Buttrey v. United States

No. 80-1617 (E.D. La. April 1, 1981)

The court holds that an applicant for a dredge and fill permit under § 404 of the Federal Water Pollution Control Act is not entitled to an adjudicatory hearing. Section 404 provides that the Corps may issue permits "after notice and opportunity for public hearings." Under similar language in § 402 of the Act, the Environmental Protection Agency conducts adjudicatory hearings on applications for pollution control permits. Nonetheless, the legislative history of § 404 shows that Congress intended to continue the system of dredge and fill permit issuance that existed under the Rivers and Harbors Act of 1899, including informal non-adversarial public hearings. The court also finds that the Corps's informal hearing procedures satisfy the requirements of due process. In ruling on the permit denial, the court limits its review to the administrative record and applies an arbitrary and capricious standard of review under § 706(2)(A) of the Administrative Procedure Act. After rejecting a hearsay-rule argument against the Corps' reliance on reports from other federal agencies, the court finds that the Corps properly concluded that the area in question constituted a wetland. The Corps' jurisdiction over navigable waters includes such wetlands.

Counsel for Plaintiffs
Pamela Pryor, Charles K. Reasonover, Harry S. Anderson
Deutsch, Kerrigan & Stiles
4700 One Shell Sq., New Orleans LA 70139
(504) 581-5141

Counsel for Defendants
John P. Volz, U.S. Attorney
Hale Boggs Fed. Bldg., 500 Camp St., New Orleans LA 70130
(504) 589-2921

William L. Want
Land and Natural Resources Division
Department of Justice, Washington DC 20530
(202) 633-2543

[11 ELR 20932]

Arceneaux, J.:

Opinion

This matter came before the Court on cross-motions for summary judgment. The Court, after hearing oral argument, requested that the parties submit supplemental memoranda on the issue of whether an adjudicatory hearing is required when, as here, the jurisdiction of the Corps of Engineers ("the Corps") is challenged.

Having considered all arguments of counsel and having reviewed the voluminous administrative record and memoranda filed in this matter, this Court holds that:

1) where the Corps' regulatory jurisdiction over a proposed "dredge and fill" project is challenged, an adjudicatory hearing is not required for the purpose of determining the propriety of the jurisdictional claim;

2) the Corps has jurisdiction to require permit issuance for the project in question;

[11 ELR 20933]

3) the procedures employed by the Corps in the processing of plaintiffs' permit were not unconstitutional;

4) on the basis of the administrative record, the permit was properly denied; and

5) plaintiff's claim for damages; allegedly due to either an unconstitutional taking of property without compensation, or alternatively, for the delay plaintiff has incurred as a result of the Corps' permitting process, is denied.

Facts

In November, 1978, plaintiff John Buttrey applied to the Mobile, Alabama, district office of the U.S. Army Corps of Engineers for a permit to channelize a portion of an area known as Gum Bayou. This tayou, located in the vicinity of Slidell, Louisiana, is a tributary of the West Pearl River. The purpose of the proposed project was to improve drainage for the Magnolia Forest subdivision, an area developed by John Buttrey Developments, Inc. This corporate entity is also a named plaintiff. The channelized area was to measure 2,600 feet in length, 7 to 10 feet in depth, and would vary in width from 100 to 300 feet.

Buttrey's permit application was denied on April 2, 1980. This denial came after the project had been subject to the required public notice, a public comment period, and on-site inspections by Corps officials and representatives of other state and federal agencies. Buttrey had requested and received both an extension of time from the Corps within which to file a comprehensive memorandum of fact and law (including supporting expert reports), as well as a conference with the Corps District Engineer, Colonel Ryan. Buttrey has now appealed the permit denial to this Court, asking declaratory and injunctive relief, as well as damages.

