28 ELR 21438 | Environmental Law Reporter | copyright © 1998 | All rights reserved


United States v. Hallmark Construction Co.

No. 97 C 3682 (N.D. Ill. July 23, 1998)

The court holds that the Federal Water Pollution Control Act (FWPCA) does not authorize the U.S. Army Corps of Engineers to seek penalties against a construction company for allegedly filling an isolated wetland without a § 404 permit. The court first holds that the Corps has no statutory authority under the FWPCA to seek civil penalties for permitless discharges. Although the Corps and the U.S. Environmental Protection Agency (EPA) agreed that the Corps would be the lead enforcement agency with respect to permitless discharges, Congress did not delegate authority to the Corps to commence civil actions for permitless discharges. That authority was placed squarely in the hands of EPA, and only Congress may delegate enforcement authority to the Corps. Therefore, the court dismisses the government's complaint because the Corps circumvented the FWPCA by referring the case directly to the U.S. Attorney.

Counsel for Plaintiff
Chris Tracey, Ass't U.S. Attorney
U.S. Attorney's Office
Everett M. Dirksen Bldg.
219 S. Dearborn St., 5th Fl., Chicago IL 60604
(312) 353-5300

Counsel for Defendant
Johnine Brown
Brown Environmental Group
35 E. Wacker Dr., Ste. 1356, Chicago IL 60601
(312) 236-1450

[28 ELR 21438]

Conlon, J.

Memorandum Opinion and Order

The United States of America sues Hallmark Construction Company ("Hallmark") for allegedly filling a five-acre isolated wetland ("Area B") without obtaining a permit under Section 404 of the Clean Water Act, 33 U.S.C. § 1344. The government seeks restoration of Area B and/or mitigation to address the loss of wetland area. Hallmark argues there is no basis for federal jurisdiction over Area B, the United States is not a proper plaintiff, and the complaint is barred by the statute of limitations. Hallmark moves for summary judgment pursuant to Fed.R.Civ.P. 56.

Background

The following facts are undisputed unless otherwise noted. Hallmark is an Illinois corporation in the business of developing property. [28 ELR 21439] Def. 12(M) P2. In 1988, Hallmark purchased the former Swift Research Farm in Frankfort, Illinois and began developing the Heritage Knolls subdivision. Id. P26.

Area B was a natural topographical depression in the middle of the farm. Id. PP2, 11. Hallmark began development in Area B until 1989. Id. P27. In 1990 — after development began — Hallmark's civil engineer recommended that Hallmark hire Planning Resources, Inc. to inspect Heritage Knolls for the presence of wetlands. Id. P28. Although other areas of the farm had standing water during the inspection, Area B was neither saturated nor inundated. Id. P32. Nonetheless, Planning Resources concluded Area B was a "seasonally flooded farmed wetland" based on the presence of a flotsam ring (or drift lines), hydrophytic vegetation, and hydric soils. Pl. 12(N) PP34, 35. A flotsam ring is created by dead or drowned vegetative debris deposited in a circular pattern where temporary inundation has occurred and receded.

In August 1990, Hallmark submitted Planning Resources' report to the United States Army Corps of Engineers ("the Corps"). Def. 12(M) P29. The Corps requested that Hallmark fill out an "after-the-fact" permit application and provide a mitigation plan to address the loss of wetland area. Over the course of more than five years, the Corps repeatedly requested (and eventually demanded) that Hallmark provide an adequate mitigation plan. In April 1994, Hallmark retained SDI Consultants, Ltd. ("SDI") to write a proposal for a mitigation plan. Id. P53. SDI reviewed all available historical data about Area B and concluded that it had not been a farmed wetland after all. SDI concluded that development of Area B did not require mitigation because it was "prior converted cropland" lacking wetland hydrology. Id. P56.

