Hoffman Homes, Incorporated, Formerly Known as Hoffman Group v. Administrator, United States Environmental Protection Agency

Cooper, supra, & Wright, Miller 17A see INCORPORATED, (1988). HOMES, Even Thibo- HOFFMAN pp. § 4241 at 13-18 Group, formerly dmx, however, support abstention as Hoffman known would Petitioner, stay a case, upheld the'Court in this permit the determination ease to the federal v. of state a issue court of difficult by the state ADMINISTRATOR, STATES UNITED condemna law, a routine here we have PROTECTION ENVIRONMENTAL case, like a Nor is this tion case. Burford AGENCY, Respondent. spe a itself, has established where state tribunal, district which a federal cialized 90-3810. No. substitute, be a close would not court Appeals, States Court type of case. We particular decide Circuit. Seventh condemna forgotten that the Wisconsin con provides for reference tion statute Argued Sept. commissioners, dis but a federal demnation July Decided well as reference as can make that trict court 71A(k) ex can. Fed.R.Civ.P. a state court in a con a reference authorizes such pressly authority to case

demnation which- given state law. is

condemn that when the therefore

We believe

City of Tomah commenced condemnation petition for condemna

proceeding filing a court, Dickie circuit

tion in the Wisconsin dis casé to federal have removed the

could jurisdiction. diversity under

trict court expenses recovery litigation

But as the proceeding

remedy in the condemnation indepen upon an right which

rather than founded, attempt to Dickie’s can be

dent suit expenses must remain

recover those at system he did not court

state because underlying condemna remove the

tempt to court. proceeding to federal district

tion dismissing the suit for failure judgment

to state a claim is therefore

Affirmed. E.P.A., Reilly,

William K. Daniel W. Pink- (argued), Justice, ston Dept, of Land & Nat- Div., 'ural DC, Washington, Resources Thom- Martin, Jr., E.P.A.; as J. Region Office of Regional Counsel, IL, Chicago, Catherine Winer, E.P.A., Office Gen. Counsel/Water Div., DC, Washington, for E.P.A. Zumbrun, Rivett, Ronald A. Robin L. Burling, James S. Klinge, Charles Pacific Legal Foundation, Sacramento, CA, for Pa- Legal Foundation, cific amicus curiae. Butler, Smith, William A. Douglas W. Jack Chorowsky, Powell, Goldstein, Frazer & DC, Washington, Murphy, Eight Wetland Scientists, amicus curiae. MANION, WOOD,

Before Judge, Circuit Jr., Judge,* Senior Circuit ROSZKOWSKI, Judge.** Senior District WOOD, Jr., HARLINGTON Senior Judge. Circuit A tremendous gone amount effort has trying into to determine whether a small Chicago wetland near may regulated be un- der the Clean Act.1 having After issued, vacated, then opinion one on this subject, hope now this resolve difficult question.

I. BACKGROUND On March employee an Army Corps of Engineers driving through Village Estates, of Hoffman Illi- employee nois. happened The to see that begun work soybean a former field on a new subdivision Crossings.” called “Victoria The subdivision occupy would a 43-acre which, square parcel is bordered on the west by Schaumburg Creek, Branch of by road, on the east by on the north * Wood, Jr., Judge assumed entirely parties status on Janu- 1. The senior effort is not ary which was after consideration of acknowledge receipt court.- of amicus this case. Legal curiae briefs the Pacific Foundation and ** Roszkowski, Stanley Hon. J. Senior District Eight Wetland Scientists. Illinois, Judge sitting for the Northern District designation. 1319(a). subdivision, the south order stated and on

