Protecting Property Rights, Preserving Federalism and Saving Wetlands

Policy Reports | Energy and Natural Resources

No. 291
Wednesday, October 25, 2006
by Daniel R. Simmons, J.D. and H. Sterling Burnett, Ph.D.

Cleaning Up the Nation's Waters: The Clean Water Act

"Concern about water pollution led to the passage of the Clean Water Act."

In the 19th century, Congress was not concerned with protecting wetlands, but rather in keeping navigable waterways free from physical obstruction and interference by prohibiting the construction of piers and dams and the unauthorized dumping of dredged materials.

As environmental concerns gained traction, in 1972 Congress used its authority to regulate commerce to prohibit pollution as well as regulate navigable waterways by passing the Clean Water Act (CWA).5 While the discharge of pollutants does not necessarily hamper navigation, it does impact water quality. And public health risks can loom large, particularly when the pollution involves the infectious agents found in municipal sewage. Thus, arguably, there is a role for government to regulate the introduction of such materials into publicly owned bodies of water. In addition, in order to protect water quality, the government may occasionally find it necessary to impose certain restrictions on land along a shoreline or adjacent to nearby rivers and streams. The Clean Water Act gave the Corps and the EPA the regulatory authority to prohibit the discharge of any pollutant into "navigable waters" without a permit.6 It defined navigable waters as "waters of the United States , including the territorial seas."7 The problem is that the term "navigable waters" is not very descriptive. [See the sidebar: "What Are Navigable Waters?"]

"The Clean Water Act led to federal control over adding or removing dirt from wetlands."

Because Congress didn't precisely define navigable waters in the CWA, the Corps and EPA did. In 1974, the Corps first defined "waters of the United States " as "those waters of the United States which are subject to the ebb and flow of the tide, and/or are presently, or have been in the past, or may be in the future susceptible for use for purposes of interstate or foreign commerce."8 It further explained that the defining characteristic of navigable waters "is the water body's capability of use by the public for purposes of transportation or commerce."9 In essence, the Corps' 1974 regulatory definition was the traditional definition, which tied navigable waters to navigation, or being able to boat on water.

This all changed in 1975, following the Supreme Court's decision in Natural Resources Defense Council ( NRDC ) v. Callaway.10 The NRDC argued that the Corps' definition of navigable waters was too narrow and the Supreme Court agreed.11 The decision expanded the Clean Water Act to encompass regulation of any discharge into wetlands that eventually drain into navigable waterways.

The Section 404 Rule. In 1977, the Corps promulgated new regulations of substantially expanded scope under Section 404 of the Clean Water Act. Relying on the full extent of Congress' commerce clause authority, the Section 404 rule covered both navigable waters and other "waters of the United States ."12 The latter included: "isolated wetlands and lakes, intermittent streams, prairie potholes, and other waters that are not part of a tributary system to interstate waters or to navigable waters of the United States, the degradation or destruction of which could affect interstate commerce."13

The regulations required anyone who wished to discharge dredged or fill material into U.S. waters to obtain a permit beforehand.14 Agencies implementing the law have interpreted Section 404 as granting federal oversight of any activity resulting in the deposit of any material into a wetland. And while the Corps issues the actual permits, the EPA provides the guidelines and has the authority to veto the Corps' issuance of a permit. The U.S. Fish and Wildlife Service (under the Department of the Interior), the Soil Conservation Service (under the U.S. Department of Agriculture), and the National Marine Fisheries Service (under the Department of Commerce) all participate in the process.

The Glancing Goose Test. In 1986, the Corps went even further than the 1977 rule and promulgated the so-called Migratory Bird Rule,15 which states that the Corps' regulatory authority extends to waters:

  1. Which are or would be used as habitat by birds protected by Migratory Bird Treaties; or
  2. Which are or would be used as habitat by other migratory birds which cross state lines; or
  3. Which are or would be used as habitat for endangered species; or
  4. Used to irrigate crops sold in interstate commerce.16

Under the Migratory Bird Rule and the expansive 1977 definition of U.S. waters, there was very little water outside the scope of the Corps' regulation. Indeed, under the Migratory Bird Rule, the Corps and the EPA defended in court what became known as the Glancing Goose Test: if a migratory goose glanced down and spotted a small pond, soggy ground or a temporarily flooded pasture or woodlot, even if it didn't stop, the mere glance extended the reach of federal control and regulations to that privately owned body of water.

