DIXIE LUMBER COMPANY OF CHERRYVILLE, INC.,
Petitioner,
v
.
NORTH CAROLINA DEPARTMENT OF ENVIRONMENT, HEALTH AND NATURAL
RESOURCES, DIVISION OF ENVIRONMENTAL MANAGEMENT,
Respondent.
Moore & Van Allen PLLC, by Peter J. McGrath, Jr., for the
petitioner.
Attorney General Roy Cooper, by Assistant Attorney General
Kimberly W. Duffley, for the respondent.
WYNN, Judge.
Dixie Lumber Company of Cherryville, Inc. appeals the trial
court's affirmance of the Final Agency Decision of the North
Carolina Department of Environment and Natural Resources
(“Environmental Department”) denying reimbursement from the
Commercial Leaking Petroleum Underground Storage Tank Cleanup Fund,
N.C. Gen. Stat. § 143-215.94B (1999) (“Commercial Fund”). We
affirm.
In March 1998, Dixie Lumber sought reimbursement from the
Commercial Fund for cleanup costs incurred by releases from two
underground petroleum storage tanks on Dixie Lumber's property.
The Environmental Department denied reimbursement upon concluding
that Dixie Lumber was the operator of the tanks, and had failed topay fees assessed against operators.
Judge Beryl E. Wade, Office of Administrative Hearings,
conducted a contested case hearing on 10 February 2000. Judge Wade
concluded Dixie Lumber was the operator of the tanks with unpaid
fees, and recommended denial of Dixie Lumber's claim for
reimbursement by the Final Agency. The Final Agency Decision
adopted Judge Wade's Recommended Decision with additional findings
of fact and conclusions of law. On judicial review, Superior Court
Judge Sanford L. Steelman, Jr. affirmed the Final Agency Decision.
Dixie Lumber appeals.
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Dixie Lumber first argues that the trial court erred in
concluding that the findings of fact and conclusions of law in the
Final Agency Decision were supported by substantial, competent and
material evidence in the record, and in concluding that the Final
Agency Decision was not arbitrary or capricious. We disagree.
In reviewing an appeal from a trial court's order affirming an
agency's final decision, this Court must “(1) determine the
appropriate standard of review and, when applicable, (2) determine
whether the trial court properly applied this standard.” In re
Appeal by McCrary, 112 N.C. App. 161, 166, 435 S.E.2d 359, 363
(1993). The proper standard of review for the trial court to apply
“in reviewing an agency decision depends upon the nature of the
alleged error.” Id. Where an appellant alleges the agency's
decision was affected by errors of law, “de novo” review is
required; however, where an appellant questions whether theagency's decision was supported by substantial evidence or was
arbitrary or capricious, the trial court must employ the “whole
record” test. Walker v. N.C. Dept. of Human Resources, 100 N.C.
App. 498, 502, 397 S.E.2d 350, 354 (1990), disc. review denied, 328
N.C. 98, 402 S.E.2d 430 (1991); see also N.C. Gen. Stat. §§ 150B-
51(b)(4)-(6) (1999).
In the case at bar, Dixie Lumber alleged in its petition for
judicial review that the Final Agency Decision prejudiced its
substantial rights as follows: (1) The conclusion in the Final
Agency Decision “that [Dixie Lumber] was not eligible for
reimbursement because tank fees were not paid and [Dixie Lumber]
was the operator of the [underground storage tanks] is unsupported
by substantial evidence admissible under N.C. Gen. Stat. § 150B-
29(a), -30 or -31, in view of the entire record as submitted, or is
arbitrary and capricious”; and (2) The conclusion of law that “The
Environmental Management Commission acted within the authority
provided by N.C.G.S. § 143B-282(a)(2)(h) in adopting rules in
subchapter 2P of Title 15A, including 15A. N.C.A.C. 2P0401(b)” is
an error of law. Dixie Lumber does not argue on appeal that the
trial court applied the incorrect standards of review in
considering Dixie Lumber's arguments, and we conclude that the
trial court applied the correct standards of review to Dixie
Lumber's challenges to the Final Agency Decision. Our review is
therefore limited to determining whether the trial court properly
applied the “whole record” and “de novo” standards of review to
Dixie Lumber's respective arguments. The trial court states in the findings of fact in its order
that, “after applying the whole record test, the Court finds that
the Final Agency Decision of the Department of Environment and
Natural Resources is supported by substantial, competent and
material evidence.” Furthermore, the trial court found that “[t]he
Final Agency Decision was not arbitrary or capricious.” The whole
record test requires examination of the entire record to determine
whether the agency decision is supported by substantial evidence.
See ACT-UP Triangle v. Commission for Health Services, 345 N.C.
699, 706, 483 S.E.2d 388, 392 (1997). “Substantial evidence is
such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion.” Comr. of Insurance v. Rating
Bureau, 292 N.C. 70, 80, 231 S.E.2d 882, 888 (1977). “If
substantial evidence supports an agency's decision after the entire
record has been reviewed, the decision must be upheld.” Blalock v.
N.C. Dep't of Health and Human Servs., 143 N.C. App. 470, 473-74,
546 S.E.2d 177, 181 (2001).
As Dixie Lumber acknowledges in its brief, the central legal
issue in this appeal is whether Dixie Lumber was properly deemed to
be the “operator” of the tanks under N.C. Gen. Stat. § 143-215.94A
(1999). We note that Dixie Lumber did not specifically except to
any of the Final Agency Decision's findings of fact before the
trial court; thus, the findings of fact in the Final Agency
Decision were binding on the trial court and constituted the whole
record before it. See Wiggins v. N.C. Dept. of Human Resources,
105 N.C. App. 302, 413 S.E.2d 3 (1992). Therefore, “the trialcourt had to determine whether those findings reflected substantial
evidence to support” the Final Agency Decision finding Dixie Lumber
to be the operator. Id. at 306, 413 S.E.2d at 5.
