News: CJ Exclusives

Court Upholds Regulator Discretion

Appeals panel declines to second-guess regulatory decision

North Carolina law often grants state environmental agencies a great deal of discretion in determining whether to issue a permit for a specific activity. A recent N.C. Court of Appeals decision highlights that state courts will ordinarily not second-guess state regulators even if a different weighing of factors might produce a different result.

In late 1990s, Chambers Developments announced plans to build a regional landfill in Anson County. The company applied for the appropriate permit from the N.C. Department of Environment and Natural Resources’ Division of Waste Management. On June 1, 2000, the division granted the permit.

As might be expected, not all local residents supported Chambers’ plans. Anson County Citizens Against Chemical Toxins in Underground Storage, the Blue Ridge Environmental Defense League, and three local residents challenged the Division of Waste Management ’s decision. While an administrative law judge agreed with the opponents, on Jan. 5, 2002, the agency found that the permit had been properly issued. Anson County Citizens Against Chemical Toxins in Underground Storage and the others sought review of the decision through the courts.

North Carolina law requires that before a permit can be issued, the Department of Environment and Natural Resources must be satisfied that an applicant has “substantially complied” with state and federal regulations at its existing sites. The law does not specify what constitutes “substantially compliance” or even what factors regulators should consider in determining whether a firm has substantially complied with regulations in the past.

The opponents charged the agency’s review of Chambers’ application “was improperly conducted and that the agency’s conclusion to grant the permit was arbitrary and capricious, and otherwise contrary to law.” They claimed that the agency did not adequately consider Chambers’ compliance record in other states in determining whether to issue the permit.

The Court of Appeals, like the Superior Court before it, was not persuaded by the environmentalists’ argument and upheld granting of the permit. The appeals court noted that Philip Prete, head of the Field Operations Branch of DENR’s Solid Waste section, had testified as to what criteria he used in determining whether to approve the permit. Prete had listed at least seven specific factors he had considered.

“…under this statute, the agency has broad discretion both to determine what factors to consider and how to weigh those factors,” wrote Judge Robin Hudson for the Court of Appeals. “Although on this record, DENR could have reached other conclusions than it did, we see no violation of the statute here in DENR’s compliance review of Chambers.”

“Petitioners do not suggest that DENR acted patently in bad faith, and we see no evidence that DENR’s review process was whimsical. To the contrary, Mr. Prete articulated the factors he considered and how he weighed them relative to each other. While petitioners argue effectively that more thorough review or different weighing of factors would have been reasonable, we cannot say that DENR’s process ‘fail[s] to indicate any course of reasoning and the exercise of judgment.’”

The case is Anson Cty. Citizens Against Chem. Taxins in Underground Storage v. N.C. Dep’t of Envtl. & Natural Res., (03-1346).

Michael Lowrey is associate editor of Carolina Journal.