SC Administrative Law Court Decisions

This case arises from the denial of an application by Petitioner, Spectre, LLC, for a storm water (also called “land disturbance”) permit by the Department of Health and Environmental Control (“DHEC”). DHEC denied the permit solely because its staff concluded that the proposed project’s impact on an area of isolated wetlands violated the policies set out in the S.C. Coastal Management Program. It was uncontested that the application for the permit met all requirements of the South Carolina Storm Water Management and Sediment Reduction Act, S.C. Code Ann. § 48-14-10, et seq. and the regulations promulgated under that statute at S.C. Reg. 72-300, et seq. The parties informed the Court during a pre-trial conference that there were no questions of material fact at issue in the case and that the questions before the Court were entirely ones of law. The parties thereafter filed cross motions for summary judgment, DHEC and Intervenors (hereinafter simply “DHEC”) filing a joint motion.

Spectre’s motion asserted that DHEC lacks statutory or regulatory authority to apply the policies of the S. C. Coastal Management Program (the “CMP”) to make substantive decisions on the issuance of storm water permits for projects which impact isolated wetlands and that it is entitled to an order requiring that the permit requested be issued by DHEC with no requirements for mitigation of wetland impacts. DHEC argued that the policies in the CMP may be applied by DHEC in the same way as regulations promulgated pursuant to the S.C Administrative Procedures Act and that the policies applied to the Spectre site.

After considering the evidentiary materials and arguments of the parties and for the reasons set out below, I find that DHEC does not have statutory or regulatory authority to apply the CMP policies to Spectre’s permit and, therefore, Spectre is entitled as a matter of law to be issued the storm water permit for which it applied without any conditions related to mitigation for wetland impacts. DHEC’s denial, therefore, should be reversed pursuant to S.C. Code Ann. § 1-23-380(A)(5)(a-f) (Supp. 2006).

I

PROCEDURAL HISTORY

On February 14, 2006, Spectre, LLC, the Petitioner, filed an application for a storm water permit with the OCRM Division of SCDHEC. On July 6, 2006, DHEC denied the permit. Spectre filed a request for final review of the permit denial with the DHEC Board on July 13, 2006 pursuant to the S.C. Administrative Procedures Act. A Final Review was conducted before the full DHEC Board on August 10, 2006 at which the Board affirmed denial of the permit. Spectre filed a timely appeal with this Court on August 30, 2006. The parties submitted evidentiary material in support of their respective motions for summary judgment and extensive legal briefs. Oral argument was heard by the Court at a hearing on December 3, 2007.

II

UNDISPUTED FACTS

A. SPECTRE’S PROJECT

The storm water permit requested by Spectre, LLC is for clearing and drainage of a 62.93 acre site in Horry County necessary to the development of the site for commercial/retail purposes. The site is located immediately north of the Horry/Georgetown County line and adjacent to U.S. Highway 17, lying on the west side of the highway. (Pet. Exh. 20, Corps of Engineers Wetland Plat; Pet. Exh. 21, Spectre Storm Water Permit Application). The storm water regulations at S.C. Reg. 72-300 require detailed engineering analysis and information concerning routing and management of storm water from the site. Principle concerns reflected in the regulations are sediment transport and erosion control as well as flood control. Prior to denial of the permit, DHEC declared the permit application filed by Spectre to be complete and sufficient with respect to the requirements of the storm water regulations. There is no dispute that Spectre’s application complied in every particular with the storm water regulations and that, if only these regulations were applied to consideration of the application, the permit should have been issued. (Pet. Exh. 19, DHEC Board Final Decision).

It is uncontested that DHEC’s denial of the permit was based solely on impacts of the proposed project to a 31.76 acre portion of the site which meets the criteria of the 1987 manual used by the federal government to classify what the manual refers to as “wetlands.” (Pet. Exh. 19, DHEC Board Final Decision). (To be classified as a wetland under the manual, a site must possess three characteristics – soil with certain physical properties associated with periodic saturation, vegetation capable of living in saturated soil conditions, and water present on the site or within twelve inches of the surface of the site at least fourteen days during the growing season). Rapanos v. U.S., 126 S.Ct. 2208, at 2237 (2006).

