Petition for Writ of Certiorari — Krilich v. United States

/ {Moree Luu, U.S.

(IV) FILED

O0U-239 AUG 1 0 2000'

nn OFFICE OF IHE CLERK

In The

Supreme Court of the United States

®

ROBERT R. KRILICH, et al.,

Petitioners,

UNITED STATES,

Respondent.

¢

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Seventh Circuit

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PETITION FOR A WRIT OF CERTIORARI

¢

Carter G. PHILuIPs*

Mark D. Hopson

KrisTIN GRAHAM KOEHLER

Sipcey & AvusTIN

1722 Eye Street, N.W.

Washington, D.C. 20006

(202) 736-8000

Counsel for Petitioners

: *Counsel of Record

August 10, 2000

———— lS

COMMS LAN Sere hee

OR CALL COLLECT (402) 342-283

QUESTION PRESENTED

Whether the Environmental Protection Agency, con-

sistent with the Clean Water Act and Commerce Clause of

the United States Constitution, may assert jurisdiction

over isolated, intrastate waters solely because those

waters do or potentially could serve as a habitat of migra-

tory birds.

STATEMENT REQUIRED BY RULES 14.1 AND 29.6

Pursuant to Supreme Court Rule 14.1, the Petitioners

other than the one listed in the caption are Krilich Com-

panies, Inc. and Riverwoods Development Corp. The

other parties in the proceedings below were Lakemoor

Country Club, Inc., Austin State Bank Trust, not individu-

ally, but as Trustee under the Trust Agreement dated

December 18, 1968 and known as Trust No. 4580, Manu-

facturers’ Affiliated Trust Co., not individually, but as

Trustee under the Trust Agreements dated July 30, 1982

and known as Trust Nos. 866 and 867, f/k/a Affiliated

Bank/Franklin Park f/k/a First State Bank & Trust of

Franklin Park.

Pursuant to Supreme Court Rule 29.6, Krilich Com-

panies, Inc. and Riverwoods Development Corp. are cor-

porations closely held by Petitioner Robert R. Krilich.

These corporations do not have parent companies, or

subsidiaries, or affiliates that have issued common stock

or debt securities to the public.

TABLE OF CONTENTS

Page

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STATEMENT REQUIRED BY RULES 14.1 AND 29.6... ii

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RELEVANT CONSTITUTIONAL AND STATUTORY

I oie 8a Ss 6 65a A 4A Kank dA ek os 0 hn 1

enue SP BOOM CASE. oo... cca sesacn veces 2

A. Statutory And abitinory Background....... 2

ee 3

C. Decision Of The Court Of Appeals .......... 6

I i CR ae 6 C5 nA KSA SAK as 006d nd veces 8

iv

TABLE OF AUTHORITIES

Page

CASES

Cargill, Inc. v. United States, 516 U.S. 955 (1995) ..... 11

Leslie Salt Co. v. United States, 896 F.2d 354 (9th Cir.

WOOD k 6. knee dees dvidans te uathsdevecnsens 8, 12, 14, 15

Leslie Salt Co. v. United States, 55 F.3d 1388 (9th Cir.

| Ore rrr rer Tere Tere rr Tri rere re rr re 6

Solid Waste Agency v. United States Army Corps of

Eng’rs, 998 F. Supp. 946 (N.D. Ill. 1998), aff'd,

191 F.3d 845 (7th Cir. 1999), cert. granted, 120 S.

CE, DID Te ovo oun cache vores ess eo bed ereecisins 6

Solid Waste Agency v. United States Army Corps of

Eng’rs, 191 F.3d 845 (7th Cir. 1999), cert. granted,

eee Ce Peer ee passim

United States v. Gaydos, 108 F.3d 505 (3d Cir. 1997) ..... u

United States v. Krilich, 948 F. Supp. 719 (N.D. IIl.

1996), aff'd, 126 F.3d 1035 (7th Cir. 1997)........... 4

United States v. Krilich, 126 F.3d 1035 (7th Cir.

0 EERE SET OCTETS Opa 4

United States v. Lopez, 514 U.S. 549 (1995) ..... 8, 9, 10, 11

United States v. Morrison, __ U.S. __, 120 S. Ct.

SP Ss bss Asc nase Laub Ga yeekua eee neeekinees 11

United States v. Walker, 59 F.3d 1196 (11th Cir.

