DEPARTMENT OF TRANSPORTATION,
Plaintiff
v
.
Moore County
No. 99 CVS 410
GEORGE HILLIARD,
Defendant
Attorney General Roy Cooper, by Assistant Attorneys General
Fred Lamar and Lisa C. Glover, for the State.
Cunningham, Dedmond, Petersen & Smith, LLP, by Marsh Smith,
and Moser, Schmidly, Mason & Roose, LLP, by Stephen S.
Schmidly, for defendant-appellee.
EAGLES, Chief Judge.
The North Carolina Department of Transportation (“NCDOT”)
appeals from the trial court's order denying its motion to strike
George Hilliard's (“defendant”) second defense and to dismiss his
counterclaim. The issues raised in this appeal are substantially
similar to those raised in Department of Transp. v. Blue, ___ N.C.
App. ___, 556 S.E.2d 609 (2001). In light of our holding in Blue,
we affirm in part and reverse and remand in part.
A brief recitation of the facts follows: Transportation
Improvement Program R-210 (“TIP R-210”) was a NCDOT projectintended to improve portions of United States Highway 1 from south
of State Road 1853 near Lakeview, North Carolina, to State Road
1180 near Sanford, North Carolina. NCDOT began planning for the
State-funded project in 1989 and the planning process included
public hearings and public input. In 1991, NCDOT prepared and
published a Draft Environmental Impact Statement (“DEIS”)
evaluating the environmental impact of various alternative routes
for TIP R-210. Ultimately, NCDOT selected the route designated
“Alternative A.” NCDOT issued a news release announcing the
selection on 22 April 1992. In accordance with the North Carolina
Environmental Policy Act (“NCEPA”), G.S. § 113A-1 et seq., NCDOT
prepared and published a Final Environmental Impact Statement
(“FEIS”) approving its selection of “Alternative A” on 1 December
1995. Thereafter, on 21 March 1996, the United States Federal
Highway Administration (“FHWA”) issued a Record of Decision (“ROD”)
affirming its approval of NCDOT's selection of “Alternative A” as
the “environmentally preferred alternative.”
Defendant owned property located within the right-of-way of
“Alternative A.” After unsuccessfully attempting to negotiate a
purchase price for defendant's property, NCDOT filed a condemnation
action on 12 April 1999. On 5 May 2000, defendant filed an answer
and counterclaim alleging that NCDOT “engaged in arbitrary and
capricious agency action and [] abused its agency discretion”
(“defendant's second defense”) and that NCDOT violated NCEPA and
the National Environmental Policy Act (“NEPA”), 42 U.S.C. § 4321 etseq., by preparing an inadequate FEIS, inter alia (“defendant's
counterclaim”).
On 1 June 2000, NCDOT filed a motion to strike defendant's
second defense pursuant to G.S. § 1A-1, Rule 12(f) and to dismiss
defendant's counterclaim pursuant to G.S. § 1A-1, Rules 12(b)(1),
12(b)(2), and 12(b)(6). A hearing on NCDOT's motion was held
during the 21 August 2000 Civil Session of Moore County Superior
Court, the Honorable A. Moses Massey presiding. By order entered
27 October 2000, the trial court denied NCDOT's motion. NCDOT
appeals.
Before reaching the merits of NCDOT's appeal, we must deal
with several preliminary matters. First, we note at the outset
“that denial of a motion to dismiss is interlocutory; however,
issues involving sovereign immunity are immediately appealable.”
McFadyen v. Freeman, 127 N.C. App. 202, 204, 487 S.E.2d 782, 783
(1997). Here, NCDOT argues that the sovereign immunity defense
bars defendant's second defense and counterclaim. Thus, the trial
court's denial of NCDOT's motion to dismiss is properly before this
Court.
Secondly, NCDOT has the authority to acquire title to land
that it deems necessary and suitable for road construction pursuant
to G.S. § 136-19(a). “In enacting this statutory scheme, the
legislature has implicitly waived [NCDOT's] sovereign immunity to
the extent of the rights afforded in [G.S.] § 136-19[].” Ferrell
v. Dept. of Transportation, 334 N.C. 650, 655, 435 S.E.2d 309, 313(1993). Accordingly, NCDOT's sovereign immunity argument fails,
and we hold that the defense is inapplicable here.
Finally, we recognize that both defendant's second defense and
counterclaim allege that NCDOT violated NEPA. NEPA, which is
generally inapplicable to the states, “sets forth the environmental
policy of our federal government.” Blue, ___ N.C. App. at ___, 556
S.E.2d at 617; see also Buda v. Saxbe, 406 F.Supp. 399, 402 (E.D.
