Holly Ridge Associates, LLC v. Nc Denr

• Citation: 648 S.E.2d 830
• Decision Date: 24 August 2007
• Docket Number: No. 218A06.,218A06.
• Parties: HOLLY RIDGE ASSOCIATES, LLC, Petitioner v. NORTH CAROLINA DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES and its Division of Land Resources; William P. Holman, in his official capacity; and Charles H. Gardner, in his official capacity, Respondents, and North Carolina Shellfish Growers Association and North Carolina Coastal Federation, Intervenor-Respondents.
• Court: United States State Supreme Court of North Carolina

648 S.E.2d 830

HOLLY RIDGE ASSOCIATES, LLC, Petitioner v. NORTH CAROLINA DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES and its Division of Land Resources; William P. Holman, in his official capacity; and Charles H. Gardner, in his official capacity, Respondents, and North Carolina Shellfish Growers Association and North Carolina Coastal Federation, Intervenor-Respondents.

No. 218A06.

Supreme Court of North Carolina.

August 24, 2007.

Appeal pursuant to N.C.G.S. § 7A-30(2) from the decision of a divided panel of the Court of Appeals, 176 N.C.App. 594, 627 S.E.2d 326 (2006), affirming an order entered on 5 September 2003 by Judge Benjamin G. Alford in Superior Court, New Hanover County. Heard in the Supreme Court 10 April 2007.

Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P., by Alexander Elkan, George W. House, and S. Kyle Woosley, Greensboro, for petitioner-appellant.

Roy Cooper, Attorney General, by John F. Maddrey, Assistant Solicitor General, James C. Gulick, Senior Deputy Attorney General, and Nancy Reed Dunn, Assistant Attorney General, for respondent-appellees.

Southern Environmental Law Center, by Derb S. Carter, Jr. and Chandra T. Taylor, Chapel Hill, for intervenor-respondent-appellees.

EDMUNDS, Justice.

In this case we consider whether an administrative law judge properly allowed the North Carolina Shellfish Growers Association and the North Carolina Coastal Federation to intervene with full rights as parties in a contested case challenge to the State's imposition of a civil penalty. While the parties characterize this question as a policy issue, it is properly considered as a procedural matter within our statutory framework governing intervention. Because we hold that the intervenors did not meet the requirements of Rule 24 of the North Carolina Rules of Civil Procedure to participate as parties, we reverse the decision of the Court of Appeals.

Petitioner Holly Ridge Associates, LLC ("Holly Ridge") owns a two-thirds interest in 1,262 acres of land in Onslow County, North Carolina, known as the Morris Landing Tract. The tract drains directly to the Atlantic Intracoastal Waterway and to Cypress Branch, a tributary of Batts Mill Creek. These waters are classified as "SA" waters by the North Carolina Environmental Management Commission, meaning they are used for shellfishing for market purposes. From January through November 1998, Holly Ridge excavated eight miles of ditches on the Morris Landing Tract. After receiving complaints from the North Carolina Division of Water Quality, representatives from the Land Quality Services ("LQS") of the Division of Land Resources ("DLR") of the North Carolina Department of Environment and Natural Resources ("DENR") conducted an inspection and issued a report to DLR listing violations of erosion and sedimentation control requirements.

Although Holy Ridge was sent a copy of the report, it failed to take adequate remedial measures. Subsequently, on 3 March 1999, LQS sent Holly Ridge a Notice of Violations of the Sedimentation Pollution Control Act of 1973, N.C.G.S. §§ 113A-50 to -66 ("SPCA"), and Title 15A, Chapter 4 of the North Carolina Administrative Code. Under the version of the SPCA in effect at the time, "[a]ny person who violates any of the provisions of [the SPCA] . . . or who initiates or continues a land-disturbing activity for which an erosion control plan is required except in accordance with the terms, conditions, and provisions of an approved plan, is subject to a civil penalty." N.C.G.S. § 113A-64(a)(1) (1999). DENR "shall determine the amount of the civil penalty and shall notify the person who is assessed the civil penalty of the amount of the penalty and the reason for assessing the penalty." Id. § 113A-64(a)(2) (1999). On 9 July 1999, DENR assessed a civil penalty against Holly Ridge in the amount of $32,100.00 for violations of the SPCA.

Holly Ridge then submitted an erosion control permit application to DLR, but the application was disapproved on 13 August 1999. Shortly thereafter, several hurricanes hit the North Carolina coast in the vicinity of Morris Landing. After another inspection of the site on 21 October 1999, LQS on 10 November 1999 sent a Notice of Additional Violations of the SPCA to Holly Ridge. LQS conducted a further inspection on 16 December 1999, and on 5 January 2000, sent Holly Ridge a Notice of Continuing Violations. On 5 March 2000, DENR assessed a second civil penalty in the amount of $118,000.00 for these violations, and on 3 April 2000, Holly Ridge petitioned the Office of Administrative Hearings ("OAH") for a contested case hearing to challenge this second penalty. See id. (stating the assessment notice "shall direct the violator to either pay the assessment or contest the assessment within 30 days by filing a petition for a contested case under Article 3 of Chapter 150B of the General Statutes").

