CITIZENS FOR RESPONSIBLE ENVIRONMENTAL MANAGEMENT & another [Note 1] vs. ATTLEBORO MALL, INC. [Note 2]

LIACOS, J. The defendants are Attleboro Mall, Inc. (applicant), which seeks to construct a shopping mall on a site known as Sweeden's Swamp in Attleboro, and the Department of Environmental Quality Engineering (DEQE), which reviewed and approved the applicant's plans pursuant to the Wetlands Protection Act (WPA), G. L. c. 131, Section 40. [Note 3] The applicant appeals from an order by a judge of the Superior Court, which nullified DEQE's approval and remanded the matter to the

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agency for further review. G. L. c. 30A, Section 14 (1) (1984 ed.). We reverse the judge's order and affirm the ruling by DEQE.

Efforts to build on Sweeden's Swamp began in February, 1979, when a developer known as Mugar Group, Inc./Federated Stores Realty, Inc. (Mugar), filed an environmental notice

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form with the Executive Office of Environmental Affairs (EOEA). See Massachusetts Environmental Policy Act (MEPA), G. L. c. 30, Sections 61-62H (1984 ed.). In March, Mugar filed with the conservation commission of the city of Attleboro (ACC) a notice of intent to alter wetlands pursuant to the WPA. [Note 4] After a public hearing, the ACC authorized construction of Mugar's project in May, 1979. [Note 5] A group of ten Attleboro residents then invoked their statutory right to have the commission's action reviewed by DEQE. Later, ownership of the proposed project was transferred from Mugar to Attleboro Mall, Inc., then an affiliate of the Edward J. DeBartolo Corporation (DeBartolo). On April 21, 1982, DEQE's southeast regional office [Note 6] issued a superseding order which determined that "[b]ecause of irreparable harm to several interests of the [WPA] the project as proposed is denied." DeBartolo appealed to DEQE's central office in Boston, claiming its right to a formal adjudicatory hearing.

Formal hearings were not held, however, until more than two years had passed. In the interim, in April of 1983, DEQE adopted new regulations (1983 regulations) applicable to the use of "bordering vegetated wetlands," one of the kinds of land the applicant proposed to develop at Sweeden's Swamp. See 310 Code Mass. Regs. Section 10.55 (2) (1983) (definition of

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bordering vegetated wetlands). In place of the regulations promulgated in 1978, which had permitted review of such wetlands proposals on a case-by-case basis, DEQE put in force what amounts to a per se rule; with exceptions not relevant here, the new rule prohibits approval of any proposal which results in the loss of more than 5,000 square feet of bordering vegetated wetlands. See 310 Code Mass. Regs. Sections 10.55 (3) and (4) (a)-(b) (1983) (prohibitions); 310 Code Mass. Regs. Section 10.55 (4) (c) (1983) (exception). [Note 7]

In DEQE's preface to its 1983 regulations, it is stated that "the interests of the [WPA] cannot be protected other than by leaving the existing wetland plant community intact." This is so because "while engineering solutions can protect the statutory interests at stake in most projects located in or near [some kinds of freshwater wetlands], this is not the case with bordering freshwater wetlands. The complex natural functioning of these wetlands cannot be replicated, and no amount of engineering will enable such areas to be filled or substantially altered without seriously impairing the statutory interests they serve."

According to the 1983 regulations themselves, however, the per se rule contained in Sections 10.55 (3) and (4) was to "take effect on April 1, 1983," 310 Code Mass. Regs. Section 10.10 (1), and projects already in the regulatory pipeline were to be "grandfathered" by force of provisions barring application of the new rules "to any Notice of Intent filed prior to the effective date [April 1, 1983]." Id. This grandfather clause guaranteed that "[a]ll proceedings and actions commenced under the Act prior to the effective date" would go forward to the case-by-case review authorized "under the prior applicable regulations [the 1978 rules]." 310 Code Mass. Regs. Section 10.10 (3) (1983).