another permit, thereby wetlands a road. had filled without a wetland and violating compliance 33 U.S.C site; investigated it deter- filling to cease its order directed Hoffman owner, Hoffman mined that subdivision’s carry plan activities and to submit and out a Homes, (“Hoffman”), the violated Inc. original to restore the wetlands to their con (“CWA” “Act”), or 33 Glean Water Act January dition. On the EPA also and' seq., § it filled 1251 et when U.S.C. complaint against an administrative issued for graded parts preparation of the site Hoffman, § pursuant 1319(g), to 33 U.S.C. Corps felt Specifically, the construction. $125,000 seeking penalty a for Hoffman’s fill wetlands, “Area illegally filled two Hoffman ing activities. answered the Hoffman com B.” A” and “Area plaint, admitting it the two had filled areas was, at bowl-shaped depression A a Area subject denying they to but were waters the that cov- northeast border of the tract the 1988, 24, hearings October com On CWA. was approximately, óne-acre. The basin ered menced before an EPA Administrative Law relatively clay; impermeable be- lined with (“ALJ”). Judge hearings lasted a total Hoffman, A being filled Area collect- fore twenty-one days run but did not consecu frequently rain water and snow melt and ed tively. hearing January The final held ponded during weather. or saturated wet 19, 1989. types A at contained least four different vegetation, including 4, cattails. 1988, August hearings of wetland On while the be directly A to Area was connected proceeding, the ALJ were Hoffman fore still water, body either on the surface or brought seeking an action in district court a lay groundwater, approximately 750 feet compliance order’s declaration invalidi along B ran the Poplar from Creek. Area injunction ty against and an its enforcement. of the southern entire western most yet At that time EPA had not decided of the tract. This wetland covered borders compliance to enforce order whether its acres, which filled 5.9 13.3 Hoffman had pursuant bringing an action in a federal court part B is wetland acres. Area of a '50-acre 1319(b). § Consequently, to 33 U.S.C. adjacent to Creek. area court Hoffman’s action in district dismissed a into the River which is creek flows Fox January district court held that tributary empties of the Illinois River which precluded pre-enforcement the CWA review Mississippi into the River. compliance of the EPA’s order. See Hoff E.P.A., Group, man Inc. v. Having designated pur- been as wetlands 6695, *20003, at No. 88 C 1989 WL 165265 328.3(b), § to 33 C.F.R. the sites could suant (N.D.Ill. 16,599, *2 U.S. Dist. Lexis at 1989 obtained legally be filled unless Hoffman 1989). 23, appealed Hoffman or, Jan. dis § permit pursuant .to 33 U.S.C. trict decision and we affirmed. court’s § May 30,1986, Corps On issued explained that Hoffman was not entitled to order This cease and desist to Hoffman. judicial review EPA either unless the as filling stop instructed Hoffman to wet- order against penalties sessed administrative Hoff an after- apply lands at the site to for judicial sought man enforcement its fill permit areas. Hoffman the-fact time, compliance order. Hoffman Until such Agen- The Environmental Protection did so. subject penalties injunction was not or an (“EPA” cy “Agency”), re- which shares obeying compliance for not order. administering sponsibility Corps E.P.A., Group, Inc. v. See CWA, enforcing objected then (7th Cir.1990). 567, 568 damage plans mitigating Hoffman’s Consequently, the wetlands. on November Shortly after our became decision'Hoffman 1987, 20, permit denied Hoffman’s 19, judicial November entitled to review. On application matter to the and referred the 1990, the EPA’s Officer Chief Judicial EPA. (“CJO”) $50,000 against assessed fine Hoff- having “dredged or fill discharged The EPA on issued a man for December permit pursuant into Area A without a compliance order U.S.C. material” violation of 33 1311 and The CJO held that the EPA could not $50,000 penalty against affirmed another jurisdiction assert isolated, over “an intra- . B filling Area Hoffman for state body” unless it could demon- water “that strate the destruction of that water fining In filling Hoffman for body will have an on effect interstate com- reversing September CJO was ALJ. On merce.” Final at Decision 9. To satisfy its Decision,” “Initial ALJ’s burden of proof, required the CJO the EPA although ALJ had found that Area A was a minimal, potential “show effect, some subject was not to the CWA’s Id. commerce.” This effect was permit requirements. The ALJ character shown, concluded, the CJO when the EPA ized A being as “isolated.” Initial Deci provided demonstrated Area A suitable “.a shown, sion at 48. The EPA had not the ' migratory habitat for birds before it was found, A any ALJ Area surface or filled in.” Id. at 2. The CJO' noted that groundwater Poplar connection with Creek. Area B supported migratory bird habitat and opinion, Agency the In the ALJ’s also failed by proximity its A could performed Area as well. to show that Id. at Area A flood control trapping or sediment in connection with possible drainage into flooding or the of the appealed Hoffman the CJO’s decision re Instead, creek. Id. at 45. the ALJ found garding B, Area not Area but to this that water into A drained Area from the , jurisdiction court. We pursuant exercised immediately surrounding collected area § 1319(g)(8)(B). developer there, slowly evaporated and then or dissi contended give the CWA did the EPA pated. Id. at 47. “There is also no basis for regulatory authority over A. The EPA determining if A has effect on the jurisdiction maintained it had dué' to po the Creek], Schaumburg [of Branch be tential by migratory use of Area A birds. simply cause it be cannot determined what regulations We held the beyond EPA’s went drainage the of water would if flow be the limits of the Clean Water Act and the

