## Facts

- A developer group (“Pyramid”) proposed building a regional shopping mall by filling about 49.5 acres of wetlands known as Sweedens Swamp in South Attleboro, Massachusetts.
- The project required a Clean Water Act § 404 permit for the discharge of dredged or fill material into wetlands; the Army Corps of Engineers issues such permits, while EPA may veto a disposal site under § 404(c).
- EPA concluded that when Pyramid began searching for a mall site in spring 1983, a less damaging upland alternative site in nearby North Attleboro was available for purchase.
- The North Attleboro site became unavailable on July 1, 1983, after a competitor obtained purchase options.
- Pyramid purchased the wetlands site in December 1983 and applied to the Corps for a § 404(a) permit to fill the wetlands to construct the mall.
- The Corps issued the permit, focusing on the absence of practicable alternatives at the time of the permit application.
- EPA vetoed the site specification under § 404(c), reasoning that a practicable, less damaging alternative existed when Pyramid entered the market for a site and that the project would cause unacceptable adverse effects on wetlands resources, including in light of cumulative regional wetlands losses.
- Pyramid and aligned parties challenged the veto in federal court; the district court granted summary judgment for EPA, and the case proceeded on appeal.

## Issues

1. Whether EPA reasonably interpreted the § 404(b)(1) Guidelines’ “practicable alternative” requirement to allow consideration of alternatives available when the developer entered the market, rather than at the permit application date.
2. Whether a court should defer to EPA’s interpretation where the Corps had applied a different temporal approach.
3. Whether EPA exceeded its § 404(c) authority by independently evaluating compliance with the Guidelines and by considering cumulative and historical wetlands impacts when determining “unacceptable adverse effect.”
4. Whether EPA’s veto was arbitrary and capricious under the Administrative Procedure Act.

## Decision

- The Second Circuit affirmed summary judgment for EPA and upheld the § 404(c) veto.
- The court held EPA’s market-entry approach to practicable alternatives was a permissible interpretation of the § 404(b)(1) Guidelines and warranted deference.
- The court rejected arguments that the Corps’ differing interpretation controlled, emphasizing EPA’s congressionally granted § 404(c) veto role and that the Guidelines were issued by EPA.
- The court held EPA could consider practicable alternatives and cumulative effects in determining whether a discharge would have an unacceptable adverse effect.
- The court concluded EPA’s action was not arbitrary or capricious and was adequately supported and explained in the administrative record.

## Legal Principles

- An agency’s reasonable interpretation of its own regulations receives substantial deference unless plainly erroneous or inconsistent with the regulation.
- Under the § 404(b)(1) Guidelines, a § 404 permit should be denied where a practicable alternative exists that would have less adverse impact on the aquatic ecosystem and does not create other significant environmental harm.
- EPA may treat the relevant time for assessing practicable alternatives as the developer’s entry into the market for a site, to prevent regulated parties from defeating the alternatives requirement through timing or acquisition decisions.
- EPA’s Clean Water Act § 404(c) veto authority permits an independent determination of “unacceptable adverse effect” and is not confined to accepting the Corps’ conclusions.
- In making a § 404(c) determination, EPA may consider cumulative impacts and broader regional wetlands loss, consistent with the Guidelines’ cumulative-effects analysis and the statute’s protective objectives.
- A § 404(c) veto will be upheld under APA review where the agency’s reasoning is rationally connected to the record and the governing statutory and regulatory framework.

## Conclusion

The Second Circuit sustained EPA’s veto of a wetlands fill permit for a mall project, holding that EPA could assess practicable alternatives as of the developer’s market entry and could account for cumulative wetlands impacts when determining unacceptable adverse effects under Clean Water Act § 404(c).


Bersani v. U.S. Env't Prot. Agency, 850 F.2d 36 (2d Cir. 1988)