WASHINGTON INSIGHT

Local projects tread water amid uncertainty over Army Corps wetlands authority

Julia Anastasio, Esq.
Senior Manager of Government Affairs
APWA Washington Office

The phrase "muddied the waters" has been used almost too often to describe the uncertainty that arose from the Supreme Court's most recent ruling on the regulations of wetlands. Late last term, the Supreme Court ruled in Rapanos, a case that regulators, project developers, states, property rights advocates and environmental groups all hoped would clarify whether, and to what extent, the authority of the U.S. Army Corps of Engineers (USACE or Corps) under the Clean Water Act (CWA), extends to wetlands and other non-navigable waters. U.S. v. Rapanos, 126 S.Ct. 2208 (2006). The legal consequences of the Court's muddied decision in U.S. v. Rapanos and S.D. Warren Co. v. Bd. of Envt'l Protection(1) are still being clarified by the courts and federal agencies, but as a practical matter, the decision has thrown many important local projects into doubt. 126 S.Ct. 2208 (2006)(vacated and remanded); 126 S.Ct. 1843 (2006)(vacated and remanded) (hereinafter referred to as Rapanos). The fractured ruling on when project developers must seek a permit from the Corps to fill certain types of wetlands is raising more questions than answers regarding the scope of USACE or the Environmental Protection Agency (EPA)(2) jurisdiction under the CWA and is likely to result in legislative or regulatory efforts to clarify the issue. Given the ambiguity and uncertainty created by the Court, until the Corps issues guidance or a rulemaking outlining the scope of its wetlands authority or until Congress passes a legislative fix, the Corps and, on occasion, the federal courts will be forced to evaluate each situation on a case-by-case basis. Public works departments and consulting firms can expect uncertainty and delay as they plan and prepare for undertaking projects on or near streams, ditches, and tributaries.

The Rapanos Court considered the scope of USACW authority over wetlands and other non-navigable waters, including dry washes, ephemeral streams, ditches and drains, that may at times contain flowing water. Rapanos, 126 S.Ct. 2208 (2006). A majority of the Court failed to agree on the result and instead the Justices issued five separate opinions. There was a four-vote plurality led by Justice Scalia and joined by Chief Justice Roberts, Justices Alito and Thomas (referred to herein as "Scalia plurality"), that articulated a strict interpretation of the limits of Corps' authority over wetlands severely limiting the Corps' traditionally articulated statutory authority. Rapanos, 126 S.Ct. 2208 (2006). The Scalia plurality held that "navigable waters" regulated under §404 are limited to "only those relatively permanent standing or continuously flowing bodies of water 'forming geographic features that are'...typically described in ordinary parlance as "streams[,]...oceans, rivers [and] lakes." Rapanos, 126 S.Ct. 2208 (2006) (slip op. at 20). According to the Court only those wetlands "with a continuous surface connection to bodies "failing under §404 jurisdiction in their own right are covered by the Act." Id. at 24. Justice Kennedy issued a concurring opinion, which is likely to guide future interpretations of the USACE's jurisdiction, agreeing with the Scalia plurality to send the cases back to the lower courts for further factual development but disagreeing with their substantive reading of the CWA. Rapanos, 126 S.Ct. 2208 (2006). Finally, four justices—Justices Stevens, Souter, Ginsburg and Breyer—ssued a dissenting opinion basically agreeing with Justice Kennedy's interpretation of the Act, but they would have given deference to the Corps' treatment of adjacent wetlands as a reasonable interpretation of its jurisdiction under the CWA and, thereby, upholding the USACE's interpretation of its authority. Rapanos, 126 S.Ct. 2208 (2006) (slip op. at 23).

