If a North Carolina statute tells the Natural Heritage Trust Fund Board to set aside 'not to exceed 20%' of newly acquired land's value for a stewardship account, does the Board have to actually fund the account, or can it leave the account at zero?

Plain-English summary

Dewey Wells, Chairman of the Natural Heritage Trust Fund Board, wanted to know whether the Board's long-standing practice of not setting up a stewardship account violated a mandatory statutory duty under § 113-77.7(c).

The Board had been around since 1987 and had spent all the Trust Fund's money on land acquisition (which had always exceeded available funds). It had not asked the State Treasurer to set up the stewardship account that the statute references. State agencies designated to receive acquired lands (DEHNR, the Department of Agriculture, the Wildlife Resources Commission) had been picking up the land-management tab.

Senior Deputy AG Daniel Oakley and Assistant AG David Berry concluded the Board's practice was lawful.

The statutory text. § 113-77.7(c) reads:

When the State acquires land pursuant to this Article, the Chairman of the Board of Trustees shall direct a request to the State Treasurer to set aside an amount from the Fund not to exceed twenty percent (20%) of the appraised value of the land acquired… to be placed in a special stewardship account in the Fund.

The phrase "not to exceed twenty percent" carries the analytical weight. Read literally one way, the statute imposes a mandatory ceiling but no floor, so the Board could request a zero allocation each time. Read literally another way, the statute imposes a mandatory duty to request something. Read a third way, the statute establishes the stewardship account as the exclusive vehicle for land-management funding but does not require its use.

Why a literal "must request even if zero" reading fails. The opinion rejected the reading that would require the Board to send a formal zero-allocation request to the State Treasurer each time. That reading would generate unnecessary paperwork for both bodies and would not advance any aim of the Natural Heritage Trust Program. Under Mazda Motors v. Southwestern Motors and Charlotte Housing Authority v. Patterson, when a literal interpretation yields absurd results, the reason and purpose of the law controls.

The opinion's preferred reading. § 113-77.7(c) establishes the exclusive means through which the Board must earmark monies for land management but does not impose a mandatory duty to use that vehicle. If the Board wants to allocate money for land management, it must do so through a stewardship-account request to the State Treasurer (not through ad-hoc grants). If the Board does not want to allocate for land management in a given year, no statutory duty triggers.

Long-standing agency construction. The opinion gives weight to the Board's nine-year practice (1987-1996) of not establishing the stewardship account, citing the rule from State ex rel. Utilities Comm'n v. The Public Staff that "the construction adopted by those who administer and execute a statute is entitled to great consideration, especially if such construction has been observed and acted upon for many years." The Board's reading, while not controlling, is "strongly persuasive."

Recommendation to seek amendment. Because the statute is genuinely ambiguous, the AG advised the Board to seek legislative amendment to clarify intent. The opinion also recommends that the Board, going forward, fund land management through the stewardship-account vehicle (instead of through one-time special grants like the single past one mentioned) and that the Board document on the record at acquisition whether and how associated land-management responsibilities are funded.

Currency note

This opinion was issued in 1996. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The Natural Heritage Trust Fund was substantially restructured when it was merged into the Clean Water Management Trust Fund and the Parks and Recreation Trust Fund into the consolidated Land and Water Fund. The specific statutory citations from 1996 should be confirmed against current Chapter 113 and the consolidated fund statutes before relying on them.

Background and statutory framework

Article 5A of Chapter 113 established the Natural Heritage Trust Program in 1987. The Program's Trust Fund is administered by a nine-member Board of Trustees and funded by gifts, grants, deed-transfer revenue, and legislative appropriations. The Fund's purpose under § 113-77.9(b) is to support both acquisition and management of ecologically significant natural areas.

The statute's "20% stewardship account" was the drafters' answer to a real problem in conservation finance. When a state acquires land, it incurs ongoing management costs (boundary marking, invasive-species control, public-access management, biological monitoring, infrastructure maintenance). A trust fund that spends all its money on acquisition leaves the state holding land it cannot manage. The 1987 statute's drafters tried to bake in a default management endowment.

The drafters' problem, the AG opinion implicitly acknowledges, is that they wrote a ceiling-only provision and called it a duty. A duty to allocate "not to exceed 20%" is ambiguous as to whether any allocation is required at all. The Board's read for nine years was that no allocation was required if the Board chose not to allocate, and the AG opinion ratifies that reading while also recommending the legislature clean up the language.