Pee ery eer ee eee re rey Pee ree gs eee 9

United States v. Wilson, 133 F.3d 251 (4th Cir. 1997) :

ERR E PLAGE CARLENE NUE CER AAEM ORAS OCR ENAS 6, 8, 12, 13

Utah v. Marsh, 740 F.2d 799 (10th Cir. 1984)...8, 12, 15.

Ex parte Yarbrough, 110 U.S. 651 (1884)............... 9 :

ne nee

Vv

TABLE OF AUTHORITIES - Continued

Page

CONSTITUTION AND STATUTES

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REGULATIONS

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:

.

PETITION FOR A WRIT OF CERTIORARI

Petitioners Robert R. Krilich, Krilich Companies, Inc.,

and Riverwoods Development Corp. 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 opinion of the court of appeals is reported at 209

F.3d 968 (7th Cir. 2000) and is reprinted in the Appendix

to this Petition (“Pet. App.”) at 1a-10a. The memorandum

opinion and order of the district court is unreported and

is reprinted in Pet. App. at 11la-18a.

*

JURISDICTION

The court of appeals entered judgment on April 12,

2000. On July 5, 2000, Justice Stevens extended the time

for filing the petition for a writ of certiorari to and

including August 10, 2000. The jurisdiction of this Court

is invoked under 28 U.S.C. § 1254(1).

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RELEVANT CONSTITUTIONAL AND

STATUTORY PROVISIONS

The Commerce Clause of the United States Constitu-

tion provides, in relevant part, as follows: “The Congress

shall have Power . . . To regulate Commerce. . . among

the several States.” U.S. Const. art. I, § 8.

The relevant provisions of the Clean Water Act, 33

U.S.C. §§ 1311(a), 1344(a), and 1362(7), are reprinted in

Pet. App. at 19a. The pertinent regulations, 40 C.F.R.

§ 230.3(s)(3) and 33 C.F.R. § 328.3(a)(3), are reprinted in

Pet. App. at 20a-21a. The migratory bird rule, which is

found in the preamble to 51 Fed. Reg. 41,206 (1986), is

reprinted in Pet. App. at 21a.

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STATEMENT OF THE CASE

The issue in this case is whether the Environmental

Protection Agency (“EPA”) has the authority, under the

Clean Water Act and the Commerce Clause, to regulate

isolated, intrastate waters, whose only connection to

interstate commerce is the actual or potential presence of

migratory birds.

A. Statutory And Regulatory Background

Congress enacted the Clean Water Act in order “to

restore and maintain the chemical, physical, and biolog-

ical integrity of the Nation’s waters.” 33 U.S.C. § 1251(a).

To that end, the Clean Water Act specifically prohibits

“the discharge of dredged or fill material into the naviga-

ble waters” without a permit. 33 U.S.C. §§ 1311(a),

1344(a), Pet. App. at 19a. According to the terms of the

Clean Water Act, “navigable waters” are defined as

“waters of the United States, including the territorial

seas.” 33 U.S.C. § 1362(7), Pet. App. at 19a.

The EPA and the United States Army Corps of Engi-

neers, pursuant to their shared responsibility for adminis-

tering and enforcing the Clean Water Act, have

promulgated identical regulations which define “waters

of the United States” broadly to include not only inter-

state waters, but also intrastate waters - otherwise com-

pletely unrelated to interstate commerce - whose use

could affect interstate commerce. Specifically, the regula-

tions define “waters of the United States” as “[al]ll other

waters. such as intrastate lakes, rivers, streams (including

intermittent streams), mudflats, sandflats, wet-

lands, . . . the use, degradation or destruction of which could

affect interstate or foreign commerce.” 40 C.F.R. § 230.3(s)(3)

(EPA); 33 C.F.R. § 328.3(a)(3) (Army Corps), Pet. App. at

20a-21a (emphasis added).

In addition, the preamble to these regulations states

that the phrase “waters of the United States” includes all

other waters “[w]hich are or would be used as habitat by

birds protected by Migratory Bird Treaties” or “[w]hich

are or would be used as habitat by other migratory birds

which cross state lines.” 51 Fed. Reg. 41,206, 41,217

(1986), Pet. App. at 21a. This language in the preamble is

commonly referred to as the “migratory bird rule.”