Wetlands Jurisdiction Pre-Rapanos
Congress passed the CWA in 1972 to "restore and maintain the chemical, physical, and biological integrity of the nation's waters." 33 U.S.C. 1251(a). To achieve these goals, the CWA prohibits the discharge of dredge or fill material into "navigable waters" without a permit. 33 U.S. §1311(a). Navigable waters are defined in the CWA as "the waters of the United States, ...." 33 U.S.C. §1362(7). The Act requires landowners and developers to obtain a §404 permit before discharging materials into "navigable waters." 33 U.S.C. §1344. The Corps has traditionally interpreted the statutory scope of its jurisdiction as applying to waters susceptible to use in interstate commerce; tributaries of those waters and wetlands adjacent to those waters or tributaries. 33 C.F.R. §§328.3(a)(1), (5), and (7) (2005). Therefore, nearly a decade after the passage of the Act, the USACE was interpreting its statutory authority under the Act as conferring the authority to regulate virtually all waters within the aquatic system, "from low order small streams and their surrounding wetlands, to geographically separated waters like prairie pot holes and playa lakes, to the often dry washes of the arid west, and to man-made (and man-altered) ditches, canals, and similar structures that either replaced or, in many respects, acted like natural tributaries." James Murphy, "Rapanos v. United States: Wading Through Murky Waters," National Wetlands Newsletter, v. 28, No. 5, p. 1 (Sept. 2006).

The proper scope of §404 authority over non-navigable waters was previously examined by the Supreme Court in two cases. In U.S. v. Riverside Bayview Homes Inc., the Court considered the language, policies and legislative history of the CWA and held that the Corps' interpretation that "waters of the United States" encompasses all wetlands adjacent to other bodies of water over which the Corps has jurisdiction was a permissible and reasonable interpretation of §404. 474 U.S. 121, 135 (1985) (hereinafter referred to as Riverside). See also, Kevin P. Pechulis, "Scope of 'Waters of the United States' unclear after Rapanos v. U.S.," Trends, v. 38, No. 2 (Nov/Dec 2006). In Riverside, a property owner was enjoined by the Corps from filling marshy land on his property without a permit. The Court in Riverside relied on the important ecological functions wetlands perform in upholding the Corps' interpretation of its authority. 474 U.S. at 134. According to the Court, "In view of the breadth of federal regulatory authority contemplated by the Act itself and the inherent difficulties of defining precise bounds to regulable waters, the Corps' ecological judgment about the relationship between waters and their adjacent wetlands provides an adequate basis for a legal judgment that adjacent wetlands may be defined as waters under the Act." Riverside, 474 U.S. at 134. The Riverside Court did not express an opinion on wetlands that are removed from traditionally navigable waters.

Conversely, in Solid Waste Authority of Northern Cook County v. U.S., the Supreme Court reigned in the Corps and held that they could not assert jurisdiction over isolated ponds merely because they were or may be used by migratory birds. 531 U.S. 159 (2001) (hereinafter referred to as SWANCC). The controversy in SWANCC arose when the Corps promulgated regulations extending the Corps' authority to include "intrastate waters which are or could be used as habitat by migratory birds and endangered species." 531 U.S. at 174. The court held that rule exceeded congressional intent under the CWA because the wetlands in question had no "significant nexus" to traditionally navigable waters. 531 U.S. at 167. The Court's holding suggests that the Corps only has jurisdiction over waters that are either navigable in fact (i.e., they are used, have been used, or are susceptible for use to carry commerce), are physically adjacent to such navigable waters or are direct tributaries to such navigable waters. Pechulis, "Scope of 'Waters of the United States' unclear after Rapanos v. U.S.," Trends, v. 38, No. 2, p. 4 (Nov/Dec 2006).

