Okoro v. Maryland Department of the Environment

WOODWARD, J. Appellee, the Maryland Department of the Environment (“the Department”), initiated enforcement proceedings against appellant, Chukuemeka Okoro, after discovering violations of the Reduction of Lead Risk in Housing Act (“the Act”) in two of Okoro’s rental properties in Baltimore City. Okoro was granted a hearing before an Administrative Law Judge (“ALJ”), who found that Okoro had violated the Act, that his violations were willful and had the potential for harm to human safety, and that the Department’s penalty of $37,500 was appropriate. Okoro petitioned for judicial review in the Circuit Court for Baltimore City, which reversed and remanded the ALJ’s decision with instructions for the parties to ²⁰¹ argue the appropriate penalties without considering the violations’ potential for harm to human safety. On remand, the ALJ refused to allow" Okoro to present additional evidence, and heard argument only on whether Okoro’s violations were willful.

The ALJ issued a revised decision, finding that Okoro’s violations were willful, and assessing a penalty of $25,650. Okoro filed a second petition for judicial review in the circuit court, which affirmed the revised decision. Okoro presents three questions for our review, which we have rephrased as follows: 1. Do substantial evidence and applicable law support the ALJ’s finding that Okoro’s violations were willful? 2.

Did the ALJ err by refusing to allow Okoro to argue the issue of willfulness at the remand hearing? 3. Did the ALJ err by excluding the additional testimony proffered by Okoro regarding the lead risk reduction certificate for the Park Avenue property at the remand hearing? We answer the first question in the affirmative and the second and third questions in the negative. Accordingly, we affirm the judgment of the circuit court.

BACKGROUND Okoro is the owner of two residential rental properties in Baltimore, Maryland: (1) 105 West Saratoga Street, Unit 2 (“the Saratoga Street property”), and (2) 1408 Park Avenue, Unit 1 (“the Park Avenue property”). Both properties were constructed before 1950, and thus are considered “affected properties” subject to the registration and lead risk reduction certification requirements under the Act. See Md.Code (1996, 2013), §§ 6-801, -811, -812, -815 of Environment Article (“Env’t”). In May of 2010, Kurt Kroncke moved into the Saratoga Street property.

The Saratoga Street property was not registered as an “affected property,” nor was a lead risk reduction ²⁰² certificate (“certificate”) submitted to the Department upon the change of occupancy, as required by the Act. On August 10, 2011, Whitney Blomquist moved into the Park Avenue property. The Park Avenue property was initially registered as an “affected property” on May 2, 2004, but the registration had not been renewed as of Blomquist’s move-in, nor was a certificate submitted to the Department upon the change of occupancy, as required by the Act. On August 15, 2011, Blomquist reported to the Department that the Park Avenue property did not have a valid certificate, and the Department opened an investigation into all of Okoro’s rental properties.

After Okoro was informed of Blomquist’s complaint in August 2011, he arranged for both properties to be inspected on October 31, 2011. Okoro filed a certificate for the Saratoga Street property on October 31, 2011, but the Park Avenue property needed remedial work before a certificate could be issued. On March 15, 2012, the Department filed an Administrative Complaint, Order and Penalty (“Administrative Complaint”) against Okoro for various violations of the Act. The Administrative Complaint alleged that Okoro (1) failed to register or renew the registration of the Park Avenue and Saratoga Street properties; (2) failed to bring both properties into compliance with the lead risk reduction standard; and (3) failed to obtain certificates for both properties.

The Administrative Complaint ordered Okoro to bring all of his properties into compliance with the Act, and sought a $2,500 penalty for the registration violations, and a $35,000 penalty for the risk reduction violations. On March 29, 2012, Okoro requested a hearing before the Office of Administrative Hearings (OAH) to contest the Administrative Complaint. Okoro registered the Park Avenue property and the Saratoga Street property as “affected properties” on April 8, 2012. On June 12, 2012, a hearing was held before an ALJ, at which Okoro appeared pro se.

At the outset of the hearing, Okoro moved to dismiss the Administrative Complaint on the ²⁰³ grounds that he was in compliance with the Act. The Department conceded that the Saratoga Street property was “brought into compliance” with the risk reduction requirements as of the date of the filing of the Administrative Complaint, but alleged that “there was a significant period of time that that property was in violation.” In addition, the Department stated that the Park Avenue property remained in violation of the risk reduction requirements as of the date of the hearing, because there was no valid certificate on file with the Department. The ALJ denied the motion to dismiss, and both sides called witnesses and presented evidence on the merits. In a decision issued on September 7, 2012, the ALJ determined: (1) Okoro violated the Act’s registration and risk reduction certification requirements for both properties; (2) Okoro violated the Act’s 100% compliance requirement; and (3) the Department’s $37,500 penalty was reasonable and within its statutory authority.

