Corps Confirms Policy Against 'Unnecessary' Development in Wetlands

In a decision¹ of national importance, the Army Corps of Engineers has denied two applications from a large land developer for dredging and filling more than 2,000 acres of mangrove swamps at Marco Island, Florida. The Corps has thus dramatically signalled its willingness to apply strictly its own recently developed policy of protecting the nation's wetlands from unnecessary destruction. Deltona Corporation, the developer, has been constructing the Marco Island residential community for more than ten years, and many lots in Big Key and Barfield Bay, the two proposed filling sites, have already been sold to members of the public. Despite Deltona's protests that to deny the permits at this stage of the project's construction would be to change the rules in the middle of the game, the Chief of Engineers, Lt. Gen. William C. Gribble, found that the proposed filling would constitute an unnecessary and unacceptable adverse impact on this aquatic resource. Gribble therefore determined that the applications must be denied in view of overriding national factors in the public interest, including the Corps' own wetlandspolicy and the statutory purposes of the Federal Water Pollution Control Act Amendments of 1972 (FWPCA). A third application to complete the filling of approximately 100 acres in Collier Bay was granted, however, because nearly all the mangrove swamps at this third site had already been altered by previous illegal filling.

Gen. Gribble's decision is all the more noteworthy when contrasted with the Corps's initial reluctance² to assume its expanded regulatory responsibilities under § 404 of the FWPCA,³ which essentially extended the agency's jurisdiction over dredge and fill activities from only those areas traditionally subject to the navigational servitude under § 10 of the Rivers and Harbors Act of 1899⁴ to all "waters of the United States." Only after being ordered by a federal court⁵ did the Corps issue Interim Final regulations⁶ implementing this expanded authority and stating the agency's wetlands policy, and even then only after protracted negotiations with the Environmental Protection Agency as to the proper shape of the program. The Corps' firm adherence to this enlightened policy less than a year later was thus a welcome surprise to the environmental groups that had been fighting to halt the Marco Island development for a number of years, and to other Corps watchers who were glad to see the agency return to the trail it began to blaze with its denial of fill permits solely on environmental grounds in the landmark case of Zabel v. Tabb.⁷

The Project and Initial Administrative Reaction

The Marco Island project, as originally conceived, was to be a self-sufficient community for a permanent population of 35,000 persons, largely retirees from northern states, built on a number of tidal islands and mangrove wetlands on the Gulf Coast of Florida near Naples. Development was begun in 1964, at a time when the Corps had not yet begun to exercise its jurisdiction under § 10 of the Rivers and Harbors Act over dredge and fill activities in wetlands areas. The application for filling the Marco River area, the first of five major areas of which the project was to consist, was routinely granted in that same year.

The application for filling the second area, Roberts Bay, was processed concurrently with the court proceedings in Zabel v. Tabb, in which the Fifth Circuit ultimately upheld the Corps' claim of authority under § 10 to regulate dredge and fill projects in wetlands because of the national importance of such areas to fish and wildlife resources. In view of this concurrence, the Corps expressly warned Deltona, in issuing the Roberts Bay permit, that its action did not indicate that permits for further development of Marco Island would necessarily be granted.

In September 1971, the Corps asserted jurisdiction pursuant to § 10 over dredge and fill operations then underway at the third development site, Collier Bay, for which no permit had been issued. All work at Collier. Bay was promptly stopped, and in March and April, 1973, Deltona applied for dredge and fill permits for Collier Bay and the two remaining areas, Barfield Bay and Big Key. In the meantime, however, Deltona continued to sell lots, many of which were underwater, to the public, until over 90 percent of the 5,700 lots in these three areas had been sold. The state of Florida issued all necessary permits for the dredge and fill operations after an exchange agreement was arranged whereby Deltona would transfer title to 1,626 acres of nearby mangroves to the state, despite continuing opposition from the state fish and game commission.

Additional negative reactions came from the United States Fish and Wildlife Service and National Marine Fisheries Service, which likewise recommended denial of all three applications based on fish and wildlife losses. The Environmental Protection Agency was also deeply concerned about adverse effects on water quality, shellfish beds, and fishery, wildlife and recreational areas, and went so far as to refer⁸ the matter to [6 ELR 10118] the Council on Environmental Quality after reviewing the final environmental impact statement under § 309 of the Clean Air Act.⁹

The Corps' Decision

The initial level of the Corps' decision-making process on the Collier Bay, Barfield Bay and Big Key permit applications consisted of the Jacksonville District Engineer's recommendation that the first be granted and the second and third denied. After interpreting the Corps' Interim Final regulations to prohibit destruction of productive mangrove wetlands without contrary overriding factors in the public interest, the District Engineer found no such overriding factors present with respect to Barfield Bay and Big Key. Moreover, he discounted the public benefit of the exchange agreement between Deltona and Florida because the mangroves to be transferred were intertidal and thus already subject to protection under the Corps' regulatory jurisdiction. The beneficial economic effects of issuing all three permits were also discussed but were ultimately held not to outweigh the ecological harm done by destruction of the mangroves at those two sites. With regard to Collier Bay, however, the District Engineer noted that most of the mangroves on the 113 acres to be filled had already been altered and thus did not represent the same public value per acre as those in the other two areas. For this reason, be recommended that the Collier Bay permit be granted.

