(NOTE: AFFIRMED IN PART AND REVERSED IN PART BY THE INDIANA SUPREME COURT (49SO2-9306-CV-619). ON REMAND, THE ALJ WAS TO PERFORM A HEARING DE NOVO CONCERNING DETRIMENTAL AFFECTS TO FISH, WILDLIFE, OR BOTANICAL RESOURCES. THE PARTIES ENTERED, HOWEVER, INTO AN AGREED ORDER.)
The decision to deny United Refuse, Inc. a permit to construct in a floodway made by the natural resources commission on April 26, 1988 (Docket No. G-5,153 REV. II) is affirmed.
FINDINGS OF FACT
1. On May 16, 1988 United Refuse Co., Inc. (the "Claimant") filed a petition for administrative review and a stay of the decision by the natural resources commission (the "Commission") adopted at its April 26, 1988 meeting in regard to Docket No. G-5,153 REV. II.
2. The above mentioned decision denied the Claimant's request to construct in the Junk Ditch floodway; ordered the Claimant to remove all diking from the northern portion of its property and to relocate it along the I & M power line; and ordered the area north of the power line be restored, presumably to its natural condition.
3. IC 4-21.5, IC 13-2, 310 IAC 6 and 310 IAC 0.6 apply to this proceeding.
4. The Commission is an agency as defined in IC 4-21.5-1-3 and is the ultimate authority with respect to this proceeding.
5. Although there has been some discussion to the contrary, the department of natural resources (the "Department") is the Respondent in this action.
6. The Izaak Walton League of America, Inc. (the "IWL") was granted Respondent Intervenor status on June 20, 1988.
7. The Claimant filed a motion for summary judgment in this matter on December 9, 1988 contending that no material facts were in dispute and that the Claimant would prevail as a matter of law.
8. The Respondent and Respondent Intervenor both filed answers on January 3, 1989.
9. The Claimant replied on January 12, 1989.
10. An oral argument was held as to the motion for summary judgment on January 26, 1989.
11. The motion for summary judgment was denied on February 2, 1989, the Administrative Law Judge citing that numerous material facts were in dispute in regard to each issue raised by the Claimant.
12. The following issues are relevant and will be addressed in this document:
a. Did United Refuse need a permit from the Commission to construct in the area in question?
b. Was there basis for the Commission's denial of the Claimant's permit application that would lead a reasonable and honest person to the same conclusion?[FOOTNTOE i]
c. Was the portion of the order which required the Claimant to remove all diking from the northern portion of its property, relocate it along the I & M power line and to restore the area to its natural state, proper in equity and legally sufficient?
d. Was United Refuse's right to due process violated?
13. Most of the historical evidence presented at hearing is not relevant to these issues. Where it is relevant it will be alluded to.
14. The Department is not in privity with the department of environmental management (the "DEM") as these two separate entities' interests and statutory responsibilities, in regard to this case, are mutually exclusive.
15. Permits to construct in a floodway must be obtained from the Department. The DEM has no jurisdiction in this area.
16. A citizen, especially one doing business in the State of Indiana, is charged with knowing and understanding the law as it pertains to obtaining permits.
17. The Claimant challenges the jurisdiction of the Commission over the area in question. He maintains that his land is in a floodplain not a floodway.
18. A permit from the Commission would not be required if the proposed construction would be in a floodplain which is not part of a floodway.
19. United may raise the issue of lack of jurisdiction even though it submitted a permit application to the Commission.
20. A floodway
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is either an area designated a floodway by the Commission pursuant to IC 13-222-14 or an area which meets the definition at IC 13-2-22-3(12).
21. The Commission has not designated a Commission floodway for the Junk Ditch area.
22. The United area is not located in the channel of Junk Ditch.
23. There are two questions to be examined: does Junk Ditch have a floodway at all and, if it does, is the area in question in that floodway?
24. A key measuring tool used in determining the parameters of a floodway is the regulatory flood. This is defined at 310 IAC 6-1-3(f) as "the flood having a peak discharge which can be expected to be equalized or exceeded on the average of once in a one hundred year period... this flood is equivalent to a flood having a probability of occurrence of one percent in a given year." The regulation flood is commonly referred to as the 100 year flood.
25. The question as to whether Junk Ditch has a floodway requires an examination of the topography of the area.
26. Junk Ditch is designed to carry runoff from higher elevations to the St. Marys River. However, when there is a high flow in the St. Marys, that water flows back up Junk Ditch in a manner which is the reverse of its normal function.