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In December, 1983, DeBartolo conveyed the stock of Attleboro Mall, Inc., to the Newport Galleria Group, an affiliate of the Pyramid Companies of Syracuse, New York (Pyramid); [Note 8] and Pyramid (hereafter, applicant) decided to proceed with the adjudicatory hearing originally sought by DeBartolo. [Note 9] In May, 1984, it submitted revised plans for development of the mall at Sweeden's Swamp. The changes made were designed primarily to mitigate the adverse impact of the project with respect to the interests protected by the WPA. [Note 10]

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On June 22, 1984, DEQE issued a superseding order of conditions in draft form which approved the project as revised. On August 8, 1984, the adjudicatory hearing commenced. Over fourteen days of hearings, the hearing officer considered expert testimony and documentary evidence relevant to the impact of the redesigned project on the following statutory interests: ground water protection, prevention of pollution, protection of drinking water, storm damage prevention, flood control, and protection of fisheries. While the hearings progressed, the applicant responded to criticisms by the plaintiffs' experts by proposing alterations to its plans.

On January 28, 1985, the hearing officer issued a tentative decision, concluding that "[t]he overall concept of this development is consistent with the protection of the interests of the Wetlands Protection Act." The hearing officer found that, while 70% of the water entering this 49.6 acre wetland now "leaves the site untreated" because it passes through by way of three major channels without making contact with the vegetation, [Note 11] the applicant's plants would be at least as efficient at filtration as the existing red maple swamp, and probably more so. In effect, the project as planned would replace a relatively large but inefficient wetland with one smaller in size but "more valuable . . . from a pollution attenuation point of view. "Because he concluded that the techniques for creating herbaceous wetlands were tested and reliable, he found that "the applicant's plan with regard to wetlands replication is feasible and satisfies the interests of the [A]ct with regard to pollution control."

The hearing officer found that the current suitability of the aquifer for drinking wells was slight, but relevant. Although he found that "use of the proposed parking area will contribute to pollution loading . . . and decrease the overall ability of the project to prevent pollution," he concluded that the project's

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"mall pad" feature "will prevent contaminants from entering the groundwater from the parking lot" and that its design is "sufficient to protect the [statutory interests] in protection of ground water and drinking water, in addition to having pollution attenuation function." Concerning the related statutory interests in prevention of flooding and storm damage prevention, he found that "no increased flooding will occur on site or off site during a worst case Type II 48 hour 100 year intensity storm, and there will be no increase in peak flow from the site in its developed condition." Concerning the statutory interest in protection of fisheries, the hearing officer found that, despite the regional office's finding of significant fisheries interests at Sweeden's Swamp, subsequent inquires showed "no significant fisheries on site" nor downstream at Seven Mile River; and that the proposal will have, "if anything, a positive impact on fisheries."

The hearing officer added to the order of conditions a requirement that the mall's environmental function be monitored for at least five years following construction. He also recommended that DEQE retain "jurisdiction to order whatever remedial actions are necessary including measures to limit pollution loading of the wetland and the construction of water treatment facilities."

On March 13, 1985, the commissioner issued his final decision and order of conditions by which he adopted the hearing officer's decision and approved the applicant's revised plans. In response to the plaintiffs' principal legal objection, that the applicant's plans were so altered as to "constitute a new filing" and therefore to require de novo review by the filing of a new notice of intent with the ACC, the commissioner found that (a) remand to the local body would be pointless because the ACC had never sought remand after approving a plan which would have filled "all 50 acres" of the wetlands at issue, and (b) the plaintiffs sought a refiling of the case only to place its review under the new regulations which would prohibit wetland alterations of the size and scope contemplated here. While agreeing with MACC that "public comment on wetlands projects is

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important," the commissioner saw no need for more public participation than the review process had already afforded. He characterized the revisions as "changes imposed by the Department," and stated that his staff knew of no case in which such changes had caused DEQE to require refiling.

