Court Opinion

ID: 9895430
Source: CourtListenerOpinion
Date Created: 2023-11-07 13:06:50.452034+00
Date Added: 2024-06-11T09:12:35.078088
License: Public Domain

IN THE COURT OF APPEALS OF NORTH CAROLINA

                               No. COA22-1072

                            Filed 7 November 2023

Wake County, Nos. 21 CVS 3292, 3457

N.C. DEPARTMENT OF ENVIRONMENTAL QUALITY, DIVISION OF WATER
RESOURCES, Petitioner,

           v.

N.C. FARM BUREAU FEDERATION, INC., Respondent.

NORTH CAROLINA ENVIRONMENTAL JUSTICE NETWORK AND NORTH
CAROLINA STATE CONFERENCE OF THE NATIONAL ASSOCIATION FOR THE
ADVANCEMENT OF COLORED PEOPLE, Petitioners,

           v.

N.C. FARM BUREAU FEDERATION, INC.,

           and

N.C. DEPARTMENT OF ENVIRONMENTAL QUALITY, DIVISION OF WATER
RESOURCES, Respondents.

     Appeal by Respondent from order entered 20 June 2022 by Judge Mark A.

Sternlicht in Wake County Superior Court.    Heard in the Court of Appeals 6

September 2023.

     North Carolina Farm Bureau Legal Foundation, Inc., by Phillip Jacob Parker,
     Jr., Steven A. Woodson, & Stacy Revels Sereno, for Respondent-Appellant.

     Attorney General Joshua H. Stein, by Special Deputy Attorney General Marc
     Bernstein & Assistant Attorney General Taylor Hampton Crabtree, for
     Petitioner-Appellee.
             DEP’T OF ENV’T QUALITY V. N.C. FARM BUREAU FED’N, INC.

                                  Opinion of the Court

      Southern Environmental Law Center, by Julia F. Youngman, Blakely E.
      Hildebrand, & Iritha Jasmine Washington, for Appellee-NC Environmental
      Justice Network, et al.

      Irving Joyner, for Appellee-NC Environmental Justice Network, et al.

      Lawyers Committee For Civil Rights Under Law, by Edward Caspar, admitted
      pro hac vice, & Sophia E. Jayanty, admitted pro hac vice, for Appellee-NC
      Environmental Justice Network, et al.

      CARPENTER, Judge.

      The North Carolina Farm Bureau Federation, Inc. (“Farm Bureau”) appeals

from the superior court’s order reversing the Office of Administrative Hearing’s (the

“OAH’s”) grant of summary judgment for Farm Bureau on one issue and affirming

the OAH’s denial of partial summary judgment for Farm Bureau on another issue.

After careful review, we agree with Farm Bureau concerning the superior court’s

reversal, and we need not reach the superior court’s affirmance. For the reasons

explained below, we reverse the superior court’s order.

                   I.   Factual & Procedural Background

      This case involves a permitting process for farmers. “It is the public policy of

the State to maintain, protect, and enhance water quality within North Carolina.”

N.C. Gen. Stat. § 143-211(b) (2021). To that end, the General Assembly authorized

the Environmental Management Commission (the “EMC”) to establish a permitting

system to regulate animal-waste management systems within North Carolina. See

id. §§ 143-215.10C(a), 143B-282(a). Specifically, subsection 143-215.10C(a) provides:

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                                   Opinion of the Court

             No person shall construct or operate an animal waste
             management system for an animal operation or operate an
             animal waste management system . . . without first
             obtaining an individual permit or a general permit under
             this Article . . . . The Commission shall develop a system
             of individual and general permits for animal operations
             and dry litter poultry facilities based on species, number of
             animals, and other relevant factors . . . . It is the intent of
             the General Assembly that most animal waste
             management systems be permitted under a general permit.
             The Commission, in its discretion, may require that an
             animal waste management system be permitted under an
             individual permit if the Commission determines that an
             individual permit is necessary to protect water quality,
             public health, or the environment.

Id. § 143-215.10C(a).

