1996Public Service

Murphy's Law

For Murphy, good government means good business
Pat Stith and Joby Warrick
N&O Staff Writers
February 22, 1995

Former legislator Wendell Murphy heads the nation's largest hog farm. (N&O photo by Robert Willett)

Wendell H. Murphy, who became the nation's biggest hog producer during the 10 years he served in the General Assembly, helped pass laws worth millions of dollars to his company and his industry.

The Duplin County executive voted for, and sometimes co-sponsored, bills giving hog and poultry producers tax breaks, protection from local zoning and exemptions from tougher environmental regulations.

Those laws -- adopted in the 1980s and early '90s -- often passed without a dissenting vote. They got little public notice then. Now, with high-density hog farming growing at an unprecedented rate in Eastern North Carolina, their impact has hit home:

  • Counties trying to deal with odor can't use their zoning authority. The biggest of the hog operations are more like factories than farms, with a row of climate-controlled buildings containing 10,000 or more hogs being fed and watered by machines. But a bill co-sponsored by Murphy in 1991 treats those facilities like the old family farm and exempts them from zoning regulations.
  • A big hog farm generates more sewage than than most towns in North Carolina. But Murphy sponsored an amendment that would have gutted the penalties for illegal discharges of hog waste into streams. Another amendment restored some state authority.
  • Thousands of hog and poultry houses have been built in the last few years, adding up to millions of dollars worth of investment in facilities. One lender, Cape Fear Farm Credit Service in Fayetteville, says its hog loans total $100 million. But all that building material, and all that equipment, has been exempted from sales tax because of two other laws Murphy supported.

With this story:

  • 'Boss Hog.' While he was mastering business and politics, Wendell Murphy stayed close to his Duplin County roots.
  • Murphy's Laws. Nine laws, passed during Wendell Murphy's legislative tenure, that benefited corporate hog producers.
  • Ethics Test. State legislators can vote on laws in which they have financial stakes, as long as they can say their personal interests are not clouding their legislative judgment.
  • A Switch.What started out as a bill to address groundwater safety became the basis for the Swine Odor Task Force.
  • Information sources.

Murphy Family Farms, with its headquarters in Rose Hill in Duplin County, is the General Motors of a hog industry empire that extends from the coastal plain of North Carolina to Utah. This year the company is expected to raise more than 3 million hogs in North Carolina -- more than 8,200 a day, seven days a week.

Murphy is the top executive of that industry. But as a legislator, he pushed for state laws that treated hog companies like Farmer Brown, the backbone of rural North Carolina. He got them.

And he got them without violating state ethics law. Members of the General Assembly are allowed to make money off the bills they introduce, the amendments they offer and the votes they cast -- as long as they can say their financial interests didn't cloud their judgment.

Murphy says he represented the one of the state's top agricultural counties and has no apologies for his hog and poultry votes.

"They shouldn't have sent me up there if I couldn't, if I was going to have to abstain from voting on matters pertaining to agriculture," he said. "If I had one little industry here and I was just doing it for myself, then it would be wrong. But I did what I thought was right for the industry of Duplin County."

Murphy, a Democrat, is the quintessential country boy who made good. Born and raised on a tobacco farm near Rose Hill, population 896 in 1950, he graduated from Rose Hill High School in 1956 and N.C. State University in 1960. He worked hard and earned millions. He was 44 years old when he won a seat in the House in 1982.

He represented Duplin County, his home, and Jones County when he was first elected. In those days Duplin had 172,000 hogs. Now it has six times that number -- more than 1 million.

And most of them belong to Murphy Family Farms.

A legislative power

In the General Assembly, Murphy was open about his financial interest in hogs.

His legislative biography, published in the North Carolina Manual, says he was vice president of the family business, Murphy Farms Inc. The biography lists two honors: "Pork All American, 1975; N.C. Outstanding Pork Producer Award, 1980."

Murphy was an effective legislator whose influence increased year by year, according to rankings from the N.C. Center for Public Policy Research. After his first term, he was rated 75th in effectiveness among 120 House members; after his second, 55th; after his third term, 33rd most effective.

In addition to his own influence, Murphy drew on powerful friends in the General Assembly.

