Moriarity v. Ind. Dep't of Natural Res.

113 N.E.3d 614

John E. MORIARITY and Mae E. Moriarity, Appellants (Petitioners below),

v.INDIANA DEPARTMENT OF NATURAL RESOURCES, Appellee (Respondent below).

Supreme Court Case No. 18S-PL-00296

Supreme Court of Indiana.

Argued: June 28, 2018

FILED January 3, 2019

ATTORNEY FOR APPELLANTS: William M. Horne, Horne Law LLC, Indianapolis, Indiana

ATTORNEYS FOR APPELLEE: Curtis T. Hill, Jr., Attorney General of Indiana, Patricia C. McMath, Deputy Attorney General, Indianapolis, Indiana

On Petition to Transfer from the Indiana Court of Appeals, No. 27A04-1612-PL-02731

Goff, Justice.

The Dam Safety Act gives the Indiana Department of Natural Resources (the "DNR") jurisdiction over certain dams in, on, or along streams in Indiana to protect Hoosiers' lives and property. The Moriaritys have a large pond and related dam on their land, and, since the early 2000s, the DNR has tried to exercise jurisdiction over the dam based on its determination that the dam was located in, on, or along a stream. The Moriaritys have resisted the DNR's jurisdiction and contested its findings without much success in the administrative tribunals and courts below. They now appeal to this Court, presenting us with three different questions. First, did the DNR properly exercise jurisdiction over the dam? Within this question lie issues concerning the reasonableness of the DNR's definition of the word stream and what, if any, notice the Moriaritys had of that definition. Second, did the DNR present substantial evidence supporting its classification of the dam as a high-hazard dam? Third, can the Moriaritys modify their dam to remove it from DNR's future jurisdiction? We answer each of these questions in the affirmative, largely based on our standard of review, and affirm the trial court.

Factual and Procedural History

In the late 1990s, Mae ("Becky") and John Moriarity decided to build a pond on farm land they owned in Grant County. Before excavating and building the necessary embankments, they contacted various local, state, and federal agencies and obtained what they were told were the necessary permits. By 2000, after a few years of work, the Moriaritys ended up with a fairly large pond and related dam. Their pond covered between thirty and forty acres and contained at least one hundred acre-feet of water, and parts of the dam holding back this water were taller than twenty feet.

By 2002, the DNR was aware of the pond and dam. Throughout the early 2000s, the DNR sought to have the Moriaritys correct what it considered "significant safety deficiencies" in the dam according to Indiana Code chapter 14-27-7.5 (the "Dam Safety Act" or the "Act"). See Appellee's App. Vol. V, pp. 237, 239. On May 14, 2012, the DNR issued Notice of Violation VTS-3933-DM (the "NOV") to the Moriaritys, describing numerous violations of the Dam Safety Act. The NOV ordered the Moriaritys to make certain changes to their pond and dam, imposed $35,000 in civil penalties for past violations, and provided daily penalties for any continuing violations.

The Moriaritys petitioned for administrative review of the NOV. Two administrative law judges held a multi-part fact-finding hearing over the course of several months at which the parties presented argument and evidence. At the hearing, the parties' disputes included whether the Moriaritys' dam fell within the DNR's jurisdiction to regulate dams built in, on, or along streams and, if so, whether the dam was properly classified as a high-hazard dam. After the hearing, the presiding administrative law judge issued her Findings of Fact, Conclusions of Law and Nonfinal Order generally in favor of the DNR.

The Moriaritys objected to the administrative law judge's order, and the Natural Resources Commission (the "NRC") held oral argument. The NRC then issued its Findings of Fact, Conclusions of Law and Final Order (the "Final Order") largely along the same lines as the administrative law judge's nonfinal order.¹ The NRC found that the DNR's use of the common meaning of the word stream was proper and constituted an ascertainable standard for identifying a stream, that the Moriaritys' dam was in, on, or along at least one stream, and that there was sufficient evidence to support the conclusion that the Moriaritys' dam was a high-hazard dam. The NRC ordered the Moriaritys to address the issues with their dam, giving them essentially two options: (1) have a professional engineer help safely lower the water in the pond, inspect the dam, make any necessary repairs to the dam, and refill the pond, or (2) have a professional engineer help "dewater, breach and permanently decommission the dam." See Appellants' Corrected App. Vol. 2, pp. 56–57, ¶¶ 1–5. The NRC also ordered the Moriaritys to pay civil penalties totaling $10,000 for past violations of the Dam Safety Act without imposing daily penalties for continuing violations. Id. at 57, ¶ 6.