B. Factual Background

Robert R. Krilich, Krilich Companies, Inc., and River-

woods Development Corp. (collectively “Petitioners”) are

involved in real estate development in the Chicago area.

The specific site at issue in this case is the Royce Renais-

sance property in Oakbrook Terrace, Illinois. On August

7, 1992, the EPA filed a complaint in the United States

District Court for the Northern District of Illinois, alleg-

ing that Petitioners had illegally discharged fill into iso-

lated, intrastate wetlands on the Royce Renaissance

property, in violation of section 301(a) of the Clean Water

Act, 33 U.S.C. § 1311(a), because they had not obtained a

permit issued by the Army Corps of Engineers, pursuant

to Section 404 of the Clean Water Act, 33 U.S.C. § 1344.

The EPA’s position was that these isolated, intrastate

waters were “waters of the United States” because of

their actual or potential use by migratory birds.

Petitioners and the EPA entered into a consent decree

regarding the Royce Renaissance property, which was

adopted by the district court on October 29, 1992

(“Decree”). Pursuant to the Decree, Petitioners were

required to remediate specified wetlands on the property,

to construct a 3.1 acre pond to compensate for wetlands

that were allowed to remain filled, and to pay a fine. The

Decree provided specific deadlines for the construction of

the pond and monetary penalties for failure to meet those

deadlines.

When Petitioners were unable to meet the deadlines

for construction of the pond on the Royce Renaissance

property, the United States moved to enforce the penalty

provisions in the Decree. The district court found that

Petitioners had violated the remediation plans contained

in the Decree and imposed a penalty of $1,307,500. United

States v. Krilich, 948 F. Supp. 719, 728 (N.D. Ill. 1996). The

United States Court of Appeals for the Seventh Circuit

affirmed the district court’s judgment. United States v.

Krilich, 126 F.3d 1035 (7th Cir. 1997). The appellate court,

however, remanded the case for entry of an amended

judgment in order to correct a miscalculation of the pen-

alty, which the United States had conceded on appeal.

Consequently, on December 15, 1997, the district court

entered a modified judgment in the amount of $1,257,500.

On November 2, 1998, Petitioners moved, pursuant

to Rule 60(b) of the Federal Rules of Civil Procedure, to

bar enforcement of the penalty. Pet. App. at 12a. Because

the wetlands in question were isolated, intrastate wet-

lands,’ Petitioners contended that those wetlands did not

have a sufficient connection to interstate commerce and

were beyond the EPA’s power to regulate. Id. at 14a. If the

wetlands were not within the EPA’s power to regulate,

Petitioners argued that the district court lacked subject

matter jurisdiction over the EPA’s complaint and that its

earlier orders and judgments were void. Id. at 12a.

Finally, Petitioners asserted that this challenge to the

court’s subject matter jurisdiction had not been waived

because defects in subject matter jurisdiction may be

raised at any time. Id. at 13a. Simply stated, Petitioners’

position was: if the EPA had no authority to commence

the action, then the district court had no jurisdiction to

entertain it.

1 Throughout this action, Petitioners have maintained, and

the lower courts have assumed, that the wetlands at issue were

isolated, intrastate wetlands. Pet. App. at 3a, 15a. The only

arguable basis for the EPA’s jurisdiction over the wetlands,

therefore, would have been if the use of the wetlands affected

interstate commerce. 40 C.F.R. § 230.3(s)(3); 33 C.F.R.

§ 328.3(a)(3), Pet. App. at 20a-21a. There could be no alternative

basis for jurisdiction because the wetlands at issue are neither

interstate wetlands nor wetlands adjacent to other navigable

waters of the United States. 40 C.RR. § 230.3(s); 33 C.FR.

§ 328.3(a).

The district court agreed with Petitioners that “the

question of whether there is a sufficient nexus to inter-

state commerce is clearly a jurisdictional issue that can be

raised at any time.” Pet. App. at 15a. The district court,

therefore, addressed directly the issue presented regard-

ing whether the EPA, consistent with Commerce Clause

and Clean Water Act limitations, may regulate isolated,

intrastate wetlands. The court relied upon the Ninth Cir-

cuit’s decision in Leslie Salt Co. v. United States, 55 F.3d

1388, 1395-96 (9th Cir. 1995), and the district court’s deci-

sion in Solid Waste Agency v. United States Army Corps of

Engineers, 998 F. Supp. 946, 954-55 (N.D. Ill. 1998), as

precedent supporting the position “that isolated wetlands

are a sufficient basis for CWA regulation.” Pet. App. at

16a. The district court acknowledged that the Fourth

Circuit had reached a contrary conclusion in United States

v. Wilson, 133 F.3d 251, 257 (4th Cir. 1997). However,

according to the district court, “[t]here was and continues

to be a colorable basis for exercising jurisdiction over the

Decree’s subject matter and it cannot be held that juris-

diction in this case was totally wanting.” Pet. App. at 16a.