The U.S. Army Corps of Engineers verified that the site is not connected to the surface water tributary system – that it is “isolated” – and, therefore, is not subject to federal jurisdiction pursuant to Section 404 of the Clean Water Act, 33 USC Sec. 1344. (Pet. Exh. 20, Corps of Engineers Wetland Plat). The Corps’ renunciation of its jurisdiction was necessitated by the decision of the U.S. Supreme Court in Solid Waste Authority of Northern Cook County v. U.S. Army Corps of Engineers, 531 U.S. 159, 121 S.Ct. 675, 148 L.Ed.2d 576 (2001), generally referred to as the “SWANCC” case, holding that the federal government did not have authority to regulate wetlands isolated from the surface water system of creeks, streams and rivers which drain into traditional navigable waters. For sixteen years prior to this decision, the Corps and the U.S. Environmental Protection Agency regulated isolated wetlands by asserting that Section 404 of the Clean Water Act required a permit from the Corps for the discharge of fill material into such areas. (Pet. Exh. 26, Excerpt from Law of Wetlands Regulation, William L. Want).

B. PERMIT DENIAL

DHEC denied Spectre’s permit based on its staff’s conclusion that the impacts to the wetland on the site violated several policies included in the S.C. Coastal Zone Management Program (CMP). (DHEC letter of July 6, 2006, Attached to Spectre Request for Contested Case Hearing). All of these polices relate either to general resource values or to wetlands. None relate to storm water management plans or storm water permits. The policies listed were: Chapter III, Sec. C.3.1(1)(b); Chapter III, Sec. C.3.1(7); Chapter III, Policy Section IV.1(b) and (c); Chapter III, Policy Section VII.A.1; and Chapter III, Policy Section XII.E.1. In summary, these policies provide that projects that fill or otherwise destroy wetlands should not be authorized. (Resp. Exh. 3, CMP at pages III-14, 40 and 73).

DHEC claimed in its denial letter that the Spectre project was inconsistent with the above policies and, therefore, with the CMP, requiring denial of the application.

C. THE SOUTH CAROLINA COASTAL MANAGEMENT PROGRAM

The CMP was published by the South Carolina Coastal Council in 1978 to satisfy a number of requirements, including, as the name implies, to serve as the Environmental Impact Statement (“EIS”) for the federal approval and funding aspect of the State program. (Resp. Exh. 3, CMP). It is uncontested that the CMP was never promulgated in compliance with the Administrative Procedures Act. (Pet. Exh. 8, DHEC Answers to Spectre Interrogatories). Indeed, the CMP was published in the State Register on October 20, 1978 with this introductory notation:

THIS ISSUE OF THE STATE REGISTER IS A SPECIAL ISSUE DEVOTED TO THE PUBLICATION OF THE COASTAL PROGRAM OF THE SOUTH CAROLINA COASTAL COUNCIL FOR INFORMATION PURPOSES ONLY. THE CONTENTS OF THIS ISSUE ARE PRINTED IN THE FORM SUBMITTED TO THE LEGISLATIVE COUNCIL AND DO NOT CONSTIUTE OFFICIAL REGULATIONS AS DEFINED IN ACT 176 OF 1977.

(Pet. Exh. 24, Introduction to State Register, Oct. 20, 1978).

The CMP served to satisfy the goals set forth in the South Carolina Coastal Zone Management Act, S.C. Code Ann. § 48-39-80, among which were the establishment of a permitting system (called a “regulatory system”) for impacts to the critical areas, subsection (A) along the coast and establishment of a system, “whereby the department shall have the authority to review all state and federal permit applications in the coastal zone, and to certify that these do not contravene the management plan.” Subsection (B)(11). Regulations were promulgated and are published at S.C. Code Reg. 30-1 governing issuance of permits for alteration of critical areas. No regulations have ever been promulgated which govern the review of all state and federal permit applications for projects in the coastal zone. Instead, the S.C. Coastal Council and its successor, the Ocean and Coastal Resource Management Division of DHEC, made those decisions based solely on policies contained in the CMP where they deemed “consistency certification” was necessary. (Pet. Exh. 8, DHEC Answers to Spectre interrogatories; Pet. Exh. 2, Deposition of Carolyn Boltin; Pet. Exh. 3, Deposition of John Hensel; Pet. Exh. 4, Deposition of Richard Chinnis; Pet. Exh. 5, Affidavit of Christopher Holmes; Pet. Exh. 6, Affidavit of Mary Shahid).

