ORDERS:
ORDER GRANTING IN PART AND DENYING IN PART RESPONDENTS' MOTIONS TO DISMISS
This matter comes before me upon Motions to Dismiss filed by the Respondents, William
L. Boyd, II, Darnall W. Boyd, Boyd & Company (hereinafter referred to collectively as "Boyd")
and South Carolina Department of Health and Environmental Control (hereinafter referred to as
"DHEC"). A hearing on the Motions, consolidated with a motion hearing for Motions to Dismiss
regarding similar issues in the case of Roy C. Smith, Chairman, Congaree Community
Association, Inc. v. John H. Rudisill and South Carolina Department of Health and Environmental
Control, Docket No. 96-ALJ-07-0467-CC, was held Wednesday, January 22, 1997. For the
following reasons, the Motions to Dismiss are granted as to Phase I of Eastwood Acres, but
denied as to Phase II and Phase III of Eastwood Acres.
FACTS
Respondent Boyd is the owner of a one hundred eighty-one (181) acre tract of real
property in rural Richland County known as Eastwood Acres proposed to be developed in phases
into a residential subdivision ultimately consisting of ninety-one (91) individual lots. Boyd has
submitted to DHEC separate plats and applications for Phase I (Lots 1-7), Phase II (Lots 8-13),
and Phase III (Lots 14-19) of the development.
To be habitable as residences, the lots will require water and sewerage service, either by
connection to public systems or installation of individual systems. To promote the health of the
state's citizens and to protect the ground and surface waters of the state from contamination,
DHEC regulates the installation and operation of all sewerage and water systems in South
Carolina pursuant to 24A S.C. Code Ann. Regs. 61-56 and 61-57, promulgated and adopted
under authority of S.C. Code Ann. §§ 44-1-140 and 48-1-10, et seq. (as amended).
On December 14, 1994, the developer of Eastwood Acres, f/k/a "Rainbow Plantation
LC," submitted a "DHEC Application for Subdivision Approval," for Phase I of the subdivision,
consisting of seven lots, shown as Lots 1 through 7 on the subdivision plat of December 10, 1994.
By letter dated March 1, 1995, DHEC advised the developer that, based upon site evaluations and
review of the application materials, on-site septic tank installations would be acceptable in
conjunction with individual wells on all seven lots. The letter went on to advise that a permit to
construct a sewage disposal system in accordance with R. 61-56 would be necessary prior to
construction on any lot and that DHEC would perform another evaluation to ensure a suitable
location for the septic tank tile field on each lot. Upon receiving DHEC subdivision approval,
Boyd began selling lots in Phase I. As of the date of the hearing, Lots 1 - 7 have been sold and
individual septic tank permits have been subsequently issued to new lot owners Loretta Scott,
Anthony Wilson, and Dwayne M. Moye, for Lots 2, 3, and 7, respectively.(1)
On July 16, 1996, the developer of Eastwood Acres submitted two more "DHEC
Applications for Subdivision Approval." One was for Eastwood Acres Phase II, consisting of six
lots, shown as Lots 8 through 13 on the subdivision plat of July 15, 1996. The third application
was for Phase III of the subdivision, consisting of six lots, shown as Lots 14 through 19 on the
subdivision plat of July 15, 1996. By separate letters dated August 6, 1996, DHEC advised the
developer that, based upon site evaluations and review of the application materials, on-site septic
tank installations would be acceptable in conjunction with individual wells on all twelve lots in
Phases II and III of Eastwood Acres. As with Phase I, the letters advised that a permit to
construct a sewage disposal system in accordance with R. 61-56 would be necessary prior to
construction on any lot and that DHEC would perform another evaluation to ensure a suitable
location for the septic tank tile field on each lot. After receiving DHEC subdivision approval for
Phases II and III, Respondent Darnall Boyd applied for individual septic tank permits for Lots 8,
9, and 10 in Phase II, and for Lots 16, 17, 18, and 19 in Phase III. The permits for the Phase II
lots were issued January 16, 1997, and the permits for the Phase III lots were issued January 20,
1997.
During the summer of 1996, members of the Congaree Community Association, Inc.
