ORDER
[NOTE: MARION SUPERIOR COURT (49-D02-9712-MI-1663) ENTERED ON JUNE 2, 1999 FINDINGS OF FACT AND CONCLUSIONS OF LAW VACATING NRC'S OCTOBER 31, 1997 FINAL ORDER AND REMANDING THIS CAUSE BACK TO THE NRC. "ON REMAND NRC IS ORDERED TO APPROVE A COMMISSION FLOODWAY.'" FINDINGS AND CONCLUSIONS ATTACHED BELOW.]
The decision of the Department of Natural Resources to deny floodway construction permit application FW-17,392 is affirmed.
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 responsible for the regulation of construction in floodways within the state of Indiana.
3. IC 4-21.5 and IC 14-28 apply to this proceeding.
4. At all times relevant to these proceedings, Jim Welch ("Welch") owned or otherwise controlled property within the floodway of White Lick Creek, near Mooresville, Indiana.
5. The Natural Resources Commission ("NRC") is the ultimate authority within the meaning of IC 4-21.5 with respect to floodway construction permits.
6. The property in question was the subject of a properly permitted sand and gravel mining operation which resulted in the creation of a lake.
7. During 1985, Welch acquired the property from the sand and gravel company for purposes of development.
8. Early after his acquisition of the lake property, Welch commenced residential development on the east side of the lake which resulted in a number of very attractive single family homes being built ("Phase I").
9. IN 1992, Welch submitted an application to construct in the floodway (FW-15,114) in order to commence "Phase II."
10. The DNR denied FW-15,114 resulting in Welch v. DNR, 7 Caddnar 20A (1995), Administrative Cause Number 93-086W, being litigated and decided by the NRC ion February 23, 1995. ("Welch I").
11. The decision of the NRC in Welch I allowed Welch to proceed with Phase II.
12. The DNR took judicial review of Welch I, and on October 23, 1995, the parties terminated the litigation by entering into a written settlement agreement.
13. The settlement agreement allowed Welch to proceed with Phase II residential development on six lots on the southern shore of the lake.
14. The settlement agreement specifically deferred any action on the four lots on the northern shore and required a separate application before construction could begin on the northern lots.
15. Floodway construction permit application FW-17,392 ("Permit") was submitted by Welch in order to commence residential construction on the four northern lots ("Phase III").
16. The settlement agreement specifically state, "Neither party waives any arguments regarding the status of the north lots."
17. On August 15, 1996, the DNR mailed out a notice based on the statutory prohibition of the placement or residences in or on a floodway.
18. The permit, if approved, would have allowed unauthorized fill to remain and allowed residences to be built on pads at least three feet above the 100 year frequency flood elevation.
19. Fill was placed in the floodway on the north side of the lake pursuant to G-4449 approved in 1975 which allowed a levee to be constructed with a maximum elevation of 681.0 feet. The permitted width of the top of the levee was twelve feet.
20. In 1978, the 1975 permit was revised somewhat, because of excess fill beyond that allowed by the permit had been deposited on the north side.
21. The 1987 revision to G-449 required the removal of a portion of the levee and did not increase the maximum elevation of the top of the levee. So, as of today, the maximum permitted fill on the
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north side of the lake is a sloped levee with a twelve foot top width at 681.0 feet elevation.
22. The primary arguments set forth by Welch involve res judicata and collateral estoppel.
23. The DNR relies on the language of the settlement agreement, and as interpreted by the NRC in March of 1988.
24. The NRC has examined the effect of settlement agreements before and concluded that the NRC is obliged to follow or enforce the terms of a settlement entered into in a separate case. See Prohosky v. DNR and Prudential Insurance Co., (1991), 5 Caddnar 193, in which the NRC used a previously executed settlement agreement between Prohosky and Prudential in which Prohosky agreed to release Prudential from all damages both present and future to ground water quantity to deny Prohosky the benefits of IC 13-2-2.5 (now IC 14-25-4) to which he otherwise would have been entitled.
25. The settlement agreement requires Welch to reapply for a permit for Phase III.
26. The application must be decided under the law as it existed at the time of the current application, that being February 8, 1996.