As to the apparent inconsistency between the approval of the applicant's revised plans and the preface to DEQE's 1983 regulations, the commissioner observed that the per se rule in the 1983 regulations was reasonable because it served a purpose "to standardize decisions." In his view, a change of approach by DEQE was "especially important in the administration of the wetlands program, in which there are 351 different administering agencies -- the city and town conservation commissions." The commissioner concluded, however, that "[i]t is not inconsistent for the Department to believe that as a general rule the filling of more than 5,000 square feet of bordering wetland will not protect the interests of the act and at the same time approve the filling of much more than 5,000 square feet when forced to apply the case by case method of analysis" to the "unusual" facts before it. The commissioner concluded that DEQE's promulgation and application of the "grandfather clause" was not at odds with the department's policy as stated in the preface to the 1983 regulations. Finally, the commissioner addressed an alleged contradiction between his decision and DEQE's own statement in the 1983 preface "that the functions served by bordering vegetated wetlands cannot be replicated in their totality by engineering means." He found that there was no contradiction in light of testimony from the director of DEQE's wetlands programs who had supervised preparation of the preface. In the director's opinion, the applicant's plan to create a substitute wetland relied not on "an engineering solution to replace the pollution attenuation and fisheries values of the existing wetland, but rather [on] a biological solution."

The plaintiffs appealed to the Superior Court in Suffolk County pursuant to G. L. c. 30A, Section 14 (1). The judge issued his ruling on September 25, 1986. He found that the new plans contained "significant changes," see note 10, supra, but he neither explained the nature of their significance to the statutory

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interests, nor did he find that DEQE had erred by not requiring the applicant to file a new notice of intent. [Note 12] He did rule, however, that "the interests of the [WPA] cannot be protected other than by leaving the existing wetlands plant community intact," and that it was "error of law for DEQE to have grand-fathered the new owners into the 1978 regulations, as they [sic] are diametrically opposed to the mandates of the 1983 regulations." It is from this decision that the applicant appeals, arguing that the Superior Court judge erred in holding as matter of law that DEQE was obliged to apply the requirements of its 1983 regulations retroactively. Because the plaintiffs argue that DEQE's decision cannot stand even if the judge erred, we shall discuss the merits of the judge's decision first; then we will analyze the plaintiffs' remaining concerns.

1. The decision in the Superior Court. The applicant argues, too broadly we think, that the judge erred when requiring retroactive application of new rules because, in its view, an agency is always entitled to limit new regulations to prospective application if, in the agency's judgment, retroactive application would be unfair to parties who have invested time and money, or otherwise altered their positions in reliance on the continuing applicability of old regulations. In support of this proposition, the applicant has cited numerous decisions in which Federal courts have upheld "grandfather clauses" as serving governmental purposes "legitimate" enough to withstand challenge under the equal protection clause of the Fourteenth Amendment to the United States Constitution. See Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 467-468 (1981); New Orleans v. Dukes, 427 U.S. 297, 303-306 (1976); Sklar v. Byrne, 727 F.2d 633, 640-642 (7th Cir. 1984); Trafelet v. Thompson, 594 F. 2d 623, 631 & n.11 (7th Cir.), cert. denied, 444 U.S. 906 (1979). The judge, in his ruling, appears also to have relied on Federal case law. The judge stated, "In deciding the retroactive effect of newly adopted administrative rules, [re]viewing courts must look to the standard established by the

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Supreme Court in SEC v. Chenery Corp., 332 U.S. 194, 203 (1947)." Additionally, the judge relied primarily on the tests set forth in Sierra Club v. EPA, 719 F.2d 436, 467-468 (D.C. Cir. 1983), cert. denied sub nom. Alabama Power Co. v. Sierra Club, 468 U.S. 1204 (1984). [Note 13] In our view, since neither Federal constitutional nor statutory issues are involved on the facts of this case, the proper standard of judicial review is to be drawn from State law.