AArea were not there.” Id. clause, 1, 8,§ commerce U.S. Const. art. cl. recognized The ALJ that under EPA and 22, 1992, Accordingly, April we vacat Corps regulations, subject AArea would be $50,000 against ed. the penalty Hoff permit requirements to the if CWA the wet- filling man for See Hoffman commerce, land affected interstate see 40 Homes, Administrator, Inc. v. United States 230.3(b)(3), 328.3(a)(3), § § C.F.R. C.F.R. E.P.A., 961 F.2d 1321-23 Cir. Corps and further the EPA noted that 1992). consider a wetland to interstate com- if, instance, merce the wetland serves as petition then filed a for rehear migratory habitat for birds'. Initial Decision ing suggested rehearing be the conduct however, ALJ, at 48. The found the EPA September ed en banc. On presented had not evidence actual use granted petition rehearing the and vacat migratory any special A birds of Area nor of opinion ed our We further or order. characteristics that would attract dered that be matter referred our birds to Area A. Wall, staff'attorney, senior Donald J. for the purpose conducting negotia settlement nothing Since there more “than was parties pursuant tions between the to Feder possibility” theoretical AArea would be used Appellate al Rule of Procedure 33 and Cir by migratory birds, regu- the ALJ found'the Homes, cuit Rule 33. See Inc. v. lations did not Id. at 49. apply. The EPA Hoffman Administrator, E.P.A., United States appealed the ALJ’s decision to the CJO. (7th Cir.1992). Since that EPA, however, challenge did not time, Mr. Wall'has with counsel conferred findings regarding hydrologi- ALJ’s Area A’s isolation; parties on numerous occasions On Agency only cal challenged given ALJ’s March the court findings conclusion that those he informed regulations inapplicable parties to reach a were Area A. unable settlement were (ii) are or which fish or shellfish From be futile.2 negotiations would further in interstate or taken and sold could be in the hands thus back The matter is commerce; foreign argu- heard the oral panel which original (iii) ago. used for years used or could be nearly two case Which ments on this in inter- purpose industries industrial commerce; state II. DISCUSSION 230.3(s)(3)(EPA’s definition); 33 § 40 C.F.R. definition). 328.3(a)(3) (Corp’s § C.F.R. dispute that Homes does not Hoffman correctly character- EPA and ruled Judicial Officer The EPA’s Chief - pursuant to 33 a wetland Area A as ized to Area A regulation extended that the 230.3(t). 328.3(b) 40 C.F.R. potential effect on C.F.R. virtue of wetland’s Area A. deny having filled necessary Hoffman Nor does It commerce. only held, disputes that the small that the regulation, the CJO under the Act. Water regulated under Clean interstate com- can be an actual effect on EPA show noted the EPA’s The CJO merce. objective enacting the Clean Congress’s “degradation or de- explicitly forbids and maintain Act was “to restore wetlands when such of intrastate struction” chemical, biological integrity of physical, and affect” interstate commerce: actions “could 1251(a). § 33 U.S.C. the Nation’s waters.” EPA means that of the word ‘could’ “The use end, prohibits “the dis that CWA To effect on interstate not show an actual need - into the dredged or fill material charge of ' will Showing potential effect commerce. permit. Id. navigable waters” without Final at 11. Decision suffice.” 1344(a). “navigable wa § The CWA defines (i) the job is to determine whether Our meaning “the waters of United ters” as § 230.- properly interpreted 40 C.F.R. Id. States, seas.” including the territorial (ii) 3(s)(3) finding of a the CJO’s and whether 1362(7). § by “sub supported is violation of the CWA CWA, though, not define does evidence.” See 33 stantial of the United States.” review); term “waters (mandating of 1319(g)(8) § standard — in two have done so Oklahoma, U.S.-, -, EPA and Arkansas v. According to identically worded-regulations. (1992). 1060, 1046, L.Ed.2d 239 112 117 S.Ct. Corps, “waters of the Unit- EPA and the question, Regarding the first includes, things, among other bod- ed States” of its agency’s construction “[a]n stated that wholly within a state whose use water ies of in all but ex regulation binds a court own commerce: affect interstate misuse could or Shore, N. traordinary cases.” Homemakers (s) States (7th The term waters Bowen, 408, 411 Cir. 832 F.2d Inc. v. means: 1987); v. Baxter accord United (7th 1401, Corp., 901 Healthcare (court Cir.1990) gives great deference regula its own agency’s interpretations of (3) such as intrastate All other waters tions). interpre uphold the EPA’s must We lakes, rivers, (including intermit- streams 230.3(s)(3) “unless it-is sandflats, tation of 40 C.F.R. mudflats, wet- streams), tent with the or inconsistent plainly erroneous lands, mead- sloughs, prairie potholes, wet Larionoff, 431 States v. use, regulation.” United lakes, ows, ponds, the playa or natural L.Ed.2d 97 S.Ct. U.S. could of which degradation or destruction (citation omitted); (1977) accord Wiscon in- foreign affect interstate or commerce 901, Reilly, 893 F.2d Power Co. v. sin Elec. any waters: cluding such Cir.1990). (i)Which by inter- or could be used per failed to Homes has recreational foreign travelers for state or 40 C.F.R. EPA has misread us the suade or purposes; other but were un- negotiations had been conducted the court was 2. Mr. Wall’s communication solely reporting successful. the fact settlement limited 230.3(s)(3). regulation speaks regu- such relevant means evidence aas reasonable lating of water might accept wetlands other bodies mind adequate as support use, degradation or destruction whose conclusion.” Consolidated Edison Na Co. v. This in- “could” interstate commerce. Board, 197, tional Labor Relations 305 U.S. waters “which are or could be” used 206, cludes (1938). 