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NC Court of Appeals Victory for Hog, Cattle, Dairy, and Egg Farmers

By Ray Starling, NC Chamber General Counsel

Whether the North Carolina agricultural community knows it or not, the Court of Appeals handed them a significant legal victory on Tuesday. It did not come without a significant investment of time, money, and legal maneuvering. I write today to hopefully bring some attention to the outcome, and to shine some light on the work done by a few that greatly benefits us all.

But first, some history. On August 27, 1997, Governor Jim Hunt signed S.L. 1997-458 into law, now most famous for its leading section, “Moratoria on Construction or Expansion of Swine Farms.” The law also contained a provision that declared the General Assembly’s intent regarding how existing swine farms (and any farms that require permitted animal waste management systems) would be permitted going forward.

In particular, the law stated: “It is the intent of the General Assembly that most animal waste management systems be permitted under a general permit.” And indeed, the overwhelming majority of swine farms in the state today are permitted pursuant to a “general,” as opposed to an “individual” NPDES permit. But don’t mistake this permitting process as being easy. To be covered under the general permit, hog farmers still have to demonstrate compliance with more than ninety regulatory conditions, all closely monitored by the state’s environmental enforcement apparatus. And of course, DEQ may impose civil and criminal penalties on farmers who do not obtain a permit or who fail to comply with a permit’s “terms, conditions, or requirements.” See N.C. Gen. Stat. §§ 143-215.6A (civil); -215.6B (criminal).

General permits issued by NC Department of Environmental Quality (DEQ) are, in part, an administrative convenience to alleviate the burden on the agency of issuing individual permits where categories of permittees are large in number, use closely similar waste management technology, and whose permits would predictably contain virtually identical terms and conditions. DEQ issues general permits using the same procedures applicable to the issuance of individual permits.

Every five years, DEQ revisits the criteria it imposes for issuing a certificate of coverage under the general permit and for its individual permits. This process most recently wrapped up in 2019 and is the subject of yesterday’s Court of Appeals decision. The North Carolina Farm Bureau sued DEQ shortly after it issued its 2019 permit conditions, arguing that DEQ adopted requirements that had not been appropriately funneled through the state’s administrative rulemaking process. In fact, some of the permit conditions looked strikingly similar to provisions demanded by environmental advocacy groups from a federal administrative complaint they filed back in 2014. The settlement in that matter wasn’t finalized until 2018, and DEQ was arguably on the hook for including certain terms from that settlement in their 2019 rewrite of the permitting requirements. This resolution looked suspiciously similar to “sue and settle.” That is a tactic in which a complainant sues an agency to force a change in agency policy without the benefit of full transparency and the procedural safeguards found in the formal rulemaking process. It is also popular because the agency may not always be a vigorous adversary. In fact, litigation may, from time-to-time, be a brought by a collaborator in efforts to expand the agency’s jurisdiction or regulatory might.

In short, Farm Bureau’s central (and consistent) argument has been that the terms of a general permit were “rules” not properly adopted in accordance with state law. The Office of Administrative Hearings agreed, the Wake County Superior Court did not, and the case went on to the NC Court of Appeals.

On November 7, 2023, the NC Court of Appeals unanimously held that the requirements imposed in the General Permit could not be included without first going through proper rulemaking procedures. In other words, North Carolina Farm Bureau won.

I’m proud of the North Carolina Farm Bureau for shouldering the laboring oar in this litigation, and in particular of Jake Parker, who argued the case in the Court of Appeals after scores of hours of preparation and literally years of litigation. Jake is actually set to become the President of the American Agricultural Law Association later this week.

And despite a unanimous victory, this case may not be over. DEQ and environmental advocacy organizations may attempt to have the NC Supreme Court hear the case. In this case alone, the North Carolina environmental Justice Network and North Carolina State Conference of the National Association for the Advancement of Colored People, along with attorneys employed by the Lawyers Committee for Civil Rights Under Law out of Washington, D.C., supplied the state with a talented team of litigation wingmen and will clearly be disappointed with the result.

That said, if Tuesday’s decision remains undisturbed, it is a victory for hog, cattle, dairy, and egg farmers, and for the rule of law in our state.

Take my word for it. You will be hearing a lot about administrative rulemaking authority in the coming months. It seems there are lots of opinions about just how far executive branch bodies can go in creating new law, who can be appointed to those bodies, and even over who is allowed to appoint the members of those bodies. But make no mistake, the debate isn’t over who will sit in the seats, it’s about what the rules will ultimately be. Policy debates masquerading as legal arguments. I’m glad Farm Bureau and Jake, who is also a member of our Chamber Legal Institute Board, are here to call them out. We stand shoulder to shoulder with them in our interest in protecting the state’s legal (and farming) climate. There is some interesting rulemaking and legal wrangling ahead, and the result in this case suggests there may be more like it in the years to come.