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NC State Extension

Neighbor Complaints and Response: the Basics of North Carolina’s Right to Farm and Bona Fide Zoning

[Farm Law editor’s note: the following piece is in draft pending academic peer review, and written as part of the series Farm Law: Owning, Managing and Transferring Farm Interests, sponsored by the North Carolina Tobacco Trust Fund Project # #583400-10363. Comments to rabrana2@ncsu.edu are welcome. The narrative below with citations may be found in this Google Doc]

Introduction

Though impossible to measure the incidence of neighbor complaints against farmers, North Carolina public policy to protect production agriculture rests on the presumption of a legal pathway by which one landowner can curtail the farming practices of another. These concerns may arise when a neighbor complains to the farm operator about aspects of their land use they find displeasing. Other times when a neighbor discovers that the landowner plans to expand or implement new farming practices on land in their proximity, the neighbor may threaten to “sue” the farmer, or may call local authorities (e.g. zoning office, sheriff’s office, animal control) demanding they use their power to stop the offending farming activity. 

Such complaints call into force North Carolina’s Right to Farm Law, as well as the Bona Fide Farm exception to county zoning regulations. Two phenomena of the past decade have prompted active changes to these two laws. As for Right to Farm, the well-publicized lawsuits (and verdicts) against Murphy-Brown, LLC (and parent, Smithfield Foods) for nuisance from swine production – which resulted in injunction against some operators – prompted changes to that law to further reduce the pool of potential complainants, utilizing proximity and time restrictions, as well as damage relief restrictions to make such cases less financially attractive to plaintiff’s lawyers. For zoning, the rise of agritourism and focus on rural entertainment venues on farms – the “wedding barn” – has expanded protections for farms operating such lucrative venues, while anchoring the protection to income produced from production farming (the growing of crops, the raising of animals), in effect protecting the integrity of farm protection policy.

A complaint against a farm operation is at least an aggravation to the operator. Complaints to local authorities may raise questions about the proper response, and when not to respond at all. This short paper addresses the basics of each in the context of neighbor complaints and threats of action, with a focus on when a farmer can expect inquiry from local government authority (e.g. animal control, sheriff, zoning). Hopefully this paper can also further educate public officials on whether to respond to such complaints.

Distinction Between Private Nuisance and Zoning Law

Every landowner enjoys a right – attached to their real property – of “quiet use and enjoyment.” This essentially means that no one else may in their own right infringe upon this property right held by another. Over the course of centuries – first in England and then in America – the common law has developed legal principles for when one property owner’s right to quiet enjoyment has been infringed by another to the a point that the infringing property owner must compensate the damaged property owner for the value of what they have damaged (i.e. the right to quiet enjoyment). Legal remedies for such invasion also include an injunction, whereby the offending landowner is outright ordered by a civil court – under threat of criminal penalty – to cease the offending activity. We generally refer to such invasions as nuisance and, if a physical invasion such as water or effluent, trespass.

Zoning law is influenced by the concept of nuisance, and has developed in America as a valid exercise of a state’s police power, which is a government’s inherent authority to protect the health and welfare of the public. Zoning seeks to separate incompatible uses that – history has shown – lead to nuisance actions. For example, prior to the development of zoning, one landowner might build a factory in the midst of a residential area, which leads to a civil nuisance action against the factory owner for noise, vibration, soot, dust – or other claimed affronts to the complaining residential owner’s right of quiet enjoyment. Zoning seeks to ensure that such incompatible uses – industrial manufacturing and residential dwelling – are separated, and relegated to areas where each can lawfully manufacture or enjoy quiet without interference, respectively. In effect, a key purpose of zoning is to minimize private and public nuisance complaints, and otherwise keep “unhealthy” uses away from denser populations of people. Because zoning decisions require public input – and are themselves a matter of public record – it is improbable that one landowner may purchase a piece of property expecting the right to use it as they wish, or expect known intensive users to refrain from impacting their quiet enjoyment.

