The Avoyelles Sportsmen's League, Inc., Cross-Appellants v. John O. Marsh, Jr., Secretary of the Army, Etc., Elder Realty Company, Inc., Cross-Appellee. The Avoyelles Sportsmen's League, Inc. v. John O. Marsh, Jr., Secretary of the Army, Etc., Elder Realty Company, Inc., George Bartmess, Intervenors-Appellants, Louisiana Department of Agriculture, Movant-Appellant

This is an appeal from a district court judgment that enjoined the private defendants1 from any additional clearing, except by permit under 33 U.S.C. § 1344 (Supp. V 1981), of certain lands determined by the district court to be wetlands. The federal defendants2 contend that the district court should have reviewed the Environmental Protection Agency's ("EPA") final wetlands determination (attached as an appendix to this opinion) on the basis of the administrative record, and that the court erred in adopting its own wetlands determination instead of reviewing the agency's determination under the arbitrary and capricious standard. The federal defendants also dispute the district court's conclusion that the mere removal of vegetation from wetlands constitutes a discharge of a pollutant under section 301(a) of the Clean Water Act ("CWA"), 33 U.S.C. § 1311(a) (1976).3 The private defendants contest the validity of the district court's determination that approximately ninety percent of their land is a wetland, as well as the court's conclusion that their landclearing activities fall under the CWA's prohibition on the discharge of pollutants into waters of the United States.

For the reasons set forth below, to the extent that the district court's decision that ninety percent of the Lake Long Tract is a wetland is inconsistent with the EPA's determination, the decision of the district court is reversed. The court's determination that the private defendants' actual landclearing activities require permits is affirmed.

I. FACTUAL AND PROCEDURAL BACKGROUND.

This case concerns an approximately 20,000 acre tract of land (the "Lake Long Tract") in Avoyelles Parish, Louisiana. The tract lies within the Bayou Natchitoches basin, an area of approximately 140,000 acres, which, along with the Ouachita, Black and Tensas river basins, makes up the Red River backwater area. The Bayou Natchitoches basin is subject to flooding during the spring months, and it experiences an average rainfall of sixty inches per year.

Much of the basin had been cleared of forest before the private defendants began their landclearing activities, but 80,000 acres were still forested. The Lake Long Tract made up a quarter of this forested area. The topography of the tract itself is uneven, resulting in some areas with permanent water impoundments and other drier areas that support a variety of plant species.

The private defendants own the Lake Long Tract. They decided that the land could be put to agricultural use, specifically soybean production. Consequently, they began a program of large-scale deforestation in June of 1978.4 Using bulldozers with shearing blades that "floated" along the ground, the defendants cut the timber and vegetation at or just above ground level. The trees were then raked into windrows, burned, and the stumps and ashes were disced into the ground by other machinery. The shearing and raking caused some leveling of the tract, and the defendants dug one drainage ditch.

On August 25, 1978, the Vicksburg District of the Army Corps of Engineers ordered defendant Prevot to halt his activities pending a wetlands determination by the Corps. Thereafter, Dr. Donald G. Rhodes, an expert consultant employed by the Corps, undertook a comprehensive vegetative mapping of the Lake Long Tract and determined that thirty-five percent of it was a wetland. In October, 1978, the Fish and Wildlife Service wrote a letter to the Corps stating that the Service believed that the entire tract was a wetland. After Dr. Rhodes had made his determination, the landowners resumed their activities on the portion of the tract that the Corps had not designated as a wetland.

On November 8, 1978, the plaintiffs5 brought this citizens' suit6 against a number of Corps and EPA officials, as well as against the private landowners. The plaintiffs claimed, inter alia,7 that the landclearing activities would result in the discharge of dredged and fill material into the waters of the United States in violation of sections 301(a) and 404 of the CWA, 33 U.S.C. §§ 1311, 1344 (1976 & Supp. V 1981),8 and also result in the discharge of pollutants into the waters of the United States in violation of section 402 of the CWA, 33 U.S.C. § 1342 (1976 & Supp. V 1981).9 The plaintiffs requested a declaration that the tract was a wetland within the scope of the CWA,10 that the private defendants could not engage in their landclearing activities without obtaining a permit from the EPA or the Corps, and that the federal defendants had failed to exercise their "mandatory duty"11 to designate the tract a wetland and to order the private defendants to cease and desist from discharging pollutants and dredged materials. The plaintiffs also sought injunctive relief against the federal defendants to require them to exercise their jurisdiction over the property and to issue cease-and-desist orders until the private defendants obtained the requisite permits. The district court immediately issued a temporary restraining order, preventing the private defendants from engaging in landclearing activities pending the court's action on the plaintiffs' motion for a preliminary injunction.

