15-Apelle Brief (Found) 2014.6.26 with Bookmarks and recognizable text, full text, too

15-Apelle Brief (Found) 2014.6.26 with Bookmarks and recognizable text

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No. COA 14-311 TENTH JUDICIAL DISTRICT
NORTH CAROLINA COURT OF APPEALS
********************************
FREDERICK CUBBAGE, RONALD W.
SUTHERLAND, PHD., RICHARD J.
“BARNEY” BERNARD, JR., JAMES
D. GREGORY AND JOHN EDDY,
Plaintiffs-Appellants,
v.
THE BOARD OF TRUSTEES OF THE
ENDOWMENT FUND OF NORTH
CAROLINA STATE UNIVERSITY AT
RALEIGH AND NC STATE NATURAL
RESOURCES FOUNDATION, INC.,
Defendants-Appellees.
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From Wake County
No. 13-CVS-12884
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DEFENDANT-APPELLEE NC STATE NATURAL RESOURCES
FOUNDATION, INC.’S BRIEF
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INDEX
TABLE OF CASES AND AUTHORITIES …………….. ii
ISSUES PRESENTED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
STATEMENT OF THE FACTS …………………….. 2
STANDARD OF REVIEW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
I. THE TRIAL COURT DID NOT ERR IN GRANTING
THE FOUNDATION’S MOTION TO DISMISS
PLAINTIFFS-APPELLANTS’ CLAIMS ARISING
UNDER THE NORTH CAROLINA ENVIRONMENTAL
POLICY ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
A. The North Carolina Environmental
Policy Act Does Not Apply Because
There Is No Use of Public Land for
Projects or Programs ………………. 8
B. The North Carolina Environmental
Policy Act Does Not Apply Because
There Is No Expenditure of Public
Moneys for Projects or Programs ……. 14
C. The National Environmental Policy
Act Is Not Applicable …………….. 18
II. THE TRIAL COURT DID NOT ERR IN GRANTING
THE FOUNDATION’S MOTION TO DISMISS
PLAINTIFFS-APPELLANTS’ CLAIMS ARISING
UNDER ARTICLE XIV, SECTION 5 OF THE
NORTH CAROLINA CONSTITUTION …………… 19
CONCLUSION ………………………………. 2 6
IDENTIFICATION OF COUNSEL …………………. 27
CERTIFICATE OF SERVICE ……………………. 28
-ii-
TABLE OF CASES AND AUTHORITIES
Cases:
Citizens for Clean Industry v. Lofton,
109 N.C. App. 229,
427 S.E.2d 120 (1993) ………………. 10-11
Dickens v. Puryear, 302 N.C. 437,
276 S.E.2d 325 (1981) …………………. 13
Hargrove v. Billings & Garrett, Inc.,
137 N.C. App. 759, 529 S.E.2d 693 (2000) …. 6
In re Env’l Mgmt. Comm’n, 53 N.C. App. 135,
280 S.E.2d 520 (1981) ………………. 10-11
In re Investigation of the Death of Miller,
357 N.C. 316, 584 S.E.2d 772 (2003} …….. 13
Marvin M. Brandt Revocable Trust v.
United States, 134 S. Ct. 1257 (2014) …… 13
Matter of Am. Waste & Pollution Control
Co., 633 So.2d 188 (La. Ct. App. 1994) .. 24-25
Owsichek v. State, Guide Licensing
& Control Ed., 763 P.2d 488 (Alaska 1988) .. 24
Sierra Club v. Dep’t of Transp.,
167 P.3d 292 (Haw. 2007) ……………. 23-24
State ex rel. Hunt v. North Carolina
Reinsurance Facility, 302 N.C. 274,
275 S.E.2d 399 (1981} ………………. 12-13
State ex rel. Martin v. Preston,
325 N.C. 438, 385 S.E.2d 473 (1989) …. 21, 26
State ex rel. Rohrer v. Credle,
322 N.C. 522, 369 S.E.2d 825 (1988} ….. 22-23
Constitutional Provisions and Statutes:
Haw. Const. art. Xi, §9 …………………… 24
-iii-
La. Canst. art. IX, Sec. 1 ………………… 25
N.C. Canst. art. XIV, §5 …………. 19-22, 25-26
42 U.S.C. § 4321 et seq …………………… 18
42 U.S.C. § 4332(2} (C) ……………………. 19
N.C. Gen. Stat. § 113A-1 et seq . ……………. 5
N.C. Gen. Stat. § 113A-2 ………………….. 11
N.C. Gen. Stat. § 113A-4(2) . …………….. 7, 10, 19
N.C. Gen. Stat. § 113A-9(11) . …………………….. 8
N.C. Gen. Stat. § 116-30.20 ………………… 2
N.C. Gen. Stat. § 116-36(a) . ……………………… 2
N.C. Gen. Stat. § 116-36 (d) . …………………………. 14
N.C. Gen. Stat. § 116-36(e) .. …………………………… 14
N.C. Gen. Stat. § 116-36 (g) . …………………………….. 15
Other:
1 NCAC 2 5. 010 8 (a) . . . .. . . . . . . . . . . . . . . . .. . . . . . . . . 17
1 NCAC 25.0108 (b) (4) ……………………… 17
1 NCAC 25.0108 (b) (7) ……………………… 18
Op. Att’y Gen., Environmental Policy
Act of 1971; Application of Ongoing
Projects, pp. 26-36 (July 13, 1973) ………… 18
Milton S. Heath, Jr. and Alex L. Hess, III,
The Evolution of Modern North Carolina
Environmental and Conservation Policy
Legislation, 29 Campbell
L. Rev. 535 {2007) ……………………. 22
Restatement (First) of Property
§ 154(1) (1936) ……………………….. 13
No. COA 14-311 TENTH JUDICIAL DISTRICT
NORTH CAROLINA COURT OF APPEALS
********************************
FREDERICK CUBBAGE, RONALD W.