Every permit application processed by the Army Corps under Section 404 of the Clean Water Act for the filling of wetlands requires two certifications by DHEC before the Corps may issue the permit. Section 401 of the Clean Water Act, 33 U.S.C. Sec. 1341, requires a “water quality certification” that the proposed project will not contravene state water quality standards. (Pet. Exh. 12, DHEC Emergency Regulation). DHEC’s decisions on water quality certifications are governed by a set of regulations adopted in accord with the Administrative Procedures Act, S.C. Code Section 1-23-10, et seq., and found at S.C. Code Reg. 61-101.

Similarly, pursuant to the federal Coastal Zone Management Act, 16 U.S.C. Sec. 1456(c), DHEC must certify that a project is consistent with the state’s Coastal Management Program (“CMP”). As with the 401 certification, if “CZM certification” is denied, or if conditions are attached to such certification by DHEC, the decision is binding, as a matter of federal law, on the Army Corps. 33 C.F.R. Part 320.3(b), 320.4(h), 325.2(b)(2).

As originally published, the CMP specifically described the wetlands to which its policies applied as only those which were contiguous to coastal rivers and streams. The policies relied on by DHEC as authority to regulate the wetlands at issue here are contained at Section III-73(e) of the CMP which contains this finding:

In addition to the extensive areas of salt and brackish marsh within the critical areas along the South Carolina coastline, the State’s coastal zone also contains over 60,000 acres of fresh-water marshes. These wetlands further up the creeks and rivers, beyond the reach of saltwater at high tides, have a great diversity of plant species. They play a vitally important role in contributing nutrients to the waters which eventually reach the estuarine system (the critical areas). Fresh-water marsh areas are active filters for improving water quality, and since they are linked with the downstream system, they affect water quality in the critical areas. The fresh-water marshes are important flood buffers and also function in maintenance of salinity levels in downstream estuaries.

(Pet. Exh. 25, Excerpts from CMP, p. III-73) (emphasis supplied).

It is not surprising that the original CMP referred only to contiguous wetlands. At the time it was proposed in 1978, there was no federal permit requirement which applied solely to isolated wetlands, as the Army Corps had issued a blanket authorization for filling such areas. (Pet. Exh. 26, Excerpt from Law of Wetlands Regulation, William L. Want). No state permit requirement existed at that time which in any way applied to impacts to isolated wetlands. The storm water permit requirement was not created by the General Assembly until passage of the Storm Water Management and Sediment Reduction Act, S.C. Code Ann. § 48-14-10 in 1992.

In 1993, the CMP was amended through adoption of a set of “refinements.”[1] The refinements were also not promulgated as regulations in accord with the APA. Despite the clear language of Section III-73(e) of the CMP limiting its application to those wetlands “linked with the downstream system” of coastal rivers and creeks, the Coastal Council began to regulate any wetland which was subject to the jurisdiction and regulation by the Army Corps. (Pet. Exh. 4, Deposition of Richard Chinnis). Consequently, the 1993 refinements to the CMP provided that such review applied only to wetlands under the jurisdiction of the Army Corps. In the section entitled “Wetlands” on page 1, the Background paragraph says:

The Corps of Engineers is mandated by Federal law to delineate wetlands. Once delineated by the Corps of Engineers, Coastal Council manages the wetlands through the policies contained in Chapter III of the State’s Coastal Zone Management Program document.

(Resp. Exh. 11, CMP Refinements) (emphasis supplied).

On page 12, the refinements introduced a new policy governing mitigation of wetland impacts:

The avoidance of wetlands is preferable to mitigation. Mitigation of wetlands impacts is considered only after all policies of the S.C. Coastal Council Program Document and the Coastal Zone Management Act have been addressed and the mitigation plan must be submitted by the applicant and approved by the Coastal Council for all projects which (1) require a coastal zone consistency determination, and (2) impact federally defined jurisdictional freshwater wetlands in the coastal zone, unless (3) the Coastal Council determines that the impacts are so minimal as not to warrant mitigation.

