Petition for Writ of Certiorari — Rueth Development Co. v. United States

PEN Kinet

supreme Court, U.S.

FILE®

(7)

O38 5480018 2003

No. 03-

IN THE

Supreme Court of the United States

RUETH DEVELOPMENT COMPANY and

HAROLD G. RUETH,

Petitioners,

v.

UNITED STATES OF AMERICA,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES CourT OF APPEALS FOR THE SEVENTH CIRCUIT

mares

PETITION FOR A WRIT OF CERTIORARI

STEPHEN A. STUDER LAURENCE A. McHucGu*

PLEws SHADLEY RACHER & BRAUN BRIAN E. Casey

53732 Generations Drive uf BARNES & THORNBURG

South Bend, IN 46635 100 North Michigan Street

(574) 273-1010 Suite 600

South Bend, IN 46601

(574) 233-1171

* Counsel of Record

Attorneys for Petitioners

183375 cr

COUNSEL PRESS

(800) 274-3321 + (800) 359-6859 Kae

f¥

SRE ORR NTR . > beta!

a haaiaie ee : r we ata oe a

i ‘

QUESTIONS PRESENTED

1. Whether a consent decree with a federal agency can

ever be modified after a significant change in the law makes

evident that the consent decree was void ab initio because

the agency lacked the authority to enter into or enforce the

decree.

2. Whether the Seventh Circuit erred in concluding that

Section 404(a) of the Clean Water Act, 33 U.S.C. § 1344(a),

permits the government to regulate wetlands that ‘ are not

adjacent to open water” in contravention of this Court’s

decision in Solid Waste Agency of N. Cook County v. United

States Army Corps of Engineers, 531 U.S. 159, 168 (2001).

Ul

STATEMENT PURSUANT TO RULE 29.6

Petitioner Rueth Development Company states that it is

not a corporation. It is a limited partnership, consisting of

individual general and limited partners. Petitioner Harold

Rueth is an individual residing in Indiana.

Stee ME be OAD LOR wet e

ill

TABLE OF CONTENTS

QUESTIONS PRESENTED .....--- +++ e eres

STATEMENT PURSUANT TO RULE 29.6 ......

TABLE OF CONTENTS .....--- esse eeeeeees

TABLE OF CITED AUTHORITIES ..........- fa

TABLE OF APPENDICES ........--+-+++555: -,

OPINIONS BELOW ........-.- see ee rete renee

STATEMENT OF J URISDICTION aan ss

STATUTORY PROVISIONS INVOLVED .......

yy sg 0) ec coo

REASONS FOR GRANTING THE PETITION ...

I.

The Decision Below Conflicts With

Established Rule 60(b)(5) Jurisprudence As

Applied to Consent Decrees. .........---

A. The Seventh Circuit’s Decision Conflicts

With This Court’s Established Precedent

Permitting Modification of Consent

ee eee

B. The Decision Conflicts With Other

Decisions Regarding the Availability of

Post-Consent Judgment Relief .......

Page

il

Xl

10

11

16

iv :

Contents

Page |

II. The Decision Below Permits The Federal

Government to Continue Regulating An

Isolated Wetland In Contravention Of This

Court’s Reasoning in SWANCC. .......... 17

A. The Decision Below Contradicts This

- Court’s Prior Caselaw Interpreting CWA |

SE 5-5 cab kteud awe eeh sees tha 18 ;

B. Appellate Courts Already Conflict About :

the Scope of the Government’s CWA

§ 404(a) Jurisdiction After SWANCC .. 25

C. Even the Regulating Agencies Have |

Expressed Confusion Over The Breadth

Of Their Jurisdiction. .............. 28

aE. sche wedarskce sid eekeauweeines 30 |

TABLE OF CITED AUTHORITIES

Page

CASES ”

Agostini. v. Felton,

SE We Oe COED Kanan duenesesuenass 3, 9, 14, 15

Ahern v. Board of Education,

USD P.O Sis CT" CA. BGS) coc nvcevesvccsaes 11

Bousley v. United States,

a eer rer eee 16

Bowen v. Georgetown Univ. Hosp.,

BGS UD. FOS CIGSS) ccccvenessvernssenccens 12

DeCecco v. United States,

SES F.26 STZ Ci* Cae. 1979) nove cecivcesvesss 16

FDA v. Brown & Williamson Tobacco Corp.,

rf Bet ey f. ererrrres es res 12

FD&P Enterp., Inc. v. U.S. Army Corps of Eng’rs,

239 F. Supp.2d 509 (D.N.J. 2003). ........ ne 28

Federal Crop Ins. Corp. v. Merrill,

BOS Us SUP CRMETD sc dncansetevesvuseasuves 6, 12

Firefighters Local Union No. 1784 v. Stotts,

pik rt. | erreryr rer rer rr re 14

Headwaters v. Talent Irrigation Dist.,

DES FG S26 Cr LAE FOE) cc cncevicsenccuss 27

Hoffman Homes, Inc. y. Administrator,

United States EPA,

S99 F.26 256 CF" Cis. 1999) .nevacccesccvtens 4,5

vi

Cited Authorities

Page

In re Veldhuis,

2002 EPA ALJ LEXIS 39 (June 24, 2002) ..... 29

Lawrence v. Chater,

| FUG Us FOS CROED 6o can cenesacecesiguaken 23

|

Lawson v. United States,

, 397 F. Supp. 370 (N.D. Ga. 1975) ............ 16

Local Number 93, Int’l Ass'n of Firefighters v.

City of Cleveland, ;

eo ee | ere es 1,10, 11, 15

Rapanos v. United States, ;

BUR Roo | eer a ey ee 23

Rice v. Harken Exploration Co.,

200 Fe Bee CS Ga BOOED vv de scevacseues 9, 10, 26

Rivers v. Roadway Express, Inc.,

Rte ee ee ee ee 6

Rufo v. Inmates of Suffolk County Jail,

ek Pere ee rere passim

Solid Waste Agency of Northern Cook County v.

United States,

See Wide BOW COUEE oc v kawken ceeeeeed yeas passim

Stanback v. United States,

ECD F206 Oe CHG BOUTS acaba creas aceuys 16

System Federation No. 91 v. Wright,

See Us OE SOME! oh 6 es ee cdcen seawews ee

vil

Cited Authorities

Page

The Floyd Acceptances,

74 US. (7 Wall.) 666 (1869) ............02.. 12

Treacy v. Newdunn Associates, LLP,

2003 U.S. App. LEXIS 18681 (4" Cir. Sept. 10,

Ee er Ree ee Ep mee ene ae 27

United States v. Amdahl Corp.,

786 F.2d 387 (Fed. Cir. 1986) ............... 12

United States v. Armour & Co..,

ee STE PE ct cn eaas bnwkcacuseeen 10-11

United States v. Beebe,

Pe ee ERED a kha 4A 0 abd bea eee sek 12, 13

United States v. Deaton,

358 F.90 COE (4" Cie. 2008) 2... ccc ccc ccccess 27

United States v. Eidson,

S06 F.36 2336 (11° Cig, 1997) ... 0... ccc aces 27

United States v. Interstate General Co.,

2002 WL 1421411 (4th Cir. July 2, 2002) ...... 25-26

United States v. ITT Continental Baking Co.,

Ge SE PC EUEOD bbs nkae es cscndcakner ane 10, 11

United States v. Krilich,

303 F.3d 784 (7 Cir.2002), cert. denied, 123

iy Mle SUE EE co GS Gli wk < 40a baa Wew since 24-25

United States v. Lamplight Equestrian Ctr.

