{ "id": 9367616, "name": "R.J. REYNOLDS TOBACCO COMPANY, Petitioner v. NORTH CAROLINA DEPARTMENT OF ENVIRONMENT & NATURAL RESOURCES, Respondent", "name_abbreviation": "R.J. Reynolds Tobacco Co. v. North Carolina Department of Environment & Natural Resources", "decision_date": "2002-02-19", "docket_number": "No. COA01-74", "first_page": "610", "last_page": "620", "citations": [ { "type": "official", "cite": "148 N.C. App. 610" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "373 S.E.2d 862", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1988, "opinion_index": 0 }, { "cite": "323 N.C. 476", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2562080, 2563931, 2565667, 2565971, 2563611 ], "year": 1988, "opinion_index": 0, "case_paths": [ "/nc/323/0476-05", "/nc/323/0476-01", "/nc/323/0476-02", "/nc/323/0476-03", "/nc/323/0476-04" ] }, { "cite": "370 S.E.2d 866", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1988, "pin_cites": [ { "page": "868" } ], "opinion_index": 0 }, { "cite": "91 N.C. App. 153", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8524873 ], "year": 1988, "pin_cites": [ { "page": "156" } ], "opinion_index": 0, "case_paths": [ "/nc-app/91/0153-01" ] }, { "cite": "509 S.E.2d 165", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1998, "opinion_index": 0 }, { "cite": "349 N.C. 656", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 571673 ], "year": 1998, "opinion_index": 0, "case_paths": [ "/nc/349/0656-01" ] }, { "cite": "293 S.E.2d 171", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1982, "pin_cites": [ { "page": "176" } ], "opinion_index": 0 }, { "cite": "306 N.C. 231", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8568091 ], "year": 1982, "pin_cites": [ { "page": "238" } ], "opinion_index": 0, "case_paths": [ "/nc/306/0231-01" ] }, { "cite": "231 S.E.2d 882", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1977, "pin_cites": [ { "page": "888" } ], "opinion_index": 0 }, { "cite": "292 N.C. 70", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8567415 ], "year": 1977, "pin_cites": [ { "page": "80" } ], "opinion_index": 0, "case_paths": [ "/nc/292/0070-01" ] }, { "cite": "443 S.E.2d 114", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1994, "pin_cites": [ { "page": "118" } ], "opinion_index": 0 }, { "cite": "114 N.C. App. 668", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8527936 ], "year": 1994, "pin_cites": [ { "page": "674" } ], "opinion_index": 0, "case_paths": [ "/nc-app/114/0668-01" ] }, { "cite": "42 USC \u00a7 6903", "category": "laws:leg_statute", "reporter": "U.S.C.", "pin_cites": [ { "page": "(27)" } ], "opinion_index": 0 }, { "cite": "42 USC \u00a7 6901", "category": "laws:leg_statute", "reporter": "U.S.C.", "pin_cites": [ { "page": "et seq." } ], "opinion_index": 0 }, { "cite": "281 S.E.2d 391", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1981, "pin_cites": [ { "parenthetical": "citations omitted" } ], "opinion_index": 0 }, { "cite": "303 N.C. 544", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8574372, 8574312, 8574353, 8574295, 8574328 ], "year": 1981, "pin_cites": [ { "parenthetical": "citations omitted" } ], "opinion_index": 0, "case_paths": [ "/nc/303/0544-05", "/nc/303/0544-02", "/nc/303/0544-04", "/nc/303/0544-01", "/nc/303/0544-03" ] }, { "cite": "277 S.E.2d 91", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1981, "pin_cites": [ { "page": "94", "parenthetical": "citations omitted" } ], "opinion_index": 0 }, { "cite": "51 N.C. App. 516", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 2644938 ], "year": 1981, "pin_cites": [ { "page": "521", "parenthetical": "citations omitted" } ], "opinion_index": 0, "case_paths": [ "/nc-app/51/0516-01" ] }, { "cite": "276 S.E.2d 443", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1981, "pin_cites": [ { "page": "447" }, { "parenthetical": "citations omitted" } ], "opinion_index": 0 }, { "cite": "302 N.C. 550", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8567833 ], "year": 1981, "pin_cites": [ { "page": "556" } ], "opinion_index": 0, "case_paths": [ "/nc/302/0550-01" ] }, { "cite": "425 S.E.2d 698", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1993, "pin_cites": [ { "page": "701" } ], "opinion_index": 0 }, { "cite": "333 N.C. 258", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2547559 ], "year": 1993, "pin_cites": [ { "page": "262" } ], "opinion_index": 0, "case_paths": [ "/nc/333/0258-01" ] }, { "cite": "418 S.E.2d 232", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1992, "pin_cites": [ { "page": "235" } ], "opinion_index": 0 }, { "cite": "332 N.C. 141", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2508082 ], "year": 1992, "pin_cites": [ { "page": "144" } ], "opinion_index": 0, "case_paths": [ "/nc/332/0141-01" ] }, { "cite": "N.C. Gen. Stat. \u00a7 105-275", "category": "laws:leg_statute", "reporter": "N.C. Gen. Stat.", "pin_cites": [ { "page": "(8)(b)", "parenthetical": "emphasis added" } ], "opinion_index": 0 }, { "cite": "528 S.E.2d 927", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2000, "pin_cites": [ { "page": "929", "parenthetical": "citation omitted" } ], "opinion_index": 0 }, { "cite": "137 N.C. App. 575", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11094894 ], "year": 2000, "pin_cites": [ { "page": "577", "parenthetical": "citation omitted" } ], "opinion_index": 0, "case_paths": [ "/nc-app/137/0575-01" ] }, { "cite": "483 S.E.2d 388", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1997, "opinion_index": 0 }, { "cite": "345 N.C. 699", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 53839 ], "year": 1997, "opinion_index": 0, "case_paths": [ "/nc/345/0699-01" ] }, { "cite": "513 S.E.2d 823", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1999, "opinion_index": 0 }, { "cite": "132 N.C. App. 704", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11239996 ], "year": 1999, "opinion_index": 0, "case_paths": [ "/nc-app/132/0704-01" ] }, { "cite": "435 S.E.2d 359", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1993, "opinion_index": 0 }, { "cite": "112 N.C. App. 161", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8520617 ], "weight": 2, "year": 1993, "opinion_index": 0, "case_paths": [ "/nc-app/112/0161-01" ] }, { "cite": "372 S.E.2d 887", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1988, "opinion_index": 0 }, { "cite": "91 N.C. App. 527", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8526141 ], "year": 1988, "opinion_index": 0, "case_paths": [ "/nc-app/91/0527-01" ] } ], "analysis": { "cardinality": 915, "char_count": 24515, "ocr_confidence": 0.76, "pagerank": { "raw": 4.4358662655769275e-07, "percentile": 0.9209718404432073 }, "sha256": "fa59b7dc74ddc5d24a975c64d265be16c152eeee9e5266d43b5b74ee5389a5bb", "simhash": "1:dbb9e3ba5610319c", "word_count": 3841 }, "last_updated": "2023-07-14T20:14:25.013425+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Chief Judge EAGLES and Judge BIGGS concur." ], "parties": [ "R.J. REYNOLDS TOBACCO COMPANY, Petitioner v. NORTH CAROLINA DEPARTMENT OF ENVIRONMENT & NATURAL RESOURCES, Respondent" ], "opinions": [ { "text": "MARTIN, Judge.\nOn 16 April 1998, petitioner, R.J. Reynolds Tobacco Company (\u201cReynolds\u201d) applied to respondent, North Carolina Department of Environment and Natural Resources (\u201cDENR\u201d) for tax certification of certain newly installed equipment as solid waste recycling or resource recovery equipment, pursuant to G.S. \u00a7\u00a7 105-275(8)(b), 105-122(b), 105-130.5, and 105-130.10. By letter dated 4 September 1998, DENR denied Reynolds\u2019 tax certification application, based upon its assertion that the materials processed by the equipment were not waste materials. Reynolds petitioned for a contested case hearing pursuant to G.S. \u00a7 150B-23.\nThe Tax Certification Program, codified at G.S. \u00a7\u00a7 105-275(8)(b), 105-122(b), 130A-290(35), 105-130.5, and 105-130.10 provides tax benefits for capital investments in facilities and equipment used exclusively for resource recovery or recycling of or from solid waste. These tax benefits include the exclusion of real and personal property from the local city and county ad valorem tax base, deduction of the value of the facilities and equipment from the value of property upon which the corporate franchise tax is levied, and rapid amortization of the construction, purchase and installation cost of the facilities, resulting in increased deductions from corporate taxable income. DENR must certify a facility\u2019s eligibility for participation before a facility receives any tax benefits for its recycling program.\nReynolds first submitted a request to DENR for tax certification for a resource recovery facility and equipment in Building 603 at its Whitaker Park manufacturing facility in 1982. DENR issued Reynolds a tax certification covering the building, land, and equipment listed in the application. From 1986 until 1995, Reynolds applied for and received eight additional tax certifications from DENR for new equipment purchased and installed in Building 603 at Whitaker Park. DENR conducted an inspection before granting certification upon each of these applications. DENR issued its 4 September 1998 letter denying Reynolds\u2019 April 1998 application, the first time it had denied an application for tax certification for Building 603, without conducting any inspection.