STATE OF NORTH CAROLINA COUNTY OF WAKE BEFORE THE ...
STATE OF NORTH CAROLINA
BEFORE THE ENVIRONMENTAL MANAGEMENT COMMISSION 12 EHR 02850
COUNTY OF WAKE
North Carolina Coastal Federation, Cape Fear River Watch, Pender Watch and Conservancy, and Sierra Club, Petitioners, v. N.C. Department of Environment and Natural Resources, Division of Air Quality, Respondent, and
RESPONDENT DAQ’S RESPONSE TO PETITIONERS’ BRIEF IN SUPPORT OF EXCEPTIONS
Carolinas Cement Company, LLC, Respondent-Intervenor.
NOW COMES RESPONDENT, the Division of Air Quality (“DAQ” or “Respondent”) of the Department of Environment and Natural Resources (“DENR”), by and through the undersigned and hereby submits this Response to Petitioners’ Brief in Support of Exceptions.
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INDEX INTRODUCTION....................................................................................................3 ARGUMENT ............................................................................................................4 I. THE ADMINISTRATIVE LAW JUDGE PROPERLY DISPOSED OF THE CONTESTED CASE DUE TO FAILURE TO PROVE AN ESSENTIAL ELEMENT OF THE CLAIMS ....................................................5 II. STANDARD OF REVIEW............................................................................6 III. STANDING GENERALLY .......................................................................6 IV. SUBSTANTIAL PREJUDICE ...................................................................7 A. ALLEGING SUBSTANTIAL PREJUDICE IS A SUBJECT MATTER JURISDICTION ISSUE, BUT IT DOES NOT FOLLOW THAT SUBSTANTIAL PREJUDICE EQUATES TO STANDING ........................8 B. N.C. GEN. STAT. § 150B-29 REQUIRES PROOF OF SUBSTANTIAL PREJUDICE .........................................................................9 C. THE CASES REGARDING THE PROCEDURE REQUIRED TO PROVE SUBSTANTIAL PREJUDICE ARE DIRECTLY RELEVANT .....................................................................................................11 D. THE RIGHTS RELEVANT TO THIS CONTESTED CASE ARE EVALUATED IN LIGHT OF THE AIR POLLUTION CONTORL ACT’S PURPOSE TO ALLOW DEVELOPMENT, AND PETITIONERS HAVE FAILED TO DEMONSTRATE THAT THEIR HARM CANNOT BE ADEQUATELY PROVEN .......................................................................13 CONCLUSION.......................................................................................................18
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INTRODUCTION In this contested case, Petitioners North Carolina Coastal Federation, Cape Fear River Watch, Pender Watch and Conservancy, and Sierra Club (“Petitioners”) challenged the issuance of Air Quality Permit No. 07300R09 (“Final Permit”) to Respondent-Intervenor Carolinas Cement Company, LLC (“Carolinas Cement” or “Respondent-Intervenor”) on February 29, 2012 for the construction and operation of a Portland cement manufacturing facility in Castle Hayne, North Carolina. Petitioners alleged that their members live, work, and recreate in the area of the proposed facility and would be harmed by emission of air pollutants from the permitted facility. Petition at 1-2 (R.III.a. 93-94). On July 24, 2012, Administrative Law Judge Beecher R. Gray granted dismissal of Petitioners’ claim relating to the quarry at the permitted facility (claim 1 of the Petition, issues 1-4 of Petitioners’ Prehearing Statement) for failure to state a claim upon which relief can be granted and lack of subject matter jurisdiction. Amended Order Jul. 24, 2012 at 1 (R.IV.g. 1059). On September 23, 2013, after “extensive discovery, including the exchange of thousands of documents, dozens of interrogatories and requests for admission, and the depositions of six witnesses, including Petitioners’ expert witnesses,” Judge Gray granted summary judgment in favor of Petitioners on the issue of standing, and in favor of Respondent and Respondent-Intervenor on all remaining issues “on the ground that the ‘agency 3
named as respondent’ did not ‘substantially prejudice[]’ the petitioner[s’] rights.” Decision Granting Summary Judgment in Favor of Respondent and RespondentIntervenor, Sep. 23, 2013, at 2 (R.II. 89) (quoting N.C. Gen. Stat. § 150B-23(a)). DAQ’s summary judgment briefing contained a review of the underlying air quality law relevant to this case. DAQ will not herein recount this background information, which can be found in R.IV.j. Pursuant to the applicable version of North Carolina Administrative Procedure Act, N.C. Gen. Stat. § 150B-36(b) (2010) (attached hereto as Exhibit A for ease of reference), the decision of the Administrative Law Judge now comes before the Special Air Permit Appeals Committee (“Committee”) of the Environmental Management Commission for a final agency decision. 2011 N.C. Sess. Laws 398, §§ 20, 63; 2012 N.C. Sess. Laws 187, § 8.1 (modifying 2011 N.C. Sess. Laws 398). ARGUMENT The ALJ properly granted summary judgment for DAQ and Carolinas Cement on the issue of substantial prejudice. Petitioners were required by existing case law regarding N.C. Gen. Stat. § 150B-23(a) to prove the harm they would experience due to the alleged errors. Petitioners did not make such a showing, and therefore the Committee should adopt the ALJ’s decision. In addition, the ALJ properly dismissed Petitioners’ quarry-related claims for failure to state a claim 4
upon which relief can be granted. Therefore, the Committee should adopt this order as well. I.
THE ADMINISTRATIVE LAW JUDGE PROPERLY DISPOSED OF THE CONTESTED CASE DUE TO FAILURE TO PROVE AN ESSENTIAL ELEMENT OF THE CLAIMS Petitioners appear to argue that the Administrative Law Judge (“ALJ”) erred
by resolving the contested case on the issue of substantial prejudice without reaching the merits. Petitioners’ Exceptions at 7. The inability to produce evidence supporting an essential element of a claim is a proper basis for summary judgment, however. Roumillat v. Simplistic Enterprises, Inc., 331 N.C. 57, 63, 414 S.E.2d 339, 342 (1992). Substantial prejudice is an essential element of any claim under the North Carolina Administrative Procedure Act (“APA”). N.C. Gen. Stat. § 150B-23; Britthaven, Inc. v. N.C. Dep’t of Human Res., Div. of Facility Servs., 118 N.C. App. 379, 382, 455 S.E.2d 455, 459, disc rev. denied, 341 N.C. 418, 461 S.E.2d 754 (1995). Therefore, the ALJ properly disposed of the contested case on the issue of substantial prejudice without reaching the remaining elements of Petitioners’ claims. 1
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Petitioners note that the ALJ’s decision did not include findings of fact or conclusions of law. Petitioners’ Exceptions at 8. This format, however, is expressly allowed by the applicable version of the APA. N.C. Gen. Stat. § 150B-36(d) (2010).
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II.
STANDARD OF REVIEW Under the APA, the agency (here the Committee) reviews an ALJ’s order
granting summary judgment, and if the Committee determines that the ALJ’s order is incorrect, it “shall set forth the basis for failing to adopt the decision and shall remand the case to the administrative law judge for hearing.” N.C. Gen. Stat. § 150B-36(d) (2010). Orders granting summary judgment are reviewed to determine whether any errors of law were made, and the Committee can “freely substitute[] its own judgment” for that of the ALJ. Burnham v. S&L Sawmill, Inc., ___ N.C. App. ___, ___, 749 S.E.2d 75, 79, disc rev. denied, 2013 N.C. LEXIS 1413 (2013). Summary judgment is proper when “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.” N.C. Gen. Stat. § 1A-1, Rule 56(c). III.
