South Carolina Lawyer
SC Lawyer, September 2008, #2.
To Stay or Not to Stay: Automatic Stays Before the Administrative Law Court in DHEC Matters
South Carolina LawyerSeptember 2008To Stay or Not to Stay: Automatic Stays Before the Administrative Law Court in DHEC MattersBy Randolph R. LowellOn June 16, 2008, the Governor signed a compromise bill that amended the automatic stay provisions applicable to proceedings before the Administrative Law Court (ALC). Act No. 334 not only brings a greater degree of clarity to the effect of challenging an agency decision, but also raises interesting questions as to the scope and extent of a newly-created exception to the automatic stay provision found in the South Carolina Administrative Procedures Act (APA). This will have its greatest impact on cases involving the S.C. Department of Health and Environmental Control (DHEC).
When the Administrative Law Court began hearing contested cases in 1994, a question was raised regarding the applicability of agency-specific stay provisions to those proceedings. For example, DHEC's contested case provisions, S.C. Code Ann. Regs. 61-72, included an automatic stay provision. Regulation 61-72 governed contested case proceedings when DHEC retained hearing officers prior to the creation of the ALC. Between 1994 and 2006, the administrative law judges (ALJs) were split on whether that provision applied in matters before them. Some ALJs found that it applied because the regulation addressed DHEC proceedings. Other ALJs determined that the regulation was procedural in nature and displaced by the ALC's rules of procedure, which did not provide for an automatic stay and, thus, required a party to move the ALC to enjoin the permitted activity under ALC Rule 16 (which authorizes an ALJ to grant injunctive relief pursuant to Rule 56, SCRCP).
The passage of Act No. 387 in 2006 ushered in a new administrative review process for DHEC decisions. This 2006 legislation, which repealed regulation 61-72 by implication, codified an automatic stay in the APA for decisions in which a contested case request is filed with the ALC. Now, as a general rule, a "request for a contested case hearing for an agency order stays the order." S.C. Code Ann. § 1-23-600(H)(2). While renewals are stayed, the original underlying permit or license remains valid. For new permits or licenses, the permitted activities are stayed, but matters for which no permit or license are required can proceed. Additionally, the statute now includes an exception to the automatic stay for "subsequent licenses."
Under Act No. 387, a person wishing to challenge a DHEC permit must first file a request for final review with the DHEC Board. The Board has the discretion whether to hear the matter. A subsequent challenge to either the DHEC Board's decision or the staff decision in the event the DHEC Board elects not to review the permit decision is then made at the ALC.
This statutory scheme for DHEC licenses creates an interesting situation when a permittee or licensee receives a permit. Generally speaking, even if challenged at the DHEC Board level, the permit is valid and effective once issued, and the permittee can begin construction or initiate whatever action is authorized under the permit. However, if a contested case request is filed with the ALC, then an automatic stay applies to stop the activity. This places the permittee in a difficult position.
There are exceptions to this general rule. For instance, certain environmental permitting programs provide that no permit is effective until after the conclusion of a contested case proceeding. Arguably, these provisions may no longer be effective in light of Act No. 387's language that the act "is intended to provide a uniform procedure for contested cases and appeals from administrative agencies and to the extent that a provision of this act conflicts with an existing statute or regulation, the provisions of this act are controlling." 2006 Act No. 387 § 53.
This problem can be best illustrated in the health programs of DHEC where the automatic stay may have a schizophrenic application in health cases. In cases involving a certificate of need (CON), it is...