North Carolina Court Hears Dispute Over Smithfield Settlement Funds

RALEIGH, N.C. — A legal battle over $12 million from a decades-old settlement with Smithfield Foods has reached North Carolina’s Court of Appeals, raising questions about the attorney general’s authority and how state funds should be spent.

The dispute stems from a 2000 agreement between Smithfield Foods and then-Attorney General Mike Easley. Under the deal, Smithfield agreed to pay the state up to $2 million per year for 25 years to support environmental enhancement efforts after a string of hog waste spills.

From 2000 until mid-2019, the attorney general’s office controlled the distribution of the funds. But a 2019 law required such funds to be deposited into the state treasury. Critics argue that former Attorney General Josh Stein, now the governor, continued using the funds for grants without proper authorization.

Lawsuit Brought on Behalf of Schools

The case was filed by Jonathan Burris, a pastor in Randolph County, on behalf of the local school board. Burris claims the attorney general violated the state constitution by requisitioning more than $5 million between July 2019 and November 2023 without a legal appropriation. He argues that the funds should be used for environmental improvements at public schools.

A Wake County Superior Court judge agreed last year, ordering that the funds go to schools. Judge Graham Shirley ruled that, since the money was placed in an account designated for seized and forfeited assets, it falls under constitutional provisions that require such funds to be used for maintaining free public schools.

“I am thankful that the NC Constitution, particularly Article IX, has won the day and that these funds will be used exclusively for maintaining free public schools,” Burris said after the ruling.

Attorney General's Office Pushes Back

Current Attorney General Jeff Jackson is challenging the lower court’s decision. In a filing submitted in May, his office argued that the funds were never civil penalties and were explicitly intended to support environmental grant programs.

Jackson’s lawyers wrote, “This appeal concerns a longstanding environmental grant program that has benefited North Carolina for more than two decades.” They added that Smithfield’s payments were a “gift” to the state meant to support specific environmental goals.

Constitutional Debate at Core

At the heart of the case is whether the attorney general can distribute funds from the state treasury without a direct appropriation from the General Assembly. Article V of the North Carolina Constitution restricts withdrawals without legislative approval, while Article IX requires certain unappropriated funds to support public schools.

“The power of the purse belongs to the General Assembly alone,” Burris’ legal team argued.

This is not the first challenge to the grant program. A previous lawsuit was dismissed by the state Supreme Court in 2022 but left open the door for new claims involving post-2019 funds.

The appellate court will now decide whether the trial court’s ruling should stand or be overturned. Meanwhile, roughly $12 million remains in dispute.

No timeline has been set for a final decision.