Kiawah Development v. So. Car. Dept. of Health & Environ. Cont.

THE STATE OF SOUTH CAROLINA
In The Supreme Court

Kiawah Development Partners, II, Respondent,

v.

South Carolina Department of Health and Environmental Control, Appellant.

and

South Carolina Coastal Conservation League, Appellant,

v.

South Carolina Department of Health and Environmental Control and Kiawah Development Partners, II, of whom South Carolina Department of Health and Environmental Control is, Appellant,

and Kiawah Development Partners, II, is, Respondent.

Appeal from Richland County
Ralph K. Anderson, III, Administrative Law Judge

Opinion No.  27065
Heard January 18, 2011 Filed November 21, 2011 

REVERSED AND REMANDED

Amy E. Armstrong, of Pawleys Island, for Appellant SC Coastal Conservation League; Bradley D. Churdar and Davis A. Whitfield-Cargile, both of Charleston; and Carlisle  Roberts, Jr, of Columbia, for Appellant SCDHEC.

G. Trenholm Walker , of Pratt-Thomas & Walker, and Gedney M. Howe, III, both of Charleston, for Respondent.

JUSTICE PLEICONES:  The South Carolina Coastal Conservation League (League) and the South Carolina Department of Health and Environmental Control (DHEC) appeal an administrative law judge's (ALJ) order permitting respondent to construct erosion control devices in a critical zone on Captain Sam's Spit (Spit).  We reverse and remand, finding the ALJ's decision is affected by numerous errors of law.

FACTS

Respondent owns a peninsula (Spit) which lies primarily south of Kiawah Island, surrounded on three sides by the Atlantic Ocean, the Kiawah River, and by Capitan Sam's Inlet, which separates the Spit from Seabrook Island.  At the time of this hearing, the Spit was approximately a mile and a third long, with the narrowest part being the "neck" where the Spit joins Kiawah Island.  The neck is approximately 450 feet wide, as measured from the critical line on the Kiawah River side to the mean high water line on the Atlantic Ocean side.  At its widest part, the Spit has a high ground width of more than 1,600 feet.  The Spit has a number of high dune ridges running its entire length, and, on the river side, a "young and growing maritime forest."

For the past sixty years, the Spit has been "growing," accreting sand on the ocean side at a greater rate than it has been losing ground to erosion on the river side.  Over the past three hundred years, however, a version of the Spit has formed and disappeared at least twice.  The present Spit began to reform around 1949. 

At present, respondent leases oceanfront property near the neck to the Charleston County Parks and Recreation Commission, which operates Beachwalker Park there.  The Spit has approximately 150 acres of highland above mean high water, and respondent has obtained permission from the Town of Kiawah Island to develop not more than 50 home sites, on not more than 20 of the 31 highland acres which lie between the river's critical line and the set-back line established by DHEC's Ocean and Coastal Resource Management (OCRM) division.

Respondent sought a permit from DHEC to erect a 2,783 foot bulkhead/revetment combination along the Kiawah River, with the structure to begin at the neck, that is, at Beachwalker Park.  DHEC authorized construction of the proposed erosion control device for 270 feet, beginning at Beachwalker Park, and denied the remaining portion of the request.  Both the League and respondent requested a contested case hearing before the ALJ, the League to protest the portion of the permit request which was granted, and respondent to challenge the portion denied.

 After an evidentiary hearing, the ALJ "amended" DHEC's original permit to allow respondent to construct a combination of bulkheads, which would be placed upright against the vertical face of riverbank, and revetments, in the form of a flexible interconnected articulated concrete block (ACB) mat, along the Spit's riverside sandy shoreline.  The mat was to extend from the bulkhead toward the river.  The bulkhead could not be installed in certain areas, and the ACB mat permitted by the ALJ would vary in width from 40 feet to eight feet.

The ALJ found that respondent needed this permit in order to stabilize the width of the neck so that it could support an access road with underground utilities, road shelters, and other improvements.  He also found such a road was required in order for respondent to develop the Spit, and that the entire revetment/bulkhead system was necessary in order for "the developable land on the peninsula [to] . . . be readily marketable." 

The League and DHEC appeal.  We have consolidated the appeals.

ISSUES

I)  Did the ALJ err in not deferring to the DHEC Board's interpretation of its rules and regulations, including the agency's exclusive right to issue a permit?