"A wetland came to mean any place a goose might land."

Wetland Protections: Harming Property Owners, Criminalizing Development. In 1989, the scope of federal wetlands protection activities was further expanded when President George H.W. Bush pledged to achieve "no net loss" of wetlands. The Corps and the EPA developed a "Memorandum of Agreement" to create a uniform jurisdictional definition of wetlands within the federal government.17 Unfortunately, they wrote the guidelines so broadly that it became difficult to find acreage outside the federal regulatory reach. At the same time, to meet the president's goal, the agencies expanded the conditions a landowner must meet to receive a permit to develop property containing wetlands, heightened enforcement efforts and sought increased punishment against those who violated the new standards.

The government imposed several new requirements on landowners desiring to develop property on jurisdictional wetlands (that is, wetlands as defined by regulations); among them, that the property owner must create, reclaim or reestablish wetlands elsewhere. More often, however, permits were simply denied. For instance, when a Baptist congregation in Florida wanted to build a new church and adjacent parking lot, federal officials intervened, usurped local authorities' power to regulate development and refused to grant a permit to build the church.18

"Virtually all private land is at risk of being declared a federally regulated wetland."

Wetlands Witch Hunt. In December 1990, the EPA and the U.S. Army Corps of Engineers issued a joint memorandum outlining a publicity campaign against wetland regulation violations. The memorandum directed regional officials to nominate regulatory violations for high-profile prosecutions in time to meet an Earth Day 1991 deadline.19 It endorsed both civil and criminal penalties. The latter were not to be limited to egregious violations; they could apply even in cases of negligence.

With a few criminal prosecutions, the federal government intended to frighten other wetlands owners into meek compliance. In Maine, landowner Gaston Roberge found this out firsthand. Roberge had allowed a town to dump fill-dirt on his 2.8-acre commercial lot, but when he attempted to sell the lot, the Corps charged him with illegally filling a wetland. An internal Corps memo was discovered that said, "Roberge would be a good one to squash and set an example."20

As a result of this memorandum, some property owners not only lost their property rights and suffered economic consequences, many were sent to or threatened with prison for mere technical violations. For instance:

  • Maryland developer James Wilson created several wildlife ponds on his land and was found guilty of violating the CWA by filling wetlands; he was sentenced to 21 months in federal prison and fined $4 million.
  • Ocie Mills and his son both spent 21 months in federal prison for filling a dry ditch - which the government argued was a seasonal wetland - with clean sand in order to build the son's home.21

"A father and son went to prison for filling a dry ditch with sand."

In addition, when Wall Street-millionaire Paul Tudor Jones III tried to create a waterfowl habitat on his land along the Chesapeake Bay, the EPA determined that this was a criminal act. Jones paid a $1 million fine and "donated" a second million to support a wildlife refuge, thereby avoiding trial. But William Ellen, Jones' employee, was sentenced to six months in jail and several additional months of home detention. Despite the fact that he had sought and secured 38 separate permits to construct a waterfowl habitat on his employer's land, the government considered him a willful violator of the law.22

In perhaps the most famous case, Hungarian immigrant John Pozsgai of Morrisville, Pa., was fined $5,000 and sentenced to three years in jail. After purchasing a 14-acre dump site to build a home and to expand his truck repair business, he carted off over 7,000 old tires and several rusting cars from his land and a storm-water drainage ditch. During heavy rain the ditch flooded and the tires became a breeding ground for mosquitoes. Pozsgai carted off the tires to reduce the mosquitoes and then leveled the drainage ditch and about five acres with clean fill dirt. The EPA prosecuted him for dumping dirt without permission. He served one and a half years in prison, another 18 months in a halfway house and five years of supervised probation. Fighting the case forced his family into bankruptcy, and his daughter is still seeking a presidential pardon for her father.23

"Another man went to prison for carting off 7,000 old tires (a breeding ground for mosquitoes) and filling the area with dirt."

Courts Begin to Rein in Federal Wetlands Authority. A number of legal scholars have argued that the federal government claims unconstitutional authority over wetlands, violating both the separation of powers between the federal and state governments (federalism) and the "takings clause" of the Fifth Amendment to the Constitution, which requires just compensation when private property is taken for public use.24 Over time, some federal courts began to recognize the injustices resulting from prosecutions and the arguably unconstitutional authority the government claimed.