STANDING GENERALLY Petitioners in their memoranda to the ALJ and to this Committee have
mischaracterized the relationship between standing and substantial prejudice. Contrary to Petitioners’ assertions, establishing standing does not automatically equate to having established substantial prejudice. In order to initiate a case, a party must have “standing.” Generally speaking, if the initiating party does not have standing, there is no jurisdiction to hear the 6
case (in other words, the court does not have “subject matter jurisdiction”). See Jackson v. N.C. Dep’t of Human Res., 131 N.C. App. 179, 182-83, 505 S.E.2d 899, 901-02 (1998) (“Whether one has standing to obtain judicial review of an administrative decision is a question of subject matter jurisdiction.”) (citation omitted), disc. review denied, 350 N.C. 594, 537 S.E.2d 213 (1999). In environmental cases under the APA, a “person aggrieved” has standing to challenge agency action, or in other words, has the ability to initiate a contested case. N.C. Gen. Stat. § 150B-23(a); Empire Power Co. v. N.C. Dep’t of Env’t, Health & Natural Res. Div. of Envtl. Mgmt., 337 N.C. 569, 588, 447 S.E.2d 768, 779, reh’g denied, 338 N.C. 314, 451 S.E.2d 634 (1994). “Person aggrieved” is defined in the APA as “any person or group of persons of common interest directly or indirectly affected substantially in his or its person, property, or employment by an administrative decision.” N.C. Gen. Stat. § 150B-2(6). The North Carolina Supreme Court has explained that the analysis for standing depends upon the circumstances involved. Empire Power, 337 N.C. at 588, 447 S.E.2d at 779. IV.
SUBSTANTIAL PREJUDICE In the order on summary judgment, Petitioners’ motion regarding standing
was granted. Decision Granting Summary Judgment in Favor of Respondent and Respondent-Intervenor, Sep. 23, 2013, at 2 (R.II. 89). However, Judge Gray, the same ALJ whose ruling on standing was upheld by the North Carolina Supreme 7
Court in Empire Power, 337 N.C. at 573, 596, 447 S.E.2d at 771, 784, did not find that substantial prejudice was established merely by the existence of standing. In his order, Judge Gray instead granted Respondent’s and Respondent-Intervenor’s motions for summary judgment on all remaining issues in the case because Petitioners failed to demonstrate or forecast substantial prejudice. Decision Granting Summary Judgment in Favor of Respondent and Respondent-Intervenor, Sep. 23, 2013, at 2 (R.II. 89). Petitioners opine that the U.S. Environmental Protection Agency would revoke approval for North Carolina’s permitting program if this body upholds the ALJ’s order. Petitioners’ Exceptions at 19 n.8. In support of this argument, Petitioners once again point to irrelevant case law and other sources that solely address standing, rather than substantial prejudice. Petitioners’ Exceptions at 1719. As explained below, Petitioners’ argument fails because substantial prejudice is separate and distinct from standing. A.
ALLEGING SUBSTANTIAL PREJUDICE IS A SUBJECT MATTER JURISDICTION ISSUE, BUT IT DOES NOT FOLLOW THAT SUBSTANTIAL PREJUDICE EQUATES TO STANDING
Any petitioner in a contested case under the APA must initiate the case with a petition that alleges substantial prejudice pursuant to N.C. Gen. Stat. § 150B23(a) in order to give the Office of Administrative Hearings (“OAH”) subject matter jurisdiction, allowing OAH to hear the matter. N.C. Gen. Stat. § 150B8
23(a) (requiring that a petition “shall state facts tending to establish,” among other things, that the agency has substantially prejudiced the petitioner’s rights); see also Gummels v. N.C. Dep’t of Human Resources, 98 N.C. App. 675, 392 S.E.2d 113 (1990) (holding that when such a statutory procedure was not followed, the petition was subject to dismissal). In order to be successful in the contested case, however, the petitioner must also prove substantial prejudice. N.C. Gen. Stat. § 150B-29. Therefore, alleging substantial prejudice is indeed an issue of subject matter jurisdiction, but proving substantial prejudice is simply a matter of meeting the petitioner’s burden to prove its claims. Petitioners misconstrue DAQ’s statements on this subject, contending that DAQ has admitted that substantial prejudice equates with standing because DAQ noted that Petitioners must allege substantial prejudice in their Petition in order for OAH to have subject matter jurisdiction. Petitioners’ Exceptions at 12. To the contrary, this incorrect interpretation of DAQ’s statements, which were entirely consistent with the law as stated above, further demonstrates Petitioners’ misunderstanding of the law. B. N.C. GEN. STAT. § 150B-29 REQUIRES PROOF OF SUBSTANTIAL PREJUDICE Petitioners correctly note that N.C. Gen. Stat. § 150B-29 requires them to prove the allegations of their petition. Petitioners’ Exceptions at 14. However, Petitioners then claim that because they need only prove the allegations of their 9
petition, including the allegations regarding substantial prejudice, they are excused from providing the level of proof required under the North Carolina Rules of Civil Procedure. This argument is untenable. The North Carolina Rules of Civil Procedure, which apply to civil suits in the general courts of justice, also expressly apply to matters heard by OAH. 26 NCAC 3 .0101(b). Whereas a civil suit is initiated with a complaint (also called a “pleading”) that alleges that the plaintiff incurred damages legally attributable to the defendant, in OAH a contested case is initiated by a petition alleging the petitioner has been substantially prejudiced. See N.C. Gen. Stat. § 150B-23(a). The petition is therefore subject to the “notice pleading” requirements under the Rules of Civil Procedure, which allow pleadings to merely provide “a short and plain statement of the claim that will give the defendant fair notice of what the plaintiff’s claim is and the grounds upon which it rests.” Sutton v. Duke, 277 N.C. 94, 102, 176 S.E.2d 161, 165 (1970) (citations and internal quotation marks omitted); see also N.C. Gen. Stat. § 1A-1, Rule 8(a)(1). As applied to damages in a civil suit, notice pleading requires that the plaintiff’s damages must be set forth generally in the initial complaint, but does not require a specific measure of damages to be included therein. Holloway v. Wachovia Bank & Trust Co., N.A., 339 N.C. 338, 346, 452 S.E.2d 233, 237 (1994). The petition’s facts tending to demonstrate substantial prejudice, therefore, may conform to this standard. In fact, 10
in a recent decision regarding substantial prejudice, the petition filed to initiate the contested case made general allegations regarding substantial prejudice, but the North Carolina Court of Appeals held that once the petitioner was presenting evidence of that element of its claims, more was required than simply general allegations. Compare Caromont Petition Apr. 29, 2011 at 3 (attached hereto as Exhibit B) with CaroMont Health, Inc. v. N.C. HHS Div. of Health Serv. Regulation, ___ N.C. App. ___, 751 S.E.2d 244 (2013) (finding the petitioners’ proof of substantial prejudice deficient, despite the fact that it went beyond the allegations of the petition). Here, assuming that Petitioners sufficiently alleged that they could be harmed by the permitted facility’s emissions for purposes of notice pleading, these allegations do not relieve Petitioners of having to meet their burden to establish substantial prejudice with sufficient evidence, as discussed below. C. THE CASES REGARDING THE PROCEDURE REQUIRED TO PROVE SUBSTANTIAL PREJUDICE ARE DIRECTLY RELEVANT Petitioners argue that the cases interpreting N.C. Gen. Stat. § 150B-23 in the context of decisions by the North Carolina Department of Health and Human Services (“DHHS”) are not relevant to environmental permitting cases. Petitioners’ Exceptions at 17. These cases directly address proof of substantial
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prejudice required pursuant to N.C. Gen. Stat. § 150B-23(a), the provision at issue here, and are therefore immanently relevant. 2 As stated in Parkway Urology, P.A. v. N.C. HHS, 205 N.C. App. 529, 539, 696 S.E.2d 187, 195 (2010), disc rev. denied, 365 N.C. 78, 705 S.E.2d 739 (2011), in order to establish substantial prejudice, a petitioner must be specific about the harm. In Parkway, the court explained that otherwise, any increase in the allegedly harmful conduct (competition, in that case, and here, emission of pollutants) would be considered “inherently and substantially prejudicial” to a petitioner, which the court recognized “would eviscerate the substantial prejudice requirement contained in N.C. Gen. Stat. § 150B-23.” Id. at 539, 696 S.E.2d at 195; see also CaroMont, ___ N.C. App. ___, 751 S.E.2d 244 (reiterating the Parkway analysis for proof required to establish substantial prejudice). In much the same manner, reading “substantial prejudice” to require that any permit issued to any facility automatically substantially prejudices petitioners with standing would read the term “substantial prejudice” out of the statute. This could not have been the intent of the General Assembly. N.C. Dep’t of Corr. v. N.C. Med. Bd., 363 N.C. 189,
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Petitioners’ claim that this Committee should not refer to cases interpreting the precise language applicable to this case is puzzling in light of Petitioners’ own reference during summary judgment briefing to case law interpreting N.C. Gen. Stat. § 150B-23 in the context of numerous other administrative agencies’ decisions, including certificate of need cases. Petitioners’ Memo on Summary Judgment at 21 (R.IV.i. 5097) (citing decisions regarding actions by other agencies, not just those from the environmental arena, including a certificate of need case).
