13B_.1500_HearingOfficersReport

HEARING OFFICER'S REPORT OF PROCEEDINGS OF
PUBLIC HEARING AND COMMENT PERIOD
Readoption and Amendments to
15A NCAC 13B .1500
Standards for Special Tax Treatment of Recycling and
Resource Recovery Equipment and Facilities
Department of Environmental Quality
January 7, 2021
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Basic Information
Agency Department of Environmental Quality
Division of Waste Management, Solid Waste Section
Title Standards for Special Tax Treatment of Recycling and Resource Recovery
Equipment and Facilities
Citations 15A NCAC 13B .1500
Description of the It is the responsibility of the Division of Waste Management Solid Waste
Proposed Rules Section to regulate how solid waste is managed within the state under the
statutory authority of the Solid Waste Management Act, Article 9 of Chapter
130A of the General Statutes. State rules governing solid waste
management are found in Title 15A, Subchapter 13B of the North Carolina
Administrative Code. Section .1500 regulates the application and
qualification process for special tax treatment of recycling and resource
recovery equipment and facilities.
Agency Contact Jessica Montie
Environmental Program Consultant
[e-mail]
[phone]
Authority G.S. 130A-294(a)(3) and G.S. 105-275(8)(b)
Statement of Necessity These rules are proposed for readoption in accordance with G.S. 15013-
21.3A.
Hearing Officer Jason Watkins, Solid Waste Section Field Operations Branch Head
Comment Period November 2, 2020 to January 4, 2021
Public Hearing A virtual public hearing was held via WebEx on December 3, 2020.
Comment Summary No verbal comments were received at the December 3, 2020 public hearing.
Two written comment letters were received from interested parties on the
proposed rules during the public comment period.
Appendices APPENDIX 1 —Agency Head Certification Form
APPENDIX 2 — Notice of Text
APPENDIX 3 — Hearing Attendance Sheet and Transcript
APPENDIX 4 — Written Comments Received During the Comment Period
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Rule Summary and Backaround
The Division of Waste Management (Division) Solid Waste Section (Section) is responsible for
regulating solid waste management within the state under the statutory authority of the Solid
Waste Management Act, Article 9 of Chapter 130A of the General Statutes. Existing rules adopted
by the Department of Environmental Quality (DEQ) under the authority of G.S. 130A-294(a)(3)
are codified at Title 15A, Subchapter 13B of the North Carolina Administrative Code, Section
.1500 Standards for Special Tax Treatment of Recycling and Resource Recovery Equipment and
Facilities. Section .1500 establishes standards for qualification as a "recycling, reduction or
resource recovering facility" or as "recycling, reduction or resource recovering equipment" for the
purpose of special tax classifications or treatment, and to certify as qualifying those applicants
which meet the established standards. These rules are proposed for readoption in accordance
with G.S. 150B-21.3A; and are required to be readopted by DEQ by the deadline set by the Rules
Review Commission of April 30, 2021.
The Section's webpage regarding tax certifications can be found at this link:
https://deg.nc.gov/about/divisions/waste-management/solid-waste-section/tax-certification.
The Section's webpage regarding the rule readoption process can be found at this link:
httos://dea.nc.aov/about/divisions/waste-manaaement/solid-waste-section/rules-review.
A fiscal note was prepared for the amendments to Rules .1501 - .1503. No fiscal note is required
for the repeal of Rules .1504 - .1514. The North Carolina Office of State Budget and Management
(OSBM) initially approved the fiscal note on July 29, 2020. Some revisions were made to the rules
and fiscal note after approval, and the revised version of the fiscal note was approved for
publication on September 22, 2020. The fiscal note indicated some impacts to state and local
governments, mainly in benefits, but no substantial economic impact as a result of the
amendments.
Public Comment and Hearing
The proposed rules and the fiscal note were approved by the Secretary of DEQ to proceed to
public comment and hearing on October 1, 2020. The Agency Head Certification is included in
Appendix 1. The proposed rules were published in the NC Register, Volume 35, Issue 09, and
the proposed rules and fiscal note were published on DEQ's proposed rules website
(https://deg.nc.gov/documents/15a-ncac-13b-1500-recycling-tax-certifications) throughout the
public comment period from November 2, 2020 through January 4, 2021. The notice of text from
the NC Register is included in Appendix 2.
The Division also sent a link to the published notice, rule text, and fiscal note for public comment
to interested parties including county tax assessors, tax certification applicants for the last five
years, staff from the Department of Revenue and the Department of Commerce, staff from the
DEQ Recycling Business Assistance Center, environmental groups, solid waste management
organizations, the League of Municipalities, and the Association of County Commissioners via e-
mail on October 30, 2020.
Public Hearing
The Division held a virtual public hearing via WebEx Events for this rule set on December 3, 2020.
Jason Watkins, Field Operations Branch Head for the Solid Waste Section, served as the hearing
officer for the hearing. The public notice provided a link for interested parties to register to speak
at the hearing. The hearing attendance sheet and transcript can be found in Appendix 3. The
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public hearing was attended by representatives of the Recycling Association of North America
(RANC) and a tax consulting company. No comments were provided at the public hearing.
Written Comments
Written comments that were received during the comment period can be found in Appendix 4. A
summary of the written comments received and DEQ's responses to those comments are
provided below.
Comment Letter #1
Submitted By. Daniel Williams, Franklin County Tax Administrator
Date Received: November 16, 2020
Comment:
Having reviewed the material provided the only issue that I see is that throughout the
rule(s) we refer to the "tax collector" however, all of the interactions for this rule should be
with the county "tax assessor."
Agency Response:
DEQ agrees that the rules need to refer to the county assessor instead of the tax collector. DEQ
has revised Rule .1501 to add a definition of "county assessor" as being the county assessor
established by Article 16 of Chapter 105 of the General Statutes and removed the definition for
tax collector. Rules .1502 and .1503 were also revised to replace all uses of the term "tax
collector" with "county assessor."
Comment Letter #2
Submitted By: Kim Marston with Brooks Pierce, Counsel to the Recycling Association of North
Carolina (RANC)
Date Received: January 4, 2021
Ms. Marston originally submitted a comment letter on December 2, 2020; but sent a revised
comment letter after two conference calls on December 4 and 18, 2020 between Section staff,
Ms. Marston, and Steve Levetan with RANC provided clarity on the rule changes and their intent.
Comments:
On behalf of the Recycling Association of North Carolina (RANC)
(www.ncrecyclingassociation.org), I offer these amended comments on the above -
captioned proposed rules. Our firm serves as Counsel to the Association, which
represents an industry employing over 5,000 people in North Carolina and whose activities
annually process tons of materials keeping them out of solid waste landfills. These
amended comments (which revise comment numbers 3 and 4) are intended to replace
our original comments submitted on December 2, 2020.
Materials handled by this industry are not "solid waste" as defined in North Carolina law
and any rule changes should recognize and preserve this distinction. They should also
be consistent with current relevant State law. This is especially important since the
proposed rules relate to "tax certification for real and personal property used in recycling
and resource recovery."
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Comment #1
"Recovered materials" are not solid waste.
It is important to note that "recovered materials," as defined in G.S. 130A-290(a)(24)
and-309.5(c), are not solid waste under G.S. 130A-290(a)(35)(f). Instead, "recovered
materials" are materials that have been diverted or removed from the solid waste stream.
Importantly, "recovered materials" are not subject to regulation as solid waste pursuant
to G.S. 130A-309.5(c).
The proposed rules do not provide a clear definition of "recovered materials." Plus,
reference to the statutory definition of "recycling" fails to recognize the distinction
between recovered materials and solid waste in the same way existing rules .1503, .1504,
and .1505 do when they use the term "recovered resources" or "recovered materials."
A definition of "recovered materials" that maintains the distinction from solid waste should
be added to the proposed rules. Further, any definitions of "recycling" should use the
terms "recovered materials" and "recyclable materials."
Comment # 2
Related to Comment #1, the definitions in the proposed rules are important
The proposed 15A NCAC 13B .1503 indicates, among other things, that when the
Department receives an application for tax certification that complies with Rule .1502 of
this Section, the Department shall conduct an inspection, investigation, or verification of
the requested property to confirm that it qualifies as a recycling or resource recovery
facility or as recycling or resource recovery equipment for the purpose of special tax
classifications or treatment in accordance with G.S. 130A-294(a)(3) and the requirements
of this Rule. (emphasis added).
"Resource recovery" is defined in G.S. 130A-290(a)(29) as "the process of obtaining
material or energy resources from discarded solid waste which no longer has any useful
life in its present form and preparing the solid waste for recycling.
The definition of "resource recovery" in the proposed 15A NCAC 13B .1501 references
the statutory definition but adds this sentence: "The term includes the transportation and
storage of recyclable materials and recovered materials."
This last sentence of proposed Rule .1501(11) should be revised because it has the
potential to confuse solid waste concepts (e.g., "resource recovery") with things that are
not solid waste concepts (e.g., "recycling" and "recovered materials."). Specifically, it could
be read to include entities that engage in recycling which transport or store recyclable
materials or recovered materials for use in its recycling processes. A potential revision
may be: "the term includes the transportation and storage of materials used or created in
the resource recovery process by the applicant for a tax certification."
Amended Comment # 3
Existing Rule 15A NCAC 13B .1506(c) provides, "Qualifying equipment and facilities must
be used in a mechanical or chemical process, in transportation, or in storage."
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As noted in Comment # 2, proposed Rule .1501(11) appears to be incorporating this
aspect of the existing rule into the new definition of "resource recovery." However, a
similar clause was not added to the definition of recycling in the proposed rule.
The definition of "recycling" in proposed Rule .1501(9) should be revised to include
transportation and storage similar to proposed Rule .1509(11).
Alternatively, an amendment to proposed Rule .1503(c) and (d) to include facilities and
equipment that are used in recycling, resource recovery, or in transportation or storage of
recyclable materials, recovered materials, or new materials could be added.
Amended Comment # 4
The current tax certification rules under 15A NCAC 13B .1504 define the "recycling
process," as
(a) To constitute recycling, the recovered materials must be so altered in form that
the original materials lose their identity, and a new product is formed. A physical
rather than a chemical change may be all that occurs but a substantial change in
the form of the materials must occur.
(b) The recycling process ends when a new product has been created from the
recovered materials, even though the complete manufacturing process involving
the recycled products has not concluded.
This current definition uses terms that mirror the commonly accepted legal definition of
"manufacturing" in North Carolina. See Duke Power v. Clayton, 274 N.C. 505, 514, 164
S.E.2d 289, 295 (1968) (defining manufacturing "as the producing of a new article or use
or ornament by application of skill and labor to raw materials").
The Tax Certification Guidelines for Pollution Abatement Property and Recycling and
Resource Recovery of or from Solid Waste Property provide further explanation to
illustrate current Rule .1504(b) on when the recycling process ends: "It is important to note
that the recycling process ends when the new product is formed, even if the complete
manufacturing process has not. This would mean any equipment used on this product
after it has changed forms would not qualify." Guidelines at p. 17
(https://files.nc.gov/ncdor/documents/forms/tax_certification_guidelines.pdf).
RANC recognizes and supports the Department's effort to preserve or improve the clarity
of this distinction between a recycling process (which is a type of manufacturing subject
to special tax classification under G.S. 105-275(8)(b)) and other manufacturing or non -
manufacturing processes (for which property is not eligible for tax certification). RANC also
recognizes that the determination of what property is subject to special tax classification
is fact -specific and based on the unique circumstances of each applicant.
However, RANC has concerns about the clarity of the proposed rules. Proposed rule
.1501(4) defines a "manufacturing process" as "a process by which goods are produced
for sale or use from raw materials or from new materials resulting from a recycling or
resource recovery process, or a combination of these materials."
Proposed .1501(5) defines a "new material" as "a material that was generated from a
recycling or resource recovery process that can be used without further processing in the
same way as a raw material in a manufacturing process."
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The proposed rules do not define "raw materials.
Coupled with the removal of the current definition of recycling process in current Rule
.1504(a), which tracks the common law definition of manufacturing, this lack of a definition
of "raw materials" creates the potential for confusion as to whether recycling is a
manufacturing process. For example, if "raw materials" means virgin materials (e.g., wood,
iron, glass, etc.), then recyclers could not meet the definition for manufacturing under the
proposed rule because they would not be making products from raw materials or from new
materials.
It is clear, however, that recyclers are manufacturers under the current tax certification
rules, other North Carolina statutes, and common law. See, e.g., G.S. 105-129.25,
defining a "recycling facility" as a "manufacturing plant at least three -fourths of whose
products are made of at least fifty percent (50%) post -consumer waste material measured
by weight or volume..." (emphasis added).
Ultimately, any new rule or definitions should recognize that the recycling process is a
specific type of manufacturing. RANC proposes the revisions below as a starting point for
the Department in the hopes that potential confusion or inconsistency can be avoided
while still achieving the Department's intent to provide guidance for the Department, tax
assessors, and applicants to know what property is used for recycling or resource recovery
and what property is used for other, non -qualified, processes.
The proposed definitions of "new material" and "Recycling" attempt to recognize that a
recycler may perform operations on a material after the moment it has been transformed
and that such operations are typically considered to be "Recycling." Instead, it draws the
line, for tax certification purposes, when the new material is used as an ingredient material
with other ingredient materials to produce a good.
Replace proposed .1501(4) with:
(4) "Production process" means all steps of manufacturing by which goods are produced
for sale or use from ingredient materials by conditioning, treating, or other operations
turning out goods for sale or use.
Revise proposed .1501(5) to read:
(5) "New material" means a material that is generated from a recycling or resource
recovery process. A "new material" is created when any ingredient materials are
transformed into an article with a distinctive name, character, or use, even if the new
material will be used with other ingredient materials in subsequent manufacturing
processes.
Revise proposed .1501(6) to read:
(6) "Production scrap" means excess or unusable material that is generated during a
production process and is returned to be reused in the same production process. An
example of production scrap is excess metal or cardboard or textiles from a sheet of metal
or cardboard or batting that remains after a portion of the sheet is cut, stamped, trimmed,
or formed to make a product, and the excess material is collected and returned to the
process or equipment where the original sheet or batting was created. Another example
of production scrap is a material that does not meet the quality standards or customer
specifications for sale or use as determined by the person or business; and are returned