The Standard of Review

The Court has utilized the "arbitrary and capricious" standard in its review of the permit denial which is the subject of this action. In applying this standard, the Court follows the substantial body of case law mandating its use. See, e.g., Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 414 [1 ELR 20110] (1971); DiVosta Rentals, Inc. v. Lee, 488 F.2d 674, 679 [4 ELR 20005] (5th Cir. 1973).The "substantial evidence" standard of review urged by plaintiff arises in conjunction with a rulemaking provision of the Administrative Procedure Act, or when administrative action arises from a statutorily-mandated, on-the-record public adjudicatory hearing. 5 U.S.C. § 551, et seq. Neither of these two settings pertain to a permit evaluation conducted pursuant to the Federal Water Pollution Control Act (FWPCA), 33 U.S.C. § 1331 et seq, e.g., Taylor v. District Engineer, U.S. Army Corps. etc., 567 F.2d 1332, 1335 [8 ELR 20194] (5th Cir. 1978).

The plaintiffs also contend that this Court's review of the Corps' proceedings should not be limited to the administrative record compiled by the Corps. While this Court allowed plaintiffs to take discovery depositions and has also reviewed those depositions in conjunction with the pending motions, there is strong support for the defendants' claim that any de novo judicial review is inappropriate. See, e.g., Volpe, supra at 415; Camp v. Pitts, 411 U.S. 138, 142 (1973); F.P.C. v. Transcontinental Gas Pipeline, Inc., 423 U.S. 326, 331 (1976); and DiVosta, supra at 679. As stated in Joseph G. Moretti, Inc. v. Hoffman, 526 F.2d 1311 [6 ELR 20223] (5th Cir. 1976):

We are equally unimpressed with Moretti, Inc.'s argument that his discovery was curtailed. In Gables by the Sea, Inc. v. Lee, S.D. Fla. 1973, 365 F. Supp. 826, aff'd per curiam, 5th Cir. 1974, 498 F.2d 1340, the plaintiff sought to conduct extensive discovery proceedings to show that the Corps improperly denied his application for a dredge and fill permit.The discovery was denied on the basis that the action was a challenge, pursuant to the Administrative Procedure Act, to a final agency decision which must be reviewed only on the administrative record. "Information extraneous to the record should not be considered in the review procedure. If the agency action is found to be improper, the matter should be remanded to the agency; it would be improper to conduct de novo proceedings in the form of a trial by the district court to consider extra-record information." 365 F. Supp. at 830.

Nor need we tarry long to consider Moretti, Inc.'s lack of substantial evidence contention. "The appropriate standard for review was . . . whether the . . . adjudication was 'arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,' as specified in 5 U.S.C. § 703(2)(A). In applying that standard, the focal point for judicial review should be the administrative record already in existence, not some new record made initially in the reviewing court." Camp v. Pitts, 1973, 411 U.S. 138 at 142, 93 S. Ct. 1241 at 1244, 36 L. Ed. 2d 106. Moretti, supra at 1312.

In accordance with the above reasoning, this Court has confined its review of this matter to the administrative record.

Jurisdiction

In addressing plaintiffs' attack on the Corps' jurisdiction, it is necessary to examine the meaning of the term "navigable waters" as it appears in 33 U.S.C. § 1344(a). It is this statute which creates the Corps' jurisdiction over the regulation of dredge and fill operations. The case law and legislative history indicate that this language is to given broad interpretation. As stated in the Senate Conference Report to the FWPCA 1972 Amendments:

The conferees fully intend that the term navigable waters be given the broadest possible constitutional interpretation unencumbered by agency determinations which have been made or may be made for administrative purposes.

Conference Report, S. REP. NO. 236, 92d Cong. 2d Sess. 114, reprinted in 1972 U.S. CODE CONG. & AD. NEWS 3822.

