U.S. v. Newdunn Associates

• Decision Date: 03 April 2002
• Docket Number: Nos. CIV.A. 2:01CV508, CIV.A. 4:01CV86.,s. CIV.A. 2:01CV508, CIV.A. 4:01CV86.
• Citation: 195 F.Supp.2d 751
• Court: U.S. District Court — Eastern District of Virginia
• Parties: UNITED STATES of America, Plaintiff, v. NEWDUNN ASSOCIATES, Orion Associates, and Northwest Contractors Corporation, Defendants. Dennis H. Treacy, Director Commonwealth of Virginia Department of Environmental Quality, and State Water Control Board, Plaintiffs, v. Newdunn Associates, L.L.P.,

195 F.Supp.2d 751

UNITED STATES of America, Plaintiff, v. NEWDUNN ASSOCIATES, Orion Associates, and Northwest Contractors Corporation, Defendants.

Dennis H. Treacy, Director Commonwealth of Virginia Department of Environmental Quality, and State Water Control Board, Plaintiffs, v. Newdunn Associates, L.L.P.,

Nos. CIV.A. 2:01CV508, CIV.A. 4:01CV86.

United States District Court, E.D. Virginia, Norfolk Division.

April 3, 2002.

United States of America, Michael Anson Rhine, Esq., Craig Paul Wittman,

Esq., U.S. Attorney's Office, Norfolk, Steven Edward Rusak, Esq., Kent Edmund Hanson, Esq., U.S. Department of Justice, Environmental Defense, Environment and Natural Resources Division, Washington, DC, John Kenneth Byrum, Jr., Esq., Rick Randall Linker, Esq., Office of the Attorney General, Richmond, for Plaintiffs.

Mark Randolf Baumgartner, Esq., Richard Hoyt Matthews, Esq., Douglas Eugene Kahle, Pender & Coward, Virginia Beach, for Defendants.

OPINION AND ORDER

MORGAN, District Judge.

The parties come before the Court in these consolidated cases for a non-jury trial, seeking to resolve issues surrounding the Defendant's activities on the forty three (43) acre parcel of land located at the intersection of Industrial Park Drive and Jefferson Avenue in Newport News, Virginia (the "Property" or the "Newdunn Property"). At the conclusion of the trial on March 8, 2002, the Court ruled from the bench that the United States Army Corps of Engineers (the "Corps") did not have jurisdiction to regulate the Property. The Court also ruled that Plaintiff Dennis Treacy ("Treacy"), Director of the Virginia Department of Environmental Quality ("VDEQ"), acting on behalf of the State Water Control Board (the "Board"), possessed no jurisdiction over the Property independent of the Corps' claim of jurisdiction. This order further explains the reasoning of the Court's decision.

I. Factual and Procedural Background

Newdunn Associates, LLP ("Newdunn" or the "Defendants") is the owner of the Property at issue in this case. On May 21, 2001, the Corps issued a second jurisdictional determination that the Newdunn Property contained wetlands which are waters of the United States and any filling would require a "404 permit," pursuant to Section 404 of the Clean Water Act ("CWA"), 33 U.S.C. § 1344(a). From approximately June 12, 2001 through July 12, 2001, Newdunn and/or persons acting on their behalf, conducted, contracted for, supervised and/or otherwise controlled the discharge of dredged or fill material onto the Newdunn Property without a permit under CWA section 404. On June 14, 2001 and June 16, 2001, the Corps issued a cease and desist order to the Defendants. On June 25, 2001, the Board issued Newdunn an Emergency Special Order ("ESO") directing Newdunn Associates to cease all excavation on the Property. Believing that the Corps lacked jurisdiction over the Property and that their activities did not violate state law, the Defendants elected not to comply with these orders.

On July 6, 2001, the United States filed a Complaint in United States v. Newdunn Associates, et. al., Civil Action No. 2:01cv508, seeking inter alia an injunction barring the Defendants from discharging dredged or fill material into the Property without a permit. On July 13, 2001, the Court granted the motion by the United States for a Temporary Restraining Order ("TRO") enjoining the Defendants from conducting any filling or related activity on the Property for a period of ten (10) days. On July 23, 2001, after conducting an evidentiary hearing and viewing the Property, the Court granted a Preliminary Injunction ("PI") with significant modifications to the July 13, 2001 TRO. With certain conditions regarding, amongst other things, the maintenance of a buffer strip of wetlands on the perimeter of the Property and the construction of a ditching system to minimize surface water runoff, the Court lifted the prohibition on the Defendant's activities. The Court indicated at that time that the paramount issue in this case was whether the Corps had jurisdiction to regulate the Property.

From late July, 2001 through approximately September 30, 2001, Defendants and/or persons acting on their behalf conducted, contracted for, supervised and/or otherwise controlled the use of mechanized land-clearing and earth moving equipment to discharge dredged or fill material into a portion of the wetlands on the Newdunn Property.