On January 17, 1979, the district court granted the plaintiffs' motion for a preliminary injunction and ordered the federal defendants to prepare a final wetlands determination within sixty days. All of the private parties were to have the opportunity to participate in the administrative proceedings, and the federal defendants were to file a preliminary report within forty-five days. The court allowed the private defendants to engage in normal cultivation on the more than 10,000 acres that had been cleared, but ordered them to apply for a permit with respect to the area already designated by the government as a wetland and enjoined them for sixty days from engaging in landclearing activities on the remainder of the tract.

The parties complied with the court's preliminary order, and the EPA submitted its final wetlands determination on March 26, 1979.12 After examining the vegetation, soil conditions, and hydrology of the tract, the EPA concluded that approximately eighty percent of the land was a wetland. In a brief final paragraph, the EPA also offered its views of the types of activities that would require a section 404 permit.

At the private defendants' request, the district court agreed to bifurcate the consideration of the two major issues in the case: (1) how much of the Lake Long Tract was a wetland, and (2) which activities required a section 404 permit. After extensive trials on both issues, the court decided that a section 404 permit was required for the landclearing activities and that over ninety percent of the Lake Long Tract was a wetland.13 The court then enjoined the private defendants from engaging in any additional landclearing activities, without a section 404 permit, on the land that the court had determined to be a wetland, other than the land already cleared. The defendants timely appealed.

II. THE WETLANDS DETERMINATION.

The procedural posture of this case is, to say the least, unusual. Issues were raised by the parties at one stage of the litigation only to be forgotten or ignored by both the parties and the court at a later stage in the proceedings. Indeed, as in Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc., 435 U.S. 519, 540, 98 S.Ct. 1197, 1210, 55 L.Ed.2d 460 (1978), the parties in this litigation have "changed positions as nimbly as if dancing a quadrille."14 In deciding to give the federal defendants an opportunity to make a final wetlands determination, the district court recognized that the federal defendants bore the "primary responsibility" for the determination of which lands were wetlands:

But these matters often come up to a court in the nature of a review of a ruling made by a Governmental agency. In this instance one of the primary requests for relief made by the plaintiffs was that the agencies be directed to take up this matter of delineation of wetlands, the definition of what are wetlands, and then the enforcing of their order after it is so defined. Also, coupled with that was a prayer more directly to the merits; that is, that the Court itself makes such definitions and defines them. This is something which does not come up every day, and Congress has burdened and designated certain Government agencies with the responsibility for doing just what the prayer in this petition requests.... Whatever the reason, the matter of wetlands in this area, the definition of what is wetlands in that area is not now definite.... [B]asically speaking, since this is a responsibility which Congress has designated the Corps and two other Government agencies to accomplish, it is their primary responsibility and they have the expertise to handle the question. And since in just about all cases that the Court has come into contact with, these cases have been cases in which the Court has the benefit of the consideration given by the agencies and is not called upon to be the agency of first impression, or to use its own initiative in making a definition or enforcing it. It has been asked to review a definition made by persons who are experts in that field and have accumulated expert testimony.... [T]he Court ordinarily has the benefit of this consideration. And I feel that the Court in this instance should also have the benefit of this consideration, if it is possible to do so.

Preliminary Injunction Hearing Transcript at 34-36. After asking the federal agencies to use their expertise in making a final wetlands determination, however, the court proceeded to conduct a de novo trial on the wetlands issue and to substitute its judgment for the EPA's, without any explanation in its opinion of why it had found it necessary to go outside of the administrative record or of the standard that it was using to review the EPA's determination. Thus, while it may not be a sea that we have all been cast adrift upon, we have nevertheless been cast adrift.

The federal defendants maintain that the court's de novo review of the EPA's final wetlands determination was inappropriate. They contend that the district court should have reviewed the agency's determination on the basis of the administrative record, and that the agency's determination should have been upheld as long as it was not "arbitrary and capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(B) (1976). We agree with the federal defendants that the district court's wetlands determination must be set aside because the court applied the wrong standard in reviewing the agency's determination.

