Judge tosses historic fine against Bottomley Properties because wrong DEQ employee signed the paperwork

A judge tossed a $263,000 civil penalty assessed to Bottomley Properties for procedural reasons, finding that the Department of Environmental Quality employee who signed the paperwork was not authorized to do so.

Administrative Law Judge John Evans, himself a former DEQ chief deputy secretary in the McCrory administration, issued his decision earlier this month.

In April 2022, the Division of Water Resources fined the company for agency officials described as “egregious violations” of the state’s water quality standards. “The violations observed constituted some of the most extensive sedimentation damage to waters the Division of Water Resources staff involved in this matter have ever seen,” previously court documents read.

The damage occurred in 2020 and 2021, when Bottomley had cleared more than 300 acres for a cattle operation. Rock, mud and dirt had damaged three-quarters of an acre of wetlands and more than three linear miles of streams. The NC Wildlife Resources Commission subsequently performed an emergency rescue of vulnerable and unique mountain brook trout — known as “brookies” — and relocated the fish to another stream.  In addition, cattle grazing operations polluted streams with high levels of fecal bacteria, more than six times the state freshwater standard.

The fine was among the largest ever assessed by DEQ. Bottomley then contested the penalty in the Office of Administrative Hearings, the typical venue for these cases. In court filings the company’s attorneys wrote,” the case is about misguided bureaucratic fervor directed at farmers and their lawful activities in order to produce unlawfully inflated penalties.”

While Bottomley attorneys rebutted several of DEQ’s environmental arguments, the case ultimately hinged on what appeared to be a picayune, but important, legal argument: Which agency employees can sign civil penalty assessments, as laid out in state law.

Attorneys for Bottomley Properties argued the civil penalty assessment was signed by a person not legally authorized to do so: Jeffrey Poupart, section chief of the Water Quality Permitting Section.

Under state law, the DEQ secretary can sign a civil penalty assessment and can delegate that duty to “any subordinate officer of employee” of the department. In 2020, then DEQ Secretary Michael Regan delegated the authority to assess penalties to the director of the Division of Water Resources. That, according to state law, is legal.

Where Regan overstepped legal boundaries is when he authorized the director to also “sub-delegate those functions in writing,” Judge Evans ruled. By allowing these “sub-delegations” DEQ could create a “limitless delegation chain” to even the lowest-level employee, Judge Evans wrote.

Based on Regan’s delegation document, in 2021 Danny Smith, then the director of the Division of Water Resources, sub-delegated the authority to assess civil penalties to 13 different positions, including section chiefs like Poupart. A year later, Poupart signed the Bottomley penalty assessment.

Judge Evans acknowledged that certain routine administrative functions must be delegated, but not those involving policymaking, “matters of significant strategic importance,” and functions that involve the “exercise of judgment and discretion” —  like levying penalties.

Judge Evans acknowledged that his decision“could be perceived as a procedural issue.” However, he wrote that he is “equally cognizant that the General Assembly has vested tremendous power in the DEQ Secretary” and with that comes the “responsibility to act in accordance with the circumscribed limit of power. … The official that assessed the civil penalty was not properly authorized to do so, and the court may not uphold the agency action.”