection. To be eligible for the reduced tax
rate, a person must have a manufacturer's certificate or a farmer's certificate issued
under G.S. 105-164.28A. A person who uses piped natural gas for an unauthorized
purpose is liable for any tax due on the gas.
Monthly Volume of Rate Per Therm
Therms Received
First 200 $.02-5.014
201 to 15,000 .04-9.010
15,001 to 60,000 443.007
60,001 to 500,000 -.00$.004
Over 500,000 -.00-2.001"
SECTION 11.(d) G.S. 105-187.41(d), as enacted by this section, is repealed.
SECTION 11.(e) G.S. 105-187.41(c) reads as rewritten:
"(c) _� Exemptions.--The tax imposed by this section does not
apply to any of the�ing_
(l Piped natural gas received by a gas city for consumption by that ei
n9ae
gas delivered by a gas city to a sales or transportation
gas city.
Piped natural gas received by a manufacturer for use in connection
with the o eration of the manufacturiny, facili . To be eligible for the
exemption, a person must have a manufacturer's certificate issued
under G.S. 10 -164.28A. A person who uses piped natural gas for an
unauthorized pumose is liable for any tax due on the gas.
Piped natural gas received by a farmer to be used for any farming
purvose other than revaring food heatinp, dwellin s and other
household puMoses. To be eligible for the exemption, a person must
have a farmers certificate issued under G.S. 10 -164.28 A A person
who uses piped natural gas for an unauthorized purpose is liable for
any tax due on the gas."
SECTION 11.(f) Subsection (a) of this section becomes effective 1 October
2007 and applies to bills issued on or after that date. Subsection (b) of this section
becomes effective 1 July 2008 and applies to bills issued on or after that date.
Subsection (c) of this section becomes effective 1 July 2009 and applies to bills issued
on or after that date. Subsections (d) and (e) of this section become effective 1 July
2010 and apply to bills issued on or after that date. The remainder of this section is
effective when it becomes law.
SECTION 12.(a) G.S. 105-187.51A reads as rewritten:
"§ 105-187.51A. Tax imposed on manufacturing fuel.
A privilege tax is imposed on a manufacturing industry or plant that purchases fuel
to operate the industry or plant. The tax is ° seven-tenths percent (0.7%)
of the sales price of the fuel. The tax does not apply to electricity or piped natural gas."
SECTION 12.(b) G.S. 105-187.51A, as amended by subsection (a) of this
section, reads as rewritten:
"§ 105-187.51A. Tax imposed on manufacturing fuel.
A privilege tax is imposed on a manufacturing industry or plant that purchases fuel
to operate the industry or plant. The tax is five-tenths percent
0.5/o of the sales price of the fuel. The tax does not apply to electricity or piped
natural gas."
SECTION 12.(c) G.S. 105-187.51A, as amended by subsection (a) of this
section, reads as rewritten:
"§ 105-187.51A. Tax imposed on manufacturing fuel.
A privilege tax is imposed on a manufacturing industry or plant that purchases fuel
to operate the industry or plant. The tax is five to atlas pe.eent. (0 G0-) three-tenths
SL2007-0397 Session Law 2007-397 Page 21

