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Date: 01-03-2020
Case Style:
Countryclub Homes, LLC and Valley Oaks Real Estate, LLC vs. 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 Know as the Powell Parties
Case Number: WD82476 and WD82477
Judge: LISA WHITE HARDWICK
Court: MISSOURI COURT OF APPEALS WESTERN DISTRICT
Plaintiff's Attorney:
Defendant's Attorney:
Description:
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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
3
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.
1 All regulatory references are to the Missouri Code of State Regulations (2016).
4
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
2 All statutory references are to the Revised Statutes of Missouri 2016.
5
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.
3 In their respective cases, Lone Jack and Powell filed motions to dismiss Valley Oaks’s appeal. We deny those motions.
6
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).
7
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 persons5 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
4 Sections 644.006, et seq.
5 As used in the Missouri Clean Water Law, the term “person” means “any individual, partnership, copartnership, firm, company, public or private corporation, association, joint stock company, trust, estate, political subdivision, or any agency, board, department, or bureau of the state or federal government, or any other legal entity whatever which is recognized by law as the subject of rights and duties[.]” § 644.016(15).
8
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 mail or within thirty days of any such finding, order, decision, or assessment being delivered, whichever is earlier.
(Emphasis added).
9
At no point in its brief does Valley Oaks assert that Lone Jack and Powell were
not adversely affected by the issuance of a permit to Valley Oaks. Instead, Valley Oaks
argues that, despite the legislature’s clear expression of intent in Section 621.250.2 to
allow “any person or entity who is a party to, or who is aggrieved or adversely affected
by” a decision of the Director to appeal, Lone Jack and Powell do not have standing to
appeal because Section 644.051.6 provides that a narrower class of persons or entities
– only applicants or potential applicants — may take appeals from the Director’s
decision. This argument, however, has already been specifically rejected by our
Supreme Court in Missouri Coalition for the Environment v. Herrmann, 142 S.W.3d 700,
702 (Mo. banc 2004).
In Herrmann, the Court stated that “Section 644.051.6 does not limit the right of
appeal to the [CWC] solely to those denied a permit[.]” Id. Nevertheless, Valley Oaks
argues that, after Herrmann, the legislature’s amendment of Section 640.010 to remove
language that granted “affected parties” the right to appeal signaled the legislature’s
repudiation of the Court’s holding in Herrmann. Valley Oaks misunderstands the effect
of the amendment. While the legislature has amended Sections 644.010.1 and
644.051.6 since the Supreme Court’s decision in Herrmann, it has neither implicitly nor
explicitly abrogated that opinion.6 Further, the Herrmann Court did not base its
decision on the then-in-force language of Section 640.010.1 or predicate its holding on
any language that has since been amended. See 142 S.W.3d at 702. The Court
merely mentioned that Section 640.010.1 provides that the Director’s decisions are
subject to appeal before it held that Section 644.051.6 did not limit the right to appeal
6 See, e.g., § 287.020.10, wherein the Legislature specified that amendments to the Workers’ Compensation Law were intended to “reject and abrogate earlier case law interpretations.”
10
the decisions of the Director to any exclusive class. See id. Put another way, the Court
did not state that it was ruling as it did because of any particular language in Section
640.010.1. See id. Therefore, Herrmann still binds this court. See MO. CONST. art V, §
2. The CWC did not err in holding that Lone Jack and Powell had standing to appeal
the Director’s decision. Point I is denied.
Point II – Failure to Issue Decision Within 180 Days
In Point II, Valley Oaks contends the CWC exceeded its statutory authority by
failing to issue its decision within the statutorily-prescribed time period. Valley Oaks
argues that the failure to comply with the statute’s deadline rendered the CWC’s
decision null and void and, therefore, the DNR’s decision to issue the permit should be
allowed to stand.
As set forth in Section 621.250.2, any party aggrieved by the DNR’s decision
appeals to the AHC. The AHC is authorized to hold a hearing and send a recommended
decision to the CWC along with the record. § 621.250.2-3. The CWC’s final decision
“shall be issued” within 180 days of the date the notice of appeal to the AHC was filed.
§ 621.250.3. The date by which the CWC is required to issue its final decision “may be
extended at the sole discretion of the permittee as either petitioner or intervenor in the
appeal.” Id.
