Sugarloaf Citizens Ass'n v. Northeast Maryland Waste Disposal Authority
ELDRIDGE, Judge. The controversy in this case centers around the Prevention of Significant Deterioration (PSD) permit process required by the federal Clean Air Act, 42 U.S.C. § 7401 et seq., and implemented by the State of Maryland through the Air Management Administration of the Maryland Department of the Environment. The purpose of the PSD permit process is to prevent degradation of the ambient air quality in areas where air quality is already superior to that required by the National Ambient Air Quality Standards. PSD approval is the first step in a three stage air quality permit process, and PSD approval is required before any potential source of air pollution can be located in a PSD area.
The next stage in the air quality approval process requires an applicant to obtain a permit to construct, and the final stage requires the. applicant to obtain a permit to 648 operate. 1 The plaintiffs are two individual landowners, Beverly Thoms and Karen Kalla, who reside near Sugarloaf Mountain, and the Sugarloaf Citizens Association, a nonprofit corporation representing the interests of the citizens residing in the Sugarloaf Mountain area of Montgomery County, Maryland. 2 The defendants are Montgomery County, Maryland, the Northeast Maryland Waste Disposal Authority, and the Air Management Administration. At issue in this case is a municipal solid waste incinerator which Montgomery County and the Northeast Authority propose to construct at Dickerson, Maryland, near Sugar-loaf Mountain. 3 Sometime in 1988, Montgomery County and the Northeast Authority filed an application for PSD approval of the proposed facility with the Air Management Administration. 4 See COMAR 26.11.02.09. On May 10, 1988, the plaintiffs sent a letter to George P. Ferreri, head of the Air Management Administration, requesting that the Administration hold an “adjudicatory” 649 hearing on the PSD application. The Citizens Association sent numerous additional requests for an adjudicatory hearing to the Administration, specifically on May 24, 1988, September 28, 1988, and September 18, 1989.
By letter of October 18, 1989, Mr. Ferreri denied the request for an adjudicatory hearing. Furthermore, he stated that a public hearing at which interested persons could make comments would be held on November 18, 1989. Pursuant to COMAR 26.11.02.10C, notices were published in newspapers in the Sugarloaf Mountain area, informing residents that the Air Management Administration would hold a public hearing on November 18, 1989, regarding the PSD application, and that comments would be received through the date of the hearing. A five hour non-trial type hearing was held on November 18th, and the record was kept open for an additional thirty days in order to receive any further comments.
Prior to the public hearing, on November 6, 1989, Sugar-loaf Citizens Association filed in the Circuit Court for Baltimore City a complaint for a declaratory judgment, requesting the court to declare that the Air Management Administration was required to hold an “adjudicatory” hearing before taking final action on the PSD application filed by Montgomery County and the Northeast Authority. 5 A petition for a writ of mandamus was also filed. The original defendants, Air Management Administration and the head of the Administration, George Ferreri, answered the complaint and petition. Subsequently, the Northeast Authority and Montgomery County moved to intervene as defendants, and filed an answer to the complaint and petition; intervention was granted. 650 Each defendant then filed a motion for summary judgment on two grounds, namely that the Citizens Association had no standing to sue because it lacked a property interest or special damages, and that a contested case hearing in PSD permit proceedings was not required by statute, regulation, or due process. After the defendants’ motions for summary judgment were filed, the complaint and mandamus petition were amended to include the two individual plaintiffs, Ms. Thoms and Ms. Kalla.
On March 2, 1990, the circuit court held a hearing on the defendants’ motions for summary judgment. The trial court entered an order on March 6,1990, granting summary judgment in favor of the defendants. The court declared that a contested case hearing was not required by any law or by due process principles. The circuit court further held that the standing issue was moot because of its decision on the merits.
The Citizens Association and the individual plaintiffs then filed an appeal to the Court of Special Appeals. Before the case was heard in that court, Montgomery County, the Northeast Authority, and the Administration petitioned this Court for a writ of certiorari. The Citizens Association, Thoms, and Kalla filed a cross-petition. We granted both petitions and shall affirm. 6 651 The issue in this case is whether the Air Management Administration, upon request, is required to hold a “contested case” hearing as defined by Maryland’s Administrative Procedure Act (APA), Code (1984, 1990 Cum.Supp.), §§ 10-201 through 10-217 of the State Government Article, before ruling on an application for PSD approval.
