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Countryclub Homes, LLC v. Missouri Department of Natural Resources

Court of Appeals of Missouri, Western District, Fourth Division

December 24, 2019

COUNTRYCLUB HOMES, LLC and VALLEY OAKS REAL ESTATE, LLC, Appellants,
v.
MISSOURI DEPARTMENT OF NATURAL RESOURCES, MISSOURI CLEAN WATER COMMISSION, LONE JACK NEIGHBORS FOR RESPONSIBLE AGRICULTURE, POWELL GARDENS, INC., ELIZABETH DEICH, RYAN DEICH and THE ROBERT M. CHAMNESS TRUST, COLLECTIVELY KNOWN AS THE POWELL PARTIES, Respondents.

          APPEAL FROM THE CLEAN WATER COMMISSION

          Before Karen King Mitchell, Chief Judge, Presiding, Lisa White Hardwick and Cynthia L. Martin, Judges.

          Lisa White Hardwick, Judge.

         Countryclub Homes, LLC and Valley Oaks Real Estate, LLC (collectively, "Valley Oaks") appeal from the decisions of the Clean Water Commission ("CWC") in two cases to deny Valley Oaks's permit application for a concentrated animal feeding operation ("CAFO") in Johnson County. In case number WD82476 ("Lone Jack case"), the entity opposing the permit was Lone Jack Neighbors for Responsible Agriculture, LLC ("Lone Jack"). In case number WD82477 ("Powell case"), the entities opposing the permit were Powell Gardens, Inc., Ryan Deich, Elizabeth Deich, and the Robert M. Chamness Trust (collectively, "Powell").

         In both appeals, Valley Oaks alleges the same four procedural errors in the CWC's decisions to deny its permit application: (1) Lone Jack and Powell lacked standing to challenge the permitting decision of the Department of Natural Resources ("DNR"); (2) the CWC's written decisions were untimely; (3) the CWC issued its decisions without reviewing all of the record; and (4) the CWC's decisions were not approved by four commissioners because the approvals of two commissioners were void. Also in both appeals, Valley Oaks contends the CWC erred in denying its permit on the grounds that its application failed to identify a continuing authority and that Valley Oaks failed to provide neighbor notice prior to filing its application for the CAFO. Lastly, in its appeal of the decision in the Powell case, Valley Oaks asserts the CWC erred in denying its permit on the additional grounds that Valley Oaks failed to provide realistic yield goals for the fields it identified for land application of manure and that Valley Oaks failed to provide for adequate manure storage.

         We consolidated the two cases for appeal. For reasons explained herein, we find no error and affirm the CWC's decisions in both cases to deny Valley Oaks's permit application. We remand the cause to the CWC for a determination of Lone Jack's entitlement to attorneys' fees.

         FACTUAL AND PROCEDURAL HISTORY

         On December 19, 2017, David Ward submitted an application to the DNR for a proposed Class IB CAFO, comprised of approximately 6, 999 head of cattle, to be located on property in Johnson County. Ward filed the CAFO permit application in the name of "Country Club Homes LLC." "Country Club Homes LLC" was listed on the application as both the owner and the continuing authority that was to be responsible for the operation, maintenance, and modernization of the facility to which the permit was issued, as required by 10 CSR 20-6.010(3)(A).[1] Ward, however, is the sole member of an entity named "Countryclub Homes, LLC," and not an entity named "Country Club Homes LLC."

         The permit application was reviewed by DNR employee Greg Caldwell, who determined that the application met all statutory and regulatory requirements. On June 15, 2018, the DNR issued a Class IB CAFO permit to "County [sic] Club Homes, LLC." Shortly thereafter, Ward applied to the DNR for a transfer of the ownership of the CAFO permit to "Valley Oaks Real Estate, LLC." Ward signed the transfer application as both the previous owner and the new owner. In August 2018, the DNR transferred ownership of the CAFO permit to Valley Oaks Real Estate, LLC.