The line of incompatible uses becomes blurred in farming, which is so often both a residential and a commercial use of property, and historically performed in less densely populated areas. As denser residential neighborhoods are developed around metropolitan areas on land formerly used for farming, these new and denser residential uses collide with the requirements of farming – livestock smell and noise, machinery noise, dust and necessary chemical spraying. Even in traditional farming areas, the reduction in the number of farms increases the ratio of residents not involved in farming and indifferent to its purpose and perhaps societal value. To address the threat of potential nuisance claims and its impact on farming operations, legal policy has developed to protect farm operations from private nuisance complaints as well as the public imposition of zoning restrictions.

The Private Nuisance

A complaint by one neighbor against another for interference with their right of quiet enjoyment is called a private nuisance. Private nuisance is a civil claim that must be brought in court against the offending landowner. Private nuisances by definition impact one or a few nearby landowners directly; public nuisances, on the other hand, impact numerous landowners over a broad area. (Indeed, zoning as described above and other ordinances such as a noise ordinance, are meant to directly abate public nuisances.) At law, a single landowner cannot complain of a public nuisance, only the state – by extension the county or municipality – may bring an enforcement action under its police power (again, its authority and obligation to protect people from harm). This is to say: if one landowner is upset with another for how they use their property, it is purely a civil matter that must be brought in court by the aggrieved landowner who cannot simply turn to the local authorities – zoning office, sheriff, etc. – to resolve the issue.

Nuisance is known as an intentional tort (from the Latin tortus, to twist), that the offender intends to commit his offending activity, not intending to cause harm, but rather intending to conduct his operation in customary fashion, using conventional technology and method. The legal standard a complaining landowner must meet (by proof of facts) to establish that a neighboring landowner is liable to them for common law nuisance is whether “the invasion is either intentional and unreasonable, or unintentional and otherwise actionable under the rules controlling liability for negligent or reckless conduct, or for abnormally dangerous conditions or activities.” It is upon the complaining landowner to introduce as evidence and prove sufficient facts to meet this “unreasonable” standard. Whether an offending landowner’s actions are unreasonable calls into balance the utility of conduct versus the gravity harm caused, with utility and gravity of harm dependent upon facts of economic alternatives to avoid or mitigate offending conduct, suitability of conduct to the area, extent of damage, social value of the right that has been invaded, and so on. 

The burden of proving the above is upon the complaining landowner, who must front the costs of such litigation. The remedy is normally limited to the damage to the value of their property right (e.g. measured by a decrease in property value), and in theory is a forced sale and purchase of the property right (quiet use and enjoyment) that has been taken by the offending landowner’s use of their own property. As noted above, another remedy is injunction, a court order to the offending landowner to cease their activity, the violation of which results in criminal penalty. Sometimes it is a combination of remedies. Proof of evidence of recklessness by the offending landowner may bring punitive damages. In other words, a complaining landowner must bring and pay for the action in court and see it matter through to a jury verdict for an award of relief; there is no legal presumption their right has been invaded. Private nuisance is a common law action, and unless reported as a regulation violation, it does warrant direct government action.

Nuisance Protection from Neighbors: Right to Farm

All states have a statute in some form that insulates operating farms from such nuisance lawsuits. The effect of such laws is to limit a court’s authority to entertain a private nuisance action beyond several preliminary facts and time limitations. At the point where certain facts are established, the court must dismiss the case. The premise of the law is a defense to nuisance actions called “coming to the nuisance,” whereby a complaining landowner cannot entertain a claim of nuisance having acquired his property after the offending landowner’s use is already underway. (In theory, upon inspection of the property prior to purchase, the landowner should have discovered that the property’s “right to quiet enjoyment” had been compromised by a neighbor’s activity, and his purchase price was buying what was left of that right.