\nIn manufacturing tobacco products, Reynolds buys tobacco leaves at auction. The tobacco is sent to a stemmery, where the stems (hard, woody part of the leaf) are separated from the lamina portion of the leaf (material in between the stems). The separation process also generates small scraps of tobacco (scraps) and very fine scraps of tobacco (dust). The usable tobacco lamina material is sent to the manufacturing operation where it is blended and processed into cigarettes. The stems, scraps and dust are packed into containers and sent to a storage facility until they are either processed into reconstituted sheet tobacco, through a process known as the G-7 process, or are discarded. The reconstituted sheet tobacco is shredded and blended with the processed lamina strips and made into filler for cigarettes. The reconstituted tobacco filler is part of most brands of cigarettes made by Reynolds, and enables cigarettes to be made with lower tar and nicotine content which has been demanded by smoking consumers.\nReynolds uses approximately seventy million pounds of tobacco stems, scrap and dust each year in making reconstituted sheet tobacco. Reynolds also disposes of between five and seven million pounds of tobacco waste materials in landfills each year. This material is of a lower quality than the stems, scrap and dust used in the G-7 process; much of it is generated by the manufacturing process, rather than the stemmery, though some tobacco waste generated by the stemmery is also disposed of.\nIn order to keep up with its production requirements for reconstituted tobacco, Reynolds imports tobacco stems purchased overseas. Reynolds sells reconstituted tobacco to other manufacturers of tobacco products, and manufactures reconstituted sheet tobacco for other tobacco manufacturers, using stems, scraps and dust supplied by them. One of Reynolds\u2019 witnesses testified that even if there were no tax incentives for recycling and resource recovery of or from solid waste, Reynolds would still operate the G-7 process because of its cost-effectiveness.\nAn administrative law judge issued a recommended decision upholding DENR\u2019s denial of Reynolds\u2019 1998 application for tax certification. DENR subsequently issued its final agency decision, in which it adopted the recommended decision of the administrative law judge and denied certification. Reynolds filed a timely petition for judicial review of the final agency decision pursuant to G.S. \u00a7 150B-43 et seq. The Forsyth County superior court reversed the final agency decision and ordered DENR to approve Reynolds\u2019 application for tax certification. The superior court concluded that the tobacco scrap, stems and dust used to make reconstituted sheet tobacco are \u201csolid waste\u201d within the meaning of G.S. \u00a7 130A-290(35) and therefore Reynolds\u2019 resource recovery and recycling equipment qualified for inclusion in the North Carolina Tax Certification Program. The court also concluded that DENR\u2019s final agency decision was not supported by substantial evidence, was in excess of its statutory authority because DENR had failed to inspect the Reynolds facility after receiving a complete application for tax certification as required by 15A NCAC 13B. 1508(d), and was arbitrary and capricious. DENR appeals.\nJudicial review of administrative agency decisions is governed by the North Carolina Administrative Procedure Act (APA), codified at Chapter 150B of the General Statutes. Henderson v. N.C. Dept. of Human Resources, 91 N.C. App. 527, 372 S.E.2d 887 (1988). The superior court is authorized to reverse or modify an agency\u2019s final decision under G.S. \u00a7 150B-51(b)\nif the substantial rights of the petitioners may have been prejudiced because the agency\u2019s findings, inferences, conclusions, or decisions are:\n(1) In violation of constitutional provisions;\n(2) In excess of the statutory authority or jurisdiction of the agency;\n(3) Made upon unlawful procedure;\n(4) Affected by other error of law;\n(5) Unsupported by substantial evidence admissible under G.S. 150B-29(a), 150B-30, or 150B-31 in view of the entire record as submitted; or\n(6) Arbitrary or capricious.\nThe proper standard of review by the superior court is determined by the particular issues presented on appeal. In re Appeal by McCrary, 112 N.C. App. 161, 435 S.E.2d 359 (1993). When the petitioner contends the agency decision was affected by an error of law, G.S. \u00a7 150B-51(b)(l)(2)(3) & (4), de novo review is the proper standard; if it is contended the agency decision was not supported by the evidence, G.S. \u00a7 150B-51(b)(5), or was arbitrary and capricious, G.S. \u00a7 150B-51(b)(6), the whole record test is the proper standard. Dillingham v. N.C. Dept. of Human Resources, 132 N.C. App. 704, 513 S.E.2d 823 (1999). The reviewing court may be required to utilize both standards of review if warranted by the nature of the issues raised. McCrary, 112 N.C. App. 161, 435 S.E.2d 359.