SHORELINES HEARINGS BOARD
STATE OF WASHINGTON
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H & H PARTNERSHIP and DAN HILGER Appellants, v. STATE OF WASHINGTON, DEPARTMENT OF ECOLOGY, Respondent. |
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SHB NO. 00-022 AMENDED SUMMARY JUDGMENT AND ORDER OF DISMISSAL |
Appellants H & H
Partnership and Dan Hilger, previously requested entry of summary judgment and
dismissal. On February 16, 2001, the
board entered an order denying summary judgment. The parties subsequently submitted correspondence requesting
clarification of the legal basis for the board's ruling. This correspondence will be accepted as
joint motions for reconsideration. The
board has reviewed and considered the following pleadings, declarations
together with all documents attached thereto:
1. Appellants' Motion for Summary
Judgment.
2. Declaration of Michael W. Gendler is
Support of Appellants' Motion for Summary Judgment.
3. Declaration of Gary L. Pedersen is
Support of Motion for Summary Judgment.
4. Declaration of Sue E. Evans in Support
of Motion for Summary Judgment.
5. Respondent's Memorandum in Opposition
to Appellants' Motion for Summary Judgment.
6. Affidavit of Ken Lederman.
7. Affidavit of Kim Van Zwalenburg.
8. Affidavit of Jo Sohneronne.
9. City of Tacoma's Response to Department
of Ecology's Memorandum in Opposition to Summary Judgment.
10. Declaration of Jana Magoon.
11. Appellants' Reply Memorandum in Support
of Motion for Summary Judgment.
12. Reply Declaration of Michael W. Gendler
in Support of Appellants' Motion for Summary Judgment.
13. Correspondence from Ken Lederman to the
board dated February 20, 2001.
14. Correspondence from Michael W. Gendler to
the board dated February 21, 2001.
On January 18, 2001, the board heard
oral argument in support and in opposition to the motion for summary judgment. Michael W. Gendler represented the
appellants. Assistant City Attorney
Kyle J. Crews represented the City of Tacoma.
Assistant Attorney General Ken Lederman represented the Department of
Ecology. Gene Barker & Associates
of Olympia, Washington, provided court-reporting services for the hearing on
the motion for summary judgment. Board
Member Kaleen Cottingham reviewed a transcript of the proceeding and
participated in the decision of the board.
DISCUSSION
Appellants seek review of penalty assessed
by the Department of Ecology under the Shoreline Management Act (SMA). This case involves an over the water
restaurant that installed 13 card tables under a license from the state
Gambling Commission. The local
government concluded and maintains that the card tables do not constitute a
development within the meaning of the SMA and, in this case did not constitute
a change in use. The local government
deemed the card tables exempt from shoreline permit requirements and declined
to require a shoreline permit for the card tables. The Department of Ecology and local governments may impose civil
penalties under RCW 90.58.210(2) of the Shoreline Management Act (SMA) where
there has been a violation of a shoreline permit or failure to obtain a
required shoreline permit before undertaking shoreline development. Appellants contend that there has been no
violation within the meaning of RCW 90.58.210(2) necessary for imposing a
penalty. The Department of Ecology does
not dispute this contention but counters that its broad authority to take
enforcement action to correct uses of shorelands inconsistent with the policies
of the SMA and applicable regulations, includes authority for the penalty at
issue here. The board concludes that
the Department of Ecology does not have authority to issue civil penalties
beyond RCW 90.58.210(2). The board
accordingly grants summary judgment to appellants and vacates the notice of
penalty. The ruling is without
prejudice and is not intended to limit the statutory authority of the
Department of Ecology to enforce the policies and regulations of the SMA.
FACTUAL BACKGROUND
H & H Partnership owns the
property on which Luciano's Casino and Restorante operates. The subject property is located on the
Ruston Way waterfront in Tacoma, Washington.
The building at the location was built in 1969 and a restaurant was
operated on the premises until 1983. H
& H Partnership purchased the property in 1992 and has operated some form
of restaurant on the site since 1993.
In 1983 a shoreline conditional use
permit was issued for construction of a deck addition and parking lot
expansion. In 1985 a second conditional
use permit was issued to increase the size of the over-water deck.