The court, therefore, concluded that “[t]he December

1997 judgment is not a void judgment that is subject to

being vacated for lack of subject matter jurisdiction.” Id.

C. Decision Of The Court Of Appeals

The United States Court of Appeals for the Seventh

Circuit affirmed. First, the Seventh Circuit panel held that

the absence of a nexus between the subject property and

interstate commerce did not affect the district court’s

subject matter jurisdiction, but was rather an element of

the offense. Pet. App. at 9a. Second, the panel held that

“just as a guilty plea (in which the criminal defendant

admits — at least implicitly - the connection between his

conduct and interstate commerce) forecloses an appellate

attack on subject matter jurisdiction, [Petitioners] cannot

now assail the district court’s subject matter jurisdiction

because [they] entered into a consent decree” which con-

ceded jurisdiction over the controversy. Id. at 8a. Thus,

the court declined to reach the constitutional and statu-

tory issue presented to it and decided by the district

court:

Because the district court had subject matter

jurisdiction over the EPA’s complaint based on

the terms of the consent decree, we need not

determine whether, in light of the Supreme

Court’s decision in United States v. Lopez, regula-

tion of isolated intrastate wetlands is beyond

Congress’ power under the Commerce Clause.

Compare, United States. v. Wilson, 133 F.3d 251

(4th Cir. 1997), with Solid Waste Agency of North-

ern Cook County v. United States Army Corps of

Engineers, 191 F.3d 845, 848 (7th Cir. 1999), peti-

tion for cert. filed, 68 U.S.L.W. 3480 (U.S. Jan. 14,

2000) (No. 99-1178). See also Cargill, Inc. v. United

States, 516 U.S. 955, 958, 116 S. Ct. 407, 133

L.Ed.2d 325 (1995) (Thomas, J., dissenting from

denial of certiorari) (“In this case, the Corps’

basis for jurisdiction rests entirely on the actual

or potential presence of migratory birds on peti-

tioner’s land. In light of Lopez, I have serious

doubts about the propriety of the Corps’ asser-

tion of jurisdiction over petitioner’s land in this

e's

Pet. App. at 10a n.5.

ARGUMENT

This case presents an important and recurring issue

of federal law regarding whether the EPA may regulate

isolated, intrastate waters, consistent with the limits on

EPA’s regulatory authority inherent in the Clean Water

Act and the Commerce Clause. Although the panel below

refused to reach this issue, the answer certainly must be

“no,” particularly in light of this Court’s decision in

United States v. Lopez, 514 U.S. 549 (1995), which signifi-

cantly altered the Court’s Commerce Clause jurispru-

dence. To date, however, at least four courts of appeals

have issued decisions on this question of substantial legal

significance and great practical importance and have

reached conflicting conclusions. Compare United States v.

Wilson, 133 F.3d 251, 253-54 (4th Cir. 1997), with Solid

Waste Agency v. United States Army Corps of Eng’rs, 191

F.3d 845, 847 (7th Cir. 1999), Leslie Salt Co. v. United States,

896 F.2d 354, 355 (9th Cir. 1990), and Utah v. Marsh, 740

F.2d 799, 800 (10th Cir. 1984). As a result, a clear conflict

currently exists among the circuit courts. This Court has

granted the petition for a writ of certiorari in Solid Waste,

and the Court’s decision in that case likely will resolve

the conflict and provide guidance on the question pre-

sented in this case. Solid Waste Agency v. United States

Army Corps of Eng’rs, 191 F.3d 845 (7th Cir. 1999), cert.

granted, 120 S. Ct. 2003 (2000). Accordingly, the Peti-

tioners respectfully submit that their petition for a writ of

certiorari should be held pending the Court's decision in

Solid Waste and then disposed of as appropriate in light of

the Court’s decision.

me ii |

1. Contrary to the decision below, the question of

whether a federal enforcement action exceeds congres-

sional authority under the Commerce Clause bears directly

on a court’s subject matter jurisdiction and, therefore, is

never waived. For example, in Ex parte Yarbrough, 110 U.S.