One of those friends was Sen. Harold W. "Bull" Hardison of Kinston.

Hardison was a favorite of business. He had sponsored several bills -- the Hardison Amendments -- that knocked down strict state environmental regulations. He was renowned as a back-room wheeler-dealer, a man who knew how to get things done. Year after year, he ranked near the top in power and influence.

It was Hardison who sponsored or co-sponsored bills to eliminate sales tax on hog and poultry houses in 1986 and on related equipment in 1987. And when Hardison sought the Democratic nomination for lieutenant governor in 1988, Murphy gave him a $100,000 campaign contribution, which violated the legal maximum.

A few days later, Hardison received another $100,000 check from Marvin Johnson, president of House of Raeford Farms Inc., one of the biggest turkey processors in the country. The legal maximum for the primary election was $4,000.

Those and other illegal contributions to Hardison were uncovered by the State Bureau of Investigation. Colon W. Willoughby, the district attorney of Wake County, said in 1992 that he could not prosecute Murphy or Johnson for election law violations because the two year statute of limitations had expired.

Johnson said he didn't lobby for the sales tax exemption bill. He described the $100,000 check to Hardison as a loan rather than an illegal contribution, and said Hardison had repaid part of the money.

Asked how much Hardison had paid back, Johnson answered: "I don't know.

"Fact is, since you've brought it up, I'll look into it."

Murphy acknowledges that the sales tax exemption was worth millions of dollars to an industry in which he is the dominant player.

Asked if his support of Hardison in 1988 was quid pro quo -- Hardison helped him so he helped Hardison -- Murphy replied:

"No, I wouldn't answer that way. I would tell you that Harold Hardison has been a friend since long before I went to the legislature, and still is. As far as I know. I haven't seen him in a while, and rarely see him any more."

"But I think Sen. Hardison has done more to represent his district, as much as anybody ever did. And I have no apologies for any support I've ever given Sen. Hardison. If he was running today, I'd support him again."

The bill to exempt hog and poultry houses from sales tax was ratified by overwhelming margins in both houses in the 1986 legislative session. Murphy voted yes.

After the state Department of Revenue interpreted that bill to apply only to building materials, and not to equipment and machinery in the buildings, Hardison introduced a second bill on May 5, 1987, that removed all doubt.

That law was ratified Aug. 12, 1987. Murphy voted yes. There were no opposing votes.

Hardison said his action on the tax exemptions had no connection to the money he got from Murphy and Johnson.

"I was told they made a sizable contribution, and that's all I know," said Hardison, who is 71 now and semiretired. "That had no connection whatsoever. I can absolutely, unequivocally, tell you that."

In the 1980s, when the tax-exemption bills were being considered, the General Assembly's Fiscal Research Division estimated the annual state tax loss on building materials at $737,550 a year and on equipment and machinery at $200,000 to $225,000 a year. That's a total of almost $1 million a year.

Since then, the tax break has totaled a lot more than that. State and local sales taxes on building materials have increased by a third, to 6 percent; building costs have increased by about 30 percent due to inflation; and the number of hogs in North Carolina has tripled, creating a hog-house building boom.

The Murphy Amendment

Murphy also tried to protect the hog industry in 1991 when the legislature repealed the Hardison Amendments, which had prevented North Carolina from imposing environmental air and water standards that were stricter than federal regulations.

Environmentalists had fought for several years to knock down the laws and finally rallied the votes they needed in 1991. But before the bill reached the Senate floor -- while it was in the Committee on Environment and Natural Resources -- Murphy added this amendment:

"Except as required by federal law or regulations, the commission may not adopt effluent standards or limitations applicable to animal and poultry feeding operations."

The committee adopted Murphy's amendment on May 9, 1991, and the Senate passed the bill 37-0. Murphy voted yes.

Murphy said he offered the amendment because proponents of the bill had told him the legislation wasn't aimed at agriculture.

"The day that amendment was offered the Farm Bureau representative came by, with it prepared, said, "Here, Wendell,' said, "put this on them. They say it doesn't have anything to do with livestock, let's see how they like this.' I said, well, if they say it doesn't, then this amendment won't hurt the bill."

