[CITE: Fankhauser Holding, LLC & Sedgwick v. DNR, 14 CADDNAR 110 (2016)]
[VOLUME 14, PAGE 110]
Cause #: 15-122W
Caption: Fankhauser Holding, LLC & Sedgwick v. DNR
Administrative Law Judge: Wilson
Attorneys: pro se (Fankhauser);
Wooding (DNR)
Date: September 1, 2016
FINAL ORDER
The denial issued by the Department is affirmed with respect to the Permit, PL-22751.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Statement of the Proceeding and Jurisdiction
1 On October 13, 2015, G.W. Sedgwick (“Sedgwick”) and Eva David (“David”) filed correspondence on G.W. Sedgwick Seawall Construction letterhead with the Natural Resources Commission (“the Commission”) and identified themselves as “agent”. Sedgwick and David are collectively referred to as G.W. Sedgwick Seawall Construction (“Sedgwick Seawall”) in this decision. The correspondence identified Fankhauser Holding Co, LLC (“Fankhauser LLC”) as the “applicant”.
2 The correspondence seeks administrative review of the Department of Natural Resources’ (“Department”) denial of Permit #PL-22751 (“the Permit”) under Indiana Code (“IC”) 14-26-2, commonly referred to as the Lake Preservation Act, and 312 IAC 11.
3 In part, the correspondence filed by Sedgwick Seawall states “We are requesting a review on Denial #PL-22751 We Feel the Glacial Stone or bio-engineered Material Won’t Protect our Property. We Currently Have a Failed Glacial Stone Seawall, yard is Eroded and Mounding From Ice + Water Damage. We are requesting Permission To Submitt an Engineers Report Maintaining A Conventional Concrete Sea Wall Will Only Work Here. (Thanks For your Consideration).”[1] See the request for administrative review filed October 13, 2015.
4 The correspondence initiated a proceeding governed by IC 4-21.5-3, commonly referred to as the “Administrative Orders and Procedures Act” (“AOPA”), and the administrative rules adopted by the Commission at 312 IAC 3-1 to assist with the implementation of AOPA.
5 Administrative Law Judge (“ALJ”) Dawn Wilson was appointed under IC 14-10-2-2 to conduct this proceeding and to consider the request for administrative review as a Petition for Administrative Review under AOPA and 312 IAC 3-1.
6 On October 23, 2015, Sean Wooding filed his Appearance on behalf of the Department.
7 On November 4, 2015, following the service of notice on Sedgwick Seawall, Fankhauser LLC, the Department and potentially interested persons identified on the service list for the Permit, the ALJ held a prehearing conference in Columbia City, Indiana. No potentially interested person from the service list advised the ALJ of a desire to participate in a courtesy distribution. Sedgwick Seawall, by Sedgwick and David, participated telephonically, self-represented. The Department appeared telephonically by counsel, Sean Wooding. Fankhauser LLC did not appear.
8 During the prehearing conference on November 4, 2015, Sedgwick acknowledged that the proposed construction area was in an “area of special concern”. Sedgwick stated that he was aware of an exception that would allow for a concrete seawall when no other composition would work. Sedgwick stated no specific regulatory authority for his position and requested that the Department perform an additional review of the application. The Department, by counsel, agreed to conduct an additional review of the Permit application.
9 On November 30, 2015, January 21, 2016 and March 31, 2016, prehearing conferences and a status conference were heard, respectively, with all parties participating telephonically. The Department, by counsel, stated that the Department conducted an additional review of the application and confirmed its original position to deny the Permit application. On November 30, 2015, Sedgwick stated his intent to present an engineering report to the Department for consideration and thereafter, submitted an engineering report to the Department. Following a review of the report, the Department’s position to deny the Permit remained unaltered. By order dated March 31, 2016, the deadline for the parties to file and serve final witness and exhibit lists on the other parties was ordered to be June 2, 2016. The final status conference was set for June 23, 2016. The administrative hearing date was set to be heard on July 7, 2016.
10 The Department’s witness and exhibit list was filed on June 2, 2016.
11 The final status conference was heard telephonically on June 23, 2016, and all parties were present telephonically. David requested an extension of the deadline to file a witness and exhibit list, in that she served the Department but did not file the list as ordered. Without objection, David’s request was granted by the ALJ and the list was filed electronically on the revised deadline, June 23, 2016. Fankhauser LLC neither served nor filed any witness and exhibit list.