For example, in a 1991 case, a Missouri farmer moved dirt to repair a broken levee on his farm. He was accused of destroying wetlands and was tried, but not convicted.25 The farmer's attorney forced an EPA witness to admit that if a baseball diamond were built on the type of soil typical of wetlands, a player knocking dirt off his cleats could be in technical violation of Section 404. The court felt this went too far.

In 1998, a federal appeals court held that the Corps was limited to regulating the "filling" of wetlands and had to stop regulating activities that could not be characterized as such.26 This case overturned the so-called Tullock rule, which prohibited dredging of wetlands. Under the Tullock rule, the Corps claimed they could regulate dredging and require property owners to get permits because some material might fall back into the wetlands. But the court noted: "Congress could not have contemplated that the attempted removal of 100 tons of [dredged material] could constitute an addition simply because 99 of it were actually taken away."27

To meet the standards set by the court, while providing the same type of regulation as the original Tullock rule, the Clinton administration proposed, and the Bush administration implemented, a new regulation covering dredged material that could be defined as more than incidental and which settles beyond its original place of removal.28

Solid Waste Agency of Northern Cook County (SWANCC) v. Army Corps of Engineers. In 2001, the Supreme Court finally stepped in, telling the Corps and EPA that defining navigable waters to mean any habitat used by migratory birds is obviously stretching the government's power to regulate wetlands too far.29 SWANCC dealt with whether or not the Corps could use the Migratory Bird Rule to regulate wetlands isolated from any streams, rivers or lakes of any kind. The Supreme Court held that the CWA did not authorize the Migratory Bird Rule.30

"Regulators want to interpret the mandate to regulate navigable waters into carte blanche authority to regulate all waters."

SWANCC revolved around the decision of solid waste agencies in Cook County , Ill. , to use an abandoned sand and gravel pit for a municipal land fill. The pit was isolated and unconnected to any navigable waters, though it held some permanent and seasonal water. Citing the Glancing Goose Test, the Corps argued that filling the pit would violate the CWA. In overturning the lower courts and the Migratory Bird Rule, the Supreme Court determined that while it may be reasonable to regulate wetlands adjacent to navigable waters, the CWA does not grant the Corps carte blanche to regulate all waters.31 The Court argued that while Congress evidenced some intent to regulate at least some nonnavigable waters, it did not write "navigable" out of the statute.32 The Court explained that "[t]he term 'navigable' has at least the import of showing us what Congress had in mind as its authority for enacting the CWA: its traditional jurisdiction over waters that were or had been navigable in fact or which could reasonably be so made."33

Instead of expansively interpreting "navigable waters" and "waters of the United States" to mean any water permissibly regulated under Congress' commerce clause powers, the Court found "nothing approaching a clear statement from Congress that it intended CWA Section 404(a) to reach an abandoned sand and gravel pit," at issue in this case.34 Instead, the Supreme Court found that the CWA did not extend to isolated wetlands.35

While SWANCC clearly showed that isolated wetlands were not necessarily regulable under the CWA, as the Rapanos and Carabell cases demonstrate (see below), the Corps and EPA were loathe to relinquish any more regulatory authority than necessary.

Rapanos v. United States.36 Rapanos concerns the desire of John Rapanos to develop three parcels of land he owns in Michigan. Starting in 1988, Rapanos hired contractors to prepare the three sites for development. In December of 1988 the Michigan Department of Natural Resources (MDNR) informed him that one site was likely a wetland. In spite of cease-and-desist letters from the MDNR in 1992 and the EPA in 1997, Rapanos continued to prepare the land for construction, without applying for a CWA permit. He felt that the Act did not apply to "nonnavigable, intrastate wetlands far removed from any traditional navigable waters."

The federal government charged Rapanos with civil and criminal offenses under the Clean Water Act. The district court found that there was a surface hydrologic connection between two of the sites and two rivers. None of these wetlands, however, are physically adjacent to a navigable waterway, nor did Rapanos ever fill any actual navigable waters.37

"One judge refused the federal government's request to imprison a landowner for moving sand from one end of his property to the other."

