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State v. McGinnis Auto & Mobile Home Salvage, LLC

Superior Court of Delaware, Kent

February 21, 2019

STATE OF DELAWARE, DEPARTMENT OF NATURAL RESOURCES AND ENVIRONMENTAL CONTROL, Appellant,
v.
MCGINNIS AUTO & MOBILE HOME SALVAGE, LLC, Appellee.

          Submitted: February 8, 2019

          Ralph K. Durstein, III, Deputy Attorney General, Department of Justice, Dover, Delaware, Attorney for the Appellant.

          John W. Paradee, Esquire, Daniel F. McAllister, Esquire, & Stephen A. Spence, Esquire, Baird, Mandalas, Brockstedt, LLC, Dover, Delaware, Attorneys for the Appellee.

          OPINION

          CLARK, J.

         Appellant Department of Natural Resources and Environmental Control (hereinafter "DNREC") appeals an Environmental Appeals Board (hereinafter "the Board" or "the EAB") decision in favor of McGinnis Auto & Mobile Home Salvage, LLC (hereinafter "McGinnis"). DNREC had cited McGinnis for a series of alleged environmental violations. It then issued an order on August 2, 2016, pursuant to its cease and desist authority found in 7 Del. C. § 6018 (hereinafter "Section 6018"). The cease and desist order contained both prohibitive and affirmative orders. In addition to requiring McGinnis to cease all alleged violations, it directed McGinnis to remediate its site within thirty days and account for solid waste at its facility. McGinnis challenged the legality of the order and appealed it to the EAB. In its EAB appeal, McGinnis argued that the Secretary exceeded his cease and desist authority by ordering McGinnis to take affirmative corrective action. DNREC countered that it has authority to issue mandatory injunctions based upon its statutory authority to issue cease and desist orders.

         The EAB agreed with McGinnis and found that the Secretary's cease and desist power permits him to prohibit conduct but not to mandate corrective action. This case presents an issue of first impression regarding the scope of this agency's "cease and desist" power. For the reasons that follow, the provision in DNREC's enabling statute authorizing its Secretary to issue cease and desist orders does not authorize it to mandate that a party pursue affirmative corrective action. Accordingly, the EAB's decision in this matter is AFFIRMED.

         I. PROCEDURAL BACKGROUND

         McGinnis owns and operates a business in Kent County, Delaware, that among other things, dismantles and salvages dilapidated mobile homes. On February 25, 2015, staff from DNREC conducted a site inspection of its premises. After the inspection, DNREC cited it for improperly storing solid waste and operating a materials recovery facility without a permit. In DNREC's notice of violation, it demanded that McGinnis submit a detailed plan to remove the waste. DNREC also imposed a ninety-day deadline for McGinnis to submit an application for a resource recovery permit. McGinnis submitted a timely solid waste disposal plan to remove the solid waste by July 2016, but did not apply for a permit.

         DNREC inspected the site again on March 30, 2016, and documented the same violations as the year before. It gave McGinnis a new deadline in July 2016, to remove the waste pile. Thereafter, McGinnis allegedly did not comply. The DNREC Secretary then issued Secretary's Order No. 2016-WH-0031 on August 2, 2016. The order provided:

         IT IS HEREBY ORDERED, based on the foregoing findings and pursuant to the authority vested in the Secretary by 7 Del. C. §6018 that Respondent shall:

1) Upon receipt of this Order, immediately cease and desist receiving and dismantling mobile homes and construction and demolition waste.
2) Within 30 days of receipt of this Order, remove all solid wastes including, but not limited to, discarded mobile homes and piles of construction and demolition waste on land and in containers. However, in accordance with the approval issued by Kent County in 1995, Respondent may store no more than two mobile homes.
3) Complete the above-referenced requirements in compliance with all applicable laws and regulations, and only utilize transportation companies, disposal facilities, and contractors holding valid permits.
4) Within 30 days of receipt of this Order, provide written documentation to the Department confirming the proper disposal or recycling of the solid wastes. Documentation shall include, but not be limited to, identification of the hauler used to transport the solid wastes as well as weigh tickets or other valid documentation representing authorized disposal or recycling.
5) Within 30 days of receipt of this Order, provide to the Department a list of all mobile homes received by McGinnis since 2001, including, but not limited to, the date each mobile home was received by McGinnis, the vehicle identification number for each mobile home, and date of manufacture of each mobile home. Respondent shall also identify those mobile homes currently at the facility.
6) Within 30 days of receipt of this Order, provide a detailed explanation of McGinnis' inspection, handling, storage, disposal, and recycling procedures for all materials removed from, or contained within, mobile homes.
7) Should Respondent desire to continue receiving, dismantling and recycling mobile homes or other construction and demolition debris, Respondent shall provide to the Department a completed Resource Recovery Facility Permit Application within 30 days of receipt of this Order. Respondent shall not accept mobile homes or construction and demolition waste prior to such a permit being issued by the Department.

         McGinnis appealed this order to the EAB. The parties, by stipulation, agreed that certain facts would be assumed only for purposes of resolving the scope of DNREC's authority under Section 6018. In the EAB appeal, McGinnis argued that the order exceeded the Secretary's cease and desist power because the mandates found in paragraphs (2) through (6) were equivalent to mandatory injunctions. DNREC countered that it had authority to issue all seven mandates pursuant to its broad statutory and regulatory powers.

         The EAB found paragraphs (1) and (7) to fall within the Secretary's cease and desist power. The EAB found, however, that the Secretary "did not have adequate legal authority to impose paragraphs (2) through (6) of the order." The Board reasoned that DNREC's cease and desist power was "not the proper enforcement mechanism to mandate affirmative injunctive relief" and that "other, more appropriate, enforcement mechanisms" should have been used.

         DNREC then appealed the EAB's decision to this Court, arguing that paragraphs (2) through (6) were lawful orders. Since McGinnis did not appeal the Secretary's authority to issue paragraphs (1) and (7) of the order, only paragraphs (2) through (6) are at issue in this appeal.

         II. Arguments of the Parties

         Both parties briefed this matter well but cited little case authority because little is available. Both concede that there is no Delaware authority addressing the scope of an agency's cease and desist authority. Furthermore, DNREC identified no persuasive authority in federal administrative law or in the administrative law of other states that support expanding its cease and desist authority to the extent it advocates. In briefing, the parties focused on DNREC's enabling statute, the Delaware Supreme Court's decision in Formosa Plastics Corp. v. Wilson., [1] and authority discussing the nature and availability of injunctions in the Court of Chancery and federal courts.

         On balance, DNREC likens its Secretary's authority to that of the Court of Chancery. Namely, it argues that in the same way the Court of Chancery exercises its authority to mandate compliance with the law through injunctive relief, it too has broad authority to administratively order compliance and to monitor remediation. It argues that the Secretary's order properly chose an approach designed to bring McGinnis into compliance within 30 days without resorting to litigation. It also argues that the General Assembly intended this cease and desist authority to be an administrative alternative to seeking a mandatory injunction in the Court of Chancery.

         DNREC further alleges that the EAB's order "would eviscerate efforts by DNREC to deal administratively with serious statutory and regulatory violations presenting imminent risk to the environment and to public health." DNREC relies heavily upon a provision in Chapter 60 of Title 7 (hereinafter "Chapter 60") that provides that its powers should be construed liberally in order to preserve the land, air and water resources of Delaware.[2] It argues that the Secretary's cease and desist orders are not limited in scope, but only in duration. Accordingly, DNREC argues ...


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