Rollingwood Acres, Inc. v. Rhode Island Department of Environmental Management

ROLLINGWOOD ACRES, INC. et al. v. RHODE ISLAND DEPARTMENT OF ENVIRONMENTAL MANAGEMENT, et al.

C.A. No. PC-2012-6341

Superior Court of Rhode Island

August 26, 2013

Providence County Superior Court

For Plaintiff: Michael A. Kelly, Esq.; Joelle C. Sylvia, Esq.

For Defendant: Marisa A. Desautel, Esq.

DECISION

HURST J.

This matter is before the Court on appeal from a decision of the Chief Hearing Officer of the Administrative Adjudication Division (AAD) of the Rhode Island Department of Environmental Management (DEM). Rollingwood Acres, Inc. (Rollingwood), Smithfield Peat Co., Inc. (Smithfield Peat) and Smithfield Crushing Co., LLC (Smithfield Crushing) (collectively, "Plaintiffs") appeal the decision which denied Plaintiffs' motion for recovery of litigation expenses pursuant to the Rhode Island Equal Access to Justice Act (EAJA), codified at G.L. § 42-92-1, and Rule 20.00 of the Administrative Adjudication Division's Rules of Practice and Procedure. Jurisdiction is pursuant to Rhode Island General Laws 1956 § 42-35-15.

I Facts & Travel

Rollingwood Acres, a Rhode Island business corporation with its principal place of business at 295 Washington Highway, Smithfield Rhode Island, is the owner of property located at 961 Douglas Pike, Smithfield, Rhode Island, identified as Town of Smithfield's Assessor's Plat 46, Lots 71 and 76 (Property). (Pls.' Ex. A, In re Rollingwood Acres, Inc./Smithfield Peat Co., Inc./Smithfield Crushing Co., LLC, AAD No. 06-004/WRE, Rhode Island Department of Environmental Management Administrative Adjudication Division Decision, (hereinafter, "AAD Decision"), at 39 ¶ 2.) At the Property, Smithfield Peat operates a leaf and yard waste composting facility, and Smithfield Crushing operates a rock crushing facility. Id. at 39 ¶¶ 5, 7.

On or about May 4, 1982, DEM issued a freshwater wetlands permit to Smithfield Peat and John D. Despres, authorizing Smithfield Peat to alter freshwater wetlands on the site by excavating, filling, and grading within fifty feet of an unnamed swamp for the purpose of peat removal, construction of two storm water detention basins, installation of a sewer line, and construction of a road. Id. at 39 ¶ 8. Smithfield Peat constructed a drainage structure under that approval, which consisted of two basins, a control structure, a 15-inch pipe, and two catch basins. Id. at 40 ¶ 13. To obtain and install this approved drainage structure, the Plaintiffs paid more than $100, 000 over the course of more than two years. Id. at 40 ¶¶ 14-15.

From 1996 to 1997, DOT engaged in a project to improve Route 7 in Smithfield immediately adjacent to Plaintiffs Property. Id. at 40 ¶ 11. Prior to the DOT improvements, Plaintiffs had a properly functioning drainage structure, permitted by DEM. Id. at 40 ¶ 12. Although the DOT plan for improvements to Route 7 did not show any changes or alterations to Plaintiffs' drainage structure, and although Plaintiffs did not give permission to DOT to alter the drainage structure, DOT removed Plaintiffs' drainage structure. Id. at 40 ¶¶ 16, 18-19. The new structure, altered without the knowledge of Plaintiffs or permission from DEM, caused the system to discharge increased sediment— that is, caused turbidity—into the nearby unnamed stream. Id. at 40 ¶¶ 21-23.

On or around December 3, 1996, Bill Riccio of the DOT made a complaint to DEM that Plaintiffs' drainage structure was causing sedimentation in the nearby unnamed stream. Id. at 41 ¶ 24. Sean Carney, a representative of DEM conducted inspections of the Plaintiffs' property and adjacent area on January 9, 1997 and January 21, 1997. Id. at 41 ¶ 25. During that inspection, Carney found new culvert pipes which did not conform with Plaintiffs' permit. Id. at 4-5.

On June 3, 1997, DEM issued a Notice of Intent to Enforce (NOIE) for sediment laden water to an unnamed stream. Id. at 41 ¶ 26. Nine years later, on a follow up inspection on another complaint, Peter Naumann went to the Site of the Plaintiffs' drainage structure, which was the subject of the prior NOIE. Id. at 30. During inspections on February 9 and 10 of 2005, and April 4, 2006, Representatives of DEM took samples of water discharge to test for turbidity. Id. at 41 ¶¶ 28-29.

The standard for a violation under the Water Quality Regulations is for turbidity that is in excess of 10 NTU over natural background. Id. at 41 ¶ 30. Although the regulations define "background" as the water quality upstream of all point and nonpoint sources of pollution, DEM failed to take any upstream samples. Id. at 41 ¶ 33. The water samples were not performed in conformance with the water quality regulations or statutes, and they could therefore not be used to prove a turbidity violation. Id. at 41 ¶¶ 33-34.