The Rapanos Decision
The consolidated cases in Rapanos involve fact patterns involving wetlands that are in between the spectrum of applicable jurisdiction created by the Court in Riverside and SWANCC. John Rapanos(3) owned several parcels of land in Michigan containing wetlands that were approximately 10 miles from navigable waters. These wetlands had a surface connection to the waterways via a series of drains and ditches. The Rapanoses wanted to develop the parcels, but they were told by Michigan regulators that they had to identify and preserve any wetlands on their parcels and obtain a permit prior to development. In spite of the instructions, Mr. Rapanos proceeded to fill in the wetlands in preparation for development, and as such, the government brought civil and criminal charges against the Rapanoses for violating the CWA. The Rapanoses argued that their lands were not adjacent to navigable waters, and therefore not subject to a permit under the CWA.

After the Court agreed to hear the Rapanos case, interested stakeholders looked to the justices to clarify the scope of USACE authority to regulate wetlands adjacent to traditionally navigable waters. However, since the Court issued its opinion, many observers feel as though the Court did little more than "muddy the waters" of §404 jurisdiction rather than clarify the scope of USACE authority. Rapanos addressed the issue of whether "waters of the United States" extends to wetlands that are not physically adjacent to navigable waters. 126 S.Ct. 2208 (slip op. at 10). Five justices—the Scalia plurality plus Justice Kennedy—agreed that the cases should be vacated and remanded to the lower court for further consideration of the facts, but they failed to agree on the proper interpretation of "waters of the United States." Murphy, "Rapanos v. United States: Wading Through Murky Waters," National Wetlands Newsletter, v. 28, No. 5, p. 1 (Sept. 2006). This lack of agreement has led to two potential tests on the proper scope of Corps' authority leaving uncertainty and confusion in its wake.

The Scalia plurality limited the Corps' authority over wetlands and non-navigable waters by determining that §404 jurisdiction extends only to those "relatively permanent, standing or continuously flowing bodies of water" that are typically recognized as streams, oceans, rivers and lakes. 126 St. 2208 (2206) (slip op. at 20). Moreover, the Scalia plurality held that §404 does not extend to "channels through which water flows intermittently or ephemerally, or channels that periodically provide drainage for rainfall." Id. at 21. Accordingly, the Scalia plurality limited the Corps' assertion of jurisdiction to those wetlands that are physically adjacent to "waters of the United States" and have a continuous surface connection with that water, making it difficult to determine where the water ends and the wetlands begin. Id. at 24; see also, Pechulis, "Scope of 'Waters of the United States' unclear after Rapanos v. U.S.," Trends, v. 38, No. 2, p. 4 (Nov/Dec 2006). The Scalia plurality flatly rejected the scope of jurisdiction urged by the government as it would amount to allowing the Corps "to function as a de facto regulator of immense stretches of intrastate land-an authority the agency has shown its willingness to exercise with the scope of discretion that would befit a local zoning board." James Murphy, "Rapanos v. United States: Wading Through Murky Waters," National Wetlands Newsletter, v. 28, No. 5, p. 1 (Sept. 2006).

Although Justice Kennedy joined the Scalia plurality, he issued his own concurring opinion offering his own analysis and conclusion. Administrative & Regulatory Law News, "Statutory Interpretation, Federalism, and Chevron Deference: the Clean Water Act cases," v. 32, No. 1, p. 22 (Fall 2006). Justice Kennedy determined that the Scalia plurality opinion was "inconsistent with the Act's text, structure and purpose." 126 S.Ct. 2208 (slip op. at 11); see also, Pechulis, "Scope of 'Waters of the United States' unclear after Rapanos v. U.S.," Trends, v. 38, No. 2, p. 4 (Nov/Dec 2006). Furthermore, according to Justice Kennedy, "whether a wetland constitutes 'waters of the United States' depends on whether it has a 'significant nexus' to navigable waters." Rapanos, 126 S.Ct. 2208 (2006) (slip op. at 10). The requisite nexus is established if "the wetlands alone, or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biologic integrity of other navigable waters." Id. at 23. Conversely, if the effect of the wetland on water quality in navigable water is "speculative or insubstantial," then the wetland does not fall within the definition of "waters of the United States" and the Corps does not have the statutory authority to regulate these areas. Id. at 23. According to Justice Kennedy, the standard used by the Corps in making its determination on the Rapanoses' permit application was insufficient to determine whether the wetlands adjacent to a tributary satisfied the significant nexus test. Id. at 25. Because the Corps standard lacked the necessary specificity to determine whether the wetlands were likely to have a significant impact on the integrity of an aquatic system that includes navigable waters, the Corps' rejection of the Rapanoses' permit application was flawed. Id. at 24-25.