651 (1884), this Court held that “[i]f the law which defines

the offense and prescribes its punishment is void, the court

was without jurisdiction and the prisoner must be dis-

charged.” Id. at 654. Similarly, in United States v. Walker, 59

F.3d 1196 (11th Cir. 1995), a defendant challenged on’

appeal the constitutionality of one of the statutes under

which he was convicted on the ground that the statute

exceeded congressional authority under the Commerce

Clause. Id. at 1198. The United States argued that the

defendant had waived his constitutional challenge to the

statute. Id. The Eleventh Circuit held that the conviction

could not “stand under a statute which Congress was

without power to enact. In essence, the statute was void ab

initio, and consequently, the district court below lacked

subject matter jurisdiction with respect to that charge.” Id.;

see also United States v. Gaydos, 108 F.3d 505, 508-09 (3d

Cir. 1997) (acknowledging that the question whether a

statute exceeds congressional authority under the Com- -

merce Clause affects federal courts’ subject matter jurisdic-

tion). Thus, the refusal of the panel below to reach the

constitutional issue decided by the district court does not

and should not preclude Petitioners from challenging the

EPA’s constitutional and statutory power to assert regula-

tory authority over the isolated, intrastate wetlands in

question.

2. The significant shift in this Court’s Commerce

Clause jurisprudence, which began in United States v.

10

Lopez, 514 U.S. 549 (1995), casts considerable doubt on the

EPA’s assertion of federal jurisdiction over isolated, intra-

state wetlands and calls into question the continued va-

lidity of the consent decree entered into in this case. In

Lopez, the Court held that the Gun-Free School Zones Act

of 1990, which made it a federal crime to knowingly

possess a firearm in a school zone, exceeded Congress’

authority under the Commerce Clause. Id. at 551. In

reaching this conclusion, the Court identified the “three

broad categories of activity that Congress may regulate

under its commerce power”: (1) “the use of the channels

of interstate commerce”; (2) “the instrumentalities of

interstate commerce, or persons or things in interstate

commerce”; and (3) “those activities that substantially

affect interstate commerce.” Id. at 558-59. With respect to

the third category, the Court admitted that its “case law

has not been clear whether an activity must ‘affect’ or

‘substantially affect’ interstate commerce in order to Be

within Congress’ power to regulate it under the Com-

merce Clause.” Id. at 559. The Court concluded that “the

proper test requires an analysis of whether the regulated

activity ‘substantially affects’ interstate commerce.” Id.

The Court determined that the firearm statute at issue did

not regulate an activity that substantially affects inter-

state commerce. Id.

The Court’s decision in Lopez marked a departure

from decades of this Court’s decisions that had afforded

tremendous deference to congressional action under the

Commerce Clause. The Lopez Court acknowledged that

such a retreat was necessary in order to maintain “a

distinction between what is truly national and what is

truly local.” Id. at 567-68. That distinction, which always

11

had existed in theory, has become one of increasing prac-

tical significance as this Court has demonstrated a will-

ingness to scrutinize congressional action under Lopez's

analytical framework. See, e.g., United States v. Morrison,

—__._ U.S. __, 120 S. Ct. 1740, 1745 (2000) (holding that

Congress lacked authority under the Commerce Clause to

enact the civil remedy in the Violence Against Women

Act, 42 U.S.C. § 13981).

In the instant case, the “all other waters” regulation

requires only that the waters “could affect interstate or

foreign commerce” and the “migratory bird rule”

requires only that the waters “are or would be used” by

migratory birds. Because these regulations do not require

any actual effect on interstate commerce - let alone a

substantial effect on interstate commerce — they are insuf-

ficient to pass constitutional muster under Lopez. See

Cargill, Inc. v. United States, 516 U.S. 955, 958 (1995)

(Thomas, J., dissenting from denial of certiorari) (“In this

case, the Corps’ basis for jurisdiction rests entirely on the

actual or potential presence of migratory birds on peti-

tioner’s land. In light of Lopez, I have serious doubts

about the propriety of the Corps’ assertion of jurisdic-

tion. . . . [T]he Corps’ expansive interpretation of its

regulatory powers under the Clean Water Act may test

the very ‘bounds of reason,’ and, in my mind, likely

stretches Congress’ Commerce powers beyond the break-

ing point.”) (citations omitted). Although Petitioners

could not reasonably have expected to succeed in chal-

lenging the EPA’s assertion of jurisdiction in 1992, when

the consent decree was entered, given this Court’s Com-

merce Clause jurisprudence at that time, this Court’s 1995

decision in Lopez effectively places the conduct at issue in

12

this case beyond the reach of federal law. Petitioners

should not now be forced to acquiesce in an essentially

lawless assertion of federal jurisdiction over their prop-

erty.