II)  Did the ALJ err in its interpretation and application of the Coastal Zone Management Act and the Coastal Management Program, and the applicable statutes and regulations?

I.  Deference/Authority

In 2006, the General Assembly restructured the Administrative Procedures Act.  2006 Act. No. 387; Chem-Nuclear Sys., LLC v. S.C. Dep't of Health and Enviro. Control, 347 S.C. 201, 648 S.E.2d 601 (2007).  Under this restructuring, the ALJ has become the agency fact-finder in a contested case such as this.  See S.C. Code Ann. § 1-23-600(A) (Supp. 2010).  Despite that change in function, DHEC retains the exclusive authority to issue a permit,[1] and the ALJ must give the same deference to the agency's interpretation of its statutes and regulations that a court would.  Media Gen. Comm., Inc. v. S.C. Dep't of Health and Enviro. Control, 388 S.C. 138, 694 S.E.2d 525 (2010).

The appellants contend the ALJ failed to give the deference due DHEC's interpretation of the statutes and regulations, and further that he exceeded his authority in rewriting the permit, resulting in one with terms neither approved by DHEC nor sought by respondent.  We agree.  Oakwood Landfill, supra; Media Gen., supra.  These errors require that we reverse the ALJ's decision, and remand it for reconsideration.  As the order contains other legal errors, we address those which will arise upon remand.

II.   Statutes and Regulations

Appellants contend that the ALJ misconstrued the governing statutes and regulations.  We agree.

The Spit is part of South Carolina's coastal zone,[2] and the structure which is at issue here would be constructed in the critical area.[3]  It is the policy of the State to balance development in the coastal zone with concern for sensitive and fragile coastal areas.[4] 

Under  the Coastal Zone Management Act (CZMA), appellant DHEC, through OCRM, was required to develop a comprehensive coastal management program (CMP) for the coastal zone, and was given the responsibility to enforce and administer the CMP.  S.C. Code Ann. § 48-39-80 (2008); Spectre, LLC v. S.C.Dep't of Health and Enviro. Control, 386 S.C. 357, 688 S.E.2d 844 (2010).  DHEC was also required by statute to enact rules and regulations to enforce the CMP.  § 48-39-80. 

Section 48-39-150 (2008) states the general considerations to be used by OCRM in determining whether to issue a permit for construction in the critical area, and reiterates that the policies found in § 48-39-20 (2008), requiring that high priority be given to protecting "natural systems in the coastal zone while balancing economic interests," and § 48-39-30 (2008), requiring that "[c]ritical areas . . . be used to provide the combination of uses which will ensure the maximum benefit to the people, but not necessarily a combination of uses which will generate measurable, maximum dollar benefits," must be honored. 

The General Assembly further required that, in determining whether to permit erosion devices such as the ones at issue here, OCRM must act in the manner it "deem[ed] most advantageous to the State" in order to promote public health, safety, and welfare; to protect public and private property from beach and shore destruction; and to ensure the continued use of tidelands, submerged lands, and waters for public purposes.  S.C. Code Ann. § 48-39-120(F) (2008).

OCRM is charged with two separate, but interrelated responsibilities.  As explained in the CMP,

Two types of management authority are granted in two specific areas of the State.  [OCRM][5] has direct control through a permit program over critical areas…Direct permitting authority is specifically limited to these critical areas.  Indirect management authority of coastal resources is granted to [OCRM] in…the coastal zone…."

CMP, Chapter II, cited in Spectre, LLC, supra.

In this case the ALJ narrowed consideration of the public interest solely to the impact of the proposed revetment and bulkhead on the shore of the Kiawah River, that is, to the critical area upon which the device is to be constructed.  As state statutes, regulations, and the CMP make clear, the public interest encompasses that of the entire Spit, and the surrounding coastal zone.  In determining that he could not consider the impact beyond the critical area, the ALJ opined that to do so would allow OCRM to "deny critical area permits near towns or cities simply because it believes the permits would facilitate upland sprawl and general over-development."  He went on to state, "In fact, [an OCRM witness] testified he denied the revetment…other than adjacent to Beachwalker Park, because he believed potential residential development would destroy the pristine habitat of Captain Sam's.  Thus [OCRM] avers that it has the authority through coastal permitting to deny upland development even against [municipal] approval of that development through its zoning process."  By law, OCRM must take into account the impact of any critical area permit on upland sprawl, general overdevelopment, and pristine habitats.  E.g., Reg. 30-1(C)(1), infra; CMP, Chapter II, supra. 

