High Rock Lake Ass'n Inc. v. North Carolina Environmental Management Commission

Decision Date20 February 1979
Docket NumberNo. 7810SC179,7810SC179
Citation39 N.C.App. 699,252 S.E.2d 109
PartiesHIGH ROCK LAKE ASSOCIATION INC. and Mary Davis v. NORTH CAROLINA ENVIRONMENTAL MANAGEMENT COMMISSION, John W. Thomas, Jr., P. Greer Johnson, Edwin C. Baker, Owen R. Braughler, Paul Dickson, Erskin L. Harkey, Jr., Robert W. Hester, James E. Harrington, Jr., Louis J. Marchetti, Jerome E. Shiffert, W. E. Strafford, D. J. Walker, Jr., and James C. Wallace.
CourtNorth Carolina Court of Appeals

Pfefferkorn & Cooley by William G. Pfefferkorn and David A. Wallace, Winston-Salem, for plaintiffs-appellants.

MORRIS, Chief Judge.

The petition for judicial review and the complaint for declaratory relief were dismissed by the Superior Court on the ground that the court had no jurisdiction to review the matter. The narrow question before this Court is whether the petition sufficiently alleges grounds for judicial review of the Commission's action.

Judicial Review

The plaintiffs assert two grounds for judicial review. First, plaintiffs argue that the hearing by the Commission on 27 October 1976 constituted a formal proceeding to determine whether the Commission should, without declaring the Yadkin River Basin a "capacity use area", issue an order restricting the withdrawal of water. A hearing before issuing such an order is required by G.S. 143-215.13(d) and is subject to specific adjudicatory-like procedures as set forth in G.S. 143-215.4. Judicial review of the order entered in such a proceeding is available, pursuant to the provisions of G.S. 143-215.5, to "(a) ny person who is adversely affected by an order of the Environmental Management Commission issued pursuant to (G.S. 143-215.13(d))".

On the other hand, the Commission asserts that the proceeding served two functions. It served as a procedure pursuant to G.S. 143-215.13(c) to determine whether the Yadkin River Basin should be designated a capacity use area and its water users subjected to a permit-letting system. Plaintiffs do not contest this proposition. Second, and the major point of dispute, the Commission asserts that the hearing also served the function of a general information gathering tool to have injected public participation at a state of decision-making generally reserved to staff participation. This participation was, the Commission asserts, to aid it in determining whether to initiate proceedings which would ultimately involve proposing the issuance of a permit under G.S. 143-215.13(d) and a hearing of an adjudicatory nature. The Commission contends that they had not yet reached the stage in the decision-making process that necessitated formal hearing required by "13(d)".

The Commission's characterization of the proceeding as an informal stage of the decision-making process with respect to the "13(d)" considerations appears accurate. We perceive no evil in allowing the Commission to utilize the evidence presented at that hearing in determining whether it should initiate proceedings pursuant to G.S. 143-215.13(d). The Commission's use of that public participation can be likened to the district attorney's evaluation of all facts available to him in determining whether criminal prosecution should be pursued. Our courts must refrain from the impulse to subject essentially discretionary matters to the rigors of administrative procedural requirements whether under an organic act or the Administrative Procedure Act, G.S. Chapter 150A. As noted by Professor Daye in his article "North Carolina's New Administrative Procedure Act: An Interpretive Analysis", 53 N.C.L.Rev. 833 (1975), "A degree of informality may be essential if agencies are to accomplish the missions assigned to them with flexibility and expedition." Id. at 847. Furthermore, assuming Arguendo that the hearing should have fallen under G.S. 143-215.13(d), the statute limits those who may appeal from the agency action:

" § 143-215.13. . . .

(d) . . .

Any person who is adversely affected by an order of the Environmental Management Commission issued pursuant to this subsection may seek judicial review of the order pursuant to the provisions of G.S. 143-215.5; and the order shall not be stayed by the appeal."

The foregoing provision operates as a statutory limitation on the standing of parties interested in or affected by the action to seek judicial review. Therefore, based on a plain reading of the statute, since no order was issued by the Commission which in turn could have adversely affected the plaintiffs, plaintiffs are not entitled to judicial review under the foregoing statutory provision.