The government argued that the CWA provides authority to regulate wetlands that are adjacent to tributaries which in turn have a connection to navigable waters. In Rapanos , the 6th Circuit Court held that "[t]here is no 'direct abutment' requirement in order to invoke CWA jurisdiction"; rather, "[n]on-navigable waters must have a hydrological connection or some other 'significant nexus' to traditional navigable waters in order to invoke CWA jurisdiction."38

The federal government wanted Rapanos to spend 63 months in jail for repeated violations of the CWA; however, Chief District Judge Lawrence Zatkoff decided that it would be outrageous to jail him for these offenses:

"So here we have a person who comes to the United States and commits crimes of selling dope and the government asks me to put him in prison for 10 months. And then we have an American citizen who buys land, pays for it with his own money, and he moves some sand from one end to the other and the government wants me to give him 63 months in prison. Now, if that isn't our system gone crazy, I don't know what is. And I'm not going to do it."39

Judge Zatkoff sentenced Rapanos to three years probation and fined him $185,000. But the federal government wanted to make an example of Rapanos, so they appealed Judge Zatkoff's decision - and won.40 The appeals court sent the case back to the District Court for resentencing - meaning harsher sentencing - arguing that the District Court improperly deviated from the U.S. Sentencing Guidelines Manual for a crime of the magnitude Rapanos committed.

Carabell v. United States Army Corps of Engineers.41 The Carabells wanted to build condos on their acreage in Michigan. Fifteen of the 19.6 acres were a forested wetland. But the property is hydrologically isolated from any navigable water by nonpermeable berms along two sides of the property.42 The Carabells' first application for a permit from the Michigan Department of Environmental Quality was denied, even after they agreed to construct a functional wetland on 3.7 acres of their land. The state agency recommended a permit be issued, but the EPA objected and asserted federal jurisdiction on the grounds that the property was a wetland adjacent to navigable waters.

The Corps took over the case from the EPA, and even though they conducted three site inspections, they never found a hydrological connection between the property and any navigable waterway. Instead, the Corps argues that it has regulatory authority because the land is "adjacent to a drain which empties directly into a [traditional navigable] water."43

The federal district court and, on appeal, the 6th Circuit Court agreed with the Corps that it had authority to regulate the land. The Carabells appealed to the Supreme Court and the Supreme Court agreed to hear the case, consolidating it with the Rapanos case.

"Justice Scalia said the Army Corps of Engineers exercises the powers of an enlightened despot."

Court Decision Muddies Wetlands Regulation. On June 19, 2006, the Supreme Court issued a fractured (5-4) opinion in the Rapanos and Carabell cases. It overturned the lower courts' decisions, arguing that the Corps misinterpreted the government's reach under the CWA in denying both Rapanos and the Carabells permits to develop their properties. Writing for a plurality of the Supreme Court, Justice Scalia noted the significant hurdles the average applicant for a permit had to overcome. He said the Corps exercises the powers of an "enlightened despot, relying on such factors as 'economics,' 'aesthetics,' 'recreation' and 'in general, the needs and welfare of the people,'" when deciding whether to grant a permit to alter or develop a wetland.44 Confronting civil and criminal penalties, landowners cannot easily avoid the substantial costs involved in the permitting process. The average applicant spends 788 days and more than $271,000 to gain an individual permit.45

While these burdens might be justified to protect permanent wetlands adjacent to or connected by flowing surface water to navigable waterways, the Supreme Court found that the CWA did not intend "waters of the United States" to include ditches, canals and other channels through which water flows intermittently or briefly.46

Scalia - joined by Chief Justice Roberts, Justice Alito, and Justice Thomas - set out a two-part test to determine whether the Corps has jurisdiction over a wetland. First, the wetlands must be adjacent to an essentially permanent body of water connected to traditionally defined navigable waters. Second, the wetlands must have a continuous surface connection with that water.47 This seems relatively straightforward. The Supreme Court vacated the 6th Circuit's opinion and remanded both back to the lower courts. Scalia made it clear that he thought both Rapanos and the Carabells should win.

"The Supreme Court couldn't agree on the definition of a federally regulated wetland."

The plurality's straightforward opinion, however, was muddled by the separate concurring opinion of Justice Kennedy. He agreed in overturning the lower courts' rulings but not in the criteria set forth by Scalia. Kennedy argued that as long as the Corps could establish a significant connection with navigable waters it could legally exercise jurisdiction over wetlands that were not navigable or were adjacent to nonnavigable waterways.48 Some analysts argue that since Kennedy was the swing vote, his opinion should control. This would open the door for the appellants to lose - as long as the Corps establishes the hydrological, biological and other functions of the wetlands and their connection to navigable waters in each case.

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