Amicus Curiae Brief — Fairbanks North Star Borough v. United States Army Corps of Engineers (No. 08-1052)

FILED

(2) MAR 2 3 2009

OFFICE OF THE CLERK

No. Q8-1052 SUPREME COURT, U.S.

In The

Supreme Court of the United States

FAIRBANKS NORTH STAR BOROUGH,

Petitioner,

V.

U.S. ARMY CORPS OF ENGINEERS, e? al.,

Respondents.

On Petition for Writ of Certiorari to the

United States Court of Appeals for the Ninth Circuit

BRIEF OF AMICUS CURIAE

NATIONAL ASSOCIATION OF HOME BUILDERS

IN SUPPORT OF PETITIONER

Duane J. Desiderio*

Thomas J. Ward

Jeffrey B. Augello

National Association of

Home Builders

1201 15" Street, N.W.

Washington, D.C. 20005

(202) 866-8200

* Counsel of Record

Counsel for Amicus Curiae

March 23, 2009

Becker Gallavpher » Cincuunti, OH «+ Washington, D.C. - 800.890.5001

TABLE OF CONTENTS

Page(s)

INTEREST OF AMICUS CURIAE

a oie ddt bev saptncep oe scen ecaeeet eral aewcnsnaecel

I. CERTIORARI SHOULD BE GRANTED TO

RESOLVE CONFLICTS WITH THIS COURTS

DECISIONS AND THOSE FROM OTHER

Jn 8 ¢) 5 o.. orto OG ES SO I eee

A. Conflict With This Court’s Decisions,

Including Bennett v. Spear-...............-.ccssscssesee0

B. Conflict With Other Circuits ....................0... 9

oe

Il. THE CORPS [ITSELF TREATS CWA

JURISDICTIONAL DETERMINATIONS AS

HAVING BINDING, LEGAL EFFECT .............. 13

.A CWA JURISDICTIONAL

DETERMINATION HAS MANY

CONSEQUENCES BEYOND THE CORPS

TN Oda oes eovcccetasncvancsevsvinccnssdarecsenss 15

A. The Value of Real Property 1s Impacted by a

Jurisdictional Determination .......................16

B. Some States Require Real Property Owners

to Disclose The Presence of Wetlands to

TT PARA ARD a Aart SEE EPR ee eR

TABLE OF CONTENTS (cont.)

Page(s)

C. A Project’s “Green” Rating can be Affected

by a WetlJands Jurisdictional

EC is onsen es na cn..cceceee. 21

Certain EPA Construction Grants do not

Allow Filling of Wetlands..................0........... 23

The Rights of Ehgible Communities Under

the National Flood Insurance Program are

Impacted by Wetlands Determinatione........ 25

CONCLUSION

TABLE OF AUTHORITIES

Page(s)

Cases

Abbott Labs v. Gardner, 387 U.S. 136 (1967),

overruled on other grounds by Califano v.

Sanders, 430 U.S. 99 (1977)

Baccarat Fremont Developers, LLC v. U.S. Army

Corps of Eng’rs, 425 F.3d 1150 (9' Cir. 2005),

cert. denied, 127 S. Ct. 1258 (2007)

Bennett v. Spear, 520 U.S. 154 (1997)

Ciba-Geigy Corp. v. EPA, 801 F.2d 430

(D.C. Cir. 1986)

Fairbanks N. Star Borough v. U.S. Army Corps

of Eng’rs, 543 F.3d 586 (9% Cir. 2008) passim

FTC v. Standard Oil Co., 449 U.S. 232 (1980) ..........9

Gerke Excavating, Inc. v. United States,

464 F.3d 728 (7% Cir. 2006), cert. deniea,

E26 S&S. Gt. 5. CIF occ vesstsadicucs Poe ucieaeineiann ew 5

Leslie Salt Co. v. Froehlke, 578 F.2d 742

(Ott Cir, 1978)

Loving v. Alexander, 548 F. Supp. 1079 (D.C. Va.

1983), affd, 745 F.2d 861 (4™ Cir. 1984)

Lucas v. United States, 516 F.3d 316 (5 Cir

2008). cert. denied, 129 S. Ct. 116 (2008)....

TABLE OF AUTHORITIES (cont.)

Page(s)

Lykes Bros., Inc. v. U. S. Army Corps of Engrs,

64 F.3d 630 (11 Cir. 1995)

Lykes Bros., Inc. v. U. S. Army Corps of Eng’rs,

821 F. Supp. 1457 (M.D. Fla. 1993)

No. Cal. River Watch v. City of Healdsburg,

496 F.3d 999 (9th Cir. 2007), cert. dented,

128 S. Ct. 1225 (2008)

Nat'l Ass'n of Home Builders v. U.S. Army Corps

of Eng’rs, 417 F.3d 1272 (D.C. Cir. 2006)

Nat. Res. Def. Council v. Costle, 568 F.2d 1369

Pe i ee cay suncatenia orien a ssetaiedaweaaans 8

Or. Nat. Desert Ass'n. v. Bureau of Land Mgmt.,

531 F.3d 1114 (9t» Gir. 2008).

Rapanos v. United States, 547 U.S. 715

(2006)

Shanty Towns Assocs. Ltd. P’ship v. EPA,

843 F.2d 782 (4 Cir. 1988)

Solid Waste Agency of N. Cook County v. U.S.

Army Corps of Eng’rs, 531 U.S. 159 (2001)

Swanson v. United States, 789 F.2d 1368

(9th Cir. 1986) ....

TABLE OF AUTHORITIES (cont.)

Page(s)

The Daniel Ball, 77 U.S. 557 (10

Wall. 557) (1871)

United States v. Appalachian Elec. Power Co.,

311 US. 377 (1940)

United States v. C.E. Harrell, 926 F.2d 1036

(11% Cir. 1991)

United States v. Heinrich, 184 Fed. Appx. 542

(7th Cir. 2006‘, cert. dented, 127 S. Ct. 2974

(2007)

United States v. Johnson, 467 F.3d 56

(1st Cir. 2006), cert. denied, 128 S. Ct. 375

| rr

United States v. Morrison, 178 Fed. Appx. 481

(6 Cir. 2006), cert. denied, 127 S. Ct. 270 (2007) ..!

