No Deference to the Agency? Environmental Appeals in Indiana have Changed. By Brianna J. Schroeder

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Indiana House Enrolled Act 1003 changes the way we litigate administrative appeals. This will impact confined feeding challenges, permit modification appeals, and other regulatory decisions by our the Indiana Department of Environmental Management (IDEM).

Lady Justice considering an administrative appeal

First, HEA 1003 does away with the Office of Environmental Adjudication (OEA). For years, the OEA was the “ultimate authority,” or the body who considered administrative appeals related to an IDEM decision. To consolidate government resources, the OEA has essentially been folded into the Office of Administrative Law Proceedings (OALP). The OALP decides all kinds of administrative review cases, from civil rights to licensing questions. Now, the OALP will also decide environmental matters. However, OALP administrative law judges who hear environmental matters are required to be an Indiana attorney with at least five years of environmental or administrative experience and must meet the OALP’s training program environmental qualifications (details on that program were tbd as of the date this blog was published). These requirements are similar to the requirements we’ve had for OEA judges.

Second, HEA 1003 introduced an attorneys’ fee-shifting provision. Now, the OALP shall award attorneys’ fees to the petitioner if the government agency’s actions were not supported by a valid rule or statute. The petitioner is also entitled to attorneys’ fees if it prevails before the OALP, then the agency asks for judicial review in a county court, and then that court affirms the OALP’s decision in favor of the petitioner. In other words, if IDEM appeals an OALP decision but loses the appeal, it will have to pay attorneys’ fees. This fee provision does not apply if the agency action was merely as an arbiter between two other parties or the agency’s position became wrong because of an intervening change in the law.

Third, the new law changes the standard of review for judicial review of administrative appeals. On appeal of an OALP decision, the court does not need to give any deference to the OALP’s findings of facts if those facts are not supported by the record. The court must decide all questions of law without any deference to the agency’s interpretation. The second piece of this – no agency deference – is new. Courts used to give at least some deference to the agency’s interpretation of the agency’s own rules as long as that interpretation was reasonable. No longer. HEA 1003 also deleted a sentence which prohibited courts from substituting its judgment for that of the agency.

Fourth, HEA 1003 slightly changes the standard of proof needed for a court to overturn an agency decision. Now, a court is required to grant relief to a petitioner if that person was prejudiced by an agency action that was unsupported by “a preponderance of the” evidence. It used to refer to agency actions that were unsupported by “substantial” evidence. Under Indiana law, substantial evidence is less than a preponderance. A preponderance is sometimes described in civil law as being more than 50%—so 51/49 would be a preponderance. In other words, the statute now requires agency actions to be supported by more evidence than before.

Finally, in a judicial review (asking a county court to reverse the OALP’s decision) the burden for preparing the agency record now falls on the OALP instead of the petitioner. The law used to require the petitioner to submit the record within 30 days of the request for judicial review, but now the OALP must do so within 30 days after it receives the request. It used to be the case that failure to timely submit the record would require dismissal of the appeal. HEA 1003 deleted that language and shifted the record responsibility to the OALP.

So what does this new law mean to Indiana agriculture? Administrative appeals will have a new look. On judicial review, courts have more leeway (good for parties who lost before the agency or OALP, not great for parties who prevailed). As a whole, HEA 1003 gives less deference to agency decisions and holds the agency to higher standards than before. If you are defending a third party challenge to a permit IDEM granted to your livestock farm, HEA 1003 is not necessarily helpful to you. On the other hand, if you are challenging an IDEM action, the law makes your challenge a bit easier. These changes will cut both ways for regulated farms and other entities who find themselves before the OALP.

HEA 1003 is effective July 1, 2024. Contact an attorney with questions about your appellate rights.