State of North Carolina s3

STATE OF NORTH CAROLINA IN THE OFFICE OF ADMINISTRATIVE HEARINGS COUNTY OF CARTERET 02 EHR 1155

RAPHAEL J. SCHARF AND WIFE, ) GUYLENE SCHARF, ) Petitioners, ) ) v. ) DECISION ) N.C. DEPARTMENT OF ) ENVIRONMENT AND NATURAL ) RESOURCES, ) Respondent. )

A contested case hearing was heard in this matter on August 26, 2003, in Beaufort, North Carolina, and September 19, 2003, in Raleigh, North Carolina, before Beecher R. Gray, Administrative Law Judge. Petitioner Raphael Scharf was represented by Michael Lincoln, Attorney at Law. Respondent Department of Environment and Natural Resources was represented by John P. Barkley, Assistant Attorney General. The parties stipulated that notice of hearing in this matter was proper.

Whether Respondent properly denied Petitioners’ proposal for use of an on-site wastewater system on Petitioners’ lot on Harker’s Island pursuant to a proposal prepared by Petitioners’ soil scientist and submitted for review and approval under 15A NCAC 18A .1948(d).

Based upon the evidence presented at the hearing, the exhibits admitted, and all other relevant material, the undersigned makes the following:

FINDINGS OF FACT

1. Raphael and Guylene Scharf, Petitioners in this matter (hereinafter “Petitioners”) are the owners of Lot 1, Oak Hammock Subdivision (hereinafter “the lot”), on Harker’s Island in Carteret County, North Carolina.

2. Applications previously had been made and denied, with subsequent hearings upholding the denials, for a conventional on-site wastewater system for the lot. 3. Both the State’s experts and Petitioners’ expert agreed that the site was unsuitable for a conventional on-site wastewater system under the wastewater laws and rules because of the soil wetness condition on the site. (T. p. 53)

4. In November of 1996, Petitioners applied for approval of a .1948(d) study to allow installation of an on-site wastewater system on the lot.

5. In December of 1996, Kevin Martin, a soil scientist hired by Petitioners and recognized in this hearing as an expert in soil science, submitted a proposal to the Carteret County Health Department (hereinafter “CCHD”) to study the lot pursuant to 15A NCAC 18A .1948(d) (hereinafter “.1948(d)”). The proposal stated that the site did not contain enough suitable or provisionally suitable soil or fill pursuant to wastewater rules and that the quality of the fill also was a concern. The proposal suggested a methodology for determining the suitability of the lot for an engineered system pursuant to .1948(d).

6. Monitoring wells were installed on the site in December 1996 in accordance with Mr. Martin’s proposal, and well monitoring was conducted through April of 1997. The results of the well monitoring data were analyzed by Mr. Martin, and Mr. Martin submitted a final report and proposal in December of 1997 recommending the excavation of existing fill on the property, refilling the excavated portions with new fill material, and installing a sand filter pretreatment system on the site.

7. CCHD forwarded the proposal to the State for review and technical assistance.

8. Roger Melville, the environmental health supervisor for CCHD at the time, testified that it was the county’s policy to submit all .1948(d) proposals to the State for review and for recommendations on whether or not to approve such proposals. (T. p. 92)

9. Curtis Oden, the on-site wastewater system supervisor for CCHD, and Troy Dees, the Environmental Health Supervisor in CCHD in 2002, testified that CCHD did not have the technical expertise on staff to make a determination on a .1948(d) proposal and therefore sent such proposals to the State for review.

10. The Regional Soil Specialist serving the CCHD region at the time of the application was John Williams. Mr. Williams received the proposal for State review from CCHD. John Williams’ review consisted of the following:

a. Review of the Scharf file in Carteret County regarding the site, including Kevin Martin’s report;

b. Review of well-monitoring data;

c. Review of the chronology of the site, including the conventional permit process and appeal and Dr. Uebler’s involvement; and

2 d. Conversations with Kevin Martin and Steven Berkowitz regarding the engineering and mounding analysis. (R. pp. 29-31 and 36).

11. Mr. Williams testified that after he reviewed the soils and hydrology portion of the . 1948(d) proposal from Mr. Martin he discussed the proposal with Steven Berkowitz, engineer with Respondent’s On-Site Wastewater Program office in Raleigh. They determined that the soil and site criteria had been met and that they could proceed to review of the engineering plan. (T. p. 31)

12. Mr. Williams testified that Mr. Berkowitz needed to review the mounding analysis contained in the report because, at the time, Mr. Williams was not qualified or prepared to review the mounding analysis out of his office. He stated that the mounding analysis involved more of an engineering approach that required Mr. Berkowitz’s review.

13. Mr. Williams also testified that the State frequently gave oral approvals of soils and hydrology proposals prior to proceeding to engineered plans.