12 An administrative hearing was heard on July 7, 2016, in Columbia City, Indiana. Sedgwick Seawall appeared by Sedgwick. David failed to appear.[2] Fankhauser LLC, a family limited partnership, appeared by the partnership’s property manager, Eric Fankhauser. The Department appeared by counsel, Sean Wooding, and by Jim Hebenstreit, Assistant Director for the Department’s Division of Water.
13 The Department is the permitting authority for the placement of seawalls under the Lake Preservation Act and 312 IAC 11. 312 IAC 11-1-2
14 AOPA provides at IC 4-21.5-3-14(c) in pertinent part that “[a]t each stage of the proceeding, the agency or other person requesting that an agency take action…has the burden of persuasion and the burden of going forward with the proof of the request….” The burden of persuasion and the burden of going forward are sometimes collectively referred to as the “burden of proof”.
15 A person seeking a permit under the Lake Preservation Act has the burden to prove entitlement to the permit. Burke’s Vinyl Seawalls & Reynolds v. DNR, 11 CADDNAR 345, 347 (2008), and, generally, Ind. DNR and NRC v. Krantz Bros. Const., 581 N.E.2d 935 (Ind. App. 1991).
16 The standard of review under AOPA is generally “preponderance of the evidence”. Indiana Dept. of Natural Resources v. United Refuge Company, Inc., 615 N.E.2d 100 (Ind. 1993) and Burke’s Vinyl Seawalls, at 347. “Preponderance of the evidence” refers to evidence which, when considered and compared with that opposed to it, has more convincing force, and which produces in the mind of the trier of fact, a belief that what is sought is more likely true than not. Bivens v. State, 642 N.E.2d 928 (Ind. 1994).
17 Sedgwick Seawall and Fankhauser LLC have the burden of proof to demonstrate by a preponderance of the evidence that the Department’s denial is in error in that the applicant, Fankhauser LLC, is entitled to the Permit.
18 The Commission is the “ultimate authority” for proceedings under AOPA for Department permitting issues pursuant to the Lake Preservation Act. IC 4-21.5-1-15 and IC 14-10-2-3
19 The Commission has jurisdiction over the subject matter and over the persons of the parties under IC 4-21.5 and rules adopted under 312 IAC 3-1 to assist with the implementation of IC 4-21.5.
[VOLUME 14, PAGE 111]
Findings of Fact[3]
20 By its agent Sedgwick Seawall, the applicant, Fankhauser LLC, sought a Permit from the Department under the Lake Preservation Act and 312 IAC 11-1 for the placement of a concrete seawall “across 80ˊ of the applicant’s 80ˊ frontage…along the lake’s legal shoreline” of Clear Lake. See Exhibit A. [4]
21 Clear Lake, in Steuben County, is a “public freshwater lake” as defined at IC 14-26-2-3 and 312 IAC 11-2-17 and is listed as such in the “Listing of Public Freshwater Lakes”, Information Bulletin #61 (Fifth Amendment), Indiana Register, http://www.in.gov/legislative/iac/20160127-IR-312160050NRA.xml.pdf (January 27, 2016), page 8.
22 The application for the Permit involves a portion of the Clear Lake shoreline belonging to Fankhauser LLC that is currently comprised of glacial stone.
23 The Department performed a site inspection. Site inspection notes within the “Site Inspection-Documentation Checklist” include a “Permanent Structure Assessment” designed to: “List the type of permanent structures at the project site. Document location and type of permanent structures within 300’ from the center of the proposed project in both directions.” The handwritten notes state “Existing GS at site” and “concrete within 100’ to South 300’ to North.” The inspection resulted in the determination by the Department that the area covered by the proposed Permit was an “area of special concern.” See Exhibit C, page 3.
24 James Hebenstreit (“Hebenstreit”) is registered as a professional engineer in Indiana. He has been a member of the Department’s staff for approximately 43 years and has over 25 years of experience in the Department’s Division of Water permitting section. He currently oversees Department staff in their review of construction permit applications for projects on public freshwater lakes and within floodways. See testimony of Hebenstreit.