The Significant Nexus Standard
Because there was no majority opinion issued by the Court and because Justice Kennedy's holding in Rapanos is narrower than the Scalia plurality, the significant nexus test is likely to govern §404 determinations in the short term. In considering the issues presented in the case and the Scalia plurality's position that jurisdiction is dependent on merely the presence and flow of water, Justice Kennedy recognized that waters in combination have important functions and consequences that impact downstream waters. The significant nexus test is not satisfied by a mere hydrologic connection between the wetlands and navigable waters and there is no related requirement that there be a hydrologic connection required to demonstrate a significant nexus between a potentially regulated wetland and navigable waters. Id. at 28-29. Instead, the evidence used to determine whether a significant nexus exists must be substantial and not speculative. Id. at 23.

In coming to articulate this standard, Justice Kennedy determined that the central element in the appropriate Corps standard is a determination of the ecological relationship between the water bodies. Murphy, "Rapanos v. United States: Wading Through Murky Waters," National Wetlands Newsletter, v. 28, No. 5, p. 17 (Sept. 2006). Justice Kennedy's concurrence clarifies that waters performing ecological functions, such as flood retention, pollutant trapping or filtration, that either individually or collectively impact the integrity of downstream waters falls within the scope of proper §404 jurisdiction. Under the Kennedy test, waters performing these functions may be intermittent or ephemeral, and they need not have a surface connection to other waters to confer §404 jurisdiction. James Murphy, "Rapanos v. United States: Wading Through Murky Waters," National Wetlands Newsletter, v. 28, No. 5, p. 17 (Sept. 2006).

Justice Kennedy held that absent new regulations that are sufficiently specific to make a determination of a significant nexus, the Corps will need to establish a significant nexus on a case-by-case basis when reviewing §404 permit applications. Id. at 25. Justice Kennedy also observed that it may be appropriate "when an adequate nexus is established for a particular wetland, it may be permissible, as a matter of administrative convenience or necessity, to preserve covered status for other comparable wetlands in the region." Id. Per Justice Kennedy, "through regulation, the Corps may choose to identify categories of tributaries that, due to their volume of flow (either annually or on average), their proximity to navigable waters, or other relevant considerations, are significant enough that wetlands adjacent to them are likely, in the majority of cases, to perform important functions for an aquatic system that includes navigable waters, and therefore fall within the Corps' jurisdiction." Id. at 24. Finally, Justice Kennedy determined that for certain wetlands adjacent to "certain major tributaries" they can be presumed to satisfy the significant nexus test. 126 S.Ct. 2208 (2006) (slip op. at 23).

Regulatory and Legislative Implications
The Rapanos decision already has resulted in confusion, uncertainty, and delay for public works projects and consultants nationwide. Expectations were that the Court's decision in Rapanos would clarify the extent of the Corps' jurisdiction to regulate wetlands that are not immediately adjacent to traditionally navigable waters. However, the lack of a majority opinion has done little more than muddy the waters of wetlands regulation and thrown many important flood control, pollutant trapping and filtration projects into limbo. The long-term consequences of the Rapanos confusion remain to be seen, but it is likely that it will include more litigation, a possible legislative fix, and/or at a minimum and up to federal guidance or rulemaking sufficiently specific enough to satisfy the significant nexus standard. Id.

