U.S. v. Cumberland Farms of Connecticut, Inc.

• Decision Date: 09 April 1987
• Docket Number: No. 86-1983,86-1983
• Citation: 826 F.2d 1151
• Parties: , 17 Envtl. L. Rep. 21,270 UNITED STATES of America, Plaintiff, Appellee, v. CUMBERLAND FARMS OF CONNECTICUT, INC., Defendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 1151

826 F.2d 1151

26 ERC 1393, 17 Envtl. L. Rep. 21,270

UNITED STATES of America, Plaintiff, Appellee, v. CUMBERLAND FARMS OF CONNECTICUT, INC., Defendant, Appellant.

No. 86-1983.

United States Court of Appeals First Circuit.

Heard April 9, 1987.

Decided Aug. 18, 1987.

As Amended Aug. 20, 1987.

Allan van Gestel with whom Nancer Ballard, William J. Duensing and Goodwin, Procter & Hoar, Boston, Mass., were on brief for defendant, appellant.

Edward J. Shawaker with whom F. Henry Habicht II, Asst. Atty. Gen., Washington, D.C., Robert S. Mueller III, U.S. Atty., Richard E. Welch III, Asst. U.S. Atty., Boston, Mass., and David C. Shilton, Washington, D.C., were on brief for plaintiff, appellee.

Douglas B. MacDonald, Ralph A. Child, David P. Novello and Palmer & Dodge, Boston, Mass., on brief for Sierra Club, amicus curiae.

Before CAMPBELL, Chief Judge, TORRUELLA, Circuit Judge, and MALETZ, ^* Senior Judge.

LEVIN H. CAMPBELL, Chief Judge.

This is an appeal by Cumberland Farms of Connecticut, Inc. ("Cumberland") from a judgment of the United States District Court for the District of Massachusetts. ¹ The district court ruled that from 1977 to 1985 Cumberland had violated sections 301 and 502 of the Federal Water Pollution Control Act (the "Clean Water Act"), 33 U.S.C. Secs. 1311, 1362 (1982), by dredging and filling a freshwater wetland without the required permit from the Army Corps of Engineers ("Corps"). Clean Water Act, section 404, 33 U.S.C. Sec. 1344 (1982). The court ordered injunctive relief directing Cumberland to restore the wetland to approximately its 1977 condition. The court also imposed a civil fine of $540,000, of which $390,000 was to be remitted to Cumberland if it satisfactorily restored the wetland as ordered in the injunction. Cumberland raises numerous issues on appeal.

I. BACKGROUND

The area in contention consists of about 2,000 acres of the Great Cedar Swamp located in southeastern Massachusetts. Prior to Cumberland's activities, the Great Cedar Swamp was a forested freshwater swamp. It was then one of the largest freshwater wetlands in Massachusetts. Freshwater wetlands are ecologically valuable for various reasons. They act as a natural flood control mechanism by slowing and storing storm water runoff. They help supply fresh water to recharge groundwater supplies. They serve as biological filters by purifying water as it flows through the wetlands. They provide seasonal and year-round habitat for both terrestrial and aquatic wildlife. See 33 C.F.R. Sec. 320.4(b) (1986).

In 1972, V.S. Hasiotis, Inc., purchased the 2,000-acre wetland, leasing it to Cumberland Farms of Connecticut, Inc. (a related corporation owned by essentially the same shareholders as Hasiotis, Inc.). Beginning in 1972 and continuing through 1985, Cumberland began converting the swamp into farmland using dredge and fill techniques. Cumberland removed the standing timber, bulldozed the stumps and roots and levelled the soil in preparation for planting. To lower the water table so as to make the wet soil arable, Cumberland dug a network of drainage ditches and channelized two streams (the Raven Brook located on the eastern side of the swamp, and the Bartlett Brook to the west).

In recent times the Army Corps of Engineers has been regulating the dredging and filling of freshwater wetlands, relying for its authority on sections 301 and 502 of the Clean Water Act, 33 U.S.C. Secs. 1311 & 1362. These provisions prohibit the discharge of dredged or fill material into "navigable waters" unless authorized by a permit issued by the Corps pursuant to section 404, 33 U.S.C. Sec. 1344. When these provisions were enacted in 1972, the Corps at first construed the term "navigable waters," 33 U.S.C. Sec. 1362(12), literally. Thus from 1972 until 1975, a Corps permit was required under section 404 of the Clean Water Act only if dredge and fill operations took place in waters that were actually navigable.