27. IC 14-28-1-20(l) prohibits the construction of an abode or residence "in or on any floodway... ."
28. In March of 1988, the NRC passed a resolution presented by the DNR which prohibited the construction of residences on fill placed in the floodway even though the amount of the fill would raise the elevation out of the floodway.
29. Two recent administrative cases, both ultimately decided by the Indiana Court of Appeals, are determinative of the issues presented here.
30. In Yater v. Hancock Co. Board of Health, et al., (1997), 677 N.E.2d 526, ("Yater I") the Court of Appeals considered the effect of a regulatory change on an ongoing residential construction project.
31. At issue in Yater I, was the installation of septic systems. Yater began his project in 1986, and by December 1990, had sold and developed 35 lots with septic permits which allowed septic systems to be placed on the lots which were in the floodplain, providing enough fill was placed on the lots to take them out of the floodplain. In December of 1990, new rules of the State Board of Health took effect, and those rules prohibited the installation of septic systems on fill in the floodplain for the rest of his lots. Yater claimed a vested right to septic permit because of the ongoing nature of his development, and claimed that the application of changes taking place in 1990 was a retroactive application. Both the trial court and the Court of Appeals held that since no application for septic permits on the remaining lots had been filed prior to the rule changes, there was not a retroactive application, and upheld the denials.
31. In Yater v. DNR, (1994), 6 Caddnar 168 ("Yater II"), the court system got the opportunity to deal with the legal effect of the 1988 resolution.
33. In Yater II, the NRC found that it was bound to use the approved Federal Emergency Management Agency (FEMA) flood insurance maps and designated elevations when such maps and flood event designations exist.
35.[sic.] In Yater II, the NRC also affirmed the use of the 1988 resolution to deny permits to place fill in an existing floodway for the purpose of building homes and upheld the DNR's denial of a permit.
36. Yater took judicial review of Yater II.
37. The Hancock Circuit Court upheld the decision by the NRC. See Yater v. DNR, Cause Number 30C01-9411-CP-457, which holds that the NRC, in fact, is required to rely on the results of FEMA flood insurance studies, and that filling in the floodway in order to build residences is a violation of the statutory prohibition against construction of homes in the a floodway.
38. Yater appealed the decision of the Hancock Circuit Court claiming the NRC's denial should be declared void, because it was based on an unpromulgated rule (the 1988 resolution), and because the NRC had exceeded its authority.
39. The Court of Appeals, in an unpublished opinion, found that the 1988 resolution was an interpretation issued by the NRC with respect to statutes it is responsible for enforcing; and therefore, is entitled to great weight. Given the statutory prohibition on
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construction of a residence, "in or on" a floodway, the Court found this to be a reasonable interpretation and within its statutory authority. See Yater v. NRC, (1997), Cause Number 30A01-9605-CV-168.
40. Appellate Rule 15(A)(3) states that memorandum decisions are not to be regarded as precedent or cited before any court expect for the purpose of establishing the defense re judicata, collateral estoppel, or the law of the case.
41. However, IC 4-21.5-3-32 allows the use of final agency orders after administrative review as precedent if all final orders are indexed and made available to the public.
42. The NRC indexes all of its final orders following contested actions in a publication called CADDNAR which is available in written form upon request, or on the Internet.
43. As such, Yater v. DNR, (1994), 6 Caddnar 168, may be relied upon as precedent.
44. Since both the Hancock Circuit Court and the Court of Appeals have ruled upon the same case, their rulings have to be considered as a part of CADDNAR.
45. The unpublished decision of the Court of Appeals in Yater II, thus has precedential value not as an appellate court decision, but because of its effect on CADDNAR. If Yater II had been reversed or modified by a higher court, that reversal or modification would be incorporated into the decision in CADDNAR, and used as precedent in future similar cases. Certainly a total affirmation can likewise be used.
46. On July 30, 1997, the parties stipulated that the 100 year flood elevation for the area of the north lots as set by the FEMA Flood Insurance study is 681.8 feet.
47. The maximum amount of fill on the north side of the lake allowed by earlier permits is 681.0 feet.
48. The permit application at issue here was filed in 1996.
49. The permit application seeks to allow fill at elevations higher than 681.8 feet on the north side for the purpose of constructing residences.