\nIn seeking judicial review of DENR\u2019s decision in this case, Reynolds alleged that the decision was based on an error of law, that the decision was not supported by the evidence, and that the decision was arbitrary and capricious. Therefore, the superior court was required to employ both a de novo review for errors of law, and a whole record review to determine whether DENR\u2019s decision was supported by substantial evidence and whether it was arbitrary and capricious. Our review of the superior court\u2019s decision requires that we review the order for error of law to determine whether that court employed the appropriate standard of review and whether it did so correctly. ACT-UP Triangle v. Comm\u2019n for Health Services, 345 N.C. 699, 483 S.E.2d 388 (1997).\nI.\nIn those cases where the superior court is required to employ a de novo standard of review of the agency\u2019s decision, appellate review of the superior court\u2019s order requires that this Court also review the agency\u2019s decision de novo. McCrary, supra. De novo review requires the court to \u201c \u2018consider a question anew, as if not considered or decided by the agency\u2019 previously....\u201d and to \u201cmake its own findings of fact and conclusions of law ...\u201d rather than relying upon those made by the agency. Jordan v. Civil Serv. Bd. of Charlotte, 137 N.C. App. 575, 577, 528 S.E.2d 927, 929 (2000) (citation omitted).\nThe Tax Certification Program provides an exemption from taxation for\n[ r]eal or personal property that is used or, if under construction, is to be used exclusively for recycling or resource recovering of or from solid waste, if the Department of Environment and Natural Resources furnishes a certificate to the tax supervisor of the county in which the property is situated stating the Department of Environment and Natural Resources has found that the described property has been or will be constructed or installed, complies or will comply with the rules of the Department of Environment and Natural Resources, and has, or will have as its primary purpose recycling or resource recovering of or from solid waste.\nN.C. Gen. Stat. \u00a7 105-275(8)(b) (emphasis added). Thus, whether the tobacco stems, scraps and dust used in Reynolds\u2019 G-7 process is \u201csolid waste\u201d is critical to a determination of this matter.\nG.S. \u00a7 130A-290(35) provides in pertinent part:\n\u201cSolid waste\u201d means any hazardous or nonhazardous garbage, refuse or sludge from a waste treatment plant, water supply treatment plant, or air pollution control facility, domestic sewage and sludges generated by the treatment thereof in sanitary sewage collection, treatment and disposal systems, and other material that is either discarded or is being accumulated, stored or treated prior to being discarded, or has served its original intended use and is generally discarded, including solid, liquid, semisolid or contained gaseous material resulting from industrial, institutional, commercial and agricultural operations, and from community activities . . . (emphasis added).\nWhether the tobacco stems, scrap and dust used by Reynolds in its G-7 process to make reconstituted sheet tobacco comes within the statutory definition, then, is a question of law. McCrary, supra. (Incorrect statutory interpretation constitutes an error of law). In reviewing DENR\u2019s denial of Reynolds\u2019 1998 application for tax certification, the superior court found the evidence in the official record with respect to Reynolds\u2019 use of the G-7 process to make reconstituted sheet tobacco from stems, scrap and tobacco dust supported a conclusion that such materials are \u201csolid waste\u201d within the meaning of G.S. \u00a7 130A-290(35). The superior court concluded that DENR\u2019s conclusion to the contrary in its Final Agency Decision was an error of law. In so doing, the superior court correctly utilized the de novo standard of review. In order for this Court to properly conduct its review of the superior court order, we must also review de novo DENR\u2019s conclusion that \u201c[t]obacco scrap, tobacco stems, and tobacco dust used in the G-7 process are not \u2018solid waste\u2019 within the meaning of N.C. Gen. Stat. \u00a7 130A-290(35).\u201d McCrary, supra.\n\u201cStatutory interpretation properly begins with an examination of the plain words of the statute.