James City County v. U.S. Environmental Protection Agency

No. 89-156-NN (E.D. Va. August 5, 1992)

The court holds that the U.S. Environmental Protection Agency's (EPA's) Federal Water Pollution Control Act (FWPCA) § 404(c) veto of an FWPCA § 404 permit for the Ware Creek reservoir and dam project in James City County, Virginia, was unsupported by substantial evidence. The court finds that EPA's decision failed to consider the county's need for water and was based only on environmental factors. EPA may not look solely to environmental concerns and ignore vital human needs when it considers the acceptability of a project that affects the environment. Further, substantial evidence is required by the Fourth Circuit and is necessary to veto a permit that has already been granted. Although EPA provided reams of environmental analysis, it neglected its duty to consider all of the factors important to the project's acceptability. The court holds that EPA's analysis of the project's ecological impact fails to consider adequately the mitigation plan. Moreover, EPA presented skewed data on the anticipated net loss of wetlands and the damage to fish and wildlife, and the Agency overlooked the extent of the development that will occur in the area.

[An earlier district court decision is published at 21 ELR 20371. The Fourth Circuit's decision is published at 22 ELR 20566, and the appellate briefs are published at ELR PEND. LIT. 66159.]

Counsel for Plaintiff
William B. Ellis
McSweeney, Burtch & Crump
P.O. Box 1463, Richmond VA 23212
(804) 783-6800

Counsel for Defendants
David Carson
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

MacKenzie, J.

[23 ELR 20228]

MacKenzie, J.:

Memorandum Opinion

This case returns to our Court after a long administrative and judicial journey. Since the late 1970's, James City County, Virginia, adjacent to the city of Williamsburg, has sought solutions to its growing demand for water. After extensive studies about a possible dam and reservoir on Ware Creek, the Army Corps of Engineers approved the project and issued a permit in accordance with the Section 404(a) of the Clean Water Act, 33 U.S.C. § 1344(a). The Environmental Protection Agency (EPA), however, pursuant to its authority under 33 U.S.C. § 1344(c), vetoed the project, arguing that viable alternatives to the Ware Creek project should be pursued.

When the county challenged the denial of a permit, this Court held that none of the EPA's "alternatives" was a realistic solution to an imminent water shortage, and therefore, on November 6, 1990, overturned the EPA's veto and ordered a permit to be issued for the project. See James City County, Virginia, v. EPA, 758 F. Supp. 348 [21 ELR 20371] (E.D. Va. 1990). On appeal, the Fourth Circuit approved the district court's decision that no practicable alternatives to the Ware Creek project exist; however, the Court of Appeals gave the EPA sixty days in which to determine whether, in the absence of alternatives, the Ware Creek project was "unacceptable" within the meaning of the Clean Water Act. James City County v.EPA, 955 F.2d 254 [22 ELR 20566] (4th Cir. 1992). The EPA has vetoed the project again, and James City County seeks to have this second veto overturned.

Section 404(c) of the Clean Water Act, 33 U.S.C. § 1344(c), authorizes the Administrator of the EPA to deny or restrict the use of [23 ELR 20229] a site for the disposal of fill material that will have an "unacceptable adverse effect on municipal water supplies, shellfish beds and fishery areas (including spawning and breeding areas), wildlife, or recreational areas." The regulations in 40 C.F.R. Part 231 govern Section 404(c)'s application. The Code of Federal Regulations states that "[i]n making this determination, the Administrator will take into account all information available to him, including any written determination of compliance with the section 404(b)(1) Guidelines made in 40 C.F.R. Part 230 . . ." (emphasis added). Significantly, the regulations do not limit the EPA to the consideration of purely environmental factors, as suggested by the EPA.

In this case the EPA has only partly fulfilled its duty. In its Second Final Determination on Remand ("Second Determination"), submitted to the Court on March 27, 1992, the EPA considers both the initial and supplemental administrative records. The Second Determination contains 49 pages of analysis of the administrative record, considering the adverse impacts of the proposed Ware Creek project and the mitigation plan. As 40 C.F.R. Part 230 instructs it to do when reviewing a proposal that would affect our waters, the EPA has carefully analyzed the probable environmental impacts of the Ware Creek dam project.