The relevant question here is whether the "grandfather clause" in the 1983 regulations violates the statutory mandate of DEQE as set forth in G. L. c. 131, Section 40. We have held that courts should "not hesitate to overrule agency interpretations . . . [when they] are arbitrary, unreasonable or inconsistent with the plain terms of the [empowering statute]." Finkelstein v. Board of Registration in Optometry, 370 Mass. 476, 478 (1976). Reliance interests are among the factors that agencies properly may consider when promulgating or applying rules in the context of the agency's statutory mandate.

When the judge ruled that DEQE erred as matter of law in grandfathering the applicant's project, he effectively substituted his own judgment, that grandfathering is "diametrically opposed to the mandates of the 1983 regulations" and the statutory mandate, for DEQE's determination to the contrary. The propriety of that substitution, of judicial judgment for administrative determination, is doubtful. "We give substantial deference to the construction placed on a statute . . . by the agency charged with its administration," Manning v. Boston

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Redevelopment Auth., ante 444, 453 (1987); and deference is especially appropriate where the Legislature "has seen fit to delegate broad rulemaking authority to the [agency]." Natural Resources Defense Council, Inc. v. SEC, 606 F.2d 1031, 1050 (D.C. Cir. 1979). Accord SEC v. Chenery Corp., 332 U.S. 194, 208 (1947) (where statutory grant of substantive administrative discretion is broad, reversal of agency's judgment is warranted only when abuse of discretion is "plain"). As we have noted in another context, "[i]t is significant that [the WPA] is entirely `procedural' in that it [only] prescribes the steps to be taken before any dredging or landfill activities may be conducted in certain wetland areas." Boston v. Massachusetts Port Auth., 364 Mass. 639, 647-648 n.10 (1974).

The Act "does not lay down absolute use prohibitions." Coons v. Carstensen, 15 Mass. App. Ct. 431, 435 (1983). It vests in DEQE precisely that "broad authority to effectuate [its] purposes" which commands judicial deference. Levy v. Board of Registration & Discipline in Medicine, 378 Mass. 519, 524 (1979). Where deference of this kind is due, a reviewing court must treat DEQE's regulations, including 310 Code Mass. Regs. Sections 10.10 (1) and (3) (the grandfather clause), as presumptively rational "and not declare [them] void unless [their] provisions cannot by any reasonable construction be interpreted in harmony with the legislative mandate." Id. at 525, quoting Consolidated Cigar Corp v. Department of Pub. Health, 372 Mass. 844, 855 (1977). "[N]o more need be discerned than some rational relation between the regulation and the empowering statute." White Dove, Inc. v. Director of the Div. of Marine Fisheries, 380 Mass. 471, 477 (1980).

In this case, the range of potentially rational regulations is quite broad because the WPA requires no more of DEQE than that it "impose such conditions [on landfill projects affecting wetlands] as will contribute to the protection of the interests described . . . [in the Act, to the end that] all work [on such projects] shall be done in accordance therewith." G. L. c. 131, Section 40 (1984 ed.). Although the protected interests are stated with some specificity, see note 3, supra, the statute is silent with respect to what may or may not constitute "protection."

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Into this silence, the judge read the language of the 1983 preface, "that the interests of the Act cannot be protected other than by leaving the existing wetland plant community intact." He concluded that the "near prohibition" in the 1983 regulations on the filling of bordering vegetated wetlands "becomes essential to performance by DEQE of its lawful obligation," and any "different course constitutes irresponsibility." He erred, however, in not giving due deference to DEQE's determination that the grandfather clause is not inconsistent with the language of the preface or the statutory mandate.