Tenn. 1974). Nevertheless, TIP R-210 was a State-funded project to
be constructed with North Carolina Highway Trust Funds. While some
federal funds were expended on planning for the project and NCDOT
left open the option to later request federal funds, TIP R-210 was
not federal in nature. See Southwest Williamson County Community
v. Slater, 67 F.Supp.2d 875, 884-85 (M.D. Tenn. 1999), aff'd and
remanded, 243 F.3d 270 (6th Cir. 2001) (“early coordination or
compliance with the eligibility requirements for federal funding,
or designing a project so as to preserve the option of federal
funding in the future, standing alone, will not convert a project
into a major federal action” under NEPA). “Because no major
federal action was involved in TIP R-210, we hold that NEPA was
inapplicable to NCDOT, a state agency, in this project.
Consequently, defendants are barred from raising alleged violations
of NEPA in this action.” Blue, ___ N.C. App. at ___, 556 S.E.2d at
616.
Under its assignments of error, NCDOT argues that the trial
court erred in denying its motion to strike defendant's second
defense pursuant to G.S. § 1A-1, Rule 12(f). We disagree. “A motion under Rule 12(f) is a device to test the legal
sufficiency of an affirmative defense.” Blue, ___ N.C. App. at
___, 556 S.E.2d at 615. “If there is any question as to whether an
issue may arise, the motion [under Rule 12(f)] should be denied.”
Shellhorn v. Brad Ragan, Inc., 38 N.C. App. 310, 316, 248 S.E.2d
103, 108 (1978).
In his answer, defendant asserted as a defense that NCDOT
abused its agency discretion and NCDOT's alleged violations of
NCEPA made the condemnation of his land arbitrary and capricious.
First, “allegations of arbitrary and capricious conduct or of abuse
of discretion on the part of [NCDOT] render the issue subject to
judicial review.” Dept. of Transportation v. Overton, 111 N.C.
App. 857, 859, 433 S.E.2d 471, 473 (1993). Additionally, this
Court has held that a landowner's failure to assert a violation of
NCEPA as a defense in his answer to a condemnation proceeding
constitutes a waiver. See State v. Williams and Hessee, 53 N.C.
App. 674, 680-81, 281 S.E.2d 721, 726 (1981). Here, defendant
alleged in his answer that NCDOT abused its discretion, acted
arbitrarily and capriciously, and violated NCEPA. Consequently,
defendant is entitled to proceed with his second defense -- a
review of whether NCDOT's condemnation action was arbitrary and
capricious.
However, “[a]dministrative and judicial review of an
environmental document is incidental to, and may only be undertaken
in connection with, review of the agency action. No other review
of an environmental document is allowed.” G.S. § 113A-13 (emphasisadded). Since the environmental documents at issue in this case
were all prepared during NCDOT's planning and selection of
“Alternative A” for TIP R-210 in 1995, defendant may not obtain
judicial review of those documents in this review of NCDOT's
condemnation of defendant's land in 1999. See Blue, ___ N.C. App.
at ___, 556 S.E.2d at 616-17. Hence, we affirm that portion of the
trial court's order denying NCDOT's motion to strike defendant's
second defense.
Next, NCDOT assigns error to the trial court's denial of its
motion to dismiss defendant's counterclaim. After careful review,
we reverse and remand.
Here, NCDOT filed a motion to dismiss defendant's counterclaim
for lack of subject matter jurisdiction pursuant to G.S. § 1A-1,
Rule 12(b)(1), inter alia. “Subject matter jurisdiction is a
prerequisite for the exercise of judicial authority over any case
or controversy.” Shell Island Homeowners Ass'n v. Tomlinson, 134
N.C. App. 286, 290, 517 S.E.2d 401, 403-04 (1999). “If a court
has no jurisdiction, it can only dismiss the case.” Gainey v.
Brotherhood, 252 N.C. 256, 262, 113 S.E.2d 594, 599 (1960).
Moreover, “[t]he issue of lack of subject matter jurisdiction can
be raised at any time, even on appeal.” State v. Moraitis, 141
N.C. App. 538, 541, 540 S.E.2d 756, 757 (2000).
In his counterclaim, defendant alleges that NCDOT violated
NCEPA by preparing an inadequate FEIS, inter alia. “The North
Carolina Environmental Policy Act (“NCEPA”), G.S. § 113A-1 et seq.,
sets forth our State's environmental policy.” Blue, ___ N.C. App.at ___, 556 S.E.2d at 617. The primary purpose of NCEPA “is to
ensure that government agencies seriously consider the
environmental effects of each of the reasonable and realistic
alternatives available to them.” Orange County v. Dept. of
Transportation, 46 N.C. App. 350, 383, 265 S.E.2d 890, 911 (1980).
Pursuant to NCEPA, a State agency planning to expend public money
on a government project that significantly affects the quality of
the State's environment must issue an environmental impact
statement (“EIS”). See G.S. § 113A-4. The requirement of the EIS
is designed to provide a mechanism by which all affected State
agencies raise and consider environmental factors of proposed
projects. See In re Appeal From Environmental Management Comm., 53
N.C. App. 135, 141, 280 S.E.2d 520, 525 (1981).
