Case Law Update – Does a Distant City Have Standing to Allege County Engaged in “Contract Zoning”?

            Last week the N.C. Court of Appeals issued an opinion that ends a long-fought battle between two eastern North Carolina governments, a battle that has pre-occupied the media, the public, and elected officials for 2½ years. The case is Morgan, et. al. v. Nash County.

             Full and complete disclosure: I was privileged to serve as lead counsel for Nash County, the prevailing party.  You may interpret my post and any perceived biases through that filter.

 What was this case about?

             This case asks whether the City of Wilson (in Wilson County) had standing to claim that Nash County engaged in illegal “contract zoning” when it rezoned land for a chicken processing facility. The opinion also explains why this was not contract zoning.

             But there was an intensity among the groundswell of citizen opponents that was disconnected from Wilson’s sole claim that its drinking water supply would be affected, and much of that intensity focused on the groups and nationalities that might be lured to the area to work at the facility.  That focus will be the subject of a future blog post, and I’ll give you actual quotes from lawsuit depositions.

 The History

             In mid-2010, the N.C. Department of Commerce approached the local economic development agency (Gateway Partnership) about a Mississippi company named Sanderson Farms.  Sanderson was looking at several locations for a mid-Atlantic processing facility.  It would create 1100 new jobs, many of them above the county median wage.

             Gateway Partnership, in turn, approached Nash County to determine if it was interested in 1100 new jobs and an investment exceeding $100 million.  Remember that this was mid-2010 when job losses and unemployment were at unsustainable levels.  Of course Nash was interested.

             Thus began an all-hands-on-deck effort to be the county that Sanderson selected.  One of Sanderson’s criteria was land already rezoned for the processing plant, its supporting hatchery and its wastewater sprayfields, each to be in separate yet proximate locations.

             The various tracts fell into place.  A hatchery site was located.  Because this was a bona fide agricultural use, no rezoning was required.  Seven hundred acres were found for sprayfields which would use standard “land application” to treat the plant’s wastewater. The land was already zoned AG, and sprayfields were allowed in that district. All of these sites were within Nash County.

             Approximately 147 acres was then found for the plant itself.  However, because chicken processing is an industrial function, this site had to be zoned for heavy industry.

             Sidebar: This battle was fought through three separate lawsuits and more than a dozen public hearings. This history is somewhat abbreviated, but the essential facts are here.  End sidebar

 What was Wilson’s Alleged Injury?

             Wilson claimed, without any valid supporting evidence, that the sprayfields would contaminate its water supply with nutrients. Its reservoir was approximately ten miles from the sprayfields. 

             The sprayfield wastewater would have originated at the processing facility where it would be drained to a large, covered lagoon.  After settlement of solid particles, the water would then be piped to a second lagoon where more settlement and treatment would take place. Before being piped to the sprayfields six miles away it would undergo ultraviolet treatment to kill most remaining bacteria.  The wastewater would then be sprayed onto soil planted in Bermuda hay grass which absorbs water and nutrients quickly.

             But this is not the process that Wilson’s expert studied, nor are they the facts understood by the public.

             Wilson presented the trial court a “study” which it alleged “proved” the damage to Wilson’s water supply.  However, in the 30+ pages in this “study,” not one paragraph was dedicated to describing or studying the actual process proposed to be used by Sanderson Farms or the chemical content of this highly treated wastewater.  There was no description of the efficacy of ultraviolet treatment or any discussion of the effectiveness of a particular soil or this particular grass to absorb or treat the wastewater.

             Rather, the “study” described in great detail the environmental dangers posed when swine lagoons – full of swine manure – overflow into rivers and streams; of the dangers posed  by cattle manure in fields upstream from waterways; of the dangers created when chicken carcasses are buried (or tossed without burial) on chicken farms; and it regurgitated the conclusions of all sorts of studies from other states related to direct contact between animal waste and water supplies, none of which had anything to do with Sanderson’s treatment process.

             If all you ask is whether uncontrolled agricultural nutrients (mainly nitrogen) are bad for water quality, the answer is easy.  And that is what the “expert” asked and answered.  But the question whether Sanderson’s treatment process works was never considered by Wilson or its consultant. Why?  Because the answer would not have been legally or politically convenient.

             If you listened to the public (which spoke through letters to the editor, at hearings, and in depositions), there was widespread misunderstanding that chicken manure and blood and body parts would be directly sprayed on the sprayfields. 

             At any rate, Nash County purchased the property and proceeded to rezone the property that it now owned.  Wilson and surrounding property owners sued.

             Sidebar: There actually were two rezonings.  Wilson and 34 individual property owners, many who lived over two miles away, filed suit after the first one alleging technical irregularities.  Rather than fight that case, Nash simple rezoned the land a second time that procedurally was textbook perfect. That case is the one the court heard and recently decided. End sidebar.

 Did Wilson have Standing to Sue Nash County?

             Before a court can hear any dispute it must have jurisdiction.  One of the questions asked to determine whether a court has what is called “subject matter jurisdiction” is whether the plaintiff – the party who files the lawsuit – has a right to be in court at all.  Were they in fact injured by the government’s decision?

