It is well-established that the state has preempted local regulation of certain activities, such as the regulation of hazardous waste facilities (RSA 147-A). This case establishes that the state’s regulation of air emissions under RSA 125-C preempts local regulation through zoning ordinances.
Since 1983, Bio Energy, LLC has operated a wood co-generation facility in Hopkinton involving the combustion of woodchips to generate steam and electricity sold to PSNH and other utility companies. Because the facility is located in the town’s industrial M-1 zone, which does not expressly allow the use of wood co-generation, Bio Energy obtained a variance from the town’s zoning board of adjustment and site plan approval from the planning board in order to construct and operate the facility. The approvals were conditioned upon receipt of all necessary state and federal environmental permits but did not contain any limitations of the source or nature of fuel to be used. The facility’s emissions are regulated by the U.S. Environmental Protection Agency (EPA) under the Clean Air Act and by New Hampshire Department of Environmental Services (DES) under RSA 125-C and 125-I. In the 1990s, DES established the Title V permitting program, which places limitations on Bio Energy’s facility, including on its fuel use and fuel mixtures.
Bio Energy has continually adjusted its fuel source to respond to changing environmental regulations and economic conditions, increasingly using construction and demolition (C&D) woodchips because it was a lower cost source of fuel. C&D woodchips are woodchip fuel prepared from wood that has been separated from other material following construction and demolition activities and then cleaned.
In December 2001, Bio Energy applied to the town for a building permit to mechanize the delivery of C&D woodchips from the storage area to the power plant, informing the town that the work was proposed to allow the use of woodchips derived from C&D wood. The building permit was issued by the board of selectmen on December 10, 2001. In January 2002, the town administrator sent a letter on behalf of the selectmen to Bio Energy supporting its plan to use C&D woodchips and requesting a meeting to discuss whether Bio Energy could accept the town’s C&D material. In July 2002, Bio Energy applied to DES for a modified Title V permit to allow it to burn up to 100 percent woodchips derived from C&D debris and for a permit to use C&D woodchips in its fuel mix. In July 2003, after a review period that included public notice of the proposed revised permit and a public hearing in the town, DES issued a Title V permit allowing Bio Energy to burn C&D woodchips.
However, in September 2003, several residents of Hopkinton filed a petition with the selectmen requesting the issuance of a cease and desist order to prevent Bio Energy from using C&D woodchips. The cease and desist order was issued in November 2003 following a public hearing. The order stated that, because the burning of C&D debris is not permitted in any zone and was not part of the original variance, the change in fuel constituted a change in use that required a new approval.
In December 2003, Bio Energy filed a petition with the superior court for declaratory and injunctive relief and damages against the town. In response to a series of motions by both parties, the superior court issued several orders, which were appealed to the New Hampshire Supreme Court. Although DES may have revoked one of Bio Energy’s operating permits and the legislature had established a moratorium on the incineration of C&D waste until July 1, 2006, the Supreme Court decided the case anyway because it concluded the case involves a “pressing public interest.”
The first issue on appeal was whether the superior court erred in ruling that the town was preempted by state air emissions statutes (RSA 125-C) from exercising control over local land use issues, and specifically that the town was preempted from issuing a cease and desist order to prevent Bio Energy from operating its facility in a manner contrary to the variance issued by the town. Implied preemption may be found when the comprehensiveness and detail of the state statutory scheme evinces legislative intent to supersede local regulation. To determine whether a statutory scheme is comprehensive, the Court looks to: whether the expressed purpose of the statute and the grant of regulatory authority evinces an intent to regulate the entire field in question; the extent of the application process necessary to obtain a permit; whether the statute contemplates public hearings on any proposal affecting a municipality; the level of detail and technical specifics of the state’s regulations; and whether the agency has the authority to investigate and take action in response to regulatory violations.
The Court reviewed the purpose of RSA 125-C, the extent of the permitting process, the breadth of the comprehensive regulatory and abatement program established by the statute, the coordination with municipalities involved, the detail and extent of the technical specifics, and the detailed criteria for enforcement and compliance.