59 S.Ct. 83 L.Ed. 126 travellers, which by interstate fish or “[f]rom obviously do not need to examine We taken,” are or could be and which shellfish finding the EPA’s that Hoffman filled “are used could be used” for industrial A; Hoffman has admitted this act. We must added). (emphasis agree Id. purposes. ask, however, if the finding that Area the CJO that with use of word before, filled, being po was a suitable or “could”' indicates the covers wa- sup tential habitat birds is whose connection to com- ters ported by ALJ, substantial evidence. The as may 'actual, potential be than merce rather earlier, noted found there was no evidence minimal than substantial. rather any migratory actually birds used agree We also that it the CJO presented only The witnesses the EPA interpret reasonable as al seeing migratory testified as to birds at Area' lowing migratory birds to be that connection B. The ALJ also foúnd the EPA had failed a wetland between and interstate commerce. present any evidence “that Area A con America, Throughout peo North millions of any tains characteristic that would render annually spend ple more than a billion dollars any more attractive to birds than other hunting, observing trapping, migrato land that at one time or another contains ry Yet the loss of birds.3 cumulative wet water.” Initial Decision at 48. The ALJ many populations has lands reduced bird concluded: “It has not been shown species consequently ability people preponderance of the evidence that Area A hunt, trap, and observe those birds. See by has characteristics whose use and value Management American North Waterfowl migratory is well birds established (1985); 1 Dep’t Palila Plan v. Hawaii cf. of likely it is that it -willbe migratory used Resources, F.Supp. Land & Natural 471 985 at birds.” Id. (D.Haw.1979) (protecting endangered bird preserves species in Despite findings, interstate commerce the ALJ’s the con- CJO persons wishing movement of interstate cluded the same that on evidence Area A was - species), aff'd, study 495 Cir. migratory 639 F.2d a site suitable to birds. Final 1981). .First, generally Byrd, See v. United States Decision at 26. the CJO noted that 1204, (7th Cir.1979) (Con relatively 609 F.2d 1209 Area A located Area B close to gress’s power part fifty-acre commerce clause “has come to which itself was of a Congress may regulate mean that activities area and bordered Creek. wit- Five commerce.”). which nesses testified before the ALJ as to migratory species they numerous bird Next we must whether the determine B, spotted including egrets, at Area white finding CJO’s of a violation of the herons, herons, green blue geese, Canada supported is “substantial evidence.” The ducks,’ blackbirds, red-winged mallard Supreme recently emphasized Court Ar mourning Id. at 27 n. doves. 25. The CJO — Oklahoma, U.S.-, v. 112 kansas S.Ct. if B support reasoned that Area would those 1046, (1992), 117 L.Ed.2d 239 that a “court migratory then A birds Area would as well. reviewing agency’s adjudicative an action accept agency’s findings should factual if on part The CJO based this conclusion in findings witnesses, supported by testimony transcripts those substantial of of two — Bade, evidence on the a Id. a biologist record as whole.” Gerald fish and wildlife with -, Service, U.S. at S.Ct. at 1060. Fish and United Wildlife “Substantial Ehorn, is Douglas quality evidence more than a mere scintilla. It an EPA water Congress long importance seq., recognized passed has et and in 1929 it Act, preserving migratory Congress Migratory birds. In 1918 Bird Conservation 16 U.S.C. Act, approved Treaty Migratory seq. Bird 715 et every temporary wet words, April ... After showers not In the “Bade specialist. CJO’s subject govern- necessarily B as a becomes spot of Wetland testified that value migratory would be for birds habitat ment control. suitable it was a at Area A.” Ehorn stated replicated migratory use possibility” birds would “good III. CONCLUSION A. years ago the Su- one hundred Almost record, our examination of the Based on preme wetlands as “the Court characterized A find the CJO’s conclusion that malignant fevers” and of malarial and cause to be for bird habitat suitable ^as police “the is never more opined power on the substantial evidence unsupported removing such legitimately exercised than Bade, example, whole. for testi- record as a States, Leovy v. 177 U.S. nuisances.” he B and to what had seen at Area fied as 44 L.Ed. 914 S.Ct. testimony the suitabil- His as to not (1900). know that wetlands are not now merely speculation A was based ity of Area the well- but are vital to nuisances instead assumption that A a wetland Area was Nonethe- being both humans and wildlife. B, B. to Area In contrast to Area similar less, particu- it is our conclusion based on stream, Area A does not border a it does findings Area A lar facts and below that is wetland, adjoin large only its source subject to under the Clean rainfall, only part is wet moisture vacate Act. For reason we this year, approximately it covers one acre Homes, Inc. requiring EPA’s order fifty. instead $50,000 penalty pay a administrative