      In other words, farmers who use certain animal-waste management systems

must first obtain either a general or an individual permit (“General Permit” and

“Individual Permit,” respectively) to do so. See id. Although it “is the intent of the

General Assembly that most animal waste management systems be permitted under

a general permit,” the EMC may grant Individual Permits when it deems necessary.

See id.

      The EMC delegated its permitting authority to the Division of Water Resources

(the “DWR”) of the Department of Environmental Quality (the “DEQ”). See id. § 143-

215.3(a)(4). In order to enforce permit conditions, the Secretary of Environmental

Quality may assess civil penalties for thousands of dollars for failing to comply. Id. §

143-215.6A(a).

      On 3 September 2014, the North Carolina Environmental Justice Network,

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                                 Opinion of the Court

along with other nonprofits (collectively, “Complainants”), filed a complaint against

the DEQ with the United States Environmental Protection Agency’s Office of Civil

Rights, alleging that permits issued by the DEQ discriminated on the basis of race.

On 3 May 2018, the DEQ settled with Complainants. The settlement agreement

included a draft General Permit that included conditions that the DEQ agreed to

submit “for consideration during its Stakeholder Process.” Farm Bureau participated

in the stakeholder process by submitting written comments following stakeholder

meetings, providing oral comments at public meetings, and submitting comment

letters. The DWR issued final versions of the revised General Permits on 12 April

2019.

        On 10 May 2019, Farm Bureau filed three case petitions in the OAH. The OAH

consolidated the cases. Farm Bureau contended the DWR unlawfully included three

conditions in the General Permits. First, Farm Bureau argued the conditions were

not properly adopted as “rules” under the North Carolina Administrative Procedure

Act (the “NCAPA”).      Second, Farm Bureau argued the DWR was improperly

influenced by the settlement agreement.

        Through these arguments, Farm Bureau specifically challenged three General

Permit conditions: (1) farmers with waste structures within the 100-year floodplain

must install monitoring wells; (2) certain farmers must conduct a Phosphorus Loss

Assessment Tool (“PLAT”) analysis; and (3) all permitted farmers must submit an

annual report summarizing the system’s operations.            The North Carolina

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                                  Opinion of the Court

Environmental Justice Network and the North Carolina State Conference of the

National Association for the Advancement of Colored People (collectively,

“Intervenors”) moved to intervene in the case, but the OAH denied their motion.

      At a summary-judgment hearing on 9 February 2021, the OAH concluded that

the three challenged conditions were “rules” under the NCAPA, and because they

were not noticed and adopted as such, they were unlawfully included in the General

Permits. The OAH also concluded that the DWR was not improperly influenced by

the settlement agreement. The OAH did, however, find that “[t]he genesis of the

terms of the special conditions under review are part of the Settlement Agreement

reached in order to end the Title VI lawsuit.” The DWR appealed, contesting the

OAH’s holding on the rule issue. Intervenors appealed the OAH’s denial of their

motion to intervene.   And Farm Bureau appealed the OAH’s conclusion on the

settlement-agreement issue.      The parties appealed all issues to Wake County

Superior Court.

      On 20 June 2022, the superior court resolved all of the issues in a single order,

reversing the OAH concerning the rule issue and affirming the OAH concerning the

settlement-agreement issue. The superior court also held that the OAH improperly

denied Intervenors’ motion to intervene. Farm Bureau timely appealed from the

superior court on 8 July 2022.

      The parties have stipulated that intervention is no longer an issue before this

Court. As a result, Farm Bureau is the sole appellant; the DWR and Intervenors are

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                                       Opinion of the Court

co-appellees. On appeal, Farm Bureau challenges the superior court’s reversal of the

OAH’s rule determination and the superior court’s affirmance of the OAH’s

settlement-agreement determination.

                                 II.      Jurisdiction

      This Court has jurisdiction under N.C. Gen. Stat. § 7A-27(b)(1) (2021).

                                       III.   Issues

      The issues on appeal are whether the superior court erred in concluding: (1)

the challenged General Permit conditions are not rules; and (2) the DWR was not

improperly influenced by the settlement agreement when it created the challenged

General Permit conditions.