(Resp. Exh. 11, CMP Refinements) (emphasis supplied).

When the SWANCC decision removed isolated wetlands from federal jurisdiction in 2001, DHEC lost the ability to review Section 404 permit applications for projects involving isolated wetlands. DHEC characterized this retreat of federal regulation of wetlands as an emergency and promulgated an emergency regulation for the purpose of restoring review for impacts to isolated wetlands for both 401 water quality certification and coastal zone consistency certification. (Pet. Exh. 12, DHEC Emergency Regulation). The authority for promulgating the emergency regulation was the Administrative Procedures Act, S.C. Code Ann. § 1-23-130. As required by the APA, DHEC attached to the regulation an explanation of the emergency which they believed justified the extraordinary step which included the following statement, “The SWANCC decision held that the Corps does not have jurisdiction over isolated wetlands and therefore removed the Department’s opportunity to issue water quality and coastal zone consistency certifications for activities in those areas.” (Pet. Exh. 12, DHEC Emergency Regulation) (emphasis supplied).

The agency’s solution to the loss of DHEC’s and OCRM’s ability to review impacts to isolated wetlands through their respective certification programs was to adopt the federal method for delineating a wetland, and require that any State permitted activity impacting areas meeting this criteria for a wetland be certified as consistent with both State 401 water quality standards and (for projects in the coastal counties) with CMP policies. Simply put, the emergency regulation restored the same review of impacts to isolated wetlands by DHEC which existed when a project required a Section 404 permit from the Army Corps, by adding these certifications as requirements for State permits that impacted wetlands not subject to Army Corps jurisdiction.

DHEC did not submit the emergency regulation to the General Assembly and it expired in May 2001. Citing the same reasons, DHEC proposed permanent regulations in 2003 giving it the power to regulate isolated wetlands outside of federal jurisdiction and cited the same reasons. (Pet. Exh. 14, Summary Sheet for DHEC Proposed Regulations; Pet. Exh. 15, DHEC Preamble to Proposed Regulations; Pet Exh. 16, Excerpt of Transcript of DHEC Public Hearing on Proposed Regulations). These regulations were not adopted by the General Assembly.

Despite its repeated declarations that the state lacks authority over wetlands not regulated by the federal government, DHEC proceeded to act as though it had such authority. Since a storm water permit is required for most land disturbance activities, DHEC began to regulate impacts to isolated wetlands by denying storm water permit applications or requiring mitigation for wetland impacts as a condition for issuance of these permits. (Pet. Exh. 8, DHEC Answers to Spectre Interrogatories).

In 2007, the S. C. Supreme Court decided the case of Responsible Economic Development v. DHEC, 371 S.C. 547, 641 S.E.2d 425 (2007), in which it held that DHEC lacked the statutory authority to employ either the Pollution Control Act or the Anti-degradation regulations to make decisions on applications for storm water permits. Since that decision, DHEC has not employed storm water permits to regulate impacts to wetlands in the non-coastal counties. In the coastal counties, however, DHEC has continued to regulate impacts to isolated wetlands through application of what it asserts are the legally binding requirements of the CMP’s policies. (Pet. Exh. 8, DHEC Answers to Spectre Interrogatories; Pet. Exh. 7, Affidavit of David Stevens).

It is undisputed that these policies are being employed by DHEC as if they were regulations promulgated pursuant to the Administrative Procedures Act. Both Earl Hunter, DHEC Commissioner, and Carolyn Boltin, Deputy Commissioner of the OCRM Division, testified that the agency regards these policies as having the “force and effect of law”, just like regulations. DHEC admitted the same thing in its Answers to Petitioner’s Interrogatories. (Pet. Exh. 8, DHEC Answers to Spectre Interrogatories; Pet. Exh. 1, Deposition of Earl Hunter; Pet. Exh. 2, Deposition of Carolyn Boltin). Despite this admission and these declarations, the CMP is not contained in the S. C. Code of laws or published in any compendium of state laws and regulations. They are available to the public only in abbreviated form from DHEC itself.