The ALJ misconstrued OCRM's role here.  The failure of the order to consider the policies set forth in the statutes, reiterated in the CMP and the regulations, is an error of law requiring we reverse and remand this order.

Both appellants argue that the ALJ misunderstood Reg. 30-11(C)(1), and the League also contends that the ALJ misapplied Reg. 30-12(C)(1).  We agree with both contentions.

Regulation 30-11 is entitled "General Guidelines for All Critical Areas."  Subsection (B) restates the general considerations for permitting in critical areas found in § 48-39-150.  Subsection (C), entitled "Further Guidelines" provides that OCRM's permit decisions must be based in part on the policies in §§ 48-39-20 and-30, and take into consideration:

(1)  The extent to which long-range, cumulative effects of the project may result within the context of other possible developments and the general character of the area.

Reg. 30-11 C(1).

The ALJ held that Reg. 30-11 C(1) requires that OCRM consider only the cumulative impact of the proposed project on the critical area itself, and does not permit OCRM to look at the impact on the area surrounding the critical area for which the permit is sought.[6] 

Read in its entirety, Reg. 30-11 is consistent with the two prong management approach stated in the CMP.  While OCRM's permitting authority is limited to critical areas, it is charged with managing the entire coastal zone, and thus permitting decisions are not to be made in a vacuum.  For example, Reg. 30-11(B) specifically provides that in assessing the potential impact of critical area projects, OCRM must be guided by the policies in §§ 48-39-20 and -30, both of which are concerned with the coastal zone, and its vulnerability to manmade alterations.  See § 48-39-20(B), (D), (E), and (F); § 48-39-30(A), (B)(1), (2), (5), and (E).  Reg. 30-11(C) reiterates the need for the public policies found in these two statutes to be considered in making permitting decisions pursuant to § 48-39-150, the statute governing this bulkhead and revetment.  Further, subsection (C)(1) specifically refers to the long range cumulative effects of permitting a project within the context of other possible development and the general character of the area.  Since the ALJ's decision was controlled by his erroneous belief that all permitting decisions in the critical area must be decided in a vacuum, this error of law alone requires we reverse and remand.

The League contends the ALJ also committed an error of law in applying Reg. 30-12(C)(1).  This regulation provides the standards for bulkheads and revetments that, like those sought by respondent, are not ocean front:

(c)  Bulkheads and revetments will be prohibited where . . . public access is adversely affected unless upland is being lost due to tidally induced erosion.

(d)  Bulkheads and revetments will be prohibited where public access is adversely affected unless no feasible alternative exists.

The ALJ found that "public access to the riverbank at low tide may be affected on a very limited basis" and that the revetment "degrades public uses of the shoreline."  In other sections of the order, however, he stated the project "does not eliminate all public access," and would not "significantly impair public access to critical areas."  The prohibitions in Regulation 30-12(C)(1) were triggered by the ALJ's finding that there was some adverse effect on public access, even if the ALJ believed this effect was not substantial.  The plain language of the regulation demands that any adverse effect on public access must be overcome by a showing that one of the exceptions in parts (c) and (d) apply. 

We agree with the League that the ALJ did not make sufficient findings of fact with regard to the lack of feasible alternatives as required by Reg. 30-12(C)(1)(d).  The ALJ found "evidence did not establish that there was a feasible alternative to the bulkhead/revetment that would stabilize the river shoreline . . . . ," a finding which imposed upon the League the burden to demonstrate that there was a feasible alternative.  Regulation 30-12(C)(1)(d) creates a presumption that a structure which will adversely affect public access is prohibited unless the applicant shows there are no feasible alternatives, and thus the duty to show that the structure fits within an exception to the prohibition falls on the applicant, i.e., upon respondent.  We agree with the league that the order's findings with regard to Reg. 30-12(C)(1)(d) must be reversed.

                                                CONCLUSION

The appealed order reflects several errors of law, beginning with the ALJ's misunderstanding of the applicable statutes, regulations, and public policies, and concluding with his erroneous effort to craft a new permit, one which has never been sought by respondent, nor reviewed by OCRM, and which he, in any case, lacks the authority to issue.  We therefore vacate the appealed order, and remand the matter to the Administrative Law Court for reconsideration.

