Final Rule Establishing an Administrative Appeal Process for the Regulatory Program of the Corps of Engineers

SUMMARY: On July 19, 1995, the Corps of Engineers published notice in

the Federal Register of a proposal to establish an administrative

appeal process for the regulatory program of the Corps of Engineers,

(33 CFR Parts 320-331). The notice period expired on September 5, 1995.

The Corps has evaluated and addressed the issues raised in comments

submitted in response to the proposed rule. Appropriate changes have

been made to clarify and enhance the administrative appeal process for

permit denials and declined permits published herein as a Final Rule.

EFFECTIVE DATE: This rule becomes effective on August 6, 1999.

FOR FURTHER INFORMATION CONTACT: Mr. Sam Collinson, Corps of Engineers

Regulatory Branch, (202) 761-0199.

SUPPLEMENTARY INFORMATION:

I. Background

Shortly after coming into office in 1993, the Clinton

Administration convened an interagency working group to address

concerns with Federal wetlands policy. After hearing from States,

tribes, developers, farmers, environmental interests, members of

Congress, and scientists, the working group developed a comprehensive,

40-point plan (the Plan) to enhance wetlands protection, while making

wetlands regulations more fair, flexible, and effective for everyone,

including America's small landowners. The Plan was issued on August 24,

1993. It emphasizes improving Federal wetlands policy through various

means, including streamlining wetlands permitting programs. One of

several approaches identified in the Plan for achieving such

streamlining was through the development by the Corps of an

administrative appeal process, to be implemented after public

rulemaking. The Plan provides that the process will be designed to

allow for administrative appeal of Section 404 geographic

jurisdictional determinations and permit denials.

On July 19, 1995, the Corps of Engineers published notice in the

Federal Register of a proposal to establish an administrative appeal

process for the regulatory program of the Corps of Engineers. The

notice period expired on September 5, 1995. The Corps has evaluated and

addressed the issues raised in comments submitted in response to the

proposed rule. Appropriate changes have been made to clarify and

enhance the administrative appeal process for permit denials and

declined permits published herein as a Final Rule. In Fiscal Years 1995

to 1999 the President's budgets have included money to implement an

administrative appeal process for permit denials and jurisdiction

determinations. From FY 95 through FY 97 the Congressional

appropriation for the Corps regulatory program was held level at $101

million. In FY 98 Congress appropriated $106 million. This funding in

FY 98 allowed the Corps to move toward finalizing regulations for

administrative appeals of permit denials and declined permits. Congress

held the Corps regulatory program budget level again in FY 99 at $106

million. The President's Budget request for FY 00 of $117 million

includes funds necessary to implement the appeals process for

jurisdictional determinations as well as the appeals process for permit

denials that we are finalizing with this rule. Should Congress provide

the full request of $117 million in FY 00, we will proceed to implement

the appeals process for jurisdictional determinations.

The rule adopted herein provides for the administrative appeal

within the Corps of a denial with prejudice by the district engineer of

a Department of the Army permit application, as well as the appeal of a

declined proffered individual permit. Consistent with the Plan and as

explained below, third parties may participate in the appeal process.

This rule does not establish, at this time, an appeal process for

jurisdictional determinations or wetland delineations. We have

carefully considered the issue, and have determined that given the

resources available to the Corps at this time, we would be unable to

administer an appeal process for jurisdictional determinations and

wetland delineations in a timely manner without adversely affecting the

overall performance of the Corps regulatory program. The employees

dedicated to these new tasks would have to be taken from the existing

district staffs, with the result that each district would have fewer

project managers to evaluate permit applications and administer the

rest of the program. Given this situation, we believe that our efforts

should be concentrated to the extent possible on maintaining and

improving the overall performance of the Corps regulatory program.

Should additional resources become available at a later date, we will

consider expanding the appeal process to include jurisdictional

determinations and wetland delineations.

II. Comments on the Proposed Rule

A. General

Comments received on the proposed rule can be summarized under

several broad headings. They are: (1) The type of actions reviewed and

the extent of the review; (2) The identity and authority of the review

officer (RO); (3) The identity and rights of appellants; (4)

Enforcement-related issues; (5) Suggested procedural changes and

clarifications; and (6) General expressions of both opposition and

support of an administrative appeal process. The comments concerning

each of these topics, including those that pertain to the appeal of

permit denials and the terms and conditions of proffered individual

permits, were carefully considered, and are addressed herein. Comments

that pertain solely to the appeal of jurisdictional determinations are

not addressed in this document. Consideration of those comments will be

addressed at such time as the Corps may adopt an appeal process for

jurisdictional determinations.

B. Discussion of Specific Comments

(1) Type of Actions Reviewed and Extent of Review

A number of comments were received requesting that the appeal

process be expanded to include the assertion of discretionary

authority, issuance of cease and desist orders, special conditions,

denial without prejudice of a permit application, and delays in the

evaluation of a permit application.

While we recognize the desire of various individuals and interest

groups to expand the scope of the administrative appeal process to

cover all regulatory decisions that may impact their respective

interests, we have determined that there are several reasons why it

would not currently be prudent to do so. First, some of the decisions

that were suggested should be appealable are preliminary in nature. As

a result, there often is not an adequate administrative record upon

which to base a meaningful review. For example, the assertion of

discretionary authority to require an individual permit for an activity

is often based upon preliminary

[[Page 11709]]

indications that the potential adverse effects of a particular project

on the environment, or other aspects of the public interest, may be

more than minimal. In such cases, the individual permit process is

needed to investigate the probable effect of the project on the public

interest before making a final permit decision. In addition, the

assertion of discretionary authority only addresses the form of

authorization that is being considered, and not whether the proposed

activity will be authorized. Second, we have limited resources to

implement an administrative appeal process, and we could easily find

ourselves to be overwhelmed by the demand for administrative review of

a broad range of regulatory decisions. Given our FY 1998 appropriation

from Congress, sufficient funds are available to implement properly an

administrative appeal process for denied permits, and declined

individual permits only. Third, we do not wish to encourage permit

applicants to enter into a formal administrative appeal process without

first utilizing the informal review process already available in Corps

district offices. The informal district review process, generally based

on additional information or a new interpretation of existing

information, is the most timely and efficient means to resolve many

issues, such as jurisdictional questions. Accordingly, at this time, we

are limiting the administrative appeal process to denied permits, and

to proffered individual permits that have been declined by the

applicant.

Several of the comments received indicated that some parties

believed that the appeal process would allow an applicant to appeal the

terms and conditions of an individual permit, and begin work in

jurisdictional areas, while the appeal was under way. This

interpretation of the appeal process is incorrect. Permit conditions

are an integral part of a permit, and cannot be treated as independent

actions. No regulated activity would be allowed to begin in any

jurisdictional waters of the United States until the applicant has

accepted all the terms and conditions of the proffered permit. In cases

where an individual permit has been accepted by the applicant, and the

terms and conditions of such permit are subsequently unilaterally

modified by the district engineer pursuant to 33 CFR 325.7, the permit

may be declined by the permittee and appealed under this process, as

long as no regulated activities have taken place in waters of the

United States on the project site. Permit conditions are designed to

ensure that the authorized project will be constructed, operated and

maintained in such way that it would not cause significant degradation

of the aquatic environment, or be contrary to the public interest; or

to ensure compliance with legal requirements, such as Section 401 State

water quality certification conditions, and the Endangered Species Act.

In the case where an applicant declines a proffered individual permit

because the applicant objects to the terms and conditions of the

permit, the appeal process would proceed as follows. Should the

applicant object to the terms and conditions of the individual permit,

the applicant must write a letter to the district engineer explaining

his objections to the permit. The district engineer, upon evaluation of

the applicant's objections, may: (a) modify the permit to address all

of the applicant's objections, or (b) modify the permit to address

some, but not all, of the applicant's objections, or (c) not modify the

permit, having determined that the permit should be issued as

previously written. In the event that the district engineer agrees to

modify the proffered individual permit to address all of the

applicant's objections, the district engineer will issue such a

modified permit. Should the district engineer modify the proffered

permit to address some, but not all, of the applicant's objections, the

district engineer will send the applicant such a modified permit and

the decision document for the project. If the district engineer does

not modify the proffered permit, the district engineer will offer the

unmodified permit to the applicant a second time. In all cases, the

second transmittal of the permit shall include a notification of appeal

(NAP) form and a request for appeal (RFA) form (see definitions in 33

CFR 331.2). If the applicant subsequently declines any modified or

unmodified permit, this declined permit may be appealed to the division

engineer upon submittal of a completed RFA form. The completed RFA must

be received by the division engineer within 60 days of the NAP.