50. In short, Welch seeks to build residences on fill placed in the floodway.
51. Since 1988, the NRC has interpreted IC 14-28-1-20 and its predecessors as prohibiting the building of residences on fill in the floodway.
CONCLUSIONS OF LAW Yater I and Yater II require the denial of a floodway construction permit filed in 1996 seeking to build homes on fill in a floodway even though the residential development is part of an ongoing project stared in 1985.
MARION COUNTY SUPERIOR COURT FINDINGS OF FACT AND CONCLUSIONS OF LAW:
This in an action for judicial review of a final agency decision. Ind. Code 4-21.5-5.1 et. seq. Petitioner Jim Welch ("Welch") asks the Court to overturn the Indiana Natural Resource Commission's ("NRC") final order, issued October 31, 1997, which denied Floodway Construction Application #FW-17,392. This application seeks permission to construct the last four homes in Welch Lake Subdivision near Plainfield, Indiana. Respondent Indiana Department of Natural Resources ("DNR") asks the Court to uphold NRC's October 31, 1997 denial. After the administrative record was filed, the parties briefed the issues pursuant to an agreed briefing schedule and presented oral argument. Based on the briefs, the oral arguments and the evidence in the administrative record, the Court now ORDERS that Welch's petition to overturn NRC's October 31, 1997 final order is GRANTED. The Court VACATES NRC's October 31, 1997 final order and REMANDS this proceeding to NRC with instructions. This Order is based on the following findings of fact and conclusions of law.
FINDINGS OF FACT:
1. Welch is the developer of the Welch Lake Subdivision. A.R. at 78, para. 1. Welch purchased the real property which contains the subdivision (the "Property") in 1985. Id. From 1975 to 1985 the Property was used by Welch's employer, U.S. Aggregates, Inc. ("U.S. Aggregates") for gravel mining. A.R. at 78, para. 2. Welch was U.S. Aggregates' general superintendent during this time; he was actively involved in obtaining a floodway construction permit for the Property. A.R. at 78-79, para. 2-3.
2. The Flood Control Act provides that a "person may not...[e]rect in or on any floodway a permanent structure for use as an abode or a place of residence." Ind. Code 14-28-1-20(1). A "floodway" is "the area reasonably required to efficiently carry and discharge the peak flood flow of the [100 year] flood of any river or stream." 310 IAC 6-1-3(15), 6-1-3(20).
3. The Flood Control Act does not contain any explicit prohibition regarding construction of residences on areas which no longer are reasonably required to convey the 100 year flood due to the placement of fill.
4. DNR is the agency which administers the Flood Control Act, Ind. Code 14-28-1 et seq., and which makes recommendations regarding issuance of floodway construction permits. Ind. Code 14-11-1-6.
5. NRC is the "ultimate authority" which accepts or rejects DNR's recommendations and which issues final, appealable decisions on floodway construction permits. Ind. Code 14-10-2-3.
6. The Welch Lake Subdivision consists of 21 home sites. All 21 sites are above the 100 year flood elevation, which the parties have stipulated as 681.8 feet above mean sea level ("msl"). A.R. at 455. That is, in the 100 year flood, none of these sites would be touched by flood waters.
7. The parties agree that 11 of the home sites (east of Welch Lake along SR 267) were never in a floodway. Six others, located on the south edge of Welch Lake, were located in a floodway according to DNR and were raised, like the four sites at issue here, out of the floodway by placement of fill. A.R. at 80, para. 8-10; A.R. at 224.
8. In a settlement of a prior stage of this litigation DNR agreed to define the floodway boundary to remove the six sites on the south edge. A.R. at 81, para. 12, The rem four north, which are higher than the home sites south of Welch Lake (A.R. at 194), are the subject matter of this proceeding. The four north sites are contiguous to and connected to the sites on high ground on the eastern side of Welch Lake which are not in the floodway. Id.
9. On October 301, 975, NRC granted a "Certificate of Approval of Construction In A Floodway" ("1975 permit") to U.S. Aggregates. A.R. at 126-127. Prior to the issuance of the permit, Welch and the other representatives of U.S. Aggregates discussed Welch's plans for development on the Property with Victor H. Wenning ("Wenning"), at that time DNR's Assistant Chief, Division of Water. A.R. at 78-79, para. 3; A.R. at 116, para. 5.