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201, 675 S.E.2d 641, 649 (2009) (noting that courts should “give every word of the statute effect, presuming that the legislature carefully chose each word used”). 3 D. THE RIGHTS RELEVANT TO THIS CONTESTED CASE ARE EVALUATED IN LIGHT OF THE AIR POLLUTION CONTORL ACT’S PURPOSE TO ALLOW DEVELOPMENT, AND PETITIONERS HAVE FAILED TO DEMONSTRATE THAT THEIR HARM CANNOT BE ADEQUATELY PROVEN Petitioners note that the rights protected under the APA are determined by reference to the organic statute, which is the Air Pollution Control Act here. Petitioners’ Exceptions at 16. What Petitioners conveniently ignore, however, is the applicable purpose statement found in N.C. Gen. Stat. § 143-211(c), which includes, among other things, “to encourage the expansion of employment opportunities, [and] to provide a permanent foundation for healthy industrial development.” Therefore, the substantial harm Petitioners must demonstrate is more akin to that of the existing cases interpreting substantial prejudice in the context of DHHS’ certificates of need than Petitioners wish to acknowledge. While the petitioners in those cases must prove something more than normal competition due to their organic statute, petitioners in environmental permitting cases must prove that they are prejudiced by something more than simply the lawful permitting of a facility. 3
Petitioners claim that under the existing cases interpreting substantial prejudice, they are prejudiced as a matter of law. Petitioners’ Exceptions at 21 (citing Hospice at Greensboro, Inc. v. N.C. HHS Div. of Facility Servs., 185 N.C. App. 1, 647 S.E.2d 651 (2007). However, the current situation is not analogous. See N.C. Gen. Stat. §§ 131E-175, 131E-183(a)(6).
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Petitioners also allege that harm in this context is difficult if not impossible to prove. Petitioners provide no legitimate justification for this argument. They alleged adverse health impacts from the Facility’s emissions in their petition, and retained a health expert, Dr. Alan H. Lockwood. However, perhaps Dr. Lockwood was not the best expert for the case, or not well prepared. Dr. Lockwood is a retired neurologist, not an epidemiologist or toxicologist. He had never examined any risk assessment in connection with any cement plant. Lockwood Dep. at 22:48 (R.IV.h. Ex. 6, 2155). Dr. Lockwood was not even aware of emission limits in the Final Permit until the night before his deposition. Lockwood Dep. at 211:1219 (R.IV.h. Ex. 6, 2344). During summary judgment briefing, Petitioners did not produce any affidavit from Dr. Lockwood attesting to whether there would be an increase in health risks if the emissions limits in the Final Permit were not decreased to the levels that Petitioners’ engineering expert, Dr. Sahu, opined were appropriate. It is possible that Dr. Lockwood could not specify any actual difference in risks. The record provides no answer to the question because Petitioners insist that they need not prove their allegations. See, e.g., Petitioners’ Exceptions at 9. Moreover, the burden of proof is on Petitioners. Britthaven, 118 N.C. App. at 382, 455 S.E.2d at 459. Judge Gray, recognizing the difference between allegations and proof, aggrieved party status and substantial prejudice,
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correctly granted judgment for Respondent and Respondent-Intervenor. The Committee should uphold his decision. V.
THE ALJ PROPERLY DISMISSED PETITIONERS’ QUARRYRELATED CLAIMS Petitioners’ quarry claims were based on the premise that DAQ erred in
relying on the quarry plan submitted to DAQ with Carolinas Cement’s April 2008 application because Carolinas Cement submitted a different quarry plan to the Army Corps of Engineers (the “Corps”) in November of 2008 in connection with a National Environmental Policy Act (“NEPA”) process for Carolinas Cement’s Clean Water Act Section 404 permit. Therefore, Petitioners contend that the emissions limits in the Final Permit were based on “inaccurate and outdated information about the boundaries and operations of the quarry,” and that DAQ did not provide accurate information to the public. Petitioners’ Exceptions at 23, 27; Petition at 7-9 (R.III.a. 99-101); Petitioners’ Prehearing Statement at 14-22 (R.III.b. 360-68). As an initial matter, Petitioners concede that the November 2008 quarry plan was not submitted to DAQ. Petitioners’ Prehearing Statement at 16 (R.III.b. 362). Therefore, whatever that plan is, it is not a part of the permitting record. Second, the information in the permitting record made it absolutely clear that the Final Permit did not authorize Carolinas Cement to use any quarry other than that described in the April 2008 quarry plan that was submitted to DAQ with their 15
application. Both the Final Permit and the cover letter sent to Carolinas Cement with the Final Permit state that “if the facility chooses to utilize limestone from a quarry different than that represented in Application No. 6500296.08A, the Permittee shall apply for a modification of this Air Quality Permit.” Final Permit at 77, Petition Ex. A (R.III.a. 188); Cover letter attached to Final Permit, Petition Ex. A (R.III.a. 109). If Carolinas Cement were to use raw materials collected from outside the geographic scope of the April 2008 quarry plan, it would be out of compliance with the Final Permit. Third, with regard to Petitioners’ claim of inaccurate notice, information regarding the boundaries and layout of the quarry that Carolinas Cement is authorized to use has been publicly available since at least September 2009, when the draft air permit was publicly noticed. This information is set forth in Sheet 2 of Carolinas Cement’s Plot Plan and Survey Maps, which accompanied Application No. 6500296.08A. See 4/8/2008 “CCC Plot Plan and Survey Maps” available at http://daq.state.nc.us/permits/psd/titan.shtml (R.IV.h. Ex. 11). Petitioners’ suggestion that Judge Gray should have ignored these facts and relied solely on their allegations is contrary to the law governing the standard of review of motions to dismiss. In reviewing a motion to dismiss pursuant to Rule 12(b)(1) for lack of subject matter jurisdiction, matters outside the pleadings may be considered. Keith v. Wallerich, 201 N.C. App. 550, 554, 687 S.E.2d 299, 302 16
(2009) (affirming dismissal for lack of subject matter jurisdiction where the trial court considered matters outside the pleadings). “A complaint may be dismissed pursuant to Rule 12(b)(6) if there is no law to support the claim made, an absence of facts sufficient to make a good claim, or the disclosure of facts which will necessarily defeat the claim.” Robertson v. Boyd, 88 N.C. App. 437, 441, 363 S.E.2d 672, 675 (1988); Oberlin Capital, LP v. Slavin, 147 N.C. App. 52, 56, 554 S.E.2d 840, 844 (2001). In reaching a ruling on a motion to dismiss, courts are authorized to examine all documents referenced in the complaint. “[A] court may properly consider documents which are the subject of a plaintiff’s complaint and to which the complaint specifically refers even though they are presented by the defendant.” Oberlin Capital, 147 N.C. App. at 60, 554 S.E.2d at 847 (citing Robertson, 88 N.C. App. at 441, 363 S.E.2d at 675); Eastway Wrecker Serv., Inc. v. City of Charlotte, 165 N.C. App. 639, 642, 599 S.E.2d 410, 412 (2004), aff’d per curiam, 360 N.C. 167, 622 S.E.2d 495 (2005). Accordingly, the Administrative Law Judge can consider the core permitting documents regarding which Petitioners have sought relief.