There were several comments concerning the scope of the review

process. Several commenters recommended that the review officer (RO)

consider new information, conducting, in effect, a new and independent

review. Other commenters indicated that new information should be

accepted only if it serves to clarify existing issues, and did not

raise new issues that were not considered in the Corps original

evaluation of the permit application. After careful consideration, we

have decided that the review undertaken by the RO would be limited to

the existing administrative record; however, the RO may seek to clarify

the record through consultation with the appellant and his agent(s),

the district engineer, other Federal and state agency personnel, or

other parties, as described in 33 CFR 331.3 and 331.7.

Accepting new information about the project during the appeal

process would constitute a fundamental change of the administrative

record. Such new information might well have resulted in a different

permit decision had it been presented to the district engineer during

the original permit evaluation process. It is essential that new

information be accepted only at the district level, so that the

district engineer's decision will reflect an accurate and comprehensive

analysis of the data compiled in the administrative record.

Furthermore, allowing an applicant to withhold potentially critical

information from the district engineer might encourage forum-shopping,

if an applicant were to believe that a more favorable decision might be

obtained from the division engineer than from the district engineer.

(2) The Identity and Authority of the Review Officer (RO)

Comments were received regarding the appropriate person to serve as

the RO, and the extent of the RO's authority. Most comments were

concerned primarily with ensuring that the RO be independent and

impartial, that the process be efficient, and that the RO have the

authority to change the original permit decision. Some commenters also

recommended that the RO be authorized to change unilaterally a district

engineer's permit denial decision.

Suggestions were also received stating that the administrative

appeal process should be conducted outside of the Corps of Engineers,

e.g., by contracting with private consultants, utilizing administrative

law judges, or referring the appeals to another Federal agency. Several

commenters expressed strong support for retaining the appeal process

within the Corps, while other commenters expressed an equally strong

desire to transfer the appeal process to an independent third party in

order to promote impartiality, to avoid the perception of bias, and to

enhance the credibility of the process.

We have given careful consideration to whether the appeal process

should be administered wholly within the Corps, or whether it should be

administered by an independent third party. While the perception of

agency bias is a serious concern, we believe that such perceptions

cannot be avoided

[[Page 11710]]

absolutely, and that the negative connotations are far outweighed by

having the appeal process managed by people who have the most

experience with the Corps of Engineers regulatory program. Moving the

appeal process outside the agency, either to another Federal agency, or

by contracting with the private sector, even if a Corps representative

were part of the process, would severely diminish the consistency and

efficiency of the appeal process, and would raise serious legal

questions. The Corps regulatory program is complex, and it is unlikely

that individuals outside of the agency would have the perspective and

long experience with the program that would be needed to conduct a

thorough, timely review. Also, given the evolving nature of the

policies, laws, regulations and court decisions that have shaped the

Corps regulatory program, non-Corps review officers would have to be

trained and updated on a regular basis in order to stay abreast of the

changes. We believe that it would be difficult to provide this

recurring training to individuals outside of the Corps. Furthermore, it

would be imprudent and inappropriate to transfer the appeal process to

a third party, because the Corps bears the statutory responsibility for

full implementation of the regulatory program. Finally, it is noted

that this rule does not diminish the right of an appellant to seek

redress through the Federal courts if he receives an unfavorable

decision from the Corps upon completion of the administrative appeal

process.

Simplification and lower program costs were also offered as reasons

for transferring the process to the private sector. We are not

convinced that contracting the work would be simpler or less costly

than administering the process internally. Corps involvement in the

appeal process would still be necessary, particularly in the case where

permit denial decisions were remanded to the district engineer for

reconsideration as the result of a successful appeal. Further, contract

management responsibilities would remain with the Corps, and could

constitute a substantial administrative burden.

Efficiency was also cited by several commenters in support of

establishing the appeal process as a single level of review at the

division level. We have examined the issue, and agree that the

operational efficiency of the appeal process would be maximized by a

one-level review of the existing administrative record.

Several commenters expressed the view that the appeal process

should grant authority to the division engineer to unilaterally

overturn the permit decision of the district engineer. Otherwise, it

was argued, the best result an appellant could hope for would be a new,

time-consuming review by the same regulatory project manager who made

the original permit recommendation to the district engineer. One

commenter further stated that such a process is inconsistent with the

Corps own assertion that an impartial, objective review requires the

final permit decision be made at the division rather than district

level.

We believe that the commenters failed to appreciate the positive

aspects of limiting the review to ensure that the requisite procedural

steps have been followed, that no material facts have been overlooked

or misinterpreted, and that the permit decision is consistent with

established policies and official guidance. If the division engineer

determines that the administrative record is insufficient to support

the decision, or that the decision is inconsistent with a requirement

of law, regulation, an Executive Order, or officially-promulgated Corps

policy or guidance, the division engineer will give specific

instructions to the district engineer regarding corrective actions that

must be taken in reconsidering the permit decision. These instructions

would ensure that the district engineer's subsequent decision would be

based on proper legal, factual, procedural, and policy grounds.

Remanding the decision to the district engineer for corrective action

also affirms the principle that the authority to make permit decisions

rests with the district engineer, who is the person ultimately

responsible for implementation of the regulatory program within his

district. Furthermore, from a workload management perspective, Corps

district staff are better prepared than division personnel to handle

the day-to-day requirements of the permit evaluation process. In

addition, an administrative appeal process that required a full public

interest review would be more time consuming than a review of specific

issues, and would in many cases duplicate work already done at the

district level. Also, if after conducting an appellate review, the

division engineer has reason to believe that the permit application

should not be referred back to the district engineer for a final

decision, the permit application may be elevated in accordance with 33

CFR 325.8(b)(4), and the division engineer will make the permit

decision.

Another commenter suggested modifying the third sentence of Section

331.3(b)(2) to provide the RO more flexibility. It was suggested that

we strike the wording, ``shall not substitute their judgment for that

of the Corps district (when reviewing technical issues) unless the

reviewed decision was clearly erroneous or omitted a material fact,''

and replace it with, ``shall provide a recommendation on the decision

that is supported by clear and convincing evidence.'' We believe that

under the original language, the RO has sufficient flexibility under

the review process; however, we have reworded that section to clarify

the meaning.

A comment was received suggesting more involvement by Corps

headquarters to assure the consistency of appealed decisions and to

facilitate adjustments in policy, as may become necessary. We agree

that there is a need for Corps Headquarters to monitor the appeal

process, especially during the period of initial implementation, but we

believe that routine, case-by-case involvement is neither warranted nor

practical. Corps Headquarters will provide training to the review

officers to ensure understanding of the policy and procedures, and to

ensure consistency of the process. Corps Headquarters will also provide

support on a case by case basis in the evaluation of appealed actions,

if requested by a division engineer.

Permit decisions made by a division engineer or higher authority

may be appealed to an Army official at least one level higher than the

decision-maker. This higher Army official shall make the decision on

the merits of the appeal, and may appoint a qualified individual to act

as a review officer (as defined in Section 331.2 of this Part).

References to the division engineer in this Part shall be understood as

also referring to higher-level Army authority when that authority is

conducting an administrative appeal.

Several commenters suggested that, because of its unique

organizational structure, appeals arising from decisions in the New

England Division (NED) office should be directed to Corps headquarters

rather than the division engineer. The Corps has recently reorganized

the division offices. The former New England Division is now the New

England District, and reports to the North Atlantic Division office.