Here, after the DNR issued the permit to Valley Oaks, Lone Jack filed its notice
of appeal to the AHC on June 25, 2018, while Powell filed its notice of appeal on June
27, 2018. The AHC held hearings and made recommended decisions in both cases,
which it then transmitted along with the record to the CWC. Pursuant to Section
621.250.3, the CWC’s final decision in the Lone Jack case was due on December 22,
11
2018, and the CWC’s final decision in the Powell case was due on December 24, 2018.
The permittee, Valley Oaks, did not extend the time period beyond these dates. On
December 10, 2018, all parties were present when the CWC voted 4-1 to deny the
permit; however, the CWC did not issue its final decision in both cases until January 7,
2019. Valley Oaks argues that, because Section 621.250.3 states that the CWC’s
decision “shall be issued” within 180 days of the date the notice of appeal to the AHC
was filed, the issuance of the decisions within that time period was mandatory and,
consequently, the CWC’s untimely decisions reversing the DNR’s decision to issue the
permit were null and void.
Our Supreme Court has explained that, when the legislature uses the word
“shall” in a statute, the issue “is not whether ‘shall’ means ‘shall’ but what sanction (if
any) the legislature intended to apply” when the required act is not done. Frye v. Levy,
440 S.W.3d 405, 408 (Mo. banc 2014). If the legislature has imposed a sanction or
otherwise indicated a consequence for noncompliance, then the statute is a mandatory
statute, and courts will enforce the intended sanction or consequence for
noncompliance. Id. If, however, the legislature has not approved a sanction or has not
otherwise indicated a consequence for noncompliance, then the statute is a directory
statute. Id. A directory statute’s “terms are limited to what is required to be done,” and
courts will not create a sanction or consequence for noncompliance where the
legislature has not expressed an intent for such sanction or consequence. Id. at 409
(quoting Hudgins v. Mooresville Consol. Sch. Dist., 278 S.W. 769, 770 (Mo. 1925)).7
7 The Court in Frye explained in detail the difference in the language of mandatory and directory statutes:
Two examples of when a statute that imposes an obligation will be construed to be “mandatory” are: (a) if the statute explicitly provides what the consequence of non
12
The determination as to whether a statute is mandatory or directory turns on the
language the legislature has chosen. Id. at 410. Section 621.250.3 imposes an
obligation on the CWC to issue its final decision within 180 days of the date the notice of
appeal to the AHC is filed. It does not, however, explicitly provide that the CWC may
issue its decision only within that 180 days, nor does it explicitly provide that the CWC
lacks the authority to issue a decision after the 180th day. “In the absence of such
legislative intent, courts have no authority to impose such a sanction on their own.” Id.
The Court in Frye recognized that, while “[t]he lack of statutory approval for a
sanction in the event of non-compliance with a statutory obligation, or the lack of any
language permitting only acts that are in compliance with that obligation, is an important
factor” in distinguishing between mandatory and directory statutes, other factors may be
considered. Id. Indeed, the Court noted that, “[u]ltimately, whether a statute is
mandatory or directory is a ‘function of context and legislative intent.’” Id. at 410-11
(quoting Bauer v. Transitional Sch. Dist. of City of St. Louis, 111 S.W.3d 405, 408 (Mo.
banc 2003)).
compliance will be (e.g., that any act performed after the stated deadline or in a manner different than the required method will be void or ineffective); and (b) if the statute explicitly provides that the required action can be taken only before the stated deadline or can be performed only in the stated manner. See, e.g., [West v.]Ross, 53 Mo. [350], 354 [(Mo. 1873)] (“the legislature has not only by the statute directed what shall be done, but has also declared what consequence shall follow disobedience”); Greene v. Holt, 76 Mo. 677, 680 (1882) (“Negative words are imperative.”) (citing Sedgwick [on Stat. Const.], at 316, 320, and 325). On the other hand, if a statute imposes an obligation and does not explicitly allow only compliant actions (or explicitly declare non-compliant actions void or ineffective), the statute likely is “directory” and courts are not free to create and impose a sanction that the legislature did not approve.
