CADDNAR

[CITE: Crown Point v. DNR and Stillwater of Crown Pt., 13 CADDNAR 42 (2012)]

 

[VOLUME 13, PAGE 42]

 

 

Cause #: 11-036W

Caption: Crown Point v. DNR and Stillwater of Crown Pt.

Administrative Law Judge: Lucas

Attorneys: Czajki, Nicholls (Crown Point); Wyndham (DNR); Bowman (Stillwater)

Date: April 23, 2012

 

 

FINAL ORDER OF DISMISSAL

 

On January 28, 2011, the Department of Natural Resources (the “DNR”) issued notice of violation NOV-4621-FW (the “subject NOV”) to the City of Crown Point (the “City”).  The subject NOV alleged three culvert crossings were placed in a floodway without written DNR approval in violation of Ind. Code § 14-28-1 (sometimes referred to as the “Flood Control Act”). 

 

On February 8, the City sought administrative review of the subject NOV from the Natural Resources Commission (the “Commission”).   A Commission administrative law judge was appointed to perform administrative review pursuant to Ind. Code § 4-21.5 (sometimes referred to as “AOPA”), and pursuant to rules adopted at 312 Ind. Admin. Code § 3-1 to assist with implementation of AOPA.  The DNR and the City were notified, and the initial prehearing conference was conducted as scheduled in Michigan City, Indiana on March 25.  Without objections by the other parties, Stillwater of Crown Point Homeowner’s Association, Inc. (“Stillwater of Crown Point”) intervened in the proceeding during the initial prehearing conference. 

 

The subject NOV stated it was an enforcement action taken pursuant to Ind. Code § 14-25.5.  This statutory article applies to the Flood Control Act.  IC § 14-25.5-1-1(3).  The DNR is authorized to issue a notice of violation if a person violates the Flood Control Act or a rule of the Flood Control Act.  IC § 14-25.5-2-2.  A notice of violation must identify:

 

(1)   The nature of the violation.

(2)   The action that is appropriate to mitigate the violation.

(3)   The date by which the violation must be mitigated.

(4)   The procedure to obtain administrative review if a person is aggrieved by the issuance of the notice of violations.

 

IC § 14-25.5-2-3.  The subject NOV meets the jurisdictional and substantive requirements of IC§ 14-25.5.

 

The sixth telephone status conference was conducted on September 22.  The administrative law judge reflected he had not yet received a copy of the subject NOV and was not fully apprised of its contents.  He asked whether the DNR would file a copy of the subject NOV and whether any party objected to filing.  The DNR stated it would file a copy of the subject NOV, and the other parties stated they had no objection.  The administrative law judge then asked whether: (1) the subject NOV already included a proposed civil penalty assessment; (2) the DNR intended to include a civil penalty assessment as part of the subject NOV; and, if so, (3) how the DNR proposed the amount of the civil penalty should be calculated.  The DNR expressed a willingness to file a written document to clarify, whether as part of the notice of violation, the agency was seeking a civil penalty, and, if so, how the agency believed the amount of the assessment should be calculated.

 

On October 6, the DNR filed a copy of the subject NOV.  The DNR filed the “Respondent Department of Natural Resources’ Assessment of Civil Penalties to Claimant City of Crown Point”.  Finally, the DNR filed a copy of a notice to the City that permit application FW-26291 was being placed in abeyance: “Based on staff’s preliminary review, your application is incomplete and has been placed in abeyance for the reason(s) listed on the following page(s).”

 

The DNR is authorized to assess a civil penalty of not more than $10,000 for a violation of the Flood Control Act or a violation of a rule of the Flood Control Act.  Each day during which a violation continues may be considered a separate violation for purpose of assessing a civil penalty.  IC § 14-25.5-4-2.  The “Respondent Department of Natural Resources’ Assessment of Civil Penalties to Claimant City of Crown Point” meets the jurisdictional and substantive requirements of IC§ 14-25.5.

 

On November 14, the City filed a copy of correspondence to the DNR which had the stated purpose of notifying the “DNR that [the City] will comply with the [subject] NOV’s prescribed actions to mitigate the violation.  [The City] is also filing with [the administrative law judge] a pleading withdrawing its appeals of both [the subject NOV] and DNR’s denial of its Construction in a Floodway permit application, Application No. FW-26291.”  On the same day, “The City of Crown Point’s Withdrawal of Appeals” was filed to withdraw “its appeals pending in this matter” of the subject NOV and the City’s “after-the-fact Construction in a Floodway permit applications.”[1]

 

Under IC § 14-25.5, a notice of violation and a civil penalty assessment may be advanced separately or together.  Depending upon factual circumstances, the DNR may issue a notice of violation but seek no civil penalty.  The DNR may make a civil penalty assessment without a prior notice of violation.  Following the September 22 request by the administrative law judge, however, the DNR indicated a civil penalty assessment was to be considered part of the subject NOV.  For this proceeding, the DNR’s civil penalty assessment is an extension of the subject NOV.  The viability of the civil penalty assessment is dependent upon the viability of the subject NOV.

 

The City may withdraw its request for administrative review of the subject NOV.  Nothing in AOPA requires a person that initiates a proceeding to see the proceeding through a full adjudication.  A person may enter an informal agreement with the agency or other interested persons to resolve a proceeding and make adjudication unnecessary.  A person may determine administrative review is not worthy of the time and expense of litigation.  The reasons a person may choose not to pursue administrative review are almost endless.  If administrative review is taken from an agency’s notice of violation, and the recipient of the notice of violation withdraws its appeal, the real crux is what is to become of the notice of violation. 