A “contested case” is defined by the APA as follows: “§ 10-201. Definitions. # * # * * * “(c) Contested case.—‘Contested case’ means a proceeding before an agency to determine: (1) a right, duty, statutory entitlement, or privilege of a person that is required by law to be determined only after an opportunity for an agency hearing; or (2) the grant, denial, renewal, revocation, suspension, or amendment of a license that is required by law to be determined only after an opportunity for an agency hearing.” Under the terms of the APA, when a proceeding meets the definition of a “contested case,” the agency is required to provide certain trial type procedures during the course of the proceeding. 7 652 It is well established, however, that the APA itself does not grant a right to a hearing. That right must come from another source such as a statute, a regulation, or due process principles. See Prince George’s County v. Blumberg, 288 Md. 275, 295-296 , 418 A.2d 1155, 1166-1167 (1980), cert. denied, 449 U.S. 1083 , 101 S.Ct. 869 , 66 L.Ed.2d 808 (1981); Eliason v. State Roads Comm., 231 Md. 257, 260 , 189 A.2d 649, 650-651 , cert. denied, 375 U.S. 914 , 84 S.Ct. 211 , 11 L.Ed.2d 152 (1963); Warwick Corp. v. Dep’t of Transp., 61 Md.App. 239, 244-245 , 486 A.2d 224, 226 (1985); Dunkel v. Elkins, 325 F.Supp. 1235, 1246-1247 (D.Md.1971).
See also Modular Closet v. Comptroller, 315 Md. 438, 445-447 , 554 A.2d 1221, 1224-1225 (1989); Donocam Assoc. v. Wash. Sub. San. Comm’n, 302 Md. 501, 512 , 489 A.2d 26, 31-32 (1985); Murray v. Dep’t of Soc.
Services, 260 Md. 323, 326-327 , 272 A.2d 16, 18 (1971); Md.-Nat’l Cap. P. & P. v. Friendship Hts., 57 Md.App. 69, 81 , 468 A.2d 1353 , 653 1359, cert. denied, 300 Md. 89 , 475 A.2d 1200 (1984). Moreover, the statute or regulation which grants the right to a hearing may negate the fact that the hearing is to be a “contested case” or “adjudicatory” hearing. If the statutory or regulatory scheme does so, then the “contested case” provisions of the APA are inapplicable.
See, e.g., Board v. Secretary of Personnel, 317 Md. 34 , 562 A.2d 700 (1989). The Air Management Administration, as part of the Maryland Department of the Environment, constitutes a State agency to which the provisions of the APA are fully applicable. See §§ 10-201(b) and 10-202 of the State Government Article. Furthermore, approval of a PSD permit application constitutes the granting of a license as set forth in the definition of “contested case.” See § 10-20X(d) of the State Government Article.
The Citizens Association and the individual plaintiffs contend that “[Code (1982, 1987 Repl.Vol.) ] Env’t Art. § 2-404 and GOMAR 26.11.02.10C legally obligate [the Air Management Administration] to provide an opportunity for a hearing on an application for PSD approval. Thus, the PSD approval application for the incinerator fully meets the definition of a ‘contested case’ under the APA.” 8 Nevertheless, as pointed out above, the source which gives a right to a hearing may negate the fact that the hearing is to be a “contested case” or “adjudicatory” hearing. An examination of the entire statutory and regulatory scheme regarding the air quality permit process reveals that PSD approval is merely a preliminary or interlocutory requirement, prior to obtaining permission to actually construct and operate a potential source of pollution. Under COMAR 26.11.02.10C and the statutory permit scheme as a whole, the hearing required at the PSD permit stage is not a contested case hearing. 654 As the Citizens Association and the individual plaintiffs state, COMAR 26.11.02.10C does provide for a “public hearing” on an application for PSD approval. 9 The provisions of the regulation itself, however, imply that the hearing required is not to be a contested case hearing.
