Town of Richmond v. Dept. of Environmental

• Decision Date: 25 January 2008
• Docket Number: No. 2005-343-Appeal.,2005-343-Appeal.
• Parties: TOWN OF RICHMOND v. RHODE ISLAND DEPARTMENT OF ENVIRONMENTAL MANAGEMENT et al.
• Court: Rhode Island Supreme Court

941 A.2d 151

TOWN OF RICHMOND v. RHODE ISLAND DEPARTMENT OF ENVIRONMENTAL MANAGEMENT et al.

No. 2005-343-Appeal.

Supreme Court of Rhode Island.

January 25, 2008.

Laura J. Bottaro, Esq., Providence, for Plaintiff.

Gerald J. Petros, Esq., Providence, for Defendant.

Present: WILLIAMS, C.J., GOLDBERG, FLAHERTY, SUTTELL, and ROBINSON, JJ.

OPINION

Justice GOLDBERG, for the Court.

This case came before the Supreme Court on October 30, 2007, on separate appeals by the defendant, Rhode Island Department of Environmental Management (DEM), and the defendant-intervenor, Charbert, Division of NFA Corporation (Charbert¹ and collectively defendants), from a Superior Court judgment entered in favor of the plaintiff, the Town of Richmond (Richmond or the town). For the reasons stated herein, we vacate the judgment of the Superior Court.

Facts and Travel

During the relevant period in this case, Charbert operated a textile manufacturing and fabric-dyeing business in a facility in the Town of Richmond. On August 13, 2004, DEM served Charbert with a Notice of Violation (NOV), which alleged that Charbert had violated various statutes and administrative regulations under DEM's jurisdiction. The NOV ordered Charbert to perform remediation of the property to comply with the applicable statutes and regulations and to pay an administrative penalty of $9,500.

On September 3, 2004, Charbert requested a hearing with the chief hearing officer (hearing officer) of DEM's Administrative Adjudication Division (AAD). Richmond filed a petition to intervene, to which DEM did not object; but Charbert did.² The town argued that in past instances DEM had failed to protect the interests of the town such that intervention in the proceeding was necessary. The petition was granted by the AAD hearing officer on March 17, 2004,³ with the caveat that jurisdiction was limited to the appeal of the NOV. The hearing officer found that Richmond had demonstrated an injury in fact and that its interests were not adequately represented by the parties to the proceeding.

Richmond then issued discovery requests to Charbert and DEM, with which neither party complied; thereafter, the town moved to compel both the production of documents and answers to its interrogatories. The record discloses that Richmond, through communications with counsel for DEM, endeavored to make known its interests concerning the NOV. While the motions to compel discovery were pending, defendants negotiated a resolution of the NOV that was embodied in a proposed consent agreement. The town received a draft copy of the consent agreement on June 29, 2005—the same day that Charbert signed the final version.⁴ On July 7, 2005, Richmond filed an objection to the consent agreement with the hearing officer, but Charbert withdrew its request for a hearing on the NOV on July 11, 2005. The AAD proceedings were closed, and the hearing on Richmond's motions to compel discovery and interrogatories was canceled.

Meanwhile, on July 22, 2005, Richmond filed a complaint against DEM in Superior Court requesting: (1) judicial review of DEM's administrative action under the Administrative Procedures Act (APA); and (2) declaratory relief under the Uniform Declaratory Judgments Act (UDJA), alleging that the AAD proceedings were terminated improperly and that the consent agreement was null and void.

The complaint alleged that for many years Charbert owned and operated a textile mill in Richmond, from which various industrial chemicals and hazardous substances were discharged, resulting in contamination of the soil and groundwater. The town further alleged that Charbert had allowed industrial chemicals and hazardous materials to escape into the air, causing noxious odors. Richmond alleged that the contamination posed a serious threat to the environment and to the health; safety, and welfare of the town's residents. The town also asserted that DEM's enforcement efforts, whether to remediate harm caused by past violations or prevent future violations, had been ineffective. Charbert thereafter filed a motion to intervene in the case, which motion was granted on August 31, 2005.

Before the Superior Court, Richmond argued that, as an intervenor in the enforcement proceeding, the town had certain rights and should have been afforded the opportunity to approve the settlement or demonstrate to the hearing officer that the terms of the consent decree were inappropriate.

