Opinion ID: 852986
Heading Depth: 1
Heading Rank: 3

Heading: IDEM's Authority to Regulate the Waters at Issue

Text: IDEM seeks to apply the state's NPDES permit process to discharges previously regulated by the federal Section 404 program. This presents at least these issues: (1) whether IDEM has statutory authority to regulate waters that are not waters of the United States; (2) whether Indiana law gives IDEM regulatory powers over private ponds or isolated wetlands or both; and (3) if so, whether the NPDES permitting system is authorized to be employed.
Indiana environmental laws give IDEM the power to regulate discharges into waters of the state. I.C. § 13-18-4-3 (1998). This statutory authority does not derive from federal legislation and no federal law purports to restrict the state's regulation of the type of waters at issue here. Nor, by its terms, does the Indiana statute limit its reach to waters within the scope of the CWA. Indeed, long before the enactment of the CWA, IDEM and its predecessors had jurisdiction over all the waters of the state except those specifically excluded by statute. 1935 Ind. Acts 537 (the agency had jurisdiction to control and prevent pollution in the waters of this state. . . .). IDEM's current statutory authority can be traced back to 1935, when the General Assembly authorized the Indiana Department of Commerce and Industry to regulate waters. Id. The state also has a long history of regulating waters through the Water Pollution Control Board (the Board). Created in 1943 through its predecessor, the Stream Pollution Control Board, the Board's primary purpose is to adopt rules regarding water pollution. I.C. §§ 13-18-4-3 and -4 (1998). In 1972, the federal Clean Water Act was passed. 33 U.S.C. §§ 1251 et seq. The Indiana legislature later created IDEM, and constituted it as the Indiana state agency to implement the CWA. I.C. § 13-13-5-1. The Board is now one of six agencies that operate under IDEM's umbrella but with separate and distinct statutory authority. The Water Pollution Control Board in particular is assigned the duties of adopting rules for the control and prevention of pollution in Indiana's waters. I.C. § 13-18-3-1. Twin Eagle cites what is now codified at Indiana Code section 13-18-3-2(a) (2002), which authorizes IDEM to adopt rules necessary to the implementation of the CWA, and contends that only waters subject to the federal law are within IDEM's rulemaking power. We do not regard this as a jurisdictional confinement of the waters to be regulated to those subject to the CWA. In any event, it is not the only authorizing statute. Several other provisions of Indiana law authorize IDEM to issue regulations without regard to the CWA or any other federal law. Specifically, [t]he board may adopt rules restricting the polluting content of any waste material and polluting substances discharged or sought to be discharged into any of the streams or waters of Indiana. I.C. § 13-18-4-3 (1998). In addition, the Board shall adopt rules for the control and prevention of pollution . . . that is deleterious to the public health . . . or by which . . . any fish life or beneficial animal or vegetable life may be destroyed. . . . I.C. § 13-18-3-1. And IDEM's commissioner may take appropriate steps to prevent any pollution that is determined to be unreasonable and against public interests. . . . I.C. § 13-18-4-4. That is what IDEM has done by issuing the interim regulations. Twin Eagle notes the more recently added authority under Indiana state law to adopt regulations to implement the CWA. I.C. § 13-18-3-2. We think this was intended to make clear the state agency was empowered to proceed under federal law, but in no way curtailed its preexisting authority. Among the rules adopted pursuant to these authorizations is the requirement that [a]ny discharge of pollutants into waters of the state requires an NPDES permit unless it is specifically excluded. 327 I.A.C. 5-2-2. The reach of the rule is unaffected by the choice of Congress to limit federal legislation or by any constitutional constraints on federal jurisdiction. Thus, when SWANCC curbed previously expansive views of the reach of the CWA, IDEM's scope of authority did not shrink. To the contrary, as the Supreme Court expressly noted, SWANCC had no effect whatever on the scope of waters subject to state regulation. SWANCC, 531 U.S. at 174, 121 S.Ct. 675. In short, Twin Eagle would have been required to get state water approval through the water certification process before SWANCC, albeit pursuant to a federal, not a state, law. The contraction of federal authority did nothing to limit state power.
