Steuart Investment Co. v. Board of Commissioners

Davidson, J., delivered the opinion of the Court. The appellant, Steuart Investment Co. (Steuart), is the owner of 397 acres of industrially zoned land at Piney Point, St. Mary’s County, on which since 1950 it has operated an oil storage facility, a permitted use, 1 now containing 26 storage tanks. In August, 1975, as a prerequisite to the issuance of building permits for the construction of additional tanks identical to four existing tanks, Steuart submitted a site plan for approval. 2 Steuart also submitted a report from a civil ³⁸³ engineer to show compliance with the Zoning Ordinance. After holding hearings and requiring Steuart to file grading and soil sedimentation control plans and to upgrade the fire protection system, the Technical Evaluation Committee ³⁸⁴ (TEC) 3 approved the site plan.

After hearings, the Planning Commission recommended approval of the site plan with a “stipulation that all Federal, State and County regulations and Ordinance requirements be met prior to the expansion of operation of the additional tanks; and that the appropriate agencies be requested to provide results of any evaluation and approvals as may be forthcoming.” 4 Subsequently, the Planning Commission indicated that in its opinion “all regulatory requirements are currently satisfied as prerequisite to site plan approval.” 5 Notwithstanding that neither article 9 nor article 14 of the Zoning Ordinance requires a showing that the proposed facility does not lie within a fifty-year flood plain, on 8 January 1976, Steuart, in answer to a request from the Board of County Commissioners (Board), 6 provided information showing that its facility was not so located. On 16 January 1976, in answer to a request from the Board regarding ambient water and air quality at the Piney Point facility, Steuart explained that the earthen dike surrounding each tank prevented water pollution and that measurements of the air quality would be meaningless because there were no State standards for hydrocarbon emissions. On 4 February 1976, the Board determined that “additional, objective data is needed to ultimately decide whether to ³⁸⁵ approve or disapprove the site plan as proposed.” In a letter dated 5 February 1976, it asserted that there was: “a lack of data which might be properly termed probative evidence to substantiate an allegation that all requirements of the Zoning Ordinance have been met. Specific reference is made to Article 9.3 ‘Performance Standards’, A-J. While it is true that some such data has been supplied by the applicant and additional data has been assembled from federal and state agencies by Mr. Richard Platt, at the direction of the Planning Commission, it does not comply fully with the scope and intent of Article 9.3J.” Notwithstanding the fact that the uncontradicted evidence showed that “the proposed tank expansion would not increase through-put,” 7 the Board found that “the fact that the proposed expansion represents a substantial increase in capacity would on the surface, at least, make such testimony inconsistent.” It determined that the “impact upon the loading and unloading facilities and operating procedures” resulting from a “potential for increased through-put of petroleum products” had “not been addressed.” The Board concluded that: “an environmental impact analysis is needed to objectively decide in this matter.

Such analysis should: “(1) Be paid for by the applicant. This is a reasonable expectation in that under the terms of the Zoning Ordinance, it is the burden of the applicant to show that any proposed establishment or expansion of an industrial use is in conformance with the performance standards of the Ordinance. ³⁸⁶ “(2) Be performed by a firm of the Board of County Commissioners’ choosing and directed by the Board of County Commissioners. The applicant and the St. Mary’s County Environmental Committee shall be allowed to review the credentials of any proposed firm and comment on same prior to final selection. “(3) Be organized in such a fashion that will identify each requirement of the Zoning Ordinance and address same by providing probative evidence relative to each requirement. “(4) Devote particular and concerted attention to the loading and unloading facilities and operating procedures — both from ' the standpoint of what exists and what might be required if the proposed expansion increases through-put. This phase of the analysis should include a determination of what the ‘technological state of the art’ is with respect to loading and off-loading petroleum and containment of spills; and should further compare Steuart’s operating procedures and facilities to such. “The Board of County Commissioners should like to assure the applicant that it shall not act in an arbitrary and capricious manner in this case, but rather shall base its ultimate approval or disapproval on the objective data developed through the environmental impact analysis. “The Board shall await your response to this letter and stands ready to promptly work out the details as to who shall perform the environmental impact ³⁸⁷ analysis and the procedures by which same shall be accomplished.” In a letter dated 4 March 1976, the Board submitted “draft-preliminary” specifications for the environmental impact analysis (EIA) to Steuart for review and invited Steuart “to discuss the matter further.” In a letter dated 26 April 1976, Steuart asked that the building permits be issued.