United States v. Moses, 496 F.3d 984

(9th Cir. 2007), cert. dented, 128 S. Ct

(2008)

STATUTORY PROVISIONS

> t.29.4. S 7O4

16 U.S.C. § 1536(a)(2)

16 U.S.C § LaA86(b)C3)(A)

33 U.S.C. § 401

TABLE OF AUTHORITIES (cont.)

Page(s)

ee ME ORD. a van vadnuces danenedsenecavavntaarsxcu¥easons 23

ee hes, Se Bee MEMICD) ...00..005 0000505,

33 U.S.C. § 1285

33 U.S.C. § 1311

33 U.S.C. § 1342(a)

33 U.S.C. § 1344(a)

1.S.C. § 4022(a)

>.C. § 4022(b)

Md. Code Ann. § 10-702 (2007)...

riaw. Rev. Stat. Ann. § 508D-1 (2008) .....................

ia. Rev. Stat. Ann. § 9:3195 (2008).

R.I. Gen. Laws § 5-20.8-2(b)(2Z)(xx1x) (2008)

Wis. Stat. § 769.03 (2008)

Or. Rev. Stat. § 105.464 (2009).

TABLE OF AUTHORITIES (cont.)

Page(s)

REGULATIONS

83 C.F.R.:

Section

Section 32:

Section <

Section

Section 3:

40 C.F_R.:

Section 35.925-13

OTHER

Appraisal Institute, The Appraisal of Real

Estate (13 ed. 2008)

D. Linda Kone, Land Development (National

Association of Home Builders 18t> ed., 1994)

Margaret N. Strand, Wetlands: Avoiding the

Swamp Monster, in Environmental Aspects of

Real Estate and Commercial Transactions: From

trownfields to Green Buildings (James B

Witkin 2 ed., 1999)

Vii

TABLE OF AUTHORITIES (cont.)

Page(s)

Randall S. Guttery, Stephen L. Poe & C.F.

Sirmans, An Empirical Investigation of Federal

Wetlands Regulation and Flood Delineation:

Implications for Residential Property Owners,

26 J. Real Estate Research 303, No. 3 (2004) 17

William Bunkley, Charles P. Edmunds,

Appraising Wetlands, Appraisal Journal

(1992), available at http://www.entrepreneur.

com/tradejournals/article/12085965_1.htm|]

FEMA, NFIP CRS Coordinator’s Manual,

(2006)

Int'l] Code Council, National Green Building

Standard. 700-2008 (ZOOB) ......ccccocccccrssccccccscceseccces 2%

fa

U.S. Army Corps Regulatory Guidance Letter, No.

08-02 (June 26, 2008), htttp://newsletters.wetland

studies.com/docUpload/RGLO8021.pdf

EPA Green Building Home VPage,

http://www.epa.gov/greenbuilding........................4

EPA Green Building, Basic Information,

r

http://www.epa.gov/greenbuilding/pubs/

an]

about. htm

TABLE OF AUTHORITIES (cont. )

Page(s)

PEMA, NI'IP/CRS Update, Feb. 2009, http://

www .fema.gov/library/view Record.do?id

=3297

Green Communities Criteria 2008, http://www.

practitionerresources.org/cache/documents/666/

66641.pdf

Florida Association of Realtors Prop. Disclosure

Statement, avatlable at http://www.sellinghome

madeceasy.com/forms/Florida.pdf...........................20

Louisiana Residential Prop. Disclosure Form,

available at http://www.lrec.state.la.us/

Residential%20Property%20 Disclosure%

2003-01-08.pdf

Maryland Residential Prop. Disclosure and

Disclaimer Statement, available at

http://www.dllr.state.md.us/forms/

danddform.doc....

The National Association of Home Builders

(NAHB) has received the parties’ written consent to

file this amicus curiae brief in- support of

Petitioner. !

NAHB is a Washington, D.C.-based trade

association whose mission 1s to enhance the climate

for housing and the building industry. Chief

among NAHB’s goals is providing and expanding

opportunities for all people to have safe, decent and

affordable housing. Founded in 1942, NAHB is a

federation of more than 800 state and _ local

associations. About one-third of NAIIB’s more than

200,000 members are nome builders and/or

remodelers, and its builder members construct

about 80 percent of the new homes each year in the

United States.

NAHB is a vigilant advocate in the Nation's

courts. It frequently participates as a party litigant

and amicus curtae to safeguard the property rights

and interests of its members. NAHB was a

petitioner in another Clean Water Act (CWA) case

NAHB ov. Defenders of Wildlife, 127 S.Ct. 2518

Counsel] of record for all parties received notice at least 10

days prior to the due date of the amicus curtae’s intention to

file this bref letters of consent are on file with the Clerk

No counsel for a party authored this bnef in whole or in part

and no counsel or party made a monetary contribution

intended to fund the preparation or submission of this bref

No person other tham arnicus i! member

made a8 monetary

submission

(2007). It has also participated before this Court as

amicus curiae or “of counsel” in a number of cases

involving landowners aggrieved by excessive

regulation under a wide array of statutes and

regulatory programs. See Appendix A.

NAHB’s organizational policies have long

advocated that the federal courts must be available

for landowners to adjudicate their rights and duties

arising under federal law. The court of appeals’

decision undermines this chief objective of amicus.

As a result of the fragmented opinion in Rapanos vu.