A. Standard of Review.

Since the Clean Water Act does not set forth the standards for reviewing the EPA's or the Corps' decisions, we look to the Administrative Procedure Act (APA), 5 U.S.C. §§ 701 et seq. (1976), for guidance. See Save the Bay, Inc. v. Administrator of the EPA, 556 F.2d 1282 (5th Cir.1977); Natural Resources Defense Council, Inc. v. Train, 510 F.2d 692 (D.C.Cir.1975). In general, the APA provides that a court shall set aside agency findings, conclusions, and actions that are "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law," or that fail to meet statutory, procedural or constitutional requirements. 5 U.S.C. §§ 706(2)(A), (B), (C), (D). This standard of review is highly deferential. A final agency decision is "entitled to a presumption of regularity." Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 415, 91 S.Ct. 814, 823, 28 L.Ed.2d 136 (1971). While the court "must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment," and while "this inquiry into the facts is to be searching and careful, the ultimate standard of review is a narrow one." Id. at 416, 91 S.Ct. at 824. In Overton Park, the Supreme Court stated unequivocally that the "court is not empowered to substitute its judgment for that of the agency." Id.; accord Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 285, 290, 95 S.Ct. 438, 442, 444, 42 L.Ed.2d 447 (1974); Louisiana Environmental Society, Inc. v. Dole, 707 F.2d 116, 118-19 (5th Cir.1983); City of Houston v. FAA, 679 F.2d 1184, 1190 (5th Cir.1982).

In Ethyl Corp. v. EPA, 541 F.2d 1 (D.C.Cir.) (en banc), cert. denied, 426 U.S. 941, 96 S.Ct. 2663, 49 L.Ed.2d 394 (1976), the Court of Appeals for the District of Columbia explained the boundaries of a court's role in reviewing an agency decision under the arbitrary and capricious standard. The Ethyl Court directed reviewing courts to "immerse" themselves in the evidence in the administrative record in order to determine whether the "agency decision was rational and based on consideration of the relevant factors." 541 F.2d at 36 (citing Overton Park ). The court warned, however, that this effort to understand the evidence must be performed with a "conscientious awareness of the limited nature" of the court's function and the need to defer to the agency's expertise:

The enforced education into the intricacies of the problem before the agency is not designed to enable the court to become a superagency that can supplant the agency's expert decision-maker. To the contrary, the court must give due deference to the agency's ability to rely on its own developed expertise....

Thus, after our careful study of the record, we must take a step back from the agency decision. We must look at the decision not as the chemist, biologist or statistician that we are qualified neither by training nor experience to be, but as a reviewing court exercising our narrowly defined duty of holding agencies to certain minimal standards of rationality.

Id. (citations and footnotes omitted).

The basis for a court's review of an agency decision is subject to narrow limitations. Where an agency's decision is based on an administrative record, the decision should be reviewed in light of that record. Camp v. Pitts, 411 U.S. 138, 142-43, 93 S.Ct. 1241, 1244, 36 L.Ed.2d 106 (1973); accord Louisiana Environmental Society, supra. If the agency decision is not sustainable on the basis of the administrative record, then "the matter should be remanded to [the agency] for further consideration." Camp, 411 U.S. at 143, 93 S.Ct. at 1244 (emphasis added); accord Vermont Yankee Nuclear Power Corp. v. National Resources Defense Council, Inc., 435 U.S. 519, 549, 98 S.Ct. 1197, 1214, 55 L.Ed.2d 460 (1978).

In "certain narrow, specifically limited situations," agency action may also be set aside if it is not supported by "substantial evidence," 5 U.S.C. § 706(2)(E), or, in "other equally narrow circumstances," a court may engage in de novo review of the action and set it aside if it is "unwarranted by the facts" 5 U.S.C. § 706(2)(F). Overton Park, 401 U.S. at 414, 91 S.Ct. at 822. De novo review under section 706(2)(F) is authorized only "when the action is adjudicatory in nature and the agency factfinding procedures are inadequate," or "when issues that were not raised before the agency are raised in a proceeding to enforce nonadjudicatory agency action." Overton Park, 401 U.S. at 415, 91 S.Ct. at 823. No one contends that the substantial evidence test applies to this case, nor is there any indication that de novo review was authorized by the presence of either of the circumstances mentioned in Overton Park.15