The former New England Division is consequently like the other Corps

districts, and there is no need to set up a separate appeal process

structure for the New England regional office.

(3) The Identity and Rights of the Appellant

A number of commenters expressed concerns that the proposed

[[Page 11711]]

administrative appeal process would unduly restrict who may pursue an

appeal, that the scope of participation by the appellant was ill-

defined, and that appellants should not be required to exhaust the

administrative appeal process before seeking relief in the Federal

courts.

In response to the question regarding who may pursue an appeal, the

Corps has decided that, since the appeal process is limited at this

time to the appeal of denied permits, and to the appeal of declined

individual permits, appellants are properly limited to those parties

who have had their permit applications denied, or to those parties

proffered an individual permit by the district engineer. Expanding the

appeal rights to third parties would potentially increase the number of

appealable actions by an order of magnitude or more. This would simply

be unworkable. With regard to the scope of participation by the

appellant, we believe that the procedures outlined in 33 CFR 331.6 and

331.7 adequately describe the scope of participation of appellants and

their agents. We have also added a definition of the term ``agent(s)''

to 33 CFR 331.2. With regard to the need to exhaust the administrative

appeal process before seeking relief in the Federal courts, we believe

that the administrative appeal process would serve to identify and

correct any procedural shortcomings of the original permit evaluation

process, and can lead to a resolution of problems without the added

burden to both parties of an action in the Federal courts. Furthermore,

requiring an appellant to exhaust the administrative appeal process

does not prevent the appellant from seeking relief in the Federal

courts should the appellant not be satisfied with the outcome of the

appeal.

In response to requests for clarification of who may attend site

investigations and appeal conferences to provide support and

representation for the appellant, the rule has been written to allow

the appellant's agent(s), as defined in 33 CFR 331.2, to participate in

the process. The appellant's agent(s) may participate in the appeal

conference and in any site investigations, as outlined in 33 CFR 331.7.

Numerous comments were received regarding third party involvement

in the administrative appeal process. A number of commenters favored

limiting third party involvement to the extent provided for in the

proposed rule. Other commenters requested expansion of third party

involvement. It was evident from several comments that some confusion

exists regarding when third parties may participate in the appeal

process. In order to clarify these issues, additional language has been

added to the rule in 33 CFR 331.7 and 33 CFR 331.10. The supplementary

language is intended to make it clear that there is no third party

involvement in the appeal process itself. However, we have provided for

interested parties to be involved in those cases where the division

engineer has determined that the administrative record supporting a

permit denial is inadequate, and has remanded the decision to the

district engineer for further consideration. In such a case, any party

who commented during the original permit review process will be advised

that the decision is being reconsidered, and that they may submit

supplemental comments. If the noted deficiency in the administrative

record is serious enough to merit issuance of a new public notice,

anyone may submit comments. Under these circumstances, the public

interest review is starting anew, and there is no requirement that

interested parties must have participated in the original permit review

process.

(4) Enforcement-Related Issues

One commenter suggested that under the proposed rule the after-the-

fact (ATF) permit process should more appropriately be titled an after-

the-fact ``enforcement'' process. We believe that the existing language

properly identifies that a permit application is being evaluated

``after-the-fact'' for an activity that has already occurred. It would

be inappropriate to use the term ``after-the-fact enforcement'' since a

permit may be granted as a result of the ATF review process. In certain

cases involving alleged unauthorized activities, the Corps will afford

the responsible party the opportunity to apply for an ATF permit. Once

any initial corrective measures have been completed and the activity

otherwise meets the criteria in 33 CFR 326.3(e), evaluating an ATF

permit application is an appropriate response to an unauthorized

activity. If an ATF permit is issued, such permit will alleviate

adverse effects to the affected water of the United States through

special conditions and/or compensatory mitigation requirements. The ATF

process is one of several administrative remedies available to the

Corps to resolve unauthorized activities.

Several commenters responded to our proposal to amend 33 CFR

326.3(e) to require a tolling agreement as a prerequisite to filing an

administrative appeal of an adverse ATF permit decision. Several

commenters recommended narrowing the scope of the proposed tolling

agreement. As a result of further consideration, we have determined

that it would be appropriate to limit the tolling agreement, and

326.3(e) has been amended by adding subparagraph (v).

This new provision would mandate that any party alleged to have

engaged in an unauthorized activity, who files an ATF permit

application that the Corps processes, has thereby agreed to a tolling

of the Statute of Limitations, and, in addition, must sign an agreement

to that effect. Such tolling agreement would state that, in exchange

for the Corps accepting the ATF permit application and, if appropriate,

considering the appeal of any ATF permit denial or declined individual

permit, the party has agreed that the Statute of Limitations would be

tolled for one year after the final action has been taken on the ATF

permit decision, or any succeeding administrative appeal of an ATF

permit denial has been finalized, whichever is later. The tolling

period would terminate one year after a final decision on (1) the

denial of an ATF permit application; or, (2) an appeal of such a denial

decision, whichever is later. The one year post-decision period is

necessary in the event that the United States determines that it would

be appropriate to file an action in the Federal courts to obtain a

satisfactory remedy for the unauthorized activity.

The tolling agreement would also state that permit applicants will

not raise a Statute of Limitations defense in any subsequent

enforcement action brought by the United States, with respect to the

unauthorized activity for the period of time in which the Statute of

Limitations is tolled. A party will be required to sign a separate

tolling agreement for each individual unauthorized activity.

One commenter asked that the third sentence in Section 331.11 be

revised to read ``* * * unless the Corps receives an ATF permit * * *''

because the commenter felt the Corps could not refuse a permit

application. To the contrary, the Corps may refuse a permit application

when any one of four situations exist as identified in 33 CFR

326.3(e)(1). For this reason, we believe that the current language is

appropriate. Another commenter recommended that an appeal initiated in

response to the Corps actions on unauthorized activities should not be

processed until resolution of the alleged violation. As noted earlier,

although protection of the environment is one of the Corps primary

goals, there are some circumstances where allowing an appeal to proceed

before an enforcement action is

[[Page 11712]]

concluded is appropriate. Accordingly, we are convinced that this

decision must remain subject to the discretion of the district

engineer.

Comments were received questioning the basis of the requirement

that initial corrective measures must be completed before an appeal

could be accepted. One comment stated that this requirement left an

appellant little recourse; a result that appeared to be contrary to the

purpose of these regulations. Another believed that such a requirement

was premature because it presupposes that the appeal lacks merit. We

disagree with both of these arguments. First, interim corrective

measures are those actions which the district engineer believes to be

necessary to prevent serious jeopardy to life, property, or important

public resources. We believe that when such a situation exists, the

district engineer must act promptly to require initial corrective

measures to ensure that any unsafe or hazardous conditions are

corrected. Second, a determination to require a corrective action does

not prejudice an appeal, since it does not pass any judgment on the

merits of the overall project; it is simply intended to eliminate or

reduce unsafe conditions while the appeal is pending. Finally, the

appellant always has the option of seeking relief from the Federal

courts.

The proposed rule, in Section 331.11(b), concerned the calculation

of potential penalties for unauthorized activities. That provision

stated that ``[A]ny penalty imposed, as determined in the appropriate

forum by the appropriate decision-maker, may also include in the

calculation of penalty the time period involving the appeal process.''

This provision elicited comments stating that it was both ambiguous and

potentially unlawful. The Corps takes no position on the legality of

this provision. However, we have omitted this provision for several

reasons. First, this particular provision was somewhat ambiguous in

that it was not clear whether the time period of the appeal process

could be used to increase or decrease the penalties for unauthorized

activities. Second, the Corps realizes that it cannot dictate to a

Federal court that the time period for the appeal process must be

included in determining the penalty for unauthorized activities. A

court must independently weigh the facts of a particular case in order

to determine the appropriate extent of penalties for that case. By

omitting this language, the Corps is not waiving its right to argue

before a court that the time period for the appeal process should be

included in the calculation of the penalty for those unauthorized

activities. This explanation serves as notice to every appellant

regarding ATF permit applications that the time it takes for an appeal

to be resolved by the Corps may be included in the calculation of

penalties for the unauthorized activities.

