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United States v. Stoeco Homes Inc.

decided: May 23, 1974.

UNITED STATES OF AMERICA
v.
STOECO HOMES, INC., A CORPORATION, APPELLANT



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY.

Aldisert, Gibbons and Rosenn, Circuit Judges.

Author: Gibbons

Opinion OF THE COURT

GIBBONS, Circuit Judge.

The defendant Stoeco Homes, Inc. (hereinafter Stoeco) appeals from an order issued in a suit by the United States of America which permanently enjoined Stoeco from engaging in or permitting any dredge, fill or construction operations in an area in Ocean City, New Jersey, bordered by Bay Avenue, Tennessee Avenue, Spruce Road, and the Back Thorofare of the Intercoastal Waterway, without the prior recommendation of the Army Corps of Engineers and approval of the Secretary of the Army. The government's suit alleges violations of the Rivers and Harbors Appropriation Act of 1899, ch. 425, 30 Stat. 1151, 33 U.S.C. § 401 et seq.

Stoeco has for many years been engaged in the creation of waterfront homesites by dredging and bulkheading lagoons and pumping the dredged materials to adjoining uplands. It acquired the premises in question in 1951 from Ocean City.*fn1 At the time of this acquisition the land area was substantially above mean high tide. The government contends, however, that prior to 1927 the entire area was a salt water marsh, subject to the ebb and flow of the tide, and that in 1927 R. L. Chester Company, the City's predecessor in title, hydraulically filled the marsh to form firm land suitable for residential development. The land, in 1951, was vacant and overgrown by bayberry. It was bounded on the southwesterly side by Tennessee Avenue, an improved street, on the southeasterly side by Bay Avenue, an improved street, on the northeasterly side by Spruce Road and irregularly on the north, northwesterly and westerly side by Back Thorofare, a part of the Intercoastal Waterway passing through Great Egg Harbor Bay, a tidal estuary. In October 1951 Stoeco filed with the Army Corps of Engineers a plan (Page 6 of Exhibit P-19) to dredge from Back Thorofare to the premises in question two separate waterway openings. The plan discloses an intention to create, within the premises in question, two separate internal waterway systems. The more northerly opening was to be 500 feet wide at the 1951 high water line. The lagoon system developed off that entrance, now known as Sunny Harbor, does not figure in this litigation. Off the more southerly opening Stoeco proposed to construct what is now known as South Harbor. South Harbor and its tributaries is the subject matter of this litigation and will be described more fully hereafter. On November 2, 1951 the Army Corps of Engineers granted a permit to dredge the two openings to Back Thorofare provided the work was completed by December 31, 1955. The two openings to Back Thorofare were completed within the specified time and the work was inspected and approved by the Army Corps of Engineers on June 16, 1955. (Page 2 of Exhibit P-19) Thereafter work on the internal lagoon systems was suspended while certain resident taxpayers of Ocean City challenged the validity of Stoeco's title. The contention was that the grantee had not improved the area as rapidly as the conveyance contemplated, and that there should be a forfeiture. See Oldfield v. Stoeco Homes, Inc., 26 N.J. 246, 139 A.2d 291 (1958). After that litigation terminated in its favor Stoeco resumed its development, but with a revised plot plan. No change was made in the openings to Back Thorofare, but within the premises in question the lagoon arrangement was revised from that shown on the 1951 application. It should be understood that the 1951 application dealt only with access to the Intercoastal Waterway, not with the internal lagoons. The change, insofar as the South Harbor area is concerned, was from an arrangement in which, from a point near the access to Back Thorofare the harbor was to divide into two long lagoons running parallel to Tennessee Avenue toward Bay Avenue, to an arrangement in which one wider lagoon was to be excavated, running parallel to Tennessee Avenue toward Bay Avenue (South Harbor) and off this main channel, at right angles, parallel to Bay Avenue, five additional lagoons would be excavated on each side. No application was made to the Army Corps of Engineers with respect to the modified plan.