25 Hebenstreit is aware that Department rules require more natural materials for certain shorelines, including a restriction for the use of bioengineered materials and glacial stone for seawalls in shorelines defined as areas of special concern. Hebenstreit believes that the current administrative rules represent an effort by the Department to bring into focus and to preserve the natural scenic beauty of Indiana’s public freshwater lakes. See testimony of Hebenstreit.
26 Hebenstreit conducted a review of the Petitioner’s application and the Department’s “Site Inspection-Documentation Checklist” for the proposed Permit. Hebenstreit concurred with the Department staff and determined that the Permit’s proposed site is in an “area of special concern” based on the distances between bulkhead seawalls as reflected by the inspection notes. See testimony of Hebenstreit.
27 On August 28, 2015, prior to the issuance of a Denial Notice, the Department issued an Incomplete Application Notice[5]. The Incomplete Application Notice states: “As determined by the Department staff during an inspection, your project site occurs within a shoreline category that is considered an ‘Area of Special Concern’. According to the lake rules (312 IAC 11-4-2), seawalls in such an area may only be constructed of glacial stone or bio engineered material, or both. The Department would not oppose the project if one of the above materials is used. Please submit a written response regarding the material change to the Division of Water….” See 312 IAC 11-4-2 and Exhibit A, pages 5-7.
28 The Incomplete Application Notice was sent to inform the applicant of the Department’s potential denial of the application proposing a concrete seawall. The Incomplete Application Notice allowed the applicant the opportunity to amend the application to propose construction of the seawall from a required material, glacial stone or bioengineered material. In the alternative, the Incomplete Application Notice allowed the applicant the opportunity to submit information to correct any perceived misinformation upon which the Department’s decision was based. See testimony of Hebenstreit and Exhibit A, pages 5-7.
29 After the issuance of the Incomplete Application Notice, no amendment to the application was submitted to propose construction with an allowed material. No information was provided by the applicant to show the area was inaccurately identified as an area of special concern. No information was presented to show that any exception to the material requirement was applicable. See testimony of Hebenstreit.
30 On October 8, 2015, the Department issued a Denial Notice for the Permit. The Denial Notice included the following relevant information:
a The lake was identified as “Clear Lake”.
b The applicant was identified as “Fankhauser Holding Company LLC”.
c The agent was identified as “G W Sedwick (sic) Seawall Construction Eva David”.
d The description for the proposed construction was identified as “A new concrete seawall…”
e The permit application was denied by “James Hebenstreit, PE, Assistant Director for the Department’s Division of Water”.
f The Department denied the permit application for the following reasons: “(1) failure to provide a complete application and the information necessary to adequately review the project as requested in the Incomplete Application Notice dated August 28, 2015, copy enclosed (2) the site is located in an area of special concern as defined in 312 IAC 11-2-2; pursuant to 312 IAC 11-4-2(c ) if a new seawall is to be placed in an area of special concern, the seawall must be comprised of either glacial stone or bioengineered materials”.
See Exhibit A, pages 1-3.
31 On December 18, 2015, Thomas Green (“Green”) conducted a site visit of the Permit’s proposed location. Green observed erosion behind the stones at the shoreline and determined that the existing stone wall was not adequately protecting the shore due to sandy sediment behind the wall. He observed that the current stone wall was providing some erosion control. Green recommended the proposed concrete seawall as “the best material” for a seawall at the site. Green did not identify a concrete seawall as the only viable option for controlling erosion at the site. See testimony of Green and Exhibit 1.
32 Green prepared a written assessment report on December 27, 2015, and revised his report on April 8, 2016. The revised report is on “Tom Green Engineering” letterhead and the report has a designation at the bottom of the report indicating the report’s author to be “Thomas J Green, PE, CPSEC.” While no testimony or other evidence specifically identified Green as an engineer, a reasonable inference is that Green is a registered engineer. No contrary evidence was presented regarding Green’s status as a registered engineer. See Exhibit 1.