Although Indiana is not precluded from regulating waters beyond federal regulatory reach, the issue remains whether the legislature has given IDEM authority over the waters at issue. To do that, it is not sufficient that IDEM have the authority to regulate some waters beyond the post- SWANCC reach of the CWA. It must also have the statutory authority to regulate private ponds or isolated wetlands or both, and must be able to reach the particular waters at issue here. Indiana Code section 13-11-2-265 defines waters as: (1) the accumulations of water, surface and underground, natural and artificial, public and private; or (2) a part of the accumulations of water; that are wholly or partially within, flow through, or border upon Indiana. I.C. § 13-11-2-265 (2002). However, the term `waters' does not include a private pond . . . unless the discharge from the pond . . . causes or threatens to cause water pollution. Id. A private pond is a body of water wholly upon the land of a single owner or group of owners and not connected with any public waters of the state. Trowbridge v. Torabi, 693 N.E.2d 622, 627 (Ind.Ct.App.1998); I.C. § 13-11-2-265. Whether Twin Eagle's project involves ponds within this definition, and if so whether their discharge causes or threatens pollution are fact issues for administrative determination in the first instance. Wetlands also raise factual issues. The term has no statutory definition and the only definition of that term applicable to the Water Pollution Control Board in the statutes and rules defines wetlands as those areas that are inundated or saturated by surface water or ground water at a frequency and duration to support and that, under normal circumstances, do support a prevalence of vegetation typically adapted for life in saturated soil conditions. Wetlands generally include the following: (1) Swamps. (2) Marshes. (3) Bogs. (4) Similar areas. 327 I.A.C. 6.1-2-62 (dealing with industrial waste). [4] See also Family Dev. Ltd. v. Steuben County, 749 N.E.2d 1243 (Ind.Ct.App.2001) (dealing with regulation of pre- SWANCC federal wetlands). Moreover, wetlands by their very nature vary in the amount of water they contain at a given time, and their boundaries can change depending on the season and the weather. But their outer boundaries are ascertainable, so the mere difficulty in determining what constitutes a wetland does not remove it from IDEM's jurisdiction. Nor do the characteristics of wetlands automatically remove them from of waters of the state if the statutory definition of waters, includes the accumulations of water . . . or . . . a part of the accumulations. I.C. § 13-11-2-265. So defined, at least some wetlands can be waters of the state. Finally, presumably in response to the regulatory gap created by SWANCC, in March 2002 the General Assembly enacted Public Law 183, which states that a state agency may not adopt or amend an administrative rule . . . that concerns the definition of `wetlands' or `isolated wetlands'.. . . 2002 Ind. Acts 183 Sec. 2. In the absence of any general definition of isolated wetland, it remains for case-by-case determination whether a particular site does or does not include waters of the state within the general regulatory power of IDEM under I.C. § 13-18-4-4, -5 (1998). Whether the wetlands on Twin Eagle's project meet that definition is again a question for the administrative process to resolve. Twin Eagle has at least two options if it believes its project will not affect regulated waters. It can apply for an NPDES permit, and challenge the finding if it believes it to be erroneous. Or, if Twin Eagle is sufficiently confident that its project will not violate the Act, it may proceed and risk an enforcement action by IDEM. This may leave a somewhat unsatisfactory legal framework, but we see no alternative to individualized determinations of IDEM's jurisdiction given the statutory prohibition against rulemaking.
Even if IDEM has statutory authority to regulate the waters at issue, the issue remains whether the interim process is lawfully imposed. It is well established that administrative agencies may make reasonable rules and regulations to apply and enforce legislative enactments. Ind. Dep't of Envtl. Mgmt. v. AMAX, Inc., 529 N.E.2d 1209, 1212 (Ind.App.1988); Podgor v. Ind. Univ. 178 Ind.App. 245, 250, 381 N.E.2d 1274, 1278 (1978). But IDEM may regulate by a new rule only if the proper rulemaking procedures have been followed. Thus, in establishing rules, the agency must comply with the Indiana Administrative Orders and Procedures Act, Indiana Code chapter 4-22-2, which includes provisions for public hearings and review by executive branch officials. By contrast, agency actions that result in resolutions or directives that relate solely to internal policy, procedure, or organization, and do not have the effect of law, are not subject to the same requirements. I.C. § 4-22-2-13(c)(1) (1998); AMAX, Inc., 529 N.E.2d at 1212. The validity of the interim regulatory process turns on whether it constituted a new rule when IDEM applied the NPDES permit process to waters of the state previously, but no longer, subject to the federal Section 404 program. IDEM does not assert that it followed rulemaking procedures in announcing the interim process. Rather it contends that requiring state NPDES permits for dredge and fill after SWANCC is not a new rule at all and is therefore not subject to the statutory requirements for adopting new rules. A rule is defined by Indiana Code section 4-22-2-3 as: [T]he whole or any part of an agency statement of general applicability that: (1) [H]as or is designed to have the effect of law; and (2) [I]mplements, interprets, or prescribes: (A) Law or policy; or (B) The organization, procedure, or practice requirements of an agency.