United States, property owners must determine the

extent of CWA jurisdiction by “feelfing] their way

on a case-by-case basis.” 547 U.S. 715, 758 (2006)

(Roberts, C.J., concurring). Land owners presently

lack any clear understanding of whether an

otherwise ordinary_. aquatic feature on_ their

property, such as a creek, pond, or wetland, will be

deemed within the control of the U.S. Army Corps

of Engineers (Corps) and the’ Environmental

Protection Agency (EPA) as they administer the

CWA's massive bureaucracy

Such sprawhng regulatory encroachment is

compounded by the court of appeals’ decision,

which shields the agencie purisdictional

determinations’ (JDs) from impartial judicial

review. Asa result, property owners have no choice

but to abide by overly-zealous and unreasonable

assertions of CWA jurisdiction or else they will

become targets of a Corps or EPA enforcement

action. The agenmes can thus roam at will because

they have no real apprehension that a federal judge

might question the breadth of a particular JD.

The Court should grant certiorari to confirm

that the federal! court forum is available to land

owners. It can thereby restore some balance to the

lop-sided and unjust system by which the Executive

Branch’ subjects private property to CWA

jurisdiction

ARGUMENT

CERTIORARI SHOULD BE GRANTED TO

RESOLVE CONFLICTS WITH THIS

COURT’S DECISIONS AND THOSE FROM

OTHER CIRCUITS.

A. Conflict With This Court’s Decisions,

Including Bennett v. Spear.

The court of appeals withheld judicial review of

a Corps JD regarding wetlands on Fairbanks's

property, reasoning that such a determination 1s

not “final agency action’ under the Administrative

Procedure Act (APA). Fairbanks N. Star Borough

{ U.S Arm y Corp } of kngr oO 1:3 a 3d Y&8&G6, 597 (9!

Cir. 2008) Certiorarit 1s warranted because the

opimion below decides an important federal

question in a manner that conflicts with this

Court's decisions, in particular Bennetl v. Spear,

520 U.S. 154 (1997). S.Ct. Rule 10(c)

Bennett set forth the two-part test to decide

when agency action is final for purposes of APA

review. First, the action “must mark the

consummation of the agency’s decision making

process.” Bennett, 520 U.S. at 177-178. The court

of appeals acknowledged that the Fairbenks JD

met the first prong of the Bennett test, because it

“announces the Corps’ considered, definite and firm

position about the presence of jurisdictional

wetlands.” Fairbanks, 543 F.3d at 593.

Error lies in the court of appeals’ consideration

of Bennett's second element: agency action 1s final if

it is “one by which rights or obligations have been

determined, or from which legal consequences will

flow.” Bennett, 520 U.S. at 178 (internal quotes

omitted). The opinion below provides that the JD

at issue was not final because legal obligations

arose “solely from the CWA, and not from the

Corps’ issuance of an approved jurisdictional

determination.” Fairbanks, 5438 F.3d at 594.

Certiorari should be granted because the Ninth

Circuit’s analysis strips the “rights or obligation”

prong of all meaning.

The CWA prohibits “discharges” into statutory

‘navigable waters’ unless authorized under the

permit provisions of section 402 (“any pollutant’) or

section 404 (“dredged or fill material’). 33 U.S.C

§$ 1311, 1342(a), 1344(a). In Bennett's parlance, a

landowner has an “obligation” to obtain a section

404 permit if he wants to discharge dredged or fill

material onto jurisdictional wetlands on his

property, and faces the “consequences” of violating

federal law and CWA) enforcement if those

resources are filled without the requisite permit

Simply put, if private property contains covered

wetlands, the landowner must get agency approval

to fill them. The presence of CWA waters on

private land shapes’ behavior, alters legal

relationships, and creates responsibilities that do

not exist on property without statutory “navigable

waters.”

The court of appeals stated that “lajt bottom,

Fairbanks has an obligation to comply with the

CWA,” and then arrived at the non sequitur that

legal obligations “arise directly and solely” from the

statute and not the Corps’s JD. Fairbanks, 543

F.3d at 594. That is illogical and circular. Of

course Fairbanks has the CWA obligation to avoid

filling jurisdictional wetlands. The very reason

that the Corps issued the JD was to implement the

CWA and impose upon Fairbanks the duty to avoid

filling jurisdictional waters without first procuring

section 404 approval. The CWA’s permit sections

are not self-executing; the federal government

cannot indiscriminately claim section 404 authority

over private land unless it determines that

statutory “navigable waters” exist there.

specially in light of the confusion since Rapanos,?

2 At least eight petitions have been submitted to this Court to

resolve the confusion surrounding CWA jurisdiction in the

wake of Hapanos See Gerke Excavating, Inc. v. United

States. 464 F.3d 723 (7 Cir. 2006), cert. dented, 128 S. Ct. 45

(2007): United States v. Johnson, 467 F.3d 56 (1% Cir. 2006),

cert dented, 128 S. Ct. 375 (2007), No. Cal. River Watch .

City of Healdsburg, 496 V.3d 999 (9% Cir. 2007), cert. denied,

Ce 1225 (2008): U/nited States Hleinrich. 184 Fed

Cir. 2006), cert. dented, 127 S. Ct. 2974 (2007)

Viorrison, 178 Fed. Appx. 481 (6% Cir, 2006)

6

as a practical matter most landowners do not

ordinarily know if their property contains aquatic

resources within federal CWA jurisdiction. They

are accordingly unaware whether they need a

discharge permit until and if the Corps determines

that “navigable waters” are present. Thus, a

landowner’s legal rights and obligations are “fairly

traceable” to the Corps’s issuance of an approved

JD. See Bennett, 520 U.S. at 170-71.

Consequences can be avoided or redressed if a court

strikes an agency’s unreasonable assertion of CWA

jurisdiction through APA review.

If the court of appeals’ analysis stands, then the

agency action in Bennett would never have been

exposed to judicial review. Bennett involved a

challenge against a Fish and Wildlife Service

(FWS) biological opinion issued under the

Endangered Species Act (ESA). The biological

opinion concluded that operation of a proposed

irrigation project would likely “jeopardize the

continued existence” of two fish species unless

“reasonable and = prudent = alternatives” were

imposed to maintain minimum water levels in a

lake and reservoir 920 U.S. at 159. Federal

obligations to avoid jeopardy through consultation,

and develop a biological opinion offering reasonable

and prudent alternatives, derive from the text of

cerl. dented, 127 S. Ct. 270 (2007): Baccarat Fremont

Developers, LLC uu. US. Army Corps of Enp'rs, 425 F 3d 1150

(on Cir POO5) cert l¢ 4 Led, Sg S ('t 1258 (2007) l/nited

States vu. Moses, 496 F.3d 984 (9% Cir 2007). cert. denied. 128

S. Ct. 2963 (2008); Lucas vu. United States, 516 F.3d 316 (5

Cir. 2008), cert. dented, L295. Ct. 116 (2008)

KSA section 7. See 16 U.S.C. §§ 1536(a)(2),

(b)(3)(A).

