An order handed down from the Court of Appeals on Monday installed a stay on a Superior Court ruling that cleared the state Attorney General’s office of appropriating funds meant for the Public School Fund for environmental projects for the last 15 years.
The case was brought against the Attorney General’s (AG) Office by Francis De Luca, president of the conservative Civitas Institute, and the New Hanover County Board of Education over a $65 million agreement between the AG’s Office and Smithfield Foods.
In 2000 Smithfield Foods agreed to pay $15 million initially for researching hog waste disposal, and each year pay $2 million to be granted to environmental projects, at the AG’s discretion, for 25 years, equaling $65 million.
The suit claimed that the millions in environmental program funding should have gone to the public school fund, as the state constitution requires for fines and forfeitures.
The order, signed by a clerk of the Court of Appeals, stayed Judge Paul Ridgeway’s Oct. 12 decision pending the court’s decision on the petition for a writ of supersedeas, or the petition for the court to stay the lower court ruling while the appeals process is completed.
The temporary stay will last until the court rules on the motion that would install a stay on the Superior Court decision until the end of the appeal.
The temporary motion expires when the defendants and the interveners file a response to the petition, or the time period to respond expires.
The decision comes on the heels of a Superior Court decision in October not to re-instate the injunction against the AG’s Office spending any more funds while the case moved forward, after ruling against De Luca and the school system.
De Luca brought the suit against the AG’s office in 2016 while current Gov. Roy Cooper was still in the job, but the suit has been transferred to Attorney General Josh Stein.
The case rests on whether the Smithfield Foods company, and its subsidiaries, entered into the agreement to pay $65 million over the next 25 years, beginning in 2000, as part of a penalty, or to avoid penalties, or the company decided to voluntarily pay out the $65 million without any enforcement action.
The agreement, settled in July of 2000, between Smithfield Foods, and its subsidiaries, with the AG’s office was to pay $15 million to North Carolina State University up front for research into technologies for more efficient, environmentally friendly disposal of hog waste. In subsequent years, Smithfield was to pay $2 million annually for 25 years, or $1 for every pig capped at $2 million, to a fund that the state attorney general, then Mike Easley, would control for the purpose of funding what the suit calls supplemental environmental programs.
For the last 16 years the fund has been administering grants at the discretion of the state attorney general – Mike Easley and then Cooper, and now Stein.
The case seemingly rested on the testimony of some of the former state officials involved in the handling of the agreement or in the area of environmental enforcement in the state 15 years ago.
The testimonies held that the agreement was not based on any pending enforcement action, and also was not done to avoid a coming enforcement action, and therefore it was ruled that the $65 million was not paid as a part of a settlement.
An affidavit from former director of the Environmental Division of the North Carolina Department of Environmental and Natural Resources (now the Department of Environmental Quality) Daniel Oakley, who was the primary negotiator of the agreement, said “I know that the agreement was not reached in order to settle any case in which a civil penalty had been assessed by [the North Carolina Department of Environmental and Natural Resources].”
Oakley did say that there were penalties filed against the companies that were party to the 2000 agreement in the five years leading up to the agreement and in the following year, but that those were settled through other means.
In the ruling the judge handling the case said that a key difference between a similar case and De Luca’s was that there were already penalties assessed in the referenced case as opposed to De Luca’s case.