See Board v. Secretary of Personnel, supra, 317 Md. at 41-42 , 562 A.2d at 703-704 ; Eliason v. State Roads Comm., supra, 231 Md. at 260-261 , 189 A.2d at 651 . See also Holmes v. Robinson, 84 Md.App. 144, 149-151 , 578 A.2d 294, 296-297 (1990); cert. denied, 321 Md. 501 , 583 A.2d 275 (1991); 655 Parlato v. Md. Human Relations Comm’n, 76 Mc.App. 695, 700-703, 548 A.2d 144, 147-148 (1988); cert. denied, 314 Md. 497 , 551 A.2d 867 (1989). Although COMAR 26.11.02.10C specifies the procedures to be followed for a PSD permit hearing, in the alternative the regulation allows the Air Management Administration to substitute the procedures used in PSD proceedings at the federal level by the Environmental Protection Agency. Specifically, COMAR 26.11.02.100(9) states: “In place of all of the procedures set forth in this regulation, the Department may use all or part of the procedures set forth in 40 CFR Part 52.21, 1987 edition, to review the application for an approval for any PSD source.” In turn, 40 C.F.R. Part 52.21(q) mandates that the procedures found in 40 C.F.R. Part 124 shall be used in processing PSD applications.
Part 124 provides for non-trial type public notice and comment hearings in cases of PSD permit applications. See 40 C.F.R. Part 124.10 to 124.15. Furthermore, Part 124.71(c) states that PSD permits may never be subject to an “evidentiary” hearing. Thus, the federal Environmental Protection Agency has clearly demonstrated its intent that federal PSD permit proceedings be subject only to non-contested case type hearings.
Maryland has shown a similar intent by providing that in place of its own procedures for PSD proceedings, the federal procedures, in which only non-trial type hearings are available, may be substituted. 10 656 The plaintiffs further contend that § 2-404 of the Environment Article obligates the Air Management Administration to hold a contested case hearing on PSD permit applications. Contrary to this contention, however, § 2-404, by its terms, is applicable only to proceedings involving permits to construct PSD sources. Section 2-404 provides in pertinent part as follows: “§ 2-404. Ambient air quality control permits; notice; hearings. “(a) Construction of certain sources.—The Department shall comply with the provisions in subsection (b) of this section before issuing a permit to construct: (1) Any source which is required to obtain a permit to operate under regulations adopted under this subtitle; or (2) Any source which is subject to federal standards under 40 CFR Part 60 (New Source Performance Standards), 40 CFR Part 61 (National Emission Standards for Hazardous Air Pollutants), or 40 CFR 52.21 (Prevention of Significant Deterioration).
(b) Hearing and notice of intended issuance of per mit.—Before issuing a permit to construct for any source listed in subsection (a) of this section, the Department shall: (1) Give public notice of the intended issuance of the permit; and (2) Provide an opportunity for a public hearing in the county in which the proposed source will be located.” (Emphasis added). The statutory provision for a hearing at the construction permit stage confirms the conclusion that a contested case hearing is not required at the PSD approval stage. 11 Under the air quality permit scheme as a whole, the State has chosen the construction permit approval stage as the point at which a hearing is required by law, thus 657 meeting the definition of a contested case. 12 A hearing at the PSD approval stage is addressed only by COMAR 26.11.02.10C, which, by authorizing substitution of the federal procedures, negates the fact that the hearing required is a contested case hearing. This interpretation of the statutory and regulatory scheme is reinforced by the fact that the construction permit stage is a more appropriate time for a contested case hearing than the PSD approval stage. Plaintiffs Thoms 658 and Kalla allege that their property and health will suffer because of the operation of the proposed facility.
The PSD approval, however, is simply a preliminary finding that the incinerator will not significantly harm the air quality in the Sugarloaf Mountain area generally. Although such approval is required in order to construct and operate the incinerator, the PSD approval itself does not authorize the construction or operation of the facility. As noted previously, Montgomery County and the Northeast Authority must engage in a permit application approval process at each of these stages also. Approval of the PSD permit has no immediate effect on any individual property rights, nor does it grant to the County the authority to begin constructing the proposed facility.
Conversely, the granting of a permit to construct would more immediately affect the individuals living around the proposed facility whose property might be harmed by the incinerator. The construction permit would create an immediate right in the County to begin building the facility. Clearly at this stage in the process, where actual harm may occur, a contested case hearing is more appropriate. Montgomery County is required by law to provide for solid waste disposal, reduction, and recycling.