The Corps asked the National Resources Conservation Service ("the Conservation Service") to determine whether wetlands previously existed on Heritage Knolls. The Conservation Service's wetland map, prepared in 1987 or 1988, designates approximately five acres of Area B as wetland. The Conservation Service makes wetland determinations based on examination of aerial photographs and other historical data. Def. 12(M) P61; Pl. 12(N) P61. The parties dispute whether aerial photographs from 1964, 1970, 1976 and 1980 and crop compliance photographs from 1980, 1982, 1984, 1986 and 1988 show evidence of significant or lengthy inundation of Area B. Id. P64.

After attempts to resolve the dispute proved unsuccessful, the Corps referred the matter to the United States Attorney; this suit was filed in May 1997.

Discussion

I. The Propriety of the United States as Plaintiff

Enforcement of the Clean Water Act is performed jointly by the Corps and the Environmental Protection Agency ("EPA"). The EPA may issue compliance orders to violators of the Act, it may assess an administrative penalty, and it may commence an enforcement action in federal court. See 33 U.S.C. § 1319(a), (b), (g). Specifically, section 1319(b) provides that "[t]he Administrator [of the EPA] is authorized to commence a civil action for appropriate relief . . . for any violation for which heis authorized to issue a compliance order under subsection (a) of this section." 33 U.S.C. § 1319(b).

The 1977 amendments to the Clean Water Act granted the Corps the power to bring civil actions for violations of issued permits. 33 U.S.C. § 1344(s). The Conference Report stated that "[n]ew subsection (s) of section 404 provides similar enforcement authority with respect to permits issued by the Secretary [of the Army] under section 404 as is provided to the Administrator [of the EPA] in section 309 of the Act with respect to permits issued under section 402 and 404 of the Act." H.R. Conf. Rep. No. 830, 95th Cong., 1st Sess. 103 (1977), U.S.C.C.A.N. 1977, p. 4478 (emphasis added). Neither the Clean Water Act nor its legislative history make any mention of the Corps' purported authority to commence a civil action for permitless discharges.

The Corps promulgated revised regulations to implement 33 U.S.C. § 1344. Section 326 of these regulations describes enforcement procedures applicable to activities performed both with and without an issued permit. See 33 C.F.R. §§ 326.3 and 326.4. Section 326.5 instructs the District Engineer of the Army Corps of Engineers to "recommend civil or criminal actions to obtain penalties for violations [or] compliance with the orders and directives he has issued pursuant to sections 326.3 and 326.4 . . . ." 33 C.F.R. § 326.5(a). Section 326.5 provides that with the limited exceptions outlined in section 326.5(d), the District Engineers are authorized to refer cases directly to the United States Attorney. 33 C.F.R. § 326.5(c). The regulations make clear the Corps would investigate cases involving permitless discharges, and would refer those cases to the United States Attorney for enforcement. In 1989, the Corps entered into a "memorandum of agreement" with the EPA, in which the two agencies effectively reallocated the enforcement authority delegated by Congress. The Corps and the EPA agreed that the Corps would be the lead enforcement agency with respect to permitless discharges.

Hallmark acknowledges that the Corps has authority to issue and enforce permits and has the authority to bring a civil action for violations of issued permits. But Hallmark argues the United States Attorney cannot bring this suit on behalf of the Corps because the Corps has no statutory authority under the Clean Water Act to seek civil penalties for permitless discharges. Hallmark contends the authority to investigate and enforce matters involving permitless discharges lies squarely with the EPA, citing 33 U.S.C. § 1319(b). Hallmark argues the agencies' 1989 agreement "allows [the] EPA to evade its statutory responsibility and [allows] the Corps to assume enforcement authority which Congress did not delegate to it." Mem. at 18-19. Hallmark further argues the United States Attorney cannot accept a referral from the Corps because to do so would circumvent the express remedies set out by Congress in the Clean Water Act.