3. The proper scope of the EPA’s authority under

the Clean Water Act and the Commerce Clause is an issue

that has sharply divided the courts of appeal. Specifically,

the Fourth Circuit has held that the EPA’s assertion of

jurisdiction over isolated, intrastate waters is constitu-

tionally impermissible. United States v. Wilson, 133 F.3d

251, 257 (4th Cir. 1997). To the contrary, the Seventh,

Ninth, and Tenth Circuits have upheld the EPA’s author-

ity under the Commerce Clause to assert such jurisdic-

tion. Solid Waste Agency v. United States Army Corps of

Eng’rs, 191 F.3d 845, 847 (7th Cir. 1999); Leslie Salt Co. v.

United States, 896 F.2d 354, 355 (9th Cir. 1990); Utah v.

Marsh, 740 F.2d 799, 800 (10th Cir. 1984).

In United States v. Wilson, 133 F.3d 251 (4th Cir. 1997),

the Fourth Circuit held that the asserted federal authority

to regulate isolated, intrastate waters was not supported

by the terms of the Clean Water Act as limited by the

Commerce Clause. In Wilson, the conduct in question -

like the conduct at issue in this petition - involved the

discharge of fill materials into “wetlands,” without a

permit, in alleged violation of the Clean Water Act. On

appeal, the defendants challenged the asserted basis for

federal jurisdiction under 33 C.F.R. § 328.3(a)(3), which

defines “” ‘waters of the United States’ ” to include ” ‘[a]ll

other waters . . . the use, degradation or destruction of

which could affect interstate or foreign commerce.’ ”

Wilson, 133 F.3d at 255, 256-57.

a a TL TN a EE TT Cee B

13

The Fourth Circuit began its analysis by noting that

“[the] regulation purports to extend the coverage of the

Clean Water Act to a variety of waters that are intrastate,

nonnavigable, or both, solely on the basis that the use,

degradation, or destruction of such waters could affect

interstate commerce.” Id. at 257 (emphasis added). Thus,

“[t]he regulation requires neither that the regulated activ-

ity have a substantial effect on interstate commerce, nor

that the covered waters have any sort of nexus with

navigable, or even interstate, waters.” Id. According to

the Fourth Circuit, the regulation authorized the asser-

tion of jurisdiction in “a sweeping and constitutionally

troubling manner.” Id. Thus, the court held that the regu-

lation exceeded the authority granted under the Clean

Water Act, as limited by the Commerce Clause, and was

invalid. Id. at 253-54.

By contrast, in Solid Waste Agency v. United States

Army Corps of Engineers, 191 F.3d 845 (7th Cir. 1999), the

Seventh Circuit upheld the EPA’s authority to regulate

isolated, intrastate waters under the Clean Water Act as

consistent with the Commerce Clause. In that case, the

plaintiff sought to convert approximately 414 acres of

property into a landfill. Id. at 848. The. Army Corps of

Engineers asserted jurisdiction over the property under

the migratory bird rule on the ground that the intrastate

waters on the property were used or could be used as

habitat for migratory birds. Id. at 847. Plaintiff filed suit,

asserting that the Corps did not have jurisdiction over the

property. Id. The district court found that the Corps had

jurisdiction, and the Seventh Circuit affirmed. Id.