The Board's practice of farming out land-management duties to the receiving state agency (DEHNR, Agriculture, Wildlife) is the practical workaround. Each agency budgets land management as part of its operating costs, and the Trust Fund is freed to focus on acquisition. That works as long as the receiving agencies actually fund the management; it breaks down when an agency's general appropriation is squeezed and management is deferred.

The opinion's structural recommendation, that the Board recommit to the stewardship-account vehicle when it does choose to fund management, is itself important. It says: do not use ad-hoc grants outside the account structure (as the Board had done once). If the Board wants to support a specific land-management project, the statutory vehicle is the stewardship account, deposited into and drawn from in the structured way. That keeps the funding traceable and accountable.

Common questions

Could the Board have been sued to compel it to fund a stewardship account?

The opinion would have made a mandamus action difficult to sustain. Mandamus requires a clear legal duty to act. The opinion concluded no such duty existed. A plaintiff would have had to convince a court that the AG opinion was wrong and that "not to exceed 20%" carried a mandatory floor obligation, which would have been a stretch in light of the legislature's deliberate choice of ceiling language.

Why didn't the AG just recommend a literal reading?

The opinion explained: a literal reading of "shall direct a request to set aside an amount not to exceed 20%" would require a formal zero-allocation request each time, producing paperwork for the State Treasurer and the Board without advancing the statute's purpose. North Carolina case law (Mazda Motors and Charlotte Housing Authority) directs courts to avoid absurd literal results.

What if a future Board wanted to start funding the stewardship account?

The opinion was permissive on this. Nothing forbade the Board from establishing the account and funding it. The opinion in fact recommended that future allocations use the account rather than ad-hoc grants. The Board could shift practice without legislative action.

How does this compare to the Parks and Recreation Trust Fund?

The Parks and Recreation Trust Fund statute (also examined in a contemporaneous AG opinion) is structured differently. PARTF uses statutory percentages (30% to local governments, etc.) and the corresponding allocations are mandatory subject to the introductory "unless otherwise specified by the General Assembly or terms of a gift or grant" clause. The two trust funds have different mandatory/discretionary architectures.

Did the legislature ever clean up § 113-77.7(c)?

The opinion does not say, and the statutory history would need to be checked against later session laws and the consolidated Land and Water Fund framework. The recommendation to seek amendment was the AG's, and whether the Board acted on it would be a matter of legislative record.

Source

• Landing page: https://ncdoj.gov/opinions/special-stewardship-account/

Citations

• N.C. Gen. Stat. § 113-77.7
• N.C. Gen. Stat. § 113-77.9
• Hyler v. GTE Products Co., 333 N.C. 258, 425 S.E.2d 698 (1993)
• Alberti v. Manufactured Homes, Inc., 329 N.C. 727, 407 S.E.2d 819 (1991)
• Correll v. Division of Social Services, 332 N.C. 141, 418 S.E.2d 232 (1992)
• Wood v. J.P. Stevens & Co., 297 N.C. 636, 256 S.E.2d 692 (1979)
• Mazda Motors v. Southwestern Motors, 296 N.C. 357, 250 S.E.2d 250 (1979)
• Charlotte Housing Authority v. Patterson, 120 N.C. App. 552, 464 S.E.2d 68 (1995)
• State ex rel. Utilities Comm'n v. The Public Staff–N.C. Utilities Comm'n, 309 N.C. 195, 306 S.E.2d 435 (1983)
• Walls & Marshall Fuel Co. v. N.C. Dept. of Revenue, 95 N.C. App. 151, 381 S.E.2d 815 (1989)
• John R. Sexton & Co. v. Justus, 342 N.C. 374, 464 S.E.2d 268 (1995)

Original opinion text

November 6, 1996

Mr. Dewey W. Wells, Chairman
N.C. Natural Heritage Trust Fund Board of Trustees
c/o Wellspring Farm
1890 Pilot Ridge Road
Collettsville, N.C. 28611

RE: Advisory Opinion: Interpretation of N.C. Gen. Stat. §113-77.7(c)

Dear Mr. Wells:

By letter received July 8, 1996, you requested an advisory opinion on whether the Natural Heritage Trust Fund Board of Trustees' long-standing practice not to direct the State Treasurer to establish a special stewardship account within the Fund constitutes a failure to perform a mandatory statutory duty prescribed by N.C. Gen. Stat. §113-77.7(c). Based upon our review of the statute and consultation with the State Treasurer's Office and the Office of State Budget and Management, we are pleased to provide you with the following advisory opinion.