27. Normally during this reverse flow the Junk Ditch area serves as a storage area for the excess St. Marys flow. The Claimant argues that this makes the entire Junk Ditch area a floodplain for the St. Marys.
28. However, since the measure used by the Department to determine floodways is the regulatory flood, the action of Junk Ditch must be examined in that regard.
29. At the regulatory flood level, the water level in Junk Ditch reaches a height which exceeds the highest surrounding elevations. At that time, the water flows over the continental divide, into the Graham McCulloch Ditch, on to the Little River and ultimately to the Wabash Valley.
30. This effect must be examined and compared with the statutory definition of "floodway". IC 13-2-22-3(c) defines a floodway as "the channel of a river or stream and those portions of the flood plains adjoining the channel, which are reasonably required to efficiently carry and discharge the flood water or flood flow of every river or stream."
31. The Claimant contends that the key words are "carry and discharge" and maintains that since the Junk Ditch effect is that of storage for the St. Marys, it does not "carry and discharge".
32. The Department and the Izaak Walton League maintain that at the regulatory flood when the wastes in Junk Ditch flows over the divide to the Graham McCulloch Ditch, floodwater is "carried and discharged".
33. It is not unreasonable to select the latter argument. That is, a "reasonable and honest person" could draw the conclusion that Junk Ditch did "carry and discharge" floodwater at the regulatory flood happening.
34. This being the case, it is reasonable for the Commission to take jurisdiction over a floodway which exists at Junk Ditch.
35. Assuming the first question is answered in the affirmative (Junk Ditch has a floodway) the question of whether United's land is in that floodway must be examined.
36. United maintains that if Junk Ditch has a floodway the United property is not in it but rather is in the flood plain and therefore no permit from the Commission is required.
37. It must be noted that areas normally defined as "flood plain" are part of the floodway if that area is reasonably required to efficiently carry and discharge flood water or flood flow during a regulatory flood event (IC 13-2-22-3(c)).
38. Therefore, United could be right in maintaining that its property is in a floodplain and still need to obtain a permit from the Commission based on the above statutory construction.
39. Uncontroverted testimony at hearing revealed that the test used by the Department staff to locate the floodway was, using a computer model, to fill the area to the level of a regulatory flood event; to move the land edges in toward the center; and, to determine the floodway when the surface elevation rises .1 foot or more.
40. When this test was applied to Junk Ditch the model revealed that the floodway for Junk Ditch is almost the full valley and that United's property was in the floodway.
41. United points out that this is a unique situation and it is unfair to apply the model to an area such as this because storage is the primary function of the Junk Ditch until the elevation of the water exceeds that of the continental divide.
42. It is true that this area is probably unique but when the Commission in its discretion determined that Junk Ditch had a floodway, the floodway must be determined by the available tools.
43. These available tools were properly applied and made a reasonable determination that United's land is in the floodway of Junk Ditch.
44. The Claimant claims that the commission's
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rejection of its permit application was arbitrary and capricious because there is no basis for its disapproval.
45. An examination of the IC 13-2-22-13 (the "Statute") sets out the responsibility of the Commission in regard to permits to construct in a floodway in paragraph (d) as follows: "The Commission shall issue a permit only if in the opinion of the Commission the applicant has clearly proven that such structure, obstruction, deposit, or excavation will not adversely affect the efficiency of or will not unduly restrict the capacity of the floodway, or will not constitute an unreasonable hazard to the safety of life or property, or will not result in unreasonable detrimental effects upon fish, wildlife or botanical resources."
46. For purposes of this issue the key phrase of the statute is "in the opinion of the Commission the applicant has clearly proven." With this phrase the legislature places a great burden upon an applicant who wishes to construct in a floodway and, at the same time, awards individual members of the commission much power to exercise discretion in this regard.
47. Here the collective opinion of the Commission was that United Refuse had not clearly proven that its proposed floodway construction met the requirements of the statute.
48. The evidence presented at hearing clearly shows United Refuse proved that the efficiency of the floodway would not be adversely affected, and capacity of the floodway would not be unduly restricted, and the proposed construction would not constitute an unreasonable hazard to the safety of life or property.
49. This evidence included DNR staff recommendations and findings, documentation of all types of expert testimony. The weight of the evidence presented no rational basis on which to base an opinion that United has not proved its case in these areas.
