CADDNAR

[CITE: Daniel v. Johnston & Fultz Excavating (Vinyl Seawall), 12 CADDNAR 317 (2011)]

 

 

[VOLUME 12, PAGE 317]

 

Cause #: 09-130W

Caption: Daniel v. Johnston & Fultz Excavating (Vinyl Seawall)

Administrative Law Judge: Lucas

Attorneys: Gallmeyer (Claimants); Cornelius, Laker (Johnston); Wyndham (DNR)

Date: May 31, 2011

 

 

FINAL ORDER

 

(1) The “description” of the project in the subject permit is ordered modified to read as follows:

A new steel sheet piling seawall will be constructed across 60’ of the applicant’s frontage.  The lakeward face of the wall will be located along the lake’s legal shoreline.  In addition, an existing concrete seawall will be refaced with steel sheet piling across 60’ of the applicant’s frontage.  The reface layer will be placed 6” lakeward of the toe of the existing concrete seawall.  Details of the project are contained in information received electronically at the Division of Water on March 19, 2009 and in plans and information received at the Division of Water on April 2, 2009, April 15, 2009 and May 12, 2009.\

 

In all other respects, the terms of the subject permit are affirmed.

 

(2) Any claim by Johnston for litigation expenses, including attorney fees, has been waived. 

 

The briefing schedule was properly cancelled.

 

 

FINDINGS OF FACT AND CONCLUSIONS OF LAW

 

A. Statement of the Case and Jurisdiction

 

1. On July 16, 2009, Jack Daniel, Lorrie Daniel, Leo Helmuth, and Rita Helmuth (collectively, the “Claimants”) filed their “Petition for Administrative Review of Approval of Application #PL-21248 by Department of Natural Resources” (the “petition”), under Ind. Code § 4-21.5 (sometimes referred to as the “Administrative Orders and Procedures Act” or “AOPA”), and rules adopted by the Natural Resources Commission (the “Commission”) at 312 Ind. Admin. Code § 3-1 to assist in the administration of AOPA, for administrative review of a determination by the Department of Natural Resources (the “DNR”) to issue permit PL-21248 (the “subject permit”) to Richard M. Johnston (“Johnston”).

 

2. Stephen Lucas was appointed the Commission’s administrative law judge under AOPA.  He served a “Notice of Prehearing Conference” on the Claimants, the DNR, Johnston, and James C. Brown, doing business as Fultz Excavating & Dredging, with a copy of the petition attached.  James Brown is the consultant or contractor for Johnston but did not participate in the proceeding.  The DNR, Johnston, and James C. Brown are collectively the “Respondents”.  The Claimants and the Respondents are collectively the “parties”.  Based on a service list supplied by the DNR’s Division of Water, notice was also provided to other potentially interested persons, but none of them have intervened or been joined as parties.

 

3. The subject permit granted authority to Johnston, under IC 14-26-2 (sometimes referred to as the “Lakes Preservation Act”) and rules adopted at 312 IAC 11 to assist with implementation of the Lakes Preservation Act, to place a vinyl seawall on a portion of the shoreline of Clear Lake, Clear Lake Township, Steuben County.

 

4. Clear Lake is a “public freshwater lake” as defined at IC 14-26-2-3 and 312 IAC 11-2-7 and is subject to the Lakes Preservation Act.  Brown and Zeller, et al. v. DNR, 9 Caddnar 136 (2004).[1]

 

5. The DNR is the permitting authority for the placement of seawalls under the Lakes Preservation Act.  The Commission is the “ultimate authority” for the DNR under AOPA with respect to administrative review of a permitting determination for seawalls under the Lakes Preservation Act.  IC 4-21.5-1-15 and IC 14-10-2-3.  Burke’s Vinyl Seawalls & Reynolds v. DNR, 11 Caddnar 345, 346 (2008). 

 

6. The Commission has jurisdiction over the subject matter of a DNR permitting action and may determine its propriety on administrative review.  The Commission also has jurisdiction over the persons of the parties.[2]

 

[VOLUME 12, PAGE 318]

 

B. Hearing De Novo

 

7. As the DNR’s “ultimate authority”, the Commission must properly conduct this proceeding de novo.  Rather than deferring to a DNR permitting determination, de novo review requires the Commission to consider and apply proper weight to the evidence.  Burke’s Vinyl Seawalls & Reynolds v. DNR at 346 applying DNR v. United Refuse Co., Inc., 615 N.E.2d 100 (Ind. 1993).

 

8. Upon completion of a proceeding, the Commission may affirm the initial DNR determination.  Faulk v. DNR, 11 Caddnar 272 (2008).  The Commission may amend the DNR determination by imposing different conditions.  Colton Lambermont v. DNR, 12 Caddnar 215 (2010).  The Commission may reverse the DNR determination.  DNR v. Freeman Orchard Assoc., Inc., 11 Caddnar 285 (2008).

