CADDNAR

[CITE: Sugar Creek Mobile Estates, et al. v. Department of Natural Resources, 5 CADDNAR 226 (1992)]

[VOLUME 5, PAGE 226]

Cause #: 89-086W

Caption: Sugar Creek Mobile Estates, et al. v. Department of Natural Resources
Administrative Law Judge: Teeguarden
Attorneys: Ayres; Watson, DAG
Date: October 27, 1992

ORDER

[NOTE: COURT OF APPEALS UPHELD THE NATURAL RESOURCES COMMISSION FINDING. THIS CASE IS THE SAME AS NATURAL RESOURCES COMMISSION v. SUGAR CREEK MOBILE HOME ESTATES, 54A01-9408-CV-60, (Ind. Court of Appeals, First District.]

It is hereby ORDERED that the structure put in place without a permit be not be permitted and that the claimants shall, within sixty days of this order, remove said structure and the affected area be revegetated in a manner consistent with the natural environment.

FINDINGS OF FACT

1. The Indiana Department of Natural Resources ("DNR") is an agency within the meaning of IC 4-21.5.

2. The DNR is the state agency responsible for regulating construction in a floodway.

3. IC 4-21.5 and IC 132 apply to these proceedings.

4. The Natural Resources Commission ("NRC") is the ultimate authority with respect to decisions by the DNR dealing with floodway construction permits.

5. In January of 1988, the owners of Sugar Creek Mobile Home Estates ("Estates") had entered into an informal agreement with a concrete company which allowed the concrete company to dump left over concrete on the bank of Sugar Creek near the mobile home park.

6. The reason for entering into this agreement was to prevent erosion and stabilize the creek bank in an area near the septic system for the mobile home park.

7. The local conservation officer was aware of the dumping and told the park owners it was all right because the erosion problem was severe.

8. When the Division of Water of the DNR learned of the dumping, it began an investigation.

9. Upon determining that concrete had been dumped in the floodway of Sugar Creek and no permit to allow dumping had been applied for or approved, the DNR notified the land owners to stop dumping and apply for a permit.

10. Estates then submitted floodway construction permit application L-10,679 which would allow the creation of a hard bank or levee to prevent erosion and to place fill behind the levee to replace soil lost to erosion.

11. The Advisory Council recommended approval of the permit application with nine conditions, some of which dealt with fish and wildlife mitigation.

12. The NRC delegates adopted the recommendation of the Advisory Council and issued the permit with the conditions on February 17, 1989.

13. The permit was mailed to the applicant on or about February 20, 1989.

14. On March 10, 1989, Estates filed a request for reconsideration of conditions 4 and 5.

15. The letter accompanying the permit (Exhibit 18) tells the applicant he may appeal any portion of this permit by the procedures indicated on the attached sheet.

16. Either there was no attached sheet or it was not introduced into evidence by either party. In any case, there is no way for the trier of fact to know what it is that the applicant was told to do if he wanted to appeal.

17. There is not (and was not) any procedure provided by law for a reconstruction.

18. Accordingly, the applicant took no valid administrative appeal within 18 days after the notice of permit approval was mailed and thus no further action should have or could have been taken by the DNR or the NRC. The permit should stand as approved by the Advisory Council Chairman and the Bureau Director on February 17, 1989.

19. However, in the event that the applicant was following instructions from the DNR on how to appeal, other issues will be discussed and finding made.

20. The DNR treated the letter of March 10, 1989, of Estates as a request for an informal consideration by the NRC pursuant to 310 IAC 0.6-1-3(a)(1).[FOOTNOTE 1]

21. The matter was then docketed by the DNR for the April 14, 1989, NRC meeting set in Jeffersonville, Indiana.

22. On March 23, 1989, Estates, by Counsel, pointed out that his client was 84 years old and that matters involving Crawfordsville projects should be heard in the state capital,

[VOLUME 5, PAGE 227]

not Jeffersonville.

23. On March 30, 1989, the DNR notified Estates that the request to defer the NRC consideration was denied and corrected the applicant's understanding of the date of the meeting; the corrected date being 7:00 p.m. on April 27, 1989, in Jeffersonville.