440 S.W.3d at 410.
13
Valley Oaks argues that, despite the lack of an explicit sanction or of language
allowing only compliant acts, the context of the statute indicates that Section
621.250.3’s time limit is mandatory. Specifically, Valley Oaks argues that the legislature
has created an “elaborate permitting system with the goal of promoting business and
maximizing employment in the State” and, within the statutory scheme, the legislature
has “provided a series of rapid deadlines ensuring applicants certainty in applying for
permits and planning business operations.”8 Valley Oaks contends that, collectively,
this statutory scheme “demonstrates a legislative intent of expedient issuance and
review throughout the permitting process.”
Notwithstanding this argument, we find nothing in the relevant statutes to indicate
that the CWC’s final decision must be invalidated if the 180-day time frame is exceeded.
It is noteworthy that the Legislature has included consequences for the failure to follow
the time deadlines contained in the permit process statutory scheme when it so
chooses. For example, Section 640.018.1 provides that, in any case where the DNR
“has not issued a permit or rendered a permit decision by the expiration of a statutorily
required time frame for any application for a permit . . . , upon request of the permit
applicant, the [DNR] shall issue the permit the first day following the expiration of the
required time frame[.]” That the legislature explicitly provided a consequence for the
DNR’s failure to render a permit decision within the statutorily-required time frame – but
8 Valley Oaks has listed several of these deadlines, including: (1) the DNR shall issue or deny permits within 60 days under Section 644.051.5-6; (2) the DNR shall issue or respond with a letter of comment to CAFO permit applicants within 45 days under Section 640.715.3; (3) appeals of DNR permit decisions must filed with the AHC within 30 days of the decision under Section 621.250.2; (4) the AHC may hold hearings within 90 days of the filing of the notice of appeal under Section 621.250.2; (5) the AHC shall make its recommended decision within 120 days of the filing of the notice of appeal under Section 621.250.2; and (6) the AHC must transmit its record and recommended decision to the CWC within 15 days after the AHC has rendered its recommended decision under Section 621.250.3.
14
did not do so for the CWC’s failure to timely issue its final decision – further supports the
conclusion that Section 621.250.3 is a directory, and not mandatory, statute. Therefore,
we cannot conclude that the CWC’s decisions are null and void because the CWC failed
to comply with this directory statute.9 Point II is denied.
Point III – The CWC’s Review of the AHC’s Record
In Point III, Valley Oaks contends the CWC committed reversible error by issuing
its final decisions before reviewing “missing portions” of the AHC’s record, namely, the
parties’ proposed recommended decisions that they submitted to the AHC. Valley Oaks
asserts that, at the end of oral arguments before the CWC, the CWC agreed to receive
and review the proposed recommended decisions but never did so.
Administrative appeals of the DNR’s permitting decisions are contested cases,
which are governed, inter alia, by Chapter 536 and Section 621.250. See 621.250.1.
Section 536.080.2 states:
In contested cases, each official of an agency who renders or joins in rendering a final decision shall, prior to such final decision, either hear all the evidence, read the full record including all the evidence, or personally consider the portions of the record cited or referred to in the arguments or briefs. The parties to a contested case may by written stipulation or by oral stipulation in the record at a hearing waive compliance with the provisions of this section.
Valley Oaks argues that, by not reviewing the parties’ proposed recommended
decisions submitted to the AHC, the CWC neglected the statutory prerequisite of
9 To enforce Section 621.250.3’s requirement that the CWC issue its final decisions within the 180-day time limit, Valley Oaks could have sought a writ of mandamus compelling the CWC to do so. See, e.g., Am. Civil Liberties Union v. Ashcroft, 577 S.W.3d 881, 895-96 (Mo. App. 2019).
15
“personally consider[ing] the portions of the record cited or referred to in the arguments
or briefs” before exercising its authority to render a final decision in both cases.
Contrary to Valley Oaks’s assertion, the page in the record to which it cited does
not indicate that the CWC agreed to receive and review the parties’ proposed
recommended decisions before rendering its final decisions. In any event, Valley Oaks
has not demonstrated how the CWC’s failure to review the proposed recommended
decisions means that the CWC failed to “personally consider the portions of the record
cited or referred to in the arguments or briefs.” Valley Oaks argues that the proposed
recommended decisions “included the parties’ respective positions along with citations
to legal authority and evidence on which they relied – and show Powell abandoned one
argument.” The parties had oral arguments before the CWC, however, during which
they were each given an opportunity to argue their respective positions with legal
authority and citations to the record. During oral arguments, Valley Oaks used a
PowerPoint presentation to “walk through each one of the items” of the AHC’s
recommended decision that it believed was incorrect. Included in Valley Oaks’s
presentation was its assertion of Powell’s purported abandonment of one of its
arguments.