On 31 October 2000, two months after discovery had closed in the contested case, the North Carolina Shellfish Growers Association ("Shellfish Growers") and the North Carolina Coastal Federation ("Coastal Federation") (collectively "intervenors") moved to intervene as parties.¹ That same day these organizations formally notified Holly Ridge that they intended to bring a federal lawsuit under the Clean Water Act against Holly Ridge based upon the same facts and circumstances that gave rise to the contested case. Intervenors asserted that they should be allowed to intervene in the case at bar to protect their interests in the related federal proceeding.² After reviewing intervenors' motion, Holly Ridge's objection, several affidavits, and arguments of counsel, the administrative law judge ("ALJ") on 15 November 2000 ordered that Shellfish Growers and Coastal Federation be "allowed to intervene in this contested case with the full rights of parties, pursuant to N.C. Rule of [Civil] Procedure 24(b), 24(a), and 26 NCAC 03.0117." The ALJ reopened discovery and set time limits for written discovery and depositions. After both Holly Ridge and DENR received separate continuances, the contested case was finally heard during late summer and fall of 2001.

On 20 December 2001, the ALJ issued a recommended decision that affirmed assessment of the 5 March 2000 civil penalty but reduced the amount to $104,180.00, and DENR subsequently issued a final agency decision adopting the ALJ's recommendations in full. Holly Ridge sought judicial review in New Hanover County Superior Court. When that court affirmed the final agency decision, Holly Ridge appealed to the Court of Appeals, which, in a divided opinion, affirmed the trial court's order. Holly Ridge Assocs. v. N.C. Dep't of Env't & Natural Res., 176 N.C.App. 594, 627 S.E.2d 326 (2006).

Holly Ridge, appealing on the basis of the dissent, argues that private third parties do not have the right or authority to prosecute civil penalties under applicable North Carolina case law or statutes. Intervenors respond that intervention in this contested case was proper, citing N.C.G.S. § 150B-23(d), 26 NCAC 3.0117, and this Court's prior holding in State ex rel. Commissioner of Insurance v. North Carolina Rate Bureau, 300 N.C. 460, 269 S.E.2d 538 (1980) (granting the ALJ discretion without limitation to allow intervention in a contested case).

An appellate court reviewing a superior court order regarding an agency decision "`examines the trial court's order for error of law. The process has been described as a twofold task: (1) determining whether the trial court exercised the appropriate scope of review and, if appropriate, (2) deciding whether the court did so properly.'" ACT-UP Triangle v. Comm'n for Health Servs., 345 N.C. 699, 706, 483 S.E.2d 388, 392 (1997) (citation omitted). When, as here, "a petitioner contends the [agency's] decision was based on an error of law, de novo review is proper." Mann Media, Inc. v. Randolph Cty. Planning Bd., 356 N.C. 1, 13, 565 S.E.2d 9, 17 (2002) (citations and internal quotation marks omitted).

Intervention in a contested case hearing is controlled by interlocking statutes. "The Rules of Civil Procedure . . . shall apply in contested cases in the Office of Administrative Hearings (OAH) unless another specific statute or rule of the Office of Administrative Hearings provides otherwise." 26 NCAC 3.0101(a) (June 2006). The North Carolina Rules of Civil Procedure provide two avenues for intervention: intervention as of right pursuant to Rule 24(a) and permissive intervention pursuant to Rule 24(b). N.C.G.S. § 1A-1, Rule 24 (2005) ("Rule 24"). Rule 24 has long been interpreted to mean that a successful intervenor under subsection (a) or (b) enters the case as a party. See, e.g., Leonard E. Warner, Inc. v. Nissan Motor Corp., 66 N.C.App. 73, 78, 311 S.E.2d 1, 4 (1984) (stating that a Rule 24 "intervenor is as much a party to the action as the original parties are and has rights equally as broad").

In addition to the Rules of Civil Procedure, the North Carolina Administrative Procedure Act ("APA") applies to this case. N.C.G.S. § 150B-1(e) (2005) ("The contested case provisions of this Chapter apply to all agencies and all proceedings not expressly exempted from the Chapter."). Pursuant to section 150B-23(d):

Any person may petition to become a party [in a contested case] by filing a motion to intervene in the manner provided in G.S. 1A-1, Rule 24. In addition, any person interested in a contested case may intervene and participate in that proceeding to the extent deemed appropriate by the administrative law judge.

Id. § 150B-23(d) (2005). We do not read the second sentence of this APA provision as overriding Rule 24. To the contrary, "statutes in pari materia should be construed together and harmonized whenever possible." State v. Jones, 359 N.C. 832, 836, 616 S.E.2d 496, 498 (2005) (citing Williams v. Williams, 299 N.C. 174, 180-81, 261 S.E.2d 849, 854 (1980)). Accordingly, a person or entity wishing to intervene in a contested case may...