On July 30, 2001, the Court filed a written Order explaining the July 23, 2001 Preliminary Injunction. The Corps, unsuccessful in its attempt in this Court to enjoin Newdunn's filling activities, then conferred with the state regulatory body, the VDEQ. The day after the Court entered the Preliminary Injunction, Treacy notified Newdunn that it could not excavate ditches on the Property¹ and followed this notice with a civil action in the Circuit Court of the City of Newport News, Virginia, seeking to enjoin the excavation ordered by this Court². Prior to VDEQ's filing this state court claim, Newdunn filed Newdunn Associates, L.L.P. v. Dennis H. Treacy and Bert W. Parolari, Jr., Civil Action No. 2:01cv575, in which Newdunn sought to enjoin Treacy and Parolari, as state officials, from proceeding with plans to seek injunctive relief in state court regarding Newdunn's ditching activities on the Property. On August 8, 2001, Newdunn also filed a petition to remove the state action to this Court, which had been designated Dennis H. Treacy and State Water Control Board v. Newdunn Associates, L.L.P., Civil Action No. 4:01cv86.

In an Order entered in Civil Action No: 2:01cv575 on August 9, 2001, this Court issued a TRO enjoining Treacy and Parolari from instituting any proceeding in state court against Newdunn relating to activities authorized by the PI and ordered them to appear and show cause why such state court proceeding would not be controlled by Civil Action No. 2:01cv508, which was pending in this Court. In a tele-conference hearing held on August 10, 2001, this Court rejected the state's request to dissolve or modify this TRO.

On August 8, 2001, Treacy and Parolari moved to dismiss Newdunn v. Treacy, et. al., Civil Action No. 2:01cv575. On August 17, 2001, the United States filed a Motion to Enforce the Preliminary Injunction in United States v. Newdunn, et. al., Civil Action No. 2:01cv508. On August 20, 2001, Newdunn moved in Civil Action No. 2:01cv575 to convert the August 9, 2001 TRO into a PI. The Court heard evidence and arguments on these interrelated motions on August 20, 2001³. In an Order filed August 22, 2001, the Court extended the TRO for an additional 10 days, ordered Newdunn to obtain a bond with sufficient surety or obtain an appropriate letter of undertaking from a bank in the principal sum of one-hundred and fifty thousand dollars to cover the potential cost of reversing its excavation activities and ordered a hearing upon Newdunn's request for a Preliminary Injunction be held on August 30, 2001. Further, the Court dismissed Parolari as a party to the suit.

On August 23, 2001, Treacy moved to remand Civil Action No. 4:01cv86 to the Newport News Circuit Court. The Court heard arguments on this motion as well as Newdunn's motion to convert the August 9, 2001 TRO to a Preliminary Injunction on August 30, 2001. In an Order filed August 31, 2001 in Civil Action No:201cv575, the Court found preliminarily that (1) Treacy relied on the Corps' assertion of jurisdiction over the Property via the CWA in his attempt to assert jurisdiction to enjoin the excavation of ditches and, (2) Treacy's proffered evidence was insufficient to establish that Newdunn's filling and subsequent excavation activities authorized in the Court's July 30, 2001 Preliminary Injunction was in violation of state statute, Va.Code §§ 62.1-44.5 and 62.1-44.15:5, and (3) as of October 1, 2001, Treacy had independent jurisdiction over further filling activity provided that Treacy also had independent jurisdiction over the Property. Further, the Court converted the TRO into a Preliminary Injunction with modifications, and thereby enjoined Treacy from instituting any proceeding in state court against Newdunn related to activities authorized by the Corps' Preliminary Injunction issued by the Court on July 30, 2001 and modified on August 22, 2001 in Civil Action 2:01cv508. The Court set an expiration date for the Treacy Preliminary Injunction of October 1, 2001.

In an Order filed September 5, 2001 in Civil Action No. 4:01cv86, the Court again found that Treacy relied on the Corps' assertion of jurisdiction over the Property via the CWA in his attempt to assert jurisdiction to enjoin the excavation of ditches. In that Order the Court denied Treacy's Motion to Remand.

On October 4, 2001, the Board affirmed the Emergency Special Order ("ESO") and held that Newdunn was in violation of Va.Code § 62.1-44 et seq. The Board issued a Final Special Order ("FSO") on October 11, 2001 ordering Newdunn to cease its activities on the Property. Both the ESO and FSO listed as the first Finding of Fact that the Corps had jurisdiction over the Property under the CWA.

On October 26, 2001, Treacy moved for Voluntary Dismissal Without Prejudice of Civil Action No. 4:01cv86. On October 29, 2001, Newdunn moved to Consolidate Civil Action No. 2:01cv 508 and Civil Action No. 4:01cv86. On November 7, 2001, Newdunn moved for a Preliminary Injunction to prevent VDEQ from taking any further state administrative actions involving Newdunn's activities on the Property before October 1, 2001. On November 7, 2001, Treacy moved for partial summary judgment against Newdunn on the issue of liability based upon the outcome of the state administrative hearings. The Court held a hearing on these matters on December 11, 2001. In an Order filed December 21, 2001, the Court adhered to its finding that Treacy's exercise of jurisdiction was dependent upon the Corps' alleged jurisdiction under the CWA. Further, the...