Judicial review of an agency's interpretation of a statute under its administration is limited to a two-step inquiry. First, the court must determine whether Congress' intent is clear from the statute; second, if Congress' intent is unclear, the court must then determine whether the agency's interpretation is reasonable. Massachusetts v. U.S. Dep't of Transp., 93 F.3d 890 [26 ELR 21652] (D.C. Cir. 1996), citing Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S. Ct. 2778, 81 L. Ed. 2d 694 [14 ELR 20507] (1984) and quoting Nuclear Info. Resource Serv. v. NRC, 969 F.2d 1169, 1773 [22 ELR 21252] (D.C. Cir. 1992) (en banc). Because Congress' intent is clear from the face of the Clean Water Act, the court need not conduct the second step of this inquiry.

As already discussed, section 1319(b) provides that "[t]he Administrator [of the EPA] is authorized to commence a civil action for appropriate relief . . . for any violation for which he is authorized to issue a compliance order under subsection (a) of this section." 33 U.S.C. § 1319(b). When Congress granted the Corps the power to bring a civil action for violations of issued permits, its language was clear and unambiguous: "The Secretary is authorized to commence a civil action for appropriate relief . . . for any violation for which he is authorized to issue a compliance order under paragraph (1) of this subsection." 33 U.S.C. § 1344(s)(3). Paragraph (1), in turn, states as follows:

Whenever on the basis of any information available to him the Secretary finds that any person is in violation of any condition or limitation set forth in a permit issued by the Secretary under this section, the Secretary shall issue an order requiring such person to comply with such condition or limitation, or the Secretary shall bring a civil action in accordance with paragraph (3) of this subsection.

33 U.S.C. § 1344(s)(1) (emphasis added). This language will not bear multiple interpretations; Congress expressed its intent clearly and unambiguously. Congress did not delegate authority to the Corps to commence civil actions for permitless discharges. That authority was placed squarely in the hands of the EPA. No matter how expedient it may seem for agencies to re-allocate among themselves the enforcement authority delegated by Congress, the agencies lack authority to do so. Only Congress may delegate enforcement authority to the Corps.

The opposite conclusion was reached by the only other court to address this issue. See United States v. Kelcourse, 721 F. Supp. 1472 [20 ELR 20208] (D. Mass. 1989) (Young, J.). Without citing any authority, Kelcourse concluded the EPA could freely re-delegate its authority to the Corps. Judge Young reasoned as follows:

Such delegation does not run afoul of any Congressional policy underlying the relevant statutes; indeed, it seems to be in line with the purpose and objective of the [Clean Water Act] to "restore and maintain the chemical, physical, and biological integrity of the Nation's waters." 33 U.S.C. § 1251(a), and Congress' explicit intent that "to the maximum extent possible the procedures utilized for implementing [28 ELR 21440] this chapter shall encourage the drastic minimization of paperwork and interagency decision procedures, and the best use of available [personnel] and funds, so as to prevent needless duplication and unnecessary delays at all levels of government." 33 U.S.C. § 1251(f).

721 F. Supp. at 1478. Respectfully, this court does not agree that Congress' general encouragement to reduce costs and increase efficiency through reduced paperwork and increased reliance on interagency decision procedures constitutes authorization to re-allocate the statute's express delegation of enforcement authority. Section 1251(f) simply will not bear that reading. Matters involving permitless discharges must be referred to the EPA for civil enforcement. The Corps may not circumvent the Act by referring these matters directly to the United States Attorney, and the United States Attorney cannot circumvent the Act by pursuing a referral from the Corps. The Corps admits it referred this case directly to the United States Attorney. Pl. 12(N) P67. Accordingly, the complaint must be dismissed. The court need not address the remaining arguments in Hallmark's motion.

Conclusion

Defendant's motion for summary judgment is granted in part. Because the United States is not a proper plaintiff, the complaint is dismissed without prejudice.


28 ELR 21438 | Environmental Law Reporter | copyright © 1998 | All rights reserved