Application of Union Carbide Corp., 13104

• Decision Date: 22 July 1981
• Docket Number: No. 13104,13104
• Parties: In the Matter of the Application of UNION CARBIDE CORPORATION for an Exploration Permit in Craven Canyon, Fall River County. Dr. James C. ZANDER, Deborah Grosser, Bruce Bornstein, Margaret Bornstein, Ron Eastep, and The Black Hills Alliance, Appellants, v. SOUTH DAKOTA STATE CONSERVATION COMMISSION, South Dakota Division of Conservation, and Union Carbide Corporation, Appellees.
• Court: South Dakota Supreme Court

Page 753

308 N.W.2d 753

In the Matter of the Application of UNION CARBIDE

CORPORATION for an

Exploration Permit in Craven Canyon, Fall River County. Dr.

James C. ZANDER, Deborah Grosser, Bruce Bornstein,

Margaret Bornstein, Ron Eastep, and The

Black Hills Alliance, Appellants, v. SOUTH DAKOTA STATE CONSERVATION COMMISSION, South Dakota

Division of Conservation, and Union Carbide

Corporation, Appellees.

No. 13104.

Supreme Court of South Dakota.

Argued Jan. 13, 1981.

Decided July 22, 1981.

Andrew B. Reid and Phyllis R. Girouard, Piedmont, for appellants.

Roxanne Giedd, Asst. Atty. Gen., Pierre, for appellee State of South Dakota; Mark V. Meierhenry, Atty. Gen., Pierre, on the brief.

Thomas J. Welk of Boyce, Murphy, Mc Dowell & Greenfield, Sioux Falls, for appellee Union Carbide Corp.

MORGAN, Justice.

This appeal stems from an administrative action taken by the South Dakota Conservation Commission (Commission) granting an exploration permit to Union Carbide Corporation (Union Carbide) to explore for U-308 (uranium ore) in Craven Canyon in Fall River County, South Dakota. Originally, the appeal was filed in the circuit court for Fall River County but venue was changed, over appellants' objections, to the circuit court for Hughes County upon motion by appellees. Thereafter, the Sixth Circuit Court for Hughes County entered judgment affirming Commission's action. We reverse and remand.

The issues before us on this appeal relate to procedural actions taken by Commission under the provisions of SDCL ch. 1-26, the South Dakota Administrative Procedures Act (SDAPA), and Chapter 12:04:01 of Commission's rules (ARSD). Commission is a nine-member body created pursuant to SDCL 38-7-3 with a chairman designated by Commission annually. Commission is administered under the direction and supervision of the Division of Conservation of the Department of Agriculture (Division), and the director thereof (Director). SDCL 38-7-3.1. Commission, however, retains quasi-judicial, quasi-legislative and other functions which are exercised independently of Director. Id.

Initially, Union Carbide filed its application on August 8, 1979. Additional filings of supplemental information required by statute and Commission rules were made as late as August 13, 1979.

A notice of final Commission action was mailed to the Hot Springs Star, a legal weekly newspaper in Hot Springs, South Dakota, on August 20, 1979. On August 27, 1979, a written notice of hearing was sent to Union Carbide. On August 29, 1979, the Star published the notice. Both notices set the final Commission action for September 6, 1979, in Pierre, South Dakota.

On August 31, 1979, counsel for appellants first reviewed a portion of Commission file on Union Carbide's permit application. They were not, however, allowed to view the detailed Forest Service Environmental Assessment Report or the project maps, which were withheld by Commission as confidential papers.

Shortly before the meeting began on September 6, 1979, appellants' counsel filed and served upon Division several petitions including a petition to initiate a contested case proceeding under Commission rules, or in the alternative, to intervene, and a petition for declaratory ruling. Appellants served Commission and Union Carbide with the papers at the commencement of the meeting. After some rather confusing discussion of the best procedural step to take, including the possibility of appointing a hearing examiner, Commission placed the matter on the table over the noon recess. When the hearing resumed the issue of timeliness of the filings was raised. Commission, by its own motion, ruled that they were not timely and proceeded to hearing on the application. Counsel for appellants was permitted some degree of cross-examination. The meeting terminated when one of Commission's members called for the question. After the motion for question was passed debate was stopped. A vote was then taken on whether to grant the permit and the motion carried.