SUTHERLAND, PHD., RICHARD J.
“BARNEY” BERNARD, JR., JAMES
D. GREGORY AND JOHN EDDY,
Plaintiffs-Appellants,
v.
THE BOARD OF TRUSTEES OF THE
ENDOWMENT FUND OF NORTH
CAROLINA STATE UNIVERSITY AT
RALEIGH AND NC STATE NATURAL
RESOURCES FOUNDATION, INC.,
Defendants-Appellees.
)
)
)
)
)
)
)
)
)
)
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From Wake County
No. 13-CVS-12884
*****************************************
DEFENDANT-APPELLEE NC STATE NATURAL RESOURCES
FOUNDATION, INC.’S BRIEF
*****************************************
ISSUES PRESENTED
I. DID THE TRIAL COURT ERR IN DISMISSING PURSUANT TO RULE
12(B) (6) PLAINTIFFS-APPELLANTS’ CLAIMS UNDER THE NORTH
CAROLINA ENVIRONMENTAL POLICY ACT.
II. DID THE TRIAL COURT ERR IN DISMISSING PURSUANT TO RULE
12(B) (6) PLAINTIFFS-APPELLANTS’ CLAIMS UNDER ARTICLE XIV,
SECTION 5 THE NORTH CAROLINA CONSTITUION.
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STATEMENT OF THE FACTS
The land comprising Hofmann Forest is currently owned by
Defendant-Appellee The Board of Trustees of The Endowment Fund
of North Carolina State University at Raleigh (“Endowment
Fundn), subject to a reversionary interest held by Defendant-
Appellee NC State Natural Resources Foundation, Inc.
(“Foundation”) . (R. pp. 5, 9, 21-22, 112.) The Endowment Fund
is an entity created pursuant to N.C. Gen. Stat. § 116-36(a),
for the purpose of, inter alia, acquiring and disposing of
property pursuant to donor requests and otherwise providing
financial support to North Carolina State University. The
Foundation is a private, nonprofit corporation formed to support
the College of Natural Resources at North Carolina State
University. (R. pp. 5, 24, 53, 68); see also N.C. Gen. Stat.
§ 116-30.20 (2013) (encouraging the establishment of private,
non-profit corporations to support the constituent institutions
of The University of North Carolina and The University System).
The Foundation acquired Hofmann Forest in 1934. (R. p.
68.) On 15 December 1977, the Foundation1 gifted Hofmann Forest
to the Endowment Fund via a Deed of Gift recorded in both Jones
1 In 2008, the North Carolina Forestry Foundation, Inc. merged with Pulp and
Paper Foundation, Inc. and changed its
Foundation, Inc. The North Carolina
original signatory to the Deed of Gift.
name to NC State Natural
Forestry Foundation, Inc.
(R. p. 58, 112, 117.)
Resources
was the
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and Onslow Counties. (R. p. 110.) The Deed of Gift was
conditioned on the requirement that “[a]ll net income of
whatever kind earned by said land and all net proceeds from the
sale or other disposition of said land shall be used solely for
the support of the School of Forest Resources of North Carolina
State University.”2 (R. p. 111.} If proceeds were not used for
that purpose, title would revert to the Foundation. (R. p. 111-
12.) Further, the Deed of Gift provided that title to the land
would revert to the Foundation in the event that the General
Assembly amended N.C. Gen. Stat. § 116-36 to provide (a) that
proceeds from endowment funds would take the place of State
appropriations or (b) that sale, leasing or other disposition of
properties belonging to an endowment fund would be subject to
Chapters 143 [State Departments, Institutions, and Commissions]
and 14 6 [State Lands] of the North Carolina General Statutes.
( R . pp . 111-12 . )
In conjunction with the Deed of Gift, the Foundation and
The Endowment Fund also executed an Agreement that reiterated
the conditions set forth in the Deed of Gift, restated the
Foundation’s reversionary interest in the property, and
prohibited the Endowment Fund from selling, leasing or otherwise
2 The School of Forest Resources of North Carolina State University is now
known as the College of Natural Resources.