While applied by DHEC as if they were regulations, the CMP policies are not written as regulations. They lack clarity and specificity on many points and lack definitions of many key terms. They contain, most significantly, no definition of what constitutes a wetland or a process adopted by the state for delineating a wetland. It is uncontested that DHEC simply accepts designation by the Army Corps of areas as a wetland. (Pet. Exh. 2, Deposition of Carolyn Boltin; Pet. Exh. 3, Deposition of John Hensel; Pet. Exh. 8, DHEC Answers to Spectre Interrogatories).

III

DECISION

Summary Judgment is proper when there is no issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Rule 56(c), SCRCP; Helms Realty, Inc. v. Gibson-Wall Co., 363 S.C. 334, 340, 611 S.E.2d 485, 488 (2005). To determine whether any triable issues of fact exist, the Court must consider the evidence and all reasonable inferences in the light most favorable to the non-moving party. Law v. S.C. Dep't of Corr., 368 S.C. 424, 434, 629 S.E.2d 642, 648 (2006). When plain, palpable, and indisputable facts exist on which reasonable minds cannot differ, summary judgment should be granted. Ellis v. Davidson, 358 S.C. 509, 518, 595 S.E.2d 817, 822 (Ct. App. 2004). The existence of a mere scintilla of evidence in support of the nonmoving party’s position is not sufficient to overcome a motion for summary judgment. Bravis v. Dunbar, 316 S.C. 263, 265, 449 S.E.2d 495, 496 (Ct. App. 1994). The party seeking summary judgment has the burden of establishing the absence of a genuine issue of material fact.  McNair v. Rainsford, 330 S.C. 332, 341, 499 S.E.2d 488, 493 (Ct. App. 1998).  With respect to an issue upon which the nonmoving party bears the burden of proof, this initial responsibility may be discharged by showing the trial court there is an absence of evidence to support the nonmoving party’s case.  Id.

Based on the undisputed facts in the record, as explained below, the Court finds that DHEC lacked authority to rely on the CMP policies to deny Spectre’s storm water permit for two reasons. The CMP policies by their own terms do not apply to the isolated wetland on the Spectre site. In addition, the CMP policies have not been promulgated as regulations in compliance with the APA and, therefore, may not be employed as binding norms by DHEC to render decisions on permit applications, as was done in this case.

A. LIMITATIONS IN THE LANGUAGE OF THE CMP POLICIES

It is undisputed that the wetlands on the Spectre site are isolated and not connected to the surface tributary system. The Army Corps, as the CMP policy refinements acknowledge it is authorized to do, has delineated the wetlands on the Spectre site and determined that they are isolated and outside of its jurisdiction pursuant to the Clean Water Act.

The CMP policies contained in the original 1978 CMP document relating to wetlands outside the critical areas were specifically limited to, “fresh-water marshes…wetlands further up the creeks and rivers, beyond the reach of saltwater at high tides… Fresh-water marsh areas linked with the downstream system,” which serve to protect the water quality of the downstream critical areas. (Resp. Exh. 3, CMP at page III-73) (emphasis supplied). An isolated wetland, like that on the Spectre site, unconnected to the surface tributary system, does not meet this description of “fresh water marshes” and “wetlands”. The policies set forth in Section III relied on by DHEC, therefore, simply do not apply to the Spectre permit application.

Moreover, the 1993 refinements, clearly limit application of the CMP policies to wetlands over which the Army Corps has jurisdiction. The following statement on page one of the refinements is unambiguous, “Once delineated by the Corps of Engineers, Coastal Council manages the wetlands through the policies contained in Chapter III of the State’s Coastal Zone Management Program document.” (Resp. Exh. 11, CMP Refinements) (emphasis supplied). The requirements for avoidance of wetland impacts and mitigation of unavoidable impacts DHEC cited in its denial of Spectre’s permit are set forth on page 12 of the refinements and specifically apply only when projects require coastal zone consistency certification “and impact federally defined jurisdictional freshwater wetlands in the coastal zone.” (Resp. Exh. 11, CMP Refinements) (emphasis supplied). This language absolutely limits application of the CMP policies to wetlands over which the Army Corps exercises jurisdiction.[2]

