Delaware Supreme Court Clarifies Standing Requirements To Appeal Issuance Of A Coastal Zone Act Permit

October 2013Articles In the Zone

In the case of Nichols v. State Coastal Zone Industrial Control Board et al. (Del. Supr. No. 190, 2013), the Delaware Supreme Court clarified that “any person aggrieved” for purposes of standing to appeal a final decision under the Delaware Coastal Zone Act must demonstrate an injury in fact and that such injury is within the zone of interest protected by the statute.

This case dealt with an application to develop and operate an electrical generation facility on lands in the northern part of the state located within a “coastal zone” identified in Delaware’s Coastal Zone Act (CZA), 7 Del. C. §7001 et seq. In November 2011, Diamond State Generation Partners LLC (DSGP) applied to the Secretary of the Delaware Department of Natural Resources and Environmental Control (DNREC) for a CZA permit to develop and operate a facility to be known as the Red Lion Energy Center where DSGP planned to utilize fuel cells which would “chemically convert natural gas to electrical power.” The Secretary of DNREC issued an Environmental Assessment Report respecting the project proposal, finding DSGP’s application complete and noting the benefits of the project and that no hazardous wastes would be generated from the facility. In March 2012, the secretary of DNREC through a hearing officer held a public hearing to receive comment on the proposed permit. Nichols appeared at this hearing and raised objections to the permit request, questioning whether DSGP had disclosed all materials that could be hazardous and pointing out that DSGP had not included an Environmental Assessment Report from DNREC’s Natural Heritage Program as required by regulations. The hearing officer issued a report recommending approval of DSGP’s application and the secretary thereafter issued the CZA permit.

Nichols appealed the order granting the permit on various grounds to the State Coastal Zone Industrial Control Board (the Board). In response, DSGP, joined by DNREC, filed a motion to dismiss based on lack of standing, arguing that Nichols had failed to show that he was an “aggrieved” person under 7 Del. C. §7007(b). Nichols responded with two arguments: That he was acting on behalf of the “nesting birds and other flora and fauna, which were unable to appeal,” and that his interest was the “public interest in a thorough, fact-based administrative determination before a Coastal Zone permit is issued.” The Board held a hearing in June 2012 to address the appeal. At this hearing, Nichols declined to be sworn in and present testimony, and instead relied solely on the arguments he advanced in response to the motion to dismiss together with the testimony of experts he called to testify. Nichols contended that the term “aggrieved” referred to “any person who simply thinks that DNREC got it wrong,” and that grievance is based upon a “perception or state of mind.” At the conclusion of the hearing, five of the seven board members present voted to dismiss the appeal for lack of standing. In its Opinion and Final Order, the Board cited that Nichols had “not identified or presented any evidence relating to any legally protected interest that he possesses that has been or will be invaded upon by the permit issued” to DSGP, and that Nichols had failed to connect the potential injury to the flora and fauna and his own legally protected interests.

Nichols then appealed to the Superior Court. In its Memorandum Opinion, the Superior Court cited that the sole issue before it was whether Nichols had standing to appeal the secretary’s order granting the CZA permit, noting that the appellant has the burden of proof to establish standing. Whether the Board correctly interpreted the applicable standing provision was a question of law that it reviews de novo. As to the Board’s factual findings, it stated that it must determine whether such findings are supported by substantial evidence in the record. The Superior Court affirmed the decision of the Board. Citing the Delaware Supreme Court’s opinion in Oceanport Industries, Inc. v. Wilmington Stevedores, Inc., 636 A.2d 892 (Del. 1994), it held that for purposes of the CZA, a person wishing to appeal a decision of the Secretary must show (i) an injury in fact and (ii) that such injury is within the zone of interest sought to be protected by the CZA. Superior Court noted that Nichols’ only argument with respect to an “injury in fact” was the potential injury to the flora and fauna in the coastal zone, but that he had failed to establish any connection between that potential injury and his own legally protected interests. In this connection, it pointed out that Nichols did not prove that he possessed a personal interest, financial or aesthetic, in the relevant coastal zone areas, nor did he demonstrate that he lived in close proximity to such areas.

On appeal to the Delaware Supreme Court, Nichols raised two claims. First, that the Board’s vote on whether he had standing to pursue the appeal failed due to a lack of a five vote majority of the nine member Board. Second, that he possessed standing under the “any person aggrieved” standard, or, in the alternative, as a matter of common law.

On the first issue, although noting that generally issues not presented to the Board will not be considered for the first time on appeal, the Court stated that where the interests of justice require the Court may choose to adjudicate a question not fairly presented at the hearing. On this issue, the Court noted that the transcript of the hearing as well as the subsequent signed Opinion and Final Order sufficiently demonstrated that a five member majority of the Board voted that Nichols lacked standing to appeal. With regard to the issue of standing, the Delaware Supreme Court concurred with the Superior Court’s use of the standing requirements set forth in the Oceanport case. Although noting that Oceanport did not specifically address the “any person aggrieved” phrase in the CZA, the Court noted that in its Oceanport opinion it had made reference to the CZA, stating that “it seems clear that the General Assembly intended a stricter standing requirement for appeals to the Environmental Appeals Board or under the CZA.” In its opinion in this matter, the Court noted that in Oceanport it had relied upon the United States Supreme Court decision in Association of Data Processing Serv. Organizations, Inc. v. Camp, 397 U.S. 150 (1970), to determine standing under the term “substantially affected” and would look to the same decision for guidance regarding the word “aggrieved.” The Court noted that in the Oceanport matter it had determined that “[B]y enacting the standing provisions, the General Assembly adopted an appeals standard requiring a heightened interest. It seems clear that the intent of the legislature was to limit standing to appeal to those who were actually affected by the Secretary’s decisions.” The Court held that the Oceanport standing requirements must be satisfied to establish that a person is aggrieved under the CZA: Demonstration of an injury in fact together with an interest arguably within the zone of interest to be protected or regulated under the CZA, and that such invasion must be “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.”

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