Had this case commenced as a challenge to the Corps' decision to grant or deny a section 404 dredge-and-fill permit, the district court would clearly have been expected to review the agency's decision under the arbitrary and capricious standard on the basis of the administrative record. See Buttrey v. United States, 690 F.2d 1170, 1183-85 (5th Cir.1982), cert. denied, --- U.S. ----, 103 S.Ct. 2087, 77 L.Ed.2d 298 (1983) (Corps' denial of permit reviewed on administrative record under arbitrary and capricious standard); Joseph G. Moretti, Inc. v. Hoffman, 526 F.2d 1311, 1312 (5th Cir.1976) (discovery not improperly curtailed because challenge to Corps' denial of permit must be reviewed on basis of administrative record; Corps' decision was not arbitrary and capricious); Di Vosta Rentals, Inc. v. Lee, 488 F.2d 674, 678-79 (5th Cir.1973), cert. denied, 416 U.S. 984, 94 S.Ct. 2387, 40 L.Ed.2d 761 (1974) (court's review of Corps' permit decision is limited to whether that decision is arbitrary and capricious in light of administrative record).16 The plaintiffs argue that the court's de novo review of the final wetlands determination was appropriate in this case because the EPA's determination was a jurisdictional decision. We disagree.

This is not a case where the parties have challenged the federal agency's jurisdiction to assert any authority over the tract. The landowners have conceded that thirty-five percent of the tract is a wetland subject to the federal defendants' regulatory jurisdiction under the CWA. We are not confronted with a situation where the court must determine whether the property falls under the agency's jurisdiction at all before it may determine whether the exercise of the agency's jurisdiction is appropriate. See, e.g., United States v. Lee Wood Contracting, Inc., 529 F.Supp. 119 (E.D.Mich.1981) (enforcement action holding that land is "neighboring wetland" within Corps' jurisdiction); Parkview Corp. v. Department of the Army Corps of Engineers, 469 F.Supp. 217 (E.D.Wis.1979) (granting Corps' summary judgment motion that the land is a wetland under 1974 definition within Corps' jurisdiction); P.F.Z. Properties, Inc. v. Train, 393 F.Supp. 1370 (D.D.C.1975) (holding that Corps had jurisdiction over proposed building site).

The question in this case is the extent, not the existence, of agency jurisdiction. Since there is no assertion that the EPA's jurisdiction is conspicuously lacking, its findings with respect to the extent of its jurisdiction must be reviewed under the same standard as any other administrative findings. See Federal Power Commission v. Transcontinental Gas Pipe Line Corp., 423 U.S. 326, 331, 96 S.Ct. 579, 582, 46 L.Ed.2d 533 (1976) (commissioner's findings reviewed under "substantial evidence" standard where existence of gas shortage formed "the factual predicate necessary to the Commission's assertion of authority"); Buttrey, supra, 690 F.2d at 1185-86 (Corps' determination of the extent of wetlands reviewed under arbitrary and capricious standard); cf. Deltona Corp. v. Alexander, 682 F.2d 888, 893-94 (11th Cir.1982) (upholding district court's grant of summary judgment in Corps' favor on jurisdictional issue because plaintiff had not exhausted administrative remedies and extent of wetlands is type of decision necessitating agency expertise).

The wetlands determination is precisely the type of agency decision that is normally subject to limited judicial review. The EPA developed an extensive administrative record in making its decision; it collected reports from its own expert consultants, as well as from the parties. The determination itself, which requires an analysis of the types of vegetation, soil and water conditions that would indicate the existence of wetlands, is the kind of scientific decision normally accorded significant deference by the courts. See Deltona Corp., supra; Hercules, Inc. v. EPA, 598 F.2d 91, 106 (D.C.Cir.1978); Ethyl, supra.17 De novo review would permit the courts to intrude into an area in which they have no particular competence, and the presentation of the scientific evidence at both the administrative and judicial levels of the proceeding would result in inefficiencies and delays where they are most harmful. See Sierra Club v. Sigler, 695 F.2d 957, 981 (5th Cir.1983) (noting that "protracted litigation in environmental cases can kill projects by delay"). The arbitrary and capricious standard affords the proper deference to the agency's scientific expertise, while the requirement that a court engage in a thorough in-depth review of the administrative record to ascertain whether the agency has considered all of the relevant factors and whether the agency's decision is rational, Overton Park, 401 U.S. at 416, 91 S.Ct. at 823-24, assures that deference to the agency does not result in abdication of judicial responsibility. See Ethyl, supra, 541 F.2d at 36-37.

At trial, the landowners objected to the EPA's reliance on the administrative record, claiming that it was not a true administrative record because it had been "prepared by order of the court, which was not in the ordinary course of administrative proceedings." 23 Record at 444-45. The administrative determination in this case is something of a hybrid since it was prepared in a sixty day period under a court order. In the absence of any indication that it was actually tainted by the nature of the proceedings, however, see Overton Park, 401 U.S. at 420, 91 S.Ct. at 825 (court may go outside of administrative record only upon showing of bad faith or improper behavior), the administrative record compiled by the agency should have served as the "focal point" for judicial review of the EPA's final wetlands determination. See Camp, supra, 411 U.S. at 142, 93 S.Ct. at 1244; Louisiana Environmental Society, supra, 707 F.2d at 119.

