U.S. v. Hallmark Const. Co., 97 C 3682.

• Decision Date: 10 September 1998
• Docket Number: No. 97 C 3682.,97 C 3682.
• Citation: 14 F.Supp.2d 1069
• Parties: UNITED STATES of America, Plaintiff, v. HALLMARK CONSTRUCTION COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Illinois

14 F.Supp.2d 1069

UNITED STATES of America, Plaintiff, v. HALLMARK CONSTRUCTION COMPANY, Defendant.

No. 97 C 3682.

United States District Court, N.D. Illinois, Eastern Division.

September 10, 1998.

COPYRIGHT MATERIAL OMITTED

Christopher Eric Tracy, United States Attorney's Office, Chicago, IL, for Plaintiff.

Johnine J. Brown, Sheila H. Deely, Julie Dana Melvin, The Brown Environmental Law Group, P.C., Chicago, IL, Maureen Martin, Martin Law Firm, Chicago, IL, for Defendant.

MEMORANDUM OPINION AND ORDER

CONLON, District Judge.

The United States of America sues Hallmark Construction Company ("Hallmark") for allegedly filling a five-acre isolated wetland ("Area B") without obtaining authorization under Section 404 of the Clean Water Act, 33 U.S.C. § 1344. The government seeks restoration of Area B and/or mitigation to address the loss of wetland area. Hallmark argues there is no basis for federal jurisdiction over Area B, the United States is not a proper plaintiff, and the complaint is barred by the statute of limitations. Hallmark moved for summary judgment pursuant to Fed.R.Civ.P. 56. On July 23, 1998, the court granted Hallmark's motion, finding the United States an improper party plaintiff. On September 9, 1998, the court granted the United States' motion to reconsider the July 23rd judgment and vacated its prior decision. The court now addresses the other issues raised by Hallmark in its previous motion for summary judgment.

BACKGROUND

The following facts are undisputed unless otherwise noted. Hallmark is an Illinois corporation in the business of developing property. Def. 12(M) ¶ 2. In 1988, Hallmark purchased the former Swift Research Farm in Frankfort, Illinois and began developing the Heritage Knolls subdivision. Id. ¶ 26.

Area B was a natural topographical depression in the middle of the farm. Id. ¶¶ 2, 11. The farm contained underground clay tiles for drainage. The parties dispute the extent to which the underground tiles successfully drained Area B in the years before development. See, e.g., Def. 12(M) and Pl. 12(N) ¶¶ 8, 13, 14, 15, 19. The United States points to historical aerial photographs as evidence of inundation and saturation in Area B. John Kestel, the person who farmed the land purchased by Hallmark, states that Area B was never ponded over for more than four consecutive days. Hallmark points to computer modeling evidence suggesting that Area B could not have been inundated for 15 or more consecutive days during the growing season. Def. 12(M) ¶ 65.

Hallmark did not begin development in Area B until 1989. Def. 12(M) ¶ 27. The parties dispute whether Area B provided substantial habitat, nesting, feeding, or other value to migratory birds different from that provided by the surrounding farm fields. See Def. 12(M) and Pl. 12(N) ¶ 25. But it is undisputed that John Kestel saw geese in his fields, including Area B. Today, Area B contains an artificial five-acre stormwater detention/retention pond, roads, and several homes. Def. 12(M) ¶ 40. Although the present stormwater detention area stores more water than Area B stored prior to development, the parties dispute whether the quality of the water has improved and whether it provides a better or worse habitat for migratory birds. Id. ¶ 46; Pl. 12(N) ¶¶ 24 - 25, 46.

In 1990 — after development began — Hallmark's civil engineer recommended that Hallmark hire Planning Resources, Inc. to inspect Heritage Knolls for the presence of wetlands. Id. ¶ 28. Planning Resources inspected Heritage Knolls in accordance with the 1989 Federal Manual For Identifying and Delineating Jurisdictional Wetlands ("1989 Manual") and prepared a report.¹ Id. ¶ 29. Although other areas of the farm had standing water during the inspection, Area B was neither saturated nor inundated. Id. ¶ 32.² Nonetheless, Planning Resources concluded Area B was a "seasonally flooded farmed wetland" based on the presence of a flotsam ring (or drift lines), hydrophytic vegetation, and hydric soils. Pl. 12(N) ¶¶ 34, 35. A flotsam ring is created by dead or drowned vegetative debris deposited in a circular pattern where temporary inundation has occurred and receded.

In August 1990, Hallmark submitted Planning Resources' report to the United States Army Corps of Engineers ("the Corps"). Id. ¶ 29. The Corps requested that Hallmark fill out an "after-the-fact" permit application and provide a mitigation plan to address the loss of wetland area. Over the course of more than five years, the Corps repeatedly requested (and eventually demanded) that Hallmark provide an adequate mitigation plan. In April 1994, Hallmark retained SDI Consultants, Ltd. ("SDI") to write a proposal for a mitigation plan. Id. ¶ 53. SDI reviewed all available historical data about Area B and concluded that it had not been a farmed wetland after all. SDI concluded development of Area B did not require mitigation because it was "prior converted cropland" lacking wetland hydrology. Id. ¶ 56.

