According to the state’s high court, millions of dollars in payments made by Smithfield Foods to North Carolina could be routed to grants for environmental improvement projects and not to civil penalties that must be designated to schools.
Friday’s Supreme Court ruling found that the North Carolina Court of Appeals acted prematurely by allowing the New Hanover County Board of Education, to appeal a claim that had not been argued before.
The 6-0 decision means that money paid out of a 2000 settlement by the pork giant to then-Attorney General Mike Easley could continue being funneled to states Environmental Enhancement Grant or EEG program.
In 2001, Gov. Roy Cooper, at the time attorney general, created this program to disburse funds gathered under the Smithfield Agreement.
Smithfield and its affiliates agreed to pay $2 million per year for 25 years to a savings fund. This account will hold the money until it is distributed to the attorney general for environmental enhancement projects.
Francis De Luca, former president and founder of Civitas Institute in Raleigh, filed a complaint with Wake County Superior Court in fall 2016. He claimed that the payments made under the agreement were civil penalties, and that the funds should be used to support county schools. De Luca included the New Hanover County Board of Education in his lawsuit in 2017.
De Luca eventually resigned from the case. It has been a tennis match between the Court of Appeals, Supreme Court.
Blakely Hildebrand, a Southern Environmental Law Center staff attorney, said Monday that this is likely to be the last time the courts will hear arguments about the Environmental Enhancement Grant Program.
The nonprofit was represented at the law center North Carolina Coastal Federation Sound Rivers Inc., which joined in 2017 to support Attorney General Josh Stein.
Stein had transferred the annual payments to the Office of State Treasurer from a private account, out of excess caution before the Court of Appeals Dec 2020 ruling that the money needed to be paid into either the general fund or the treasury.
This ruling reversed the April 2020 ruling by the state Supreme Courts in favor of the attorney-generals office, and the payments did not amount to penalties.
Judge Philip Berger Jr. & Judge John Tyson split the decision and ruled that N.C.General Statute 147-76.1, commonly referred to as the gift law, applies to current and future funds paid under this agreement and that the law requires those funds to be deposited in the treasury.
Cooper signed the bill into law in 2019, three years before the lawsuit was filed at Wake County Superior Court.
In a separate opinion, Judge Wanda Bryant, a dissident judge, noted that the appellate court ruling was premature and that the board educations claim should first have been argued in a trial Court.
The parties could appeal the split decision to the Supreme Court.
Berger, an associate judge in the Supreme Court did not participate in the courts deliberations regarding the case.
Associate Justice Sam Ervin IV said that the board could file a new suit to argue where the money should be directed.
Paul Skip Stam, lead attorney for plaintiffs, did not return calls seeking comment.
Hildebrand stated that they are pleased with the decision and that the program will continue to be run in North Carolina for the next few years. Hildebrand added that the program is a great benefit to the environment and communities. This grant program is very important, not only for the environment but also for the non-profit organizations that work hard under it.
To date, nearly $37million has been awarded by the attorney generals office to more than 190 projects throughout the state. These projects include wetland restoration and land acquisition, stormwater remediation as well as stream stabilization and environmental education and other research initiatives.
According to the website of the attorney generals, the program has resulted in the closure of 240 abandoned hog lagos and the conservation or restoration of more than 31,000 acres land and wildlife habitats since its inception.
The program grants grants of $5,000 to $500,000 to three-year projects. Grants are available only for nonprofit organizations, government entities, and academic institutions.
Stein granted nearly $3 million to 27 grantees last year. In eastern North Carolina, more than $850,000 was spent on EEG projects last November.
