Appeals Court Deals Federal Wetlands Permitting Program Major Setback

Published February 1, 1998

The Clinton administration’s wetlands policy suffered a significant setback last December when an appeals court ruled that the U.S. Army Corps of Engineers exceeded its authority under the Clean Water Act (CWA) when it issued a rule in 1993 requiring developers to obtain wetlands permits before engaging in activities that “could affect interstate commerce.”

Handed down on December 23–just two days before Christmas–the court’s decision attracted little attention. Only now are proponents and opponents of federal wetlands policy beginning to come to grips with the far-reaching implications of the court’s ruling.

At the center of the ruling is the administration’s broad interpretation of wetlands-related activities that “could affect interstate commerce.” The 1993 Corps of Engineers rule rejected by the court stated that wetlands whose destruction or degradation “could affect interstate commerce” were subject to regulation under the CWA. But in U.S. v. James Wilson, the U.S. Appeals Court for the Fourth Circuit overturned a lower court’s conviction of the Maryland developer, ordered a retrial of the defendant, and, in so doing, significantly narrowed the CWA’s applicability to the Commerce Clause of the U.S. Constitution.

Pulling Down the Pillars

Wilson, a residential developer, had been sentenced to 21 months in prison and fined $1 million for “knowingly discharging fill material and excavated dirt into wetlands on four separate parcels without a permit, in violation of the Clean Water Act.” In appealing his conviction, Wilson focused his attention on three pillars of the federal wetlands permitting process and succeeded in pulling down each of them.

Wilson first challenged the Corps’ authority under the CWA to regulate activities that “could affect interstate commerce.” He also questioned what constitutes a wetland by contesting the lower court’s application of the CWA to wetlands that do not have a “direct or indirect surface connection to other waters of the United States.”

Finally, Wilson sought and got clarification under the CWA of a practice known as “sidecasting.” Virtually unavoidable in certain phases of construction activity, sidecasting involves depositing excavated material, mostly dirt, from wetlands drainage ditches next to the ditch.

Rejecting the administration’s broad interpretation of how the CWA relates to the Commerce Clause, the court found that the Corps’ controversial 1993 rule “requires neither that the regulated activity have a substantial effect on interstate commerce, nor that the covered waters have any sort of nexus with navigable, or even interstate, waters. Were this regulation a statute, it would present serious constitutional difficulties, because, at least at first blush, it would appear to exceed congressional authority under the Commerce Clause.”

Introducing an element of precision into the confusing terminology surrounding wetlands regulation, the appeals court also ruled that the lower court should not have extended the jurisdiction of the CWA to wetlands that lack any “direct or indirect surface connection” to interstate waters, navigable waters, or interstate commerce.

The court also found that “sidecasting” is not prohibited under the CWA “because adding fill to dry land cannot be construed as polluting the waters of the United States.”

Biggest Impact in the West

In essence, the court ruled that it isn’t enough to argue that a wetlands-related activity “could affect interstate commerce.” For a wetlands permit to be required, the wetlands activity must demonstrably affect interstate commerce, a significant difference.

The impact of the court’s ruling will be greatest in so-called isolated wetlands, principally areas with water on them only during certain times of the year. Most of the country’s isolated wetlands are in the West and form after heavy, but infrequent, rains. Those wetlands typically have no connection to surface waters or to “navigable waters of the United States.”

Under normal circumstances, the Clinton administration could be expected to be eager to appeal the ruling to the Supreme Court. If left standing, the appeals court decision would make it much easier for developers to go about their business, because they would no longer be confronted with the time-consuming burden of seeking permits for isolated wetlands. For an administration that prides itself on wetlands protection, this would be a bitter pill.

However, there is clearly no guarantee that the Supreme Court would overturn the appeals court ruling. In recent decisions, most notably on gun control, the high court has taken the same hard line on the use of the Commerce Clause as did the appeals court in U.S. v. Wilson. A high-profile, precedent-setting Supreme Court ruling upholding all or most of the appeals court decision would deal the administration’s wetlands policies a crippling blow.

The administration thus has decided to forgo an appeal to the Supreme Court. Instead, it has requested a rehearing before the same three-judge Fourth Circuit panel that handed down the December 23 ruling. Attorneys for the Justice Department have filed a petition for a rehearing, arguing, among other things, that, “This Court, the Supreme Court, and other courts of appeals have repeatedly held that Congress intended the CWA to exercise the full extent of its Commerce Clause powers over the nation’s waters.” An answer to the government’s request for a rehearing is expected shortly.

Another Wetlands Ruling Pending

While the three-judge panel considers the administration’s petition for a rehearing, another wetlands case is before the courts. It, too, involves a controversial rule promulgated in 1993.

On January 9, the U.S. Court of Appeals for the District of Columbia Circuit heard oral arguments in National Mining Association v. U.S. Army Corps of Engineers. The court will determine whether Congress intended to regulate dredging and clearing activities on wetlands that only incidentally result in the redeposit of soil onto the property. In CWA terminology, this is known as “fallback.”

Under the CWA, the Corps of Engineers and EPA can regulate the discharge of dredged or fill material into “waters of the United States,” including certain wetlands. However, clearing wetlands of vegetation or excavation activities that drain wetlands are not addressed in the CWA. Frustrated by this lack of regulatory authority, the two agencies, which share regulatory jurisdiction over wetlands, promulgated a rule in 1993 known as the “Tulluch Rule” that prohibits such excavation activities in wetlands without a permit from the Corps of Engineers.

According to Paul Kamenar, executive director of the Washington Legal Foundation (WLF), the agencies “justified the rule on the grounds that when land is cleared, a small amount of soil from the roots of the removed trees or from the excavating equipment trickle or fall back into the ground, and therefore constitute a ‘discharge’ of fill material onto the wetland.”

Writing in the January 9 issue of WLF’s Counsel’s Advisory, Kamenar points out that “the agencies go so far as to argue that ‘walking, bicycling, or driving a vehicle’ on wetlands causes a ‘discharge of dredged material’ that the government could regulate under the Clean Water Act.”

Last year, the U.S. District Court for the District of Columbia struck down the Tulluch Rule. The court ruled that Congress did not intend to regulate the incidental fallback from excavation, but rather the addition of pollutants to the waters of the United States. Kamenar explains that the court based its decision on the statutory language and legislative history, consistent agency interpretations over the life of the CWA before the Tulluch Rule was promulgated, and judicial decisions recognizing that the statute regulates disposal but not removal activities.

Joining the National Mining Association on the appeal are the American Forestry & Paper Association and the National Association of Home Builders. Supporting the government’s position are the Sierra Club, National Wildlife Federation, and National Audubon Society. A decision on the National Mining Association v. U.S. Army Corps of Engineers is expected in three to six months.