Com. ex rel. State Water Control Bd. v. Appalachian Power Co.

• Decision Date: 05 December 1989
• Docket Number: No. 1274-88-3,1274-88-3
• Citation: 386 S.E.2d 633,9 Va.App. 254
• Court: Virginia Court of Appeals
• Parties: COMMONWEALTH of Virginia, ex rel. STATE WATER CONTROL BOARD v. APPALACHIAN POWER COMPANY. Record

Page 633

386 S.E.2d 633

9 Va.App. 254

COMMONWEALTH of Virginia, ex rel. STATE WATER CONTROL BOARD v. APPALACHIAN POWER COMPANY.

Record No. 1274-88-3.

Court of Appeals of Virginia.

Dec. 5, 1989.

Rehearing En Banc Granted Jan. 5, 1990.

John R. Butcher, Asst. Atty. Gen. (Mary Sue Terry, Atty. Gen., on briefs), for appellant.

Joseph M. Spivey, III (William L. Rosbe; Hunton & Williams, Richmond, on brief), for appellee.

Present: KOONTZ, C.J., and COLEMAN and HODGES, ^* JJ.

COLEMAN, Judge.

The issue on this appeal is whether an administrative agency, the State Water Control Board (the SWCB), followed the statutory requirements when it enacted two of its water control standards. On October 7, 1987, the SWCB attempted to amend its standards to prohibit the use of "chlorine or other halogen compounds" by any facility that discharges at least 20,000 gallons of effluent per day into state waters inhabited by endangered or threatened species of aquatic life, and to designate a 121 mile section of the Clinch River as an essential or critical habitat for six species of endangered or threatened freshwater mussels indigenous to the Clinch, namely: the Appalachian monkeyface pearly, the birdwing pearly, the fine-rayed pigtoe pearly, the green blossom pearly, the pink mucket pearly, and the shiny pigtoe pearly.

The Appalachian Power Company (APCo), which operates a steam electric power plant within the designated area of the Clinch River near Carbo, Virginia, intermittently uses chlorine as an anti-biofouling agent, appealed the adoption of the amended standards to the Circuit Court of the City of Roanoke pursuant to Code §§ 62.1-44.24 and 9-6.14:16. The circuit court ruled that the standards were invalid because the SWCB failed to hold an evidential hearing before amending the water quality standards as required by Code § 9-6.14:8. The SWCB appeals that ruling, contending that it satisfied the statutory requirement for an evidential hearing by providing APCo an opportunity to request an evidential hearing; alternatively, SWCB contends that APCo was not harmed by the failure to hold an evidential hearing. For the reasons that follow, we affirm the trial court's decision.

The SWCB is charged with the duties to "protect existing high quality state waters and restore all other state waters to such condition of quality that any such waters will permit all reasonable public uses and will support the propagation and growth of all aquatic life ... which might reasonably be expected to inhabit them." Code § 62.1-44.2(1). To enforce that policy, the SWCB is empowered to establish standards of water quality, Code § 62.1-44.15(3a), and to adopt regulations necessary to enforce them, Code § 62.1-44.15(10). As part of a mandated triennial review of its standards, Code § 62.1-44.15(3a), the SWCB proposed to amend its water quality standards restricting the discharge of chlorine by prohibiting discharges exceeding 20,000 gallons per day into waters containing trout or threatened or endangered species. The pearly shelled mussels have been classified endangered under federal and state regulations. 50 C.F.R. § 17.11 (1988); VR 325-01-1, § 13(6). Studies conducted by the SWCB had shown that chlorine discharged into the Clinch River is highly toxic to the endangered mussels and that virtually no mussels exist in the Clinch River for approximately 20 miles downstream from the Carbo plant. The SWCB was further concerned about water quality standards from chlorine discharges due to a number of chlorine spills which have occurred on rivers throughout Virginia, causing massive fish kills.

Code § 62.1-44.15(3b), part of the basic law which governs the SWCB, defines the procedure by which the SWCB may amend its water quality standards and provides that it shall do so according to the Administrative Process Act (APA), Code § 9-6.14:1 et seq. Under the APA, before a state agency may promulgate a regulation, ¹ Code § 9-6.14:7.1 requires that it set guidelines for soliciting input of the public and of interested parties into the formation and development of its regulations. This stage, which is denominated an informational hearing, allows public participation in the formation of an agency's policies and agency dissemination to the public of information about the proposals. A second requirement of the APA, Code § 9-6.14:8, provides that an agency may conduct formal evidential hearings before exercising its authority to promulgate a regulation however, the Code section also provides that "the agency shall always do so where the basic law requires a hearing." Thus, in determining whether an evidential hearing is mandatory or discretionary, the APA provides that the basic law governing the agency shall control. Code § 62.1-44.15(3a), part of the basic law governing the SWCB, provides the board "shall ... hold hearings as hereinafter provided for the purpose of ... adopting, modifying, or cancelling such standards." ² Thus, since the law requires the SWCB to hold an evidential hearing, the issue in this case is the meaning of the term "evidential hearing" and whether the SWCB complied with that requirement.

