Stoeco Dev. v. DEPT. OF ARMY CORPS OF ENGINEERS

• Decision Date: 14 April 1992
• Docket Number: Civ. No. 88-0054 (WGB).
• Citation: 792 F. Supp. 339
• Parties: STOECO DEVELOPMENT, LTD.; Stainton-Burrell Development, Ltd.; The Shore Memorial Hospital, and The Pennington School, 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.; Stainton-Burrell Development, Ltd.; The Shore Hospital; and The Pennington School, Defendants.
• Court: U.S. District Court — District of New Jersey

792 F. Supp. 339

STOECO DEVELOPMENT, LTD.; Stainton-Burrell Development, Ltd.; The Shore Memorial Hospital, and The Pennington School, 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.; Stainton-Burrell Development, Ltd.; The Shore Hospital; and The Pennington School, Defendants.

Civ. No. 88-0054 (WGB).

United States District Court, D. New Jersey.

April 14, 1992.

Michael Chertoff, U.S. Atty. by Irene Dowdy, Asst. U.S. Atty., D. N.J., Trenton, N.J., for the Army Corps of Engineers.

Levin & Hluchan by Richard M. Hluchan, Voorhees, N.J., for Stoeco, et al.

OPINION

BASSLER, District Judge:

Plaintiffs Stoeco Development, Ltd., Stainton-Burrell Development, Ltd., the Shore Memorial Hospital and the Pennington School ("Stoeco") move for a plenary hearing on the issue of whether the lands they are developing are "wetlands" within the meaning of the Clean Water Act, 33 U.S.C. § 1251 et seq., and 33 C.F.R. § 328.3(b). Defendant Department of the Army, Corps of Engineers, ("Corps") cross-moves for partial summary judgment on the issue of the Stoeco's liability for violating 33 U.S.C. § 1251 et seq. For the following reasons, the Corps' motion is denied; Stoeco's motion is granted to the extent that the Corps must prove the existence of wet-lands at trial by a preponderance of the evidence.

Factual History

The tract at issue is a 17-acre site in Ocean City, New Jersey, which Stoeco was developing for residential use. In 1987, the Corps made two determinations in regard to this tract. First, the Corps found the tract to be "wetlands" within the meaning of the Clean Water Act and the Code of Federal Regulations. Second, the Corps determined that Stoeco had placed fill on these wetlands without a permit, in violation of 33 U.S.C. § 1344. Having made these determinations, the Corps issued a "Cease and Desist" order to Stoeco on June 16, 1987, directing Stoeco to either remove the fill or apply for an after-the-fact permit.

Admitting that it had placed fill on the site but denying that it was wetlands, Stoeco filed an action to invalidate the "Cease and Desist" order and to obtain a declaratory judgment that the area in question was not wetlands. In response, the United States filed an enforcement action seeking removal of the fill, civil penalties and injunctive relief. These two actions were subsequently consolidated into this lawsuit.

In the summer of 1988, Stoeco moved for partial summary judgment on the limited issue of whether the Corps had authority to issue the "Cease and Desist" order. In support of this motion, Stoeco argued that because the administrative record compiled by the Corps did not support the issuance of the order, it was "arbitrary and capricious" within the meaning of 5 U.S.C. § 706(2)(A) (the Administrative Procedure Act).

The Corps cross-moved for summary judgment on three issues: its authority to issue the order under 5 U.S.C. § 706; its right to an order compelling Stoeco to remove the fill; and Stoeco's liability for monetary damages.

In response to these motions, United States District Court Judge Mitchell H. Cohen denied on November 2, 1988 Stoeco's motion for partial summary judgment and granted partial summary judgment to the Corps solely on the ground that the agency action at issue — the issuance of the "Cease and Desist" order — was not "arbitrary and capricious". Stoeco Development v. Department of the Army Corps of Engineers, 701 F.Supp. 1075, 1084 (D.N.J.1988).

In accordance with Judge Cohen's order enforcing the "Cease and Desist" order, Stoeco applied for an after-the-fact fill permit on May 7, 1990. The permit application was denied by the Corps in January of 1991.

In November of 1991, Stoeco moved for a plenary hearing on the issue of whether or not the tract was wetlands. In response, the Corps asserted that Judge Cohen had already determined that the tract was wetlands, and renewed its motion for partial summary judgment.

Discussion

The motions before this court raise three basic issues:

(1) Did Judge Cohen rule that, in an enforcement action, the Corps does not have to prove the existence of wetlands by a preponderance of the evidence? Also, if Judge Cohen made such a ruling, is this court bound by it under the "law of the case" doctrine?

(2) Assuming that no such ruling was made, must the Corps, in an enforcement action, prove the existence of wetlands by a preponderance of the evidence? Alternatively, is the trial court bound by the Corps' determination that an area is wetlands unless that determination is found to be arbitrary and capricious?