(hereinafter referred to as "Association") became aware of the proposed development of
Eastwood Acres and began a group effort to prevent the construction and use of septic tanks in
the subdivision. Members of the Association attended and participated in a public hearing before
the Richland County Planning Commission on September 9, 1996, at which the use of septic tanks
within Eastwood Acres was discussed by the developer of Eastwood Acres, and an attorney
representing the Association expressed the Association's opposition to the use of septic tanks in
the subdivision.
Subsequent to the September 9, 1996 hearing before the Richland County Planning
Commission, Collette Wornall, an Association member, filed a Freedom of Information ("FOI")
Request with DHEC on September 11, 1996, requesting water and sewer subdivision files on
Eastwood Acres and Rudisill Acres. Her request was acknowledged by DHEC by letter dated
September 13, 1996, but by letter dated September 20, 1996, DHEC informed the Association
member that no such files could be found within the Department. Another Association member,
Karen O. Smith, filed a second FOI request with DHEC on October 17, 1996, requesting existing
and future file materials related to septic tanks in Eastwood Acres and Rudisill Acres. By letter
dated October 22, 1996, DHEC responded to that FOI request by stating that all existing file
materials were forthcoming, but that additional FOI requests would have to be filed to obtain
future file activity information. By letter dated October 28, 1996, DHEC provided the existing
septic tank subdivision information related to Eastwood Acres and Rudisill Acres.(2) The
Association filed its Petition for Administrative Review with DHEC on October 29, 1996,
requesting an evidentiary hearing and Order reversing the DHEC staff decision to issue the
subject subdivision approval.
DHEC and Boyd move for dismissal of this action on two grounds: (1) that this is not a
contested case within the jurisdiction of the ALJD because DHEC subdivision approval is
preliminary and not an agency decision which gives rise to a contested case hearing; and (2) even
if it is a contested case, Petitioner failed to timely file its petition within the requisite fifteen days
of receipt of actual or constructive notice of the subdivision approval.
The Association, on the other hand, asserts that DHEC subdivision approval under
R. 61-57 is part of the agency's environmental approval process, which is subject to due process
considerations of the S.C. Constitution and Administrative Procedures Act, entitling the
Association to notice and an opportunity to be heard before the administrative action is final. On
the timeliness issue, the Association asserts that upon hearing that subdivision approval had been
granted, it acted with due diligence to obtain written verification of the subdivision approval and
filed its Petition within fifteen days of receipt of such notice.
DISCUSSION For purposes of R. 61-57, each phase of Eastwood Acres must be considered a separate
subdivision since they were not submitted for DHEC subdivision approval collectively, but as
distinct and separate sections with different plats and applications. For purposes of subject matter
jurisdiction, such distinction is inconsequential; however, for the issue of the timeliness of the
petition, the distinction is significant.
I. JURISDICTION
DHEC and Boyd move to dismiss this action on the basis that it is not a "contested case"
under the APA, and thus, the ALJD is without jurisdiction to hear it. The threshold issue is
whether DHEC subdivision approval under R. 61-57 is an agency decision subject to an
adjudicatory hearing. If it is, the next question is whether the adjudicatory hearing required to be
conducted is a contested case or is some other proceeding not covered by the APA. DHEC
characterizes subdivision septic tank approval as a preliminary staff determination, not an issuance
of a license or permit within the contemplation of the APA, and not an agency decision which
gives a third party the right to any type of adjudicatory hearing. Petitioner cites the APA; DHEC
R. 61-72; S.C. Const. art. I, § 22; League of Women Voters of Georgetown County v.
Litchfield-By-The-Sea, 305 S.C. 424, 409 S.E.2d 378 (1991); and other case law in support of its
position to the contrary.
Before a septic tank system is constructed on any lot within a subdivision, a plat of the
proposed development must first be submitted to and approved by DHEC under R. 61-57 to
determine if the lots in the proposed subdivision are of sufficient size and soil composition to meet
the requirements R. 61-56. Without prior DHEC approval of the subdivision under R. 61-57, no
lot in the subdivision may be sold. Violation of the subdivision approval procedure is a punishable
offense under DHEC's general enforcement powers set forth in §§ 44-1-150, 48-1-320, and
48-1-330. Subsequent to subdivision approval by DHEC, but prior to construction and operation
of any individual septic tank system, a permit must be issued to the property owner of an
individual lot by DHEC pursuant to the procedures and standards of R. 61-56 and will be issued
only after another site evaluation and soil analysis.