In December 1998 H & H
Partnership was issued a license by the Washington State Gambling
Commission. The license authorized five
"social" card tables as an accessory to the restaurant and
lounge. On November 19, 1999, the Gambling
Commission issued a license authorizing up to 15 "house-banked" card
tables under WAC 230-40-900. By law the
tables are only approved as a "commercial stimulant" to the sale of
food and beverages in the restaurant and lounge. The restaurant must remain the primary use of the premises. WAC 230-04-080 provides: “Such
activities shall not be operated other than as a commercial stimulant and the
food and/or drink business shall be open and providing service to the general
public at all times gambling activities are operated.”
In June 1999 H & H Partnership
obtained a building permit from the city of Tacoma. The permit was issued for interior remodeling necessary to
accommodate the card tables. In
September 1999 a second building permit was issued for structural components of
the remodeling. The remodeling was
necessary to remove interior columns, installation of security systems and a
secure caged area.
On November 16, 1999, Kim Van
Zwalenburg of the Department of Ecology received a telephone call advising her
that H & H Partnership had begun construction under the building
permits. She contacted the city of
Tacoma and confirmed that the building permits had been issued for the interior
remodeling. On December 22, 1999, Ms.
Van Zwalenburg sent H & H Partnership a letter stating that the operation
of card tables in the restaurant constitutes a change in use and required a
shoreline permit.
The City of Tacoma responded to the
Department of Ecology on the same day.
In that letter the city outlined its position that the proposed card
tables were accessory uses under the applicable provisions of the Tacoma
municipal code including the local shoreline master program. The city further outlined its understanding
the interior remodeling did not constitute a development within the meaning of
the SMA, RCW 90.58.030. Based on these
understandings, the city did not require a shoreline permit application prior
to issuing the two building permits or in response to Ecology's letter. Luciano's reopened with the authorized card
tables on December 28, 1999.
A year prior to the reopening H
& H Partnership had applied for a shoreline permit for the exterior
expansion of the building and other improvements. The expansion included covering a portion of the exterior deck
and incorporating it into the interior floor plan. On January 12, 1999, the Department of Ecology submitted a
comment letter on the environmental checklist prepared for the shoreline permit
application. In that letter the
department stated that a casino is not a permitted use and should be located
outside of the shoreline jurisdiction. The
City of Tacoma Land Use Administrator denied the shoreline permit application
on September 28, 1999.
On April 11, 2000, the City of
Tacoma Hearing Examiner issued a decision on an appeal of the shoreline permit
application denial. The Hearing Examiner
found that 13 gaming tables had been installed in the central portion of the
building. These tables serve 78
patrons. There are an additional 117
seats used for dining in the "fine-dining area" and "bistro
dining" area. The entire
restaurant/casino is open to the general public except that the card tables,
lounge and bistro area are open only to patrons 21-years old and above. The hearing examiner adopted the City of
Tacoma calculations that at least 60% of the floor area was devoted to
restaurant use and 40% was devoted to gaming.
The hearing examiner additionally found that for the first three months
of 2000, 60 percent of the gross income for the business was derived from
gaming. The examiner further noted that
the majority of the employees at the business are assigned to the gaming
operations.
The Hearing Examiner noted that the
gambling component of the proposal had changed from the original shoreline
application. Prior to the shoreline
application Luciano's had 114 seats for dining and 57 seats in its bar and
lounge area. The lounge area was not
open to patrons under 21 years of age.
The original shoreline permit contemplated 105 gaming seats and 89
dining seats. As built, however, dining
areas in the facility encompass 117 seats.
Some of these seats are located in a lounge and Bistro dining area that
are not open to anyone under 21 years of age.[1]
The Department of Ecology issued a
Notice of Correction on March 8, 2000.
The notice states that a shoreline conditional use permit was required
to for the card room and that the card room violated the policies of the
SMA. The notice demanded that
appellants cease operating the cardroom and restore public access to a standard
and degree that existed before the cardroom opened. The department issued an amended Notice of Correction on March
24, 2000. On June 22, 2000, the
department issued an Order and Notice of Penalty. The notice of penalty alleges that changing a portion of the
restaurant to use as a cardroom is inconsistent with the policies of the SMA
under RCW 90.58.020. The notice further
alleges that the cardroom reduces the general accessibility of the building to
the public and therefore violates the Tacoma Shoreline Master Program. The notice additionally alleges that
installing the card tables constitutes an unlawful change in use of a
pre-existing use as defined and regulated under the Tacoma Shoreline Master
Program.