As to the language of the preface, we think it just as reasonable to read it, in light of the regulations it explains, as meaning by its reference to the "existing wetland plant community" that portion of the State's wetlands which would be kept essentially "intact" by the new regulations, i.e., those wetlands not subject in 1983 to a notice of intent. Nor do we perceive that the presence of the grandfather clause in the 1983 regulations was in any way violative of the statutory mandate. The WPA does not command DEQE to protect all wetlands from all development. Rather, it commands the agency to condition all work on wetlands so as to protect the statutory interests in prevention of pollution, flooding, and storm damage, and in preservation of water supplies and wildlife. Even though the 1983 regulations which prospectively bar case-by-case review of development proposals may be reasonable (a point which we need not decide), it remains true that a grandfather clause carrying forward the prior approach allowing case-by-case review may also be within the statutory mandate. To the extent that a grandfather clause permits case-by-case review where a project is already in the administrative pipeline, such an approach may also be reasonable because DEQE properly may determine, on the basis of its knowledge of the number and nature of the projects in its pipeline, that such grandfathering will not be so administratively burdensome as to prevent effective, efficient protection of the statutory interests. When consideration is given to the additional facts that, by virtue of being grand-fathered, the applicant's project did not escape review, and that none of the hearing officers' favorable findings was challenged

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by the judge, it is clear that DEQE's actions have been consonant with the statutory mandate. Accordingly, we hold that the judge's nullification of DEQE's decision was error.

2. The plaintiffs' remaining objections. What we have said effectively answers most of the questions raised by the plaintiffs. In its amicus brief MACC argues that even if, as a procedural matter, the applicant is entitled to review under the 1978 regulations, DEQE's decision to allow filling at SWeeden's Swamp was erroneous. MACC contends that the rule making process which culminated in the 1983 regulations shows that DEQE had concluded that "except in limited circumstances expressly set forth, no wetlands that border bodies of water may be altered by any project" (emphasis in original). DEQE's actual conclusion was very different. Contrary to MACC's view, DEQE did not determine in 1983 that case-by-case review was incapable of determining whether, in an individual case, filling or alterations of wetland might be consistent with protection of the statutory interests. [Note 14] Nothing in G. L. c. 131, Section 40, sustains this view. It is primarily to the statue that we look to determine the proper range of an agency's power to shape regulations. Additionally, to the extent we give deference to the agency's decision, the deference is to the regulations as they were promulgated, including the grandfather clause.

We note also that DEQE has expertise, not only with respect to what conditions will protect the statutory interests in a given case but also with respect to what adjudicatory techniques will be administratively feasible in service of those interests. DEQE

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had discretion to decide that the general rule need not apply to projects already in development and in process of review. Additionally, the hearing officer found, on the basis of substantial evidence, that the existing wetland does not function efficiently in service of the statutory interests. He found further that the project, as planned, would result in creation of an environmental entity whose "functioning" would be "biological," that is to say, "natural." That the feasibility of recreating functional wetlands was debated by the experts who testified is not a ground for reversal.

The plaintiffs also argue that the judge erred in not requiring the applicant to seek de novo review by filing a new notice of intent with the ACC. [Note 15] By the literal terms of the WPA, anyone planning to "alter" a wetland must file a notice of intent with local authorities including "such plans as may be necessary to describe such proposed activity and its effect on the environment." G. L. c. 131, Section 40 (1984 ed.).

The hearing officer decided, pursuant to the terms of Section 10.06 (5) of the 1978 regulations, that the revisions did not amount to such a "significant change of the activity" as to "require a new filing," [Note 16] because (1) it had been DEQE's practice not to remand to the local level so long as "the general intent of a proposal [as here, to build a mall in Sweeden's Swamp] remains the same"; (2) the WPA contemplates changes subsequent to initial filings and vests final authority to approve plans in DEQE; (3) local opponents were not denied a full opportunity to oppose the revised proposal; and (4) the design changes were intended to reduce the adverse environmental impact of the project below the levels already approved by a local conservation commission which had not sought remand.

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The judge, on the other hand, characterized the revisions as "significant," and he referred to the plans as "new"; but, despite the plaintiffs' contention to the contrary, the judge did not find that DEQE had erred by misapplying Section 10.06 (5). The word "significant" is defined in the regulations to apply to a wetland which "plays a role in the provision or protection of an interest of the Act." 310 Mass. Regs. Section 10.02 (42) (1978) (defining "[s]ignificant"). See also 310 Code Mass. Regs. Section 10.04 (1983) (same). This definition was promulgated, not for use in the context of Section 10.06 (5), but for use when the agency must determine whether it has jurisdiction to determine, in the words of the statute, that "the area on which the proposed work is to be done is significant" to protection of enumerated environmental interests. Where jurisdiction is concerned, it is clearly apt for DEQE to define "significant" broadly, as it is clear the Legislature intended to place within DEQE's protective purview any wetland which, in DEQE's opinion, might play a role in flood control or the prevention of pollution.