In order to carry out its obligations, the County must have appropriate facilities. In turn, the County must demonstrate through the three stage air quality permit process that a facility such as the proposed incinerator will comply with the provisions of the federal Clean Air Act. Allowing opponents the opportunity for full blown contested case hearings, with the accompanying right of judicial review, at each stage in the permit process would greatly interfere with a local government’s ability to carry out its legal obligations and to protect the health and welfare of the citizens which it serves. 13 659 Therefore, the statutory and regulatory air quality permit scheme as a whole indicates that a PSD hearing is not a contested case hearing. See State Dep’t of A. & Tax. v. Clark, 281 Md. 385, 392-396 , 380 A.2d 28, 33-35 (1977) (entire statutory scheme for contesting tax assessments indicates that provisions allowing for challenges to assessments after the date of finality does not provide for a contested case).
JUDGMENT OF THE CIRCUIT COURT FOR BALTIMORE CITY AFFIRMED. APPELLANTS TO PAY COSTS. ON MOTION FOR RECONSIDERATION ELDRIDGE, Judge. The defendant Air Management Administration has filed a motion for reconsideration, stating that this Court’s opinion “went much further” than was necessary and “decided two matters not at issue: (a) that appellants are entitled to a ‘contested case’ at the ‘permit to construct’ stage, and (b) that ‘contested case’ hearings are required under various unrelated statutory schemes. * * * The State submits that this latter portion of the opinion, 660 particularly the sweeping conclusions about statutes cited in n. 12 ..., should be reconsidered or revised.” (Motion for Reconsideration, p. 2).
In addition to arguing that the above-described portion of the opinion was unnecessary and decided matters not at issue, the Air Management Administration asserts that the challenged portion of the opinion “obscures, if it does not entirely eliminate, [the] fundamental distinction” between “contested case hearings” and “legislative-type hearings” involving “issues of agency policy.” Ibid. It is claimed that the opinion is “inconsistent with prior decisions of this Court, Montgomery County v. Woodward & Lothrop, Inc., 280 Md. 686, 711-712 [ 376 A.2d 483, 494 (1977)], cert. denied, 434 U.S. 1067 , [ 98 S.Ct. 1245 , 55 L.Ed.2d 769 ] (1978); Chevy Chase Village v. Montgomery County Board of Appeals, 249 Md. 334, 345 [ 239 A.2d 740, 744-745 ] (1968)....” Id. at p. 3. Finally, the Air Management Administration argues that, if this Court should decline to delete the challenged portion of the opinion, the Court should “declar[e] that the rule of this case—that statutorily-labeled ‘public hearings’ may nevertheless be ‘contested case’ hearings—is a rule of purely prospective application____” Id. at p. 8. Subsequently, the defendants Montgomery County and the Northeast Maryland Waste Disposal Authority also filed motions for reconsideration, advancing essentially the same arguments set forth by the Air Management Administration.
Memoranda on behalf of amici curiae in support of the motions for reconsideration have also been filed. For the reasons delineated below, we disagree with all of the above-mentioned arguments and shall deny the motions for reconsideration. I. Preliminarily, we point out that the Air Management Administration mischaracterizes our opinion when it asserts that we decided “that appellants are entitled to a ‘contested 661 case’ at the ‘permit to construct’ stage.... ” (Petition for Reconsideration, p. 2). We held that the “construction permit approval stage [is] the point at which a hearing is required by law, thus meeting the [Administrative Procedure Act’s] definition of a contested case.” 323 Md. at 656-657, 594 A.2d at 1122.
We decided nothing concerning the entitlement or standing of these appellants to obtain a contested case hearing at the construction permit stage. Moreover, we have made it clear in footnote 6 of the opinion that we are not reaching any issue of standing. Consequently, while one who has standing to be a party in a construction permit case before the agency is entitled to the opportunity for a contested case hearing at the construction permit stage, see Maryland Code (1984, 1990 Cum.Supp.), § 10-205 of the State Government Article, we did not decide whether the appellants in the present case fall within such category. There is no merit in the defendants’ arguments that the discussion in the opinion concerning the nature of the hearing at the construction permit stage was “unnecessary” and addressed a matter “not at issue.” As the opinion points out, the plaintiffs in their brief specifically relied upon the statutory provision for a hearing set forth in Code (1982, 1987 Repl.Vol., 1990 Cum.Supp.), § 2-404 of the Environment Article, which provides for a hearing at the construction permit stage.
