CADDNAR

[CITE: DNR v. Allen and Allen v. DNR, 12 CADDNAR 175 (2009)]

 

 

[VOLUME 12, PAGE 175]

 

Cause #: 08-048F

Caption: DNR v. Allen and Allen v. DNR

Administrative Law Judge: Lucas

Attorneys: Wallsmith (Allen); Boyko (DNR)

Date: October 29, 2009

 

 

FINAL ORDER

 

Part (1) A genuine issue of material fact does not exist, and the registration certificate issued to Cheyenne Allen, doing business as A&S Logging & Sawmill, is revoked.  Allen is prohibited from engaging in any activity for which a registration certificate is required under IC § 25-36.5-1-2(a), unless the Department of Natural Resources issues to him a new registration certificate (or Allen receives a registration certificate from the Commission on administrative review or from a court on judicial review).

 

Part (2) Genuine issues of material fact exist as to whether a civil penalty or civil penalties should be issued against Cheyenne Allen under IC § 25-36.5-1-13.5 and 312 IAC § 14-4-3.  In Administrative Cause Number 08-048F, the administrative law judge shall determine and issue a separate nonfinal order concerning any civil penalty.

 

Part (3) The Department of Natural Resources denial of a license renewal of a timber buyer registration certificate in favor of Cheyenne Allen, at issue in Administrative Cause Number 09-008F, is vacated as constituting a procedure not authorized by IC § 4-21.5.  In addition, with the license revocation ordered in Part (1), the denial is moot.

 

 

Findings of Fact and Conclusions of Law in Administrative Cause Number 08-048F

 

1. This proceeding was initiated on May 10, 2008 when the Department of Natural Resources (the “DNR”) filed a “Complaint to Revoke Timber Buyers License and Assess Civil Penalties” (the “Complaint”) against Cheyenne Allen, d/b/a A&S Logging & Sawmill (“Allen”).  The DNR and Allen are collectively the “Parties”.  The Complaint sought relief under Ind. Code § 25-36.5-1 (sometimes referred to as the “Timber Buyer Act” and rules adopted by the Natural Resources Commission (the “Commission”) at 312 Ind. Admin. Code § 14 to assist with implementation of the Timber Buyer Act.  Stephen Lucas was appointed administrative law judge for the Commission under IC § 4-21.5 (sometimes referred to as the “Administrative Orders and Procedures Act” or “AOPA”) and rules adopted by the Commission at 312 IAC § 3-1 to assist with implementation of AOPA.  The Commission is the “ultimate authority” for the Timber Buyer Act under AOPA.  Personal service of the proceeding was obtained upon Allen.  The Commission has jurisdiction over the Parties and over the subject matter of Administrative Cause Number 08-048F.

 

2. By agreement of the Parties and order of the administrative law judge, a schedule was established to file and respond to motions for summary judgment.  The DNR sought an extension of time to executive the schedule to which Allen did not object.  Pursuant to a “Notice of Agreement to Extend Summary Judgment Filing Deadlines” and resulting “Order Approving Agreement to Extend Schedule for Filing Summary Judgment Motions”, the following schedule was ordered on July 22, 2009:

A. The DNR shall file any motion for summary judgment by August 26, 2009.

B. Allen shall file any response to the motion for summary judgment by September 25, 2009.

C. DNR shall file any reply to the response by October 9, 2009.

 

[VOLUME 12, PAGE 176]

 

3. The “DNR’s Motion for Summary Judgment” with attachments was timely filed on August 24, 2009.  Allen did not file a response to the motion.  The “DNR’s Motion for Expedited Ruling on Summary Judgment” was filed on October 6, 2009.  The proceeding is ripe for disposition.

 

4. In the Complaint, the DNR seeks relief against Allen through license revocation of a timber buyer registration certificate and through the imposition of civil penalties for multiple violations of the Timber Buyer Act.

 

5. In support of the “DNR’s Motion for Summary Judgment” is the “Affidavit of Duane A. McCoy” dated August 24, 2009. 

 

6. Upon affirmation, Duane A. McCoy (“McCoy”) states that in his capacity as Timber Licensing Forester for the State of Indiana, he administers and coordinates the Timber Buyer Act and accompanying rules at 312 IAC § 14.  The performance of his duties requires McCoy to be familiar with and apply the Timber Buyer Act and 312 IAC § 14 that requires buyers of standing timber in Indiana and their agents to obtain a license from the DNR’s Division of Forestry.  A “timber buyer” under the Timber Buyer Act is also required to post a bond in incremental amounts up to a maximum of $20,000 that is based on the dollar amount of timber purchased in the prior calendar year.  McCoy’s duties include issuing timber buyer licenses and agent cards after he reviews and evaluates submitted applications requesting issuance of these license and agent cards in order to insure compliance with the Timber Buyer Act and 312 IAC § 14, including bonding requirements.  McCoy has official custody and maintains all files and records pertaining to the licensing of timber buyers and their agents in Indiana.

