ELR Citation: ELR 21026
No(s). 92-597-LO (D. Del. Feb 19, 1993)

The court grants a land developer a preliminary injunction to enjoin the U.S. Army Corps of Engineers (the Corps) from enforcing its order requiring the developer to fill completely ponds that the developer previously excavated on wetlands located within its development project boundaries, because the Corps was probably without jurisdiction under the Federal Water Pollution Control Act (FWPCA) to require a §404 after-the-fact permit for pond excavation activities and probably lacked authority under the FWPCA to require the restoration of the ponds. The court holds that the Corps' requirement that the developer initiate plans to restore the ponds is postponed pending a full review of the administrative record. However, to the extent that the developer has engaged in activities over which the Corps may exercise FWPCA jurisdiction, the Corps properly required the developer to include a permit request for a canal in its §404 after-the-fact permit application, because the canal project is related to the larger development project. Additionally, the court dismisses the developer's motions requesting the court to enjoin the Corps from future enforcement actions and that the court direct the Corps to issue the developer the canal permit separately, because such relief is beyond the scope of the court's authority at this stage of the proceedings.

Two years after the developer began developing land for resale as waterfront lots, during which time the developer engaged in extensive consultation with the Corps to ensure compliance with applicable environmental wetlands requirements, the Corps notified the developer that a 12-acre area of the total development project was under the agency's jurisdictional control. During a subsequent on-site investigation, Corps investigators determined that 10 ponds excavated by the developer existed on the wetland portion of the project and that the developer had engaged in illegal wetlands clearing. The Corps subsequently issued a cease and desist order and directed the developer to apply for a §404 after-the-fact permit. The developer submitted the permit application and requested that the Corps sever the developer's permit request for a water and sewer utility crossing permit (canal permit), claiming it was unrelated to matters pertaining to §404 wetlands jurisdiction and the excavation of the ponds. The government responded that the canal permit request must be included with the after-the-fact permit application. Subsequently, the Corps rejected the developer's permit application as contrary to the general public interest, but offered the developer an opportunity to receive an alternative permit, which would include the canal permit, if the developer satisfied 31 "special conditions." The government noted that if this alternative was not accepted, the developer would have 60 days to initiate action for environmental restoration including the complete restoration of the excavated ponds.

The court first holds that judicial review of issues relating to the completed permitting process does not constitute judicially proscribed preenforcement review of agency enforcement matters, and such review will not disrupt the administrative process. Under the terms and regulations of the FWPCA, the Corps has already reached a thoroughly considered decision on the after-the-fact permit and that decision has resulted in legal consequences to the developer and has effectively determined its obligations. Moreover, the Corps' denial of the permit reflects the agency's definitive position that the project is "contrary to the general public interest." The court also rejects the Corps' position that the developer has "recharacterized" its demands for relief, because the entire record reveals that the developer seeks both a postponement of the Corps' directive that the developer submit a plan for the complete restoration of the ponds within 60 days and/or the total deletion of any and all conditions relating to the restoration of the ponds. Section 705 of the Administrative Procedure Act (APA) gives the court jurisdiction to postpone the date of the Corps' action concerning the restoration of the ponds if the appropriate legal standards have been met by the developer. The court also rejects the developer's "extensive remedial powers" theory under APA §705 for seeking to sever the canal permit from the §404 permit. The scope of the relief available is limited to a postponement of the agency action or a preservation of the status or rights of the parties. When a court is determining interim relief, APA §705 does not confer jurisdiction on the court to alter the status quo nor does it allow the court in issuing interim relief to dictate specific terms or conditions to a governmental agency. Ordering the Corps to issue the canal permit would not preserve the status quo or rights of the parties because the canal permit has never been approved.

Turning to the merits of issuing injunctive relief, the court holds that the developer has demonstrated a strong probability that the Corps' exercise of FWPCA jurisdiction over pond excavation activities and the subsequent pond filling requirements associated with the Corp's permit decision was arbitrary and capricious, in excess of the Corp's statutory authority under the FWPCA, was issued without observance of APA-required procedures and constituted an abuse of discretion. The reach of the FWPCA extends only to the discharge of pollutants into navigable waters and not the excavation or dredging activities that occur in §404 wetlands, and the developer's position that pond excavation is not a discharge of dredged material subject to FWPCA jurisdiction is supported by the current regulatory standards. Thus, the Corps was without jurisdiction to require the developer to submit to the after-the-fact permit process for excavation activities and accordingly could not legally compel the developer to restore the excavated ponds. Although the government's decision to adopt the excavation and land-clearing permit requirements in a regulatory guidance letter issued by the agency is arguably beneficial for protecting the environment, the Corps' reliance on that guidance in lieu of its own validly promulgated regulations is fatal to its after-the-fact permit decision in this case. The Corps adopted this guidance in a manner having the force of law without being issued in accordance with the appropriate notice-and-comment requirements of APA §553. There is little doubt that the Corps used the guidance as a substantive rule having the force of law. The court concludes that this interim review of the record indicates that the developer would eventually succeed in proving that the Corps was not authorized to employ the guidance as a basis for requiring the developer to seek an after-the-fact permit for landscaping activities associated with the excavation or dredging of the ponds.

The court next holds that the Corps was reasonable and within its authority in requiring the developer to submit the canal permit as part of the after-the-fact §404 permit for the development project. All activities reasonably related to one project that require a permit should be included in one permit application under the plain language of the Corps' regulations at 33 C.F.R. §325.1(d)(2).

The court holds that the developer has shown that its alleged economic injury from the Corps' actions satisfies the more stringent standard required where a purely economic injury is alleged. The developer has demonstrated that the alleged injuries it will suffer if a preliminary injunction does not issue are peculiar in that they are not generally compensable. Here, as a result of the Corps' probably improper permit decision, the irreparable injury absent a stay is the immediate termination of the development project and an overall loss of millions of dollars by the developer. Further, in the absence of injunctive relief, the developer is without a viable means of compensation for its business related economic injuries, because it is a single enterprise entity. Moreover, without injunctive relief, the harm to interested persons such as the lot owners far outweighs any harm to either party if the injunction is issued.

Counsel for Plaintiff
F. Michael Parkowski
Parkowski, Noble & Guerke
116 W. Water St., P.O. Box 598, Dover DE 19903
(302) 678-3262

Counsel for Defendants
Robert E. Lefevre
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000