Environmental Scientific Corp. v. Durfee, 91-644-M

• Citation: 621 A.2d 200
• Decision Date: 02 March 1993
• Docket Number: No. 91-644-M,91-644-M
• Parties: The ENVIRONMENTAL SCIENTIFIC CORPORATION v. Louise DURFEE, in her capacity as director of the Department of Environmental Management. P.
• Court: United States State Supreme Court of Rhode Island

Page 200

621 A.2d 200

The ENVIRONMENTAL SCIENTIFIC CORPORATION v. Louise DURFEE, in her capacity as director of the Department of Environmental Management.

No. 91-644-M.P.

Supreme Court of Rhode Island.

March 2, 1993.

John Tarantino, Patricia Rocha, Adler, Pollock & Sheehan, Providence, for plaintiff.

Kendra Beaver, Catherine Robinson Hall, Dept. of Environmental Management, for defendant.

OPINION

FAY, Chief Justice.

This case comes before this court pursuant to a writ of certiorari. The petitioner, the Environmental Scientific Corporation (ESC), seeks relief from a Superior Court judgment that affirmed the Department of Environmental Management's (DEM or department) denial of a water-quality certificate and an application to alter freshwater wetlands (application). ¹ The ESC maintains that the DEM improperly overturned the decision of its administrative hearing officer. After a careful review of the proceedings, we agree.

The ESC's contentions consist of two basic components. First it avers that the DEM's actions went awry of proper administrative procedures and that, therefore, its decision resulted in a denial of procedural due process. More specifically it claims that the DEM engaged in unauthorized rulemaking, that the DEM rejected the hearing officer's findings without an adequate rationale, and that the DEM's denials were not supported by any evidence in the record. Second, if upheld, the denials of the water-quality certificate and the application constitute an unconstitutional taking of the ESC's property. We do not believe that it is necessary for us to address all the issues touched upon in the ESC's petition in order for us to make our determination. Since we dispose of this case on the ESC's first issue, we need not reach the merits of its takings argument.

An understanding of the administrative procedures of the DEM will help to clarify the issues before us. The Freshwater Wetlands Act (Wetlands Act), G.L.1956 (1987 Reenactment) § 2-1-18 through § 2-1-27, gives the director of the DEM responsibility for identifying, protecting, and regulating development within Rhode Island's freshwater wetlands. Vito v. Department of Environmental Management, 589 A.2d 809, 810 (R.I.1991). Pursuant to § 2-1-20.1 the director promulgates rules and regulations governing the enforcement of the Wetlands Act (wetlands regulations).

If the DEM decides that a land-use proposal represents a significant alteration of a wetland, the applicant must file a formal application to alter a wetland. The DEM then reviews the formal application and conducts a site inspection. An applicant denied a permit by the DEM may initiate formal proceedings by requesting a hearing before the division of administrative adjudication (division). The division may then conduct prehearing conferences and hearings and perform other adjudicatory functions. Should an applicant request a hearing, G.L.1956 (1988 Reenactment) § 42-17.7-6, as enacted by P.L.1989, ch. 508, § 1, provides for adjudication before a hearing officer and review of that decision by the director.

Pursuant to the Administrative Procedures Act (APA), G.L.1956 (1988 Reenactment) chapter 35 of title 42, the DEM has adopted rules of practice and procedure for proceedings before the division. All hearings occur before an administrative hearing officer. The hearing officer has the duty of conducting the hearing and making decisions regarding the admission of evidence according to the Rhode Island Rules of Evidence. Section 42-35-10. The weight to be given to any evidence rests with the sound discretion of the hearing officer. All parties have the right to present evidence, cross-examine witnesses, and make objections, motions, and oral arguments. The hearing officer may also permit public participation.

At the conclusion of the hearing, the hearing officer issues a written decision and order (decision) to the director of the DEM. As set forth in § 42-17.7-6(1), the decision is made public when submitted to the director for review. The director may adopt, modify, or reject the hearing officer's decision. The director then issues a final agency decision and order (final decision). The final decision must be in writing and contain a statement of reasons and a determination of every issue of fact or law. If it is determined that an applicant's proposed land use would require alterations of freshwater wetlands that are inconsistent with the purposes of the Wetlands Act, the application for a permit is denied. As delineated in wetlands regulation 5.03(c), the director has the authority to deny a proposed wetlands alteration "if, in his opinion, such alteration will cause random, unnecessary and/or undesirable destruction of fresh water wetlands including, but not limited to: * * * [d]egradation of the natural character of any 'unique' wetland * * * [and] [r]eduction of the value of any 'valuable' wetland."

