12 ELR 20790 | Environmental Law Reporter | copyright © 1982 | All rights reserved


Smithwick v. Alexander

No. 78-83-CIV-7 (E.D.N.C. March 23, 1981)

The court dismisses a challenge to the Corps of Engineers' denial of a dredge and fill permit application under § 10 of the Rivers and Harbors Act and § 404 of the Federal Water Pollution Control Act. Applying the arbitrary and capricious standard of review, the court finds that the Corps acted within the scope of its authority and did not abuse its discretion in applying the factors provided in its regulation in denying the requested application to dredge and fill 18 acres on a 20-acre peninsula. The court also finds that the Corps satisfied the requirements of due process by making adequate findings and affording plaintiff an opportunity to respond. In addition, the Corps' actions were not arbitrary, capricious,or an abuse of discretion because it is clear that the land constitutes a wetland within the meaning of the regulation. The court holds that since plaintiff can still use the property for its current purpose, there is no unconstitutional taking.

Counsel for Plaintiff
Thomas J. Morgan
Hunoval, Fullwood & Morgan
P.O. Box 1388, Wilmington NC 28402
(919) 762-5271

Counsel for Defendants
Bruce H. Johnson, Ass't U.S. Attorney
P.O. Box 26897, Raleigh NC 27611
(919) 755-4530

[12 ELR 20791]

McCotter, J.:

This action, brought against Clifford L. Alexander, Jr., Secretary of the Army, and Adolph A. Hight, District Engineer of the Corps of Engineers, challenges the administrative determination made by the Corps of Engineers to deny plaintiff's application for a dredge and fill permit pursuant to § 10 of the River and Harbor Act of 1899 (33 U.S.C. § 403) and § 404 of the Federal Water Pollution Control Act Amendments of 1972 (33 U.S.C. § 1344). Plaintiff seeks declaratory relief and damages.

Plaintiff is the owner of approximately 20 acres of land lying east of the town of Belhaven, North Carolina. The land in question is a peninsula, bounded on the north by Battalina Creek and on the south by Toms Creek. Plaintiff first applied for a dredge and fill permit in July of 1973. He proposed to excavate a number of canals and use the dredged material to fill portions of the land, thus allowing the development of the land for residential purposes. The Corps of Engineers on November 29, 1973 refused to issue the permit based on the earlier denial of state authorization. Plaintiff reapplied in 1975 for a federal permit and at the same time for state authorization. Plaintiff's application for a state permit was denied by the Division of Marine Fisheries in December, 1975. Plaintiff appealed this decision and on August 26, 1976 the North Carolina Marine Fisheries Commission found that the Department of Natural and Economic Resources lacked jurisdiction over the project under the provisions of N.C.G.S. Section 113-229. A state permit was then issued. Plaintiff's application for a federal permit was denied April 6, 1977 on the ground that the site of the proposed work was a wetland area and authorization of the work would be contrary to the Corps' wetland policy as expressed in 33 C.F.R. § 209.120(g)(3) and 40 C.F.R. § 230.5(b)(8)(ii).

Plaintiff then filed this action alleging that defendants' denial of his permit application was arbitrary, capricious, an abuse of discretion and not supported by substantial evidence; the denial was in excess of the statutory jurisdiction of the Corps; the Corps failed to observe procedures required by law; and the denial resulted in the condemnation and taking of plaintiff's property without just compensation. This action is now before the court on the defendants' motion for summary judgment.

The Federal Rules of Civil Procedure provide that a party moving for summary judgment pursuant to Rule 56 is entitled to such judgment if the pleadings and other papers show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Both parties have submitted numerous exhibits and affidavits. The court has carefully reviewed the papers filed in this case and is persuaded that there is no genuine issue of material fact. The question before the court therefore is whether the defendants are entitled to judgment as a matter of law.

In order to determine whether the decision of the Corps of Engineers to deny the permit was proper, it is first necessary to establish the proper scope of review. Plaintiff appears to argue that the defendants' decision was arbitrary and capricious because it was not supported by substantial evidence, in addition to other reasons which will be discussed later. This is not the proper standard, however, by which the defendants' action must be judged. Whether the denial of a permit application is arbitrary and capricious and whether it is supported by substantial evidence are two separate inquiries and only the former is applicable in this case.

Review under the substantial evidence test is authorized only when the agency action is taken pursuant to a statute requiring that rulemaking be made on the record after opportunity for a hearing, 5 U.S.C. § 553; or when the action is based upon a public adjudicatory hearing required to be made on the record, see 5 U.S.C. §§ 556, 557. The statutes regulating the issuance of dredge and fill permits provide that only the opportunity for a hearing prior to issuance is required. The United States Supreme Court has recently reiterated that where a statute or regulation requires that an "opportunity for a public hearing" be provided, the "opportunity" for a hearing may be keyed to a request for a hearing. Costle v. Pacific Legal Foundation, 445 U.S. 198 [10 ELR 20225] (1980); see also, National Coal Operators' Association v. Kleppe, 423 U.S. 388 (1976). As the record shows that no hearing was requested by any interested party, no hearing was required. Furthermore, plaintiff has not asserted that he was denied the right to a hearing. His argument therefore that the Corps' denial of his permit application must be overturned because it was not supported by substantial evidence is without merit. This conclusion, however, does not prevent the court from engaging in a thorough, indepth review.