(cid:127) moreover, Bade, admitted that Victoria filling of Area A. value Crossing would have low waterfowl Vacated. Similarly, open of the lack of water. because large he never wa- Ehorn said observed MANION, concurring Judge, Circuit Sanders, plant at the site. Dana terfowl judgment. ecologist Corps, also tes- associated agree I with the conclusion that the court’s having Area A as tified and characterized authority regulate Area EPA has no resting place only suitability “moderate” as a I vacate but for different reasons. would migratory birds. in this reasons EPA’s order case for the set course, true, migratory of that birds It is EPA, Homes, Inc. v. out in Hoffman alight anywhere. Bade can most As Gerald vacated). Cir.1992) (since F.2d 1310 I testified, parking he has seen lot mallards pub- incorporate previously reference that ALJ, however, puddles. The concurrence, subject opinion my as lished evidence, unique position to view to hear following additional comments. credibility testimony, judge and to of agree holding that He the evi- I with court’s the witnesses. concluded permit support not conclusion that not misconstrue the EPA’s dence did CJO did 230.3(s)(3). regulation, A had characteristics whose use C.F.R. That juris- regulation provides EPA has migratory birds is well established. that the value use, degrada- all agree. migratory are better over wetlands “the birds diction tion, could judges of what is for their welfare or destruction of which suitable we, Having foreign The CJO the ALJ interstate or commerce.” than are CJO. interpreted give the EPA Area A the birds have this avoided any jurisdiction over that could spoken and submitted their own evi- have thus “minimal, argue potential them. effect” on interstate We see no need to dence. reasonable, justification from the This construction is No whatsoever is seen commerce. regula- ownership it is with the private given to interfere with consistent evidence jurisdiction than a of over wetlands appears on what to be no more tion’s assertion based particular effort that “could affect commerce.” To intentioned in these interstate well reg- interpretation of the expand government the CJO’s factual circumstances to overturn great limits. would be with the beyond practical ulation inconsistent control reasonable interpreta- give agency’s merely traveling to an deference we because bird might, stop regulations. decide to for a drink. tion of its own position reflects the EPA’s gives jurisdiction Act that the Clean including

