John A. Bersani v. United States Environmental Protection Agency
850 F.2d 36 (1988)
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Rule of Law:
When evaluating permits for non-water dependent activities under Section 404 of the Clean Water Act, the EPA may apply a "market entry" approach, considering whether practicable alternative sites were available at the time the permit applicant began its search for a site, not solely at the time the permit application was submitted.
Facts:
- Sweedens Swamp, a 49.5-acre high-quality red maple wetland in South Attleboro, Massachusetts, was identified as a potential site for a shopping mall.
- Edward J. DeBartolo Corporation ("DeBartolo"), Pyramid's predecessor, purchased Sweedens Swamp sometime before April 1982, when an alternative upland site in North Attleboro was available.
- In April 1982, the Massachusetts Department of Environmental Quality Engineering (DEQE) denied DeBartolo's application to build on Sweedens Swamp.
- Pyramid Companies ("Pyramid") took over the project from DeBartolo in 1983.
- On July 1, 1983, New England Development Co. ("NED"), a competitor, purchased options to buy the North Attleboro site, making it arguably unavailable to Pyramid.
- Pyramid purchased Sweedens Swamp from DeBartolo in December 1983 and later sought to fill or alter 32 of its 49.6 acres for the mall, proposing off-site wetland mitigation.
- Pyramid rejected the North Attleboro site as an alternative, claiming it was commercially unfeasible due to insufficient traffic, access, tenant interest, and community resistance, rather than its unavailability.
- The EPA found that Pyramid had not overcome the presumption of available alternatives, partly because Pyramid failed to provide information about the North Attleboro site's availability when it investigated the area.
Procedural Posture:
- In August 1984, Pyramid applied under Section 404(a) to the New England regional division of the Army Corps of Engineers (NE Corps) for a permit to fill Sweedens Swamp.
- In November 1984, the EPA and the Fish and Wildlife Service (FWS) submitted official comments to the NE Corps recommending denial of Pyramid's application.
- On May 2, 1985, the NE Corps recommended to the national headquarters of the Corps that the permit be denied.
- General John F. Wall, Director of Civil Works at the national headquarters of the Corps, reviewed the NE Corps' decision and decided to grant the permit.
- On May 31, 1985, Wall ordered the NE Corps to send Pyramid, EPA, and FWS a notice of its intent to grant the permit.
- On July 23, 1985, EPA's Regional Administrator (RA) initiated a Section 404(c) review of the Corps' decision.
- After notice, public hearings, and comment periods, on March 4, 1986, the RA recommended that EPA veto the permit.
- On May 13, 1986, EPA issued its final determination prohibiting Pyramid from using Sweedens Swamp.
- On July 1, 1986, Pyramid commenced an action in the United States District Court for the Northern District of New York, seeking to vacate EPA's final determination as arbitrary and capricious.
- On October 6, 1987, the District Court granted summary judgment in favor of the EPA and denied Pyramid's motion for summary judgment.
- Pyramid appealed the district court's judgment to the United States Court of Appeals for the Second Circuit.
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Issue:
Does the Clean Water Act's Section 404(b)(1) guidelines, specifically regarding the "practicable alternatives" analysis for non-water dependent activities, require the EPA to assess the availability of alternative sites at the time a permit application is filed, or may the EPA consider the availability of such sites at the time the developer entered the market to search for a site?
Opinions:
Majority - Timbers, Circuit Judge
Yes, the Clean Water Act's Section 404(b)(1) guidelines allow the EPA to assess the availability of alternative sites at the time the developer entered the market to search for a site, and such an interpretation is reasonable and supported by the administrative record. The court found that the regulatory language (40 C.F.R. Sec. 230.10(a)(2)) using the present tense "is available" does not specify when availability is determined, making the regulations "essentially silent" on the timing issue. Therefore, it is appropriate to consider the objectives of the Act. The court emphasized that the purpose of the "practicable alternatives" analysis, as stated in the preamble to the 404(b)(1) guidelines, is "to recognize the special value of wetlands and to avoid their unnecessary destruction, particularly where practicable alternatives were available in non-aquatic areas." Pyramid's "time-of-application" theory would thwart this purpose by removing the incentive for developers to search for alternative sites at the crucial decision-making stage, potentially allowing developers to wait until alternatives disappear before applying for a permit to fill wetlands. The court found no prior case law or agency practice that directly addressed this timing issue, deeming it an issue of first impression, and thus EPA's current application was not contrary to past practice. While acknowledging a potential divergence between EPA and the Corps regarding the timing, the court affirmed EPA's interpretation as "reasonable" under the arbitrary and capricious standard of the Administrative Procedure Act (5 U.S.C. Sec. 706(2)(A)). The court also rejected Pyramid's subordinate claims, finding the "market entry" concept specific enough given its case-by-case nature, the application not "unfairly retroactive" but rather an interpretation of existing law, and the district court's rationale being supported by EPA's own articulated reasons.
Dissenting - Pratt, Circuit Judge
No, the EPA should not use the "market entry" theory because it ignores the statute's basic purpose, creates unfair and anomalous results, and improperly injects vagueness into the permit process. The dissent argued that Section 404's primary purpose is to balance environmental protection with economic needs by focusing on the land itself and whether a site should be preserved, not on the specific developer's past actions or motives. The market entry theory "taints" a specific developer, potentially allowing a "latecomer" developer (B) to obtain a permit for the same wetland site that developer A was denied, simply because developer B entered the market after alternatives became unavailable. This punishes developer A without protecting the land. The theory creates "exquisite vagueness" regarding when "market entry" actually occurs (e.g., first memo, first consultant, first visit), making it impossible for developers to know the standards. The dissent believed the EPA should consider the circumstances and most up-to-date data existing at the time it makes its decision ("time of decision" theory) to make a fully informed balance of economic and ecological concerns, reinforced by the present-tense language "is available" in the regulation, consistent with Gwaltney of Smithfield.
Analysis:
This case is significant for clarifying the temporal scope of the "practicable alternatives" analysis under the Clean Water Act's Section 404 guidelines for non-water dependent projects. By upholding EPA's "market entry" approach, the Second Circuit emphasized the regulatory goal of incentivizing developers to avoid wetlands from the outset of a project search. This decision reinforces EPA's authority to interpret its own regulations in a manner consistent with environmental protection goals, even when another administering agency (the Corps) may have implicitly taken a different view. It potentially impacts future wetland development by compelling early consideration of alternatives and shifting the burden onto developers to demonstrate that no practicable upland alternative was available at the earliest stages of project planning.