The notice of penalty was timely
appealed to the board.
CONCLUSIONS OF LAW
Summary judgment is appropriate
where there are no genuine issues of material fact and the moving party is
entitled to judgment as a matter of law.
CR 56(c). Greater Harbor 2000
v. City of Seattle, 132 Wn.2d 267, 278 (1997). There are no genuine issues of material fact before the board.
Appellants move for summary judgment
on the grounds that there has been no violation within the meaning of RCW
90.58.210(2) and therefore no basis in law for imposing a penalty pursuant to
the Shoreline Management Act (SMA). RCW
90.58.210(2) provides:
Any person who shall fail to
conform to the terms of a permit issued under this chapter or who shall
undertake development on the shorelines of the state without first obtaining
any permit required under this chapter shall also be subject to a civil penalty
not to exceed one thousand dollars for each violation. Each permit violation or each day of
continued development without a required permit shall constitute a separate
violation.
RCW 90.58.210(4) provides that any penalty imposed pursuant to this section is subject to review by the Shorelines Hearings Board. In order for this board to sustain a penalty under RCW 90.58.210(2), there must be either a permit violation or the failure to obtain a shoreline permit prior to engaging in development on a shoreland of the state.
In its initial order the board concluded that there were genuine issues of material fact as to whether the thirteen card tables constitute a change of use requiring a shoreline permit. We accordingly denied summary judgment to appellants under RCW 90.58.210(2).
In response to that order the Department of Ecology has advised the board that it did not issue the notice of penalty before the board under RCW 90.58.210(2) and requested clarification as to the department's authority to assess the penalty under RCW 90.58.210(1) or WAC 173-27-280. The department’s request for clarification states:
In our Motion in Opposition to Summary Judgment, Ecology clarified that the enforcement action in this case was not issued under RCW 90.58.210(2). Rather, Ecology issued Notice of Correction #00SEASR-757 to the Appellants under the specific statutory authority of RCW 90.58.210(1) and regulatory authority of WAC 173-27-270. Ecology later issued Order & Notice of Penalty #00SEASR-757 to address the Appellant’s willful non-compliance with the Notice of Correction. RCW 90.58.210(1); WAC 173-27-270; WAC 173-27-280. Ecology respectfully requests that the Board clarify its ruling in this regard.
In light of the position advanced by the department, the appellants are entitled to summary judgment as to liability under RCW 90.58.210(2). We must therefore resolve whether the Department of Ecology has any authority independent of RCW 90.58.210(2) to issue a civil penalty and whether this board has any jurisdiction to hear an appeal of a such a penalty.
The Department of Ecology contends that it has authority under RCW 90.58.210(1) to issue civil penalties as a necessary enforcement action to ensure that shorelines of statewide significance are used in a manner consistent with rules and regulations of the SMA. RCW 90.58.210(1) provides:
[T]he attorney general or the
attorney for the local government shall bring such injunctive, declaratory, or
other actions as are necessary to insure that no uses are made of the
shorelines of the state in conflict with the provisions and programs of this
chapter, and to otherwise enforce the provisions of this chapter
(Emphasis supplied.)
The
provisions of this section date to the original adoption of the SMA. In 1986 the Act was amended by the
legislature to include the penalty provision codified at RCW 90.58.210(2).[2] 1986 Washington Laws chapter 292. The amendment included the remaining
provisions of RCW 90.58.210 governing the procedural requirements and right of
appeal for a penalty issued under RCW 90.58.210(2). Prior to 1986 this board had ruled in Nelson v. Department of
Ecology, SHB NO. 79-011(1979), that the provisions of what is now codified
as RCW 90.58.210(1) were limited to actions for declaratory relief or injunctive
relief.
In
Nelson, the department had issued a cease and desist order against a
residential development on the shoreline of Lake Sammamish. Ecology's regulations in effect at that
time, WAC 173-14-190, provided for a right to appeal such regulatory orders
before this board. Following a hearing
on the merits the board dismissed the appeal for lack of jurisdiction. We concluded there that the SMA did not give
the board specific authority to hear and decide appeals of such orders.
In
reaching this conclusion the board applied the following test in reviewing the
authority of a state agency:
It is
well settled in this state, as elsewhere, that a public service commission,
such as the department of public service in this state, is an administrative
agency created by statute and as such has no inherent powers, but only such as
have been expressly granted to it by the legislature or have, by implication,
been conferred upon it as necessarily incident to the exercise of those powers
expressly granted.