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The facts disclosed in the permitting documents attached to the Petition necessarily defeated Petitioners’ quarry claims. Judge Gray properly dismissed these claims and the Committee should affirm his decision. 4 CONCLUSION For the foregoing reasons, DAQ requests that the Committee adopt the ALJ’s decisions in full.
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Petitioners had also claimed that DAQ erred in relying on a quarry plan that was not approved by the Corps or the Division of Water Quality (“DWQ”). This claim, too, was premised on the notion that the November 2008 quarry plan was the plan DAQ was permitting. Petitioners’ Prehearing Statement at 17-19 (R.III.b. 363-65). While Petitioners reference “quarry-based claims” in their exceptions, Petitioners’ Exceptions at 7, and list the four claims in a footnote, Petitioners’ Exceptions at 23, Petitioners failed to discuss this particular claim in the body of their brief. In any event, as set forth in DAQ’s Motion to Dismiss at 6-8 (R.IV.c. 823-25), this claim is also belied by the fact that the Final Permit does not authorize use of the November 2008 quarry. Additionally, there was no suggestion that the April 2008 quarry authorized in the Final Permit needs any review by the Corps or DWQ. Finally, even if some review by the Corps or DWQ were required, there is no law prohibiting DAQ from issuing the Final Permit first. The Final Permit does not relieve CCC “of the obligation to comply with any other applicable local, state, or federal requirements, including but not limited to the obligation to obtain the permits and authorizations for the construction and operation of the proposed facility. Additionally . . . the issuance of th[e] Air Permit does not represent any commitment on the part of the State to issue any of the remaining permits. Each additional permit will need to be obtained on its respective merits.” Cover letter attached to Final Permit, at 2, Petition Ex. A (R.III.a. 109). 18
EXHIBIT A To RESPONDENT DAQ’S RESPONSE TO PETITIONERS’ BRIEF IN SUPPORT OF EXCEPTIONS
Page 1 N.C. Gen. Stat. § 150B-36
GENERAL STATUTES OF NORTH CAROLINA Copyright 2011 by Matthew Bender & Company, Inc. a member of the LexisNexis Group. All rights reserved *** ARCHIVE DATA *** *** ***STATUTES CURRENT THROUGH THE 2010 REGULAR SESSION*** *** *** ***ANNOTATIONS CURRENT THROUGH June 24, 2011*** *** CHAPTER 150B. ADMINISTRATIVE PROCEDURE ACT ARTICLE 3. ADMINISTRATIVE HEARINGS N.C. Gen. Stat. § 150B-36 (2011) § 150B-36. Final decision
(a) Before the agency makes a final decision, it shall give each party an opportunity to file exceptions to the decision made by the administrative law judge, and to present written arguments to those in the agency who will make the final decision or order. If a party files in good faith a timely and sufficient affidavit of personal bias or other reason for disqualification of a member of the agency making the final decision, the agency shall determine the matter as a part of the record in the case, and the determination is subject to judicial review at the conclusion of the case. (b) Except as provided in G.S. 150B-34(c) or subsection (d) of this section, a final decision in a contested case shall be made by the agency in writing after review of the official record as defined in G.S. 150B-37(a) and shall include findings of fact and conclusions of law. The agency shall adopt each finding of fact contained in the administrative law judge's decision unless the finding is clearly contrary to the preponderance of the admissible evidence, giving due regard to the opportunity of the administrative law judge to evaluate the credibility of witnesses. For each finding of fact not adopted by the agency and each finding of fact made by the agency that is not contained in the administrative law judge's decision, the agency shall follow the procedures set forth in subsections (b1) and (b2) of this section. (b1) For each finding of fact not adopted by the agency, the agency shall set forth separately and in detail the following: (1) The reasons for not adopting the findings of fact. (2) The evidence in the record relied upon by the agency in not adopting the finding of fact contained in the administrative law judge's decision. Any finding of fact not specifically rejected as required by this subsection shall be deemed accepted for purposes of judicial review of the final decision pursuant to Article 4 of this Chapter. (b2) For each finding of fact made by the agency that is not contained in the administrative law judge's decision, the agency shall set forth separately and in detail the evidence in the record relied upon by the agency in making the finding of fact. Any new finding of fact made by the agency shall be supported by a preponderance of the admissible evidence in the record. The agency shall not make any new finding of fact that is inconsistent with a finding of fact contained in the administrative law judge's decision unless the finding of fact in the administrative law judge's decision is not adopted as required by subsection (b1) of this section. (b3) Except as provided in G.S. 150B-34(c), the agency shall adopt the decision of the administrative law judge unless the agency demonstrates that the decision of the administrative law judge is clearly contrary to the preponderance of the admissible evidence in the record. If the agency does not adopt the administrative law judge's decision as its final decision, the agency shall set forth its reasoning for the final decision in light of the findings of fact and conclusions of
Page 2 N.C. Gen. Stat. § 150B-36
law in the final decision, including any exercise of discretion by the agency. The agency may consider only the official record prepared pursuant to G.S. 150B-37 in making a final decision. A copy of the decision shall be served upon each party personally or by certified mail addressed to the party at the latest address given by the party to the agency, and a copy shall be furnished to his attorney of record and the Office of Administrative Hearings. (c) The following decisions made by administrative law judges in contested cases are final decisions appealable directly to superior court under Article 4 of this Chapter: (1) A determination that the Office of Administrative Hearings lacks jurisdiction. (2) An order entered pursuant to the authority in G.S. 7A-759(e). (3) An order entered pursuant to a written prehearing motion that either dismisses the contested case for failure of the petitioner to prosecute or grants the relief requested when a party does not comply with procedural requirements. (4) An order entered pursuant to a prehearing motion to dismiss the contested case in accordance with G.S. 1A-1, Rule 12(b) when the order disposes of all issues in the contested case. (5) An order entered pursuant to the authority in G.S. 150B-31(b) when the stipulation or waiver confers final decision authority on the administrative law judge. (d) An administrative law judge may grant judgment on the pleadings, pursuant to a motion made in accordance with G.S. 1A-1, Rule 12(c), or summary judgment, pursuant to a motion made in accordance with G.S. 1A-1, Rule 56, that disposes of all issues in the contested case. Notwithstanding subsection (b) of this section, a decision granting a motion for judgment on the pleadings or summary judgment need not include findings of fact or conclusions of law, except as determined by the administrative law judge to be required or allowed by G.S. 1A-1, Rule 12(c) or Rule 56. For any decision by the administrative law judge granting judgment on the pleadings or summary judgment that disposes of all issues in the contested case, the agency shall make a final decision. If the agency does not adopt the administrative law judge's decision, it shall set forth the basis for failing to adopt the decision and shall remand the case to the administrative law judge for hearing. The party aggrieved by the agency's decision shall be entitled to immediate judicial review of the decision under Article 4 of this Chapter. HISTORY: 1973, c. 1331, s. 1; 1975, 2nd Sess., c. 983, s. 67; 1985, c. 746, s. 1; 1985 (Reg. Sess., 1986), c. 1022, s. 1(16); 1987, c. 878, ss. 12, 24; 1987 (Reg. Sess., 1988), c. 1111, s. 20; 1991, c. 35, s. 7; 2000-190, s. 7; 2009-51, s. 1. NOTES: EFFECT OF AMENDMENTS. --Session Laws 2009-51, s. 1, effective June 1, 2009, and applicable to contested cases commenced on or after that date, added subdivision (c)(5).
