CADDNAR

[CITE: Centre Properties v. DNR, In re Hoosier Environmental Council, 10 CADDNAR 49 (2005)]

Cause # 04-080W
Caption: Centre Properties v. DNR, In re Hoosier Environmental Council
Administrative Law Judge: Jensen
Attorneys: McInerny, Marron; Boyko; Wieneke
Date: March 24, 2005

[NOTE 1: FOLLOWING ORAL ARGUMENT BEFORE THE COMMISSION’S AOPA COMMITTEE ON OBJECTIONS FILED BY INTERVENTION PETITIONERS, HEC, FRANK AND MAHONEY, AND BY CLAIMANT, CENTRE PROPERTIES, LLC, THE ALJ’S NON-FINAL ORDER ON INTERVENTION WAS MODIFIED AND THE FOLLOWING FINAL ORDER ENTERED. HEC, FRANK AND MAHONEY SOUGHT JUDICIAL REVIEW IN THE MARION CIRCUIT COURT (49F12-0505-MI-016786). ON OCTOBER 27, 2005, THE MARION SUPERIOR COURT DISMISSED WITHOUT PREJUDICE. ORDER FOLLOWS THE COMMISSION'S FINDINGS OF FACT AND CONCLUSIONS OF LAW.]

[NOTE 2: SUBSEQUENT TO ISSUANCE OF THE COMMISSION’S FINAL ORDER ON HEC’S, FRANK’S AND MAHONEY’S PETITION TO INTERVENE, THE CLAIMANT, CENTRE PROPERTIES, LLC AND THE RESPONDENT, DNR, SUBMITTED AN AGREED ORDER THAT WAS ADOPTED AS THE COMMISSION'S FINAL ORDER ON AUGUST 26, 2005. HEC, FRANK AND MAHONEY ALSO SOUGHT JUDICIAL REVIEW OF THIS FINAL ORDER IN THE MARION CIRCUIT COURT (49F12-0509-MI-038096). ON DECEMBER 21, 2006, THE MARION SUPERIOR COURT ENTERED JUDGMENT UPHOLDING THE COMMISSION'S FINAL ORDER. THIS JUDGMENT FOLLOWS DISMISSAL ORDER REFERENCED IN NOTE 1.]

FINAL ORDER OF THE NATURAL RESOURCES COMMISSION

The petitioners’ contention that IC 13-30-1-5 grants to them a conditional statutory right to intervene in this proceeding is in error.

Petitioners HEC, Mahoney and Frank have failed to successfully establish that they may be sufficiently aggrieved or adversely affected by a reversal of the Department’s order so as to support their petition for intervention in this proceeding.

STATEMENT OF THE CASE:

1. At issue in this proceeding is application for a certificate of approval for construction in a floodway # FW-22, 170. (hereinafter application # FW-22, 170) denied to the applicant, Centre Properties, by the Department of Natural Resources (hereinafter Department) on March 16, 2004. Application # FW-22, 170 sought to fill approximately 15.4 acres within the floodway of the West Fork White River for the purpose of developing a commercial center, expanding an existing cemetery and forest area.

2. Application # FW-22, 170 was denied due to "failure to provide modeling information necessary to adequately review the project…" relating to surcharges and the efficiency and capacity of the floodway.

3. This proceeding was initiated by Centre Properties with its "Petition for Administrative Review" filed on April 1, 2004 alleging that it had complied with the Department’s request for modeling information and that the Department’s denial of application # FW-22, 170 was made in bad faith and constituted a denial of due process to Centre Properties.

4. This proceeding is controlled by IC 4-21.5 (the "administrative orders and procedures act" or "AOPA"). The Indiana Natural Resources Commission adopted rules at 312 IAC 3-1 to assist in its administration of "AOPA," and 312 IAC 3-1 also applies to this proceeding.

5. A prehearing conference was held on June 7, 2004 at which time the parties agreed to hold this proceeding in abeyance for ninety (90) days due to Centre Properties’ filing of its "Complaint for Declaratory Relief" in the Marion County Courts. A status conference was held on September 15, 2004, at which time the parties agreed to continue this proceeding for an additional ninety (90) days while awaiting the Marion County Court’s hearing and decision on the parties’ competing Motions to Dismiss and Motions for Summary Judgment.