(3) Assuming that, in an enforcement action, the Corps must prove the existence of wetlands by a preponderance of the evidence, is the Corps entitled to summary judgment on the basis of the affidavits submitted by the parties?

I. Judge Cohen's Order of November 2, 1988

The Corps asserts that Judge Cohen's earlier order disposes of Stoeco's motion. According to the Corps, Judge Cohen held that the Corps does not have to prove the existence of wetlands by a preponderance of the evidence. The Corps reads the order to mean that the Corps' wetlands determination in an enforcement action is only subject to judicial review under the arbitrary and capricious standard of 5 U.S.C. § 706(2)(A).

Stoeco, on the other hand, argues that Judge Cohen did not make such a ruling. Rather, it is argued that Judge Cohen merely held that the agency action at issue in the earlier motion — the Corps' decision to issue the "Cease and Desist" order — was to be judged by the arbitrary and capricious standard. Thus Stoeco contends that Judge Cohen never reached the issue of whether or not the Corp would have to prove the "existence of wetlands" at trial by a preponderance of the evidence.

After reviewing Judge Cohen's opinion, this court concludes that Stoeco's reading is the correct one. Judge Cohen's decision did not relieve the Corps of the burden of proving the existence of wetlands by a preponderance of the evidence. Nothing in the opinion indicates that Judge Cohen even considered this issue, let alone decided it. Stoeco moved for summary judgment solely on the ground that the agency action—the issuance of the "Cease and Desist" order — was arbitrary and capricious in light of the administrative record. While the Corps' cross motion did include demands for fines and an injunction, it is evident that Judge Cohen focused exclusively on a single question: whether the issuance of the "Cease and Desist" order was arbitrary and capricious. Having concluded that it was not, Judge Cohen merely required Stoeco to comply with the Corps' order by applying, after the fact, for a § 404 permit. Stoeco Development v. Department of the Army Corps of Engineers, 701 F.Supp. 1075, 1080 (D.N.J.1988).

Since the key to resolving this dispute is not to be found in Judge Cohen's opinion, the court must consider the next issue.

II. The "Existence of Wetlands" Issue in an Enforcement Action

Most of the seeming complexity in this case results from the parties' failure to frame this issue with precision. Boiling away all of the surplusage about "plenary hearings" and "standards of review," we are left with a very simple question: in an enforcement action, does the Corps have to prove the existence of wetlands by a preponderance of the evidence?

The Corps' initial position is that it does not have such an obligation.¹ Instead, it asserts that its determination that an area is wetlands must be accepted by the court unless the determination is found to be arbitrary and capricious under 5 U.S.C. § 706(2)(A).

Stoeco acknowledges that the "arbitrary and capricious" standard is appropriate in a "citizens suit" brought under § 505(a)² of the Clean Water Act to challenge a wetlands determination by the Corps. But Stoeco argues that such a standard is not appropriate in an enforcement action where the Corps invokes the power of the court to impose fines and an injunction.

What is the appropriate standard of review in an enforcement action brought by the Corps is a question of first impression in the Third Circuit. There have been several enforcement actions in the Third Circuit in which the trial court, without objection from the Corps, took evidence and made a de novo factual finding on the existence of wetlands. See, United States v. Ciampitti, 583 F.Supp. 483 (D.N.J.1984), aff'd 772 F.2d 893 (3rd Cir.1985), cert. denied, 475 U.S. 1014, 106 S.Ct. 1192, 89 L.Ed.2d 307 (1986); United States v. Malibu Beach, Inc., 711 F.Supp. 1301 (D.N.J. 1989). This case is unique, however, in that the Corps resists any requirement to prove the existence of wetlands by a preponderance of the evidence in a plenary hearing.

As in all cases that involve a statutory regime, we begin our analysis with an examination of the relevant statutory provisions and regulations. The federal Clean Water Act ("CWA") prohibits the discharge of fill materials into the "waters of the United States" unless authorized by a Corps permit issued pursuant to 33 U.S.C. § 1344. "Wetlands adjacent to navigable waters" and their tributaries are included within the definition of "waters of the United States." 33 C.F.R. § 328.3(a)(3). See United States v. Riverside Bayview Homes, Inc., 474 U.S. 121, 133, 106 S.Ct. 455, 462, 88 L.Ed.2d 419 (1985) (upholding the inclusion of "wetlands adjacent to navigable waters" as within the scope of the Corps' regulatory authority). To be wetlands, an area must: (1) be durationally inundated or saturated; (2) be supportive of vegetation dependent on or adapted to saturated soils; and (3), contain saturated soils. 33 C.F.R. § 328.3(b) (1987)³.

Taken together, the CWA and the accompanying regulations provide a definition of wetlands and require a permit in order to fill them. They do not, however, answer the question of who, in an...