Kreshtool v. Delmarva Power & Light Co.

• Decision Date: 09 July 1973
• Citation: Kreshtool v. Delmarva Power & Light Co., 310 A.2d 649 (Del. Super. 1973)
• Parties: Jacob KRESHTOOL and Richard Beckerbauer, Appellants, v. DELMARVA POWER AND LIGHT CO., Appellee.
• Court: Delaware Superior Court

Page 649

310 A.2d 649

Jacob KRESHTOOL and Richard Beckerbauer, Appellants, v.DELMARVA POWER AND LIGHT CO., Appellee.

Superior Court of Delaware, New Castle County.

July 9, 1973.

Jacob Kreshtool, of Bader, Dorsey & Kreshtool, Wilmington, for appellants.

E. Dickinson Griffenberg, Jr., of Potter, Anderson & Corroon, Wilmington, for appellee.

OPINION AND ORDER ON APPEAL FROM THE STATE COASTAL ZONE

INDUSTRIAL BOARD; AFFIRMED

QUILLEN, Judge:

This is an appeal from a final order of the State Coastal Zone Industrial Board(Board) affirming the decision of the State Planner which granted appellee, Delmarva Power & Light Company(Delmarva), a permit to construct an electric generating unit at Edge Moor, Delaware.Jurisdiction of the Court is predicated upon 7 Del.C., § 7008.

On June 20, 1972 Delmarva, pursuant to § 7005 of the recently enacted Coastal Zone Act, directed a request for a permit to the State Planner permitting it to construct and put in service a 400,000 kilowatt generating unit at a site where it presently operates four similar units.In accordance with the statute, the State Planner held a public hearing on Delmarva's permit application on July 27, 1972.By letter dated September 13, 1972 the State Planner granted Delmarva a Coastal Zone Permit 'for construction and operating of a fifth electric generating unit, Edge Moor UnitNo. 5, including a cooling system, a fuel storage tank, a 230 KV switchyard, and all other facilities necessary for the operation of UnitNo. 5 at the Edge Moor Power Plant as described in the Coastal Zone Permit application of June 20, 1972.'

The appellants, who opposed a Delmarva's permit application at the hearing before the State Planner and who represented persons aggrieved by the decision of the State Planner, timely noted on appeal to the Board in accordance with § 7007 of the statute.The mandatory public hearing was held by the Board on November 13, 1972 and eleven days later the Board issued its opinion and order affirming the decision of the State Planner.On December 14, 1972appellants appealed to this Court from the final order of the Board.Shortly thereafter a dispute arose between the parties over the contents of the record on appeal, which matter was subsequently resolved by a stipulation and order dated April 10, 1973.

By statute the appeal is restricted to but one issue.Section 7008 of the statute provides that 'the appeal shall be based on the record of proceedings before the board, the only issue being whether the board abused its discretion in applying standards set forth (in the statute) and regulations issued pursuant thereto to the facts of the particular case.'Under the statute, this Court has the power to affirm, alter or reverse the order of the Board.

Resolution of this appeal, however, requires some analysis of the facts of this case and of the pertinent statute.In 1971 the Delaware Legislature passed the Coastal Zone Act, an environmental protection statute, which prohibits the construction of new 'heavy industry' within the coastal zone--a substantial geographic area that borders on Delaware's waterways.The purpose of the statute is to control the location, extent and type of industrial development that is most likely to pollute Delaware's bays and coastal areas.To this end, the statute creates a permit issuing procedure that requires all new industry seeking development within the coastal zone to obtain a permit.The permit procedure is administered by a State Planner and a Coastal Zone Industrial Control Board.

Under § 7003 of the statute new 'heavy industry uses' that were not in operation on the date of enactment of the statute are absolutely prohibited in the coastal zone and no permits may be issued.Industrial uses other than those of heavy industry, that is manufacturing uses, are permitted in the coastal zone but only after a permit has been issued to the applicant by the State Planner.In order to receive a permit, the applicant must establish to the satisfaction of the State Planner that the proposed use is not a heavy industry use.In resolving that question the State Planner must look to the statutory definition of 'heavy industry use' set out in § 7002 of the statute and any further elaborations on the definition effected through regulations proposed by him and approved by the Board.To date no such regulations have been approved.If the State Planner determines that the proposed use is not a heavy industry use but is a manufacturing use, he must then pass on such permit requests by considering other factors enumerated in the statute.Those factors include: (1) environmental impact of the proposed use, e.g. air and water pollution, and the nuisance effect of such use, both under normal operating conditions and in the event of equipment malfunctions; (2) its economic effect, e.g., creation of jobs, tax revenues; (3) it aesthetic effect; (4) the impact of probable supporting facilities on the above factors; (5) the effect of the proposed use, e.g., air and water pollution, and (6) the suitability of the proposed use in terms of county or municipal development and/or conservation plans.7 Del.C., § 7004.