6. On June 22, 2004, the Hoosier Environmental Council, Inc. (hereinafter

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HEC), Elizabeth Mahoney (hereinafter Mahoney) and Janyce K. Frank (hereinafter Frank); (collectively petitioners) filed their "Verified Petition to Intervene," to which Centre Properties objected on July 23, 2004. Thereafter, on August 30, 2004, petitioners filed their reply.

7. On October 13, 2004, the Petitioners were provided until November 1, 2004 to provide additional factual support to more fully develop the basis for their sought intervention. 8. The Petitioners filed their "Verified Supplement to Verified Petition to Intervene" on November 1, 2004.

9. Mahoney and Frank, contend that they are personally aggrieved and adversely affected by virtue of their use of the area’s natural resources and their ownership of real property and personal residences within the floodplain of the West Fork White River.

10. More specifically, both Mahoney and Frank, state that they recreate in and along the White River through activities including boating, kayaking, canoeing, hiking, bird watching, and fishing and are concerned about the aesthetics and wildlife habitat of the area.

11. Mahoney states that her real property is "less than two miles downstream of the proposed project," and that her property has previously experienced flooding six times in the previous five years. Mahoney’s concern is that the project will increase water velocity and volume thereby increasing the damage resulting from those flood events. Mahoney provides no data in support of her concerns on this point.

12. Frank states that her real property abuts the floodway in question and is located in the Flood Hazard Area identified by the Federal Emergency Management Agency and that HEC-RAS data produced by the Indiana Department of Natural Resources has indicated that the project will result in increased water surface elevation and river top width in the vicinity of Frank’s real property.

13. HEC, contends that it is aggrieved and adversely affected due to the association’s long standing history of activity in furtherance of the protection and preservation of Indiana’s environment, in particular maintaining the efficiency and capacity of the floodway at issue in application # FW-22, 170 as well as the adverse affect of the project upon its individual members, including Mahoney and Frank.

14. Furthermore, HEC, an association with headquarters located in Indiana, and Frank and Mahoney, as citizens of Indiana, contend that they are possessed of a conditional statutory right to intervene pursuant to IC 13-30-1-5 on the basis that this proceeding is an administrative, a licensing, or other proceeding that "involves conduct, programs, or products that may have the effect of significantly impairing, polluting, or destroying the environment of Indiana." IC 13-30-1-5.

15. Centre Properties contends in opposition, that IC 13-30-1-5 does not confer upon the petitioners a statutory conditional right to intervene in this proceeding. Centre Properties, to the contrary identifies IC 13-30-1-5 as one section of an overall chapter of the Indiana Code authorizing individual actions in the name of the State for the protection of Indiana’s environment and urges that the construction afforded section 5 be in context with the entire chapter. Center Properties further contends that the petitioners have each failed to demonstrate that they are aggrieved or adversely affected as required by IC 4-21.5-3-21(a)(2)(B).

FINDINGS OF FACT AND CONCLUSIONS OF LAW:

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16. On administrative review, the administrative law judge conducts proceedings de novo requiring the independent weighing of evidence without deference to the initial agency decision.

17. The administrative law judge must establish specific findings in order to provide a reviewing court the opportunity for intelligent judicial review of the decision.

18. A petition for intervention is governed by IC 4-21.5-3-21, which provides for mandatory and permissive grant of intervention dependent upon the timing of the filing of the petition as well as the basis for the sought intervention.

19. IC 4-21.5-3-21(a)(2)(A) & (B) and IC 13-30-1-5 specifically govern the petition for intervention in this proceeding.

20. IC 4-21.5-3-21(a)(2)(A) & (B) state,

Before the beginning of the hearing on the subject of the proceeding, the administrative law judge shall grant a petition for intervention in a proceeding and identify the petitioner in the record of the proceeding as a party if: … (2) the petition: (A) is submitted in writing to the administrative law judge, with copies mailed to all parties named in the record of the proceeding, at least three (3) days before the hearing; and (B) states facts demonstrating that the petitioner is aggrieved or adversely affected by the order or a statute gives the petitioner a conditional right to intervene in the proceeding.