North Carolina’s right to farm law – one of the first in the United States – generally operated on the “coming to the nuisance” theory, in that a farm may not be considered a nuisance due tochanged conditions in or about the locality outside of the operation after the operation has been in operation for more than one year.” A collection of nuisance lawsuits against the swine integrator Murphy Brown LLC prompted changes to the statute, and the “changes in locality” concept was abandoned, given that the judge in those lawsuits found that rural residential use pre-dated the commencement of the hog operations in question, whereby the right to farm defense was dismissed.

The right to farm statute continues to focus on three barring principles: 1) the freedom of the farm to make changes to its operation; 2) a limitation on the time to bring a lawsuit; 3) a limitation on how nearby a complaining landowner must be to the source of the offending activity; and 4) a limitation on extent and type of damages a successful plaintiff may claim. 

Regarding whether changes in the operation – which may increase its intensity – constitute a nuisance, the statute eliminates certain broad changes from consideration. (As a historical note, such language was inspired by an adverse ruling against a farm which had switched from turkey production to swine production.) The statute declares a list of changes that a court may not consider “fundamental changes” in a nuisance claim against a farm. These fundamental changes are: 

(1) A change in ownership or size;

(2) An interruption of farming for a period of no more than three years;

(3) Participation in a government-sponsored agricultural program.

(4) Employment of new technology;

(5) A change in the type of agricultural or forestry product produced.

To date, no court has issued an opinion to illustrate which facts are barred by these phrases, and what evidence might get a court to push beyond these limitations to allow a jury to consider a fundamental change as a nuisance.

Of the five, “a change in the type of agricultural or forestry produced” may be the broadest and most beneficial, as it would exempt changes in intensity of use, for example: a stand of trees (forested property) is cleared to make way for cropping or livestock, perhaps building of chicken houses (i.e. a change from forestry product to an agricultural product) or a pasture grazing operation converts to a dairy operation (change in agricultural product); and so on. The five “safe harbors” could be invoked to cover numerous situations. As noted, such fact patterns have not been tested by a judicial opinion.

As for the other principles, the statute of limitations on one year (which begins at the starting of the offending activity) operates to limit the time in which to build the basic facts of a nuisance case. The proximity restriction – whereas the offended property must lie within one-half mile from the source of the offending activity – reduces the pool of potential plaintiffs who have standing to sue (note that the proximity is to the source: the waste management system (lagoon or sprayfield), the barn or poultry house, etc., not the property line adjoining the offending property to the offended property.

As for damages, the jury verdicts in the Murphy-Brown cases reached into the millions, and were based largely on punitive damages, awarded upon evidence of Murphy-Brown’s alleged indifference to the externalities – odor, flies, dust – of the management protocols required of its contracting farms, including carcass disposal and waste management procedures and their effect upon neighbors. To greatly restrict punitive damages as a remedy, the right to farm statute was amended in 2018 to limit damages to the reduction in fair market value of the complaining property, and limiting punitive damages only to situations where the offending property’s operator had been cited for criminal or civil penalty regarding regulatory violations. Though these statutory changes largely did not benefit Murphy-Brown on appeal of the cases to the federal 4th Circuit, it is clear from that court’s opinion that the changes should be respected by judges moving forward. With the possibility of punitive damages greatly reduced, the pool of lawyers willing to take an offended property owner’s case on contingency fee (a percentage of the damages award) is greatly reduced; a complaining landowner can expect to pay for such litigation – with attorneys fees, expert witness fees, and other costs – out of their own pocket on a payment schedule.

As a practical matter, nuisance lawsuits in North Carolina that have resulted in jury verdicts and appeal of those verdicts are so far limited to swine production farms (with the waste management system of sprayfields and slurry lagoons being the primary source of alleged nuisance). That said, the principles of nuisance can theoretically apply to any farming operation, and farmers – as noted above – are routinely on the receiving end of threats from a neighbor unhappy with their farm use of the land. But again, if such a complaint does not relate to escaped livestock, trespass by a person, non-farming violation of a noise ordinance, or an observable environmental regulation violation, it is not a matter for the local authorities to address. (For response authority related to escaped livestock or poultry, please review the fact sheet Escaped Livestock and Poultry Liability)

Farm and Forestry Protection from County Zoning: Bona Fide Farm

Unlike private nuisance, zoning is a matter of local government enforcement, and perceived use violations may be reported to local authorities who will investigate. It is helpful to know that – for the farm lying in the county – there are objective standards for qualifying as exempt from county zoning. This can be particularly helpful for farms lying in the extraterritorial jurisdiction (ETJ) of a nearby municipality’s zoning authority.