 

9. The scope of de novo hearing anticipates a permit applicant and the DNR may agree upon permit terms in the course of a proceeding, although the DNR denied the initial application.  An affected person that opposes issuance of a permit may intervene even though the DNR denied the initial application.  To hold otherwise could deny a permit’s opponent due process because a de novo hearing may produce a permitting result which is fundamentally different than the initial DNR determination.  Jansing v. DNR and Hawkins, et al., 11 Caddnar 8 (2007).

 

C. Permitting of Vinyl Seawall Seawall Contrasted with Steel Sheet Piling Seawall

 

10. A hearing of the facts was scheduled for April 14, 2011.  As agreed by the parties and memorialized in a “Report of Telephone Status Conference and Notice of Hearing” entered on February 17, 2011, the sole issue for hearing was whether the subject permit “properly approved the use of vinyl for a seawall on the shoreline of Clear Lake and on a manmade channel to Clear Lake.”

 

11. The ordinary standards regarding individual permits for particular types of structures, such as marinas, seawalls, seawall refacings, underwater beaches, boatwells, and fish attractors, are set forth in 312 IAC 11-4. 

 

12. The Commission has adopted a three-tiered regulatory approach for licensing the placement of seawalls.  Most pristine are a “natural shoreline” or a “significant wetland”.  In these areas, new seawall construction is limited to bioengineered materials.  An “area of special concern” has an intermediate condition, and here a new seawall may be constructed of bioengineered materials or of glacial stone.  312 IAC 11-4-2(c).  A “developed area” has the greatest human disruption, and in a developed area a new seawall may be constructed of bioengineered materials, glacial stone, riprap, or an approved bulkhead material (either concrete or steel sheet piling).  Vinyl is not a material which is approved for a bulkhead seawall under 312 IAC 11-4-2(d).  Burke’s Vinyl Seawalls & Reynolds v. DNR at 345. 

 

13. This “regulatory approach seeks to preserve and protect public freshwater lakes for the enjoyment of all the public.  Portions of shorelines exhibiting ‘natural scenic beauty’, and which are least affected by manmade additions or alterations, are accorded greater protections than those more disrupted.  The approach is consistent with the Lakes Preservation Act and particularly IC 14-26-2-5.”  Patton and Sedgwick v. DNR, 12 Caddnar 20, 23 (2009) cited in Majewski v. DNR, 12 Caddnar 299, 303 (2011).

 

14. The placement of a seawall within a “developed area”[3] is governed by 312 IAC 11-4-2 which provides in pertinent parts as follows:

 

     (a) A written license under IC 14-26-2 and this rule is required for the construction or placement of a seawall within or along the shoreline or water line of a public freshwater lake.

     ….

     (d) If a new seawall is to be placed in a developed area, the seawall must be comprised of…any…of the following:

       ….

       (5) Steel sheet piling.

 

 

[VOLUME 12, PAGE 319]

 

15. In the subject permit, the DNR authorized a “new vinyl seawall” to be “constructed across 60’ of the applicant’s frontage.  The lakeward face of the wall will be located along the lake’s legal shoreline.  In addition, an existing concrete seawall will be refaced with vinyl across 60’of the applicant’s frontage.  The reface layer will be placed 6” lakeward of the toe of the existing concrete seawall.  Details of the project are contained in information received electronically at the Division of Water on March 19, 2009 and in plans and information received at the Division of Water on April 2, 2009, April 15, 2009 and May 12, 2009.”  Stipulated Exhibit 10.

 

16. 312 IAC 11-4-2 does not authorize the placement of a vinyl seawall.

 

17. In addition to standards for the licensure of individual structures at 312 IAC 11-4, the Commission has adopted rules at 312 IAC 11-5 to provide for innovative practices and to allow for extraordinary remedies where extraordinary conditions exist.

 

18. Included within 312 IAC 11-5-3 are remedies to enhance the public trust or to control vexing erosion problems.  Upon a proper factual showing, a vinyl seawall could be approved under 312 IA 11-5-3 even though not authorized by 312 IAC 11-4-2.  To qualify for the placement of a vinyl seawall, an applicant must satisfy requirements that are in addition to those for a steel sheet piling seawall or another form of seawall authorized by 312 IAC 11-4-2.  Burke’s Vinyl Seawalls & Reynolds v. DNR at 353.   

 

19. For the subject permit to appropriately authorize the use of vinyl, the more rigorous standards of 312 IAC 11-5-3 would apply and not merely those of 312 IAC 11-4-2.

