N.C. Dep't of Envtl. Quality v. TRK Dev., LLC

259 N.C.App. 597

816 S.E.2d 232

N.C. DEPARTMENT OF ENVIRONMENTAL QUALITY, DIVISION OF WASTE MANAGEMENT, Petitioner,

v.TRK DEVELOPMENT, LLC, Respondent.

No. COA17-882

Court of Appeals of North Carolina.

Filed: May 15, 2018

Attorney General Joshua H. Stein, by Assistant Attorney General T. Hill Davis, III, for petitioner.

Hartsell & Williams, PA, by Andrew T. Cornelius, Concord, and Austin "Dutch" Entwistle III, for respondent.

DAVIS, Judge.

This case requires us to determine whether the North Carolina Department of Environmental Quality ("DEQ") was properly estopped from enforcing the Solid Waste Management Act against a developer based on the developer's prior receipt of an erosion and sedimentation control permit from DEQ. Because we conclude that both the administrative law judge and the trial court erred in their application of the equitable estoppel doctrine in favor of the developer on these facts, we reverse.

Factual and Procedural Background

At all times relevant to this appeal, TRK Development, LLC ("TRK") owned three adjoining parcels of land in Concord, North Carolina. In April 2014, TRK sought to make a structural addition to a warehouse located on the first parcel. The planned addition required that a substantial amount of soil be excavated from the second parcel. Prior to beginning construction, TRK hired surveyors, an architect, and a civil engineer to prepare an erosion and sedimentation control plan to be submitted to DEQ for approval.¹

On 18 June 2014, Dale Fink, the civil engineer hired by TRK, submitted the completed erosion and sedimentation control plan to Tamara Eplin, an assistant regional engineer in the Land Quality Section of DEQ.² Included in the plans were topographic maps containing the results of soil boring testing conducted by TRK at the proposed construction site. The borings indicated the presence of trash in multiple locations beneath the surface of the soil TRK intended to excavate.

The Land Quality Section approved TRK's erosion and sedimentation control plan by issuing a Letter of Approval and Certificate of Plan Approval on 26 June 2014. The Letter of Approval contained the following language:

If, following the commencement of this project, the erosion and sedimentation control plan is inadequate to meet the requirements of the Sedimentation Pollution Control Act of 1973 ... this office may require revisions to the plan and implementation of the revisions to insure compliance with the Act.

Acceptance and approval of this plan is conditioned upon your compliance with Federal and State water quality laws, regulations, and rules. In addition, local city or county ordinances or rules may also apply to this land-disturbing activity. This approval does not supersede any other permit or approval.

(Emphasis added.)

On 18 August 2014, Fink submitted an amended erosion and sedimentation control plan to Eplin that was specifically for the "spoils area" where excavated soil would be placed. DEQ approved TRK's second erosion and sedimentation control plan on 26 August 2014 by issuing another Letter of Approval and Certificate of Plan Approval. The 26 August Letter of Approval contained the same above-quoted language as the 26 June Letter of Approval.

After receiving these approvals, TRK began construction on the warehouse addition in September 2014. On 18 September 2014, an inspector with the Land Quality Section conducted an inspection of the construction site and determined that it was in compliance with the Sedimentation Pollution Control Act of 1973.³

On 23 November 2014, DEQ received an anonymous letter stating, in pertinent part, as follows:

In the area of Ramdin Court and Cascade Drive in Concord, NC there seems to be some activity taking place that basically is leaving the area looking like a landfill. ... There is some sort of grading taking place that is uncovering what appears to be a massive area of buried trash and garbage. There is all kind of trash and also rank odors. It has been spread across a large area near a creek and near power lines. ... We would appreciate it if you can help look into this matter. If this is not a matter you are responsible for, please forward it [to] the appropriate department. You are the only place I could think of that handles this sort of thing.

In response to the letter, Teresa Bradford, an environmental senior specialist working in the Solid Waste Section of DEQ's Division of Waste Management, conducted a site inspection of the construction area on 3 December 2014. During the inspection, she observed "waste being moved from one area to the next[.]" Bradford spoke with TRK's main contractor, Brandon Cornelius, who told her that TRK possessed the necessary permits for its construction project. Cornelius showed Bradford one of the Certificates of Plan Approval that TRK had received from the Land Quality Section of DEQ. Bradford explained that this approval had been given "for erosion and sediment control measures only" and not "to dispose [of] solid waste on the [third] parcel." While at the site, Bradford also spoke by phone with Rishi Kapadia, a member manager of TRK. She advised Kapadia that TRK's permit "was approval for erosion control measures only" and that she "wasn't aware of any solid waste permit that would allow for the disposal."