10. Wenning told Welch and U.S. Aggregates that individuals could remove an area from the floodway by placing fill which did not constrict flood flows to an elevation above the 100 year flood level. A.R. at 78-79, para. 3. In anticipation of future development on fill on the Property, U.S. Aggregates and DNR agreed to incorporate a condition ("Condition 3") into the 1975 permit. A.R. at 78-79, para. 3, A.R. at 117, para. 7.
11. It appears to this court that the purpose of Condition 3 was to allow DNR an opportunity to make sure that filled areas had been suitably elevated before residential development could proceed. Id. A number of DNR and NRC documents show that the 1975 permit anticipated development on filled areas. (Footnote 1) These documents do not impose any limitation that development be commercial rather than residential.
12. In 1978 DNR alleged that fill which did not comply with the 1975 permit had been placed north of Welch Lake. A.R. at 79, para. 4; A.R. at 117, para. 8. To resolve the claim, DNR officials including Wenning and DNR's affiant John Hall, met with Welch and U.S. Aggregates's engineer to identify all fill which had to be removed bring the project into compliance. A.R. at 79, para. 4; A.R. at 117-118, para. 9.
13. Welch and U.S. Aggregates removed the fill DNR identified as noncompliant, leaving the fill which presently exists on the north lots, A.R. at 79, para. 5. No further filling has occurred in this area. Id.
14. DNR acknowledged that the remaining fill was properly placed: "The permittee has now corrected all violations in a satisfactory manner and staff now recommends that the permit be reissued." A.R. at 133, emphasis added. NRC reinstated the 1975 permit by unanimous vote. Id.
15. The 1978 reinstatement left the fill on the north lot at its present height at or above 684 feet above msl. A.R. at 79, para. 5; A.R. at 80, para.4 (Footnote 2)
16. In 1979 NRC approved a revision to the 1975 permit regarding changes to the levee north of Welch Lake. A.R. at 138. DNR's "Engineers Report" on this revision again noted that development would proceed on filled areas and reiterated Condition 3 of the 1975 permit. A.R. at 135-136.
17. U.S. Aggregates' gravel mining and placement of fill created Welch Lake and the home sites south, east and north of the Lake. Welch purchased the Property in January of 1985, after gravel mining and the placement of fill had been completed. A.R. at 78, para. 1. Homes east of the Lake, along State route 267, were built first and without controversy.
18. DNR's Assistant Chief for the Division of Water stated at NRC's March, 1988 meeting that this matter was under consideration so that "a uniform position may be formulated so that [DNR] may administer the provisions of the Flood Control Act in a consistent manner." Id. At the same meeting NRC adopted a "resolution" which provided that "any isolated fills, regardless of height, do not modify the floodway delineation." Id.
19. In February, 1992, Welch sought DNR's approval pursuant to Condition 3 of the 1975 permit and its 1979 revision, for the development of ten home sites along the north and south shores of Welch Lake. A.R. at 80, para. 17.
20. By letters dated April 8, 1992 and September 22, 1992, DNR informed Welch for the first time that his proposed residential development could not proceed. A.R. at 84-87. DNR's letters indicated that to obtain administrative review Welch had to submit to an entirely new floodway construction application. Id.
21. Welch then submitted Floodway Construction Application #FW-15,114. A.R. at 80, para. 10. The application contained plans for the development of ten houses, six along the south shore of Welch Lake and four along the north shore of Welch Lake. A.R. at 225. DNR denied the application, claiming that the proposed construction would be in a floodway. A.R. at 224.
22. Welch petitioned for administrative review, initiating Administrative Cause No. 93-076W. A.R. at 80, para. 10. The ALJ granted summary judgment in favor of Welch and approved Floodway Construction Application #FW-15,114. A.R. at 104-109.
23. NRC rejected the ALJ's decision. A.R. at 88, para. E.
24. Welch sought judicial reveiw. A.R. at 88, para. F. The Marion Superior Court vacated NRC's denial of Welch's floodway construction application and remanded the case to NRC. A.R. at 89, para. G.
25. On February 23, 1995 NRC reversed itself and voted 6-1 to adopt, with one minor modification, the ALJ's order approving Floodway Construction Permit Application #FW-15,144. A.R. at 147.