14. Mr. Williams also testified that he never evaluated the site and never was asked to do so by CCHD.

15. Mr. Williams testified that no permit ever was issued for the site and that an improvement permit for a .1948(d) proposal is issued only after all soils and engineering work is concluded. Mr. Williams testified on cross-examination that there is not a valid permit until all criteria of .1948(d), including engineering, has been done.

16. Kevin Martin, Petitioners’ soil scientist, testified that he submitted the proposal under rule .1948(d) and that the proposal was reviewed by John Williams. He testified that Mr. Williams had told him that the soils and hydrology work had been approved. He also testified that Steve Steinbeck told him the soils work had been approved. Soil Scientist Martin conducted a monitoring well analysis on Petitioners’ lot, consistent with Carteret County requirements.

17. There is variance in the testimonies of Mr. Williams, Mr. Martin, Mr. Berkowitz, and Mr. Steinbeck as to whether oral approval of the soils and hydrology part of the two part approval process was given and reasonably relied upon by Petitioners’ consultant in proceeding to the engineering phase of the .1948(d) process.

18. Mr. Berkowitz testified that Mr. Williams brought him a copy of the proposal and that he discussed the proposal with Mr. Williams at that time and agreed that they should discuss the proposal further. Mr. Berkowitz testified that he had no further discussions with Mr. Williams about the proposal. Mr. Berkowitz stated that he never did a mounding analysis on the property and did not tell Mr. Williams to tell Mr. Martin or Mr. Scharf that the soils work had been approved. He testified that he was surprised when the engineered plans were received because he did not remember the soils work having been approved. He checked with Dr. Uebler, who

3 was acting as regional soil specialist for CCHD after Mr. Williams left the State in 1998, and determined that the soils work had not been approved by Dr. Uebler. He never reviewed the engineering work because the soils work had not been approved. (T. pp. 212-219).

19. Mr. Steve Steinbeck, Mr. Williams’ supervisor at the time, also testified that he never discussed the proposal with Mr. Williams and was not aware of any approval of the soils work. He also testified that, while he believed Mr. Martin if Mr. Martin said they discussed the matter, he did not remember telling Mr. Martin that the soils work was approved. (T. pp. 241-242) Mr. Steinbeck testified that he is on the telephone or using email all day when he is in the office and cannot remember each such contact.

20. Mr. Steinbeck, Mr. Berkowitz, and Dr. Uebler testified that there is no policy of granting an oral approval for soils work prior to proceeding to engineering work and that they were not aware of there ever being such a policy in the Department. They agreed that the process is a two- part process but that there should be some written documentation of the soils approval in the file. (T. pp. 215-216, 234-239)

21. The only documentation by Mr. Williams regarding the proposal prior to his leaving employment with the State was Mr. Williams’ letter of February 4, 1998, which states that the proposal had not been approved. There are no documents showing that Mr. Williams ever approved the soils criteria in writing for the site or showing that he had informed the county or other State officials of any oral approval.

22. Mr. Melville’s letter of December 21, 1999, states that “no permits or prior approvals have been made since the earlier hearings on this lot in 1986 or 1987.” (R. Exh. 10) This letter was written over a year after Mr. Williams left the State, and Mr. Melville testified that he wrote it because he had “never received anything from the State in writing indicating that the approval would be forthcoming.” (T. p. 97). Roger Melville testified that approval or rejection of the soils part of the proposal never was nailed down in his discussions with the State officials but was just floating.

23. Curtis Oden, supervisor of the onsite wastewater staff at the CCHD, testified that Mr. Williams did not render an opinion to him on the proposal during the time Mr. Williams was employed by the State. (T. pp. 110-111)

24. Based on the above, and in light of the conflicting evidence, the administrative law judge finds that evidence shows the State did not make a written final decision approving the soils and hydrology work either prior to Mr. Williams leaving State employment or after Dr. Uebler reviewed the proposal, and that there was no clear, uniformly understood among State staff, policy in place of providing oral or written approvals for the soil and hydrology portion of . 1948(d) proposals.

25. Following Mr. Williams’ departure from State government, Dr. Uebler reviewed the proposal as the acting State regional soil specialist serving CCHD.

4 26. Mr. Melville asked Dr. Uebler to review the proposal from Mr. Martin and determine whether the State advised CCHD to approve or deny the proposal.

27. Dr. Uebler was familiar with the site and previously had evaluated the site.

28. Dr. Uebler reviewed the proposal and found numerous problems with the methodologies proposed to determine the site’s suitability pursuant to .1948(d).

29. Dr. Uebler stated his objections to the proposal in a letter to Mr. Scharf dated June 9, 2000. Dr. Uebler’s objections in the letter were based on what he described as the inability “to accurately characterize the hydraulic characteristics of sites that have been filled in a multilayered manner such as this site.”