Since the Court's decision, the Corps, EPA, state regulatory agencies, courts, contractors, property rights advocates and environmental groups are struggling with the implications of the Rapanos decision. Shortly after the Court's decision, the Corps and EPA issued internal guidance advising field staff, to the extent possible, to delay "making CWA jurisdictional determinations for areas beyond the limits of traditional navigable waters (Section 10 Waters) until new guidance is issued." USACE Regulatory Division, Information for our Customers, http://www.saw.usace.army.mil/wetland/, Nov. 1, 2006. The internal guidance also makes clear that the agency does not intend "to delay the processing and issuance of Nationwide or Individual CWA permit authorizations, unless permit applicants request that we delay such actions until substantive guidance is received." Id. Finally, the Corps internal guidance states "permit seekers will be given the option to modify their general or individual NPDES permits after new guidance is issued if they determine the permit requirements are 'inappropriate' in light of the Supreme Court ruling." (Amena H. Saiyid, Corps of Engineers, "EPA Preparing Guidance in Wake of US Supreme Court Decision," BNA Daily Env't., No. 137, p.A-4) (July 18, 2006).

In the months since the Court issued the Rapanos decision, the agencies have expressed general concern about the Court's ruling and its potential impacts, while stating their intention to "continue to exert [EPA/Corps] jurisdiction over wetlands and waters to the extent allowable" under the CWA. Inside EPA, "EPA Weighs Plan on Ephemeral, Intermittent Waters for Rapanos Guide," v. 27, No. 35 (Sep. 1, 2006). In the interim, the Corps has been working to develop interim guidance to respond to the Court's holding in the case. They have signaled a reluctance to engage in a formal rulemaking process at this stage as suggested by both Chief Justice Roberts(4) and Justice Kennedy. They have signaled that their preference is to issue interim guidance for regulators to follow when making permit authorization decisions. Moreover, in the intervening months since the Court's ruling, several lower courts have revisited the issue of Corps' authority in light of Rapanos over wetlands adjacent to non-navigable waters in litigation. Again, the lower courts are interpreting the Rapanos decision differently across the country and creating more uncertainty and delay. In some lower courts, the Corps has successfully argued that it can apply either the stricter Scalia plurality test or the narrower Kennedy significant nexus test to assert jurisdiction depending on the factual situation. Inside EPA, "EPA Guide May Determine Fate of Bills Expanding Water Law Jurisdiction," v. 27, No. 46 (Nov. 17, 2006). Legal observers and analysts suggest that the interim guidance will provide the agencies with the option of using either test when making a permit authorization decision, thereby perpetuating the uncertainty and confusion over §404 determinations. Id.

Congress also has indicated that it may wade into the issue and attempt a statutory fix to make clear the limits or extent of CWA jurisdiction. Congressional reaction to the Rapanos ruling has been mixed and along party lines, but the switch in Congress from Republican to Democratic control could make the likelihood of a legislative fix far greater than previously. Legislation(5) was introduced in 2006 by Democrats in the House and Senate to define "waters of the United States" to mean "all waters subject to the ebb and flow of the tide...and all rivers, and streams (including intermittent streams)." Backers of these bills say that they would clarify the intent of the original 1972 law. Manu Raju, "Congress Unlikely to Act Soon on Water Ruling Despite Proliferating Confusion," p.12, CQ Today, Aug. 18, 2006. The proposed changes in the Clean Water Act Restoration Bill would address the Scalia plurality's problem with the Corps' "expansive interpretation" of its jurisdiction. David Loos, "Wetlands: Supreme Court ruling breathes life into clean water bill," Environment and Energy Daily, v. 10, No. 9 (June 30, 2006). However, opponents of the bills and property rights advocates are pushing for either federal rules limiting Corps' authority or different legislation(6) codifying a narrower reach of the Act. Id. Legislative battles divided along partisan lines are sure to develop when consideration of these bills begins. The success or likelihood for any of these bills moving during the 110th Congress is uncertain given the breadth of issues and priorities facing the incoming Congress.