(5) Suggested Procedural Changes and Clarifications for Specific

Sections

Section 331.3(a): One commenter suggested including ``prompt'' with

``fair, reasonable, and effective'' in describing the administrative

appeal process to emphasize the Corps commitment to timely action on

appeals. We agree that timely resolution of appeals is vital to the

success of this program, as is reflected by the inclusion of time

frames in the rule, and have revised this section to include the word

``prompt'.

Section 331.3(a)(2): One commenter suggested including the phrase

``based on the merits of the appeal'' in the first sentence. We agree

with this suggestion, and have clarified the first sentence of 33 CFR

331.3(a)(2) to reflect this suggestion.

Section 331.4: Several commenters noted that the proposed rule did

not contain a list of items that must be present in the administrative

record that would be the subject of an administrative appeal. Because

the administrative record for individual cases varies with the nature

of each proposal, we do not believe it is necessary to identify items

that could be in the administrative record. Each administrative record

typically contains many common elements, such as a determination of

jurisdiction, the permit application and supplemental information

provided by the applicant, the public notice and mailing list, comments

received in response to the notice, NEPA documentation (e.g.,

environmental assessment) and statement of findings (or a combined

decision document), 404(b)(1) Guidelines evaluation, and related

documents and correspondence.

One commenter suggested that the last three proposed words of

Section 331.4 be deleted. We have reworded the paragraph in order to

clarify that a standard form for submission of a Request For Appeal

(RFA) will be provided to the potential appellant, along with the

Notification of Appeal Process (NAP) standard form.

Section 331.5: This section has been modified to clarify the

criteria for consideration of an appeal. Additionally, the criteria

will be clearly outlined in the RFA form sent to the affected party

with the NAP.

Section 331.5(b)(1): One commenter suggested that it may not be

clear to permit applicants that endorsement of a proffered individual

permit indicates acceptance of the permit in its entirety, and effects

a waiver of the applicant's right to appeal the terms and conditions of

the permit. We acknowledge that the wording of the preamble and the

proposed rule may not be clear enough. Therefore, the wording of the

final rule has been modified to state clearly that the acceptance of an

individual permit results in the waiver of an applicant's right to

appeal the terms and conditions of the permit. This provision will also

be explained in the notification of applicant options (NAO) form

attached to the proffered individual permit sent to an applicant.

Section 331.6: One commenter suggested that we change the rule so

that the RFA must be filed within 60 days of the date that the

applicant receives the NAP, rather than within 60 days of the date of

the NAP. We have retained the wording of the proposed rule, because it

allows the 60 day time period to be measured from a clear and

verifiable date, whereas the date of receipt by the applicant would be

difficult to verify.

One commenter suggested that it would be difficult for appellants

to provide their reasons for appealing a permit denial within 60 days

unless the Corps provides a rationale for the permit denial as part of

the denial notification. In response to this request, the district

engineer will provide a copy of the decision document with the NAP

where the permit application has been denied. In response to one

commenter who requested that permit decisions be made available to the

public, permit decisions are currently available to the public under

standard Freedom of Information Act procedures.

Section 331.7(d): Several commenters suggested that the RO should

be required to notify the appellant a minimum number of days prior to

the date of the appeal conference to ensure that the appellant has

sufficient time to schedule and attend the meeting. We agree, and have

incorporated a requirement into the rule that provides that the

appellant be given 15 days notification of the date of the appeal

conference (see 33 CFR 331.7(d)(1)).

One commenter suggested that it be made mandatory that complete

transcripts be prepared for all presentations and discussions occurring

during the appeal conference. We do not agree with that suggestion,

because we believe that the cost of doing so would be burdensome, and

that requiring transcripts would considerably delay the appeal process.

However, we have required that the RO prepare a

[[Page 11713]]

memorandum for the record (MFR) to document the appeal conference (See

331.7(d)(7).) We believe that this process is adequate and not unduly

burdensome or costly.

Section 331.7(e): One commenter suggested that the RO be allowed to

communicate with both the appellant and the Corps district during the

appeal process. Another commenter concurred with our initial proposal

to prohibit any conversations between the RO and the parties to the

appeal, and also suggested that the regulation should explicitly

prohibit any conversations regarding the appeal between the RO and any

third party. The final rule has been revised to allow the RO to

communicate with all parties to the appeal, as well as outside sources.

(See Sections 331.7(d) and 331.3(b)(2).) We anticipate that the RO may

need to question the appellant and the Corps district staff to clarify

the administrative record, and may also need to consult with technical

experts, Corps Headquarters staff, Corps Office of Counsel, or other

ROs, if the appeal raises technical issues, questions of national

policy, interpretation of regulations, or legal or programmatic

concerns.

Section 331.8(b): Several commenters suggested that a specific time

period be included for soliciting comments from agencies and interested

parties following a determination by the division engineer to remand

the permit denial decision to the district engineer for

reconsideration. Some commenters suggested a minimum of 15 days for

opportunity to comment. We have provided additional information on time

frames in this rule (see Section 331.10(b).) We have also clarified

that where the reconsideration by the district engineer may involve

substantial changes in the potential impacts of the project, a new

public notice will be issued in accordance with the provisions of 33

CFR Part 325.

Some commenters suggested that there be an absolute time limit of

30 to 45 days for the district engineer to make a final decision on a

remanded permit denial. We share the desire of the commenters for

timely decisions; however, appealed permit denial cases are likely to

be controversial, and/or may involve difficult issues that will require

further agency coordination and public participation. Since we cannot

anticipate all such issues and circumstances, we have elected not to

establish any deadlines for the reconsideration of decisions remanded

to the district engineer.

Section 331.10: Some commenters recommended that the district

engineer not be required to re-open the public interest review process

on remand of a permit denial decision. Another recommended that the

public interest review process be re-opened for all remanded permit

decisions. Depending on the issues raised in each remanded permit

decision, there may be laws, regulations or other guidance that would

require the re-opening of the public interest review process, including

opportunity for comments from the public and/or Federal and State

agencies. Therefore, we are neither requiring nor prohibiting this

practice, but are retaining the original wording that makes this

determination subject to the discretion of the district engineer.

One commenter suggested that the rule be clarified regarding the

404(q) elevation process. The administrative appeal regulation does not

change any authorities or requirements of Section 404(q) of the Clean

Water Act. Currently the U.S. Army Corps of Engineers has Memoranda of

Agreement, under Section 404(q), with EPA, FWS and NMFS whereby policy

issues and certain permit decisions can be elevated to higher

headquarters for a decision. This regulation does not affect the

Section 404(q) MOA elevation process. Specifically, policy issues can

be raised at any time and the Corps will send Notice of Intent to Issue

letters at the end of the appeal process for any permit decision that

qualifies pursuant to the Section 404(q) MOAs. We have added a

statement to the end of Section 331.10(b) to clarify that nothing in

this rule precludes the agencies' authorities pursuant to Section

404(q) of the Clean Water Act.

(6) General Expressions of Opposition and Support

A number of comments were received related to the estimated costs

of administering the proposed administrative appeal process. One

commenter indicated that our estimated costs were too low. Two

commenters said that our estimated costs were too high. Though the

Corps has not had any experience with such a program, we believe that

our original cost estimates are reasonable. It is probable that, at the

start of the appeal process implementation period, there may be a

greater number of appeals than we anticipate. Consequently, the appeal

process may be slower than desired due to the workload. We anticipate

that as the appeal process matures, appellants will be less inclined to

file appeals in questionable or speculative cases, since there will be

an established record of consistent regional and national decisions,

and ROs will have become increasingly proficient in implementing the

appeal process as they gain experience. We will continually evaluate

the cost and results of our appeal process. This evaluation may result

in future adjustments to ensure that costs of the appeal process are

minimized, and that the consistency, efficiency and timeliness of our

decisions are maximized.