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disposing of Hofmann Forest without the Foundation’s consent.
( R . pp . 114 -15 . ) Pursuant to the Agreement, the Foundation
remains responsible for operating and development expenses of
Hofmann Forest, as well as taxes assessed against the property,
in excess of moneys earned by Hofmann Forest. (R. p. 115.) The
net income, of whatever kind, earned by Hofmann Forest, can only
be used for the
expressly mandated
College
that
of
the
Natural
proceeds
Resources, and it is
from any sale or
disposition are solely to support the College of Natural
Resources, or else those proceeds must be paid over to the
Foundation. (R. pp. 111, 115.)
On 25 October 2013, the Endowment Fund and the Foundation
entered an Agreement for Purchase and Sale of Real Property
(“Purchase Agreement”) to sell Hofmann Forest to Hofmann Forest,
LLC, a North Carolina limited liability company. (R. p. 68.)
The Purchase Agreement recites a purchase price of
$145,800,000.00. (R. p. 73.) Of that amount, $120,800,000.00
is to be paid in cash at closing, with the remaining
$25,000,000.00 to be paid over time pursuant to the terms of a
purchase money promissory note. (R. p. 73.) In addition to the
cash portion of the purchase price to be paid at closing,
Hofmann Forest, LLC agreed to make a gift of $4,200,000.00 to
the Endowment Fund at closing. (R. p. 73.)
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Plaintiffs-Appellants, after the plans for a potential sale
of Hofmann Forest were made public, filed a civil action on 23
September 2013 seeking declaratory and injunctive relief under
the North Carolina Environmental Policy Act3 (“SEPAn) and the
North Carolina Constitution (“Constitution”) in an attempt to
halt any planned sale of Hofmann Forest. (R. p. 2. )
Plaintiffs-Appellants filed an Amended and Supplemental
Complaint (“Complaint”) on 5 November 2013, again seeking
declaratory and injunctive relief under SEPA and the
Constitution. (R. p. 50.) On 7 November 2013, the Foundation
and the Endowment Fund each filed a Motion to Dismiss the
Complaint pursuant to Rules 12 (b) (1) and 12 (b) (6) of the North
Carolina Rules of Civil Procedure, on the grounds that
Plaintiffs lacked standing to pursue their claims and that
Plaintiffs had failed to state claims for which relief could be
granted under both SEPA and the Constitution. (R. pp. 132,
135.)
On 12 November 2013, the Motions to Dismiss were heard by
The Honorable Shannon R. Joseph, who entered an order on 22
November 2013 granting the Motions to Dismiss pursuant to Rule
3 The North Carolina Environmental Policy Act, N.C. Gen. Stat. § 113A-l et
seq., is referred to as SEPA – the State Environmental Policy Act – as well
as by the acronym NCEPA. The Foundation has utilized the acronym SEPA given
the terminology originally set forth in Plaintiffs-Appellants’ Complaint.
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12 (b) (6). (R. pp. 138-39.) Having concluded that Plaintiffs
failed to state claims upon which relief could be granted, the
trial court did not reach the Motions to Dismiss pursuant to
Rule 12 (b) (1). (R. p. 139.) On 2 December 2013, Plaintiffs
filed a Notice of Appeal of the order granting the Foundation’s
and the Endowment Fund’s Motions to Dismiss. (R. p. 142.)
STANDARD OF REVIEW
The standard of review of an order of dismissal based upon
Rule 12(b) (6) of the North Carolina Rules of Civil Procedure is
whether the allegations of the complaint, treated as true, are
sufficient to state a claim upon which relief may be granted
under some legal theory. Hargrove v. Billings & Garrett, Inc.,
137 N.C. App. 759, 760, 529 S.E.2d 693, 694 (2000). “A
complaint may be dismissed pursuant to Rule 12(b) (6) if no law
exists to support the claim made, if sufficient facts to make
out a good claim are absent, or if facts are disclosed which
will necessarily defeat the claim.”
at 694 (citations omitted).
Id., at 760-61, 529 s.E.2d
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ARGUMENT
I. THE TRIAL COURT DID NOT ERR IN GRANTING THE
FOUNDATION’S MOTION TO DISMISS PLAINTIFFS-APPELLANTS’ CLAIMS
ARISING UNDER THE NORTH CAROLINA ENVIRONMENTAL POLICY ACT.
In their Complaint, Plaintiffs-Appellants assert claims for
declaratory judgment and injunctive relief arising under SEPA.
In their First, Third and Fourth Causes of Action, Plaintiffs-
Appellants seek a declaratory judgment that SEPA applies to the
sale of Hofmann Forest, that the Foundation and Endowment Fund
failed to comply with SEPA, and that the sale cannot not move
forward until SEPA requirements are satisfied. In conjunction
therewith, Plaintiffs-Appellants request an injunction to stop
the sale of Hofmann Forest.