21. IC 13-30-1-5 states,

In an administrative licensing, or any other proceeding, and in an action for judicial review of an administrative, a licensing, or any other proceeding that is made available by law: (1) the attorney general; (2) a state, city, town, county, or local agency or officer vested with the authority to seek judicial relief; (3) a citizen of Indiana; or (4) a corporation, a limited liability company, a partnership, or an association maintaining an office in Indiana; shall be permitted to intervene as a party upon the filing of a verified pleading asserting that the proceeding or action for judicial review involves conduct, programs, or products that may have the effect of significantly impairing, polluting, or destroying the environment of Indiana.

22. The petitioners filed their written petition and caused copies of that petition to be served upon all of the parties of record at least three (3) days before the commencement of a hearing thereby complying with IC 4-21.5-3-21(a)(2)(A).

23. An "order," referenced in subsection (B), is "an agency action of particular applicability that determined the legal rights, duties, privileges, immunities, or other legal interests of one (1) or more specific persons. The term includes: (1) a license…" IC 4-21.5-1-9.

24. The Department’s denial of application # FW-22, 170 constitutes an "order" in that it determines Centre Properties’ legal rights to conduct the particular activities at the particular location specified within the application.

Intervention Under IC 13-30-1-5:

25. The parties’ respective contentions in this proceeding present opposing interpretations of IC 13-30-1-5.

26. Rules of statutory construction prohibit the construction of clear and unambiguous statutes, however when a statute is open to multiple interpretations, construction is appropriate and the implications of the interpretations may be considered.

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Indiana Alcoholic Beverage Commission v. OSCO Drug, Inc., 431 N.E.2d 823 (Ind. App. 1982). Any construction of statutes must be undertaken through a consideration of the entire act. Ernst and Ernst v. Underwriters National Assurance Company, 381N.E. 2d 897 (Ind.App. 2 Dist. 1978).

27. A thorough reading of IC 13-30-1 reveals no ambiguity in its content or meaning.

28. The parties’ differing contentions result solely from the petitioners’ interpretation of IC 13-30-1-5 in isolation from the remainder of the Chapter, which is improper. Ernst, supra.

29. Under petitioners’ construction of IC 13-30-1, IC 13-30-1-5 provides a stand-alone provision authorizing nearly any individual or entity the unfettered ability to intervene in nearly any administrative proceeding involving the mere possibility of significant environmental destruction, impairment or pollution.

30. The Commission previously addressed a position with ramifications similar to the consequence that would follow from the petitioners’ interpretation of IC 13-30-1-5 herein. Nora Northside Community Council, Inc. v. Pinnacle Media, LLC and DNR,9 CADDNAR 105, (2003). In Nora, it was asserted that the purpose of the Flood Control Act, of necessity, provided standing to all Indiana residents, to which the commission determined, "to accept this argument it must follow that ANY Indiana resident who asserts a violation of FCA, has standing to seek administrative review of any FCA permit in Indiana. Such a conclusion is an improper application of statutory construction." NORA, at 107.

31. However, IC 13-30-1, when viewed in its entirety establishes a complete mechanism for specified individuals and entities to aid in the protection of Indiana’s environment in the name of the State.

32. Utilizing all sections of IC 13-30-1, specified individuals and entities are authorized to bring actions for declaratory and equitable relief "for the protection of the environment of Indiana from significant pollution, impairment, or destruction." IC 13-30-1-1.

33. As a condition precedent to the bringing an action under IC 13-30-1-1, a claimant is first obligated to provide notice to the agencies specified in IC 13-30-1-2.