In this appeal, Valley Oaks does not articulate the specific position, legal
authority, or citations to the record contained in its proposed recommended decision –
but not in its subsequent oral argument to the CWC – that the CWC needed to consider
but did not do so because of the CWC’s failure to review the parties’ proposed
recommended decisions. “[T]here is a presumption that administrative decisions are
made in compliance with applicable statutes.” Stith v. Lakin, 129 S.W.3d 912, 920 (Mo.
16
App. 2004) (citation omitted). By not specifying the information in the proposed
recommended decision that the CWC did not consider, Valley Oaks has failed to rebut
this presumption. Valley Oaks has not demonstrated how the omission of the proposed
recommended decisions rendered the record before the CWC deficient. “It is not the
function of the appellate court to serve as advocate for any party to an appeal.” See
Falls Condo. Owners’ Ass’n, Inc. v. Sandfort, 263 S.W.3d 675, 676 (Mo. App. 2008)
(citation omitted).
Moreover, we note that Section 621.250.3, which specifically governs appeals of
DNR decisions to the CWC, states that the CWC’s final decision “shall be based only on
the facts and evidence in the hearing record[.]” (Emphasis added). Valley Oaks does
not assert that the parties’ proposed recommended decisions constituted either “facts”
or “evidence” as contemplated by Section 621.250.3. Indeed, statements made in
briefs submitted to the court are generally not considered evidence. See State ex rel.
Dixon v. Darnold, 939 S.W.2d 66, 69 (Mo. App. 1997). As the parties’ proposed
recommended decisions were neither facts nor evidence, the CWC did not err in failing
to review them before rendering its final decision. Valley Oaks has not demonstrated
that the CWC neglected its statutory obligations under Sections 536.080.2 or 621.250.3.
Point III is denied.
Point IV – The Validity of the Commissioners’ Approvals
In Point IV, Valley Oaks contends the CWC’s decisions were arbitrary,
capricious, unreasonable, and in excess of its statutory authority because they were not
validly approved by four commissioners as required by Section 644.066.3(3). In the
Lone Jack case, Commissioners Ashley McCarty, Patricia Thomas, John Reece, and
17
Allen Rowland voted to approve and adopt the AHC’s recommended decision as the
CWC’s final decision, while Commissioner Stan Coday voted to disapprove the AHC’s
recommended decision. In the Powell case, Commissioners McCarty, Thomas, Reece,
and Coday voted to approve and adopt the AHC’s recommended decision as the
CWC’s final decision, while Commissioner Rowland voted to disapprove the AHC’s
recommended decision. Valley Oaks argues that, even though four commissioners
approved each decision, the approval of Commissioner Reece was void in both cases,
and the approval of Commissioner Coday was void in the Powell case.
With regard to Commissioner Reece, Valley Oaks asserts that his approval was
void because he improperly considered information outside the record in making his
decision. At the start of the hearing before the CWC, Valley Oaks made an oral motion
to disqualify Commissioner Reece because he visited Valley Oaks’s proposed facility
during the pendency of the appeal. In response, Commissioner Reece stated, “I did
visit Valley Oaks, mainly for my own edification to see what was there and to see what
type of an operation they had.” He further stated, “And if that disqualifies me, then
something is wrong. I’m trying to educate myself as to what is going on, and I think
visiting the site gave me a lot of insight into this whole proceeding.” The remaining four
commissioners then voted to deny Valley Oaks’s motion to disqualify Commissioner
Reece. Valley Oaks further argues that, later in the hearing, Commissioner Reece
indicated that he did not have to accept as correct the engineering report submitted with
Valley Oaks’s permit application simply because the report was sealed by a
professional engineer.
18
On appeal, Valley Oaks does not argue that the CWC erred in refusing to
disqualify Commissioner Reece. Instead, Valley Oaks argues that Commissioner
Reece’s comments show that his decision was contrary to Section 621.250.3’s mandate
that the CWC’s final decision “shall be based only on the facts and evidence in the
hearing record[.]” We disagree. Commissioner Reece voted to approve the AHC’s
recommended decisions in both cases in their entirety and without any modifications.