III. Exhaustion of Administrative Remedies

In Darby v. Cisneros, 113 S.Ct. 2539 (1993), the Supreme Court

recently held that persons subject to Federal agency regulation need

not exhaust administrative remedies before filing a lawsuit in Federal

district court, unless a statutory or regulatory provision requires

such exhaustion. In response to Darby v. Cisneros, the Corps is

including section 331.12 in this rule to make it explicit that persons

dissatisfied with permit decisions must avail themselves of the

administrative appeal process established in this rule, and have

received a final Corps decision on the merits of the appeal, prior to

seeking redress in the Federal courts.

IV. Application of Rule to Prior Regulatory Decisions

Affected parties may appeal permit denial decisions and declined

permits where the permit denial or proffered individual permit occurs

after March 9, 1999. Such requests will be accepted for administrative

appeal in accordance with this regulation. Permit denials or proffered

permits that were transmitted in writing to an affected party prior to

the publication date of the final regulation will not be accepted under

the appeal process. Additionally, if large numbers of RFAs are received

under this provision, an RO may delay the initiation of processing an

RFA for up to 6 months after the effective date of these regulations,

if necessary.

One commenter asked whether the availability of an administrative

appeal process would affect in-process litigation, initiated in

response to a permit denied with prejudice after the date of the

publication of the final rule in the Federal Register. That is, would

this rule render the case as not ripe for judicial review. The appeal

of permit denials and declined individual permits will be accepted by

the Corps starting on today's date. Therefore, applicants must use the

appeal process as of today's date and exhaust such administrative

processes before seeking relief in the Federal courts. Furthermore, in

it's discretion, the United States may agree to a suspension of on-

going litigation if the litigant wishes to seek relief through

initiation

[[Page 11714]]

of an administrative appeal, and if the government believes that such a

suspension would be appropriate. The suspension of litigation to pursue

an administrative appeal will not be construed as a waiver of any right

to resume litigation in the event that an administrative remedy

acceptable to the applicant is not achieved.

V. Environmental Documentation

We have determined that this action does not constitute a major

Federal action significantly affecting the quality of the human

environment, because the Corps has prepared appropriate environmental

documentation, including an Environmental Impact Statement (EIS) when

required, for all permit decisions. Therefore, environmental

documentation under the National Environmental Policy Act (NEPA) is not

required for this rule. Moreover, this proposed regulation for

administrative appeals only establishes a one-level review for denied

permits and declined individual permits, as needed to ensure that

applicable regulations, policies, practices, and procedures (including

the preparation of appropriate environmental documentation) have been

appropriately followed.

VI. Executive Order 12291 and the Regulatory Flexibility Act

The Corps does not believe that this final rule meets the

definition of a major rule under Executive Order 12291, and we

therefore do not believe that a regulatory impact analysis is required.

This final rule should reduce the burden on the public by offering an

administrative appeal process for certain Corps decisions, and, in some

instances, should allow the applicant to avoid the more time-consuming

and costly alternative of challenging a Corps permit decision in the

Federal courts.

We also do not believe that this final rule will have a significant

impact on a substantial number of small entities pursuant to Section

605(b) of the Regulatory Flexibility Act of 1980, because this final

rule only creates an optional review of certain decisions through an

administrative appeal process. The final rule should be less time

consuming and less costly to permit applicants who want to appeal a

decision with which they disagree, but currently can only seek to have

the decision reviewed through the Federal courts. Furthermore, since

the administrative appeal would be optional at the applicant's or

landowner's discretion, we have minimized the potential of any

increased regulatory burden on small entities. If an applicant or

landowner chooses to forego an appeal, the net effect of the final rule

would be zero.

Note 1: The term ``he'' and its derivatives used in these

regulations are generic and should be considered as applying to both

male and female.

List of Subjects

33 CFR Part 320

Environmental protection, Intergovernmental relations, Navigation,

Water pollution control, Waterways.

33 CFR Part 326

Investigations, Intergovernmental relations, Law enforcement,

Navigation, Water pollution control, Waterways.

33 CFR Part 331

Administrative appeal, Navigation, Waterways, Environmental

protection, Water pollution control.

Dated: March 3, 1999.

Joseph W. Westphal,

Assistant Secretary of the Army (Civil Works), Department of the Army.

Comments regarding new levels of bureaucracy and the legality of

the proposed rule were adequately addressed in the preamble to the

proposed rule. As noted in the preamble to this final rule, numerous

substantive and procedural changes have been adopted as a result of the

comments received. Accordingly, 33 CFR Parts 320 and 326 are hereby

amended and 33 CFR Part 331 is added as follows:

PART 320--GENERAL REGULATORY POLICIES

1. The authority citations for Part 320 continue to read as

follows:

Authority: 33 U.S.C. 401 et seq.; 33 U.S.C. 1344; 33 U.S.C.

1413.

2. Section 320.1(a)(2) is amended by revising the final sentence to

read as set forth below.

Sec. 320.1 Purpose and Scope.

(a) * * *

(2) * * * A district engineer's decision on a permit denial or a

declined individual permit is subject to an administrative appeal by

the affected party in accordance with the procedures and authorities

contained in 33 CFR Part 331. Such administrative appeal must meet the

criteria in 33 CFR 331.5; otherwise, no administrative appeal of that

decision is allowed. The terms ``permit denial'' and ``declined

permit'' are defined at 33 CFR 331.2. There shall be no administrative

appeal of any issued individual permit that an applicant has accepted,

unless the authorized work has not started in waters of the United

States, and that issued permit is subsequently modified by the district

engineer pursuant to 33 CFR 325.7 (see 33 CFR 331.5(b)(1)). An

applicant must exhaust any administrative appeal available pursuant to

33 CFR Part 331 and receive a final Corps decision on his permit

application prior to filing a lawsuit in the Federal courts based on a

permit denial, or the terms and conditions of a declined permit.

PART 326--ENFORCEMENT

1. The authority citations for Part 326 continue to read as

follows:

Authority: 33 U.S.C. 401 et seq.; 33 U.S.C. 1344; 33 U.S.C.

1413.

2. Section 326.3(e) is amended by adding a new paragraph (e)(1)(v)

to read as follows:

Sec. 326.3 Unauthorized Activities.

* * * * *

(e) * * *

(1) * * *

(v) No after-the-fact permit application will be accepted unless

and until the applicant has furnished a signed statute of limitations

tolling agreement to the district engineer. A separate statute of

limitations tolling agreement will be prepared for each unauthorized

activity. Any person who applies for an after-the-fact permit, where

the application is accepted and processed by the Corps, thereby agrees

that the statute of limitations regarding any violation associated with

that application is tolled until one year after the final Corps

decision, as defined at 33 CFR 331.10. Moreover, the applicant for an

after-the-fact permit must also memorialize that agreement to toll the

statute of limitations, by signing an agreement to that effect, in

exchange for the Corps acceptance of the after-the-fact permit

application, and/or any administrative appeal. Such agreement will

state that, in exchange for the Corps acceptance of any after-the-fact

permit application and/or any administrative appeal associated with the

unauthorized activity, the responsible party agrees that the statute of

limitations will be tolled until one year after the final Corps

decision on the after-the-fact permit application or, if there is an

administrative appeal, one year after the final Corps decision as

defined at 33 CFR 331.10, whichever date is later.

Part 331 is added to read as follows:

PART 331--ADMINISTRATIVE APPEAL PROCESS

Sec.

331.1 Purpose and policy.

331.2 Definitions.

[[Page 11715]]

331.3 Review officer.

331.4 Notification of appealable actions.

331.5 Criteria.

331.6 Filing an appeal.

331.7 Review procedures.

331.8 Timeframes for final appeal decisions.

331.9 Final appeal decision.

331.10 Final Corps decision.

331.11 Unauthorized activities.

331.12 Exhaustion of administrative remedies.

Appendix A--Administrative Appeal Proces.

Appendix B--Applicant Options with Proffered Individual Permit.

Authority: 33 U.S.C. 401 et seq.; 33 U.S.C. 1344; 33 U.S.C. 1413.

Sec. 331.1 Purpose and policy.

