Indiana Department of Natural Resources v. Kevin Prosser

FILED
Aug 01 2019, 7:30 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE
Curtis T. Hill, Jr. Stephen R. Snyder
Attorney General of Indiana Randall L. Morgan
Snyder Morgan Federoff &
Aaron T. Craft
Kuchmay LLP
Deputy Attorney General
Syracuse, Indiana
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Indiana Department of Natural August 1, 2019
Resources, Court of Appeals Case No.
Appellant-Respondent, 18A-MI-2644
Appeal from the Fulton Circuit
v. Court
The Hon. Wayne E. Steele,
Kevin Prosser, Special Judge
Appellee-Petitioner. Trial Court Cause No.
25C01-1706-MI-355
Bradford, Judge.
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Case Summary
[1] Kevin Prosser owns property on Lake Manitou, and, in 2015, applied to the
Indiana Department of Natural Resources (“DNR”) for a permit to construct a
concrete seawall. Under Indiana law, a concrete seawall may only be
constructed in a “developed area,” which means a shoreline that has been
altered in such a way as to increase its overall length. Prosser contended that a
dredging operation that had occurred in 1947 or 1948 near what is now his
property (“the Dredging”) had increased the overall length of Lake Manitou’s
shoreline.
[2] DNR denied Prosser’s application, and he applied for administrative review. A
DNR administrative law judge (“ALJ”) affirmed the denial after a hearing,
finding that Prosser had failed to establish that the Dredging had lengthened the
shoreline of Lake Manitou. After the Natural Resources Commission adopted
the ALJ’s disposition, Prosser sought judicial review in Fulton Circuit Court.
The trial court reversed DNR’s denial of his application for a permit to
construct a concrete seawall. DNR contends that the trial court erred in
reversing its denial of Prosser’s application. Because we agree, we reverse.
Facts and Procedural History
[3] Prosser owns two adjacent parcels located at 2920 and 2922 Country Club
Drive South, Rochester, Indiana (“the Property”). The Property is on Lake
Manitou, has a 117-foot shoreline, and the Dredging occurred in the area in
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1947 or 1948, with the apparent intention of deepening the nearby lake bottom
to allow better boat access.
[4] On August 24, 2015, Prosser applied to DNR for a permit to construct a
concrete seawall. DNR Assistant Director of the Division of Water James
Hebenstreit reviewed Prosser’s permit application and, on February 1, 2016,
denied it. Hebenstreit denied Prosser’s application on the bases that it was
incomplete; the Property was in an “area of special concern” rather than a
“developed area”; and construction of a concrete seawall would significantly
affect fish, wildlife, and plant life near the site. Pursuant to the Indiana
Administrative Code, seawalls constructed in an “area of special concern” are
required to be made of bioengineered material and/or glacial stone, while a
concrete seawall is only allowed in “developed area.” 321 IAC 11-4-2(c), -2(d).
One thing that qualifies as a “developed area” is a “manmade channel,” which
is “a watercourse created by mechanical means that connects to the lake at one
(1) or more points and by its construction increases the total length of shoreline
around the lake.” 312 IAC 11-2-11.8.
[5] On February 16, 2016, Prosser petitioned for administrative review. On
February 8, 2017, an ALJ conducted an evidentiary hearing, at which former
DNR surveyor Rodney Neese, Hebenstreit, and Prosser testified. Among the
admitted exhibits were a series of aerial photographs taken in 1940, 1957, 1963,
1998, and 2011/2013, with the 2011/2013 shoreline superimposed onto the
earlier photographs. Prosser testified that the photographs appeared to indicate
that the shoreline had been lengthened by the Dredging.
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[6] Neese testified, however, that the line he superimposed on the photographs
could be off by an unknown amount and that the time of year at which the
photographs were taken (which was unknown) would affect the amount of
vegetation in the lake, as well as its level. Neese opined that the length of Lake
Manitou’s shoreline could have either increased or decreased between 1940 and
1957. An environmental evaluation prepared on February 1, 2016, by DNR
biologist Nathan Thomas was admitted as part of Exhibit 7. Thomas opined,
inter alia, that “there was no definitive evidence presented to support the fact
that the dredging resulted in creating additional lake frontage[.]” Appellant’s
App. Vol. III p. 30. Finally, Hebenstreit testified that “it’s hard to tell where the
legal shoreline of that lake was and whether or not [the Dredging] added or
decreased the amount of shoreline frontage.” Appellant’s App. Vol. II p. 151.
Hebenstreit opined that the Property’s shoreline was an area of special concern.
[7] In addition to his testimony that it appeared to him that the Dredging had
increased the total shoreline of Lake Manitou, Prosser offered depositions from
Joseph Mills and Douglas Sampsel, both of whom testified that they had
witnessed the Dredging firsthand. Mills testified that his parents built a house
next door to the Property in 1947, when he was nine years old, and that he
observed the Dredging. According to Mills, when the bucket containing
material dredged from the lake bottom returned to shore, it would also remove
a portion of the shoreline.