[VOLUME 14, PAGE 112]
33 In Green’s revised report, he included the following sections: “Description and Research Information”, “Composition of Existing Shoreline Terrain”, “Impacts due to Wind and Wave Action”, “Severity of Erosion and Need for Bank Stabilization” and “The Suitability of Materials to Armor and Provide Bank Stabilization”. In the “Severity of Erosion and Need for Bank Stabilization” section of his revised report, Green determined the Permit site’s stone “reduced the rate of shoreline erosion but not stopped it completely. As the shoreline erodes the slope of the bank will steepen causing more soil to be washed into Clear Lake….” See Exhibit 1, page 2.
34 In addition, the revised report includes the following sections: “Proposal’s Impact on Public Safety”, Proposal’s Impact on Natural Resources”, “Proposal’s Impact on the Natural Senic (sic) Beauty” and a section addressing the “Proposal’s Impact on Water Level”. In the “Proposal’s Impact on Natural Resources” section, Green determined that the “current glacial stone shoreline protection has provided some shoreline protection from the erosive effect of waves and ice in the past. Installation of a concrete seawall would completely stop the deposition of sediment and future lake degradation.” See Exhibit 1, page 3.
35 Green concluded in his revised report:
Currently, the shoreline along Mr. Fankhauser’s property is slowly eroding due to the wave action pushing past the existing stone washing the sandy soil into Clear Lake. Installation of the concrete seawall would eliminate this source of sediment and degradation of Clear Lake. The proposed seawall will improve the safety of people entering and exiting the lake. The concrete will provide a stable anchorage for placing a dock so the Frankhauser’s can enjoy their lake home and not have a detrimental impact on the Clear Lake as a resource, or scenic beauty. The concrete seawall in front will provide protection for the shoreline and will reduce the rebound wave effect.
The composition of the soil makes the shoreline susceptible to erosion from water. Plainfield Fine Sand (PnA), soils are characterized as having a course texture which allows for rapid water infiltration but have limited cohesiveness. This allows water to easily dislodge the soil and carry it away from the embankment causing erosion of the shoreline.….
See Exhibit 1, page 3.
36 Nate Thomas (“Thomas”) is a Lakes Permitting Biologist with the Department’s Division of Fish and Wildlife. Thomas has been a staff member with the Department for nine years and has served in his current position for over six years. Typically, when he conducts site visits that include seawalls, he looks for the presence of rare, threatened or endangered species that may be near a seawall. In his capacity as a biologist, Thomas generally considers a seawall comprised of glacial stone to be more beneficial to wildlife than a seawall comprised of other materials. See testimony of Thomas.
37 Thomas conducted a site visit as a part of the Department’s evaluation of the Permit application in the spring or early summer of 2015 to observe and consider what was on the lake, in the lake and near the site. During his site visit of the Fankhauser LLC property, Thomas did not observe “active erosion” such as bare soils or disturbed areas at the site. In his role as a biologist for the Department, Thomas reviewed Green’s report and found nothing in the report to identify concrete as the only viable option for the site to control erosion. See testimony of Thomas.
38 Hebenstreit received and reviewed Green’s revised report. He reviewed Green’s recommendation for a concrete seawall as a better alternative to the required materials for the site. Hebenstreit does not dispute that concrete might have provided an adequate material for a seawall at the Permit site. Hebenstreit also acknowledges that a seawall comprised of glacial stone may require more frequent maintenance than a concrete seawall. However, he is aware that glacial stone is currently being used successfully as an effective method to control erosion. See testimony of Hebenstreit.
39 Hebenstreit acknowledges that the Department rules allow for a potential exception in seawall material requirements when a different material is the only viable method for controlling erosion. Hebenstreit determined that Green’s report did not present an engineer’s report that identified concrete as the only viable method to control erosion at the Permit’s project site. See testimony of Hebenstreit.[6]
Conclusions of Law
40 Clear Lake is a “public freshwater lake” in Steuben County, Indiana. IC 14-26-2-3
41 The Lake Preservation Act prohibits certain activities unless the person obtains a permit from the Department and conducts the activity in accordance with the terms of the permit. One activity that is prohibited without a permit from the Department is to: “Construct a wall whose lowest point would be: (A) below the elevation of the shoreline or water line; and (B) within ten (10) feet landward of the shoreline or water line, as measured perpendicularly from the shoreline or water line; of a public freshwater lake.” IC 14-26-2-23(a)(2)
42 The Lake Preservation Act authorizes the Department to issue a permit after investigating the merits of an application. The Department may consider any factor, including cumulative effects of the proposed activity upon “(1) The shoreline, water line, or bed of the public freshwater lake. (2) The fish, wildlife, or botanical resources. (3) The public rights described in section 5 of this chapter. (4) The management of watercraft operations under IC 14-15. (5) The interests of a landowner having property rights abutting the public freshwater lake or rights to access the public freshwater lake.” IC 14-26-2-23(c)
43 As authorized by IC 14-26-2-23(e), to implement the Lake Preservation Act, the Commission adopted rules to assist in the administration of the Act.