Farming and forestry use and practice have historically been exempt from county zoning restrictions, though the manner of application of this exemption has changed over the years. Previously, farms and forestry practice were generally exempt from county use restrictions (outside of municipal boundaries), and most rural areas – where counties chose to exercise their optional zoning authority as authorized by state law were designated “R-A,” or “residential-agricultural”). Given this generalized approach and inherent discretion of use interpretation empowered to the county zoning authorities, the NC General Assembly updated the county zoning law to create objective criteria for exempting a parcel under farming or forestry practices from use restrictions.

The updated statute – passed in 2011 – based the exemption on a list of “safe harbors,” whereby if the parcel in question could demonstrate their farming and forestry bona fides by producing one of several objective qualifiers for “bona fide farm” exemption from county zoning restrictions. These qualifiers are: 

1)  A farm sales tax exemption certificate issued by the Department of Revenue.

2) A copy of the property tax listing showing that the property is eligible for participation in the present-use value program pursuant to G.S. 105-277.3.

3) A copy of the farm owner’s or operator’s Schedule F from the owner’s or operator’s most recent federal income tax return.

4)  A forest management plan.

Prior to a change in 2017, identification numbers offered by the federal Farm Service Agency (known as “farm numbers”) counted as a safe harbor. However, acquiring a farm number required no particular proof of past or present farming activity, and purchasers who bought land for use as entertainment venues (e.g. the “wedding barn”) tended to bypass farm production (growing and selling of crops and livestock) and thus frustrated the integrity of agricultural production protection policy. (As noted below, such venues are now legally considered agritourism, which itself is included in the definition of agriculture.) Note there is no minimum acreage requirement for bona fide farm status (with exception noted below). The bona fide farm use exemption applies to any land leased by the operator of a parcel serving as the basis for bona fide farm qualification (i.e. the home farm owned by the operator).

Regarding the first of the safe harbors – the farm sales tax exemption – this is a certificate issued by the North Carolina Department of Revenue (NCDOR) that exempts farm purchases from sales tax, so purchasers neither pay sales tax nor vendors remit the same. The NCDOR farm certificate requires proof of a minimum $10,000 annual gross farm revenue for each of the three years prior to application for such certificate. Newer farmers who have not yet achieved the minimum gross may apply for a conditional farmer certificate, which allows them three years to achieve the $10,000, provided they voluntarily provide their federal tax returns to NCDOR during the conditional period (and keep a record of all purchases with the certificate to produce upon request). 

The second safe harbor – present use value (PUV) property tax qualification – is heavily scrutinized by the county property tax office, and if a parcel of land qualifies for PUV status, that land is a bona fide farm. While it is rare that a qualified parcel is not enrolled in PUV, it is certainly possible. In effect any parcel enrolled in PUV is exempt from zoning for farm use. Though explored in more detail in the narrative The Basics of Present Use Value Property Tax, PUV has three classifications for use: agricultural use, which requires a minimum 10 acre single parcel in agricultural production; horticultural use, requiring minimum 5 acre single in horticultural production; and forestry use, which requires a minimum 20 acre single parcel under written forest management. While forest use has no income requirement (apart from a plan for commercial harvesting), agricultural and horticultural use require a showing of annual production receipts of $1000 (based on a three prior year rolling average). Unlike the other safe harbors, the PUV qualification is a de facto minimum acreage requirement for bona fide farm status.