G.S. § 143-215.94A(8) defines “operator” as “any person in
control of, or having responsibility for, the operation of an
underground storage tank.” After reviewing the record, we conclude
that it contains substantial evidence to support the Final Agency
Decision that Dixie Lumber was the “operator” of the tanks.
Indeed, testimony before Judge Wade indicated that an underground
storage tank form on file with the Environmental Department listed
Larry Summer, an officer of Dixie Lumber, as the contact person at
the tanks' site, indicating a relationship between Dixie Lumber and
the tanks. Furthermore, the contact person listed on the form
usually indicates the tanks' operator. Evidence before Judge Wade
indicated that Dixie Lumber used the two tanks for its business
until discontinuing its relationship with its petroleum supplier,
McNeely Oil Company. The Final Agency Decision's unchallenged
findings reflect that only Dixie Lumber's employees used the tanks;
Dixie Lumber's employees maintained the tanks, locking them up
nightly; and purchased and installed the second tank in the 1970s.
While there may be conflicting evidence in the record, the “whole
record” test “does not allow the reviewing court to replace the
agency's judgment as between two reasonably conflicting views, even
though the court could justifiably have reached a different result
had the matter been before it de novo.” Mendenhall v. N.C. Dept.
of Human Resources, 119 N.C. App. 644, 650, 459 S.E.2d 820, 824(1995). We hold Dixie Lumber's first two assignments of error to
be without merit.
Dixie Lumber next argues that the trial court erred in
concluding that the Environmental Department did not exceed its
statutory authority or jurisdiction, or commit an error of law in
denying Dixie Lumber reimbursement from the Commercial Fund. We
disagree.
As Dixie Lumber alleged an error of law, “de novo” review was
required; we note that the trial court applied “de novo” review to
this argument. We must therefore determine whether the trial court
did so properly. See In re McCrary.
G.S. § 143-215.94B establishes the Commercial Fund and defines
the parameters for the disbursement of funds therein. N.C. Gen.
Stat. § 143-215.94C(a) (1999) provides that an:
operator of a commercial petroleum underground
storage tank shall pay to the [North Carolina]
Secretary [of Environment and Natural
Resources] for deposit into the Commercial
Fund an annual operating fee according to the
following schedule:
(1) For each petroleum commercial
underground storage tank of 3,500 gallons
or less capacity -- two hundred dollars
($200.00).
(2) For each petroleum commercial
underground storage tank of more than
3,500 gallon capacity -- three hundred
dollars ($300.00).
Additionally, N.C. Gen. Stat. § 143-215.94E (1999) delineates the
rights and obligations of operators, providing in relevant part
that:
(g) No . . . operator shall be reimbursedpursuant to this section, and the
[Environmental] Department shall seek
reimbursement of the appropriate fund or of
the [Environmental] Department for any monies
disbursed from the appropriate fund or
expended by the [Environmental] Department if:
. . .
(3) The . . . operator has failed to pay
any annual tank operating fee due
pursuant to G.S 143-215.94C.
G.S. § 143-215.94E(g). Dixie Lumber does not contest that past
annual tank operating fees were due at the time of discovery of the
releases from the tanks. Rather, Dixie Lumber argues that G.S. §
143-215.94E(g)(3) does not impose a time restriction for fee
payments, and appears to allow for the “back” payment of fees
following the discovery of a release, so long as the fees are paid
prior to reimbursement from the Commercial Fund. However, N.C.
Admin. Code tit. 15A, r. 2P.0401(b) (September 2001) provides that:
An . . . operator of a commercial underground
storage tank is not eligible for reimbursement
for costs related to releases if any annual
operating fees due have not been paid in
accordance with [N.C. Admin. Code tit. 15A, r.
2P.0301 (2000)] prior to discovery.”
(Emphasis added.) Dixie Lumber contends that this rule
conditioning eligibility for reimbursement from the Commercial Fund
upon the payment of fees prior to the discovery of the release
conflicts with G.S. § 143-215.94E(g)(3) and is therefore invalid.
We disagree.
The North Carolina Environmental Management Commission is the
agency charged with enforcing the “Oil Pollution and Hazardous
Substances Control Act of 1978,” set forth in Article 21A ofChapter 143 of our General Statutes, including Part 2A thereof,
“Leaking Petroleum Underground Storage Tank Cleanup.” See G.S. §
143-215.94A et seq.; see also N.C. Gen. Stat. §§ 143-215.77(2) and
143-215.79 (1999); Carpenter v. Brewer Hendley Oil Co., 145 N.C.
App. 493, 549 S.E.2d 886 (2001). The Environmental Management
Commission is specifically authorized under N.C. Gen. Stat. § 143-
215.3(a)(17) (1999) to “adopt rules to implement Part 2A of Article
21A of Chapter 143.” See also N.C. Gen. Stat. §§ 143B-282(a)(2)(h)
and (i) (1999). We conclude that the Environmental Management
Commission was empowered to adopt N.C. Admin. Code tit. 15A, r.
2P.0401(b) in an effort to implement G.S. § 143-215.94A et seq.;
furthermore, Dixie Lumber's argument that the rule conflicts with
G.S. § 143-215.94E(g)(3) is wholly without merit.
Accordingly, the trial court's 28 March 2001 order affirming
the 7 November 2000 Final Agency Decision is,
Affirmed.
Judges McCULLOUGH and THOMAS concur.
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