The Corps asked the National Resources Conservation Service ("the Conservation Service") to determine whether wetlands previously existed on Heritage Knolls. The Conservation Service's wetland map, prepared in 1987 or 1988, designates approximately five acres of Area B as wetland. The Conservation Service makes wetland determinations based on examination of aerial photographs and other historical data. Def. 12(M) ¶ 61; Pl. 12(N) ¶ 61. The parties dispute whether aerial photographs from 1964, 1970, 1976 and 1980 and crop compliance photographs from 1980, 1982, 1984, 1986 and 1988 show evidence of inundation of Area B. Id. ¶ 64.

After attempts to resolve the dispute proved unsuccessful, the Corps referred the matter to the United States Attorney; this suit was filed in May 1997. The Corps never consulted with the Environmental Protection Agency regarding Area B or its decision to refer this case to the United States Attorney for civil enforcement. Id. ¶ 67.

DISCUSSION

I. SUMMARY JUDGMENT STANDARD

A movant is entitled to summary judgment under Rule 56 when the moving papers and affidavits show there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Unterreiner v. Volkswagen of America, Inc., 8 F.3d 1206, 1209 (7th Cir.1993). Once a moving party has met its burden, the nonmoving party must go beyond the pleadings and set forth specific facts showing there is a genuine issue for trial. Fed.R.Civ.P. 56(e); Becker v. Tenenbaum-Hill Assoc., Inc., 914 F.2d 107, 110 (7th Cir.1990). The court considers the record as a whole and draws all reasonable inferences in the light most favorable to the party opposing the motion. Fisher v. Transco Services-Milwaukee, Inc., 979 F.2d 1239, 1242 (7th Cir.1992). A genuine issue of material fact exists when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Stewart v. McGinnis, 5 F.3d 1031, 1033 (7th Cir.1993).

II. FEDERAL JURISDICTION OVER AREA B

A. Constitutional and Statutory Basis for Federal Jurisdiction

Section 404(a) of the Clean Water Act authorizes the Army Corps of Engineers to issue permits for the "discharge of dredged or fill material into the navigable waters at specified disposal sites." 33 U.S.C. § 1344(a). The Clean Water Act defines navigable waters as "the waters of the United States." 33 U.S.C. § 1362(7). By regulation, the Corps defines the phrase "waters of the United States" to include "[a]ll other waters such as intrastate lakes, rivers, streams (including intermittent streams), mudflats, sandflats, wetlands, sloughs, prairie potholes, wet meadows, playa lakes, or natural ponds, the use, degradation or destruction of which could affect interstate or foreign commerce." 33 C.F.R. § 328.3(a)(3). In a preamble to this regulation, the Corps explains that the term "other waters" includes those which "are or would be used as habitat by other migratory birds which cross state lines." 51 Fed.Reg. 41,217 (Nov. 13, 1986). This preamble language is commonly known as the "migratory bird rule."

Hallmark argues that to the extent the Clean Water Act permits regulation of isolated intrastate wetlands that could affect interstate commerce based on actual or potential use by migratory birds, Congress has exceeded its powers under the Commerce Clause. The Seventh Circuit first addressed this issue in Hoffman Homes, Inc. v. Administrator, U.S. EPA, 961 F.2d 1310 (7th Cir. 1992) ("Hoffman Homes I"). A residential developer was fined after it filled a one-acre pond without a permit. The EPA asserted jurisdiction over the pond pursuant to the migratory bird rule. The court held that the EPA's (and the Corps') regulation of isolated intrastate wetlands as "waters of the United States" was not authorized by the Clean Water Act. Id. at 1316. The court also held the EPA could not constitutionally exert jurisdiction over the pond based solely on its potential use as a habitat for migratory birds:

Although we recognize that the Commerce Clause power is broad, it has never been extended to reach all areas in (much less those only potentially in) migratory bird flyways.... The Commerce Clause, at the very least, require some connection to human commercial activity.

961 F.2d at 1321-1322 (citations omitted).

On rehearing, the court vacated Hoffman Homes I and held that the migratory bird rule and the EPA's regulation of isolated intrastate wetlands did not violate the Commerce Clause. Hoffman Homes, Inc. v. EPA, 999 F.2d 256, 260 - 261 (7th Cir.1993) ("Hoffman Homes II"). The court explained that the potential use of wetlands by migratory birds was sufficient to support jurisdiction because "millions of people annually spend more than a billion dollars on hunting, trapping, and observing migratory birds" and "the...