         IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Pocono Manor Investors, LP,       :
                Petitioner        :
                                  :
      v.                          : No. 133 M.D. 2018
                                  : ARGUED: March 13, 2019
Department of Environmental       :
Protection of the Commonwealth of :
Pennsylvania and Environmental    :
Quality Board of the Commonwealth :
of Pennsylvania,                  :
                   Respondents    :

BEFORE:     HONORABLE MARY HANNAH LEAVITT, President Judge
            HONORABLE RENÉE COHN JUBELIRER, Judge
            HONORABLE PATRICIA A. McCULLOUGH, Judge
            HONORABLE ANNE E. COVEY, Judge
            HONORABLE MICHAEL H. WOJCIK, Judge
            HONORABLE CHRISTINE FIZZANO CANNON, Judge
            HONORABLE ELLEN CEISLER, Judge

OPINION NOT REPORTED

MEMORANDUM OPINION
BY JUDGE CEISLER                                          FILED: May 6, 2019

      Respondents Department of Environmental Protection of the Commonwealth
of Pennsylvania and Environmental Quality Board of the Commonwealth of
Pennsylvania (DEP and EQB, individually, and Respondents, collectively) have
filed Preliminary Objections to Petitioner Pocono Manor Investors, LP’s (Petitioner)
Amended Petition for Review (Amended Petition), through which Petitioner seeks
declaratory and injunctive relief regarding the DEP and EQB’s redesignation of
Swiftwater Creek, which runs through Petitioner’s property, as “Exceptional Value”
for purposes of water quality standards.1 After careful review, we hold that Petitioner
has neither exhausted its administrative remedies, nor pled facts in its Amended
Petition that would enable it to circumvent this exhaustion requirement. Therefore,
we sustain Respondents’ preliminary objection as to Petitioner’s failure to exhaust
administrative remedies and dismiss the Amended Petition for lack of original
jurisdiction.
       Petitioner
              owns Pocono Manor Resort & Spa located at 1 Manor
              Drive, Pocono Manor, Pennsylvania 18349. The Pocono
              Manor Resort & Spa encompasses approximately 3,000
              acres and is situated almost entirely within the upper
              portion of the Swiftwater Creek watershed. Pocono Manor
              Resort & Spa currently includes a hotel, conference
              facilities, an 18-hole golf course, and residences along
              with a number of other recreational amenities.
Amended Petition, ¶4.2 According to Petitioner, the Brodhead Watershed
Association filed a petition with the EQB on July 2, 2007, requesting that the
Swiftwater Creek watershed be designated as Exceptional Value3 from its source to
the point at which it crosses State Route 611. Id., ¶28. For unspecified reasons, the
DEP did not issue a draft report based off of this request until 2015, and did not issue


       1
         “Water quality standards consist of the combination of water uses to be protected and the
stream conditions that need to be maintained or attained to prevent or eliminate pollution in order
to protect the designated uses. 25 Pa. Code § 93.1.” Concerned Citizens of Chestnuthill Twp. v.
Dep’t of Envtl. Res., 632 A.2d 1, 2 n.1 (Pa. Cmwlth. 1993).

       2
        As this matter comes before us on preliminary objections, “[Petitioner’s] well-pled factual
averments [in its Amended Petition] are [deemed] admitted; [however, Petitioner’s] conclusions
of law are not.” Arbor Res. LLC v. Nockamixon Twp., 973 A.2d 1036, 1042 n.5 (Pa. Cmwlth.
2009).

       3
          Swiftwater Creek had, at that time, a designation of “High Quality,” which is a
designation that places fewer and less-onerous restrictions on usage of the Creek than would
designation as Exceptional Value. See Amended Petition, ¶¶13-27.