SUMMARY

The Board's practice not to direct the State Treasurer to establish a special stewardship account within the Fund follows a reasonable interpretation of N.C. Gen. Stat. §113-77.7(c) in light of what the Natural Heritage Trust Fund is meant to accomplish and the presumably unintended consequence which arises if the statute were read literally. Further, the Board's practice does not appear to offend any laws pertaining to the State Treasurer. However, since N.C. Gen. Stat. §113-77.7 is susceptible to various interpretations, we advise the Board to seek its amendment, in order to clarify legislative intent and ensure its consistency with the Board's long-standing practice.

BACKGROUND

Article 5A of Chapter 113 establishes the State's Natural Heritage Trust Program, and more specifically the Natural Heritage Trust Fund, which is administered by a nine-member Board of Trustees. Pursuant to N.C. Gen. Stat. §113-77.9(b), the legislature granted the Board authority to expend Fund monies for both acquisition and management of ecologically significant natural areas.

To pay for potential land management costs, the legislature authorized the establishment of a special stewardship account within the Fund. N.C. Gen. Stat. §113-77.7(c) provides that:

[w]hen the State acquires land pursuant to this Article, the Chairman of the Board of Trustees shall direct a request to the State Treasurer to set aside an amount from the Fund not to exceed twenty percent (20%) of the appraised value of the land acquired, or the land affected if less than a fee interest was acquired, to be placed in a special stewardship account in the Fund. The special stewardship account shall be a non-lapsing account, and income derived from investment of the account shall be credited to the account. The special stewardship account shall be used for the management of land acquired pursuant to this Article, as directed by the Trustees, so long as such land remains in the Trust. (emphasis added)

Despite this statutory authorization in 1987, the Board has never requested the State Treasurer to allocate any Fund monies into a special stewardship account. Instead, the Board has chosen to expend Fund monies almost exclusively on land acquisition, not land management. The justification for the Board's decision is the fact that acquisition costs of proposed tracts always have exceeded existing monies in the Fund, leaving little or no monies available for land management purposes. Thus, the Board never has appropriated any monies for land management, except once, through a special one-time grant. Rather than establishing the stewardship account, the Board has designated the state agency which proposes a particular tract for acquisition–either the Department of Environment, Health and Natural Resources, the Department of Agriculture, or the Wildlife Resources Commission–to accept and finance all associated land management responsibilities.

You have requested an opinion as to whether the Board's long-standing practice not to establish a stewardship account within the Fund constitutes a failure to perform a mandatory statutory duty prescribed by N.C. Gen. Stat. §113-77.7(c).

ANALYSIS

N.C. Gen. Stat. §113-77.7(c) must be interpreted in light of several well-established principles of statutory construction. Legislative intent controls the meaning of a statute; and in ascertaining this intent, one must consider the act as a whole, weighing the language of the statute, its spirit, and that which the statute seeks to accomplish. Hyler v. GTE Products Co., 333 N.C. 258, 425 S.E.2d 698 (1993). Additionally, legislative intent may be inferred from the nature and purpose of a statute and the consequences which would follow, respectively, from various constructions. Alberti v. Manufactured Homes, Inc., 329 N.C. 727, 407 S.E.2d 819 (1991). Statutory interpretation properly begins with an examination of the plain words of the statute. If the language of the statute is clear and not ambiguous, one must conclude that the legislature intended the statute be implemented according to the plain meaning of its terms. Correll v. Division of Social Services, 332 N.C. 141, 144, 418 S.E.2d 232, 235 (1992).

N.C. Gen. Stat. §113-77.7(c) appears susceptible to at least two interpretations. First, the statute can be read literally to impose upon the Board a mandatory duty–that after acquiring any tract, it must request the State Treasurer to set aside an amount "not to exceed" twenty percent (20%) of the land's appraised value in a stewardship account. Similarly, the specific phrase "not to exceed" can be construed to mean that the Board can allocate any amount under twenty percent (20%) of the appraised value of the land acquired. Since the legislature did not provide a minimum allocation figure, only a maximum, conceivably the legislature intended that the Board could grant any allocation up to twenty percent (20%), including a zero allocation. Therefore, following this strict, literal interpretation of N.C. Gen. Stat. §113-77.7(c), the Board could fulfill its mandatory statutory duty by simply requesting the State Treasurer to allocate $-0- from the Fund to the stewardship account each time a particular tract was acquired. To interpret the statute otherwise (i.e., to require the Board to request a sum certain for allocation) is not consistent with the plain language of the phrase "not to exceed twenty percent (20%)." The legislature is presumed to have used the words of a statute to convey their natural and ordinary meaning. Wood v. J.P. Stevens & Co., 297 N.C. 636, 256 S.E.2d 692 (1979).