24. Pursuant to 310 IAC 0.5-2-1, Estates had an absolute right to the grant of its requested continuance.[FOOTNOTE 2]

25. On April 27, 1989, the NRC denied Permit Application L-10,679 in all respects.

26. Estates was notified of this denial by letter dated May 4, 1989.

27. Estates filed a timely request for review on May 19, 1989.

28. One issue which thus needs resolving is the effect of the wrongful denial of the motion to continue on this case.

29. There are two possible ways to resolve this issue:

(a) invalidate everything which occurred after the denial of the continuance request and return to the status that the permit application had on March 23, 1989, the day the request for continuance was made.

(b) Since the April 27, 1989, determination by the NRC was an initial permit decision and the applicant filed a timely request for review under IC 4-21.5, the resultant due process hearing would cure all prior procedural defects and the matter should and could be resolved on its merits and presented to the NRC for a final determination.

30. Choosing option (a) in paragraph 29 does not resolve the issues. It would leave Estates in possession of an initially approved permit which Estates desired to have "reconsidered." The informal review procedure no longer exists.

31. The only review to which Estates is currently entitled is the full due process administrative hearing provided by IC 4-21.5.

32. Therefore, option (b) of paragraph 29 is adopted in this case. The permitted has had a hearing under IC 4-21.5 and the parties are entitled to a decision on the merits.

33. Floodway construction permits are governed by IC 13-2-22-13 which provides that the NRC shall issue such a permit if the obstruction or deposit:

(a) will not adversely affect the efficiency or unduly restrict the capacity of the floodway;

(b) will not constitute an unreasonable hazard to the safety of life or property; or

34. The DNR agrees that the concrete bank does not affect the efficiency of the floodway or unduly restrict the capacity of the floodway.

35. The DNR agrees that the bank is not a hazard to life or property.

36. The issue thus becomes one to the effect on fish, wildlife, and botanical resources.

37. There is evidence that the structure impacts fish, wildlife, and botanical resources in an adverse manner.

FOOTNOTES

1. 310 IAC O.-6-1-3 gave a person aggrieved by a determination by delegates of the NRC a choice of remedies. One would be a full-fledged administrative bearing pursuant to IC 4-21.5. The other was to request an informal consideration by the NRC. This option was only available from May of 1988 through May of 1989 when the informal consideration option was removed from the rule.

2. 310 IAC 0.5-2-1 has since been repealed but currently 310 IAC 0.6-2-4 contains a similar provision.

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[NOTE: CADDNAR citation does not apply to entry below.]

MONTGOMERY CIRCUIT COURT - FINDINGS OF FACT AND ORDER

1. The court hereby incorporates herein by reference the findings of fact numbered 1 - 61 inclusive made by Administrative Law Judge Teeguarden dated June 26, 1992. Such findings are marked Exhibit A and attached hereto.

2. The court hereby incorporates herein by reference the findings of fact numbered 1 - 37 inclusive made by the Natural Resources commission and dated October 27, 1992. Such findings are marked Exhibit B and attached hereto.

3. The testimony of witness Poole given before Administrative Law Judge Teeguarden and found on the following pages of the transcript of the bearing which is incorporated into volume one of the record of proceedings that have been submitted to the court. That testimony is as follows: Page 62 line 20 through page 63 line 16; Page 73 line 14 through line 24; Page 75 line 2 through line 6 and Line 23 through line 26; Page 78 line 2 through line 25; Page 80 line 21 through page 8l line 12; Page 83 line 5 through line 24; Page 84 line 19 through 26. This testimony, marked as Exhibit C attached hereto, is hereby incorporated herein by reference.

4. The court includes herein marked Exhibit D attached hereto and hereby made findings of fact an excerpt from the minutes of the Natural Resources Commission meeting of July 29, 1992, pages 9 through 11 inclusive, and particularly the comments and statements made by persons who were nonparties to these proceedings. The comments and statements dealt with and related to aesthetics and other considerations which were important to those people but which were extraneous and irrelevant to the statutory criteria upon which the commission was obliged to judge the permit application.

LAW APPLICABLE TO THESE PROCEEDINGS

The statutes which govern the court's determination in this cause are as follows: I.C. 13-2-22-13(d) "A person desiring to: erect... or maintain a structure...in or on any floodway shall first file with the director a verified written application for a permit... The director shall issue a permit only if in the opinion of the director the applicant has clearly proven that the structure ... will not adversely effect the efficiency of, or unduly restrict the capacity of, the floodway, will not constitute an unreasonable hazard to the safety of life or property, and will not result in unreasonably detrimental effects upon fish, wildlife, or botanical resources [emphasis deleted] ...."