44 In Patton and Sedgwick v. DNR, 12 CADDNAR 20 (2009), the Commission summarized its regulatory approach for implementing the Lake Preservation Act regarding the permitting of seawalls on public freshwater lakes. The decision summarizes a “three-tiered approach” as follows:
A ‘natural shoreline’ or a ‘significant wetland’ exhibits the most pristine characteristics. In these areas new seawall construction is limited to bioengineered materials. An ‘area of special concern’ exhibits an intermediate condition, and here a new seawall may be constructed of bioengineered materials or of glacial stone. 312 IAC 11-4-2(c). A ‘developed area’ exhibits the greatest disruption by human activities, and in a developed area a new seawall may be constructed of bioengineered materials, glacial stone, riprap, or an approved bulkhead material. Burke’s Vinyl Seawalls& Reynolds v. DNR, 11 Caddnar 345, 349 (2008). This regulatory approach seeks to preserve and protect public freshwater lakes for the enjoyment of all the public. Portions of shorelines exhibiting ‘natural scenic beauty’, and which are least affected by manmade additions or alterations, are accorded greater protections than those more disrupted. The approach is consistent with the Lakes Preservation Act and particularly IC 14-26-2-5.
Id at 23.
45 A “seawall” is “a manmade structure placed along the shoreline or water line of a public freshwater lake for the purpose of shoreline stabilization.” 312 IAC 11-2-21
46 An “area of special concern” is an area that contains “[a]n altered shoreline where bulkhead seawalls are at least two hundred fifty (250) feet apart.” 312 IAC 11-2-2(1)
47 “Bulkhead seawall” is defined at 312 IAC 11-2-5. The definition provides in pertinent part: “(a) ‘Bulkhead seawall’ means a vertical, or near vertical, solid concrete, steel sheet piling, or vinyl piling structure, which has the purpose of shoreline protection. (b) A timber wall may be deemed to be a bulkhead wall if the property owner proves to the satisfaction of the division of water that the wall functions as a bulkhead wall …”
48 "Bioengineered" means “the use of a combination of biological elements (plant materials) and structural or mechanical reinforcements for stabilization, revetment, or erosion control. Biological and mechanical elements must function together in an integrated and complementary manner.” 312 IAC 11-2-3
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49 "Glacial stone" means “a rounded stone that satisfies each of the following: (1) Was produced by glacial activity. (2) No individual stone weighs more than one hundred twenty (120) pounds. (3) At least ninety percent (90%) of the material passes through a twelve (12) inch sieve. (4) Not more than ten percent (10%) of the material passes through a six (6) inch sieve.” 312 IAC 11-2-11
50 The evidence is not refuted that the Permit is for an area where there is a span of over 250 feet between bulkhead seawalls. The shoreline along the Fankhauser LLC property is an “area of special concern” as defined by 312 IAC 11-2-2(1).
51 The evidence is not refuted that the area of shoreline along the Fankhauser LLC property is currently comprised of glacial stone and that the Permit proposes a new seawall comprised of concrete, contrary to the requirements of 312 IAC 11-4-2(c).
52 An exception to the requirement for specific materials of a new seawall in an area of special concern may be available to a person who demonstrates “vexing erosion problems” and who satisfies the requirements of 312 IAC 11-5-3. See 312 IAC 11-5-3 and Burke’s Vinyl Seawalls & Reynolds v. DNR, 11 CADDNAR 345 (2008), at 353-354. As pertinent to this proceeding, the Department is authorized to consider the issuance of a permit upon meeting the following requirements:
(a) If an applicant demonstrates to the satisfaction of the department that modifications to conditions required under this article would promote a purpose described in subsection (b) or (c), the director or a delegate may issue a license under this section that incorporates those modifications. A person who wishes to secure a license under this section must confer with the department before filing an application…
(c) If a purpose of the license is to control erosion and stabilize the shoreline or waterline, the department may issue a license where supported by a written assessment from a registered engineer, geologist, or soil scientist (with expertise in bank stabilization and erosion control practices) that the proposal is the only viable method for controlling erosion and stabilizing the shoreline or waterline. The written assessment must evaluate the following:
(1) The composition of existing shoreline terrain.