Under the court of appeals’ reasoning, the

biological opinion in Bennett would not be “final

agency action” because the oblgations to avoid

species’ jeopardy and develop reasonable and

prudent alternatives stem from the ESA’s very

language. Yet, this Court found that the biological

opinion itself imposed rights and obligations, and

thus FWS’s very action was amenable to APA

review. Bennett, 520 U.S. at 178. This Court did

not adopt the court of appeals’ fiction that FWS’s

action was off-limits to court review because the

obligation to avoid species’ jeopardy flowed from

the underlying ESA statute. Likewise, whether

the Corps was too zealous here in determining the

breadth of “navigable waters” on Fairbanks’s

property should not be shielded from judicial

scrutiny, just because the CWA establishes the

basic prohibition against discharges into covered

wetlands without a permit.

Similarly, under the National Environmental Policy Act

(NEPA), agencies must develop an environmental impact

statement (IeIS) for any “major action significantly affecting

the human environment.” 42 U.S.C. § 4332(C) Under the

Ninth Circuit's reasoning, an FIS would not be a final agency

action, because the requirement to develop it and = its

substance emanates from NEPA. /d. Yet, it is well settled

that a final EIS is a final agency action for purposes of APA

review. See Or. Nat. Desert Ass'n. v. Bureau of Land Mgmt

531 F.3d 1114, 11389 (9% Cir. 2008) (listing the courts of

appeals that have found an EIS1s a final agency action)

Nor did Bennett resort to the confusing and

undecipherable distinction drawn by the court of

appeals, between a “legal consequence” of an

agency action that supports a conclusion of APA

finality and a “practical effect” of that same action

which does not. Fairbanks, 543 F.3d at 595-96.

Rather, Bennett recognized that a_ biological

opinion, which “theoretically serves an ‘advisory

function’ ... in reality has a powerful coercive

effect.” Bennett, 520 U.S. at 169. So too with JDs.

The Corps and EPA generally do not “choose[ ] to

deviate” from their determinations of CWA

jurisdiction and suddenly allow parties to fill

covered wetlands without a permit. See id.; Cf.

Nat. Res. Def. Council v. Costle, 568 F.2d 1369

(D.C. Cir. 1977) (EPA does not have the authority

to exempt classes of dischargers from CWA

permitting requirements).

Moreover, in NATHIB’s experience, when its

members are constrained by Corps JDs, they do not

blithely ignore them lest they be faced with serious

enforcement and penalty issues. “{Wle are to apply

the finality requirement in ae ‘flexible’ and

‘pragmatic way.” Abbott Labs. v. Gardner, 387

U.S. 136, 149-50 (1967), overruled on other grounds

by Califano v. Sanders, 430 U.S. 99 (1977); see also

Ciba-Geigy Corp. v. EPA, 801 F.2d 430, 435-36

(D.C. Cir. 1986). To that end, this Court and other

lower courts advise that whether an action ts final

for APA review should be assessed from. the

vantage point of a regulated entity that is the

object of the agency's decision. An agency action is

final if it is definitive ” and has a “ ‘direct and

immediate ... effect on the day-to-day business’ ” of

the party challenging it. FTC v. Standard Oil Co.,

449 U.S. 232, 239, (1980) (quoting & citing Abbott

Labs., 387 U.S. at 152). Certainly from the

perspective of Fairbanks and private land owners,

a JD from the Corps is not an “otherwise idle ...

statement of agency policy” but rather “carrf[ics]

easily-identifiable legal consequences for the

would-be dischargers.” Natl Ass’n of Home

Builders v. U.S. Army Corps of Eng’rs, 417 F.3d

1272, 1279 (D.C. Cir. 2006).

To conclude, if the court of appeals’ reasoning

stands, then agencies could always evade APA

review simply by claiming their actions have no

legal effect, but merely stem from authorizations

and responsibilities imposed by Congress.

Theoretically, all agency decisions should have

some grounding in ae piece of authorizing

legislation. Certiorari should be granted to review

the court of appeals decision, bring it in line with

this Court’s precedent, and allow land owners the

chance to seek court review of Corps JDs that

assert federal control over their real property.

B. Conflict With Other Circuits.

The court of appeals’ holding contradicts other

circuits that have exercised judicial review to

decide the merits of whether specific resources are

deemed “navigable waters of the United States”

under the Rreers and Harbors Appropniation Act of

1899 (RHA), ce U.S.C. § 401 et seq

10

Similar to the CWA, the RHA “requires that a

permit be obtained from ... the Army Corps of

Engineers, for any activity which takes place in

navigable waters of the United States, or which

affects the capacity of such waters.” Swanson uv.

United States, 789 F.2d 1368, 1371 (9t Cir. 1986).4

For RHA purposes, “navigable waters of the United

States are those waters that are subject to the ebb

and flow of the tide and/or are presently used, or

have been used in the past, or may be susceptible

for use to transport interstate or foreign

commerce.” 33 C.F.R. § 329.4 (2008) (Corps

regulation). These features are referred to as

“traditional navigable waters,” defined by seminal

opinions such as The Daniel Ball, 77 U.S. 557 (10

Wall. 557) (1871), and Jnited States v.

Appalachian Elec. Power Co., 311 U.S. 377, 407-08

(1940). Traditional navigable waters are “what

Congress had in mind as its authority for enacting

the CWA.” Solid Waste Agency of N. Cook. County

v. U.S. Army Corps of Eng'rs, 531 U.S. 159, 172

(2001).5 Contrary to the court of appeals’ opinion,

after the Corps makes a “navigable water of the

United States” determination, other circuits have

invoked APA review to adjudicate RHA

jurisdictional decisions.