2002 U.S. Dist. LEXIS 3694 (N.D. Ill. 2002)... 27

Vill

Cited Authorities

Page

United States v. Lewis,

S76 P.O GOS (5? Cie, 1973) cn ccc cccccscncess 16

United States v. Loschiavo,

S58 Fete Cle Gl Ge COTOD co vcccccsccccnseusr 16

United States v. Rapanos,

190 F. Supp. 2d 1011 (E.D. Mich. 2002), reversed,

3359 F.36 G67 (O” Cit. BOGS) on cs ccceccess 23, 25, 27

United States v. RGM Corp.,

222 F. Supp.2d 780 (D.N.J. 2003) ............ 28

United States v. Riverside Bayview Homes,

Gey Bee CUE 84:65 babe haue dea deans 18, 19, 25

United States v. Russo,

358 F. Supp. 436 (D.N.J. 1973) .............. 16

United States v. Sawyer,

74 F. Supp. 2d 88 (D. Mass. 1999), reversed,

239 F.3d 31 (1" Cir. ZOOL) . nce ceseccceneens 17

United States v. Summa,

362 F. Supp. 1177 (D. Conn. 1972) ........... 16

United States v. Swift & Co.,

er es SE 4s hv Heh eee i nnceeceennes 14

United States v. TGR Corp.,

171 F.3d 762 (2d Cir. 1999) ......... Perse? 27

United States v. Wilson,

133 F.36 251 (4? Cir. 1997) onc cecccccccsecs 9, 26

ix

Cited Authorities

Page

STATUTES

jk To | wor rrr Terre rere ree errs 20

BB US.C./GIZSAD) oc cvccvcccvevecncesesceses l

Rik Real Oi | errr er eee rere er rere ee ee 1, 18

SS UBC. 8 USIDD) 22. ccscccesesecevescvvess 2

pie Rom | rrr r errr iret eee i, 1,2,4

33 UBL. § 1SGRT) ciccccccsevcccecvesvoees 1, 5, 18

RULES

© See S| Bee reeTerrererererraeee 7

Pod, RB. Gov. F GRR) nv cccccccescccsvevevesss passim

OTHER AUTHORITIES

33 C.F.R. § 209.260(e)(1) (1974) ......- eee eee 21

33 C.F.R. § 328.2(j) (1981) «1... cece eee ee eee 21, 28

SS CER. 8306.3 .......... Re rem eae ty passim

GO CER. © Z5G3 2 cc cccesccccsvnvcvcescvncces 18

118 Cong. Rec. 33,699 (1972) ....-...-- eee eeee 22

118 Cong. Rec. 33,756-57 (1972) .......-.. eee 22

x

Cited Authorities

51 Fed. Reg. 41,206 (Nov. 13, 1986) ............

68 Fed. Reg. 1991, 1997 (Jan. 15, 2003) .........

Robin K. Craig, Beyond SWANCC: The New

Federalism and Clean Water Act Jurisdiction,

cg SER | Ee re

Lars Noah, Administrative Arm-Twisting In The

Shadow of Congressional Delegations of

Authority, 1997 Wisc. L. Rev. 873, 891 (1997)

eer ee ee eee eee eee eee ee ee ee we we ew eee ee ee ee we

John D. Ostergren, SWANCC in Duck Country: Will

Court-Ordered Devolution Fill the Prairie

Potholes? 22 Stan. Envtv. L.J. 381, 395 (2003)

SeosegceecesaneoewewnececeaneecCnaneaeeveeoegeseeaeeseeesaeesemeaeseu eves ee 66 6

SpreoeneeoeoevpegcezpeCoseseeoeseonseeeeeouoaovueoe ca Foseveaesete eves

26

aes

x1

TABLE OFAPPENDICES

: Page

Appendix A — Opinion Of The United States Court

Of Appeals For The Seventh Circuit Decided

ig, big, SO OS ED eee es la

Appendix B — Order Of The United States District

Court For The Northern District Of Indiana,

Hammond Division Dated February 21,2002 .. 18a

Appendix C — Order Of The United States District

Court For The Northern District Of Indiana,

Hammond Division Entered September 25,

ET Kirievete karte a tet .. 4la

Appendix D — Consent Decree Of The United States

District Court For The Northern District Of

Indiana Dated And Filed January 26, 1999 ..... 60a

Appendix E — Statutory Provisions Involved .... 87a

]

Petitioners respectfully petition for a writ of certiorari to

review the judgment of the United States Court of Appeals for

the Seventh Circuit in this case.

OPINIONS BELOW

The district court’s opinion granting Respondent’s Motion

to Enforce Consent Decree and denying, among other things,

Petitioners’ Petition for Modification of Consent Decree is

published at 189 F. Supp.2d 874 (N.D. Ind. 2001). See Appendix

(“Pet. App.””) 41a-59a. The district court’s subsequent opinion

vacating part of that opinion but denying Petitioners’ motion

for reconsideration is published at 189 F. Supp.2d 874 at 883

(N.D. Ind. 2002). Jd. at 18a-40a. Tle Seventh Circuit’s opinion

(per Flaum, C.J., joined by Posner and Kanne, JJ.) is published

at 335 F.3d 598 (7" Cir. 2003). Jd. at 1a-17a.

STATEMENT OF JURISDICTION

The court of appeals entered its opinion and order on

July 10, 2003. This Court has jurisdiction pursuant to 28 U.S.C.

§ 1254(1).

STATUTORY PROVISIONS INVOLVED

The relevant sections of the Clean Water Act, 33 U.S.C.

§§ 1311, 1344, and 1362 are set forth at Pet. App. 87a-89a.

STATEMENT

For federal agencies bringing enforcement actions, “consent

decrees have become widely used as devices to facilitate

settlement.” Local Number 93, Int'l Ass'n of Firefighters v. City

of Cleveland, 478 U.S. 501, 524 n.13 (1986). In fact, “the vast

majority of all administrative enforcement proceedings result

in settlements . . . . [which] often lead to the entry of judgment

by a court in the form of a consent decree.” Lars Noah,

Administrative Arm-Twisting In The Shadow of Congressional

Delegations of Authority, 1997 Wisc. L. REv. 873, 891 (1997).

2

The dual nature of consent decrees — which are both contracts

and judgments — has spawned frequent litigation in the lower

courts and required repeated guidance from this Court.

This case asks two questions of nationwide importance

arising from the continued confusion over the nature of consent

decrees in the environmental iaw context: First, can a party

that entered into a consent decree with the federal government!

ever modify that consent decree under Fed. R. Civ. P. 60(6)(5)

after a decision of this Court significantly changes the law to

make clear that the federal agency lacked the regulatory

jurisdiction to enter originally into or continue to enforce the

consent decree? Second, does this Court’s recent decision in

Solid Waste Agency of N. Cook County v. United States Army

Corps of Engineers, 531 U.S. 159 (2001) (“SWANCC’”), mean

that the federal government may not assert jurisdiction under

Section 404(a) of the Clean Water Act, 33 U.S.C. § 1344(a)

(“CWA”), over wetlands that “are not adjacent to open water,”

thus establishing a “new jurisdictional line” that limits the federal

government’s authority? SWANCC, 531 U.S. at 168 (majority

opinion); id. at 176 (Stevens, J., dissenting, joined by Souter,

Ginsburg, and Breyer, JJ.).

On the first question, this Court has stated repeatedly that

consent decrees, like other judgments, may be modified pursuant

to Rule 60(b)(5) in appropriate circumstances, such as when

the decree is premised on a “misunderstanding of the

governing law,” or “when the statutory or decisional law has

changed to make legal what the decree was designed to prevent.”

1. In this case, the Consent Decree was entered by the

Environmental Protection Agency (“EPA”) on behalf of the United States.

The Army Corps of Engineers (“ACOE”) has the authority to regulate

discharges into “waters of the United States,” 33 U.S.C. § 1344(a), while

the EPA shares concurrent jurisdiction over those waters and has the

responsibility to bring enforcement actions on behalf of the ACOE. Jd.,

§ 1319(b). They are referred to collectively here simply as the federal

government.

3

Rufo v. Inmates of the Suffolk County Jail, 502 U.S. 367, 390,

388 (1992); see also Agostini v. Felton, 521 U.S. 203 (1997);

System Federation No. 91 v. Wright, 364 U.S. 642 (1961).

The Seventh Circuit ignored this avenue for Petitioners.

While noting that the law governing the breadth of the

government’s jurisdiction and therefore the Consent Decree here

“is obviously no longer accurate after SWANCC,” Pet. App. 12a,

the court said it “fail[ed] to see how it has any effect on the

validity of the decree.” Jd. The court concluded that permitting

modification of the Consent Decree would give Petitioners an

impermissible “free ride on the defendants’ success in

SWANCC.” Id. The Seventh Circuit concluded, contrary to the

text of the rule and this Court’s decisions in Rufo, Agostini, and

System Federation No. 91, that parties can not have consent

decrees modified even if the governing law hz» changed such

that the agency had no authority to enter the decree in the

first place.

