Stites & Harbison, PLLC

In a decision announced June 19, 2006, the Supreme Court came extremely close to throwing out almost all of the federal government's jurisdiction over wetlands and other waters such as intermittent streams that are not directly abutting or have connection to navigable waters.  Justice Scalia writing for a plurality of the Court stated:

Establishing wetlands under the Clean Water Act requires two findings:  First that the adjacent channel contains a water of the United States (i.e., a relatively permanent body of water connected to traditional interstate navigable waters); and second, that the wetland has a continuous surface connection with that water, making it difficult to determine where the 'water' ends and the 'wetland' begins. Opinion of Justice Scalia, Rapanos v. U.S., 547 U.S. ____ (June 19, 2006).

Thus if the plurality opinion was adopted by the majority of the Court, intermittent streams and isolated wetlands are not waters of the United States under the Clean Water Act (CWA).  This interpretation is applied on a case by case basis, but would substantially alter the United States Army Corps of Engineers (USACE) definition of Waters of the United States.  Justice Kennedy, who also concurred in the reversal of the Sixth Circuit's decision, disagreed with the plurality's opinion, but agreed with the decision to reverse and remand, opined that the Sixth Circuit did not properly apply the "significant nexus" test.  As a result, the USACE regulations remain in effect; however, upon remand the USACE will have to show a significant nexus, not a hydrologic connection, between the wetlands and streams that were the subject of the lawsuit and navigable waters.

The decision has mixed results.  Certainly developers and industry may be heartened by the language of the plurality, the reversal of the Sixth Circuit, and the fact that the USACE will be required to make sure their existing rules comply with the significant nexus test.  Environmental groups are grateful that, but for Justice Kennedy, the USCAE rules would have been thrown out.  Both groups live to fight again; however, no doubt the USACE will review its rules and policies on jurisdictional waters of the United States and make changes. 

Since Congress passed the Clean Water Act in 1972 over the veto of President Nixon, wetlands and small intermittent and ephemeral streams have created challenges for developers.  Costs for avoiding wetlands and mitigating the impacts led to many projects losing viability or substantially reduced the economic realization.  Some developers have gone to prison for illegally filling wetlands.  Justice Scalia notes, for example, that the average applicant for an individual permit spends 788 days and $271,596 in completing the permit process, and the average applicant for a nationwide permit spends 313 days and $28,915—not counting costs of mitigation.  Still others have been heavily fined by either the state or federal government.  Environmental interests on the other hand have largely seen wetland protection as essential to preserving habitat and cleaning up waters.  Some have used wetland regulation merely to stop unwanted development.

While many expected the Court to decide the issue based on whether Congress had authority to regulate isolated wetlands under the Constitution's Commerce Clause, the Court sidestepped that question altogether.  Instead, writing for plurality, Justice Scalia ruled that the USACE had gone too far in its interpretation of "waters of the United States," while Justice Kennedy casting the deciding vote opined that the USACE must demonstrate a substantial nexus to navigable waters.  The Supreme Court has recognized that where a statute is ambiguous, they will defer administrative agency interpretation.  Justice Scalia recognized that "waters of the United States" was in some respects ambiguous; however, the scope of the ambiguity "does not conceivably extend to whether storm drains and dry ditches are 'waters' and hence does not support the Corps interpretation."

Mr. Rapanos, a Michigan developer, filled in several plots of land located 11 to 20 miles away from the nearest navigable water without a permit.  Portions of these areas were jurisdictional waters according to the USACE.  He defied orders from the EPA and USCAE and was convicted of a Clean Water Act felony.  He was sued by EPA in a parallel civil proceeding.  The Supreme Court reviewed the civil suit.  The Carabells sought to fill a triangular piece of property about a mile from Lake St. Clair.  A manmade ditch ran alongside the property which was contained by a berm.

The decision in this case could put the brakes on and substantially alter the USACE expansive reading of the definition as set forth at 33 CFR 328.3.  Future decisions may be based upon a case by case determination within the scope of this decision.  It is still too early to know if the USACE or EPA will alter their rules or wait for another Supreme Court showdown.  Justice Scalia chided the agency for not taking appropriate regulatory action after its decision in Solid Waste Agency of Northern Cook Cty. v. Army Corps of Engineers, 531 U.S. 159, 121 S.Ct. 675, 148 L.Ed.2d 576 (2002), and Chief Justice Roberts lamented that the lack of a definitive decision could have been avoided.  In any event, the Rapanos/Carabell decisions were remanded to the Sixth Circuit, and there is some likelihood it could show up again.

The Court's decision may be found at http://www.law.cornell.edu/supct/html/04-1034.ZS.html.

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For more information, contact William L. Penny, Environmental, Natural Resources and Energy Service Group, at (615) 782-2308 or bill.penny@stites.com.