26. DNR sought judicial review of NRC's February 23, 1995 final order. A.R. at 89, para. 1. Welch and DNR then settled part of their dispute by means of a written settlement agreement. A.R. at 88-113. The settlement agreement provided that "[n]either party waives any arguments regarding the status of the North lots" and further that if Welch did not file a new application for construction on the north lots DNR would issue a notice of violation. A.R. at 89, para. 4.
27. DNR also agreed to dismiss its appeal of NRC's February 23, 1995 final order with prejudice. A.R. at 89, para. 1. DNR did not ask NRC to vacate its February 23, 1995 final order with prejudice. A.R. at 89, para. 1. DNR did not ask NRC to vacate its February 23, 1995 final order or seek an analogous remedy. DNR agreed to take all steps necessary to create a "Commission Floodway" which would allow Welch to proceed with home construction on the six sites south of Welch Lake. A.R. at 89, para. 3.(Footnote 3). Welch agreed to forego pursuit of an inverse condemnation action concerning the home lots south of Welch Lake. A.R. at 89, para. 2.
28. Welch then submitted Floodway Construction Application #FW-17,392 for the remaining four north lots. A.R. at 81, para. 14. The new application contained exactly the same plan map that Welch submitted with Floodway Construction Application #FW-15,114. A.R. at 194. DNR recommended denial of the new application, again stating that the proposed homes would be in a floodway. A.R. at 5.
29. Welch petitioned for administrative review. A.R. at 1-38. This time the same ALJ recommended judgment in favor of DNR. A.R. at 459-465. NRC adopted the ALJ's second non-final order on the Welch Lake Subdivision by a 5-3 vote, with 2 abstentions, and issued its final order of denial (the subject of this case) on October 31, 1997. A.R. at 490, 495. Welch seeks judicial reveiw in this proceeding.
CONCLUSIONS OF LAW:
1. A court may reverse an agency's final decision if that decision is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law" or if the decision is "unsupported by substantial evidence." Ind. Code 4-21.5-14(d). An agency's legal conclusions are reviewed without deference. Ashlin Transportation Services, Inc. V. Indiana Unemployment Insurance Board, 637 N.E.2d 162, 165-166 (Ind. App. 1994). An agency's incorrect interpretation of a statute, even one the agency is charged with enforcing, is not entitled to any weight at all. Id. At 165-166.
2. Welch urges five reasons why NRC's October 31, 1997 final order should be reversed. The first three reasons were adopted by the ALJ the first time he adjudicated this dispute: (1) NRC improperly applied an unpromulgated policy; (2) NRC's retroactive application of its 1988 resolution on "isolated fills" was improper; (3) and DNR and NRC are estopped by prior actions and representations from taking their present position. Welch further argues that (4) NRC's February 23, 1995 final order has res judicata effect and that (5) NRC's October 31, 1997 final order lacks support by substantial evidence. The Court agrees that NRC's October 31, 1997 final order is flawed for at least reasons one thru four.
3. NRC's October 31, 1997 final order improperly applies an unpromulgated policy in a manner which contradicts NRC's promulgated regulation. The ALJ's first opinion recognized this impropriety--his second opinion did not address this point. A.R. at 104-109, 459-465.
4. NRC's promulgated definition of "floodway," states that " Floodway' means the area reasonably required to efficiently carry and discharge the peak flood flow of the [100 year] flood of any river or stream." 310 IAC 6-1-3(15), 6-1-3(20).
5. It is undisputed that the north lots are several feet above the maximum level of the 100 year flood. A.R. at 194; 455. It also is undisputed that the north lots are connected by high ground to areas above and outside the White Lick Creek floodway. A.R. at 194. DNR does not dispute that as a practical matter, the north lots are not needed to and in fact will not participate in conveyance of the 100 year flood of White Lick Creek. Plainly and simply, the north lots do not fall within NRC's promulgated definition of a "floodway."
6. NRC's October 31, 1997 final order hold that residential construction on the north lots may not proceed because these lots lie within a floodway. A.R. at 464, para. 50; A.R. at 495. The basis for this conclusion is a policy NRC adopted at its March, 1988 meeting. A.R. at 462, para. 28; A.R. at 464, para. 51. The policy provides that "any isolated fills, regardless of height, do not modify the floodway delineation." A.R. at 168. No statute or regulation adopts NRC's March, 1988 policy on "isolated fills."
