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Oregon Communities and Developers Face Significantly Heightened Standards Following ESA Consultation on National Flood Insurance Program

Molly Lawrence and Jenna Mandell-Rice

On April 14, 2016, the National Marine Fisheries Service (NMFS) released its Endangered Species Act (ESA) Section 7(a)(2) Biological Opinion regarding the Federal Emergency Management Agency’s (FEMA) implementation of the National Flood Insurance Program (NFIP) in Oregon (Oregon BiOp).

Similar to the 2008 Biological Opinion issued by NMFS regarding the NFIP in the Puget Sound region (the Puget Sound BiOp), the Oregon BiOp concludes that the Oregon NFIP allows and encourages floodplain development that jeopardizes the continued existence of 16 ESA-listed anadromous fish species and Southern Resident killer whales, and results in the destruction or adverse modification of critical habitat for the fish species. In contrast to the Puget Sound BiOp, where NMFS permitted FEMA to rely heavily on local governments to implement more restrictive floodplain development standards, the Oregon BiOp takes a different approach to the “reasonable and prudent alternative” (RPA), and directs FEMA to change significant portions of the NFIP at the national level. Specifically, NMFS directed FEMA to change mapping protocols and the minimum floodplain regulatory criteria that all local jurisdictions must adopt to participate in the NFIP (enabling residents and businesses within their jurisdictions to purchase flood insurance through the NFIP) and to enforce NMFS’s proposed new national standards against local governments in Oregon.

The magnitude of the Oregon BiOp is startling. If implemented as written, it could force local governments in Oregon, and ultimately other jurisdiction around the country, to apply much more restrictive development standards to larger floodplain areas to maintain eligibility to participate in the NFIP. For both public and private property owners and developers near a river or coast line, these changes could effectively prohibit the majority of development options, significantly reducing the value of previously high priced lands.

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IN BRIEF

The Coweeman River Mitigation Bank, a wetland and conservation bank located  in the Lower Columbia River floodplain and the Cowlitz River watershed, will re-establish, rehabilitate and enhance wetland functions and create off-channel rearing, refuge and potential spawning habitat for salmon. The Bank will provide an option for developers to purchase wetland credits to mitigate unavoidable impacts to wetlands, or conservation credits for impacts to salmonid species listed under the Endangered Species Act.  

In Emerson v. Island County, the Court of Appeals (Div. I) affirmed a summary judgment which dismissed a property owner’s damages claims against the County under various theories including Chapter 64.40 RCW and 42 U.S.C. 1983.  The dispute involved a County enforcement action involving an unpermitted addition to Emerson’s home, allegations of wetland fill, Emerson’s refusal to allow a county wetland inspection, and the adequacy of wetland reports that were submitted by Emerson.  The County eventually fined Emerson $37,000 and denied his application for an after-the-fact building permit.  Emerson appealed.  The parties then executed a settlement agreement under which Emerson paid a reduced fine and agreed to submit a wetland report by a third wetland expert.  After the third wetland report was rejected by the County as inadequate and the County again insisted on an on-site wetland inspection, which Emerson again refused, Emerson initiated another lawsuit claiming a breach of the settlement agreement and damages.  In litigation, the County gained access to the Emerson home site under CR34(a)(2) discovery and found no wetlands.  The County then issued the after-the-fact building permit and successfully moved for summary judgement to dismiss Emerson’s damages claims.  The RCW 64.40 claim (claiming damages from governmental action) was dismissed for Emerson’s failure to exhaust administrative remedies because Emerson could have reinstated his appeal of the building permit denial or appealed the wetland inspection condition that the County had imposed.  No substantive due process violation was found because, as the Court noted, all the County was seeking was a determination whether wetlands were on the Emerson property.  The Court specifically pointed to “more than 10 letters and phone calls” that were made, notifying Emerson that the dispute could have been quickly resolved if the County had been permitted to inspect the Emerson property for wetlands, which Emerson refused.

One lesson in this case is the importance of structuring settlement agreement terms to address preservation of damage rights in the event the parties cannot resolve all issues as specified in that agreement.  Perhaps the more important lesson is the value of having quality wetland consultants advising owners and that an on-site wetland inspection can often resolve issues before they escalate.

The U.S. District Court in Oregon ruled that the current federal fisheries plan (2014 Biological Opinion or BiOp) for operating the Federal Columbia River Power System violates the Endangered Species Act (ESA) and the National Environmental Policy Act (NEPA).  In National Wildlife Federation v. National Marine Fisheries Service, the federal district court in Oregon held that the 2014 BiOp fails because it applied an inadequate recovery standard and relied on mitigation measures that yield uncertain benefits.  The Court held that the Army Corps of Engineers and the Bureau of Reclamation violated NEPA by failing to prepare an environmental impact statement (EIS) in connection with its action on the 73 “reasonable and prudent alternatives” described in the 2014 BiOp.  The Army Corps and the Bureau had relied on EIS documents from the 1990s, which the Court found “too stale” to justify continuation of a failed approach when the listed species are in a “perilous state.”

The Court ordered preparation of a new BiOp by March 1, 2018, which will be the fifth proposed BiOp to be reviewed in the long-running litigation that was originally filed in 2001 and features its third presiding judge.  In his May 4 opinion, Judge Michael Simon criticized the agencies for ignoring the “admonishments” of his predecessors to “consider more aggressive changes” to the power system, including actions on one or more of the lower Snake River dams.  Judge Simon ordered preparation of a new 2018 BiOp that complies with the ESA and an EIS that complies with NEPA.   "Although the Court is not predetermining any specific aspect of what a compliant NEPA analysis would look like in this case, it may well require consideration of the reasonable alternative of breaching, bypassing, or removing one or more of the four Lower Snake River Dams."  Judge Simon commented that the EIS requirement of analyzing all reasonable alternatives may be able to break the status quo “logjam” and to identify a new approach. 