A literal interpretation of N.C. Gen. Stat. §113-77.7(c) yields the presumably unintended consequence of imposing a mandatory duty upon the Board to send a formal request to the State Treasurer, even if no monies from the Fund are to be allocated into a stewardship account. Imposing this duty upon the Board would not further any aim of the Natural Heritage Trust Program and would only create unnecessary paperwork for both the State Treasurer and the Board. When a literal interpretation of the statutory language yields absurd results, however, or contravenes clearly expressed legislative intent, "the reason and purpose of the law shall control and the strict letter thereof shall be disregarded." Mazda Motors v. Southwestern Motors, 296 N.C. 357, 361, 250 S.E.2d 250 (1979); Charlotte Housing Authority v. Patterson, 120 N.C. App. 552, 556, 464 S.E.2d 68 (1995). We believe that interpreting N.C. Gen. Stat. §113-77.7(c) to require the Board to direct a formal request to the State Treasurer for a zero allocation is unreasonable and could not have been the intent of the legislature.

Another interpretation of N.C. Gen. Stat. §113-77.7(c) is that it establishes the exclusive means through which the Board must earmark monies within the Fund for land management; but, it does not impose upon the Board a mandatory duty to utilize it. Following this interpretation, if the Board decides to expend monies for land management, then it necessarily must request that the State Treasurer establish the special stewardship account and deposit therein an amount from the Fund not to exceed twenty percent (20%) of the land's appraised value. However, if the Board decides not to expend monies for land management, the Board is under no obligation to direct any request to the State Treasurer concerning land management and the stewardship account. This latter interpretation does not yield itself to an unreasonable result and takes into account the fiscal reality that the Fund continually has had insufficient monies to cover both acquisition and management of desired lands.

We believe that this latter interpretation is more consistent with the intent of the legislature than a more literal construction. It does not appear to offend any laws pertaining to the State Treasurer and for the most part, comports with the Board's practices since its inception in 1987. When interpreting an ambiguous statute, the construction adopted by those who administer and execute a statute "is entitled to great consideration, especially if such construction has been observed and acted upon for many years." State ex rel. Utilities Comm'n v. The Public Staff–N.C. Utilities Comm'n, 309 N.C. 195, 211, 306 S.E.2d 435, appeal after remand, 320 N.C. 1, 358 S.E.2d 35 (1983); Walls & Marshall Fuel Co., Inc. v. N.C. Dept. of Revenue, 95 N.C. App. 151, 381 S.E.2d 815 (1989). Although not controlling, such a construction however "is strongly persuasive." John R. Sexton & Co., v. Justus, 342 N.C. 374, 380, 464 S.E.2d 268 (1995).

Under either interpretation, N.C. Gen. Stat. §113-77.7(c) sets forth the exclusive means through which the Board must allocate monies within the Fund for land management. We advise that in the future the Board should refrain from making special grants from the Fund for land management purposes, and instead, establish and utilize the stewardship account as prescribed by N.C. Gen. Stat. §113-77.7(c) and N.C. Gen. Stat. §113-77.9(b).

CONCLUSION

In conclusion, the Board's long-standing practice appears to accomplish what the legislature intended under Article 5A of Chapter 113. The legislature charged the Board with a dual responsibility, to acquire and manage ecologically significant lands. The Board has carried out both responsibilities by acquiring lands with Fund monies and delegating land management responsibilities to the state agencies involved. Since the Board has carried out its overall statutory duties, its construction of N.C. Gen. Stat. §113-77.7(c) is reasonable under the present circumstances, with the possible exception of its one time special grant for land management.

Since N.C. Gen. Stat. §113-77.7(c) is subject to varying interpretations–specifically whether or not it imposes a mandatory duty upon the Board to request and fund a special stewardship account–we advise the Board to seek legislative amendment of this statute to ensure that the Board's long-standing practice is consistent with legislative intent. If it is not doing so already, we also advise the Board that after it votes to acquire a tract, it should make a specific finding on the record concerning the funding, or lack of funding, for associated land management responsibilities.

Please call us if you have any questions or need additional assistance.

Daniel C. Oakley
Senior Deputy Attorney General

David W. Berry
Assistant Attorney General