30. Dr. Uebler was qualified and accepted as an expert in soil science.

31. Dr. Uebler testified that the lot has a multilayered soil with three to four layers of differing fill material resulting in preferential flow rather than uniform flow of fluid through the soils. In Dr. Uebler’s opinion, the techniques proposed by Mr. Martin cannot predict what happens with preferential flow on the site. He also stated that he knew of no way to accurately predict the conductivity of new fill materials proposed to replace the existing fill on the site. He knew of no peer-reviewed studies showing a means of making such a prediction. He also testified that there was no mechanism for accurately predicting travel times between the source of pollution and adjoining water in the sound. His opinion, based on these factors, especially the difficulties in predicting conductivity and travel times in multilayer soils or in new fill, was that there is no known method of adequately predicting these factors at this time. Therefore, he determined that the proposal could not adequately predict these factors and could not meet the requirements of .1948(d).

32. Dr. Uebler testified that .1948(d) was written to allow for the submission of data showing a means of using new technology to approve systems that could function properly but could not otherwise be approved under the wastewater laws and rules and for new information to be submitted to the department showing that such systems will work.

33. Dr. Uebler’s expert opinion was that Mr. Martin’s proposal was not adequate to satisfy . 1948(d) and a system might not function properly on the site. He based this opinion on the hydrology of the site not being adequately characterized and that preferential flow was likely with preferential movement of sewage to the surrounding waters at the site. It was also his expert opinion that there is no existing method to predict such factors. (T. pp. 178-179).

34. Once Mr. Martin became aware of Dr. Uebler’s objections, he requested a meeting with State and local staff. A meeting was held in May of 2001 in Raleigh with Bill Jeter, the head of the State On-Site Wastewater Section office, Mr. Steinbeck, Dr. Uebler, Mr. Oden, Mr. Berkowitz, and Mr. Martin. At the meeting, the State confirmed that it did not recommend approval of the proposal based on Dr. Uebler’s objections. According to Curtis Oden, the

5 proposal was not accepted at that meeting, but the door was left open for additional work to be done to satisfy Dr. Uebler’s concerns and to resubmit the proposal.

35. Based on the State’s recommendation, on June 11, 2002, Troy Dees, CCHD Environmental Health Supervisor since November, 2001, issued a denial letter to Petitioners stating that the proposal did not meet the criteria in .1948(d).

36. Mr. Martin, Mr. Williams, Mr. Melville, Mr. Oden, Mr. Dees, Dr. Uebler, Mr. Berkowitz and Mr. Steinbeck all testified that a final permit never was issued for Petitioners’ lot. All agreed that the engineering plan submitted by Kevin Martin, after what he believed in good faith was oral approval of the soil and hydrology part of the .1948(d) proposal, was not reviewed for the Petitioners’ lot and that a final permit could not be issued until a review and approval of the soils and engineering work.

37. This case demonstrates inordinate delay by the State in responding to inquiry by Petitioners about whether the lot could be approved under .1948(d). According to testimony by witnesses for Respondent, it took three (3) years for Respondent to answer this inquiry because, among other reasons, the State lost a regional employee, John Williams, in that area of the State while this case was pending.

38. 15A NCAC 18A .1948(d) states that “a site classified as UNSUITABLE may be used for a ground absorption sewage treatment and disposal system specifically identified in Rules .1955, . 1956, or .1957 of this Section or a system approved under Rule .1969 if written documentation, including engineering, hydrogeologic, geologic or soil studies, indicates to the local health department that the proposed system can be expected to function satisfactorily. Such sites shall be reclassified as PROVISIONALLY SUITABLE if the local health department determines that the substantiating data indicate that: (1) a ground absorption system can be installed so that the effluent will be non-pathogenic, non-infectious, non-toxic, and non-hazardous; (2) the effluent will not contaminate groundwater or surface water; and (3) the effluent will not be exposed on the ground surface or be discharged to surface waters where it could come in contact with people, animals or vectors. The State shall review the substantiating data if requested by the local health department”.

CONCLUSIONS OF LAW

1. The parties properly are before the Office of Administrative Hearings.

2. The experts for both parties agree that a conventional system cannot work on this site and that the only means of issuing an improvement permit for the site would be through a .1948(d) proposal.

3. A local health department may, through agents authorized by DENR, approve a proposal under 15A NCAC 18A .1948(d). However, the State’s agents in a local health department may refer a proposal under Rule .1948(d) to the State for review in accordance with the last sentence of .1948(d) and in accordance with 15A NCAC 18A .1964. In this case, the evidence shows that

6 the local health department did not have the requisite expertise to review the .1948(d) proposal submitted by Mr. Martin on behalf of Petitioners and forwarded the proposal to the State for review in accordance with the rule. Nothing in the rules or laws required the local health department to perform the review without State assistance.