EXHIBIT B To RESPONDENT DAQ’S RESPONSE TO PETITIONERS’ BRIEF IN SUPPORT OF EXCEPTIONS
BEFORE THE ENVIRONMENTAL MANAGEMENT COMMISSION 12 EHR 02850
COUNTY OF WAKE
North Carolina Coastal Federation, Cape Fear River Watch, Pender Watch and Conservancy, and Sierra Club, Petitioners, v. N.C. Department of Environment and Natural Resources, Division of Air Quality, Respondent, and
RESPONDENT DAQ’S RESPONSE TO PETITIONERS’ BRIEF IN SUPPORT OF EXCEPTIONS
Carolinas Cement Company, LLC, Respondent-Intervenor.
NOW COMES RESPONDENT, the Division of Air Quality (“DAQ” or “Respondent”) of the Department of Environment and Natural Resources (“DENR”), by and through the undersigned and hereby submits this Response to Petitioners’ Brief in Support of Exceptions.
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INDEX INTRODUCTION....................................................................................................3 ARGUMENT ............................................................................................................4 I. THE ADMINISTRATIVE LAW JUDGE PROPERLY DISPOSED OF THE CONTESTED CASE DUE TO FAILURE TO PROVE AN ESSENTIAL ELEMENT OF THE CLAIMS ....................................................5 II. STANDARD OF REVIEW............................................................................6 III. STANDING GENERALLY .......................................................................6 IV. SUBSTANTIAL PREJUDICE ...................................................................7 A. ALLEGING SUBSTANTIAL PREJUDICE IS A SUBJECT MATTER JURISDICTION ISSUE, BUT IT DOES NOT FOLLOW THAT SUBSTANTIAL PREJUDICE EQUATES TO STANDING ........................8 B. N.C. GEN. STAT. § 150B-29 REQUIRES PROOF OF SUBSTANTIAL PREJUDICE .........................................................................9 C. THE CASES REGARDING THE PROCEDURE REQUIRED TO PROVE SUBSTANTIAL PREJUDICE ARE DIRECTLY RELEVANT .....................................................................................................11 D. THE RIGHTS RELEVANT TO THIS CONTESTED CASE ARE EVALUATED IN LIGHT OF THE AIR POLLUTION CONTORL ACT’S PURPOSE TO ALLOW DEVELOPMENT, AND PETITIONERS HAVE FAILED TO DEMONSTRATE THAT THEIR HARM CANNOT BE ADEQUATELY PROVEN .......................................................................13 CONCLUSION.......................................................................................................18
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INTRODUCTION In this contested case, Petitioners North Carolina Coastal Federation, Cape Fear River Watch, Pender Watch and Conservancy, and Sierra Club (“Petitioners”) challenged the issuance of Air Quality Permit No. 07300R09 (“Final Permit”) to Respondent-Intervenor Carolinas Cement Company, LLC (“Carolinas Cement” or “Respondent-Intervenor”) on February 29, 2012 for the construction and operation of a Portland cement manufacturing facility in Castle Hayne, North Carolina. Petitioners alleged that their members live, work, and recreate in the area of the proposed facility and would be harmed by emission of air pollutants from the permitted facility. Petition at 1-2 (R.III.a. 93-94). On July 24, 2012, Administrative Law Judge Beecher R. Gray granted dismissal of Petitioners’ claim relating to the quarry at the permitted facility (claim 1 of the Petition, issues 1-4 of Petitioners’ Prehearing Statement) for failure to state a claim upon which relief can be granted and lack of subject matter jurisdiction. Amended Order Jul. 24, 2012 at 1 (R.IV.g. 1059). On September 23, 2013, after “extensive discovery, including the exchange of thousands of documents, dozens of interrogatories and requests for admission, and the depositions of six witnesses, including Petitioners’ expert witnesses,” Judge Gray granted summary judgment in favor of Petitioners on the issue of standing, and in favor of Respondent and Respondent-Intervenor on all remaining issues “on the ground that the ‘agency 3
named as respondent’ did not ‘substantially prejudice[]’ the petitioner[s’] rights.” Decision Granting Summary Judgment in Favor of Respondent and RespondentIntervenor, Sep. 23, 2013, at 2 (R.II. 89) (quoting N.C. Gen. Stat. § 150B-23(a)). DAQ’s summary judgment briefing contained a review of the underlying air quality law relevant to this case. DAQ will not herein recount this background information, which can be found in R.IV.j. Pursuant to the applicable version of North Carolina Administrative Procedure Act, N.C. Gen. Stat. § 150B-36(b) (2010) (attached hereto as Exhibit A for ease of reference), the decision of the Administrative Law Judge now comes before the Special Air Permit Appeals Committee (“Committee”) of the Environmental Management Commission for a final agency decision. 2011 N.C. Sess. Laws 398, §§ 20, 63; 2012 N.C. Sess. Laws 187, § 8.1 (modifying 2011 N.C. Sess. Laws 398). ARGUMENT The ALJ properly granted summary judgment for DAQ and Carolinas Cement on the issue of substantial prejudice. Petitioners were required by existing case law regarding N.C. Gen. Stat. § 150B-23(a) to prove the harm they would experience due to the alleged errors. Petitioners did not make such a showing, and therefore the Committee should adopt the ALJ’s decision. In addition, the ALJ properly dismissed Petitioners’ quarry-related claims for failure to state a claim 4
upon which relief can be granted. Therefore, the Committee should adopt this order as well. I.
THE ADMINISTRATIVE LAW JUDGE PROPERLY DISPOSED OF THE CONTESTED CASE DUE TO FAILURE TO PROVE AN ESSENTIAL ELEMENT OF THE CLAIMS Petitioners appear to argue that the Administrative Law Judge (“ALJ”) erred
by resolving the contested case on the issue of substantial prejudice without reaching the merits. Petitioners’ Exceptions at 7. The inability to produce evidence supporting an essential element of a claim is a proper basis for summary judgment, however. Roumillat v. Simplistic Enterprises, Inc., 331 N.C. 57, 63, 414 S.E.2d 339, 342 (1992). Substantial prejudice is an essential element of any claim under the North Carolina Administrative Procedure Act (“APA”). N.C. Gen. Stat. § 150B-23; Britthaven, Inc. v. N.C. Dep’t of Human Res., Div. of Facility Servs., 118 N.C. App. 379, 382, 455 S.E.2d 455, 459, disc rev. denied, 341 N.C. 418, 461 S.E.2d 754 (1995). Therefore, the ALJ properly disposed of the contested case on the issue of substantial prejudice without reaching the remaining elements of Petitioners’ claims. 1
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Petitioners note that the ALJ’s decision did not include findings of fact or conclusions of law. Petitioners’ Exceptions at 8. This format, however, is expressly allowed by the applicable version of the APA. N.C. Gen. Stat. § 150B-36(d) (2010).
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II.
STANDARD OF REVIEW Under the APA, the agency (here the Committee) reviews an ALJ’s order
granting summary judgment, and if the Committee determines that the ALJ’s order is incorrect, it “shall set forth the basis for failing to adopt the decision and shall remand the case to the administrative law judge for hearing.” N.C. Gen. Stat. § 150B-36(d) (2010). Orders granting summary judgment are reviewed to determine whether any errors of law were made, and the Committee can “freely substitute[] its own judgment” for that of the ALJ. Burnham v. S&L Sawmill, Inc., ___ N.C. App. ___, ___, 749 S.E.2d 75, 79, disc rev. denied, 2013 N.C. LEXIS 1413 (2013). Summary judgment is proper when “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.” N.C. Gen. Stat. § 1A-1, Rule 56(c). III.