After Rapanos, wetlands jurisdiction remains murky as to how far federal authority extends in establishing water quality standards and regulating development or construction activities on or near millions of acres of streams, ditches, and tributaries. There is little doubt that either a legislative fix or the promulgation of a rulemaking sufficiently specific will be a lengthy and contentious process. Until then, however, the USACE must make a case-by-case demonstration on permit authorizations that a given parcel has a significant nexus to traditionally navigable waters. Jonathan H. Adler, "All Wet," National Review Online (Jun. 27, 2006). Project developers and managers can expect continued uncertainty, confusion and costly delays until there is a rulemaking or a legislative fix clarifying the scope of the CWA. Public works officials responsible for the development or construction of projects that may affect a wetland should consider consulting with their local Corps district office for guidance or contact your local state agency responsible for issuing §404 authorizations to get further clarity before undertaking any construction or disturbance activities. Moreover, public works departments may wish to consider reevaluating previously issued jurisdictional determinations for land that has not been developed yet to see if jurisdiction was properly assessed under the significant nexus test articulated in Rapanos.

Julia Anastasio can be reached at (202) 218-6750 or janastasio@apwa.net.

Footnotes:

(1) Rapanos and S.D. Warren involved the issue of U.S. Army Corps of Engineers §404 jurisdiction over the dredging and filling of wetlands that are adjacent to tributaries of traditionally navigable waters. The Court consolidated the cases for oral arguments and decision.

(2) The USACE and EPA jointly administer the NPDES requirements of the CWA; EPA has overall responsibility for setting environmental standards and the USACE has the statutory authority to issue and enforce NPDES permits.

(3) The Carabell case concerns a 20-acre parcel in Michigan that was categorized as forested wetlands, located one mile from a large lake. One side of the parcel is separated by a man-made berm from a ditch connecting to a drain which ultimately empties into a nearby lake. The owners of the Carabell site sought a permit to develop the parcel, and the permit was denied because the property "provides water storage functions that, if destroyed, could result in increased risk of erosion and degradation of water quality..." in the region. 126 S.Ct. 2208 (2206 (slip op. at 8).

(4) Chief Justice Roberts issued a concurring opinion that indicated that a rulemaking referring to the Corps' "view of its authority in light of our decision in SWANCC, and providing guidance" expressing "some notion of an outer bound" may well have avoided the Court's decision in Rapanos today. 126 S.Ct. 2208 (2006) (slip op. at 2) (C.J. Roberts concurring).

(5) See Clean Water Authority Restoration Act of 2005. S. 92 and H.R. 1356.

(6) See H.R. 2658.


APWA member discusses New Orleans rebuilding progress with congressional staff

APWA Louisiana Chapter President-elect Robert Lambert, General Manager of the Greater New Orleans Expressway Commission, discussed rebuilding infrastructure in hurricane-ravaged New Orleans during a Congressional Briefing in Washington, D.C., on Dec. 12, 2006.

Lambert oversees the Lake Pontchartrain Causeway, which proved to be a shining beacon among the ruins of New Orleans' crippled infrastructure and a literal lifeline to safety immediately following Hurricane Katrina. Lambert and his staff kept the Causeway open until 2 a.m. the morning of the storm and were able to reopen it for returning emergency personnel by 7 p.m. that evening.

Lambert asked Congress to continue enacting legislation to aid the rebuilding of New Orleans and the Gulf Coast. He also urged the Federal Highway Administration to release federal funds to repair transportation infrastructure in the area.

In addition to Lambert, APWA Region IV Director Shelby LaSalle was also in attendance at the briefing. APWA Congressional Briefings are one part of an awareness campaign to provide congressional staff with information about the role and needs of public works and infrastructure in local communities. APWA member experts brief staff members about issues ranging from transportation funding to emergency preparedness and clean water.

Contributed by Becky Wickstrom, APWA Manager of Media Affairs, who can be reached at (202) 218-6736 or bwickstrom@apwa.net.