                           IV.    Standard of Review

      The purpose of the NCAPA is to “establish[] a uniform system of

administrative rule making and adjudicatory procedures for agencies.” N.C. Gen.

Stat. § 150B-1(a) (2021). The NCAPA governs the review of OAH decisions. Sound

Rivers, Inc. v. N.C. Dep’t of Env’t Quality, Div. of Water Res., 271 N.C. App. 674, 693,

845 S.E.2d 802, 816 (2020). When reviewing OAH decisions, courts apply different

standards based on “the substantive nature of each assignment of error.” N.C. Dep’t

of Env’t & Nat. Res. v. Carroll, 358 N.C. 649, 658, 599 S.E.2d 888, 894 (2004). A

reviewing court may:

             reverse or modify the decision if the substantial rights of
             the petitioners may have been prejudiced because the
             findings, inferences, conclusions, or decisions are:

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                                   Opinion of the Court

             (1) In violation of constitutional provisions;
             (2) In excess of the statutory authority or jurisdiction of the
             agency or administrative law judge;
             (3) Made upon unlawful procedure;
             (4) Affected by other error of law;
             (5) Unsupported by substantial evidence admissible under
             [N.C. Gen. Stat. §§] 150B-29(a), 150B-30, or 150B-31 in
             view of the entire record as submitted; or
             (6) Arbitrary, capricious, or an abuse of discretion.

N.C. Gen. Stat. § 150B-51(b) (2021). We review asserted errors under subsections (1)

through (4) de novo. Carroll, 358 N.C. at 659, 599 S.E.2d at 896. We review asserted

errors pursuant to subsections (5) or (6) under the “whole record” test. Id. at 659, 599

S.E.2d at 896.

      “‘Under a de novo review, the court considers the matter anew and freely

substitutes its own judgment’ for that of the lower tribunal.” State v. Williams, 362

N.C. 628, 632–33, 669 S.E.2d 290, 294 (2008) (quoting In re Greens of Pine Glen, Ltd.

P’ship, 356 N.C. 642, 647, 576 S.E.2d 316, 319 (2003)).

                                   V.    Analysis

   A. Rules Under the NCAPA

      The first issue is whether the conditions within the General Permits are rules

under the NCAPA. This is a question of law, which we review de novo. See Carroll,

358 N.C. at 659, 599 S.E.2d at 896.

      In statutory interpretation, “[w]e take the statute as we find it.” Anderson v.

Wilson, 289 U.S. 20, 27, 53 S. Ct. 417, 420, 77 L. Ed. 1004, 1010 (1933). This is

because “a law is the best expositor of itself.” Pennington v. Coxe, 6 U.S. (2 Cranch)

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              DEP’T OF ENV’T QUALITY V. N.C. FARM BUREAU FED’N, INC.

                                  Opinion of the Court

33, 52, 2 L. Ed. 199, 205 (1804). And when examining statutes, words that are

undefined by the legislature “must be given their common and ordinary meaning.”

In re Clayton-Marcus Co., 286 N.C. 215, 219, 210 S.E.2d 199, 202–03 (1974).

Nonetheless, we must follow precedent if our appellate courts have already

interpreted a statute. See In re Civil Penalty, 324 N.C. 373, 384, 379 S.E.2d 30, 37

(1989).

      The NCAPA defines a “rule” as “[a]ny agency regulation, standard, or

statement of general applicability that implements or interprets an enactment of the

General Assembly . . . .” N.C. Gen. Stat. § 150B-2(8a). A rule is invalid “unless it is

adopted in substantial compliance with” the NCAPA’s rulemaking requirements. Id.

§ 150B-18.

      Here, the parties do not dispute that the General Permit conditions

“implement[] or interpret[] an enactment of the General Assembly.” See id. §§ 150B-

2(8a), 143-215.10C(a) (authorizing a permitting system to regulate animal-waste

management systems within North Carolina). But the parties do dispute whether

the challenged General Permit conditions are “regulation[s], standard[s], or

statement[s] of general applicability.” See id. § 150B-2(8a).