             The first legal skirmish in a zoning case is often whether the plaintiff has standing – a point Nash County fought vigorously as to the City of Wilson, whose municipal boundary is, at its closest point, 3½ miles from the rezoned property, and whose reservoir was 10 miles from the sprayfields.

             This opinion was authored by Judge Robert C. Hunter (from Marion), whose recent opinion in Fort v. Cumberland County was one of the most interesting – and correct – decisions on standing in several years.  In this case, Judge Hunter answered a new question: can someone have a justiciable injury resulting from an activity that might occur on land that was not rezoned (the sprayfields) but which activity would not take place except for a rezoning of land somewhere else (the processing plant). 

             The court said “no standing” based on both a traditional zoning analysis (how close are you to the rezoned property?) and a standard environmental case analysis (are your potential injuries “actual and imminent” or merely “conjectural or hypothetical”?).  The trial court used the latter analysis.

             The court noted that that Wilson’s boundaries were 3½ miles away from the rezoned property and dispensed with the matter quickly, finding Wilson to be too far away for its injuries to be “direct and adverse.”

             The court then held that injury from the sprayfields was too conjectural and hypothetical.  In order to establish injury, the court would have to assume that the wastewater would not be treated (in contravention of the facts) and that the sprayfields would not be properly permitted according to environmental regulations or properly monitored by DENR (in contravention of the law). 

             But the court did find that neighbors who lived adjacent to the rezoned property had standing, so it proceeded to answer the big question: was this rezoning illegal because it was “contract zoning?”

 Was this “contract zoning?”

 

            No.  But here’s why.

             A board of commissioners is a legislative body acting in a legislative capacity when it rezones property.  As such, it cannot limit its legislative powers through a contract. (Yes, counties may enter contracts, but in general rezoning cases they cannot).

             Two N.C. Supreme Court cases from the early 1970s (Allred and Blades) described “contract zoning” as a city council’s failure to consider all possible uses when changing a property’s zoning map designation.  Later cases described it as a bilateral contract – a “meeting of the minds” – between the property owner and the council or commission.

             The court correctly noted that (1) all uses of the rezoned tract were included in the staff report; (2) all uses were presented in writing and read aloud by staff at the hearing; (3) several of the other uses were noted by board members at the hearing; (4) the county attorney instructed the board that the rezoning was for all 205 uses allowed in an HI district; and (5) board members stated in affidavits that they considered all uses. 

             Wilson, in its brief, tried to convince the court that it was all a ruse.  Nash, on the other hand, openly admitted that it was courting Sanderson as an end user of the site, but Sanderson had yet to complete its due diligence, and the property was too valuable to be used by right for farming or low density housing.  Thus, whether Sanderson chose to come or not, Nash wanted the land zoned for heavy industry.

             As to whether there was a bilateral contract, the court noted that Nash County owned the property and was the applicant and could not enter into a contract with itself.  Also, as noted at the hearing by Nash County Attorney, Vince Durham, Sanderson Farms had no legal right through option or otherwise to buy this land, and the county had no legal obligation to sell it to Sanderson.

 Epilogue

             Approximately two weeks before this decision was published, Sanderson Farms announced that it had had enough litigation delay and was moving to another location.  But there were plaintiff neighbors who opposed any industrial use, so the case did not become moot.

             I predict that Nash will not soon forget how a neighboring government tried to control its land use and industry recruitment decisions, especially as to how it recruits 1100 jobs in a poor economy.  Wilson, of course, will claim that Nash County was threatening Wilson’s water supply.  My response is simple: show me a real study that asked the relevant question and studied the relevant facts and I’ll listen.

             Finally, I interpret much of the hysteria among opponents – even Wilson officials – as a fear that “others” who are “not us” would enter Nash County and surrounding areas in high numbers. But that post follows.

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Comments
2 Responses to “Case Law Update – Does a Distant City Have Standing to Allege County Engaged in “Contract Zoning”?”
  1. Karla Hammer Knotts says:

    on you point:
    “Finally, I interpret much of the hysteria among opponents – even Wilson officials – as a fear that “others” who are “not us” would enter Nash County and surrounding areas in high numbers. ”

    It is also my opinion that most hysteria about the use by others of THEIR land is most often about the feared People Not Like Us (PNLU). But it has become almost impossible to get an elected or appointed body to see past the ‘merely “conjectural or hypothetical”‘ and deal with the real land use issues.

    Does Session law 2011-299 help curb this abuse?

    • Tom Terrell says:

      Session Law 299 was also known as HB 687, a bill that was codified as G.S. 6-21.6. It was a measure that allowed a court, in its discretion, to award attorney’s fees in litigation where the city or county acted beyond the scope of statutory authority. However, where the court finds that the city or county abused its discretion, it is required to award attorney’s fees. Frankly, I haven’t thought about this application, but if a public record search or the meeting minutes disclosed information that would lead a court reasonably to conclude that such discrimination was a contributing factor, then this statute arguably could be applied. Thank you for that question and insight.

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