In a recent development, North Carolina Attorney General (AG) Josh Stein announced his intention to appeal a Wake County Superior Court decision regarding allocation of environmental grant funds from Smithfield Foods. The ruling, which favors redirecting these funds exclusively to public schools, has sparked a legal debate with significant implications for environmental initiatives and educational funding in the state.

In 2000, following a major hog waste spill, Smithfield Foods entered into an agreement with the state of North Carolina, which has now become the center of this dispute. Under this agreement, Smithfield committed to paying $50 million over 25 years for “environmental enhancement.” Since then, the company has been contributing approximately $2 million annually.

Wake County Superior Court Judge A. Graham Shirley II recently granted summary judgment to plaintiff Jonathan Burris, ruling that the funds should be used solely for environmental enhancements in public schools. The judge cited Article IX of the North Carolina Constitution, which mandates that unallocated state funds be directed toward maintaining public schools. This decision challenges Stein’s practice of using these funds for broader environmental grants.

In response to the ruling, Stein argues that this is the third attempt to challenge his office’s administration of these environmental grants, with previous cases decided in his favor by the North Carolina Supreme Court. The plaintiff, Jonathan Burris, a pastor and local taxpayer who filed suit on behalf of the Randolph County Board of Education, contends that the funds should be allocated to public schools. Burris’ argument is particularly relevant, considering a 2019 law that required the money to be deposited in the state treasury.

The legal dispute also involves a question of timing. While Smithfield Foods has been making these payments since 2000, the lawsuit focuses on funds received since 2019, when lawmakers passed regulation requiring the money go to the state treasury. Despite this change, Stein allegedly continued to use the funds for environmental grants, which prompted Burris’ legal challenge.

Stein has now filed a notice of appeal in Wake County Superior Court, indicating his intent to bring the case before a three-judge panel at the state appeals court. This move sets the stage for a continued legal battle over the proper allocation of these environmental funds.

Why It Matters

This case underscores the complex interplay between environmental protection initiatives and educational funding in North Carolina. The outcome of this appeal could have far-reaching consequences for how environmental grant money is allocated in the state, potentially shifting resources from broader environmental projects to specifically school-based environmental enhancements.

Troutman Pepper State Attorneys General Team

Ashley Taylor – Co-leader and Firm Vice Chair
Ashley is co-leader of the firm’s nationally ranked State Attorneys General practice, vice chair of the firm, and a partner in its Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He helps his clients navigate the complexities involved with multistate attorneys general investigations and enforcement actions, federal agency actions, and accompanying litigation.
Clay Friedman – Co-leader
Clayton is a partner in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and co-leader of the State Attorneys General practice, multidisciplinary teams with decades of experience crafting effective strategies to help deter or mitigate the risk of enforcement actions and litigation.
Judy Jagdmann
Judy is a partner in the firm’s Regulatory Investigations, Strategy and Enforcement (RISE) practice, based in the Richmond office. She brings experience serving as chair and commissioner of the Virginia State Corporate Commission (VSCC) from 2006 through 2022, which includes regulating the utilities, insurance, banking, and securities industries. She also served as Virginia’s attorney general from 2005-2006.
Stephen Piepgrass
Stephen leads the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. He focuses his practice on enforcement actions, investigations, and litigation. Stephen primarily represents clients engaging with, or being investigated by, state attorneys general and other state or local governmental enforcement bodies, including the CFPB and FTC, as well as clients involved with litigation, with a particular focus on heavily regulated industries.
Michael Yaghi
Michael is a partner in the firm’s State Attorneys General and Regulatory Investigations, Strategy + Enforcement (RISE) Practice Groups, nationwide teams that advise clients on consumer protection enforcement matters and other regulatory issues.
Samuel E. “Gene” Fishel
Gene is a member of the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) practice, based in the Richmond office. He brings extensive regulatory experience, having most recently served as senior assistant attorney general and chief of the Computer Crime Section in the Office of the Attorney General of Virginia, and as special assistant U.S. attorney in the Eastern District of Virginia for 20 years.
Tim Bado
Tim is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, where he represents corporations and individuals facing potential civil and criminal exposure. Tim’s experience in government investigations, enforcement actions, and white-collar litigation spans a number of industries, including financial services, pharmaceutical, health care, and government contracting, among others.
Chris Carlson
Chris Carlson represents clients in regulatory, civil and criminal investigations and litigation. In his practice, Chris regularly employs his prior regulatory experience to benefit clients who are interacting with and being investigated by state attorneys general.
Blake R. Christopher
Blake collaborates with clients on matters related to government contracting, investigations, and disputes. His senior-level government experience generates valuable insights and strategies for clients across a variety of industries.
Natalia Jacobo
Natalia is an associate in the firm’s Regulatory Investigations, Strategy and Enforcement (RISE) practice. She focuses her practice on two primary areas: government contracting and state attorney general work.
Namrata Kang
Namrata (Nam) is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group, based in the Washington, D.C. office. She routinely advises clients on a wide variety of state and federal regulatory matters, with a particular emphasis on state consumer protection laws relating to consumer financial services and marketing and advertising.
Michael Lafleur
Michael is an associate in the firm’s Regulatory Investigations, Strategy, and Enforcement Practice Group. Based out of the firm’s Boston office, Mike has deep experience in litigation, investigations, and other regulatory matters involving state-level regulators and state attorneys general.
Susan Nikdel
Susan is an associate in the firm’s Consumer Financial Services Practice Group, and focuses her practice on consumer financial services matters. She has defended several of the nation’s largest and most influential financial institutions in individual and class action litigation involving the Telephone Consumer Protection Act (TCPA), Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), and other consumer privacy statutes.
Whitney Shephard
Whitney is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group. She represents clients facing state and federal regulatory investigations and enforcement actions, as well as related civil litigation.
Trey Smith
Trey is an associate in the firm’s Regulatory Investigations, Strategy + Enforcement Practice. He focuses his practice on helping financial institutions and consumer facing companies navigate regulatory investigations and resulting litigation.
Daniel Waltz
Daniel is a member of the firm’s Regulatory Investigations, Strategy + Enforcement (RISE) Practice Group and State Attorneys General team. He counsels clients in connection with navigating complex government investigations, regulatory compliance, and transactions, involving state and federal government contracting obligations. Drawing on his broad experience as a former assistant attorney general for the state of Illinois, Daniel is a problem solver both inside and outside the courtroom.
Stephanie Kozol
Stephanie is Troutman Pepper’s senior government relations manager in the state attorneys general department.