The third – a Schedule F “Profit and Loss from Farming” attachment to a taxpayer’s federal tax return – is a fairly low bar, in that no minimum income is required, and it is possible that such a filing could show only expenditures toward farming in the first year of operation. A farm is presumed to be legitimate operating for profit if it produced a profit in 3 of the last 5 years, including the current year.

And the fourth – a forest management plan – requires only that a plan for harvesting or growing timber on the parcel be created. Though the elements of such plans are not defined in the zoning statute and do not provide criteria by which a zoning administrator may “approve” a plan as a bona fide farm safe harbor, the plans are defined elsewhere. For example, such plans are a necessary component of forestry PUV qualification, and must concern “the production and sale of forest products.” In an unrelated statute – The Forest Development Act – a forest management plan must include “forest management practices to insure both maximum forest productivity and environmental protection of the lands to be treated under the management plan.” Any landowner may theoretically commission a plan from a consulting forester or county forester, or write one on their own. (To give a plan its best chance to secure county approval, consult the N.C. Cooperative Extension Fact Sheet Management Plans: A Guide for Landowners.)

Counties each have their own method of ‘certifying’ a farm as a bona fide farm. However, there is no requirement that a farm parcel owner take any action with the county zoning authorities to gain their approval of farming or forestry use of the property. The exemption comes into play when an operator approaches local offices on matters of required permitting for structures, which cannot be denied on the basis of the farming activities in a zone that otherwise does not permit them by right (this would likely be applicable in a residential zone which placed certain limitations on commercial activity and accessory structures). Building permits are not required for 

Of course, the exemption should come into play upon a neighbor’s complaint that the farm’s activities and commercial nature are a use violation. How counties investigate complaints or their practice to refrain from doing so with a known bona fide farm is a matter for further study.

Bona Fide Farm zoning exemption may only exist in the county, outside of the municipal boundary. This applies even within a municipalities ETJ as noted above. The ETJ is a sort of geographic buffer surrounding the boundary of a town or city; its depth depends on the population size of the municipality: towns of less than 10,000 population may enforce their municipal zoning ordinance within a 1 mile ETJ; municipalities from 10,000 to 25,000, 2 miles; and over 25,000, 3 miles. By statute, no municipality may extend their ETJ beyond 1 mile without approval by the county.

Municipal zoning codes are generally unfavorable to production agriculture, with bans of commercial raising of livestock and limitations on residential accessory structures such as sheds and greenhouses. However, any bona fide farm outside of the town or city geographic limit, although within the ETJ, may operate free of the municipal zoning restrictions. Additionally, the bona fide farm statute specifically empowers municipalities to apply bona fide farm zoning principles in their jurisdiction to allow accessory building and fencing limitation exemptions on a parcel in town limits. 

Finally, a change in the Farm Act of 2020 exempts on- or off-farm catering services provided from a bona fide farm from any county (or municipal) requirement that the catering service apply for and receive a permit. However, though free of a permit requirement, all state and local health code regulations continue to apply.

Limitations of Bona Fide Farm Exemption

Note that the bona fide farm exemption only serves to exempt practices involved in farm or forestry production use of the parcel. The exemption does not cover non-farm uses. For activities that fall outside the statutory definition of agriculture, such uses may be prohibited if violative of the zoning area where the farm is located. Agricultural uses – “when performed on the farm”are “production and activities relating or incidental to the production of crops, grains, fruits, vegetables, ornamental and flowering plants, dairy, livestock, poultry, and all other forms of agriculture, as defined in G.S. 106-581.1.” That statutory reference provides further detail on activities considered agriculture, including aquaculture, agritourism, and on-farm packing, storing and value-added processing (all activities which might, in sufficient scale, amount to light industrial use or produce externalities such as noise and traffic. 