percent (0.3%) of the sales price of the fuel. The tax does not apply to electricity or
piped natural gas."
SECTION 12.(d) G.S. 105-187.51A is repealed.
SECTION 12.(e) Subsection (a) of this section becomes effective 1 October
2007 and applies to fuel purchased on or after that date. Subsection (b) of this section
becomes effective 1 July 2008 and applies to fuel purchased on or after that date.
Subsection (c) of this section becomes effective 1 July 2009 and applies to fuel
purchased on or after that date. Subsection (d) of this section becomes effective 1 July
2010. The remainder of this section is effective when it becomes law.
SECTION 13.(a) Article 3B of Chapter 105 of the General Statutes is
amended by adding a new section to read:
"& 105-129.16G. Credit for donating funds to a nonprofit organization to enable
the noniprofit to acquire renewable enerLyv Property.
(a) re it. — A taxpayer who donates money to a tax-exempt nonprofit
or anization for the pu ose of providing unds for the organization to construct
purchase, or lease renewable energy property is allowed a credit under this section if the
nonprofit or anization uses the donation for its intended ose. A tax-exempt
nonprofit organization is an organization that is exempt from tax under section
501(c)(3) of the Code.
The amount of the credit allowed in this section is the taxpUer's share of the credit
the nonprofit organization could claim under G.S. 105-129.16A if the nonprofit
organization were subject to tax. The taxpayer's share of the credit is calculated by
dividing the tax a er's donation bv the cost of the renewable en prMeny
constructed purchased, or leased by the non rofit organization and Ha—i in service
during the taxable year and then multiplying this percentage by the amount of the credit
the nonprofit organization could claim if it were subject to tax. A tax a er must take the
credit allowed by this section in the year in which the property is placed in service. The
installment requirements in G.S. 105-129.16A for nonresidential 12ropertY do not apply
to the credit allowed in this section.
Records. — A nonprofit organization must keep a record of all donations it
receives for the purpose of providing funds for the organization to construct purchase
or lease renewable energy property and of the amount of the donations used for this
purpose. If a nonprofit organization places renewable energy property in service that is
purchased in whole or in part from donations made for this purpose, the nonprofit
organization must give each taxpayer who made a donation a statement setting out the
amount of the credit for which e taxpayer qualifies under this section. The statement
must describe the renewable energy property placed in service and state the cost of the
property, the amount of the credit the nonprofit or anization could claim under
G.S. 105-129.16A if it were subject to tax and the tax a er's share of the credit allowed
in this section. If the donations made for the renewable energy property exceed the cost
of the property, the nonprofit organization must prorate each taxpUer's share of the
credit. The sum of the credits allowed under this section to taxpayers who make
donations to a nonprofit organization may not exceed the amount of the credit the
nonl2rofit organization could claim under G.S. 105-129.16A if it were subject to tax.
c No Double Benefit. —A taxpayer who claims a credit under this section based
on a donation to a nonprofit organization is not allowed to deduct this donation as a
charitable contribution."
SECTION 13.(b) G.S. 105-130.5(a) is amended by adding a new
subdivision to read:
"(a) The following additions to federal taxable income shall be made in
determining State net income:
The amount of a donation made to a nonprofit organization for which a
credit is claimed under G.S. 1105-129.16G."
Page 22 Session Law 2007-397 SL2007-0397

SECTION 13.(c) G.S. 105-134.6(c) is amended by adding a new
subdivision to read:
"(c) Additions. — The following additions to taxable income shall be made in
calculating North Carolina taxable income, to the extent each item is not included in
taxable income:
The amount of a donation made to a nonl2rofit organization for which a
credit is claimed under G.S. 105-129.16 ."
SECTION 13.(d) G.S. 105-259(b) is amended by adding a new section to
read:
"(b) Disclosure Prohibited. — An officer, an employee, or an agent of the State
who has access to tax information in the course of service to or employment by the State
may not disclose the information to any other person unless the disclosure is made for
one of the following purposes:
38 To verify with a nonprofit organization information relating to
eli ibili for a credit under G.S. 105-129.16G."
SECTIO 13.(e) This section is effective for taxable years beginning on or
after 1 January 2008.
SECTION 14. The Utilities Commission shall submit to the Governor, the
Environmental Review Commission, and the Joint Legislative Utility Review
Committee a report on the actual results of the cost allocations established pursuant to
G.S. 62-133.7(h), as enacted by Section 2 of this act, G.S. 62-133.8(e) and
G.S. 62-133.8(f), as enacted by Section 4 of this act, and G.S. 62-133.2(a2) and
G.S. 62-133.2(a3), as enacted by Section 5 of this act, during the preceding two fiscal
years on or before 1 October of odd-numbered years. The Utilities Commission shall
submit the first report required by this section no later than 1 October 2009.
SECTION 15. If any section or provision of this act is declared
unconstitutional or invalid by the courts, the unconstitutional or invalid section or
provision does not affect the validity of this act as a whole or any part of this act other
than the part declared to be unconstitutional or invalid.
SL2007-0397 Session Law 2007-397 Page 23

SECTION 16. Sections 1, 2, 6, 7, and 8 of this act become effective 1
January 2008. The provisions of Section 2 of this act that provide for the recovery of
costs incurred under Section 2 aly only to costs that are incurred on and after 1
pp
January 2008. Sections 3, 4, 14, 15, and 16 of this act become effective when this act
becomes law. The provisions of Section 4 of this act that provide for the recovery of
costs incurred under Section 4 apply only to costs that are incurred on and after the date
that this act becomes law. Section 5 of this act becomes effective 1 January 2008
provided that (i) the provisions of G.S. 62-133.2, as amended by Section 5 of this act,
apply only to fuel and fuel-related costs incurred on and after 1 January 2008 regardless
of the test period established by the Utilities Commission, and (ii) the costs described in
G.S. 62-133.2(al)(3) that are incurred on and after the date this act becomes law shall
be recoverable as provided in G.S. 62-133.2 as amended by Section 5 of this act.
Sections 10, 11, 12, and 13 of this act become effective as provided in those sections.
Section 9 of this act becomes effective 1 July 2007.
In the General Assembly read three times and ratified this the 2°d day of
August, 2007.
s/ Beverly E. Perdue
President of the Senate
s/ Joe Hackney
Speaker of the House of Representatives
s/ Michael F. Easley
Governor
Approved 3:20 p.m. this 20t' day of August, 2007
Page 24 Session Law 2007-397 SL2007-0397

