## Facts

- Tunnell Companies, L.P. sought two potable-well permits from the Delaware Department of Natural Resources and Environmental Control (DNREC) to supply water for facilities at Baywood Greens in Sussex County.
- Public Water Supply Company, Inc. (PWSC) was a regulated public water utility serving the area and asserted that Baywood Greens fell within PWSC’s certificated service territory.
- PWSC opposed DNREC’s issuance of the permits, arguing that Tunnell’s proposed self-supply would improperly intrude on PWSC’s certificated right to provide public water service in the area.
- A DNREC hearing officer considered whether Tunnell’s proposed water system would constitute a regulated “water utility” under the governing statutory scheme and concluded it would not.
- The hearing officer recommended issuing the potable-well permits to Tunnell.
- The DNREC Secretary, Nicholas A. DiPasquale, adopted the hearing officer’s recommendation and issued the permits.
- PWSC appealed within the administrative process to the Environmental Appeals Board (EAB), which upheld the Secretary’s action.
- PWSC then appealed to the Delaware Superior Court. The Superior Court treated the EAB’s interpretation of the relevant statute as entitled to a “clearly erroneous” form of deference and affirmed.
- PWSC appealed to the Delaware Supreme Court, challenging the Superior Court’s use of a deferential standard when reviewing the agency’s statutory interpretation.

## Issues

1. Did the Superior Court apply the wrong standard of review by deferring to the EAB’s interpretation of the governing statute under a “clearly erroneous” approach, rather than independently deciding the legal meaning of the statute?

## Decision

- The Delaware Supreme Court reversed the Superior Court’s judgment and remanded the case.
- The court held that questions of statutory interpretation are questions of law for the judiciary, and the Superior Court erred by using a “clearly erroneous” standard to review the agency’s legal interpretation.
- In addressing the standard of review, the court rejected the prior, overly deferential approach associated with earlier Delaware precedent (including the “Eastern Shore II” formulation) to the extent it treated agency statutory interpretation as reviewable only for clear error.
- The remand directed the lower court to apply the proper, non-deferential review to the agency’s statutory interpretation while continuing to apply deferential review to supported factual findings.
- The Supreme Court’s decision focused on correcting the judicial review framework and did not finally resolve the underlying permit/territory dispute on the merits in the posture presented.

## Legal Principles

- Statutory interpretation is a question of law that courts decide independently on review of administrative action.
- A reviewing court may defer to an agency’s supported findings of fact, but it must not treat the agency’s view of statutory meaning as controlling.
- When reviewing administrative decisions, courts must separate factual determinations (reviewed with deference when supported by the record) from legal determinations (reviewed independently).
- An agency’s legal interpretation may be considered for whatever persuasive value it has, but the court remains responsible for determining the statute’s meaning.

## Conclusion

Public Water Supply Co., Inc. v. DiPasquale holds that Delaware courts must independently review an administrative agency’s statutory interpretation and may not affirm simply because the agency’s legal reading is not “clearly erroneous.” Because the Superior Court applied an overly deferential standard to the EAB’s interpretation, the Delaware Supreme Court reversed and remanded for review under the correct legal standard.


Public Water Supply Co., Inc. v. DiPasquale, 735 A.2d 378 (Del. 1999)