Significantly, NCEPA does not contain an explicit judicial
review provision. See Blue, ___ N.C. App. at ___, 556 S.E.2d at
617. However, this Court has held that judicial review of an
alleged NCDOT NCEPA violation is available under the judicial
review provisions of the North Carolina Administrative Procedure
Act (“NCAPA”), G.S. § 150B-1 et seq. See id. We based this
holding on the fact that NCDOT is expressly exempted from the
contested case provisions of the NCAPA and that defendant cannot
petition for a hearing before the Office of Administrative Hearings
(“OAH”). See id. at ___, 556 S.E.2d at 618; see also G.S. § 150B-
1(e)(8). This case is one where judicial review of an agency
decision is available in superior court pursuant to G.S. § 150B-43even when no prior proceeding was held before the OAH. See Blue,
___ N.C. App. at ___, 556 S.E.2d at 618.
Pursuant to G.S. § 150B-43, an aggrieved party may seek
judicial review of an adverse agency determination. Prior to
obtaining review under § 150B-43, a party must satisfy five
requirements: “(1) the person must be aggrieved; (2) there must be
a contested case; (3) there must be a final agency decision; (4)
administrative remedies must be exhausted; and (5) no other
adequate procedure for judicial review can be provided by another
statute.” Huang v. N.C. State University, 107 N.C. App. 710, 713,
421 S.E.2d 812, 814 (1992).
First, defendant here is aggrieved because (1) he owns land
within the proposed route for “Alternative A” for TIP R-210, (2) he
asserted his position as a taxpayer, and (3) he shares a sufficient
geographical nexus to “Alternative A” so that he may be expected to
suffer whatever adverse environmental effects TIP R-210 may have.
See Blue, ___ N.C. App. at ___, 556 S.E.2d at 618. Second,
defendant has a contested case because he alleged that NCDOT
violated NCEPA in its decision concerning location of a highway.
See id.; see also Orange County, 46 N.C. App. at 374-76, 265 S.E.2d
at 906-07. Third, NCDOT's action was final when it issued the FEIS
on 1 December 1995. See Blue, ___ N.C. App. at ___, 556 S.E.2d at
619; see also Orange County, 46 N.C. App. at 367, 265 S.E.2d at 903
(“an action to challenge the sufficiency of the environmental
impact statement would be ripe when the Board of Transportation
approved the location of the highway corridor following thepreparation of a final environmental impact statement [FEIS]”).
Fourth, the available administrative remedies were exhausted. See
Blue, ___ N.C. App. at ___, 556 S.E.2d at 619-20 (defendant had
the opportunity to participate in NCDOT's decision making process;
and a citizens' petition in opposition to “Alternative A” was
before NCDOT pursuant to G.S. § 136-62). Finally, no other
adequate procedure for judicial review of defendant's NCEPA
challenge was provided by any other statute. See id. at ___, 556
S.E.2d at 620 (“Because review of an environmental document may be
undertaken only in connection with review of the agency action for
which the document was prepared, see G.S. § 113A-13 and 1 N.C.A.C.
§ 25.0605(f), section 136-108 does not provide an adequate
procedure for judicial review of defendant['s] NCEPA challenge”).
Thus, defendant has satisfied the five requirements under G.S. §
150B-43 for judicial review of an adverse agency determination.
G.S. § 150B-45 provides that
[t]o obtain judicial review of a final
decision under this Article, the person
seeking review must file a petition in the
Superior Court of Wake County or in the
superior court of the county where the person
resides. &nbs
p;
The person seeking review must file the
petition within 30 days after the person is
served with a written copy of the decision. A
person who fails to file a petition within the
required time waives the right to judicial
review under this Article.
Defendant failed to file a petition with the superior court within
thirty days of NCDOT's publication of the FEIS on 1 December 1995.
See Blue, ___ N.C. App. at ___, 556 S.E.2d at 620-21 (service bypublication of a FEIS is sufficient). Defendant's failure to
timely comply with the NCAPA's judicial review requirements is
sufficient basis to dismiss defendant's counterclaim. See id. at
___, 556 S.E.2d at 621; see also Citizens For Responsible Roadways
v. N.C. Dep't of Transp., 145 N.C. App. 497, 550 S.E.2d 253 (2001).
Since defendant failed to file his petition with the superior court
within thirty days after he received notice of the agency decision,
the trial court was without subject matter jurisdiction over
defendant's counterclaim. Thus, the trial court erred in failing
to dismiss defendant's counterclaim pursuant to Rule 12(b)(1).
Accordingly, we reverse and remand this case to the trial court for
entry of an order dismissing defendant's counterclaim.
In sum, we affirm that portion of the trial court's order
denying NCDOT's motion to strike defendant's second defense; we
reverse that portion of the order denying NCDOT's motion to dismiss
defendant's counterclaim; and we remand to the trial court for
entry of an order dismissing defendant's counterclaim for lack of
subject matter jurisdiction pursuant to Rule 12(b)(1).
Affirmed in part, reversed and remanded in part.
Judges McCULLOUGH and BIGGS concur.
Report per Rule 30(e).
*** Converted from WordPerfect ***