STANDING GENERALLY Petitioners in their memoranda to the ALJ and to this Committee have
mischaracterized the relationship between standing and substantial prejudice. Contrary to Petitioners’ assertions, establishing standing does not automatically equate to having established substantial prejudice. In order to initiate a case, a party must have “standing.” Generally speaking, if the initiating party does not have standing, there is no jurisdiction to hear the 6
case (in other words, the court does not have “subject matter jurisdiction”). See Jackson v. N.C. Dep’t of Human Res., 131 N.C. App. 179, 182-83, 505 S.E.2d 899, 901-02 (1998) (“Whether one has standing to obtain judicial review of an administrative decision is a question of subject matter jurisdiction.”) (citation omitted), disc. review denied, 350 N.C. 594, 537 S.E.2d 213 (1999). In environmental cases under the APA, a “person aggrieved” has standing to challenge agency action, or in other words, has the ability to initiate a contested case. N.C. Gen. Stat. § 150B-23(a); Empire Power Co. v. N.C. Dep’t of Env’t, Health & Natural Res. Div. of Envtl. Mgmt., 337 N.C. 569, 588, 447 S.E.2d 768, 779, reh’g denied, 338 N.C. 314, 451 S.E.2d 634 (1994). “Person aggrieved” is defined in the APA as “any person or group of persons of common interest directly or indirectly affected substantially in his or its person, property, or employment by an administrative decision.” N.C. Gen. Stat. § 150B-2(6). The North Carolina Supreme Court has explained that the analysis for standing depends upon the circumstances involved. Empire Power, 337 N.C. at 588, 447 S.E.2d at 779. IV.
SUBSTANTIAL PREJUDICE In the order on summary judgment, Petitioners’ motion regarding standing
was granted. Decision Granting Summary Judgment in Favor of Respondent and Respondent-Intervenor, Sep. 23, 2013, at 2 (R.II. 89). However, Judge Gray, the same ALJ whose ruling on standing was upheld by the North Carolina Supreme 7
Court in Empire Power, 337 N.C. at 573, 596, 447 S.E.2d at 771, 784, did not find that substantial prejudice was established merely by the existence of standing. In his order, Judge Gray instead granted Respondent’s and Respondent-Intervenor’s motions for summary judgment on all remaining issues in the case because Petitioners failed to demonstrate or forecast substantial prejudice. Decision Granting Summary Judgment in Favor of Respondent and Respondent-Intervenor, Sep. 23, 2013, at 2 (R.II. 89). Petitioners opine that the U.S. Environmental Protection Agency would revoke approval for North Carolina’s permitting program if this body upholds the ALJ’s order. Petitioners’ Exceptions at 19 n.8. In support of this argument, Petitioners once again point to irrelevant case law and other sources that solely address standing, rather than substantial prejudice. Petitioners’ Exceptions at 1719. As explained below, Petitioners’ argument fails because substantial prejudice is separate and distinct from standing. A.
ALLEGING SUBSTANTIAL PREJUDICE IS A SUBJECT MATTER JURISDICTION ISSUE, BUT IT DOES NOT FOLLOW THAT SUBSTANTIAL PREJUDICE EQUATES TO STANDING
Any petitioner in a contested case under the APA must initiate the case with a petition that alleges substantial prejudice pursuant to N.C. Gen. Stat. § 150B23(a) in order to give the Office of Administrative Hearings (“OAH”) subject matter jurisdiction, allowing OAH to hear the matter. N.C. Gen. Stat. § 150B8
23(a) (requiring that a petition “shall state facts tending to establish,” among other things, that the agency has substantially prejudiced the petitioner’s rights); see also Gummels v. N.C. Dep’t of Human Resources, 98 N.C. App. 675, 392 S.E.2d 113 (1990) (holding that when such a statutory procedure was not followed, the petition was subject to dismissal). In order to be successful in the contested case, however, the petitioner must also prove substantial prejudice. N.C. Gen. Stat. § 150B-29. Therefore, alleging substantial prejudice is indeed an issue of subject matter jurisdiction, but proving substantial prejudice is simply a matter of meeting the petitioner’s burden to prove its claims. Petitioners misconstrue DAQ’s statements on this subject, contending that DAQ has admitted that substantial prejudice equates with standing because DAQ noted that Petitioners must allege substantial prejudice in their Petition in order for OAH to have subject matter jurisdiction. Petitioners’ Exceptions at 12. To the contrary, this incorrect interpretation of DAQ’s statements, which were entirely consistent with the law as stated above, further demonstrates Petitioners’ misunderstanding of the law. B. N.C. GEN. STAT. § 150B-29 REQUIRES PROOF OF SUBSTANTIAL PREJUDICE Petitioners correctly note that N.C. Gen. Stat. § 150B-29 requires them to prove the allegations of their petition. Petitioners’ Exceptions at 14. However, Petitioners then claim that because they need only prove the allegations of their 9
petition, including the allegations regarding substantial prejudice, they are excused from providing the level of proof required under the North Carolina Rules of Civil Procedure. This argument is untenable. The North Carolina Rules of Civil Procedure, which apply to civil suits in the general courts of justice, also expressly apply to matters heard by OAH. 26 NCAC 3 .0101(b). Whereas a civil suit is initiated with a complaint (also called a “pleading”) that alleges that the plaintiff incurred damages legally attributable to the defendant, in OAH a contested case is initiated by a petition alleging the petitioner has been substantially prejudiced. See N.C. Gen. Stat. § 150B-23(a). The petition is therefore subject to the “notice pleading” requirements under the Rules of Civil Procedure, which allow pleadings to merely provide “a short and plain statement of the claim that will give the defendant fair notice of what the plaintiff’s claim is and the grounds upon which it rests.” Sutton v. Duke, 277 N.C. 94, 102, 176 S.E.2d 161, 165 (1970) (citations and internal quotation marks omitted); see also N.C. Gen. Stat. § 1A-1, Rule 8(a)(1). As applied to damages in a civil suit, notice pleading requires that the plaintiff’s damages must be set forth generally in the initial complaint, but does not require a specific measure of damages to be included therein. Holloway v. Wachovia Bank & Trust Co., N.A., 339 N.C. 338, 346, 452 S.E.2d 233, 237 (1994). The petition’s facts tending to demonstrate substantial prejudice, therefore, may conform to this standard. In fact, 10
in a recent decision regarding substantial prejudice, the petition filed to initiate the contested case made general allegations regarding substantial prejudice, but the North Carolina Court of Appeals held that once the petitioner was presenting evidence of that element of its claims, more was required than simply general allegations. Compare Caromont Petition Apr. 29, 2011 at 3 (attached hereto as Exhibit B) with CaroMont Health, Inc. v. N.C. HHS Div. of Health Serv. Regulation, ___ N.C. App. ___, 751 S.E.2d 244 (2013) (finding the petitioners’ proof of substantial prejudice deficient, despite the fact that it went beyond the allegations of the petition). Here, assuming that Petitioners sufficiently alleged that they could be harmed by the permitted facility’s emissions for purposes of notice pleading, these allegations do not relieve Petitioners of having to meet their burden to establish substantial prejudice with sufficient evidence, as discussed below. C. THE CASES REGARDING THE PROCEDURE REQUIRED TO PROVE SUBSTANTIAL PREJUDICE ARE DIRECTLY RELEVANT Petitioners argue that the cases interpreting N.C. Gen. Stat. § 150B-23 in the context of decisions by the North Carolina Department of Health and Human Services (“DHHS”) are not relevant to environmental permitting cases. Petitioners’ Exceptions at 17. These cases directly address proof of substantial
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prejudice required pursuant to N.C. Gen. Stat. § 150B-23(a), the provision at issue here, and are therefore immanently relevant. 2 As stated in Parkway Urology, P.A. v. N.C. HHS, 205 N.C. App. 529, 539, 696 S.E.2d 187, 195 (2010), disc rev. denied, 365 N.C. 78, 705 S.E.2d 739 (2011), in order to establish substantial prejudice, a petitioner must be specific about the harm. In Parkway, the court explained that otherwise, any increase in the allegedly harmful conduct (competition, in that case, and here, emission of pollutants) would be considered “inherently and substantially prejudicial” to a petitioner, which the court recognized “would eviscerate the substantial prejudice requirement contained in N.C. Gen. Stat. § 150B-23.” Id. at 539, 696 S.E.2d at 195; see also CaroMont, ___ N.C. App. ___, 751 S.E.2d 244 (reiterating the Parkway analysis for proof required to establish substantial prejudice). In much the same manner, reading “substantial prejudice” to require that any permit issued to any facility automatically substantially prejudices petitioners with standing would read the term “substantial prejudice” out of the statute. This could not have been the intent of the General Assembly. N.C. Dep’t of Corr. v. N.C. Med. Bd., 363 N.C. 189,
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Petitioners’ claim that this Committee should not refer to cases interpreting the precise language applicable to this case is puzzling in light of Petitioners’ own reference during summary judgment briefing to case law interpreting N.C. Gen. Stat. § 150B-23 in the context of numerous other administrative agencies’ decisions, including certificate of need cases. Petitioners’ Memo on Summary Judgment at 21 (R.IV.i. 5097) (citing decisions regarding actions by other agencies, not just those from the environmental arena, including a certificate of need case).