(a) General. The purpose of this Part is to establish policies and

procedures to be used for the administrative appeal of permit

applications denied with prejudice, and for the administrative appeals

of declined individual permits. The appeal process will allow the

affected party to pursue an administrative appeal of certain final

Corps of Engineers decisions with which they disagree. The basis for an

appeal, and the specific policies and procedures of the appeal process,

are described in the following sections. It shall be the policy of the

Corps of Engineers to promote and maintain an administrative appeal

process that is independent, objective, fair, prompt, and efficient.

(b) This administrative appeal process provides only for the appeal

of permit denials or declined individual permits.

(c) Permit decisions made by a division engineer or higher

authority may be appealed to an Army official at least one level higher

than the decision-maker. This higher Army official shall make the

decision on the merits of the appeal, and may appoint a qualified

individual to act as a review officer (as defined in Sec. 331.2 of this

Part). References to the division engineer in this Part shall be

understood as also referring to higher-level Army authority when that

authority is conducting an administrative appeal.

Sec. 331.2 Definitions.

The terms and definitions contained in 33 CFR Parts 320 through 330

are applicable to this regulation. In addition, the following terms are

defined for the purposes of Part 331:

Affected party means a permit applicant who has received a permit

denial, or who has declined a proffered individual permit.

Agent(s) means the affected party's business partner, attorney,

consultant, engineer, planner, or any individual with legal authority

to represent the appellant's interests.

Appealable action means a permit denial, or a declined individual

permit, as these terms are defined below.

Appellant means an affected party who has filed an appeal of a

permit denial or declined individual permit under the criteria and

procedures of these regulations.

Declined permit means a proffered individual permit, including a

letter of permission, that an applicant has refused to accept, because

he has objections to the terms and conditions therein. A declined

permit can also be an individual permit that the applicant originally

accepted, but where such permit was subsequently modified by the

district engineer, pursuant to 33 CFR 325.7, in such a manner that the

resulting permit contains terms and conditions that lead the applicant

to decline the modified permit, provided that the applicant has not

started work in waters of the United States authorized by such permit.

Where an applicant declines a permit (either initial or modified), the

applicant does not have a valid permit to conduct regulated activities

in waters of the United States, and must not begin construction of the

work requiring a Corps permit unless and until the applicant receives

and accepts a valid Corps permit.

Denial determination means a letter from the district engineer

detailing the reasons a permit was denied with prejudice. The decision

document for the project will be attached to the denial determination

in all cases.

Notification of Applicant Options (NAO) means a fact sheet

explaining an applicant's options with a proffered individual permit

under the administrative appeal process.

Notification of Appeal Process (NAP) means a fact sheet that

explains the criteria and procedures of the administrative appeal

process. Every permit denial, and every proffered individual permit

returned to the applicant for reconsideration after review by the

district engineer in accordance with Sec. 331.6(b), will have an NAP

form attached.

Permit denial means a written denial with prejudice (see 33 CFR

320.4(j)) of an individual permit application as defined in 33 CFR

325.5(b).

Request for appeal (RFA) means the affected party's official

request to initiate the appeal process. The RFA must include the name

of the affected party, the Corps file number of the denied or declined

individual permit application, the reason(s) for the appeal, and any

supporting data and information. A grant of right of entry for the

Corps to the project site is a condition of the RFA. A standard RFA

form will be provided to the affected party with the NAP form. The

affected party initiates the administrative appeal process by

completing the RFA and returning it to the appropriate Corps of

Engineers division office.

Review officer (RO) means the Corps official responsible for

assisting the division engineer or higher authority responsible for

rendering the final decision on the merits of an appeal.

Sec. 331.3 Review officer.

(a) Authority. (1) The division engineer has the authority and

responsibility for administering a fair, reasonable, prompt, and

effective administrative appeal process. The division engineer may act

as the review officer (RO), or may delegate, either generically or on a

case-by-case basis, any authority or responsibility described in this

Part as that of the RO. However, the division engineer may not delegate

any authority or responsibility described in this Part as that of the

division engineer. Regardless of any delegation of RO authority or

responsibility, the division engineer retains overall responsibility

for the administrative appeal process.

(2) The RO will assist the division engineer in reaching and

documenting the division engineer's decision on the merits of an

appeal, if the division engineer has delegated this responsibility as

explained above. The division engineer has the authority to make the

final decision on the merits of the appeal. Neither the RO nor the

division engineer has the authority to make a final decision to issue

or deny any particular permit, pursuant to the administrative appeal

process established by this Part. The authority to issue or deny

permits remains with the district engineer. However, the division

engineer may exercise the authority at 33 CFR 325.8(c) to elevate any

permit application, and subsequently to make the final permit decision.

In such a case, any appeal process of the district engineer's initial

decision is terminated. If a particular permit application is elevated

to the division engineer pursuant to 33 CFR 325.8(c), and the division

engineer's decision on the permit application is a permit denial, or

results in a declined permit, that permit denial or declined permit

would be subject to an administrative appeal to the Chief of Engineers.

(3) Qualifications. The RO will be a Corps employee with extensive

knowledge of the Corps regulatory program. Where the permit decision

being appealed was made by the division engineer or higher authority, a

[[Page 11716]]

Corps official at least one level higher than the decision-maker shall

make the decision on the merits of the RFA, and this Corps official

shall appoint a qualified individual as the RO to conduct the appeal

process.

(b) General. (1) Independence. The RO will not perform, or have

been involved with, the preparation, review, or decision-making of the

action being appealed. The RO will be independent and impartial in

reviewing any appeal, and when assisting the division engineer to make

a decision on the merits of the appeal.

(2) Review. The RO will conduct an independent review of the

administrative record to address the reasons for the appeal cited by

the applicant in the RFA. In addition, to the extent that it is

practicable and feasible, the RO will also conduct an independent

review of the administrative record to verify that the record provides

an adequate and reasonable basis supporting the district engineer's

decision, that facts or analysis essential to the district engineer's

decision have not been omitted from the administrative record, and that

all relevant requirements of law, regulations, and officially-

promulgated Corps policy guidance have been satisfied. Should the RO

require expert advice regarding any subject, he may seek such advice

from any employee of the Corps or of another Federal or state agency,

or from any recognized expert, so long as that person had not been

previously involved in the action under review.

Sec. 331.4 Notification of appealable actions.

Affected parties will be notified in writing of a Corps decision on

an appealable action. For permit denials, the notification must include

a copy of the decision document for the permit application, an NAP fact

sheet and an RFA form. For proffered individual permits, when the

initial proffered permit is sent to the applicant, the notification

must include an NAO fact sheet. For declined permits (i.e., proffered

individual permits that the applicant refuses to accept and sends back

to the Corps), the notification must include an NAP fact sheet and an

RFA form. Additionally, an affected party has the right to obtain a

copy of the administrative record.

Sec. 331.5 Criteria.

(a) Criteria for Appeal. (1) Submission of RFA. The appellant must

submit a completed RFA (as defined at Sec. 331.2) to the appropriate

division office in order to appeal a permit denial, or a declined

individual permit. An individual permit that has been signed by the

applicant, and subsequently unilaterally modified by the district

engineer pursuant to 33 CFR 325.7, may be appealed under this process,

provided that the applicant has not started work in waters of the

United States authorized by the permit. The RFA must be received by the

division engineer within 60 days of the date of the NAP.

(2) Reasons for appeal. The reason(s) for requesting an appeal of a

permit denial, or a declined individual permit, must be specifically

stated in the RFA, and must be more than a simple request for appeal

because the affected party did not like the permit decision, or the

permit conditions. Examples of reasons for appeals include, but are not

limited to, the following: a procedural error, an incorrect application

of law, regulation or officially-promulgated policy, omission of

material fact, incorrect application of the Section 404(b)(1)

Guidelines, or use of incorrect data.