                                                2
its final report until February 2016. In this final report, the DEP recommended that
Swiftwater Creek be designated as Exceptional Value “from its source to a location
at the confluence of an unnamed tributary identified as UNT 04960[.]” Id., ¶¶38-39.
Respondents then undertook rulemaking efforts in 2017, based upon the final report,
and issued a final rule on February 10, 2018. See id., ¶¶41-48, 60. After review, the
Environmental Protection Agency (EPA) then approved Swiftwater Creek’s new
designation on April 16, 2018, pursuant to the requirements of Section 303 of the
federal Clean Water Act, 33 U.S.C. § 1313. Id., ¶¶66-70.
      In response to Respondents’ final rule, Petitioner filed its Petition for Review
with our Court on March 12, 2018, followed by the Amended Petition on May 29,
2018. Through this Amended Petition, Petitioner seeks a declaratory judgment that:
1. The redesignation of Swiftwater Creek as Exceptional Value “conflicts directly
with and/or is contrary to the express provisions of other relevant statutes and
regulations applicable to the industry”; 2. Respondents did not comply with the
statutory and regulatory scheme for redesignating Swiftwater Creek as Exceptional
Value; 3. The redesignation was not supported by “acceptable data”; 4. The “DEP’s
statutory and regulatory scheme of designating the water quality standards for
waterways . . . violate[d] [Petitioner’s] constitutional due process and equal
protection rights”; 5. “The EQB failed in its statutory duty to draft and adopt the
regulations, deferring entirely to [the] DEP to take full responsibility for every word
in every iteration promulgated”; and 6. The rulemaking process through which
Respondents designated Swiftwater Creek as Exceptional Value “[did not] comply
with the Regulatory Review Act,[4] as shown in part by an inadequate Regulatory
Analysis Form[.]” Id., ¶93. In addition, Petitioner seeks a stay of Swiftwater Creek’s


      4
          Act of June 25, 1982, P.L. 633, as amended, 71 P.S. §§ 745.1-745.12a.


                                               3
redesignation as Exceptional Value, and injunctive relief to prevent Respondents
from implementing or enforcing the redesignation, until this case has been resolved.
Id., ¶¶94-103.
      Respondents filed Preliminary Objections to Petitioner’s Amended Petition.
Therein, Respondents argue the Amended Petition should be dismissed because
Petitioner failed to exhaust the administrative and statutory remedies available to it
under the Environmental Hearing Board Act,5 and the Clean Streams Law,6 which
Respondents maintain are adequate to address Petitioner’s concerns regarding
Swiftwater Creek’s redesignation. Br. in Support of Preliminary Objections at 13.
      Respondents cite Concerned Citizens and Rouse & Associates v.
Environmental Quality Board, 642 A.2d 642 (Pa. Cmwlth. 1994), two seminal cases
in which our Court has previously addressed pre-enforcement review of the
redesignation of bodies of water. Br. in Support of Preliminary Objections at 16-20.
Respondents note these two cases are somewhat at odds with each other regarding
whether reclassification of a water source, prior to any enforcement action, is
something that can be adequately addressed at the administrative level. Id.
Respondents contend that this matter is factually similar to Concerned Citizens, in
which our Court found that exhaustion of administrative remedies was indeed a
prerequisite for judicial review in this type of situation. Id. at 20-21. Respondents
also maintain that the harms alleged by Petitioner are speculative, prospective, and
merely relate to Petitioner’s own particular interests in this one, specific instance,
rather than to those of an entire industry or the regulatory scheme as a whole, such