The proper standard of review in this case is as follows: The reviewing court must decide (1) whether the administrative agency is acting within the scope of its authority; (2) whether the necessary procedural requirements were followed; and (3) whether the actual decision made was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402 [1 ELR 20110] (1971); see 5 U.S.C. § 706(2).

(1) Corps of Engineers' Authority

The determination as to whether the Corps acted within the scope of its authority naturally must begin with a delineation of its authority. Under both 33 U.S.C. § 403 and 33 U.S.C. § 1344, the Secretary of the Army, acting through the Corps of Engineers, is charged with the responsibility of issuing permits for the discharge of dredge and fill material into navigable waters at specified disposal points. Plaintiff urges that the Corps acted in excess of its jurisdiction because a permit was not even required for dredging and filling wetlands on the date he made his application or, in the alternative, if a permit was required, the Corps exceeded its jurisdiction by failing to follow and observe the goals of the legislation.

In support of his first argument, plainiff cites 42 Fed. Reg. 37,145 (1975) (now codified as 33 C.F.R. § 323.3(a)), which provides:

If a discharge of dredged or fill materials is not permitted by this regulation, an individual or general Sec. 404 permit will be required for the discharge of dredged or fill material into waters of the United States in accordance with the following phased schedule:

(1) Before July 25, 1975, discharges into navigable waters of the United States.

(2) After July 25, 1975, discharges into navigable waters of the United States and adjacent wetlands.

This argument is without merit for several reasons. While plaintiff's application is dated July 25, 1975, the cover letter thereto indicates that the required Adjacent Riparian Landowner's statements, dated July 26, July 28 and August 2, 1975, were attached to the application when submitted. It therefore must be concluded that plaintiff's application was not submitted until after July 25, 1975. Furthermore, even if plaintiff's application was submitted on July 25, 1975, the regulation cited by plaintiff speaks in terms of the date of discharge, not the date of application. Plaintiff's application for a permit dated July 25, 1975, was obviously for a discharge to occur after July 25. The regulation therefore applied and a permit was required for plaintiff to accomplish his proposed project.

Plaintiff's alternative argument, that if a permit was required, the Corps exceeded its jurisdiction by failing to follow and observe the goals of the legislation, is also without merit. The regulations provide that the decision as to whether to issue a permit must rest on an evaluaton of all factors, including conservation, economics, aesthetics, general environmental concerns, historic values, fish and wildlife values, flood damage prevention, land use classification, navigation, recreation, water supply, water quality and in general the needs and welfare of the people. A review of the record reveals that, contrary to plaintiff's assertions, the Corps engaged in a balancing of the benefit which might reasonably be expected to accrue from the proposed activity against its reasonably foreseeable detriments and found that the permanent removal of approximately 18 acres of wetland area from the estuarine system for the purpose of providing a residential development was not warranted, as alternative upland sites were available for such a purpose. See Exhibit 15.

(2) Corps of Engineers' compliance with procedural requirements

Plaintiff contends that the Corps did not adhere to the procedures required by law in denying his application for a permit and [12 ELR 20792] further contends that even if the procedural requirements were met, these were not sufficient to meet the substantive requirements of due process. The court will first address whether the procedures set forth in the regulations of the Corps1 satisfy the requirements of due process.

The regulations governing the issuance of a dredge and fill permit specify that once an application for a permit is filed with the Corps of Engineers, a public notice of the application must be given in order to allow for public responses and to obtain consultation from interested parties. 33 C.F.R. § 209.120(f) (1972). If any substantive objections are received, the regulations provide that the applicant is to receive "full and complete information to give him an opportunity to comment thereon," 33 C.F.R. § 209.120(f)(9) (1972), and if sufficient public interest is shown in the project, then the District Engineer of the Corps is authorized to conduct a public, informal hearing at which both proponents and opponents of the project are allowed to be heard. 33 C.F.R. § 209.120(g)(4) (1972). The regulations also detail as thoroughly as practical the standards the Corps must apply in assessing applications, requiring that the decision must rest on an evaluation of all relevant factors, including the effect of the proposed work on navigation, fish and wildlife conservation and the other factors listed earlier in this opinion.

Plaintiff asserts that due process requires that an agency make sufficient findings to support its decision. He specifically challenges the Corps' decision on the grounds that the limited findings of fact made by the Corps were generalizations, unsupported opinions and based upon the findings and conclusions of the North Carolina Division of Marine Fisheries later overturned by the North Carolina Marine Fisheries Commission; that the Commission participated in ex parte communications; and failed to provide plaintiff with the opportunity to examine the decision of the District Engineer or to submit proposed findings of facts.

As set out above, it is apparent that the regulations do not require detailed findings of fact or any of the other procedures that plaintiff claims he was denied. These regulations have been upheld consistently by other courts; e.g., Taylor v. District Engineer, U.S. Army Corps of Engineers, 567 F.2d 1332 [8 ELR 20194] (1978), and nothing plaintiff has brought before the court leads to a different conclusion.