34. Thereafter, pursuant to IC 13-30-1-3 the claimant is prohibited from maintaining that action in the name of the State unless none of the agencies so notified:

within ninety (90) days:
- commence an administrative proceeding (IC 13-30-1-3((a)(1)(A);or
- commence a civil action (IC 13-30-1-3((a)(1)(A); or
- take steps in furtherance of a criminal action (IC 13-30-1-3((a)(1)(B); and
after the commencement of such an action fail to diligently pursue the same (IC 13-30-1-3(a)(2).

35. Despite the inability of an individual to maintain an action following an agency’s initiation of an administrative proceeding, civil action, or pursuance of a criminal action and diligence in the furtherance of the action taken, a claimant is authorized by IC 13-30-1-5 to intervene in the administrative, licensing, or other proceeding or in the action for judicial review resulting from the agency’s action.

36. IC 13-30-1, and specifically IC 13-30-1-5, have been cited in at least two cases in support of the Natural Resources

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Commission’s liberal view of the ability to participate in adjudicatory proceedings when environmental concerns are at issue. Hoosier Environmental Council v. RDI/Caesar's River Boat Casino, LLC and DNR, 8 CADDNAR 48, (1998); Regina Bieda v. B & R Development and DNR, 9 CADDNAR 1, (2001).

37. However, RDI and Bieda do not stand for the premise that IC 13-30-1-5, alone, provides a sufficient basis for intervention in a proceeding. In fact, RDI and Bieda do not involve the issue of intervention. Instead, in each instance the issue involved a claimant’s ability to initiate an administrative proceeding… something to which IC 13-30-1-5 does not apply.

38. In RDI, Supra, the contentions presented by the claimants therein identified "several particulars" relating to the potential detrimental effects upon fish, wildlife and botanical resources and specific provisions of the Flood Control Act that were allegedly violated by the issuance of the permit. The commission concluded that the "claimants have averred granting the subject permit will have a harmful effect on them and that their interests are arguably within the zone of interests to be protected by the Flood Control Act and the Navigable Waterways Act." RDI at 52-54.

39. In Bieda, Supra, review was sought of the Department’s issuance of a permit on the claimant’s allegation that the permit issued by the Department authorized activity that was likely to increase flooding of the claimant’s real property, which abutted the project site, and was likely to harm endangered species located in the area.

40. In essence the standing issue raised in both RDI and BIEDA was decided upon the respective claimant’s ability to establish their status as aggrieved or adversely affected by the Department’s issuance of the permit at issue in those proceedings.

41. While IC 13-30-1 provides evidence in support of the Commission’s liberal allowance of citizen participation in proceedings involving environmental concerns, IC 13-30-1-5 has not before and cannot now be construed so broadly as to removed it from the context of the remaining provisions of the chapter.

42. IC 13-30-1-5 does not provide petitioners with a conditional statutory right to intervene in this proceeding as prescribed by IC 4-21.5-3-21(a)(2)(B).

Intervention as Aggrieved or Adversely Affected Individuals

43. In determining whether any of the petitioners is entitled to intervene in this proceeding, a review of the underlying substantive law is appropriate. Lafayette Bank & Trust Company, and Russell Feurbach, D/B/A Landcraft v. Department of Natural Resources, 93-353R.

44. With the enactment of IC 14-11-4, the Indiana General Assembly identified sensitive classes of permits where adjacent property owners must be informed of and allowed to participate in the permitting process. Among these are permits for floodway construction. 312 IAC 2-3-4 and IC 14-11-4-8.

45. Real estate "adjacent to the affected real property" is defined at 312 IAC 2-3-2 as real property owned by a person, other than the applicant, that is "(1) located within one fourth (1/4) of a mile of the site where the licensed activity would take place, and (2) has a border or point in common with the exterior boundary of the property where the licensed activity would take place…." 312 IAC 2-3-2.

46. In addition to the

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notification required to be provided to adjacent property owners, individuals residing in the county within one mile of the project site are entitled to petition the Department for a public hearing on the issue of a floodway construction permit. IC 14-11-4-8.

47. The legislature obviously considered that construction in floodways was of such widespread importance that public input, especially from those members of the public most likely affected as a result of ownership of real property abutting or within one mile of the project site, was statutorily protected and encouraged.

