UPDATE September 2013:  In 2013 the General Assembly expanded the scope of the bona-fide-farm exemption in several respects.  S.L. 2013 – 347 amends G.S. 153A-340 to provide that exempt activity includes agricultural activity associated with a farm “and any other farm owned or leased to or from others by the bona fide farm operator, no matter where located.”  Thus energy production and processing activities and facilities will be allowed on one property can be of a scale necessary to serve multiple farm tracts in the same ownership.  In addition, the same session law exempts grain warehouses and storage facilities from zoning by counties and municipalities in their extraterritorial planning areas.  A provision in a second act, section 45 of S.L. 2013 – 413, directs the Department of Transportation to adopt rules to authorize selective pruning vegetation within the rights-of-way of federal and state primary highway for that obstructs motorists’ views of properties on which agritourism activities occur. 

The conference speaker, representing agricultural interests, posed this question to his audience: “What is the North Carolina state motto?” The answer came back: “Esse Quam Videri.” “What do you think it means?” he asked. After some buzz, those in the audience who were in the know confidently replied, “To be rather than to seem.” The speaker paused and then chuckled, “Well, my folks say that in North Carolina it means agriculture is exempt.”

Those in the audience involved in land use and environmental regulation knew what he meant. For purposes of various North Carolina regulatory programs and laws, agriculture is either exempt or is subject to special treatment. S.L. 2011-363 (H 168), adopted in this year’s session of the General Assembly, illustrates the trend to expand these exemptions. The act (1) expands the exemption that a “bona fide farm” enjoy from county zoning; (2) makes all of the powers that a municipality exercises in its extraterritorial area inapplicable to such a farm; and (3) prevents municipalities from annexing such a farm, wherever located, without the consent of the owner.

One of the more well-known examples of agricultural exemption has involved county zoning. A “bona fide farm” is generally exempt from county zoning, although nonfarm uses of farm properties are still subject to regulation. Over time, the definition of what constitutes a bona fide farm (G.S. 153A-340(b)) has been clarified, elaborated, and expanded by statutory amendment and case law interpretation, and cross-linked to other definitions. The exemption from county zoning for bona fide farms dates from the county zoning enabling legislation of 1959. The term remained undefined until 1991 when language was added to G.S 153A-340 to provide that farm purposes “include the production and activities relating or incidental to the production of crops, fruits, vegetables, ornamental and flowering plants, dairy, livestock, poultry, and all other forms of agricultural products having a domestic or foreign market.” A 1997 amendment to the statute was the only retreat from the march to broader and broader exemptions: it allowed large-scale swine farms to be regulated. A few years later a little-noticed 2001 North Carolina Court of Appeals case broadened the exemption by holding that an agricultural activity pursued purely for pleasure (e.g., raising horses) rather than for profit would still qualify, and so too would related incidental activities (e.g., extracting and selling soil to prepare pasture land for the horses). A big breakthrough came in 2005 when a new law provided that the owner of a farm property in an enhanced voluntary agricultural district (EVAD) that is subject to an agricultural conservation easement may receive up to 25% of its gross sales from the sale of nonfarm products and still be exempt from county zoning. The 2005 law also provided that production of certain nonfarm items that were recognized under the “Goodness Grows in North Carolina” program (e.g., beer, wine, soft drinks, soaps, lotions) was a bona fide farm purpose if produced on a farm subject to a conservation easement. Yet another amendment to G.S. 153A-340 in 2006 linked “bona-fide farm” to the definition of “agriculture” found in G.S. 106-581.1. This latter definition of agriculture expressly includes tree production and timbering, aquaculture, the raising of livestock (including beekeeping), the “packing, treating, processing, sorting, storage, and other activities performed to add value to crops, livestock, and agricultural items produced on the farm . . . ,“ and finally, “agritourism,” a term variously interpreted to include “pick-your-own-produce” farms, corn mazes, hay rides, vineyards, Christmas tree farms—even mass-gathering events like weddings for which the farm setting is an integral part of the draw. Whew! Small wonder, then, that everything from managing the strawberry patch in your back yard to raising emus in a large pen to hosting a wedding in an historic barn may be exempt from county zoning.