      5
          Act of July 13, 1988, P.L. 530, 35 P.S. §§ 7511-7516.

      6
          Act of June 22, 1937, P.L. 1987, as amended, 35 P.S. §§ 691.1-691.1001.


                                                4
that Petitioner’s claims fail to justify pre-enforcement review and deprive our Court
of original jurisdiction to consider the merits of the Amended Petition. Id. at 21-25.
      By contrast, Petitioner contends that it has pled sufficient facts in its Amended
Petition to establish it “will suffer actual, present harm” in the absence of pre-
enforcement review, thereby establishing our Court’s original jurisdiction over this
matter, per Rouse, despite Petitioner’s failure to exhaust its administrative remedies.
Petitioner’s Br. in Opposition to Respondents’ Preliminary Objections at 1-19. In
addition, Petitioner maintains that pre-enforcement review is proper because, like
the petitioner in Rouse, it has also made constitutional challenges to Respondents’
designation scheme as a whole, rather than on an as-applied basis. Id. at 19-20.
Finally, Petitioner maintains its Amended Petition “advances the interests of an
entire industry[,]” which establishes another justification for pre-enforcement
review. Id. at 21.
       “In general, a court lacks jurisdiction to address an action in law or in equity
where an administrative remedy exists. . . . However, the exhaustion of
administrative remedies is not required where a statutory scheme’s constitutionality
or validity is being challenged.” Giffin v. Chronister, 616 A.2d 1070, 1073 (Pa.
Cmwlth. 1992). Furthermore, such exhaustion is not a necessary prerequisite for
obtaining judicial review if “[the challenged administrative] regulation itself causes
actual, present harm” prior to its enforcement. Concerned Citizens, 632 A.2d at 3.
      We concur with the parties that both Concerned Citizens and Rouse guide our
review of this matter. In Concerned Citizens, the EQB redesignated a body of water
known as “McMichaels Creek,” upgrading its designation from High Quality to
Exceptional Value. 632 A.2d at 2. Concerned Citizens of Chestnuthill Township, a
local organization, then petitioned for review of this decision and requested that our



                                          5
Court vacate the redesignation, lodging “objections to the reclassification
comprising challenges to the facts and the law supporting the [re]designation, claims
that the upgrade will have deleterious economic, social[,] and political effects, and
allegations of procedural and notification defects in the rulemaking process which
resulted in the reclassification.” Id. The Department of Environmental Resources
(DER)7 and the EQB filed preliminary objections in response, arguing in relevant
part therein that our Court did not have original jurisdiction to consider the petition
for review. Id.
       We agreed, reasoning that the redesignation itself of McMichaels Creek did
not stand to wreak actual, direct harm upon Concerned Citizens of Chestnuthill
Township, as the redesignation was not “self-executing,” in that it did not directly
impose affirmative duties upon the organization’s members, and the DER had not
theretofore taken action to enforce the redesignation. Id. at 3.
              The reclassification does not, for instance, make certain
              existing land uses impermissible, and the eventual impact
              of the new classification is, therefore, at this point of time,
              uncertain. . . . Furthermore, despite [the Concerned
              Citizens of Chestnuthill Township’s] claim that land
              development will now be more costly because of the
              allegedly invalid [Exceptional Value] classification, if and
              when the first landowner is aggrieved by a DER
              application of the new regulation, the landowner may not
              only appeal to the [Environmental Hearing Board]
              challenging the DER action, but also may challenge the
              validity of the regulation itself. . . . Thereafter, if it is
              decided that the regulation reclassifying [McMichaels]
              Creek is invalid, landowners will not be obliged to
              undertake the more costly land use evaluation required by
              a conditional use designation.



       7
         DER was the DEP’s previous name. Adams Sanitation Co. v. Pennsylvania Dep’t of Envtl.
Prot., 683 A.2d 981, 982 n.1 (Pa. Cmwlth. 1996), aff’d on other grounds, 715 A.2d 390 (Pa. 1998).


                                               6
Id. at 3-4. Consequently, we held that post-enforcement review was the proper
remedy under the circumstances and, in addition, that the petition for review only
contained issues that were not yet ripe for our consideration. Id. at 4.
      In Rouse, Rouse submitted a
             preliminary subdivision and land development plan
             application to develop 161 acres for multi-family
             residential dwellings in East Whiteland Township (the
             Township). The East Whiteland Township Zoning Board
             (zoning board) approved Rouse’s application with the
             condition that Rouse construct a package treatment plant
             that discharges treated water into Valley Creek. At that
             time, there were already package treatment plants located
             on Valley Creek which discharged treated water into the
             waterway. Rouse had initially proposed to connect to the
             Township’s public sewer system but agreed to construct
             the treatment plant in conformity with the zoning board’s
             direction. Subsequently, three environmental groups
             unsuccessfully challenged the zoning board’s requirement
             that Rouse’s treatment plant discharge water into Valley
             Creek.
642 A.2d at 643. Thereafter, the DER began reviewing the status of Valley Creek,
instigating a process which eventually led to the designation of Valley Creek as
Exceptional Value. Id. at 643-44.
      Rouse then filed a petition for review in our Court, challenging Valley Creek’s
new designation, to which the DER and EQB filed preliminary objections based, in
part, on the argument that we did not have original jurisdiction to consider the
petition for review on account of Rouse’s failure to exhaust administrative remedies.
Id. at 644. We overruled this objection for three reasons:
             First, Rouse has alleged that it will suffer actual, present
             harm before the enforcement of DER’s designation of
             Valley Creek as [Exceptional Value]. In its petition for
             review, Rouse claims that it is immediately, directly, and
             actually impacted and that it will suffer a hardship for the
             following reasons:

                                           7
                     a. Rouse would be required to spend endless
                     amounts of time and money to prepare plans and
                     applications and submit them for its proposed
                     treatment plant. They would then be processed by
                     DER when DER has already predetermined that a
                     treatment plant with stream discharge into an
                     [Exceptional Value] stream will cause an adverse
                     measurable change in the existing water quality and,
                     therefore, would not be issued a permit.
                     b. Rouse would be forced to await an administrative
                     determination of its permit application before being
                     able to obtain a judicial review of the validity of the
                     regulation and the viability of the permit
                     application.
                     c. In order to be able to apply for a sewage disposal
                     plan permit, Rouse would have to spend tremendous
                     sums of money for final land development plans for
                     its proposed development because DER will not
                     process Act 537[8] amendments or sewage disposal
                     plant permits until final land development plans
                     have been approved.
                     d. Rouse cannot proceed with its development or
                     sell its development because of the uncertainty of
                     the sewer proposal.
              These allegations, when accepted as true, demonstrate the
              existence of actual, present harm.
              Second, the instant matter can be distinguished from
              Concerned Citizens, because Rouse is placed in a unique
              position by the zoning board’s refusal to allow Rouse to
              connect to presently operating sewage disposal units and
              by the zoning board’s conditioning of its approval of
              Rouse's land use plans on Rouse’s agreement to construct
              a sewage treatment plant. In Concerned Citizens, the
              [Concerned Citizens of Chestnuthill Township’s] general
              claim that the redesignation of McMichaels Creek would
              have deleterious economic, social, and political effects is
              far more remote and anticipatory than Rouse’s claims in

       8
          “Act 537” is formally known as the Pennsylvania Sewage Facilities Act, Act of January
24, 1966, P.L. (1965) 1535, as amended, 35 P.S. §§ 750.1-750.20a. Delaware Riverkeeper v. Dep’t
of Envtl. Prot., 879 A.2d 351, 353 (Pa. Cmwlth. 2005).


                                              8
             the present matter. The [Concerned Citizens of
             Chestnuthill Township] did not have any pending
             subdivision or land development plan, the approval of
             which was tied to the existence of an [Exceptional Value]
             stream. In the instant matter, the zoning board’s
             requirement that Rouse construct a treatment plant that
             discharges into Valley Creek in order [to] realize [its] land
             use proposal, forces Rouse to be more immediately
             concerned with the water quality requirements for Valley
             Creek.
             [Finally], Rouse’s petition for review goes further than
             merely challenging DER’s redesignation of Valley Creek.
             Rouse’s petition for review raises constitutional due
             process and equal protection challenges to DER’s
             regulatory scheme of designating the water quality
             standards for waterways.
Id. at 646-47.
      Here, even assuming the truth of the Amended Petition’s well-pled averments,
we find that Petitioner has failed to establish that we may properly invoke our powers
of original jurisdiction over this matter. In Rouse, the DER initiated the designation
process after Rouse was already in the midst of developing its property. Here, the
only specific project that Petitioner claims will be affected by Swiftwater Creek’s
redesignation is the “Pocono Springs Entertainment Village,” which was announced
two months after Respondents issued their final rule enacting the designation and
five days before the EPA approved Respondents’ decision. Amended Petition, ¶¶69-
70, 74-85. Thus, it is Petitioner’s decision to initiate development of its property
while Swiftwater Creek’s redesignation was still under formal consideration, rather
than the redesignation itself, which stands to cause potential harm to Petitioner.
Petitioner’s choice to move forward with the Pocono Springs Entertainment Village
project under the circumstances is not dissimilar to a pedestrian leaving the safety of
the sidewalk, deliberately jumping into the rush of oncoming traffic, and then
faulting the affected drivers for their inability to avoid the resultant collision. In