In essence, Plaintiffs-Appellants assert that Defendants-
Appellees are required to prepare an environmental impact
statement (“EIS”) prior to selling Hofmann Forest under SEPA,
specifically N.C. Gen. Stat. § 113A-4(2). (R. pp. 59-62.) The
statute provides that every State agency shall include an EIS
“in every recommendation or report on any action involving
expenditure of public moneys or use of public land for projects
and programs significantly affecting the quality of the
environment of this State.” N.C. Gen. Stat. § 113A-4 (2) (2013)
(emphasis added) . Assuming arguendo that the Endowment Fund, as
record owner of Hofmann Forest, is a “State agency” under SEPA,
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or that SEPA applies to property in which a reversionary
interest is held by a private corporation, SEPA still does not
apply to the transaction at issue here because the pending sale
of Hofmann Forest does not involve the “use of public land” or
the expenditure of “public moneys.”
A. The North Carolina Environmental Policy Act Does. Not
Apply Because There Is No Use of Public Land for Projects or
Programs.
The proposed sale of Hofmann Forest is not a “use of public
land” that would require an EIS. The term “use of public land”
is defined by SEPA as follows:
(11) “Use of public land” means activity
that results in changes in the natural cover
or topography that includes:
a. The grant of a lease, easement, or
permit authorizing private use of
public land; or
b. The use of privately owned land
for any project or program if the
State or any agency of the State
has agreed to purchase the
property or to exchange the
property for public land.
N.C. Gen. Stat. § 113A-9(11) (2013). Subsection {a) is the only
potentially applicable language. The act of transferring title
to Hofmann Forest will not result in changes in the natural
cover or topography of Hoffman Forest, and further, the act of
transferring title does not involve “[t] he grant of a lease,
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easement, or permit”. Under the plain language of the statute,
the sale does not involve “use of public land,” and accordingly,
the requirements of SEPA simply do not apply.
Plaintiffs-Appellants attempt to argue that transfer of
ownership of Hofmann Forest is equivalent to an action by a
state agency to award grants, issue permits, or grant licenses,
which, they state, constitutes action under SEPA. In support of
their position, Plaintiffs-Appellants rely on a guidance manual
published by the North Carolina Department of the Environment
and Natural Resources that explains for a project to be subject
to SEPA, it must involve action by a state agency “such as
appropriating land or money, awarding grants, issuing permits 1
or granting licenses.” (Pl.-App. Br. p. 14.) Plaintiffs.,..
Appellants state that the “issuance of a permit is a classic
trigger for NCEPA” and that “printing and signing of a permit,
just like the printing and signing of a deed, creates no
environmental impact itself.” (Pl.-App. Br. p. 14.)
This argument ignores the fact that permits are required in
the above situations because an entity intends to implement a
project or program, or in other words, to take some specific
action that is regulated. Grants and licenses are awarded
because an entity has requested permission to undertake a
project or to perform some specific action for which money or
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permission is needed. Those permits, grants and licenses are
necessary and inextricably entwined with the action being
pursued. That is not the case here as there is not a specific
action, project or program tied to the transfer. The statute
itself emphasizes the requirement that there be some project or
program at issue. An EIS is required for ~any action involving
expenditure of public moneys or use of public land for projects
and programs significantly affecting the quality of the
environment of this State.” N.C. Gen. Stat. § 113A-4(2)
(emphasis added) .
Plaintiffs-Appellants cite to In re EMC and Citizens for
Clean Industry to bolster their position, but reliance on such
cases is misplaced. In the former case, the Orange Water and
Sewer Authority ( “OWASA”) petitioned the Environmental
Management Corrunission (~commission”) for a “certificate
authorizing institution of eminent domain proceedings in order
to construct a dam and reservoir for water supply purposes.” In
re Env’l Mgmt. Comm’n, 53 N.C. App. 135, 136, 280 S.E.2d 520,
522 (1981). In that case the Court of Appeals held that
certification action by the Commission triggered the preparation
of an EIS. However, there the Commission was specifically
empowered by the legislature to issue certificates authorizing
land and water rights acquisition, and the entire purpose of the
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certificate was to allow acquisition for the purpose of
constructing a dam and reservoir. In other words, there was a
specific action behind the certification.
In Citizens for Clean Industry v. Lofton,. 109 N.C. App.
229, 427 S. E. 2d 120 ( 1993), the environmental assessment was
triggered because a permit was sought that would allow a
specific action the discharge from a wastewater treatment
plant. Here, no matter the speculation Plaintiffs-Appellants
may raise with respect to the future of Hofmann Forest, the only
issue is the sale of property to a private entity, and there is
no specific action, project, program or activity linked to such
sale.