DHEC’s claim to authority over the isolated wetlands on the Spectre site is premised entirely on its claim that the General Assembly approved both the 1978 CMP and 1993 refinements. Yet, in this case DHEC asks the Court to hold that it has authority much broader than what it says was approved by the General Assembly – in effect, to have the Court approve a substantial expansion of that authority. An agency cannot change the limits of its authorization, even if it concludes the change is necessary to achieve the purposes of the authorization. In Simkins v. City of Gaffney, 431 S.C. 592, 315 S.E.2d 26 (Ct. App. 1993), the Court of Appeals reiterated the principle that an ordinance or similar regulation may not be amended by the passage of a resolution, but must be amended, “by another ordinance or an instrument of equal dignity.” Accord, Lominick v. City of Aiken, 244 S.C. 32, 135 S.E.2d 305 (1964), citing Central Realty Corp. v. Allison, 218 S.C. 435, 63 S.E.2d 153 (1951), “to permit the previous ordinance here...to be amended or repealed by the indefinite motion or resolution above referred to would result, we believe, in repeated confusion.”

There is equal reason for concern over the novel assertion by DHEC in this case. DHEC has offered no justification for a retreat from the principle that amendments to regulations, by whatever name, should only be approved through the full legislative process.

The terms of the policies do not permit review of isolated wetlands over which the Army Corps does not have jurisdiction and, therefore, under the rule of Responsible Economic Development, DHEC has no authority to use the policies to make decisions on storm water permit applications involving impacts to isolated wetlands over which the Army Corps does not exercise jurisdiction. DHEC’s application of the policies to areas specifically outside their coverage is no different from, “the case-by-case modification of regulatory requirements under the Stormwater Act,” struck down by the Supreme Court in that case. It was, therefore, an abuse of discretion for DHEC to base denial of Spectre’s permit on the CMP policies.

B. APPLICATION OF THE CMP POLICIES AS REGULATIONS

The S.C. Administrative Procedures Act, at S.C. Code Ann. § 1-23-10 (4) defines a regulation:

(4) “Regulation” means each agency statement of general public applicability that implements or prescribes law or policy or practice requirements of any agency. Policy or guidance issued by an agency other than in a regulation does not have the force and effect of law. The term “regulation” includes general licensing criteria and conditions and the amendment or repeal of a prior regulation...

S.C. Code Ann. § 1-23-10 (4) (Rev. 2005).

The S.C. Supreme Court has articulated a test to determine if a particular statement of agency policy amounts to a, “statement of general public applicability that implements or prescribes law or policy…Whether a particular agency proceeding announces a rule or a general policy statement depends upon whether the agency action establishes a binding norm.” Home Health Service, Inc. v. SC Tax Commission, 312 S.C. 324, 440 S.E.2d 375 (1994), citing Ryder Truck Lines, Inc. v. U.S., 716 F.2d 1369 (1983).

It is undisputed that DHEC denied Spectre’s application for a storm water permit because its staff concluded that it violated policies contained in the CMP quoted in the July 6, 2006 denial letter. All of DHEC’s witnesses testified that these policies are employed by DHEC as the criteria by which the agency decides whether to approve a project (and allow it to be permitted), and upon what conditions. The 1993 refinements to the policies, cited by DHEC in its denial letter, include the rules governing how permit applicants are required by DHEC to mitigate for wetland impacts.

The policies contained in the CMP have been used as regulations in every sense, as they are the sole criteria employed by the agency to determine whether it will authorize a proposed project. Nevertheless, DHEC has taken the position that the CMP policies need not be promulgated in accord with the Administrative Procedures Act’s requirements for regulations. It is enough, DHEC argues in its memoranda, for these regulations to have been in the text of the CMP, and if that document has been adopted in accord with the Coastal Zone Management Act, the policies may be enforced as if they are valid regulations.

A review of the language of the Coastal Zone Management Act itself reveals no support for this argument. The Act at Section 48-39-80 required the establishment of a Coastal Management Program to include a long list of different functions. Many of the requirements were data gathering, such as section (B)(1) to identify resources and land uses, and (B)(4) to inventory areas of critical state concern in the coastal zone. Others were planning mandates, such as (B)(2) to evaluate resources in terms of quality, quantity and capability for use, and (D) to consider planning and review of water quality standards and classifications.