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to the production process. Production scrap does not include excess materials that are
combined with recovered materials and returned to be reused in a recycling process.
Revise proposed .1501(9) to read:
(9) "Recycling" means the term defined in G.S. 130A-290. Recycling ends when a new
material has been created. The term does not include the use of the new material as an
ingredient material in subsequent production processes.
Agency Response:
Response to Comments #1, #2, and #3:
The terms "recycling," "resource recovery," "recyclable material," and "recovered material" are all
defined in G.S. 130A-290(a), and Rule .1501 incorporates all definitions in G.S. 130A Article 9.
Since these terms are already defined for the purpose of these rules, and to avoid confusion with
the statute definitions, the Division has now revised Rule .1501 to remove the proposed
references to the statute definitions for "recycling" and "resource recovery," and the added
clarifying text, and will rely strictly on the statute definitions. As suggested in Comment #3, the
additional clarification regarding transportation and storage was added to the requirements for
qualification in Rule .1503 instead.
Response to Comment #4:
The intention of these rules is only to determine what does or does not qualify as recycling for the
purpose of special tax treatment, regardless of whether the recycling is or is not a part of a
manufacturing process, or being conducted by a manufacturer or at a manufacturing plant. A
recycling facility may be considered a manufacturing plant, but not all parts of a manufacturing
process are recycling, and not all recycling is done at manufacturing plants.
Note also that the rules of this Section do not apply to and do not interpret Article 3C of Chapter
105 of the General Statutes, which pertains to tax credits for recycling facilities but does not
pertain to property tax exemptions or the certifications governed by the rules in Section .1500.
Also, the definitions in Article 3C do not apply to these rules. The Division has added a paragraph
at the beginning of Rule .1502 to clarify this applicability.
The Division agrees that recycling can be part of or a type of manufacturing process, and the
intent of the rule change was only to clarify that any continued manufacturing taking place after
the recycling portion of the manufacturing process ends, or any process outside of a recycling
process altogether, does not qualify for special tax treatment under these rules. The Division has
revised the proposed definition of "manufacturing process" to use the term "production process"
instead, to avoid confusion with statutory definitions of manufacturers or manufacturing plants.
For the purpose of these rules only, a production process is meant to be broad, and the term itself
is only used to clarify the definitions for production scrap (replacing "manufacturing process") and
new material. No requirements or exclusions are imposed by these rules on the production
process itself.
As used in these rules, "raw material" is not meant to have a meaning other than the common
meaning found in Merriam-Webster's dictionary or Wikipedia, and is also meant to be broad, and
to include virgin materials. Following the revisions described above, the term raw material is only
used in the definition for "production process," which states that it includes both raw (virgin) and
new (post -recycling) materials, or a combination of both, and does not exclude any materials; and
the definition does not apply outside of these rules in Section .1500. Raw materials could include
new (post -recycling) materials too, and the term "new materials" was only added separately to
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this definition/statement to be clear that the definition of a production process did not exclude
post -recycling materials.
As mentioned in response to Comments #1-3 above, references to the definitions for "recycling"
and "resource recovery" were removed from Rule .1501, since the statute definitions of these
terms were incorporated in the first paragraph of Rule .1501.
To address the concerns in these comments, and to clarify when the recycling process ends, the
definition of "new material" was revised to utilize the language more closely in existing Rule. 1504
regarding the recycling process. Rule .1503 was then revised to state that facility space and
equipment used for processing new material does not qualify.
Summary
Two written comment letters were received from interested parties during the public comment
period on 15A NCAC 13B Section .1500. No comments were provided at the December 3, 2020
public hearing. DEQ has made changes to the rules to address the public comments received as
described above, and the changes are highlighted in the rule text submitted for adoption.
Hearing Officer's Recommendation
The Hearing Officer recommends that the Department of Environmental Quality adopt
amendments to Rules .1501 - .1503, including the highlighted changes made after the public
comment period; repeal 15A NCAC 13B Rules. 1504-.1508,.1510, and .1512-.1514, and approve
the fiscal note, which is unchanged from the published version.
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APPENDIX 1
Agency Head Certification Form
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CERTIFICATION OF THE AGENCY HEAD
REGARDING COMPLETION OF A FISCAL NOTE AND RULE ANALYSIS
IN RE: 15A NCAC 13B SECTION .1500 STANDARDS FOR SPECIAL TAX
TREATMENT OF RECYCLING AND RESOURCE RECOVERY EQUIPMENT AND
FACILITIES
FINDINGS
The Secretary is the head of the Department of Environmental Quality ("the
Department"). G.S. § 143B-279.4(a).
The Department has the duty to aid in the promotion of conservation and development
of the natural resources of the State and to provide for the protection of the environment
and the management of the State's resources. G.S. § 113-3, 143B-279.2(1), (1 b), and
(3).
The undersigned Secretary of the Department of Environmental Quality hereby certifies
that the attached rules comply with the rulemaking principles set out in Executive Order
No. 70. The Secretary specifically certifies the following:
The attached rules are necessary because the rules are
required by federal law, citation:
X required by state law, citation: G.S. 15013-21.3A
X deemed necessary by the agency to serve the public interest for
the purpose of special tax classifications or treatment in
accordance with G.S. 105-275(8)(b) and under the authority of G.S.
130A-294(a)(3)
2. These rules were based on sound, reasonably available scientific, technical,
economic, and other relevant information that can be found in the rulemaking record.
The rulemaking records can be found on the Department's website at
htt s://de .nc. ov/abouVdivisions/waste-mana ement/solid-waste-section/rules-review
or may be requested from Jessica Montie of the Division of Waste Management at
[e-mail].
3. The fiscal impacts of these rules have been analyzed and appropriate action taken as
follows:
The Department determined that no fiscal note was required under G.S. §
15013-21.4, or
X A fiscal note has been prepared and approved by the Office of State
Budget and Management in accordance with G.S. § 150B-21.4. A copy of
the fiscal note can be found in the rulemaking record at the locations
described in (2) above.
4 The rules meet all other requirements of Executive Order No. 70.
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Based upon the foregoing Findings, and pursuant to the requirements of the North
Carolina Administrative Procedures Act and Executive Order No. 70, the undersigned
makes the following:
CERTIFICATION
The following proposed rules, 15A NCAC 13B Section .1500, entitled "Standards for
Special Tax Treatment of Recycling and Resource Recovery Equipment and Facilities",
are in compliance with Executive Order No. 70.
S-�
This, the day of October, 2020 at Raleigh, North Carolina.
r
/�P,
—A., e - , " j Michael S. Regan
Secretary
North Carolina Department of Environmental Quality
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APPENDIX 2
Notice of Text
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TITLE 15A — DEPARTMENT OF ENVIRONMENTAL QUALITY
Notice is hereby given in accordance with G.S. 150B-21.2 and G.S. 150B-21.3A (c) (2)g. that the Department of Environmental Quality
intends to repeal the rule cited as 15A NCAC 13B .1510, readopt with substantive changes the rules cited as 15A NCAC 13B .1501-
.1503, and repeal through readoption the rules cited as 15A NCAC 13B .1504-.1508, and .1512-.1514.
Pursuant to G.S. 150B-21.17, the Codifier has determined it impractical to publish the text of rules proposed for repeal unless the
agency requests otherwise. The text of the rule(s) are available on the OAHwebsite at http://reports.oah.state.nc.us/ncac.asp.
Link to agency website pursuant to G.S. 150B-19.1(c): https://deq.nc.govlpermits-regulations/rules-regulations/proposed-main
Proposed Effective Date: March 1, 2021
Public Hearing:
Date: December 3, 2020
Time: 4: 00 p.m.
Location: : A virtual public hearing will be held by webinar as follows:
WebEx Events meeting link:
https: //ncdenrits. webex. com/ncdenri is/onstage/gphp?MTID= ee5e682c55c8333e69aed28243d4aad3f
Event number (access code): 171 691 8436
Event password: DWM1203
Call [phone] US TOLL, enter access code
If you wish to attend the hearing, you must register before 5: 00 pm on Wednesday, December 2, 2020.
Registration information can be found on the DEQ Proposed Rule webpage at the following link: https:lldeq.nc.gov/documents/15a-
ncac-13b-1500-recycling-tax-certifications
Reason for Proposed Action: Rules .1501-.1503 are proposed for readoption in accordance with G.S. 150B-21.3A, with amendments
to update these rules to consolidate the requirements of this Section, to provide clarification, and to incorporate into rule currentpolicies
and guidance. Rules .1504-.1508, .1510, and .1512-.1514 are proposed for repeal because the requirements of these rules have been
moved to Rules .1501-.1503, can be found in the general statutes, or are no longer necessary.
Comments may be submitted to: Jessica Montie, 1646 Mail Service Center, Raleigh, NC 27699-1646; phone [phone]; fax
[phone]; email [e-mail] (please include "Solid Waste Rule Readoption " in the subject line)
Comment period ends: January 4, 2021
Procedure for Subjecting a Proposed Rule to Legislative Review: If an objection is not resolved prior to the adoption of the rule, a
person may also submit written objections to the Rules Review Commission after the adoption of the Rule. If the Rules Review
Commission receives written and signed objections after the adoption of the Rule in accordance with G.S. 150B-21.3(b2) from 10 or
more persons clearly requesting review by the legislature and the Rules Review Commission approves the rule, the rule will become
effective as provided in G.S. 150B-21.3(bl). The Commission will receive written objections until 5:00 p.m. on the day following the
day the Commission approves the rule. The Commission will receive those objections by mail, delivery service, hand delivery, or
facsimile transmission. If you have any further questions concerning the submission of objections to the Commission, please call a
Commission staff attorney at 919-431-3000.
Fiscal impact. Does any rule or combination of rules in this notice create an economic impact? Check all that apply.
® State funds affected
® Local funds affected
❑ Substantial economic impact (>= $1,000,000)
® Approved by OSBM
❑ No fiscal note required
CHAPTER 13 - SOLID WASTE MANAGEMENT
SUBCHAPTER 13B - SOLID WASTE MANAGEMENT
SECTION .1500 - STANDARDS FOR SPECIAL TAX TREATMENT OF RECYCLING AND RESOURCE RECOVERY
EQUIPMENT AND FACILITIES
15A NCAC 13B .1501 DEFINITIONS
The definitions in Article 9 of Chapter 130A of the General Statutes and the following definitions shall apply to the rules of this Section.
"Applicant" means a person that submits an application to the Department to request tax certification for real property
or personal property. The applicant shall be a business conducting a recycling or resource recovery process or shall
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be a Derson that owns real or personal Droperty that is beine used by or leased to a business conducting a recycling or
resource recovery process.
"Incidental or supportive equipment" means personal property that is used at any time for a purpose other than
recycling or resource recovery; is not necessary for recycling or resource recovery to occur; or has a primaa pmose
that is not recycling or resource recovery. Incidental or supportive equipment includes personal property that is used
at any time for administrative, safety, or maintenance services, even though it may be used in support of a recycling
or resource recovery process, or that is used to provide comfort, safety, or convenience for employees such as:
(a) spare parts;
office furniture or equipment;
(c) employee personal protective or safety equipment;
kitchen or breakroom furniture, equipment, or appliances;
(e) heating or air conditioning equipment for employee comfort;
(f) fire alarms or fire suppression systems;
W vehicles used to transport employees, new materials, or waste for disposal at any time; and
landfill gas vents or wells that are required by a permit issued by the Department.
"Incidental or supportive facilities" means real property or parts thereof that is used at any time for a purpose other
than recycling or resource recovery; is not necessary for recycling or resource recovery to occur, or has a primary
purpose that is not recycling or resource recovery. Incidental or supportive facilities include real property that is used
at any time for administrative, safety, or maintenance services, even though it may be used in support of a recycling
or resource recovery, or that is used to provide comfort, safety, or convenience for the employees such as:
(a) office space,
conference rooms;
(c) bathrooms;
kitchens;
(e) employee breakrooms;
(f) employee parking;
W maintenance sheds;
maintenance areas;
stormwater basins; and
W unused areas.
"Manufacturing process" means a process by which goods are produced for sale or use from raw materials or from
new materials resulting from a recycling or resource recovery process, or a combination of these materials.
"New material' means a material that was ,generated from a recycling or resource recovery_ process that can be used
without further processing in the same way as a raw material in a manufacturing process.
"Production scrap" means excess or unusable material that is generated during a manufacturing process and is returned
to be reused in the same manufacturing process. An example of production scrap is excess metal or cardboard or
textiles from a sheet of metal or cardboard or batting that remains after a portion of the sheet is cut, stamped, trimmed,
or formed to make a product, and the excess material is collected and returned to the process or equipment where the
original sheet or batting was created. Another example of production scrap is a material that does not meet the quality
standards or customer specifications for sale or use as determined by the person or business; and are returned to the
manufacturing process. Production scrap does not include excess materials that are combined with recovered materials
and returned to be reused in a recycling process.
(77) "Qualifying property" means requested property that meets the standards set forth in Rule .1503(c) or (d) of this
Section to qualify for certification as a recycling or resource recovery facility or as recycling or resource recovery
equipment for the purpose of special tax classification or treatment in accordance with G.S. 130A-294(a)(3) to be
eligible for exclusion from the tax base as set forth in G.S. 105-275(8)(b).
"Real property" means land and buildings, structures, improvements, or permanent fixtures on land, or a portion
thereof.
"Recycling" means the term defined in G.S. 130A-290. Recycling ends when a new material has been created from
the recovered material. The term does not include the subsequent manufacturing process that utilizes the new material.
"Requested property" means the real and personal property that have been included in an application for tax
certification submitted in accordance with Rule .1502 of this Section because the applicant is requesting that the
Department make a determination on whether these items qualify for exclusion from the property tax base.
11 "Resource recovery" means the term defined in G.S. 130A-290. The term includes the transportation and storage of
recyclable materials and recovered materials.
12 "Spare parts" means parts of equipment that are purchased for future or speculative use, but that have not been installed
in the equipment for which they were purchased.
"Personal property" means equipment that is used by a business that is not permanently affixed to real property.
14 "Tax certification" means a certification issued by the Department of Environmental Ouali , certifying that the
Department has determined that the real or personal property listed on the certification document meet the
requirements of the rules of this Section to qualify for certification as a recycling or resource recovery facility or as
recycling or resource recovery equipment for the purpose of special tax classifications or treatment in accordance with
G.S. 130A-294(a)(3) to be eligible for exclusion from the tax base as set forth in G.S. 105-275(8
15 "Tax collector" means the tax collector for the taxing unit as defined in G.S. 105-273 for the requested property.
Page 15 of 32