R. 61-57 does not include a procedure whereby DHEC's determination of approval or
disapproval of a proposed subdivision septic system can be formally contested. At the motion
hearing, DHEC conceded that if a subdivision plan submitted to DHEC were disapproved, the
submitting party would have due process recourse and be entitled to a hearing on the matter, but
argued that a third party challenging subdivision approval has no such recourse or rights.(3)
There must be a process by which an aggrieved person can seek protection of its
substantive rights against action or inaction of the State. While the right to or means of such
consideration might not be clearly stated in a regulation or statute, superseding constitutional due
process provisions confer the right to receive notice, have an opportunity to be heard, and obtain
judicial review when private rights are affected. Article I, Section 22 of the South Carolina
Constitution provides in pertinent part that "[n]o person shall be finally bound by a judicial or
quasi-judicial decision of an administrative agency affecting private rights except on due notice
and an opportunity to be heard . . . and he shall have in all instances the right to judicial review."
The Supreme Court has consistently invoked that constitutional provision to recognize the due
process rights of affected persons during the administrative permitting process, apart from any
rights conferred by statute or regulation. League of Women Voters of Georgetown County v.
Litchfield-By-The-Sea, supra (Coastal Council certification of sewer system construction
project); Stono River Environmental Protection Association v. S.C. Department of Health and
Environmental Control, 305 S.C. 90, 406 S.E.2d 340 (1991) (DHEC water quality certification of
marina).
The present case is factually comparable to League of Women Voters, supra. In League,
the Court held that an opponent of a sewer system which a residential developer sought to
construct was entitled to notice and hearing prior to certification of the project, and to judicial
review, even though the certification determination was not binding upon the permitting agency,
stating, "we are constrained to safeguard the interests of the parties at all stages of the application
process since [the] certification determination may be afforded significant weight by the
permitting agency in deciding whether or not to grant a permit." As opponents to the
construction and operation of septic tanks for a subdivision which a residential developer seeks to
develop, Petitioner in the instant case is similarly situated and must be afforded notice and an
opportunity to be heard on the subdivision approval determination made under R. 61-57.
In League (and Stono River), the Court recognized a party's right to an adjudicatory
hearing by virtue of Article I, Section 22 of the State Constitution, but nonetheless held that the
requisite hearing did not amount to a contested case under the APA. A contested case is defined
as a "proceeding, including but not restricted to ratemaking, price fixing, and licensing, in which
the legal rights, duties or privileges of a party are required by law to be determined by an agency
after an opportunity for hearing." (emphasis added) S.C. Code Ann. § 1-23-310(2) (Supp. 1996).
As used in § 1-23-310(2), the court in League, Stono River, and Triska v. Department of Health
and Environmental Control, 292 S.C. 190, 355 S.E.2d 531 (1987) (DHEC water quality
certification), interprets "required by law" to mean "required by statute or regulation." Thus, if
an adjudicatory hearing is required only by constitutional mandate, without a specific statutory or
regulatory directive, it is not considered to be an APA contested case.
League, Stono River, and Triska must be kept in historical context, however. In each of
these decisions, the matters were held not to be contested cases based upon "the statutes and
regulations then prevailing." League, 409 S.E.2d 378, at 380. Because of the subsequent agency
promulgation and legislative approval of DHEC Regulation 61-101(4) which requires by law (i.e.,
regulation) adjudicatory hearings in DHEC water quality certification cases, those cases are now
considered contested cases. Stono River, 406 S.E.2d 340, at n.3. Likewise, subsequent to the
1991 League decision, DHEC promulgated and the General Assembly approved new regulations
to address the Court's opinion. The revised version of R. 61-72(5) sets forth the procedures for
conducting all adjudicatory hearings involving DHEC in which a hearing is required by the
constitution, APA, or other applicable statute or regulation. Previously, R. 61-72 provided for
procedures for DHEC contested cases only, without mention of constitutionally required hearings.
Under the current version of R. 61-72, hearings are specifically mandated and a procedure set
forth for those cases in which the right to hearing is constitutionally required. It provides:
The provisions of this regulation shall apply to all proceedings,
except as modified by agreement of all parties or as otherwise
provided by law or regulation, in which the right to hearing (a) is
provided by the Administrative Procedures Act; (b) is specifically
required by other statutes or regulations; or © is required by due
process under the South Carolina or United States Constitutions.