In 1975, the Corps revised its regulations so that the term "navigable waters" came to include, inter alia, freshwater wetlands that were periodically inundated and which supported vegetation that requires saturated soil conditions. See United States v. Riverside Bayview Homes, Inc., 474 U.S. 121, 106 S.Ct. 455, 457, 88 L.Ed.2d 419 (1985); 33 C.F.R. Sec. 209.120(d)(2)(h ) (1976). In 1977, the Corps further extended its jurisdiction over wetlands by eliminating the requirement that the wetland be periodically inundated, requiring only that it be inundated or saturated by surface or groundwater at a sufficient frequency to support vegetation adapted for life in saturated soils. Id. at 458; 33 C.F.R. Sec. 323.2(c) (1978). In Riverside Bayview Homes, the Supreme Court upheld the Corps' expanded view of its regulatory authority over freshwater wetlands under the Clean Water Act. Id. at 465. In conjunction with its program of regulating dredge and fill activities, the Corps established a number of so-called "nationwide permits." These allow certain categories of activities to be carried on without first obtaining an individual permit. At issue in this case is whether Cumberland's dredge and fill activities were validated by one or another of two nationwide permits.

The practical effect of the Corps' expanding jurisdiction under the Clean Water Act was that, beginning in July 1977, the wetlands in question came under the Corps' regulatory power. Thereafter, Cumberland's dredge and fill activities required an individual permit from the Corps pursuant to section 404, 33 U.S.C. Sec. 1344, unless, as discussed infra, Cumberland qualified under a statutory exception to the permit requirement or for a general nationwide permit. Cumberland did not, however, apply for an individual permit in 1977 or thereafter, but continued to dredge and fill in the Great Cedar Swamp. The district court found that from 1978 to 1985 Cumberland converted 674.4 acres of wetland to farmland through the use of dredge and fill. 647 F.Supp. at 1171.

In April 1983, a private individual first alerted the Corps to Cumberland's activities. The Corps then sent a letter to John Peck, Vice President of Operations for Cumberland, noting that discharges of dredge and fill material were apparently being made into waters under the Corps' jurisdiction without the required permit. The letter stated that no additional work should be performed in the area subject to the Corps' jurisdiction unless and until Cumberland obtained a permit. The letter asked for some additional information and recommended that exposed stream banks along the Bartlett and Raven Brooks be stabilized. In addition, the Corps set out eight interim protective measures that Cumberland should institute in order to restore the water table to its 1977 level, including filling various drainage ditches that Cumberland had installed.

In May 1983, Cumberland responded by asserting that its activities fell within the statutory exemption for agricultural work, 33 U.S.C. Sec. 1344(f)(1), and that in Cumberland's view no permit was needed. In June 1983, prior to any further Corps activity, Cumberland instituted an action against the Corps in federal district court seeking a declaratory judgment that its activities were permitted by the statutory agricultural exemption. Cumberland argued that the Corps' letter had been a final determination by the agency of its jurisdiction, and that this determination presented a judicially reviewable issue. Because the Corps allegedly had no power to regulate Cumberland's activities in the Great Cedar Swamp, Cumberland argued that it should not be required to apply for a permit or otherwise go through the administrative process. The district court dismissed Cumberland's action, agreeing with the Corps that, as of yet, the Corps had only made an initial determination of jurisdiction and that this initial determination did not permit judicial review. The court held that to allow the declaratory judgment action to proceed would improperly and prematurely interrupt the Corps' administrative process. The court made it clear that its dismissal of the action would not preclude Cumberland from raising the jurisdictional issue after the Corps had completed its administrative process.

In December 1984, the Corps unequivocally asserted jurisdiction in a letter to Cumberland. The Corps pointed out alleged violations of the Clean Water Act, ordered that Cumberland cease its illegal activity and demanded that eight interim protective measures be undertaken. These interim protective measures were designed to restore the area to its 1977 freshwater wetland condition. Cumberland objected to the interim protective measures because they would have inundated Cumberland's farm fields. Cumberland refused to implement the protective measures unless and until "some higher authority" determined that to be an appropriate result. For the first time, Cumberland formally applied for an individual permit, but the Corps took the position that under its regulations it could not consider issuance of a retroactive permit until the area had been restored to its 1977 condition under the mandated interim protective measures. 33 C.F.R. Sec. 326.3(c) (1986). The Corps then brought this enforcement action.

The district court held a bifurcated trial with a liability phase and a remedies phase. As to liability, the court found that Cumberland had violated the Clean Water Act by discharging into waters of the United States without a Corps permit. 647 F.Supp. at 1174-75. The court held that Cumberland's activities did not fall within the statutory exemption for agricultural activities, ruling that the exemption applies only to prior established and continuing farming, id. at 1175, whereas Cumberland's activities constituted a new conversion of wetland to agriculture. Cumberland does not appeal from this ruling.

The district court also rejected Cumberland's claim that it qualified for either the "headwaters"...