The defendant Air Management Administration in its brief devoted ten pages to the nature of the hearing at the construction permit stage provided for by § 2-404. In addition, the relationship between the statutory provision for a hearing at the construction permit stage, and the COMAR provision for a hearing at the PSD approval stage, was thoroughly explored at the oral argument before this Court. Furthermore, our determination that there was an opportunity for a contested case hearing at the construction permit stage was part of the reasoning underlying our conclusion that a contested case hearing was 662 not required at the PSD approval stage. 1 Similarly, there is no merit in the defendants’ arguments that the discussion in footnote 12 of the opinion, relating to the word “public” in statutory provisions for hearings, was unnecessary and unrelated to a matter at issue. A major argument by the defendants in this case was that the adjective “public” before the word “hearing,” both in the regulation and in § 2-404 of the Environment Article, meant that the hearing was not a contested case hearing.
The entire discussion in footnote 12 was part of the Court’s response to this argument. In fact, while asserting in their motions for reconsideration that the discussion in footnote 12 is unnecessary and relates to matters not at issue, the defendants elsewhere in their motions for reconsideration continue to argue that the word “public” in a statutory provision for a hearing means that the hearing is “informational, not adjudicatory.” (Air Management Administration’s Motion for Reconsideration, p. 5).
II
In arguing that our opinion “obscures” or “eliminate[s]” the distinction between contested case hearings and “informational” or “legislative type” hearings involving 663 “issues of agency policy” (Air Management Administration’s Motion for Reconsideration, p. 2), the defendants in their motions overlook the contested case provisions of the Maryland Administrative Procedure Act, §§ 10-201 through 10-216 of the State Government Article. They do not even cite the statute. Instead, their reliance is upon cases not involving the Maryland Administrative Procedure Act. Moreover, their only arguments as to why the hearing provided for in § 2-404 of the Environment Article, and the hearings referred to in footnote 12, are not contested case hearings are that the word “public” is used in the statutes providing for hearings and that the administrative practice has not been to treat the hearings as contested case hearings. 2 Under Maryland administrative law, where a statute, regulation or due process principles provide that a particular administrative function be done after an agency hearing, it is the definition in the Administrative Procedure Act, and not the statute dealing with the underlying administrative function, which ordinarily determines whether the hearing is a “contested case” hearing.
Donocam Assoc. v. Wash. Sub. San. Comm’n, 302 Md. 501, 512 , 489 A.2d 26, 31 (1985).
In other words, where a statute such as § 2-404 of the Environment Article requires an opportunity for an agency hearing prior to the issuance of a construction permit, the question whether such hearing is a “contested case” hearing ordinarily depends upon applying the definition of “contested case” in the Administrative Procedure Act to the agency activity, and not upon whether § 2-404 uses language indicating that the hearing is “adjudicatory.” 664 Otherwise, the definition of contested case in the Administrative Procedure Act, § 10-201(e) of the State Government Article, would be superfluous. In this regard, the Maryland Administrative Procedure Act differs from the administrative procedure acts in some other jurisdictions. 3 The position of the defendants seems to be that the definition of “contested case” in the Administrative Procedure Act should be ignored, and that the sole issue is whether an application for a construction permit under § 2-404 of the Environment Article is “legislative-type” action or “adjudicatory” action. A similar argument was flatly rejected by this Court in Donocam Assoc. v. Wash. Sub.
San. Comm’n, supra, 302 Md. 501 , 489 A.2d 26 . The issue in Donocam was whether a “public hearing” 4 by the Commission, prior to levying front-foot benefit charges on Donocam Associates' land, was a “contested case” hearing so that the Commission’s decision was subject to judicial review under the Administrative Procedure Act. 5 The Commission, like the defendants in the case at bar, “argued ... that the setting of front-foot benefit charges is a legislative action and that such action is not reviewable as a contested case.” 302 Md. at 512 , 489 A.2d at 31 . We disagreed with this position, stating that the alleged “legislative” nature of the “ 'underlying function involved’ ” of setting front-foot benefit charges is not what determines whether a matter is a “contested case.” Ibid.