SEPA recites that its purpose is to “require agencies of
the State to consider and report upon environmental aspects and
consequences of their actions involving the expenditure of
public moneys or use of public land.” N.C. Gen. Stat. § 113A-2
(2013). The requirement of an EIS is designed “to provide a
mechanism by which all affected State agencies raise and
consider environmental factors of proposed projects” and to
provide the responsible agency “with a useful decisionmaking
tool.” In re Env’l Mgt. Comm’n, 53 N.C. App. at 144, 280 S.E.2d
at 527 (emphasis added). Again, the common factor is that the
EIS is to be utilized to evaluate some specific project, program
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or proposed action. Because the sale of Hofmann Forest is not
an activity that results in changes in the natural cover or
topography of the land, there is no defined environmental impact
to consider. Further, because there is no specific project or
program attached to the sale, there is no action that could be
argued as “significantly affecting the quality of the
environment of the State.”
Plaintiffs-Appellants also attempt to argue that the sale
of land should be read into the definition of “use of public
land” by this Court, even though “sale” is not included in the
language of the definition. The General Assembly provided a
precise definition of “use of public land,” and listed the grant
of a lease, permit, or easement, but not the sale of land. In
addition, the “use of public land” must be an activity that
results in changes in the natural cover or topography, which a
sale alone does not do. It must be assumed under the doctrine of
expressio unius est exclusio alterius that the General Assembly
intentionally omitted the sale of land from this definition.
“Where a statute sets forth one method for accomplishing a
certain objective, or sets forth the instances of its
application or coverage, other methods or coverage are
necessarily excluded under ‘the maxim expressio unius est
exclusio alterius.” State ex rel. Hunt v. North Carolina
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Reinsurance Facility, 302 N.C. 274, 290, 275 S.E.2d 399, 407
(1981) (internal quotation marks omitted}; see also In re
Investigation of the Death of Miller, 357 N.C. 316, 325, 584
S.E.2d 772, 780 (2003) (“Under the doctrine of expressio unius
est exclusio alterius, when a statute lists the situations to
which it applies, it implies the exclusion of situations not
contained ln the list.n (internal quotation marks omitted));
Dickens v. Puryear, 302 N.C. 437, 444 n.8, 276 S.E.2d 325, 330
n.8 (1981).
It must also be emphasized that Hofmann Forest was gifted
by the Foundation to the Endowment Fund, expressly subject to a
reversionary interest. (R. pp. 5, 9, 21-22, 112.} “A
reversionary interest is ‘any future interest left in a
transferor or his successor in interest.’ It arises when the
grantor \transfers less than his entire interest’ in a piece of
land, and it is either certain or possible that he will retake
the transferred interest at a future date.” Marvin M. Brandt
Revocable Trust v. United States, 134 S. Ct. 1257, 1266 (2014)
(quoting Restatement (First) of Property § 154 (1) (1936)). The
Endowment Fund simply holds Hofmann Forest as a gift, subject to
the restrictions of the Deed of Gift and Agreement. The
Foundation is a private, nonprofit corporation formed to support
the College of Natural Resources at North Carolina State
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University. ( R. pp. 5, 2 4, 53, 6 8 . ) Given the manner and
restriction of the title, Hofmann Forest is uniquely held and
does not qualify as “public land” under SEPA.
B. The North Carolina Environmental Policy Act Does Not
Apply Because There Is No Expenditure of Public Moneys for
Projects or Programs.
The Endowment Fund is a creature of statute and was created
to support North Carolina State University, separate and apart
from the moneys received “from State appropriations and from
tuition and fees collected from students and used for the
general operation of the institution.” N.C. Gen. Stat. § 116-
3 6 (d) • The Endowment Fund meets this purpose through private
gifts, like that of Hofmann Forest gifted by the Foundation.
See id. (noting that “the trustees of an endowment fund may
receive and administer as a part of the endowment fund gifts,
and devises and any other property of any kind”) .
The Endowment Fund is specifically tasked with the
responsibility for investment of the fund, ”but in compliance
with any lawful condition placed by the donor upon that part of
the endowment fund to be invested.” N.C. Gen. Stat. § 116-
36 (e) (2013). The Endowment Fund is also specifically authorized
to buy, sell, lend, exchange, lease, transfer, or otherwise
dispose of or to acquire any property, real or personal, in
either public or private transactions except when such act
-15-
would violate a lawful condition of receipt of the gift. N.C.
Gen. Stat. § 116-36 (g) (2013). When engaging in such activities,
the Endowment Fund is not subject to Chapters 143, 143C or 146
of the General Statutes, which respectively deal with State
Departments, Institutions and Commissions; the State Budget Act;
and State Lands. Id.
Hofmann Forest was gifted by the Foundation to the
Endowment Fund in 1977 with specific restrictions related to the
Endowment Fund’s use of the proceeds of Hoffman Forest. (R. pp.
17-24.) The Agreement expressly contemplated the possibility of
the sale of Hoffman Forest. (R. p. 114). Under the Agreement
and Deed of Gift to the Endowment Fund, the Foundation remains
responsible for all operating and development expenses and taxes
in connection with Hofmann Forest. (R. pp. 110 – 116.) The net
income, of whatever kind, earned by Hofmann Forest, as well as
the proceeds from any sale or distribution, can only be used to
support the College of Natural Resources. (R. p. 115) . Failure
to honor this condition will result in Hoffman Forest reverting
to the Foundation, a private entity.