However, after DEQE has taken jurisdiction, the question changes to that of whether the statute requires similar breadth in defining the change which may mandate remand for local reconsideration. We think it does not, for the result would be to deny to DEQE the exercise of discretion which is so clearly contemplated by G. L. c. 131, Section 40, and by Section 10.06 (5) of the 1978 regulations.

Additionally, as stated by the Appeals Court in Hamilton v. Conservation Comm'n of Orleans, 12 Mass. App. Ct. 359, 368 (1981), "it is apparent that the Legislature has assigned to local authorities acting under [the WPA] the role of making an initial review of an application for the familiar purposes of bringing local knowledge to bear on local conditions and reducing the administrative burden on a Statewide agency." While the statute requires that the notice which triggers local review must include "such plans as may be necessary to describe [the] proposed activity and its effect on the environment," the statute nowhere intimates that all subsequent proceedings under the Act must remain directed to the specific plans initially filed with local authorities. Moreover, the statute contains several

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indications to the contrary, for it empowers DEQE to review any local determination sua sponte, and to issue orders "supersed[ing]" any orders issued locally. Implicit in this power of DEQE is a power to revise, or to request revisions, and to approve them when appropriate.

The question is whether the statutory requirement of bringing local knowledge to bear on local conditions is inadequately protected when DEQE permits altered plans to go forward to final approval without remand for additional local review. While the changes submitted to DEQE were not scrutinized locally and are undeniably "substantial" in terms of environmental effect, these same changes were found by DEQE to reduce the adverse environmental impact of a project previously approved on the local level. [Note 17]

We note that local residents and officials have had an opportunity to be heard by way of a public hearing and to apply local knowledge by way of initial approval. Local opponents have been heard at length during the process of review. We attach some importance to the Legislature's presumed intent that the DEQE's review procedures operate efficiently in individual cases, so the WPA's Statewide mandate may be effectively implemented. Obviously, if a change or set of changes is meaningful enough to win DEQE's approval, those changes must be substantial in terms of their environmental impact. We cannot conclude that the Legislature intended to burden every meaningful change in an applicant's proposal with de novo review, regardless whether or not the change was one as to which the process of review might benefit from local participation. See Wolbach v. Beckett, 20 Mass. App. Ct. 302, 307 (1985) (nothing in Section 40 requires local participation as condition precedent to determination by DEQE).

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In this case, the interveners have not attempted to demonstrate, except in the most speculative and conclusory ways, how remand could improve the process. Implicit in DEQE's position is the insight that, where local authorities have seen fit, on the basis of local understanding of local conditions, to approve wholesale destruction of a local wetland, the process of review is not likely to be meaningfully informed by remand for local consideration of proposals not so destructive, and indeed the likely consequence of such remand would be needless delay. Since unnecessary delay is not what the Legislature could rationally have intended, we do not read the WPA to require such delay.

Last, there remains the question whether the applicant's plans were in fact less destructive or more protective of statutory interests than the plans approved locally. On this point, we defer to DEQE's expertise and review only to determine whether its decision was supported by substantial evidence. See Wolbach v. Beckett, supra; Raytheon Co. v. Director of the Div. of Employment Sec., 364 Mass. 593, 595-596 (1974). While the testifying witnesses disagreed concerning the feasibility of the applicant's proposal, there was ample evidence to support the conclusion that the proposal is workable and substantially more protective of statutory interests than the plans they replaced. In these circumstances, no new notice of intent could have served any statutory purpose.

The judgment of the Superior Court is reversed, and the case is remanded to the Superior Court for entry of a judgment affirming the decision of DEQE.

So ordered.