The Corps regulation which broadly defines "navigable waters" to include wetland areas (33 C.F.R. § 323.2(a)(5)) has come under considerable judicial scrutiny. Yet the consistent result of such scrutiny has been its vindication. See, e.g., Leslie Salt Co. v. Froehlke, 578 F.2d 742, 755 [8 ELR 20480] (9th Cir. 1978); U.S. v. Byrd, 609 F.2d 1204 [9 ELR 20757] (7th Cir. 1979); U.S. v. Holland, 373 F. Supp. 665, 674-76 [4 ELR 20710] (M.D. Fla. 1974).

Due Process and the Need for an Adjudicatory Hearing

As alluded to above, this Court requested that the parties present supplemental briefs on the issue of whether an adversary hearing is constitutionally required prior to the Corps' assertion of jurisdiction over a proposed project.

The plaintiffs originally contended that they were entitled to such an adversary hearing, based on a due process argument which this Circuit has previously considered in Taylor, supra. As the Court stated in Taylor, referring to the appellants' contention that they had been deprived of their property without due process: "We do not agree with appellants and feel that the procedures set forth in the regulations of the Corps easily satisfy the requirements of due process . . . . This Court has previously condoned the procedural protections provided for in these regulations, and has implied that these regulations satisfy Fifth Amendment due process." Taylor, supra at 1338.

Section 404(a) of the FWPCA (33 U.S.C. § 1344(a)) reads as follows: "The Secretary may issue permits, after notice and opportunity for public hearings, for the discharge of dredged or fill material . . . ." The parties look to the legislative history for evidence of the Congressional intent which motivated the reference to "public hearings."

Historically, under the Rivers & Harbors Act of 1899, the Corps was given jurisdiction over fill permit proceedings. The Rivers & Harbors Act provided for informal non-adversarial public hearings. Defendants cite Conference Committee language supporting their view that the Congress intended for that system of permit issuance to continue under the FWPCA.

Plaintiffs attempt to invoke § 554 and § 556 of the Administrative Procedure Act as authority for their position that a hearing with the right to cross-examine is required. Close scrutiny of those statutes reveals that they are simply not applicable. Section 556 speaks to the requirement of an adversarial hearing for a § 553 or § 554 proceeding. Plaintiffs concede that § 553 is inapplicable. Section 554 speaks to adjudications. Plaintiffs then argue by extraporation, based on several liquor-licensing and pollution permit (§ 402) cases, that the dredge and fill permit proceeding is an adjudication.

[11 ELR 20934]

The Corps attacks this position by pointing out that the § 402 pollution permit cases relate to EPA proceedings. The EPA is a new agency, and as a result, Congress was able to write upon a "clean slate."

In addition, the facts of this case negate any inference that a due process denial occurred. The plaintiffs requested and were furnished those comments, positive and negative, which the Corps considered in evaluating the permit application. Plaintiffs also received, upon request, an opportunity to discuss with Colonel Ryan, the Corps District Engineer, the status of their application. Plaintiffs were also given a substantial extension of time within which to file a comprehensive legal memorandum responsive to the comments and reports alluded to above.

While this Court has serious reservations as to the propriety of the Corps, in cases such as this, in effect, determining its own jurisdiction while at the same time sitting as a finder of fact with judicial review confined to the "arbitrary and capricious" standard, this Court feels itself bound by the existing jurisprudence which sanctions the same.

Wetland Status

There is ample evidence in the administrative record indicating the wetland nature of the area in question. It is not an excepted "headwater" area, as plaintiffs would have this Court decide. This conclusion is based on a review of the objective "rate of flow" tests conducted by the Corps and plaintiffs' own expert. This Court is also convinced that, as provided in 33 C.F.R. § 323.2, n.3, the Corps may, in its discretion, use either of the two "rate of flow" measuring procedures set forth in its regulations. The Corps may also require a permit of even a "headwater" area, should it find that compelling environmental concerns so require. 33 C.F.R. § 323.2, n.2. Lastly, plaintiffs virtually concede in their supplemental opposition memorandum that a finding of wetlands status could be established by the Corps, should the jurisdictional hearing which this Court suggested at oral argument occur.