48. It is important to note that the instant situation differs from the vast majority of intervention petitions. These petitioners seek to intervene in support of the Department’s order involving application # FW-22, 170, while the more common situation involves intervention in opposition to a Department’s order.

49. In the latter, more common instance, the actual harm suffered or the potential for future harm is more readily identifiable and is of a significantly more immediate nature.

50. In the former situation, as contemplated here, the Department’s order will not result in any harm or potential for harm to the petitioners. The petitioners herein acknowledge this reality.

51. Instead, the Petitioners claim to be aggrieved or adversely affected because of the possibility that upon de novo review, the Department’s order denying Centre Properties’ application # FW-22, 170 could be reversed and the permit, if approved, could cause them to suffer harm.

52. The difficulty here is in striking a balance between the legislature’s requirement that the public be allowed to participate in the floodway construction permit process and the legislature’s further mandate that only those persons aggrieved or adversely affected by a Department’s order be allowed to intervene in the de novo administrative review of that order.

53. An "aggrieved or adversely affected" person is "one whose legal right is invaded by an act complained of, or whose pecuniary interest is directly and adversely affected by a decree or judgment. One whose right of property may be established or divested. The word "aggrieved" refers to a substantial grievance, a denial of some personal, pecuniary or property right, or the imposition upon a party of a burden or obligation." Black's Law Dictionary, Sixth Edition, West Publishing Company, 1990.

54. The petitioners contend that "Indiana courts have interpreted ‘adversely affected’ as requiring only an ‘affected’ interest, not necessarily a ‘negatively affected’ interest." Terre Haute Gas Corp. v. Johnson, 45 N.E.2d 484, (1942). In actuality the TERRE HAUTE GAS Court determined that while the Public Service Commission’s order required a rate reduction, the claimants "may have believed that the reduced rates were exorbitant." Id at 505. The court proceeded to conclude that the "phrase ‘adversely affected’ conveys the same meaning as the Commonlaw rule which would be applicable in the absence of the statute. Generally, to enable a private individual to invoke the judicial power to determine the validity of an administrative order, he must show that he has sustained or is in immediate danger of sustaining a direct injury as a result of the order, and it is not sufficient that he has merely a general interest common to all members of the public." Id at 505; See further citation in State of Indiana on the relation of Jack P. Cittadine v. Indiana Department of Transportation, Michigan Southern Railroad Company, et al. , 790 N.E.2d 97, (2003).

55. While Terre Haute Gas, supra, relates to judicial

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review, a case decided by the Indiana Supreme Court on June 30, 2004, which relates specifically to the ability to seek administrative review under AOPA, distinguishes earlier decisions rendered under AOPA’s predecessor, the Administrative Adjudications Act. Huffman v. Indiana Office of Environmental Adjudication, Indiana Department of Environmental Management, and Eli Lilly and Company, 2004 Ind. LEXIS,614, 622.

56. First, Huffman confirmed that under AOPA, "to be ‘aggrieved or adversely affected,’ a person must have suffered or be likely to suffer in the immediate future harm to a legal interest, be it a pecuniary, property, or personal interest." Id.at 623.

57. Second, HUFFMAN establishes that unlike its predecessor, the Administrative Adjudications Act, "the language of AOPA does not allow for administrative review based on a generalized concern as a member of the public. The statute says "aggrieved or adversely affected" and this contemplates some sort of personal harm." Id at 631

58. Petitioners rely upon Wells v. DNR, et al., 7 CADDNAR 186, and a previous decision entered by Administrative Law Judge Wilcox in Administrative Cause Number 99-014W in support of their standing to intervene in this proceeding.

59. The April 13, 1999 order issued by Judge Wilcox in Administrative Cause Number 99-014W has not been indexed pursuant to the requirements of IC 4-21.5-3-32(a) and as such is not properly relied upon as precedent. IC 4-21.5-3-32(b).[FOOTNOTE 1]

60. In WELLS, the issue was not related to intervention, but instead involved the standing of a county resident and user of the area’s natural resources to initiate an action as a claimant based upon the allegation that activity authorized in an order issued by the Department would cause pollution and damage to the stream as well as the fish, wildlife and botanical resources of the stream. This situation involves a Department order that was opposed by the claimant and on this basis alone is distinguishable.