The Seventh Circuit rejected the argument that Con-

gress lacked the power to grant regulatory jurisdiction

14

over isolated, intrastate waters. Id. at 849. Rather, the

court held that “a federal statute based on the Commerce

Clause must serve one of three purposes: (1) regulation of

the channels of interstate commerce; (2) regulation or

protection of the instrumentalities of interstate com-

merce, or persons or things in interstate commerce; or (3)

regulation of activities that ‘substantially affect’ interstate

commerce.” Id. (citing United States v. Lopez, 514 U.S. 549,

558-59 (1995)). Applying the “third variety of regulatory

power,” the court ruled that “a single activity that itself

has no discernable effect on interstate commerce may still

be regulated if the aggregate effect of that class of activity

has a substantial impact on interstate commerce.” Id. at

849-50. Because the court found that “millions of people

annually spend more than a billion dollars on hunting,

trapping, and observing migratory birds,” it concluded

that “the destruction of migratory bird habitat and the

attendant decrease in the populations of these birds ‘sub-

stantially affects’ interstate commerce. The effect may not

be observable as each isolated pond used by the birds for

feeding, nesting, and breeding is filled, but the aggregate

effect is clear, and that is all the Commerce Clause

requires.” Id. at 850. Accordingly, “the decision to regu-

late isolated waters based on their actual use as habitat

by migratory birds is within Congress’ power under the

Commerce Clause.” Id. at 853.

Two other circuits have reached decisions that essen-

tially are in accord with the Seventh Circuit’s decision in

Solid Waste. In Leslie Salt Co. v. United States, 896 F.2d 354

(9th Cir. 1990), the Ninth Circuit held that “[t]he com-

merce clause power, and thus the Clean Water Act, is

broad enough to extend the Corps’ jurisdiction to local

15

waters which may provide habitat to migratory birds and

endangered species.” Id. at 360. Similarly, the Tenth Cir-

cuit in Utah v. Marsh, 740 F.2d 799 (10th Cir. 1984), upheld

the Army Corps of Engineers’ assertion of jurisdiction

over an intrastate lake on the ground that the discharge

of dredged or fill material into the lake “could well have

a substantial economic impact on interstate commerce.”

Id. at 803-04.

In sum, the validity of the EPA’s asserted authority

over isolated, intrastate waters under the Clean Water

Act and the Commerce Clause - and, in particular, its

authority under the “migratory bird rule” — is an impor-

tant and recurring question of federal law on which there

is a direct conflict among the courts of appeal.

4. This Court has granted the petition for a writ of

certiorari to review the Seventh Circuit’s decision and

judgment in Solid Waste. Solid Waste Agency v. United

States Army Corps of Eng’rs, 191 F.3d 845 (7th Cir. 1999),

cert. granted, 120 S. Ct. 2003 (2000). Resolution of that case

very likely will resolve the existing split among the

courts of appeals on the question presented in this peti-

tion. In fact, the question presented in Solid Waste is

virtually identical to the question presented here: “May

U.S. Army Corps of Engineers, consistent with the Clean

Water Act and commerce clause of the U.S. Constitution,

assert jurisdiction over isolated intrastate waters solely

because those waters do or potentially could serve as

habitat of migratory birds?” 68 U.S.L.W. 3505 (U.S. Feb. 8,

2000) (No. 99-1178).

This Court’s decision in Solid Waste likely will affect

the proper disposition of this case. In particular, this

16

Court’s decision in Solid Waste is likely to resolve the

recurring question of the validity of the migratory bird

rule. More generally, the decision in Solid Waste likely will

clarify the scope of regulatory authority under the Clean

Water Act and the Commerce Clause. Accordingly, this

petition for a writ of certiorari should be held pending

the Court’s decision in Solid Waste and then disposed of

as appropriate in light of the Court’s decision in that case.

€

CONCLUSION

For the foregoing reasons, Petitioners respectfully

submit that the petition for a writ of certiorari should be

held pending this Court’s decision in Solid Waste Agency

v. United States Army Corps of Engineers, No. 99-1178, and

then disposed of as appropriate in light of the Court's

resolution of that case.

Respectfully submitted,

CarTER G. PHILLIPs*

Mark D. Hopson

KrisTIN GRAHAM KOEHLER

SipLtey & AUSTIN

1722 Eye Street, N.W.

Washington, D.C. 20006

(202) 736-8000

Counsel for Petitioner

* Counsel of Record

August 10, 2000

la

APPENDIX A

UNITED STATES of America,

Plaintiff-Appellee,

Vv.

Robert R. KRILICH, Krilich Companies,

Incorporated, Riverwoods Development

Corporation, et al.,

Defendants-Appellants.

Nos. 99-2271, 99-2397.

United States Court of Appeals,

Seventh Circuit.

