Opinion
CV156028562S
01-20-2016
Recycling, Inc. v. Commissioner, Department of Energy and Environmental Protection
UNPUBLISHED OPINION
MEMORANDUM OF DECISION
Henry S. Cohn, Judge Trial Referee.
The plaintiff, Recycling, Inc. (RCI), brings this administrative appeal from an August 25, 2014 proposed final decision issued by a hearing officer and a February 5, 2015 final decision of the commissioner of the department of energy and environmental protection (DEEP), issued by the deputy commissioner. (Return of Record, ROR, Section A.) The final decision revoked RCI's general permit to operate a recycling facility in the town of Milford, and denied RCI's pending application to obtain an individual recycling permit. The court has given the town permission to intervene in this appeal, as in the DEEP proceedings, and the town filed a brief in support of DEEP.
RCI has sufficiently stated aggrievement for the purposes of General Statutes § 4-183(a).
The following facts of record, and as found by the DEEP hearing officer and deputy commissioner in their respective rulings, are not in dispute: In 2008, RCI applied for an individual permit to construct and operate a volume reduction plant (" VRP"), or recycling facility at 990 Naugatuck Avenue, Milford. At that time, RCI already held a general permit registration for limited recycling. An individual permit would allow RCI to increase greatly both the volume and breadth of its recycling operations. After numerous correspondences with RCI and its purported owner, Darlene Chapdelaine, regarding RCI's individual permit application, DEEP staff issued a tentative determination to approve the application for RCI's individual permit on February 10, 2012.
In April 2012, before DEEP had made a final determination on the individual permit application, DEEP staff learned of a lawsuit between Darlene Chapdelaine, RCI and Gus Curcio, Sr. over ownership of RCI. The pleadings in that litigation, Count 1, para. 4, for example, alleged that RCI submitted information to DEEP since its inception disguising Gus Curcio, Sr.'s true ownership of RCI in order to keep his past criminal convictions from tainting the DEEP permitting process. Attached to the complaint in Bridgeport litigation were documents that undermined RCI's representations to DEEP staff that Darlene Chapdelaine was the sole owner of RCI. (ROR, DEEP Ex. 29, p. 9-21.) Those documents included an affidavit that was signed by Chapdelaine and independently notarized at the time when she purported to purchase RCI stating that she was " [t]he owner in record of name only of Recycling, Inc." (ROR, DEEP Ex. 29, p. 9.) Subsequently, DEEP issued a Notice of Violation (" NOV") on June 11, 2012, to RCI for failing to submit accurate and timely quarterly reports, accepting treated wood and storing an excessive amount of mixed household items at the facility. (ROR, DEEP Ex. 65.) RCI's application for the individual permit was required to show an organizational chart, but did not include Curcio as an interested party in RCI. (ROR, DEEP Ex. 11, 21, 106, 110.)
Recycling, Inc. v. Chapdelaine, Docket No. FBT CV 12 6026714.
On October 23, 2012, the litigation between Chapdelaine and Curcio, Sr. resulted in a court-ordered judgment that stated that Curcio, Sr. was the beneficial owner of 100% of RCI. Consequently, in November 2012, DEEP staff issued a tentative determination to withdraw its approval and to deny RCI's application for an individual permit, as well as give RCI notice that it intended to revoke RCI's general permit. In the notice, DEEP staff explained that RCI's failure to disclose Gus Curcio, Sr.'s extensive ownership interests and its false or misleading representations as to the control of RCI by James Barrett and Darlene Chapdelaine, justified its notice to deny and revoke RCI's permits. On January 24, 2013, a Revised and Amended Notice of Intent to Revoke RCI's General Permit was issued by DEEP staff adding RCI's and Gus Curcio's demonstrated inability or unwillingness to comply with its permit requirements as an additional basis for denial and revocation.
The extent to which RCI met its permit requirements and filed its quarterly reports is detailed in the proposed final decision and the final decision. RCI contested these findings at oral argument before this court; but the court declines to resolve this factual dispute in light of its conclusions on disclosure as stated below.
On February 27, 2013, RCI was provided with a compliance conference at DEEP in accordance with Connecticut General Statutes § 4-182(c) in order to demonstrate to DEEP staff that it had met all of the requirements for lawful retention of its general permit. On May 17, 2013, DEEP issued a letter to RCI informing it that DEEP staff had not changed its position as a result of the compliance conference and that justification remained to revoke and deny RCI's permits.
