Orleans Audubon Society v. Lee (742 F.2d 901, 1984)

E. GRADY JOLLY, Circuit Judge:

I.

A.

This environmental suit involves a 466-acre tract of cypress-tupelo gum swamp located on the west bank of the Mississippi River in Jefferson Parish, Louisiana. The tract is bounded on the northeast by a residential subdivision known as Lincoln-shire, on the west by the Drill Hole Canal, a small artificial canal constructed during the 1960s, and on the east by a levee, on the other side of which runs the Millaudon Canal. The tract is surrounded by levees constructed in 1972 by the owner of the property at that time. In late 1972 or early 1973, the Drill Hole Canal, which previously had been a navigable waterway, was dammed, completing the ring of levees and impounding the tract so that it was no longer subject to tidal motion.

In late 1976 or early 1977, C.I.T. Corporation became the owner of the tract through foreclosure and decided to proceed with the previous owner’s plans to convert the tract for residential use by draining and filling the area within the levees. In order to do so, C.I.T. began working with the Corps of Engineers to prepare the environmental impact statement needed to secure an after-the-fact permit for the closure of the Drill Hole Canal. See infra, part B. In late 1979, the Corps discovered two gaps in the levee at the closure of the Drill Hole Canal. After receiving assurance from the Corps that no permits were required for the work, C.I.T. repaired the two gaps.

In 1980, C.I.T. installed a drainage culvert into the levee between the tract and the Lincolnshire subdivision. This culvert permitted gravity drainage from the tract into a drainage canal serving the subdivision. Because the first culvert was ineffective, in 1981 C.I.T. installed a second culvert into the levee at a lower elevation.

B.

The Corps of Engineers first became involved in this case in March 1976, when it received a citizen’s complaint that the Drill Hole Canal had been blocked in violation of the Rivers and Harbors Appropriation Act of 1899 (RHA) and federal regulations which require the issuance of a permit for activities which result in the obstruction of navigable waters. Soon after receiving the complaint, the Corps issued a cease and desist order to the developer of the tract (C.I.T.’s predecessor in interest) and ordered the developer to apply for an after-the-fact permit for the canal blockage and for maintenance of the levee system around the tract. After C.I.T. became owner of the tract, it filed the necessary application. The Corps decided that it would have to prepare an environmental impact statement before granting or denying the permit application in order to comply with its responsibilities under the National Environmental Policy Act, § 102, 42 U.S.C. § 4332 (1977).

Between late 1977 and June 1979, the Corps proceeded with the development of an environmental impact statement and took other steps to review C.I.T.’s application. During this time, several federal agencies, including the Environmental Protection Agency, the National Park Service and the United States Fish and Wildlife Service, notified the Corps of their opposition to the granting of the permit and their intention to participate in hearings on the matter.

In the spring of 1979, C.I.T. first inquired of the Corps whether the blockage of the Drill Hole Canal fell within the scope of nationwide permits issued by the Corps in July 1977. These nationwide permits authorize certain classes of activity within the scope of the Corps’ jurisdiction to be carried out without an individual project permit. The Corps agreed with C.I.T. that its activities were authorized by the nationwide permit and did not require an individual permit. In September 1979, the Corps advised C.I.T. that its proposed repair of gaps in the levees surrounding the tract was also authorized by the nationwide permits.

In early 1980, Orleans asked the Corps to reconsider its two decisions regarding the applicability of nationwide permits. The Corps considered Orleans’ arguments and consulted with personnel of the Environmental Protection Agency before deciding, after almost one year, to stand by its determinations that the canal blockage and levee repair were authorized by the nationwide permits. During this period of reconsideration, the Corps inspected, also at Orleans’ request, the installation of the two drainage culverts in the tract’s northeast levee. The Corps engineer who inspected the site reported that the installation did not involve any work upon the wetlands in the interior of the tract, nor did it result in the depositing of dredged or fill material into the wetlands. The Corps concluded that it had no basis to assert jurisdiction over the culvert installations.

C.

Orleans filed this suit in June 1981, seeking declaratory and injunctive’ relief from the Corps’ decision that C.I.T. was not subject to individual permit requirements for three activities: the blockage of the Drill Hole Canal, the repair of levees around the tract and the installation of culverts to drain the tract. One year later, the plaintiffs filed a motion for partial summary judgment, arguing that permits were required as a matter of law for installation of the two drainage culverts. The defendants countered with motions to dismiss the complaint or, in the alternative, for summary judgment on all issues raised by the plaintiffs. The district court, after a hearing, granted the defendants’ motions and dismissed the complaint, holding that none of the decisions not to require permits was arbitrary or capricious. The plaintiffs now appeal the judgment of the district court.

II.

