When Environmental Regulators Try to Enforce Unwritten Policies

Posted on May 3, 2011 by Jeff Thaler

Anyone with substantial experience representing clients before regulatory agencies has likely encountered the frustrating situation where a staff person holds your client to a standard not found either in statute or regulation, but rather in “unwritten policy” of the agency. For most clients, additional review of such actions by agency staff is either not worth the time and money, or are subsumed in a variety of other issues.


Recently, the Maine Supreme Judicial Court had the opportunity to review the legality of certain actions of the Maine Department of Environmental Protection that were based not in Maine law or regulation, but rather upon “unwritten agency customs and practices”. Despite the Court’s normal deference to a state agency’s interpretation of a statute, in the case of Tenants Harbor General Store, LLC v. Department of Environmental Protection,2011 ME 6, 10 A. 3d 722, the court reversed a lower court judgment for the DEP, and ruled in favor of a small business owner.


The case involved the question of whether the installation of new underground gasoline storage tanks at a convenience store must be undertaken pursuant to new regulations that impose additional restrictions on placement in relation to proximity to public and private water supplies, or whether the tanks would be “grandfathered” and thus not subject to the new regulations. When Tenants Harbor General Store, LLC, which purchased the convenience store with gasoline pumps in question in 2007, removed the old tanks in 2008 and sought to install new tanks in the same location, the DEP refused to treat the proposed installation of new tanks as “replacement of an existing facility”; staff instead insisted that this was a new installation subject to new restrictions. The LLC sought judicial review, and the DEP won the first round in Superior Court.


The DEP argued that the prior owner had signed a document notifying the Department that she was abandoning the facility, and that neither the prior owner nor the LLC provided the Department with notice in writing of the intention to replace the removed tanks. However, as noted by the Maine Supreme Court, “the Department does not, however, identify any applicable statute or rule that required a registrant to provide notice of the intent to replace an existing facility.” Moreover, “none of the Department’s forms indicated any requirement that a registrant provide written notice of the intent to replace a facility that was being removed.”


Interestingly, the Department argued in court that “the LLC could have also have learned of the Department’s practice of requiring of written notice by seeking advice from an attorney”; this proposition was rejected by the Supreme Court, which stated that “neither an applicant nor an advocate would have a basis in law to determine that notice was required. Statutes and regulations, not unwritten agency customs and practices, must inform registrants and their attorneys of what is required to register a facility.” (emphasis in original). Thus, the Supreme Court concluded that the Department’s position “was contrary to the statutory and regulatory law”and, therefore, the Court vacated the lower court’s judgment, and remanded with instructions that the Department accept the LLC’s registration of the tanks to replace the grandfathered tanks.

This decision is the first one in Maine to attack the common approach of regulators to act on unwritten agency customs and practices. The Maine Supreme Court’s decision and logic are certainly applicable to similar situations in other jurisdictions, as well as at the federal level, indeed anywhere that regulators act outside of the confines of properly written laws and regulations.



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