Government agencies often have the legal authority to impose fines for violations of agency regulations. It’s also not uncommon for interest groups to have an interest in how such proceedings turn out.

A case recently decided by the N.C Court of Appeals takes this a step further: An issue on appeal is the propriety of interest groups presenting evidence, even at times jointly with the Department of Environment and Natural Resources, in support of the department’s proposed fines. While a majority of the appeals court’s judges held the intervention by the groups proper, the case probably will be heard by the N.C. Supreme Court.

Holly Ridge Associates owns a substantial piece of land in Onslow County. In 1997, the company began constructing a ditch system on 34 acres of its land. By early 1999, the Department of Environment and Natural Resources had determined that ditches violated provisions of the Sedimentation Pollution Control Act. In July 1999 the department fined Holly Ridge $32,100. An additional fine of $118,000 was assessed in January 2000.

The appeal process of an administrative agency decision begins with a hearing before an administrative law judge. The administrative law judge ruled that two groups, the North Carolina Shellfish Growers Association and the North Carolina Coastal Federation, should intervene in the case. At the hearing on the proposed fine, both groups presented evidence, including evidence with the state.

The judge’s decision to uphold reduced penalties against Holly Ridge was adopted by the agency and upheld by a superior court judge.

Holly Ridge appealed the fines to the N.C. Court of Appeals, contending in part that the judge’s decision to allow the two groups to intervene was inappropriate.

Judge Robin Hudson, writing for a majority of the appellate court, rejected Holly Associate’s argument. Hearing rules specify, “The administrative law judge shall allow intervention upon a proper showing under this Rule, unless the administrative law judge finds that the movant’s interest is adequately represented by one or more parties participating in the case . . .” (emphasis in decision).

The judge found that the interests of the Shellfish Growers Association and Coastal Federation were not adequately represented by the DENR, a ruling endorsed by Hudson.

“…Under the facts here, we conclude that intervenors’ interests in the waters affected by HRA’s discharge activities are discrete and particular to certain members of the intervenor organizations, who live near, or who visit, fish or shellfish in the affected waters, and are not merely a generalized public interest,” she wrote.

Judge Barbara Jackson dissented from the majority holding.

“The legislature has delegated to the several executive branch agencies the authority to impose civil penalties for a variety of purposes. That delegation properly rests with an agency of the State, not with a private citizen or association,” she wrote.

“By allowing the Shellfish Growers and the Coastal Federation to intervene in this matter, the ALJ effectively deputized both entities with the authority of the State and enabled both of them to act as private prosecutors. I cannot believe that this was the legislature’s intention in creating the various schemes for assessment of civil money penalties that flow throughout State government, more particularly, the Sedimentation Pollution Control Act, under which Petitioner was assessed. Therefore, I would reverse the trial court.”

Because of Jackson’s dissent, the N.C. Supreme Court must hear the case if Holly Ridge Associates further appeal.

The case is Holly Ridge Assoc. v. NC DENR, (03-1686)

http://www.aoc.state.nc.us/www/public/coa/opinions/2006/031686-1.htm

Michael Lowrey is associate editor of Carolina Journal.