- The North Carolina Supreme Court will determine whether three conditions in state animal waste permits are invalid because regulators never subjected them to the state rulemaking process.
- It's a dispute that pits the North Carolina Department of Environmental Quality against the North Carolina Farm Bureau Federation.
- A unanimous state Court of Appeals panel ruled in favor of the Farm Bureau in November 2023.
The North Carolina Supreme Court must decide whether three challenged conditions in state animal waste permits are state government rules. If so, those conditions would be thrown out because they didn’t go through the state’s rulemaking process.
The high court heard nearly an hour of oral arguments Wednesday in the case NC Department of Environmental Quality v. NC Farm Bureau Federation.
The Farm Bureau challenged conditions DEQ added in 2019 to permits used by 2,000 farms across North Carolina. Each affected hog, cattle, and poultry farm uses a “lagoon-and-spray-field system” to address animal waste. The three disputed permit conditions involved groundwater monitoring, phosphorus loss assessment tool analysis, and the filing of annual reports.
A unanimous state Court of Appeals panel ruled in favor of the Farm Bureau in November 2023.
“This was error,” argued state Assistant Attorney General Taylor Crabtree, representing the environmental regulators. “For at least 20 years, the General Assembly has known that these permits were being issued as permits — not adopted as rules. And despite interacting with the program on multiple occasions and directly intervening to refine the division’s process for issuing these permits, it has never required that these permits be adopted as rules.”
The Farm Bureau countered that state regulators with DEQ’s Division of Water Resources inserted the challenged provisions into animal waste permits without following the proper procedure. North Carolina’s Administrative Procedure Act dictates the rulemaking process.
“This case presents this court with an opportunity to make clear that the division cannot operate outside of the APA’s uniform system of rulemaking unless an exception applies,” argued Jake Parker, the Farm Bureau’s secretary and general counsel.
Justice Richard Dietz questioned DEQ’s approach to the dispute. “If the permits themselves, when we look at them, … are providing a general rule that’s going to apply to everyone unless the agency gives someone an exception, that sounds like rulemaking,” he said.
“The ability for the agency to … just in its discretion decide what other criteria it wants to stick on a permit is allowing it to start regulating without any oversight from the General Assembly,” Dietz added.
Justice Anita Earls questioned whether this case could have an impact on other state government agency permits.
“DEQ administers 21 different general industrial permits,” Earls said. “If we were to say that the conditions for the permitting process here have to go through rulemaking, does that mean that for every kind of industrial permit that has conditions, those would also have to go through rulemaking? And would this extend beyond DEQ to all of the state government operations?”
“It would place the activities that are authorized currently under those general permits in some doubt,” Crabtree responded. “So it would really work a great deal of uncertainty into the system.”
“I’m struggling to find limiting principles for all this,” Justice Trey Allen said.
“It’s difficult for me to believe that the General Assembly’s intent in enacting the permitting process was to enable the department to essentially avoid having to engage in rulemaking,” Allen added.
“I agree with you, your honor, that that’s not what the General Assembly intended,” Parker responded.
Parker also downplayed the potential impact on other state government permits. “I don’t think it’s going to blow up the permitting system or anything to that extent,” he said. “I do think it puts an extra check in the process for the agency.”
“Farm Bureau engages in the rulemaking process all the time,” Parker added. “It does take time, but again, it’s a process by which everybody gets heard. The rules are out in front where everybody can see them. … That’s the balance the APA reached.”
An administrative law judge initially agreed with the Farm Bureau in the dispute, but a Superior Court judge reversed that decision. Then a three-judge Appeals Court panel overturned the trial court’s ruling in 2023.
Appellate judges agreed with the Farm Bureau that the three challenged conditions should have been treated as state rules.
Each challenged condition 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.
“[T]he General Permit conditions are regulations under the NCAPA because they are ‘authoritative rule[s] dealing with details’ of animal-waste management systems,” Judge Jeff Carpenter wrote for the unanimous Appeals Court panel.
“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.