This years’ legislation, S.L. 2011-363 (H 168), advances the cause of agriculture in a different way by listing specific items of proof that a landowner may provide to demonstrate that a property functions as a farm. The act provides a “safe harbor” by listing five forms of verification, any one of which is sufficient to qualify a property for the bona fide farming exemption. The items of proof include (a) a farm sales tax exemption certificate; (b) a copy of the property tax listing showing that the farm qualifies for the present-use-value property taxation that apples to agricultural, horticultural, and forestry uses; (c) a copy of the farm operator’s federal income tax form that demonstrates farm activity; (d) a forestry management plan; or (e) a farm identification number issued by the U.S. Department of Agriculture. Several of these safe harbors—qualifying for present-use-value taxation (item b), filing an IRS form demonstrating farm activity (item c)—even obtaining a farm sale tax exemption certificate—involve the regulatory authority of either the state or federal government. In each case the government has an incentive to prevent abuse and fraud concerning eligibility. However, for several of these forms of verification—particularly a “forestry management plan” or the issuance of farm identification numbers—there is no independent review of actual farm activity on the site. For the regulatory purposes described below, there is some reason to wonder whether all future claims of qualification for the “bona fide exemption” will be truly genuine.

The new law also clarifies that the exemption applies not only to a single property, but it can also apply to an identifiable portion of a single tract that is partially being used for another purpose. The new provision appears to aid the farmer by allowing the exemption to apply to a portion of a tract the remainder of which is used for an entirely different unrelated purpose (e.g., industrial or recreational purposes). But what if eight acres of a nine-acre parcel are under cultivation and one acre is devoted a residence? Is the entire parcel treated as a bona fide farm if the residence is accessory to the farm? Quite likely so, as under prior law.

The real significance of S.L. 2011-363 (H 168) concerns the way it extends the reach of the bona fide farm exemption beyond county zoning. It adds a new G.S. 160A-360(k) to provide that land being used for bona fide farm purposes is also exempt from a municipality’s exercise of its powers in its extraterritorial planning jurisdiction (ETPJ). The act specifically provides that property “located in the geographic area of a municipality’s extraterritorial jurisdiction and that is used for bona fide farm purpose is exempt from exercise of the municipality’s extraterritorial jurisdiction.” (Underlining added.) The underlined phrase has been read by some to suggest that the area included within a city’s ETPJ thus becomes a sieve with holes representing farms that are left for the county to include in its planning jurisdiction. Although the language quoted above is susceptible to several interpretations, the evolution of the legislation suggests that no such result was intended. Instead, a farm within a city’s ETPJ is exempt from the exercise of the powers that a city may otherwise exercise in the geographic area it controls only as long as the property qualifies as a bona fide farm. When the farm exemption is lost, the property becomes subject to the city’s ETPJ regulatory powers, as it was before the act became effective (June 21). It is important to understand, however, that the agricultural exemption in areas within a municipal extraterritorial planning jurisdiction applies not only to municipal zoning, but also to municipal subdivision control, building and housing code enforcement, soil erosion and sedimentation control, flood hazard protection regulations, stormwater control, community development authority, acquisition of open space, and other powers that a municipality may exercise in its ETPJ. Clearly, farms in a city ETPJ now enjoy a broader exemption from regulation than do farms in a county planning jurisdiction, which are exempt only from county zoning and certain aspects of building code enforcement.

Finally, the act goes on to provide that land used for farming purposes may not be made subject to any form of municipal-initiated annexation without the consent of the owners, if the land was so used on the date the municipal resolution of intent to consider annexation was adopted. In the past agricultural land that was subject to or eligible for present-use value taxation for property tax purposes could be annexed and considered part of a city only for purposes of applying the city’s planning and development jurisdiction and for purposes of determining the city boundary for additional annexations. Now such property may qualify for complete exemption from annexation.

So, yes indeed, for various local government purposes, agriculture is different. If you are a farmer in an urban fringe area, you may find that you are immune from local government actions that affect your neighbors. Similarly if your property is used for a purpose other than agriculture, you may find that the farm next door is not subject to the same rules as you are. It doesn’t just seem that way; it is that way.