(2) Impacts due to wind and wave action.
(3) The severity of erosion and need for bank stabilization.
(4) The suitability of materials to armor and provide bank stabilization.
(d) The applicant for a license under this section must also demonstrate the proposal would not affect the:
(1) public safety;
(2) natural resources;
(3) natural scenic beauty; or
(4) water level;
of the lake in a manner otherwise prohibited by IC 14-26-2.
(e) The following materials do not qualify for a license under this section:
(1) Railroad ties.
(2) Treated timber.
(3) Broken concrete.
(4) Tires.
(5) Scrap metal, appliances, or vehicle bodies.
(6) Asphalt.
(7) Another material determined by the department to be unsuitable for satisfying the requirements of this section.
312 IAC 11-5-3
53 No evidence was presented to support a finding that any Petitioner conferred with the Department before filing the Permit application concerning a modification as required by 312 IAC 11-5-3(a).
54 Green is registered as an engineer as required by 312 IAC 11-5-3(c).
55 Green’s revised report is determined to be a written assessment required by 312 IAC 11-5-3(c). The revised report evaluated all of the requirements of 312 IAC 11-5-3(c)(1) through (c)(4). Green’s report also demonstrated the requirements of 312 IAC 11-5-3(d)(1) through (d)(4).
56 The Department may issue a permit where it is supported by a written assessment from a registered engineer “with expertise in bank stabilization and erosion control practices” 312 IAC 11-5-3(c). No party asked to have Green qualified as an expert witness. However, the evidence presented by Green was based on his personal observations during his site visit. Green’s testimony and the information within Green’s report based on his personal observations of the Permit site are sufficient to qualify him as a skilled lay witness and to form an opinion rationally based on his own perceptions. Green’s opinions regarding the current level of stabilization for the shoreline and the conditions resulting erosion at the site reveal his expertise in “bank stabilization and erosion control practices” as required by 312 IAC 11-5-3(c). See 312 IAC 11-5-3(c), Skilbred, et al. v Spaw, et al., 13 CADDNAR 99, 104 (2013) and the Indiana Rules of Evidence 701 and 702.
57 Neither Green’s revised report nor his testimony during the administrative hearing identified concrete as the “only viable method for controlling erosion and stabilizing the shoreline or waterline” relevant to the Permit.
58 Green’s revised report and his testimony are not sufficient to satisfy the necessary requirements found in 312 IAC 11-5-3. The Department may not consider the issuance of a permit to construct a new seawall of a material other than bioengineered materials or of glacial stone as required by 312 IAC 11-4-2(c).
59 Fankhauser Holding Co., LLC and G.W. Sedgwick Seawall Construction by George Sedgwick and Eva David failed to meet their burden of proof, by a preponderance of the evidence, to set aside the reason identified by the Department of Natural Resources for denial of the Permit.
60 Fankhauser Holding Company, LLC is disqualified under 312 IAC 11-4 from receiving a permit to place a concrete seawall along the shoreline of Clear Lake.
[1] As stated in the Petition with no alterations or corrections.
[2] Despite David’s failure to appear, the hearing was conducted without objection and the decision herein is binding upon David.
[3] Findings of fact that may be construed as conclusions of law and conclusions of law that may be construed as findings of fact are so deemed.
[4] Notations are provided as a reference to testimony or exhibits in the record. The reference may not be exhaustive.
[5] The Incomplete Application Notice was also referred to by Hebenstreit as an “Abeyance Notice.”
[6] Erick Fankhauser and George Sedgwick were present for the administrative hearing and affirmatively asserted their individual decisions not to testify. Only Green, Hebenstreit and Thomas testified. Eric Fankhauser and George Sedgwick did engage in the direct examination of Green and the cross examination of Hebenstreit and Thomas.