Natural Resources & Environmental Protection Cabinet v. Pinnacle Coal Corp.

STEPHENSON, Justice. The trial court entered a summary judgment upholding an assessment against Pinnacle Coal Corporation for excessive air pollution. The Court of Appeals vacated the judgment of the trial court. We granted discretionary review and affirm the decision of the Court of Appeals. Natural Resources assessed a civil penalty against Pinnacle for air pollution. The background is not essential to this appeal, as the question involved on appeal is whether effective service of the final report of the hearing officer upon counsel for Pinnacle constituted service on Pinnacle. The section of the statute governing hearings and notice of decisions by the Natural Resources and Environmental Protection Cabinet is KRS 224.083(1), which provides: ... The hearing officer shall serve a copy of his report and recommended order upon all parties of record to the proceeding, and they shall be granted the right to file within seven (7) days of receipt exceptions thereto. The secretary shall consider the report and recommended order and pass upon the case. The decision shall be served by mail upon all parties and shall be a final order of the cabinet. Natural Resources served the report on counsel for Pinnacle, contending that parties, as used in the statute, also means the attorney for the party and that service of notice in these matters is governed by 400 K.A.R. 1:030, Section 3(2), which states: Whenever under these rules service is required or permitted to be made upon a party represented by an attorney, the service shall be made upon the attorney unless service upon the party is ordered by the hearing officer. Thus, the question presented is whether the regulation adopted by Natural Resources is in conflict with the statute. We are of the opinion that it is in conflict and that the service here upon the [439] attorney instead of the party is a nullity. This is an administrative proceeding, and procedural matters, including notice, are prescribed by the legislature. Here, the statute plainly states that service should be on all parties. The only meaning to be ascribed to this statute is that the parties shall be served and not the attorney for the parties. Administrative agencies are bound by the procedural dictates of the statutes and are not empowered to adopt regulations in conflict with plain statutory provisions. Natural Resources argues that we have heretofore held that service on the attorney complies with a statutory requirement of service on the parties. In support of this assertion, worker’s compensation cases are cited. The difficulty with this argument is that the procedural provisions of the statutes are different. In worker’s compensation matters, KRS 342.135, enacted in 1916, provides how notice is to be served: Any notice required to be given under this chapter shall be considered properly given and served when deposited in the mail in a registered letter or package properly stamped and addressed to the person to whom notice is to be given at his last known address and in time to reach him in due time to act thereon. Notice may also be given and served like notices in civil actions.... Here, the requirement of the statute on serving notice is clear. The regulation is in conflict with the statute, and service on counsel here violates the statute and is not effective service. Pinnacle did not receive effective notice of the decision of Natural Resources. The decision of the Court of Appeals is affirmed, and the judgment of the trial court is reversed. STEPHENS, C.J., and STEPHENSON, VANCE and WINTERSHEIMER, JJ., concur. LAMBERT, J., dissents and files a separate dissenting opinion in which GANT and LEIBSON, JJ., join.