The Director of the Department of Consumer and Regulatory Affairs (DCRA) suspended twenty three used car dealers and adopted a new rule for outdoor storage of motor vehicles (Rule 314) after several investigative inspections of used car dealerships revealed multiple regulatory violations such as lots containing junk vehicles with missing and dangerous auto parts, exposing metal parts and broken glass. A Notice of Proposed and Emergency Rulemaking was published, stating the Director of the DCRA would adopt the rule in final in not less than 30 days from the publication in the register. Rule 314 became a final rule 49 days later, and prohibited the outdoor storage of motor vehicles unless the person has twin business licenses to operate as both a dealer and to maintain a used car lot, and required that the lot must be located in a C-M or M zoning district, which are Industrial Districts under the zoning regulations.
Ten independent car dealers sued for injunctive relief and declatory judgment that Rule 314 was beyond DCRA’s authority to promulgate and arbitrarily singled out used car dealers operating under paid and valid licenses by restrictions on storage that would destroy their livelihood. The trial court dismissed the suit and upheld the regulation, because it made sure that businesses are conducted in a way that’s not harmful to the surrounding areas or to other people.
The car dealers appealed, arguing Rule 314 was invalid because the notice of proposed final rulemaking was combined with a notice wrongly adopting an emergency rule, and because one of the three statutory provisions it relied on as authority had been repealed. They also contested specific provisions of the regulations amounted to the exercise of zoning powers by a licensing agency beyond its authority, and singled out for regulations used car dealers unfairly blamed for problems of urban blight.
Although actions to enforce the existing laws had been taken against offending dealers before the rule was passed, the court found the issue to be moot because the permanent rule was adopted before the emergency rule was ever enforced, making it unnecessary to consider whether the claimed emergency was or was not genuine. The inclusion of a notice to adopt a Final Rule in an invalid emergency rule does not make it invalid as long as notice and fair opportunity is given. The citation to the repealed provision was also inconsequential because the notice also cited statute delegating authority to the director of the DCRA to establish reasonable conditions of licensure, and thus the other statutes cited were sufficient.
The court also held a rule incorporating a zoning description does not automatically make it a zoning regulation, as zoning is defined as the legislative division of a region subject to regulations. Rule 314 did not restrict commercial use or activity to particular zoning districts, but rather gave certain entities that store five or more motor vehicles the choice between storing them in a garage or relocating to a CM or M zoned district. Rule 314 did not violate any due process rights, because it was a reasonable restriction on dangerous and unhealthy conditions, and those car dealers operating in industrial districts are compatible with other uses allowed there by zoning laws. The court noted it was not judicially obligated to finely tune the regulation, but only to determine whether the classifications it embodied were rationally related to a legitimate government interest, and Rule 314 had a rational basis reasonably related to its purposes to protect the public welfare.
Capital Auto Sales, Inc. v. District of Columbia, 2010 WL 3033715 (D.C. Ct of App. 8/5/10)
The opinion can be accessed here.