Valley Oaks does not specify anything in the AHC’s recommended decisions – including
its explanation in the Powell case for rejecting Valley Oaks’s engineering report – that
was based upon facts or evidence outside the record. Thus, despite Commissioner
Reece’s comments during the hearing, it appears that his final decisions were based
only on the facts and evidence in the hearing record, as Section 621.250.3 required.10
Valley Oaks has not met its burden of demonstrating that Commissioner Reece violated
Section 621.250.3.
Regarding Commissioner Coday, Valley Oaks contends that his approval of the
AHC’s recommended decision in the Powell case was void because he did not approve
the AHC’s recommended decision in the Lone Jack case. As detailed supra, in the
Lone Jack case, the AHC recommended overturning the DNR’s permitting decision
based on two grounds: Valley Oaks’s failure to prove a continuing authority and its
10 Valley Oaks’s reliance on Hauk v. Scotland Cty. Comm’n, 429 S.W.3d 459 (Mo. App. 2014), is misplaced. Hauk was an appeal from the circuit court’s decision in a non-contested case. Id. at 461. In explaining their reasons for denying the health permit in Hauk, the commissioners’ testimonies during the hearing before the circuit court indicated that they ignored the language of the ordinance they were purportedly applying and, instead, “‘each applied their self-determined, unwritten standard’ to make their determination with respect to the application of the [ordinance].” Id. at 463. Hence, on appeal, the Eastern District of this court properly affirmed the circuit court’s finding that the commission’s decision to deny the permit was arbitrary. Id. In these contested cases, regardless of Commissioner Reece’s comments during the hearing before the CWC, the CWC’s final decisions indicate that the decisions were based solely upon evidence in the record and, therefore, were not arbitrary or capricious.
19
failure to provide the required neighbor notice. In the Powell case, the AHC
recommended overturning the DNR’s permitting decision based those same two
grounds, plus two other grounds: Valley Oaks’s failure to provide a compliant nutrient
management plan and its failure to ensure the requisite minimum days of manure
storage. Valley Oaks argues that, because the two grounds in the Lone Jack case
overlapped with two of the four grounds in this case, Coday’s approval in the Powell
case was arbitrary and capricious. We disagree.
Valley Oaks points to no statute or regulation requiring commissioners to explain
their votes or reasoning. It is only when the CWC modifies or does not adopt the AHC’s
recommended decision that the CWC must explain the specific reason why. §
621.250.3. While we do not know why Coday did not approve the AHC’s recommended
decision in the Lone Jack case, a simple explanation could be that he found the other
two grounds for denying the permit in the Powell case – the failure to provide realistic
yield goals for the fields it identified for land application of manure and the failure to
provide for adequate manure storage – more persuasive. Valley Oaks has not
demonstrated that Coday’s approval of the AHC’s recommended decision in the Powell
case was arbitrary and capricious. Point IV is denied.
Points V, VI, and VII – Continuing Authority and Transfer
In Points V and VI, Valley Oaks asserts that the CWC erred in determining that
its permit application was deficient because it failed to identify a continuing authority.
Valley Oaks contends any typographical error associated with its identification of
“Country Club Homes LLC” as the continuing authority for the operation and
maintenance of the CAFO was not fatal to the permitting process and that, in approving
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the permit, the DNR properly followed its “historical application” of the regulations
addressing the issuance of permits. In Point VII, Valley Oaks asserts that the CWC
erred in determining that, based on the failure to identify a continuing authority in the
permit application, the subsequent transfer of the permit was ineffective.
In denying the permit to Valley Oaks, the CWC concluded that Valley Oaks
“failed in th[e] simple task [of identifying the entity to serve as a continuing authority],
and the DNR failed to ask it to correct the mistake pursuant to 10 CSR 20-6.300.” The
CWC made the following findings of fact in support of this ruling: On December 19,
2017, Ward submitted a permit application for a proposed CAFO. Greg Caldwell, an
employee of the DNR for more than thirty years, reviewed the application. The
application listed “Country Club Homes LLC” as both the owner and continuing authority
for the CAFO facility. The CWC determined that a “Certificate of No Record,” dated
June 27, 2018, from the Missouri Secretary of State indicates than no entity named
“Country Club Homes LLC," with the address [as stated on the permit] exists. Caldwell
testified that he had reviewed the Secretary of State’s website and found information for
an entity named “Countryclub Homes, LLC” and assumed that the application identifying
“Country Club Homes LLC” as the continuing authority merely contained a typographical
error. The CWC found that “Caldwell did not communicate with the permit applicant or
the [permit applicant’s] engineer concerning the purported typographical error.”
