FEATURE ARTICLE, JULY 2007

WETLANDS GUIDANCE REMAINS CLOUDY
Determining what constitutes a wetland, and whether a builder needs a Section 404 permit, can be difficult.
Matthew P. Coglianese

The development of property that is considered a wetland can range from difficult to impossible, and can, in any case, have significant financial consequences. Builders want to know whether they must calculate the costs of obtaining a federal wetlands permit, commonly referred to as a Section 404 permit. They also want to ensure that they have proper contractual and insurance protection for environmental issues that may be encountered during a project.

The threshold question is, “Do I need a Section 404 permit for my project?”  The answer is often not easy.  Is an area that has a hydrological connection to a non-navigable tributary a wetland? How about a marshy area separated from a river with no hydrological connection to the river? What about a tributary that is dry half of the year but flows into a river the rest of the year?

Federal Jurisdiction Over Wetlands

Defining jurisdictional “wetlands” is a process that has spanned several decades. The evolution of the definition has taken place through judicial and regulatory interpretation of the Clean Water Act (the “Act”) by federal courts, the United States Army Corp of Engineers (the “Corps”) and the United States Environmental Protection Agency (the “EPA”). The Corps exercises its jurisdiction over dredge and fill activities through Section 404 of the Act, while EPA maintains jurisdiction through Section 401 of the Act which gives EPA the authority to prohibit an activity, including a construction project, if it will impact water quality or have other unacceptable environmental consequences. In many states, EPA has delegated its wetlands permitting authority to state environmental agencies. Typically, for work in wetlands, the applicant will complete a joint application which is submitted to the Corps and EPA or the state agency. The courts have agreed that the Act requires permits to degrade wetlands along navigable waterways such as lakes and rivers. However, the questions faced by the U.S. Supreme Court in recent decisions was whether the Act also applied to tributaries of those waters and their adjacent wetlands, and if so, how far upstream.

In 2006, the Supreme Court, in Rapanos v. United States and Carabell v. United States, provided the latest interpretation of federal jurisdiction over wetlands. Since then, there have been a handful of federal court decisions interpreting the application of those cases. Currently, the Corp and EPA are developing formal guidance on how to make wetlands jurisdictional determinations.

While the Court, in Rapanos,  did have an opportunity to set aside what some saw as ever-increasing federal regulation over private property interests and development, the Court did not define the limits of federal regulatory in a clear and decisive manner. The result was that, at least for the time being, there will still be a great deal of uncertainty as to whether or not a property is a jurisdictional wetland and, therefore, uncertainty into whether there will be significant environmental regulatory impediments i.e., time and costs, associated with development projects.

The Justices pretty much did not agree on anything regarding interpretation of the Act. The Court’s opinion lacked the backing of the majority of the Court. And the reasoning in the plurality opinion is at odds with the written opinions of other justices. The prevailing sentiment in the legal and regulated community is that the Court’s plurality opinion will not have the effect of limiting federal jurisdiction at all. Consequently, developers, contractors, and environmental groups are struggling with how to interpret the ruling.

Rapanos and Carabell required the Court to decide whether the term “navigable waters” in the Act extended to wetlands that do not contain and are not adjacent to waters that are navigable in fact. Over time, the federal government has interpreted this language to confer regulatory jurisdiction over waters and wetlands that clearly are not navigable and that in many instances were many miles from any truly navigable waterway.  

Rapanos is an example of a developer’s misplaced expectations. In 1988, Mr. Rapanos, seeking to develop the site, asked the Michigan Department of Natural Resources to conduct an inspection. The Department told Rapanos that he could proceed with the project if the wetlands were delineated. Rapanos’s expert found that the site included between 48-58 acres of wetlands.

Rapanos apparently did not agree with his own consultant’s wetlands determination and allegedly threatened to “destroy” him unless he eradicated all traces of his wetlands report. Rapanos then ordered land clearing work that filled in 22 of the wetlands acres on the site. The United States sued Rapanos both civilly and criminally. It was the civil case challenging federal jurisdiction over his property that was before the Supreme Court. Prior to reaching the Supreme Court, the lower court, applying the Corps’ definition of wetlands, found that the site included 28 acres of wetlands and that they had a surface water connection to tributaries of a river which flowed into another river which flowed into Lake Huron.

In Carabell, the issue was a parcel of land shaped like a triangle consisting of 19.6 acres, 15.9 of which were forested wetlands according to the lower court. The property was located about a mile from a large lake. Part of the property was alongside a man-made ditch. The ditch blocked surface water flow from the wetlands into the ditch. Near the northeast corner of the property, the ditch connected to a drain which carried water continuously throughout the year into a creek. The creek emptied into the lake.

In 1993, the owners sought a permit hoping to fill in the wetlands and build 130 condominium units. The Corps concluded that the property “provides water storage functions that, if destroyed, could result in an increased risk of erosion and degradation of water quality in the drain, creek and lake.”  The permit was denied.