The Planning Commission, pointing out that the requirements of the Zoning Ordinance and “the additional requirements and standards deemed necessary by the St. Mary’s County Commissioners ... have not yet been fulfilled,” said “your request is denied.” Steuart’s request for a reconsideration of the denial of its application was denied “[u]ntil such time as the County Commissioners authorize otherwise.” In a letter to the Board dated 30 April 1976, Steuart, insisting that it had complied with all requirements of article 9, demanded that the building permits be issued. In a letter dated 6 May 1976, the Board wrote: “The Board wishes to reiterate that its position is the same today as stated in [the letters of 5 February and 4 March 1976], Your demand that the site plan be approved and building permit issued within ten (10) days is therefore denied. The Board also wishes to reiterate its willingness to discuss the preliminary specifications for the environmental impact analysis so that the analysis may move forward.” On 25 May 1976, in the Circuit Court for St. Mary’s County, Steuart filed a bill of complaint seeking, among other things, a writ of mandamus to compel the County to approve the site plan and issue the building permits. After oral argument, the trial court found, among other things, that: 1) the Zoning Ordinance authorizes the Board to approve industrial site plans; 2) the Zoning Ordinance authorizes the Board, even without a recommendation from the Planning Commission, to impose additional standards and requirements before approving an industrial site plan; and 3) the Zoning Ordinance contains sufficient guidelines to govern the imposition of ³⁸⁸ those additional standards or requirements.

We agree for the following reasons: 1) On 10 March 1977, the Zoning Ordinance was amended to include a specific authorization for the Board to approve site plans. 8 Steuart concedes that the question of whether the Board has authority to approve industrial site plans is moot. 2) In interpreting a statute, the court must accord words their ordinary and natural signification. If the statute is part of a general statutory scheme or system, the sections must be read together to ascertain the true intention of the legislative body. 9 Here the 10 March 1977 amendments establish a legislative intent to place ultimate responsibility for industrial site plan approval in the Board. This implies that the legislature intended the Board to have the right to take such reasonable action as it deemed necessary in order to fulfill its responsibility. Accordingly, the statutory provision which authorizes the Board to impose additional standards and requirements 10 must be read as permitting the Board to exercise that function in a manner it deems appropriate independently of the recommendations of any other agency.

Thus a Planning Commission recommendation is not required before the Board may impose additional standards or requirements. 3) When a legislative body delegates authority to administrative officials, it must establish adequate guides and standards, but such guides and standards need not be established when the legislative body itself is exercising the police power.* 11 Here the Zoning Ordinance contains detailed standards which require that consideration be given to questions such as noise, vibration, smoke and particulate matter, toxic matter, odorous matter and glare. Additional ³⁸⁹ standards and requirements which the Board may impose are limited to those “necessary for the maximum protection of the environment and health and safety of the citizens of the County.” 12 These standards are adequate. 13 Accordingly, the Zoning Ordinance is valid whether the action of the Board is legislative or administrative. The trial court additionally found that the regulations that permit the Board to impose additional standards and requirements comply with the requirement that the regulations shall be uniform throughout each district, and that the Zoning Ordinance as applied did not deprive Steuart of equal protection. We agree. 14 Finally, the trial court rejected Steuart’s contention that the Board had imposed a requirement that an EIA be provided.

It concluded that because the content of the EIA had not been agreed upon, no requirement had yet been imposed. Consequently, it did not reach the question of whether the alleged additional requirement was arbitrary and capricious. More specifically, it stated that the letters dated 4 March 1976 and 6 May 1976 invited Steuart “to discuss the contents” of the EIA specifications and that because of Steuart’s “failure to accept [the Board’s] offer to discuss the preliminary specifications in a possible attempt to reduce or modify or eliminate them, [Steuart] has clearly not exhausted its administrative remedies as to any claim of arbitrariness regarding content of such proposals and will not be allowed to argue that point here. Because of [the Board’s] invitation to discuss the contents, the draft-preliminary copy was not an imposed requirement.” (Emphasis added.) ³⁹⁰ We do not agree.

Ordinarily, a court does not have jurisdiction in a case in which the protestant has not exhausted his administrative remedies. 15 To exhaust administrative remedies, a person must pursue the prescribed administrative procedure to its conclusion and await its final outcome. 16 Generally, resort can be had to a court only when there is a final order. 17 Here the question presented is whether the Board had imposed a requirement that an EIA be provided so that its refusal to act on Steuart’s site plan in the absence of such an analysis was a final order. 18 A final order of a court has been characterized as a judicial determination which settles some disputed right or rights of the parties or denies a person further means of vindicating his rights and interests in the subject matter. 19 While Maryland .courts have considered whether a particular administrative determination is a “final order,” the characteristics of such an administrative order have not been extensively articulated. 20 With respect to the finality of ³⁹¹ administrative determinations, the United States Supreme Court has stated that: 21 “[Administrative orders are not reviewable unless and until they impose an obligation, deny a right or fix some legal relationship as a consummation of the administrative process.” More recently that Court said: 22 “[T]he relevant considerations in determining finality are whether the process of administrative decisionmaking has reached a stage where judicial review will not disrupt the orderly process of adjudication and whether rights or obligations have been determined or legal consequences will flow from the agency action.” We shall apply these criteria. Here the record shows that the Board, in its letter of 5 February 1976, after its statement that “an environmental impact analysis is needed to objectively decide in this matter” of approval of Steuart’s site plan, indicated that it was willing to “work out the details as to who shall perform the environmental impact analysis and the procedures by which same shall be accomplished.” The Board’s letter of 4 March 1976 repeated its willingness “to discuss the matter further.” After Steuart demanded that the site plan be approved without an El A, the Board, in its letter of 6 May 1976, denied ³⁹² the demand and reiterated “its willingness to discuss the preliminary specifications for the environmental impact analysis so that the analysis may move forward.” This history demonstrates that although the contents of the EIA had not been agreed upon, the Board had determined that it would not act upon Steuart’s site plan without an EIA of some as yet undetermined content. Thus the Board’s action, as expressed in its letters, was to require an EIA as a prerequisite to site plan approval despite Steuart’s protest. The Board’s action imposed an obligation on Steuart to participate in the provision of the EIA and settled the disputed issue of whether an EIA was prerequisite to approval.