Generally, a detailed and comprehensive [s]tate statutory scheme governing a particular field demonstrates legislative intent to preempt that field by placing exclusive control in the [s]tate’s hands….Such exhaustive treatment of the field ordinarily manifests legislative intent to occupy it….We hold that RSA chapter 125-C constitutes a comprehensive and detailed regulatory scheme preempting the field of air pollution control in this [s]tate.It is well settled that towns cannot regulate a field that has been preempted by the State. Even when a local ordinance does not expressly conflict with a state statute, it will be preempted when it frustrates the state’s purpose. RSA 125-C does not contain any authorization for local control over the creation of air policy throughout the state; therefore, the Court concluded that the superior court was correct when it said that “to require Bio Energy to apply for a new variance in order to burn C&D debris, when Bio Energy has already been granted a Title V [permit] from [DES] to burn such debris, would amount to granting the town an impermissible veto power over the…Title V program and frustrates its purpose.”
As a result, the Court held that the town had no authority to issue the cease and desist order. However, “any local regulations relating to such matters as traffic and roads, landscaping and building specifications, snow, garbage, and sewage removal, signs, and other related subjects, to which any industrial facility would be subjected and which are administered in good faith and without exclusionary effect, may validly be applied to a facility approved by the [s]tate.”
The town also asserted that Bio Energy’s use of C&D woodchips constituted a change in use from that permitted by the 1983 variance. An extension and enlargement of a nonconforming use that substantially changes the nature and purpose of that use is impermissible. In deciding whether an activity is within the scope of an established or acquired nonconforming use, consideration may be given to several factors including, among others, (1) to what extent the use reflects the nature and purpose of the prevailing nonconforming use, (2) whether it is merely a different manner of utilizing the same use or constitutes a use different in character, nature, and kind, and (3) whether the use has a substantially different effect on the neighborhood.
The town argued that Bio Energy represented to the town that the facility would use “pure wood chips,” and that the subsequent change “to a more dangerous, toxic substance departs from the nature and purpose of the prevailing nonconforming use and represents an illegal expansion of [the] operation.” The Court rejected this argument, noting that “pure woodchips” were not mentioned in the town’s minutes, and neither the ZBA nor the planning board approvals limited the source or nature of the woodchips to be used. Since Bio Energy had been using a fuel mix for almost 20 years containing waste wood from a wide range of sources, including C&D wood, the Court concluded that the increased use of C&D woodchips was “merely a different manner of utilizing the same use” and did not substantially change the nature and purpose of the original use permitted by the 1983 variance.
The Court also ruled on three issues raised by Bio Energy. First, it held that although the town improperly issued the cease and desist order, it did so at a time when there was no controlling legal precedent prohibiting the town from banning the burning of C&D debris; therefore, the town’s actions were not “arbitrary and unreasonable” and did not amount to an unconstitutional taking of Bio Energy’s vested property rights under Part I, Article 12 of the New Hampshire Constitution.
Second, the Court remanded to the superior court the issue of whether Bio Energy should be awarded attorney’s fees and costs under RSA 676:17-a, VII. When a cease and desist order is dismissed, the superior court “shall order the defendant’s costs and reasonable attorneys fees to be paid by the municipality” if “it appears to the court that the order was frivolous, was commenced in bad faith, or was not based upon information and belief formed after reasonable inquiry or was not well-grounded in fact.” The superior court had dismissed this request but the Court reversed that dismissal in light of the fact that Bio Energy had used C&D fuel for the better part of 20 years, and that the town had actively sought to enter into an agreement for the burning of its own C&D waste at the facility.
Finally, Bio Energy requested a ruling that the doctrine of preemption bars the town from regulating its proposed facility modification, but the Court affirmed the superior court’s decision that Bio Energy’s request was not yet ripe for review because Bio Energy had not submitted its plan for site plan review to the town. “The [t]own has not made any attempt to regulate any portion of Bio Energy’s proposed…plan, nor has Bio Energy demonstrated that any permit required by the [t]own would frustrate the [s]tate’s authority to regulate solid waste or air emissions.”