Opinion ID: 3184650
Heading Depth: 1
Heading Rank: 1

Heading: standard of review

Text: Before 2009, challenges to the issuance or denial of a discharge permit were subject to a contested case hearing. Md. Code (1984, 2014 Repl. Vol.), § 10-222 of the State Government Article (“SG”), which is part of Maryland’s Administrative Procedure Act, delineates the grounds upon which a court can reverse an agency decision in a contested case. Specifically, SG § 10-222 provides that a court can reverse an agency decision in a contested case that “is unsupported by competent, material, and substantial evidence in light of the entire record as submitted” or that “is arbitrary or capricious.” In 2009, the General Assembly changed the procedures for challenging a discharge permit. EN § 1–601 now permits direct judicial review of agency permitting decisions without a contested case hearing. Although this statute does not set forth a standard of review, the substantial evidence and arbitrary and capricious standards apply where an “organic statute” authorizes judicial review without a contested case hearing and does not set forth a standard of review. See Supervisor of Assessments of Carroll Cnty. v. Peter & John Radio Fellowship, Inc., 274 Md. 353, 355, 335 A.2d 93, 94 (1975) (“Our cases have held that where no scope of review is thus provided, decisions of an administrative body will not be disturbed on appeal unless they are not supported by substantial evidence or are arbitrary, capricious or unreasonable.”) (citations omitted); Med. Waste Assocs., Inc. v. Md. Waste Coal., Inc., 327 Md. 596, 621, 612 A.2d 241, 253 (1992) (“In an action for judicial review of an administrative decision granting a permit, however, the court determines not 27 only whether the agency’s decision to issue the permit was in accordance with law, but also whether the particular administrative decision was arbitrary, capricious or unsupported by substantial evidence in light of the record as a whole.”). Thus, even though all challenges going to the merits of the Permits in these consolidated cases originated in the Circuit Courts,38 we will review MDE’s decision to issue the Permits under the substantial evidence and arbitrary and capricious standards of review. Applying the substantial evidence standard of review to a case where no contested case hearing took place may seem anomalous because there is no formal record that was presented before an administrative law judge. EN § 1-606, however, expressly details the documents that can be included in a record. EN § 1-606(c)(1)-(9).39 For example, 38 The Water Groups initiated a challenge to the Montgomery County Permit before the General Assembly amended the Environmental Article and thus, the dispute over this Permit was the subject of a contested case hearing. The administrative law judge (“ALJ”) concluded that the Water Groups lacked standing to challenge the Permit, but this was appealed. The Court of Special Appeals eventually held that the Water Groups did in fact have standing and remanded for consideration of the underlying substantive issues. The General Assembly, however, changed the procedures for challenging a discharge permit during this time. As a result, it was the circuit court that first held a hearing on the merits of the issuance of the Montgomery County Permit. Thus, no issues involving the merits of this Permit were addressed in a contested case hearing. 39 EN § 1-606(c) provides: Any judicial review of a determination provided for in accordance with § 1-601 of this subtitle or § 5-204 or § 16-204 of this article shall be limited to a record compiled by the Department or Board, consisting of: (1) Any permit or license application and any data submitted to the Department or Board in support of the application; (2) Any draft permit or license issued by the Department or Board; (3) Any notice of intent from the Department or Board to deny the application or to terminate the permit or license; 28 EN § 1-606 stipulates that any draft permit, comments submitted to MDE during the public comment period, transcripts of public hearings on the permit application, and responses to submitted comments constitute part of the administrative record. Thus, we are essentially reviewing the same record that we would have examined, excluding the administrative law judge’s decision, had the merits of this case been subject to a contested case proceeding. Accordingly, our review of the issuance of the Permits fits within the substantial evidence standard of review contemplated by SG § 10-222. In a review for substantial evidence, we ask “whether a reasoning mind reasonably could have reached the factual conclusion the agency reached.” Najafi v. Motor Vehicle Admin., 418 Md. 164, 173, 12 A.3d 1255, 1261 (2011). We should accord deference “‘to the agency’s fact-finding and drawing of inferences’” when the record supports them. Id. (citation omitted); see Mayor & Aldermen of City of