The Endowment Fund is, at best, a passive record owner,
that simply holds Hofmann Forest as a gift, subject to the
restrictions of the Deed of Gift and Agreement. There are no
“public moneys” at issue in this unique situation. The
-16-
Endowment Fund is not entitled to benefit from any moneys
associated with Hofmann Forest. (As discussed above, there are
also no projects and programs tied to any expenditure of public
moneys with respect to the sale of Hofmann Forest.)
The only alleged upublic moneys” specifically identified by
Plaintiffs-Appellants to support their argument that
applies to the sale of Hofmann Forest are as follows:
a. Seller’s payment for preparation of a deed and
other documents necessary to perform Seller’s
obligations under the Purchase Agreement;
b. Seller’s payment of excise tax (revenue stamps);
c. If there are exceptions to title, Seller’s
payment to remove, satisfy or otherwise cure
those exceptions; and
d. Splitting of profits from timber harvesting from
the date of the Purchase Agreement through
Closing between Seller and Purchaser.
SEPA
(R. at 61.) Deed preparation and payment of excise taxes are
specifically made a part of the Seller’s closing obligations,
meaning that those costs will be paid out of proceeds at
closing. (R. at 92.) In other words, the profit from the sale
of Hofmann Forest will be reduced by those costs. Similarly, if
timber profits are split, that simply means that the
-17-
Foundation’s share of net income attributable to timber sales
during that time period is reduced. Again, no proceeds related
to Hofmann Forest inure to the benefit of the Endowment Fund.
The remaining item – payment to address exceptions to title – is
speculative. The only way any moneys would be expended is if
there were any exceptions to title that were uncovered. Even if
any exceptions were uncovered, the Foundation is responsible for
all operating and development expenses of Hofmann Forest (R. p.
22), and such payment to address any exceptions would simply
reduce the net income paid to the Endowment Fund for the benefit
of the College of Natural Resources at closing.
Plaintiffs-Appellants attempt to support their theory that
“public moneys” are at issue by citing to the definition of
“public moneys” contained in 1 NCAC 25.0108 (b) (4) (2013}. (Pl.App.
Br. pp. 21-22.) However, the regulations implementing SEPA
that are described in Chapter 25 of the Administrative Code are
applicable only when there is (1) an expenditure of public
moneys or the use of public land; (2) an action by a state
agency subject to this Chapter; and (3) a potential
environmental effect upon, inter alia, natural resources. 1
NCAC 25.0108 (a) (2013) (emphasis added) . The term “State
agencies subject to this Chapter” is a defined term, and is
defined by reference to several statutes which list principal
-18-
departments such as the Department of Health and Human Services,
Department of Revenue, Department of Commerce, etc., as well as
their subdivisions. See 1 NCAC 25. 0108 (b) (7) (2013) and
statutes cited therein. The Endowment Fund is not state agency
subject to Chapter 25 and the definition of “public moneys”
relied upon by Plaintiffs-appellants is not applicable.
c. The National Environmental Policy Act Is Not
Applicable.
Plaintiffs-Appellants also argue that under the National
Environmental Policy Act, 42 U.S.C. §§ 4321 et seq. (“NEPA”),
which applies only to federal land, the sale or exchange of land
has been treated as triggering NEPA requirements, and cite to an
opinion from the North Carolina Attorney General to support the
idea that SEPA must be interpreted in the same manner:
This question has been raised under the National
Environmental Policy Act, 42 USCA § 4321 et seq., the
federal Act that the State Environmental Policy Act
traced with very few exceptions almost verbatim.
Since the two Acts are extremely similar, unl.ess the
State Act differs subs tan tial.ly from the federal. Act
J..n its wording, the legal reasoning of the federal
courts in interpreting the Federal Act applies to the
State Act also.
Op. Att’y Gen., Environmental Policy Act of 1971; Application of
Ongoing Projects (July 13, 1973} (emphasis added}. The obvious
flaw ln Plaintiffs-Appellants’ theory is that, with respect to
the issues before this Court, NEPA and SEPA do differ
substantially.
-19-
The central question before this Court is whether SEPA is
applicable to the sale of Hofmann Forest such that an EIS must
be prepared. NEPA states that all federal government agencies
shall include an EIS “in every recormnendation or report on
proposals for legislation and other major Federal actions
significantly affecting the quality of the human environment. a
42 u.s.c. § 4332 (2) (C). When adopting SEPA, the North Carolina
General Assembly replaced the expansive jurisdictional language
of NEPA, namely, “proposals for legislation and other major
Federal actions,” by the more restrictive language, “any action
involving expenditure of public moneys or use of public land for
projects or programs.” See N.C. Gen. Stat. § 113A-4(2).