The Moriaritys sought judicial review of the Final Order, and the trial court affirmed. It ordered the Moriaritys to take the specific action ordered by the DNR, quoting some paragraphs from the NRC's final order and summarizing others. The Moriaritys filed a motion to correct error, which was later deemed denied.

The Moriaritys then appealed to the Court of Appeals. Moriarity v. Ind. Dep't of Nat. Res. , 91 N.E.3d 642 (Ind. Ct. App. 2018). They raised many of the same issues as before the NRC and trial court, and the Court of Appeals affirmed. Id. at 646–49. They also challenged the Final Order to the extent that it did not expressly allow them to modify their pond and dam so that it would fall outside DNR's jurisdiction, but the Court of Appeals found this argument waived. Id. at 649.

We granted the Moriaritys' petition to transfer, thereby vacating the Court of Appeals opinion. See Ind. Appellate Rule 58(A).

Standard of Review

The Moriaritys challenge the trial court's order upholding the DNR's administrative decision. Under Indiana's Administrative Orders and Procedures Act ("AOPA"), we may set aside an agency's action if it is:

(1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; (2) contrary to constitutional right, power, privilege, or immunity; (3) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right; (4) without observance of procedure required by law; or (5) unsupported by substantial evidence.

Ind. Code § 4-21.5-5-14(d) (2018). The Moriaritys bear the burden of showing us that the DNR's action is invalid. I.C. § 4-21.5-5-14(a).

With AOPA in mind, we note that "[o]ur review of agency action is intentionally limited, as we recognize an agency has expertise in its field and the public relies on its authority to govern in that area." Ind. Alcohol and Tobacco Comm'n v. Spirited Sales, LLC , 79 N.E.3d 371, 375 (Ind. 2017) (quoting West v. Office of Ind. Sec'y of State , 54 N.E.3d 349, 352–53 (Ind. 2016) ). We do "not try the facts de novo" but rather "defer to the agency's findings if they are supported by substantial evidence." Id. "On the other hand, an agency's conclusions of law are ordinarily reviewed de novo." Id. While "[w]e are not bound by the [agency's] conclusions of law, ... ‘[a]n interpretation of a statute by an administrative agency charged with the duty of enforcing the statute is entitled to great weight, unless this interpretation would be inconsistent with the statute itself.’ " Chrysler Grp., LLC v. Review Bd. of Ind. Dep't of Workforce Dev. , 960 N.E.2d 118, 123 (Ind. 2012) (third alteration in original) (quoting LTV Steel Co. v. Griffin , 730 N.E.2d 1251, 1257 (Ind. 2000) ). See also Nat. Res. Comm'n v. Porter Cty. Drainage Bd. , 576 N.E.2d 587, 588 (Ind. 1991) (stating that "the interpretation of a statute by the administrative agency charged with its enforcement is entitled to great weight"). "In fact, ‘if the agency's interpretation is reasonable, we stop our analysis and need not move forward with any other proposed interpretation.’ " Jay Classroom Teachers Ass'n v. Jay Sch. Corp. , 55 N.E.3d 813, 816 (Ind. 2016) (citation omitted). Like many cases involving judicial review of agency action, the outcome here turns on this standard of review.

Despite the dissent's resolute arguments to the contrary, applying this standard of review comports with precedent and our prior decision in NIPSCO Industrial Group v. Northern Indiana Public Service Co. , 100 N.E.3d 234, 241 (Ind. 2018). Rather than effecting a sea change in NIPSCO , we applied a specific, controlling portion of the same standard we recite today. Both in NIPSCO and here, we note that we ordinarily review legal questions addressed by an agency de novo. Id. In NIPSCO , that was our primary focus. Id. We did not continue our discussion of the standard of review to address an agency's interpretation of the relevant statute because there was no need; we found the agency's interpretation contrary to the statute itself and, thus, necessarily unreasonable. Compare id. at 237–38, 242, with Jay Classroom Teachers Ass'n , 55 N.E.3d at 816 (instructing that we accept an agency's interpretation only if it is reasonable), and Chrysler Grp., LLC , 960 N.E.2d at 123 (providing that an agency's interpretation that is inconsistent with the statute itself does not receive "great weight"). Here, on the other hand, we continue our discussion and recite the full standard because in Part I.A. below we find the DNR's interpretation reasonable and not inconsistent with the Dam Safety Act. Differences in the respective agencies' statutory interpretations in NIPSCO and here lead us to focus on different parts of the standard of review.

In both cases, however, the whole standard remains the same.

Taking a step back from the details of these cases, this standard of review does not abdicate any of our duties, diminish the role of the judiciary, or cast doubt on any rules of statutory construction by implication. This standard entails a fresh look at the dispute on appeal, including the...