The EPA neglects a significant consideration, however, when it completely ignores James City County's desperate need for water. No mention of this need is contained in the EPA's evaluation of the acceptability of the reservoir project. While the regulations governing Section 404(c) do not advise the EPA of each of the limitless considerations that must enter an evaluation of a project's acceptability, the need for water is a factor it must consider. As the plaintiff points out, counsel for the EPA acknowledged during previous arguments that the EPA has an obligation to consider water supply when it analyzes the acceptability of a project pursuant to Section 404(c). See Transcript of Proceedings at 49-51 (Sept. 21, 1990); Appellant's Reply Brief at 8-9. Moreover, the regulations are obviously concerned with the effect a project has on municipal water supplies, for they instruct the EPA to restrict a site whenever it is determined that fill will have an "'unacceptable adverse effect' on municipal water supplies, shellfish beds and fishery areas, . . . wildlife or recreational areas." See 40 C.F.R. § 231.1(a). While normally one would anticipate a situation where fill was ruining the water supply, in this case, the refusal to allow a project has an adverse effect on municipal water supplies. The EPA now argues that it can look solely to environmental concerns and ignore vital human needs when it considers the "acceptability" of a project that affects the environment. The regulations do not support such a proposition, and we think it clear that the deference afforded administrative agencies makes it incumbent upon them to consider all factors when exercising their significant discretion.

The Fourth Circuit has indicated that in reviewing EPA decisionsto veto issued permits pursuant to Section 404(c), this Court must determine whether the EPA's decision is supported by "substantial evidence."¹ While the EPA provides reams of environmental analysis, it neglects its duty to consider all of the factors important to this project's acceptability or unacceptability — namely the county's need for water, a need which it previously stated it should and would consider. We find, therefore, that the EPA's decision, based only on environmental factors, is unsupported by the substantial evidence required by the Fourth Circuit and necessary to veto a permit which has been already granted.

However, in addition to its failure to consider the admitted plight of James City County, we find that the environmental data in the administrative record also fail to provide substantial support for the EPA's position. This Court views the EPA's analysis of the ecological impact of the project to be flawed primarily because of its failure to consider the mitigation plan adequately. The EPA cites several values of the Ware Creek wetlands, a diverse watershed area containing 1168 acres of vegetated wetlands and open water systems.² This area provides a habitat for many types of wildlife and sends nutrients into the York River and Chesapeake Bay.³ However, the EPA has presented skewed data on the anticipated net loss of wetlands and the damage to fish and wildlife, while ignoring the projected inevitable development of the area.

With respect to the net loss of wetlands (i.e. the loss after the mitigation plan is completed), the EPA's Memorandum in Support of its Motion for Summary Judgment contradicts the information in the Second Determination. The Second Determination cites a 60% loss of vegetated wetlands and 50% loss of scrub-shrub wetlands before mitigation, but almost no loss for the scrub-shrub wetlands and at least a 50% loss for the herbaceous wetlands after mitigation.⁴ In its memorandum the EPA incorrectly cites the premitigation figures as if they would be accurate after mitigation.⁵ Thus, at the outset we note a faulty presentation of the extent of the environmental damage.

Moreover, while arguing that 425 acres of wetlands will be lost because of the project, the EPA fails to consider the Army Corps of Engineers' projections that between 167 and 295 acres of wetlands will be created, and that between 340 and 506 acres of wetlands would be enhanced by breaching the Cranstons Pond dam.⁶ Moreover, 44 acres of presently nonvegetated open water are included in the 425-acre figure, thus further overestimating the damage.⁷ Finally, according to the summary of mitigation efforts, 1645 acres of wetlands are designated for preservation and should be counted as 164 acres worth of mitigation "credit" by the EPA.⁸ Indeed, the net loss of acreage is almost zero, not nearly the drastic exercise that the EPA projects.