\u201d Correll v. Division of Social Servs., 332 N.C. 141, 144, 418 S.E.2d 232, 235 (1992). \u201cIf the language of the statute is clear and is not ambiguous, we must conclude that the legislature intended the statute to be implemented according to the plain meaning of its terms.\u201d Hyler v. GTE Prods. Co., 333 N.C. 258, 262, 425 S.E.2d 698, 701 (1993). \u201c[A] statute must be considered as a whole and construed, if possible, so that none of its provisions shall be rendered useless or redundant.\u201d Builders, Inc. v. City of Winston-Salem, 302 N.C. 550, 556, 276 S.E.2d 443, 447 (1981). \u201cIt is presumed that the legislature intended each portion to be given full effect and did not intend any provision to be mere surplusage.\u201d Id. (citations omitted). Though we have held that \u201ctax exemption statutes must be strictly construed against exemption . . .,\u201d we have observed \u201cthat such statutes should not be given a narrow or stingy construction.\u201d In re Wake Forest University, 51 N.C. App. 516, 521, 277 S.E.2d 91, 94, disc. review denied, 303 N.C. 544, 281 S.E.2d 391 (1981) (citations omitted).\nApplying these tenets to the statutory definition of \u201csolid waste,\u201d we conclude that the tobacco scrap, stems and dust used in Reynolds\u2019 G-7 process fall within it. The statutory definition includes \u201cmaterial that is either discarded or is being accumulated, stored or treated prior to being discarded ... .\u201d The language of the statute is clear and we must interpret the statute according to the plain meaning of its terms. The record evidence before DENR is undisputed that the tobacco stems, scrap and dust are waste materials generated in the stemmery, that Reynolds accumulates and stores such materials after the tobacco lamina leaves the stemmery, and that such materials remain in storage until they are either used in the G-7 process or discarded. Were it not for the G-7 process, all of the stems, scrap and dust generated by the stemmery process would be discarded. Thus, we hold that the tobacco stems, scrap and dust utilized in Reynolds\u2019 G-7 process are \u201csolid waste\u201d within the meaning of G.S. \u00a7 130A-290(35).\nIn so holding, we reject DENR\u2019s argument that our decision should be guided by federal case law interpreting the definition of \u201csolid waste\u201d as used in the federal Resource Conservation and Recovery Act (RCRA), 42 USC \u00a7 6901 et seq. North Carolina\u2019s statute contains broader language than the federal statute in defining \u201csolid waste,\u201d expanding the phrase \u201cother discarded material\u201d contained in the federal definition, 42 USC \u00a7 6903(27), to include \u201cand other material that is either discarded or is being accumulated, stored or treated prior to being discarded, or has served its original intended use and is generally discarded.\u201d N.C. Gen. Stat. \u00a7 130A-290(35). Because the state definition is broader than the federal definition, we will not rely on federal case law in our interpretation.\nII.\nIn reviewing Reynolds\u2019 contentions that DENR\u2019s final decision was not supported by substantial evidence and was arbitrary and capricious, the superior court was required to conduct a whole record review. In its order, the superior court asserted that it had \u201creviewed the entire record in this matter and applied the \u2018whole record\u2019 test. . ..\u201d\n\u201cThe \u2018whole record\u2019 test requires the reviewing court to examine all competent evidence (the \u2018whole record\u2019) in order to determine whether the agency decision is supported by \u2018substantial evidence.\u2019 \u201d Amanini v. N.C. Dept. of Human Resources, 114 N.C. App. 668, 674, 443 S.E.2d 114, 118 (1994). Substantial evidence has been defined as \u201csuch relevant evidence as a reasonable mind might accept as adequate to support a conclusion.\u201d Comr. of Ins. v. Rating Bureau, 292 N.C. 70, 80, 231 S.E.2d 882, 888 (1977). In applying the whole record test, the reviewing court must \u201ctake into account both the evidence justifying the agency\u2019s decision and the contradictory evidence from which a different result could be reached.\u201d Lackey v. Dept. of Human Resources, 306 N.C. 231, 238, 293 S.E.2d 171, 176 (1982). Under this test, the reviewing court is not allowed to replace the agency\u2019s judgment as between two reasonably conflicting views, even though the court could justifiably have reached a different conclusion had the matter been before it de novo. Meads v. N.C. Dept. of Agric., 349 N.C. 656, 509 S.E.2d 165 (1998). Additionally, a decision by an administrative agency \u201cis arbitrary and capricious if it clearly evinces a lack of fair and careful consideration or want of impartial, reasoned deci-sionmaking.