 

7. McCoy’s duties include taking and investigating public complaints concerning the activities of licensed timber buyers and their agents and reviewing their conduct to determine if a violation of law has occurred.  He assists the DNR’s Division of Law Enforcement in criminal investigations concerning wrongfully cut trees.

 

8. McCoy is familiar with and has records pertaining to Allen in his capacity as a timber buyer.  The records show that on or about January 18, 2006 the former Timber Buyer Licensing Forester issued Timber Buyers License No. H 414 and Agent’s Registration Card No. 789 to Allen based on his December 16, 2005 “Application for Indiana Timber Buyers License”.  The records also show that on or about January 1, 2003, Allen posted with the DNR Bond No. 3-767-426, in the amount of $5,000, through the Ohio Casualty Group.  On or about January 16, 2006, Ohio Casualty Group issued a “Rider Changing Amount of Bond” to increase the amount of the surety to $8,500.

 

[VOLUME 12, PAGE 177]

 

9. In paragraph (C) of the 2006 application, Allen stated under oath that he had paid $65,000 to $70,000 for timber in the twelve months prior to making the application.

 

10. In October 2006, Sgt. Detective Gary E. Whitaker (“Whitaker”) of DNR’s Division of Law Enforcement had Allen produce timber buyer records for the year 2005 that showed timber purchases in the total amount of $56,175.  Subsequent investigation showed two additional contracts in 2005 for the purchase of timber in the amount of $72,752, which brought the total amount of timber purchased by Allen in 2005 to $128,827.

 

11. McCoy’s review discloses that Allen failed to both honestly account to DNR for the total dollar amount of timber purchases made in 2005 and to be truthful in Allen’s Application for Indiana Timber Buyers License which was made and notarized on December 16, 2005.  Allen also failed to maintain sufficient surety bond or security in 2006 as required since his timber purchases in 2005 totaled at least $128,827 while his surety bond never exceeded $8,500 in 2006.  Under the Timber Buyer Act, Allen in 2006 should have posted at least a $14,400 bond based on timber purchases he made in 2005 of $128,827.  IC § 25-36.5-1-3(d).

 

12. McCoy’s review discloses that Allen was licensed as a timber buyer in 2006 under License No. H 414 that expired on December 31, 2006.  The DNR received Allen’s application to renew his license for 2007 on April 3, 2007.  The DNR issued a renewal to Allen on April 13, 2007.  Subsequent investigation by Whitaker found that between February 8, 2007 and April 9, 2007, Allen entered into at least five contracts for the purchase of timber from landowners.  During this period, Allen did not possess a valid timber buyer license.

 

13. Also in support of the “DNR’s Motion for Summary Judgment” is the “Affidavit of Gary E. Whitaker” dated August 19, 2009. 

 

14. Upon affirmation, Whitaker states he is employed by DNR’s Division of Law Enforcement and currently holds the rank of Sergeant Detective.  In this capacity, Whitaker has investigated Allen’s timber buyer activities under the Timber Buyer Act.

 

15. In October 2006, Whitaker had Allen produce timber buying records for the year 2005 that showed timber purchases in the total amount of $56,175.  Whitaker also contacted Consulting Forester Christopher Egolf, who provided him with two additional 2005 contracts for the purchase of timber in the amount of $72,752, which brought the total amount of timber purchased by Allen in 2005 to $128,827.

 

[VOLUME 12, PAGE 178]

 

16. During his investigation, Whitaker also interviewed James Schmidt (“Schmidt”) of Peru, Indiana.  Schmidt informed Whitaker that on August 29, 2006, he signed a contract for timber sales to Allen that was prepared and witnessed by Consulting Forester Christopher Egolf.  Allen agreed to pay Schmidt $32,433 for standing timber located at Schmidt’s property in Cass County, Indiana.  Allen was to pay Schmidt 25% of this total within ten days of signing the contract and the balance prior to cutting any trees.