In regards to farm structures and building permits, Bona Fide Farm status is not an exemption from the state building code for residences on the farm and structures used by people requiring electricity and plumbing, i.e. for a venue. In response to the ever-expanding urban-rural interface, the North Carolina General Assembly created the “Bona Fide Farm” exemption to countywide zoning authority, whereby certain rural activities and supporting infrastructure on a qualifying farm are exempt from a county’s authority to prohibit them under its zoning authority as granted by state law. In 2017, the NC General Assembly further defined the term “agritourism” in a law titled “An Act to Amend Certain Laws Governing Agricultural Matters” (the “2017 Act”), ch. 108, 2017 N.C. Sess. Laws __, __. The 2017 Act amended the Bona Fide Farm Law to further define agritourism in respect to which buildings related to the same are exempt from county zoning (NCGS § 153A-340[b][2a]). The 2017 Act clarified that buildings used for “weddings, receptions, meetings, demonstrations of farm activities, meals, and other events that are taking place on the farm because of its farm or rural setting” qualified as agritourism.

For structures used in agritourism operations – which may serve more of an entertainment function than incidental support to farm livestock and crop production activity – the exemption discards two of the bona fide farm safe harbors, the forest management plan and the Schedule F. For structures used in agritourism, the county may not interfere with such use of buildings for agritourism if the owner of the parcel possesses either the NCDOR sales tax exemption certificate (discussed above), or the parcel supporting the structure is enrolled in (as opposed to simply qualifying for) the present use value property tax program. Failure to maintain either of which is used for this exemption (i.e. the $10,000 gross receipts for the certificate of the $1000 gross farm receipts for PUV) results in a resumption of county authority to limit use of the property. Put another way, for a wedding barn or similar venue, the county may not prohibit use of such buildings for agritourism purposes if one of those safe harbors is met. As noted, structures still must meet state building code requirements.

The state building code authorization statute (NC Gen. Stat. § 143-138) supplies limitations and exclusions related to “farm structures.” (NC Building Code application to farm buildings will be further outlined in an upcoming N.C. Cooperative Extension Fact Sheet, Farm Buildings and the NC Building Code)

Deed Restrictions, Covenants, and Private Action

Often, land purchase opportunities – sufficient to support a small farm – are found as a subdivision of a larger parcel, whereby the owner of larger parcel will survey and subdivide their parcel into several smaller parcels which are nonetheless sizable enough to support a small-scale farm operation; such parcels are sometimes large enough to qualify for either agricultural or horticultural PUV classification. After county approval of the subdivision, the subdividing landowner will sometimes record deed restrictions or restrictive covenants attached to the subdivided parcel. The purchase of the parcel and its use and development is subject to the restrictions, which have in effect compromised the rights normally inherent in the property. As a practical matter, covenants that restrict non-impervious surface (paved roads, structures), number of accessory buildings, restrictions on commercial activity, and limitations on animal type and number are unsuited to farming.

Violations of deed restrictions and subdivision covenants are a private matter between the person with standing to enforce the restriction (normally the owners of other properties subject to the restrictions, or a homeowners association). Violations of deed restrictions and covenants are not a matter for local government intervention.

Conclusion

The purpose of this paper is to explain the separate concepts of nuisance liability and zoning regulation, which are related when such are used as weapons by annoyed neighbors. While both concepts have public policy carve-outs to allow farm operators greater freedom in their land use and management, they differ in respect for when local authorities may become involved in a dispute between neighbors over one’s use or intended use of their property. Private nuisance actions likely require a steep cash investment by the complainant, and with the safe harbors available regarding changes of increasing intensity in operations, nonetheless pose a significant risk to a complainant’s success. And while zoning enforcement comes at public expense (requiring only a report to zoning officials by an annoyed neighbor, the objective safe harbors remove much discretion from local zoning officials to curtail farm production and farm entertainment use of land.

Acknowledgements

Content loaded to Agricultural and Natural Resource Law portal, including narratives, workbooks and presentations, is supported by The North Carolina Tobacco Trust Fund Commission (TTFC) (Grant award 2019-001-16), titled “An Heirs Guide to Farmland”).