Plaintiffs' alternative ground for seeking judicial review is based upon the judicial review provisions of the North Carolina Administrative Procedure Act, G.S. Chapter 150A, Art. 4. The right of judicial review under that article is determined by the following language:

" § 150A-43. Right to judicial review. Any person who is aggrieved by a final agency decision in a Contested case, and who has exhausted all administrative remedies made available to him by statute or agency rule, is entitled to judicial review of such decision under this Article, unless adequate procedure for judicial review is provided by some other statute, in which case the review shall be under such other statute. Nothing in this Chapter shall prevent any person from invoking any judicial remedy available to him under the law to test the validity of any administrative action not made reviewable under this Article." (Emphasis supplied.)

Plaintiffs contend that "the matters heard on October 27, 1976 constitute a 'contested case' " entitling plaintiffs to judicial review under Chapter 150A, Art. 4.

The term "contested case" is defined in the statute as follows:

" § 150A-2. Definitions. . . .

(2) 'Contested case' means any agency proceeding, by whatever name called, wherein the legal rights, duties or privileges of a party are required by law to be determined by an agency after an opportunity for an adjudicatory hearing. Contested cases include, but are not limited to proceedings involving rate-making, price-fixing and licensing. Contested cases shall not be deemed to include rule making, declaratory rulings, or the award or denial of a scholarship or grant."

It is apparent from the statute, therefore, that the determinative question is whether plaintiffs are entitled "by law" to an adjudicatory hearing. We note initially that by organic statute, to the extent they seek review of the capacity use area proceeding, the plaintiffs are entitled only to a hearing under G.S. 143-215.13(c) in the nature of a rule making hearing such as under Article 2 of the Administrative Procedure Act, G.S. 150A-9 Et seq. Nevertheless, our inquiry goes beyond statutory law. If the fundamental concepts of due process entitle plaintiffs to an adjudicatory hearing, then the matters considered at the hearing are required "by law" to be determined by an adjudicatory hearing and thus are entitled to judicial review under G.S. 150A-43.

In order to determine whether due process entitles the plaintiffs to an adjudicatory hearing, it is helpful first to consider what legal rights, duties, or privileges of the plaintiffs are affected. As noted above, the plaintiffs are riparian landowners concerned with the quality of water in the Yadkin River Basin. The declaration of the Yadkin River Basin as a capacity use area would entitle the Commission to issue regulations to be applied to the area concerning the use of water, G.S. 143-215.14, and would require certain water users to apply for permits before utilizing the waters. G.S. 143-215.15 and G.S. 143-215.16. The benefit to plaintiffs and other persons utilizing the resources of the Yadkin River Basin is a general one. They receive the indirect benefit (or perhaps direct burden) of regulation intended to conserve the water resources and to maintain conditions which are conducive to the development and use of the resource. See G.S. 143-215.12. The impact of the decision whether to declare an area as a "capacity use area" has a general effect on the entire class of persons who utilize the resource.

A determination of whether an adjudication is required by due process requires an evaluation of the nature of the Commission's decision. Where the decision rests on findings of a general nature and not upon "individual grounds", the determination need not be adjudicative. See Bi-Meltallic Inv. Co. v. State Board of Equalization, 239 U.S. 441, 36 S.Ct. 141, 60 L.Ed. 372 (1915). Our decision involves an application of the historic legal distinction between rule making and adjudication, I. e. legislative and adjudicative determinations. Professor Daye, in his article on the North Carolina Administrative Procedure Act, offers this guide for distinguishing rule making from adjudication:

"The touchstone for distinguishing adjudication from rulemaking is that adjudication involves a specifically named party and a determination of particularized legal issues and facts with respect to that party. Rulemaking, by contrast, involves general categories or classes of parties and facts and policies of general applicability." Daye, supra, 53 N.C.L.Rev. at 868.

The leading treatise on administrative law offers this distinction:

"Adjudicative facts are the facts about the parties and their activities, businesses, and properties. Adjudicative facts usually answer the questions of who did what, where, when, how, why, with what motive or intent; adjudicative facts are roughly the kind of facts that go to a jury in a jury case. Legislative facts do not usually concern the immediate parties but are general facts which help the tribunal decide questions of law and policy and discretion." 1 K. Davis, Administrative Law Treatise § 7.02 at p. 413 (1958).

Both the Commission and plaintiffs quote the following distinction made by Justice Holmes between the judicial-adjudicatory inquiry and the legislative inquiry:

"A judicial inquiry investigates, declares, and enforces...

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