Farm Bureau challenges animal waste permit rules at top NC court

The North Carolina Farm Bureau is urging the state Supreme Court to uphold a lower court’s ruling against state environmental regulators in a dispute over animal waste permits. The Farm Bureau argues that challenged permit conditions should be treated as state rules.

The state Court of Appeals issued a unanimous decision in November 2023 siding with the Farm Bureau and against the North Carolina Department of Health and Human Services.

“This case presents a foundational question of administrative accountability: whether state agencies may sidestep the safeguards of rulemaking by imposing sweeping regulatory mandates through general permits,” Farm Bureau lawyers wrote in a brief filed Friday. “North Carolina Farm Bureau asks this Court to affirm the Court of Appeals’ unanimous decision holding that three onerous conditions in the Division’s animal waste general permits are ‘rules’ under the Administrative Procedure Act.”

“These conditions, which dictate how thousands of farmers manage their operations, carry the force of law, expose farmers to penalties, and function exactly like rules, as defined by the APA,” the court filing continued.

“If imposed, the three conditions will require farmers to: (1) monitor groundwater on farms located within the 100-year flood plain; (2) engage in phosphorous loss assessment testing (‘PLAT’); and (3) file annual reports that the Division may make public on request,” Farm Bureau lawyers wrote. “As a result, Farm Bureau’s farmer members who hold animal waste general permits will be forced to incur additional production and operational costs, comply with unnecessary and burdensome administrative requirements, restrict the use of their property, and endure the likely disclosure to the public of their confidential and other protected commercial business information.”

“Once the conditions are enforced, these harms cannot be undone,” the brief argued. “Farmers cannot recover from the State the cost of installing wells or acquiring new fields, and confidential information, once disclosed, cannot be rescinded.”

“The Court of Appeals properly checked the Division’s attempt to use the animal waste general permits as a means of imposing onerous regulatory burdens on the States’ farmers outside of the APA’s robust rulemaking process,” Farm Bureau lawyers wrote.

The Appeals Court determined that the three challenged provisions in general animal waste permits were rules. DEQ’s Division of Water Resources should have followed North Carolina’s official rule-making process before adopting those conditions, according to appellate judges.

“In a unanimous opinion below, the Court of Appeals barred the Division from enforcing three onerous general permit conditions against approximately 2,000 of the State’s cattle, swine, and wet-waste poultry farms,” Farm Bureau lawyers wrote in a December 2023 court filing. “The panel concluded the three conditions are rules under N.C.G.S. § 150B-2(8a) because they ‘are generally applicable regulations’ and held the agency should have adopted the conditions as rules before including them in three animal waste general permits.”

The Appeals Court decision would force DEQ to route the three challenged permit conditions through a process tied to North Carolina’s Administrative Procedure Act.

DEQ’s petition seeking the state Supreme Court’s review of the dispute explained why the state agency believes the high court should reverse appellate judges.

“For over twenty years, Petitioner Division of Water Resources of the Department of Environmental Quality has periodically issued three general permits — one each for animal waste management systems at certain swine, cattle and liquid-waste poultry farms,” wrote state government lawyers representing DEQ. “Each time it has issued these permits, it has done so under the procedures set forth for issuing general permits, and has not adopted these permits as rules.”

“Dissatisfied with three of the new conditions included in the most recent re-issuance, Respondent N.C. Farm Bureau Federation, Inc. contested the permits in the Office of Administrative Hearings,” the DEQ petition continued. “Instead of challenging the substantive bases for those conditions, the Farm Bureau asserted that these three conditions were rules under the Administrative Procedure Act and should have been adopted through rulemaking.”

An administrative law judge agreed with the Farm Bureau, but a Superior Court judge reversed that decision. Then a three-judge Appeals Court panel reversed the trial court’s decision last November.

“The Court of Appeals held that a condition in a general permit is a rule if ‘it applies to most situations.’ It then reasoned that, because the General Assembly has stated its intention that ‘most’ animal waste management systems be permitted under a general permit, the conditions at issue in this case are rules that should have been adopted through the rulemaking process,” DEQ’s lawyers wrote.

“The Court of Appeals’ judgment expressly renders only the three challenged conditions unenforceable, but the logic of its holding applies equally to nearly half the conditions in the three Animal Waste General Permits,” the petition continued. “These permits cover the large majority of animal waste operations at swine, cattle, and liquid-waste poultry animal waste management systems in North Carolina. In total, the permits apply to well over two thousand farms.”

“Despite the fact that the General Assembly explicitly directed that these facilities be governed by a permit system, the Court of Appeals said otherwise and mandated that the facilities be regulated by a system of rules,” DEQ’s lawyers argued. “The Court of Appeals’ opinion puts in jeopardy a longstanding permitting program that governs the vast majority of swine farms in the state, which comprise a significant portion of national swine production.”

“The potentially sweeping nature of its logic threatens to upend the jurisprudential landscape on general permitting programs more broadly,” the petition warned. “For these reasons, the Division asks this Court to grant this Petition for Discretionary Review and correct the Court of Appeals’ erroneous restructuring of this major permitting program.”

Appellate judges agreed with the Farm Bureau that three challenged conditions tied to general animal-waste permits adopted in 2019 were state rules. None of the three conditions proceeded through the state’s official rule-making process in the Administrative Procedure Act. All of those conditions are invalid, according to the Appeals Court opinion.

Each of the 2,000 affected hog, cattle, and poultry farms across North Carolina uses a “lagoon-and-spray-field system” to address animal waste.

“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,” wrote Judge Jeff Carpenter for the unanimous appellate panel.

Each of the challenged conditions had been tied to a settlement agreement DEQ reached with the North Carolina Environmental Justice Network and other groups after a federal civil rights complaint.

“Here, any farmer who uses certain animal-waste management systems must obtain a permit and comply with its conditions,” Carpenter wrote. “These conditions are authoritative, as the [Division of Water Resources] has the authority to grant permits, which are required to operate the animal-waste systems. 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.”

“Therefore, the General Permit conditions are regulations under the NCAPA because they are ‘authoritative rule[s] dealing with details’ of animal-waste management systems,” Carpenter wrote.  

“The challenged conditions are invalid until they are adopted through the rulemaking process,” Carpenter concluded.

A split 2-1 Court of Appeals panel issued an order in October 2022 blocking the rules from taking effect.