As grounds for appeal, the appellants contend that the Board abused its discretion by: (1) deciding that the proposed use of Delmarva is not a 'heavy industry use'; (2) affirming a decision of the State Planner although the State Planner issued neither a decision nor stated reason for the decision, although required to do so by the statute; and (3) deciding that the proposed use is not a heavy industry use' without stating any reasons for such determination.

On the first ground, the appellants maintain that the generation of electricity as exemplified by the proposed Delmarva facility is a heavy industry use.They argue that the facility possesses the relevant indicia of heavy industry set out in the statutory definition of the term.

"Heavy industry use' means a use characteristically involving more than 20 acres and characteristically employing some, but not necessarily all of such equipment such as, but not limited to, smokestacks, tanks, distillation or reaction columns, chemical processing equipment, scribbing towers, pickling equipment, and waste-treatment lagoons; which industry, although conceivably operable without polluting the environment, has the potential to pollute when equipment malfunctions or human error occurs.Examples of heavy industry are oil refineries, basic steel manufacturing plants, basic cellulosic plup-paper mills, and chemical plants such as petrochemical complexes.Generic examples of uses not included in the definition of 'heavy industry' are such uses as garment factories, automobile assembly plants and jewelry and leather goods manufacturing establishments.'

Thus the statute defines heavy industry use not only in terms of its physical characteristics but also in terms of its potential to pollute in the event of equipment failure or human error.

The law in Delaware governing review of agency discretionary decisions is clear.An administrative agency with discretionary power cannot act arbitrarily or capriciously.Spear v. Blackwell & Son, Inc., Del.Super., 221 A.2d 52(1966);Gunnip v. Lautenklos, 33 Del.Ch. 915, 94 A.2d 712, 716(Ch.1953).The record must clearly show the basis on which the administrative agency acted in order that its exercise of discretion may be properly reviewed.Phelps Dodge Corp. v. National Labor Relations Board, 313 U.S. 177, 196--197, 61 S.Ct. 845, 85 L.Ed. 1271(1941);Spear v. Blackwell, Supra.Although the reviewing court's inquiry into the record is to be searching and careful, the ultimate standard that it must apply is a normal appellate one.Reversal is warranted if the administrative agency exercised its power arbitrarily, or committed an error of law, or made findings of fact unsupportable by substantial evidence.Universal Camera Corp. v. National Labor Relations Board, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456(1951).It is immaterial whether the reviewing court would have reached a contrary conclusion from the same evidence.Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 28 L.Ed.2d 136(1971);Applications of X-Chequer Inn, Inc., Del.Super., 229 A.2d 22, 26(1967);Stewart v. Delaware Liquor Commission, 6 Terry 363, 74 A.2d 472(Gen.Sess.1950).However, if the record clearly indicates that the administrative agency made its decision on improper or inadequate grounds, discretion has been abused and reversal upon judicial review is required.Securities & Exchange Commission v. Chenery, 332 U.S. 194, 196, 67 S.Ct. 1575, 91 L.Ed. 1995(1947).Moreover, the reviewing court may not affirm the decision of an agency by supplying entirely different factual grounds for 'to do so would propel the Court into the domain which the legislature has set aside for the administrative agency.'Applications of X-Chequer Inn, Inc., Supra;see alsoDelaware Alcoholic Beverage Commission v. Mitchell, 7 Storey 103, 196 A.2d 410, 412(Del.Sup.1963).

In the instant case, the granting or refusal of an application for a coastal zone permit is a matter resting with the sound discretion of the State Planner and the Board.In reviewing the record before the Board it must be remembered that this Court cannot substitute its own judgment for that of the Board.

The record reveals that the appellants attempted to show through the testimony at the hearings below that Delmarva's proposed use possessed the relevant characteristics of heavy industry.Delmarva concedes that the power station has a smoke stack and oil storage tanks, but argues that the power plant is free from the other characteristics of heavy industry.Even appellants concede that the facility has no distillation or reaction columns, chemical processing equipment or pickling equipment, though there is some dispute between the parties as to whether the unit has a waste...