Also required in section (A) was the creation of, “a regulatory system which the department shall use in providing for the orderly and beneficial use of the critical areas,” defined at Section 48-39-10(J) of the Act as those areas of water and marsh closest to the sea. For this “regulatory” system, the Act in Section 48-39-130(B) required the agency to promulgate regulations in accord with the APA. Finally, the Program was to include a, “system whereby the department shall have the authority to review all state and federal permit applications in the coastal zone, and to certify that these do not contravene the management plan.” Subsection 48-39-80 (B)(11). The CMP describes how all of these mandates were to be carried out.

DHEC seems to argue that the CMP document was devoted only to establishment of the last mandate – the consistency certification process – while the critical area permitting system was established independently in regulations. In fact, the CMP document describes all aspects of the program listed in 48-39-80. At page III-12, it summarizes the permitting system for critical area impacts, which it notes will be governed by regulations separately promulgated by the agency.

There is nothing in the Act itself or the CMP implying that regulations for the consistency certification process are to be promulgated in the CMP document itself. In fact, in the Legal Authorities section of the CMP, at p.V-1 and 2, entitled, “Authority Outside Critical Areas,” it says “All agencies currently exercising regulatory authority in the coastal zone shall administer such authority in accordance with the provisions of this act and rules and regulations promulgated thereunder.’” (Resp. Exh. 3, CMP at page V-1) (emphasis supplied). This language can only refer to coastal zone consistency certification by the agency of state permits in the coastal counties. The CMP document itself, therefore, contemplated promulgation of regulations governing certification as well as regulations governing critical areas.

It has long been held that regulatory bodies are creatures of statute whose powers may not be derived from mere inference. “Their power must be founded upon language in the enabling acts which admits of no other reasonable construction.” Piedmont and Northern Railroad Co. v. Scott, 202 S.C. 207, 24 S.E.2d 353 (1943), which explained the principle:

Such bodies being unknown to the common law, and deriving their authority wholly from constitutional and statutory provisions, will be held to possess only such powers as are conferred, expressly or by reasonably necessary implication, or such as are merely incidental to the powers expressly granted. Any reasonable doubt of the existence in the Commission of any particular power should ordinarily be resolved against its exercise of the power. And purely administrative functions are readily distinguishable from the making of regulations affecting substantial rights, which being in derogation of the common law must be derived from constitutional or statutory provisions.

Piedmont and Northern Railroad Co., 24 S.E.2d at 360. Accord: Captain’s Quarters Motor Inn, Inc., supra.; Mungo v. Smith, 289 S.C.560, 347 S.E.2d 514 (Ct. App. 1986); SCE&G v. PSC, 275 S.C. 487, 272 S.E.2d 793 (1980); Bunch v. Cobb, 273 S.C. 445, 257 S.E.2d 225 (1979); Brooks v. State Board of Funeral Service, 271 S.C. 457, 247 S.E.2d 820 (1978); and Black River Electric Co-op, Inc. v. PSC, 238 S.C. 282, 120 S.E.2d 6 (1961).

The S.C. Supreme Court has applied this principle to invalidate actions by DHEC (and DHEC’s predecessor, the Coastal Council) found to be beyond their statutory authorities. Captain’s Quarters Motor Inn, Inc., supra. held the Coastal Council could not employ a policy regarding damage assessment to evaluate sea wall permits as it was never promulgated as a regulation. In Brown v. DHEC, the court struck down an interpretation – an internal policy – of DHEC regarding the storm water statute and regulations which the court found to be contrary to the wording of the statute and associated regulations. Most recently, and, perhaps, most significantly, in Responsible Economic Development, supra., the court held that DHEC lacked authority to evaluate storm water permits using either the Pollution Control Act or the anti-degradation regulations published at S.C. Reg. 61-68.