Addressing plaintiff's contention that his due process rights were violated because the Corps failed to comply with its regulations in that it failed to provide him with an opportunity to respond to adverse comments, failed to seek comments of other interested parties and relied on comments and recommendations not properly before it, the court finds that these allegations are without factual support in the record and that the Corps complied with the regulations as set out above.

(3) Arbitrary and capricious action

The standard for determining if the denial of plaintiff's application for a permit was arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law is whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment. Citizens to Preserve Overton Park, supra; L. JAFFE, JUDICIAL CONTROL OF ADMINISTRATIVE ACTION 359 (1965). This inquiry must be searching and careful, but ultimately, the standard is a narrow one.

It is well-documented that prior to plaintiff's disking of the area in 1974, the entire twenty-acre tract involved herein was dominated by balck needlerush (Juncus roemerianus), which is a type of vegetation adapted for life in saturated soil conditions. By late 1975 the vegetative growth on the tract was beginning to recover from the disking operation, and in 1977, at the time plaintiff's permit was denied, the area had significantly recovered and was expected to once again be a vitally productive area. See Exhibit 15.

It is also well-documented that in 1978, and presumably from the time plaintiff disked the area in 1974, the mean sea level elevations of the 18 acres plaintiff proposed to develop ranged from 0.9 to 1.4, with one spot in excess of this range, and that the tide level in this area reached 1.0 feet mean sea level elevation or greater 127.4 days per year or 10.6 days per month and reached 1.5 feet MSL elevation or greater 29.6 days/year or 2.5 days/month.

It is therefore obvious to the court that the land in question constitutes a "wetlands" within the meaning of the definition contained in the regulations and was subject to the regulations complained of herein. As discussed in an earlier part of this opinion, the record shows that all relevant factors were considered by the Corps in reaching its decision to deny plaintiff a dredge and fill permit. Additionally, the court finds that the Corps' denial did not constitute a clear error of judgment and, therefore, the defendants' actions were not arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law.

Having established that the Corps' regulation of plaintiff's property is proper, the court will now address plaintiff's contention that the denial of his permit application constitutes a taking of his property without payment of just compensation.

As recognized by the United States Supreme Court in Goldblatt v. Hempstead, 369 U.S. 590 (1962), there is no set formula for determining where regulation ends and taking begins. A study of the case law reveals that there are two commonly recognized tests for determining whether a regulation constitutes a taking. The first is whether the regulation is for the purpose of preventing public harm, rather than for the purpose of creating a public benefit; and it is only in the latter case whether the government appropriates property for public use, that compensation is due. FREUND, THE POLICE POWER, § 511 (1904); Sax, Takings, Private Property and Public Rights, 81 YALE L.J. 149 (1971). The second test looks to the degree of damage and finds a taking when a regulation destroys all or substantially all of the property's beneficial use.

This second test was first enunciated in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922), and appears to actually be an extension and refinement of the first test. The regulation involved in that case forbade the mining of coal in such a way as to cause the subsidence of structures used as human habitations. This of course could be characterized as regulation for the prevention of public harm. Justice Holmes, writing for the majority, did not stop with this analysis, however, but balanced the degree of damage to the property owner against the importance of the public interest served by the regulation.

The test generally applied to determine the degree of damage to a property owner's interest is whether the governmental interference is so substantial as to deprive the owner of all or most of his interest in the property. See United States v. General Motors, 323 U.S. 373, 378 (1945). Stated another way, it depends upon whether the property has been rendered useless for all reasonable purposes or whether there is any practical use remaining in the property as regulated. See Sibson v. State, 115 N.H. 124, 336 A.2d 239 [5 ELR 20300] (1975); Just v. Marinette County, 56 Wis. 2d 7, 201 N.W.2d 761 [3 ELR 20167] (1972). Dimunition in value is also considered. Goldblatt v. Hempstead, 369 U.S. 590 (1962).

The court finds that plaintiff's property has not been rendered valueless or useless for all reasonable purposes and, accordingly, finds that the Corps' denial of plaintiff's permit application does not constitute a taking without just compensation in violation of the Fifth Amendment.

Reasonable uses are not confined to the most commercially profitable uses, but necessarily include natural uses of the property as well. The denial of the permit application in this case did not depreciate the value of plaintiff's property. Its value was the same after the denial as before. Nor did the denial change the current use of the property. An owner of land does not have an absolute and unlimited right to change the essential character of his land so as to use it for a purpose for which it is unsuited in its natural state. The importance of wetlands to the public health and welfare clearly outweighs the degree of damage sustained by plaintiff and, hence, there has been no taking of his property.

Accordingly, finding that there is no genuine issue of material fact and that the defendants are entitled to judgment as a matter of law, defendants' motion for summary judgment is GRANTED and this action is DISMISSED.

SO ORDERED. THIS THE 20TH DAY OF MARCH, 1981.

1. The court is concerned only with those regulations effective during the consideration of this permit application. 33 C.F.R. § 209.120 (1972).


12 ELR 20790 | Environmental Law Reporter | copyright © 1982 | All rights reserved