50. The Respondent basically agreed with the above proposed findings, but in his post-hearing brief, argues that United did not prove its case in regard to the last requirement which specifies that the construction must not result in unreasonable detrimental effects upon fish, wildlife or botanical resources.
51. The key considerations in all these statutory elements are: What did the Commission read and hear in regard to this permit application and did this information provide a rational basis for an individual commission member to form the opinion that United Refuse has not proved its case?
52. At hearing, Mr. Scott Pruitt of the United States Fish & Wildlife Service testified that, in his opinion, a wetland area existed at United's proposed construction site. He supported his opinion by testifying as to accepted biological practice used in identifying wetlands and then applying what he saw on-site to this accepted practice.
53. Mr. Pruitt pointed out that he had provided the Commission with data included in engineering reports and with verbal testimony, both indicating that the aforementioned wetlands existed.
54. The Claimant disputes whether these wetlands exist and argues that if they exist they are a creation of United's surface water management system and are not unique.
55. The Claimant's arguments are well taken but Mr. Pruitt was a convincing witness who is an expert biologist and has good command of facts.
56. The issue here is not whether Mr. Pruitt is right or wrong but rather was his testimony to the Commission was convincing enough to create a rational basis by which an individual commission member could form an opinion as to whether unreasonable detrimental effects upon fish, wildlife or botanical resources could occur.
57. The extinction of wetlands is a sensitive environmental issue. Mr. Pruitt's testimony was convincing as to wetlands being located at the site in question. Therefore, from that testimony, a reasonable and honest person could form the opinion that the Claimant has not proved every element of the statute.
58. The Claimant seeks to invalidate the portion of the Commission's order which requires all diking be removed from the area in question.
59. United proposed several theories including estoppel, laches and failure to follow procedures specified by law.
60. The equitable arguments (estoppel and laches) lean heavily on the conduct of DEM employees and alleged inaction by the Commission.
61. It bears repeating the DEM and DNR are not in privity in regard to this case because the Department's only interest is permitting floodway construction and DEM has no interest, legal or equitable, in the process.
62. In reference to United's claim that the Commission is estopped from ordering the removal of the dike, he presents the argument that DEM ordered the dike built where it was. Since DEM is not in privity with the Department this argument is immaterial.
63. He also argues that DNR had notice of the placement of the dike in
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1982 but took no action thereby estopping the present action. The evidence is far from clear as to who knew what in 1982. However, the burden of commencing an action to obtain a permit to construct in a floodway is on the applicant. There is some evidence that United asked for a permit in 1982 which was not granted.
64. It is clear that at no time was the Claimant granted a permit to construct in a floodway by the NRC pertaining to the area in question here.
65. It is unreasonable to find that because the Commission did not investigate a report that it might have received in 1982 about a dike that might be in a floodway, it is now powerless to exercise any statutory authority to order the dike removed.
66. Finally, as the Claimant points out, a necessary element of equitable estoppel is a misrepresentation or concealment of a material fact. There is no evidence of this in regard to any action by the Commission.
67. The equitable doctrine of laches requires an inexcusable delay in asserting a right as well as some sort of knowledge and acquiescence in a present situation.
68. United claims that the Commission delayed assertion of its right to prohibit construction of United's dike and acquiesced to the building of dike.
69. This argument is incorrect because the statute places the duty to act, in regard to floodway construction, upon the party doing the constructing and not the Commission. Namely, a permit must be applied for.
70. If it were clear, which it is not, that the Commission knew that a dike was to be constructed in a floodway without a permit and it could be shown that the Commission made a conscious decision to acquiesce in this construction then laches might be sustained.
71. In this case the Claimant tries to substitute the doctrine of laches for its own inaction or lack of knowledge in applying for a permit to construct a dike in a floodway.
72. The Claimant's argument that this part of the order is in contravention with the law is based on IC 13-2-22-20(b) which says "the Commission may maintain an action to enjoin any violation of this chapter."
73. This argument would require the commission to abdicate to a court of law its responsibilities contained in the statute. The statute at paragraph (c) clearly gives the Commission the authority to issue the order to remove the dike. IC 13-2-22-20(b) allows the Commission to enforce its orders through a court of law if the person in violation refuses to obey.
74. The only portion of IC 13-2-22 which requires court action is Section 10 which deals with the power of eminent domain.
75. Eminent domain involves disputes in purchasing land, easements, etc. from owners for purposes of the Commission. If agreement cannot be reached, condemnation can be had under Section 10.
