Sohocki v. AIR QUALITY CONTROL COM'N

• Citation: 12 P.3d 274
• Decision Date: 09 December 1999
• Docket Number: No. 98CA1861.,98CA1861.
• Parties: Dennis SOHOCKI, Plaintiff-Appellant, and Sierra Club, Plaintiff/Intervenor-Appellant, v. COLORADO AIR QUALITY CONTROL COMMISSION, an agency of the State of Colorado, Defendant-Appellee, and Colorado Springs Utilities; Platte River Power Authority; Public Service Company of Colorado, Inc.; and Tri-State Generation & Transmission Association, Inc., Defendants/Intervenors-Appellees.
• Court: Colorado Court of Appeals

12 P.3d 274

Dennis SOHOCKI, Plaintiff-Appellant, and Sierra Club, Plaintiff/Intervenor-Appellant, v. COLORADO AIR QUALITY CONTROL COMMISSION, an agency of the State of Colorado, Defendant-Appellee, and Colorado Springs Utilities; Platte River Power Authority; Public Service Company of Colorado, Inc.; and Tri-State Generation & Transmission Association, Inc., Defendants/Intervenors-Appellees.

No. 98CA1861.

Colorado Court of Appeals, Div. V.

December 9, 1999.

Rehearing Denied March 30, 2000.

Certiorari Denied October 23, 2000.

Stephen I. Singer, Denver, Colorado, for Plaintiff-Appellant (On the Briefs).

Haddon, Morgan & Foreman, P.C., Janet C. Hoeffel, Denver, Colorado, for Plaintiff-Appellant.

Mark Hughes, Denver, Colorado, for Plaintiff/Intervenor-Appellant.

Ken Salazar, Attorney General, Barbara McDonnell, Chief Deputy Attorney General, Michael E. McLachlan, Solicitor General, John Daniel Dailey, Assistant Solicitor General, Anthony S. Trumbly, Assistant Attorney General, Denver, Colorado, for Defendant-Appellee.

Friedlob Sanderson Raskin Paulson Tourtillott, LLC, James W. Sanderson, Paul M. Seby, Denver, Colorado, for Defendants/Intervenors-Appellees.

Opinion by Judge TAUBMAN.

In this action for judicial review of an agency rulemaking proceeding, plaintiff, Dennis Sohocki, and plaintiff/intervenor, the Sierra Club, appeal the district court's judgment affirming a rulemaking action of defendant, Colorado Air Quality Control Commission (AQCC), which modified existing air quality regulations. The following parties intervened in this action as individual defendants and as members of the Colorado Utilities Coalition for Clean Air (CUCCA): Colorado Springs Utilities; Platte River Power Authority; Public Service Company of Colorado, Inc.; and Tri-State Generation and Transmission Association, Inc. We affirm.

Upon review of AQCC's rulemaking proceedings, the district court made the following findings. On March 15, 1996, CUCCA filed a petition for rulemaking with AQCC. AQCC is an administrative agency created by statute to promulgate and enforce air pollution regulations in Colorado. CUCCA requested a change in the opacity and sulfur dioxide regulations for coal-fired utility boilers during periods of start-up, shutdown, and upset.

On April 10, 1996, AQCC published a notice of CUCCA's proposed regulation. The AQCC notice was amended on May 10, 1996, and clarified on July 10, 1996.

On June 13, 1996, AQCC granted the Sierra Club party status in the proceeding.

AQCC held a hearing regarding the proposed regulation on December 19 and 20, 1996. Three days later, it voted to adopt a modified version of the proposed regulation. The regulation took effect March 2, 1997.

On April 1, 1997, Sohocki filed this action for judicial review. On August 1, 1997, the district court granted the Sierra Club leave to intervene as a plaintiff, and granted CUCCA and its members leave to intervene as defendants.

I. Disclosure by Commissioners

Sohocki and the Sierra Club contend that the district court erred when it determined that two AQCC commissioners were not required to disclose what plaintiffs allege were apparent or potential conflicts of interest. We agree that the district court applied an incorrect legal standard, but affirm the judgment on different grounds.

In October 1996, the first commissioner in question spoke with the executive director of the Colorado Department of Public Health and the Environment (CDPHE) regarding the creation of a temporary position for the commissioner in the Office of Public/Private Initiatives, if funding became available. Shortly after the AQCC rulemaking proceeding concluded, the commissioner resigned from her position with AQCC and accepted a temporary position with CDPHE in the Office of Public/Private Initiatives. After a competitive hiring process, the commissioner later obtained permanent employment in a different position with the Office of Public/Private Initiatives.