‘' The Rivers and Harbors Act requires a permit “for

structures and/or work in or affecting navigable waters of the

United States.” 33 CLE RR. §& 322.3 (2008)

> However, this Court appears unanimous in holding that the

CWA covers more than just traditional navigable waters See

Rapanos v. Untted States, 547 US. 715, 731 (2006) (plurality)

For example, in Lykes Bros., Inc. v. U.S. Army

Corps of Engrs, 64 F.3d 630 (11tP Cir. 1995),

property owners along Fisheating Creek erected

fences, felled trees, and posted “no trespassing”

signs to keep the public from using the Creek.

Subsequently, the Corps prepared a report, finding

that Fisheating Creek was a “navigable water of

the United States.” Lykes Brothers “brought a civil

action pursuant to 5 U.S.C. $ 704 against the

[Corps] seeking to review and set aside the

fagency’s] determination that Fisheating Creek

is a navigable water of the United States ....” Id

at 633 (emphasis added). Significantly, the Lykes

Brothers invoked the A.’A to obtain judicial review

over the Corps’s action. After a 17-day trial and

“expending a great amount of time to fully digest

the voluminous testimony, enough exhibits to fill

every wall of the courtroom, and the learned

memoranda of the parties,’ the trial court

concluded that Fisheating Creek was nat a

“navigable water of the United States.” Lykes Bros.,

Inc v. U.S. Army Corps of Engineers, 821 F. Supp

1457, 1458 (M.D. Fla. 1993). On appeal, the

)

Eleventh Circuit reviewed che factual findings and

found no error in the trial court’s decision. Thus,

the merits of the Corps’s decision was tried and

appealed all without raising the question of

whether the Corps’s decision regarding the Creek's

jurisdictional status was final agency action. See

also United States v. C.E. “arrell, 926 F.2d 1036

(lit Cir. 1991) (reaching the merits and

overturning Corps’s determiiation that Lewis

(reek was a navigable water of the United States,

even though no permits had been sought to use the

raterbody and without any question of whether the

agency's action was final).

Similarly, in Loving v. Alexander, 548 F. Supp

1079 (D.C. Va. 1982), affd, 745 F.2d 861, 863 (4th

Cir. 1984) approximately 67 riparian land owners

sought a “judgment declaring that the Jackson

River is nonnavigable from the mouth of Dunlap

Creck ... to the base of the Gathright Dam if

548 F.Supp. 1079. The district court upheld the

Corps’s assertion of RHA jurisdiction, found its

“determination of navigability is an agency action,”

and decided that the “plaintiffs ... stated a cause of

action under the [APA].” On appeal, the Fourth

Circuit recognized that “navigability is a term that.

has traditionally been defined by decisions of

federal courts” and affirmed the district court’s

decision. Loving, 745 F.2d at 864. See also Leslre

Salt Co. u Froehlke, 578 F.2d 742, 747 (9% Cir.

1978) weaching the question of Corps jurisdiction

even though the suit “did not involve action or

inaction by the Corps on any particular application

by [the plaintiff] for a permit under the Rivers and

Harbors Act or the [CWA],” because the plaintiff

refused to apply for a permit).

Thus, the circuit courts have routinely treated

risdictional determinations completed under the

RHA as al agency action subject to APA judicial

review. n hght of this Court's recognition in

SWANNC and Rapanos that traditional navigable

waters provide the basis for the CWA’s scope, and

the fact that both the CWA and RHA have similar

permitting processes, Fairbanks cannot be

13

reconciled with other circuit court decisions that

address the merits of Corps assertions of authority

over the “navigable waters of the United States.” If

there is a reason why the Corpss RHA

jurisdictional determinations are final agency

action subject to judicial review but the Corps’s

CWA determinations are not, then this Court

should grant certiorari to clarify any basis for such

a distinction.

Il. THE CORPS ITSELF TREATS CWA

JURISDICTIONAL DETERMINATIONS

AS HAVING BINDING, LEGAL EFFECT.

The Corps’s litigating position, that JDs issued

under the CWA are not final agency action, is

belied by its own regulations and policies.

‘lo wit, the agency’s regulations state that JDs

are “Corps final agency action.” 33 C.F.R. §

320.1(a)(6).

And, recent guidance provides further

confirmation of the agency’s regulatory position (if

not the one it has argued to the court of appeals).

On June 26, 2008, the Corps issued Regulatory

Guidance Letter No. 08-02,.0on the subject of JDs®

(hereinafter RGL 08-02). In RGL 08-02, the agency

addresses the differences between “preliminary”

jurisdictional determinations and “approved”

jurisdictional determinations. The Corps describes

preliminary determinations as non-binding, but

Avatlable at http.//newsletters. wetlandstudies.com

docUpload/RGIO8021.pdf Cast visited March 18, 2009)

14

describes an approved determination as “an official

Corps determinetion that jurisdictional ‘waters of

the United States,’ or ‘navigable waters of the

United States,’ or both, are either present or absent

on a particular site.” RGL 08-02 at 1. The agency's

own description of an approved determination 1s

thus a far cry from a “bare statement of [its]

opinion.” Fairbanks, 543 F.3d at 593.

Furthermore, RGL 08-02 highlights the rights,

obligations, and legal consequences that stem from

an approved jurisdictional determination:

An approved JD:

(1) constitutes the Corps’ official, written

representation that the JD’s findings are

correct;

(2) can be relied upon by a landowner,

permit applicant, or other “affected party”

(as defined at 33 C.F.R. 331.2) who receives

an approved JD for five years (subject to

certain limited exceptions explained in

RGL 05-02);

(3) can be used and relied on by the

recipient of the approved JD (absent

extraordinary circumstances, such as an

approved JD based on incorrect data

provided by a landowner or consultant) if a

CWA citizen’s lawsuit is brought ino the

Federal Courts against the landowner or

other “affected party,” challenging the

legitimacy of that JD or its determinations

and

15

(4) can be immediately appealed through

the Corps’ administrative appeal process

set out at 33 CFR Part 331.

RGL 08-02 at 2 (emphasis supplied). One would

certainly think that an approved JD carries with it

legal rights if it can be relied upon for five years as

against the Corps and EPA, and can further be

used to defend against a CWA citizen suit.

It is hard to understand how the Corps can

develop this policy less than a year ago, and now

argue that approved JDs do not affect rights or

obligations or produce legal consequences. ‘The

Court should grant certiorari to integrate the law

on final agency action with the Corps’s policy on

“approved” JDs.

Il, ACWA JURISDICTIONAL

DETERMINATION HAS MANY

CONSEQUENCES BEYOND THE CORPS

PERMIT PROCESS.

The court of appeals’ conclusion that a wetland:

JD does not impose obligations, deny rights, or fix

legal relationships except in the context of a

permit application or enforcement proceeding’

(ratrbanks, 543 F.3d at 595), 1s simply wrong

That view 1s grounded in neither practical business

realitv nor an adequate understanding of modern

environmental and greon building’ programs

There are many instances in which a. property

owner would seck a determination as to whether

wetlands are subject to federal CWA jurisdiction

16

aside from the section 404 permitting process or

agency-initiated enforcement. Indeed, a landowner

should simply have a right to know if her property

contains resources subject to federal agency

regulation, even if she does not want to incur the

time and expense of obtaining a 404 permit

In any event, various economic and legal

consequences flow from jurisdictional

determinations and impact the value and usability

of land.

A. The Value of Real Property is Impacted

by a Jurisdictional Determination.

The value of real property is influenced by the

“highest and best use”’®’ options available to the

owner The presence of federally-regulated

wetlands will often decrease the options available

to an owner and prospective purchaser of real

property. The resulting uncertainty may cause a

significant reduction in value. Due to these high

The ave rage applicant for an individual pcrmit spend

days and $271,596 in completing the proce and the average

ipplicant for a Nationwide permit spend ;

PIR OLS not counting costs of mitigation or dé

Di

Rar mo 47 US it 719 (plural ty opinion)

+ A leading group representing the interest

ippramwial mdustry define

L7

risks, the identification of federally-regulated

wetlands has become a routine part of many real

estate transactions

Consider for example the investor who holds an

option contract to purchase certain unimproved

land. As part of the due diligence process the

investor needs to determine whether such land

contains a CWA “navigable water.” In turn, the

existing owner must request a JD from tne Corps.

The Corps, in turn, issues a positive determination

indicating the presence of jurisdictional wetlands.

Assuming the wetlands consume the property line

which is coincident with the edge of the public

roadway, access to the property may be severely

restricted. If the wetlands pock-mark the property,

the buildable envelope may be reduced = or

eliminated entirely. The investor must also

consider whether authorization to alter’ the

wetlands can be secured, the time and expense of

securing such authorizations (including mitigation

costs), and any past CWA violations or possible

future enforcement actions. See Randall S.

Guttery, Stephen L. Poe & C.F. Sirmans, An

Emptrical Investigation of Federal Wetlands

Regulation and Flood Delineation: Implications for

Residential Property Owners, 26 J. Real Estate

Research, No. 3, at 303 (2004); Margaret N. Strand,

Wetland Avoiding the Swamp Monster, tin

Movironmental Aspects of Rea! state

Transactions, From Brownfields to Green Buildings

720, 721 (James B. Witkin 2° ed., 1999). Each of

these considerations flow from a determination

that CWA-covered resources exist on the re;

18

in question and will profoundly impact its market

value.

Similarly, a lender will always want to assess

the value of real property before advancing any

funds. As an executive for the Maryland Bankers

Association remarked on loans’ secured_ by

unimproved land, “Unless we have a reason to

know that it is or isn’t a wetland, we just don’t

know the value of it."2 A JD will be considered

alongside any private restrictions, zoning, building

codes, historic district controls and _ other

environmental regulations to reach a reasonable

market value opinion. In addition, a JD will

trigger a marked increase in the amount of site

feasibility documentation required by the lender for

loan approval. This will directly affect the

borrower's investment and development choices by

increasing the length of time required to secure

loan approval, the types of outside consultants

needed to produce necessary documentation, and

the costs associated with both. D. Linda Kone,

Land Development, 50-51 (National Association of

Home Builders, 18 ed. 1994)

lham Bunkle: Charles P. Edmunds, Appraisiny

etlands, Appraisal Journal (1992) (quoting John Bowers, Jr

cutive Vice President. Marvland Bankers Association)

/www entrepreneur com/tradejourn ils

t visited on Mar. 20, 2009)

19

B. Some States Require Real Property

Owners to Disclose The Presence of

Wetlands to Buyers.

JDs also have significant legal consequences for

owners of real property in terms of disclosures to

prospective purchasers. Recognizing the

potentially devastating impact a JD may have on

property value, a number of states now impose

strict wetland disclosure obligations on sellers of

residential real property.

In Louisiana, under Act 308 of the 2003

Louisiana Legislature, the seller must disclose

whether “any part of the property [has] been

determined a wetland by the United States Army

Corps of Engineers under § 404 of the Clean Water

Act,” attach a copy of the JD, and provide notice

that additional costs for a section 404 permit may

resuit. La. Rev. Stat. Ann. §9:3195-3199 (2008).

The requirement to disclose the presence of CWA-

covered wetlands 1s made a basic part of a real

estate sales transaction through the Louisiana

Residential Property Disclosure form.!°

In Hawau, the seller is required to provide the

purchaser with a disclosure statement that fully

and accurately exposes all known or reasonably

discoverable “material facts” relating to the

property. Haw. Rev. Stat. Ann. § 508D-1 (2008).