The DEM's final decision is reviewable on appeal by the Superior Court pursuant to § 42-35-15 of the APA. The review is conducted by the court without a jury and is confined to the record compiled during the adjudicatory proceeding.

The events giving rise to this litigation began on January 4, 1985, when Westerly Commercial Associates filed an application with the DEM, Division of Freshwater Wetlands, for permission to alter and fill approximately six acres of freshwater wetlands. Westerly Commercial Associates (WCA) proposed to alter wetlands in the Aguntaug Swamp in Westerly. The DEM denied the application, and WCA requested an administrative hearing. During the course of the hearing, WCA amended its application to divide the project into two phases, phase I and phase II. The hearing officer held that phase I was outside the department's jurisdiction and ordered the department to issue a permit. The focus of our inquiry concerns the DEM's treatment of phase II.

On October 27, 1987, the ESC filed an application, No. 87-0557F, on behalf of the property owners, WCA, to alter 2.92 acres of freshwater wetlands permanently and proceed with phase II. The phase II proposal contemplates the construction of buildings, paved parking areas, and drainage structures along the southern and western perimeters of Aguntaug Swamp. The proposal involves the filling in and relocation of a river and an intermittent stream.

The department referred the ESC's application to its Division of Water Resources to determine whether to issue a water-quality certificate for the proposal. On April 12, 1989, the Division of Water Resources denied the issuance of a water-quality certificate. The department subsequently denied the application on the grounds that the proposed alterations were inconsistent with both the public policy stated in the Wetlands Act and the department's own regulations. The ESC's appeals from both denials were consolidated for an administrative hearing.

Public hearings were conducted before a hearing officer pursuant to § 2-1-22, the APA, § 42-35-9, and the DEM's regulations. Over a period of nine days the ESC presented eight of its own witnesses and called three DEM employees to testify. The department presented five witnesses. The hearing officer permitted public participation and several objectors appeared, representing various public-interest groups. On August 22, 1990, the hearing officer reversed the department's decision. He recommended to the director of the DEM that the water-quality certificate and the application be granted.

The hearing officer made numerous findings of fact and conclusions of law. Relying on his findings of fact, the hearing officer concluded that the proposed alterations will "not cause unnecessary and/or undesirable destruction of freshwater wetlands as described in Section 5.03" of the wetlands regulations. In addition to his other conclusions, the hearing officer declared that

"the proposed alterations will not result in significant loss, encroachment, and permanent alteration of a unique and valuable freshwater wetland.

"5. The proposed project will not reduce the value of the wetlands recreational potential [or the] aesthetics and actual character of the wetland and buffer zone.

"6. The proposed project will not reduce the ability of the subject wetland area to recharge a groundwater aquifer, to wit Westerly Chapman Swamp aquifer.

"7. The proposed project will not reduce the ability of a wetland tributary to a proposed public water supply to remove pollutants from service water."

Following the reversal by the hearing officer, the matter was referred to the director of the DEM for the issuance of a final decision. ² On November 2, 1990, the director reversed the hearing officer and denied the water-quality certificate and the application.

In his final decision the director asserted that the hearing officer "adopt[ed] wholesale the applicant's proposed findings of fact and conclusions of law." The director wrote that the hearing officer interpreted the DEM's rules and regulations "in a manner which is, in fact, clearly contrary to the agency's and the responsible Division's historic and articulated interpretation of their meaning, purpose and intent and, furthermore, in a manner which, if left uncorrected, will result in violations of applicable law and regulation." In summary, the director reversed the hearing officer's decision for the following reasons:

"The recommended Decision and Order would have the effect of subjecting 'valuable' and 'unique' wetlands such as the Aguntaug Swamp to inevitable incremental degradation in a manner which is prohibited by sections 5.03(c)(6) and (7) of the Rules and Regulations Governing the Enforcement of the Freshwater Wetlands Act and which, further, runs contrary to the expressed legislative intent underlying the Freshwater Wetlands Act; 'to preserve and regulate the use of swamps, marshlands, and other freshwater wetlands'. * * * The recommended Decision and Order would also have the effect of...