used thefein fef obtaining ma4er-ial or- efie Fam solid waste. The faefl4y also ifieludes !and eeeupied by the buildings and
nefit.
(b) Faeilities used to eelleet, saf4, of ethefwise prepare solid waste fef: r-euse of feeyeling afe Fesetiree Feeever-ing f6eilit
(e) Ineidental or- suppeFtive f4eilities and equipment as defined in .1 506(a) of this Seetion do not qualify fef speeial twE tf emmef4 as
f4eilities.
History Note: Authority G.S. 130A-294(a)(3);
Eff. June 2, 1976;
Readopted Eff. December S, 1977;
Amended Eff. December 6, 1991. 1991;
Readopted Eff. March 1, 2021.
15A NCAC 13B .1502 RESOURCE RECOVERING EQUIPMENT APPLICATION REQUIREMENTS
(a) An applicant for a tax certification for real and personal nroDertv used in recvcline or resource recovery shall submit one electronic
copy of an application to the Department. The applicant shall submit a copy of the application to the tax collector in accordance with
the requirements of the tax collector. The applicant shall provide a coon of the application to the person responsible for management,
operation, and maintenance of the requested property. The application form may be obtained from the Department's website at
https://deq.nc.gov/about/divisions/waste-management/solid-waste-section/tax-certification. An application for tax certification shall
contain the following information:
the applicant name, address, phone number, and e-mail address;
the name, address, and phone number for the location of the requested property;
the name, phone number, and email address for the person responsible for management, operation, and maintenance
of the requested property;
the name, phone number, and email address of the person filling out the application;
a description of facility operations, including the following information:
the types of business conducted at the facility location, such as manufacturing, retail, solid waste
management, recycling, or resource recover
the type and source of recyclable material that is received at the facility for resource recovery, or recovered
material that is received at the facility for recycling;
a description of the recycling or resource recovery process showing the steps involved the process, which
may be in the form of a flow chart or a narrative; and
the intended destination of any solid waste, recovered material, or new material leaving the facility;
the following information for each item of personal property for which certification is requested:
W name, make, and model number;
a unique identification number that is affixed to the personal property such as a serial number, vehicle
identification number, or asset number;
(CC•) the cost or value at the time of acquisition;
the year of acquisition, provided as the last two -digits of a four -digit year;
a description of how the personal property is used for recycling or resource recover
the percent of time the personal property is used for recycling or resource recovery; and
the vehicle registration or the invoice from the purchase of the personal property if the personal propertyis a
vehicle, trailer, or container that will be in use off site at the time of inspection by the Department. If an
invoice is required to be submitted and the trailer or container has no serial number that can be matched to
the invoice, the invoice number from the purchase of the trailer or container may be used as the unique
identification number required by Part (B) of this Subparagraph;
the following information for the real property for which certification is requested:
a facility drawing and aerial map outlining the recycling or resource recovery areas, including the
measurements of these areas;
a description of the real property, including the parcel number of the land and the requested square footage
of the facility space and the acreage of the land areas; and
a description of how the areas are used for recycling or resource recover
a copy of any notice of violation issued by the Department for violations of G.S. 113A, 130A, or 143, or the rules
adopted under G.S. I I3A, 130A, or 143 that are under the authority of the Department to administer or enforce, that
have not been resolved at the time of application submittal;
if the real or personal property is under a lease agreement, the contact information for the lessor and lessee stated in
the agreement, the expiration date of the lease agreement, and a copy of the executed lease agreement and amendments
signed by the lessor and lessee; and
10 a list of permit numbers for permits issued by the Department, or a unit of local government under delegated authority
by the Department, in accordance with G.S. 113A, 130A, and 143 and the rules adopted under G.S. 113A, 130A, and
143. The Department may request a copy of the permit if it is necessary to determine compliance with the rules of this
Section.
(b) The application shall be signed by the applicant and the person receiving the benefit of the tax exemption.
Page 16 of 32