As for the second question, despite the recency of SWANCC,

appellate courts already conflict and a number of them have

already ignored or sidestepped this Court’s pronouncement that

“the text of [CWA § 404(a)] does not allow” the federal

government to assert jurisdiction over waters that “are not

adjacent to open water.” SWANCC, 531 U.S. at 168. While the

Fifth Circuit has adhered to SWANCC, a growing number of

appellate courts, including the Seventh Circuit here, have refused

to view SWANCC as a significant limitation on the government’s

regulatory authority under the CWA. See Robin K. Craig, Beyond

SWANCC: The New Federalism and Clean Water Act

_ Jurisdiction, 33 ENvtt. L. 113, 115 (2003) (“for the most part,

post-SWANCC federal courts have been less interested in

adopting the SWANCC Court’s emphasis on the role of

federalism in interpreting the CWA than they have been in

limiting SWANCC itself.”’).

The Seventh Circuit’s departure from this Court’s

precedents on these two important federal questions, along with

4

the growing number of other cases that do as well, merits this

Court’s attention.

This case traces its origin to 1991 when the Environmental

Protection Agency (“EPA”) issued an Administrative

Compliance Order against Rueth Development Company

(“RDC”), asserting that RDC had illegally discharged fill

material into a wetland located in the Castlewood subdivision

in Dyer, Indiana in violation of CWA § 404(a). The EPA asserted _

in its order that the subject wetland was “adjacent to an unnamed

tributary to Dyer Ditch, which flows north to Hart Ditch, which

flows north to the Little Calumet River, which is a navigable

water of the United States.” Pet. App. 2a. RDC ultimately filed

a complaint in federal court, arguing that the wetland in the

Castlewood subdivision was isolated and thus beyond the

government’s regulatory jurisdiction under the CWA.

The Seventh Circuit affirmed the dismissal of RDC’s complaint

because the Administrative Compliance Order was a

nonreviewable preenforcement action. Rueth v. EPA, 13 F.3d

227, 230 (7" Cir. 1993) (“Rueth I’); Pet. App. 3a. In doing so,

however, the Seventh Circuit made clear that under existing

precedent “nearly all wetlands fall within the jurisdiction of the

CWA since one test for whether the wetland affects interstate

commerce is whether migratory birds use the wetland.”

Rueth I, 7 F.3d at 231 (citing Hoffman Homes, Inc. v. EPA, 999

F.2d 256 (7" Cir: 1993)). The court then stated in no uncertain

terms that the CWA was “as far-reaching as the Commerce

Clause permits” and the court was “of the opinion that the

wetland at issue falls under the broad definition of ‘waters of

the United States’ in Hoffman Homes.” Id.

Thereafter, in November, 1996, the United States brought

an enforcement action alleging that RDC and Harold Rueth,

one of RDC’s individual general partners (“Petitioners’’),

violated CWA § 404(a), 33 U.S.C. § 1344(a), by filling the

wetland without first obtaining a permit and failing to comply

with the Administrative Compliance Order. Pet. App. 4a-Sa.

5

Petitioners disputed that the government had authority to

regulate the subject wetland because it was purely intrastate

and isolated and therefore not a “water of the United States.”

Nonetheless, given the Seventh Circuit’s position in Hoffman

Homes and the clear warning to Petitioners in Rueth J that even

isolated wetlands could be regulated under the CWA, Petitioners

decided to enter into a Consent Decree with the government.

The district court entered the Consent Decree on January 26,

1999. Pet. App. Sa.

Importantly, the Consent Decree contained no admission,

stipulation or finding that: (1) the government had regulatory

jurisdiction over the subject wetland, (2) the wetland was

“adjacent” to navigable water, or (3) the wetland was otherwise

part of the “navigable waters” that comprise the “waters of the

United States.” 33 U.S.C. § 1362(7); 33 C.F.R. § 328.3(a).

In the Consent Decree, the parties agreed that Petitioners did

not admit that they had committed the violations of the CWA as

set forth in the Complaint, and Petitioners specifically denied

that they had unlawfully dredged or filled wetlands that were

subject to federal regulation. Pet. App. 61a. Petitioners did not

waive their rights to reopen, modify, or set aside the

Consent Decree in the future, and the parties agreed that they

each reserved whatever legal and equitable remedies they

had to construe, effectuate, or enforce the Consent Decree.

Pet. App. 83a. The Decree required Petitioners to pay a $23,500

penalty and restore a three acre wetland on RDC’s property

(Wetland Section 6). After Petitioners were unable to meet

various interim deadlines set forth in the Consent Decree, in

November of 2000, the government moved to enforce the

Consent Decree, seeking over $6,750,000 in penalties. Jd.

On January 9, 2001, this Court decided SWANCC, which

held that the government’s authority to regulate “waters of the

United States” pursuant to CWA § 404(a) arises from its

traditional authority to regulate navigation; therefore the

government’s attempt to regulate non-navigable, intrastate,

6

isolated ponds in which migratory birds occasionally alighted

exceeded the scope of its authority under the CWA. 531 U.S. at

167-68. Because “when this Court construes a statute, it is

explaining its understanding of what the statute has meant

continuously since the date when it became law,” Rivers v.

Roadway Express, Inc., 511 U.S. 298, 313, n.12 (1994), the

SWANCC decision meant that the government never had the

authority to enter into the Consent Decree with Petitioners —

which, as demonstrated below, governed an isolated wetland

— and certainly had no authority to continue to enforce the

Consent Decree.

Two weeks later, Petitioners apprised the district court of

the SWANCC decision, and one week thereafter, filed a Petition

for Modification of Consent Decree pursuant to Fed. R. Civ. P.

60(b). Petitioners asserted that, under SWANCC, the United

States lacked jurisdiction to regulate an isolated wetland such

as the Castlewood Site under the CWA, both when it signed the

Consent Decree and subsequently when it sought to enforce the

Consent Decree, particularly when the agreement contained no

admission that the wetlands were “waters of the United States.”

Petitioners made the common-sense argument that a contract

entered by one who lacks authority is ultra vires and therefore

void ab initio, even if the contract is a consent decree entered

by a governmental entity. See, e.g., Federal Crop Ins. Corp. v.

Merrill, 332 U.S. 380, 385 (1947) (FCIC insurance policy was

void ab initio because FCIC lacked authority to issue policy).

In support of their petition, Petitioners submitted an expert

affidavit testifying that Wetland Section 6 was “an isolated,

intrastate wetland.” Their Petition sought to modify the Consent

Decree pursuant to Rule 60(b) and prohibit the government from

seeking to enforce the Consent Decree.

Eight months after Petitioners submitted their Rule 60(b)

motion to modify the Consent Decree, the district court entered

judgment in favor of the United States without a hearing,

enforcing the Consent Decree and imposing $4,018,500.00 in

7

\

penalties payable jointly and severally by Petitioners — roughly

their combined net worth. Pet. App. 41a-59a. In its Order, the

court asserted that “the government seeks to regulate the Site

on the theory that it is an ‘adjacent wetland.’” Jd. 45a. Then, for

the first time, the district court found — without any evidence

in the record to support its conclusion — that the wetland on

the Castlewood Site was an “adjacent wetland,” not an isolated

wetland. According to the court, the wetland is subject to

regulation by the United States because “[a] drop of rainwater

landing in the Site is certain to intermingle with water from the

Little Calumet River.” Jd. 46a.

On October 11, 2001, Petitioners moved to alter or amend

the judgment pursuant to Fed. R. Civ. P. 59(e). They pointed

out that the district court reached its conclusion that Wetland

Section 6 was an “adjacent” wetland by relying on an exhibit

the government submitted that discussed a completely different

wetland than the one at issue. Petitioners demonstrated that the

only evidence in the record clearly demonstrated that the wetland

at issue (Wetland Section 6) is an isolated wetland with no

hydrological connection to “waters of the United States.”

Petitioners again argued that the Consent Decree should be

vacated or modified because the government never had the

authority to enter into or enforce the Consent Decree regulating

this isolated wetland.

On February 21, 2002, the district court vacated its finding

that the wetland at issue was an “adjacent wetland” but otherwise

denied Petitioners’ Rule 59(e) motion. Pet. App. 18a-40a.

Instead, the district court changed its approach and presumed

that the Castlewood Site wetland is isolated (i.e., it does not

connect to and is not adjacent to “waters of the United States’’).

Id. 27a.

Despite the court’s correct assumption that the wetland is

isolated, the Court upheld its award imposing $4,018,500 in

penalties on the grounds that the act of entering into the Consent

Decree forever precluded Petitioners from later having the decree

8

modified based on the government’s lack of regulatory

jurisdiction. Jd. 34a-36a. In essence, the court ignored

Rule 60(b)(5) and reasoned that, because Petitioners entered

into the Consent Decree, they are per se barred from having the

Consent Decree modified even assuming the Consent Decree

was void ab initio and the government originally had no

authority to enter into the Consent Decree. Jd. 35a-36a.

The Seventh Circuit affirmed. Pet. App. 1a-17a. Like the

district court, the appellate court reasoned that entering into the

Consent Decree sets up a per se bar that forever precludes

Petitioners from having the decree modified pursuant to

Rule 60(b)(5) when it becomes evident that the decree is

premised on a “misunderstanding of the. governing law” or

“when the statutory or decisional law has changed to make

legal what the decree was designed to prevent.” Rufo, 502 U.S.

at 390, 388. While acknowledging that the law in the Seventh

Circuit when the Consent Decree was entered “is obviously no

longer accurate after SWANCC,” Pet. App. 12a, the court stated

that it “fail[ed] to see how it has any effect on the validity of the

decree.” Id.

The court acknowledged that the district court enforced the

Consent Decree despite its assumption “that the wetlands are

isolated and not adjacent.” Pet. App. 10a. However, the court

then proceeded to ignore this, and even went so far as to speculate

that perhaps the wetland was adjacent, contrary to both the

district court’s decision and the only evidence in the record.

Id. 10a-11a.

Despite the fact that the case came to the Seventh Circuit

under the presumption that the wetland is isolated, and despite

the fact that SWANCC makes regulation of such wetlands beyond

the government’s jurisdiction, the Seventh Circuit concluded

that to permit Petitioners to have the Consent Decree modified

would be an impermissible “free ride on the defendants’ success

in SWANCC.” Id. According to the court, the fact that the parties

did not agree to (and the government never demonstrated) a

9

basis for the government’s jurisdiction is irrelevant. Pet. App.

13a. Allowing Petitioners to attempt to modify the decree

because the government had no basis under the CWA to enforce

the Consent Decree (or to have entered it) would “render the

consent decree worthless.” Pet. App. 14a.

The practical effect of this decision is to permit the

government to continue to enforce a Consent Decree and regulate

a wholly intrastate, hydrologically isolated wetland after

SWANCC has demonstrated that the government has no authority

to do so. This conflicts sharply with Fifth Circuit’s conclusion

that, after SWANCC, isolated wetlands are beyond the

government’s jurisdiction under the CWA. See Rice v. Harken

Exploration Co., 250 F.3d 264, 265 (5* Cir. 2001) (“a body of

water is subject to regulation under the CWA if the body of

water is actually navigable or is adjacent to an open body of

navigable water.”). It also conflicts with the Fourth Circuit’s

decision in United States v. Wilson, 133 F.3d 251, 257 (4" Cir.

1997), which struck down the government’s jurisdiction over

isolated wetlands even before SWANCC. However, the Seventh

Circuit’s decision joins a growing body of appellate court cases

in which SWANCC has been read, despite its clear language, to

permit the government’s jurisdiction to extend to wetlands that

“are not adjacent to open water.”

This petition for a writ of certiorari followed.

REASONS FOR GRANTING THE PETITION

This case satisfies multiple criteria for Supreme Court

review. First, the decision below conflicts with this Court’s

caselaw, including Agostini, Rufo, and System Federation

No. 91, which permits modification of judgments, including

consent decrees, under Rule 60(b)(5) when there has been a

“misunderstanding of the governing law” or “when the statutory

or decisional law has changed to make legal what the decree

was designed to prevent.” Rufo, 502 U.S. at 390, 388. Second,

the decision below, along with a growing body of other appellate

10

cases, conflicts with both this Court’s SWANCC decision and

the Fifth Circuit’s conclusion that, after SWANCC, “a body of

water is subject to regulation under the CWA if the body of

water is actually navigable or is adjacent to an open body of

navigable water.” Rice, 250 F.3d at 265. The SWANCC decision

has quickly led to substantial confusion among the lower courts

and even the regulatory agencies themselves as to the limits of

the federal government’s authority to regulate “waters of the

United States.” This Court’s guidance therefore is needed again.

The questions presented not only are of great importance,

they are likely to recur frequently because the government

resolves the vast majority of its Clean Water Act enforcement

actions via consent decrees. Moreover, the issue of whether a

consent decree with a federal agency can be modified following

a subsequent decision from this Court that the agency lacks

regulatory jurisdiction over the subject matter of the consent

decree has far-reaching repercussions for any and all

regulatory agencies that ernploy consent decrees to resolve

their enforcement actions as well as their regulated entities.

This petition should therefore be granted.

I. The Decision Below Conflicts With Established

Rule 60(b)(5) Jurisprudence As Applied to Consent

Decrees.

This Court has explained that “consent decrees ‘have

attributes both of contracts and of judicial decrees,”” giving them

a “dual character that has resulted in different treatment for

different purposes.” Local No. 93, Int'l Ass'n of Firefighters v.

City of Cleveland, 478 U.S. 501, 519 (1986) (quoting United

States v. ITT Continental Baking Co., 420 U.S. 223, 236 n.10

(1975)). That duality has led to confusion over when to treat a

consent decree as one or the other or both.? Whether parties can

2. The court below diverged from proper canons of consent decree

construction on a number of levels. Compare United States v. Armour &

(Cont'd)

11

have a consent decree with the government modified, as if it

were any other kind of judgment, when “it is no longer equitable

that the judgment should have prospective application,”

Fed. R. Civ. P. 60(b)(5), because the federal agency never had

authority to enter into the consent decree is a question that

remains to be answered by this Court.

A. The Seventh Circuit’s Decision Conflicts With

This Court’s Established Precedent Permitting

Modification of Consent Decrees

The Seventh Circuit in this case concluded that Petitioners’

“consent” in entering into the Consent Decree forecloses their

ability under Rule 60(b)(5) from having the Consent Decree

itself modified. Pet. App. 11a. This logic simply cannot be true

because, if it were, there would be no cases in which Rule

60(b)(5) applied to consent decrees. Of course, this is not the

case. “There is no suggestion in [this Court’s cases] that a consent

decree is not subject to Rule 60(b).” Rufo, 502 U.S. at 378.

This Court has stated that “a consent decree or order is to

be construed for enforcement purposes basically as a contract.”

ITT Continental Baking Co., 420 U.S. at 238; see also Ahern v.

Board of Educetion, 133 F.3d 975, 981 (7™ Cir. 1998)

(“Although consent decrees have the force of a court order, they

are also a form of contract to be construed according to basic

principles of contract interpretation.”). Consent decrees must

be govemed by contract law because “‘it is the parties’ agreement

that serves as the source of the court’s authority to enter any

judgment at all.” Local Number 93, 478 U.S. at 522.

(Cont'd)

Co., 402 U.S. 673, 682 (1971) (“the scope of a consent decree must be

discerned within its four corners, and not by reference to what might

satisfy the purposes of one of the parties to it.”) with Pet. App. 15a

(stating that “we must ‘look at the evil which the decree was designed

to rectify.’”).

12

Under traditional methods of contract interpretation,

a contract entered by one without authority is ultra vires and

therefore void ab initio, even when the party without authority

is the government. See, e.g., Merrill, 332 U.S. at 385 (FCIC

insurance policy was void ab initio because FCIC lacked

authority to issue policy); The Floyd Acceptances, 74 U.S.

(7 Wall.) 666, 671, 681 (1869) (without proper statutory

authority, contract between Secretary of War and merchant was

void because “the secretary was acting wholly beyond the scope

of his authority’’); United States v. Amdahl Corp., 786 F.2d 387,

392-93 (Fed. Cir. 1986) (“[a]dministrative actions taken in

violation of statutory authorization or requirement are of no

effect.... The courts are bound to strike down illegal

contracts.”); 12 WILLISTON ON Contracts § 35:63 (4" ed. 1999)

(summarizing general rule that ultra vires contracts by

governments are void).

Indeed, nowhere should this maxim apply with more force

than where a regulatory agency, which is purely a creature of

statute, is involved. See FDA v. Brown & Williamson Tobacco

Corp., 529 U.S. 120, 161 (2000) (“[N]o matter how ‘important,

conspicuous, and controversial’ the issue . . . an administrative

agency’s power to regulate in the public interest must always

be grounded in a valid grant of authority from Congress.”);

Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988)

(“It is axiomatic that an administrative agency’s power .. . is

limited to the authority delegated by Congress.’’).

The Court has applied this hornbook rule even in consent

decree cases involving the government. For example, in United

States v. Beebe, 180 U.S. 343 (1901), a government prosecutor

entered into a consent judgment with two sureties in which the

government agreed to dismiss claims for monies owed in return

for each defendant paying $100. Years after the court entered

the consent judgment, the government sought to void it because

the prosecutor lacked the authority under federal law to enter

into a compromise judgment without the consent of the Solicitor

13

of the Treasury. Jd. at 351. This Court agreed, vacating the

judgment and returning the parties to the status quo ante because

“!a] judgment entered upon such a compromise is subject to be

set aside on the ground of the lack of authority in the attorney

to make the compromise upon which the judgment rests.”

Id. at 352.

The government’s authority to enter into a consent decree

is always subject to these limitations. SWANCC, as discussed

infra, established that the “text of the statute does not allow”

the government to assert jurisdiction over waters that “are not

adjacent to open water.” SWANCC, 531 U.S. at 168. This limit

on the government’s jurisdiction under CWA § 404(a) means

that it had no authority to enforce the Consent Decree or enter

into it in the first instance. The Consent Decree was void

ab initio.

In this type of circumstance, where there has been

“a significant change either in factual conditions or in law,”

Rufo, 502 U.S. at 384, this Court has stated that modification of

a consent decree, like any other type of judgment, is appropriate.

See id. at 388 (“modification of a consent decree may be

warranted when the statutory or decisional law has changed to

make legal what the decree was designed to prevent.”).

See also System Federation No. 91, 364 U.S. at 651 (consent

decree is “not an abandonment of the right to exact revision in

the future if revision should become necessary in adaptation to

events to be.”).

While a decision that simply “clarifies the law will not, in

and of itself, provide a basis for modifying a decree,” even that

lesser circumstance “could constitute a change in circumstances

that would support modification if the parties had based

their agreement on a misunderstanding of the governing law.”

Rufo, 502 U.S. at 390; see also System Federation No. 91,

364 U.S. at 650 n.6 (“There are many cases where a mere change

in decisional law has been held to justify modification of an

outstanding injunction.”’). In fact, “[a] court errs when it refuses

14

to modify an injunction or consent decree in light of such

changes.” Agostini v. Felton, 521 U.S. 203, 214 (1997).

When a change in the law alters the breadth of a statute’s

reach, it is particularly appropriate to modify a consent decree

impacted by that statute. For example, in System Federation

No. 91, when the Railway Labor Act prohibited union-shop

agreements between railroads and labor unions, nonunion

railroad employees brought suit against the railroad and certain

unions which resulted in a consent decree forbidding the

defendants from discriminating against workers who refused to

join unions. 364 U.S. at 644. When the statute was later amended

to permit union-shop agreements between railroads and unions,

the unions moved under Rule 60(b)(5) to have the decree

modified to allow the unions and railroads to enter such

agreements. Jd. at 645. This Court held that it was an abuse of

discretion to refuse to modify the consent decree because the

change in the law had made lawful what was previously

prohibited. Jd. at 651-52. This Court reasoned that a court

“must be free to modify the terms of a consent decree when a

change in law brings those terms in conflict with statutory

objectives.” Jd. at 651.

That the judgment arose from a consent decree and not

litigation does not matter. According to this Court, “(t]he result

is all one whether the decree has been entered after litigation or

by consent.” Jd. at 651 (quoting United States v. Swift & Co.,

286 U.S. 106, 114 (1932)). A party “ha[s] no power to require

of the court continuing enforcement of rights the statute no

longer gives.” Jd. at 652.

This Court has made clear repeatedly that when the

law changes such that a consent decree’s terms conflict

with the governing statute, the decree should be modified.

See, e.g., Firefighters Local Union No. 1784 v. Stotts, 467 U.S.

561, 576 n.9 (1984) (“when a change in the law brought the

terms of the decree into conflict with the statute pursuant to

which the decree was entered, the decree should be modified

15

over the objections of one of the parties bound by the decree.’’)

(emphasis added); Local Number 93, 478 U.S. at 526 (parties

to a consent decree may not “agree to take action that conflicts

with or violates the statute upon which the complaint was

based.”). In fact, while courts often have discretion to modify

consent decrees, when a decree is based on an erroneous view

of the law, it must be modified. See Agostini, 521 U.S. at 238

(“the exercise of discretion cannot be permitted to stand if [the

court] find[s] it rests upon a legal principle that can no longer

be sustained.’’).

Despite this Court’s repeated pronouncements and despite

acknowledging that the law governing the breadth of the

government’s jurisdiction and therefore the Consent Decree was

“obviously no longer accurate after SWANCC,” Pet. App. 12a,

the court said it “fail[ed] to see how it has any effect on the

validity of the decree.” Jd. Petitioners believe it is self-evident.

Though Petitioners never agreed that the wetland at issue

was “adjacent” or otherwise part of the “waters of the United

States,” and never agreed to waive the right to contest the

government’s jurisdiction in the future, the court concluded that

Petitioners’ act of entering into the Consent Decree was sufficient

by itself to compel adherence to the Decree. Though the district

court enforced the Consent Decree based on the premise that

the wetland was isolated -which, according to SWANCC,

“the text of the statute does not allow,” SWANCC, 531 U.S. at

168, the Seventh Circuit concluded that Petitioners’ consent to

the decree obviated their right to have the Consent Decree

modified after SWANCC changed the governing law. According

to the court, Petitioners’ decision to enter into the decree rather

than litigate forever foreclosed their right to raise this issue after

this Court changed the governing law. The Seventh Circuit’s

estoppel theory thus writes Rule 60(b)(5) out of the Federal

Rules of Civil Procedure for ail settlements. Because the Seventh

Circuit’s position conflicts sharply with this Court’s opinions

on the modification of consent decrees, the petition for certiorari

16

should be granted and the Seventh Circuit’s decision should be

reversed.

B. The Decision Conflicts With Other Decisions

Regarding the Availability of Post-Consent

Judgment Relief

The Seventh Circuit’s position that Petitioners’ agreement

to the Consent Decree prohibited them from having the decree

modified later based on a subsequent change in the law also

diverges from the law dealing with other types of consent

judgments. Perhaps the cases most analytically similar to

Petitioners’ situation are those in which criminal defendants have

had their sentences vacated after a subsequent decision from

this Court establishes that the activity for which they were

convicted was not criminal. This has occurred after both trials

and guilty pleas in which a defendant agrees to both the

elements of an offense and even the imposition of a sentence.

See, e.g., Stanback v. United States, 113 F.3d 651, 654

(7th Cir. 1997) (vacating conviction and sentence after a guilty

plea where underlying facts no longer were considered a crime);

United States v. Loschiavo, 531 F.2d 659, 667 (2™ Cir. 1976)

(trial).? As one court has stated, a judgment pursuant to a plea

3. Courts have frequently vacated guilty pleas (or at least

acknowledged the ability to do so) through the writ of coram nobis

(Rule 60(b)’s criminal counterpart) based on a subsequent decision by

this Court. See, e.g., United States v. Lewis, 478 F.2d 835, 836 (5® Cir.

1973) (vacating plea-conviction due to subsequent decision by this

Court); DeCecco v. United States, 485 F.2d 372, 374 (1* Cir. 1973)

(same); Lawson v. United States, 397 F. Supp. 370, 371 (N.D. Ga. 1975)

(same); United States v. Russo, 358 F. Supp. 436, 438 (D.N.J. 1973);

(same); United States v. Summa, 362 F. Supp. 1177, 1179 (D. Conn.

1972) (same). In addition, this Court recently held that guilty pleas can

be reviewed via a writ of habeas corpus after it has concluded

subsequently that the underlying activity is not criminal. See Bousley v.

United States, 523 U.S. 614, 620 (1998) (“it would be inconsistent with

the doctrinal underpinnings of habeas review to preclude petitioner from

relying on our decision in Bailey in support of his claim that his guilty

plea was constitutionally invalid.”).

17

agreement is “fatally and constitutionally tainted for lack of due

process of law” where a subsequent Supreme Court decision

has made clear that the activity for which he was convicted was

not acrime. United States v. Sawyer, 74 F. Supp. 2d 88, 106 (D.

Mass. 1999).* According to that court, to preclude attacking the

plea agreement (or the analogous Consent Decree here) would

be “a legal error of fundamental proportion.” Jd.

The court below took the opposite view of decisions by

this Court which dramatically alter the validity of previously

consented-to agreements. Rather than conclude that continuing

to enforce an agreement where the underlying law has been

reversed would be “a legal error of fundamental proportion,”

the court below concluded that it “fail[ed] to see how it has any

effect on the validity of the decree.” Pet. App. 12a. Under the

Seventh Circuit’s logic, the decision to enter into a plea

agreement rather than litigate forever cuts off the ability to seek

relief after this Court determines that the agreed-to conduct was

not actually criminal. To resolve this split in authority, certiorari

should be granted here.

II. The Decision Below Permits The Federal Government

to Continue Regulating An Isolated Wetland In

Contravention Of This Court’s Reasoning in SWANCC.

The Seventh Circuit’s decision allows the federal

government to continue to regulate an isolated, non-navigable,

intrastate wetland and seek over $4,000,000 in penalties from

Petitioners via a Consent Decree which, according to SWANCC,

the government lacked the authority to enter into in 1999 and

certainly now lacks the authority to enforce. With this decision,

4. The vacation of Sawyer’s sentence was subsequently reversed

by the First Circuit because, in the First Circuit’s view, Sawyer was

guilty of violating the statute even based on this Court’s interpretation

of the governing statute. United States v. Sawyer, 239 F.3d 31 (1% Cir.

2001). The First Circuit nonetheless assumed that a writ of coram nobis

is available to vacate a criminal conviction based on a guilty plea which

is premised on a fundamental error of law. /d. at 38.

18

the court below has joined a growing body of appellate courts,

along with the government, which have refused to adhere to the

Court’s conclusion that “the text of [CWA § 404(a)] will not

allow” the jurisdiction of the government to extend to

waters that “are not adjacent to open water.” SWANCC,

531 US. at 168.

A. The Decision Below Contradicts This Court’s Prior

Caselaw Interpreting CWA § 404(a)

This Court has explained repeatedly that the scope of the

CWA, and therefore the government’s authority to regulate

pursuant to it, relies heavily on traditional concepts of navigation

and what constitutes “navigable waters.” CWA § 404(a),

33 U.S.C. § 1344(a), authorizes the ACOE to issue permits

approving “the discharge of dredged or fill material into the

navigable waters.” Discharges not authorized by the ACOE are

prohibited. CWA § 301(a), 33 U.S.C. § 1311(a). “Navigable

waters” are defined as “waters of the United States.” 33 U.S.C.

§ 1362(7). By regulation, the ACOE and the EPA have defined

the scope of their jurisdiction over “waters of the United States”

to include, among other things, certain types of wetlands.

33 C.F.R. § 328.3(a) (ACOE definition); 40 C.F.R. § 230.3(s)

(essentially identical EPA definition).

In 1985, this Court decided United States v. Riverside

Bayview Homes, 474 U.S. 121 (1985), in which it upheld the

government’s jurisdiction over a wetland that was not itself

navigable, but which physically abutted a navigable creek and

therefore was “adjacent to a body of navigable water.”

Id. at 131. The government’s jurisdiction was based upon that

portion of the definition of “waters of the United States” now

found at 33 C.F.R. § 328.3(a)(7) which encompasses adjacent

wetlands. See also 33 C.F.R. § 328.3(c) (defining “adjacent” as

“bordering, contiguous, or neighboring” and also including

“Tw ]etlands separated from other waters of the United States by

man-made dikes or barriers, natural river berms, beach dunes

and the like”); 40 C.F.R. § 230.3(b) (same). In concluding that

i

this adjacent wetland acceptably fell within CWA § 404(a)’s

definition of “waters of the United States,” the Court specifically

stated that it “d[id] not express any opinion” on the “question

of the authority of the [government] to regulate discharges of

fill material into wetlands that are not adjacent to bodies of

open water.” Riverside Bayview Homes, 474 U.S. at 131 n.8.

A separate portion of the definition of “waters of the United

States” addresses “isolated” waters, including isolated wetlands.

These are defined to include:

(3) All other waters such as intrastate lakes, rivers,

streams (including intermittent streams),

mudflats, sandflats, wetlands, sloughs, prairie

potholes, wet meadows, playa lakes or natural

ponds, the use, degradation or destruction of

which could affect interstate or foreign

commerce including any such waters:

(i) Which are or could be used by

interstate or foreign travelers for_

recreational or other purposes; or

(ii) From which fish or shellfish are or

could be taken and sold in

interstate or foreign commerce; or

(i111) Which are used or could be used for

industrial purpose by industries in

interstate commerce;

33 CER. § 328.3(a)(3).

In 1986, the year after Riverside Bayview Homes, the ACOE

issued a “clarification” which expanded its jurisdiction under

§ 328.3(a)(3) over intrastate waters:

(a) Which are or would be used as habitat by birds

protected by Migratory Bird Treaties; or

20

(b) Which are or would be used as habitat by other

migratory birds which cross state lines; or.

(c) Which are or would be used as habitat for

endangered species; or

(d) Used to irrigate crops sold in interstate

commerce.

51 Fed. Reg. 41,206, 41,217 (Nov. 13, 1986).

This was the Migratory Bird Rule, issued without formal

notice and comment, see 5 U.S.C. § 553, and never codified in

the definition of “waters of the United States.”

The Court revisited the issue of the breadth of the

government’s jurisdiction under these regulations two years ago

in SWANCC in the context of anon-navigable, intrastate, isolated

area of seasonal ponds which were periodically visited by

migratory birds. There, this Court specifically invalidated

33 C.F.R. § 328.3(a)(3), as clarified by the Migratory Bird Rule,

as exceeding the authority granted by Congress in CWA § 404(a).

SWANCC, 531 U.S. at 174. While focusing on the Migratory

Bird Rule, the Court’s analysis demonstrates that it applies

equally to all other types of non-navigable, intrastate, isolated

waters, such as the isolated wetland at issue here. The Court

explained that:

It was the significant nexus between the wetlands

and “navigable waters” that informed our reading

of the CWA in Riverside Bayview Homes. Indeed,

we did not “express any opinion” on the question of

the authority of the Corps to regulate discharges of

fill material into wetlands that are not adjacent to

bodies of open water. .. .” 474 U.S. at 131-132, n.8.

In order to rule for [the ACOE] here, we would have

to hold that the jurisdiction of the Corps extends to

21

ponds that are not adjacent to open water. But we

conclude that the text of the statute will not allow

this.

SWANCC, 531 U.S. at 167-68.

Thus, the Court clearly stated that “the text of the statute

will not allow” the government to assert jurisdiction over waters

“that are not adjacent to open water,” such as a wholly intrastate,

isolated wetland not adjacent to navigable waterways or their

tributaries, as is at issue here. /d. at 168. Congress’s authority

to enact the CWA stems from “its traditional jurisdiction over

waters that were or had been navigable in fact or which could

reasonably be so made.” Jd. at 172. According to the Court,

the ACOE shared that understanding prior to the 1986 passage

of the Migratory Bird Rule. Before that time, the ACOE

grounded its view of “waters of the United States”

in traditional notions of navigation. The ACOE declared that

“the determinative factor” in deciding whether it had

jurisdiction to regulate a particular body of water was “the water

body’s capability of use by the public for purposes of

transportation or commerce . . .” Jd. at 168 (quoting 33 C.F.R.

§ 209.260(e)(1) (1974)).

The four Justices who dissented in SWANCC also clearly

recognized and articulated that conclusion. According to the

dissent, “[i]n its decision today, the Court draws a new

jurisdictional line, one that invalidates the 1986 migratory bird

regulation as well as the Corps’ assertion of jurisdiction over

all waters except for actually navigable waters, their tributaries

and wetlands adjacent to each.” Jd. at 176 (Stevens, J.,

dissenting). The dissent explained that the decision limited the

ACOE’s jurisdiction to what the agency termed “Phase 1” and

“Phase 2” waters, i.e., navigable waters and their contiguous

wetlands, and primary tributaries of navigable waters and their

adjacent wetlands. Jd. at 189 (Stevens, J., dissenting); see also

33 C.FR. § 328.2(j) (1981) (defining “primary tributaries”

as “the main stems of tributaries directly connecting to navigable

22

waters of the United States up to their headwaters and does not

include any additional tributaries extending off of the main stems

of these tributaries.”). In doing so, it effectively “excise[d] —

from the scope of the [CWA]” so-called “Phase 3” waters

which include “isolated waters [such] as intermittent

rivers, streams, tributaries, and perched wetlands that are

not contiguous or adjacent to navigable waters.” SWANCC, 531

U.S. at 189 & n.14.

The CWA’s legislative history underscores the conclusion

of this Court that the government’s jurisdiction is limited to

those waters which could be used for navigation purposes in

commerce and those waters that are tributaries or adjacent to

such waters. According to conferees on the CWA, “navigable

waters” are defined as:

all water bodies, such as lakes, streams, and rivers,

regarded as public navigable waters in law which

are navigable in fact. It is further intended that such

waters shall be considered to be navigable in fact

when they form, in their ordinary condition by

themselves or by uniting with other waters or other

systems of transportation, such as highways or

railroads, a continuing highway over which

commerce is or may be carried on with other

States. ...

118 Cong. Rec. 33,699 (1972) (statement of Sen. Muskie,

sponsor and floor manager of Senate version of CWA);

see also 118 Cong. Rec. 33,756-57 (1972) (statement of Rep.

Dingell) (defining “navigable waters” to mean “that the

waterway serves as a link in the chain of commerce among the

States as it flows in the various channels of transportation.”’).

Therefore, the scope of the government’s authority to

regulate pursuant to the CWA is limited to waters which are

part of a “continuing highway over which commerce” travels

between the states. That is, Congress limited the government’s

“Get 4 RL iT RAC PLLA

_ contiguous, or neighboring

23

regulatory authority under the CWA to waters that are navigable,

tributaries to such waters, and wetlands that are immediately

adjacent to such waters.°

The effect of the Seventh Circuit’s decision is to perpetuate

the government’s assertion of regulatory jurisdiction over the

isolated wetland here in contravention of the Court’s holding

and reasoning in SWANCC. The district court clearly vacated

its finding of adjacency and presumed correctly that this wetland

is isolated, Pet. App. 22a, 27a, meaning that it is not “bordering,

” “navigable waters.” 33 C.F.R.

§ 328.3{c) (definition of “‘adjacent”).° The SWANCC majority

5. Perhaps to underscore this point, soon after the SWANCC

decision, this Court vacated and remanded a judgment affirming a

developer’s conviction for unlawfully filling wetlands in light of

SWANCC. There, the government had not invoked the Migratory Bird

Rule to support its alleged jurisdiction, and the conviction left it unclear

whether the subject wetland was isolated or adjacent. Rapanos v. United

States, 533 U.S. 913 (2001). See Lawrence v. Chater, 516 U.S. 163, 167

(1996) (GVR order is “potentially appropriate” when there is “reasonable

probability that the decision below rests upon a premise that the lower

court would reject if given the opportunity for further consideration,

and where it appears that such a redetermination may determine the

ultimate outcome of the litigation. . . .”).

Following remand, the district court dismissed the case because

the wetlands were between eleven and twenty miles from the nearest

navigable-in-fact waters and so “were not directly adjacent to navigable

waters.” United States v. Rapanos, 190 F. Supp.2d 1011, 1013-14 &

1017 (E.D. Mich. 2002). However, the Sixth Circuit has since reinstated

the conviction, reasoning that SWANCC did not “restrict[] the Act’s

coverage to only wetlands directly abutting navigable water.” United

States v. Rapanos, 339 F.3d 447, 453 (6" Cir. 2003} (discussed infra).

6. The Seventh Circuit’s digressions about adjacency, Pet. App.

10a-1la, draw no conclusions about the issue (nor couid they as an

appellate court, without an evidentiary hearing) and are completely belied

by: (1) the district court’s vacatur of its factual finding that the wetland

is adjacent, Pet. App. 27a; (2) the uncontradicted evidence in the recor?;

(Cont'd)

24

stated plainly that “the text of the statute does not allow” the

government to assert jurisdiction over waters “that are not

adjacent to open water.” 531 U.S. at 168. As the dissent in

SWANCC makes clear, this is a “new jurisdictional line” that

“invalidates . . . the [government’s] assertion of jurisdiction over

all waters except for actually navigable waters, their tributaries

and wetlands adjacent to each” and “excises . . . from the scope

of the [CWA]” “isolated waters [such] as intermittent rivers,

streams, tributaries, and perched wetlands that are not contiguous

or adjacent to navigable waters.” /d. at 176, 188 & n.14 (Stevens,

J., dissenting, joined by Souter, Ginsburg, and Breyer, JJ.).

The isolated wetland here, by definition, is “not adjacent

to open water” and “not contiguous or adjacent to navigable

waters.” Because this Court in SWANCC determined that such

wetlands are beyond the scope of the government’s jurisdiction

based on the text of CWA § 404(a), the government lacked

statutory authority when it brought an enforcement action against

Petitioners regarding this wetland and subsequently entered into

the Consert Decree. It certainly lacks the authority to continue

to seek enforcement of the Consent Decree after SWANCC.

The Seventh Circuit’s decision must therefore be reversed.’

(Cont'd)

and (3) the lack of any admission whatsoever by Petitioners in the

Consent Decree itself that the wetland is “adjacent” or otherwise part of

the “waters of the United States.” In fact, according to the government's

own allegations in its 1991 Administrative Compliance Order (which

were rebutted by Petitioners’ uncontradicted evidence), the wetland is

“adjacent to an unnamed tributary to Dyer Ditch which flows north to

Hart Ditch which flows north to the Little Calumet River, which is a

navigable water of the United States.” The court’s thought that this might

constitute “adjacency” when even the ACOE defines adjacent as

“bordering, contiguous, or neighboring,” 33 C.F.R. § 328.3(c), only

further demonstrates the need for additional guidance from this Court

in this confused area.

7. In reaching its conclusion, the Seventh Circuit relied heavily on

its prior decision in United States v. Krilich, 303 F.3d 784

(Cont'd) _

25

B. Appellate Courts Already Conflict About the Scope

of the Government’s CWA § 404(a) Jurisdiction

After SWANCC

In scarcely two years, lower courts have already divided on

several issues regarding how far the government’s jurisdiction

extends under CWA § 404(a), particularly with regard to its

jurisdiction to regulate wetlands. See, e.g., United States v.

Rapanos, 339 F.3d 447, 451 (6" Cir. 2003) (“Wetlands have

presented one of the most difficu t areas in which to determine

the Clean Water Act’s exact jurisdictional limitations.”).

The first is whether SWANCC simply invalidated the Migratory

Bird Rule or whether its logic applies more broadly to invalidate

any assertion of jurisdiction by the government over isolated

wetlands under any portion of 33 C.F.R. § 328.3(a)(3). Because

the district court vacated its finding that the wetland here is

adjacent, Pet. App. 27a, that issue more directly affects this case.

The second issue is closely-related to the first. Did SWANCC

impact how far along the spectrum between adjacent wetlands

and isolated wetlands the government’s CWA § 404(a)

jurisdiction extends? Rather than address the government’s

inability to continue regulating isolated wetlands, the

government (and some courts) have tried to limit SWANCC’s

application to isolated wetlands and then espouse an incredibly

broad interpretation of what constitutes an adjacent wetland

which is inconsistent with this Court’s prior interpretations of

CWA § 404(a) in SWANCC and Riverside Bayview Homes.

See, e.g., United States v. Interstate General Co., 2002

(Cont’d)

(7® Cir. 2002), cert. denied, 123 S. Ct. 1782 (2003), which differs greatly

from this case. In Krilich, the court concluded that SWANCC did not

require modification of a CWA consent decree because: (1) the developer

had “already agreed ‘= t the waters [at issue] were ‘waters of the United

States,”” id. at 791; and (2) the parties expressly agreed that the decree

would interpret CWA § 404(a) to exclude isolated wetlands from the

ACOE’s jurisdiction, id. at 791. These dispositive admissions are missing

in Petitioners’ Consent Decree.

26

WL 1421411, *3 (4th Cir. July 2, 2002) (concluding that

“the only clear change in law made by SWANCC is much more

narrow,” affecting only “the Corps’s jurisdiction over an isolated

intrastate body of water.”’).

Both issues have become critically important since

SWANCC ended the government’s heavy reliance on the

Migratory Bird Rule as a basis for jurisdiction. See John D.

Ostergren, SWANCC in Duck Country: Will Court-Ordered

Devolution Fill the Prairie Potholes? 22 STAN. ENVTL. L.J. 381,

395 (2003) (“jurisdiction under the [Migratory Bird Rule] was

so broad that the Corps had little incentive to distinguish between

adjacent and isolated wetlands. After SWANCC, what remains

of this rule, or of jurisdiction under Section 328.3(a)(3) generally,

remains unclear and hotly contested.”); see also id. at 393

(“By forcing greater reliance on adjacency as a basis for federal

jurisdiction, SWANCC is balkanizing the circuits on these issues.

A uniform position appears unlikely to emerge until the Supreme

Court revisits adjacency jurisdiction.”).

With regard to the government’s ability to regulate isolated

waters, including isolated wetlands, the Fifth Circuit has relied

on SWANCC to conclude that such regulation is no longer

permissible. See Rice v. Harken Exploration Co., 250 F.3d 264,

269 (5" Cir. 2001) (“a body of water is subject to regulation

under the CWA if the body of water is actually navigable or is

adjacent to an open body of navigable water.”). In addition, the

Fourth Circuit, even before SWANCC, struck down 33 C.FR.

§ 328.3(a)(3) because it had “nothing to do with navigable or

interstate waters.” United States v. Wilson, 133 F.3d 251, 257

(4" Cir. 1997). Both these circuits, therefore, starkly conflict

with the Seventh Circuit’s decision below which permits

continued regulation of an isolated wetland.

As for the “adjacency” question, courts have now stretched

the definition of “adjacent” to “navigable waters” from the more

familiar definition set forth in the regulations, i.e., “bordering,

contiguous, or neighboring,” 33 C.F.R. § 328.3(c), to include

27

wetlands that drain waters that flow through man-made culverts,

ditches, and drains, or that flow seasonally or intermittently,

or that are many miles from navigable waters. For example, the

Sixth Circuit recently reinstated a conviction for illegally filling

an “adjacent” wetland that was “between eleven and twenty

miles from the nearest navigable-in-fact water.” Rapanos,

339 F.3d at 449. The Sixth Circuit concluded that SWANCC did

not restrict “the Act’s coverage to only wetlands directly abutting

navigable water.” Jd. at 453. The court found a “significant

nexus” between the wetlands and ‘navigable waters,’ via a drain

that connected the wetland to a navigable river. Jd.

Other courts, including the Second, Fourth, Ninth, and

Eleventh Circuits, have concluded that, so long as a wetland is

adjacent to some part of an entire tributary system that ultimately

flows at some point into a navigable water, even roadside ditches

are a sufficient basis for the -government to assert jurisdiction.

See United States v. Deaton, 332 F.3d 698, 710-12 (4% Cir. 2003);

see also Treacy v. Newdunn Associates, LLP, 2003 U.S. App.

LEXIS 18681, *23-26 (4" Cir. September 10, 2003) (applying

Deaton and finding adjacency via a 2.4 mile series of natural

and manmade ditches alongside interstate highways);

Headwaters vy. Talent Irrigation Dist., 243 F.3d 526, 534

(9" Cir. 2001) (“Even tributaries that flow intermittently are

waters of the United States”); United States v. TGR Corp.,

171 F.3d 762, 764 (2d Cir. 1999) (non-navigable tributaries

flowing into navigable streams are ‘waters of the United

States’”); United States v. Eidson, 108 F.3d 1336 (11" Cir. 1997)

(manmade ditches and canals that flow intermittently into creek

may be tributaries); United States v. Lamplight Equestrian Ctr.,

2002 U.S. Dist. LEXIS 3694, *27 (N.D. Ill. 2002) (“tributaries

three times removed from navigable waters can fall under federal

jurisdiction. Even where the distance from the tributary to the

navigable water is significant, the quality of the tributary is still

vital to the quality of the navigable waters.”).

28

The Seventh Circuit’s ruminations that the wetland here

might be adjacent despite the district court’s explicit vacatur of

that determination fall squarely within these cases as well.

Pet. App. 10a-12a. And they all seem clearly at odds with the

ACOE’s former definition of “primary tributaries” as being

limited to “the main stems of tributaries directly connecting to

navigable waters of the United States up to their headwaters

and does not include any additional tributaries extending off of

the main stems of these tributaries.” 33 C.F.R. § 328.2(j) (1981).

A few courts have concluded that SWANCC addressed more

_ than simply isolated wetlands and now has raised the threshold

for the government to assert adjacency jurisdiction as well.

See, e.g., FD&P Enterp., Inc. v. U.S. Army Corps of Engineers,

239 F. Supp.2d 509, 516 (D.N.J. 2003) (SWANCC requires that

“a ‘significant nexus’ [to navigable waters] must constitute more

than a mere ‘hydrological connection.’”); United States v. RGM

Corp., 222 F. Supp.2d 780 (E.D. Va. 2002) (wetlands not

contiguous to navigable river so jurisdiction not established

based upon adjacency to navigable water).

The divergence of methodologies and results since

SWANCC strongly suggests that this Court should provide

additional guidance as to the limits of CWA § 404(a) jurisdiction.

C. Even the Regulating Agencies Have Expressed

Confusion Over The Breadth Of Their Jurisdiction

Even the EPA and ACOE have expressed uncertainty over

the impact of SWANCC on their regulatory jurisdiction. In their

recent Advance Notice of Proposed Rulemaking on the Clean

Water Act Regulatory Definition of “Waters of the United

States,” the general counsels for their respective agencies stated

that, “in light of SWANCC, it is uncertain whether there remains

any basis for jurisdiction under the other rationales of

§ 328.(a)(3)(i)-(iii) over isolated, non-navigable, intrastate

waters .. .” 68 Fed. Reg. 1991, 1997 (Jan. 15, 2003) (attaching

Joint Memorandum of Robert E. Fabricant, General Counsel,

29

Environmental Protection Agency and Steven J. Morello,

General Counsel, Department of the Army). The agencies also

remarked that “the Supreme Court has not itself defined the

term ‘adjacent,’ nor stated whether the basis for adjacency is

geographic proximity or hydrology.” Jd. Notwithstanding this

confusion, as is apparent in this case, the government still

continues to assert the most narrow interpretation of SWANCC

possible and the broadest vision of its regulatory authority in

litigation. See also In re Veldhuis, 2002 EPA ALJ LEXIS 39,

*177-78 (June 24, 2002) (jurisdictional connection to navigable

waters “is not precluded by the distances or number of tributary

connections involved, the intermittency of the connection, or

the fact that some tributaries may have been of human

construction.”’). |

Federal regulators, the courts, and certainly the regulated

entities such as Petitioners have struggled to interpret the scope

of CWA § 404(a) jurisdiction ever since the SWANCC decision

was handed down. They will continue to do so absent additional

guidance from this Court. This petition for writ of certiorari

should therefore be granted.

30

CONCLUSION

For all of the foregoing reasons, the petition should be

granted.

Respectfully submitted,

STEPHEN A. STUDER LAURENCE A. McHuGu*

PLews SHADLEY RACHER BRIAN E. CASEY

& BRAUN BARNES & THORNBURG

53732 Generations Drive 100 North Michigan Street

South Bend, IN 46635 Suite 600

(574) 273-1010 South Bend, IN 46601

(574) 233-1171

* Counsel of Record

Attorneys for Petitioners