  1. Whether the General Permit Conditions are Regulations, Standards, or
     Statements

      We begin with whether the conditions are “regulations.” The NCAPA does not

define “regulation.” See id. § 150B-2. Therefore, we must discern its “common and

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ordinary meaning.” See In re Clayton-Marcus Co., 286 N.C. at 219, 210 S.E.2d at

202–03.   Absent precedent, we look to dictionaries to discern a word’s common

meaning. Midrex Techs., Inc. v. N.C. Dept. of Rev., 369 N.C. 250, 258, 794 S.E.2d 785,

792 (2016). Merriam-Webster’s defines “regulation” as “an authoritative rule dealing

with details or procedure.” Regulation, MERRIAM-WEBSTER’S COLLEGIATE DICTIONARY

(11th ed. 2003).

      Here, any farmer who uses certain animal-waste management systems must

obtain a permit and comply with its conditions. See N.C. Gen. Stat. § 143-215.10C(a).

The challenged General Permit conditions concern details like installation of

monitoring wells within the 100-year floodplain, PLAT analysis, and submission of

annual reports summarizing waste-management system operations.                   These

conditions are authoritative, as the DWR has the authority to grant permits, which

are required to operate the animal-waste systems. See id. Further, the Secretary of

Environmental Quality has the authority to assess civil penalties for thousands of

dollars if a farmer fails to comply with these conditions. See id. § 143-215.6A(a).

      Therefore, the General Permit conditions are regulations under the NCAPA

because they are “authoritative rule[s] dealing with details” of animal-waste

management systems. See, MERRIAM-WEBSTER’S COLLEGIATE DICTIONARY, supra;

N.C. Gen. Stat. § 150B-2(8a). Because the conditions are “regulations,” we need not

determine whether the conditions are also “standards” or “statements.” See N.C. Gen.

Stat. § 150B-2(8a). To be a “rule,” an agency action only needs to be one of the three.

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See id.

  2. Whether a Regulation Must be Generally Applicable

      We must now determine whether “general applicability” applies to regulations.

Under the last-antecedent canon, “a limiting clause or phrase . . . should ordinarily

be read as modifying only the noun or phrase that it immediately follows . . . .”

Barnhart v. Thomas, 540 U.S. 20, 26, 124 S. Ct. 376, 380, 157 L. Ed. 2d 333, 340

(2003).   Following that principle, “general applicability” should be read as only

modifying “statement.” See id. at 26, 124 S. Ct. at 380, 157 L. Ed. 2d at 340. Thus,

if we apply the last-antecedent canon, all regulations and standards are rules,

regardless of applicability. See N.C. Gen. Stat. § 150B-2(8a). This Court, however,

has not interpreted subsection 150B-2(8a) that way.

      Specifically, we did not apply the last-antecedent canon when we interpreted

subsection 150B-2(8a) in Wal-Mart Stores East, Inc. v. Hinton, 197 N.C. App. 30, 56,

676 S.E.2d 634, 652–53 (2009). There, this Court analyzed an agency “standard” and

held that the standard did not have “general applicability” and was, therefore, not a

“rule.” Id. at 56, 676 S.E.2d at 652–53. Bound by our logic in Wal-Mart, if a standard

requires general applicability, then so does a regulation. See id. at 56, 676 S.E.2d at

652–53; In re Civil Penalty, 324 N.C. at 384, 379 S.E.2d at 37.

      In other words, if the last-antecedent canon does not prevent extending

“general applicability” to “standard,” the canon should not prevent extending general

applicability to “regulation,” either. See Wal-Mart, 197 N.C. App. at 56, 676 S.E.2d

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at 652–53; N.C. Gen. Stat. § 150B-2(8a); see also Barnhart, 540 U.S. at 26, 124 S. Ct.

at 380, 157 L. Ed. 2d at 340 (stating that the last-antecedent canon is not absolute).

      Therefore, because we do not apply the last-antecedent canon to subsection

150B-2(8a), a “regulation” must have “general applicability” to be a “rule.” See N.C.