During the rulemaking proceedings, employees from the Division of Air Pollution Control (Division) served as staff for AQCC. The Division is a part of CDPHE. Its employees are CDPHE employees, and its director reports to the executive director of CDPHE. The Division reviewed CUCCA's petition for the new regulation, and after such review, drafted a proposal that addressed CUCCA's concerns while still complying with applicable air quality standards. AQCC considered this proposal, along with the proposal of the Sierra Club and public comment, during the rulemaking proceedings. Sohocki and the Sierra Club argue that the first commissioner failed to disclose an apparent or potential conflict of interest. They assert that, based on the Division's support and help in drafting the new regulation, the commissioner voted for the Division's proposal, and possibly influenced the vote of others, at a time when she was seeking to obtain employment with CDPHE. We agree that this commissioner should have disclosed her interest, but disagree with plaintiffs that the appropriate remedy here is invalidation of the new air quality regulations.

The second commissioner at issue is an employee of a local brewing company. This brewery receives essentially all of its electrical power and steam from five boilers adjacent to its property, which are owned by a separate energy company. At least three of the five coal-fired boilers attached to the brewery were affected by the regulation promulgated by AQCC.

Sohocki and the Sierra Club urge that because the energy company would benefit from the new regulation, and the brewery is the only customer of the energy company with respect to the three boilers, the commissioner's failure to disclose his employment with the brewery and the brewery's relationship with the energy company was a potential or apparent conflict of interest. We are not persuaded.

The question whether the district court correctly interpreted the applicable regulations is a question of law, and is therefore subject to de novo review. Lakeview Associates Ltd. v. Maes, 907 P.2d 580 (Colo. 1995).

A correct judgment may be affirmed based on reasoning different from that of the trial court. Barham v. Scalia, 928 P.2d 1381 (Colo.App.1996).

A court shall affirm an agency rule unless the agency action is, among other things, not in accord with procedures or procedural limitations of the Colorado Administrative Procedure Act or otherwise required by law, is unsupported by substantial evidence when the record is considered as a whole, or is otherwise contrary to law. Section 24-4-106(7), C.R.S.1999.

Courts presume the validity of administrative regulations, and the challenging party has the burden of establishing the asserted invalidity beyond a reasonable doubt. Stone Environmental Engineering Services, Inc. v. Colorado Department of Health, 762 P.2d 737 (Colo.App.1988).

Here, the district court held that neither commissioner should have been disqualified from the rulemaking proceedings because the Sierra Club and Sohocki did not make a clear and convincing showing that the commissioners had "unalterably closed minds" during the proceedings. The court further held that neither the Sierra Club nor Sohocki had shown that the commissioners or the entities for which they worked would benefit from the promulgation of the modified regulation. The district court based these findings on federal case law concerning disqualification of an agency official arising from a conflict of interest. Because plaintiffs were contending only that the two commissioners should have disclosed their interests, the court applied an incorrect legal standard.

According to AQCC procedural rules in effect at the time of the rulemaking proceeding, a commissioner was required to disclose a conflict of interest if he or she "perceives that a real, potential, or apparent conflict of interest exists...." Department of Health Procedural Rules 5 Code Colo. Reg. 1001-1. This disclosure requirement is separate and distinct from the standards applied to disqualification.

In their arguments, Sohocki and the Sierra Club rely on the definitions of apparent and potential conflict contained in AQCC's revised procedural rules, promulgated in 1998. These rules were not in effect at the time of the rulemaking proceeding at issue.

When a rule is amended, it is presumed that the amendment was intended to change the law. However, this presumption may be rebutted by evidence that the amendment was intended to clarify an ambiguity. See Southwest Capital Investments, Inc. v. Pioneer General Insurance Co., 924 P.2d 1205 (Colo.App.1996)

. As AQCC admits, the new procedural rules, including the revised definitions of apparent and potential conflict, clarified the prior rules. Therefore, we may rely on those definitions to determine whether the two commissioners were required to disclose their interests.

According to the new rules:

An apparent conflict of interest means a personal or financial interest which could reasonably be perceived as an interest that may influence the Commissioner's decision. A potential conflict of interest means an apparent or actual conflict of interest that may come about due to reasonably foreseeable events.

Department of Public Health and Environment Procedural Rules, 5 Code Colo. Reg. 1001-1 1.10.1(2) - 1.10.1(3).

These definitions clarify that in addition to the subjective perceptions of commissioners regarding conflicts of interest, the perceptions of others are relevant. We therefore agree with AQCC that the new rules set forth both a subjective and an objective test for determining apparent or potential conflicts of interest.

Here, both commissioners met the subjective test contained in the procedural rules through their affidavits stating that they did not perceive that they had a conflict of interest at the time of the rulemaking proceedings.

To establish that disclosure was required under the objective test, Sohocki and the Sierra Club...