Nevertheless, on June 15, 2018, the DNR issued the instant permit for the
operation of a Class IB CAFO. The permit had another typographical error and was
issued to “County [sic] Club Homes, LLC.” Ward then requested the permit be
transferred to “Valley Oaks Real Estate, LLC.” On August 9, 2018, the DNR issued the
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modified permit “for ownership transfer and facility name change” to Valley Oaks Real
Estate, LLC.
10 CSR 20-6.010(3)(A), in effect at the time of Valley Oaks’s permit application,
states:
All applicants for construction permits or operating permits shall show, as part of their application, that a permanent organization exists which will serve as the continuing authority for the operation, maintenance, and modernization of the facility for which the application is made. Construction and first-time operating permits shall not be issued unless the applicant provides such proof to the department and the continuing authority has submitted a statement indicating acceptance of the facility.
The term “continuing authority” is not defined in the text of the regulations, see 10 CSR
20-2.010,11 but we have previously stated that, under agency interpretations of 10 CSR
20-6.010(3) applicable here, the regulation “requires only a showing that an entity was a
permanent organization to satisfy the ‘continuing authority’ requirements.” Trenton
Farms, 504 S.W.3d at 164. Thus, 10 CSR 20-6.010(3) necessitates only that the
applicant “identify the entity which will serve the function [of operating, maintaining, and
modernizing the CAFO facility.]” Id. at 166.
Here, we agree with the CWC that Valley Oaks failed to identify the entity serving
as a continuing authority. As a general matter, to be registered as a limited liability
company in the State of Missouri, an entity must, inter alia, have a name that is
“distinguishable upon the records of the secretary from the name of any corporation,
limited liability company, limited partnership, limited liability partnership, or limited
11 10 CSR 20-2.010 has since been amended to include a definition of continuing authority. 10 CSR 202.010(19). This amendment is immaterial to the disposition of this appeal, however, as we apply the regulations that were in effect at the time of the permit application. See, e.g., State ex rel. Wolfhole, Inc. v. Scott Cty. Soil & Water Conservation Dist., 880 S.W.2d 908, 910 (Mo. App. 1994).
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liability limited partnership which is licensed, organized, reserved, or registered under
the laws of this state as a domestic or foreign entity, unless” one of two inapplicable
exceptions excuses the noncompliance. § 347.020(3).
The term “distinguishable” is not defined in the statute, so we look to a dictionary
to determine the term’s meaning. Kader v. Bd. of Regents of Harris-Stowe State Univ.,
565 S.W.3d 182, 187 (Mo. banc 2019). “Distinguishable” is defined as “capable of
being distinguished,” Distinguishable, WEBSTER’S THIRD NEW INT’L DICTIONARY 659
(2002), while the term “distinguish” means: (1) “to perceive as being separate or
different: [to] recognize a difference in”; or (2) to mark as separate or different (as one
thing from another).” Distinguish, WEBSTER’S THIRD NEW INT’L DICTIONARY 659 (2002).
There is no doubt that the entities “Country Club Homes LLC” and “Countryclub Homes,
LLC” are distinguishable from one another because they are easily perceivable as
different from one another. This observation is further supported by the fact that one
entity exists on the records of the Secretary of State and the other does not.
Moreover, a limited liability company’s name, as set forth in its articles of
organization, “shall be the name under which the limited liability company transacts
business in this state unless the limited liability company registers another name under
which it transacts business as provided under chapter 417 or conspicuously discloses
its name as set forth in its articles of organization.” § 347.020(1). Valley Oaks does not
contend that “Countryclub Homes, LLC” registered the name “Country Club Homes
LLC” to transact business pursuant to Chapter 417 or that it conspicuously disclosed its
actual name during the permitting process. Instead, Valley Oaks argues that any
typographical error was cured because the DNR was able to intuit the correct permit
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applicant through context clues and additional investigation. However, this effort to cure
the deficiencies was in excess of the DNR’s authority because neither the regulation nor
statute12 provides for any such internal correction mechanism. Rather, the regulations
provide the following procedure for the DNR to handle incomplete or deficient
applications:
When an application is submitted incomplete or any of the required permit documents are deficient, or if additional information is needed including, but not limited to, engineering design plans, the department will act in one (1) of the following ways:
A. The department may return the entire permit application back to the applicant for re-submittal; or
B. The applicant and/or the applicant's engineer will be notified of the deficiency and will be provided time to address department comments and submit corrections. Processing of the application may be placed on hold until the applicant has corrected identified deficiencies.