“Material facts” are defined as “any fact, defect, or

WW Avatlable at http://www. lrec.state la us/Residential%20

Property’ 20D isclosure™ 2003-01-08 pdf (ast visited Mar. ]

ZO0O9)

condition, past or present, that would be expected

to measurably affect the value to a reasonable

person of the residential real property being offered

for sale.” dd. Because a Corps’ wetland

determination measurably impacts the value of

property, such determination would need to be

disclosed to all prospective purchasers. In Florida,

wetlands constitute a material fact affecting

property value and appear as a disclosure item on

the Florida Association of Realtors Property

Disclosure Statement. Fla. Stat. Ann. § 475.278

(2006). "' See also, R.I Gen. Laws § 5-20.8-

2(b)(2)(xxix) (2008) (requiring disclosure of all

“material facts” regarding the property, including

the location of coastal wetlands, fresh water

wetlands, marshes or swamps that may impact

future development). The seller of residential real

property in Oregon faces a similar duty to disclose

“any governmental studies, designations, zoning

overlays, surveys or notices that would affect the

property.” Or. Rev. Stat. § 105.464 (2009).

Likewise, the Maryland Code requires the seller

to disclose general “land use matters.” Md. Code

Ann., [Real Prop.] § 10-702 (2007). Interpretation

of what this covers is left up to the State Real

Iistate Commission. Jd. The standardized seller

disclosure and disclaimer form developed by the

State Real Estate Commission explicitly covers

http://www.sellianghomemadeea m/torms/llomda.pdt

(last visited Mar 20. 2009)

Aa |

a

wetlands.!2 Leaving no room for interpretation, the

Wisconsin Code includes a report form entitled

Real Estate Condition Report Disclaimer. Wis.

Stat. § 709.03 (2008). Part C.11 of the report

requires disclosure of all “floodplain, wetland or

shoreland zoning area[s].” Id.

While these wetland disclosure obligations will

place the prospective purchaser in a more informed

position regarding pitfalls associated with the

property, they also have the effect of commanding

the property owner to affirmatively disclose the

presence of regulated wetlands. Failure to do si

may trigger legal consequences sounding in breach

of contract, fraudulent concealment, and negligent

misrepresentation.

C. A Project’s “Green” Rating can be

Affected by a Wetlands Jurisdictional

Determination.

“As the environmental impact of buildings

becomes more apparent, a new field called ‘green

building’ is gaining momentum.”!3 “Green building

is the practice of creating structures and using

processes that are environmentally responsible and

resource-efficient throughout a building's life-cycle

‘2 Maryland Residential Property Disclosure and Disclaimer

Statement, avarlable at http://www dllir state md us/forms

danddtorm.doc (last visited Mar. 20, 2009)

Green Building Home Page, http://www-epa.gov

| ‘(last visited Mar. 16, 2009)

22

from siting to design, construction, operation,

maintenance, renovation and deconstruction.”!4 As

illustrated by EPA’s definition, green building,

involves not only how buildings are constructed,

but also where they are constructed. Whether

wetlands are impacted is important in_ this

calculation.

For example, the American National Standards

Institute (ANSI) recently approved the

International Code Councils National Green

Building Standard, whicn establishes “practices for

the design and construction of green residential

buildings, building = sites, subdivisions and

renovation thereof.” International Code Council,

National Green Building Standard, 700-2008, §

101.3 (2009) (NGB Standard). Under the NGB

Standard, projects e awarded points for using

green building practi.s. One such practice 1s

avoiding environmentally sensitive areas, including

wetlands. Jd. §§ 202, 403.11. Sipnificantly, the

NGB Standard’s definition of “wetland” is identical

to that of the Corps at 33 C.F.R. § 328.3(b).

Therefore, the presence of CWA covered wetlands

on site is relevant to a project’s green rating,

regardless of whether a section 404 permit is

procured.

ld KPA (ireen Building Basi Information,

’ 4 , r l, yr } +? a 5 } >

http /www-_epa. gov greenbuilding/pubs/about htm (last

visited Mar 16, 2009)

Simuarly, Green Communities, which provides

funds and expertise to enable developers to build

affordable homes that are _ better for the

environment, has created criteria that must be met

before a developer is eligible for a Green

Communities grant. Green Communities Criteria

2008, 4 (2008), http://www.practitionerresources.

org/cache/documents/666/66641.pdf. One of the

Green Communities mandatory criteria requires

that a development not be located within 100 feet. of

a wetland. /d. at 6, 16 (2008). Again, Green

Communities uses the federal government’s

regulatory definition of wetlands. Under this

program, a jurisdictional determination would

negatively impact. a developer’s green rating if he

planned to place a building within 100 feet of a

wetland, even though he would not need a section

404 permit.

D. Certain EPA Construction Grants do

not Allow Filling of Wetlands.

When the Corps concludes that an area 1s a

jurisdictional wetland it has a direct effect on

whether a project can connect to certain sewage

treatment plants. The CWA allows EPA “to assist

the development and implementation of waste

treatment management plans and practices ..... 33

U.S.C. § 1281(a). Specifically, the Act authorizes

the Agency “to make grants. to any State,

municipality, or intermunicipal or interstate

agency for the construction of publicly owned

treatment works.” 33 U.S.C. 128i(g)(1); see also

Shanty Towns Assocs. Ltd. P’ship v. EPA, 843 F.2d

782, 785 (4 Cir. 1988). According to EPA

regulations governing its construction’ grant

program, the agency will not award a construction

grant unless the Regional Admunistrator

determines that the treatment system “would not

provide capacity for new habitations or other

establishments to be located on environmentally

sensitive land such as wetlands....” 40 C.F.R. §

36.925-13.'5

In practice, EPA conditioned grants for some

treatment plants to ensure a community does not

allow wastewater discharges to the plant if the

wastewater originates from a facility which is

erected in a jurisdictional wetland. Thus, even if a

property owner can obtain a section 404 permit in

those communities, once the Corps determines that

an area 1S a “wetland,” the property owner cannot

obtain approval to discharge wastewater into the

treatment plant. In many instances this makes the

property undevelopable and puts an end to the

proposed project.