 

[VOLUME 13, PAGE 43]

 

A notice of violation under IC § 14-25.5-2 and a civil penalty assessment under IC § 14-25.5-4 are issued by the DNR and governed by IC § 4-21.5-3-6.  More particularly, these DNR actions are sanctions that by statute become effective without an AOPA proceeding, if no request for a review is received within the period specified for review.  IC § 4-21.5-3-6(a)(2).  If a timely request for review is received from a person to whom the notice of violation or civil penalty assessment is directed, and the person subsequently withdraws its request for review, the sanctions can become effective as if no request for review were filed.

 

After encouragement from the administrative law judge, the DNR outlined its expectations on February 14, 2012 for mitigation of the subject NOV in the “Respondent Department of Natural Resources’ Position Regarding Disposition of Administrative Proceeding”.  This outline was clarified following progressing mitigation in the “Respondent Department of Natural Resources’ Response to Intervenor Stillwater Homeowner’s Association, Inc.’s Position Regarding Disposition of Administrative Proceeding”.  The latter document states in part:

 

…As a result of [an] on-site inspection, the [DNR] is satisfied with the removal efforts by the [City] and that [the City] has satisfied the requirements of the [subject NOV] issued to the [City.  The City] has advised the [DNR’s] Division of Water that an engineering firm has been retained by [the City] for the purpose of preparing plans and applications to the…Division of Water for floodway permits for the proper construction of replacement culverts at the three sites in question.

….

…The [DNR] does have the authority to reduce or waive the imposition of any civil penalties assessed by the [DNR] in the process of reaching a negotiated settlement of the issues in this proceeding.  The [DNR] has the authority to assess civil penalties for violations of the…Flood Control Act pursuant to IC 14-25.5-1-1(3) and IC 14-25.5-4-3….  That statute does not prevent the [DNR] from arriving at a settlement of any violation by reducing or waiving assessed civil penalties.  The unpermitted culverts in question were removed by [the City] within the time agreed upon between the [DNR and the City] as part of an agreed settlement, that date being February 14, 2012.  The assessment of civil penalties is between the [DNR and the City].  Now that the unpermitted culverts have been removed, [the City] and its taxpayers can apply its financial resources toward its proposal to replace the culvert with permitted structures.

 

 A notice of violation under IC § 14-25.5-2 is in the nature of a DNR “accusation” against a person or persons.  AOPA does not provide a remedy to a person who is dissatisfied with an agency “decision to issue or not issue a complaint, summons, or similar accusation.”  IC § 4-21.5-2-5(8) through IC § 4-21.5-2-5(10).  Under AOPA, the General Assembly generally exempts from administrative review an agency’s exercise of prosecutorial discretion.  Daniel v. Johnston & Fultz Excavating (Lake Trust), 12 Caddnar 264, 268 (2010) and Ford & Guenther v. DNR in re Matthew, 10 Caddnar 21, 22 (2005).[2]

 

Stillwater of Crown Point would have no remedy under AOPA had the DNR decided not to issue the subject NOV against the City.  Similarly, Stillwater of Crown Point has no remedy under AOPA upon a DNR determination the City has responded adequately to the subject NOV and that the imposition of a civil penalty is no longer warranted.  A third party on administrative review cannot cause the Commission to mandate a more severe sanction than that which the DNR seeks through a notice of violation.  Ford & Guenther at 22

 

Legislation may provide individuals with authority to pursue enforcement apart from what is initiated by the regulatory agency.  The law governing surface coal mining is an illustration of where this extraordinary opportunity is provided. See IC § 14-34-15-13 with rules 312 IAC § 25-7-2 and 312 IAC § 25-7-3.  Id.  An extraordinary opportunity is also provided for what is commonly called the “Lake’s Preservation Act” by IC § 14-26-2-23(e).  Neither Stillwater of Crown Point nor a reading of the Flood Control Act identifies a legislative intention to allow third parties to enforce the Flood Control Act in an AOPA proceeding.

 

The Commission acknowledged in Ford and Guenther that an aggrieved party may bring a private civil action to abate or enjoin a public nuisance, if the party demonstrates special and peculiar injury apart from the injury suffered by the public.  Water flow blockage to a river or stream affecting an aggrieved party’s property can form a sufficient basis for relief. Blair v. Anderson, 570 N.E.2d 1337 (Ind. App. 1991).  On multiple theories, Stillwater of Crown Point and others successfully pursued relief in Stillwater of Crown Point Homeowner’s Association, Inc., et al., v. Jack Kovich, et al., United States District Court, Northern District of Indiana (Hammond Division), Cause No. 2:09-CV-157-PRC.  These remedies are civil and not within the jurisdiction of the Commission.  AOPA does not abridge the opportunity of one private person to seek redress from another private person in a civil court but does limit party participation when a state agency pursues an accusation.

 

Actions that generated the subject NOV and this proceeding have a troubling history.  The administrative law judge previously expressed reticence for granting dismissal while the parties may be progressing toward a sustainable resolution.  Grievances by Stillwater of Crown Point present serious issues.  But a timely entry must be made on the City’s motion.  Following the City’s commitment to mitigate, and following DNR’s reported satisfaction with the City’s mitigation, with progress toward permitting, and that the agency does not wish to pursue a civil penalty assessment, this proceeding for administrative review of an agency accusation must properly be dismissed.

 

The parties having had a full opportunity to brief the issues, and the administrative law judge being duly advised, a final order of dismissal is entered.  The reasons for the dismissal are stated more particularly supra.  This order does not obviate any need for the City to obtain a permit for prospective activities.  Neither does it preclude the DNR from issuing a notice of violation or civil penalty assessment for activities that occur after March 13, 2012.  A person who wishes to seek judicial review must file a petition for judicial review in an appropriate court within 30 days of this order and must otherwise comply with IC § 4-21.5-5.  Service of a petition for judicial review is also governed by 312 IAC § 3-1-18.