BEATTY, KITTREDGE and HEARN, JJ., concur.  TOAL, C.J., dissenting in a separate opinion.

CHIEF JUSTICE TOAL:  I respectfully dissent and would affirm the ALJ's decision authorizing KDP to construct a bulkhead and revetment on the Spit on Kiawah Island.  The majority's decision rests primarily on the ALJ's application of Regulations 30-11(C) and 30-12(C).  It is my view that the majority reads Regulation 30-11(C) too broadly, and expands OCRM authority beyond what the General Assembly intended.  Moreover, the ALJ's decision pursuant to Regulation 30-12(C) is supported by substantial evidence in the Record.

The Administrative Procedures Act (APA) provides the appropriate standard of review.  This court will only reverse the ALJ's decision if it is:

(a)  in violation of constitutional or statutory provisions;
(b) in excess of the statutory authority of the agency;
(c)  made upon unlawful procedure;
(d) affected by other error of law;
(e)  clearly erroneous in view of the reliable, probative and substantial evidence on the whole record; or
(f)   arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion. 

S.C. Code Ann. § 1-23-610(B) (Supp. 2008).  "The court may not substitute its judgment for the judgment of the administrative law court as to the weight of the evidence on questions of fact."  Id.

Regulation 30-11

The majority's construction of Regulation 30-11 expands OCRM's permitting authority beyond that envisioned by the General Assembly.  Administrative agencies possess only those powers expressly conferred or necessarily implied to effectively fulfill the duties with which they are charged.  See Captain's Quarters Motor Inn, Inc. v. S.C. Coastal Council, 306 S.C. 488, 490, 413 S.E.2d 13, 14 (1991).   

Regulation 30-11(C) states in pertinent part:

In the fulfilling of its responsibility under Section 48-39-150, the Department must in part base its decisions regarding permit applications on the policies specified in Sections 48-39-20 and 48-39-30, and thus, be guided by the following:

(1) The extent to which long-range cumulative effects of the project may result within the context of other possible development and the general character of the area. 

The majority adopts Appellants contention that the "area" referred to under this regulation extends beyond the critical area to adjacent highlands.  The ALJ, however, found that "area" denotes only the critical area over which OCRM has permitting authority, and the construction's impact outside of that critical area is not a valid consideration. 

The General Assembly has directed OCRM to regulate this State's coastal zone, and issue permits for construction within the critical areas of the coastal zone.  See S.C. Code Ann. § 48-39-10.  The majority's position extends OCRM's grant of authority beyond the critical area and allows OCRM to deny critical area permits when the permitted construction would facilitate upland development.  I believe this is an inappropriate consideration and unreasonably enlarges OCRM's regulatory purview. 

Furthermore, the majority's reliance on our decision in Spectre is misplaced.  In Spectre, we held that the CMP's reach extended beyond the critical areas in the eight coastal counties and could be applied to isolated freshwater wetlands that were not subject to the jurisdiction of the Army Corps of Engineers.  Spectre, LLC, v. S.C. Dep't of Health and Enviro. Control, 386 S.C. 357, 36668, 688 S.E.2d 844, 84950 (2010).  However, Spectre did not involve a critical area permit.  Instead we were dealing with a permit to fill isolated freshwater wetlands for commercial development, an activity expressly addressed in the CMP.[7] 

In contrast, Regulation 30-11(C) does not specifically direct OCRM to account for land outside the critical area.  If the General Assembly had intended for OCRM to analyze the cumulative impacts outside critical areas, it is my opinion that specific provisions would have been added.  For example, the General Assembly saw fit to include specific language in the CMP with respect to isolated freshwater wetlands, and in Regulation 30-11(D) with respect to tidally induced upland erosion.  See S.C. Code Ann. § 48-39-80 (2008).  Thus, it is my opinion that the ALJ correctly confined OCRM's inquiry to the bounds of its regulatory authority. 

