1. How is precedent created, and how is it applied in future cases?

2. When two separate panels of the same court hear different cases with similar issues, must the second panel follow the decision made by the first?

3. If precedent has been set by a state appellate panel, who has the power to overrule that precedent?

This case arises from an assessment of a civil penalty against two landowners for violations of the Sedimentation Pollution Control Act of 1973, the North Carolina Department of Natural Resources and Community Development (NRCD). While enlarging one of the subdivisions on the property, between October and December 1983, the owners disturbed approximately 2½acres of land by grading, cutting, and filling, in order to construct a street to provide access to residential lots. Owners were assessed civil penalties for violations of the act. The trial court concluded that although the assessment was “not effected [sic] by error of law,” the authority conferred by the statute allowed the secretary of NRCD to assess civil penal-ties in his “absolute discretion,” and thus the statute constituted a legislative grant of judicial power prohibited by the North Carolina Constitution. A divided panel¹⁴ of the North Carolina Court of Appeals upheld the trial court’s judgment. In doing so, the panel dis-regarded another panel of the North Carolina Court of Appeals that had, in a previous case with the same issues, found that the NRCD has discretion to assess fines due to guidelines and limitations that exist in the act in question. The North Carolina Supreme Court heard the appeal.