Ve O- S'
STATIE OF NORTH CAROLINA
DEPARTMENT OF JUSTICE
ROY COOPER P.O.Box 629 REPLY To:
ATTORNEY GENERAL RALEIGH,NC 27602 Marc Bernstein
ENVIRONMENTAL DIVISION
TEL;919-716-6600
FAX:[phone]
[e-mail]
MEMORANDUM
TO: Keith Overcash
Director,Division of Air Quality
FROM: Marc Bernsl�
Special Dep y Zorney General
DATE: September 28,2009
RE: Commercial and Industrial Solid Waste Incinerators
This memorandum addresses an approach for implementing§129 of the Clean Air Act,
42 U.S.C. §7429, in the wake of the vacatur of applicable federal rules.'
When reviewing permit applications,the permitting agency(in this case the Division of
Air Quality("DAQ"))must determine whether a source is required to comply with the
procedures and requirements of§129. In order to make that determination, DAQ must determine
whether the source is a"solid waste incineration unit,"which includes a determination of
whether the unit is combusting"solid waste." "Solid waste" for this purpose is not defined by
EPA. The statute merely refers to the Solid Waste Disposal Act("SWDA") for implementation
guidance. Several cases decided under the SWDA provide guidance regarding the definition of
"solid waste"and what information DAQ must collect in order to make its determination.
The SWDA cases suggest that whether a material is"solid waste"is a highly fact specific
determination. Therefore, for your guidance, I have attached a summary of the holdings of these
cases along with a brief discussion of other pertinent issues from those decisions.
This is an advisory memorandum only. It has not been reviewed or approved according to the
procedures for issuing Attorney General Opinions.

Based on those cases, you should request the following information from any permit
applicant to support your determination. You may need to request additional information on a
case-by-case basis.
1. Identification and description of the unit in which the applicant is requesting permission
to burn the fuels.
2. A narrative description of the process by which the fuel was developed, beginning with
virgin materials. The description should include(a) the approximate duration of each
phase of the process, (b)the duration between phases, i.e.,storage times, (c)the location
where each phase occurred in relation to the location where the fuel will be burned, (d)
the involvement of any third parties (including contact information for those parties)and
(e) whether the fuels were identified for use as fuels at the time they were created.
3. A narrative description of the complete industrial processes that occur on the site where
the fuels will be burned. (A description of processes that are unrelated to the fuels and
that will not use energy or other products of combustion of the fuels is not necessary.)
4. A physical and chemical description of the finished fuels,including the extent to which
the fuels are physically and/or chemically similar to virgin materials that are also used for
fuel and the extent to which the fuels are physically and/or chemically different from the
virgin materials used to create them.
5. Identification and description of any existing markets for the fuels, including a discussion
of the historical existence of the market, the size of the market and approximate prices for
the fuels over time.
6. Identification of any treatment processes actually applied to the fuel at any stage or any
treatment plan that applies to the fuel regardless of whether the plan was actually
implemented. This should include all plans regardless of whether they were required by
law or maintained by the applicant or a third party. This should also include all treatment
processes applied by third parties.
7. A description of the general market use of the fuel material whether it is generally used as
a fuel, another useful commodity or a waste. The description should include the
approximate percentage of the total market that uses the material as a fuel, another useful
commodity,or a waste.
8. A description of any benefits derived from the combustion of the fuels other than energy
production.
9. To the extent possible, with regard to any third parties that handle the fuels, all of the
above information.
10. Any other information relevant to whether the fuel is a solid waste, including whether it
was discarded at any time, even briefly.
Once this information is provided by the applicant, DAQ should consult with the
Division of Waste Management for assistance in determining whether the applicant has provided
all the information requested;whether further information is needed; and whether the fuel should
be determined to be a"solid waste." The final decision regarding the completeness of the
application and whether the fuel is a"solid waste"must be made by DAQ.
2