On November 6, 2006, DEM issued a notice of violation, alleging that Plaintiffs had violated Sections 46-12-5(a) and (b) of the Rhode Island Water Pollution Act; Rules 9(A), 11(B), and 13(A) of the DEM's Water Quality Regulations; Section 46-12.5.1-3 of the Rhode Island Oil Pollution Control Act; Sections 6(a), 12(b)(2), and 12(b)(3) of the DEM's Oil Pollution Control Regulations; and Rule 31(a)(1)(vii) of the DEM's Regulations for the Rhode Island Pollution Discharge Elimination System. (Pls.' Ex. F, In re Rollingwood Acres, Inc./Smithfield Peat Co., Inc./Smithfield Crushing Co., LLC, No. OC&I/Water Pollution 06-07, Rhode Island Department of Environmental Management Office of Compliance and Inspection, (hereinafter, "Notice of Violation"), at 4-5.)

Plaintiffs appealed the NOV to the Administrative Adjudication Division of DEM. After multiple hearings in 2011 and 2012, the Chief Hearing Officer issued a decision on June 27, 2012, dismissing a substantial portion of the allegations against Plaintiffs, and all but approximately 7% of the fine imposed against Plaintiffs. (Pls.' Ex. A, In re Rollingwood Acres, Inc./Smithfield Peat Co., Inc./Smithfield Crushing Co., LLC, AAD Decision.) In that Decision, the Chief Hearing Officer further concluded that the DEM had failed in its burden of proving any violation of the Rhode Island Water Pollution Act or the DEM's Water Quality Regulations.

On July 27, 2012, Plaintiffs filed a request for attorney's fees and costs under G.L. § 42-91-1 and Rule 20.00 of the AAD Rules of Practice and Procedure. On September 18, 2012, the Hearing Officer issued a decision denying Plaintiffs' request for attorneys fees and costs. (Pls.' Ex. L, In re Rollingwood Acres, Inc./Smithfield Peat Co., Inc./Smithfield Crushing Co., LLC, AAD No. 06-004/WRE, Rhode Island Department of Environmental Management Administrative Adjudication Division, (hereinafter, "Litigation Expenses Decision"), at 5.) That Decision was based entirely on the conclusion that Plaintiffs were not a "party" within the meaning of the EAJA. Id. This Appeal followed.

II Standard of Review

Under § 42-35-15, "[a]ny person, . . . who has exhausted all administrative remedies available to him or her within [an] agency, and who is aggrieved by a final order in a contested case is entitled to judicial review" by the Superior Court. Under this scheme, the Court may affirm the decision of the agency or remand the case for further proceedings, or it may reverse or modify the decision if substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions or decisions are:

(1) In violation of the constitutional or statutory provisions;

(2) In excess of the statutory authority of the agency;

(3) Made upon unlawful procedure;

(4) Affected by other error or law;

(5) Clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; or

(6) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

Sec. 42-35-15.

The scope of Superior Court's review of an agency decision has been characterized as "an extension of the administrative process." R.I. Pub. Telecomms. Auth. v. RISLRB, 650 A.2d 479, 484 (R.I. 1994). As such, "judicial review is restricted to questions that the agency itself might properly entertain." Id. (citing Envtl. Scientific Corp. v. Durfee, 621 A.2d 200, 208 (R.I. 1993)). "In essence, if 'competent evidence exists in the record, the Superior Court is required to uphold the agency's conclusions.'" Auto Body Ass'n of R.I. v. State of R.I. Dep't of Bus. Regulation, 996 A.2d 91, 95 (R.I. 2010) (quoting Envtl. Scientific Corp., 621 A.2d at 208). Accordingly, this Court defers to the administrative agency's factual determinations provided that those determinations are supported by legally competent evidence. Arnold v. R.I. Dep't of Labor & Training Bd. of Review, 822 A.2d 164, 167 (R.I. 2003). Legally competent evidence is "some or any evidence supporting the agency's findings." Auto Body Ass'n of R.I., 996 A.2d at 95 (quoting Envtl. Scientific Corp., 621 A.2d at 208).

DEM utilizes a two-tier review process. Under that process, grievances are heard first by a hearing officer, who issues a recommended decision to the Director of the DEM. Then, the Director considers the decision, along with any further briefs or arguments, and renders his or her own decision. This two-step procedure has been likened to a funnel. Envt'l Scientific Corp., 621 A.2d at 207-08. The hearing officer, at the first level of review, "sits as if at the mouth of the funnel" and analyzes all of the evidence, opinions, and issues. Id. The DEM Director, stationed at the "discharge end" of the funnel, the second level of review, does not receive the information considered by the hearing officer first hand. Id.

Our Supreme Court has held, therefore, that the "further away from the mouth of the funnel that an administrative official is . . . the more deference should be...