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201, 675 S.E.2d 641, 649 (2009) (noting that courts should “give every word of the statute effect, presuming that the legislature carefully chose each word used”). 3 D. THE RIGHTS RELEVANT TO THIS CONTESTED CASE ARE EVALUATED IN LIGHT OF THE AIR POLLUTION CONTORL ACT’S PURPOSE TO ALLOW DEVELOPMENT, AND PETITIONERS HAVE FAILED TO DEMONSTRATE THAT THEIR HARM CANNOT BE ADEQUATELY PROVEN Petitioners note that the rights protected under the APA are determined by reference to the organic statute, which is the Air Pollution Control Act here. Petitioners’ Exceptions at 16. What Petitioners conveniently ignore, however, is the applicable purpose statement found in N.C. Gen. Stat. § 143-211(c), which includes, among other things, “to encourage the expansion of employment opportunities, [and] to provide a permanent foundation for healthy industrial development.” Therefore, the substantial harm Petitioners must demonstrate is more akin to that of the existing cases interpreting substantial prejudice in the context of DHHS’ certificates of need than Petitioners wish to acknowledge. While the petitioners in those cases must prove something more than normal competition due to their organic statute, petitioners in environmental permitting cases must prove that they are prejudiced by something more than simply the lawful permitting of a facility. 3
Petitioners claim that under the existing cases interpreting substantial prejudice, they are prejudiced as a matter of law. Petitioners’ Exceptions at 21 (citing Hospice at Greensboro, Inc. v. N.C. HHS Div. of Facility Servs., 185 N.C. App. 1, 647 S.E.2d 651 (2007). However, the current situation is not analogous. See N.C. Gen. Stat. §§ 131E-175, 131E-183(a)(6).
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Petitioners also allege that harm in this context is difficult if not impossible to prove. Petitioners provide no legitimate justification for this argument. They alleged adverse health impacts from the Facility’s emissions in their petition, and retained a health expert, Dr. Alan H. Lockwood. However, perhaps Dr. Lockwood was not the best expert for the case, or not well prepared. Dr. Lockwood is a retired neurologist, not an epidemiologist or toxicologist. He had never examined any risk assessment in connection with any cement plant. Lockwood Dep. at 22:48 (R.IV.h. Ex. 6, 2155). Dr. Lockwood was not even aware of emission limits in the Final Permit until the night before his deposition. Lockwood Dep. at 211:1219 (R.IV.h. Ex. 6, 2344). During summary judgment briefing, Petitioners did not produce any affidavit from Dr. Lockwood attesting to whether there would be an increase in health risks if the emissions limits in the Final Permit were not decreased to the levels that Petitioners’ engineering expert, Dr. Sahu, opined were appropriate. It is possible that Dr. Lockwood could not specify any actual difference in risks. The record provides no answer to the question because Petitioners insist that they need not prove their allegations. See, e.g., Petitioners’ Exceptions at 9. Moreover, the burden of proof is on Petitioners. Britthaven, 118 N.C. App. at 382, 455 S.E.2d at 459. Judge Gray, recognizing the difference between allegations and proof, aggrieved party status and substantial prejudice,
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correctly granted judgment for Respondent and Respondent-Intervenor. The Committee should uphold his decision. V.
THE ALJ PROPERLY DISMISSED PETITIONERS’ QUARRYRELATED CLAIMS Petitioners’ quarry claims were based on the premise that DAQ erred in
relying on the quarry plan submitted to DAQ with Carolinas Cement’s April 2008 application because Carolinas Cement submitted a different quarry plan to the Army Corps of Engineers (the “Corps”) in November of 2008 in connection with a National Environmental Policy Act (“NEPA”) process for Carolinas Cement’s Clean Water Act Section 404 permit. Therefore, Petitioners contend that the emissions limits in the Final Permit were based on “inaccurate and outdated information about the boundaries and operations of the quarry,” and that DAQ did not provide accurate information to the public. Petitioners’ Exceptions at 23, 27; Petition at 7-9 (R.III.a. 99-101); Petitioners’ Prehearing Statement at 14-22 (R.III.b. 360-68). As an initial matter, Petitioners concede that the November 2008 quarry plan was not submitted to DAQ. Petitioners’ Prehearing Statement at 16 (R.III.b. 362). Therefore, whatever that plan is, it is not a part of the permitting record. Second, the information in the permitting record made it absolutely clear that the Final Permit did not authorize Carolinas Cement to use any quarry other than that described in the April 2008 quarry plan that was submitted to DAQ with their 15
application. Both the Final Permit and the cover letter sent to Carolinas Cement with the Final Permit state that “if the facility chooses to utilize limestone from a quarry different than that represented in Application No. 6500296.08A, the Permittee shall apply for a modification of this Air Quality Permit.” Final Permit at 77, Petition Ex. A (R.III.a. 188); Cover letter attached to Final Permit, Petition Ex. A (R.III.a. 109). If Carolinas Cement were to use raw materials collected from outside the geographic scope of the April 2008 quarry plan, it would be out of compliance with the Final Permit. Third, with regard to Petitioners’ claim of inaccurate notice, information regarding the boundaries and layout of the quarry that Carolinas Cement is authorized to use has been publicly available since at least September 2009, when the draft air permit was publicly noticed. This information is set forth in Sheet 2 of Carolinas Cement’s Plot Plan and Survey Maps, which accompanied Application No. 6500296.08A. See 4/8/2008 “CCC Plot Plan and Survey Maps” available at http://daq.state.nc.us/permits/psd/titan.shtml (R.IV.h. Ex. 11). Petitioners’ suggestion that Judge Gray should have ignored these facts and relied solely on their allegations is contrary to the law governing the standard of review of motions to dismiss. In reviewing a motion to dismiss pursuant to Rule 12(b)(1) for lack of subject matter jurisdiction, matters outside the pleadings may be considered. Keith v. Wallerich, 201 N.C. App. 550, 554, 687 S.E.2d 299, 302 16
(2009) (affirming dismissal for lack of subject matter jurisdiction where the trial court considered matters outside the pleadings). “A complaint may be dismissed pursuant to Rule 12(b)(6) if there is no law to support the claim made, an absence of facts sufficient to make a good claim, or the disclosure of facts which will necessarily defeat the claim.” Robertson v. Boyd, 88 N.C. App. 437, 441, 363 S.E.2d 672, 675 (1988); Oberlin Capital, LP v. Slavin, 147 N.C. App. 52, 56, 554 S.E.2d 840, 844 (2001). In reaching a ruling on a motion to dismiss, courts are authorized to examine all documents referenced in the complaint. “[A] court may properly consider documents which are the subject of a plaintiff’s complaint and to which the complaint specifically refers even though they are presented by the defendant.” Oberlin Capital, 147 N.C. App. at 60, 554 S.E.2d at 847 (citing Robertson, 88 N.C. App. at 441, 363 S.E.2d at 675); Eastway Wrecker Serv., Inc. v. City of Charlotte, 165 N.C. App. 639, 642, 599 S.E.2d 410, 412 (2004), aff’d per curiam, 360 N.C. 167, 622 S.E.2d 495 (2005). Accordingly, the Administrative Law Judge can consider the core permitting documents regarding which Petitioners have sought relief.