On APCo's appeal, the circuit court ruled that SWCB failed to hold a formal evidential hearing as required by its basic law and therefore its attempt to promulgate new water quality standards and to designate the section of the Clinch River as a critical habitat were invalid. The SWCB appeals that ruling, contending that it satisfied the requirement for an evidential hearing because APCo, which had participated in the informational hearings, had the opportunity to request a further evidential hearing but did not do so. Further, the SWCB argues that even if it was required to convene a formal hearing, APCo cannot be heard to complain because it had the opportunity to submit evidence as if a formal hearing had been convened and, thus, was not harmed by the omission.

We recount the steps taken by the SWCB to adopt or amend its water quality standards. The SWCB, in an effort to comply with its basic law and the APA, gave notice to the public and interested parties that it planned to conduct public hearings to solicit comment on proposed amendments to the water quality standards for chlorine. In August 1987, public hearings regarding the proposed standards were held in Woodbridge, Roanoke and Williamsburg, Virginia. APCo representatives attended and spoke at the Roanoke hearing. APCo later submitted a 39 page written comment addressing the proposed chlorine standard and designation of outstanding state resource waters. The SWCB closed public comment on August 21, 1987. At its next quarterly meeting on September 29, the SWCB adopted a series of amendments proposed during the triennial review, including the two at issue. These amendments were adopted on October 7, 1987, to become effective on November 25, 1987. On November 6, 1987, APCo filed a notice of appeal to the Circuit Court of the City of Roanoke, challenging the board's new standard for Chlorine in Surface Waters (VR 680-21-01.11) and the new designation of Outstanding State Resource Waters (VR 680-21-07.2).

On appeal the trial court granted APCo's motion for summary judgment, holding that the SWCB failed to hold an evidential hearing as required by Code §§ 62.1-44.15(3a) and (3b) and 9-6.14:8. The trial court found the failure to conduct such hearings a reviewable question of law as contemplated by Code § 9-6.14:17. Based on these rulings, the trial court, pursuant to Code § 9-6.14:19, suspended the enforcement of the two water standards, set them aside, and remanded the matter to the SWCB for further proceedings.

Under the APA, the interpretation and enforcement of water quality standards and stream designation by the SWCB are presumed valid, and the burden is on APCo to rebut this presumption. See Code § 9-6.14:17; see also Johnston-Willis, Ltd. v. Kenley, 6 Va.App. 231, 243, 369 S.E.2d 1, 7-8 (1988); Bio-Medical Applications of Arlington, Inc. v. Kenley, 4 Va.App. 414, 426, 358 S.E.2d 722, 729 (1987); Roanoke Memorial Hosp. v. Kenley, 3 Va.App. 599, 603, 352 S.E.2d 525, 527 (1987). However, "[w]here the issue falls outside the specialized competence of the agency, such as constitutional and statutory interpretation issues, little deference is required to be accorded the agency's decision." Johnston-Willis, Ltd., 6 Va.App. at 246, 369 S.E.2d at 9. Thus, "even though an agency's finding of fact may be supported by substantial evidence in the record, it may be subject to reversal because the agency failed to observe required procedures or to comply with statutory authority." Id. at 243, 369 S.E.2d at 7. Therefore, even though SWCB takes the position that it complied with its basic law by providing APCo an "opportunity to request" an evidential hearing, we do not accord that position any weight. ³ We, like the circuit court, are free to construe and determine compliance with the statutes governing adoption of administrative regulations irrespective of the agency's construction, and we must determine what the Code requires. Therefore, in order for APCo to prevail, it has the burden to establish that the SWCB failed to hold an evidential hearing in the manner required by Code §§ 9-6.14:8 and 62.1-44.15(3a) and (3b). The SWCB concedes that it did not formally convene an evidential hearing but argues that it satisfied the requirement by affording APCo an opportunity to ask for one. Alternatively, the SWCB contends that the failure to hold an evidential hearing did not harm APCo.

The SWCB's basic law, Code § 62.1-44.15(3a), specifically states that it shall "hold hearings" before it promulgates its water standards. Code § 9-6.14:4(E) provides:

"Hearing " means agency processes other than those informational or factual inquiries of an informal nature provided in Code §§ 9-6.14:7.1 and 9-6.14:11 of this chapter and includes only (i) opportunity for private parties to submit factual proofs...