Despite its legal flaws, the Court directed the 2014 BiOp to remain in place and ordered the federal agencies to continue to fund and implement it until the 2018 BiOp is prepared and filed.  In addition, the Court rejected arguments that the 2014 BiOP adversely modifies critical habitat or adversely affects endangered orcas.   Although an appeal seems likely, the decision will continue to generate discussion and debate about its many potential repercussions for the federal power system and for related Columbia River resources.  

The Army Corps of Engineers issued a decision that the Gateway Pacific Terminal at Cherry Point, WA, as proposed, would violate the Lummi Nation of the Lummi Reservation’s (Lummi) treaty-based fishing rights, basing its decision on the terminal project’s Section 404/10 permit application, which found that the project would impair or eliminate a portion of the Lummi’s treaty-based fishing and crabbing rights at the Lummi’s usual and accustomed fishing  (U&A) places within the harbor. The parties did not contest that Cherry Point is within the Lummi’s U&A territory; however, the Corps noted that the project would impair the time and manner in which the Tribe could fish in those U&A places.

The applicant argued that the impacts on the Lummi’s U&A treaty fishing rights were de minimis, and questioned whether the Tribe actually exercises their rights at the site on any regular basis. The applicant also offered to mitigate the impacts of vessel traffic by limiting the vessel types, managing vessel traffic and communication, and providing specific fishing locations at the wharf and trestle portions of the project. The Corps rejected those arguments and the mitigation offered, noting that the mitigation elements would minimize but not eliminate the impacts caused by vessel traffic, and that the trestle and wharf structures’ physical impairment of the U&A fishing rights could not be mitigated.  

In Thompson and Misselwitz v. Mercer Island, the Court of Appeals addressed the issue of legal “standing” to challenge local land use decisions under Washington’s Land Use Petition Act (LUPA).  The ruling re-emphasized LUPA’s strict requirement that parties seeking to challenge land use decisions in court must first take the necessary steps to establish standing under LUPA, including exhausting administrative remedies (such as pursuing any administrative appeals that are available at the local level) and alleging specific injuries to their interests (such as a particular kind of harm to their property) rather than merely alleging an “abstract interest in having others comply with the law.”  The ruling underscores the need for parties to participate early in land use processes, to fully exhaust any potential administrative remedies, and to clearly identify how the land use decision being challenged with cause a specific type of injury to their interests.

In February, EPA opened a formal comment period on a proposed rule to add “subsurface” vapor intrusion as a component to the Hazardous Ranking System (HRS) used for determining whether a site should be listed on the federal National Priorities List (NPL). See,81 Fed. Reg. 10372 (February 29, 2016).  The rule would ensure that sites that pose a health risk from indoor vapor intrusion are investigated and cleaned up as part of remediation under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). The EPA believes the threat from subsurface intrusion was not adequately addressed in the current HRS and, that state requirements for addressing subsurface intrusion are inconsistent and generally insufficient. 

Vapor intrusion is the general term given to migration of hazardous vapors from any subsurface vapor source, such as contaminated soil or groundwater, through the soil and into an overlying building or structure. Vapors can enter buildings through cracks in basement walls, subflooring and foundations, as well as through conduits to a building that are not intended for human occupancy (e.g., sewers, drain lines, access vaults, storage sheds, pump houses). 

Buyers or lenders in real estate transactions involving certain properties (e.g., active service station in residential neighborhood, dry cleaning operation in a local mall adjacent to a neighboring merchant, vacant industrial lot proposed for development over a known or suspected contaminated groundwater plume) should be cognizant of the proposed rule as it is likely to affect potential liabilities under federal and state environmental laws.   Parties to such transactions should expect expanded environmental investigations, potential additional response costs, “stigma” concerns associated with the potential for vapor intrusion, and litigation and claims risks.  However, while it may be prudent to evaluate vapor intrusion generally, the question whether it is “required” to do so in order to meet the “All Appropriate Inquiries” standard of due diligence under EPA All Appropriate Inquiries requirements in 40 CFR 312 or ASTM E1527-05 has not been resolved.  While the comment period is now closed, EPA has not indicated whether it will reopen the comment period or publish the final rule prior to end of the current administration.  

In Bilanko v. Barclay Court Owners Ass 'n., No. 91247-5, Bilanko bought a condominium in a project that had recorded a Declaration amendment limiting the number of condo units that could be rented at any given time.  Bilanko moved in, but later wanted to rent her condo.  The rental limit had already been reached, and she was put on the “waiting list” for units that could be rented.   Bilanko sued the Condo Association, claiming that the rental restriction amendment to the Declaration was not properly adopted.  Her lawsuit was brought about 5 years after the amendment was adopted (and 4 years after she bought the condo), and based on her argument that the vote required for the passage of the amendment should have been 90%, but the paperwork indicated that the vote was “at least 67%”.   Washington law provides that that "[n]o action to challenge the validity of an amendment adopted by the association pursuant to this section may be brought more than one year after the amendment is recorded."  RCW 64.34.264(2).  The Declaration had similar language.  Based on these clear provisions, the court held that Bilanko’s challenge to the validity of the amendment was time barred and her case was dismissed.  The lesson of the case is clear – a condo purchaser should review and understand the existing use restrictions before buying in to a project. 

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