         Meanwhile, Lone Jack appealed the DNR's issuance of the permit by filing a complaint in the Administrative Hearing Commission ("AHC") on June 25, 2018. Lone Jack later filed two amended complaints. In its second amended complaint, Lone Jack alleged that its organization, members, and supporters reside in the immediate vicinity of the location of Valley Oaks's CAFO and the fields where manure from its operations will be spread, and they are adversely affected and aggrieved by the issuance of the permit and the operation of the CAFO. Lone Jack challenged the issuance of the permit on eight grounds.

         Two days later, on June 27, 2018, Powell also filed a complaint in the AHC appealing the DNR's issuance of the permit. Powell later filed an amended complaint, in which it alleged that Powell Gardens, Inc., is Kansas City's botanical garden and cultivates more than 20, 000 species of plants and attracts more than 100, 000 visitors each year. Powell Gardens, Inc., is less than three miles from the Valley Oaks facility. Powell further alleged that the Deichs, whose property is held by the Robert M. Chamness Trust, live 1, 900 feet from the Valley Oaks facility on a historic Missouri Century Farm. Powell alleged that, due to the high animal population density, on-site slaughterhouse, unique CAFO design, and minimal owned-acreage for nutrient management, Valley Oaks's operation was unusual and unproven and would have impacts on water quality and the environment that the DNR has not sufficiently quantified. Powell asserted that the DNR erred in issuing Valley Oaks a permit to operate the facility without sufficiently considering these issues. Powell challenged the issuance of the permit on six grounds.

         Valley Oaks intervened in the appeals. The AHC held a consolidated evidentiary hearing for the two appeals on August 27-28, 2018. The AHC issued decisions in both cases on October 23, 2018, recommending that the CWC reverse the DNR's decision to issue the permit. In both decisions, the AHC found that denial of the permit was appropriate on the grounds that Valley Oaks failed to identify a continuing authority, in violation of 10 CSR 20-6.010(3)(A), and failed to provide neighbor notice prior to filing its application, in violation of § 640.715, RSMo 2016, [2] and 10 CSR 20-6.300(3)(C). In the Powell case, the AHC found that denial of the permit was appropriate on two additional grounds that only Powell raised. These two grounds were that Valley Oaks failed to provide realistic yield goals for the fields it identified for land application of manure, in violation of 10 CSR 20-6.300(3)(G)2.A, and that Valley Oaks failed to provide for adequate manure storage, in violation of 10 CSR 20-6.300(1)(A)11 and 10 CSR 20-8.300(5)(B)2.

         As required by the administrative review procedures, the AHC forwarded the administrative record to the CWC for final decision. The record was comprised of the AHC proceedings in the appeals of the Lone Jack and Powell cases but did not include the proposed recommended findings that the parties had submitted to the AHC. On December 10, 2018, the CWC heard oral arguments on both appeals during a single hearing and ultimately voted 4-1 in both cases to adopt the AHC's recommended decisions. The CWC issued its final written decisions in the cases on January 7, 2019. Valley Oaks appeals both decisions, and we consolidated the appeals.[3]

         STANDARD OF REVIEW

         Pursuant to Section 644.051.6, the CWC's decisions are subject to appellate review pursuant to Chapter 536 of the Administrative Procedure Act. In re Trenton Farms RE, LLC v. Mo. Dep't of Nat. Res., 504 S.W.3d 157, 160 (Mo. App. 2016). Our review is limited to determining whether the CWC's action: (1) violates a constitutional provision; (2) exceeds the CWC's statutory authority or jurisdiction; (3) is unsupported by competent and substantial evidence upon the whole record; (4) is unauthorized by law; (5) is made upon unlawful procedure or without a fair trial; (6) is arbitrary, capricious, or unreasonable; or (7) involves an abuse of discretion. § 536.140.2.

         We defer to the CWC's findings of fact so long as they are supported by competent and substantial evidence. Trenton Farms, 504 S.W.3d at 160. We review questions of law de novo. Id. The CWC's decision "is presumed valid, and the burden is on the party attacking it to overcome that presumption." Wagner v. Mo. State Bd. of Nursing, 570 S.W.3d 147, 152 (Mo. App. 2019) (citation omitted).

