enforcement action, does the Corps have to prove the existence of wetlands by a preponderance of the evidence?
The Corps' initial position is that it does not have such an obligation.
Instead, it asserts that its determination that an area is wetlands must be accepted by the court unless the determination is found to be arbitrary and capricious under 5 U.S.C. § 706 (2)(A).
Stoeco acknowledges that the "arbitrary and capricious" standard is appropriate in a "citizens suit" brought under § 505(a)
of the Clean Water Act to challenge a wetlands determination by the Corps. But Stoeco argues that such a standard is not appropriate in an enforcement action where the Corps invokes the power of the court to impose fines and an injunction.
What is the appropriate standard of review in an enforcement action brought by the Corps is a question of first impression in the Third Circuit. There have been several enforcement actions in the Third Circuit in which the trial court, without objection from the Corps, took evidence and made a de novo factual finding on the existence of wetlands. See, United States v. Ciampitti, 583 F.Supp. 483 (D.N.J 1984), aff'd 772 F.2d 893 (3rd Cir. 1985), cert. denied, 467 U.S. 1014 (1986); United States v. Malibu Beach, Inc., 711 F.Supp. 1301 (D.N.J 1989). This case is unique, however, in that the Corps resists any requirement to prove the existence of wetlands by a preponderance of the evidence in a plenary hearing.
As in all cases that involve a statutory regime, we begin our analysis with an examination of the relevant statutory provisions and regulations. The federal Clean Water Act ("CWA") prohibits the discharge of fill materials into the "waters of the United States" unless authorized by a Corps permit issued pursuant to 33 U.S.C. § 1344. "Wetlands adjacent to navigable waters" and their tributaries are included within the definition of "waters of the United States." 33 C.F.R. § 328.3(a)(3). See United States v. Riverside Bayview Homes, Inc., 474 U.S. 121, 133, 88 L. Ed. 2d 419, 106 S. Ct. 455 (1985) (upholding the inclusion of "wetlands adjacent to navigable waters" as within the scope of the Corps' regulatory authority). To be wetlands, an area must: (1) be durationally inundated or saturated; (2) be supportive of vegetation dependent on or adapted to saturated soils; and (3), contain saturated soils. 33 C.F.R. § 328.3(b) (1987).
Taken together, the CWA and the accompanying regulations provide a definition of wetlands and require a permit in order to fill them. They do not, however, answer the question of who, in an enforcement action, is to determine that an area meets the definition of wetlands. For an answer to this question this court is forced to look elsewhere.
The Corps urges that the answer is to be found in the Administrative Procedure Act, 5 U.S.C. § 706, arguing that this provision relieves the Corps of any obligation to prove the existence of wetlands in an enforcement action by a preponderance of the evidence. According to the Corps, the trial court must accept its administrative determination that the area is wetlands unless it finds the Corps' determination to be arbitrary and capricious. For several reasons, this court finds this interpretation of § 706 to be erroneous.
In the only federal case to squarely address this issue, Leslie Salt Company v. United States, 660 F.Supp. 183 (N.D. Cal. 1987), the Corps' reading of § 706 was expressly rejected.
In a case remarkably similar to this one, Leslie held that the Corps must carry the burden of persuasion on the "existence of wetlands" issue in an enforcement action. In reaching this conclusion, Leslie reasoned that there was a difference between the standard of review which governed a "citizens suit" challenging a Corps' wetlands designation and the burden of proof in an enforcement action. Id., 660 F.Supp. at 186.
This court finds the reasoning in Leslie compelling. In a "citizens suit" brought under § 505 of the CWA, a third party challenges the agency's action and essentially asks the Court to "second-guess" agency decisions and findings. In such a situation, the arbitrary and capricious standard is entirely appropriate. The court has neither the training nor the inclination to serve as an oversight body for every agency decision. See Avoyelles Sportsmen's League, Inc. v. Marsh, 715 F.2d 897, 906 (5th Cir 1983); Golden Gate Audubon Society v. Army Corps of Engineers, 700 F.Supp. 1549, (N.D. Cal. 1988).
An enforcement action, however, is an entirely different matter. In an enforcement action, the Corps' decisions are not being questioned by a group of citizens. Rather, it is the Corps itself that is taking the initiative. In an enforcement action, the Corps seeks to invoke the power of the court in order to impose penalties and injunctive relief, including the removal of intrusive construction. In such a case, to apply an "arbitrary and capricious" standard to the Corps' assertion that certain lands are wetlands would turn the normal burden of proof at trial on its head.
The facts of this case dramatically illustrate the consequences that would result if this Court were to reject the reasoning of Leslie. Part of the relief sought by the Corps is the destruction of five completed homes with a total value of approximately $ 450,000. Three of these homes have been sold to third parties and would have to be re-purchased if the Corps prevails. The Corps also seeks the destruction of sixteen partially completed homes, with construction costs totaling more than $ 400,000. When one adds in the costs of site preparation, engineering costs, property taxes and legal fees, Stoeco's losses in this case could easily exceed $ 2,000,000. To hold that the Corps may subject a property owner to such staggering losses without having to prove the existence of wetlands by a preponderance of the evidence seems contrary to basic principles of fairness.
