ENVIRONMENT 1, DEVELOPER 0: WETLANDS ISSUE IN NN SETTLED

After appealing to the Supreme Court, a developer will pay a fine for destroying wetlands.

A Norfolk commercial real estate firm that appealed to the Supreme Court over the right to develop a parcel of wetlands in Newport News has settled its case with the state and federal government.

Newdunn Associates, which in 2001 began developing 43 acres of land on Jefferson Avenue in Northern Newport News without a federal wetlands permit, will restore 26 acres of the site that had been cut of trees, filled with dredged material, and ditched for pipe.

It also agreed to pay $250,000 — much of it to go to local environmental projects.

“It’s always better to work with state and federal regulators in the permit process to come up with a legal and environmentally acceptable way to develop the property,” said Col. Yvonne J. Prettyman-Beck, the commander of the Army Corps of Engineers’ local district.

The settlement brings to a close the lawsuit in which Newdunn and two contractors asserted the Army Corps overstepped its bounds by trying to regulate wetlands miles away from a major waterway. The groups had the support of the National Association of Realtors, the National Association of Home Builders and the Real Estate Roundtable, among others.

The issue began in June 2001 when Newdunn Associates, which wanted to build a commercial strip on the property near I-64, began construction. It was later ordered to stop.

Under the law, Newdunn Associates contended, the federal government doesn’t have the authority to regulate wetlands developments unless the project is near navigable waterways. The wetlands here, they pointed out, were nearly three miles from the nearest navigable waterway, the Warwick River.

But the Justice Department, backed by the Army Corps of Engineers and the state’s department of environmental quality, disagreed.

It asserted that the federal government’s authority to regulate navigable waterways also pertained to tributaries. In this instance, for example, water from the wetlands runs into Stony Run, which eventually flows into the Warwick River.

Wetlands are swamps, marshes or, as in the case of the land in Newport News, land that’s simply wet for much of the year. Wetlands are considered environmentally important because they serve as a natural habitat for plants and animals and help filter water.

Lawsuits on the matter went both ways. An initial decision favored Newdunn. Then the Justice Department won on appeal. Newdunn then filed to the Supreme Court, believing a prior Supreme Court case lent credence to its view.

In April 2004, the Supreme Court let the Circuit Court decision stand without hearing the case, sealing the victory for the Justice Department. The matter then went back to the Circuit Court to impose the penalty against Newdunn and its partners, Orion Associates and Northwest Contractors, both of Virginia Beach.

Penalties under the Clean Water Act for not getting a wetlands permit can be severe — as high as $25,000 a day. That theoretically could have brought the fine in this case to about $39 million, because the wetlands were first destroyed in June 2001.

Mark Baumgartner, a Virginia Beach attorney representing Newdunn, said the court-imposed penalty would not have been nearly that high. Still, he said, the firm settled not only to reduce the chance of a larger payout, but also to make sure the money was going to a good cause.

Baumgartner declined to reveal how much Newdunn is paying to restore the site, an effort that includes re-grading the soil, removing ditches and replanting trees.

As for the $250,000 fine, $150,000 is staying in Virginia — earmarked for the state’s environmental emergency cleanup fund and two environmental outfits: Wetlands Watch and the Elizabeth River Project.

“They were able to make sure the fines that were paid went to creating additional wetlands instead of going to an indeterminate government purpose,” Baumgartner said.

It’s unclear what will happen to the site now, he said: The company is still considering developing it, this time going through the federal wetlands applications.

If that’s granted, it would mean the wetlands now being restored would have to be destroyed once again. Newdunn, Baumgartner said, sought to get a new permit without restoring the wetlands, but the government wanted the wetlands restored first. *