Further, while NEPA does not contain definitions, our
legislature expressly defined the question before this Court,
including the “use of public land,” and as discussed above, the
definition does not include the sale of land. Therefore, any
case construing NEPA is necessarily inapposite to this case.
II. THE
FOUNDATION’S
ARISING UNDER
CONSTITUTION.
TRIAL COURT DID NOT ERR IN GRANTING THE
MOTION TO DISMISS PLAINTIFFS-APPELLANTS’ CLAIMS
ARTICLE XIV, SECTION 5 OF THE NORTH CAROLINA
Plaintiffs-Appellants have not advanced specific,
applicable authority supporting their contention that the trial
court erred in dismissing their claims under Article XIV,
-20-
Section 5 of the North Carolina Constitution. That Section
states, 1n full:
N.C.
It shall be the policy of this State to conserve and
protect its lands and waters for the benefit of all
its citizenry, and to this end it shall be a proper
function of the State of North Carolina and its
political subdivisions to acquire and preserve park,
recreational 1 and scenic areas, to control and limit
the pollution of our air and water, to control
excessive noise, and in every other appropriate way to
preserve as a part of the common heritage of this
State its forests, wetlands, estuaries, beaches,
historical sites, openlands, and places of beauty.
To accomplish the aforementioned public purposes, the
State and its counties, cities and towns, and other
units of local government may acquire by purchase or
gift properties or interests in properties which
shall, upon their special dedication to and acceptance
by a law enacted by a vote of three-fifths of the
members of each house of the General Assembly for
those public purposes, constitute part of the ‘State
Nature and Historic Preserve,’ and which shall not be
used for other purposes except as authorized by law
enacted by a vote of three-fifths of the members of
each house of the General Assembly. The General
Assembly shall prescribe by general law the conditions
and procedures under which such properties or
interests therein shall be dedicated for the
aforementioned public purposes.
Const. art. XIV, § 5. Plaintiffs-Appellants have
repeatedly cited to the first paragraph of Article XIV, Section
5, as support for their position that the sale of Hofmann Forest
by the Endowment Fund or other party should be forever
prohibited. A simple reading of this constitutional provision
compels rejection of Plaintiffs-Appellants’ sweeping
-21-
interpretation which is based upon only a part of Section 5.
The provision indicates authorization to preserve property (“it
shall be a proper function … to acquire and preserve … “), as
opposed to prohibition on the sale of property, particularly
property with a reversionary interest held by a private
corporation.
Plaintiffs-Appellants also completely ignore the second
paragraph of Section 5, which is a provision acknowledging that
the State’s policy of conservation is to be advanced by
acquisition of lands and the dedication of lands through
legislative action as part of the State Nature and Historic
Preserve. The paragraph expressly provides a specific mechanism
to conserve and protect the lands and waters of the state, but
it does not prohibit in any way the sale of land or provide a
private cause of action.
Plaintiffs-Appellants would have this Court impermissibly
read into the North Carolina Constitution a prohibition on the
sale of land that simply is not present. “In interpreting our
Constitution – as in interpreting a statute – where the meaning
is clear from the words used, we will not search for meaning
elsewhere.” State ex rel. Martin v. Preston, 325 N.C. 438, 439,
385 S.E.2d 473, 479 (1989).
-22-
Plaintiffs-Appellants label Section 5, and in particular
its first paragraph, as a “constitutional mandate.” In reality,
it is simply a policy declaration, as confirmed by its own
words: “It shall be the policy of this State N.C. Const.
art. XIV, § 5; see also, Milton S. Heath, Jr. and Alex L. Hess,
III, The Evolution of Modern North Carolina Environmental and
Conservation Policy Legislation, 29 Campbell L. Rev. 535, 539
{ 2007) (noting that with respect to Section 5, “It is worth
emphasizing that the constitutional provision begins with the
words, “It shall be the policy.”) Although there is an express
authorization to allow the State and its counties, cities and
towns to acquire property for preservation purposes, there is
nothing whatsoever that prohibits the sale of property
generally.
To bolster their contention that the Constitution forbids
the sale of Hofmann Forest, Plaintiffs-Appellants cite to State
ex rel. Rohrer v. Credle, 322 N.C. 522, 369 S.E.2d 825 {1988).
Citation to Credle is unavailing, however, because the Supreme
Court in Credle did not recognize a private cause of action in
Article XIV, Section 5. Rather, the court merely observed that
the constitutional provision reflects the “endorsement” by the
people of North Carolina of the public policy behind legislative
actions regulating the fishing of oyster bottoms. Credle, 322
-23-
N.C. at 532, 369 S.E.2d at 831. In Credle, the constitutional
policy of uthe conservation and protection of public lands and
waters for the benefit of the public” assisted the court in
reaching its conclusion that a private party could not acquire,
by prescription, exclusive rights to harvest oyster bottoms in
North Carolina’s coastal waters. Id.
Plaintiffs-Appellants also cite cases under various other
state constitutions for the proposition that “other states have
allowed individuals to bring state constitutional challenges to
various acts affecting the environment on the basis that the act
violates the state’s environmental constitutional amendment.”