P.U.D. No. 1 of Okanogan County
v. Department of Public Service, 21 Wn.2d 201, 208-9 (1944); accord Burlington Northern,
Inc. v. Johnston, 89 Wn.2d 321 (1977); Ortbald v. State, 85 Wn.2d
109, 209 (1975).
Based
on this standard the board held that while "the injunctive jurisdiction
conferred upon this board by WAC 173-14-190 is not abstractly inappropriate,
such jurisdiction is not necessarily incident to the exercise of the express
statutory jurisdiction of the Board, nor a necessary antecedent to injunctive
relief by court action as called for in the Act. Such jurisdiction therefore fails the test of state agency
authority set out above." Nelson,
6-7. Consistent with our ruling in Nelson, we conclude that RCW
90.58.210(1) only authorizes actions to be brought in Superior Court. The sub-section does not incorporate any
authority for administrative penalties.
We would also note that RCW 90.58.210(1) by its express terms only
applies to the Attorney General. The
Department of Ecology is not authorized under the sub-section to act
independent of the Attorney General.
Implying
authority to issue administrative penalties in RCW 90.58.210(1) would also be
inconsistent with the 1986 amendment establishing a specific penalty provision
in the SMA. In Washington Trout v.
Skagit County, SHB No, 96-3 Order Denying Dismissal (1996), the board
declined to imply a jurisdictional requirement for service on local governments
for permit appeals brought under RCW 90.58.180(1). At the time of that decision the SMA only expressly required
service on the local government in appeals brought by the Department of Ecology
under RCW 90.58.180(2). In declining to
imply a requirement for service on local governments under RCW 90.58.180(1),
the board stated that provision for such service under RCW 90.58.180(2) "reveals
that although the Legislature knew how to require a filing or service of a
petition for review on local government, it chose not to, for appeals brought
by anyone other than Ecology or the Attorney General. A tribunal may infer a different legislative intent when the
Legislature uses specific language in one instance and dissimilar language in
another. Citing Personal Restraint
of Sietz, 124 Wn.2d 645, 651 (1994).
By the same token we assume that the legislature would have amended RCW
90.58.210(1) to include authority to issue civil penalties if it had so
intended.
The Department of Ecology
suggests that the amendment of RCW 90.58.210(1) to include a reference to the
1995 Regulatory Reform Act, 1995 Washington Laws, chapter 403, established
authority for regulatory orders and civil penalties. The amendment requires the department to issue a notice of
correction prior to any enforcement action pursuant to RCW 43.05.060. A notice of correction is not however, an
enforceable regulatory order and is not properly subject to administrative
adjudication. See Amberson Egg Farm
v. Department of Ecology, PCHB No. 99-029 (1999). A notice of correction is issued as a precursor to enforcement
action. In this case a notice of
correction would be issued prior to a legal action in Superior Court under RCW
90.58.210(1) or a civil penalty and corrective order issued under RCW
90.58.210(2).
The Department of Ecology
additionally contends that it has authority independent of RCW 90.58.210(2) to
issue a penalty for failure to comply with a cease and desist order under WAC
173-27-280. The cited administrative
rule does provide for civil penalties in the event a party fails to comply with
a cease and desist order. Ecology
asserts that it has statutory authority to promulgate this rule under RCW
90.58.200 allowing the department to adopt "such rules as are necessary
and appropriate to carry out the provisions of this chapter." The department further contends that the
failure to recognize an inherent right to assess civil penalties under RCW
90.58.200 and RCW 90.58.210(1) as expressed in WAC 173-27-280 will severely
impair its ability to protect shorelines of the state under the SMA.
The views of the department
certainly have merit as a matter of policy.
It is not appropriate, however, to fill in the gaps of the SMA to create
a new basis for imposing a civil penalty.
In similar circumstances the Washington Supreme Court rejected the
creation of a private cause of action under the Model Toxics Control Act
(MTCA), chapter 70.105D RCW, by regulation.
Bird-Johnson Corporation v. Dana Corporation, 119 Wn.2d 423
(1992). There the Court held:
An
administrative agency, however, cannot modify a statute by regulation. When exercising its rule-making authority,
an agency may only draft those rules which fit within the framework and policy
of the applicable statute.