The provisions of this regulation shall not be construed to affect the
availability of any other procedure consistent with applicable law.
25 S.C. Code Ann. Regs. 61-72, § 102 (Supp. 1996).
Because R. 61-72 expressly provides for an adjudicatory hearing in all DHEC cases
subject to the due process requirements of the South Carolina Constitution, and because DHEC
subdivision approval under Reg. 61-57 is an agency decision subject to due process, the present
matter is a contested case. Subdivision septic tank approval or disapproval shall be treated as a
binding agency determination as a "licensing" procedure, as defined by S.C. Code Ann.
§ 1-23-310(3) and R. 61-72 § 101(G). The ALJD presides over all contested case hearings
involving DHEC pursuant to S.C. Code Ann. § 1-23-600(B) (Supp. 1996). The proceedings in
this case shall be conducted pursuant to Reg. 61-72, the APA, and the ALJD Rules of Procedure.
Furthermore, since Petitioner's opposition to the approval of the lots in the proposed
subdivisions for installation and operation of septic tanks would be raised to this Court at some
future time if not heard now, allowing Petitioner to express its opposition at this point in the
permitting process will avoid further repetitive action by the parties, and promote judicial
economy. See Southern Bell Tel. and Tel. Co. v. Hamm, 306 S.C. 70, 409 S.E.2d 775 (1991); See also Anchor Point, Inc. v. Shoals of Anderson, Inc., 309 S.C. 486, 424 S.E.2d 521(Ct. App.
1992). Rather than taking an awkward, piecemeal approach to considering Petitioner's
opposition to sewage disposal plans for the proposed subdivisions (through a series of protests to
individual to septic tank permit applications), it is more logical to consider the present dispute at
the subdivision stage. In this day of expensive litigation, when judicial economy is important, it is
desirable for all disputes to be finalized in one action when possible. See Cannon v. Cannon, 278
S.C. 346, 295 S.E.2d 875 (1982).
II. TIMELINESS OF PETITION
Orderly procedure requires that there must be a time from which the right of review of
administrative action begins to run. In South Carolina, the time period in which to file a request
for review or appeal generally commences when written notice of an agency decision is actually
received. Hamm v. S.C. Public Service Commission, 287 S.C. 180, 336 S.E.2d 470 (1985); South Carolina Department of Highways and Public Transp. v. Manning, 283 S.C. 394, 323
S.E.2d 775 (1984).
In DHEC matters, to be afforded an adjudicatory hearing a person is required to file a
petition with the DHEC Board within fifteen days of actual or constructive notice of a DHEC
staff decision. 25 S.C. Code Ann. Regs. 61-72, § 201(Supp. 1996). Respondents assert that
Petitioner received actual or constructive notice of the subdivision approvals of Eastwood Acres
no later than September 9, 1996. Petitioner maintains that no such notice was received until
October 15, 1996. Since Petitioner filed its Petition for Administrative Review with DHEC on
October 29, 1996, the determination of the date of notice of the DHEC staff decision is
dispositive of the issue of the timeliness of the request for a hearing.
"Notice is regarded as actual when the person sought to be affected by it knows of the
existence of the particular fact in question, or is conscious of having the means of knowing it."
66 C.J.S. Notice § 3 (1950). Constructive notice, on the other hand, is neither factual notice nor
knowledge, but an inference or presumption of notice imputed by law. Constructive notice is
generally either imputed by a recording statute or presumed because a person has knowledge of
certain facts which should reasonably lead him or her to knowledge of the ultimate fact. 66 C.J.S. Notice § 6 (1950).
Constructive notice by presumption, based upon a person having knowledge of certain
facts which should reasonably lead him or her to knowledge of the ultimate fact, is conditioned
upon a duty of inquiry. 66 C.J.S. Notice § 11 (1950) sets forth the following qualifications:
a. Whatever puts a person on inquiry amounts to judgment of law to
notice, provided the inquiry becomes a duty and would lead to a knowledge of the
facts by the exercise of ordinary intelligence and understanding.
. . . .
b. (3) A person put on inquiry by facts is to be allowed a reasonable
time in which to make such inquiry before being affected with notice.
. . . .
b. (2) After a person has actually made due inquiry and such inquiry
has proved futile, he is to be regarded as having acted [or not acted] bona fide
and without notice of the fact.