We hold that the district court erred in substituting its own wetlands determination for the EPA's instead of reviewing the agency's decision, as supported by the administrative record, under the arbitrary and capricious standard. Under different circumstances, we might end our review of the wetlands determination here and remand to the district court for review of the agency decision under the appropriate standard. This litigation has, however, already gone on long enough, particularly because it involves the type of project that may be killed by the delay. See Sierra Club, supra. Because the nature of the dispute over the EPA's wetlands determination is primarily a legal one, subject to our own independent review, and because the reasonableness of the EPA's decision turns on an analysis of documentary evidence, rather than on the credibility of witnesses appearing before a trial judge, we do not believe that anything could happen in the district court on remand that would change our view of whether the EPA's determination was arbitrary and capricious. Accordingly, we have decided to review the agency's determination ourselves. See Sierra Club, supra, 695 F.2d at 981; Di Vosta, supra, 488 F.2d at 679.

B. Methodology.

The private defendants claim that the EPA's decision to examine additional species of vegetation,18 as well as the soil and hydrology of the tract, in making its wetlands determination constituted rulemaking. Emphasizing the substantial difference between the Vicksburg District consultant's methodology and determination and the EPA's,19 and the probable impact of this change in methodology throughout the State of Louisiana,20 the landowners contend that the agencies could not make such a drastic change in their methodology without complying with the notice and comment procedures required by 5 U.S.C. § 553.21 The plaintiffs and federal defendants argue that the change in methodology was merely an interpretation of the Corps' existing wetlands definition, 33 C.F.R. § 323.2(c) (1982),22 and that therefore notice and comment proceedings were not required. 5 U.S.C. § 553(b)(A) (notice and comment requirements do not apply to "interpretative rules, general statements of policy, or rules of agency organization, procedure or practice."). All of the parties recognize that we must look beyond the label to the substance of an administrative action in order to determine whether rulemaking procedures were required. CBS, Inc. v. United States, 316 U.S. 407, 419, 62 S.Ct. 1194, 1201, 86 L.Ed. 1563 (1942).

1. Legislative Or Interpretative Rule.

The APA defines the term "rule" broadly enough to include virtually every statement an agency may make, 5 U.S.C. § 551(4),23 but not every ruling requires the procedures set forth in section 553. While "legislative" or "substantive" rules may only be promulgated in compliance with section 553, "interpretative" rules are expressly excluded from the section.

In Batterton v. Marshall, 648 F.2d 694 (D.C.Cir.1980), the District of Columbia Circuit reviewed some of the differences between the two types of rulings:

Legislative rules ... grant rights, impose obligations, or produce other significant effects on private interests. They also narrowly constrict the discretion of agency officials by largely determining the issue addressed. Finally, legislative rules have substantive legal effect.

648 F.2d at 701-02 (footnotes omitted). In contrast, interpretative rules

are not determinative of issues or rights addressed. They express the agency's intended course of action, its tentative view of the meaning of a particular statutory term, or internal house-keeping measures organizing agency activities. They do not ... foreclose alternate courses of action or conclusively affect rights of private parties.

Id. at 702 (footnotes omitted). Perhaps most importantly, interpretative rules are subject to more extensive judicial review than are legislative rules. Id.24 The Batterton court admitted, however, that it would be "less than candid if [it] pretended that the labels ... neatly place particular agency actions within any particular category. Instead, the categories have 'fuzzy perimeters' and establish 'no general formula.' " 648 F.2d at 702 (quoting Pacific Gas & Electric Co. v. FPC, 506 F.2d 33, 38 (D.C.Cir.1974); F. Cooper, Administrative Agencies and the Courts 87 (1951)); see also NLRB v. Wyman-Gordon Co., 394 U.S. 759, 770, 89 S.Ct. 1426, 1432, 22 L.Ed.2d 709 (1969) (Black, J., concurring in the result) (the line between an agency's quasi-legislative function and its quasi-judicial function is not always clear); see generally 2 K. Davis, Administrative Law Treatise § 7 (2d ed. 1983).

Further, an agency has the discretion to proceed through case-by-case adjudications and interpretative orders, rather than through the rulemaking process, for the agency will often confront special problems necessitating a flexible approach to their resolution. In SEC v. Chenery Corp.,