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Bersani v. Robichaud

decided: June 8, 1988.

JOHN A. BERSANI, NEWPORT GALLERIA GROUP, ROBERT J. CONGEL AND THE PYRAMID COMPANIES, APPELLANTS,
v.
JOSEPH ROBICHAUD AND CITIZENS IN SUPPORT OF ATTLEBORO MALL, INTERVENOR-PLAINTIFFS-APPELLANTS, HOME BUILDING ASSOCIATION OF MASSACHUSETTS, INTERVENOR-PLAINTIFF, UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, UNITED STATES ARMY CORPS OF ENGINEERS, LEE THOMAS, IN HIS OFFICIAL CAPACITY AS ADMINISTRATOR OF THE UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, RICHARD K. DAWSON, IN HIS OFFICIAL CAPACITY AS ASSISTANT SECRETARY FOR CIVIL WORKS, UNITED STATES ARMY, AND JENNIFER JOY WILSON, IN HER OFFICIAL CAPACITY AS ASSISTANT ADMINISTRATOR FOR EXTERNAL AFFAIRS, UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, APPELLEES, SIERRA CLUB, ENVIRONMENTAL DEFENSE FUND, NATIONAL WILDLIFE FEDERATION, NATIONAL AUDUBON SOCIETY, CONSERVATION LAW FOUNDATION OF NEW ENGLAND, INC., MASSACHUSETTS AUDUBON SOCIETY, CITIZENS FOR RESPONSIBLE ENVIRONMENTAL MANAGEMENT, MASSACHUSETTS SOCIETY FOR CONSERVATION PROFESSIONALS, AUDUBON SOCIETY OF RHODE ISLAND, RHODE ISLAND ASSOCIATION OF CONSERVATION COMMISSIONERS AND NATURAL RESOURCES DEFENSE COUNCIL, INTERVENOR-DEFENDANTS



Appeal from a judgment entered October 23, 1987 in the Northern District of New York, Thomas J. McAvoy, District Judge, 674 F. Supp. 405, granting appellee's motion for summary judgment and denying appellants' motion for summary judgment. Affirmed.

Timbers, Pratt and Miner, Circuit Judges.

Author: Timbers

TIMBERS, Circuit Judge:

Appellants John A. Bersani, the Pyramid Companies, Newport Galleria Group and Robert J. Congel ("Pyramid", collectively) appeal from a judgment entered October 23, 1987 in the Northern District of New York, Thomas J. McAvoy, District Judge, granting summary judgment in favor of appellees, the United States Environmental Protection Agency ("EPA"), the United States Army Corps of Engineers (the "Corps"), Lee Thomas, the Administrator of the EPA, Richard K. Dawson, Assistant Secretary for Civil Works, United States Army, and Jennifer Joy Wilson, Assistant Administrator for External Affairs of the EPA (the "Federal Appellees" collectively), and denying Pyramid's motion for summary judgment.

This case arises out of Pyramid's attempt to build a shopping mall on certain wetlands in Massachusetts known as Sweedens Swamp. Acting under the Clean Water Act, 33 U.S.C. § 1251 et seq. (1982), EPA vetoed the approval by the Corps of a permit to build the mall because EPA found that an alternative site had been available to Pyramid at the time it entered the market to search for a site for the mall. The alternative site was purchased later by another developer and arguably became unavailable by the time Pyramid applied for a permit to build the mall.

On appeal, the thrust of Pyramid's argument is a challenge to what it calls EPA's "market entry" theory, i.e., the interpretation by EPA of the relevant regulation, which led EPA to consider the availability of alternative sites at the time Pyramid entered the market for a site, instead of at the time it applied for a permit. Pyramid argues principally (1) that the market entry approach is contrary to the regulatory language and past practice; and (2) that since the Corps, another agency which was jointly responsible with EPA for administering the program in question, interpreted the pertinent regulation in a different way than EPA had, and since the market entry issue does not involve environmental expertise, this Court should not defer to EPA's interpretation of the regulation. Other subordinate claims are raised by appellants as well as by two intervenors and the amicus curiae.*fn1

We hold (1) that the market entry theory is consistent with both the regulatory language and past practice; (2) that EPA's interpretation, while not necessarily entitled to deference, is reasonable; and (3) that EPA's application of the regulation is supported by the administrative record. We agree with the district court's conclusion that EPA's findings were not arbitrary and capricious. We also hold that Pyramid's other arguments, and the arguments of one intervenor and the amicus, lack merit.

We affirm.

I.