(Pl.-App. Br. p. 34.) The cases cited, however, involve
decidedly different issues as well as decidedly different
constitutional language, and provide no support for PlaintiffsAppellants’
arguments.
For example, in the first case, Sierra Club v. Dep’t of
Transp., the issue before the court was related to an
environmental group’s standing to bring claims asserting that
the Hawaii Department of Transportation was required to perform
an environmental assessment under state law. Sierra Club v.
Dep’t of Transp., 167 P.3d 292, 297 (Haw. 2007}. The issue was
not that the plaintiffs had brought a “state constitutional
challenge” on the basis that the challenged act “violate[d] the
-24-
state’s environmental constitutional” provisions. In analyzing
the standing issue, the court discussed Hawaii’s “Environmental
Rights” constitutional provision, which stated “[e] ach person
has the right to a clean and healthful environment, as defined
by laws relating to environmental quality Any person may
enforce this right against any party, public or private, through
appropriate legal proceedings.” Id. at 313 (citing Haw. Canst.,
art. XI, § 9). The language therein conveyed specific rights to
individuals, with a specific right of enforcement, which
supported the court’s interpretation that the group in question
had standing. Neither the situation nor the language of the
Hawaii Constitution is analogous to the matter before this
Court.
In Owsichek v. State Guide Licensing & Control Ed., 763
P.2d 488, 491 (Alaska 1988), the issue before the court was
whether two statutes authorizing a licensing board to establish
exclusive guide areas violated the Alaska Constitution’s common
use clause, which specifically reserved natural state, fish,
wildlife, and waters to the citizens of Alaska for common use.
Plaintiffs-Appellants have mounted no constitutional
challenge to any state statute.
Finally, in Matter of Am. Waste & Pollution Control Co.,
633 So.2d 188 (La. Ct. App. 1994), the challenge was to a state
-25-
agency’s issuance of a construction permit for a solid waste
facility. The court noted that the state’s regulatory framework
for environmental protection was based on the Louisiana
Constitution, and went on to discuss the interrelationship of
constitutional, statutory and regulatory requirements. Id. at
193. The Louisiana Constitution was interpreted to impose a
duty of environmental protection on state agencies, require
environmental protection “insofar as possible and consistent
with the health, safety, and welfare of the people,” and mandate
the legislature to enact laws to implement said policy. Id.
(quoting La. Const., art. IX, Sec. 1).
Our Constitution does not contain the same language.
Article XIV, Section 5 of the North Carolina Constitution merely
sets forth a policy of conservation authorizing the acquisition
and preservation of natural resources, and to that end,
authorizing the designation of certain land as part of the State
Nature and Historic Preserve. The prohibition requested by
Plaintiffs-Appellants is simply not present.
The cases cited by Plaintiffs-Appellants obviously do not
interpret our Constitution. Even if the language were similar,
which it is not, in construing and applying the Constitution of
North Carolina this Court is not bound by the decisions of
federal court, including the Supreme Court of the United States,
-26-
much less other state courts. See State ex rel. Martin, 325
N.C. at 449-50, 385 S.E.2d at 479 (1989). Article XIV, Section
5 of the North Carolina Constitution neither prohibits the sale
of property nor creates a private right of action in PlaintiffsAppellants.
CONCLUSION
WHEREFORE, for the reasons stated herein, Defendant-
Appellee NC State Natural Resources Foundation, Inc.
respectfully requests that this Court affirm the decision of the
trial court dismissing Plaintiffs-Appellants’ Amended and
Supplemental Complaint for Injunctive Relief and Petition for
Declaratory Judgment.
This the
-27-
day of June, 2014.
JORDAN PRICE WALL GRAY JONES & CARLTON
By:
Paul T. Flick
N.C. State Bar No. 13494
pflick@jordanprice.com
By: Lo~~J€~
N.C. State Bar No. 32872
ljones@jordanprice.com
1951 Clark Avenue
Raleigh, North Carolina 27605
Telephone: (919) 828-2501
Facsimile: (919) 834-8447
Counsel for Defendant-Appellee
NC State Natural Resources
Foundation, Inc.
-28-
CERTIFICATE OF SERVICE
The undersigned hereby certifies that he served a copy of
the foregoing brief on all parties by depositing a copy,
contained in a first-class-postage-paid wrapper, into a
depository under the exclusive care and custody of the United
States Postal Service, addressed as follows:
James L. Conner II
Ragsdale Liggett PLLC
P.O. Box 31507
Raleigh, NC 27622
Counsel for Plaintiffs-Appellants
Catherine F. Jordan
Assistant Attorney General
N.C. Department of Justice
P.O. Box 629
Raleigh, NC 27602
Counsel for Defendant-Appellee
The Board of Trustees
of The Endowment Fund of
North Carolina State University
This ~ day of June, 2014.
Paul T. Flick

 

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