7. Indiana law decisions hold that unpromulgated policy statements by agencies do not have the force of law. Indiana Department of Environmental Management v. AMAX, 529 N.E.2d 1209, 1213 (Ind. App. 1988); The Pantry, Inc. V. Stop-N-Go Foods, Inc., 777 F. Supp. 713, 730 (S.D. Ind. 1991). An agency's action based on "policy" which contradicts that agency's own promulgated regulations is especially problematic. Indiana Family and Social Services Administration v. Methodist Hospital, 669 N.E.2d 186, 190 (Ind. App. 1996). If NRC wishes to define "floodway" to include areas which formerly were in the regulated floodway but now are elevated above the level of the 100 year flood due to the placement of fill, regardless of whether such areas are reasonably required to efficiently carry and discharge the peak flow of the 100 year flood, NRC must amend its promulgated regulation accordingly. Until that time the promulgated regulation governs. (Footnote 4)
8. NRC's October 31, 1997 final order also rests on an improper retroactive application of NRC's March, 1988 resolution on "isolated fills." A.R. at 462, para 28; A.R. at 464, para. 51; A.R. at 495. The ALJ recognized this problem in his first but not his second opinion in this case. A.R. at 104-109, 459-465. The 1988 resolution was adopted thirteen years after the 1975 permit was issued, at least ten years after the fill north of Welch Lake was placed by U.S. Aggregates, and three years after Welch bought the Property. A.R. at 78, para. 1; A.R. at 79, para. 5; A.R. at 78, para. 1. The Court is not persuaded that NRC's 1988 vote on "isolated fills" restated DNR's longstanding position on floodway fills, as DNR has argued. NRC's March, 1988 minutes describe statements by Michael Neyer, DNR's Assistant Chief for the Division of Water as follows: Mr. Neyer stated the permanency of floodways is an issue which has been discussed for many years. ...He added the issue is not an easy one to resolve. There are no clear cut answers as both points of view have defendable positions and valid concerns. By presenting this matter to the Commission, is the [DNR] staff's hope that a uniform position may be formulated so that we may administer the provision of the Flood Control Act in a consistent manner. A.R. at 168. These statements demonstrates that prior to 1988 there was not "uniform position."
9. Department of Environmental Management v. Chemical Waste Management of Indiana, Inc., 604 N.E.2d 1199, 1204 (Ind. App. 1992), transfer denied, February 9, 1993, hold that retroactive application of even a statute is unlawful. Yater v. Hancock County Board of Health, 677 N.E.2d 526 (Ind. App. 1997) holds that a permit application must be reviewed pursuant to regulations in effect at the time the application is submitted (in the present case 1975).
10. DNR incorrectly asserts that the dates of Welch's most recent floodway construction applications determine whether the proposed application of NRC's policy is retroactive. The fact is that Welch had to file his 1992 application to obtain administrative review, A.R. at 84-88, and had to submit his 1995 application to avoid issuance of a notice of violation. A.R. at 89, para. 4. An agency may not simply avoid the non-retroactivity principle enunciated in Chemical Waste Management by insisting that a properly permitted activity requires an entirely new permit application. (Footnote 5)
11. DNR and NRC are estopped by their prior actions and representations that Welch could construct residences on fill raised out of the floodway. This is another principle the ALJ applied in his first opinion and did not address the second time. A.R. at 104-109, 459-465. In Advisory Board of Zoning Appeals v. Foundation for Comprehensive Mental Health, Health, Inc., 497 N.E.2d 1089 (Ind. App. 1986), rehearing denied, December 23, 1992, a planning commission was equitably estopped from denying issuance of a certificate of occupancy and compliance to a group home after the commission already had approved building permits and an improvement location permit for the project. Advisory Board identified five elements needed for equitable estoppel to apply to an agency's action. These elements are: 1) a representation or concealment of material facts; 2) the representation must have been made with the knowledge of the facts; 3) the party to whom the representation was made must have been ignorant of the matter; 4) the representation must have been made with the intention that the other party should act upon it; and 5) the other party must have been induced to act upon the representation. Advisory board at 1091-1092. Each element is present here.