\u201d Joyce v. Winston-Salem State Univ., 91 N.C. App. 153, 156, 370 S.E.2d 866, 868, cert. denied, 323 N.C. 476, 373 S.E.2d 862 (1988).\nDENR contends that there was substantial evidence to support its denial of Reynolds\u2019 application for tax certification and that the superior court misapplied the whole record test by impermissibly substituting its judgment for that of the agency by omitting all or part of many of DENR\u2019s findings of fact, by adding new findings of fact, and by basing its conclusions of law on the court\u2019s findings rather than the agency\u2019s findings. We reject DENR\u2019s contentions.\nDENR specifically argues that the trial court erred in omitting DENR\u2019s findings that Reynolds has not discarded the tobacco stems, scrap and dust used to make reconstituted sheet tobacco but instead has aged and stored these materials before reconstituting them into sheet tobacco. However, whether Reynolds has discarded the materials is irrelevant to the inquiry of whether the tobacco stems, scrap and dust are \u201csolid waste;\u201d the definition of \u201csolid waste,\u201d as discussed earlier, includes \u201c. . . material that is either discarded or is being accumulated, stored or treated prior to being discarded . . . . \u201d N.C. Gen. Stat. 130A-290(35) (emphasis added). Therefore, there is no requirement that the materials actually be discarded. DENR\u2019s argument, carried to its logical conclusion, would mean that taxpayers who successfully recycle waste materials would no longer qualify for tax certification because they no longer discard the waste materials. Such a proposition would be absurd and clearly contrary to the legislative intent to encourage the recovery and recycling of solid waste.\nFor similar reasons, we reject DENR\u2019s arguments that the superior court erred in omitting DENR\u2019s findings: (1) that reconstituted sheet tobacco is integral and necessary to almost all of Reynolds\u2019 brands of cigarettes, where it has been a major tool for designing cigarettes with lower tar and nicotine content, as demanded by the smoking public; (2) that Reynolds buys tobacco stems overseas to keep up with its production requirements for reconstituted tobacco; (3) that Reynolds finds it is economical to utilize as much of the tobacco leaf as possible in its products; (4) that tax incentives were not determinative of whether Reynolds operated the G-7 process and that Reynolds would continue to operate the G-7 process without the tax certification program; and (5) that reconstitution of tobacco stems, scrap, and dust is widespread throughout the tobacco industry. These findings merely show that Reynolds has successfully incorporated its recycling process into its manufacturing program; such findings have no bearing on whether the materials should be considered \u201csolid waste.\u201d Therefore, it was unnecessary for the superior court to have included these findings in its order.\nDENR further contends the superior court erred in omitting its findings of fact with respect to its previous certifications of Reynolds\u2019 G-7 facility and equipment, and DENR\u2019s explanation for denying the 1998 application when it had approved nine similar applications, beginning in 1982. None of these findings were relevant, however, to a determination of whether there was substantial evidence supporting the agency\u2019s denial of Reynolds\u2019 1998 application for tax certification.\nDENR additionally contends the superior court erred by finding the following facts in its order:\n18. Without the G-7 process, the tobacco scrap, stems and dust could not be used to make cigarettes.\n19. Without the G-7 process, most of Reynolds\u2019 tobacco scrap, stems, and dust would be discarded in landfills.\nSuch facts, however, were made in regard to the superior court\u2019s determination that the materials were \u201csolid waste,\u201d a matter of law to be decided under de novo review, as previously discussed.\nFor the foregoing reasons, we conclude that the superior court did not impermissibly apply its judgment for that of the agency in conducting the whole record review in this case. After carefully reviewing the whole record before the agency in this matter, we agree with the trial court that there was not substantial evidence to support the agency\u2019s decision that the materials utilized in Reynolds\u2019 G-7 process were not \u201csolid waste\u201d and denying tax certification to the land and equipment associated with that process.