In reviewing the District Engineer's recommendation, the Division Engineer in Atlanta came to a contrary conclusion, finding that there is no overriding national interest against issuing the permits. All three permits should be issued, in the Division Engineer's view, because of significant public benefits from economic development and the transfer of other mangrove lands to the state pursuant to the exchange agreement. In addition, he emphasized the continuing nature of the project, and the inconsistency in denying these applications after earlier granting permits for other parts of the same development.

On April 15, 1976, Chief of Engineers Lt. Gen. William C. Gribble, Jr. accepted the District Engineer's recommendation and authorized him to deny permits for filling 943 acres and 1,096 acres in Barfield Bay and Big Key, respectively, and to issue one for such activity on 113 acres in Collier Bay.¹⁰ As benchmarks for his decision, Gen. Gribble cited the goal of maintaining the chemical, physical, and biological integrity of the nation's waters established in § 101(a) of the FWPCA,¹¹ EPA's Guidelines¹² under § 404(b) of the FWPCA establishing, "[f]rom a national perspective," the destruction of aquatic resources by filling operations in wetlands as "the most severe environmental impact" covered by the guidelines, and the Corps' own Interim Final regulations,¹³ which state that the unnecessary alteration or destruction of such productive and valuable public resources should be discouraged as contrary to the public interest.

"Necessary" Wetlants Destruction

Noting that mangrove swamps perform a number of important functions, including, among others, ocean food chain production, wildlife habitat, spawning and nesting areas, wave and erosion buffers, and storm and flood waters storage areas, the General held that the Corps wetlands policy requires denial of a permit for work in such areas absent substantial public interest to the contrary. In order for a permit to be issued, Gen. Gribble said, the benefits of the proposed alteration must outweigh the damage to the wetlands resources, and the proposed alteration must be necessary to realize those benefits. Whether a particular alteration is "necessary" relates primarily to whether the proposed activity is wetland site-dependent, and whether feasible alternative sites are available.

Applying these principles and the almost identical test set forth in EPA's § 404(b) Guidelines¹⁴ to the case at hand, Gen. Gribble ruled the dredging and filling of Barfield Bay and Big Key, which will almost totally destroy the existing mangroves at these two sites, to be an unnecessary and unacceptable destruction of wetlands resources. The ultimate result of this dredging and filling is housing, but housing, in order to fulfill its basic purpose of providing shelter, generally does not have to be located in wetlands. In the General's view, Deltona failed to show that there are no other sites or construction alternatives that do not involve the massive destruction of mangroves associated with the Barfield Bay and Big Key developments as proposed. Issuance of filling permits for Barfield Bay and Big Key under these circumstances would therefore be inconsistent with the Corps' policy and responsibility to prohibit the unnecessary destruction of the nation's wetlands resources.

While overriding national factors in the public interest thus dictated that these two permits be denied, Gen. Gribble held that the same factors led him to the opposite conclusion with respect to the Collier Bay application. A significant amount of the mangrove wetlands in Collier Bay had already been destroyed, and as a result, in the General's opinion, the remaining mangroves had ceased to perform the valuable public functions still being carried out by the wetlands in Barfield Bay and Big Key. Gen. Gribble therefore held that Collier Bay had already been so dedicated to development that it would no longer be in the public interest to preclude completion of that development. Also, because a certain amount of development has already occurred in the form of actual housing construction, other sites or construction alternatives were ruled no longer practicable.

Takings and Estoppel

Anticipating one of Delton's objections to his decision, Gen. Gribble asserted that his action did not [6 ELR 10119] constitute a taking of property without compensation. The Division Engineer had suggested that the property would be "practically worthless" if not developed, but the General noted that the Corps stands ready to consider and process any new applications proposing alternative plans for the use and development of the area.

The General also dismissed Deltona's related contention that it reasonably relied on a condition included in the Roberts Bay permit as evidence of government acquiesence in the completion of the Marco Island project. Denying that the conditions for estoppel exist in this case, assuming arguendo that such a claim could be raised against the government, Gen. Gribble pointed to another condition in the Roberts Bay permit that explicitly advised Deltona there was no guarantee that similar future applications would also be granted.