(c) The rules of this Section shall not apply to the certification of real and personal property that is required by permit issued by the
Department's Division of Water Resources or the Division of Air Quality or the Division of Energy, Mining, and Land Resources for
the purpose of pollution abatement.
(d) The Department's Division of Waste Management mgy return an application if the Department determines that the real or personal
property is required to be submitted in an application for pollution abatement property to the Division of Water Resources because the
real or personal property is located at a facility where the majority of the feedstock accepted at the facility is excluded from the definition
of a solid waste pursuant to G.S. 130A-290(35).
(e) Requested property that is owned under a lease agreement shall be listed on a separate application from requested property that is
not owned under a lease agreement. A separate application shall be required for each separate lease agreement, unless the lessor, lessee,
and expiration date for the lease agreements are the same.
Q) The Department may request additional information if it is necessary to determine compliance with the rules of this Section, G.S.
105-275(8)(b), or G.S. 130A-294(a)(3). If the Department requests additional information, the Department shall request the information
in writing via e-mail at the e-mail address provided in the application in accordance with Subparagraph LZ4) of this Rule. The applicant
shall provide the requested information within 15 days of the request.
(a) The Department shall review the application to determine if the application complies with the requirements of this Rule. If the
Department determines that the application does not comply with this Rule, the Department shall return the application to the applicant;
and shall state in writing the reasons why the application is not in compliance with this Rule, and shall also provide a copy of this notice
to the county tax collector.
Fese Oees fivom- sollid �vaste. To "alify, the equipment need not be speeially designed for- the reseer-ee rwovefy Resoufee r-eee * X, . . . mt is equipment exelusively and integrally used in the aetual pr-eeess of recovering material of enefgy
History Note: Authority G.S. 130A-294(a)(3);
Eff.' June 2, 1976;
Readopted Eff. March 1, 2021; December 5, 1977.
15A NCAC 13B .1503 RECYCLING FACILITIES STANDARDS FOR QUALIFICATION FOR TAX CERTIFICATION
(a) This Rule establishes onlyqualification for tax certification by the Department. Nothing in this Rule shall establish or supersede
requirements for tax exemption application established or enforced by the tax collector.
(b) When the Department receives an application for tax certification that complies with Rule .1502 of this Section, the Department
shall conduct an inspection, investigation, or verification of the requested property to confirm that it qualifies as a recycling or resource
recovery facility or as recycling or resource recovery equipment for the purpose of special tax classifications or treatment in accordance
with G.S. 130A-294(a)(3) and the requirements of this Rule.
(c) Real property shall qualify as a recycling or resource recovery facility in accordance with G.S. 130A-294(a)(3) if the following
conditions are met:
the real property was included in the application for tax certification submitted to the Department in accordance with
Rule .1502 of this Section;
the person that will receive the benefit of exclusion from the property tax base for the real grope , complies with G.S.
113A, 130A, and 143 and the rules adopted under G.S. 113A, 130A, and 143 that are under the authoriy of the
Department to administer or enforce;
the real property shall not be used at any time for a purpose other than recycling or resource recover
the real property shall be necessary for recycling or resource recovery to occur;
the real property shall not be incidental or supportive facilities;
the real property shall not be used for handling or storing production scrap;
the buildings, structures, improvements, or permanent fixtures on land shall be constructed prior to the effective date
of the tax certification; and
the land itself shall not be located beneath any area of a building or structure that does not meet the requirements of
Subparagraphs phs (1) through (7) of this Paragaph.
( Personal grope , shall qualify as recycling or resource recoveryquipment in accordance with G.S. 130A-294(a)(3) if the following
conditions are met:
(11,) the personal property was included in the application for tax certification submitted to the Department in accordance
with Rule .1502 of this Section;
the unique identification number required to be included in the application in accordance with Rule 1502(a)(6)(B) of
this Section can be matched to the same identification number affixed to the personal property duringtpection,
unless the personal property meets the conditions of Rule .1502(a)(6)(G) of this Section;
the person that will receive the benefit of exclusion from the property tax base for the equipment shall comply with
G.S. 113A, 130A, and 143 and the rules adopted under G.S. 113A, 130A, and 143 that are under the authority of the
Department to administer or enforce;
the personal property shall not be used at any time for a purpose other than recycling or resource recover
(55,) the personal property shall be necessary for recycling or resource recovery to occur;
(66,) the personal property shall not be incidental or supportive equipment;
(77,) the personal property shall not be used for handling or storing production scrap; and
(88,) the personal property shall be installed prior to the effective date of the tax certification.
(e) If the Department determines that none of the requested property in an application qualifies for exclusion from the property tax base
in accordance with this Rule, the Department shall notify the applicant and the county tax collector of the reasons for this determination
in writing. Page 17 of 32

