Stoeco Dev. v. DEPT. OF THE ARMY CORPS. OF ENGIN., Civ. A. No. 88-0054.

• Decision Date: 02 November 1988
• Docket Number: Civ. A. No. 88-0054.
• Citation: 701 F. Supp. 1075
• Parties: STOECO DEVELOPMENT, LTD., a New Jersey Limited Partnership; Stainton-Burrell Development, Ltd., a New Jersey Limited Partnership; The Shore Memorial Hospital, a Non-Profit Corporation of the State of New Jersey; and The Pennington School, a Non-Profit Corporation of the State of New Jersey, Plaintiffs, v. The DEPARTMENT OF THE ARMY CORPS OF ENGINEERS OF the UNITED STATES of America, Defendant. and UNITED STATES of America, Plaintiff, v. STOECO HOMES, INC.; Stoeco Development, Ltd., a New Jersey Limited Partnership; Stainton-Burrell Development, Ltd., a New Jersey Limited Partnership; The Shore Memorial Hospital, a non-profit Corporation of the State of New Jersey; and The Pennington School, a non-profit Corporation of the State of New Jersey, Defendants.
• Court: U.S. District Court — District of New Jersey

701 F. Supp. 1075

STOECO DEVELOPMENT, LTD., a New Jersey Limited Partnership; Stainton-Burrell Development, Ltd., a New Jersey Limited Partnership; The Shore Memorial Hospital, a Non-Profit Corporation of the State of New Jersey; and The Pennington School, a Non-Profit Corporation of the State of New Jersey, Plaintiffs, v. The DEPARTMENT OF THE ARMY CORPS OF ENGINEERS OF the UNITED STATES of America, Defendant. and UNITED STATES of America, Plaintiff, v. STOECO HOMES, INC.; Stoeco Development, Ltd., a New Jersey Limited Partnership; Stainton-Burrell Development, Ltd., a New Jersey Limited Partnership; The Shore Memorial Hospital, a non-profit Corporation of the State of New Jersey; and The Pennington School, a non-profit Corporation of the State of New Jersey, Defendants.

Civ. A. No. 88-0054.

United States District Court, D. New Jersey.

November 2, 1988.

Porro and Porro by Alfred A. Porro, Jr., Lyndhurst, N.J. and Ford and Flower, by Arthur T. Ford, III, Ocean City, N.J. for Stoeco Development, Ltd., et al.

Samuel A. Alito, Jr., U.S. Atty., by James C. Woods, Asst. U.S. Atty., Newark, N.J., for the Dept. of the Army Corps of Engineers.

OPINION

COHEN, Senior District Judge:

Presently before us are cross-motions for summary judgment in this consolidated action arising out of the defendant Department of the Army Corps of Engineers' (the "Corps") assertion of jurisdiction over approximately 17 acres of land in Ocean City, New Jersey, which the Government argues contains federally regulated wetlands. Plaintiffs are the owners and developers of the land in question. They move for summary judgment seeking, inter alia, a declaration that the Corps' assertion of jurisdiction is invalid.¹ Defendant's cross-motion seeks a ruling from the Court: a) upholding its assertion of jurisdiction; b) compelling removal of fill materials placed in wetland areas; and, c) imposing substantial monetary penalties for the alleged violations. The parties agree that the deferential "arbitrary and capricious" standard of the Administrative Procedure Act (5 U.S. C. § 551 et seq.) is applicable in reviewing the Corps' assertion of jurisdiction.

Stoeco initiated this action by filing a complaint on January 5, 1988 seeking injunctive and declaratory relief.² On January 7, 1988, the Government filed a separate action against Stoeco for injunctive relief and civil monetary penalties under the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq. (hereinafter "Clean Water Act" or "CWA").³ Thereafter, on April 15, 1988, United States Magistrate Joel B. Rosen ordered that the matters be consolidated.

To determine whether or not the agency action was "arbitrary and capricious" it is necessary for this Court to decide: 1) whether the administrative record was complete; and 2) whether that record provided a rational basis upon which to predicate jurisdiction.

I. HISTORY AND DESCRIPTION OF THE LAND

Ocean City is a barrier island separating the Atlantic Ocean from the tidal estuary which lies between it and the mainland of Cape May County. Stoeco Homes, Inc. purchased part of the lands in question from the City of Ocean City at a Public Sale on February 14, 1951.⁴ The remainder of the tract over which the Corps now asserts jurisdiction was purchased from the City of Ocean City at a Public Sale on December 15, 1964.⁵ Administrative Record at pp. 44, 46 and 63 (hereinafter "AR ____").⁶ Generally, both parcels combined are bordered on the east by Haven Avenue, and on the west by Ocean City Municipal Airport. Bay Avenue bisects the parcels on a north-south axis. Ten parallel streets cross east-west through the site, and are enumerated "Twentieth Street" through "Thirty-First Street." See, Defendant's Brief in Opposition, Exhibit A.