(b) Actions not appealable. An action or decision is not subject to

an administrative appeal under these regulations if it falls into one

or more of the following categories:

(1) an individual permit decision (including a letter of permission

or an individual permit with special conditions), where the permit has

been accepted and signed by the permittee. By signing the permit, the

applicant waives all right to appeal the terms and conditions of the

permit, unless the authorized work has not started in waters of the

United States, and that issued permit is subsequently modified by the

district engineer pursuant to 33 CFR 325.7;

(2) any site specific matter that has been the subject of a final

decision of the Federal courts;

(3) a final Corps decision that has resulted from additional

analysis and evaluation, as directed by a final appeal decision;

(4) a permit denial without prejudice or a declined permit, where

the controlling factor cannot be changed by the Corps decision-maker

(e.g., the requirements of a binding statute, regulation, state Section

401 water quality certification, state Coastal Zone Management Act

disapproval, etc. (See 33 CFR 320.4(j));

(5) a permit denial case where the applicant has subsequently

modified the proposed project, because this would constitute an amended

application that would require a new public interest review, rather

than an appeal of the existing record and decision; or

(6) any request for the appeal of a denied permit or a declined

individual permit, where the RFA has not been received by the division

engineer within 60 days of the date of the NAP.

Sec. 331.6 Filing an appeal.

(a) An affected party appealing a permit denial or declined permit

must submit an RFA that is received by the division engineer within 60

days of the date of the NAP. A flow chart of the appeal process is

shown in Appendix A.

(b) In the case where an applicant objects to a proffered

individual permit, the appeal process proceeds as follows. To initiate

the appeal process regarding the terms and conditions of the permit,

the applicant must write a letter to the district engineer explaining

his objections to the permit. The district engineer, upon evaluation of

the applicant's objections, may: modify the permit to address all of

the applicant's objections, or modify the permit to address some, but

not all, of the applicant's objections, or not modify the permit,

having determined that the permit should be issued as previously

written. In the event that the district engineer agrees to modify the

proffered individual permit to address all of the applicant's

objections, the district engineer will issue such modified permit,

enclosing an NAP form as well. Should the district engineer modify the

proffered individual permit to address some, but not all, of the

applicant's objections, the district engineer will send the applicant

such modified permit, an NAP form, and the decision document for the

project. If the district engineer does not modify the proffered

individual permit, the district engineer will offer the unmodified

permit to the applicant a second time, enclosing an NAP form and a copy

of the decision document. If the applicant still has objections, the

applicant may decline such modified or unmodified permit; this declined

individual permit may be appealed to the division engineer upon

submittal of a complete RFA form. The completed RFA must be received by

the division engineer within 60 days of the NAP. A flow chart of an

applicant's options for a proffered individual permit is shown in

Appendix B.

(c) The district engineer may not delegate his signature authority

to deny the permit with prejudice, or to return an individual permit to

the applicant with unresolved objections (see Secs. 331.6 (b)(ii) and

331.6(b)(iii)).

(d) Affected parties may appeal permit denials or declined

individual permits where the permit denial or the proffered individual

permit occurs after March 9, 1999, but may not appeal permit denials or

declined permits where the Corps took that action before March 9, 1999.

All appeals must meet

[[Page 11717]]

the criteria set forth in Sec. 331.5 of this Part.

Sec. 331.7 Review procedures.

(a) General. The administrative appeal process for permit denials

and declined individual permits is a one level appeal, normally to the

division engineer. The appeal process will normally be conducted by the

RO. The RO will document the appeal process, and assist the division

engineer to make a decision on the merits of the appeal. The division

engineer may participate in the appeal process as the division engineer

deems appropriate. The division engineer will make the decision on the

merits of the appeal, and provide any instructions, as appropriate, to

the district engineer.

(b) Requests for the appeal of permit denials or declined

individual permits. Upon receipt of an RFA, the Corps shall review the

RFA and the administrative record to determine whether the request

meets the criteria for appeal. If the RFA meets the criteria for

appeal, the RO will so notify the appellant in writing within 30 days

of the receipt of the RFA. If the RO believes that the RFA does not

meet the criteria for appeal (see Sec. 331.5), the RO will make a

recommendation on the RFA to the division engineer. If the division

engineer determines that the RFA is not acceptable, the division

engineer will notify the appellant of this determination by a certified

letter detailing the reason(s) why the appeal failed to meet the

criteria for appeal. No further administrative appeal is available,

unless the appellant revises the RFA to correct the deficiencies noted

in the division engineer's letter. The revised RFA must be received by

the division engineer within 30 days of the date of the certified

letter refusing the initial RFA. If the Corps determines that the

revised RFA still fails to meet the criteria for appeal, the division

engineer will notify the appellant of this determination by a certified

letter within 30 days of the date of the receipt of the revised RFA,

and will advise the appellant that the matter is not eligible for

appeal. No further RFAs will be accepted after this point.

(c) Site Investigations. Within 30 days of receipt of a complete

RFA, the RO should determine if a site investigation is needed to

clarify the administrative record. The RO should conduct any such site

investigation within 60 days of receipt of a complete RFA. The RO may

also conduct a site investigation at the request of the appellant,

provided the RO has determined that such an investigation would be of

benefit in interpreting the administrative record. The appellant and

the appellant's authorized agent(s) must be provided an opportunity to

participate in any site investigation, and will be given 15 days notice

of any site investigation. The RO will attempt to schedule the site

investigation at the earliest practicable time acceptable to both the

RO and the appellant. The site investigation should be scheduled in

conjunction with the appeal review conference, where practicable. The

RO, the appellant, the appellant's agent(s) and the Corps district

staff are authorized participants at the site investigation. The RO may

also invite any other party the RO has determined to be appropriate,

such as any technical experts consulted by the Corps.

(d) Appeal Conference. Conferences held in accordance with this

rule will be informal, and will be chaired by the RO. The purpose of

the appeal conference is to provide a forum that allows the

participants to discuss freely all relevant issues and material facts

associated with the appeal. An appeal conference will be held for every

appeal of a permit denial or a declined individual permit, unless the

RO and the appellant mutually agree to forego a conference. The

conference will take place within 60 days of receipt of an acceptable

RFA, unless the RO determines that unforeseen or unusual circumstances

require scheduling the conference for a later date. The purpose of the

conference will be to allow the appellant and the Corps district

representatives to discuss supporting data and information on issues

previously identified in the administrative record, and to allow the RO

the opportunity to clarify elements of the administrative record.

Presentations by the appellant and the Corps district representatives

may include interpretation, clarification, or explanation of the legal,

policy, and factual bases for their positions. The conference will be

governed by the following guidelines:

(1) Notification. The RO will set a date, time, and location for

the conference. The RO will notify the appellant and the Corps district

office in writing within 30 days of receipt of the RFA, and not less

than 15 days before the date of the conference.

(2) Facilities. The conference will be held at a location that has

suitable facilities and that is reasonably convenient to the appellant,

preferably in the proximity of the project site. Public facilities

available at no expense are preferred. If a free facility is not

available, the Corps will pay the cost for the facility.

(3) Participants. The RO, the appellant, the appellant's agent(s)

and the Corps district staff are authorized participants in the

conference. The RO may also invite any other party the RO has

determined to be appropriate, such as any technical experts consulted

by the Corps, adjacent property owners or Federal or state agency

personnel to clarify elements of the administrative record. The

division engineer and/or the district engineer may attend the

conference at their discretion. If the appellant or his authorized

agent(s) fail to attend the appeal conference, the appeal process is

terminated, unless the RO excuses the appellant for a justifiable

reason. Furthermore, should the process be terminated in such a manner,

the district engineer's original decision on the appealed action will

be sustained.

(4) The role of the RO. The RO shall be in charge of conducting the

conference. The RO shall open the conference with a summary of the

policies and procedures for conducting the conference. The RO will

conduct a fair and impartial conference, hear and fully consider all

relevant issues and facts, and seek clarification of any issues of the

administrative record, as needed, to allow the division engineer to

make a final determination on the merits of the appeal. The RO will

also be responsible for documenting the appeal conference.

(5) Appellant rights. The appellant, and/or the appellant's

authorized agent(s), will be given a reasonable opportunity to present

the appellant's views regarding the subject permit denial or declined

permit.