To decide whether the Department’s penalty was appropriate, the ALJ considered eight factors, as required by the Act, and found that two factors were present: (1) Okoro’s violations were willful, because he failed to exercise reasonable care in remedying the certification violation for the Park Avenue property, and provided no explanation for the other violations; and (2) Okoro’s violations had the potential for harm to human safety, because Blom-quist was a woman of child-bearing age. The ALJ ordered Okoro to pay the $37,500 penalty requested by the Department and bring the Park Avenue property into compliance with the Act’s lead risk reduction requirements within thirty days. On September 21, 2012, Okoro, now represented by counsel, filed a petition for judicial review in the Circuit Court for Baltimore City. In his memorandum filed on December 18, 2012, Okoro challenged (1) the ALJ’s findings that Okoro had violated the Act’s registration and certification requirements, that Okoro’s violations were “willful,” and that the violations had the potential for harm to human safety, (2) the ALJ’s impartiality, and (3) the ALJ’s characterization of the Park ²⁰⁴ Avenue property’s certificate as “undated.” The Department filed an Answering Memorandum on January 18, 2013.

On March 25, 2013, the circuit court held a hearing and issued an order holding that the Department failed to establish that Blomquist was a “person at risk” as defined by the Act, because the Department never proved that Blomquist was pregnant and spent at least twenty-four hours per week in the Park Avenue property. The court (1) reversed and remanded the agency’s decision “insofar as it assesses penalties against [Okoro],” (2) ordered that the parties be “granted an opportunity to argue the issue of imposition of penalties without considering the ‘potential for harm to human health or safety’ factor,” and (3) ordered the ALJ to make a determination of the imposition of penalties without considering the “potential for harm to human health or safety” factor. On October 9, 2013, the ALJ held a remand hearing “to give the parties an opportunity to argue the issue of imposition of penalties.” At the outset of the hearing, the ALJ heard argument on the Department’s motion to quash Okoro’s request for a subpoena of a Department employee (“Okoro’s witness”) to rebut the Department’s testimony at the June 12, 2012 hearing regarding the status of Okoro’s certificates on file with the Department. The ALJ granted the Department’s motion to quash on the grounds that the circuit court’s remand order did not provide that additional evidence could be taken at the remand hearing.

On the merits, the Department argued that the ALJ should uphold its original penalty of $37,500, because Okoro’s violations were willful. Okoro responded that his violations were not willful under Maryland law, because “he did not know of the violations” and he “had taken reasonable efforts” to remedy the violations as soon as he was made aware of them. Okoro reiterated his argument that the Department misled the ALJ at the previous hearing regarding the status of Okoro’s certificates. Two days after the hearing, Okoro filed a motion for mistrial on the ground, among others, that the ALJ erred in failing ²⁰⁵ to allow Okoro’s witness to testify at the remand hearing.

This motion was denied. On October 31, 2013, the ALJ issued a Revised Decision on Remand (the “Revised Decision”), ordering Okoro to pay a penalty of $25,650 and bring the Park Avenue property into compliance with the Act. The ALJ did not alter her original findings and discussion “except as necessary to comply with the remand order.” The ALJ, however, did reduce the total amount of the penalty from $37,500 to $25,650. Okoro filed a second petition for judicial review in the circuit court on November 18, 2013.

The Department filed a response to Okoro’s petition on November 25, 2013. Okoro filed a memorandum with the circuit court on February 18, 2014, arguing that the ALJ erred in (1) stating that she was limited on remand to consider argument on the potential for harm to human health and safety factor only, and (2) not allowing Okoro’s witness to testify to rebut the Department’s testimony at the June 12, 2012 hearing. The Department filed an Answering Memorandum on March 19, 2014, arguing that the ALJ’s Revised Decision “was based upon a proper application of the law, was supported by substantial evidence and complied with [the circuit court’s] Order by excluding the ‘potential harm to human health’ penalty factor.” The circuit court held a hearing on Okoro’s second petition for judicial review on April 23, 2014. On May 5, 2014, the court issued a Memorandum and Order affirming the ALJ’s Revised Decision.

On May 8, 2014, Okoro filed a timely notice of appeal to this Court. STANDARD OF REVIEW In reviewing an administrative decision, “[t]his Court looks through the circuit court’s decision and evaluates the decision of the agency.” Wilson v. Md. Dep’t of the Env’t, 217 Md. App. 271, 283 , 92 A.3d 579 (2014) (citation and internal quotation marks omitted). Such review is limited to deciding “if there is substantial evidence in the record as a whole to support the agency’s findings and conclusions, and ... if the ²⁰⁶ administrative decision is premised upon an erroneous conclusion of law.” John A. v. Bd. of Educ. for Howard Cnty., 400 Md. 363, 381 , 929 A.2d 136 (2007). “The substantial evidence test evaluates whether a reasoning mind reasonably could have reached the factual conclusion the agency reached.” Motor Vehicle Admin. v. Lipella, 427 Md. 455, 467 , 48 A.3d 803 (2012) (citations and internal quotation marks omitted). The Court of Appeals has stated that “[e]ven with regard to some legal issues, a degree of deference should often be accorded the position of the administrative agency.