                                          9
addition, Petitioner also avers that the value of its property “was immediately
diminished upon publication of the redesignation of Swiftwater Creek in the
Pennsylvania Bulletin on February 10, 2018.” Amended Petition, ¶86. This,
however, is far too conclusory and speculative a statement to establish the existence
of actual, direct harm to Petitioner as a result of Swiftwater Creek’s redesignation.
       Furthermore, Petitioner has failed to properly plead a facial constitutional
challenge to the regulatory scheme through which Respondents impose water quality
standards. Indeed, in its Amended Petition, Petitioner merely alleges that Petitioner
alone will be affected by Swiftwater Creek’s redesignation, rather than a broader
attack upon the designation process as a whole. See, e.g., id., ¶¶28-40. In fact, during
oral argument before this Court, the parties agreed that no other property owners
along this watershed that were impacted by the redesignation sought to challenge the
propriety of the redesignation. Petitioner’s exclusive focus on the putative effect of
Swiftwater Creek’s redesignation upon Petitioner’s property alone vitiates any
argument that Petitioner seeks to address industry-wide concerns and, consequently,
may obtain immediate, pre-enforcement review on that basis. Arsenal Coal Co. v.
Dep’t of Envtl. Res., 477 A.2d 1333, 1339-40 (Pa. 1984). Thus, to the extent that
Petitioner raises constitutional issues, it does so on an as-applied basis, which
requires it to exhaust its administrative remedies prior to seeking judicial review.
Keystone ReLeaf LLC v. Pa. Dep’t of Health, 186 A.3d 505, 516 (Pa. Cmwlth.
2018).9



       9
          In its Amended Petition, Petitioner further claims that Respondents failed to provide
Petitioner with proper notice and opportunities to be heard while redesignation of Swiftwater
Creek was being considered. Amended Petition, ¶93(d). However, during oral argument before
this Court, Petitioner conceded that it had been fully aware of Swiftwater Creek’s consideration
by Respondents for redesignation and had, in fact, participated throughout the process.


                                              10
       Therefore, as Petitioner has neither exhausted the remedies available to it at
the administrative level, nor pled facts enabling it to invoke an exception to this
doctrine of exhaustion, we sustain Respondents’ preliminary objection regarding
Petitioner’s failure to do so and dismiss the Amended Petition for lack of original
jurisdiction.10




                                                   ELLEN CEISLER, Judge




       10
        In light of this ruling, we decline to address the remainder of the arguments raised by
Respondents in their Preliminary Objection.


                                              11
         IN THE COMMONWEALTH COURT OF PENNSYLVANIA


Pocono Manor Investors, LP,       :
                Petitioner        :
                                  :
      v.                          : No. 133 M.D. 2018
                                  :
Department of Environmental       :
Protection of the Commonwealth of :
Pennsylvania and Environmental    :
Quality Board of the Commonwealth :
of Pennsylvania,                  :
                   Respondents    :


                                   ORDER


      AND NOW, this 6th day of May, 2019, upon consideration of the Department
of Environmental Protection of the Commonwealth of Pennsylvania and
Environmental Quality Board of the Commonwealth of Pennsylvania’s
(Respondents) Preliminary Objections to Pocono Manor Investors, LP’s (Petitioner)
Amended Petition for Review (Amended Petition), and Petitioner’s response thereto,
it is hereby ORDERED:
   1. Respondents’ preliminary objection, regarding Petitioner’s failure to exhaust
      administrative remedies, is SUSTAINED;
   2. Petitioner’s Amended Petition is DISMISSED, due to lack of original
      jurisdiction.




                                            ELLEN CEISLER, Judge