Annapolis v. Annapolis Waterfront Co., 284 Md. 383, 399, 396 A.2d 1080, 1089 (1979) (“The court may not substitute its judgment on the question whether the inference drawn is the right one or whether a (4) A statement or fact sheet explaining the basis for the determination by the Department or Board; (5) All documents referenced in the statement or fact sheet explaining the basis for the determination by the Department or Board; (6) All documents, except documents for which disclosure is precluded by law or that are subject to privilege, contained in the supporting file for any draft permit or license; (7) All comments submitted to the Department or Board during the public comment period, including comments made on the draft application; (8) Any tape or transcript of any public hearings held on the application; and (9) Any response to any comments submitted to the Department or Board. 29 different inference would be better supported. The test is reasonableness, not rightness.”) (citation and internal quotation marks omitted). Moreover, we shall review the agency’s decision “‘in the light most favorable to it.’” Najafi, 418 Md. at 173, 12 A.3d at 1261. Finally, we must accord an agency great deference regarding factual questions involving scientific matters in its area of technical expertise. Bd. of Physician Quality Assurance v. Banks, 354 Md. 59, 69, 729 A.2d 376, 381 (1999) (“[T]he expertise of the agency in its own field should be respected.”). We have characterized the arbitrary and capricious standard of review as one that is “extremely deferential.” Harvey v. Marshall, 389 Md. 243, 299, 884 A.2d 1171, 1205 (2005). In reviewing the issuance of an NPDES permit, the U.S. Court of Appeals for the Second Circuit quoted language derived from Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)—the United States Supreme Court’s leading case on the arbitrary and capricious standard: To determine whether the agency’s actions were “arbitrary and capricious,” we consider whether the agency ‘relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.’ Natural Res. Def. Council, 808 F.3d at 569 (citations and quotation marks omitted). The court also elaborated that “[w]e must be ‘satisfied from the record that the agency . . . examine[d] the relevant data and articulate[d] a satisfactory explanation for its action’” and that it “afford[ed] the agency’s decision greater deference regarding factual questions 30 involving scientific matters in its area of technical expertise.” Id. (quoting State Farm, 463 U.S. at 43) (citations and internal quotation marks omitted). The Second Circuit’s articulation of the arbitrary and capricious standard is in accord with Maryland’s treatment of this standard as one that is highly deferential. See Harvey, 389 Md. at 299, 884 A.2d at 1205. We are therefore mindful of the Second Circuit’s explanation of the principles underlying the arbitrary and capricious standard when applying that standard to this case.40 In addition, we will review an agency decision for an error of law. When our review concerns a legal question, we apply less deference to the agency’s conclusions. HNS Dev., LLC v. People’s Counsel for Balt. Cnty., 425 Md. 436, 449, 42 A.3d 12, 20 (2012). We refuse to uphold an agency decision “premised solely upon an erroneous conclusion of law.” Id. (citation omitted) (internal quotation marks omitted). Otherwise, we ordinarily should give “considerable weight” to an agency’s “interpretation and application of the statute which [it] administers.” W.R. Grace & Co. v. Swedo, 439 Md. 441, 453, 96 A.3d 210, 217 (2014); John A. v. Bd. of Educ. for Howard Cnty., 400 Md. 363, 381–82, 929 A.2d 136, 147 (2007) (“In reviewing an agency’s legal conclusions, it is a fundamental 40 Case law from the U.S. Court of Appeals for the D.C. Circuit, the preeminent federal appellate court for review of administrative action, is also helpful in understanding the degree of deference accorded under the arbitrary and capricious standard. In Weyerhaeuser Co. v. Costle, the court noted that in light of the structure and aims of the Clean Water Act, “and the breadth of authority delegated by it to the EPA to identify highly sophisticated control technology in an area fraught with scientific uncertainty,” its review of the agency’s action “encounter[ed] significant limitations in the substantive aspect where the given statutory standards are ‘arbitrary,’ ‘capricious,’ or ‘abuse of discretion.’” 590 F.2d 1011, 1025 (D.C. Cir. 1978). The court highlighted that “an expansive concept and exercise of the review power [by numerous courts] charged with that function could easily impede accomplishment of the [Clean Water] Act’s ambitious pollution-ending aspiration as well as its goal of industry-by-industry uniformity.” Id. 31 principle of administrative law that a reviewing court should not substitute its judgment for the expertise of those persons who constitute the administrative agency.”).