I.C. 4-21.5-5-14(d) "The court shall grant relief under section 15 of this chapter only if it determines that a person seeking judicial relief has been prejudiced by an agency action that is:

(1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; ...

(5) unsupported by substantial evidence."

I.C. 4-21.5-3-28(a) "This chapter applies to proceedings under sections 29, 30, and 31 of this chapter." I.C. 4-21.5-3-28 (g) "The final order of the ultimate authority or its designee must:

(1) identify any differences between the final order and the nonfinal order issued by the administrative law judge under section 27 of this chapter;

(2) include findings of fact meeting the standards of section 27 of this chapter or incorporate the findings of fact in the administrative law judge's order by express reference to the order,..."

I.C. 4-21.5-3-29(b) "After an administrative law judge issues an order under section 27 of this chapter, the ultimate authority or its designee shall issue a final order:

(1) affirming;

(2) modifying; or

(3) dissolving; the administrative law judge's order .... "

DISCUSSION

A. The final order of the Natural Resources Commission dated October 27, 1992 is the result of agency action that was arbitrary, capricious and an abuse of discretion. The procedural posture of the case as submitted to the administrative law judge was that the only issue to be determined was whether the structure would result in unreasonably detrimental effects upon fish, wildlife or botanical resources. The other two predicates for the issuance of the permit has been not and there was no issue regarding either of them. The issue before the Natural Resources Commission was whether the structure would result in "unreasonably detrimental effects upon ... resources." The finding made by the commission at number 37 of its findings of fact is "There is evidence that the structure impacts fish, wildlife, and botanical resources in an adverse manner. The commission makes no other findings to support that ultimate finding and makes no other findings to support its order that the structure should not be permitted and in fact should be removed. There is no finding as to what the evidence is that the commission relies upon when it says "There is evidence..." There are no findings as to whether the evidence is substantial nor are there findings from which a determination of substantial may be made. The implication is clearly that there is some evidence but the commission gives no indication as to the sufficiency of the evidence or as to the weight of the evidence. There is no finding as to the level of severity of "adverse manner". This statute requires that the impact be "unreasonably detrimental" before the permit should be denied. An "adverse manner" as referred to by the commission is less than "unreasonably detrimental". The language used by the statute contemplates more harm than simply "adverse impact". It contemplates more harm than "detrimental impact". The harm contemplated by the statute must be "unreasonably detrimental". There is no finding by the commission which would support finding that level of harm in the evidence. From the record of both the administrative law judge findings and from the comments that are set out in the July 29, 1992 meeting of the commission that resulted in the final order being issued it is apparent that the final order that was issued was a result of aesthetic and other concerns extraneous and irrelevant to the issue before the commission. The record further supports the conclusion that the final order was an emotional reaction to the structure in place and was not a rational objective judgment made by the commission after going through the process of applying the criteria established by the applicable statute to the structure under consideration. The comments of the commission members themselves as reflected in the minutes of that meeting indicate that they were reacting to and most likely influenced by the aesthetic and emotional presentations, statements and comments that were made by non-parties to the proceedings. For the forgoing reasons the court finds that the action of the natural resources commission in issuing its final order October 27, 1992 was arbitrary, capricious and an abuse of the agencies, discretion.

B. The action of the Natural Resources Commission was not in accordance with law.

(1) The order issued by the Natural Resources Commission not only denied the permit but also required the petitioners to remove the structure within 60 days and to revegitate [sic] the area. The issues of removal of the structure and revegitation [sic] were not before the commission at the time the order was issued. Those issues were never addressed in any of the proceedings in this particular cause before the administrative law judge. They are not addressed in the findings or any of the considerations given this case by the administrative law judge. There is indication in the record that these issues may be the subject of a separate proceeding which has been essentially stayed pending the result of the permit application process. Because these issues were not before the commission the order requiring them exceeds the scope and the authority of the commission in this particular proceeding and that portion of the order should be struck, vacated and set aside.