119
Wn.2d at 428. Like the SMA, RCW
90.58.900, MTCA is to be liberally construed to effectuate the policies of the
Act. RCW 70.105D.910. This does not justify, however, the
enactment of a new penalty provision by regulation. 119 Wn.2d at 427.
The Department of Ecology
nonetheless argues that its SMA enforcement rules, WAC 173-27-270, 280 and 290,
have never been challenged under the provisions of the Administrative
Procedures Act, chapter 34.05 RCW, and should therefore be deemed valid. Our ruling today does not challenge the
validity of the rules. They certainly
apply, with respect to the penalty assessments, where the department has issued
a cease and desist order and penalty under the provisions of RCW
90.58.210(2). The narrower question
here is whether the rules as applied improperly exceed the statutory authority
of the department. The jurisdiction
over an appeal and the legality of a regulation as applied are appropriate
inquiries of this board. Republican
Party v. Public Disclosure Commission, 145 Wn.2d 245, 285 n. 14
(2000). Both Bird-Johnson and Nelson
discussed above, for example, dealt with the authority of the department
under a regulation as applied.
The department further contends
that this board has previously affirmed the authority to issue a penalty for
failing to comply with a cease and desist order in Mason County v. Department of
Ecology, SHB No.
88-025 (1990). The department misreads
the ruling in that appeal. The board in
fact held that its jurisdiction stemmed from RCW 90.58.210(2). There was no dispute in Mason County between
the local government and the department that shoreline permits were required
for the subject development activities.
In contrast to the present case where there is apparently no dispute
among the parties as to whether a shoreline permit was required, the need for a
permit was largely uncontested in Mason County.
We
return finally to the necessity argument as it relates to the WAC
173-27-280. As with our analysis under Nelson
above, there is a full range of enforcement mechanisms under the SMA. The Act affords the department a full
opportunity to bring an action for declaratory or injunctive relief without
resorting to regulatory orders or civil penalties independent of RCW
90.58.210(2). We note that the
department has itself successfully sought to limit the jurisdiction of the
board to hear an appeal of a cease and desist order. In Bandy v. Jefferson County, SHB 89-008 (1989), the
Department of Ecology moved to dismiss an appeal of a cease and desist order
issued under the authority of RCW 90.58.210(1). The department argued in that case that this board only has
jurisdiction in enforcement actions involving penalties under RCW
90.58.210(2). The board agreed and the
appeal was dismissed without prejudice.
In
short, the appellants have moved for summary judgment on the basis that there
is no statutory authority for the notice of penalty before the board. The only basis for a penalty under the SMA
is provided under RCW 90.58.210(2). The
parties agree that the subject penalty before the board was not issued under
the authority of this provision. The
appellants are therefore entitled to judgment as a matter of law and an order
of dismissal.
Notwithstanding
the position of the parties, the board maintains its view that there are
genuine issues of material fact as to whether there has been a change of use
that requires a shoreline permit and, thus, a violation under RCW
90.58.210(2). Material facts can be
discerned from the findings of the hearing examiner discussed above. Forty percent of the business is now devoted
to gaming; a potentially larger portion of the premises is restricted by age,
the majority of employees work in the gaming operations and for the first
quarter of last year, the majority of revenues were derived from gaming. If nothing else, the business in fact
advertises itself as a casino. As such
there are genuine issues as whether the change in use requires a shoreline
permit under the SMA and local shoreline master program.
The
board does not address therefore the merits of the central contention between
the parties that there has been a change of use that is inconsistent with the
policies and regulations of the SMA. As
we indicated above, the Department of Ecology has broad authority to commence
actions for declaratory and injunctive relief to protect against uses of shorelines
that are inconsistent with the SMA. Our
ruling is without prejudice and is not intended to limit the Department of
Ecology from taking appropriate enforcement actions against appellants under
either RCW 90.58.210(1) or (2) for what it considers to be an unlawful use of
shorelands of the state.
ORDER
Summary Judgment is hereby GRANTED to appellants and the subject Notice of Penalty is hereby VACATED without prejudice.
DONE this 2ND day of March, 2001.
SHORELINES HEARINGS BOARD
JAMES A. TUPPER, JR.,
ROBERT V. JENSEN
KALEEN COTTINGHAM
DEAN R. FOSTER
LARRY FRAZIER
PHYLLIS SHRAUGER
SHB 00-022 SUMMARY JUDGMENT