This court's conclusion is bolstered by the impressive list of cases in which, in an enforcement action, the trial court took evidence and decided the "existence of wetlands" issue de novo without objection from the Corps. Ciampitti, supra ; United States v. Rivera Torres, 656 F.Supp. 251 (D.P.R. 1987), aff'd, 826 F.2d 151 (1st Cir. 1987); United States v. Larkins, 657 F.Supp. 76 (W.D. Ky. 1987), aff'd, 852 F.2d 189 (6th Cir. 1988), cert. denied, 489 U.S. 1016, 103 L. Ed. 2d 193, 109 S. Ct. 1131 (1989); Leslie, 700 F.Supp. 476 (N.D. Cal 1988), rev'd on other grounds, 896 F.2d 354 (9th Cir. 1990), cert. denied, U.S. , 111 S. Ct. 1089, 112 L. Ed. 2d 1194 (1991). See also United States v. Riverside Bay View Homes, Inc., 474 U.S. 121, 88 L. Ed. 2d 419, 106 S. Ct. 455 (1985). This observation is not meant to imply that there is some sort of estoppel operating in this case. If the Corps has been given the right to prevail at trial without proving the existence of wetlands by a preponderance of the evidence, its failure to assert that right in previous cases does not destroy that right. It seems inconceivable, however, that so many appellate courts could review so many trial transcripts without someone arguing that a de novo determination of the wetlands issue by the trial court was improper.
For all of these reasons, this court finds that 5 U.S.C. § 706 does not, in an enforcement action, relieve the Corps of the obligation to prove the existence of wetlands by a preponderance of the evidence.
III. Propriety of Granting Summary Judgment
Summary judgment is appropriate here only if all the probative materials in the record "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."
Fed. R. Civ. P. 56(c). See Hersh v. Allen Products Co., 789 F.2d 230, 232 (3rd Cir. 1986); Lang v. New York Life Ins. Co., 721 F.2d 118, 119 (3rd Cir. 1983).
In determining whether any genuine issues of material fact remain, the court must resolve all reasonable doubts in favor of the non-moving party. Meyer v. Riegel Products Corp., 720 F.2d 303, 307 n.2 (3rd Cir. 1983), cert. denied, 465 U.S. 1091, 79 L. Ed. 2d 910, 104 S. Ct. 2144 (1984); Smith v. Pittsburgh Gage & Supply Co., 464 F.2d 870, 874 (3rd Cir. 1972).
That does not mean, however, that fanciful or irrelevant factual disputes will stave off summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986); Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). The disputed fact must be "material." A disputed fact is "material" only if it would affect the outcome of the suit. Anderson, 477 U.S. at 248.
Further, where the moving party has made a properly supported motion for summary judgment, as the Corps has done in this case, it is incumbent upon the non-moving party to come forward with specific facts to show that there is a genuine issue of material fact. Id., 477 U.S. at 248. Thus, once the moving party has carried its burden of establishing the absence of genuine issues of material fact, the non-moving party may not rest upon allegations or denials in its pleading. Fed. R. Civ. P. 56(e). It must produce sufficient evidence to reasonably support a jury verdict in its favor. Matsushita, 475 U.S. at 586.
In this case, the Corps alleges that Stoeco violated the federal Clean Water Act by illegally filling in wetlands and seeks summary judgment as to Stoeco's liability. In order to establish liability at trial, the Corps would have to prove three elements by preponderance of the evidence: (1) that the area contained wetlands; (2) that it was filled by Stoeco; and (3) that there was no "fill permit". The second and third elements have been conceded by Stoeco. The existence of the first element, however, is contested.
The Corps contends that its experts have conclusively established that the tract contains wetlands. For this proposition, it relies primarily on the administrative record and the affidavit of Corps Biologist Michael Claffey, which conclude that all three of the wetlands characteristics mentioned previously existed on the tract in 1987. The Corps then points out that none of Stoeco's affidavits offers any affirmative evidence that the tract does not contain these wetlands elements. Rather, the Stoeco affidavits merely challenge Claffey's methods of gathering data as unsound.
From this, the Corps concludes that it is entitled to summary judgment. According to the Corps, whether or not Claffey's methods were sound is immaterial to the resolution of this dispute. The Corps maintains that in the face of Claffey's uncontradicted conclusion that the tract contains wetlands elements, Stoeco must produce evidence that affirmatively shows the non-existence of wetlands.
Stoeco denies any such obligation. It argues that since the Corps has the burden of proving the existence of wetlands at trial, Stoeco does not have to introduce evidence that the tract is not wetlands in order to survive a motion for summary judgment. Rather, Stoeco argues that its evidence has indeed demonstrated a genuine material issue of fact: the soundness of the Corps' data collection methods and the accuracy of the government reports.
After examining the relevant submissions in some detail, this court is compelled to agree with Stoeco on this point and deny summary judgment. The flaw in the government's summary judgment argument is its assumption that the only possible "genuine issue of material fact" remaining is "the existence of wetlands." Once the government has made this assumption, it is only a short leap to its conclusion that because the government has introduced evidence of the existence of wetlands, Stoeco must respond in kind and raise evidence of the non-existence of wetlands.
Such an argument fails to comprehend the meaning of "material fact" as that term is used in Fed. R. Civ. P. 56 (c). A "material fact" does not have to be one of the elements of the movant's prima facie case. Rather, it can be any fact that might affect the outcome of the action under governing law. Anderson, 477 U.S. at 248; Metro Transp. Co. v. North Star Reinsurance Co., 912 F.2d 672 (3rd Cir. 1990); Beck v. Somerset Technologies Inc., 882 F.2d 993 (5th Cir. 1989). Since the Corps has the burden of proving the existence of wetlands by a preponderance of the evidence, whether the Corps' data was gathered in a reliable manner is obviously "material." If the fact-finder concludes that the Corps' methodology was flawed, the Corps may be unable to meet its burden of proving that the lands in question are "wetlands."
Because the Court finds that Stoeco's affidavits demonstrate a genuine issue as to whether the Corps' data was gathered in a reliable manner, and because it finds this issue to be material, the Corps' motion for partial summary judgment is denied.
An appropriate order follows.
William G. Bassler, U.S.D.J.