(6) Subject matter. The purpose of the appeal conference will be to

discuss the reasons for appeal contained in the RFA. Any material in

the administrative record may be discussed during the conference, but

the discussion should be focused on relevant issues needed to address

the reasons for appeal contained in the RFA. The RO may question the

appellant or the Corps representatives with respect to interpretation

of particular issues in the record, or otherwise to clarify elements of

the administrative record. Issues not identified in the administrative

record by the date of the NAP for the application may not be raised or

discussed, because substantive new information or project modifications

would be treated as a new permit application (see Sec. 331.5(b)(5)).

(7) Documentation of the appeal conference. The appeal conference

is an informal proceeding, intended to provide clarifications and

explanations of the administrative record for the RO and the division

engineer; it is not intended to supplement the administrative record.

Consequently,

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the proceedings of the conference will not be recorded verbatim by the

Corps or any other party attending the conference, and no verbatim

transcripts of the conference will be made. However, after the

conference, the RO will write a memorandum for the record (MFR)

summarizing the presentations made at the conference, and will provide

a copy of that MFR to the division engineer, the appellant, and the

district engineer.

(8) Appellant costs. The appellant will be responsible for his own

expenses for attending the appeal conference.

(e) Basis of decision and communication with the RO. The appeal of

a permit denial or a declined individual permit is limited to the

information contained in administrative record by the date of the NAP

for the application, the proceedings of the appeal conference, and any

relevant information gathered by the RO as described in Sec. 331.5 of

this Part. Neither the appellant nor the Corps may present new

information not already contained in the administrative record, but

both parties may interpret, clarify or explain issues and information

contained in the record.

(f) Applicability of appeal decisions. Because a decision to deny

or condition a permit depends on the facts, circumstances, and physical

conditions particular to the specific project and site being evaluated,

appeal decisions would be of little or no precedential utility.

Therefore, an appeal decision of the division engineer is applicable

only to the instant appeal, and has no other precedential effect. Such

a decision may not be cited in any other administrative appeal, and may

not be used as precedent for the evaluation of any other permit

application. While administrative appeal decisions lack precedential

value and may not be cited by an appellant or a district engineer in

any other appeal proceeding, the Corps goal is to have the Corps

regulatory program operate as consistently as possible, particularly

with respect to interpretations of law, regulation, an Executive Order,

and officially-promulgated policy. Therefore, a copy of each appeal

decision will be forwarded to Corps Headquarters; those decisions will

be periodically reviewed at the headquarters level for consistency with

law, Executive Orders and policy. Additional official guidance will be

issued as necessary to maintain or improve the consistency of the

Corps' appellate and permit decisions.

Sec. 331.8 Timeframes for final appeal decisions.

The Corps will make a final decision on the merits of the appeal at

the earliest practicable time, in accordance with the time limits set

forth below. The administrative appeal process is initiated by the

receipt of an RFA by the division engineer. The Corps will review the

RFA to determine whether the action is appealable. If the division

engineer determines that the action is not appealable, the division

engineer will notify the appellant accordingly within 30 days of the

receipt of the RFA. If the division engineer determines that the action

is appealable and the RFA is complete, the RO will request the

administrative record from the district engineer. The division engineer

will make a final decision on the merits of the appeal within 90 days

of the receipt of the complete RFA.

Sec. 331.9 Final appeal decision.

(a) In accordance with the authorities contained in Sec. 331.3(b),

the division engineer will make a decision on the merits of the appeal.

While reviewing an appeal and reaching a decision on the merits of an

appeal, the division engineer can consult with or seek information from

any person, including the district engineer.

(b) The division engineer will disapprove the entirety of or any

part of the district engineer's decision only if he determines that the

decision on some relevant matter was arbitrary, capricious, an abuse of

discretion, not supported by substantial evidence in the administrative

record, or plainly contrary to a requirement of law, regulation, an

Executive Order, or officially-promulgated Corps policy guidance. The

division engineer will not attempt to substitute his judgment for that

of the district engineer regarding a matter of fact, so long as the

district engineer's determination was supported by substantial evidence

in the administrative record, or regarding any other matter if the

district engineer's determination was reasonable and within the zone of

discretion delegated to the district engineer by Corps regulations. The

division engineer may instruct the district engineer on how to correct

any procedural error that was prejudicial to the appellant (i.e., that

was not a ``harmless'' procedural error), or to reconsider the decision

where any essential part of the district engineer's decision was not

supported by accurate or sufficient information, or analysis, in the

administrative record. The division engineer will document his decision

on the merits of the appeal in writing, and provide a copy of this

decision to the applicant (using certified mail) and the district

engineer.

(c) The final decision of the division engineer on the merits of

the appeal will conclude the administrative appeal process, and this

decision will be filed in the administrative record for the project.

Sec. 331.10 Final Corps decision.

The final Corps decision on a permit application is the initial

decision to issue or deny a permit, unless the permittee submits an

RFA, and the division engineer accepts the RFA, pursuant to this Part.

The final Corps decision on an appealed action is as follows:

(a) If the division engineer determines that the appeal is without

merit, the final Corps decision is the district engineer's letter

advising the applicant that the division engineer has decided that the

appeal is without merit, and confirming the district engineer's initial

permit decision; or

(b) If the division engineer determines that the appeal has merit,

the final Corps decision is the district engineer's decision made

pursuant to the division engineer's remand of the appealed action. The

division engineer will remand the decision to the district engineer

with specific instructions to review the administrative record, and to

further analyze or evaluate specific issues. If the district engineer

determines that the effects of the district engineer's reconsideration

of the administrative record would be narrow in scope and impact, the

district engineer must provide notification only to those parties who

commented or participated in the original review, and would allow 15

days for the submission of supplemental comments. Where the district

engineer determines that the effect of the district engineer's

reconsideration of the administrative record would be substantial in

scope and impact, the district engineer's review process will include

issuance of a new public notice, and/or preparation of a supplemental

environmental analysis and decision document (see 33 CFR 325.7).

Subsequently, the district engineer's decision made pursuant to the

division engineer's remand of the appealed action becomes the final

Corps action. Nothing in this rule precludes the agencies' authorities

pursuant to Section 404(q) of the Clean Water Act.

Sec. 331.11 Unauthorized activities.

Permit denials and declined individual permits associated with

after-the-fact permit applications are appealable actions for the

purposes of these regulations. If the Corps accepts

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an after-the-fact permit application, an administrative appeal of a

permit denial or declined individual permit may be filed and processed

in accordance with these regulations subject to the provisions of

paragraphs (a), (b), and (c) of this section.

(a) Initial Corrective Measures. If the district engineer

determines that initial corrective measures are necessary pursuant to

33 CFR 326.3(d), an RFA for an appealable action will not be accepted

by the Corps, until the initial corrective measures have been completed

to the satisfaction of the district engineer.

(b) Penalties. If an affected party requests, under this Section,

an administrative appeal of an appealable action prior to the

resolution of the unauthorized activity, and the division engineer

determines that the appeal has no merit, the responsible party remains

subject to any civil, criminal, and administrative penalties as

provided by law.

(c) Tolling of Statute of Limitations. Any person who applies for

an after-the-fact permit, where the application is accepted and

processed by the Corps, thereby agrees that the statute of limitations

regarding any violation associated with that application is tolled

until one year after the final Corps decision, as defined at 33 CFR

331.10. Moreover, the applicant for an after-the-fact permit must also

memorialize that agreement to toll the statute of limitations, by

signing an agreement to that effect, in exchange for the Corps

acceptance of the after-the-fact permit application, and/or any

administrative appeal(See 33 CFR 326.3(e)(1)(v).) No after-the-fact

permit application or administrative appeal will be accepted until such

written tolling agreement is furnished to the district engineer.

Sec. 331.12 Exhaustion of administrative remedies.

No affected party may file a legal action in the Federal courts

based on a permit denial or declined individual permit until after a

final Corps decision has been made and the appellant has exhausted all

applicable administrative remedies under this Part. The appellant is

considered to have exhausted all administrative remedies when a final

Corps decision is made in accordance with Sec. 331.10 of this Part.

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