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,
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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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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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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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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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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(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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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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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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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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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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