[8] Sampsel testified that his father had directed the Dredging, excavating the lake
bottom down to a depth of five to six feet. While Sampsel testified that the
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Dredging could not have helped but alter the shoreline when the bucket was
dragged back to shore, he also testified that “we always cleaned up the
shoreline, probably taking some new soil, just to make it nice and even and
straight and sloped and so that the land owner had a nice front there when we
were finished.” Appellant’s App. Vol. III p. 116.
[9] On March 31, 2017, the ALJ issued its findings of fact and conclusion of law in
a nonfinal order, in which it affirmed Hebenstreit’s denial of Prosser’s
application. The ALJ found that aerial photos from before and after the
Dredging provided “insufficient clarity and definition to show whether the
shoreline of Lake Manitou was increased […] by dredging or other means.”
Appellant’s App. Vol. IV pp. 133–34. The ALJ also found that neither
Sampsel’s nor Mills’s testimony established that, even if parts of the shoreline
were removed during the Dredging, the process necessarily lengthened the
shoreline because Sampsel’s father also “cleaned up” the shoreline, using new
soil when necessary.
[10] On April 13, 2017, Prosser filed his objections to the ALJ’s nonfinal order. On
May 22, 2017, the Natural Resources Commission of DNR affirmed, without
modification, the ALJ’s disposition in its final order, denying Prosser’s
application for a permit to construct a concrete seawall. On June 20, 2017,
Prosser petitioned for judicial review of DNR’s final order. On October 4,
2018, the trial court granted Prosser’s petition for judicial review. The trial
court’s order provided, in part, as follows:
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The [ALJ] chose to discount the testimony of Mills and Sampsel
first because it was a recollection from 70 years prior to their
testimony and second, because it was “based on the faulty
assumption that the mere removal of any part of the shoreline
would increase the total length of the shoreline around the lake”.
A trial court may not refuse to consider and weigh[] competent,
uncontradicted evidence. Haynes v Brown, 88 N.E.2d 795 (Ind.
App. 1949). In the Haynes case, the Court listed the factors to be
considered in determining the credibility of a witness and the
weight to be given to the witness’s testimony as follows: (1)
interest of the witness in the outcome of the trial; (2) the witness’s
bias and prejudice, if any are shown; (3) the witness’s opportunity
for knowing and recollecting the facts about which he testifies; (4)
the probability or improbability of his testimony; and (5) his
demeanor while on the witness stand. Haynes, Id. p.797, citing
McKee v Mutual Life Ins. Co. Of New York, 51 N.E.2d 474 (Ind.
1943). The Court may disregard or disbelieve oral evidence if it is
considered unreasonable or inconsistent with facts and
circumstances shown by the other credible evidence in the case.
Wright v. Peabody Coal Company, 77 N.E.2d 116 (Ind. 1948). There
was no justification for the Administrative Law Judge’s
discounting of the Mills’ and Sampsel’s testimonies based on other
evidence presented at trial.
Order pp. 6–7. The trial court concluded that Prosser established that the
Property is a “developed area” and overturned DNR’s denial of his petition for
a permit to construct a concrete seawall.
Discussion and Decision
I. Background
[11] The Lakes Preservation Act (“the Act”), found at Indiana Code chapter 14-26-
2, prohibits construction of seawalls within or along the shoreline of a “public
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freshwater lake ” absent a permit issued by DNR. Ind. Code § 14-26-2-23(a)(2).
A “‘public freshwater lake’ means a lake that has been used by the public with
the acquiescence of a riparian owner” but does not include Lake Michigan or
certain other lakes. Ind. Code § 14-26-2-3. A seawall is “a manmade structure
placed along the shoreline or water line of a public freshwater lake for the
purpose of shoreline stabilization.” 312 I.A.C. 11-2-21;.
[12] The Act authorizes DNR to “issue a permit for the construction of a seawall
after investigating the merits of the application[.]” Ind. Code § 14-26-2-23(c).
DNR may consider “any factor, including cumulative effects of the proposed
activity upon[,]” inter alia, “fish, wildlife, or botanical resources.” Ind. Code §
14-26-2-23(c)(2). The Act also empowers DNR to promulgate rules providing
objective standards for the issuance of permits, Ind. Code § 14-26-2-23(e),
which DNR has, in fact, done, see 312 I.A.C. 11. Before DNR may issue a
seawall permit, it must determine “that issuance of the permit would not result
in significant environmental harm to the public freshwater lake.” 312 I.A.C.
11-3-3(d)(1).
[13] DNR issues permits for the construction of new seawalls depending on the
nature of the location of the proposed seawall. To summarize these
regulations, seawalls installed in a significant wetland or along a natural
shoreline must be built with bioengineered material; seawalls installed in “an
area of special concern” must be built with bioengineered material, glacial
stone, or both; and seawalls installed in “a developed area” must be built with
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one or more of bioengineered material, glacial stone, riprap, concrete, or steel
sheet piling. 312 I.A.C. 11-4-2(b)–(d).