This Court went on to quote in part and apply the definition of “contested case” which was then set forth in the Administrative Procedure Act ( 302 Md. at 512 , 489 A.2d at 31-32 ): 665 “It is conceded, as indeed it must be, that the statute under which these assessments were made requires a hearing. As we have already noted, the Commission is an agency within the meaning of the Administrative Procedure Act. There is no dispute relative to the fact that Donocam Associates were aggrieved- -their property has had assessments placed on it which work out to in excess of one-quarter of a million dollars, enough to aggrieve any property owner. The question becomes then whether ‘the legal rights, duties, statutory entitlements, or privileges’ of Donocam and persons similarly situated are required by law to be determined after an agency hearing. “As we see it the agency is to determine rights and duties at this hearing.” See also Newp.
Nat. Bank v. Prov. Inst. For Savings, 101 R.I. 614, 619-621 , 226 A.2d 137, 140-141 (1967) (also rejecting an argument similar to that made by the defendants in the present case).
Consequently, it is the application of the “contested case” definition in the Administrative Procedure Act which generally determines whether a proceeding is a contested case for purposes of the Administrative Procedure Act. 6 In the present case, § 2-401 of the Environment Article provides for a permit before a person, inter alia, 666 “constructs ... a source that may cause or control emissions into the air.” Section 2-402 contains certain exceptions, and § 2-403 mandates a fee for each permit issued. Section 2-404 requires that, before issuing a permit to construct, the Department of the Environment shall, inter alia, provide an opportunity for a hearing in the county where the particular source is to be located. Section 2-404, therefore, is a statute requiring an agency hearing before the agency may grant a permit to construct a specific facility at a specific location. Nothing in this scheme expressly or by implication negates a contested case hearing.
Cf., Board v. Secretary of Personnel, 317 Md. 34 , 562 A.2d 700 (1989). In light of the definition of “contested case” in the Administrative Procedure Act, we reaffirm our earlier conclusion that the hearing on a permit application provided for by § 2-404 of the Environment Article is a contested case hearing. Prior to July 1, 1977, a “contested case” for purposes of the Maryland Administrative Procedure Act was “a proceeding before an agency in which the legal rights, duties, or privileges of specific parties are required by law or constitutional right to be determined after an agency hearing.” Code (1957, 1978 Repl.Vol.), Art. 41, § 244(c). Even under this language, we took the position that where a hearing was provided for in connection with a 667 permit or license, the proceeding was a “contested case.” See, e.g., Prince George’s Co. v. Blumberg, 288 Md. 275, 294-296 , 418 A.2d 1155, 1166-1167 (1980), cert. denied, 449 U.S. 1083 , 101 S.Ct. 869 , 66 L.Ed.2d 808 (1981) (water and sewer permits); Kaufman v. Taxicab Bureau, 236 Md. 476, 479-480, 484 , 204 A.2d 521, 523, 525 (1964), cert. denied, 382 U.S. 849 , 86 S.Ct. 95 , 15 L.Ed.2d 88 (1965) (application for taxicab operator’s license).
Any doubts about the usual nature of required administrative hearings on applications for permits or licenses in Maryland were removed when the Administrative Procedure Act was revised by Ch. 884 of the Acts of 1978. 7 Ch. 884 represented a comprehensive revision of the Administrative Procedure Act which had been proposed by the Administrative Law Section of the Maryland State Bar Association. See Transactions of the Maryland State Bar Association, Vol. 83, Number 1, p. 45; Vol. 83, Number 2, p. 62. Among the changes brought about by Ch. 884 was the addition of new § 250A to Art. 41, which stated in relevant part: “(a) The provisions of this act concerning contested cases apply when the grant, denial, or renewal of a license is required by law or constitutional right to be preceded by notice and opportunity for hearing.” Ch. 884 also added new §§ 244(d) and (e) to Art. 41, stating: “(d) ‘License’ includes the whole or part of any agency permit, certificate, approval, registration, charter, or sim 668 ilar form of permission required by law, but it does not include a license required solely for revenue purposes. “(e) ‘Licensing’ includes the agency process respecting the grant, denial, renewal, revocation, suspension, annulment, withdrawal, or
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