76. The order to remove the dike from the floodway is not eminent domain and does not require a condemnation proceeding under IC 32-11.
77. Based on the above, the Commission's order to remove all diking from the area in question is proper, both as to law and in equity.
78. The Claimant contends that his right to due process was violated when the Commission issued its denial of the Claimant's permit application because it failed to specify the basis used to justify said denial.
79. The Claimant correctly argues (and cites case law on point) that due process requires certain basic elements such as notice; a neutral arbitrator; opportunity to be heard, present evidence, cross-examine witnesses, and obtain legal counsel; and a decision based on the record.
80. The Claimant concludes by maintaining that the Commission decision placed an enormous and undue burden on him in regard to his administrative hearing.
81. The Respondent disagrees and points out that United was at all times represented at the applicable Commission meetings and that the representatives were made aware of the reasoning behind the permit denial.
82. It is obvious that the Claimant knew, or could have learned through the use of discovery techniques, why the various members of the commission formed the opinion that the subject permit should not be granted. However, whether or not Claimant had this information is irrelevant because, at hearing, he must still convince the Administrative Law Judge that all requirements of the statute have been met.
83. The very fact that the Claimant had an action under IC 4-21.5 (Administrative Adjudication Act) and that all the procedural rights cited above were available to him, points to his due process rights being well protected.
84. The Claimant has not been denied due process rights in regard to this proceeding.
FOOTNOTE
i. This test was used to define an arbitrary and capricious act by an administrative agency in State Board of Tax Commissioners v. South Shore Marina, (1981).Ind. App., 422 N.E.2d 723
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and will be sometimes referred to as "rational basis" throughout this text.
FINDINGS OF FACT, CONCLUSIONS OF LAW AND JUDGMENT
James S. Kirsch, Judge of Marion Superior Court 5, entered on November 15, 1990.
Preamble is omitted.
FINDINGS OF FACT
1. On October 2, 1989, United Refuse Co., Inc. ("United") filed its verified petition for judicial review and complaint for inverse condemnation.
2. By its petition, United appeals the final agency action of the Indiana Natural Resources Commission ("NRC") entered August 29, 1989 providing as follows: The decision to deny United Refuse, Inc. a permit to construct in a floodway made by the Natural Resource Commission on April 26, 1988, (Docket No. G-5, 153, REV. II) is affirmed.
3. The final order of the NRC was entered on behalf of the Indiana Department of Natural Resources ("DNR"). The NRC is the ultimate authority of DNR for purposes of floodway construction permits.
4. United operates a sanitary landfill in Allen County, Indiana, at 5000 Smith Road, Fort Wayne.
5. The landfill accepts ordinary municipal solid waste for disposal and burial.
6. The landfill is bounded by Junk Ditch on the north and west, the Norfolk & Western Railroad on the south, and Smith Road on the east.
7. An Indiana and Michigan Co. ("I & M") power line divides the property into an approximately 70-acre southern portion and 930-acre northern portion.
8. United conducts its landfill operations pursuant to a permit issued by the Indiana Department of Environmental Management ("IDEM")
9. United currently conducts no landfill operation on the 30-acre northern portion because as a condition of United's landfill permit, IDEM required United to apply to DNR for a floodway construction permit for that 30-acre portion prior to landfilling on that portion.
10. On August 26, 1985, United applied to DNR for a floodway construction permit in accordance with the IDEM permit condition.
11. NRC considered United's application during the February 1988 and April 1988 monthly meetings.
12. At its April 26, 1988, meeting, NRC entered an initial determination. That initial determination proposed to:
(1) deny United's permit application;
(2) order United to remove all diking from the northern portion of its property;
(3) order United to construct a dike along the I & M line; and
(4) order United to restore the northern portion to "natural" conditions.
13. On May 2, 1988, NRC mailed notice of its initial determination to United's attorney.
14. On May 16, 1988, United filed a petition for administrative review and stay of that initial determination.
15. An administrative hearing was held on United's petition before the Administrative Law Judge ("ALJ") appointed by the NRC, Tim Rider, on February 27 through March 1, 1989.
16. On July 10, 1989, ALJ Rider issued a report, proposed findings of fact and recommended order that affirmed the initial denial of United's permit.