On the following day, Bradford informed Kapadia that TRK had not been issued a permit allowing it to dispose of solid waste on its property. She further told Kapadia that—for this reason—the waste that had already been excavated would have to be taken to a permitted landfill and that, similarly, "any waste continuing to be removed from the original location would have to be disposed of at [a permitted] landfill." Kapadia responded that doing so would cost "millions of dollars."

Bradford conducted a second site inspection on 16 December 2014 and saw that waste was continuing to be disposed of on the third parcel. She further observed that the waste area had increased in size since her first inspection from one acre to approximately 1.7 acres and from ten feet in height to between twenty and thirty feet.

On 29 December 2014, DEQ issued a Notice of Violation to TRK, which stated that TRK was "operating a non-conforming solid waste disposal site/open dump" in violation of four separate North Carolina Administrative Code regulations related to the disposal of solid waste.⁴ The Notice of Violation also provided that TRK had sixty days in which to come into compliance with these regulations by taking certain specified actions, including that it refrain from disposing of any additional waste on TRK's third parcel and that it remove "all solid waste from the site including any that may be buried and properly dispose of it in a facility permitted by the Division of Waste Management."

DEQ received no response from TRK, and Bradford conducted another site inspection on 29 January 2015. During this inspection, she "observed that the [waste] area had increased in height and also that there was an additional area to the east of the disposal area that had been excavated and waste was being placed into the excavated area."

Following this inspection, a meeting was scheduled at the DEQ Mooresville Regional Office between Kapadia, Bradford, and Charles Gerstell, another environmental senior specialist in the Solid Waste Section. At the meeting, Kapadia reiterated his view that TRK had already obtained the necessary permits for its construction project. Bradford informed Kapadia that "the only solution was removal of the waste, but [that] the section would work with him on technical assistance for removal and disposal options and ... a time line for a cleanup for the site."

On 27 February 2015, TRK sent a letter to DEQ responding to the Notice of Violation. The letter stated, in pertinent part, as follows:

In response to your notice sent December 29, 2014, TRK Development respectfully disagrees with [DEQ's] assessment that site work ... involves the excavation, transportation and/or disposal of solid waste. We believe that that material being transported consists of mostly soil/dirt and is in line with the definition of spoils as stated in the approved plans and Certificate of Plan Approval issued by [DEQ]. ...

We propose that we will leave the spoils in place as is, seed and mulch the area and add additional security measures such as a gate to secure the site.

DEQ issued a Notice of Continuing Violation to TRK on 17 March 2015 along with an accompanying letter informing TRK that it had thirty days in which to come into compliance with the applicable regulations. After the thirty-day deadline passed, Bradford returned to the site on 12 May 2015 with four other DEQ employees to conduct soil sampling. The laboratory results of this sampling indicated the presence of both semi-volatile organic compounds and metals (including arsenic and aluminum) in the soil at levels hazardous to human health.

On 23 July 2015, DEQ issued a Compliance Order With Administrative Penalty to TRK "because of certain violations of the North Carolina Solid Waste Management Act (N.C. General Statute 130A, Article 9) and of the North Carolina Solid Waste Management Rules (15A N.C. Administrative Code 13B) which implements [sic] the Act." The compliance order alleged violations of the same four regulations that had been listed in the Notice of Violation and Notice of Continuing Violation previously issued to TRK by DEQ. It also assessed an administrative penalty of $14,287.13.

TRK filed a petition for a contested case hearing with the Office of Administrative Hearings on 8 September 2015. Following a hearing, Administrative Law Judge ("ALJ") David F. Sutton issued a final decision on 11 July 2016 that "overruled and reversed" the 23 July 2015 compliance order issued by DEQ. In his decision, the ALJ determined, inter alia , that TRK was, in fact, a solid waste generator and did not come within the exception set out in the Solid Waste Management Act for "the management...