"I carried it into committee meeting, handed it to the chairman, to the sponsor of the bill, Dennis Winner. He took it back to Bill Holman, the Sierra Club lobbyist, they all agreed it was all right. And it was adopted."

Holman told a reporter that he agreed to the Murphy amendment to get the bill passed. But he said Steve Tedder, chief of the water quality section in the Division of Environmental Management "quietly pitched a fit about the Murphy amendment" and talked to some representatives about undoing it.

Murphy's amendment would have crippled the state's ability to penalize hog operations that illegally discharged waste into streams or other water supplies.

"You had no ability in a bad situation to take enforcement action, if you went by the federal process," Tedder said. "I mean, even if you found a lagoon breached going right straight to the river, all you could say is please, over the next 90 days would you please fix that hole."

In response to Tedder's concerns, the House adopted an amendment that allows the state to levy a penalty of $5,000 for illegal discharges.

The zoning exemption

It was during that same 1991 session that Murphy co-sponsored a bill that shut the door on any efforts by individual counties to place zoning restrictions on hog farms.

The legislature gave counties zoning powers in 1959. At that time, it exempted "bona fide farms," but it didn't define a bona fide farm. Murphy's law did.

A bona fide farm, according to Murphy's bill, included "production of crops, fruits, vegetables, ornamental and flowering plants, dairy, livestock, poultry ..."

"This was probably where the [case] law was going, but this removes any uncertainty," said David W. Owens, assistant director at the Institute of Government in Chapel Hill.

County managers in four of the state's top 12 hog counties said their governments had considered trying to regulate hog farms only to discover they they could not use their zoning authority to do so.

"Our understanding is under current state statutes, it pretty well tied the commission's hands," said Allen M. Hardison, the manager of Greene County.

Murphy downplays his role as a co-sponsor and says the zoning bill had no impact on the hog industry.

He said that the bill was sponsored by James D. Speed of Louisburg, chairman of the Senate agriculture committee, at the request of the agriculture department.

Speed "normally passes the bills around to any of the members who want to sign on, and it's just kind of, a lot of times, you sign bills you really don't know what they were," Murphy said. "I don't know that I knew what that one was but in retrospect that was about as harmless a thing as I've ever done."

David S. McLeod, attorney for the Department of Agriculture, said Murphy had gotten a "bum rap" on that bill. McLeod said the N.C. Farm Bureau Federation, the largest general farm organization in the state, initiated the zoning exemption.

"Mecklenburg had gotten a local act passed that authorized them to adopt their own definition of a bona fide farm," McLeod said. "And there was some concern that the other counties might do the same thing."

"A lot of farmers were having trouble with county zoning ordinances coming up. It wasn't just Mecklenburg County."

The Murphy satellite

Murphy served three terms in the House and two terms in the state Senate, ending in 1992, when he decided not to run again. He is back in Rose Hill, but his influence continues in state government and the General Assembly.

Campaign finance reports show that Murphy, members of his family and his executives have contributed about $150,000 since 1990 to local candidates, legislators, members of Congress and others, right on up to Gov. Jim Hunt.

His company is like a government satellite. For the two-year period ending last September, the company and members of the Murphy family received an average of 50 calls a week from state government, state telephone records show.

Most of the calls came from N.C. State University and the state Department of Agriculture, the agencies most likely to be dealing with his hog business. But the calls also come from all over government, including the governor's office and key legislators.

One of those calls came on the morning of July 8, 1993, from the legislative office phone of Vernon G. James, a Pasquotank farmer who was chairman of the House Agriculture Committee. That day, James' committee had voted to killed a bill that would have imposed tough sewage disposal regulations on hog farms.

Asked whether he had called about the sewage-regulation bill, James said, "I wouldn't be surprised if I did. Wendell came to see me, and he did not like that bill at all."

Another call came that year from a phone assigned to Charles W. Albertson, a Duplin County neighbor of Murphy's and chairman of the Senate agriculture committee.

The hog industry was pushing for passage of a bill to prevent state environmental regulators from being able to find out from the Department of Agriculture where hog farms are located.

Albertson called March 10, 1993, the same day the General Assembly passed the bill the industry wanted.

Albertson said he "talked with those folks pretty regularly" but didn't remember the subject of that particular call.