12. DNR and NRC repeatedly represented to U.S. Aggregates and Welch that residential development could proceed on areas suitably elevated above the level of the 100 year flood by placement of fill.
13. Representations to U.S. Aggregates carry over to Welch. The administrative record indicates that the representations made in the course of issuance, revocation, reinstatement and amendment of the 1975 permit were made to U.S. Aggregates and to Welch in person. A.R. at 78-79, paras. 2-5; A.R. at 116, para. 5; A.R. at 117-118, para. 9. From 1975 onward, as U.S. Aggregates' general superintendent, Welch made no secret of his plans to build a subdivision on fill surrounding the lake that would be created by gravel mining on the Property. A.R. at 78-79, paras. 2-3. Welch's purchase of the property in 1985 was the final step in his long-term plan for development of the Property. A.R. at 78, para. 1.
14. The 1975 permit specifically anticipated development on fill. A.R. at 121-122, 124, 135-136. DNR's and NRC's documents do not restrict the type of development. The chief of DNR's Division of Water made more specific representations to Welch and U.S. Aggregates. A.R. at 78, para. 3; A.R. at 117, para. 6. Welch did not learn until 1992 of DNR's position that fill could not alter a floodway boundary. Welch on DNR's and NRC's prior representations when he planned the Welch Lake Subdivision and later bought the Property.
15. DNR and NRC also are estopped from taking the position that fill which presently exists north of Welch Lake does not comply with the 1975 permit. Undisputed affidavit testimony shows that this fill is the same fill DNR and NRC indicated could remain onsite back in 1978 when the 1975 permit was revoked and then reinstated. A.R. at 79, para. 5. DNR reported to NRC at NRC's June 29, 1978 meeting that the permittee had "corrected all violations" of the 1975 permit "in a satisfactory manner." A.R. at 133. No fill has since been added to the north lots since that time. A.R. at 79, para. 5. The same fill which complied with the 1975 permit back in 1978 must still comply with the same permit now.
16. NRC's February 23, 1995 final order has res judicata effect. The doctrine of administrative res judicata has four elements: 1) whether the issues sought to be estopped were within the statutory jurisdiction of the agency; 2) whether the agency was acting in a judicial capacity; 3) whether both parties had a fair opportunity to litigate the issues; and 4) whether the decision of the administrative tribunal could be appealed to a judicial tribunal. McClanahan v. Remington Freight Lines, 517 N.E.2d 390, 394 (Ind. 1988), citing Cox v. Indiana Subcontractors Association, Inc., 441 N.E.2d 222, 225, (Ind. App. 1982). Indiana courts have repeatedly applied this doctorine.
17. Administrative res judicata governs the outcome of this proceeding as all of these elements are met in this record. The issues NRC decided on February 23, 1995 are within its jurisdiction; NRC acted in a judicial capacity; Welch and DNR had a fair opportunity to litigate all the issues; and NRC's February 23, 1995 final order was appealable and initially was appealed by DNR. To escape application of res judicata DNR should have but did not ask NRC to vacate its February 23, 1995 final order. See United States v. Munsingwear, Inc., 340 U.S. 36, 71 S. Ct. 104 (1950).
18. The elements of estoppel by judgment also are met. This doctrine requires that the former judgment was rendered by a court of competent jurisdiction, that matters now in issue were or might have been litigated in the prior action, that the parties to the present prior proceedings are the same or in privity, and that the judgment in the former suit was rendered on merits. Kokomo Medical Art Building Partnership v. William Hutchens and Associates, 566 N.E.2d 1093, 1095 (Ind. App. 1991). NRC had jurisdiction over DNR's denial of Welch's 1992 floodway construction application. The legality of the residential construction on fill in floodways was litigated in the prior proceeding. The parties are the same and NRC's February 23, 1995 final order is a decision on the merits.