i
ATTACHMENT
Maior authorities reeardine SWDA definition of"solid waste"
Statutory Definition
RCRA§1004,42 U.S.C. § 6903(27) (2009).
The term solid waste means any garbage, refuse, sludge from a waste treatment plant,
water supply treatment plant, or air pollution control facility and other discarded material,
including solid, liquid, semisolid,or contained gaseous material resulting from industrial,
commercial,mining, and agricultural operations,and from community activities,but does
not include solid or dissolved material in domestic sewage, or solid or dissolved materials
in irrigation return flows or industrial discharges which are point sources subject to
permits under section 402 of the Federal Water Pollution Control Act, as amended (86
Stat. 880) [33 USC §1342], or source, special nuclear, or byproduct material as defined
by the Atomic Energy Act of 1954, as amended(68 Stat. 923) [42 USC §§2011 et seq.].
Maior Case Decisions2
1. Safe Air v Meyer,373 F.3d 1035(9th Cir. 2004).
Practice of burning Kentucky bluegrass hay and stubble demonstrates that hay and
stubble are not solid waste because the hay and stubble are used by the producers in a
continuous on-site process that produces benefits for farming by conditioning the soil etc.
The materials were not burned for fuel value.
2. Safe Food& Fertilizer v. EPA, 350 F.3d 1263 (D.C. Cir. 2003).
EPA reasonably determined that feedstock and fertilizer made from zinc-bearing waste
from unrelated industrial processes (e.g., steel manufacturing using electric arc furnaces)
were not solid wastes. This determination was based on a combination of the market
participation and chemical identity theories(along with limits in order to ensure
substantial chemical identity). The market participation theory refers to whether market
participants treat the materials as a positively valued commodity or a negatively valued
waste. Chemical identity refers to the fact that the product is substantially chemically
identical to a product that is formed from virgin materials and used in the same manner.
Additionally,the court held that if finished products are used in a useful manner and not
"discarded,""it follows that feedstocks used to manufacture them are also not `discarded'
—and therefore not waste—since the feedstocks are ingredients in a non-discarded final
product."
Finally,the court clarified AMC I(discussed below),indicating that although use of a
by-product by the party that produced the by-product tends to negate its characterization
as a"solid waste,"the transfer of a by-product to a third party does not automatically
mean it is"discarded." In AMC I petroleum by-products were"returned to an appropriate
stage in the refining process so they can eventually be used." In Safe Food &Fertilizer
2 The cases are presented in reverse chronological order. Later cases should be understood to
qualify earlier decisions.

the party that was using the by-product was producing fertilizer,which was entirely
unrelated to the industrial processes that generated the by-product. The court concluded
that this difference was not determinative.3 The ultimate question continues to be
whether the by-products could"reasonably be considered part of the waste disposal
problem."
3. Am. Petroleum Inst. v. EPA,216 F.3d 50(D.C. Cir. 2000).
(1)EPA may characterize primary treatment as the first step of waste disposal and
therefore classify anything that is undergoing primary treatment as solid waste if EPA
determines that the purpose of the primary treatment was to facilitate waste disposal. If
the purpose of primary treatment was to recover valuable product for re-insertion into the
production process, EPA may not characterize it as waste disposal. (2)EPA had
authority to implement provisions regarding waste recycling to ensure against sham
recycling; that is,to ensure that non-useful by-products were not recycled along with
useful by-products for the sole purpose of avoiding waste disposal rules.
4. Assn of Battery Recyclers, Inc. v EPA,208 F.3d 1047 (D.C. Cir.2000).
For a material to escape classification as a solid waste, RCRA does not require that a
material be reused immediately in the industrial process in the sense that no time passes.
However, qualifying AMC I(discussed below), the material must be immediately reused
in the sense that it must be directly reinserted into the industrial process.
5. Owen Elec. Steel Co. of S.C., Inc. v Browner,37 F.3d 146(4th Cir. 1994).
Slag that sits untouched for six months before it is sold to other entities for reclamation is
reasonably classified as solid waste. The"fundamental inquiry"is whether the materials
are immediately recycled by the same industry.
6. United States v. ILCO,996 F.2d 1126(llth Cir. 1993).
Spent batteries from which a recycler extracted materials to produce lead ingots were
solid waste because EPA reasonably concluded that an item needs only to be discarded
once to be discarded. It does not need to be finally and forever discarded.
7. Connecticut Coastal Fishermen's Assn v. Remington Arms Co.,989 F.2d 1305 (2d
Cir. 1993)
Lead shot and clay targets that have been left in the ground and water after being used for
their intended purpose are solid waste.
8. Am. Mining Congress v. EPA, 907 F.2d 1179(D.C. Cir. 1990) ("AMC IF').
It was within EPA's discretion to regulate as"solid waste"materials that were stored on
site in a holding pond that may be reclaimed some time in the future but were not at the
time part of an ongoing industrial process, and in fact were being treated in wastewater
treatment systems.
3 In both AMC I and Safe Food&Fertilizer the by-product was used as feedstock for a
production line. No court has determined whether a by-product used for burning as fuel is a
solid waste.
2
I

9. Am. Petroleum Inst. v. EPA,906 F.2d 729, 741 (D.C. Cir. 1990).
EPA had authority to regulate as a solid waste materials that were delivered to a third
party as part of a waste treatment plan, because they were no longer part of an ongoing
process. A material does not lose its status as solid waste just because it is reclaimed at
some later time by a third party.
10. Am.Mining Congress v EPA, 824 F.2d 1177(D.C. Cir. 1987) ("AMCP')
Materials that were destined to be reused onsite by the same entity immediately as part of
an ongoing industrial process were not discarded and were not solid waste.
3