(f) The tax certification shall be effective upon the date of signature by the Department.
() The tax certification shall list the qualifying in roperty.
(h) The Department shall provide a copy of the tax certification to the applicant and to the office of the county tax collector.
(i) The applicant shall be responsible for maintaining records of all tax certifications issued to the applicant.
(i) Unless an expiration date is provided on the tax certification, the tax certification shall remain valid until there is a change in use,
ownership, or lease agreement of the qualifying property.
(k) Tax certifications are not transferrable. If there is a change in ownership or lease agreement or if the facility changes locations of
qualifying property after the Department issues a tax certification, then the real or personal property shall no longer qualify for exclusion
from the property tax base. The new owner, lessor, or lessee of the real or personal property that was previously listed on a tax
certification may apply for a new tax certification in accordance with Rule .1502 of this Section.
(1) If there is a change in the use of the qualifying property after the Department issues the tax certification, and the new use does not
comply with the requirements of Paragraphs (c) or (d) of this Rule, then the real or personal property shall no longer qualify for exclusion
from the property tax base.
(m) If the person receiving the benefit of exclusion from the property tax base ceases to be in compliance with G.S. 113A, 130A, or
143 or the rules adopted under G.S. 113A, 130A, or 143 that are under the authority of the Department to administer or enforce after the
Department issues the tax certification, the Department may determine that the real or personal property no longer qualifies for exclusion
from the property tax base and revoke the tax certification if the person does not comply by the deadline for compliance required by the
Department. If the Department revises or revokes a tax certification, the Department shall notify the applicant, the person receiving the
tax benefit, and the county tax collector's office of the determination in writing. The qpplicant may submit a new application for tax
certification in accordance with Rule .1502 of this Section when the person receiving the benefit complies with G.S. 113A, 130A, and
143 and the rules adopted under G.S. 113A, 130A, and 143 that are under the authority of the Department to administer or enforce.
(n) The Department may revoke a tax certification if the Department discovers that false information was provided in the application
for tax certification submitted in accordance with Rule .1502 of this Section. If the Department revokes a tax certification, the
Department shall notify the applicant, the person receiving the tax benefit, and the county tax collector's office of the determination in
writing.
(o) The Department shall not be required to verify or confirm the cost or value of requested property that is provided b, t�pplicant.
The Department may include the cost of requested personal property provided b, t�pplicant on the tax certification for ease of
reference. Any change in cost or value shall not change the qualification status of the real or personal property.
(p) Real or personal property that was listed on a tax certification issued prior to the readopted effective date of this Rule, and equivalent
real or personal propegy purchased to replace such property within five years of the readopted effective date of this Rule, shall be
deemed qualifying property for the purpose of this Section if the following conditions are met:
the use of the real or personal property has not changed;
the person that is receiving the benefit of exclusion from the property tax base for the real property complies with G.S.
113A, 130A, and 143 and the rules adopted under G.S. 113A, 130A, and 143 that are under the authority of the
Department to administer or enforce;
(33,) the real or personal property has not changed ownership since the tax certification was issued, and
(44,) any expiration date on the tax certification has not passed.
(a) If an application meeting the he requirements of Rule .1502 of this Section is submitted within five years of the readopted effective
date of this Rule for requested property that was previously certified under a lease agreement, the requested property that meets the
requirements of Para rg aph (.p) of this Rule, except Subparagraph (p)(4) of this Rule, shall be deemed qualifying property for the purpose
of this Section.
(a) A reeyeling faeilit-y is a building, eF btfildings, or parts thereof-, and ineludes any equipment exeWsively and integally used
pfeeess by whieh feeaver-ed r-esetirees are transfafmed into new pr-oduets in stieh a manner that the efiginal matefials lose their- identi�".
Reeavered r-esoufees are ma4er-ials that have been recovered from solid waste. The f4eility also ineludes the land eeeupied by the
r-e
History Note: Authority G.S. 130A-294(a)(3);
Eff. June 2, 1976;
Readopted Eff. December 5, 1977;
Amended Eff. December 6, 1991. 1991:
Readopted Eff. March 1, 2021.
15A NCAC 13B .1504 RECYCLING PROCESS
15A NCAC 13B .1505
RECYCLING EQUIPMENT
15A NCAC 13B .1506
INCIDENTAL OR SUPPORTIVE FACILITIES AND EQUIPMENT
15A NCAC 13B .1507
OPERATIONAL REQUIREMENTS FOR FACILITIES AND EQUIPMENT
15A NCAC 13B .1508
APPLICATION FOR TAX CERTIFICATION
History Note: Authority G.S. 130A-294(a)(3);
Eff. June 2, 1976;
Readopted Eff. December 5, 1977;
Amended Eff December 6, 1991; September 1, 1990; July 1, 1985;
Repealed Eff. March 1, 2021. Page 18 of 32