The EPA further considered the damage to fish, noting that the project would isolate 17 to 18 square miles of the region, thus reducing the flow of water needed for fish to spawn. However, it failed to note that freshwater fish would have a much larger area in which to live.⁹ Moreover, the mitigation plan removes a dam on the Yarmouth River, thus aiding the migratory efforts of the anadromous fish about which the EPA is concerned.¹⁰ Indeed, the Fish and Wildlife Service considers the impact on fish in Ware Creek to be mitigated adequately.¹¹

While the project will temporarily dislocate several species such as the blue heron, there is substantial evidence that many species, including the heron, which has other, undisturbed rookeries in the area, will relocate into the new and expanded habitats to be created.¹² The construction plans provide careful consideration of wildlife during "vulnerable stages in the life cycle."¹³ A "buffer strip" and "greenways" will be maintained for the preservation of wildlife.¹⁴ While the project will certainly disrupt wildlife in the watershed, the EPA's assumptions about the severity of the disruption are not based on substantial evidence.

Finally, the EPA, considering it "legally irrelevant," seems to overlook the extent of the development that will occur if the reservoir and dam are not built. Far from irrelevant, this significant piece of information is part of the entire picture which the EPA is bound by the regulations to consider in its analysis of the "acceptability" of the project. The evidence is clear that the Chesapeake Corporation, which owns much of the Ware Creek watershed, is committed to development.¹⁵ In the Second Determination the EPA acknowledges that the Chesapeake Corporation is committed to timber harvesting in the area.¹⁶ Piecemeal timbering would be "cumulatively detrimental" to the watershed, and this development has been deemed inevitable.¹⁷ The EPA has instead relied on newspaper articles that opine that a proposed residential development will protect the watershed. We cannot in good faith accept the projections of these articles when the [23 ELR 20230] overwhelming evidence suggests that timbering and its destructive impact on the area, including the debated blue heron rookery, is the more likely occurrence.

In this case, James City County has proposed an extensive mitigation plan that the EPA itself identifies as "the most comprehensive mitigation plan put forth to date in this region."¹⁸ The county's mitigation plan includes the creation of wetlands, the preservation of wetlands, the creation of Blue Heron nesting sites, and the removal of a dam in order to reconnect presently impounded wetlands. In the Second Determination, the EPA states: "James City County has opined that the potential for development and timbering activities to result in significant losses of wetlands and uplands habitat is such that, on balance, less environmental loss will be realized if the County's proposal . . . is allowed to proceed."¹⁹ The EPA disagrees because it believes the plan would recreate only 44% at best of the existing wetlands that will be destroyed by the reservoir, and the new wetlands would not offer identical habitats for the species now living at Ware Creek. The mitigation effort, however imperfect, will only occur if the reservoir is built, not if the Chesapeake Corporation cuts its timber or otherwise develops its watershed. We applaud the plan developed by the county, and think the EPA short-sighted in its preference for piecemeal, unmitigated destruction of a valuable watershed over a well-mitigated, vital reservoir project.

For all of the above reasons, this Court finds the EPA's action pursuant to 33 U.S.C. § 1344(c) to be unsupported by substantial evidence. We, therefore, will require, by Order entered simultaneously herewith and making reference hereto, that a permit for the construction of the Ware Creek reservoir and dam project be issued.

It is so ORDERED.

1. James City County v. EPA, 955 F.2d 254, 259 n.5 [22 ELR 20566] (4th Cir. 1992); 5 U.S.C. § 706(2)(E).

2. Admin. R. A-31 at 3-5 (Final Environmental Impact Statement).

3. Second Determination at 15.

4. Second Determination at 17.

5. Def's Mem. Supp. Mot. for Summ. J. at 54.

6. Admin. R. A-54 at 7 (Record of Decision, Army Corps of Engineers); Admin. R. A-31 at 2-13, 4-25, 4-17.

7. Second Determination at 27; Admin. R. A-31 at 2-13.

8. Admin. R. D-48 at 3 (Summary of Mitigation); Plf.'s Mem. Supp. Summ. J., Ex. 8.

9. Admin. R. A-31 at 4-12.

10. Admin. R. A-31 at 417; A-8 at 12-13.

11. Admin. R. G-23 at 6 & 8.

12. See, e.g., Admin. R. A-31 at 2-15, 4-19, 4-21.

13. Admin. R. A-31 at 2-14.

14. Admin. R. A-31 at 2-15, 4-20.

15. Second Determination at 43; Admin. R. A-31 at 2-37; Plf's Mem. in Supp. of Mot. for Summ. J., Ex. 9.

16. Second Determination at 43-44.

17. Second Determination at 44.

18. Second Determination at 39.

19. Final Determination at 44.