Furthermore, according to the General, the well-publicized 1969 permit denial that culminated in Zabel v. Tabb put developers on notice that the Corps' dredge and fill policies were changing and that issuance of permits thereafter would not be as predictably routine as it had once been. To counter any suggestion that this interjection of new criteria, policies and concerns not considered in previous decisions on the Marco Island development into the decision-making process was fundamentally unfair, he quoted from the Fifth Circuit's recent decision in Moretti v. Hoffman:

[W]e cannot say that [the Corps] is bound by anything that appears before us to deal with all cases at all times as it has dealt with some cases that seem comparable.¹⁵

The Corps' New Mission

The Corps' decision is noteworthy for several reasons. First, it comports with the Corps' earlier recognition, in the context of the seminal 1969 determination on the Zabel permit application, that wetlands are productive and valuable resources that contribute to the public interest in a variety of ways, and that the agency has the authority and indeed the obligation to protect such areas. Aside from the single aberration of overreaction to the court order relating to its expanded regulatory responsibilities under § 404,¹⁶ the Corps, from even before Zabel v. Tabb up through the Marco Island decision, has gradually come to recognize environmental protection as an equal part, along with the facilitation of navigation, of the agency's mission. Perhaps Gen. Gribble himself summed it up best:

The environmental concerns of the Congress, the Corps and other Federal agencies and a significant segment of the public have intensified in the last 10 years, and with these changes has come a change in our decision-making.

Secondly, the decision shows that the Corps, under the prodding of environmental groups such as the Environmental Defense Fund, is serious about acting according to these principles, even in the face of impressive political firepower: Deltona was a heavy contributor to the campaigns of former President Nixon, and its lawyer, Dean Burch, is a former chairman of the Republican National Committee. In addition, Gov. Reuben Askew of Florida, in a number of letters to the Corps, also strongly supported issuance of all three permits.

The Corps' expanded authority under § 404 has remained a hot political issue in Congress. H.R. 9560,¹⁷ which sets forth proposed amendments to the FWPCA recently passed by the House Public Works Committee, contains a provision sponsored by Rep. Breaux (D.-La.) around which the anti-404 forces have coalesced. The breaux amendment would in effect reduce the Corps' jurisdiction over dredge and fill activities to even less than what it was before § 404 was enacted. Under H.R. 9560, all wetlands above the mean high water mark in either rivers or ocean inlets, which includes half the nation's coastal and 85 percent of its total wetlands, would be excluded from federal protection. The Corps' refusal in the Marco Island case to cave in to such congressional saber-rattling is especially commendable.

And thirdly, the national impact of the decision is likely to be considerable. The proposed fill projects were the largest ever denied by the Corps, and serve as a vehicle to put other developers on notice as to the content of the agency's wetlands policy and its resolve to adhere to those principles. While not entirely new, the policy and the particular holding under it on the Barfield Bay and Big Key applications establish a strong presumption against the granting of any further dredge and fill permits for the construction of housing in productive wetland areas. Under the decision, all future destruction of wetlands for such purposes would seem to be prima facie unnecessary and therefore unacceptable. Permits for such activities could thus be issued only upon a showing by the applicant either that the wetlands are nonproductive or that there are no alternatives to constructing the housing on that site.

Not suprisingly, Deltona filed suit in the federal district court for the Southern District of Florida on May 7, challenging the decision as being arbitrary and capricious. In addition, the corporation is reportedly considering filing an inverse condemnation suit in the Court of Claims. The prospects for these actions are not bright, however, since an examination of the administrative record indicates that the decision was based squarely on both the facts and the law, and thus will most probably withstand judicial review. While the longevity of the Corps' broad policy against unnecessary development in productive wetlands in the last analysis remains up to the courts and more immediately to the Congress, the agency has now clearly and unmistakably signalled its intention to adhere firmly to its stated principle of protecting the nation's wetlands resources from unnecessary destruction.

1. Report on Application for Department of the Army Permits to Dredge and Fill at Marco Island, Florida, 6 ELR 30026 (Chief of Engineers, Apr. 15, 1976).

2. See Comment, Comprehensive Wetlands Protection: One Step Closer to Full Implementation of § 404 of the FWPCA, 5 ELR 10099 (July 1975).

3. 33 U.S.C. § 1344, ELR 41124.

4. 33 U.S.C. § 403, ELR 41142.

5. Natural Resources Defense Council v. Callaway, 392 F. Supp. 685, 5 ELR 20285 (D.D.C. 1975).

6. 33 C.F.R. § 209.120, 40 Fed. Reg. 31320 (July 25, 1975), ELR 46319.

7. 430 F.2d 199, 1 ELR 20023 (5th Cir. 1970).

8. 41 Fed. Reg. 15443 (Apr. 13, 1976); see also, Environmental Protection Agency — Recent; Developments, 6 ELR 10129 (June 1976).

9. 42 U.S.C. § 1857h-7, ELR 41218. For a discussion of EPA's referral power, see Healy, The Environmental Protection Agency's Duty to Oversee NEPA's Implementation: Section 309 of the Clean Air Act, 3 ELR 50071 (1973).

10. Report, supra note 1.

11. 33 U.S.C. § 1251(a), ELR 41102.

12. 40 C.F.R. § 230, 40 Fed. Reg. 41292 (Sept. 5, 1975).

13. Supra note 6.

14. Supra note 12, § 230.5(b)(8).

15. __ F.2d __, 6 ELR 20223, 20224 (5th Cir. Feb. 17, 1976)

16. See Comment, supra note 2.

17. 94th Cong., 2d Sess. (1976).