15A NCAC 13B .1510 SEVERABILITY
History Note: Authority G.S. 130A-294(a)(3),
Eff. June 2, 1976;
Readopted Eff. December 5, 1977;
Pursuant to G.S. 150B-21.3A, rule is necessary without substantive public interest Eff. January 9, 2018. 2018;
Repealed Eff.March 1, 2021.
15A NCAC 13B .1512 FACILITIES FOR REDUCING HAZARDOUS WASTE GENERATED
15A NCAC 13B .1513 EQUIPMENT FOR REDUCING HAZARDOUS WASTE GENERATED
History Note: Authority G.S. 130A-294(a)(3);
Eff October 1, 1983;
Amended Eff December 6, 1991; September 1, 1998-1990:
Repealed Eff. March 1, 2021.
15A NCAC 13B .1514 APPEALS PROCEDURE
History Note: Authority G.S. 130A-294(a)(3);
Eff. February 1, 1987;
Amended Eff. September], 1990. 1990;
Repealed Eff. March 1, 2021.
Page 19 of 32

APPENDIX 3
Hearing Attendance Sheet and Transcript
Page 20 of 32

Attend-
ance
Count User Type
FirstName
LastName
1 Panelist
Jason
Watkins
2 Panelist
Ethan
Brown
3 Panelist
Jessica
Montie
4 Attendee
Kim
Marston
5 Attendee
Jordan
Daniels
6 Attendee
David
Jones
7 Attendee
Steve
Levetan
8 Attendee
Chuck
Kirchner
Public Hearing for Amendments to 15A NCAC 13B .1500 for Tax Certifications
Virtual Attendance Record
WebEx Event ID: 174016316496162315, Event Key: 1716918436
Event Start: December 3, 2020, 4:00 p.m. New York Time
Attendance
Email
Attended
Join Time
Leave Time Duration
IP
Client Agent
[e-mail]
Yes
3:52 PM
4:19 PM 27.0 mins
10.46.84.230
WINDOWS,Chrome
[e-mail]
Yes
3:40 PM
4:20 PM 39.0 mins
192.168.86.53
WINDOWS,IE
[e-mail]
Yes
3:49 PM
4:19 PM 29.0 mins
10.46.85.13
WINDOWS,Firefox
[e-mail]
Yes
4:00 PM
4:18 PM 18.0 mins
192.168.4.70
IPHONE,Standalone App
[e-mail]
Yes
4:03 PM
4:19 PM 15.0 mins
192.168.1.204
WINDOWS,IE
[e-mail]
Yes
4:05 PM
4:19 PM 14.0 mins
192.168.0.34
WINDOWS,Chrome
[e-mail]
Yes
3:48 PM
4:19 PM 30.0 mins
192.168.251.85
WINDOWS,IE
[e-mail]
Yes
4:01 PM
4:19 PM 17.0 mins
127.0.0.1
WEB BASED CLIENT,Chrome
Note: Leslie Richards with Baden Tax ([e-mail]) also attempted to join the meeting at 4:58 p.m., after the meeting had concluded,
and left the meeting at 4:59 p.m. She later stated in a follow-up email that she mistakenly thought it started at 5:00 p.m.
Page 21 of 32

