Amicus Curiae Brief — Bersani v. United States Environmental Protection Agency

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ge IN THE

Supreme Court of the United States

Ocroser Term, 1988

JOHN A. BERSANI, NEWPORT GALLERIA GROUP,

ROBERT J. CONGEL and the PYRAMID COMPANIES,

Petitioners,

vs.

UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY, et ai.,

Respondents.

and

No. 88-929

JOSEPH ROBICHAUD and CITIZENS IN SUPPORT

OF ATTLEBORO MALL,

Petitioners,

vs.

UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY, et ai.,

Respondents.

ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

MOTION FOR LEAVE TO FILE BRIEF OF AMICUS

CURIAE AND BRIEF OF THE AMERICAN

ASSOCIATION OF PORT AUTHORITIES AS

AMICUS CURIAE IN SUPPORT OF PETITIONERS

Hucu H. WeEtsxH

Counsel of Record

Lynpa J. L. CaLore

One PATH Plaza

Jersey City, New Jersey 07306

(212) 466-7693

Attorneys for Amicus Curiae,

American Association of Port Authorities

MOTION FOR LEAVE TO FILE A BRIEF

AS AMICUS CURIAE

The American Association of Port Authorities (“AAPA”)

respectfully moves to file the annexed brief as Amicus

Curiae in support of the Petitioners. Consent to file the

brief has been obtained from the attorneys for the Peti-

tioners, Bersani, et al.; Department of Justice, Land and

National Resources Divisions and the Solicitor General of

the United States. The consent of the attorney for

Intervenor-Respondent, Sierra Club, was requested but

refused.

As demonstrated more fully in the annexed brief, AAPA

supports EPA’s goal of protecting wetlands. The policies

and programs of AAPA and its individual members

recognize the vital role that wetlands play in maintaining

the balance of our regional and global ecosystems, and the

urgent need to preserve, maintain and enhance this fragile

and invaluable natural resource. The objective of AAPA

and its individual members is to work cooperatively with

and assist the EPA and Army Corps of Engineers in assur-

ing the proper treatment of wetlands while at the same

time balancing the need for development to meet the

growth requirements of this Nation.

Therefore, AAPA requests leave to file this brief in an

effort to bring to the Court’s attention the need for review-

ing the decision of the Second Circuit which it believes fails

to promote a workable scheme that would balance the need

to protect wetlands and to accommodate the demands of

growth and development.

If.

IV.

TABLE OF CONTENTS

INTEREST OF AMICUS CURIAE......

STATEMENT OF THE CASE AND

(ops * 0 by yr re

Pk er rrr ere ae

A.

THE EPA ACTED BEYOND THE

SCOPE OF ITS AUTHORITY

UNDER SECTION 404(c) OF THE

CWA BY ITS RETROACTIVE

APPLICATION OF A ‘MARKET

OU NGEE, BUMPUMINE 6 cccccxvcseseses

. THE SECOND CIRCUITS

DECISION MAKES EPA’S “MARKET

ENTRY’ THEORY APPLICABLE TO

ALL MEMBERS OF THE

REGULATED COMMUNITY, THUS

HAVING THE POTENTIAL TO

DEPRIVE THEM OF FIFTH

AMENDMENT RIGHTS .......

ee errr rer rr rr

Page

TABLE OF AUTHORITIES

Cases Page

Agins v. City of Tiburon, 447 U.S. 255, 100

Si. SE CGNs 5 os sneer Grae 14

Alyeska Pipeline Co v. Wilderness Society, 421

U.S. 240, 95 S.Ct. 1612 (1975)............. 15

Atchison, Topeka and Santa Fe Railway

Company v. Wichita Board of Trade, 412

US. 800, $3 S.Ct. S967 (1979) «eases 10

Association of American Railroads v. Costle,

$62 F.2d 1310 (DC Cir. 1977)............. 9

Bersani v. Robichaud, 850 F.2d 36 (2d Cir.

MOG). o.oo és sci eee

bo

First English Evangelical Lutheran Church v.

Los Angeles, 482 U.S. 304, 107A S.Ct. 2378

(R607) CepbeeGts GIRS vio cece 14

Florida Rock Industries, Inc. v. United States,

791 F.2d 893 (Fed. Cir. 1986), cert. denied

479 U.S. 1053, 107 S.Ct. 926 (1987) (interim

OU) soc vccadacseceneeee eee 14

Georgia Power Company v. Sanders, 617 F.2d

1112, n.9 (5th Cir. 1980), cert. denied 450

U.S. 936, 101 S.Ct. 1403 (1981)............ 16

Hoffmann-LaRoche, Inc. v. Kleindienst, 478

Pod 1 Ged Ct We in eee. 13

Kaiser Aetna v. United States, 444 U.S. 164,

Rem Fo eer reer ee 13

iv

Loveladies Harbor. Inc. v. U.S., 15 Cl. Ct.

hn rer rrr rrr rrr - 14

MacDonald. Sommer & Frates v. Yolo

County, 477 U.S. 340, 106 S.Ct. 2561 (1986) 13

Marek v. Chesny, 473 U.S. 1, 105 S.Ct. 3012

(MOOE) 0. ccc ccc ccc cence sccccsceseesese 15

Marshall v. Western Union Telegraph

Company, 621 F.2d 1246 (3rd Cir. 1980)... 12, 13

Morgan v. United States, 304 U.S. 1, 58 S.Ct.

T73 (IDB) 0. wc ccc ccc ccccccccccsccccses: 13

Nectow v. City of Cambridge, et al., 277 U.S.

183, 48 S.Ct. 447 (1928) ............--- , 15

N.L.R.B. v. Wyman-Gordon Company, 394

U.S. 759, 89 S.Ct. 1426 (1969) ........... 12

Pennsylvania Coal Co. v. Mahon, 260 U.S.

303, 43 S.Ct. 158 (1922) ..............- 7 13

Permian Basin Area Rate Cases, 390 U.S. 747,

BB SCe, DAE CIGD nc kc vccaahocscessense 13

Securities and Exchange Commission v.

Chenery Corporation, 332 U.S. 194, 67

SOe TET CHGE) scccaeuubecsunasuaes A 8

Sibbach v. Wilson ¢> Co., 312 U.S. 1, 61 S.Ct.

422 (1941) ........ ' Seca 15

Texaco. Inc v. Federal Power Commission, 412

F.2d 740 (3rd Cir. 1969) .............. “a 12

Da enernmeeneemnenne

White House Vigil v. Clark. 746 F.2d 1518

Geer Ms IO 8 ve on wn cdcceesceen.,

Williamson County Regional Planning

Commission v. Hamilton Bank of Johnson

City, 473 U.S. 172, 105 S.Ct. 3108 (1985) . ..

EPA Guidelines

Wetlands Action Plan, Office of Water/Office

of Wetlands Protection (Jan. 9, 1989) ..

Federal Statutes

Administrative Procedures Act

RE So!

© CN orp wneskacakansnebenads

Federal Water Pollution Control Act

Section 101(a), 33 U.S.C. § 125l(a) ....__..

Section 101(f), 33 U.S.C. § 1251(f).........

Section 404(c), 33 U.S.C. § 1344(c)....._..

The Rules Enabling Act, 28 U.S.C. §2072 ___.

Federal Regulations

40 CFR °230.1(b)....... ere yr ry re re ee

Miscellaneous

Final Determination of the Assistant

Administrator For External Affairs

Concerning The Sweedens Swamp Site In

Attleboro Massachusetts Pursuant to Section

404(c) of the Clean Water Act (May 13,

SOs Ske ce ee ee eee

16

10

No. 88-902

IN THE

Supreme Court of the United States

OctToBer TERM, 1988

JOHN A. BERSANI, NEWPORT GALLERIA GROUP,

ROBERT J. CONGEL and the PYRAMID COMPANIES,

Petitioners.

V.

UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY, et ai.,

Respondents.

and

No. 88-929

JOSEPH ROBICHAUD and CITIZENS IN SUPPORT

OF ATTLEBORO MALL,

Petitioners.

Vv.

UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY, et ai.,

Respondents.

ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

MOTION FOR LEAVE TO FILE BRIEF OF AMICUS

CURIAE AND BRIEF OF THE AMERICAN

ASSOCIATION OF PORT AUTHORITIES AS

AMICUS CURIAE IN SUPPORT OF PETITIONERS

By leave of Court, the American Association of Port

Authorities (“AAPA”) files this brief as Amicus in support of

the Petitioners.

to

I.

INTEREST OF AMICUS CURIAE

The American Association of Port Authorities is an

association which represents virtually every United States

port agency. The AAPA currently has 84 United States

members all of which are public entities mandated by law

to serve public purposes, primarily the facilities of water-

borne commerce and the consequent generation of local

and regional economic growth.

The goal of AAPA and its individual members is to pro-

mote the growth and development of our Nation's ports

so as to enable this Nation to maintain and enhance its

status in trade and commerce among nations. At the same

time AAPA recognizes the equal importance of protecting

the waters of this Nation, and in particular its wetlands,

to preserve and enhance the well being of the environment

and its finite natural resources. Therefore, AAPA believes

that well-defined substantive standards must be established

by the EPA detailing the basis upon which decisions will

be made to permit or disallow development in wetlands

or areas which may impact upon wetlands. These standards

should be developed in a reasoned and just manner by first

soliciting input from the members of the regulated com-

munity whose individual structures and functions inherent-

ly represent a wide range of concerns.

The decision of the Second Circuit has broadened the

‘market entry’ theory used by EPA in the instant case by

stating that it was the only reasonable interpretation of the

regulations, Bersani v. Robichaud, 850 F.2d, 36, 44 (2d Cir.

1988). Thus, it appears that the Second Circuit is stating

that the ‘market entry’ theory must be used by EPA with

respect to all members of the regulated community.

Therefore, the decision in this case will have a direct and

substantial effect upon AAPA members.

The members of AAPA are public ports and as such have

a dual role, acting both in a governmental and proprietary

capacity. On the governmental side, ports and their gover-

ning boards or commissions are intimately involved with

zoning, master planning and related activities. They act

as the local sponsors of dredging projects, develop water

dependent or related facilities of commerce and promote

the development of commerce for those regions which they

represent, all pursuant to legislative mandate from the

governments which created them. In some instances the

governing bodies of ports serve as the local Coastal Com-

mission under the applicable state Coastal Act. In their pro-

prietary capacity, ports engage in strategic planning,

marketing, operations and related activities. From both the

perspective of ports as governmental and proprietary en-

tities, their involvement in planning for growth is con-

tinuous and perpetual, and thus any attempt to apply EPA’s

‘market entry’ theory to them would be an anomaly.

In addition, ports are limited geographically in their

sphere of activity to their statutorily defined districts or

other legally circumscribed boundaries. Therefore, even the

determination of availability of alternative sites on a

‘market entry’ date would have no meaning under EPA’s

standardless and geographically amorphous ‘market entry’

theory. Moreover, since many port authorities have been

granted by statute the authority to exercise the power of

eminent domain in order to acquire private property within

the port district, the decision of the Second Circuit regard-

ing ‘market entry’ could force EPA to conclude that ports

always have alternative sites available, unless the port could

show that all other sites within the port district were en-

vironmentally more sensitive than the proposed site. This

too would be an anomalous result, and a near impossible

burden for ports to meet.

II.

STATEMENT OF THE CASE AND INTRODUCTION

AAPA adopts the Statement of the Case in the petition

filed by Petitioners, Bersani, et al.

Essentially AAPA believes that EPA acted ultra viresly

in rendering its decision in the matter sub judice insofar

as it is intended to set a standardless ‘market entry’ policy,

and that its action was beyond the scope of its authority

as defined in Section 404(c) of the Clean Water Act

(“CWA”) such that it renders the language of that Section

meaningless. EPA’s action did not amount to a disallowance

of a permit as contemplated by Section 404(c), but rather

was tantamount to deciding that an entity, in this case Peti-

tioners, was not eligible to apply for a permit in the first

instance. EPA concluded that at the time of Petitoners’

‘market entry’ (a time fixed in retrospect by EPA completely

without the benefit of any standards to guide itself, the

Army Corps of Engineers (“COE”) or the regulated com-

munity), there was an alternate site available to Petitioners.

Thus, EPA’s decision was a threshold determination which

could have been decided by the Agency in the first instance

without the need for the review of COE’s decision to grant

the permit as contemplated by Section 404(c). Therefore,

whether or not EPA’s decision to disallow the permit was

factually correct in this particular case, it must not rely

generally on Section 404(c) as authority for its action

because Section 404(c), by EPA’s action in the absence of

previously articulated standards, would then be rendered

meaningless. Thus, EPA must have acted beyond the scope

of its authority, unless it can point to another section of

the Clean Water Act which gives it such authority. The

discussion in this brief, however, will show that authority

for EPA’s action cannot be found in the Clean Water Act,

uw

and in fact its action is in contravention of Section 101(a)

and (f) of the CWA and EPA’s own regulations and

guidelines. Therefore, even if EPA’s discretionary powers

were deemed broad enough to permit its action in this case,

it surely could not justify such actions as a general policy.

Most importantly, AAPA believes that the decision by

the Second Circuit, insofar as it sanctioned EPA’s final

determination and broadened its applicability by stating

that “a common-sense reading of the statute can lead only

to the use of the market entry approach used by EPA,” 850

F.2d at 44, constitutes an infringement upon the due pro-

cess rights of all members of the regulated community who

will be deprived of the use of their property, since they were

given no opportunity to respond to this broad judicially

made rule. Although it is true that EPA had the benefit

of a record which included input from the Petitioner for

its decision in this controversy, EPA’s decision could at best

be limited to the facts of this case. However, the Second

Circuit has sought to broaden EPA’s determination, and

by means of the above-quoted language seeks to apply the

‘market entry’ theory to the entire regulated community

which has never had an opportunity to submit any infor-

mation to assist EPA or the Court in reaching a decision

which will profoundly affect their property interests.

Underlying all of this, AAPA believes that the ‘market

entry’ theory as a general policy, devoid as it is of standards,

will not serve the purpose of the Clean Water Act with

respect to wetlands, since application of it will not foster

the goal of wetlands protection.

III.

ARGUMENT

A. THE EPA ACTED BEYOND THE SCOPE OF

ITS AUTHORITY UNDER SECTION 404(c) OF

THE CWA BY ITS RETROACTIVE APPLICA-

TION OF A “MARKET ENTRY’ THEORY

The Clean Water Act at Section 404(c) grants to EPA

the power to disallow the issuance by COE of a permit

whenever it determines that an activity would have cer-

tain unacceptable adverse environmental effects as

specifically enumerated in the Statute. Section 404(c) clear-

ly does not authorize EPA to make a threshold decision that

an applicant cannot qualify for a permit due to its ‘market

entry’ date whether or not granting of such would have

otherwise unacceptable adverse environmental effects. In

the instant case, this is what EPA has done, thus, effectively

ignoring the language of Section 404(c) and treating it as

if it had no meaning.

The basis upon which EPA decided to apply the ‘market

entry’ theory to the Petitioners, and the means used to

determine the point in time when EPA chose to apply it.

were unknown to Petitioners and the COE since EPA had

apparently not employed the theory in the past to evaluate

when the availability of alternative sites would be deter-

mined and had set no standards to guide itself, the COE

or the regulated community.

It is only too obvious that if such discretionary, retroac-

tive veto powers were contemplated by Section 404(c) there

would be no need for the COE and the applicant to go

through the administrative process of seeking the permit

to begin with since the decision EPA has made could have

“_

been made before any lengthy environmental evaluations

and related application procedures were undertaken. The

‘market entry’ test, requires only that an adverse en-

vironmental effect be present, and a determination by EPA

that there were practicable alternative sites available on

the date of ‘market entry, which would then, according

to EPA, make the adverse impact unacceptable. Thus, EPA’s

Section 404(c) veto power would become meaningless and

unnecessary under such circumstances since EPA could

render its decision in the first instance. The veto power

would only be applicable where an applicant had first

passed the EPA ‘market entry’ test since then it would be

worthwhile for the applicant to further explore the possi-

ble eligibility of its project for a permit. Were this situa-

tion known to the applicant and COE in advance, the per-

mit application process would, in many instances, likely

not be undertaken. However, in order for the applicant to

decide whether it is prudent to apply for the permit, there

must be standards established by EPA to give guidance to

the regulated community and to the regulatory agencies

to ensure that all applicants are fairly treated.

In Section 101(a) of the CWA Congress states that it is

a goal of the Statute to restore and maintain the chemical,

physical and biological integrity of the Nation’s waters; and

Section 101(f) states that it is the national policy that pro-

cedures utilized for implementing the CWA encourage the

drastic minimization of paperwork and interagency deci-

sion procedures and best use of available manpower and

funds. Clearly the retroactive application of a standardless

and previously unannounced ‘market entry’ test would not

be commensurate with either of the goals set forth by Con-

gress in these Sections.

Although an agency is not necessarily precluded from

announcing and applying a new standard of conduct by

individual, ad hoc litigation which would inherently have

retroactive effect, “such retroactivity must be balanced

against the mischief of producing a result which is con-

trary to the statutory design or to legal and equitable prin-

ciples.” Securities and Exchange Commission v. Chenery

Corporation, 332 U.S. 194, 203, 67 S.Ct. 1575, 1581 (1947).

The goals of Section 101(a) would not be fostered by the

‘market entry’ test because the test would not serve to pro-

tect wetlands in the absence of defined standards. The ap-

plicant, failing the ‘market entry’ test on the basis of the

availability to it of alternative sites at some time in the past

prior to its application for a permit, could, upon the denial

of the permit, sell the property to another developer.

Assuming that there were in fact no alternative sites

available at the time of the sale, the second developer could

pass EPA’s ‘market entry’ test and could, in the absence of

other unacceptable adverse environmental effects, develop

the wetland. Similarly, a developer who at some time in

the past purchased wetland property with plans to build

upon it in the future, could pass the EPA ‘market entry’

test as long as there were no practicable alternative sites

available at the time of purchase. However, if there were

such alternative sites available at the time of the permit

application, the ‘market entry’ test would not protect the

wetland. These hypotheticals are not intended to suggest

that other determinations by COE and the EPA would not

serve to protect the wetland, but are merely illustrative of

the point that there is no reason for a standardless, broad-

ly applied ‘market entry’ test since such would not serve

to protect wetlands, and would not foster the goals of the

CWA.

Likewise, the time and energy spent by the COE, other

state and federal agencies and the applicant in the applica-

tion process could, in many instances, be avoided if EPA

were to openly establish its “market entry’ theory as policy,

and were to provide standards for determining when and

how it would be applied. The goals of Section 101(f) of the

CWA to streamline procedures for implementing the CWA

surely could not be met by the manner in which EPA has

applied the ‘market entry’ theory.

Although it is an established principle of administrative

law that reviewing courts will generally give great

deference to the interpretation given a statute by the agency

charged with its administration, this principle does not

apply when “the agency has misinterpreted its statutory

mandate.” Association of American Railroads v. Costle, 562

F.2d 1310, 1318-1319 (DC Cir. 1977).

The EPA has stated in its Guidelines at 40 CFR 230.1(b)

that the Guidelines are intended to be “consistent with and

to implement” the policies expressed in the CWA. As il-

lustrated, EPA has not fulfilled this objective by inter-

preting Section 404(c) of the CWA in such manner as to

claim authority thereunder to apply a standardless ‘market

entry’ test to the regulated community. Thus, EPA has

acted beyond the scope of its authority under the CWA and

in contravention of its own Guidelines. The latter fact is

even more poignantly demonstrated by an examination of

EPA's most current Wetlands Action Plan where one of its

seven stated objectives reads as follows: “EPA will work

with the Corps to reduce uncertainty and confusion regar-

ding implementation of the Section 404 permit program.”

Wetlands Action Plan, Office of Water/Office of Wetlands

Protection at 4 (Jan. 1989). EPA has stated in the Plan that

one of the actions it will take to meet its objectives is to:

“Use Section 404(c) in advance of individual permit ap-

plications to protect significant aquatic resources which

are identified through the planning processes.” Jd. at 8.

Thus, the above-quoted language and the text of the Plan

seem to indicate that EPA too recognizes the need for

ieee acer

10

guidance and standards in the administration of Section

404(c). Moreover, it is not clear whether EPA in fact did

contemplate that a standardless ‘market entry’ theory was

to apply beyond the confines of the present case. In fact

Bays ‘market entry’ EPA states as follows in its

inal determination in this case:

The issue addressed here relates particularly to

circumstances where a developer or developers are

entering a market area for accomplishment of a

specific project. I need not, and do not, decide

here what the relevant time period would be in

other circumstances — e.g., where an applicant

wishes to build on property inherited or acquired

long ago.

Final Determination of the Assistant Administrator For Ex-

ternal Affairs Concerning The Sweedens Swamp Site In

Attleboro Massachusetts Pursuant to Section 404(c) Of the

Clean Water Act, (May 13, 1986). See: Petition of Bersani,

et al. for Writ of Certiorari, Appendix D, p. 93a, n. 14.

Thus, it is not specifically with EPA’s determination in

the instant case that AAPA takes issue. It is rather with the

language by the Second Circuit in Bersani, 850 F.2d at 44,

which on its face appears to broaden the scope of EPA’s

standardless ‘market entry’ theory so as to approve or

possibly mandate the application of it to the entire

regulated community. In fact the Second Circuit held that

there was no reason for EPA to set standards, for to do so

would only “confuse things further.” 850 F.2d at 45.

The delegation of authority to an agency is not

unbounded, and “it is the duty of a reviewing court to

determine whether the course followed ... is consistent with

its mandate from Congress.” Atchison, Topeka and Santa

Fe Railway Company v. Wichita Board of Trade, 412 U.S.

ll

800, 805-808, 93 S.Ct. 2367, 2374-2375 (1973). An agency

must clearly set forth the grounds on which it acted, and

it is the “agency’s duty to explain its departure from prior

norms” so that the reviewing court can understand first

what a decision means and then determine whether it was

consistent with the statute. [bid.

AAPA believes that EPA should not be permitted such

unfettered discretion as the Second Circuit would allow,

and in fact that to permit such would result in EPA’s act-

ing beyond the scope of its authority under the CWA. It

recognizes, however, that EPA may not have intended such

a broad interpretation of its final determination regarding

the applicability of the ‘market entry’ theory, and AAPA

takes no position with respect to the appropriateness of the

theory as restricted to the case at bar.

B. THE SECOND CIRCUIT'S DECISION MAKES

EPA'S “MARKET ENTRY’ THEORY AP-

PLICABLE TO ALL MEMBERS OF THE

REGULATED COMMUNITY, THUS HAVING

THE POTENTIAL TO DEPRIVE THEM OF

FIFTH AMENDMENT RIGHTS

As discussed in Point A, the decision of the Second Cir-

cuit appears to give approval and perhaps even direct EPA

to apply, in its discretion, a standardless ‘market entry’ test

to all members of the regulated community who seek to

obtain a dredge and fill permit for proposed activities in

a wetland. AAPA believes that the Second Circuit, by its

engagement in judicial rulemaking, has thus compound-

ed the error of any intention EPA may have had with regard

to discretionary application of a standardless ‘market en-

try’ theory.

Certainly before EPA could establish such a broadly ap-

plicable policy it would have to allow the regulated

12

community some measure of due process since properties

held by many potential permit applicants would be effec-

tively declared undevelopable by such a ruling. Therefore,

the ruling should not be made in the quasi-judicial setting.

Generally an administrative agency should not utilize

a single case to promulgate a rule of widespread effect.

Marshall v. Western Union Telegraph Company, 621 F.2d

1246, 1254 (3rd Cir. 1980). The Administrative Procedure

Act (“APA”) defines a “rule” as “the whole or part of any

agency statement of general or particular applicability and

future effect designed to implement, interpret or prescribe

law or policy...” Jd. quoting 5 U.S.C. §551(4) (1976). “When

an administrative agency attempts to exercise a legislative

function delegated to it by Congress, it must do so in com-

pliance with the provision of the APA, 5 U.S.C. §553” which

“requires, inter alia, notice of the proposed rule to be

published in the Federal Register” and the opportunity for

interested persons to comment. /d. at 1254. The purpose

of the notice and comment requirement was to afford an

opportunity for the public to participate in the rulemak-

ing process, and to enable the agency to educate itself

before establishing a rule and procedure which would

substantially impact the regulated community. Texaco, Inc.

v. Federal Power Commission, 412 F.2d 740, 744 (3rd Cir.

1969). The rulemaking provisions of the APA “were de-

signed to assure fairness and mature consideration of rules

of general application,” and those provisions “may not be

avoided by the process of making rules in the course of ad-

judicatory proceedings.” N.L.R.B. v. Wyman-Gordon

Company, 394 U.S. 759, 766, 89 S.Ct. 1426, 1429 (1969).

Even when an administrative agency engages in an ad-

judicatory proceeding involving a concrete factual situa-

tion, facts and inferences may be used to formulate

legislative-type judgments of prospective operation.

13

Hoffmann-LaRoche, Inc. v. Kleindienst, 478 F.2d 1, 13 (3rd

Cir. 1973). In the instance where the adjudicatory pro-

ceeding is thus used for legislative purposes, it must follow

the notice and comment requirements of the APA, 5 U.S.C.

§553(b). Marshall v. Western Union Telegraph Company,

621 F.2d at 1254. In the final analysis, “the ultimate stan-

dard” against which the court must “evaluate the fairness

of the proceedings is due process of law.” Hoffmann-

LaRoche, 478 F.2d at 12, citing Permian Basin Area Rate

Cases, 390 U.S. 747, 767, 88 S.Ct. 1344 (1968); Morgan v.

United States, 304 U.S. 1, 18, 58 S.Ct. 773 (1937).

The Second Circuit, however, without the benefit of any

record containing input from the affected parties has,

through the mechanism of judicial rulemaking, established

the standardless ‘market entry’ theory as the only

reasonable approach for EPA to follow in determining

whether or not there are alternative sites available to a pro-

posed project. Therefore, without according to the parties

affected by the ruling any due process rights to have their

concerns heard, the Second Circuit has set the stage so that

many will be deprived of the use of their properties.

A regulatory taking claim in violation of the Fifth

Amendment with respect to governmental restrictions on

land use requires that a land owner first establish “that the

regulation has in substance ‘taken’ his property — that is,

that the regulation ‘goes too far.” MacDonald, Sommer

& Frates v. Yolo County, 477 U.S. 340, 348, 106 S.Ct. 2561,

2566 (1986), citing Pennsylvania Coal Co. v. Mahon, 260

U.S. 393, 415, 43 S.Ct. 158, 160 (1922). Several factors have

been identified in an examination of cases to determine

whether a regulation has gone too far and these include:

“the economic impact of the regulation; its interference

with reasonable investment-backed expectations, and the

character of the governmental action...” Kaiser Aetna v.

United States, 444 U.S. 164, 175, 100 S.Ct. 383, 390 (1979).

—————————————————

14

“While the typical taking occurs when the government

acts to condemn property in the exercise of its power of

eminent domain, the entire doctrine of inverse condem-

nation is predicated on the proposition that a taking may

occur without such formal proceeding.” First English

Evangelical Lutheran Church v. Los Angeles, 482 U.S. 304,

107A S.Ct. 2378, 2386 (1987) (interim ed.) The applica-

tion of a regulation to a property effects a taking if the

regulation does not substantially advance a legitimate

governmental interest or if it, “denies an owner economical-

ly viable use of his land.” Agins v. City of Tiburon, 447

U.S. 255, 260, 100 S.Ct. 2138, 2141 (1980). The determina-

tion of whether there is a substantial advancement of a

legitimate governmental interest requires that the regula-

tion be intended to promote the public welfare. Jd. at 2142.

The mere fact that a governmental regulation was intended

to promote a public benefit will not suffice. Loveladies

Harbor, Inc. v. U.S. 15 Cl. Ct. 381, 387 (1988). The deter-

mination of whether a taking has occurred must involve

a balancing of the intended public benefit against the harm

inflicted upon the landowner. Agins v. City of Tiburon,

447 U.S. at 261. When the Federal Circuit Court balanced

the governmental interest in preserving certain wetlands

against the loss in value to the landowner in Florida Rock

Industries, Inc. v. United States, 791 F.2d 893 (Fed. Cir.

1986), cert. denied 479 U.S. 1053, 107 S.Ct. 926 (1987) (in-

terim ed.), it found the balance in favor of the landowner.

The finding was based upon the determination that the

“Clean Water Act’s preservation of wetlands was not for

the prevention of a public harm but -rather for the

maintenance of a public benefit.” Loveladies Habor, Inc.

v. U.S., supra, 15 Cl. Ct. at 388.

The governmental power to interfere by regulations with

the general rights of the landowner by restricting the

character of his use of the land “is not unlimited,” and “such

restriction cannot be imposed if it does not bear a

15

substantial relation to the public health, safety, morals or

general welfare.” Nectow v. City of Cambridge, et al., 277

U.S. 183, 188, 48 S.Ct. 447, 448 (1928). Thus, where the

‘market entry’ ruling would not protect wetlands as was

demonstrated in Point A, it would be subject to challenge

under the substantial interest test. In addition to the tak-

ing argument, it has been stated that a regulation which

goes too far violates the Due Process Clause of the Fifth

Amendment. Williamson County Regional Planning Com-

mission v. Hamilton Bank of Johnson City, 473 U.S. 172,

196, 105 S.Ct. 3108, 3122 (1985).

Moreover, the Second Circuit is not the entity charged

by Congress with expertise in matters of wetland protec-

tion, and yet it has rendered a decision which will have

far ranging impacts without the benefit of input or com-

ments even from concerned federal and state agencies

whose opinions would be a necessary requirement to the

rendering of a reasoned decision in this matter. As discussed

in Point A, AAPA believes that the ‘market entry’ theory,

as a rule of general applicability, bears no rational rela-

tionship to the protection of wetlands and the furtherance

of the goals of the CWA.

The federal courts should not purport to adopt “on their

own initiative” drastic new rules that “would make major

inroads on a policy matter that Congress has reserved for

itself.” Alyeska Pipeline Co. v. Wilderness Society, 421 U.S.

240, 269, 95 S.Ct. 1612, 1627 (1975). The judiciary’s

rulemaking authority stems from a grant by congressional

delegation and this grant is limited by condition that such

rules “shall not abridge, enlarge or modify any substan-

tive right.” Marek v. Chesny, 473 US. 1, 34, 105 S.Ct. 3012,

3030 (1985), quoting The Rules Enabling Act, 28 U.S.C.

§2072. The test must be whether a rule regulates pro-

cedures for the administration of a remedy or operates to

abridge a substantive right. Sibbach v. Wilson & Co., 312

— Eo

16

U.S. 1, 10, 14, 61 S.Ct. 422, 424, 426 (1941). “While the

temptation to engage in judicial rulemaking may be power-

ful, our Constitution is best preserved by adherence to the

proper judicial role.” White House Vigil v. Clark, 746 F.2d

1518, 1541 (DC Cir. 1984). In a concurring opinion, Justice

Fay notes the concern that “judicial rulemaking rarely takes

into account the parties expectations, which causes unfairly

retroactive rulemaking, and uncertainty in the law.”

Georgia Power Company v. Sanders, 617 F.2d 1112, 1128.

n.9 (5th Cir. 1980), cert. denied 450 U.S. 936, 101 S.Ct.

1403 (1981).

17

CONCLUSION

Irrespective of whether EPA intended its standardless

‘market entry’ theory to apply generally to all members

of the regulated community, the decision of the Second Cir-

cuit has provided this effect. The decision thus operates

as a rule of broad applicability and significant effect. It

would not have been proper for EPA to promulgate such

a rule in the course of a single quasi-judicial proceeding

since such would be beyond the scope of its authority under

the CWA, and would not comport with the rulemaking

requirements of the APA.

Yet, the Second Circuit, without the benefit of a record

including input from the regulated community and the ad-

ministrative agencies Congress has charged with expertise

in wetlands protection, has through judicial rulemaking

promulgated the standardless ‘market entry’ theory as a

general rule. Application of this rule has the potential of

depriving many members of the regulated community of

their property without due process and in contravention

of the Fifth Amendment.

In addition, the rule as demonstrated in this brief does

not foster wetlands protection, and does not promote a

substantial governmental interest. The rule is, therefore,

not properly related to the interest sought to be protected.

For the foregoing reasons AAPA urges this Court to grant

Certiorari to review the decision of the Second Circuit so

that a balanced, and reasoned result will be obtained in

the area of wetlands protection.

Respectfully submitted,

Hucu H. WEeE.LsH

Counsel of Record

Lynpa J. L. CALore

Attorneys for Amicus Curiae

American Association of Port Authorities