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Moriarity v. Indiana Department of Natural Resources

Supreme Court of Indiana

January 3, 2019

John E. Moriarity and Mae E. Moriarity, Appellants (Petitioners below),
Indiana Department of Natural Resources, Appellee (Respondent below).

          Argued: June 28, 2018

          Appeal from the Grant Circuit Court, No. 27C01-1511-PL-000073 The Honorable Mark E. Spitzer, Judge

         On Petition to Transfer from the Indiana Court of Appeals, No. 27A04-1612-PL-02731

          ATTORNEY FOR APPELLANTS William M. Horne Horne Law LLC Indianapolis, Indiana

          ATTORNEYS FOR APPELLEE Curtis T. Hill, Jr. Attorney General of Indiana Patricia C. McMath Deputy Attorney General Indianapolis, Indiana


          GOFF, JUSTICE.

         The Dam Safety Act gives the Indiana Department of Natural Resources (the "DNR") jurisdiction over certain dams in, on, or along streams in Indiana to protect Hoosiers' lives and property. The Moriaritys have a large pond and related dam on their land, and, since the early 2000s, the DNR has tried to exercise jurisdiction over the dam based on its determination that the dam was located in, on, or along a stream. The Moriaritys have resisted the DNR's jurisdiction and contested its findings without much success in the administrative tribunals and courts below. They now appeal to this Court, presenting us with three different questions. First, did the DNR properly exercise jurisdiction over the dam? Within this question lie issues concerning the reasonableness of the DNR's definition of the word stream and what, if any, notice the Moriaritys had of that definition. Second, did the DNR present substantial evidence supporting its classification of the dam as a high-hazard dam? Third, can the Moriaritys modify their dam to remove it from DNR's future jurisdiction? We answer each of these questions in the affirmative, largely based on our standard of review, and affirm the trial court.

         Factual and Procedural History

         In the late 1990s, Mae ("Becky") and John Moriarity decided to build a pond on farm land they owned in Grant County. Before excavating and building the necessary embankments, they contacted various local, state, and federal agencies and obtained what they were told were the necessary permits. By 2000, after a few years of work, the Moriaritys ended up with a fairly large pond and related dam. Their pond covered between thirty and forty acres and contained at least one hundred acre-feet of water, and parts of the dam holding back this water were taller than twenty feet.

         By 2002, the DNR was aware of the pond and dam. Throughout the early 2000s, the DNR sought to have the Moriaritys correct what it considered "significant safety deficiencies" in the dam according to Indiana Code chapter 14-27-7.5 (the "Dam Safety Act" or the "Act"). See Appellee's App. Vol. V, pp. 237, 239. On May 14, 2012, the DNR issued Notice of Violation VTS-3933-DM (the "NOV") to the Moriaritys, describing numerous violations of the Dam Safety Act. The NOV ordered the Moriaritys to make certain changes to their pond and dam, imposed $35, 000 in civil penalties for past violations, and provided daily penalties for any continuing violations.

         The Moriaritys petitioned for administrative review of the NOV. Two administrative law judges held a multi-part fact-finding hearing over the course of several months at which the parties presented argument and evidence. At the hearing, the parties' disputes included whether the Moriaritys' dam fell within the DNR's jurisdiction to regulate dams built in, on, or along streams and, if so, whether the dam was properly classified as a high-hazard dam. After the hearing, the presiding administrative law judge issued her Findings of Fact, Conclusions of Law and Nonfinal Order generally in favor of the DNR.

         The Moriaritys objected to the administrative law judge's order, and the Natural Resources Commission (the "NRC") held oral argument. The NRC then issued its Findings of Fact, Conclusions of Law and Final Order (the "Final Order") largely along the same lines as the administrative law judge's nonfinal order.[1] The NRC found that the DNR's use of the common meaning of the word stream was proper and constituted an ascertainable standard for identifying a stream, that the Moriaritys' dam was in, on, or along at least one stream, and that there was sufficient evidence to support the conclusion that the Moriaritys' dam was a high-hazard dam. The NRC ordered the Moriaritys to address the issues with their dam, giving them essentially two options: (1) have a professional engineer help safely lower the water in the pond, inspect the dam, make any necessary repairs to the dam, and refill the pond, or (2) have a professional engineer help "dewater, breach and permanently decommission the dam." See Appellants' Corrected App. Vol. 2, pp. 56- 57, ¶¶ 1-5. The NRC also ordered the Moriaritys to pay civil penalties totaling $10, 000 for past violations of the Dam Safety Act without imposing daily penalties for continuing violations. Id. at 57, ¶ 6.

         The Moriaritys sought judicial review of the Final Order, and the trial court affirmed. It ordered the Moriaritys to take the specific action ordered by the DNR, quoting some paragraphs from the NRC's final order and summarizing others. The Moriaritys filed a motion to correct error, which was later deemed denied.

         The Moriaritys then appealed to the Court of Appeals. Moriarity v. Ind. Dep't of Nat. Res., 91 N.E.3d 642 (Ind.Ct.App. 2018). They raised many of the same issues as before the NRC and trial court, and the Court of Appeals affirmed. Id. at 646-49. They also challenged the Final Order to the extent that it did not expressly allow them to modify their pond and dam so that it would fall outside DNR's jurisdiction, but the Court of Appeals found this argument waived. Id. at 649.

         We granted the Moriaritys' petition to transfer, thereby vacating the Court of Appeals opinion. See Ind. Appellate Rule 58(A).

         Standard of Review

         The Moriaritys challenge the trial court's order upholding the DNR's administrative decision. Under Indiana's Administrative Orders and Procedures Act ("AOPA"), we may set aside an agency's action if it 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 ...

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