10 CSR 20-6.300(2)(E)4 (emphasis added).
The regulation requires that the DNR, when presented with a deficient permit, will
either return all permit application documents to be resubmitted or notify the applicant
and/or the applicant’s engineer of the deficiency and provide the applicant and/or
applicant’s engineer with the opportunity to cure the deficiency.13 While we have no
doubt that the DNR could, on its own, create fully-compliant permit applications in short
12 In rendering its decision, the CWC determined that Section 644.052.8, which authorizes the modification of permits, did not give the DNR the authority to make the changes to the permit application at issue here. As Valley Oaks does not challenge this finding on appeal, we will not address it. See Lewis v. Fort Zumwalt Sch. Dist., 260 S.W.3d 888, 890 (Mo. App. 2008); Rule 84.13(a).
13 In fact, the record contains several examples of Caldwell offering Valley Oaks’s engineer the opportunity to correct other deficiencies.
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order, nothing in the text of the regulation or in any provided agency interpretation gives
the DNR the authority to sua sponte correct the deficiencies at issue here. See id.
The record supports the CWC’s determination that Valley Oaks failed to
complete the “simple task” of correctly identifying the permanent entity that would
operate as the CAFO’s continuing authority and that the DNR did not follow 10 CSR 20
6.300(2)(E)4 when it failed to ask Valley Oaks to correct this mistake. Valley Oaks has
not demonstrated how this finding was in conflict with the plain meaning of the
regulation or with the DNR’s historical application of any regulation. The CWC did not
err in denying Valley Oaks’s permit application on the ground that the application failed
to identify a continuing authority. Consequently, the CWC did not err in further holding
that, because the continuing authority on the original permit was a non-existent entity,
the transfer of the permit to “Valley Oaks Real Estate, LLC” was ineffective under 10
CSR 20-6.010(11)(A). Points V, VI, and VII are denied.
Having found that the CWC properly denied the permit on the ground that the
permit application failed to identify a continuing authority, we need not address Valley
Oaks’s challenges to the CWC’s remaining grounds for denying the permit presented in
Points VIII and IX in the appeal of the Lone Jack case and Points VIII-XIV in the appeal
of the Powell case. See Knight v. Con-Agra Foods, Inc., 476 S.W.3d 355, 358-59 (Mo.
App. 2015).
Lone Jack’s Motion for Attorneys’ Fees
Prior to the submission of its case, Lone Jack filed a motion for attorneys’ fees on
appeal pursuant to Section 536.087.1, which states:
A party who prevails in an agency proceeding or civil action arising therefrom, brought by or against the state, shall be awarded those
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reasonable fees and expenses incurred by that party in the civil action or agency proceeding, unless the court or agency finds that the position of the state was substantially justified or that special circumstances make an award unjust.
Section 536.087.2 similarly authorizes the award of reasonable fees and expenses “to a
party who prevails in any action for judicial review of an agency proceeding . . . unless
the court finds that during such agency proceeding the state was substantially justified,
or that special circumstances make an award unjust.”
A party seeking to recover attorneys’ fees and expenses is required to file its
application for fees to the body before which it first prevailed. See § 536.087.3; see
also § 536.087.4; Mo. Real. Estate Appraisers Comm’n v. Funk, 492 S.W.3d 586, 593
94 (Mo. banc 2016). Here, there is no dispute that Lone Jack has filed the necessary
application before the CWC. In light of our affirmance of the administrative decision, we
must remand this cause to the CWC to determine whether, pursuant to Section
536.087, Lone Jack is entitled an award of attorneys’ fees. See also § 536.087.4; Funk,
492 S.W.3d at 593-94.
Outcome: The CWC’s final decisions in the Lone Jack and Powell cases are affirmed. The
cause is remanded to the CWC for a determination of Lone Jack’s entitlement to
attorneys’ fees.
Plaintiff's Experts:
Defendant's Experts:
Comments: