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Supreme Court Decision Leaves U.S. Wetlands (and Bankers) Stuck in the Middle

Alice Kenny

A recent U.S. Supreme Court case challenged the enforcement of the Clean Water Act with respect to wetlands on private land. The Ecosystem Marketplace takes a look at the resulting split decision and its impact on the evolving wetland mitigation banking industry.

A recent U.S. Supreme Court case challenged the enforcement of the Clean Water Act with respect to wetlands on private land. The Ecosystem Marketplace takes a look at the resulting split decision and its impact on the evolving wetland mitigation banking industry. Thumbing their noses at regulators and threatening to "destroy" a wetland consultant who identified their land as unbuildable under the Clean Water Act, John and June Rapanos bulldozed 230 acres containing wetlands to build a shopping center in Michigan back in 1988. Despite this nefarious start, Rapanos along with another Michigan wetlands case called Carabell pushed their way through the U.S. legal system, landing before the dignified body of the Supreme Court. There, in writings dripping with sarcasm towards one another's opinions, the nine black-robed justices issued a 4-1-4 splintered decision in June 2006 that could threaten decades-old protections to the nation's waters. The decision throws into question just how stridently the Act should be enforced, what exactly should be protected, and even the meaning of such basic operational words as "waters," "navigable" and "adjacent." Conversations with regulators, attorneys, developers and wetland mitigation bankers indicate that this cacophony could lead, at least in the short term, to fewer federally protected wetlands and cut into business for the mitigation bankers who make their livelihood restoring wetlands. "The worst situation is all this ambiguity," says Russ Harding, former director of Michigan's Department of Environmental Quality who oversaw mitigation banking during its infancy. "If I were a developer, I'd be scared to do anything. It's not going to help mitigation banking until we get all this clarified."

Tabloid News

The Rapanos case reads like tabloid front-page news, but it actually raises serious legal issues that are important to conservationists, developers and mitigation bankers across the country. Along with the more staid Carabell case, the Rapanos case offers the Supreme Court an opportunity to clarify what many had complained was murky, over-reaching interpretations of environmental law. The Rapanos case began when, according to court documents, John Rapanos asked his state department of natural resources to inspect the site he owned in Midland, Michigan so he could build a shopping center there. To bolster his contention that the land was developable, he hired a wetland consultant. But when the consultant concluded that the land contained significant wetlands, Rapanos threatened to "destroy" him unless he eradicated all traces of his report. Then, without a permit, Rapanos ordered $350,000 worth of earthmoving and land-clearing work to fill and drain 22 acres of wetlands. He prevented inspectors from visiting the site and ignored cease and desist orders. He and his wife also took similar actions at two other sites, court documents reveal, spending $158,000 to fill 17 acres of wetlands on a 275-acre site and another $463,000 to fill 15 acres of wetlands on a nearby 200-acre site. The Federal Government brought criminal charges against Rapanos. The second consolidated case before the court also originated in Michigan, but is not nearly so flashy as the Rapanos story. In 1993, Keith and June Carabell sought permits from the Michigan Department of Environmental Quality to fill wetlands and construct 130 condominium units, according to court documents. Although the Department denied the permit, a State Administrative Law Judge later directed the agency to approve an alternative plan that allowed for filling 12.2 acres of wetlands and creating 3.74 acres of retention ponds. But the Army Corps of Engineers determined that the property served water-storage functions that, if destroyed, could cause erosion and degrade water quality. The Corps denied the permit, leading to a series of appeals and, ultimately, the United States Supreme Court.

A Split Decision

According to the jingle from the classic T.V. show, Mr. Ed, a horse is a horse, of course, of course. But in the environmental enforcement world created by the Clean Water Act, the meaning of such key words as waters, navigable and adjacent are up for grabs, triggering endless disputes that led, eventually, to the current face off. Appalled by waterways so polluted that the Cuyahoga River in Cleveland actually burned, Congress enacted the Clean Water Act in 1972 "to protect the nation's navigable waters." Quickly, scientists, courts and regulators agreed that the nation's navigable waters could only be protected if water flowing into them was protected as well. But where should this protection start? And how far up stream should it extend? Since the 1970s people have argued over these questions, constantly wondering whether the spirit or the letter of the law should be applied when attempting to answer them. For Justice Antonin Scalia and the justices who joined in his decision—Thomas, Alito and Chief Justice Roberts—the answer was straightforward. Relying heavily on Webster's New International Dictionary (2d ed., 1954) for his decision's backbone, Scalia wrote that waters of the United States include only ones that are permanent, standing or continuously flowing. Adjacent (protected) wetlands are those where it is difficult to determine where the wetland begins and water ends. And navigable confers jurisdiction over relatively permanent bodies of waters. Disparaging the four justices who disagreed with this opinion, Scalia wrote that they were "long on praise of environmental protection and notably short on analysis." But from Justices Stevens, Souter, Ginsburg and Breyer's perspective, Scalia's analysis fixated on the wrong issue. Instead of focusing narrowly on dictionary definitions, Stevens wrote, the case should be considered in light of Congress' intent when creating the Clean Water Act. Criticizing Scalia's "own antagonism to environmentalism," Stevens emphasized that Congress said they wrote the Act to " restore and maintain the chemical, physical and biological integrity of the Nation's waters." Wetlands, then, are protected under the Act, Stevens reasoned, when they significantly affect this integrity. Oozing sarcasm, Stevens added that "the plurality… defines 'adjacent to' as meaning "with a continuos surface connection to" other water. It is unclear how the plurality reached this conclusion, though it plainly neglected to consult a dictionary." Into this 4-4 face off entered Justice Anthony Kennedy. Stretching his judicial muscles, the Court's moderate sided in part with both groups, triggering turmoil that many say could take years to sort out. On the one hand, Kennedy agreed with Scalia that the lower court failed to establish a "significant nexus" between the waters on Raponos and Carabell's land and the nation's navigable waters. Because of this omission, the two cases, he agreed, should be remanded for a new decision. On the other hand, Kennedy wrote, Scalia's opinion was "inconsistent with the (Clean Water Act's) text, structure and purpose. " It was likely, Kennedy added, that the lower court would find a significant nexus connecting the Rapanos and Carabell wetlands to navigable water and could then accurately rule, once again, against Rapanos and Carabell. Most perplexing about Kennedy's hair-splitting decision, attorneys and regulators say, is his additional requirement that the Army Corps of Engineers, rather than following established guidelines, instead evaluate each wetland-petition permit on a "case-by-case basis" until Congress clarifies its intent or the Army Corps of Engineers and Environmental Protection Agency write better-defined regulations. Echoing the sentiments of nearly everyone affected by this decision, Sanju Misra, a fellow at Georgetown Environmental Institute comments, "lower courts don't know what to do with these sorts of fragmented opinions. It's like fitting a jigsaw puzzle together."

Missing Pieces

Many attorneys say Kennedy's "significant nexus," case-by-case requirement must be followed by courts and regulators since his decision to remand the case back to the lower court gave Scalia's opinion a five-member plurality. Others, including Reed Hopper, a principal attorney with the Pacific Legal Foundation that represented Rapanos, say courts and regulators can choose to follow either Scalia's restrictive adjacency requirements or Kennedy's significant nexus requirement. Still others, including Georgetown University environmental law professor Richard Lazarus, say the split decision broadens the Clean Water Act by allowing water bodies to fall under its protection if they meet either Scalia's or Kennedy's tests. Exacerbating the problem, no one appears willing to step up to the political plate to sort this out. Since the Supreme Court justices now realize they cannot come up with any clear consensus among themselves, it appears unlikely that the existing court will take on another case, Hopper says. Meanwhile, Congress could vote to accept one of several proposals before it to amend and clarify the Act. But this is also politically unlikely, says Leonard Shabman, an economist and wetland specialist who helped author a study assessing wetlands for the National Academy of Science's National Research Council. And while the executive branch's Army Corps of Engineers and EPA could write new regulations, they are so wary of this politically charged subject that Army Corps spokesperson Dave Hewitt would say only they plan to review the ruling and, in the meantime, have warned their staff to "just be careful."

Stuck in the Middle

There appears little doubt that this mayhem will damage the mitigation banking industry, say experts. "Since no one knows what's jurisdictional and what's not, it will slow down the wetland-permit process, resulting in less land requiring mitigation," says former president of the National Mitigation Banking Association Richard Mogensen. Not only will this process be slowed, the amount of land requiring mitigation could also be lessened, according to an internal Army Corps of Engineers memo obtained by Ecosystem Marketplace and confirmed by Corps spokesperson Hewitt. The memo instructed staff to delay determinations on cases involving "nontraditional navigable waters" until the agency comes up with new guidelines. It also added, ominously, that "the amount of required compensatory mitigation can be re-evaluated (if appropriate) based on that new guidance." Should the Army Corps ultimately decide to be aggressive in asserting jurisdiction over wetlands as it has after past court cases, the case-by-case analysis prescribed by Kennedy would increase workloads and slow down wetland identification, says Royal Gardner, a member of the National Research Council's Committee on Mitigating Wetland Losses and law professor at Stetson University. But if it decides to take a more limited approach, there would be serious wetland losses in states that do not have or pass their own wetlands protection laws. "The short term implication is a decrease in the number of wetland acres and subsequent decrease in demand for credits and mitigation bankers," Shabman says. "The long term is harder to see. The whole point of this case is that we haven't decided as a nation what a wetland is." Alice Kenny is a prize-winning science writer and a regular contributor to the Ecosystem Marketplace. She may be reached at alkenny@aim.com. First published: August 8, 2006 Please see our Reprint Guidelines for details on republishing our articles.

Please see our Reprint Guidelines for details on republishing our articles.