In August 1972, when this suit commenced, the Sunny Harbor part of the development had been completed, sold as homesites and occupied. South Harbor had been completely excavated from Back Thorofare parallel to Tennessee Avenue to a point near Bay Avenue. Off the northeasterly side of South Harbor the five perpendicular lagoons had been completely excavated. These lagoons had been bulkheaded, as had the northeasterly side of South Harbor. All the land on that side of South Harbor had been sold off as homesites, and homes had been erected and occupied. The area between South Harbor and Tennessee Avenue remained undeveloped. Stoeco had substantially completed excavation of three of the five perpendicular lagoons, and had partially completed bulkheading of those three. On April 23, 1971 the Army Corps of Engineers had for the first time taken the position that the South Harbor operations required a permit. Stoeco contested that position and continued operations until enjoined.

Stoeco's method of excavation is to dredge a mixture of solids and water from the excavated area to an upland area surrounded by a manmade dike. The heavier solids settle within the dike and the water flows back, through runoff pipes in the dike, to the lagoons already excavated. The district court found that the runoff pipes returned fines to the lagoons, which tended to cause silting in these lagoons and that occasionally the dikes failed, with a similar result. Such silting has obstructed navigation in South Harbor and in Cayman Harbor, one of the incomplete lagoons running from South Harbor toward Tennessee Avenue. These findings are not clearly erroneous. The district court also found that all of the premises in question between South Harbor and Tennessee Avenue -- indeed all of Stoeco's development including those parts already built upon -- is within the navigable waters of the United States. We will make more specific reference to the evidence supporting that finding hereafter.

The government contends that the foregoing establishes two violations of the Rivers and Harbors Appropriation Act of 1899. First, it contends that the discharge of silt into South Harbor and Cayman Harbor violates 33 U.S.C. § 407 (originally enacted as Rivers and Harbors Appropriation Act of March 3, 1899, ch. 425, § 13, 30 Stat. 1153 (hereinafter § 13)) which prohibits the discharge of refuse matter into any navigable water of the United States.*fn2 Next, it contends that even if the silting were prevented, since the entire premises in question, though substantially above mean high tide at present, is within the navigable waters of the United States, excavation of the lagoons without a permit violates 33 U.S.C. § 403 (originally enacted as Rivers and Harbors Appropriation Act of March 3, 1899, ch. 425, § 10, 30 Stat. 1151 (hereinafter § 10)).*fn3 The district court accepted both contentions and issued an injunction not only against silting of the lagoons but against any improvement of the premises without an Army Corps of Engineers recommendation and an authorization by the Secretary of the Army. Stoeco contends on appeal: (1) that the silting did not take place in the navigable waters of the United States, (2) that even if it did the injunction in its present breadth cannot be sustained on that basis, and (3) that the government has not established that the premises in question are within the navigable waters of the United States.

I. THE § 10 VIOLATION

Since, the broadest government contention, that all of Stoeco's land -- indeed all of the land it has developed and sold off -- is within the navigable waters of the United States, would, if accepted, amply justify the court's broad injunction, we start our analysis with this § 10 claim.

That claim must be considered in light of the fact that the government's permit policy with respect to § 10 was changed in 1970. Prior to May 27, 1970 it was the policy not to require § 10 permits for construction shoreward of established harbor lines. That policy is reflected in Exhibit P-19, page 23.*fn4 On May 27, 1970 the Army Corps of Engineers announced a new policy, 35 Fed. Reg. 8280 which appears at 33 C.F.R. § 209.150:

"(a) Definition. The term 'harbor line(s)' is used here in its generic sense. It includes types of harbor lines frequently referred to by other names, including, for example, pierhead lines and bulkhead lines.

(b) Policies, practices and procedures.

(1) Under previous policies, practices and procedures, riparian owners could erect open pile structures, or undertake solid fill construction shoreward of established harbor lines without obtaining a permit under 33 U.S.C. 403. This was a matter of great concern, particularly in cases involving long established harbor lines, since all factors affecting the public interest may not have been taken into account at the time the lines were established. Accordingly, under previous policies, practices and procedures there was the danger that work shoreward of existing harbor lines could be undertaken without appropriate consideration having been given to ...


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