19. Indiana Code 4-21.5-15(2) authorizes the Court to "compel [an] agency action that has been unreasonably delayed or unlawfully withheld." This standard applies here. The north four lots are several feet above the peak level of the regulatory flood. A.R. at 194, 455. Three years ago NRC approved residential construction on these lots and the six lots south of Welch Lake. A.R. at 141-147. The north lots are higher in elevation that the south six lots for which NRC created a "Commission Floodway" and allowed construction in 1996. A.R. at 81, para. 12; A.R. at 194. There is no principled basis to treat the north lots differently from the south six lots. Welch's development has been unreasonably delayed since at least 1992, when DNR unlawfully retroactively applied an unpromulgated policy contrary to its published rule and broke the promises it made many years before. Ind. Code 4-21.5-15(2) thus authorizes the Court to compel NRC to approve a "Commission Floodway," under Ind. Code 14-28-1-28, which excludes the four home lots north of Welch Lake from the floodway and allows residential development to proceed.
ORDER:
For the reasons stated above, Welch's petition to overturn NRC's October 31, 1997 final order is GRANTED. This order is vacated and this cause is remanded. On remand NRC is ORDERED to approve a "Commission Floodway" under Ind. Code 14-28-1-28 which excludes the four home lots north of Welch Lake from the floodway of White Lick Creek or take other action which grants Petitioner permission to proceed with residential construction on these lots which been unreasonably delayed and wrongfully withheld.
FOOTNOTES:
1. DNR's August 4, 1975 Engineer's Report which recommended that NRC issue the 1975 permit states: "[t]he filed areas will be three(3) feet above the 100-year frequency flood elevation, and will be developed at a future time. A.R. at 122. The minutes of NRC's October 30, 1975 meeting at which the 1975 permit was approved by a unanimous vote state: "Lou Davis of U.S. Aggregates, Inc., told the Commission that his company leased the land and had made covenant with the land owner to leave an area of a minimum of 150' along the roadways for future development of the property around the lake. A.R. at 124. Condition 3 of the 1975 permit states "(3) that when the fill area is to be developed, plans and specifications will be approved by the Natural Resources Commission before construction". A.R. at 127.
2. DNR argues that the present ground elevations north of Welch Lake violate the 1975 permit because the permit imposed a maximum fill elevation of 681 feet. The Court finds no statement of a maximum height in the permit or the record. DNR's Engineer's Report on the 1975 permit notes that the levee north of Welch Lake would slope from 681 feet to ground elevation. A.R. at 121. The same Engineer's Report notes that the 100 year flood level in the area was 680.2 feet. (DNR now places this level at 681.8. A.R. at 455). Hence DNR anticipated in 1975 that portions of the levee would exceed the 100 year flood level. Additional height adds to the levee's ability to retard erosion. There is no basis for DNR's assertion that the 1975 permit imposed a height limitation on fill placed north of Welch Lake. The 681 elevation in DNR's Engineer's Report could be a maximum or minimum elevation or neither.
3. At NRC meeting on October 24, 1996, DNR recommended and NRC unanimously approved the establishment of a Commission Floodway which excludes the areas within the south lots on which houses will be constructed, allowing residential construction to proceed. A.R. at 81, para. 12.
4. Yater v. DNR, 6 CADDNAR 168 (NRC 1994), is not binding or persuasive. Yater specifically relies on NRC's first denial of Welch's 1992 floodway construction application. This ruling was vacated by the Marion Superior Court and reversed by NRC's February 23, 1995 subsequent approval of that application. A.R. at 89, para. G; A.R. at 147. Moreover the facts in Yater differ substantially from those at issue here. The Yaters sought permission to place new fill in the floodway for purposes of subsequent residential construction. Id. At 168. There was no prior floodway construction permit. In contrast Welch seeks permission to build homes on fill placed more than twenty years ago pursuant to a floodway construction permit which specifically recognized that development on fill would occur. A.R. at 121-127. Yater is not applicable here.
5. Office of Environmental Adjudication et. al. V. J.M. Corporation, 691 N.E.2d 449 (Ind. App.
1997), transfer denied, June 11, 1998, is instructive. This decision holds that an agency may not
impose inconsistent standards during a multi-stage permitting process. Id. At 459. The agency
tried to impose different standards for what constitutes an aquifer to a solid waste facility's
construction and permit applications. Id. At 453. The J.M. court held that the agency could not
impose a different standard on the facility's operation permit application than it had on the
construction permit application. Similarly NRC may not issue a permit in 1975 which
authorized development without limitation as to type and then take the position later that only