The landowners in Rapanos and Carabell argued that even if you use the most expansive definition of wetlands or waters of the United States, their lands should be exempt from federal control because they were too distant or lacked any meaningful hydrological connection to open water.  That is, they believed that it was one thing to regulate wetlands adjacent to rivers and streams as “waters of the United States,” but quite another thing to regulate wetlands next to drainage ditches that were removed from a navigable waterway. The majority of the Justices of the Supreme Court disagreed with the jurisdictional rationale applied by the lower courts and overturned the ruling for the government. It sent both cases back to the lower court for ruling consistent with their opinion(s).

Can we now more easily determine the limits of federal jurisdiction over wetlands?

What is a Wetland?

One consistent theme in the cases was that Congress didn’t give the Corps the power to regulate any and all bodies of water in the Country no matter how small or non-navigable.

According to the plurality, by its terms the Act only applies to “waters,” so only those areas that could potentially be characterized as “waters” are subject to federal control. Regulatory control over waters could extend from actual “open water” to those lands with a “significant nexus” to actual waters, but this would require more than a remote hydrological connection. And, to be within the jurisdiction of the federal government, the wetlands must be adjacent to the navigable water. That is, non-navigable waters must have a continuous surface connection to navigable-in-fact waters.

Continuing with the plurality’s theme, it should be difficult to tell where a navigable waterway ends and wetlands begin. That is, there should be a direct surface water connection, or physical flow of water, between the waterway and the wetland. Such an area seems to be the true definition of a wetland and would include a continuous connection to a navigable body of water.  Hence, this rather generic and elementary approach would reject the Army Corps’ approach most significantly with reference to “waters” that are intermittent and not permanent, standing or continuously flowing. 

However, the other justices rejected the plurality view and reasoning. One justice called for reconsideration, or fine tuning, of what he called the preexisting “significant nexus” test. Justice Kennedy held the nexus should “be assessed in terms of the statute’s goals and purposes.”  This is a huge distinction from the plurality opinion because Justice Kennedy believed that the Act’s goals and purposes are to “restore and maintain the chemical, physical, and biological integrity of the Nation’s waters.” 

So, does this mean that as long as the federal government asserts that regulating a given wetland serves the “goals and purposes” of maintaining water quality, biological integrity, etc., regulatory jurisdiction may be upheld?

Kennedy also made it very clear that the plurality opinion will have no effect on the Corps’ regulatory definition. He states that wetlands need not have a “continuous surface connection” because they can still have “significant effects” on waters quality and the ecosystem in the absence of such a physical connection.  He dismissed the plurality’s requirement of permanent standing water or continuous flow as making little practical sense in a statute concerned with downstream water quality, distinguishing between a continuous trickle (presumably having no effect on downstream water quality) with intermittent torrents of water, which, presumably, can have a tremendous effect on downstream water quality. One could interpret the law of the case being made by Justice Kennedy when he sided with the dissenters that relative permanence and a physical connection were not required. The relevant connection is hydrological.

Like the plurality, though, Kennedy was concerned about overreaching by the Corps, particularly with respect to isolated, non-navigable tributaries. When regulating wetlands adjacent to navigable-in-fact- waters, though, Kennedy indicated that the Corps could rely on adjacency to establish its jurisdiction – almost like a presumption of jurisdiction for such adjacent wetlands. But, absent more specific regulations, the Corps would have to establish a significant nexus on a case-by-case basis when it “seeks to regulate wetlands based on adjacency to non-navigable tributaries.”  In determining whether there is a significant nexus, Kennedy stated that the Corps could take into account the status of other comparable wetlands in the region (e.g. empirical information).

There have been a handful of federal court decisions since Rapanos, with at least three Circuits applying standards from Rapanos in making decisions regarding wetlands. In two 2007 decisions, federal district courts in California and Connecticut applied Rapanos to decide whether certain intermittent and ephemeral streams and adjacent wetlands were subject to the Act.  In both instances, the court said no, because the plaintiffs (who were trying to stop development) had not presented sufficient evidence that the streams or wetlands had a significant effect (nexus) on downstream navigable waters.

So far, the Ninth and Seventh Circuit Courts of Appeal apply Kennedy’s standard that to be jurisdictional, non-navigable adjacent waters must have some significance to downstream, navigable waters. According to the First Circuit, though, the courts should use a common sense-type approach that applies common ground share between opinions joined by five or more justices.

The Corps has taken some action by amending its Nationwide Permits (NWPs) for activities that have minimal adverse effects on the aquatic environment and meet public interest review factors. Effective March 19, 2007, the Corps reissued existing NWPs and issued six new NWPs, as well as published a new condition for transferring nationwide permit authorizations on a property, and changes to the existing 43 nationwide permits authorizing development activities affecting wetlands and other U.S. waters, in order to clarify what activities are permissible in certain wetland areas.

Attorney Matthew P. Coglianese is a partner and chair of the Environmental Law Practice Group with Peckar & Abramson in Coral Gables, Florida.


©2007 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.