We shall summarize only those facts and prior proceedings believed necessary to an understanding of the issues raised on appeal.

A. Statutory and Regulatory Framework

One of the sections of the Clean Water Act (the "Act") relevant to the instant case is § 301(a), 33 U.S.C. § 1311(a) (1982), which prohibits the discharge of any pollutant, including dredged or fill materials, into the nation's navigable waters, except in compliance with the Act's provisions, including § 404. It is undisputed that Sweedens Swamp is a "navigable water", as defined in 33 U.S.C. § 1362 (1982), and that Pyramid's shopping center proposal will involve the discharge of dredged or fill materials.

Section 404 of the Act, 33 U.S.C. § 1344 (1982 & Supp. III 1985), focusing on dredged or fill materials, provides that the United States Army and EPA will share responsibility for implementation of its provisions. EPA and the Corps also share responsibility for enforcing the Act. 33 U.S.C. §§ 1311 (1982), 1319 (1982), 1344(n) and (s) (1982). Section 404(a) authorizes the Secretary of the Army, acting through the Corps, to issue permits for the discharge of dredged or fill materials at particular sites. 33 U.S.C. § 1344(a) (1982). Section 404(b) provides that, subject to § 404(c), the Corps must base its decisions regarding permits on guidelines (the "404(b)(1) guidelines") developed by EPA in conjunction with the Secretary of the Army. 33 U.S.C. § 1344(b) (Supp. III 1985).

The 404(b)(1) guidelines, published at 40 C.F.R. Part 230 (1987), are regulations containing the requirements for issuing a permit for discharge of dredged or fill materials. 40 C.F.R. § 230.10(a)*fn2 covers "non-water dependent activities" (i.e., activities that could be performed on non-wetland sites, such as building a mail) and provides essentially that the Corps must determine whether an alternative site is available that would cause less harm to the wetlands. Specifically, it provides that "no discharge of dredged or fill material shall be permitted if there is a practicable alternative" to the proposal that would have a "less adverse impact" on the "aquatic ecosystem". It also provides that a practicable alternative may include "an area not presently owned by the applicant which could reasonably be obtained, utilized, expanded or managed in order to fulfill the basic purpose of the proposed activity." 40 C.F.R. 230.10(a)(2). It further provides that, "unless clearly demonstrated otherwise", practicable alternatives are (1) "presumed to be available" and (2) "presumed to have less adverse impact on the aquatic ecosystem". 40 C.F.R. 230.10(a)(3). Thus, an applicant such as Pyramid must rebut both of these presumptions in order to obtain a permit. Sections 230.10(c) and (d) require that the Corps not permit any discharge that would contribute to significant degradation of the nation's wetlands and that any adverse impacts must be mitigated through practicable measures.

In addition to following the 404(b)(1) guidelines, the Corps may conduct a "public interest review". 33 C.F.R. § 320.4 (1987). This public interest review is not mandatory under § 404, unlike consideration of the 404(b) guidelines. In a public interest review, the Corps' decision must reflect the "national concern" for protection and use of resources but must also consider the "needs and welfare of the people." Id.

Under § 404(c) of the Act, 33 U.S.C. § 1344(c), EPA has veto power over any decision of the Corps to issue a permit. It is this provision that is at the heart of the instant case.

Specifically, § 404(c) provides that the Administrator of EPA may prohibit the specification of a disposal site "whenever he determines, after notice and opportunity for public hearings, that the discharge of materials into such area will have an unacceptable adverse effect" on, among other things, wildlife.*fn3 An "unacceptable adverse effect" is defined in 40 C.F.R. § 231.2(e) as an effect that is likely to result in, among other things, "significant loss of or damage to . . . wildlife habitat". The procedure under § 404(c) begins with the Regional Administrator ("RA") who, under § 231.3(a), must notify the Corps and the applicant when it is possible he will find an "unacceptable adverse effect". If within 15 days the applicant fails to satisfy the RA that no such effect will occur, the RA must publish his proposed determination to veto the grant of a permit. A period for public comment and an optional public hearing follows, after which the RA either withdraws the determination or submits a recommended determination to the national Administrator, whose decision to affirm, modify or rescind the RA's recommendation is the final determination of EPA for purposes of judicial review. The burden of proving that the discharge will have an "unacceptable adverse effect" is on EPA 45 Fed. Reg. 85,336, 85,338 (1980); 44 Fed. Reg. 58,076, 58,080 (1979).

