Update: The N.C. House followed the Senate in overriding Gov. Bev Perdue’s veto of Senate Bill 781 on Monday, July 25. The story has been updated to reflect this information.

Environmental regulation in North Carolina has taken a new direction as a result of budget cuts and an emphasis on deregulation.

The 2011-2012 budget cuts the Department of Environment and Natural Resources by 12 percent, transfers some of its divisions to other stage agencies, cuts conservation funding and forbids the state from enacting new environmental regulations that are stronger than federal minimum standards.

The department will have to eliminate 160 positions as a result of the cuts, said DENR spokeswoman Diana Kees.

Critics of the new budget worry that the department will lack the staff to enforce regulations and give thorough reviews to permit applications.

The cuts could also hurt businesses by slowing the permitting process, said Jonathan Howes, a professor of public policy at UNC-Chapel Hill and a former secretary of DENR.

Howes said the key to an efficient permitting process is an effective field staff. But the budget cuts directly into DENR’s field staff, a cut which Howes said will either slow down the permitting process or make it less stringent.

“There will be fewer people to work with people who are seeking permits to discharge material into the water, and consequently the quality of the permitting will be diminished or it would be slowed down even more,” Howes said.

N.C. Sen. Ellie Kinnaird, D-Orange, said the cuts to DENR aren’t just about fiscal responsibility. Rather, legislators who are also business owners have expressed personal aggravation with the department.

Kinnaird, who sat on the appropriations subcommittee for natural and economic resources, said that any discussion about environmental regulations brought out negative anecdotes about the department.

“‘DENR has done something to us in the past that cost us thousands of dollars,’” Kinnaird remembered her colleagues saying. “Story after story after story came up where DENR was inflexible and arrogant. So they’re out to get DENR, there’s no doubt about it.”

Howes echoed Kinnaird’s sentiment that the cuts were not entirely necessary.

“I’m afraid that the state’s financial position was used as an excuse in the case of environmental regulation to accomplish some things that were not really necessary to meet the state’s financial requirements,” Howes said.

An ideological debate has arisen between the business community, legislators and environmentalists about just how much regulation is necessary.

One provision in the budget prohibits any new environmental rules and regulations that are stronger than minimum federal standards. Weakening state regulations to the minimum federal standards would mean that state environmental regulations couldn’t exceed the provisions set forth in the Clean Air Act and the Clean Water Act.

The N.C. House and Senate both overrode Gov. Bev Perdue’s veto of Senate Bill 781, which will require the department to re-examine the necessity of all rules and regulations.

“Regulatory reform was one of the top three concerns this year of our members,” said Erica Baldwin, a spokeswoman for the N.C. Chamber of Commerce. “Rules in North Carolina that are more stringent than the federal level just put another layer in that red tape that makes it really hard for businesses to conduct business.”

Baldwin said that 15,000 new environmental rules and regulations have been created just in the last 10 years.

But Grady McCallie, policy director at the N.C. Conservation Network, said this number is misleading, as it counts the subsections of rules and includes rules that have been amended and repealed.

McCallie said that the anti-regulation trend in the legislature is a nationwide phenomenon.

“This is consistent with a lot of national rhetoric that basically runs along the line of, ‘We have to cut back environmental protections because they’re holding back the economy,’” he said. “I’ve seen no evidence that that’s the case.”

McCallie said that if individual rules are preventing progress, then there should be a conversation between legislators, the industry and environmentalists to find a solution. But because the budget has attacked all regulation, there’s no room for discussion, he said.

The impacts of changing these rules are diffuse but serious, he added. He offered the example that if a permit doesn’t have as tight a limit as it otherwise would, then someone could be exposed to pollution and contract cancer or some other disease.

The new budget also transfers the Division of Forestry and the Division of Soil and Water Conservation, now part of DENR, to the Department of Agriculture and Consumer Services.

Howes said that the difference between the two departments is their organizational focus.

“The emphasis in the Department of Agriculture is in promoting agriculture as an industry, as an element of the economy of North Carolina, while the emphasis in DENR has been conservation – protection of resources,” Howes said.

By transferring divisions out of DENR, limiting its regulatory capabilities and cutting its budget by 36 percent since 2008, Howes said that the legislature is looking to dismantle the department.

“I think the hope is DENR might just go away. The cuts this year are just going to be increased even more,” Howes said.