Commencing November 12, 2013, a hearing was held over the course of five days before a DEEP hearing officer. RCI, DEEP staff and the town all fully participated in presenting evidence at the hearing. On August 25, 2014, the hearing officer issued a proposed final decision concluding that RCI had submitted false, incomplete and incorrect information regarding its ownership and control in its applications to DEEP and had demonstrated a pattern or practice of inability or unwillingness to comply with the agency's permit requirements. The hearing officer concluded that the record evidence justified revocation and denial of RCI's permits. This proposed final decision referenced the evidence that Gus Curcio, Sr. tightly controlled RCI's financing, expenditures and daily operations. The evidence, including testimony from the previous litigation between Curcio, Sr. and Chapdelaine, established that Curcio, Sr. arranged for mortgages to be placed on RCI, that he controlled Darlene Chapdelaine's signature stamp, and that all expenditures, even paper clips, went through him.
In response to the proposed final decision, RCI filed exceptions to the hearing officer's conclusions. On November 12, 2014, the commissioner's designee, Deputy Commissioner Susan K. Whalen, heard argument on the exceptions. On February 5, 2015, Whalen affirmed the proposed final decision regarding revocation and denial of RCI's permits. The final decision addressed RCI's exceptions and concluded that they lacked merit. On March 20, 2015, this appeal by RCI to Superior Court followed.
In reviewing the issues raised by RCI in this appeal, as the majority of the claims raised are matters of law, the following precedent is relevant from our Appellate Court: " Before addressing the plaintiffs' claims we set forth the applicable standard of review. The plaintiffs are not contesting any of the hearing officer's factual findings; thus, this appeal raises only questions of law. As to questions of law, the court's ultimate duty is only to decide whether, in light of the evidence, the agency has acted unreasonably, arbitrarily, illegally, or in abuse of its discretion . . . Conclusions of law reached by the administrative agency must stand if the court determines that they resulted from a correct application of the law to the facts found and could reasonably and logically follow from such facts . . . Ordinarily, this court affords deference to the construction of a statute applied by the administrative agency empowered by law to carry out the statute's purposes . . . Cases that present pure questions of law, however, invoke a broader standard of review than is ordinarily involved in deciding whether, in light of the evidence, the agency has acted unreasonably, arbitrarily, illegally or in abuse of its discretion . . . Furthermore, when a state agency's determination of a question of law has not previously been subject to judicial scrutiny . . . the agency is not entitled to special deference." (Brackets omitted, internal quotation marks omitted.) Vorlon Holding, LLC v. Commissioner of Energy & Environmental Protection, 161 Conn.App. 837, 843 (2015); See also Lane v. Commissioner of Environmental Protection, 136 Conn.App. 135, 144-45, 43 A.3d 821, aff'd, 314 Conn. 1, 100 A.3d 384 (2014).
To the degree that RCI raises any factual claims, the following is appellate precedent: " The substantial evidence rule governs judicial review of administrative fact-finding under [the Uniform Administrative Procedure Act (UAPA)]. General Statutes § 4-183(j)(5) and (6). Substantial evidence exists if the administrative record affords a substantial basis of fact from which the fact in issue can be reasonably inferred . . . This substantial evidence standard is highly deferential and permits less judicial scrutiny than a clearly erroneous or weight of the evidence standard of review . . . but the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence . . . The burden is on the [plaintiff] to demonstrate that the [agency's] factual conclusions were not supported by the weight of substantial evidence on the whole record." (Citations omitted; internal quotation marks omitted.) Sams v. Department of Environmental Protection, 308 Conn. 359, 374, 63 A.3d 953 (2013). See also Cadlerock Properties Joint Venture, L.P. v. Commissioner of Environmental Protection, 253 Conn. 661, 676-77, 757 A.2d 1 (2000).
RCI's first issue arises from the fact that the town approached DEEP's commissioner to report its understanding of Curcio's role at RCI and to impress on him that it was inappropriate for DEEP to approve RCI's application for an individual permit. RCI argues that because of these discussions, the commissioner engaged in an impermissible ex parte communication. RCI, however, incorrectly cites a statutory prohibition on ex parte communications, § 4-181(a), as this section applies to hearing officers, not to the commissioner.
