\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Deference to Final Decisions of State Agencies in the Wake of Kiawah Development Partners
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Judges and administrative lawyers have wrestled with the question of what deference is due decisions of an administrative agency with regard to the interpretation of those statutes and regulations the agency administers. On the one hand, the agency deals with those statutes and regulations more than anyone else. On the other hand, there is the natural tendency for individuals to resort to interpretations that they deem most convenient or advantageous to their position in a case, and agencies cannot be allowed to "make it up as they go along." In the background there is always the murky distinction between regulatory interpretation and agency "policy," implicating the "binding norm" prohibition discussed in Home Health Serb., Inc. v. S.C. Tax Comm'n.1
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0For years there have been separate bodies of law on deference, and the question of the degree of deference due to an agency was unsettled. Modern cases turning on the question of deference historically originate from the Administrative Law Court (ALC), and prior decisions on appeals from that tribunal have not addressed the issue squarely. By contrast, ALC decisions have frequently addressed the issue of deference and have done so in great detail. While decisions of Administrative Law Judges are not mandatory authority, they are widely cited in cases before that tribunal as persuasive authority. As a result, this article will discuss case law at the ALC level as well as the appellate courts.
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0After a tortured procedural history the S.C. Supreme Court issued its final2 decision in Kiawah Dev. Partners II, v. S.C. Dep't of Health & Envtl. Control3 in December 2014. The Kiawah case involved the issuance of a DHEC Office of Coastal Resource Management permit sought by the petitioner to construct a 2783 foot erosion control structure on Captain Sam's Spit on Kiawah Island. DHEC authorized a permit for 270 feet of the structure and denied the remainder. The Coastal Conservation League sought to have the permit denied in its entirety, and the developer sought to have the portion of the permit application that was denied overturned. At the ALC, Judge Anderson amended the permit, allowing the developer to construct a combination of bulkheads and revetments in certain areas but not in others, and to use an interconnected articulated concrete block mat. DHEC and the League appealed.
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0The Supreme Court first heard oral arguments in January 2011 and issued an order reversing the ALC's decision in November of that year. After granting a petition for rehearing and accepting an amicus brief, the Court withdrew its first order. The Court heard oral arguments in April 2012 and issued an order in February 2013 upholding the ALC's decision. The Court subsequently granted another petition for rehearing and accepted amicus briefs from environmental and industry nongovernmental organizations. In December 2014, the Court issued its final order reversing the ALC and remanding the case.4
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0This article does not focus on the substantive issues of the case, which are of great importance, but on the issue of the deference afforded to the statutory and regulatory interpretations of state agencies. Specifically, in Kiawah the issue was whether DHEC staff, in reviewing a permit for an erosion control structure in the critical area, could consider impacts outside the critical area under S.C. Code Ann. Regs. 30-11. The ALC determined that staff erred in doing so. At the outset, it must be noted that there are a number of regulatory programs requiring staff members to make difficult regulatory interpretations. Critical area permitting is not the only field requiring DHEC to make qualitative, case specific and subjective determinations on how far afield it must go in considering the secondary impacts of a project.5 The ALC has had occasion to review agency decisions on the proper scope of the department's review in such cases.6 However, the roots of case law on deference have yielded different bodies of law with very different sets of requirements. For the first time, the Court's final order in Kiawah provides concrete guidance as to the procedure for reviewing the permissible bounds of deference to statutory and regulatory interpretations made by state agencies. To trace these developments, some historical discussion is required.
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0For the most part, administrative law and the review of legal interpretations of state agencies is a relatively modern body of law. Early on, the process of promulgating regulations was rudimentary, as was the process for seeking review. Further, there were very few situations where disputes with state agencies resulted in reported decisions, mostly in areas such as taxation and workers' compensation. Early case law includes a public finance case,7 tax commission cases8 and a public insurance fund case.9 The earliest test is found in these cases from the 1930s, merely holding that agency interpretations were entitled to "most respectful consideration" and ought not to be overturned without "cogent reasons."
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0However, in 1950, the Court narrowed the scope of agency discretion, building on the U.S. Supreme Court's National Lead Co. holding. In Etiwan Fertilizer Co. v. S.C. Tax Comm'n,10 the state Supreme Court found:
We have held in many cases that where the construction of the statute has been uniform for many years in administrative practice, and has been acquiesced in by the General Assembly for a long period of time, such construction is entitled to weight, and should not be overruled without cogent reasons.11
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0In addition to the "should not be overruled without cogent reasons" criterion, in Etiwan the Court placed further limits on agency discretion: the construction of the statute had to be uniform for such a long time that the General Assembly could be said to have "acquiesced" to the interpretation (i.e., it had not objected and amended the statute). This represents a significant narrowing of the "most respectful consideration" afforded agencies during the 1930s.
\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0The very next year the Court further narrowed the scope of agency discretion. In Stone Mfg Co. v. S.C. Employment Sec. Comm'n,12 the Court found that
[w]hile the construction of a statute by the officials charged with its administration, which has been...