’ IA | = t ear =

KPA now assist with the construction of wastewater

treatment pl s through Clean Water State Revolving

Lond

Funds rmiations ] - ended in L990 »

Jkt oe Se

The Rights of Eligible Communities

Under the National Flood Insurance

Program are Impacted by Wetlands

Determinations.

The National Flood Insurance Program (NFIP)

makes federally-backed flood insurance available to

eligible communities that have adopted land use

measures that are consistent with the minimum

criteria established by the Federal Emergency

Management Agency (FEMA). 42 U.S.C. §§ 4022(a),

4102(c). One section of the National Flood

Insurance Act establishes an_incentive-based

program called the Community Rating System

(CRS). 42 U.S.C. § 4022(b). Through insurance

discounts, CRS encourages commurities to

undertake floodplain management measures that

go beyond the minimum land use criteria for NFIP

eligibility. Jd.

Residents of CRS communities that conduct

advanced activities receive reductions in their flood

insurance premiums. The more “points” a

community obtains, the greater the reduction in the

premiums that must be paid. According to FEMA,

the “reductions range from 5% to 45% annually,

depending on the rating the community earns by

carrying out CRS-qualified tasks.” !®

hiEeMA NFIP/CRS Update February 2009,

http www fema gov/lbrary/view Record do?1d=3297 (last

visited Mar. 10. YOOY)

26

Among the ways that communities can improve

their CRS rating is by protecting wetlands. For

example, if a community requires real estate agents

to disclose flood related hazards, such as wetlands

to buyers, the community can obtain rating

points.'? Similarly, communities obtain points for

preserving certain open space, including

wetlands. !®

Therefore, once the Corps has determined that

certain areas in a CRS community are wetlands,

that community cannot obtain CRS “points” if it

allows the property owners to develop those areas.

Thus, the manner in which a community treats

features that the Corps considers jurisdictional

under the CWA can impact the cost of flood

insurance for its citizens.

To conclude, there are many examples of legal

rights and obligations that flow from a Corps

determination that properties contain CWA

jurisdictional waters, including wetlands. The

court of appeals was simply incorrect in

maintaining that a JD is not final agency action

because such a determination only takes” on

consequence in the context of a section 404 permit

application or a CWA enforcement action.

'7 FEMA, NFIP CRS Coordinator’s Manual, 340-1, 340-6

(2006)

NEIP CRS Coordinator's Manual, 4510-12-16 (2006)

CONCLUSION

For the foregoing reasons, the petition should be

granted.

March 238, 2009

Respectfully submitted.

Duane J. Desiderio

Counsel of Record

‘Thomas J. Ward

Jeffrey B. Augello

National Association of

Home Builders

1201 15th Street, N.W.

Washington, D.C. 20005

(202) 866-8200

APPENDIX

App. la

APPENDIX A

Cases in which NAHB has appeared as an amicus

curiae or “of counsel” before this Court include:

Agins v. Cuy of Tiburon, 447 U.S. 255 (1980); San

Diego Gas and Elec. Co. v. City of San Diego, 450 U.S.

621 (1981); Williamson County Regl Planning Comm'n

v. Hamilton Bank, 473 U.S. 172 (1985); MacDonald,

Sommer & Frates v. Yolo County, 477 U.S. 340 (1986);

First English Evangelical Lutheran Church v. Los

Angeles County, 482 U.S. 304 (1987); Nollan v. Cal.

Cuastal Coinm’n, 483 U.S. 825 (1987); Pennell v. City

of San Jose, 485 U.S 1 (1988): Yee vu. ¢ ‘ity of

Escondido, 503 U.S. 519 (1992); Lucas v. S.C. Coastal

Council, 505 U.S. 1003 (1992); Dolan v. City of Tigard,

512 U.S. 374 (1994); Badbitt v. Sweet Home Chapter of

Cmtys. for a Greater Ore., 515 U.S. 687 (1995); Surtum

v. Tahoe Regl Planning Agency, 5Z0 U.S. 725 (1997);

City of Monterey v. Del Monte Dunes at Monterey, Ltd.,

526 U.S. 687 (1999); Solid Waste Agency of N. Cook

County v. U.S. Army Corps of Eng'rs, 531 U.S. 159

2001): Palazzolo v. Rhode Island, 533 U.S. 606 (2001):

Franconia Assocs. v. United States, 536 U.S. 129

(2002): Tahoe-Sterra Pres. Council, Inc. v. Tahoe Regi

Planning Agency, 535 U.S. 302 (2002); Borden Ranch

Pship v. U.S. Army Corps of Eng'rs, 537 U.S. 99

(2002); City of Cuyahoga Falls v. Buckeye Cmty. Hope

Found., 5388 U.S. 188 (2003): S. Fla. Water Mgmt. Dist

vu. Miccosukee ]ribe of Indians, 541 U.S. 95 (2004); San

Remo Hotel, L.P. v. City and County of San Francisco

545 U.S. 323 (2005); Lingle v. Chevron U.S.A, In

544 U.S. 528 (2005): Kelo v. City of New London, 545

US. 469 (2005); S.D. Warren Co. v. Me. Bd. of Envtl

App

Prot., 547 U.S. 370 (2006); Rapanos v. United States,

547 U.S. 715 (2006): John PR. Sand and Gravel Co. vu.

United States, 128 S.Ct. 750 (2008): Winter v. Nat. Res

Def. Council, Inc., 129 5. Ct. 365 (2008); Summers v.

Earth Island Inst., 129 S. Ct. 1142 (2009); Entergy

Corp. v. Envtl. Prot. Agency, 475 F.3d 83 (2d Cir.

2007), cert. granted, 128 S. Ct. 1867 (2008) (eonsol.

with Nos. 07-585 and 07-597): and Coeur Alaska, Inc.

v. S.E. Alaska Cons. Council, 486 F.3d 638 (9th Cir.

2ZOCT), cert. granted, 128 S. Ct. 2095 (2008) (No. 07

954. ( onso!] with 07-990)