Historically, the project site had been primarily salt marsh meadows adjacent to, and with tidal access to Beach Thorofare.⁷ Stoeco Homes, Inc. and Stainton-Burrell Development, Ltd. used the land as a dredge material disposal area from approximately 1951 to the summer of 1987. See, AR 44-51. The Government contends that "as a result of the periodic disposal of dredged material on the site and the elimination of direct tidal access, the project site has been altered to such an extent that it now displays the characteristics of a brackish freshwater wetland." Defendant's Brief in Opposition, at 9. Stoeco urges, inter alia, that the project site had originally been wetlands but that thirty-seven years of filling in the area altered the lands from salt marsh meadows to dry upland areas; further, that any wetlands that now exist on the site are clearly man-induced, a consequence of the ongoing construction activity and improper grading of the area, and thus, specifically exempt from a wetlands determination under the regulations promulgated under the Clean Water Act.

II. THE CLEAN WATER ACT

Sections 301 and 502 of the Clean Water Act, 33 U.S.C. §§ 1311, 1362, prohibit the discharge of dredged or fill materials into "navigable waters" — defined as "waters of the United States" — unless authorized by a permit issued by the Corps pursuant to § 404, 33 U.S.C. § 1344. United States v. Riverside Bayview Homes, Inc., 474 U.S. 121, 106 S.Ct. 455, 88 L.Ed.2d 419 (1985). The policies, practices, and procedures to be followed by the Corps in connection with reviewing permits to authorize the discharge of dredged or fill material into "waters of the United States" pursuant to § 404, 33 U.S.C. § 1344 are set forth at 33 C.F.R. § 323 (1987). The term "waters of the United States" and all other terms relating to the geographic scope of jurisdiction are defined at 33 C.F.R. § 328 (1987) as provided for in 33 C.F.R. § 323. Under the implementing regulations, the term "waters of the United States" includes wetlands adjacent to traditional navigable waters and their tributaries. 33 C.F.R. § 328.3(a)(3) (1987). The term "wetlands" means:

those areas that are inundated or saturated by surface or ground water at a frequency and duration sufficient to support, and that under normal circumstances do support, a prevalence of vegetation typically adapted for life in saturated soil conditions. Wetlands generally include swamps, marshes, bogs, and similar areas.

33 C.F.R. § 328.3(b) (1987).

The term "adjacent" means:

bordering, contiguous, or neighboring. Wetlands separated from other waters of the United States by man-made dikes or barriers, natural river berms, beach dunes and the like are "adjacent wetlands."

33 C.F.R. § 328.3(c) (1987).

As then Judge Gerry, now Chief Judge of the United States District Court, District of New Jersey, discussed in United States v. Ciampitti, 583 F.Supp. 483 (D.N.J.1984), the above-cited wetlands regulations were specifically adopted pursuant to court order in National Resources Defense Council v. Callaway, 392 F.Supp. 685 (D.D.C. 1975). In Callaway, the court concluded "that Congress intended the Clean Water Act to assert `federal jurisdiction over the Nation's waters to the maximum extent permissible under the Commerce Clause of the Constitution,' and that the term `navigable waters' was not limited to the traditional tests of navigability." Ciampitti, supra, 583 F.Supp. at 491 (citing Callaway, supra, 392 F.Supp. at 686). Judge Gerry further noted that courts have continually applied this standard of jurisdiction when reviewing cases involving wetlands determinations. See, id. (citing cases).

The Supreme Court recently upheld the broad regulatory authority of the Corps under the CWA. In Riverside Bayview Homes, supra, the Court concluded that the language, policies, and history of the Clean Water Act compelled a finding that the Corps had acted reasonably in interpreting the Act to require permits for the discharge of fill material into wetlands adjacent to the "waters of the United States." Reversing the Court of Appeals, Justice White speaking for a unanimous Court said:

On a purely linguistic level, it may appear unreasonable to classify "lands," wet or otherwise, as "waters." Such a simplistic response, however, does justice neither to the problem faced by the Corps in defining the scope of its authority under § 404(a) nor to the realities of the problem of water pollution that the Clean Water Act was intended to combat. In determining the limits of its power to regulate discharges under the Act, the Corps must necessarily choose some point at which water ends and land begins. Our common experience tells us that this is often no easy task: the transition from water to solid ground is not necessarily or even typically an abrupt one. Rather, between open waters and dry land may lie shallows, marshes, mudflats, swamps, bogs — in short, a hugh array of areas that are not wholly aquatic but nevertheless fall far short of being dry land. Where on this continuum to find the limit of "waters" is far from obvious.

Faced with such a problem of defining the bounds of its regulatory authority, an agency may appropriately look to the legislative history and underlying policies of its statutory grants of authority. Neither of these sources provides unambiguous guidance for the Corps in this case, but together they do support the reasonableness of the Corps' approach of defining adjacent wetlands as "waters" within the meaning of § 404(a). Section 404 originated as part of the Federal Water Pollution Control Act Amendments of 1972, which constituted a comprehensive legislative attempt "to restore and maintain the chemical, physical, and biological integrity of the Nation's waters." CWA § 101, 33 U.S.C. § 1251. This objective incorporated a broad, systemic view of the goal of maintaining and improving water quality: as the House Report on the legislation put it, "the word `integrity' ... refers to a condition in which the natural structure and function of ecosystems is maintained." H.R.Rep. No. 92-911, p. 76 (1972). Protection of aquatic ecosystems, Congress recognized, demanded broad federal authority

...