         ANALYSIS

         Point I - Standing

         In Point I, Valley Oaks asserts that Sections 644.051 and 640.013 allow only permit applicants or potential permit applicants to appeal adverse decisions made by the Director of the DNR ("the Director"), and that Lone Jack and Powell are not included in either class. Therefore, Valley Oaks contends the CWC erred in denying its permit because Lone Jack and Powell lacked standing to appeal from the Director's decision.

         Standing is a question of law subject to our de novo review. Manzara v. State, 343 S.W.3d 656, 659 (Mo. banc 2011). "Standing is a necessary component of a justiciable case that must be shown to be present prior to adjudication on the merits." Schweich v. Nixon, 408 S.W.3d 769, 774 (Mo. banc 2013) (citation omitted). "Reduced to its essence, standing roughly means that the parties seeking relief must have some personal interest at stake in the dispute, even if that interest is attenuated, slight or remote." St. Louis Ass'n of Realtors v. City of Ferguson, 354 S.W.3d 620, 622-23 (Mo. banc 2011) (citation omitted).

         "Not every person who files a protest and is given an opportunity to be heard by an administrative agency has a right to appeal from the decision of the agency[.]" Mo. Nat'l Educ. Ass'n v. Mo. State Bd. of Educ., 34 S.W.3d 266, 276 (Mo. App. 2000). Instead, a party attempting to successfully assert standing must have a legally protectable interest. St. Louis Ass'n, 354 S.W.3d at 623. "A legally protectable interest exists only if the [party] is affected directly and adversely by the challenged action or if the [party]'s interest is conferred statutorily." Id.

         The General Assembly, in recognizing the necessity of state action to retain control of its water pollution control programs after Congress made amendments to the Federal Water Pollution Control Act in 1972, enacted the "Missouri Clean Water Law, "[4]which created, inter alia, an elaborate permitting scheme for persons[5] seeking to discharge water contaminants. Under this scheme, the permitting of CAFOs, in the first instance, falls to the Director. See 10 CSR 20-6.300(E); see also § 640.715. At issue in this point is who has standing to appeal from the Director's decision.

         Section 640.010.1 provides, in pertinent part, that the Director "shall faithfully cause to be executed all policies established by the boards and commissions assigned to the department, be subject to their decisions as to all substantive and procedural rules and his or her decisions shall be subject to appeal as provided by law." (Emphasis added). Valley Oaks asserts that this version of Section 640.010.1 limits standing to appeal the Director's decision to only a narrow class of persons. In support of this contention, Valley Oaks argues that a previous version of Section 640.010 stated that "affected parties" had the right to appeal and that, by amending the section to state that appeals may be taken "as provided by law[, ]" the legislature signaled its intention to limit the ability to appeal to those persons explicitly contemplated by statute. Valley Oaks then contends that, by enacting Section 644.051.6, the legislature intended the AHC to take appeals only from permit applicants and potential applicants. Section 644.051.6 states, in pertinent part:

The director shall promptly notify the applicant in writing of his or her action and if the permit is denied state the reasons for such denial. As provided by sections 621.250 and 640.013, the applicant may appeal to the administrative hearing commission from the denial of a permit or from any condition in any permit by filing a petition with the administrative hearing commission within thirty days of the notice of denial or issuance of the permit. After a final action is taken on a new or reissued general permit, a potential applicant for the general permit who can demonstrate that he or she is or may be adversely affected by any permit term or condition may appeal the terms and conditions of the general permit within thirty days of the department's issuance of the general permit.

         Valley Oaks's contention that Sections 640.010.1 and 644.051.6 limit the right to appeal to permit applicants or potential applicants is wrong for several reasons.

         In 2005, the legislature transferred the authority to hear all contested case administrative appeals granted in Chapter 640 and the Missouri Clean Water Law to the AHC. See 621.250.1; see also Valley Park Props., LLC v. Mo. Dept. of Nat. Res., 580 S.W.3d 607, 616 (Mo. App. 2019). Section 621.250.2 states, in pertinent part, that:

Except as otherwise provided by law, any person or entity who is a party to, or who is aggrieved or adversely affected by, any finding, order, decision, or assessment for which the authority to hear appeals was transferred to the administrative hearing commission in subsection 1 of this section may file a notice of appeal with the administrative hearing commission within thirty days after any such finding, order, decision, or assessment is placed in the United States ...

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