61. Unlike WELLS, the question herein is whether the alleged harm that might result, not from the order being reviewed but from the outcome of this proceeding, provides a sufficient basis upon which to determine that the petitioners are entitled to intervene under IC 4-21.5-3-21(a)(2)(B) as aggrieved or adversely affected.

62. The language of IC 4-21.5-3-21(a)(2)(B) is unambiguous in its requirement that the intervention petitioner "state facts demonstrating that the petitioner is aggrieved or adversely affected by the order…" emphasis added by the commission.

63. Petitioners can only speculate whether the commission’s review of application # FW-22, 170 will result in an approval of the permit, or that should the permit be approved through this proceeding that it would be contrary to IC 14-28-1-22(e), invade one or more of their legal rights, impose some burden or obligation upon them or divest them of some pecuniary, personal or property right.

64. The requirement that claims for administrative review must be founded upon something more than speculation was addressed in Hoosier Environmental Council v. RDI/Caesar's River Boat Casino, LLC, and DNR. In RDI, certain individual claims raised by HEC were dismissed because they were based upon the premise that future permits issued by the Department for additional land development would cause increased sedimentation, run-off and harmful effects to aquatic life and habitat. HEC’s claim was dismissed on the basis that it was "speculative" and "while the Flood Control Act is concerned with

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adverse cumulative effects, something more definitive is required than an allegation of harm resulting from general commercial or retail development which may or may not occur." HEC, 8 CADDNAR 48, 56, (1998) (emphasis added by the Commission).

65. Wells, Bieda, and RDI, supra, do confirm the longstanding premise of the commission that standing has been "assumed or viewed liberally;" but that liberal view must be balanced against:

- Huffman's dictate that AOPA requires a party be personally adversely affected or aggrieved;
- IC 4-21.5-3-21(a)(2)(B)’s requirement that the aggrieved or adverse status be a result of the order;
- The commission’s determination that claims must be based upon more than speculation, RDI, Supra; and,
- Nora's determination that IC 14-28-1 does not afford every Indiana resident standing to participate in the review of every floodway construction permit application.

66. In light of the legislature’s identification of persons having a special interest in projects such as the one at hand, it is reasonably arguable that persons owning property in the county within one mile of the project site identified in application # FW-22, 170 would maintain their ability to participate in the licensure process on de novo administrative review. To determine otherwise would deny to those individuals, during administrative review, a level of participation to which they would otherwise be entitled.

67. However, any person’s ability to participate in administrative review must only be authorized if the basis for such participation is a definitive potential for personal harm that may result from a reversal of the order underlying the administrative review.

68. HEC’s only stated basis for intervention involves its association’s history of general environmental protection and the potential aggrieved and adversely affected status of its members, including Frank and Mahoney. HEC concludes that the reversal of the Department’s denial of application # FW-22, 170 would violate IC 14-28-1-22(e)(1), (2) & (3). However, HEC provides no factual support for its position and by all appearances fails to realize that issuance of a permit violative of IC 14-28-1-22(e) (1), (2) & (3) is prohibited. HEC has not established any interest in this proceeding beyond those interests of the general public, which are based purely upon speculation. On these grounds HEC’s petition for intervention as an aggrieved or adversely affected entity must fail. Huffman, supra.

69. Mahoney bases her claimed right to intervene on the potential for increased flood damage to her real property, which is located approximately two miles away from the site involved in application # FW-22, 170. Mahoney’s concerns are of a personal, property or pecuniary interest, however the issues raised are mere speculation unsupported by any definitive data. For all of these reasons Mahoney’s petition to intervene on the basis of her aggrieved or adversely affected status must also fail.

70. Frank has also failed to establish that she is sufficiently aggrieved or adversely affected and her petition to intervene must similarly be denied.

FOOTNOTE: