Appendix — Hobbs v. United States

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IN THE

Supreme Court of the United States

OCTOBER TERM, 1991

S. PAUL Hoss, and DoNNA M. Hoss, his wife and

PHILLIP RAY Hoss, and DoroTHY V. Hosss, his wife,

Petitioners,

UNITED STATES OF AMERICA,

Respondent.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Fourth Circuit

APPENDIX TO

PETITION FOR A WRIT OF CERTIORARI

RICHARD R. NAGEOTTE *

JAMES SCOTT KREIN

NAGEOTTE & KREIN

385 Garrisonville Road, Suite 201

Stafford, Virginia 22554

(703) 659-5050

* Counsel of Record

WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

TABLE OF CONTENTS

APPENDIX A—Decision of the Court of Appeals .........

APPENDIX B—Final Order of the District Court ......

District Court’s Findings of Fact and

Legal Conclusions from the bench ......

District Court’s Judgment ..................

APPENDIX C—District Court’s Opinion and Order

denying post-trial motions for judg-

ment notwithstanding the verdict, and

alternatively new trial .........................

District Court’s Findings of Fact and

Legal Conclusions from the bench ......

District Court’s Judgment ...................

APPENDIX D-—Denial of petition for rehearing and

suggestion for rehearing en banc, De-

Ce On Oe

APPENDIX E—Jury-Forms of Verdict .........................

APPENDIX F— United States’ Answer and Counter-

APPENDIX G—Constitutional provision, statutes, and

regulations involved .............................

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 90-1861

S. PAUL Hospps; DONNA M. Hopss, his wife;

PHILLIP RAY Hopss; DorotTHy V. Hosss, his wife,

Plaintiffs-Appellants,

UNITED STATES OF AMERICA; WILLIAM REILLY, Adminis-

trator, United States Environmental Protection Agency

(A-100) ; STANLEY L. LASKOWSKI, Acting Administra-

tor, United States Environmental Protection Agency,

Region III]; GREENE A. JONES, Director, Environmental

Services Division, United States Environmental Protec-

tion Agency, Region III; JOHN O. MARSH, JR., and/or;

RICHARD L. ARMITAGE, after confirmation, Secretary of

the Army; LIEUTENANT GENERAL HENRY J. HATCH,

Chief, Army Corps of Engineers; MAJOR GENERAL

JAMES W. VAN LOBEN SELS, North Atlantic Division

Engineer; JOSEPH H. THOMAS, Norfolk District En-

gineer,

Defendants-A ppellees.

Appeal from the United States District Court

for the Eastern District of Virginia, at Norfolk

Rebecca B. Smith, District Judge

(CA-89-327-N )

Argued: May 7, 1991

Decided: November 8, 1991

Before ERVIN, Chief Judge, STAKER, United States

District Judge for the Southern District of West Vir-

ginia, sitting by designation, and KAUFMAN, Senior

United States District Judge for the District of Mary-

land, sitting by designation.

Affirmed by unpublished per curiam opinion.

OPINION

PER CURIAM:

These appeals arise from a civil enforcement action

brought by the Environmental Protection Agency for al-

leged violations of the Clean Water Act (“CWA”), 33

U.S.C. § 1251 et seq., by Phillip and Dorothy Hobbs as

well as the couple’s son and daughter-in-law, Paul and

Donna Hobbs.'! The violations stem from the clearing,

draining, and constructing of roads on approximately 50

acres of alleged wetlands to create hay fields. All of the

Hobbses were subjected to penalties for violations of the

CWA by the district court. The Hobbses appeal the dis-

trict court’s decision on various grounds. Finding none

of their arguments persuasive, we affirm the district

court’s decision.

A brief review of the statute is necessary for an under-

standing of the law of this case. The Clean Water Act is

a comprehensive statute designed to “restore and main-

1 We refer to the defendants collectively as “the Hobbses.”

tain the chemical, physical, and biological integrity of the

Nation’s waters.” CWA § 101(a) (2), 33 U.S.C. § 125(a).

In accordance with this mandate, the Act bars the dis-

charge of pollutants into waters of the United States

except in compliance with a permit issued under the Act.

CWA § 301(a), 33 U.S.C. § 1811(a). The term pollutant

includes dredged and fill material consisting of soil, rock,

and sand. CWA § 404, 33 U.S.C. § 1362(6). The Hobbses

do not contest that their discharge material fits within

the definition of a pollutant.

The term “waters of the United States” is not explicitly

defined under the statute. The Act does define “navigable

waters,” however, as waters of the United States. 33

U.S.C. § 13862(7). The term “navigable waters” has been

given the broadest constitutional understanding. A Legis-

lative History of the Water Pollution Control Act Amend-

ments of 1972, at 178.

“Waters of the United States” is also defined as waters

adjacent to other waters of the nation. 40 C.F.R.

§ 230.3(s); United States v. Riverside Bayview Homes,

Inc., 474 U.S. 121 (1985). EPA defines “adjacent” as

bordering, contiguous, or neighboring. 40 C.F.R.

§ 230.3(a). Moreover, wetlands separated from other

waters of the United States by ‘man-made dikes or bar-

riers, natural river berms, beach dunes and the like are

‘adjacent wetlands’” according to the EPA. 40 C.F.R.

§ 230.3(b). Finally, both the EPA and the Army Corps

of Engineers (‘Corps’) define wetlands as:

those areas that are inundated or saturated by sur-

face or groundwater at a frequency and duration

sufficient to support, and that under normal circum-

stances do support, a prevalence of vegetation typ-

ically adapted for life in saturated soil conditions.

Wetlands generally include swamps, marshes, bogs,

and similar areas.

40 C.F.R. § 230(t) ; 33 C.F.R. § 328(b).

The EPA is authorized under the Act to issue a Find-

ing of Violation and a Compliance Order for any viola-

tion of CWA § 301(a). 33 U.S.C. $ 1319(a). Moreover,

EPA may commence a civil action for appropriate relief

for a violation of CWA § 301(a).

For the instant case, there are two relevant manuals

for wetlands determinations, one produced by the EPA

and the other by the Corps. Both manuals are used to aid

in the determination of What constitutes wetlands. Each

manual relies on three parameters to make a determina-

tion: hydrology, vegetation, and soils. The Corps of En-

gineers Delineation Manual was adopted in 1987. The

EPA manual was adopted April 1988.2 There is also an

interagency manual, adopted by the EPA and the Corps,

which was adopted January 10, 1989. The joint manual,’

like the EPA manual, uses the three parameter test in

a manner that expands the definition of wetlands. The

jury was allowed to consider the multiparameter standard

in each of the manuals.

IT.

Phillip and Dorothy Hobbs own about 169 acres in

Ware Neck, Gloucester County, Virginia. The Hobbses’

son and daughter-in-law, Paul and Donna, also own 37

acres in the county. The combined property contains ap-

_ proximately 206 acres (“Hobbses’ property”). The jury

found this parcel to be wetlands adjacent to the Ware

River.

The Hobbses cleared, drained, and constructed roads

on approximately 50 acres of wetlands to create hay

fields. In the process, the elder Hobbs discharged,

* Revised Interim Final Edition of April 1988.

3’ For the sake of clarity, the publication is referred to as the

“joint manual.” Its official title is the Federal Manual for Identify-

ing and Delineating Jurisdictional Wetlands.

dredged, or filled material onto their wetlands in 1980,

1984, and 1985. The younger Hobbs did the same in

1986, 1987, and 1988. The Hobbses, however, did not

apply for a § 404 permit from the Corps, as required by

the CWA.

The Hobbses contend that they did not apply for a per-

mit because they were under the impression that they

were not required to do so. On September 29, 1988 an

official of the U.S. Fish and Wildlife Service (“FWS”)

went to the Hobbses property and told Paul Hobbs they

might be doing work on nontidal wetlands. The FWS

official arranged a site visit by a Corps official. The

Hobbses contend they overheard the two men talking and

expressing doubt about whether the land was in fact wet-

lands. When Paul Hobbs asked about the property, the

Corps official stated that “it was a grey area of enforce-

ment for the Corps of Engineers ... and he didn’t see

where the [Hobbses] had . . . done anything wrong.”

Moreover, the Corps employee told the Hobbses that he

would get back to them about whether their land was

wetlands; but he never told them whether the property

was wetlands nor did the official tell them about a per-

mit.

EPA issued the Hobbses a Findings of Violation and

Compliance Order, or Administrative Order, on March

23, 1989. EPA subsequently amended the order on April

25, 1989.

Il.

On April 25, 1989, the Hobbses filed a complaint chal-

lenging the EPA’s Findings of Violation and Compliance

Order issued against them under § 404. On May 4, 1989,

the district court issued a preliminary injunction allow-

ing the Hobbses to continue to farm that portion of the

land previously converted to hayfields.

The government in turn filed a counterclaim on June

23, 1989, charging the Hobbses with violating CWA

s 301/a) by discharging pollutants into wetlands without

a permit. These counterclaim ultimately became the only

cause of action in this proceeding, when, on December 14,

1989, the district court dismissed the Hobbses complaint

and granted summary judgment in favor of the govern-

ment with respect to its counterclaim.

The trial was split into a liability phase determined by

jury and a penalty/remedy phase determined by the

court. At the close of the first phase, the jury found that

the couples’ property was wetlands adjacent to waters of

the United States and that they had indeed discharged

pollutants onto their wetlands.

Following the penalty phase, the district court entered

a Final Order on August 22, 1990. The court held that:

(1) the Hobbses could continue to grow hay on the par-

cels of land already cleared; (2) the parties must either

agree to a restoration plan for the 25 acres in transition

or allow the parcel to revegetate naturally; (3) the un-

disturbed portion of the wetlands must remain that way;

(4) as permitted by the statute, the Hobbses could change

the use of any of the parcels upon approval of a permit ;

and (5) the elder Hobbs were ordered to pay $100.00 in

civil penalties, while the younger Hobbs were required to

pay $200.00.

On August 24, 1990, the district court issued a memo-

randum opinion and order addressing the post-trial mo-

tions, The court denied the Hobbses’ motions for judg-

ments notwithstanding the verdicts or new trials. These

motions were based on a sixfold argument. All of the

contentions were rejected. The district court held that:

(1) EPA has independent authority to make jurisdic-

tional determinations under the CWA: (2) the wetlands

manuals were guidance materials, not substantive rules;

(3) adjacent wetlands may be defined as waters of the

United States under the CWA because the CWA is to be

applied broadly under the Commerce Clause and in light

of the ecological connection between waters and adjacent

wetlands; (4) man-dug (sic), non-tidal drainage ditches

can be waters of the United States when they are con-

structed in wetlands; (5) good faith is not a defense to

the strict liability violation alleged; and (6) there is no

estoppel against the government absent affirmative mis-

conduct by the government.

The district court also denied a second JNOV motion

because the evidence at trial supported the jury’s finding

that the Hobbses properties are jurisdictional wetlands.

Finally, on October 24, 1990, the trial court issued a

ruling from the bench denying the Hobbses’ Fed. R. Civ.

P. 60(b) motion. The Hobbses appealed to this court.

IV.

As previously noted, the Hobbses make six arguments,

which we shall address in turn, The Hobbses first raise

the issue of whether the EPA has independent enforce-

ment authority over violations of sections 404 and 301

of the CWA, 33 U.S.C. ss 1311, 1344. According to their

reasoning, the question is whether EPA has the authority

to enforce $ 404 of the CWA when the issuance of a per-

mit allowing pollutants is the sole province of the Corps.

They contend that because the Corps did not find that the

Hobbses were discharging pollutants onto wetlands nor

required them to secure a permit, the EPA has nothing

to enforce. Merely pointing to 33 U.S.C. $1342, as the

statutory grant of permitting authority to the Corps,

however, does not mean that EPA lacks independent en-

forcement authority. Reading the whole of the statute’ re-

veals the Hobbses argument to be proof-texting.

It should be noted from the outset, that as the Hobbses

have not applied for a permit, it cannot be maintained

that they were denied one. Moreover, nothing in the rec-

ord suggests that the Corps actually refused to exert

jurisdiction over the Hobbses property through a wetlands

determination.

Under 33 U.S.C. § 1311(a) the discharge of a pollutant

is illegal “except” as in compliance with sections author-

izing permits. Thus, the discharge itself is illegal. Ac-

cordingly, the Hobbses need not be required to secure a

permit and subsequently pollute to violate the Act. The

language of the Act confers upon EPA the authority to

issue a Finding of Violation and a Compliance Order or

to institute a civil action for any violation of CWA

s 3801(a). CWA § 309(a) (3); 33 U.S.C. §$ 1819(a) (3).

Moreover, the Act authorizes the commencement of a civil

action for appropriate relief, CWA § 309(b); 33 U.S.C.

$ 1319(b). Finally, permitless discharges of dredged and

fill material are within the enforcement authority of

EPA. Administrative Authority to Construe Section 404

of the Federal Water Pollution Control Act, 43 Op. Att’y

Gen. No. 15 (Sept. 5, 1979).

This view is supported by the fact that EPA has inde-

pendent authority to make wetlands determinations. In

Ayolles Sportmen’s League, Inc. v. Marsh, 715 F.2d 897,

903 n.12, the Fifth Circuit noted that the EPA and the

Corps reached an agreement that the latter would have

the responsibility for making final determinations. More-

over, the ultimate authority for determining the reach of

navigable waters under § 404 of the CWA belongs to the

EPA. Administrative Authority, supra.

In National Wildlife Federation v. Hanson, this Court

recognized that while both the Corps and EPA “are re-

sponsible for the issuance of permits under the CWA and

enforcement of their terms,” EPA is the utimate author-

ity. 859 F.2d 313, 315-316 (4th Cir. 1988). EPA would

not be much of an authority if it could make wetlands

determinations, issue permits, but could not enforce the

very rule for which those permits provide the exception.

ps)

The second issue is whether the EPA’s wetlands deline-

ation manuals are interpretive guidance documents or

substantive rules with binding legal effect in the deter-

mination of what constitutes wetlands under 40 C.F.R.

3 230(t) and 33 C.F.R. § 328.3(b). Closely related to

this matter is the question of whether the EPA Manual

constitutes substantive rules subject to the Administra-

tive Procedure Act (“APA”) notice and comment require-

ments, 5 U.S.C. § 553.

The Hobbses contend that the EPA manual represents

substantive rules subject to the public notice and comment

requirements under the APA. Their argument in effect

is the manual does not merely clarify and explain the

process of wetlands determination, but rather expands

federal jurisdiction.

Whether the manual is subject to APA depends on

whether it constitutes interpretive rules or substantive

rules. The former rules “ ‘are those which merely clarify

or explain existing law or regulations,’ and ‘do not have

the full force and effect of a substantive rule but [are |

in the form of an explanation of particular terms.’ ”

American Hospital Ass’n v. Bowen, 834 F.2d 1037, 1045

(D.C. Cir. 1987) (citations omitted). In Jerri’s Ceramic

Arts v. Consumer Products Safety Comm’n, 874 F.2d 205

(4th Cir. 1989), we noted the distinction between the two

rules:

An interpretive rule simply states] what the admin-

istrative agency thinks the statute means, and only

“remind[s]” affected parties of existing duties .

|while] a substantive or legislative rule has the force

of law, and creates new law or imposes new rights

or duties.

Id., 207. Moreover, this court held that in determining

whether a rule was interpretive or substantive courts

must consider the agency’s intent. /d., at 208.

10a

The intent behind the manuals and absence of the

force of law make it clear that they are interpretive

rules. The EPA manual states in its preface that it was

“developed to address the need for operational and juris-

dictional guidance.” Moreover, the manual states that

the methods offered for wetlands determinations “are

the recommended approaches.”

While the EPA manual does not possess the force cf

law, the EPA manual does represent a significant change

in the definition and an expansion of jurisdiction. The

change in definition, however, is premised upon the making

of certain scientific assumptions regarding the presence

of the three parameters for a wetlands determination.

The Hobbses point to nothing in the record to suggest

any explicitly political motivation or policy consideration

behind the change in the parameter test. Without a show-

ing of intent or legal force, the manuals are no more than

interpretation rules.

Finally, for the reasons discussed, EPA was free to

apply its own or another agency’s manual; EPA possessed

the independent authority. Moreover, the agency was

not prevented from using the EPA manual under the

APA. Accordingly, the district court was correct in al-

lowing expert testimony with respect to all three man-

uals.

The contention that the district court incorrectly in-

structed the jury to determine if wetlands on the Hobbses

property were adjacent to waters of the United States is

based upon a particularly weak premise. Again the

Hobbses engage in proof-texting. Seizing upon the word

“adjacent,” they contend that their wetlands are not

adjacent because they do not actually border waters of the

United States.

Unfortunately for the Hobbs, the statute does not limit

adjacency to literal bordering. The statute, which the

judge quoted verbatim in the jury instruction, reads:

Hai Sl a came a acer amma

lla

The term “adjacent” means bordering, contiguous,

or neighboring. Wetlands separated from other

waters of the United States by man-made dikes or

barriers, natural river berms, beach dunes and the

like are “adjacent wetland.”

33 C.F.R. § 328.3(c). This reading of the statute was

upheld in Riverside Bayview Homes:

... the landward limit of Federal jurisdiction under

Section 104 must include any adjacent wetlands that

form the border or are in reasonable proximity to

other waters of the United States, as these wetlands

are part of this aquatic system.

424 U.S. at 133-134, quoting 42 Fed. Reg. 37,128 (1977)

(emphasis added). Furthermore, the jury’s factual de-

termination that the lands were wetlands is not clearly

in error. An expert in hydrology and hydrogeology, testi-

fied that there was both a ground and surface water con-

nection between the Hobbses’ property and the Ware

River. An EPA environmental scientist confirmed this

observation based upon aerial photographs. The Hobbses

land is adjacent within the meaning of the statute.

Moreover, the Hobbses’ contention that their land is

not adjacent due to the presence of man-made, non-tidal

drainage ditches dug on dry land is baseless. Such ditches

fall within the express language of the statute. The term

“adjacent” includes:

Wetlands separated from other waters of the United

States by man-made dikes or barriers, natural river

berms, beach dunes and the like....

33 C.F.R. § 328.3. Similarly, the contention that the stat-

ute is void for vagueness is without merit.

Next we turn to whether the district court violated

the Hobbses’ due process rights by denying them the op-

portunity to present evidence as to their good faith belief

12a

that administrative orders were invalid. We address the

good faith aspect of their argument first. This court

previously held that a district court erred when it refused

to impose civil penalties under § 309 of the CWA, reason-

ing that:

[The language of the statute] leaves little doubt that,

under the circumstances of this case, a penalty in

some form is mandated. Liability under the Clean

Water Act is a form of strict liability.

Stoddard v. Western Carolina Regional Sewer Authority,

784 F.2d 368, 374 (4th Cir. 1979). Under the Stoddard

standard good faith is not a defense. Moreover, the

amount of the penalty to be levied is within the discretion

of the court. State Water Control Board v. Train, 559

F.2d 921 (4th Cir. 1977).

The procedural aspect of the Hobbses’ due process argu-

ment is that there are no administrative procedures by

which they could contest the EPA’s orders. Moreover, the

Hobbses aver that they were not provided with prior

notice or an opportunity to be heard before the issuance

of the administrative order. The Hobbses, therefore, con-

clude that the lack of due process protection prior to the

imposition of liability for civil remedies violates their due

process rights.

This contention is without merit. The administrative

orders do not in themselves impose penalties. Instead pur-

suant to CWA § 309(d), the penalties were imposed by

the district court following a jury determination that the

Hobbses had violated the CWA. Furthermore, in South-

ern Pines Association v. United States, 912 F.2d 713 (4th

Cir. 1990), a landowner and a construction company

similarly argued that the lack of opportunity to be heard

prior to the issuance of a compliance order violated their

due process rights. We held that as the company and the

landowner would “have an opportunity to make their

constitutional arguments at any enforcement proceeding

before they are subjected to any injunction or penalty,”

13a

there is no violation of the fifth amendment. /d., at 717.

Likewise, the Hobbses are afforded constitutionally ade-

quate process.

Paul Hobbs’ contention that the record supported a jury

instruction on estoppel is without merit. Specifically, he

argues that the government is estopped from prosecuting

him under § 404 of the CWA because he constructed the

drainage ditches under the supervision and according to

the design specifications of two Soil Conservation Service

employees. The district court rejected this argument, be-

cause Paul Hobbs did not allege conduct by the SCS

employees that was sufficient to estop the government.

In Zografov v. V.A. Medical Center, 779 F.2d 967 (4th

Cir. 1985), we suggested a high standard in order for a

federal employee allegedly misled by a Equal Opportunity

counselor regarding an employment discrimination suit

to rely on estoppel. We held that the plaintiff “made no

showing of affirmative misconduct on the part of the gov-

ernment, which is the least the court would require, even

if that would suffice, to rely upon estoppel.” We agree

with the district court that Paul Hobbs did not allege or

prove conduct adequate to estop the government.

The Hobbses aver that the district court abused its

discretion in denying their Rule 60(b) motion. Spe-

cifically, they contend that the court abused its discretion

in denying the motion to be relieved of the final judgment

in light of “newly discovered evidence.” The Hobbses

argue that a September 26, 1990, Regulatory Guidance

Letter (“RGL”) issued by the Corps constitutes such

evidence.

As a threshold matter, the RGL cannot be considered

newly discovered evidence under Fed. R. Civ. P. 60(b) (2)

as the letter did not exist at the time of trial. Moreover,

there is not another “reason justifying relief from opera-

l4a

tion of the judgment” under Fed. R. Civ. P. 60(b) (6).

In order for the Hobbses to secure relief under Rule

60(b) they must show timeliness, a meritorious defense,

a lack of unfair prejudice to the government, and excep-

tional circumstances. Werner v. Carbo, 731. F.2d 204,

206-207 (4th Cir. 1984). Even assuming the final three

conditions were satisfied by the Hobbses, they cannot

demonstrate that the evidence would constitute a meri-

torious defense. The letter, like the manuals, is a guid-

ance document. The letter merely clarifies the relation-

ship between the jurisdiction of the EPA and the Corps

under the CWA § 404 and the jurisdiction of the SCS

under the provisions of the Food Security Act of 1985,

16 U.S.C. §§ 3821-3823. As the district court noted the

letter is “merely guidance and doesn’t change the defini-

tion of wetlands under the regulations.”

With respect to each of the issues on appeal, the district

court’s judgment, bench rulings, and opinion are affirmed.

AFFIRMED

Filed: November 25, 1991

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 90-1861

(CA-89-327-N )

S. PAUL Hops, et al,

Plaintiffs-A ppellants,

versus

UNITED STATES OF AMERICA, et al,

Defendants-A ppellees.

ORDER

The Court amends its opinion filed November 8, 1991,

as follows:

On Page 6, first paragraph, line 1—the word “These”

is corrected to read “This.”

On page 6, first paragraph, line 3; page 6, fourth full

paragraph, line 2; page 7, first full paragraph, line 13;

page 7, second full paragraph, line 4; page 10, first full

paragraph, line 2; and page 10, line 7 of text after second

indented quotation—the word “Hobbses” is corrected to

read ‘‘Hobbses’.”

On page 10, line 4 of text after second indented quota-

tion—the comma after the word “hydrogeology” is deleted.

For the Court—By Direction

s’ John M. Greacen

Clerk

l6a

APPENDIX B

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF VIRGINIA

Norfolk Division

Civil Action No. 89-327-N

UNITED STATES OF AMERICA,

Plaintiff,

S. PAUL Hosss, et al.,

Defendants.

FINAL ORDER

[Filed Aug. 27, 1990]

This action is before the court on the complaint of the

United States seeking injunctive relief and the imposition

of civil penalties against the defendants for the unper-

mitted discharge of fil] materials into waters of the

United States in violation of Sections 301(a) and 404(a)

of the Clean Water Act, 33 U.S.C. § 1311 and 1344 (a).

On January 26, 1990, a jury determined that the property

owned by Phillip Ray Hobbs and his wife, Dorothy V.

Hobbs, and the property owned by S. Paul Hobbs and his

wife, Donna M. Hobbs, all located on Ware Neck in

Gloucester, Virginia, are wetlands adjacent to waters of

the United States. The jury found that defendants Phillip

Ray Hobbs and Dorothy V. Hobbs discharged pollutants

onto cheir wetlands property in 1980, 1984, and 1985.

The jury further found that defendants S. Paul Hobbs

and Donna M. Hobbs discharged pollutants onto their

wetlands property in 1986, 1987, and 1988.

17a

On May 17, 18, and 21, 1990, the court conducted a

bench trial on appropriate penalties. On May 21, 1990,

the court, after fully considering all of the evidence and

arguments presented by all parties, issued an extensive

ruling from the bench. This ruling articulated the factual

findings pertinent to the penalty phase of the litigation,

the amount of civil penalties imposed, and the type of

restorative relief ordered.

With respect to restorative relief, the subject property

is divided into three areas based on the amount of activ-

ity conducted thus far on the property: the cleared par-

cels, the twenty-five acre parcel in transition, and the

undisturbed, forested parcels. The court ruled that the

cleared area could remain in its current use. However, prior

to any change in use, the restoration (water quality miti-

gation! plan proposed by defendants, subject to the court’s

modifications issued from the bench on May 21, 1990,

must be put in effect. See Proposed Water Quality En-

hancement Plan for the Hobbs Property Ware Neck,

Gloucester, Virginia, Exhibit 11, United States v. Hobbs,

Civil Action No. 89-327-N (E.D. Va. May 17, 18, 21,

1990); Transcript, United States v. Hobbs, Civil Action

No. 89-327-N, at 33-34 (E.D. Va. May 21, 1990).! These

modifications include: development of an acceptable out-

fall structure for the ponds; development of a mainte-

nance plan which includes water quality testing; super-

vised construction of the ponds; and further investiga-

tion into flood preparedness, fencing and buffer zones.

See id. Any change in use prior to the modified restora-

tion (water quality mitigation) plan being in effect would

be in violation of this court’s Final Order.

To assure compliance with this court’s Final Order, the

following actions shall be taken by defendants, or any

1 Both of these documents are part of the record in this case and

are incorporated into this Final Order by reference and are here-

inafter collectively referred to as “the modified restoration (water

quality mitigation) plan.”

18a

one of them as appropriate, prior to any change in use of

their wetlands presently in hay cultivation:

1. Give thirty (30) days advance notice in writing to

the United States Environmental Protection Agency, Re-

gion III, that such change is to be commenced.

2. Allow authorized representatives of the United

States Environmental Protection Agency periodic access

to the property during implementation of the modified

restoration (water quality mitigation) plan to verify

compliance with this Order.

3. Upon completion of all construction work required

under the modified restoration (water quality mitigation )

plan incorporated by reference herein, notify the United

States Environmental Protection Agency, Region III.

4. Furnish to the United States Environmental Pro-

tection Agency, Region III, timely reports documenting

the results of all water quality monitoring conducted

pursuant to the modified restoration (water quality miti-

gation) plan incorporated by reference herein.

The parties were given thirty (30) days from the date

of the court’s May 21, 1990, ruling to devise a mutually

agreeable plan for the twenty-five (25) acre parcel in

transition from forested land to agricultural use. The

court indicated that should the parties fail to reach an

agreement, the parcel would remain in the state that it

currently exists and no restoration would be ordered for

that area. The parcel would naturally revegetate, and

defendants would have to make appropriate inquiry as to

the need for permits from the appropriate government

agencies, should they desire to perform work on this area

of the property in the future. Since the parties have not

reached an agreement on this parcel, the parcel will re-

main as it is, and any future work planned -on this parcel

will be subject to any applicable government regulations

and permit requirements,

19a

In addition, the court ruled that the undisturbed por-

tion of the subject property remain as it exists, since

there was no showing that this area was environmentally

unsound. Again, as with the parcel in transition, any

desires on the defendants’ parts to alter the condition of

this undisturbed area may be subject to certain permit

requirements of the relevant governmental agencies.

Therefore, it is ORDERED that the court’s ruling from

the bench on May 21, 1990, become final regarding

penalties and restoration. Accordingly, the Clerk shall

enter final judgment in favor of plaintiff and against

defendants, in accordance with the jury’s verdict of

January 26, 1990, and this court’s ruling of May 21,

1990, as follows:

1. Defendants Phillip Ray Hobbs and Dorothy V.

Hobbs discharged fill material onto wetlands constituting

waters of the United States in 1980, 1984, and 1985

without a permit in violation of Sections 30l(a) and

404(a) of the Clean Water Act, 33 U.S.C. §§ 1311(a)

and 1344 (a).

2. Defendants A. Paul Hobbs and Donna M. Hobbs

discharged fill material onto wetlands constituting waters

of the United States in 1986, 1987, and 1988 without a

permit in violation of Sections 301(a) and 404(a) of the

Clean Water Act, 33 U.S.C. §$§13ll(a) and 1344(a).

3. Defendants Phillip Ray Hobbs and Dorothy V.

Hobbs shall pay civil penalties in the amount of One

Hundred Dollars ($100.00) within sixty (60) days from

entry of this judgment, payable to the United States

Treasury, in care of Craig B. Shaffer, United States

Department of Justice, Post Office Box 23986, Washing-

ton, D.C. 20026-3986.

4. Defendants S. Paul Hobbs and Donna M. Hobbs

shall pay civil penalties in the amount of Two Hundred

Dollars ($200.00) within sixty (60) days from entry of

this judgment, payable to the United States Treasury, in

20a

care of Craig B. Shaffer, United States Department of

Justice, Post Office Box 23986, Washington, D.C.

20026-3986.

5. Use, modification, and/or restoration of the wet-

lands property involved in this action shall be in accord-

ance With the court’s ruling of May 21, 1990, and Final

Order of August 22, 1990.

The parties may appeal from the judgment entered

pursuant to this Final Order by filing a written notice

of appeal with the Clerk of this court, United States

Courthouse, 600 Granby Street, Norfolk, Virginia 23510,

within sixty (60) days from the date of entry of such

judgment. In the event that defendants, or any one of

them, appeal, a Bond on Appeal in the amount of Ten

Thousand Dollars ($10,000.00) shall be posted to protect

the public’s interest during the appeal period.

The Clerk is DIRECTED to mail a copy of this Final

Order to counsel for the parties.

/8/ Rebecca Beach Smith

United States District J udge

Norfolk, Virginia

August 22, 1990

2la

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

Norfolk Division

Civil Action No. 89-327-N

UNITED STATES OF AMERICA,

Plaintiff,

S. Paut Hosss, DONNA M. Hopss, PHILLIP RAY HOBBs,

DorROTHY V. HOBBS,

Defendants.

EXCERPT OF PROCEEDINGS

(Judge’s Ruling)

Norfolk, Virginia

May 21, 1990

Before: Honorable Rebecca Beach Smith, Judge

* % * *

[2] THE COURT: All right, counsel. The first thing

that I’m going to do is go through my notes and review

certain findings and conclusions that I’m drawing from

those, the testimony and the evidence that I’ve heard over

the last few days. And I would tell you that they may

not be in any specific order or with any type of organi-

zation, but it will give you an idea of what I’m relying

upon to then make the legal conclusions that I will draw.

First of all, there are three types of areas involved in

this case at this point in time. There are the cleared

areas, primarily in pasture grass. There are the forested

areas which have not been cleared. And then there’s the

area that’s been referred to as being in transition. It’s

an area that’s cleared but not yet planted. It’s approxi-

" ee

22a

mately 25 acres of cleared but not planted area. So, those

are basically the three types of areas that the Court will

be dealing with in addressing the damages, primarily

the restoration plan.

Mr. Butch testified on cross-examination—or he testi-

fied on direct examination that there were various alter-

native uses for the property, and that testimony was then

brought to light more clearly through [3] cross-exami-

nation. He indicated that there may be some potential

use for forest products but this would be a long-term use;

that there may be some use for fur bearers, for produc-

ing fur, but this was speculative and no specific studies

had been done in that regard. There may be some poten-

tial for hunting leases, but that had not been studied by

the United States. The only indication of any hunting on

the property came through the testimony of Mr. Paul

Hobbs, who indicated he let the neighbors hunt the prop-

erty because they kept an eye on it. There was no indi-

cation that he had derived any revenues from any hunt-

ing leases or that there was any real potential for leasing

the property out for hunting.

Mr. Butch also indicated that the property might be

available for nature observation. but, again, he said that

there had been no studies made by the United States in

that regard.

He also indicated that it might be a good buffer area

for people who want to live in these types of areas.

Again, there had been no studies done in this regard by

the United States,

He also indicated it might be a potential area for scien-

tifie study, but again he testified that the EPA or the

United States had not really studied that possibility.

[4] The conclusion the Court would draw from that is

while there may be some various alternative potential

uses, none of them have been studied, and none of them

at this point are established for the Court beyond any

type of speculative stage other than, perhaps, the forest

products which, again, is the long-term use.

cea iatiaea enacted laine

23a

Mr. Butch also specifically testified that no site-specific

studies had been conducted by the Environmental Pro-

tection Agency or the United States and that to develop

the restoration plan he, with the help of Mr. McGlaun,

had simply relied upon the general literature in the field.

That testimony was also corroborated by both Mr. Mc-

Glaun and also by Dr. Contula, who indicated that she

had not been privy to any site-specific studies other than

the water quality study conducted by the defendants.

Mr. Butch and Mr. McGlaun spent approximately one-

half day on the site in order to develop the plan, the

restoration plan, at least at the restoration plan stage.

Both had been on site prior to that for brief amounts

of time.

Mr. Butch testified that he was not a qualified witness

to answer any questions about water quality.

Mr. Butch also indicated that the United [5] States’

plan did call for the removal of the materials and the

filling of the ditches back to the original elevation, but

he quite candidly admitted he did not know what the

original elevation would be.

Mr. Butch also testified that he did not know how far

away from a ditch it drains in making the recommenda-

tion to plug the ditches.

Mr. Butch also testified that a major consideration in

developing the United States’ plan was the no-net wet-

lands loss policy that had been developed and basically

had come to fruition since December of 1988.

In developing the United States restoration plans, both

Mr. MeGlaun and Mr. Butch expressed concern for plug-

ging the ditches down near the church and the developed

area that is between the Hobbs’ property and the Ware

River, because the ditches would be necessary to remove

water in those areas or they would run the risk of flood-

ing other people’s homes and the church area, or at least

putting unnecessary water or extra water onto that

property.

24a

No one in proposing either plan to the Court has given

the Court any indication that there was consideration

taken as to any type of natural flow original ditching

system that may have existed back in [6] colonial times

to which Dr. Johnson testified and exactly what the

Hobbs did to enhance that system or to enhance ditches

that were present on the property when they purchased it.

Mr. McGlaun was clear that after the fact permits

were not accepted by the Corps of Engineers until any

interim corrective measures or any restoration plan had

been completed, and the case law would also support that

conclusion.

Mr. McGlaun testified that one of the primary con-

cerns, environmental concerns, of both the EPA and the

Army Corps of Engineers and that he had and Mr. Butch

had in developing this restoration plan was for sheet flow

and that sheet flow was important because of erosion

considerations, detrital export considerations and water

purification considerations.

However, as Mr. McGlaun candidly admitted, there

was no showing that the water on this property from the

current sheet flow is impure. There is no erosion shown

other than from the acreage that’s in transition. And

the Court would conclude from his testimony and others

that there was no showing that the detrital export was

going to be environmentally any better with the ditches

plugged than with the ditches unplugged. And, in fact,

there was testimony, credible testimony, before the

(7] Court from Mrs. Phillips that detrital export could

also pose a potential pollutant, and I’ll go into that in a

moment.

But I would say that at this juncture the Court would

conclude that there’s been no showing that the plugging

of the ditches would enhance the detrital export in an

environmentally sowiid manner any more than it’s handled

through the ditches.

Mr. McGlaun specifically testified that water quality

was extremely important in any consideration in a resto-

25a

ration plan that he would give but that neither the EPA

nor the corps had done any testing in regard to water

quality off of this property.

No hydrologist was consulted, while the restoration

plan that’s been urged—everyone has testified, at least

from the standpoint of getting it approved, that hydrol-

ogy is the driving force behind the plan. No hydrologist

has looked at this plan, and no hydrologist has been

brought before the Court to testifiy. None of the wit-

nesses testified they were expert hydrologists. Some of

them had experience in the area, but the two people who

developed the plan, Mr. McGlavn and Mr. Butch, both

admit that they are not hydrologists.

The plan calls for the removal of all of the [8] roads,

yet the testimony before the Court is that timbering is

not a prohibited activity. And, in fact, Mr. Butch said

that that was a potential use for the property, and yet

the evidence would support a factual finding that roads

would be necessary for any type of timbering operation

on property of this size; that you wouldn’t be able to

even get the timbering equipment in without some roads

to handle the equipment.

The Court would note—and this is a bit out of order—

that both of the plans that have been submitted to the

Court are, frankly, extreme plans. On the one hand, the

government demands total restoration, and, on the other

hand, the Hobbs want to do no restoration so that they’re

both extreme plans.

And I would also note that from a review of the case

law the government, generally, at least, gives the Court

a couple of plans or a couple of alternatives to choose

from and gives the Court some help in this area to say

that, here’s what we want and here’s what we think is

best, but here’s some alternatives. And in this particular

case apparently the parties aren’t able to get together on

any alternatives, and neither side has produced anything

to the Court in the middle. You’ve both just come out

with two extreme plans, leaving it up to the Court to see

what can be worked out, which is not [9] what I think

26a

the law envisions when you get to this stage in the

proceedings. ;

Again, I would emphasize—I’m just going through my

notes, and I may be repeating things that I’ve said be-

fore, but there were no scientific—because there was a

lot of repetitious examination, and I tended to take notes

on the repetitious examination—there were no scientific

tests made by the United States and no site-specific infor-

mation developed.

In regard to Ms. Terry Phillips’ testimony, I found

Ms. Phillips to be a credible witness. Ms. Phillips relied

upon the water quality testing of Reed & Associates.

That testing the Court accepts, because there have been

no alternative tests offered, A, and, B, the United States

stipulated as to the results of those tests. Those tests

show a very high water quality currently coming off of

the property, a water quality that meets both the EPA

and the State Water Control Board’s drinking water

standards.

Ms. Phillips testified that in reviewing those water

quality studies there were no sources of pollutants com-

ing off—no significant sources of pollutants coming off

the property, and the focus was on the Chesapeake Bay

indicators for water quality, and some of the concerns

for the Chesapeake Bay, and none of those—the nutrient

[10] levels and the nitrogen levels were found to be at

all violative of any standards for the Chesapeake Bay or

any indication that there was being any danger posed to

either the Ware River or the Chesapeake Bay from the

water and the drainage off of this property.

Mrs. Phillips did testify that best management prac-

tices had been utilized in building the roads and in con-

structing the drainage ditches. 7

She testified in regard to the ditches that they were

outstanding; that they had been properly cleared and

stabilized; that there was nothing that could have been

done otherwise under best management practices for con-

struction of the drainage ditches.

27a

And at this time the Court would also note, based upon

previous testimony before the Court, that it’s an uncon-

troverted fact the Hobbs were working with the Soil

Conservation Service out of Gloucester to design and dig

these ditches and that they were revegetated as soon as

they were dug and that there’s been no showing before

the Court that they posed any significant erosion problem

or that they were not constructed in accordance with the

Soil Conservation Service’s mandates and requirements.

And, in fact, they were working together to see that these

ditches were constructed properly. When I say “working

together,” the Hobbs with the Soil Conservation [11]

Service and vice versa.

Ms. Phillips also testified that under the restoration

plan that it would pose a disturbance of sediment, the

filling of the ditches themselves would disturb the sedi-

ment and introduce a potential source of contaminants

into a waterway. Ms. Phillips also again testified on the

three sheet flow areas, erosion, water quality and detrital

export, and, without reiterating all that, found no prob-

lems, and, in fact, the plan that the government had pro-

posed in her opinion might impede some of these factors,

i.e., increase erosion and not help the detrital export.

She testified and the Court found credible that hay

fields are self-maintaining; that they require less fer-

tilizer than other products, than even, perhaps, timber

that one might be trying to bring along. Her plan that

she developed does provide for flood mitigation.

She testified that storm water retention is not neces-

sary in its current use but that it would be if the use

were changed and that cattle would introduce a potential

contaminant unless handled properly on the property,

which was the impetus for the development of the plan

proposed by the defendants.

She testified that the site-specific studies which she had

utilized were the soil studies, the [12] hydrology studies,

the rainfall data, the current site configurafion, as well

as the specific water studies.

2&a

She testified that in her opinion the plan that would

be developed for changing use of the property to cattle

farming would provide superior protection to the water

quality and restoration of water quality than the govern-

ment’s plan would if the land were put back or poten-

tially put back.

And I would also note that there’s no definitive testi-

mony before this Court that the government’s plan would

ultimately have the effect of converting the property back,

if it were all wetlands in the first place, to wetlands.

There’s only that hope and a high degree of probability

that that would occur, but there’s no assurance of that.

Also, the Court—and this again is not necessarily in

sequence, but I think something that the Court has to

keep in mind, as any court would, is that—and this has

been alluded to throughout the proceedings—that protect-

ing and restoring wetlands is certainly of primary con-

cern to this Court and to any court considering these

types of situations.

On the other hand, the only reason that this Court has

jurisdiction over these wetlands is because of its ad-

jacency to the Ware River. If these were isolated [13]

wetlands and did not constitute waters of the United

States this Court would not have jurisdiction over these

wetlands, so that the jury’s verdict was based upon these

being wetlands adjacent to the Ware River or one of its

tributaries.

So, obviously, of consideration to the Court in looking

at the environmental effects and the environmental harm

that’s proposed by either one of the plans is a strong con-

sideration of the water quality in the Ware River and

the Chesapeake Bay. And I want to make it clear it’s

not the Court’s only concern. I do not agree with Mr.

Nageotte’s principle that the Clean Water Act only looks

to water quality. The Clean Water Act looks to more

than water quality, it looks to the factors that I’ve gone

through before, which is to restore and maintain the

chemical, physical and biological integrity of the nation’s

29a

waters. And that’s more than water quality, it involves

all of the biological aspects that contribute to that water

quality, so that while water quality is a primary concern,

it’s not the only concern. On the other hand, in this case

the Court wouldn’t have jurisdiction over these wetlands

if they weren’t adjacent to the Ware River or one of its

tributaries, so the Court has to take that into consider-

ation,

[14] There was some mention of the constituents of

the road, there being some asphalt in the road, but the

credible testimony is that any runoff from those roads

would only put a negligible amount, if any, of the rock,

asphalt particles into the water, and certainly not a sig-

nificant amount to harm the water quality.

The testimony before this Court at this hearing and

before the jury would indicate that the first contact that

any of the Hobbs actually had with a representative of

the Army Corps of Engineers or the Fish and Wildlife

Service or the EPA would have been in approximately

October of 1988 when Mr. McGlaun came onto the prop-

erty. The Court would find the credible testimony to

indicate that Mr. McGlaun indicated that the property

posed a gray area of enforcement to the Corps and that

he would get back to Mr. Paul Hobbs regarding the

matter.

“he testimony that the Court finds credible indicates

that Mr. McGlaun and no one from the Army Corps of

Engineers ever got back to any of the Hobbs::that the

resulting scheme of activities consisted of Mr. Frasier

making a study of the property. Mr. Frasier is from the

Fish and Wildlife Service. Mr. Frasier then, on Decem-

ber 12, 1988, transmitted a report to the Environmental

Protection Agency.

The Environmental Protection Agency then [15] con-

tacted the Hobbs, at which point Mr. Paul Hobbs—with

an opinion that their property involved wetlands over

which the EPA had jurisdiction, they would like for them

to please plug the ditches, and Mr. Paul Hobbs at that

point requested that the EPA’s position be put in writ-

ing, at which point it was put in writing and a cease and

30a

desist order was issued in March—I don’t have the exact

date—I’m recalling 12 in my mind at this point, but it’s

somewhere in March of 1988. It was then revised because

of some matters about the adjacency to the Ware River

that Mr. Paul Hobbs raised. Legal counsel was then

retained at some juncture in there, and the matter then

proceeded into this Court.

Judge Kellam did grant an injunction to the Hobbs at

the initial inception of this case to allow them to continue

their farming operation on the property until this matter

was resolved.

The testimony before the Court is that Mr. Phillip

Hobbs’ costs to improve the property thus far have been

approximately $124,000; that Mr. Paul Hobbs’ cost to

improve his property have been approximately $292,000

thus far. And there’s testimony that some economic

benefit has been derived off of the property. There has

been some minor amounts of sale of hay and timber off

of the property.

[16] There’s no indication that the Hobbs ever refused

to cooperate with any government agency. No one has

ever been refused entry to the property.

The only testimony in regard to the cost of the plan

came from Mr. Paul Hobbs. The government offered no

testimony and no analysis of what its restoration plan

would cost and the practicalities of implementing it other

than the Hobbs own some heavy equipment and would be

able to use their own equipment and work on the property

part time themselves.

Mr. Paul Hobbs, who has been estimating this type of

work or similar work for approximately 22 years, has

estimated that his father’s costs to implement the govern-

ment plan would be $96,825 and that his costs would be

$225,925.

Exhibit Number 10 before the Court shows the finan-

cial situation of the Hobbs, and I’m not going to review

that. There’s been no indication that there’s any falsity

or any inaccuracies in their financial statements, and the

3la

Court accepts Exhibit 10 as reflective of their financial

situation.

Mr. Paul Hobbs testified that the cost of implementing

their restoration plan, the one that Mrs. Phillips devel-

oped, to his father would be $105,400 and approximately

$128,000 for him.

[17] There’s no history of violation on the part of these

individuals. As far as this Court knows, they’ve never

been in this Court or any other court on violations of

the law, in particular of the Clean Water Act.

Once they received the cease and desist order no fur-

ther work has been done on the property. Mr. Paul Hobbs

did continue to work on the 25-acre tract, I believe, and

I’m not sure about the planting. I can’t recall that. But

he did continue some work after Mr. McGlaun came out

to the property, but not after he received the cease and

desist order.

The jury found no 1989 violation of the Clean Water

Act on the part of Mr. Paul Hobbs. There was no such

violation even presented in regard to Mr. Phillip Hobbs.

Ms. Contula testified that she had certain concerns

about both plans. She said under the Hobbs plan or the

United States plan that she was concerned that whatever

areas were disturbed that they be revegetated and stabil-

ized as soon as possible to keep down any erosion. She

expressed certain concerns about the cattle; to be sure

there was proper fencing and buffer strips, other than

just water troughs, to keep them away from the edges

of the ponds and the edges of the ditches. And she also

expressed some concern about the [18] density of the

cattle. However, as it ultimately came out, the cattle

density would be dependent upon Soil Conservation Serv-

ice and the agricultural standards that would be applied

| to the property and that the plan did call for fencing

and buffer zones in addition to the water troughs.

She expressed concern for water quality. monitoring as

the land use changed.

She expressed concern for the fragmented habitat areas

but again admitted that no one had actually gone in there

32a

to see what types of habitats were being created. There

was a mention of deer and racoon, but there is no show-

ing that these are any types of threatened habitats in

this area. There was no indication of any threatened

aquatic life or any aquatic life habitats, only—and there

was no indication that the deer or the racoon would be

threatened, it was just that wooded areas would give

them more habitats, but no indication that those types

of habitats were lacking in this area in the State of

Virginia or anywhere in the United States.

She admitted that the current water quality was good

from what could be—she could tell. She did say she would

like more studies and at different times of the year and

“as the use for the property changed.

[19] And there was some indication that she had seen

hawks, insects and crayfish, but that particular testi-

mony, in the Court’s opinion, was never properly devel-

oped. There was no indication that the hawks didn’t

have a place on the property. And, again, the crayfish—

We got into some lengthy discussion about how many

crayfish holes were in the hay field versus, the ditches,

and nobody ever seemed to be able to work that out. So—

and there was no indication of what types of insects were

on this property, vis-a-vis uplands property, and whether

there was any type of threatened species of hawk, insect

or crayfish on this property.

Nutrients she indicated were a primary concern in the

Chesapeake Bay system and that the nutrients were low

on the Hobbs property, and that was good.

She expressed some concern for an outfall structure on

the proposed pond, because she was worried that the fish

would be able to get out, and then on cross-examination

she admitted that if a proper outfall structure was de-

veloped, a proper maintenance plan and the construction

would be properly supervised, the pond embankment

would be vegetated after excavation, that there would be

some type of ten-year flood event verification, that those

particular corrective measures would make her more

comfortable with the Hobbs plan.

33a

{20] The Court would also note, as it has noted earlier,

that the standards have been constantly evolving and

changing in this area. I agree with Mr. Shaffer that

the definition of wetlands has not changed from a legal

standpoint of regulation.

On the other hand, the wetlands determination and

the guidelines for determining what is a wetland by

the various enforcement agencies has changed since 1980,

and various manuals have been developed. And a new

manual did come into existence in April of 1988 with the

EPA, and on March 20th, 1989 a new joint manual came

into effect as between the EPA and the Army Corps

of Engineers. Those are matters of fact and law in

the record.

All right. Now turning specifically to the damages

that are requested, I’ll first address the area of civil

penalties.

All right. 33 United States Code Section 1319(d)

states, quote, “In determining the amount of a civil

penalty the Court shall’—mandatory language—‘“con-

sider . . .’—and it sets forth the various factors that

the Court will consider. And I’ll go through them one by

one.

The first is the seriousness of the violation. On the

one hand, the United States argues that this is a [21]

particularly serious violation because there’s been approx-

imately a hundred acres of wetlands destroyed. On the

other hand, the Hobbs have argued and presented through

their restoration plan that the water quality has not been

damaged.

And +f you go through the environmental factors that

the Court needs to consider, which I will do in a moment

when we go through the restoration plans, this is not the

type of serious violation that would warrant particularly

heavy civil penalties. When it’s measured against the

objectives of the Clean Water Act—and that’s what you

look at, you look at the seriousness of the violation

measured against the objectives of the Clean Water Act.

: ;

34a

And I’m not going to repeat what I said earlier, but I

make it clear the Court takes into consideration the im-

portance of wetlands on the one hand but also the im-

portance of the preservation of the waters of the Ches-

apeake Bay and the Ware River and the other environ-

mental concerns, the flood protection, wildlife habitat,

aquatic habitat. And I’ll go through all of those when

I review the restoration plan.

The economic benefit resulting from the violations.

There’s no showing here that either Mr. Phillip Hobbs

and his wife, Dorothy, or Mr, Paul Hobbs and his wife,

Donna, have, at least at this juncture, [22] benefited

economically to a large extent from their particular ac-

tion. There’s some showing that they sold some timber,

nothing in any significant amounts, from the property,

and some hay. There’s no showing of any great eco-

nomic benefit resulting to any of them at this juncture.

The third consideration is the history of violations.

As I’ve indicated, there is absolutely no history whatso-

ever of any violations on the part of these individuals.

The good faith efforts to comply with the act. And

the cases in this area have focused on individuals who

generally start into a permit process and whether they

then try to comply with the act and comply with what is

being asked of them.

In this particular situation, while it’s a strict liability

statute and the Court is well aware of it, the Court

still has to be cognizant of the fact that these people

did not willy-nilly and in an egregious manner go out

to violate the environmental laws of the United States,

and they were working with the Soil Conservation Serv-

ice, they thought they were complying with environ-

mental protection regulations when they took these ac-

tions, and it wasn’t until the Army Corps of Engineers

and Mr. McGlaun went out there in 1988 that [23] any-

body, at least from the Hobb’s standpoint, had any idea

they were subject to any regulations other than the ones

35a

they were already under from the Soil Conservation

Service.

Mr. Paul Hobbs did continue to do some work on his

property after he was put on notice, albeit minor, that

the property might constitute a wetlands.

The fifth concern—and as I said before, Mr. Phillip

Hobbs did no work on his property, and when the cease

and desist order came they did absolutely nothing until

Judge Kellam told them they could, and the jury found

no 1989 violations. So, the only thing the Court would

be concerned with was what was occurring basically from

October of 1988 until October of 1989 from Mr. Paul

Hobbs.

The economic impact of the penalty on the violators.

Well, it’s clear here that any economic penalty would

have a pretty big effect on these individuals. The cur-

rent net worth of Paul Hobbs is reflected to be approxi-

mately $129,000 and of Mr. Phillip Hobbs, approximately

—and these aren’t the exact figures—$321,000. The pen-

alties, particularly if the Court were to order restoration,

would exceed—the restoration would close to exceed their

net worth under the estimates berore the Court.

[24] But, in any event, given the amount of money

that they put into the property and their net worth, any

substantial penalties would have a pretty strong eco-

nomic effect on them.

Finally, and most importantly, at least,—I wouldn’t

say most importantly, but certainly importantly in this

case are such other matters as justice may require. And

I reiterate here that this is a case that, A, when the

Army Corps of Engineers went out there they said, this

is a gray area; B, nobody was flagrantly violating the

law, they were working with the Soil Conservation Serv-

ice; and, C, as soon as they got that cease and desist

order they stopped, they didn’t do anything without court

approval.

So, given all of those considerations, the Court would

for the violation itself, the seriousness of the violation

in regard to the only one of these factors that weighs

at all against Mr. Phillip Hobbs is the violation—in other

words, that wetlands may have been destroyed in this

matter—the Court would levy a civil penalty on him of

$100.

In regard to Mr. Paul Hobbs for the violation itself

and for any continuation of activity after Mr. McGlaun

went out there, the Court would levy a penalty on him of

$200, a hundred for each of those considerations.

(.25] Now to the restoration plan. The cases that have

been cited to the Court—I’m not going to review them

all, I will review some of them. As a lead case, the United

States v. Weisman, found at 489 F.Supp. 1331, Middle

District of Florida, 1980, relying upon United States

versus Sexton Coves, Incorporated at 526 F.2d 1293, a

Fifth Circuit case, 1976, that court indicated that two

prerequisites had to be met before restoration could even

be considered, and the first was that the property be

under the jurisdiction of the Court. Well, it is under the

jurisdiction of the Court. The jury has determined that

there’s been a discharge on wetlands, and the Court has

heard that testimony and liability has been established.

And the activity is to be directly affected by the restora-

tion plan.

The second consideration is that the Court is required

to hold a hearing and take evidence on the merits and

alternatives to the restoration plan. And that’s what

we've been here for these last three days, taking this

evidence and conducting the hearing.

After those two prerequisites are met, the Court then

in selecting a restoration plan or even considering restor-

ation looks to three things. Number one, whether the

plan confers maximum environmental benefits. Two,

whether it’s achievable as a practical [26] matter. And,

three, whether the plan bears an equitable relationship to

ers

via

the degree and kind of wrong which it is intended to

remedy.

In regard to the—and what I will first do is focus

on the plan of the United States, because the United

States is the one who wants restoration. They are the

nes seeking the damages in the form of restoration, and,

consequently, it’s their burden to present an acceptable

plan to the Court and one which is not speculative and

meets the criteria as set forth, as I just previously set

forth.

The first is whether or not the plan confers maximum

environmental benefits. Well, frankly, it’s difficult, if

not impossible, to tell from the government’s plan whether

or not it confers maximum environmental benefits. There

have be@n no site-specific studies done. The only site-

specific study done has been done by the defendants,

which shows that the water quality is exceptional on the

property.

n regard to the environmental benefits that are set

forth in the government’s plan, every paragraph is based

upon some general paragraph in the literature without

any reference to this specific piece of pigpanrit y. And I’m

eoing to go thro

ugh the environmental values, and I’m

reading from Exhibit 1, which is the 27] government’s

plan.

Their first environmental value is for water quality

improvement. Well, there’s no showing here that the

ity needs to be improved, and, in fact, there’s

a showing that the water quality is exceptional.

Secondly, flood protection. And there’s a general state-

ment here that wetlands, such as those found at the

Hobbs’ property, are often referred to as natural sponges

that absorb flooding waters. There's no showing here—

and, in fact, the plan presented by the Hobbs takes care

f any concerns for flood protection, and there’s no show-

ine here that the drainage ditches and the current status

of the property doesn’t protect not only the Hobbs’ prop-

erty but the surrounding property from flood protection.

38a

It was a concern expressed by the United States that if

they caused the Hobbs to plug up all their ditches they

may flood neighboring property so that it appears that

the current drainage ditches and the plan proposed, the

pond plan proposed by the Hobbs, takes care of flood

protection in the area, at least as well as the Court can

determine, because there’s no specific showing, only gen-

eral conclusions in the government’s plan.

The next one is wildlife habitat. And all the govern-

ment says here is that forested wetlands such as [28]

those of the Hobbs’ wetlands are valuable wildlife habi-

tats. And they go on to talk about a variety of birds,

migratory water fowl being one, and yet there’s a specific

showing under the Hobbs’ proposed plan that it would

attract migratory water fowl to the area. And then

there’s some mention here that these types of wetlands

give a habitat for racoon, opossum, squirrels, rabbits,

quail, foxes and white tail deer. Again, there’s no show-

ing that these animals are actually on the Hobbs’ prop-

erty, number one, or, number two, that there’s any threat

at all to this habitat and that the Hobb’s current plan

doesn’t give adequate habitat to these species.

The next is natural products, that there’s a wealth of

natural products. Now, those mentioned are, number one,

lumber, but the government’s plan calls for removal of

the roads so that you couldn’t then engage in this without,

of course, restoring—going through what the Court con-

siders an illogical exercise, which is to remove the roads,

restore the property, then go back to the Corps and re-

apply for the roads and see if you can get the roads

in then, which is certainly an economic and time waste

for all the resources of the United States and the Hobbs.

Then there’s some mention here of shell fish [29] pro-

duction and blue crabs and the aquatic life. But as I’ve

indicated before, there’s no sh »wing that this property is

doing anything to damage those types of product or the

aquatic life. It’s also that the detrital, the enriched

detrital, would serve as a principal source of food. But,

OUE

as I’ve indicated, the experts say that the detrital export

—at this juncture there’s no problem with it on the prop-

erty, so that the Hobbs—excuse me—the United States

restoration plan for the Hobbs property is so un-site-

specific as to be unacceptable to the Court to be able to

determine whether it confers maximum environmental

benefits. All the United States is doing is saying plug the

ditches, flood the property and we'll see if we can make

it into a total wetlands. We’re not sure, but we'll see.

And it’s impossible for the Court to assess the environ-

mental benefits from that.

Secondly, whether it’s achievable as a practical matter.

The United States has come in here with a plan that,

number one, all it is is a piece of paper with some orange

lines on it with specification that these ditches are to be

plugged back to natural contours and original elevations.

from a practical standpoint, it would be very difficult

for the Court or anybody supervising this plan to be

able to go in and see that |30] the requirements of it

had been met. And what the United States wants the

Court to do is to leave it up to the EPA or someone in

the government to go in and say, ves, that suits us. But

that’s not the stage we’re at now. The Court should

issue a restoration plan that can be put into a court order

that someone can know is going to be met or not met.

And at this point in time I—there was something else

in there that would be most difficult—I’m trying to find

it.

Oh. I want to go back to the environmental benetits

for a moment, too. One of the detrimental environmental

benefits tha Is ]

removing’ a

t the Court sees with this plan is it calls for

ll the side-cast material and all the dredged

and fil! material used for the road and basically putting

all this excavated material back into the ditches.

Now, there’s some indication that this would cause

erosion problems, this can cause more serious pollutants

into the water flow than you would by leaving the vi

- + : i . + . ‘ et " +4 sey I) . . lL, «4 . ;

tated ditches there, and then it calls for whatever st

4 i

40a

and waste and gravel that you can’t get back on the

property to then take it off site and dispose of it at an

approved upland disposal site, perhaps on the property.

So that the removal of the material, whatever, there’s

nothing here to show or for the Court to be able [31] to

assess except the testimony of Ms. Phillips to show that

this is environmentally sound to go about digging up

the roads that are already in place and not posing a

problem to the water quality to dig those roads up, to

put all this fill material back into the ditches, to let the

water drain through all of this material so that again

there’s no showing there of the environmental benefits of

this plan.

Again, back to the practicalities. No cost analyses

have been done by the United States. And their argument

here is, well, let the Hobbs do it, let them use their own

equipment. And the only cost analysis that’s been done

is by the Hobbs, and, frankly, it shows a prohibitive cost

to accomplish this work at this juncture. So, the Court

would find that at this point there’s no showing that this

plan is achieveable as a practical matter from either a

cost standpoint, from a specifications standpoint, and,

again, it may even cause some detrimental and environ-

mental repercussions.

And, finally, the plan has to bear an equitable re-

lationship to the degree and kind of wrong which it is

intended to remedy. Again, here, taking—I don’t want to

review all of the technicalities, but you first have to look

at the Ware River and the Chesapeake Bay. One of the

underlying basic purposes of the Clean Water Act is

(32] to promote the water quality, and this plan, A, isn’t

even looking at water quality—nobody’s even looked at

water quality with the plan—and B, there’s the testimony

from Ms. Phillips that this sediment, erosion, might even

damage the water quality.

The equities weighing in their favor that all this was

done under the auspices of the Soil Conservation Service,

and to now come in and say you have to spend 300,000 to

fill ditches that the Soil Conservation Service in the first

4la

place helped you or gave you direction on putting in some-

how doesn’t seem equitable in this particular situation.

Again, being a gray area of enforcement and no indica-

tion that there was anything wrong until the fall of 1988.

And | don’t want to repeat all the equities I went

through with the civil penalties, but all those same equi-

ties apply, and this particular plan simply doesn’t favor

1 equitable relationship to the degree and kind of wrong

which it is intended to remedy in the Court’s opinion.

So, consequently, based upon all of that, the Court

rejects the government’s plan. I do not find that it’s ade-

quate under the law or the facts of this case, and the

Court would reject that particular plan.

In regard to the Hobbs’ plan, the Court will

accept the Hobbs’ plan with certain modifications, and

those modifications would be as follows:

First of all, there has to be an acceptable outfall

structure developed to keep the fish that are going to be

put in the ponds—to be sure that they are in there.

There has to be some maintenance plan developed,

[33]

| Vv

somebody to come in and check to be sure that everything

is functioning properly, at least for a ten-year period.

There needs to be some provision made for the con-

struction of the ponds to be supervised, and Mrs. Phillips

would be an acceptable person to do that. As the ponds

are excavated, the banks would have to be vegetated after

the pond excavation.

You need to look further into this ten-year flood event

verification and be sure that the pond sizes are adequate

to take care of the flood events and that ten years is an

adequate time period. The evidence was a bit weak as

to how she finally arrived at ten years as being an appro-

priate time period for the ponds.

The other matters in regard to the fencing and the

buffer zones, that needs to be developed in more detail.

That’s very generalized language in that plan. There

needs to be some specifics as to where the fences [34] and

the buffer zones would be in regard to the cattle as wel]

as the water troughs. Al! the plan says is we'll have

42a

fences, buffer zones and water troughs. The Court would

want some indication as to where those would be and

the extent of those three times.

In terms of any density of any cattle on the property,

again, that would be left up to another government

agency to determine.

The Court would also want as part of the pian some

way to test the water quality over the ten-year period of

the maintenance plan so that someone can monitor

the use of the property would change into cattle farming

the water quality could be monitored in some acceptable

mode to monitor the water quality.

Now, in terms of the one piece of transitional property,

the way the Court looks at what is occvrring today is the

government’s plan is rejected and the Hobbs’ plan is

accepted with certain modifications which I’m going to

give you all a time period to go back and work out and

get an appropriate order to the Court. That basicsly

covers—and if you all are in disagreement, I’m going to

want to know now.

That plan basically covers the—as I started this deci-

sion out, there are three different areas. There’s one, the

undisturbed forested areas. And this [35] Court makes

no order in regard to those areas. I am not going to order

prospective injunctive relief on those areas. The Hobbs

know the rules now, and if they don’t follow those rules

they’re the ones who are going to suffer the repercussions.

It would be, in this Court’s opinion, inappropriate to go

in and order somebody to follow the law on the undevel-

oped property.

Now, I’m going to make three distinctions here. That’s

undisturbed property just like any other undisturbed

property in the United States. It’s subject to the laws,

environmental laws, of the United States, and if any

action is taken on it, if the Hobbs think there are wet-

lands there, then they’re going to have to seek the appro-

priate permit from the Army Corps of Engineers.

43a

If they don’t think there are wetlands there and they

do their development anyway and it turns out to be wet-

lands, then they suffer some pretty heavy repercussions,

because the whole civil penalties area changes on the next

case, because then you’ve got a history of violation, a

showing of lack of good faith compliance with the act.

Your whole case changes. So, as far as this Court is

concerned, I’m not going to order prospective injunctive

relief on undeveloped areas. It’s the same as anybody

else, and they know the rules.

[86] The plan that is being denied from the government

and the plan that’s being put in effect deals with the

areas that are now developed and disturbed. Now, that

leaves the question of the transitional area.

And before I go any further on that, what’s the United

States’ position—what can they do with that transitional

area under current law?

MR. SHAFFER: Well, obviously, the current law

prohibits the discharge of fill material into wetlands. We

would submit the jury has found as a matter of law that

these are wetlands, and, so, therefore, to the extent that

they continue to discharge in that area we would submit

that’s a violation. We would also submit, Your Honor,

as I argued before, that the history and the equities are

different in that 25—

THE COURT: You need to stand up, Mr. Shaffer.

MR. SHAFFER: I’m sorry. I apologize.

The equities are different with respect to that 25-acre

parcel because they clearly were working on that in late

1988. In fact, there’s testimony during the liability phase

that Mr. Lipps layed out the ditches in November of

1988, well after the Hobbs were on notice that there was

some question on the part of the Corps of Engineers.

I would submit that the Court should order [37] injunc-

tive relief which basically says they have to revegetate

and plug the ditches in those parcels to allow it to re-

vegetate to resume its status as wetlands.

44a

THE COURT: But suppose they go in and plant hay

on that? What is your position on that in terms of that

being a violation of the law at this point?

MR. SHAFFER: Well, Your Honor, the planting of

the hay is—you know, to the extent that they obviously

have to go in and remove the fill and presumably are

going to want to level the land, which means filling holes,

which involves the discharge of fill, I would submit, Your

Honor, that basically to allow them to farm that when

they have not expended considerable amounts of money

to bring it into cultivation or get it into shape really does

give them a windfall.

THE COURT: Well, I haven’t ruled on that parcel

yet. Let me make it clear. That’s the point I’m at now.

MR. SHAFFER: My concern is, Your Honor, I don’t

know the status of the land, but, presumably, they’re

going to have to fill holes, grade, level, in order to keep

the water off so they don’t ruin their crop. The sides of

the ditches clearly haven’t been seeded. I would submit.

Your Honor, that further work on that site would con-

stitute a violation in the absence of [38] a permit, and

assuming they could do the work to get it in shape to

cultivate it, you know, obviously, the statute deals with

discharge of fill material, and spoil piles are sitting out

there.

THE COURT: Was there any work in 1988 other

than that field, that you know of?

MR. SHAFFER: My understanding is that that is

the field or that is the collection of fields where they were

doing the bulk of their work in 1988.

THE COURT: That’s what I recall. too.

MR. SHAFFER: That’s my understanding, and ]

can't cite the Court to any other parcels.

THE COURT: I can’t recall from the testimony any

other parcels in 1988.

All right, go ahead, Mr. Nageotte.

MR. NAGEOTTE: If Your Honor please—

THE COURT: Four minutes.

45a

MR. NAGEOTTE: I can appreciate what the govern-

ment is saying with regard to the 25-acre field. They’re

saying, well, you shouldn’t—you know, community bene-

fit. But, on the other hand, to take that approach is

counterproductive to what the government is saying. If

in fact we’re dealing with the Clean Water Act and con-

cern for water quality, the evidence is clear on the record

of this case that the most efficient and [89] expeditious

means to solve the water quality problem, which is

clearly—

THE COURT: Let’s don’t argue about that. I’m not

arguing on what’s the most expeditious means to solve

it, I’m arguing over the legal status.

In other words, the way I view my ruling is that I am

not going to make a legal ruling on areas that are un-

disturbed upon which a jury has not concluded that there

are any wetlands, specifically. And those are just like any

other undisturbed wetlands, and the people will move at

their peril on them. Their restoration plan calls for the

land as is, including that parcel in transition. But we’ve

got an erosion problem on that parcel, so we’ve got to

decide what to do with it, whether I’m going to order

that those ditches be plugged and that it be seeded or

whether it be put into hay or what’s going to be done

with it, because the restoration plan I’m approving, basi-

cally, that you’ve proposed leaves the land as is until such

time as they’re going to put cattle on it. But it leaves

the Court with that piece of property in transition, and

I’ve got to decide now what to do with that property in

transition.

And, frankly, neither one of you all have presented

anything to me on what to do with the piece of property

in transition, other than what Mr. Shaffer did [40] to-

day. And that’s my concern. And what I’m contemplat-

ing right now is giving you all 30 days to try to come up

with something to do with that property and give the

Court some type of information, some site-specific infor-

;

46a

mation, as to what to do with these 26 acres here or 25

acres, whatever it is.

MR. NAGEOTTE: Well, I would submit to the Court

that clearly what should be done, based on all the testi-

mony that Your Honor has heard at the penalty phase,

is to allow the Hobbs to finish that 25 acres and plant it

with hay.

THE COURT: No, I’m not going to do that, Mr.

Nageotte, because the jury found that in 1988 there was

a violation. That’s the only property that was involved

in 1988, and the Court—I can leave it as is and the Hobbs

can go apply for a permit on it, but I’m not going to now

issue an injunction ordering you to plant the property

into hay. That would be entirely inappropriate under the

act to then say, all right, there’s a violation there. What

I’m doing is saying what’s been done right now shows to

the Court—you’ve been able to show no environmental

detriment, but there’s testimony before the Court that

that piece of property as is may pose an environmental

problem because of the erosion. And, so, we’ve got to

decide what’s to be done with it, and—

[41] MR. NAGEOTTE: First of all, if I could, with

all due respect, clarify something Your Honor said.

The jury did not find that that piece of property was

done in 1988 and was the subject of the ruling. Quite

to the contrary. The jury—if you look at the stipulations,

there was work on various properties in 1988 besides the

25-acre field. And, remember, the jury didn’t pick which

field or which property. The jury found that in 1988

Paul Hobbs discharged fill material into his wetlands

property, which was more than one acre. They didn’t

say how many. So, we have the same problem with the

25-acre field.

THE COURT: All right. Then I’ll tell you what we'll

do, then. We’ll take 30 days and you all can go do a

wetlands delineation on the property. Because I’ve got

to decide at the damages phase, and you can do a wet-

lands delineation on it, you can do a cost analysis of the

47a

various uses and come up with alternative plans for that

26 acres. I don’t know of any other way to do it at this

point, unless you all can agree, which I’m not going to

count on that.

MR. SHAFFER: Well, Your Honor, with all due re-

spect, we submitted in the liability phase a delineation

which covers that 25 acres. I mean, is the Court asking

us to basically go back and redo everything [42] we did

at the expense of the government?

THE COURT: No.

MR. SHAFFER: The Hobbs have presented no de-

lineations, and I would hate to think that we have to

go back and redo all of that.

MR. NAGEOTTE: Your Honor, what this boils down

to is this, very frankly, and I appreciate the government’s

problem here, but I look at it this way:

If all the evidence in the case is that the ditching of

the Hobbs when allowed to continue was okay, was ex-

cellent, as everyone has said, was done under the SCS

supervision and that field was also at an expense, even

though it’s not completed, and that the hay fields of the

Hobbs are environmentally acceptable, then it seems to

me just to take the position, well, remember—it’s like

Your Honor said about the children; well, you can’t do

this because you just can’t. Well, it’s not doing any harm,

and it would solve the problem. But, no, you can’t do it,

because you just can’t. I just don’t understand that.

I mean, my suggestion is simply to go ahead and finish

that field off and let it—

THE COURT: How can you do it without a permit,

unless you want to take the chance that it’s not a wet-

lands?

143! In other words, at this point, Mr. Nageotte, this

is the factual situation with that piece of property. That

particular work was continued after the EPA was out

there in 1988. In October of 1988 the work on that prop-

erty was continued. That’s the only werk that Mr. Paul

Hobbs was doing in 1988 as a eontinuation of that piece

48a

of property. So, that was being continued after the EPA

went out there. My order today is basically the property

is as it is. The forested wetlands are still subject to

regulation if they’re wetlands, and the property is as it

is because there’s no showing that it’s environmentally

unsound. And for all the reasons—and I’m not going to

repeat everything I’ve said today, not just for that one

reason.

All right. Your restoration plan and what the Court

ordered then leaves that property just as it is. It leaves

it in the same situation as the forested wetlands, basically.

It is as it is. So, in order for—and it’s growing back.

I’ve looked at the pictures. The area is growing back.

So, one of three things can occur here. You all can

try to get together and present to the Court some viable

alternatives for that piece of property, or the Court can

leave it as is with the Hobbs running the risk of what-

ever they do to it they’re going to end up in a [44] new

legal turmoil, or, number three, I can outright order

them to go to the Corps and get a permit for that piece

of property before proceeding any further.

Those are the three alternatives—or, number four, I

can go with the government’s plan—there are four alter-

natives—and say, go ahead and plug up the ditches and

reseed that piece of property.

So, there are four alternatives. I’ve taken care of the

forested areas, and I’ve taken care of the undeveloped

areas, and if I do no more today I’ve basically taken care

of that 25 acres.

I’m trying to give you all an opportunity to work this

out so you don’t end up back in court over your 26 acres.

And they are the only four. I can go with the govern-

ment’s plan, I can leave it as is and they run the risk

of whatever they do, the United States coming back again

and saying, you needed a permit, or they can go on their

own to apply for a permit, or I can order them to do it.

There’s nothing been presented to me in a restoration

plan that says plant that area in hay. That wasn’t part

49a

of your plan. You didn’t present that as part of your

plan. Your whole testimony and evidence before me was

based on the property as is right now. And I have no

evidence before me whatsoever to go off and say, well

just go ahead and plant it in hay. I simply [45] don’t

have that evidence before me.

MR. SHAFFER: I might observe, Your Honor, that

basically what Myr. Nageotte is proposing is to undo

the very remedy which she sought from Judge Kellam.

Judge Kellam in issuing his preliminary injunction clearly

recognized that that 25-acre parcel was separate and told

them not to do any work in it and recognized that the

equities

THE COURT: Absolutely.

MR. SHAFFER: And now they’re saying we want

even more than Judge Kellam would give us.

THE COURT: This is the way Ym going to leave it

with you. We’re not getting any further today. I’ve

made my order clear.

You all have 30 days to presnt to the Court an order

that sets forth the Court’s ruling today on the restoration

plan approved with modification.

Mr. Shaffer, by working on

this order with Mr.

Nageotte, you in no way waive any objection that you

have to the Court’s, A, not approving your plan and, B,

you don’t show any agreement in the ruling of the Court

of adopting that restoration plan with modification. But

I do require that the two of you submit to the Court an

appropriate order setting forth the plan adopted with

modification.

[46] And the reason I put it to you all to do is you’re

going to have to get together on this outfall structure

se certain —s configurations, and let’s hope that

‘ou don’t need the Court to sit with you to come up with

an outfall structure. I’m hoping that you all can take

eare of those things from a scientific standpoint without

court intervention and present that to the Court. That’s

what you’re required to do.

I would request that you also get together and see if

you can come up with some resolution for the 26-acre

\ der IS aS 1 1S, the property

. I :

parcel. Jf you don’t, n

stays. In other words, I don’t find that the government

has presented an adequate plan for stopping the ditches

on that pareel. I do not find that the defendants have

resented one iota of evidence that planting hay on that

propert any use other than its current use comports

with their evidence. Al] their evidence was based on

] 17) » 44 " rrhipnl ] . + +e xr T~ an

eaving it as is, which leaves the property as is, and,

frankly, somebody would not be very smart to avoid ap-

plving for a permit to do any further work on it.

MR. NAGEOTTE: That’s what I was going to sug-

gest to Your Honor, if you could style that that we have

30 days to work out a plan for the 26 acres, and then in

the event we are no iccessful in doing that [47] tha

he Hobbs ar )} ed to apply for a perm for the 6

application in and of itself does not predetermine the

awarding of the pern

THE COURT Well, I’m not ruling on the awarding

of the permit on that property.

MR. SHAFFER: If I can just ask for some clarifica-

tion from the Court with respect to th areas that are

, .

leve iovped.,

today, one, whether or not this mitigation plan must be

implemented now or when it should be implemented. Is

the Court saying they have to implement the program

now, or do they have to implement the program in and

when they put cattle on the property? If they don’t have

“ | ] . L- M » “ 4*t ‘ | >. } .

to do it now, | think it’s necessary that tnere be some

adi ance tice that their land . se is going to ha} or

aqvanee novice tna elr lana use Is golng cnangt

Otherwise,

THE COURT: I think that’s a viable thing. Mr.

Nageotte is shaking his head, some type of notification

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o2a

THE COURT: Well, those water quality tests were

as it is.

All right, counsel, you have 30 days from today to

present that to the Court, and I’m not going to even say

if you run into any difficulty what to do, because I’m

anticipating no difficulty whatsoever. I’m an optimist.

DOU

UNITED STATES DISTRICT COURT

KASTIERN DISTRICT OF VIRGINIA

NORFOLK DIVISION

Civil Action No. 89-327-N

S. PAUL Hosss, et al.,

Plaintiffs and

( ounte rcvdimM De Ti ndants.

UNITED STATES OF AMERICA, et al..

De fendants and

;

Counterclaima)

JUDGMENT IN A CIVIL CASE

Filed Aug. 23, 1990]

Jury Verdict. This action came before the Court for

a trial by jury. The issues have been tried and the

jury has rendered its verdict on liability on tl

counterclaim.

Decision by Court. This action came to trial before

the Court. The issues have been tried and a decision

has been rendered on damages.

IT IS ORDERED AND ADJUDGED that on the

counterclaim:

1. Defendants Phillip Ray Hobbs and Dorothy V. Hobbs

discharged fill material onto wetlands constituting waters

of the United States in 1980, 1984, and 1985 without

permit in violation of Sections 301l(a) and 404(a) of the

Clean Water Act, 33 U.S.C. $$ 18ll(a) and 1344(/a

o4a

‘)

2. Defendants S. Paul Hobbs and Donna M. Hobbs dis-

charged fill material onto wetlands constituting waters of

the United States in 1986, 1987, and 1988 without a

permit in violation of Sections 301(a) and 404(a) of the

Clean Water Act, 33 U.S.C. $$ 1811(a) and 1344(a).

8. Defendants Phillip Ray Hobbs and Dorothy V. Hobbs

shall pay civil penalties in the amount of One Hundred

Dollars ($100.00) within sixty (60) days from entry of

this judgment, payable to the United States Treasury, in

eare of Craig B. Shaffer, United States Department ot

Justice, Post Office Box 23986, Washington, D.C. 20026-

3986

4. Defendants S. Paul Hobbs and Donna M. Hobbs shall

pay civil penalties in the amount of Two Hundred Dollars

($200.00) within sixty (60) days from entry of this

judgment, payable to the United States Treasury, in care

of Craig B. Shaffer, United States Department of Justice,

Post Office Box 23986, Washington, D.C. 20036-3986.

5. Use, modification, and or restoration of the wetlands

“1 in this action shall be in accordance

with the court’s ruling of May 21, 1990, and Final Order

Date August 22, 1990 DORIS R. CASEY

APPENDIX C

UNITED STATES DISTRICT COURT

KASTERN DISTRICT OF VIRGINIA

Norfolk Division

UNITED STATES OF AMERICA.

Pla tiff.

Defendants.

MEMORANDUM OPINION AND ORDER

[his matter comes before the court on numerous post-

in this case. On Janu-

ions filed by defendants

ary 26, 1990, the jury found that defendants had dis-

rged pollutants onto the Vetlands prope

set 1 173+} oa4

| 4 ViItnou

first seeking a permit from the United States Army

Corps of Engineers ‘hereinafter referred to as “Corps’’)

in violation of Section 301(a) of the Clean Water Act

(hereinafter referred to as “CWA”), 33 U.S.C. § 1311

(a). A bench trial was conducted on May 17, 18, and

21, 1990, to determine the appropriateness of ordering

injunctive relief, in the form of restoration, and of im-

posing civil penalties.’ The court issued its ruling regard-

ing relief, restoration, and penalties from the bench on

May 21, 1990, with a Final Order entered in the case on

August 22, 1990. The following is a list of defendants’

motions, with their filing dates, which are the subject of

this opinion and order:

1 Q) Decembe 14 1989. t} irt yrant | plaintiff’

d6a

(March 2, 1990)

Defendants Donna M. Hobbs and Dorothy V. Hobbs

Motion for a New Trial;

Motion for Judgment Notwithstanding the Verdict

or, in the alternative, a New Trial on behalf of S.

Paul Hobbs and Donna M. Hobbs:

Motion for Judgment Notwithstanding the Verdict

or, in the alternative, a New Trial on behalf of

Phillip Ray Hobbs and Dorothy V. Hobbs:

(March 14, 1990)

Motion to Stay Entry of Final Judgment;

(June 26, 1990)

Motion for Judgment Notwithstanding the Verdict

and to Partially Set Aside the Jury Verdict as Con-

trary to the Law and Evidence.

The court will consider each motion in the order indicated

above.

Motion for a New Trial

In their motion, defendants Donna M. Hobbs and Dor-

othy V. Hobbs seek a new trial on the basis that the

United States failed to present evidence that either de-

fendant discharged a pollutant, a prerequisite to estab-

lishing a violation of the CWA. 33 U.S.C. S311l(a).

Defendants’ Donna M. Hobbs and Dorothy V. Hobbs’

Motion for a New Trial, United States v. Hobbs. Civil

Action No. 89-327-N, at 1-2 (E.D. Va. March 2, 1990).

Defendants represent in their motion that the court found

the two defendants could be liable for violating the CWA

purely on the basis that they were co-owners of the sub-

“Section 1311(a) provides “[e]xcept as in compliance with this

section and section ... 404 of this Act [33 U.S.C. § 1344 _ the

discharge of any pollutant by any person shall be unlawful.” 33

U.S.C. § 1311(a).

ject property with their spouses. /d. at 2-8. The court

finds that defendants’ motion lacks merit and incorrectly

states the basis of the court’s ruling.

Despite defendants’ contention that no evidence was

presented to establish liability, they stipulated to clearing,

planting,-and grubbing their property on numerous occa-

sions. The Stipulation read: “Phillip Ray Hobbs and

Dorothy V. Hobbs conducted the work on the parcels

listed on the dates set as follows... .”’ Order on Final

Pretrial Conference, United States v. Hobbs, Civil Action

No. 89-327-N, at 3 (E.D. Va. January 4, 1990) (empha-

sis added) ‘hereinafter referred to as “Stipulation’’).

Likewise, the Stipulation with respect to defendant

Donna M. Hobbs indicated: “S. Paul Hobbs and Donna

M. Hobbs conducted the work on the parcels listed on

the dates set out as follows... .” Jd. at 4 (emphasis

added). The Stipulation was presented to the jury in

the court’s preliminary instructions at the inception of

trial and as part of the court’s charge (Jury Instruction

No. 4) at the close of the liability phase of the case.

Clearly, the basis for each defendant’s liability was not

his or her status as a co-owner of the subject property,

but rather liability rested on the evidence presented to

the jury that each defendant engaged in various activi-

ties which constituted discharges of pollutants. See also

Jury Instruction No. 21 (each defendant to be considered

separately and individually by the jury). Defendants’

moreover, made no objections to the court’s preliminary

instruction or the final jury instruction, each of which

contained the Stipulation. Thus, for the reasons stated

herein, the court DENIES defendants’ motion for a new

trial as being frivolous and wholly unsupported by the

evidence.

Motions for JNOVs or New Trials

On March 2, 1990, defendants, S. Paul Hobbs and

Donna M. Hobbs, and defendants, Phillip Ray Hobbs

and Dorothy V. Hobbs, filed separate motions seeking

judgments notwithstanding the verdicts or, in the alter-

native, new trials. Because both motions raise the same

seven issues, the court will discuss these motions together.

The seven issues asserted by both motions are:

1. The Corps of Engineers is the sole permitting

authority under the CWA;

2. The 1989 Federal Manual for Identifying and

Delineating Jurisdictional Wetlands and the 1988

Environmental Protection Agency (hereinafter

referred to as “EPA’”’) Wetland Identification

and Delineation Manual violate the Administra-

tive Procedure Act;

3. The court’s Forms of Verdict are void:

4. The term “neighboring” incorporated into the

definition of “adjacency,” 33 C.F.R. § 328.3(c)

is void for vagueness;

5. The court improperly failed to instruct the jury

that man-dug, non-tidal drainage ditches are not

waters of the United States;

6. The court improperly failed to instruct the jury

on CWA Section 404(f) exemptions; and

—_

The court erred in prohibiting defendants from

presenting evidence as to their “good faith” be-

lief that the order of compliance issued by the

EPA was invalid.

S. Paul Hobbs and Donna M. Hobbs’ Motion for Judg-

ment Notwithstanding the Verdict or, in the alternative,

a New Trial; Phillip Ray Hobbs and Dorothy V. Hobbs’

Motion for Judgment Notwithstanding the Verdict or, in

the alternative, a New Trial, United States v. Hobbs,

Civil Action No. 89-327-N (E.D. Va. March 2, 1990)

(hereinafter collectively referred.to as “Motions for

JNOVS’).

59a

In addition, defendant S. Paul Hobbs asserts a separate

ground pertaining to the court’s failure to instruct the

jury on estoppel. S. Paul Hobbs and Donna M. Hobbs’

Motion for Judgment Notwithstanding the Verdict or,

in the alternative, a New Trial, United States v. Hobbs,

Civil Action No. 89-327-N, at 59-66 (E.D. Va. March

1990) (hereinafter referred to as “Paul Hobbs’ Motion

for JNOV” in regard to this one ground)

1. Permitting Authority

At the close of the government’s case, defendants moved

for a directed verdict on the basis that authority to issue

Section 404 permits rests solely with the Corps. Accord-

ing to defendants, since the Corps never determined that

defendants needed a permit, the EPA !acked all authority

to make any jurisdictional determinations and to enforce

the CWA itself. Motions for JNOVs at 5. Under defend-

ants’ theory, the EPA’s enforcement authority comes into

play only if the Corps has determined that the property

is governed by the CWA and that a permit is required

and has not been obtained, or that an existing permit has

somehow been violated. This court, at the time of defend-

ants’ motions for directed verdicts ‘as well as numerous

other occasions throughout this proceeding), heard oral

arguments on same ground and thoroughly read and

considered the — submitted by both parties, together

with the authorities cited at that time. The court, then,

held that the EPA has independent authority to evaluate

whether property is governed by the CWA. See Tran-

script, United States v. Hobbs, Civil Action No. 89-327-N

(E.D. Va. January 17, 1990). neste from the bench,

the court articulated both its reasoning and the various

authorities relied upon in making its iain,

Defendants assert the same arguments previously set

forth in support of their contention. In fact, two of the

cases relied upon by defendants, National Wildlife Feder-

ation v. Hanson, 859 F.2d 313, 315-16 (4th Cir. 1988),

602

and Golden Gate Audubon Society, Inc. v. United States

Army Corps of KMngineers, TO00 F. Supp. 1549, 1552-53

(N.D. Cal. 1988), both support the court’s decision. In

both cases, the courts held that the citizen suit provisions

of the CWA, 33 U.S.C. $ 1365, authorize such suits

against the Corps, even though the language of the pro-

vision only permits such suits against the EPA. National

Wildlife, 859 F.2d at 316; Golden Gate, 700 F. Supp. at

1552. The Fourth Circuit stated:

It is quite clear that both the Corps and the EPA

are responsible for the issuance of permits under the

CWA and enforcement of their terms. The Corps

has the nondiscretionary duty to regulate dredged or

fill material, and to fulfill that duty it must make

reasoned wetlands determinations. The Corps has a

mandatory duty to ascertain the relevant facts, cor-

rectly construe the applicable statutes and regula-

Lions, and properly apply the law to the facts. Th

BPA is ultimately re sponsible for thie protection of

wetlands.

National Wildlife, 859 F.2d at 315-16 (emphasis added)

(citations omitted). The court, therefore, remains con-

vinced that its previous rulings on this point are correct

and defendants’ Motions for JNOVs on this ground are

DENIED. ™

2. Delineation Manuals

On January 2, 1990, defendants filed a motion for sum-

lary Judgment or, in the alternative, partial summary

judgment, alleging that various identification and deline-

ation manuals utilized by EPA officials in making their

wetlands evaluations are void in that they were not en-

The court in National Wildlife went on to conclude that “Cor

ne cannot have intended to allow citizens to challenge erroneou

wetlands determinations when the EPA administrator makes them

but to prohibit h challenges when the Corps makes the determi

tion and the EPA fails to exert its authorit over the Cory

determination.” 859 F.2d at 316

6la

acted in compliance with the notice and comment provi-

sions of the Administrative Procedures Act (hereinafter

referred to as “APA”). Defendants’ Motion for Sum-

mary Judgment or, in the alternative, Partial Summary

Judgment, United States v. Hobbs, Civil Action No. &9-

327-N (i.D, Va. January 2, 1990). After reviewing the

motion and the memoranda of law filed by both parties,

the court, on January 10, 1990, denied the motion, hold-

ing that compliance with the APA was unnecessary since

the manuals aided agency officials in “interpreting” the

dictates of the CWA and, therefore, were guidance ma-

terials rather than legislation.

The court reasoned that the parties were free to pre-

sent jurisdictional determinations based on either the

federal delineations manual, the EPA manual. or the

Corps manual, since the jury was ultimately bound to

evaluate the evidence in light of the regulatory definition

of the term “wetlands.” Indeed, the jury instruction

recited verbatim the regulatory definition of the term

“wetlands.” Jury Instruction No. 19 (quoting 33 C.F.R.

$ 3828.3(b)). The court also instructed the jury that the

United States bore the burden of proving, by a preponder-

ance of the evidence, every essential element of its case.

which included proving that defendants’ property con-

stitutes jurisdictional wetlands. See Jury Instructions

Nos. 11, 12, and 14. Thus, the court is unpersuaded by

defendants’ argument that by permitting testimony on

the federal delineations manual, the court, for all practi-

cal purposes, granted a directed verdict for the United

States. Defendants’ Joint Memorandum in Support of

Hobbs’ Motions for Judgments Notwithstanding the Ver-

dicts or in the alternative a New Trial, United States v.

Hobbs, Civil Action No, 89-327-N, at 21-22 (E.D. Va.

March 2, 1990). Consequently, finding no new matters

presented for the court’s consideration, and finding no

error in the court’s pre lous ruling on this issue,

defendants’ motions with respect to this ground are

DENIED.

62a

2 Forms of Verdict

Defendants claim that the Forms of Verdict submitted

to the jury are void because the court used special inter-

rogatories pursuant to Federal Rule of Civil Procedure

19(a), without requiring the jury to render a general

verdict in the case. Motions for JNOVs at 29. When

defendants first raised this objection, the court explained

that the Forms of Verdict called for a jury determination

on each issue of fact. Transcript, ('nited States v. Hobbs,

Civil Action No, 89-327-N, at 11 (E.D. Va. January 24,

1990) thereinafter referred to as “January 24, 1990

Transcript”). Based on the jury’s answers, the court

would then enter a verdict under the law. The court did

not abuse the wide discretion accorded to trial court

when employing special verdicts. Scott v. Isbrandtsen

Co,, 827 F.2d 118, 119 (4th Cir. 1964) (“The number

and form of issues, if they present the case fairly, are

matters resting in the sound discretion of the trial

judge.”) (emphasis in original). The CWA prohibits the

discharge of a pollutant into waters of the United States

without a permit. 33 U.S.C. §1311(a). Based on the

Forms of Verdict returned by the jury, they found that

defendants’ property is wetlands constituting a water 01

the United States, and that defendants discharged pol-

lutants onto their wetlands property. Forms of Verdict,

United States v. Hobbs, Civil Action No, 89-3827-N (E.D.

Va. January 26, 1990).

On January 24, 1990, defendants first objected to the

Forms of Verdict because, while the Forms of Verdict

did inquire into whether defendants discharged pollutants

onto wetlands adjacent to waters of the United States,

they did not ask whether defendants engaged in such

ivity “without a permit required from the United

States Army Corps of Engineers.” Motions for JNOVs

at 32: January 24, 1990 Transcript at 11. At that time,

the court indicated that the CWA requires a permit if

there is a discharge of a pollutant onto waters of the

United States. January 24, 1990 Transcript at 11. If the

jury found that defendants envaged in such activity, then

as a matter of law a permit was required under the

CWA, and defendant tipulated that they, in fact, had

not obtained any permit. /d. There was no Issue of fac

for the jury to determine on

the reasons stated herein, in addition to those conveyed

Ny tne court at the time tni ODIECLION Wi I}) ralsed,

the court finds no merit in this objection.

61a

cient information from the jury to proceed with the

penalty phase of the trial.

It was then the court’s duty during the penalty phase

of the trial to consider those factors, namely the amount

and location of the discharges, in order to determine the

type of restoration to be ordered and the amount of civil

penalties to be imposed. The court allowed the parties a

full opportunity to present evidence at the penalty phase

of the trial on all relevant factors.’

For the reasons stated herein, the court finds that the

jury determined all factual matters necessary to estab-

lish defendants’ violations of the CWA in a manner

wholly consistent with their Seventh Amendment rights

as set forth in Tull. Thus, the court, hereby, DENIES

defendants’ motions with respect to this ground.

4. Adjacency

Defendants reassert in this ground an argument that

has been revisited by this court in this case on numerous

occasions. They maintain that the regulatory definition

of the term “adjacency,” 33 C.F.R. § 328.3/c!, is void

for vagueness unless the term “neighboring” utilized in

the definition is given the same meaning as the terms

“bordering” and “contiguous.” Motions for JNOVs at

14. Defendants first raised this argument in one of their

pretrial motions filed on January 2, 1990, and, then, as-

serted it again during the course of the trial and as an

objection to the jury instructions. The court has con-

sistently concluded that in light of the broad legislative

intent of the CWA to “restore and maintain the chem-

ical, physical, and biological integrity of the Nation’s

35 U.S.C. $ 1251(a), the Act is to be applied

waters,

proof on these issues. See Jury Instructions Nos. 11, 12, and 14.

Further, the government’s evidence of discharges was presented by

years, and the court finds no deficiency in this level of specificity.

5 For the most part, the parties simply relied on the evidence

previously presented to the jury

65a

broadly under the Commerce Clause. United States v.

Whichard, 20 Envtl. L. Rep. 1148, 1150 (1983) (citing

IJnited Stat uv. Texas Pipe Line Co., 611 F.2d 3

3847 (10th Cir. 1980)). Even the Supreme Court, in

United States v. Riverside Bayview Homes, Inc., 474

U.S. 121, 1384 (1985), indicated that because of the

sweeping authority contemplated by the CWA and the

rps opinion with respect’ to the ecological interplay

between waters and their adjacent wetlands, it was rea-

sonable to conclude that “adjacent wetlands may be de-

fined as waters under the Act.” Accordingly, for the

reasons herein and those recited throughout this pro-

ceeding, the court finds that the defendants’ void for

vagueness argument lacks merit and does not constitute

a basis for granting defendants’ motions, which are DE-

NIED on this ground.

ihe court instructed the jury that the phrase “waters

f the United States”? meant waters which at some point

lad heen or Mé

In time, either past, present or Iuture.

e used in interstate or foreign commerce. Jurv Instruc-

: Y ’ y 47 ] : ‘ 4 g* o+ . ‘ e >

tion No. 18. Wetlands adjacent to these waters are in-

cluded in the definition of “waters of the United States”

‘ . A

and subject to the CWA. /d. Defendants, at numerous

times throughout this case, have alleged that even if their

property does constitute wetlands, the wetlands are adja-

, - re. } : aos 3 B dil ane Bin

cent to man-dug, non-tidal drainage ditches originally

> = - . ‘ ] +] ; . > . “? . >

exCaValed on ary ftand and, therefore, not a water of the

Assuming that the ditches were man-made.’ the defi-

nition of the term “adjacent” expressly includes wetlands

Defendants filed a motion for summary judgment, on Novembe)

1990, on this Int, which was denied by the court on December

14, 1990. Defendants also moved for a directed verdict with re spect

e, which the irt denied. Finally, defendants proffered

ry instruction concerning tl tche whi he court refuse

: ff maintai that “‘wh the Hobbs claimed are man-mads

tches are actual] tu U2 i whicl ave been Improved

66a

separated from other waters of the United States by man-

made structures: “Wetlands separated from other waters

of the United States by man-made dikes or barriers, nat-

ural river berms, beach dunes and the like are ‘adjacent

wetlands. 2 C.F.R. § 328.3(c). Courts have consist-

ently found jurisdictional wetlands to exist, even when

9 99 oc

the connection between the \ etlands area and the ad-

jacent tidal waters is artificial or man-made. See United

States v. Ciam) . 5838 F. Supp. 483, 494 (D.N.J. 1984),

afd, 772 F.2d 883 (3d Cir. 1985), cert. denied, 475 U

1014 (1986) (In light of the legislative and regulatory

the CWA, jurisdictional wetlands may exist

even though they may have been artificially created.

“!F]ederal jurisdiction is determined by whether the site

is presently wetlands and not by how it came to be wet-

history of

lands.) ; United States v. Akers, 651 F. Supp. 320, 321-

93 (E.D. Cal, 1987) (Statutory and admin ae def-

Sa BS et ! tute’ 4 ‘Svetlands” are broad :

initions 01 vaters” and ‘“‘wetlands” are broad enough

to include artificially- -created wetlands because regula-

tory langauge ‘emphasizes the nature of the land in

; Y) » ) ’ } y hi ah it } rh T h: ya 1A +} |

question, not the manner by which It mignt lave reachet

sta lo ~+ «4 9 . 4s 29, > P > .

1US wetland SLALC. , Trac at I Tne. _ Distr Engine ir

United States Army Corps of Papineers, 618 F. Supp.

448 (D.C. Minn. 1985) (Corps had jurisdiction of arti-

ficial wetland created by actions of state and local author-

‘ties. including construction of a highway and a storm

Sse W age system re

Defendants’ contention includes an assumption that the

ditches which existed on the property prior to their owner-

ship of the land were dug on dry land. Defendants’ own

witness. Mr. Rudy Nuttall, a life-long resident of the

Ware Neck area, testified that the area was a swamp

and that one needed rubbe . boot s when on the defendants’

man. ited States’ Memorandum in Oppo ition to Motions

for Judgments Notwithstanding the Verdicts or in the ilternatl

for a New Trial, United States v. Hobbs. Civil Action No. 89-527 N,

property because the area was extremely wet. In any

event, the jury heard testimony from both parties de-

| scribing the iocation and the characteristics ef defend-

| ants’ property end the pattern of drainage ditches across

| the property. The court fully instructed the jury on

| the definitions of waters of the United States, wetland:

| and adjacency. Jury Instructions Nos. 18, 19, and 2(

M1, ; — 1, 1, ee . Ahead = P ’ — ine «

ine jury then determined that qaetre ndants p} erty S,

= a ] ens -_ . an te ] — . Ron 4 ] Pan . 41

indeed. 2 wetlands. For the reasons stated from the

] ’ — ;, —

neil as nose ST EPC ey In, ne cou? [| NX] “>

7 " , ; : > x ; P .

defendants’ Motions for JNOVs with resp ( is

2 : |

Frround

6. Statutory Exemptions

i I :

to inciud heir proposed jury instructic concerning tt!

‘ r ‘ . 2 . = :

CWA’s Section 1344(f) exemptions from the permitting

+ T Y } | : ‘

proces n T( INOVs a { op ifica v, defend-

1} TS VY) int mW ] 7 thay ) ( ' ? iV] 17 ) *)) ] Y)

ra i allclilile« ii Nat they Cll CU i Sil bLUA ‘ « id i

1 - ~< ~ V2) y ‘

ave aditenes [\ at 91-52. J f . Us. 1344

fi} (1) provides exemptions from the permitting process

] 4 4 : . ae = a D . 14 Pa . 2m on |

for discharges onto wetlands which result from normal

agricultural activities. The exemptions set forth in Sec-

tion 1544‘f)(1) are subject to 33 U.S.C. § 1844 (f) (2)

+ .

(emphasis added) which provides:

Any discharge of dredged or fill material into the

navigable waters incidental to any activity havi

as its purpose bringing an area of Tire a (

‘ The court concluded that defendants’ | roffered jm nstructl

overall were extremely verbose, cumbersome, and co!

cause they included matters not In issue and contained le

unnecessary statements of the law. The jury instruction of!

on statutory exemptions is a good example of this over-incl

items not in issue in any respect in the lawsuit, such as re

tion of dikes, dams, |e

Donna M. Hobbs, Philip Ray Hobbs and Dorothy \ Ho! > »

posed Jury Instructions, United States Hobbs, Civil Action N

89-327-N, at Jury Instruction F (E.D. Va. January 2, 199

vees etc. AY, Leper ants S |? }

oSa

waters into a use to which it was not pre viously sub-

ject, where the flow or circulation of navigable wat-

ers may be impaired or the reach of such waters

be reduced, shall be required to have a permit.

Section 1344(f) (1) has consistently been construed nar-

rowly. See United States v. Huebner, 752 F.2d 1235,

1240-41 (7th Cir. 1985), cert. denied, 474 U.S. 817

(1985): Avoyelles Sportsmen’s League, Ine. v. Marsh,

715 F.2d 897, 925 n.44 (5th Cir. 1983). At trial, de-

fendants testified that they purchased the property for

erowing hay and for raising cattle. They engaged in

clearing, grubbing, and planting activities in order to

achieve their goals. See Stipulation; Jury Instruction

No. 4.

Defendants’ contend that they engaged in silviculture

activity exempt from the permit requirement pursuant to

Section 1344(¢) (1) (A). According to the regulations is-

sued by the Corps for implementing that section, silvicul-

ture qualifies for the exemption only if it is a part of an

established operation. 33 C.F.R. $ 323.4(a) (1) (1) (em-

phasis added). “Activities which bring an area into.

silviculture . . . use are not part of an established oper-

ation.” Jd. Defendants cleared timber in order to con-

vert the property into hay fields and pasture land. In

United States v. Larkins, 852 F.2d 189, 192 (6th Cir.

1988), cert. de nied, —— Us. —, 109 S. Ct. 1131

(1989). defendants argued that their actions were ex-

empt under Section 1344(f) (1) (A) by claiming that

their land was used for silviculture, even though they

planted crops after the trees had been removed rather

than replanting the property with trees. The court con-

cluded that defendants were not entitled to the exemp-

tion since “33 U.S.C. $ 1344(f)(1) (A) applies to the

normal harvesting of timber, not to the activitiy of

clearing timber ‘to permanently change the area from

wetlands into non-wetland agricultural tract... 2” Id.

(quoting Avoyelles Sportsmen’s League, Ine. v. Marsh,

715 F.2d 897, 926 n.46 (Sth Cir. 1983) (citation omit-

ted) (emphasis in original). Accordingly, defendants’ in

the case at bar were clearly not entitled to the exemption

provided by Section 1844(f) (1) (A).

Next, defendants claim that their construction of for-

estry roads is also exempt pursuant to 33 U.S.C. § 1344

(f) (1) (Ek). Both the statute and the Corps’ regulations

require that such roads be constructed and maintained

consistent with best management practices (“BMPs”)

in order to avoid the need for a CWA permit. See 33

U. $ 1344(f)(1)(E); 388 C.FLR. § 323.4(a) (6). De-

fendants never proffered any evidence that the forestry

oads were constructed in accordance with BMPs, nor

do they make any such allegation in their motions pres-

ently before the court.

The farm pond constructed by defendant Phillip Hobbs

was built to serve as a watering area for cattle grazing

on the property. By constructing the pond, defendants

cleared that portion of the property in order to bring

the area into a use to which it had not previously been

t. 33 U 1(f) (2). Therefore, defendants’

actions relating to construction of the farm pond were

not exempt from the provisions of the CWA.

Defendants’ suggest that their ditching activity re-

sulted in “minor siamese of the property in an effort

to qualify for the statutory exemption contained in Sec-

tion 1344(f) (1) (A), piraes to 338 C.F.R. § 323.4

(ad) (1) (il) (C) (2), “{mJjinor drainage .. . is ree

to drainage within areas that are part of an established

farming or silviculture operation. It does not clas

drainage associated with the immediate or gradual con-

version of a wetland to a non-wetland . .. or conver-

ion from one wetland use to another (for example, silvi-

culture to farming). The uncontroverted evidence was

defendants cleared the land and then dug drainage

(

nes in order to remove excess water trom the prop-

70a

erty, all to establish hay fields and grazing areas on the

land. The discharges of pollutants associated with their

ditching activity is, therefore, not exempt pursuant to

Section 13844(f) (1) (A).

Finally, defendants assert that the jury should have

been given the opportunity to decide whether “the flow

or circulation of navigable waters may be impaired or

the reach of such waters ... reduced. ” by their

actions taken on the subject property. 33 U.S.C. § 1844

(f) (2). The Corps’ regulations set forth that “|w|here

the proposed discharge will result in significant discern-

ible alterations to flow or circulation, the presumption is

that flow or circulation may be impaired by such alter-

ation.” 33 C.F.R. § 323.4(¢c). The regulations further

state the following specific example: “a permit will be

required for... the conversion of a wetland... to

agricultural use when there is a discharge of dredged or

fill material into waters of the United States in con-

junction with construction of . . . drainage ditches or

other works or structures used to effect such conversion.”

Id. The evidence clearly showed that the defendants en-

eaged in extensive clearing and construction activities,

including drainage ditches, on the subject property to

convert it to an agricultural use. Therefore, under the

regulations, it is presumed that the discharges of pollu-

tants resulting from those activities have impaired the

flow or circulation of waters of the United States, thereby)

not entitling defendants to the exemption in § 1344(f)

(2). Defendants presented no evidence to the contrary to

rebut this presumption, and it would have been error for

the court to instruct the jury on this Statutory exemption.

For the foregoing reasons, the court DENIES de-

fendants’ Motions for JNOVs on this ground because

heir proposed jury instruction on statutory exemptions

under the CWA was properly refused as unsupported by

he = idence

- - = * ‘' /

n ‘

hs /

Mt. : C — g

v =

~~ =

- hn aS :

— rs L 2% +

fv = —

r f

aad ~

- - s

“ _

s -

~ -

Pe on oS

im <¢ a

= . Ss |

be = 4

~ —

i- ——

— av’

m= ¢

, es

=~ MS

;

(aa

112. 425-2 1987). Indeed, the court did take into ac-

int defend: aetions uy ri of the EPA’s orig-

rrvsal rde) for comiphance, al d the ume nded ‘aer, 1n fash-

jioninge a remedy for then violations, as reflected in the

court’s ruling from the bench on May 21, 1999. There-

fore. the court once again, for the reasons previously

tated. DENIES defendants’ motions on this point,

& Estoppel

Defendant S. Paul Hobbs renews his objection to the

eourt’s refusal to include a jury instruction on estoppel.

See Paul Hobbs’ Motion for JNOV at 59-66. The Su-

preme Court has not decided precisely what type of con-

duct is necessary to estop the federal government, includ-

‘ne whether “affirmative misconduct” will suffice. See

Schiwerker v. Hlausen, 450 U.S. 78a, TS (1981) (“This

Court has never decided what type of conduct by a Gov-

ernment employee will estop the Government from in-

sisting upon compliance with valid regulations

whether even ‘affirmative misconduct’ would estop the

G vernment. : Nae . Heckl re Community Health Se rv-

ices, 467 U.S. 51, 59 (1984) (party asserting estoppel

against the government must demonstrate reasonable re-

liance to his detriment).

The Fourth Circuit, in Zografov v. V.A. Medical Center,

779 F.2d 967, 969-70 (4th Cir. 1985), denied plaintiff?

request for relief by way of estoppel because he failed

ty demonstrate affirmative misconduct on the part of

EEOC officials. The court held: “|P|laintiff has made

no showing of affirmative misconduct on the part of the

eovernment, which is the least the court would require,

even if that would suffice, to rely upon estoppel.” /d. al

969 (‘citing Hansen, 150 U.S. at 7&8). The holding in

a ‘ ; Sia

LOGVAT \' CO? firmed in Johnson v, Burnle Y, OO' F.2d

"7 4” ) q*7 6 1% qs se (rue | | _ or4

171. 4738. 479 (4th Cir. 1989), when the court stated

that in order to invoke the doctrine of equitable estoppel,

yr « former employee of the U.S. Coast Guard,

] + ‘ “ ~ ] } | ,

fendant from inquiring into whether other permits were

+] 1% li] :

required Tor the work he Was ¢ nducting and puiahnning

F ] 4 | { ’ 5 TQ “yf

69 conduct on the property. See Hansen, 450 U.S. a

A ‘

a | mr , } swt FG that 34 salina from ¢ } 1c]

789. Thus, the court 1 nds tha ruli 2 from the bene!

on estoppel was correct and DENIES defendant’s motion

}

foy JNOV or, in the alternative, a new trial on 11s

States, Civil Action No. 89-453-N (E.D. Va August 11

1989), appeal docketed, No. 89-1790 (4th Cir, August 26

oy 28. 1989). Motion to Stay Entry of Final Judgment

United States v. Hobbs, Civil Action No. 89-327-N (1o.D.

Va. Ma

reh 14, 1990) (hereinafter referred to as “Notion

ty Stay’). This court relied, in part, on Southern Pines

to dism} Cou 12. and 3 of defendants’ complal

a «A

\I ch 29), Loo In | { COU . cd ren nts ough

Finding no aff ! ondu { ( t d

furthe r atl tt ] nel rs ) ? 14 } ) ] ble |

court did adcare { Ss pe nt during the OUTS ¢ Lire ul trial LT)¢

relate motions

Oricit ! April 25 1LOR9. ce lont herel { j eon

| aint ch llen Ing at EPA | I I b | \ | | ()} ] 1 ¢

(on lanes lec } t hey | i} rn .| 93 1989

herein filed a counte) harging «de rh { herein wit! |

1T) Sect Lia { I CV A, | A i 1] < lt (

O! yor mie r 14 LO89 ’ ( | ount | > and ? f t} ry

portion of the nal t th relail

th, nt +} } : i

~ Lé Tne ntiff HH t! ete lant t (

Wel ( ( t| el ! I ( l Meme (

Opinion and Order, filed M: 29 1990, as cited herein

yre-enforcement review of the compliance order requiring

| | é

them to cease and desist discharging pollutants onto wet-

lands and to contact the EPA for the purpose of devising

a restoration plan, issued by the EPA pursuant to

U.S.C. § 1819(a) (3). Id. at 1-2. Relying principally on

the Supreme Court’s decision in Middlesex County Sewer-

age Authority v. National Sea Clammers Association, 458

U.S. 1 (1981), the court concluded that the enforcement

provisions of the CWA do not provide a cause of action

for challenging compliance orders prior to their being

enforced by the EPA. Jd. at 7. Therefore, judicial re-

view of a compliance order occurs only when the EPA

Lines 7 + sot 2 pen ee —

seeks enrorcement in (lis recy COUT. Id.

Defendants argue that staying the final judgment in

nis case 1S appropriate because, 1f Southern Pines is

cl}

overturned on an er | the court should retain jurisdiction

to consider moti s defendants are certain to file. Mo-

tion to Stay at 3. Apparently, the thrust of these motions

will be to seek a new trial because defendants were

barred from introducing evidence that they challenged

tne va idity Ol if fePA’s exercise of jurisdiction over

their property and that a preliminary injunction had been

] ] : | | iy | , 013 . ‘ . , ,

ered on thelr behalf at an earher stage in the nroceed-

> '\ ] “ AY. . nell 3 = ’ \ F ; ’ y

os. Memorandum in Support of Hobbs Motion to Stay

Ientry of Final Judgment Order, United States v. Hobbs,

Civil Action No. 89-827-N, at 3 (E.D. Va. March 14,

L990 (hereinafter referred to as ‘‘Motion to Stay Mem-

s* 14 ;

orandum

Specific defendants maintain that s ld Southern Pines be

I irned

l \ i have Heel ] I | nd rr i a) pre] dic d

1 | I ( nal } te " Ir it) | B |

I t ( | tn OT } (our?

( nt t ! Fal Deter the

(, } T | { < } ( Te tne I ctior es)

CV 1¢ I I tl (

O f Prelit ter 5, 1989 whick

76a

The court concludes that defendants’ reasons for seek-

ing a stay lack merit. Counts 1, 2, and 3 of defendants’

complaint pertained solely to pre-enforcement review of

the compliance order issued by the EPA. Complaint,

Hobbs v. United States, Civil Action No. 89-327-N, at

15-20 (E.D. Va. April 25, 1989). Defendants sought

pre-enforcement review of the compliance order because

they questioned the propriety of the EPA’s assertion of

jurisdiction over their property as being wetlands ad-

jacent to waters of the United States. Jd. On January

26, 1990, a jury determined that defendants’ property is

wetlands adjacent to waters of the United States and,

therefore, subject to Corps and EPA regulation. De-

fendants conceded at trial that they did not comply with

the order, since they did not submit a restoration plan,

however they did cease activity proscribed by the com-

pliance order. Therefore, even if the Fourth Circuit de-

termines that pre-enforcement judicial review of EPA

orders to compliance is contemplated by the CWA, de-

fendants would have been correct on the law, but their

argument herein for staying entry of final judgment will

have been rendered moot since the jury found them in

violation of the CWA. Any error would be harmless at

this point.

Defendants maintain that the court’s actions in reli-

ance on Southern Pines prejudiced their position in front

of the jury because they appeared at trial as defendants,

defending the characterization of their property as being

wetlands, rather than appearing as plaintiffs, actively

challenging the validity of the EPA’s assertion of juris-

diction. Motion to Stay Memorandum at 3. This argu-

ment makes little sense, considering that as defendants

they had no burden of proof and that the burden of proof

was on the United States in this case. Specifically, this

denied [defendants] a defense to Count II of the Government’s

Complaint. and denied | defendants]! a right to a fair trial.

Motion to Stav Memorandum at 3

77a

court instructed the jury that plaintiff bore the burden

of proving every essential element of its claim by a pre-

ponderance of the evidence, and that it bore this burden

with respect to each defendant. Jury Instructions Nos. 11

& 21. In each of the two instructions, the court advised

the jury that failure on the part of the United States to

prove its case would result in a finding for the defend-

ants, and that each defendant must be examined sepa-

rately and individually for purposes of determining lia-

bility. Jd. Therefore, the court remains unconvinced that

defendants were prejudiced by being defendants. rather

than plaintiffs, in the instant case.

Defendants also contend that should Southern Pines be

reversed, they will seek a new trial on the basis that they

were prevented from introducing into evidence an Order

of Preliminary Injunction issued by this court. Motion

to Stay Memorandum at 3. According to defendants, the

Order of Preliminary Injunction constituted a defense to

the United States’ allegation, in Count II of its counter-

claim, that the Hobbs failed to comply with the EPA’s

order for compliance. Jd. The court did preclude in-

troduction of this evidence because it was irrelevant for

purposes of determining defendants’ liability for activity

not protected by the injunction, not because, as contended

by defendants, the court found that defendants were not

entitled to pre-enforcement review of the compliance or-

der. See Order on Final Pretrial Conference, United

States v. Hobbs, Civil] Action No, 89-327-N, at 37 (E.D.

Va. January 4, 1990).

The Order of Preliminary Injunction permitted the

Hobbs to continue normal farming operations in the fields

which were already in production. Order of Preliminary

Injunction, Hobbs v. United States, Civil Action No, &9-

d27-N, at 5 (E.D. Va. July 6, 1989) (hereinafter re-

ferred to as “preliminary injunction”). Deferdants

'’ The United States stipulated that the Hobbs should be :.llowed

to cut the hay already growing at the time th omplhiang rder

was Issued, Jd

+},

{

“ }

{

— 4}

urt’s decision to deny ada-

ar ; 7

junction into eviagence C=

sought civil penalties for

der for compliance prior to

he court heard arguments

equest for a preliminary 1n-

+ ¢ (° m. Hii jy / []) tod

9T-N. at 18 (E.D. Va. Jun

tio t 1. Consequently

ce Will remain prope}

dispositio f the deci

' rt DENIES ce

oft } Judgement pel

' { e « 1)"

for JNOV

} filed f nd n on I

verdict alleging that the

LWe V-T1Ve ‘Gn pNAree

m forested property to agri-

idement Notwithstanding the

\side the Jury Verdict as

Evidence, United Sta

327-N. at 1 (E.D. Va. June

rred to ; “Second Motion

maintain that the evidence

yt v's) find

LOSA. ind 1OGA. tha the

Z +4 _ ted t r | )

Ty t , | +}

79a

subject property constitutes jurisdictional wetlands. IZd.

On the contrary, two of the government’s expert wit-

nesses, Charles A. Rhodes, Jr., and Gary Frazer, testified

that the entire subject property constituted jurisdictional

wetlands. Their testimony specifically discussed the par-

cels In question, as well as other segments of the prop-

rity. Moreover, their testimony was supplemented by

photographs and diagrams illustrating the work per-

tormed on the property, the condition of the property,

and the wetlands delineations conducted by government

officials. Defendants’ offered the testimony of their ex-

pert, Dr. James A. Reed, Jr., who supported their posi-

tion that the property, including the field in transition.

lid not meet the regulatory definition of wetlands. He

described and demonstrated the method by which he

arrived at his conclusion. The jury had ample opportu-

nity to consider and evaluate the witnesses and the evi-

lence presented by both parties. It rendered a verdict

which is supported by the evidence and which is reason-

in light of the evidence. Therefore, it would be error

his court to grant defendants’ motion on this ground.

able

for t

Additionally, defendants raise the following two con-

tentions already asserted in their first motions for JNOV:

ie federal delineation manual is violative of the APA

and the regulatory definition of “adjacency,” 33 C.F.R.

S 328.3(c), is void for vagueness. See supra at 4. Having

addressed both issues numerous times throughout the

course of this litigation, and again herein. the court

DENIES defendants’ motion with respect to these issues

for the reasons stated from the bench and those stated

herein. S ipra at 7-8, 11-12.

Sanctions

In its response to defendants’ Second Motion for INOV,

he United States asks this court to sanction counsel

pursuant to Federal Rule of Civil Proceduye 11. United

States’ Memorandum in Opposition to Defendant S. Pay]

80a

Hobbs’ Motion for Judgment Notwithstanding the Verdict

and to Partially Set Aside the Jury Verdict, United

States v. Hobbs, Civil Action No. 89-327-N, at 9-13 (B.D.

Va. July 10, 1990) (hereinafter referred to as ‘Motion

for Sanctions”). Plaintiff characterizes defense counsel

as having a “propensity for rehashed legal arguments

and factual inadequacy.” Jd. at 11. Frankly, such char-

acterization is kind. This court has been besieged with

voluminous and repetitive, and often times frivolous, mo-

tions and objections throughout this litigation. For ex-

ample, the contention that the EPA lacks jurisdiction to

enforce the CWA until the Corps determines whether a

permit is required has been raised and ruled upon at least

five (5) times in this case (prior to trial, at least twice

during trial, on motion for directed verdict, and on post-

trial motions): the contention that the wetlands delinea-

tion manuals are void because of non-compliance with the

APA has been raised and ruled upon at least four (4)

times thus far (prior to trial, at trial, twice post-trial) ;

the contention that the term “adjacency” is void for

vagueness has been addressed at least four (4) times

(pre-trial, at trial, as an objection to jury instructions,

and post-trial); the assertion that the property is not a

water of the United States because, if wetlands, it is

adjacent to man-dug, non-tidal drainage ditches has been

raised and ruled upon four (4) times (pre-trial, on mo-

tion for directed verdict, as an objection to jury instruc-

tions, post-trial); and in their post-trial motions, the

defendants mention eight (8) different times they have

raised the argument that they should be able to present

evidence of their good faith non-compliance with the EPA

Order. Motions for JNOVs at 54-57; see supra at 19.

These examples are merely illustrative of the repetitious

motions and objections made in this case by defendants’

counsel and are in no way a comprehensive list of the

abuses.

Althouch the court DENIES the Motion for Sanctions

at this time, the court will not tolerate any further re-

Sla

petitive motions and objections, absent new legal author-

ity or evidence, which with due diligence could not have

been obtained at the time of the previous filings, motions,

and objections.'’ Any further improper, repetitive mo-

tions will be subject to scrutiny under Rule 11 of the

Federal Rules of Civil Procedure, and defense counsel

is so put on notice, These repetitive motions serve no

purpose other than to increase the cost of this litigation.

If defense counsel is of the opinion that the court is in-

correct in its rulings and orders, then the proper recourse

at this juncture is appeal, not repetitive filings.

It is so ORDERED.

The Clerk is DIRECTED to mail a copy of this Memo-

randum Opinion and Order to counsel for plaintiff, Craig

B. Shaffer, Msquire, Michael A. Rhine, Assistant United

States Attorney, David A. Carson, Esquire, Ellen C.

Teplitsky, Iusquire and Frances Higeins, squire; and

to counsel for defendants, Richard R. Nageotte, Esquire.

s’ Rebecca Beach Smith

United States District Judge

Norfolk, Vireinia

August 24, 1990

The court also note that some of these motions and arguments

are contrary to ettled law and have been raised repeated] y and

finally ruled upon in other CWA/‘“‘wetlands” cases involving this

same defense counse] See United States v Tull. 615 F Supp 610

K 1) Va LORS . at’ d, 769 Ie 2d 182 ith Cir, LORD ss ‘dl on one

L @82 t.5. 412 CiI987 Court held right to jury on issue of

liability nder CWA)

82a

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

NORFOLK DIVISION

Civil Action No. 89-327-N

UNITED STATES OF AMERICA,

Plaintiff,

S. PAUL Hopss, and DONNA M. Hoss, his wife,

and

PHILLIP RAY Hopzs, and DororHy V. Hosss, his wife,

Defendants.

TRANSCRIPT OF PROCEEDINGS

Norfolk, Virginia

January 24, 1990

TENTH DAY

3efore: THE HONORABLE REBECCA BEACH SMITH, Judge

* * +. *

[2133] THE COURT: All right.

Mr. Nageotte, let me hear from you on the form of

verdict.

MR. NAGEOTTE: Your Honor, first of all, we would

ask the Court to include in all of the—in number 3—

[2134] well, in all of the paragraphs on both Phillip

Ray Hobbs and Paul Hobbs and his wife’s form of

‘>

Soa

verdicts, the language “without a permit required from

the United States Army Corps of Engineers.”

this scenario.

Assuming the jury finds that a permit is not required,

or that there was no requirement of a permit, then how

can they be guilty of violating the Clean Water Act,

because the Clean Water Act says it is a violation of the

law to discharge without a permit.

THE COURT: No, if they decide there was a dis-

charge of a pollutant onto wetlands, the laws says you

have to have a permit. And there is no issue that they

were without a permit, and we went through that before.

[I mean the law says if you discharge a pollutant onto

You have to have—let me give you

wetlands—and I’m not going to gO through how it is

waters of the United States—that you need a permit.

So there is no question that if they did all these other

things, they needed a permit, and there is no issue of

fact that they had a permit. You have stipulated to the

Court yesterday.

84a

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

NORFOLK DIVISION

Civil Action No. 89-327-N

UNITED STATES OF AMERICA,

Plaintiff,

S PauL Hospss, and DONNA M. Hosps, his wife,

and

PHILLIP RAY HOBBS, and DoroTHY V. HOBBS, his wife,

De te ndants.

TRANSCRIPT OF PROCEEDINGS

Norfolk, Virginia

January 17, 1990

FIFTH DAY

Before: THE HONORABLE REBECCA BEACH SMITH, Judge

1152] THE COURT: All right.

MR. NAGEOTTE: Your Honor, at this time the de-

fendants make a motion for a directed verdict in this

case in accordance with the Federal Rules of Civil Pro-

cedure, the government having rested.

7 * *

1159] THE COURT: Well, let’s just assume, for in-

stance. for a moment that the Corps 0!

do what it was supposed to do under

SVva

purposes of your argument. That doesn’t nullify the

IV PA’s enforcement powers. I mean, that the Army Corps

of Engineers under their regulations don’t do what they

are supposed to do—how would that nullify the enforce-

ment authority under the Clean Water Act given the

l;nvironmental Protection Agency?

MR. NAGEOTTE: Because, Your Honor, we do not

question that the EPA has enforcement authority. The

problem here is that EPA is not understanding the differ-

ence between enforcement authority and permitting au-

thority.

[1160] THE COURT: Well, but maybe you are not

understanding the difference between jurisdiction and

permitting authority. If the EPA has equal enforcement

powers under the Clean Water Act, they also have an

ability to make a jurisdictional determination under that

act, and the case law supports they do.

I have read both of your memoranda, by the way. I

have read yours, Mr. Nageotte, and I have read that sub-

mitted by Mr. Carson. And the case law would indicate

that the EPA not only has equal enforcement powers, but

they can make an independent determination of jurisdic-

tion, and if there is a conflict as between the EPA and

the Army Corps of Engineers, that the EPA’s determina-

tion controls.

And what I don’t understand in your argument is what

[ think is being confused here, is whether they have ju-

risdiction, and that is being confused with the permitting

ithority. And somehow you are arguing that because

the Army Corps of E

permitting process, that that then precludes the EPA’s

jurisdiction, enforcement jurisdiction.

MR. NAGEOTTE: Your Honor, let me say this. Upon

ngineers has not gone through a

reful reading of all the cases involved in Clean Water

\ct enforcements, I will tel! Your Hono) [I have ye

( ( Sf Wl ch [ = I ne EPA n e? rece if

{ ~ rs | SS ( l - 1e)

\V j S

86a

THE COURT: You are telling me there is not a case

in the body of case law out there that every time the

EPA has come in to enforce, there has already been a

cease and desist order by the Corps?

MR. NAGEOTTE: Yes, Your Honor, of the cases we

have read, we have not been able

THE COURT: You didn’t cite any to me. I would

like to see them. None of them were cited in your brief.

MR. NAGEOTTE: Well, the—

THE COURT: You tell me what they are, because I

certainly didn’t see them in your briefs.

MR. NAGEOTTE: Every case cited to Your Honor

in the government’s memorandum, and I think the case

that we cited, which was the

THE COURT: You cite one case in your brief.

MR. NAGEOTTE: That one case we cited, that is

Washburn’s case from San Francisco.

THE COURT: Two, Alameda, but that was the same

one cited by the government.

Then Newport Galleria.

MR. NAGEOTTE: Right. Those cases, Your Honor,

all had a Corps of Engineers cease and desist order.

You see, it is my view that—

THE COURT: Well, I think it is your view, because

[1162] I have gone back—after my comments the other

day, I spent a lot of time going back through the statute,

and I think perhaps it is an argument, and it is your

view, but I don’t think it is the statutory scheme that has

been set up.

MR. NAGEOTTE: Well, Your Honor, it precisely is

the statutory scheme, for this reason. Congress, while

they gave the Corps and the EPA enforcement authority

—we don’t argue the EPA doesn’t have enforcement au-

thority—they gave in 404 only the Corps permitting au-

thority. The EPA has no permitting authority.

THE COURT: What if nobody ever applies for a

permit? It is not up to the Corps or the EPA to go out

» —

87a

and make people apply for a permit, if in fact there was

a scheme anticipated where people come in and apply

for permits.

So what if someone never applies for a permit? And

that’s what happened here. Nobody ever applied for a

permit at all, and the EPA has come in under their

enforcement authority. They have made a jurisdictional

determination that there are wetlands and waters of the

United States involved, and consequently they need to

nforce under the Clean Water Act, and now basically

we are at a situation where\it is up to the jury.

I mean we have gone past the permitting process.

It is up to the jury to determine either, A, they need a

1163] permit or they don’t need a permit. It is not even

up to the Corps anymore, because the jury is going to

determine that there are wetlands involving waters of

he United States, that they are wetlands as waters of

the United States or wetlands adjacent to waters of the

United States, and once the jury decides that, then the

cheme says you can’t fill or do any further discharge

Without a permit, so that now we are at the juncture

whereby you have gone past that regulatory scheme.

We are not at the permitting—the scheme and the

statute. The bottom line is now that it is the jury, it is

up to the jury to determine it, and whatever they de-

termine, the Court will abide by, and if they determine

t it is not wetlands, not waters of the Uni ted Stat

there is no permit required. If they determine that the

IPA is right, they agree with the EPA, then you have

got to get a permit, no further discharge without a per-

mit. So it seems to me it is as simple as that at this

int, and I think that’s the scheme a Is set up.

Now, I think you may have a different situation if

Hobbses had applied for a permit and the Corps had

declined to take jurisdiction. I still don’t think that would

ude the EPA from bringing that action. What it

lo is | ) u to present of estoppel,

United States is estopped from proceeding be-

88a

cause the [1164] Army Corps of Engineers has said you

don’t need a permit.

But under that statutory scheme, on close examination,

I’m of the opinion that the EPA and the Corps, either

one of them, can go in in and make the determination,

and either one of them can enforce, and whether or not

they agree, that’s something that you present to the

jury, and certainly you will be able to present to the jury

all you want what Mr. McGlaun did and what the Corps

has and Julie Steele’s testimony.

But at this point in time a jury is going to determine

whether or not it is wetlands or waters of the United

States, whether they agree with the EPA. And even if

in the meantime the Hobbses had applied for a permit

and the Corps said, we decline to exercise jurisdiction

hecause we don’t believe they are wetlands, what you

would have at that point is a conflict as between agencies

and case law. A lot of case law says when you get that

kind of conflict, the EPA’s determination controls, that

they are the superior organization in determining whether

there is jurisdictional wetlands.

MR. NAGEOTTE: If I may say just one more thing,

Your Honor.

T'TE COURT: All right.

MR. NAGEOTTE: And I'll sit down.

The only other point I wanted to make, Your Honor

1165] may have a point in the situation where the

Corps doesn’t know about the situation. But that is not

this case. This is a case where the Corps had actual—

not even constructive notice, I mean actual knowledge,

and went for a period of—a number of months not tak-

ing action.

THE COURT: Then I think that is favorable evi-

dence you can present to the jury, and I haven't pre-

cluded you from it. And I’m going to let you present

that to the jurv, and I think that’s the appropriate way

that evidence is considered.

89a

I think it is another factor for them to determine

whether or not there are jurisdictional wetlands out there.

MR. NAGEOTTE: Thank you, Your Honor.

THE COURT: All right, Mr. Shaffer, anything you

want to say in addition to what you have included in the

trial memorandum, or Mr. Carson?

MR. SHAFFER: No, Your Honor. Unless the Court

has some questions for me in terms of the defense mo-

tion, I have nothing to say.

THE COURT: No.

MR. SHAFFER: Clearly we feel like we have proven

more than enough to get to a jury, and we feel the motion

under Rule 50 should be denied.

THE COURT: This is a motion for directed verdict.

and all the evidence and inferences have to be drawn in

|1166] favor of the nonmoving party.

In any event, I’ll briefly review my reasons for denying

the motion. Some of them are the same as I have just

expressed to Mr. Nageotte, and for the reasons that ]

have expressed in conversation with him while he was

arguing his motion, and in addition to for the reasons

I state now, I deny the defendant’s motion for a directed

verdict.

At a threshold level, I think that Mr. Nageotte’s argu-

ment assumes that there is only one agency with juris-

diction and authority in this matter to enforce. and I

think that that is incorrect as a matter of law. I think

that there are two equal enforcement agencies contem-

plated under the statute and the regulations, and that

EPA and the Corps have equal enforcement powers un-

der the Clean Water Act.

He said that the key question here was whether the

Corps asserted Clean Water Act jurisdiction and required

the Hobbses to have a permit.

My response to that question is that, first of all. there

is no requirement that the Corps assert jurisdiction, be-

cause the EPA has already asserted it in this case. and

under the scheme that is contemplated, EPA has equal

enforcement powers under the Clean Water Act. and they

90a

can make an independent determination of jurisdiction

and, in fact, under the case law as cited in the trial

(1167] memorandum of the United States, the EPA’s ju-

risdictional determination, according to some courts, is

superior and holds when there is a conflict as between

the Army Corps of Engineers and the Environmental

Protection Agency.

In addition, I would note that the Army Corps of En-

gineers does not have to require a permit. The Hobbses

could have applied for a permit under the statutory

scheme and the Clean Water Act, and they haven’t ap-

plied for a permit. So no permit has been denied. That

is as a factual matter. It is all—everybody agrees they

haven’t applied for a permit and had the Corps deny a

permit.

Even if they had, it would be my opinion under the

and I want to reiterate they haven’t, so it is really

not an issue—but even if they had applied, for the sake

of argument, fur a permit and the Army Corps of En-

gineers had made a determination that a permit was not

necessary because there weren’t jurisdictional wetlands

involved, I’m of the opinion that the EPA could still go

forward with an enforcement action.

Now, that evidence would certainly come in and be

for the jury or the Court, whoever was finding the facts,

to consider, and it would certainly go to the legal issue of

estoppel. If the Corps found a permit unnecessary, cer-

tainly the argument could then be made that the United

States would be estopped from proceeding. And it may

even [1168] be on the estoppel issue a matter of law a

Court might conclude. But that is not an issue that I

need reach, because it is not the situation here.

And I am just taking the points as I wrote them in

my notes. There is a mention about Mr. McGlaun. Well,

I would note that Mr. MeGlaun has not testified, and as

far as the Court is concerned, the only evidence before

the Court at this time was from Mr. Frazer and Ms.

Steele, and basically it was from Mr. Frazer, that it was

9la

left up to him to do further work, that Mr. McGlaun

did not make any determination, he only went out there

once, he didn’t make any determination, and that it was

left up to Mr. Frazer to pursue further, and there has

been no evidence as to what Mr. McGlaun may or maj)

not have concluded as a result of Mr. Frazer’s further

Inquiry.

In addition, the testimony from Ms. Steele was that at

some point in time it was determined, because of man-

power—for manpower reasons, that the EPA would go

forward with the enforcement and not the Corps of En-

gineers, and that was the evidence in regard to why the

letter to Colonel Thomas was unanswered.

There basically is no evidence before the Court at this

point that the Secretary of the Army, through Colonel

Thomas and the local Army Corps of Engineers, has re-

fused a permit, number one, because nobody has applied;

and, number [1169] two, because Ms. Steel has said

some point in time, we simply left it up to the EPA to

enforce.

As a matter of general principle, again I reiterate that

both EPA and the Corps have equal enforcement powers

under the Clean Water Act. That the Corps has not

gone through a permitting process in my opinion does

not preclude the Environmental Protection Agency from

utilizing its enforcement powers under the statute. and

that they can make an independent determination of ju-

risdiction, and that even if the Corps—for some reason

it could be argued that they haven’t properly performed

under the regulations—in other words, they didn’t com-

plete their investigation and determination—let’s see. ]

think that what Mr. Nageotte was arguing was that un-

der the regulations, their regulation, that they must in-

vestigate and determine whether a permit was required.

That they failed to do something that they maybe were

supposed to have done again in my opinon does not pre-

clude EPA enforcement.

Again I would mention that in some ways the scheme

that is set up anticipates that an individual will apply

92a

for a permit. The Hobbses could have; they didn’t. And

ignorance of the law, that we are lay people or whatever,

is never an excuse for not complying with the law.

In any event, there has been no determination by the

Army Corps of Engineers as to whether they need a

permit [1170] or not. The bottom line, as I said, is it

is now up to the jury to determine. We are at a stage

where the EPA has come in, they have said, we make a

jurisdictional determination that there are wetlands and

waters of the United States involved, and improper fill.

We have enforcement powers under the act. We have

an ability to make an independent jurisdictional deter-

mination. We think that there is discharge without a

permit. We bring an enforcement action.

Now, whether or not the jury agrees with the EPA

is what we are here for right now. Whe-her or not they

agreee that there are wetlands involving waters of the

United States—those are going to be matters of fact for

the jury to determine. That’s what this suit Is all about,

and as I have indicated, I’m going to allow the defend-

ants to bring in all the evidence as to what the different

agencies did or didn’t do, what their procedures are, what

all the experts utilized to determine whether they are

jurisdictional wetlands and how you go about making

both the delineation and the jurisdictional determination,

and then it is going to be up to the jury to decide

whether by a preponderance of the evidence the United

States has proven its case, and for those reasons, I deny

the motion for a directed verdict.

* * ~ *

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF VIRGINIA

NORFOLK DIVISION

Civil Action No. 89-327-N

S. PAUL Hosps, et ai.,

Plaintiffs and

Count rclaim Def ndants,

UNITED STATES OF AMERICA, et al.

Defendants and

Y .

Counte relai mants.

JUDGMENT IN A CIVIL CASE

(Filed Aug. 24,

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