In short, both EPA and the Corps are responsible for administering the program for granting permits for discharges of pollutants into Wetlands under § 404. The Corps has the authority to issue permits following the 404(b)(1) guidelines developed by it and EPA; EPA has the authority under § 404(c) to veto any permit granted by the Corps. The Corps processes about 11,000 permit applications each year. EPA has vetoed five decisions by the Corps to grant permits.

B. Factual Background of the Sweedens Swamp Project

Sweedens Swamp is a 49.5 acre wetland which is part of an 80 acre site near Interstate 95 in South Attleboro, Massachusetts. Although some illegal dumping and motorbike intrusions have occurred, these activities have been found to have had little impact on the site which remains a "high-quality red maple swamp" providing wildlife habitat and protecting the area from flooding and pollution.

The effort to build a mall on Sweedens Swamp was initiated by Pyramid's predecessor, the Edward J. DeBartolo Corporation ("DeBartolo"). DeBartolo purchased the Swamp some time before April 1982. At the time of this purchase an alternative site was available in North Attleboro (the "North Attleboro site"). Since Massachusetts requires state approval (in addition to federal approval) for projects that would fill wetlands, DeBartolo applied to the Massachusetts Department of Environmental Quality Engineering ("DEQE") for permission to build on Sweedens Swamp. DEQE denied the application in April 1982.

Pyramid took over the project in 1983 while the appeal of the DEQE denial was pending. In April 1983, Massachusetts adopted more rigorous standards for approval of permits. The new standards added wildlife habitat as a value of wetlands to be protected and required the absence of a "practicable alternative". In March 1985, DEQE granted approval under the old, less stringent, regulations. The Massachusetts District Court reversed on the ground that DEQE should have applied the new regulations, but the Massachusetts Supreme Judicial Court ultimately upheld DEQE's approval. Citizens for Responsible Environmental Management v. Attleboro Mall, Inc., 400 Mass. 658, 511 N.E.2d 562 (1987).

One of the key issues in dispute in the instant case is just when did Pyramid begin searching for a suitable site for its mall. EPA asserts that Pyramid began to search in the Spring of 1983. Pyramid asserts that it began to search several months later, in September 1983. The difference is crucial because on July 1, 1983--a date between the starting dates claimed by EPA and Pyramid--a competitor of Pyramid, the New England Development Co. ("NED"), purchased options to buy the North Attleboro site. This site was located upland and could have served as a "practicable alternative" to Sweedens Swamp, if it had been "available" at the relevant time. Thus, if the relevant time to determine whether an alternative is "available" is the time the applicant is searching for a site (an issue that is hotly disputed), and if Pyramid began to search at a time before NED acquired options on the North Attleboro site, there definitely would have been a "practicable alternative" to Sweedens Swamp, and Pyramid's application should have been denied. On the other hand, if Pyramid did not begin its search until after NED acquired options on the North Attleboro site, then the site arguably was not "available" and the permit should have been granted. Of course it also is possible that the North Attleboro site remained "available" after NED's acquisition of the options, since Pyramid arguably could have purchased the options from NED. Moreover, since the North Attleboro site indisputably was "available" when Pyramid's predecessor, DeBartolo, purchased Sweedens Swamp, one might argue, as EPA does, that Pyramid should be held to stand in its predecessor's shoes. The district court apparently agreed with Pyramid on the issue of when Pyramid entered the market, stating that "Pyramid initially became interested in developing a shopping mall in the Attleboro area in September 1983". Bersani v. EPA, 674 F. Supp. 405, 409 (N.D.N.Y. 1987).

In December 1983, Pyramid purchased Sweedens Swamp from DeBartolo. In August 1984, Pyramid applied under § 404(a) to the New England regional division of the Corps (the "NE Corps") for a permit. It sought to fill or alter 32 of the 49.6 acres of the Swamp; to excavate nine acres of uplands to create artificial wetlands; and to alter 13.3 acres of existing wetlands to improve its environmental quality. Later Pyramid proposed to mitigate the adverse impact on the wetlands by creating 36 acres of replacement wetlands in an off-site gravel pit.

During the review of Pyramid's application by EPA, by the Fish and Wildlife Service ("FWS") and by the Corps, Pyramid submitted information on "practicable alternatives", especially the North Attleboro site. In rejecting that site as an alternative, Pyramid asserted that building a mall there was not feasible, not that the site was unavailable. In the words of the district court, Pyramid claimed that

"the site lacked sufficient traffic volume and sufficient access from local roads, potential department store tenants had expressed strong doubts about the feasibility of the site and previous attempts to develop the site had ...


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