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The facts disclosed in the permitting documents attached to the Petition necessarily defeated Petitioners’ quarry claims. Judge Gray properly dismissed these claims and the Committee should affirm his decision. 4 CONCLUSION For the foregoing reasons, DAQ requests that the Committee adopt the ALJ’s decisions in full.
4
Petitioners had also claimed that DAQ erred in relying on a quarry plan that was not approved by the Corps or the Division of Water Quality (“DWQ”). This claim, too, was premised on the notion that the November 2008 quarry plan was the plan DAQ was permitting. Petitioners’ Prehearing Statement at 17-19 (R.III.b. 363-65). While Petitioners reference “quarry-based claims” in their exceptions, Petitioners’ Exceptions at 7, and list the four claims in a footnote, Petitioners’ Exceptions at 23, Petitioners failed to discuss this particular claim in the body of their brief. In any event, as set forth in DAQ’s Motion to Dismiss at 6-8 (R.IV.c. 823-25), this claim is also belied by the fact that the Final Permit does not authorize use of the November 2008 quarry. Additionally, there was no suggestion that the April 2008 quarry authorized in the Final Permit needs any review by the Corps or DWQ. Finally, even if some review by the Corps or DWQ were required, there is no law prohibiting DAQ from issuing the Final Permit first. The Final Permit does not relieve CCC “of the obligation to comply with any other applicable local, state, or federal requirements, including but not limited to the obligation to obtain the permits and authorizations for the construction and operation of the proposed facility. Additionally . . . the issuance of th[e] Air Permit does not represent any commitment on the part of the State to issue any of the remaining permits. Each additional permit will need to be obtained on its respective merits.” Cover letter attached to Final Permit, at 2, Petition Ex. A (R.III.a. 109). 18
EXHIBIT A To RESPONDENT DAQ’S RESPONSE TO PETITIONERS’ BRIEF IN SUPPORT OF EXCEPTIONS
Page 1 N.C. Gen. Stat. § 150B-36
GENERAL STATUTES OF NORTH CAROLINA Copyright 2011 by Matthew Bender & Company, Inc. a member of the LexisNexis Group. All rights reserved *** ARCHIVE DATA *** *** ***STATUTES CURRENT THROUGH THE 2010 REGULAR SESSION*** *** *** ***ANNOTATIONS CURRENT THROUGH June 24, 2011*** *** CHAPTER 150B. ADMINISTRATIVE PROCEDURE ACT ARTICLE 3. ADMINISTRATIVE HEARINGS N.C. Gen. Stat. § 150B-36 (2011) § 150B-36. Final decision
(a) Before the agency makes a final decision, it shall give each party an opportunity to file exceptions to the decision made by the administrative law judge, and to present written arguments to those in the agency who will make the final decision or order. If a party files in good faith a timely and sufficient affidavit of personal bias or other reason for disqualification of a member of the agency making the final decision, the agency shall determine the matter as a part of the record in the case, and the determination is subject to judicial review at the conclusion of the case. (b) Except as provided in G.S. 150B-34(c) or subsection (d) of this section, a final decision in a contested case shall be made by the agency in writing after review of the official record as defined in G.S. 150B-37(a) and shall include findings of fact and conclusions of law. The agency shall adopt each finding of fact contained in the administrative law judge's decision unless the finding is clearly contrary to the preponderance of the admissible evidence, giving due regard to the opportunity of the administrative law judge to evaluate the credibility of witnesses. For each finding of fact not adopted by the agency and each finding of fact made by the agency that is not contained in the administrative law judge's decision, the agency shall follow the procedures set forth in subsections (b1) and (b2) of this section. (b1) For each finding of fact not adopted by the agency, the agency shall set forth separately and in detail the following: (1) The reasons for not adopting the findings of fact. (2) The evidence in the record relied upon by the agency in not adopting the finding of fact contained in the administrative law judge's decision. Any finding of fact not specifically rejected as required by this subsection shall be deemed accepted for purposes of judicial review of the final decision pursuant to Article 4 of this Chapter. (b2) For each finding of fact made by the agency that is not contained in the administrative law judge's decision, the agency shall set forth separately and in detail the evidence in the record relied upon by the agency in making the finding of fact. Any new finding of fact made by the agency shall be supported by a preponderance of the admissible evidence in the record. The agency shall not make any new finding of fact that is inconsistent with a finding of fact contained in the administrative law judge's decision unless the finding of fact in the administrative law judge's decision is not adopted as required by subsection (b1) of this section. (b3) Except as provided in G.S. 150B-34(c), the agency shall adopt the decision of the administrative law judge unless the agency demonstrates that the decision of the administrative law judge is clearly contrary to the preponderance of the admissible evidence in the record. If the agency does not adopt the administrative law judge's decision as its final decision, the agency shall set forth its reasoning for the final decision in light of the findings of fact and conclusions of
Page 2 N.C. Gen. Stat. § 150B-36
law in the final decision, including any exercise of discretion by the agency. The agency may consider only the official record prepared pursuant to G.S. 150B-37 in making a final decision. A copy of the decision shall be served upon each party personally or by certified mail addressed to the party at the latest address given by the party to the agency, and a copy shall be furnished to his attorney of record and the Office of Administrative Hearings. (c) The following decisions made by administrative law judges in contested cases are final decisions appealable directly to superior court under Article 4 of this Chapter: (1) A determination that the Office of Administrative Hearings lacks jurisdiction. (2) An order entered pursuant to the authority in G.S. 7A-759(e). (3) An order entered pursuant to a written prehearing motion that either dismisses the contested case for failure of the petitioner to prosecute or grants the relief requested when a party does not comply with procedural requirements. (4) An order entered pursuant to a prehearing motion to dismiss the contested case in accordance with G.S. 1A-1, Rule 12(b) when the order disposes of all issues in the contested case. (5) An order entered pursuant to the authority in G.S. 150B-31(b) when the stipulation or waiver confers final decision authority on the administrative law judge. (d) An administrative law judge may grant judgment on the pleadings, pursuant to a motion made in accordance with G.S. 1A-1, Rule 12(c), or summary judgment, pursuant to a motion made in accordance with G.S. 1A-1, Rule 56, that disposes of all issues in the contested case. Notwithstanding subsection (b) of this section, a decision granting a motion for judgment on the pleadings or summary judgment need not include findings of fact or conclusions of law, except as determined by the administrative law judge to be required or allowed by G.S. 1A-1, Rule 12(c) or Rule 56. For any decision by the administrative law judge granting judgment on the pleadings or summary judgment that disposes of all issues in the contested case, the agency shall make a final decision. If the agency does not adopt the administrative law judge's decision, it shall set forth the basis for failing to adopt the decision and shall remand the case to the administrative law judge for hearing. The party aggrieved by the agency's decision shall be entitled to immediate judicial review of the decision under Article 4 of this Chapter. HISTORY: 1973, c. 1331, s. 1; 1975, 2nd Sess., c. 983, s. 67; 1985, c. 746, s. 1; 1985 (Reg. Sess., 1986), c. 1022, s. 1(16); 1987, c. 878, ss. 12, 24; 1987 (Reg. Sess., 1988), c. 1111, s. 20; 1991, c. 35, s. 7; 2000-190, s. 7; 2009-51, s. 1. NOTES: EFFECT OF AMENDMENTS. --Session Laws 2009-51, s. 1, effective June 1, 2009, and applicable to contested cases commenced on or after that date, added subdivision (c)(5).
EXHIBIT B To RESPONDENT DAQ’S RESPONSE TO PETITIONERS’ BRIEF IN SUPPORT OF EXCEPTIONS