Orleans concedes that we normally must review discretionary decisions of the Corps under the arbitrary and capricious standard, and it concedes that decisions not to require permits for actions by private developers, such as those at issue here, are usually considered to be discretionary. Despite these admissions, Orleans argues that we should review the first of the three decisions challenged in this case more closely because “a successor agency head [has], without any apparent valid reason, alter[ed] a three year old, apparently valid exercise of authority by his predecessor ____” The issues before this court, then, are (1) what standards of review to apply, and (2) whether the three challenged agency-decisions are reversible under the appropriate standards of review. Before discussing these issues, however, we shall canvass some of the statutes and regulations governing the Corps’ decisions.

III.

Orleans argues that there are two statutory schemes under which the Corps should have exercised its authority to require permits for the enclosure and drainage of the C.I.T. tract: the Federal Water Pollution Control Act, as amended in 1977, popularly known as the Clean Water Act (CWA), and the RHA.

The Corps possesses regulatory authority relevant to this case granted by the Clean Water Act, which, in general, prohibits the discharge of pollutants into the navigable waters of the United States except in compliance with the CWA’s terms. Clean Water Act, §§ 301(a), 502(12), 33 U.S.C. § 1311(a), 1362(12) (1978). The Act authorizes the Secretary of the Army, acting through the Chief of Engineers, to “issue permits, after notice and opportunity for public hearings[,] for the discharge of dredged or fill material into the navigable waters at specified disposal sites,” and to issue nationwide permits for some classes of activity. Clean Water Act, § 404(a), (e), 33 U.S.C. § 1344(a), (e) (1978). In July 1977 the Corps enacted the nationwide permit regulations on which the Corps relied in this case to exempt the blockage of the Drill Hole Canal from individual permit requirements under the CWA. Those regulations provided for a phase-in of the individual permit requirements to wetlands and non-navigable waters. Discharges into wetlands or non-navigable waters prior to the phase-in dates were not subject to individual permit requirements if they did not violate certain health and environmental restrictions, subject to the Corps’ reservation of discretionary authority to require an individual permit if the circumstances “indicate the need for such action because of ... adverse impacts to the affected waters,” 33 C.F.R. §§ 323.4-l(a), 323.4-4 (1977), superseded, see 47 Fed.Reg. 31,800 (1982). In addition to its authority to require individual permits for the depositing of dredged or fill material in navigable waters, the Corps may bring suits for injunctive and punitive relief for violations of permits issued under section 404. 33 U.S.C. § 1344(s) (1978). The Corps’ 1977 regulations allowed district engineers to require an after-the-fact permit rather than bring suit if “the unauthorized activity does not warrant legal action.” 33 C.F.R. § 326.5 (1977).

Orleans has also asserted claims relating to the Corps’ regulatory authority under the Rivers and Harbors Act. Section 10 of the RHA prohibits the obstruction of the “navigable capacity” of the waters of the United States except as. authorized by the Chief of Engineers and the Secretary of Army. 33 U.S.C. § 403. The Corps of Engineers has developed regulations which specify the circumstances under which it will authorize activities which obstruct navigable waters, as well as regulations which define “navigable waters” for the purposes of determining whether the Corps will exercise section 10 jurisdiction over particular bodies of water. Through these regulations the Corps has asserted jurisdiction over privately developed artificial channels, even those passing through private property, if they are susceptible to being used in support of interstate commerce. 33 C.F.R. 329.4, 329.5, 329.8 (1983). In general, the Corps requires individual permits for all “structures and/or work in or affecting navigable waters of the United States ____” unless the regulations specifically exempt the activity, 33 C.F.R. § 322.3(a) (1983), but it has established “nationwide permits” which exempt certain classes of activities from the individual permit requirements. Prior to July 22, 1982, nationwide permits promulgated under section 10 authority were codified at 33 C.F.R. § 322.-4. These nationwide permits, promulgated by the Corps in July 1977, provide:

The following structures or work are hereby permitted for purposes of Section 10 and do not require separate Department of the Army permits:

(c) The repair, rehabilitation, or replacement of any previously authorized, currently serviceable, structure or of any currently serviceable structure constructed prior to the requirement for authorization; provided such repair, rehabilitation, or replacement does not result in a deviation from the plans of the original structure, and further provided that the structure to be maintained has not been put to uses differing from uses specified for it in any permit authorizing its original construction;

(g) Structures or work completed before 18 December 1968 or in waterbodies over which the District Engineer has not asserted jurisdiction provided there is no interference with navigation.

33 C.F.R. § 322.4 (1977) (emphasis added). In this case, the Corps found that C.I.T. was exempt from the permit requirement for the blockage of the Drill Hole Canal on the basis of section 322.4(g), and the repair of the levees around the C.I.T. tract on the basis of section 322.4(c).

Section 9 of the RHA prohibits the construction of dams or dikes across navigable waters of the United States unless both Congress and the Secretary of the Army approve. The Secretary of the Army has not delegated the authority to grant or deny section 9 permits to the Chief of Engineers, but the Corps’ regulations under section 9 allow the district engineer of the relevant district to recommend “conditions to be imposed” upon authorized section 9 projects. 33 C.F.R. § 321 (1983).

