In re Adams
The United States Environmental Protection Agency, Region l0 (Region), appeals an October 19, 2006 Initial Decision issued by Administrative Law Judge William B. Moran (ALJ) dismissing an administrative enforcement action the Region initiated against J. Phillip Adams (Adams) for alleged violations of the Clean Water Act (CWA or Act). In the proceedings below, the Region alleged that Adams violated sections 301(a) and 404 of the Act, 33 U.S.C. §§l3l1(a) and 1344, in the fall of 2001, when he did not obtain a permit issued pursuant to section 404 before using heavy equipment to place dredged and/or fill material into wetlands while constructing a road crossing over Potter Creek in Bannock County, Idaho. In his Initial Decision, the ALJ found that the exemption set forth in CWA section 404(f)(l)(E), 33 U.S.C. §1344(f)(1)(E), which Adams invoked for the first time six business days prior to the evidentiary hearing in the case, was a jurisdictional defense that applied to the road crossing project and exempted the activity from the section 404 permit requirement.
The Region contends that the ALJ's finding of no liability was in error and challenges the finding on both procedural and substantive grounds. The Region argues that Adams did not timely raise the farm road exemption, that the ALJ impermissibly permitted Adams to raise the issue at hearing, and that the Region was materially prejudiced by the late introduction of the issue. The Region also asserts that the ALJ erroneously shifted the burden of proof associated with the exemption from Adams to the Region. The Region further challenges the ALJ's findings that Adams constructed only a road crossing and not a dam as well, and that Adams adequately implemented the best management practices that the applicable regulations require. Finally, the Region contends that the ALJ failed to fully consider the implications of section 404(f) and to make a finding regarding the "recapture" provision in section 404(f)(2).
Held: The Board reverses the ALJ's decision and remands the matter to the ALJ for further proceedings consistent with the Board's ruling. Contrary to the ALJ's decision, the farm road exemption found in CWA section 404(f) is not a jurisdictional defense. Rather, the exemption is an affirmative defense to an allegation of a section 404 violation. As an affirmative defense, the burden of proving the application of the farm road exemption lies with its proponent. To establish the defense under the exemption, a proponent must establish that: (l) the project is the construction or maintenance of a farm road; (2) the project is in compliance with each of the fifteen baseline best management practices in 33 C.F.R. §323.4a(6); (3) the discharge of dredged or fill material resulting from the project does not contain a toxic pollutant listed in CWA section 307; and (4) the purpose of the activity in question is not to convert an area of water of the United States into a use to which it was not previously subject such that the flow or circulation of affected waters may be impaired or the reach of such waters reduced. The Board finds that it is unclear from the record whether the ALJ properly applied the burden of proof and whether Adams satisfied that burden.
With respect to the timeliness of Adams' assertion of the exemption, an ALJ has broad discretion when conducting an administrative proceeding and may deem an untimely-raised defense as waived after considering the reasons for the delay and whether inclusion of the defense will cause prejudice to the parties. Because the ALJ erroneously construed the farm road exemption as a jurisdictional claim that can be raised at anytime, rather than as an affirmative defense, he did not evaluate whether Adams' late assertion of the farm road exemption prejudiced the Region's ability to prepare a rebuttal to the defense. The Board finds that the ALJ erred when he failed to consider the Region's claims of prejudice. The Board further finds that Adams' late assertion of the farm road exemption did, in fact prejudice the Region's ability to prepare its rebuttal to the defense, and that the ALJ's decision to allow the assertion of the defense without delaying the hearing to allow the Region the time necessary to elicit and adduce the pertinent facts to support its rebuttal was an abuse of discretion. Accordingly, the Board remands the case to the ALJ for further proceedings consistent with this opinion.