HEARING OFFICER'S STATEMENT
Hearing Date: December 3, 2020, 4:00 p.m.
15A NCAC 13B Section .1500 Standards for Special Tax Treatment of
Recycling and Resource Recovery Equipment and Facilities
Good afternoon, I am Jason Watkins with the Division of Waste Management, Solid
Waste Section, and I am the hearing officer for this hearing. My role as hearing
officer is to receive comments on the proposed rule actions and the associated fiscal
and regulatory impact analysis; and then provide those comments and any
recommended actions to the Secretary of the Department of Environmental Quality.
During this virtual public hearing, we will provide a brief presentation, and then we
will receive oral comments from those individuals who requested to speak when they
pre -registered for this event. If you are having technical difficulties with WebEx,
you can try using the chat feature in WebEx to ask questions or seek assistance, or
try logging out and rejoining the meeting. You can also visit the Department of
Environmental Quality's website using the links provided in the public notice for
this hearing for instructions on various ways to connect to WebEx. A link to the
public notice webpage will be provided in the chat now. This hearing is being
recorded, and a transcript of the hearing will be included in the hearing record.
We will now open the hearing on the proposed readoption of Solid Waste
Management Rules 15A NCAC 13B .1501 - .1503, and repeal of Rules .1504 - .1514
"Standards for Special Tax Treatment of Recycling and Resource Recovery
Equipment and Facilities." A fiscal and regulatory impact analysis was drafted for
these rule changes and approved for publication by the North Carolina Office of
State Budget and Management pursuant to G.S. 150B-21.4. The Office of State
Budget and Management determined that the proposed rule actions have minor
I
Page 22 of 32

impacts to state and local governments and private industry, but no substantial
economic impact.
The public notice for this hearing was published in Volume 35, Issue 09 of the North
Carolina Register on November 2, 2020, and the public notice and fiscal and
regulatory impact analysis were posted on the Department of Environmental
Quality's website. The public notice was also emailed to those on the Solid Waste
Section's rule development email distribution list, the county tax assessors, and
applicants for tax certification within the last 5 years. We will add the public notice
and the proposed rule changes into the hearing record without reading them at this
time.
[Presentation] — Jessica Montie from the Division of Waste Management Solid
Waste Section will now give a brief overview of the amendments to these rules.
[Jessica Montie with the Division gave a short presentation]
We will now take comments on the readoption of the rules in 15A NCAC 13B
Section .1500. To do this, I will call the names of each of the pre -registered speakers
in order, and our WebEx Host will unmute the speaker when it is their turn to speak.
Please do not start speaking until the WebEx Host has indicated that your
microphone has been unmuted. It would also be helpful if any person speaking
tonight would also submit a written statement for inclusion into the hearing record.
If we call your name, but cannot hear you after you have been unmuted, please check
to see if you are still muted on the WebEx screen on your computer. If you are having
audio issues, try a different method of audio connection within WebEx or use the
"Call Me" feature to have WebEx call your personal telephone line. If we still cannot
2
Page 23 of 32

hear you, we will proceed to the next registered speaker, but will call your name
again at the end of the hearing. I will now call the registered speakers.
[Those who originally registered to speak declined to speak at the hearing,
because the Section had scheduled a meeting with them for the next day.]
That is all the speakers on the pre -registration list. Are there any other attendees that
would like to provide a comment at this time?
[Host unmuted each person to see if anyone wished to speak. Everyone
declined]
If you did not register to speak, but still want to provide comments on the proposed
rulemaking, remember there are several other ways to provide comments until the
end of the comment period on January 4, 2021:
• You can call 919-707-8247 and leave a voicemail message providing your
first and last name, whom you are representing, and your comments on the
proposed rule changes; or
• To provide written comments, please email them to
[e-mail] with "Solid Waste Rule Readoption" in
the subject line. You can also mail written comments to the address listed in
the public notice. Equal weight is given to both written and oral comments.
Today's speakers are also welcome to submit written versions of the
comments they have provided today.
Thank you all for your participation in this virtual public hearing and your interest
in the public hearing process. This hearing is adjourned.
3
Page 24 of 32

APPENDIX 4
Written Comments Received During the Comment Period
Page 25 of 32

Montle, Jessica
From: Daniel Williams <[e-mail]>
Sent: November 16, 2020 2:11 PM
To: SVC_dwm.publiccomments
Subject: [External] Solid Waste Rule Readoption
External email. Do not click links or open attachments unless you verify. Send all suspicious email as an attachment to
[e-mail]
Having reviewed the material provided the only issue that I see is that throughout the rule(s) we refer to the "tax
collector" however, all of the interactions for this rule should be with the county "tax assessor".
Please feel free to let me know if you have any questions in these regards.
Sincerely,
Daniel A. Williams
Franklin County Tax Administrator
(919)-496-2172
1
Page 26 of 32

Montie, Jessica
From: Kim Marston <[e-mail]>
Sent: January 4, 2021 2:45 PM
To: SVC_dwm.publiccomments
Cc: Watkins, Jason; Montie, Jessica
Subject: [External] Solid Waste Rules Readoption - RANC Amended Comments
Attachments: 2020-01-04 RANC - Amended Comments to DEQ Solid Waste Rules Readoption.docx
CAUTION: External email. Do not click links or open attachments unless you verify. Send all suspicious email as an attachment to
Report Spam.
Attached are RANC's amended comments for inclusion in the record. Thank you!
Kim Mnrctnn
B R
PIEFE
F:ourtia�V La);
t: 336.271.3145
f: 336.232.9145
2000 Renaissance Plaza
230 North Elm Street
Greensboro, NC 27401
P.O. Box 26000 (27420)
Confidentiality Notice:
The information contained in this e-mail transmittal is privileged and confidential intended for the addressee only. If you are neither
the intended recipient nor the employee or agent responsible for delivering this e-mail to the intended recipient, any disclosure of
this information in any way or taking of any action in reliance on this information is strictly prohibited. If you have received this e-
mail in error, please notify the person transmitting the information immediately.
This email has been scanned for viruses and malware by Mimecast Ltd.
1
Page 27 of 32

January 4, 2021
Ms. Jessica Montie
Department of Environmental Quality
1646 Mail Service Center
Raleigh, NC 27699-1646
Submitted by email to: [e-mail]
Re: Amended Comments to Solid Waste Rules Readoption
Dear Ms. Montle:
On behalf of the Recycling Association of North Carolina (RANG)
(www.ncrecyclingassociation.org), I offer these amended comments on the above -
captioned proposed rules.. Our firm serves as Counsel to the Association, which
represents an industry employing over 5,000 people in North Carolina and whose
activities annually process tons of materials keeping them out of solid waste
landfills. These amended comments (which revise comment numbers 3 and 4) are
intended to replace our original comments submitted on December 2, 2020.
Materials handled by this industry are not "solid waste" as defined in North Carolina
law and any rule changes should recognize and preserve this distinction. They
should also be consistent with current relevant State law. This is especially
important since the proposed rules relate to "tax certification for real and personal
property used in recycling and resource recovery."
Comment #1
"Recovered materials" are not solid waste.
It is important to note that "recovered materials," as defined in G.S. 130A-
290(a)(24) and-309.5(c), are not solid waste under G.S. 130A-
290(a)(35)f. Instead, "recovered materials" are materials that have been
diverted or removed from the solid waste stream. Importantly, "recovered
materials" are not subject to regulation as solid waste pursuant to G.S. 130A-
309.5(c).
The proposed rules do not provide a clear definition of "recovered materials."
Plus, reference to the statutory definition of "recycling" fails to recognize the
distinction between recovered materials and solid waste in the same way
existing rules .1503, .1504, and .1505 do when they use the term "recovered
resources" or "recovered materials."
4829-7242-2356.v3
Page 28 of 32