(2) Sections 28 and 29 of I.C. 4-21.5-3 quoted above contemplate that the final order of the ultimate authority identify differences between the final order of the ultimate authority and the nonfinal order issued by the administrative judge and that the final order of the ultimate authority include findings of fact meeting certain statutory criteria which are set out by section 27 of that same statutory chapter. In section 27 we find "Findings must be based on the kind of evidence that is substantial and reliable." I.C. 4-21.5-327(c) "The order must include, separately stated, findings of fact for all aspects of the order. ...Findings of ultimate fact must be accompanied by a concise statement of the underlying basic facts of record to support the findings ..." I.C. 4-21.5-3-27(b) The final order of the commission does not include any findings of fact, either of ultimate fact or underlying basic facts, which support the order. There is no way to tell if there is "substantial and reliable" evidence to support the findings. The order doesn't comply with the statutory requirements as found in I.C. 4-21.5 -3-28(g). It is impossible from the findings of the order itself to determine what the commission relied on to arrive at its order. It is clearly not in accordance with the law and therefore can only be construed as being arbitrary, capricious, an abuse of the agencies, discretion and illegal.

(1) The only finding of fact which supports the final order of the commission is "There is evidence that the structure impacts ... resources in an adverse manner." As mentioned above there is no showing that that is based on substantial evidence. It is a weak statement of a conclusary or ultimate nature without a showing of what is relied on to reach the conclusion. There is no way that that finding of fact can be construed to be substantial evidence or to be based on substantial evidence.

(2) A review of the record yields only the evidence relied upon by the administrative law judge in his findings and the testimony of witness Poole which might tend to support the commission's order. Without weighing the evidence, or construing or interpreting it in any way other than such that would support the commission's order all the evidence taken together simply does not amount to substantial evidence. The statute asks a reviewer to quantify the qualitative attributes of the evidence. The standards are not entirely clear but the law gives some guidance in consideration of what might be substantial evidence. There is recognized in the law a scintilla of evidence, some evidence, a preponderance of the evidence, clear and convincing evidence and evidence beyond a reasonable doubt. These gradations of evidence appear on a continuum. Somewhere on the continuum is substantial evidence. Substantial evidence clearly must be more than a scintilla of evidence and must be more than some evidence. It does not rise to the level of evidence beyond a reasonable doubt and it may not rise to the level of clear and convincing. It is most likely lies somewhere around preponderance of the evidence. If that is true there is only some evidence to support the position of the commission. Giving the evidence in the record the construction and intrepration [sic] most favorable to the commission and most supportive of the commission's position it simply cannot be said that there is substantial evidence to support the final order. The predicate for the order is that the structure results in "unreasonably detrimental effects upon ... resources." The court finds there is evidence to support that the structure impacts resources in an adverse manner. The testimony of witness Poole clearly establishes that, but the testimony of witness Poole cannot be construed or interpreted as establishing substantial evidence to support a finding that the structure results in "unreasonably detrimental effects upon... resources"

CONCLUSION

The statute contemplates that in the absence of the establishment of the predicate that the structure results in "unreasonably detrimental effects upon fish, wildlife and botanical resources" that the Director of the National [sic] Resources Commission should issue the permit requested. There is no issue before the court and in fact both parties stipulate that the structure does not adversely effect the efficiency or unduly restrict the capacity of the floodway or that the structure will in any way constitute an unreasonable hazard to the safety of life and property. The only requirement of the statute in issue is that of the unreasonable detrimental effects upon resources. The court further finds that since that predicate for the order of the commission has not been established by substantial evidence that the permit applied for should be issued. Inasmuch as it was not issued and that the petitioners were ordered to remove the structure and revegitate [sic] the area the court finds that the petitioners were prejudiced by the final order of the Natural Resources Commission dated October 27, 1992 in this cause and pursuant to I.C. 4-21.5-5-l5 the order should be vacated and set aside and cause should be remanded to the Natural Resources Commission for further proceedings pursuant to the findings made and the statutes relied on in this order.

IT IS THEREFORE ADJUDGED AND DECREED that the final order issued by the natural Resources Commission under date of October 27, 1992 in this cause be and it is hereby vacated and set aside.

IT IS FURTHER ORDERED, ADJUDGED AND DECREED that this cause be remanded to the Natural Resources Commission for further proceedings.

IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the permit be issued as applied for unless the commission can make findings that are contemplated by the statutes relied on in this order which would require denial of the permit.