Appellants immediately served appellees with a notice of appeal that was venued in the circuit court for Hughes County. They appealed the denial of their petition to intervene and all other related petitions filed. The circuit court dismissed the appeal for the reason that it was not from a final agency action. The dismissal was conditioned as follows:

That the Black Hills Alliance is a party aggrieved and would have a right to file an appeal to any action that they feel aggrieved by as a result of action by the Conservation Commission;

Further, that the Commission is directed to serve a copy of any decision it reaches upon counsel for appellants;

Further, that counsel for appellants are authorized, if they desire, to file proposed Findings of Fact and Conclusions of Law for consideration by the Commission.

No appeal from this order was taken by any of the parties.

Appellants filed proposed findings of fact and conclusions of law with Commission. At its October 4, 1979, meeting, however, Commission rejected appellants' findings of fact and conclusions of law. After adopting other findings of fact and conclusions of law, Commission ordered issuance of the temporary permit to Union Carbide.

Appellants again filed an appeal in circuit court, this time from Commission's final action. This appeal was filed in Fall River County. Union Carbide filed an application for change of venue to Hughes County which the circuit court granted. The Sixth Judicial Circuit Court, Hughes County, heard arguments on the merits of the appeal and issued a memorandum decision. It also issued an order and judgment stating,

(T)hat the State Conservation Commission's decision to deny Appellant's Petition to initiate a contested case, or in the alternative, to intervene, Petition for declaratory ruling, and various other Motions, and, the Commission's decision to grant Union Carbide Corporation on (sic) exploration permit, are affirmed for the grounds and reasons stated in my Memorandum Decision of March 18, 1980.

This court reviews "the record of the administrative agency in the same manner as the circuit court, unaided by any presumption that the lower court's decision is correct." Matter of South Lincoln Rural Water System, 295 N.W.2d 743, 745 (S.D.1980).

The reviewing court must first decide whether the agency acted within the scope of its statutory authority. If it has, the court must then determine whether its actual choice was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law." The final inquiry is whether the agency followed the necessary procedural requirements. During the course of this inquiry, the reviewing court must be satisfied that the agency not only employed procedures which conform to the procedural requirements of the Administrative Procedure Act, but which also conform to the agency's own internal procedures.

Oglala Sioux Tribe of Indians v. Andrus, 603 F.2d 707, 713 (8th Cir. 1979) (citations omitted). "(J)udicial review of an administrative decision is limited in scope. Such a review is confined to a review of the record made at the administrative level." South Dakota v. Volpe, 353 F.Supp. 335, 338-339 (D.S.D.1973).

Of the several issues raised by appellants we find two ¹ to be crucial: (1) Was the September 6, 1979, hearing a contested case without a filing of the petition for contested case under ARSD 12:04:06:08? We hold that it was. (2) Did appellants make timely application for intervention? We hold that they did.

Appellants contend that under Commission's rules a petition for contested case under ARSD 12:04:06:08 is required, and that Division, having failed to file such a petition, Commission was without authority to act on the application at the September 6, 1979, hearing. Commission concluded that it had jurisdiction, that the hearing was a license proceeding and that the provisions of SDCL ch. 1-26 concerning contested cases had been complied with.

SDCL 1-26-1(2) defines "contested case" to mean "a proceeding including but not restricted to ... licensing, in which the legal rights, duties, or privileges of a party are required by law to be determined by an agency after an opportunity for hearing(.)" Licensing is the administrative process of granting a license. SDCL 1-26-1(4). SDCL 1-26-1(3) defines "license" to include "the whole or part of any agency permit ... required by law (.)" "When the grant ... of a license is required to be preceded by notice and opportunity for hearing, or an applicant, a party or an agency requests a hearing, the provisions of this chapter concerning contested cases apply." SDCL 1-26-27 (emphasis added).

In essence, ARSD 12:04:06:08 provides that, in order for any interested person to initiate a contested case proceeding, a written petition shall be filed in the office of Director. Director must issue notice of contested cases and mail it to the parties. ARSD 12:04:06:01.

We first note that Commission rules cannot expand the scope of the statutes. ² Furthermore, we have to read the rules to give maximum effect to all provisions whenever possible. ³ The trial court upheld Commission's determination that the contested case provisions had been complied with under the SDAPA and Commission's rules noting that ARSD 12:04:06:01 provides that mailing of a petition for contested case (under ARSD 12:04:06:08) and order for hearing is sufficient notice in lieu of the notice by Director. It further held that ARSD 12:04:06:08 is to be used by parties seeking intervention and ARSD 12:04:06:01 to be used by Director when no intervention is sought.

We agree that the proceeding was properly before Commission as a contested case but we disagree with the trial court's reasoning on the use of the petition under ARSD 12:04:06:08. This rule simply provides a vehicle by which any person can petition to bring before Commission some matter which is not by law a contested case. The "in lieu" provision of ARSD...