[14] This case turns on whether the Property qualifies as an “area of special
concern” or is a “developed area,” and the parties seem to agree that the only
factual issue in this case is whether the Dredging increased the total length of
the shoreline around Lake Manitou. If Prosser established that it did, he may
be issued a permit to install a concrete seawall. If Prosser failed to establish that
it did, his application was properly denied.
II. Whether the Trial Court Erred in Granting
Prosser’s Petition for Judicial Review
[15] We review an administrative agency’s order using the same standard as the trial
court. Gray v. Med. Licensing Bd. of Ind., 102 N.E.3d 917, 921 (Ind. Ct. App.
2018). Judicial review under the Indiana Administrative Orders and
Procedures Act is limited, and the person seeking judicial review bears the
burden of establishing the agency action’s invalidity. Ind. Code § 4-21.5-5-
14(a). We must defer to the agency’s expertise, and we may set aside an agency
action only if the challenger shows that he has been prejudiced by a decision
that is “(1) arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law; (2) contrary to constitutional right, power, privilege, or
immunity; (3) in excess of statutory jurisdiction, authority, or limitations, or
short of statutory right; (4) without observance of procedure required by law; or
(5) unsupported by substantial evidence.” Ind. Code § 4-21.5-5-14(d). We do
not try the case de novo, reweigh the evidence, judge witness credibility, or
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substitute our judgment for that of the agency. Ind. Code § 4-21.5-5-11. We are
bound by the agency’s findings of fact if those findings are supported by
substantial evidence. Ind. Civil Rights Comm’n v. S. Ind. Gas & Elec. Co., 648
N.E.2d 674, 679 (Ind. Ct. App. 1995), trans. denied. “Substantial evidence is
more than a scintilla, but something less than a preponderance of the evidence.”
State v. Carmel Healthcare Mgmt., Inc., 660 N.E.2d 1379, 1384 (Ind. Ct. App.
1996) (citation omitted), trans. denied.
[16] The question before us as we review the ALJ’s disposition is whether the
administrative record contains substantial evidence to sustain the ALJ’s finding
that Prosser failed to establish that the Dredging lengthened the shoreline of
Lake Manitou, which was his burden. We conclude that the record does, in
fact, support the ALJ’s finding. Neese testified that he used a technology called
Geographic Information Systems (“GIS”) to superimpose the lines onto the
aerial maps and that, while the exact accuracy of GIS was unknown, error was
present in any scaled photograph. Neese also testified that there was no way to
know either the water level on the days on which any of the aerial photographs
were taken or the time of year, which would have affected the water level (and
therefore the shoreline) as well as the amount of vegetation in the lake. Neese
opined that the length of Lake Manitou’s shoreline could have either increased
or decreased between 1940 and 1957.
[17] In addition, Thomas opined that “there was no definitive evidence presented to
support a finding that the dredging resulted in creating additional lake
frontage[.]” Appellant’s App. Vol. III p. 183. Finally, Hebenstreit testified that
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“it’s hard to tell where the legal shoreline of that lake was and whether or not
[the Dredging] added or decreased the amount of shoreline frontage.”
Appellant’s App. Vol. II p. 151. Keeping in mind that it was Prosser’s burden
to establish that the shoreline had been lengthened and that we show
considerable deference to state agencies working within their areas of expertise,
we conclude that the ALJ’s conclusion was supported by substantial evidence.
[18] Prosser points to his testimony and that of Mills and Sampsel, both of whom
agreed with Prosser’s testimony that the shoreline had been lengthened by the
Dredging. The ALJ concluded that while their testimony supported a finding
that the Dredging had straightened the shoreline of the Property, it did not
support a finding that the Dredging had lengthened the shoreline because
Sampsel’s father had “cleaned up” the shoreline, using new soil when
necessary. Put another way, an originally uneven shoreline between two
points, even if shifted slightly landward, would not necessarily be longer if it
were also straightened in the process. In the end, it was ALJ’s job to evaluate
the testimony of witnesses and other evidence for credibility and weight, and
the ALJ’s evaluation of their evidence strikes us as neither arbitrary nor
capricious. We will not second-guess the ALJ’s determinations in this regard.1
1
In reversing the final order of the Natural Resources Commission, the trial court relied on our decision in
Haynes v. Brown, in which we stated that “the trial court may not refuse to consider and weigh competent,
uncontradicted evidence” and that we will substitute our judgment for that of the trial court “when the
evidence is all one way, and but one conclusion could be reached from the facts proved.” 120 Ind. App. 184,
189, 190, 88 N.E.2d 795, 797 (1949). Even if Haynes would require the ALJ to credit Mills’s and Sampsel’s
depositions if (1) they were uncontradicted and (2) only permitted one possible conclusion, they were not and
did not, as explained above. Consequently, Haynes does not help Prosser.
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We therefore reverse the trial court’s reversal of DNR’s denial of Prosser’s
application for a permit to construct a concrete seawall on the Property.
[19] The judgment of the trial court is reversed.
Crone, J., and Tavitas, J., concur.
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