The legal consequence of the Board’s action was that, unless and until the Board obtained an EIA, Steuart’s permit was, in effect, denied. Under all these circumstances, the Board’s letter of 6 May 1976 was a final order and Steuart had thus exhausted its administrative remedies with respect to the requirement of an EIA even though the contents of the EIA had not yet been determined. Accordingly, Steuart is entitled to judicial review of the question of whether, under the present circumstances, the Board was arbitrary and capricious in requiring an EIA. 23 With respect to judicial review of an administrative action alleged to be arbitrary or unreasonable, the Court of Appeals has said: 24 “The courts have been alert to exercise their residual power to restrain improper exercises of administrative powers whether judicial or legislative in nature. If the legislature has not expressly provided for judicial review, a court will ordinarily utilize its inherent powers to prevent illegal, unreasonable, arbitrary or capricious administrative action.

In Heaps v. Cobb, 185 Md. 372, 379 , this Court said: ‘The legislature is without authority to divest the judicial branch of the government of its inherent ³⁹³ power to review actions of administrative boards shown to be arbitrary, illegal or capricious, and to impair personal or property rights; * * and then quoted the opinion in Hecht v. Crook, 184 Md. 271 , 280: “ ‘Courts have the inherent power, through the writ of mandamus, by injunction, or otherwise, to correct abuses of discretion and arbitrary, illegal, capricious or unreasonable acts; but in exercising that power care must be taken not to interfere with the legislative prerogative, or with the exercise of sound administrative discretion * * * * “Administrative action may be arbitrary or unreasonable if it is not based on or supported by sufficient facts or proper factual inferences. The Court in Heaps at page 378 quoted the language of the Supreme Court in the Chicago Junction Case, 264 U. S. 258, 265 , 68 L. Ed. 667, 674 , that: ‘To refuse to consider evidence introduced, or to make an essential finding without supporting evidence, is arbitrary action, 'and added: ‘Administrative boards in general may be said to act in a quasi judicial capacity insofar as they have the duty to hear and determine facts and, based on them, to make decisions. “Whichever of the recognized tests the court uses —substantiality of the evidence on the record as a whole, clearly erroneous, fairly debatable or against the weight or preponderance of the evidence on the entire record — its appraisal or evaluation must be of the agency’s fact-finding results and not an independent original estimate of or decision on the evidence----There are differences but they are slight and under any of the standards the judicial ³⁹⁴ review essentially should be limited to whether a reasoning mind reasonably could have reached the factual conclusion the agency reached. This need not and must not be either judicial fact-finding or a substitution of judicial judgment for agencyjudgment____ “We hold that a court in reviewing legislative actions or decisions of an administrative agency may apply the weight of the evidence test to the factual findings of' the agency, without exercising nonjudicial functions, provided it does not itself .make independent findings of fact or substitute its jiudgment for that of the agency. . . .” 25 (Footnote and citations omitted. Emphasis added.) Thus the Court of Appeals has established that when an administrative agency, exercising either quasi-judicial or quasi-legislative power, hears and determines facts, and acts or makes decisions based upon those facts, a court, reviewing those acts or decisions, applies the weight of the evidence test.

The court must determine whether a reasoning mind could have reached the factual conclusion reached by the agency. Administrative action is arbitrary and unreasonable if it is not based upon or supported by sufficient facts or proper factual inferences. Refusal to consider evidence introduced or making findings without supporting evidence is arbitrary action. 26 Applying these principles, the Court of Appeals has recognized that in the administrative process, the requested benefit must be granted if the record shows compliance with ³⁹⁵ all the applicable prerequisites, and there is no evidence to the contrary. Because there would be no foundation of fact upon which to base denial of the claim, denial would constitute arbitrary and capricious action.

In Heaps v. Cobb, 27 a widow’s claim for pension benefits under the Baltimore City Employees’ Retirement System was administratively denied. The trial court issued a writ of mandamus directing that benefits be paid and the Court of Appeals affirmed. Pointing out that testimony before the administrative agency had been uncontradicted, undisputed and unimpeached, that Court said: 28 “[T]he only conclusion to be reached is that the appellee has fully made out a case in compliance with every prerequisite of the ordinance, thus leaving no foundation of fact for the denial of her claim, and placing upon the appellant the mandatory duty of approving it.” In State Health Department v. Walker, 29 a property owner’s application for sewage disposal system permits was administratively denied. The trial court issued a writ of mandamus directing that the requested permits be approved and the Court of Appeals affirmed.

Pointing out that the testimony before the administrative agency had been uncontradieted, undisputed by legally admissible evidence and,unimpeached, that Court said: 30