Leaving this seeming concession aside, the Corps enumerates several convincing factors which prompted its finding of wetlands status. It cites plaintiffs' own expert report, which refers to "soil [that] remains saturated most of the time." A soil saturation factor is contained in the Corps regulations' definition of wetlands (33 C.F.R. § 323.2(c)).

The other agency reports which the Corps considered (from the Fish & Wildlife Service, the Environmental Protection Agency, and the National Marine Fisheries Service) all describe the area as a wetland. Plaintiffs claim that reliance on such evidence, all of which is contained in the administrative report, would constitute "hearsay" and is therefore unreliable. This contention receives no credence under the case law. See, e.g., DiVosta, supra at 680:

An examination of the record reveals that the objections from other agencies were put in terms sufficiently explicit to give DiVosta an opportunity to try to refute them. At communicate with these agencies in an effort to change their recommendations. In no respect can DiVosta be said to have been deprived of its right to due process of law. As to the apparent hearsay objection raised in DiVosta's brief, we have been cited to no case which holds that in a proceeding such as this, the Secretary is to be held to the rigid formalities of the hearsay rule.

The Corps is within its procedural rights in relying on these agency assessments. The Corps' finding of wetlands status and its decision not to engage in a formal wetlands determination is not unreasonable.

Equal Protection

The plaintiffs make various unsubstantiated claims that their right to equal protection was violated. Aside from several allusions by plaintiffs to a nearby NASA project which evidently received a Corps permit, this Court fails to find any evidence that plaintiffs were treated differently from others similarly situated. Despite the discovery depositions which plaintiffs undertook, no evidence of discriminatory treatment is apparent.

The "Public Interests"

Plaintiffs make much of the Corps' failure to meaningfully articulate those "public interests" which, by statute (33 C.F.R. § 320.4(a)), they must consider in the permitting process. Admittedly, some of Colonel Ryan's and Mr. Conlon's deposition testimony is somewhat unconvincing. However, despite the emphasis which plaintiffs have placed upon that testimony, this Court is not convinced that the "public interest" was ignored or dishonored.

The strong language which appears in Ethyl Corp. v. EPA regarding agency decisions in areas of scientific expertise is significant:

The more technical the case, the more intensive must be the court's effort to understand the evidence, for without an appropriate understanding of the case before it the court cannot properly perform its appellate function. But that function must be performed with conscientious awareness of its limited nature. The enforced education into the intricacies of the problem before the agency is not designed to enable the court to become a superagency that can supplant the agency's expert decision-maker. To the contrary, the court must give due deference to the agency's ability to rely on its own developed expertise. Market Street Railway v. Railroad Commission, 324 U.S. 548, 559-561, 65 S. Ct. 770, 776-777, 89 L. Ed. 1171, 1180-1182 (1945). The immersion in the evidence is designed solely to enable the court to determine whether the agency decision was rational and based on consideration of the relevant factors. Citizens to Preserve Overton Park v. Volpe, supra, 401 U.S. at 416, 91 S. Ct. at 823, 28 L. Ed. 2d at 153; Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., supra, 419 U.S. at 285, 290, 95 S. Ct. at 441, 444, 42 L. Ed. 2d at 455, 458. It is settled that we must affirm decisions with which we disagree so long as this test is met. Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., supra, 491 U.S. at 290, 95 S. Ct. at 444, 42 L. Ed. 2d at 458; United States v. Allegheny-Ludlum Steel Corp., supra, 406 U.S. at 749, 92 S. Ct. at 1946, 32 L. Ed. 2d at 460.

Judgment shall be entered accordingly.¹

1. Plaintiffs have not responded to defendants' contention that the claim presented in Count V of plaintiffs' complaint is beyond this Court's jurisdictional reach. However, in view of this Court's opinion, it is unnecessary to reach full consideration of this issue.