4. The greater weight of the evidence in this case is that Petitioners’ soil science consultant, Kevin Martin, was told that the soils part of the .1948(d) review was approved and that he then proceeded under a good faith belief that he had adequate approval to obtain the engineering phase of the proposal for State Review, which he proceeded to do. It is the law of this State, however, that the State cannot be estopped from properly carrying out police powers of the State in enforcing wastewater laws and rules in order to the protect the public health. Raleigh v. Fisher, 232 N.C. 629, 635, 61 S.E.2d 897, 902 (1950). To estop the State in such circumstances could place the public’s health at risk, and protection of the public health is the overriding factor in determining whether a permit should or should not be issued.

5. The State and the local health department had to make its decision based on the provisions of 15A NCAC 18A .1948(d) as to whether written substantiating data was provided to show that a system could function satisfactorily without discharging to groundwaters or surface waters. Despite Mr. Martin’s recognized expertise and high standing with the On-Site Wastewater staff, I conclude that Dr. Uebler’s expert opinion that the methodologies used in the proposal cannot adequately address the issues of preferential flow in multilayered fill material, prediction of conductivity in new fill material used to replace existing fill, or travel times of sewage to the sound has not been overcome or outweighed by Kevin Martin’s expert opinion. Dr. Uebler’s credentials and experience support his contention that Mr. Martin has not provided adequate substantiating data to show that these methodologies will work. No peer-reviewed or other reliable data was submitted as part of the proposal showing that these factors accurately could be predicted. Dr. Uebler explained why these methodologies should be adequately tested. As recently stated in Howerton v. Arai Helmet, Ltd., ___ N.C. App. ____ , 581 S.E.2d 816, 825 (2003), in adopting Daubert as the standard for expert testimony in North Carolina, “ in determining the admissibility of expert testimony, the emphasis is on the reliability of the scientific method.” This is true even when the expert witness has excellent credentials, but is proposing a novel scientific theory. Howerton at 822. The standards for admissibility of scientific evidence set out in Daubert include whether the theory or technique can be tested, whether the technique has a known error rate, whether the theory or technique has been subjected to peer review by publication and whether the technique has achieved a general acceptance in the scientific community. Howerton at 824. The information provided in this case does not meet these criteria and therefore is not sufficient to be admissible as scientific evidence under Rule 702 of the North Carolina Rules of Evidence. The purpose of Rule .1948(d) is to allow new and innovative approaches to approval of systems when sufficient, reliable scientific evidence can be provided to support such proposals. In this case, the data simply has not been provided to show that these methods are reliable and are scientifically acceptable today. The evidence may be available in the future, but the criteria of the rule have not been met at present.

6. Based on these factors, the State and the local health department properly determined that the proposal did not meet the criteria of .1948(d) and properly denied the improvement permit.

7 The decision was made by authorized agents of the State in CCHD, based on recommendations from the State review.

7. Respondent’s decision to deny the improvement permit due to the insufficiency of Mr. Martin’s proposal to meet the criteria of Rule .1948(d) was supported by substantial evidence in the record, by the scientific evidence on behalf of the State, and lack of sufficient scientific evidence on behalf of Petitioners to support the proposal. DECISION

Respondent’s decision to deny Petitioners’ request for an improvement permit for lack of sufficient evidence to satisfy the criteria of 15A NCAC 18A .1948(d) was proper and should be AFFIRMED.

It is hereby ordered that the agency serve a copy of the final decision on the Office of Administrative Hearings, 6714 Mail Service Center, Raleigh, N.C. 27699-6714, in accordance with North Carolina General Statute 150B-36(b).

NOTICE

The Agency that will make the final decision in this contested case is the North Carolina Department of Environment and Natural Resources.

The Agency is required to give each party an opportunity to file exceptions to the recommended decision and to present written arguments to those in the Agency who will make the final decision. N.C. Gen. Stat. § 150-36(a). The Agency is required by N.C. Gen. Stat. § 150B-36(b) to serve a copy of the final decision on all parties and to furnish a copy to the parties’ attorney of record and to the Office of Administrative Hearings.

In accordance with N.C. Gen. Stat. § 150B-36 the Agency shall adopt each finding of fact contained in the Administrative Law Judge’s decision unless the finding is clearly contrary to the preponderance of the admissible evidence. For each finding of fact not adopted by the agency, the agency shall set forth separately and in detail the reasons for not adopting the finding of fact and the evidence in the record relied upon by the agency in not adopting the finding of fact. For each new finding of fact made by the agency that is not contained in the Administrative Law Judge’s decision, the agency shall set forth separately and in detail the evidence in the record relied upon by the agency in making the finding of fact.

This the 21st day of November, 2003.

______Beecher R. Gray Administrative Law Judge