17. United and DNR filed objections to the ALJ's recommended order.
18. On August 1, 1989, ALJ Rider wrote a letter to each NRC member expressing his discomfort with the recommendation he had made, characterized the Junk Ditch area as a "bathtub" without a drain, and asked the NRC to closely consider whether United's property was, in fact, in a floodway.
19. In that letter, ALJ Rider also indicated that he affirmed the NRC because he believed that he should not substitute his judgment for the initial determination of the NRC.
20. ALJ Rider did not review and weigh the sworn testimony and evidence presented at the hearing before him to determine if the area in question is located in a floodway.
21. ALJ Rider instead attempted to determine whether a "reasonable and honest person" having heard what the NRC heard at its February and April, 1988, monthly meetings, could have found that United's property was located in a floodway.
22. No sworn testimony or opportunity for cross examination was offered and no evidence was taken at the monthly meetings of the NRC in February and April, 1988.
23. The NRC heard oral argument on the objections filed by DNR and United at its August 17, 1989, meeting.
24. As part of its final agency action, the NRC adopted, without any [Page (V 50B) begins} revisions, all of the findings made by ALJ Rider.
25. The NRC has not designed a floodway for Junk Ditch.
26. The United property is not located in the channel of Junk Ditch.
27. DNR staff believed United's property was located in what they characterized as a "storage floodway."
28. The modeling techniques presented at the administrative hearing support the conclusion that during a 100-year flood, Junk Ditch is a water storage area, not an area necessary to "efficiently carry and discharge" water.
29. Normally, Junk Ditch flows northeasterly toward the St. Mary's River serving as a drainage outlet for an eight to nine square mile area. When there is high flow on the St. Mary's River, Junk Ditch serves as overflow storage relief for excess water in the St. Mary's River.
30. There is no significant gradient on Junk Ditch.
31. During a 100-year flood, the significance of Junk Ditch and its associated flood plains is the storage of water, not the movement of water.
32. The channel of Junk Ditch -- outside United's proposed landfill boundary -- carries and discharges water in a 100-year flood event.
33. United's property is not in the portion of the flood plain reasonably required to efficiently carry and discharge water in the Junk Ditch area.
CONCLUSIONS
1. The Court has jurisdiction of the parties and the subject matter of this action.
2. The law is with the Petitioner, United Refuse Co., Inc. and against the Respondents, Indiana Department of Natural Resources and Indiana Natural Resources Commission.
3. The information received by the NRC at its meeting prior to making a preliminary determination is not part of an administrative record as compiled under IC 4-21-5-3-14, 26, and 27(c), and so the ALJ should not have considered that information in formulating his decisions.
4. The ALJ's failure to consider the evidence submitted at hearing and rule as a trier of fact, not a quasi-appellate judge, was contrary to the statutory scheme and deprived United of its statutory and due process rights.
5. The ALJ's Findings indicate that an inappropriate standard was applied. Specifically, Findings 12, 33, 51 and 56 all show application of an appellate standard of review. This conclusion is also supported by the letter written by the ALJ to the commission members.
6. The standard of review of evidence applied by the ALJ was improper under IC 4-21.5, which requires an ALJ serve as the trier of fact, issuing findings of fact to support the order that are based exclusively upon the evidence of record in the proceedings. The findings must be based upon evidence that is substantial and reliable.
7. The ALJ's deference to the NRC through utilizing a misplaced appellate standard was contrary to law.
8. In order for the DNR to have jurisdiction over United, United's property must fall within a floodway, not a flood plain.
9. "Floodway" is defined by IC 12-2-22-3(12) as: The channel of a river or stream and those portions of the flood plains adjoining the channel, which are reasonably required to efficiently carry and discharge the flood water or flood flow of any river or stream.
10. "Flood plain" is defined by IC 13-2-22-3(11) as: The area adjoining the river or stream which has been or may be covered by flood water.
11. The statute does not recognize a type of floodway known as a "storage floodway."
12. DNR's conclusion that United's property is within a "storage floodway" failed to address the proper classification under the statute and is, therefore, arbitrary and contrary to law.
13. Because United's property is not located in the portion of the flood plains "reasonably required to efficiently carry and discharge" flood water, it is not a floodway and the NRC, therefore, lacks jurisdiction over United's property. The actions of the NRC and DNR asserting jurisdiction over United's property in this case are, therefore, void for lack of jurisdiction and must be vacated.
14. The finding that United's property is in a floodway should be reversed.
15. This Court reserves Judgment on the inverse condemnation claim brought by United, without prejudice to such claim.