IV.

A.

Orleans argues that because the Corps initially required C.I.T. to apply for an after-the-fact permit for the 1972-73 canal closure, the Corps' decision to abandon the permit process should be reviewed under a stricter standard than the usual “arbitrary and capricious” standard. Because the reversal in position occurred after a change in the administration of the Corps’ New Orleans District, we should, according to Orleans, view it with suspicion.

This court has recently reaffirmed the principle that an agency may adjust its rules and policies in the light of its experience and changing circumstances. Creppel, 670 F.2d at 571; American Petroleum Institute v. Environmental Protection Agency, 661 F.2d 340, 355 (5th Cir.1981). Even when an agency abandons a prior determination, the reviewing court should affirm the agency’s decision if the final agency action is not arbitrary or capricious. Texaco, Inc. v. National Labor Relations Board, 700 F.2d 1039, 1043 (5th Cir.1983); Creppel, 670 F.2d at 571-72.

Orleans invites this panel to modify the rules summarized above because in this case the reversal of an agency’s position coincides with a change in agency leadership. We decline to depart from our traditional standard of review, however, because to do so would violate a basic principle of judicial review of agency action, that is, the presumption of regularity. See Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 415, 91 S.Ct. 814, 823, 28 L.Ed.2d 136 (1971). Orleans advances no persuasive reasons for abandoning this presumption here. If, in fact, the Corps’ decision to discontinue the permit process for the Drill Hole Canal was made in bad faith or is otherwise not supported by the administrative record, then the decision will not withstand the arbitrary and capricious standard. On the other hand, if the decision represents a valid exercise of the Corps’ decision-making powers, then this court should not interfere with the Corps’ judgment. Overton Park, 401 U.S. at 416, 91 S.Ct. at 824. To substitute a stricter rule of judicial review for changes of agency rules made by succeeding administrations would unnecessarily and inappropriately restrict the agency’s discretion. The record in this case shows that the New Orleans district of the Corps has had three district engineers since 1976. If this court considers each change of administration to undermine the traditional standards of deference outlined in Creppel, then only rarely would a federal agency such as the Corps be able to change its bureaucratic mind without being subject to a higher level of judicial scrutiny. Such a rule is, it seems to us, at odds with this court’s policy of deference to matters generally committed to the expertise and discretion of federal agencies. See Avoyelles Sportsmen’s League, Inc. v. Marsh, 715 F.2d 897, 904 (5th Cir.1983); Buttrey v. United States, 690 F.2d 1170, 1183-85 (5th Cir.1982), cert. denied, 461 U.S. 927, 103 S.Ct. 2087, 77 L.Ed.2d 298 (1983).

We therefore conclude that the Corps’ decision not to require an after-the-fact permit for the closure of the Drill Hole Canal will be reviewed, as will the other two decisions challenged on appeal, under the arbitrary and capricious standard.

B.

Orleans has challenged the three Corps decisions relating to the C.I.T. tract on the grounds that they violate the terms of the CWA. We first address Orleans’ attack on the halting of the after-the-fact permit process for the closure of the Drill Hole Canal,

1.

In 1979, the Corps decided that the closure of the canal was within the scope of a nationwide permit promulgated under the CWA in 1977, 33 C.F.R. § 323.4-l(a), the text of which is set out supra, note 7. Under this regulation, the Corps did not require after-the-fact permits for discharges made prior to July 25, 1975, except for discharges “into navigable waters of the United States.”

Orleans has not expressly stated why it believes its decision was arbitrary or capricious. Primarily, it relies on the fact that the decision not to require a permit was a reversal of the Corps’ prior position. We examine, first, whether the Corps’ decision appears to be a reasonable application of the regulation, and second, whether the Corps acted arbitrarily or capriciously in reversing the permit process.

The facts before the Corps were as follows. During 1972 and 1973, when this discharge occurred, the Corps did not consider the Drill Hole Canal to be a navigable waterway. The Corps did not exert jurisdiction over private, man-made canals, such as the Drill Hole Canal, during the period when this canal was actually blocked. In March 1976, the Corps issued a cease and desist order to the owner of the C.I.T. tract, basing its authority to require an after-the-fact permit on United States v. Stoeco Homes, Inc., 498 F.2d 597 (3d Cir. 1974), cert. denied, 420 U.S. 927, 95 S.Ct. 1124, 43 L.Ed.2d 397 (1975). This was the first time that the Corps even arguably asserted jurisdiction over the Drill Hole Canal. In 1977, the Corps formally amended its regulations to make it clear that private artificial canals subject to tidal action were within the Corps’ jurisdiction,

In applying the nationwide permit regulation to this situation, the Corps decided that the discharge was not made into a “navigable water”, based on the status of the Drill Hole Canal when the discharge occurred. In reasoning this way, the Corps chose not to use several other points in time at which it might have chosen to measure navigability: the enactment of the CWA, the promulgation of the 1977 regulations’ or the time when the CorPs was deciding whether to re