Mall Properties, Inc. was an organization that for many years had sought to develop a shopping mall in the town of North Haven, Connecticut, a suburb of New Haven. Because the proposed development would require the filling of some wetlands, Mall Properties was required to obtain a permit from the Corps of Engineers pursuant to Section 404 of the Clean Water Act. The City of New Haven opposed development of the mall—and the granting of the permit—on the grounds it would jeopardize the fragile economy of New Haven. 

The Corps of Engineers found the net loss of wetlands would be substantially compensated for by a proposed on-site wetland creation. Relying primarily on the socioeconomic concerns of the City of New Haven, the district engineer rejected the proposed permit. Mall Properties then brought suit against the Corps of Engineers, claiming that the decision was arbitrary and capricious. Should the district engineer have relied on socioeconomic factors unrelated to the project’s environmental impacts in making a decision on the permit?