Respondent Boyd asserts notice to the Association of the subdivision approvals of
Eastwood Acres is statutorily imputed by virtue of the recording of the subdivision restrictive
covenants requiring septic tanks and the deeds conveying individual lots in the Richland County
RMC office and are public record. After receiving DHEC approval of the Phase I plat, Boyd
sold each of the seven lots in Phase I of Eastwood Acres, with deeds and purchase money
mortgages executed and recorded. The deeds for Lots 1- 7 were recorded in the Richland County
RMC office between September 12 - October 16, 1996.
Pursuant to S.C. Code Ann. § 30-9-30 (1976), the filing of written instruments concerning
real or personal property is notice to all persons, sufficient to put them upon inquiry of the
purport of the instrument so filed and the property affected by the instrument. A deed properly
recorded in the courthouse records operates as constructive notice to third persons of the
conveyance of title of the affected property. Shealy v. South Carolina Elec. and Gas Co., 278
S.C. 132, 293 S.E.2d 306 (1982); Franklin Sav. & Loan Co. v. Riddle, 216 S.C. 367, 57 S.E.2d
910 (1950). Therefore, the Association is charged with constructive notice of the sale of lots
within Phase I of Eastwood Acres, effective with the first recorded conveyances on
September 12, 1996.
It is clear under R. 61-57 that subdivision approval is a prerequisite to conveyance of any
of the individual lots within the subdivision, so the Association reasonably should have known
that subdivision approval for Phase I had been issued by DHEC. Conversely, no evidence was
presented at the motion hearing to indicate that any lots had been sold from Phases II or III of
Eastwood Acres. Individual septic tank permit applications have been filed for Lots 8, 9, and 10
of Phase II, and Lots 16, 17, 18, and 19 of Phase III, by Darnall Boyd, but each of those
applications were filed subsequent to the commencement of this case.
Respondents also insist that statements made and heard at the September 9, 1996 County
Planning Commission public meeting constitute constructive notice of the existence of the DHEC
staff decisions approving the Eastwood Acres subdivision plats. The oral statements heard by
Association members and counsel at the September 9, 1996 County Planning Commission public
meeting regarding the subdivision approvals of Eastwood Acres, Phases II and III, was
information sufficient to require further inquiry on the subject. After obtaining the information,
the Association fulfilled its duty of inquiry by promptly making a written request for file materials
to DHEC. If the Association had not acted in such an expeditious manner, the information
received at the September 9, 1996 meeting would constitute notice of the subdivision approval of
Phase II and Phase III of Eastwood Acres. Since due diligence was used by the Association to
seek actual knowledge of the agency approval and that knowledge was not gained until DHEC
finally responded to the Association's information request, however, the Association did not have
actual or constructive notice of the subdivision approval of Phases II and III of Eastwood Acres
until October 15, 1996. Upon receipt of the written approval, Petitioner timely filed a request for
hearing within fifteen days.
ORDER
IT IS HEREBY ORDERED, for the foregoing reasons, that Respondents' Motions to
Dismiss are granted in regard to Phase I of Eastwood Acres, but denied in regard to Phase II and
Phase III of Eastwood Acres.
IT IS FURTHER ORDERED that a contested case hearing shall be conducted in this
matter as soon as practicable, subject to discovery and notice to be ordered by this Court.
_________________________________
STEPHEN P. BATES
ADMINISTRATIVE LAW JUDGE
February 24, 1997
Columbia, South Carolina
f:\960468.wpd
1. As documented by copies of the closing statements, purchase money mortgages, and
permits submitted by Boyd at the hearing.
2. At the motion hearing, counsel for the Association stated that DHEC sent the
subdivision approval documents to them on October 15, 1996.
3. DHEC counsel was not aware of any instances in which a submitting party has formally
requested such a hearing. The instant case, and a pending action involving a nearby development
known as Eastwood Acres, are the first formal hearing requests received by DHEC from any persons challenging a R. 61-57 subdivision approval determination.
4. 25A S.C. Code Ann. Regs. 61-101, approved February 23, 1990, by the General
Assembly, established procedures and policies for implementing State water certification
requirements of Section 401 of the Clean Water Act.
5. This regulation was duly promulgated through the APA and became effective April 23,
1993. 17 S.C. State Reg. (No. 4) 75-76 (1993). |