RCI also contends that the commissioner's actions in this conversation and a subsequent official statement that he issued denied it due process in DEEP's decision-making. The commissioner did subsequently recuse himself from taking any action on RCI's permits, assigning these matters to his deputy. Our Supreme Court has stated the following on the protections afforded by the due process clause from a claim of pre-determination bias, also applicable here: " There is a presumption however that administrative board members acting in an adjudicate capacity are not biased . . . To overcome the presumption, the plaintiff . . . must demonstrate actual bias, rather than mere potential bias, of the board members challenged, unless the circumstances indicate a probability of such bias too high to be constitutionally tolerable . . . The plaintiff has the burden of establishing a disqualifying interest." (Brackets omitted, citations omitted, internal quotation marks omitted.) O& G Industries, Inc. v. Planning & Zoning Commission, 232 Conn. 419, 429-30, 655 A.2d 1121 (1995). Such allegation of an ex parte communication must be raised in a timely manner. Moraski v. Connecticut Board of Examiners of Embalmers & Funeral Directors, 291 Conn. 242, 262, 967 A.2d 1199 (2009).
Here RCI has not met its burden to show that the commissioner violated due process. He did talk to the town and issued a statement. But he also recused himself from the hearing as well as reviewing the hearing officer's proposed decision and issuing the final decision. RCI, in addition, did not brief this issue to this court. The court concludes similarly on an allied issue raised by RCI, that the DEEP staff was biased in its factual investigation by the commissioner's meeting with the town. RCI has not met its burden to show that the commissioner's actions dominated the staff's position at the administrative hearing, or earlier.
RCI next contends that it was denied due process at the administrative hearing. The hearing officer stated that she would, as required by DEEP regulations, " evaluate the evidence in the record, find facts based on this record, and make conclusions of law based on these facts." The hearing officer also stated that " The question before me is not whether I would have reached the same conclusions as Staff, but whether the facts and evidence in the record support Staff's decision." (ROR, Proposed Final Decision, p. 3.) RCI relies on this second sentence to claim that the hearing officer was merely looking at the record to see if it supported the DEEP staff's decision. On the other hand, the first quoted sentence shows that the hearing officer intended to meet the requirement of Regulation § 22a-3a-6(d)(1), requiring a fair and impartial proceeding and ruling. The hearing officer's detailed findings and conclusions of law support this conclusion. The court will not overturn an administrative hearing officer's determination where the full context of the proposed final decision does not support RCI's contention. Gonzalez v. State Elections Enforcement Commission, 145 Conn.App. 458, 463, 77 A.3d 790 (2013).
RCI contends that the hearing officer excluded evidence of comparable proceedings to revoke penalties and this amounted to a denial of due process. The deputy commissioner states that selective enforcement was not made an issue by RCI before the hearing officer. (ROR, Final Decision, p. 2.) In addition " [w]e have held repeatedly that 'the procedures required by the UAPA exceed the minimal procedural safeguards mandated by the due process clause." (Citations omitted.) Pet v. Department of Health Services, 228 Conn. 651, 661, 638 A.2d 6 (1994). Under this principle, the hearing officer did not deny due process in her ruling, made under the UAPA's § 4-178(1) evidentiary standard.
The deputy commissioner also agreed with this court's conclusion in her final decision. (ROR, Final Decision, p. 3.) That the proposed final decision must be read in full context also answers another similar claim of error by RCI that the hearing officer should not have described DEEP's powers in licensure as " unlimited." Section 22a-6m(a) clearly gives DEEP the broad and wide authority. This was recognized by the hearing officer in other parts of the proposed final decision. The hearing officer's proposed final decision was correct on this point when it is taken in full context.
RCI next raises issues of burden of proof and level of proof. The court agrees with DEEP that RCI bore the burden of proof of satisfying the DEEP staff and the hearing officer that it was entitled to the individual license. See Regulation § 22a-3a-6(f) and Newtown v. Keeney, 234 Conn. 312, 320-22, 661 A.2d 589 (1995). The court further agrees with DEEP that to revoke RCI's general permit, DEEP bore the burden of proof. Finally, there is no legal ground to distinguish this case from the general rule that the level of proof at the administrative hearing is that of " preponderance of evidence." Goldstar Medical Services, Inc. v. Department of Social Services, 288 Conn. 790, 821, 955 A.2d 15 (2008); Jones v. Connecticut Medical Examining Board, 309 Conn. 727, 728-29, 72 A.3d 1034 (2013). Nor does a fraud allegation in an administrative proceeding change the standard from " preponderance of the evidence" to a heightened standard. Goldstar, supra at 819.
This burden is not reversed here because RCI had a duty to show that it provided complete information to DEEP, or to " prove a negative." In Newtown v. Keeney, the plaintiff did not submit a " hydrogeological study." This did not change the burden on the plaintiff, where it had omitted filing a document that was a prerequisite for granting a permit. Id. at 322-23.