 

20. On April 14, 2011, the hearing was commenced as scheduled.  The administrative law judge made opening remarks, and the parties stipulated several exhibits into evidence.  The administrative law judge then asked whether any party had a preliminary matter to come before the Commission prior to swearing or affirming the first witness.

 

21. By his attorney, Johnston moved to modify the application for the subject permit to authorize a steel sheet piling seawall instead of a vinyl seawall.  The DNR stated it had no objection to the modification.  The Claimants objected, asserting Johnston must file a new application with the DNR because the approved application was for a vinyl seawall and because due process would be violated by authorizing a steel sheet piling seawall.

 

22. Over the Claimants’ objections, the administrative law judge orally approved modification of the subject permit from an authorization to place a vinyl seawall to one authorizing the placement of a steel sheet piling seawall.  He stated he would issue findings and a nonfinal order, in writing, and would provide an opportunity for any of the parties to file objections.

 

23. The reasons for approving the modification of the authorization from one for a vinyl seawall to one for a steel sheet piling seawall are summarized as follows:

 

(A) As agreed by the parties and then ordered by the administrative law judge, the sole issue for hearing of the facts was to consider whether Johnston qualified for the placement of a vinyl seawall.  The extraordinary factual foundation required under 312 IAC 11-5-3 for a vinyl seawall is unnecessary to the ordinary factual foundation for a steel sheet piling seawall under 312 IAC 11-4-2.  On the use of materials for construction of a seawall, the Claimants have prevailed in this proceeding.  The subject permit no longer authorizes the use of vinyl for the construction of a seawall.

 

(B)  The Commission provides de novo review under IC 4-21.5 and 312 IAC 3-1.  The Commission is not exclusively bound to approve or disapprove a DNR permitting decision.  The Commission can amend a permit to conform to the law or the facts.  Restricting the subject permit to the placement of a steel sheet piling seawall (or another material authorized by 312 IAC 11-4-2), and prohibiting the use of vinyl, is here well within the scope of de novo review.  Although Johnston’s agreement to accept a steel sheet piling seawall, and the DNR’s concurrence, are relevant to the outcome, neither Johnston’s agreement nor the DNR’s concurrence is essential.  The modification is within the nature of de novo review and within the scope of Commission authority as the DNR’s “ultimate authority”.

 

(C)  A copy of the petition was attached to the initial “Notice of Prehearing Conference” entered by the administrative law judge on July 22, 2009 and sent to all persons known by the Commission to have a potential legal or personal interest.  These persons were placed on notice of the pendency of the proceeding, and they could have informally or formally (as through a petition to intervene) participated.  They did not.  The record does not support a conclusion that anyone has been denied due process.

 

(D) Regardless of the conclusion in Part (C), the possibility exists that a person other than a party might come forward to assert the person has been denied due process.  The assertion must then be considered on its merits.  The Claimants have no standing to assert a violation of due process by unidentified and unknown persons who are not parties.  The Claimants participated fully in the proceeding, and they were not denied due process.

 

 

[VOLUME 12, PAGE 320]

 

D. Litigation Expenses

 

24. Johnston asserted that pursuant to 312 IAC 3-1-3 he was entitled to an award of litigation expenses, including attorney fees, based upon the Claimant’s initiation and pursuit of this proceeding.  “Report of Initial Prehearing Conference and Notice of Telephone Status Conference” (September 23, 2009) and Johnston’s “Request for Clarification” (November 24, 2010).

 

25. The administrative law judge ruled that an award of litigation expenses would be premature until the merits of the subject permit were full adjudicated.  After a hearing of the facts, Johnston’s claim would be considered.  As a prerequisite to considering the claim, a schedule would be set to brief the Commission’s legal authority to award litigation expenses.  “Entry in Response to Request for Clarification” (December 3, 2010), as restated in opening remarks of administrative law judge on April 14, 2011.

 

26. On April 21, 2011, the administrative law judge sent correspondence to the parties in furtherance of the “Entry in Response to Request for Clarification” (December 3, 2010), as restated in opening remarks of administrative law judge made on April 14, 2011.  To assist the parties, a “Draft Order in Anticipation of Briefing of Johnston’s Request for Litigation Expenses” was enclosed with the correspondence.  A schedule was set for the parties to brief the Commission’s legal authority to award litigation expenses.  Johnston was directed to file the initial brief by May 5, 2011.

 

27. On May 2, 2011, Johnston filed a “Waiver of Request for Attorney’s Fees”.

 

28. The waiver should properly be considered as a request to waive all litigation expenses, including attorney fees, and should be granted.

 

29. With this waiver, the consideration of litigation expenses should be brought to conclusion and the briefing schedule cancelled.