 

17. On September 26, 2006, Allen met with Schmidt at the property in Cass County where the trees were located, and he wrote Schmidt check 1436 for $8,110.75 and check 1437 for $24,332.55.  On September 27, 2006, Schmidt deposited check 1436 in an account at Beacon Credit Union in Peru, Indiana, but the credit union informed him on October 2, 2006 the check was returned for insufficient funds.  Allen subsequently gave Schmidt an $8,110.75 cashier’s check for the down payment and told Schmidt the other check for $24,332.75 would be good in a few days.

 

18. Over the course of approximately two weeks, Schmidt contacted Key Bank to determine if there were sufficient funds in Allen’s account to cover check 1437 for $24,332.75 but was repeatedly told there were not.  On October 17, 2006, a representative from Campbell Road Sawmill entered into a separate contract with Schmidt to purchase the timber.  Check 1437 issued by Allen to Schmidt in the amount of $24,332.75 was never honored by the bank.

 

19. In August 2007, Whitaker completed an additional investigation into Allen’s timber buying activities and concluded Allen engaged in the business of buying timber without a DNR license during the first part of 2007.  The conclusion was based on each of the following transactions that Whitaker found in reviewing Allen’s records:

 

A. Contract #001462 dated and signed on February 8, 2007 for the purchase of standing timber from Lawrence Owens in the amount of $20,000.  Allen confirmed to Whitaker in a taped interview that this contract was entered in 2007 even though the last two numbers in the year appear to be “02”.

B. Contract #001470 dated and signed on March 8, 2007 for the purchase of standing timber from John Felton in the amount of $3,400.

C. Contract #001471 dated and signed on March 31, 2007 for the purchase of standing timber from Cyndi Rosenbaum in the amount of $5,000.

D. Contract #001472 dated and signed on April 9, 2007 for the purchase of standing timber from Edward Kogut in the amount of $500.

E. Contract #001473 dated and signed on April 9, 2007 for the purchase of standing timber from Kenny Yeck in the amount of $1,000.

 

20. Also in support of the “DNR’s Motion for Summary Judgment” is the “Affidavit of Samantha Howard” dated July 15, 2009. 

 

[VOLUME 12, PAGE 179]

 

21. Upon affirmation, Samantha Howard (“Howard”) states she is employed by Pike Lumber Company, Inc.  Her job title is Vice President of Administration, and her duties include accounting, finance, and human resources.

 

22. Howard is familiar with Allen and a transaction in October 2006 where he offered and sold to both Pike Lumber Company, Inc. and Campbell Road Sawmill the same parcel of logs and obtained payment from each.  On November 10, 2006, Howard participated in an agreement that was finalized between Campbell Road Sawmill and Pike Lumber Company, Inc. to resolve between them the indebtedness of Allen to each company.

 

23. In a letter dated November 20, 2006 and attached to the “Affidavit of Samantha Howard” as Exhibit E, Howard wrote to Campbell Road Sawmill regarding Allen’s sale of cut logs from the Schmidt farm.  The letter stated in substantive portions as follows:

 

I am writing this letter to document the agreement that Greg Fitzpatrick, representing Campbell Road, and myself, representing Pike Lumber Co., Inc., reached this morning at approximately 9 am.  The agreement is centered around the parcel of logs that A&S Logging offered and sold to Pike and then later offered and sold to Campbell Road.

Greg and I agreed that the logs from this deal, which are currently yarded at Connor Sawmill, are the property of Pike Lumber.  Pike will haul these logs from the Connor yard at Pike’s expense.  This will satisfy Pike’s claim against A&S Logging.

Greg is currently working with A&S Logging on another log purchase.  They will accept those logs as payment of A&S’s indebtedness to them.  In the event that those logs total more than A&S’s debt, Campbell Road will pay the balance due to A&S.

This concludes the agreement between Greg and me.

I would like to take this opportunity to thank Connor Sawmill for use of their yard and equipment and Campbell Road sawmill for their willingness to work out this unfortunate situation.  We look forward to continuing our business relationship with both firms.

 

24. Howard stated the approximate total value of the referenced logs was $27,000 when delivered to Akron, Indiana.

 

25. Under AOPA, summary judgment is governed by IC 4-21.5-3-23: 

 

   Sec. 23. (a) A party may, at any time after a matter is assigned to an administrative law judge, move for a summary judgment in the party's favor as to all or any part of the issues in a proceeding.  The motion must be supported with affidavits or other evidence permitted under this section and set forth specific facts showing that there is not a genuine issue in dispute.

 

[VOLUME 12, PAGE 180]

    (b) The motion must be served at least five (5) days before the time fixed for the hearing on the motion.  The adverse party may serve opposing affidavits before the day of hearing.  The administrative law judge may direct the parties to give oral argument on the motion.  The judgment sought shall be rendered immediately if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits and testimony, if any, show that a genuine issue as to any material fact does not exist and that the moving party is entitled to a judgment as a matter of law. A summary judgment may be rendered upon fewer than all the issues or claims (such as the issue of penalties alone) although there is a genuine issue as to damages or liability, as the case may be.  A summary judgment upon fewer than all the issues involved in a proceeding or with respect to fewer than all the claims or parties is not a final order.  The administrative law judge shall designate the issues or claims upon which the judge finds no genuine issue as to any material facts.  Summary judgment may not be granted as a matter of course because the opposing party fails to offer opposing affidavits or evidence, but the administrative law judge shall make a determination from the affidavits and testimony offered upon the matters placed in issue by the pleadings or the evidence.  If it appears from the affidavits of a party opposing the motion that the party cannot for reasons stated present by affidavit facts essential to justify the party’s opposition, the administrative law judge may make any order that is just.
    (c) If on motion under this section no order is rendered upon the whole case or for all the relief asked and a hearing is necessary, the administrative law judge at the hearing of the motion, by examining the pleadings and the evidence before it and by interrogating any person, shall if practicable ascertain:
        (1) what material facts exist without substantial controversy; and

        (2) what material facts are actually and in good faith controverted.
The administrative law judge shall then make an order specifying the facts that appear without substantial controversy, including the extent to which the amount of damages or other relief is not in controversy, and directing further proceedings in the action as are just. Upon the hearing of the action, the facts specified are established in the judge’s order under this subsection.
    (d) Supporting and opposing affidavits must:
        (1) be made on personal knowledge;
        (2) set forth facts that are admissible in evidence; and
        (3) show affirmatively that the affiant is competent to testify to the matters stated in the affidavit.
  

[VOLUME 12, PAGE 181]

 

  (e) The administrative law judge may permit affidavits to be supplemented or opposed by depositions, answers to interrogatories, further affidavits, or testimony of witnesses.
    (f) If a motion for summary judgment is made and supported under this section, an adverse party may not rely upon the mere allegations or denials made in the adverse party's pleadings as a response to the motion. The adverse party shall respond to the motion with affidavits or other evidence permitted under this section and set forth specific facts showing that there is a genuine issue in dispute. If the adverse party does not respond as required by this subsection, the administrative law judge may enter summary judgment against the adverse party.

 

26. As provided in 312 IAC 3-1-10, a Commission administrative law judge may apply the Trial Rules where not inconsistent with AOPA.  Reference may be made to Trial Rule 56 and to reported decisions based upon Trial Rule 56.  In those instances where Trial Rule 56 is inconsistent with IC 4-21.5-3-23, however, the latter would control. Kingdom Prairie Farm & Preserve v. Department of Natural Resources, 10 Caddnar 167 (2005).[1]

 

27. The purpose of summary judgment is to terminate litigation about which there is no genuine factual dispute and which may be determined as a matter of law.  Summary judgment should be granted if the designated evidentiary material shows that there is no genuine issue of material fact and the moving party is entitled to summary judgment as a matter of law. Orem v. Ivy Tech State College, 711 N.E.2d 864, 867 (Ind. Ct. App. 1999), rehearing denied.

 

28. A party moving for summary judgment has the burden of showing there is no genuine issue of material fact. Marsym Development Corp. v. Winchester Econ. Devel. Comm'n, 447 N.E.2d 1187 (Ind. App. 1983).  A party moving for summary judgment has the burden of proof with respect to summary judgment.  Miller, Trustee v. Miller & Morin Logging, 10 Caddnar 280, 282 (2006).

 

29. The Complaint alleges ten Counts against Allen in support of the DNR’s claims for relief.

 

30. Count I is based on IC § 25-36.5-1-4(c) that makes it unlawful for “a timber buyer to willfully make any false statement in connection with the application, bond or other information required to be given to the [DNR] or a timber grower.”  A genuine issue of material fact does not exist, and Count I is supported by evidence described in Finding 9, Finding 10, Finding 11, and Finding 15.  Allen made a false statement in his license application and in providing information concerning bonding for the requisite security for the protection of timber growers.

 

[VOLUME 12, PAGE 182]

 

31. Count II is based on IC § 25-36.5-1-4(d) that makes it unlawful for a timber buyer “to fail to honestly account to the timber grower or the [DNR] for timber purchased or cut if the buyer is under a duty to do so.”  A genuine issue of material fact does not exist, and Count II is supported by evidence described in Finding 9, Finding 10, Finding 11, and Finding 15.  Allen did not honestly account to the DNR regarding timber purchased.

 

32. Count III is based on IC § 25-36.5-1-3(d) that requires a timber buyer to post security with the DNR for the protection of timber growers according to the following formula:

(d) The security…shall be in the principal amount of two thousand dollars ($2,000) for an applicant who paid timber growers five thousand dollars ($5,000) or less for timber during the immediate preceding year, and an additional one hundred dollars ($100) for each additional one thousand dollars ($1,000) or fraction thereof paid to timber growers for timber purchased during the preceding year, but shall not be more than twenty thousand dollars ($20,000). In the case of an applicant not previously engaged in business as a timber buyer, the amount of such bond shall be based on the estimated dollar amount to be paid by such timber buyer to timber growers for timber purchased during the next succeeding year, as set forth in the application.

A genuine issue of material fact does not exist, and Count III is supported by evidence described in Finding 8, Finding 9, Finding 10, Finding 11, and Finding 15.  Allen did not post the requisite security as required by the Timber Buyer Act.

33. Count IV is based on IC § 25-36.5-1-4(e) that makes it unlawful and a violation for a timber buyer to commit a fraudulent act in connection with the purchase or cutting of timber.  A genuine issue of material fact does not exist, and Count IV is supported by evidence described in Finding 22, Finding 23, and Finding 24.  Allen in October 2006 sold the same parcel of logs to Pike Lumber Company, Inc. and to Campbell Road Sawmill, and Allen obtained payment from each.

34. Count V is also based on IC § 25-36.5-1-4(e) that makes it unlawful and a violation for a timber buyer to commit a fraudulent act in connection with the purchase or cutting of timber.  A genuine issue of material fact does not exist, and Count V is supported by evidence described in Finding 16, Finding 17, and Finding 18.  Allen agreed to pay Schmidt $32,433 for standing timber in Cass County, Indiana and provided Schmidt a check for $8,110.75 as a down payment and a second check for $24,332.75 for the balance.  Both checks were returned by Beacon Credit Union for insufficient funds.  Allen subsequently provided Schmidt with a cashier’s check for $8,110.75, but the check for $24,332.75 was never honored by the bank. 

35. Count VI through Count X are based on IC § 25-36.5-1-2(a) that provides a person must not “engage in the business of timber buying in the state of Indiana without a registration certificate issued by the” DNR.  A genuine issue of material fact does not exist, and Count VI through County X are supported by evidence described in Finding 12 and Finding 19.  Between February 8, 2007 and April 9, 2007, Allen did not possess a valid license as a timber buyer.  During this period, Allen entered a contract as a timber buyer with Lawrence Owens, a second contract with John Felton, a third contract with Cyndi Rosenbaum, a fourth contract with Edward Kogut, and a fifth contract with Kenny Yeck.

[VOLUME 12, PAGE 183]

 

36. As provided in IC § 25-36.5-1-16(2), the DNR director may revoke or suspend a license of a timber buyer who has violated any provision of the Timber Buyer Act following a proceeding under AOPA.  As the “ultimate authority” for the DNR under AOPA at 312 IAC § 14-1-2, IC § 14-10-2-3, and IC § 4-21.5-1-15, the Commission has conducted the requisite proceeding.

37. A genuine issue of material fact does not exist, and Allen’s current timber buyer registration certificate should be revoked.  Allen should be prohibited from engaging in activities for which a registration certificate is required, under IC § 25-36.5-1-2(a), unless the DNR issues to him a new registration certificate (or Allen receives a registration certificate from the Commission on administrative review or from a court on judicial review).[2]

38. Genuine issues of material fact exist as to whether a civil penalty or civil penalties should be issued against Allen under IC § 25-36.5-1-13.5 and 312 IAC § 14-4-3.  The evidence is now insufficient to evaluate mitigating or aggravating factors.  The evidence is also now insufficient to determine the extent to which the ten Counts considered in Finding 30 through Finding 35 are duplicative or redundant.  DNR v. Bruce Barnes, d/b/a Barnes Firewood & Logging, 8 Caddnar 152 (2000).

 

 

Findings of Fact and Conclusions of Law in Administrative Cause Number 09-008F

 

1. On December 17, 2008, the DNR’s Division of Forestry sent correspondence to Allen that stated in substantive part:

 

The Division of Forestry has reviewed the application requesting renewal of a Timber Buyer’s License in the name of A&S Logging & Sawmill and an Agent’s Registration Card to Cheyenne D. Allen.  Due to the Denial of the Timber Buyer’s License in the name of A&S Logging & Sawmill means that all Agents requesting renewal under said license are denied.  The request to renew a Timber Buyer’s License in the name of A&S Logging and an Agent’s Registration to Cheyenne D. Allen is denied under IC 25-36.5-1-16(2) and (3).  Denial of the Timber Buyer’s License in the name of A&S Logging & Sawmill and the Agent’s Registration Card to Cheyenne D. Allen is based on his violation of IC 25-36.5-1 and 312 IAC 12 as follows:

 

1. Failure to pay for timber cut in violation of IC 25-36.5-1-4, resulting in the filing of a Complaint by the timber grower S. Cameron Stell in the following administrative legal proceeding before the Natural Resources Commission of the State of Indiana…:  S. Cameron Stell v. Cheyenne Allen, d/b/a A&S Logging, Administrative Cause No. 08-192F.

 

2. On July 15, 2008, the Division of Forestry filed an administrative Complaint to Revoke Timber Buyer’s License and to assess Civil Penalties against Cheyenne Allen d/b/a A&S Logging & Sawmill with the NRC under Cause No. 08-048F.  The Complaint alleged multiple violations of [IC 25-36.5] including: IC 25-36.5-1-4(c) for false statement on renewal application; IC 25-36.5-1-4(d) for failure to honestly account; IC 25-36.5-1-4(d) for failure to maintain sufficient bond; IC 25-36.5-1-4(e) for fraudulent acts against sawmills and a timber grower; and IC 25-36.5-1-10 buying timber without a license.  The Division of Forestry also requested imposition of applicable civil penalties in the amount of Fifty-Five Thousand Dollars ($55,000.00).

 

[VOLUME 12, PAGE 184]

 

Under IC 4-21.5-3-5 and IC 4-21.5-3-7, a person who is aggrieved or adversely affected by this denial order has the right to request administrative review.  In order to qualify for review, a person must petition for review in a writing that states facts demonstrating that the person requesting review is:

            (A) a person to whom the order is specifically directed;

            (B) aggrieved or adversely affected by the order; or

            (C) entitled to review under any law.

 

In order to be timely, a petition for administrative review of this denial order must be filed within fifteen days after this notice is served, with three additional days added if service of this denial order is by United States mail, or the denial will become final.  Any petition for review of this denial order must be filed [with the Division of Hearings of the Natural Resources Commission].

 

We will also be refunding the fee of $165.00 you submitted for the renewal of the Timber Buyer’s License and all applicable Agent’s Cards.

 

2. On December 31, 2008, Allen filed a timely “Request for Administrative Review Pursuant to I.C. 4-21.5-3-7” with the Commission.

 

3. The Commission is the DNR’s “ultimate authority” for administrative review under AOPA.  312 IAC § 14-1-2, IC § 14-10-2-3, and IC § 4-21.5-1-15.

 

4. AOPA governs an “agency action” by the DNR.  An agency action” includes the “whole or part of an order”.  IC § 4-21.5-1-4.  “Order” means an agency action of particular applicability that determines the legal rights, duties, privileges, immunities, or other legal interests of one (1) or more specific persons” and includes a “license”.  IC § 4-21.5-1-9.  A “license” means a franchise, permit, certification, approval, registration, charter, or similar form of authorization required by law.”  IC § 4-21.5-1-8.

 

5. AOPA applies to an “agency action” by the DNR in administration of the regulatory functions of the Timber Buyer Act and 312 IAC § 14.  The correspondence described in Finding 1[3] is an “order” and an “agency action” by the DNR. 

 

6. The “Request for Administrative Review Pursuant to I.C. 4-21.5-3-7” initiated this proceeding.  The Parties are Allen and the DNR.  The Commission has jurisdiction over the persons of the Parties and over the subject matter for Administrative Cause Number 09-008F.

 

7. Stephen Lucas was appointed as the Commission’s administrative law judge under AOPA and 312 IAC § 3-1.

 

8. The Parties and the administrative law judge participated in a telephone conference on January 7, 2009.  During the conference, the Parties agreed to present oral argument on January 27, 2009, with the primary function of oral argument being to consider the consideration under AOPA of stays and license renewals.  If either the Timber Buyer Act or 312 IAC § 3-1 provided insight or clarification, they might also be considered.  In addition, any reference to a Caddnar decision would be considered.

 

9. The oral argument anticipated by Finding 8 was conducted as scheduled on January 27, 2009.  The administrative law judge indicated he would prepare findings of fact[4] and conclusions of law with a nonfinal order that would be ripe for the parties to seek relief from the Commission’s Administrative Orders and Procedures Act Committee at its next meeting.  The Parties were provided until February 4, 2009 to supplement their oral arguments with briefs.  The Parties each availed themselves of the opportunity and filed timely briefs through the “Claimant’s Citation of Authority and Argument” and through the “Respondent DNR’s Legal Authorities”.  The Commission’s AOPA Committee scheduled consideration of oral argument for April 7, 2009, but the argument was deferred.

 

10. The proceeding is again ripe to enter findings of fact and conclusions of law with a final order.

 

[VOLUME 12, PAGE 185]

 

11. AOPA provides at IC § 4-21.5-3-14(c), in pertinent part, that “[a]t each stage of the proceeding, the agency or other person requesting that an agency take action…has the burden of persuasion and the burden of going forward with the proof of the request….”  The burden of persuasion and the burden of going forward are sometimes collectively referred to as the “burden of proof”.

 

12. Where the DNR issues an order pertaining to a new license, the burden of proof is upon the person seeking to set aside or modify the order.  DNR v. United Refuse Co., Inc., 615 N.E.2d 100 (Ind. 1993) and Ind. DNR and NRC v. Krantz Bros. Const., 581 N.E.2d 935 (Ind. App. 1991).

 

13. For a license revocation, notice of violation, civil penalty, or similar sanction, the burden of proof is on the DNR.  Peabody Coal Co. v. Ralston, 578 N.E.2d 751 (Ind. App. 1991) and Department of Natural Resources v. Molden, 11 Caddnar 1 (2007).

 

14. In Department of Natural Resources vs. Cheyenne Allen, d/b/a Logging & Sawmill, Administrative Cause No. 08-048F, the DNR had the burden of proof.

 

15. The DNR order described in Finding 1 sought to be self-executing.  Allen was immediately denied renewal of his timber buyer license and agent cards, not based upon a factual disposition, but rather upon averments in the correspondence.  In effect, the order would have removed the burden of proof from the DNR and placed the burden on Allen.

 

16. In 1923, the Indiana State Board of Embalmers requested an opinion from the Attorney General as to what “justifies refusal by the State Board” to grant the renewal of a license.  The Attorney General responded in pertinent part:

 

…[T]he facts in each case coming before the board, shown by an applicant for renewal of his license must be determined by the board….

 

[If allegations of wrongful conduct against a license holder are] filed with the board it becomes the duty of the board to notify such applicant in writing of such charges or belief, and after a hearing the board may revoke such a license.

 

…[T]he board may legally refuse to grant a renewal of a license after a hearing on the same grounds requiring it to revoke a license….

 

1923-24 Op. Ind. Att. General 213.

 

17. The Uniform Law Commissioners’ Model State Administrative Procedure Act (the “Model Act”) states that, if a license applicant makes timely and sufficient application for the renewal of a license, or for a new license with reference to an activity of a continuing nature, the existing license does not expire until the application is denied or finally determined by the agency.  If an application for renewal is denied or the terms of the new license limited, the existing license does not expire until the last day for seeking review of the agency order or a later date fixed by the court on judicial review.  2 Am. Jur. 2d §267 (2004). 

 

18. In support of the order described in Finding 1, the DNR cited two 1986 decisions from Caddnar.  The DNR urged a timber buyer does not have “an unqualified right to have a license granted under IC 25-36.5”, and the Commission may deny the renewal of a timber buyer license and agent cards associated with the license.  These decisions are Lowell Ransom v. DNR, 4 Caddnar 1 (1986) and Jerry L. Kline v. DNR, 4 Caddnar 26 (1986).

 

19. The Lowell Ransom decision and the Jerry Kline decision are companion cases.  In both instances, the Commission found in May 1986 that the renewal of timber buyer licenses could be denied, where civil judgments had been rendered by the Warrick Circuit Court for violations of the Timber Buyer Act, until the respective judgments were satisfied.  The Commission findings were based upon evidence of the judgments admitted into the record and not upon unproven averments in DNR correspondence.  In Lowell Ransom and in Jerry Kline, the DNR provided evidence and carried its burden of proof for establishing the two timber buyers were “in default to the people of the State of Indiana for moneys due” under the Timber Buyer Act.  IC § 25-36.5-1-11.