Gen. Stat. § 150B-2(8a); Wal-Mart, 197 N.C. App. at 56, 676 S.E.2d at 652–53; In re

Civil Penalty, 324 N.C. at 384, 379 S.E.2d at 37.

  3. Whether the General Permit Conditions are Generally Applicable

      We must now decide whether the General Permit conditions are generally

applicable. Again, the NCAPA does not define “general applicability,” see N.C. Gen.

Stat. § 150B-2, so we must discern its “common and ordinary meaning,” see In re

Clayton-Marcus Co., 286 N.C. at 219, 210 S.E.2d at 202–03. The Wal-Mart Court,

however, has already discerned the common meaning of “general applicability.” See

Wal-Mart, 197 N.C. App. at 56, 676 S.E.2d at 652–53. So we must adhere to it. See

In re Civil Penalty, 324 N.C. at 384, 379 S.E.2d at 37.

      In Wal-Mart, this Court defined “general applicability” in the negative, stating

that a rule is not generally applicable if it “is exceptional, and not allowed unless

specifically required.” Id. at 56, 676 S.E.2d at 652–53. In other words, a rule is

generally applicable if it is not exceptional and is allowed without specific

requirements. See id. at 56, 676 S.E.2d at 652–53. Said another way: A rule is

generally applicable if it applies to most situations. See id. at 56, 676 S.E.2d at 652–

53.

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                                 Opinion of the Court

      Here, General Permits and “general applicability” share the same descriptor:

general. And the explicit “intent of the General Assembly [is] that most animal waste

management systems be permitted under a general permit.” See N.C. Gen. Stat. §

143-215.10C(a). On the other hand, Individual Permits are intended to be the second

option. See id. Individual Permits are exceptional; whereas General Permits are not.

See id. Aptly named, General Permit conditions have general applicability because

the General Permits are to be used for “most animal waste management systems,”

and the General Permits are applicable notwithstanding special circumstances. See

id; Wal-Mart, 197 N.C. App. at 56, 676 S.E.2d at 652–53.

      The DEQ argues that General Permits are not generally applicable because

farmers can obtain Individual Permits instead. First, we question the DEQ’s premise

that Individual Permits are guaranteed. Allotting Individual Permits under section

143-215.10C is within the DEQ’s “discretion.” See N.C. Gen. Stat. § 143-215.10C(a).

Thus, contrary to the DEQ’s suggestion, Individual Permits are not automatic. See

id. Second, if farmers can avoid the challenged General Permit conditions simply by

seeking an Individual Permit, all farmers would likely do so. Following the DEQ’s

reasoning would render General Permits worthless and fly in face of section 143-

215.10C: Our General Assembly expressly stated that General Permits are to be used

for “most animal waste management systems.” See id.

      Therefore, the conditions within General Permits are generally applicable

regulations under the NCAPA. They are rules, and the superior court erred when it

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                                 Opinion of the Court

held to the contrary. See id. § 150B-2(8a). Because rules are invalid “unless [they

are] adopted in substantial compliance with” the NCAPA rulemaking requirements,

we reverse the superior court on the rule issue. See id. § 150B-18. The challenged

conditions are invalid until they are adopted through the rulemaking process. See id.

   B. Settlement Agreement

      The second issue on appeal is whether the settlement agreement improperly

influenced the DWR in creating the challenged General Permit conditions. We need

not reach this issue, however, because the challenged conditions were unlawfully

adopted, notwithstanding the settlement agreement. See id. Thus, we need not

determine whether the superior court erred in affirming the OAH’s denial of

summary judgment for Farm Bureau on the settlement-agreement issue. See id.

                               VI.   Conclusion

      The superior court erred in reversing the OAH’s grant of summary judgment

to Farm Bureau concerning whether the challenged General Permit conditions are

rules under the NCAPA. We conclude the challenged conditions are rules, and they

must be adopted as such. Therefore, we reverse the superior court’s order concerning

the rule issue.   We need not address the settlement-agreement issue, as the

challenged conditions are invalid, regardless of the effect of the settlement

agreement.

      REVERSED.

      Judges TYSON and GORE concur.

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