RANC - Amended Comments
Page 2 of 5
A definition of "recovered materials" that maintains the distinction from solid
waste should be added to the proposed rules. Further, any definitions of
"recycling" should use the terms "recovered materials" and "recyclable
materials."
Comment # 2
Related to Comment #1, the definitions in the proposed rules are important.
The proposed 15A NCAC 13B .1503 indicates, among other things, that when
the Department receives an application for tax certification that complies with
Rule .1502 of this Section, the Department shall conduct an inspection,
investigation, or verification of the requested property to confirm that it
qualifies as a recycling or resource recovery facility or as recycling or
resource recovery equipment for the purpose of special tax classifications
or treatment in accordance with G.S. 130A-294(a)(3) and the requirements of
this Rule. (emphasis added).
"Resource recovery" is defined in G.S. 130A-290(a)(29) as "the process of
obtaining material or energy resources from discarded solid waste which no
longer has any useful life in its present form and preparing the solid waste for
recycling.
The definition of "resource recovery" in the proposed 15A NCAC 13B .1501
references the statutory definition but adds this sentence: "The term includes
the transportation and storage of recyclable materials and recovered
materials."
This last sentence of proposed Rule .1501(11) should be revised because it has
the potential to confuse solid waste concepts (e.g., "resource recovery") with
things that are not solid waste concepts (e.g., "recycling" and "recovered
materials."). Specifically, it could be read to include entities that engage in
recycling which transport or store recyclable materials or recovered materials
for use in its recycling processes. A potential revision may be: "the term
includes the transportation and storage of materials used or created in the
resource recovery process by the applicant for a tax certification."
Amended Comment # 3
Existing Rule 15A NCAC 13B .1506(c) provides, "Qualifying equipment and
facilities must be used in a mechanical or chemical process, in transportation,
or in storage."
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As noted in Comment # 2, proposed Rule .1501(11) appears to be incorporating
this aspect of the existing rule into the new definition of "resource recovery."
However, a similar clause was not added to the definition of recycling in the
proposed rule.
The definition of "recycling" in proposed Rule .1501(9) should be revised to
include transportation and storage similar to proposed Rule .1509(11).
Alternatively, an amendment to proposed Rule .1503(c) and (d) to include
facilities and equipment that are used in recycling, resource recovery, or in
transportation or storage of recyclable materials, recovered materials, or new
materials could be added.
Amended Comment # 4
The current tax certification rules under 15A NCAC 13B .1504 define the "recycling
process," as
(a) To constitute recycling, the recovered materials must be
so altered in form that the original materials lose their
identity and a new product is formed. A physical rather
than a chemical change may be all that occurs but a
substantial change in the form of the materials must occur.
(b) The recycling process ends when a new product has
been created from the recovered materials, even though the
complete manufacturing process involving the recycled
products has not concluded.
This current definition uses terms that mirror the commonly accepted legal definition
of "manufacturing" in North Carolina. See Duke Power v. Clayton, 274 N.C. 505, 514,
164 S.E.2d 289, 295 (1968) (defining manufacturing "as the producing of a new article
or use or ornament by application of skill and labor to raw materials").
The Tax Certification Guidelines for Pollution Abatement Property and Recycling and
Resource Recovery of or from Solid Waste Property provide further explanation to
illustrate current Rule .1504(b) on when the recycling process ends: "It is important
to note that the recycling process ends when the new product is formed, even if the
complete manufacturing process has not. This would mean any equipment used on
this product after it has changed forms would not qualify." Guidelines at p. 17
(https:Hfiles.nc. gov/ncdor/documents/forms/tax_certification_guidelines.pdo.
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RANC recognizes and supports the Department's effort to preserve or improve the
clarity of this distinction between a recycling process (which is a type of
manufacturing subject to special tax classification under G.S. 105-275(8)(b)) and
other manufacturing or non -manufacturing processes (for which property is not
eligible for tax certification). RANC also recognizes that the determination of what
property is subject to special tax classification is fact -specific and based on the unique
circumstances of each applicant.
However, RANC has concerns about the clarity of the proposed rules. Proposed rule
.1501(4) defines a "manufacturing process" as "a process by which goods are
produced for sale or use from raw materials or from new materials resulting from a
recycling or resource recovery process, or a combination of these materials."
Proposed .1501(5) defines a "new material" as "a material that was generated from
a recycling or resource recovery process that can be used without further processing
in the same way as a raw material in a manufacturing process."
The proposed rules do not define "raw materials."
Coupled with the removal of the current definition of recycling process in current
Rule .1504(a), which tracks the common law definition of manufacturing, this lack of
a definition of "raw materials" creates the potential for confusion as to whether
recycling is a manufacturing process. For example, if "raw materials" means virgin
materials (e.g. wood, iron, glass, etc.), then recyclers could not meet the definition for
manufacturing under the proposed rule because they would not be making products
from raw materials or from new materials.
It is clear, however, that recyclers are manufacturers under the current tax
certification rules, other North Carolina statutes, and common law. See, e.g., G.S.
105-129.25, defining a "recycling facility" as a "manufacturing plant at least three -
fourths of whose products are made of at least fifty percent (50%) post -consumer
waste material measured by weight or volume..." (emphasis added).
Ultimately, any new rule or definitions should recognize that the recycling process is
a specific type of manufacturing. RANC proposes the revisions below as a starting
point for the Department in the hopes that potential confusion or inconsistency can
be avoided while still achieving the Department's intent to provide guidance for the
Department, tax assessors, and applicants to know what property is used for
recycling or resource recovery and what property is used for other, non -qualified,
processes.
The proposed definitions of "new material" and "Recycling" attempt to recognize that
a recycler may perform operations on a material after the moment it has been
transformed and that such operations are typically considered to be "Recycling."
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Instead, it draws the line, for tax certification purposes, when the new material is
used as an ingredient material with other ingredient materials to produce a good.
Replace proposed .1501(4) with:
(4) "Production process" means all steps of manufacturing by which goods are
produced for sale or use from ingredient materials by conditioning, treating, or other
operations turning out goods for sale or use.
Revise proposed .1501(5) to read:
(5) "New material" means a material that is generated from a recycling or resource
recovery process. A "new material' is created when any ingredient materials are
transformed into an article with a distinctive name, character or use, even if the new
material will be used with other ingredient materials in subsequent manufacturing
processes.
Revise proposed .1501(6) to read:
(6) "Production scrap" means excess or unusable material that is generated during a
production process and is returned to be reused in the same production process. An
example of production scrap is excess metal or cardboard or textiles from a sheet of
metal or cardboard or batting that remains after a portion of the sheet is cut,
stamped, trimmed, or formed to make a product, and the excess material is collected
and returned to the process or equipment where the original sheet or batting was
created. Another example of production scrap is a material that does not meet the
quality standards or customer specifications for sale or use as determined by the
person or business; and are returned to the production process. Production scrap does
not include excess materials that are combined with recovered materials and
returned to be reused in a recycling process.
Revise proposed .1501(9) to read:
(9) "Recycling" means the term defined in G.S. 130A-290. Recycling ends when a new
material has been created. The term does not include the use of the new material as
an ingredient material in subsequent production processes.
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