Both DEM and Charbert argued that intervention in an administrative enforcement action is different from intervention under the Superior Court Rules of Civil Procedure, Charbert also argued that Richmond's complaint was grounded on the town's erroneous belief that it could assert its own claims in the context of a DEM enforcement action. Charbert contended that because it was the only entity that could request a hearing on the NOV, only Charbert and DEM could reach a settlement of those claims; Charbert further contended that once it withdrew its request for a hearing, the town had no independent right to demand that the hearing proceed. The defendants also raised a jurisdictional defense in the Superior Court and argued that the complaint should be, treated as an APA appeal and not as a declaratory judgment action.

The trial justice found that as an intervenor, Richmond was a full party to the proceeding with all the procedural rights that other parties enjoy, including the right to notice and the right to be heard. He declared that the hearing officer could not exclude a party once it became an intervenor without first having a hearing. Additionally, the trial justice found that, if negotiations lead to a consent disposition, the hearing officer must determine whether all parties agree with the proposed consent order and that no party can be forced to stipulate to a settlement. The trial justice also held that, if all parties do not agree, then the hearing officer must decide whether the consent order will stand. Further, the trial justice declared that the hearing officer could reject the agreement and schedule a hearing on the merits, even if all three parties agreed to the consent order.

Significantly, the trial justice found that, having been granted intervenor status, the town became a full party to the enforcement proceedings. The trial justice also held that one party cannot be excluded from the final resolution of the dispute; and, since Richmond did not participate in the process, the proceeding at the hearing level became "unlawful and a nullity." The trial justice ordered that the consent agreement be set aside and that the matter proceed to a hearing with Richmond's participation.

In addressing the jurisdictional issue, the trial justice concluded that he was vested with jurisdiction to grant the relief sought under both the APA and the UDJA. An order and final judgment was entered on November 18, 2005, nunc pro tunc to November 4, 2005.⁵ The judgment declared that the relief sought by the town was granted under the declaratory judgment count of the complaint, and therefore no further action had to be taken with respect to the administrative appeal.

The case was remanded to the AAD for further proceedings. Charbert filed a notice of appeal on November 15, 2005, and DEM filed a notice of appeal on December 2, 2005.

Standard of Review

This Court frequently has held that the trial justice has discretion whether to grant or to deny declaratory relief under the UDJA. Sullivan v. Chafee, 703 A.2d 748, 751 (R.I.1997) (citing Woonsocket Teachers' Guild Local Union 951, AFT v. Woonsocket School Committee, 694 A.2d 727, 729 (R.I.1997) and Lombardi v. Goodyear Loan Co., 549 A.2d 1025, 1027 (R.I. 1988)). However, the discretion granted to the trial justice "is not absolute and is subject to appropriate appellate review." Id. (citing State v. Cianci, 496 A.2d 139, 146 (R.I.1985)). The decision of the trial justice will not be disturbed unless there is an abuse of discretion or the decision clearly was erroneous. Id. (citing Woonsocket Teachers' Guild Local Union 951, AFT, 694 A.2d at 729). Accordingly, this Court reviews a declaratory judgment to determine "whether the court abused its discretion, misinterpreted the applicable law, overlooked material facts, or otherwise exceeded its authority." Id.

Exhaustion

Before this Court, defendants argue that the trial justice improperly interfered with the statutory authority of the director of DEM to resolve enforcement actions, resulting in a finding that the intervenor may exercise veto power over a negotiated resolution of a NOV. Additionally, defendants argue that the trial justice erroneously treated an informal resolution by the parties as a formal consent order under DEM's rules. The defendants also contend that the trial justice ignored the town's failure to seek review under the APA, which failure in defendants' view deprived the Superior Court of subject-matter jurisdiction.

We first shall address the contradictory arguments set forth by each defendant concerning the trial court's jurisdiction over the issues in this case. Charbert contends that the trial court lacked subject-matter jurisdiction under the APA because Charbert was the only party that requested a hearing and that, after Charbert withdrew its request for a hearing, there was no final agency order and nothing that could be reviewed by the Superior Court in accordance with G.L.1956 § 42-35-15.

The DEM, on the other hand, argues that § 42-35-15 was the vehicle by which Richmond could seek judicial review, and the trial justice "erred as a matter of law" when he accepted jurisdiction under both the APA and the UDJA. According to DEM, these statutory vehicles for judicial relief "are wholly incompatible," both procedurally and substantively. The DEM contends that once an administrative action becomes a contested case, judicial review must be sought under the APA, but that, as an intervenor, Richmond only was "arguably...