 

20. Lowell Ransom and Jerry Kline were consistent with the Attorney General’s reasoning described in Finding 16.  License renewals were denied by the Commission after making findings based upon evidence.  In Lowell Ransom and Jerry Kline, the DNR satisfied the same grounds as would have been required for a license revocation.  Lowell Ransom and Jerry Kline do not, however, support the application of a self-executing order as set forth in Finding 1.

 

[VOLUME 12, PAGE 186]

 

21. Lowell Ransom and Jerry Kline must be distinguished from this proceeding in another important way.  These 1986 Caddnar decisions were governed by IC 4-22-1 (sometimes referred to as the “Administrative Adjudication Act” or “AAA”).  The AAA was repealed effective July 1, 1987 and replaced by AOPA.

 

22. AOPA was the product of the Indiana General Assembly’s Administrative Adjudication Law Recodification and Revision Commission (the “Administrative Adjudication Commission”).  The Administrative Adjudication Commission held eleven official sessions and periodically convened subcommittees to address specific issues.  Oral testimony was received from at least 39 witnesses.  The Administrative Adjudication Commission reviewed the Model Act, and the Model Act became the foundation for elements of AOPA.  An illustration is the concept for and the definition of “agency action” referenced in Finding 4.  The Administrative Adjudication Commission also reviewed the existing precedents for the AAA and for the implementation of state administrative law, generally.  K. Givens Lucas, Administrative Adjudication—Revised and Recodified, 20 Ind. L. Rev. 1 (1987).

 

23. The AAA did not have specific language addressing the treatment of license renewals.  With language containing elements of the Model Act, but unique to AOPA, the Administrative Adjudication Commission adopted language to govern license renewals that is now codified as IC 4-21.5-3-5(g):

 

(g) If a timely and sufficient application has been made for renewal of a license with reference to any activity of a continuing nature and review is granted under [IC 4-21.5-3-7], the existing license does not expire until the agency has disposed of a proceeding under [IC 4-21.5-3] concerning the renewal, unless a statute other than this article provides otherwise.  This subsection does not preclude an agency from issuing, under IC 4-21.5-4, an emergency or other temporary order with respect to the license.

 

24. Allen made timely and sufficient application for renewal of his license as a timber buyer and for related agent cards.  The business of a timber buyer is an activity of a continuing nature, and the license is essential to the performance of the business.  No statute prohibits the implementation of IC § 4-21.5-3-5(g) to the Timber Buyer Act.

 

25. The Indiana General Assembly provided the DNR with a remedy for license revocation.  Under IC § 4-21.5-3-8, the DNR filed a complaint for license revocation against Allen that was considered in Administrative Cause Number 08-048F.  An AOPA proceeding was provided in which Allen was accorded the opportunities of due process, and upon summary judgment, facts not in material dispute where found to support the revocation of his timber buyer license.  This process is authorized by AOPA.  The Indiana General Assembly also authorized extraordinary relief under AOPA to address an emergency through the issuance of a temporary order.[5]  This relief is generally available to an agency, and it is specifically referenced in IC 4-21.5-3-5(g).  The correspondence identified in Finding 1 is not authorized by AOPA.

 

26. “If a license holder timely files a renewal application, an agency cannot use license expiration to implement license revocation. The agency must carry the burden of proof to demonstrate cause for revocation.” Brown and Zeller, et al. v. DNR, 9 Caddnar 136, footnote (2003) construing IC 4-21.5-3-5(g). 

 

27. DNR is not authorized by AOPA to deny the renewal of a timber buyer registration certificate, deprive a person of the continuing ability to engage in the business as a timber buyer without any factual finding of wrongdoing, and shift the burden of proof for a license revocation from the agency.  Although the language of IC § 4-21.5-3-5(g) provides legislative clarity, the 1923 Attorney General Opinion, the Model Act, and the Commission precedents in Lowell Ransom and Jerry Kline are also unsupportive of this mechanism for burden shifting.

 

28. The denial of license renewal referenced in Finding 1 should be vacated.  Any disposition of Allen’s timber buyer registration certificate must be addressed through the mechanisms for revocation and civil penalty, as initiated with Administrative Cause Number 08-048F, that are authorized by AOPA.  In addition, Administrative Cause Number 09-008F is mooted by the disposition of Administrative Cause Number 08-048F.