Thus, an administrative agency’s interpretation and application of the statute which the agency administers should ordinarily be given considerable weight by reviewing courts.” Md. Aviation Admin. v. Noland, 386 Md. 556, 572 , 873 A.2d 1145 (2005) (citations and internal quotation marks omitted). Furthermore, an agency “has broad latitude in fashioning sanctions within legislatively designated limits.” Neutron Products, Inc. v. Dep’t Of The Env’t, 166 Md.App. 549, 584 , 890 A.2d 858 , cert. denied, 392 Md. 726 , 898 A.2d 1005 (2006). Therefore, “[a] reviewing court is not authorized to overturn a lawful and authorized sanction unless the disproportionality [of the sanction] or abuse of discretion was so extreme and egregious that the reviewing court can properly deem the decision to be arbitrary and capricious.” Noland, 386 Md. at 581 , 873 A.2d 1145 (brackets in original) (citations and internal quotation marks omitted). DISCUSSION I. “Willfulness” Factor First, Okoro argues that the ALJ erred in finding that Okoro’s violations were willful, because “willfulness” under Maryland law requires an “intentional violation or deliberate intention or reckless disregard with an intent to cause harm,” not merely a lack of knowledge of the law.

According to Okoro, the ALJ’s determination that Okoro’s violations were willful was unsupported by evidence in the record, because the ALJ stated in her decision that she accepted as credible ²⁰⁷ Okoro’s testimony that he made efforts to comply with the Act’s requirements, and that she erroneously ignored the evidence that Okoro was unaware of the violations. The Department responds that the ALJ’s findings concerning Okoro’s willfulness were supported by substantial evidence and were legally correct. According to the Department, willfulness in the environmental enforcement context “is considered in terms of the extent to which the existence of the violation was known but uncorrected by the violator, and the extent to which the violator exercised reasonable care.” The Department contends that, because Okoro was aware of his obligations under the Act, substantial evidence demonstrated that Okoro did not exercise reasonable care in ensuring that he met such obligations. Under the Act, rental property owners must annually register their “affected properties” (properties constructed before 1950) with the Department, and update those registrations and satisfy lead risk reduction standards with every change in occupancy.

See Env’t §§ 6-801, -811, -812, -815. The Act requires an owner to ensure that 100% of his affected properties satisfy these risk reduction standards by filing a current certificate of compliance for each affected property with the Department. Env’t § 6-817. The Department may impose a monetary penalty for any violation of the registration and certification requirements described above; each day a violation occurs constitutes a separate violation.

Env’t §§ 6-849, 7-266(b)(3). The Department may impose a maximum penalty of (1) $20 per day for failure to register (or renew registration of) an affected property, and (2) $500 per day for all other violations. Env’t § 6-849(a), -850(a), 7-266. The penalty may not exceed $25,000 for each violation, or $100,000 in total.

Env’t § 7-266(b)(2)(i). In evaluating the appropriateness of a monetary penalty for a violation, the following eight factors must be considered: 1. The willfulness of the violation, the extent to which the existence of the violation was known to but ²⁰⁸ uncorrected by the violator, and the extent to which the violator exercised reasonable care; 2. Any actual harm to the environment or to human health, including injury to or impairment of the use of the waters of this State or the natural resources of this State; 3.

The cost of cleanup and the cost of restoration of natural resources; 4. The nature and degree of injury to or interference with general welfare, health, and property; 5. The extent to which the location of the violation, including location near waters of this State or areas of human population, creates the potential for harm to the environment or to human health or safety; 6. The available technology and economic reasonableness of controlling, reducing, or eliminating the violation; 7.

The degree of hazard posed by the particular waste material or materials involved; and 8. The extent to which the current violation is part of a recurrent pattern of the same or similar type of violation committed by the violator. Env’t § 7—266(b)(2)(ii) (emphasis added). We agree with the Department that “[i]n the context of an environmental enforcement action, ‘the willfulness of a violation’ of an order is considered in terms of ‘the extent to which the existence of the violation was known but uncorrected by the violator, and the extent to which the violator exercised reasonable care.’ ” Gertz v. Md. Dep’t of the Env’t, 199 Md.App. 413, 430-31 , 23 A.3d 236 (quoting Env’t § 9-342(b)(2)(ii)(l), the water pollution control statute, which contains identical language regarding “willfulness” as a factor to consider before assessing a penalty), cert. denied, 423 Md. 451 , 31 A.3d 919 (2011); see also Am.

Recovery Co., Inc. v. Dep’t of Health & Mental Hygiene, 306 Md. 12, 21 , 506 A.2d 1171 (1986) (upholding a penalty in which the agency found that the appellant’s environmental violation satisfied the “willfulness” ²⁰⁹ factor, because the “hearing examiner expressly found that the company has been on notice about specific violations and has not remedied them” (internal quotation marks omitted)). 1 The statute requires the ALJ to consider both “the extent to which the existence of the violation was known to but uncorrected by the violator, and the extent to which the violator exercised reasonable care,” before finding that a violation was willful. Env’t § 7-266(a)(b)(2)(ii)(l). The ALJ need not, however, find both elements to be present to determine willfulness; he or she simply must consider both parts of the “willfulness” definition and make appropriate findings thereunder. See id.

We conclude that substantial evidence supports the ALJ’s finding that Okoro’s violations were willful. The Revised Decision stated the following on willfulness: [The Department] presented evidence that [Okoro] was aware of the registration and