Several of RCI's issues turn on the degree, factually and legally, that Curcio had sufficient control or involvement with RCI that failure to disclose his name was grounds for the denial of one permit and the revocation of the other. Factually, RCI contends that Curcio did not " own" RCI when the individual permit application was made. RCI also argues that he was merely a source of funds for the company and in fact did not control the company. Factually the hearing officer made findings otherwise that the court accepts under the substantial evidence test cited above. As the cases above state, the hearing officer has the discretion to make factual findings, and in doing so, reject other facts as maintained by the applicant.
For example, the hearing officer could reject the evidence of RCI that Curcio's relationship to RCI was merely that of a financier.
The following factual findings were made by the hearing officer: RCI was formed at Curcio's direction (ROR, Proposed Final Decision, p. 11.) He nominated the first president of RCI. (p. 12.) Chapdelaine gave an affidavit that her ownership was " in name only." (p. 12.) Curcio nominated Chapdelaine to be the second president of RCI. (p. 14.) Curcio approved all expenses and made the major decisions at RCI. (p. 16.) Curcio was the beneficial owner of RCI. (p. 17.) Curcio controlled the day-to-day activities of RCI; he met with Chapdelaine at the yard frequently. (p. 18.) He controlled the finances of RCI and every aspect of the business. (p. 18). He arranged for eighteen mortgages to be placed on the real estate of RCI. (p. 19.)
The hearing officer also made findings on whether the submissions of RCI amounted to " misrepresentation" to DEEP. The court need not reach that issue, as the statutes and applicable regulations require full disclosure by RCI. The court uses this full disclosure standard in its ruling.
As a matter of law, while the general and individual permits are governed by § 22a-208a, and not § 22a-432, the case of BEC Corp. v. Dept. of Environmental Protection, 256 Conn. 602, 775 A.2d 928 (2001) similarly would govern the issue of control. BEC finds control if the officer is in a position of responsibility that allows that officer to influence corporate policies, there is a nexus between the officer's actions or inactions in that position and the alleged violation, and the officer's action resulted in a violation. Id. at 618. See also Vorlon, supra at 837-38.
This statute concerns when a corporate officer may be held liable for pollution of a property.
Curcio factually had the right to influence corporate policies, there was a nexus between his actions and RCI's failure to disclose, and in fact there was a failure to disclose. Therefore there was sufficient control by Curcio that required disclosure by RCI in its applications. RCI did not satisfy its burden with regard to the individual application and DEEP met its burden with regard to the revocation of the general permit.
RCI claims that the failure to disclose did no harm as the information, if disclosed about Curcio, would not have revealed any environmental violations in his past. However, the DEEP is entitled on a permit application to receive all required information. § 22a-208a. This information was simply not provided. DEEP statutes " are remedial in nature and should be liberally construed to accomplish their purpose." Manchester Environmental Coalition v. Stockton, 184 Conn. 51, 55-56, 441 A.2d 68 (1981).
RCI also claims that there was no intent to violate any law in its failure to submit the information as it thought that its applications were complete. RCI emphasizes that nothing fraudulent was done here. The response to this is that DEEP is authorized to deny or revoke an application for failure to disclose any relevant and material facts. Regulations § § 22a-3a-5(d)(2)(B) and (C); 22a-209-4(1)(B). Based on the record and the findings, as supported by substantial evidence, RCI clearly should have informed DEEP of Curcio's role in RCI's corporate structure.
RCI claims that the hearing officer and the deputy commissioner erred by treating Curcio's beneficial ownership of RCI as grounds to claim that RCI did not properly disclose that Curcio was a " shareholder." In RCI's opinion it was not required to disclose a beneficial shareholder, such as Curcio. Our Supreme Court has concluded, however, that a beneficial owner can be deemed the legal owner if he has access to control of the corporation. See Loew v. Falsey, 144 Conn. 67, 74, 127 A.2d 67 (1956). This exact holding was followed in Success, Inc. v. Curcio, 160 Conn.App. 153, 124 A.3d 563, note 5 (2015).
The Success case did not involve environmental law, but did concern Curcio's son, who was a named defendant, and a beneficial owner of a premises.
RCI argues finally that the penalties of denial and revocation were too severe under the factual circumstances of alleged good faith on these facts. The rule, however, is that if " the penalty meted out is within the limits prescribed by law, the matter lies within the [agency's] discretion and cannot be successfully challenged unless the discretion has been abused." Wasfi v. Department of Public Health, 60 Conn.App. 775, 790, 761 A.2d 257 (2000), citing Gibson v. Connecticut Medical Examining Board, 141 Conn. 218, 230, 104 A.2d 890 (1954). The record does not support a finding of abuse of discretion.
For the above-stated reasons, the appeal is dismissed.
SO ORDERED.