\nThe superior court also concluded that DENR\u2019s failure to inspect the Building 603, Whitaker Park facility, as required by 15A NCAC 13B. 1508(d), prior to its decision to deny the application was \u201cindicative of a lack of fair and careful consideration by DENR\u201d and that its denial of Reynolds\u2019 1998 application was arbitrary and capricious. 15A NCAC 13B.1500 et seq. sets forth standards for the special tax treatment given resource recovery equipment and facilities. Applications for tax certification are governed by rule .1508 which provides, in pertinent part, that upon \u201cproper receipt\u201d of the information required by the rule \u201ca representative of the Division of Solid Waste Management shall inspect said facilities and equipment.\u201d 15A NCAC 13B.1508(d).\nDENR argues that if the application discloses on its face that the facility is not eligible for certification, no inspection is required, as there has been no \u201cproper receipt\u201d of an application. We need not decide, in this case, what constitutes a \u201cproper receipt\u201d or when inspection is required; the record shows that DENR had inspected this same facility on nine previous occasions, had approved certification for the facility after each of those inspections, and denied certification of the 1998 application after erroneously characterizing the materials utilized in the process as \u201chome scrap,\u201d an error which would have been apparent upon inspection. Under these circumstances, we agree with the trial court\u2019s conclusion that DENR\u2019s denial of the application without inspection evinced a lack of fair and careful consideration and was arbitrary and capricious.\nBecause the superior court is authorized to reverse an agency decision upon any of the grounds specified in G.S. \u00a7 150B-51(b), and we have determined the court in this case was correct in its conclusion that DENR\u2019s denial of Reynolds\u2019 application was affected by an error of law and was arbitrary and capricious, we need not discuss DENR\u2019s remaining arguments with respect to the superior court\u2019s order. For the foregoing reasons, we affirm the superior court\u2019s reversal of DENR\u2019s final agency decision denying Reynolds\u2019 16 April 1998 application for tax certification of the land and equipment associated with its G-7 process for reconstituted sheet tobacco and its order requiring DENR to approve the application.\nAffirmed.\nChief Judge EAGLES and Judge BIGGS concur.", "type": "majority", "author": "MARTIN, Judge." } ], "attorneys": [ "Kilpatrick Stockton LLP, by Alan H. McConnell and Theodore C. Edwards, II, for petitioner-appellee.", "Attorney General Roy A. Cooper, III, by Assistant Attorney General Nancy E. Scott, for respondent-appellant." ], "corrections": "", "head_matter": "R.J. REYNOLDS TOBACCO COMPANY, Petitioner v. NORTH CAROLINA DEPARTMENT OF ENVIRONMENT & NATURAL RESOURCES, Respondent\nNo. COA01-74\n(Filed 19 February 2002)\n1. Taxation\u2014 recycling credit \u2014 tobacco stems, scrap, and dust\nRecovered tobacco stems, scrap and dust used in cigarette manufacturing are \u201csolid waste\u201d within the meaning of the statutes providing tax benefits for equipment used in resource recovery or recycling. The stems, scrap, and dust used in this process would otherwise be discarded. N.C.G.S. \u00a7\u00a7 130A-290(35), 105-275(8)(b).\n2. Administrative Law\u2014 superior court review \u2014 agency findings omitted\nThe trial court did not err by omitting all or part of respondent-agency\u2019s findings regarding a tax certification for re-using discarded tobacco stems, scrap, and dust where one finding involved the storage of the discarded tobacco materials, but there is no requirement that materials to be recycled be discarded; other findings merely showed that petitioner successfully incorporated its recycling process into its manufacturing program; and previous certifications were not relevant to the denial of this application.\n3. Administrative Law\u2014 denial of recycling tax certification \u2014 arbitrary and capricious\nRespondent-agency\u2019s denial of an application for a recycling tax certification without an inspection of the facility evinced a lack of fair and careful consideration under the circumstances and was arbitrary and capricious.\nAppeal by respondent from order entered 20 September 2000 by Judge W. Douglas Albright in Forsyth County Superior Court. Heard in the Court of Appeals 26 November 2001.\nKilpatrick Stockton LLP, by Alan H. McConnell and Theodore C. Edwards, II, for petitioner-appellee.\nAttorney General Roy A. Cooper, III, by Assistant Attorney General Nancy E. Scott, for respondent-appellant." }, "file_name": "0610-01", "first_page_order": 640, "last_page_order": 650 }