DHEC asserts that as the CMP was published in accord with the procedure set forth in the Coastal Zone Management Act, it was unnecessary for the policies to be promulgated as regulations in accord with the APA. To do so, DHEC argues, would have been redundant. Comparison of the requirements of the Coastal Zone Management Act and the APA, both as it existed in 1978 when the original CMP was published, and in 1993 when the refinements were published, shows that this is not the case. There are significant substantive requirements required by the APA which were not required for publication of the CMP.

The Coastal Zone Management Act required the CMP to be presented in hearings held around the state, that notice be given in advance of the hearings and that all documents related to its preparation be made available for public review. After public review and preparation of the final document, it was to be “approved” by the governor and the General Assembly with no specifics provided for an approval process.

The 1978 APA required similar public review and hearings, but also required specific notice to the public that regulations were being promulgated. The APA also required submission of the final text of proposed regulations to the appropriate committees in both houses of the General Assembly. Neither of the latter requirements was satisfied by the process by which the original CMP was published. In fact, when it was published for public review, the notice specifically announced that no regulations were being promulgated.

Similarly, the APA in effect in 1993 required notice to the public that regulations were being promulgated and that a specific and detailed filing and committee review process be followed for General Assembly approval of regulations. The 1993 refinements, like the original CMP, were not promulgated as proposed regulations and the General Assembly did not process them as such. It is the complete lack of notice that regulations were being published which most distinguishes the process followed in publishing the CMP and its refinements from that required for promulgating regulations. Absent a specific legislative provision, not present here, the Court finds that there is no support for the suggestion that the General Assembly intended regulations to be promulgated without specific notice that regulations having the full force and effect of law were being proposed and legislative consideration consistent with proposed regulations.[3]

The CMP policies at issue are like the policy involved in Captain’s Quarters Inn, the CMP policies employed by DHEC to deny Spectre’s permit application, are “binding norms”, and as such may not be applied to make substantive permit decisions until they are promulgated as regulations pursuant to the APA.[4] Like the anti-degradation regulations at issue in Responsible Economic Development, there is no statutory authority for DHEC to deny storm water permits because they do not satisfy the requirements of the CMP policies. DHEC’s denial of Spectre’s permit was, therefore, arbitrary and capricious, outside the agency’s authority, and as such, DHEC’s action was null and void. As the storm water permit application filed by Spectre satisfied the requirements of the storm water regulations at S.C. Reg. 72-300, et seq., Spectre was entitled to a storm water permit as a matter of law.

C. SPECTRE IS ENTITLED TO A PERMIT BY OPERATION OF LAW.

As the CMP policies relied upon by DHEC to deny Spectre’s permit do not apply to its permit by their own terms and as the policies are not properly promulgated regulations, DHEC acted without any legal authority in basing its denial of the permit on those policies and employing them as if they were regulations promulgated pursuant to the APA. DHEC’s decision must, therefore, be reversed pursuant to S.C. Code Sec. 1-23-380(A)(a-f) as it was made in violation of the APA, exceeded the authority conferred on DHEC by S.C. Code Sec. 48-14-10, et seq., was made using an unlawful procedure (application of policies as if they were regulations without promulgating them as such), was clearly erroneous as it was premised improperly on the CMP policies, and was arbitrary, capricious and an abuse of discretion for the same reason

Spectre’s storm water permit was complete and satisfied the storm water permit regulations at S.C. Reg. 72-300 at the time it was improperly denied on July 6, 2006. Like the permit applicant in Responsible Economic Development, Spectre was entitled to a storm water permit as a matter of law issued solely in accord with those regulations. S.C. Reg. 72-305(M) provides that a storm water permit will be considered approved if DHEC does not take action within twenty working days of receiving a complete application. In this case, DHEC’s action was more than an abuse of discretion; it was in excess of its legal authority. For that reason, the Court finds that Spectre is entitled to have its storm water permit deemed approved as of a date twenty working days after July 6, 2006. The Court further finds that any wetland mitigation proposed by Spectre may not be made a part of its obligations under its storm water permit as DHEC lacked any authority to require such mitigation either in S.C. Code Sec. 48-18-10, et seq. or S.C. Reg. 72-300.

IT IS SO ORDERED.

___________________________

John D. McLeod

Administrative Law Judge

February 19, 2008

Columbia, South Carolina