In so concluding, I do not suggest that OCRM should grant critical area permits simply because a landowner complains he would be unable to develop his property without it.  There are always statutory and regulatory considerations in any permitting decision, and those must control regardless of the economic harm or benefit to the landowner resulting from any permitting decision.  Here, however, the statutory and regulatory guidelines do not militate against the ALJ's decision to grant the permit.  Future upland development alone is not a proper consideration for granting or denying a critical area permit.  The permit may not be denied solely because development may occurdevelopment which will, of course, be subject to the local zoning authorities and must comply with any applicable DHEC regulationsnor may the permit be granted solely in consideration of KDP's economic interest.  Instead, as outlined thoroughly in the ALJ's amended final order, all potential impacts within the critical area should be considered. 

Regulation 30-12

The ALJ further found the proposed bulkhead and revetment complied with Regulation 30-12(C).  The majority holds that Regulation 30-12(C)(1)(d) places a burden on the applicant for a proposed structure to show that there are no feasible alternatives when the structure will adversely affect public access.   However, the plain language of the regulation creates no such presumption. 

Regulation 30-12(C)(1)(d) states:

"[B]ulkheads and revetments will be prohibited where public access is adversely affected unless no feasible alternative exists." 

The ALJ found that KDP was losing upland due to tidally induced erosion, and that no feasible alternative existed to stabilize the eroding riverbank.  Thus, he did not prohibit the proposed bulkhead and revetment construction.   

Appellants contend that the ALJ did not make sufficient findings of fact with regard to the lack of feasible alternatives.  This argument should carry little weight when juxtaposed with our standard of review for the ALJ's factual determinations.  The majority does not hold that the ALJ's findings were not supported by substantial evidence, but instead adopts Appellant's position that the findings were not "sufficient."  However, the sufficiency of the ALJ's findings is determined by whether "reasonable minds could reach the same conclusion the ALJ reached."  Hill v. S.C. Dep't of Health and Envtl. Control, 389 S.C. 1, 910, 698 S.E.2d 612, 617.  The majority does not assert that it is impossible for "reasonable minds" to reach the same conclusion as the ALJ.  Moreover, the General Assembly has  directed this Court not to substitute our own judgment "for the judgment of the administrative law court as to the weight of the evidence on questions of fact."  S.C. Code Ann. § 1-23-610(B) (Supp. 2008).           

The ALJ in this case examined the testimony in detail and thoroughly recited the evidence offered on each issue.  Over half of his 31-page amended final order was dedicated to his factual findings.  He clearly explained what facts he found, and upon what evidence and testimony he based those findings.  A review of the record demonstrates that the ALJ made sufficient factual findings supported by substantial evidence in the record, and that the ALJ's conclusions drawn from those facts were reasonable.    

The simple fact that Appellants disagree with the ALJ's determination is not sufficient grounds for reversal.  See Id. at 10, 698 S.E.2d at 617 (citation omitted) ("[T]he mere possibility of drawing two inconsistent conclusions from the evidence does not prevent a finding from being supported by substantial evidence.").   

For the above reasons I would affirm the ALJ's decision. 

[1] See Oakwood Landfill, Inc. v. S.C. Dep't of Health and Enviro. Control, 381 S.C. 120, 671 S.E.2d 646 (Ct. App. 2009) overruled on other grounds Charlotte-Mecklenburg Hosp. Auth. v. S.C. Dep't of Health and Enviro. Control, 387 S.C. 265, 692 S.E.2d 894 (2010).

[2] S.C. Code Ann. § 48-39-10(B) (2008).

[3] S.C. Code Ann. § 48-39-10(J) (2008).

[4] S.C. Code Ann. § 48-39-30(B)(1) (2008); 49-39-20(F) (2008).

[5] The CMP refers to the Coastal Council, which was abolished in 1994 when its authority was transferred to OCRM.  See 1993 Act. No. 181.

[6] The ALJ was concerned that permitting OCRM to consider the area outside the critical zone would intrude on local government's land use planning and zoning authority.  The granting of an OCRM permit does not preempt local zoning requirements any more than zoning ordinances are inapplicable to a project permitted by OCRM.  See Rockville Haven, LLC v.Town of Rockville, 394 S.C. 1, 714 S.E.2d 277 (2011).  Local zoning rules serve one purpose in the coastal zone, while State CZMA policies, statutes, and regulations serve another.  This is yet another error of law requiring reversal.

[7] The CMP provides that upland wetlands play an important role in the ecosystem and thus prohibits most commercial construction that requires filling these freshwater wetlands.