over all within wetlands “waters” —

reach of the Commerce Clause. Does the give jurisdiction

Clean Water Act the EPA

over Area A an Area A? “isolated wet- SWANK, Gary Plaintiff-Appellant, land,” D. wetlands isolated definition no effect on waters of the United v. pulled States. That definition is not from SMART, Individually City James and as rather, air; thin it is the defini- EPA’s own Marshal, City Carthage, Illinois, of tion. The found that A has no ALJ Nightingale, Individually R. James ground surface or water connection Mayor City Carthage as of the of and as water, body perform any other does of not Safety a member of the Public Commit quality body water functions as to any other City Carthage, tee of the Council of Illi water, actually and is not aas wildlife used nois, Tomlinson, Individually William challenged EPA habitat. The has never Safety a member as of the Public findings, these and the CJO did alter or City Committee of the Council Car Thus, findings discard them. ALJ’s Illinois, thage, al., Defendants-Appe et words, findings; the EPA’s other llees ALJ’s definition of “isolated is the wetlands” No. 92-2998. EPA’s definition. Appeals, Court of It from the EPA’s own follows definition Seventh Circuit. Area A regulating “isolated wetlands” that pur- does not further Water Act’s Argued May the.Clean 1993. chemical, pose to and maintain “restore July Decided physical, biological integrity the Na- tion’s waters.” See 33

Therefore, Water Act Clean does

give authority regulate

even if the Commerce Clause Con- allows

gress regulate isolated wetlands. See a fuller at 1312-16 for discussion

Clean Water Act’s construction.

But even if were that the correct

Clean Water Act authorizes wetlands,

isolated I would still vacate in this case. For stated reasons ordeif case, previous opinion I panel in this

would hold 'that the Commerce does Clause Congress empower regulate isolated Area A. F.2d at

wetlands such as See 961 be,

1316-23. To hold otherwise would effect, Congress’ power to hold that under y Commerce Clause limitless. virtuall power commerce as construed expansive, expan

courts is indeed but not so puddles

sive as to authorize

Case Details

Case Name: Hoffman Homes, Incorporated, Formerly Known as Hoffman Group v. Administrator, United States Environmental Protection Agency

Court Name: Court of Appeals for the Seventh Circuit

Date Published: Jul 19, 1993

Citation: 999 F.2d 256

Docket Number: 90-3810

Court Abbreviation: 7th Cir.