Argued Nov. 9, 1999

Decided April 12, 2000

Before COFFEY, MANION, and EVANS, Circuit

Judges.

MANION, Circuit Judge.

The EPA civilly charged Robert Krilich with illegally

filling a wetland on property he was developing in subur-

ban Chicago, Illinois. Krilich entered into a consent

decree with the EPA to settle the dispute, the terms of

which required him, among other things, to create a

substitute wetland by a specific date, or pay a substantial

penalty for any delay. He failed to complete the new

wetland by the stated time, so the EPA moved to enforce

the terms of the consent decree. The district court granted

that motion and fined Krilich in excess of $1.2 million.

Krilich appealed from that judgment and we affirmed

(although the case was remanded to correct an error in

calculating the penalty). Krilich then filed a Rule 60(b)(4)

2a

motion to vacate the judgment as void. The district court

denied that motion and he again appeals. We affirm.

I.

Factual and Legal Background

To understand this appeal, we must return to 1992 -

both factually and legally. In 1992, the EPA charged

Robert Krilich,1 who was developing the Royce Renais-

sance Property in Oakbrook Terrace, Illinois, with violat-

ing section 301(a) of the Clean Water Act by discharging

fill into “wetlands” without first obtaining a section 404

permit. Section 301(a) of the Clean Water Act prohibits

“the discharge of any pollutant,” except as otherwise

authorized by the Clean Water Act. 33 U.S.C. § 1311.

Section 404 of the Clean Water Act authorizes the Secre-

tary to issue a permit approving “the discharge of fill

material into the navigable waters.”2 33 U.S.C. § 1344.

The Clean Water Act defines “navigable waters” as

“waters of the United States,” 33 U.S.C. § 1362(7), but

does not further describe what is included as part of

“waters of the United States.” The Act may not cover all

of the “water in the United States,” but it comes close:

The EPA and the Army Corps of Engineers have promul-

gated regulations defining “waters of the United States”

to include “intrastate lakes, rivers, streams (including

1 The EPA’s charge was against Robert R. Krilich

individually, and numerous corporations which he controlled.

For simplicity, we refer to them merely as “Krilich.”

2 Section 404(a) authorizes the Secretary to issue permits

allowing fill materials to be discharged into “navigable waters”

but it does not mention “wetlands.” See 33 U.S.C. § 1344(a).

a caeaaaiaceaenara aaa iana a eae

3a

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.” 33

C.F.R. § 328.3(a)(2); 40 C.RR. § 230.3(s)(3).%

’ Both the EPA and the Corps have long maintained

that this regulatory definition of “waters of the United

States” includes “all waters, including those otherwise

unrelated to interstate commerce, ‘which are or would be

used as habitat by birds protected by Migratory Bird

Treaties’ or ‘which are or would be used as habitat by

other migratory birds which cross state lines.’” Solid

Waste Agency of Northern Cook County v. United States

_ Army Corps of Engineers, 191 F.3d 845, 848 (7th Cir. 1999)

(quoting 51 Fed. Reg. 41,206, 42,217 (1986)). Based on its

view that isolated intrastate waters were “waters of the

United States” because of the actual or potential use by

migratory birds, the EPA charged Krilich with violating

section 301. However, at the time that the EPA first

charged Krilich with violating section 301 in August 1992,

the law of this circuit was more narrow. This court had

just held that Congress did not have the power to regu-

late isolated intrastate waterways based simply on the

supposition that migratory birds, while migrating to sea-

sonal nesting areas, could potentially use the waters.

Hoffman Homes, Inc. v. Administrator, United States EPA,

961 F.2d 1310, 1311 (7th Cir. 1992) (Hoffman I) (rejecting

3 The Army Corps of Engineers and the EPA share

responsibility for administering and enforcing the Clean Water

Act. 33 U.S.C. §§ 1319(a)(3), 1344.

4a

the EPA’s claim of jurisdiction “over the intrastate wet-

land solely on the ground that migratory birds could,

potentially, use the wetland as a place to feed, or nest or

as a stopover on the way to the Gulf States for the Winter

months”), vacated 975 F.2d 1554 (7th Cir.1992). But this

holding had a short life; it was vacated on September 4,

1992, before the birds had reason to migrate south. Hoff-

man Homes, 975 F.2d 1554.

After Hoffman I was vacated, Krilich entered into a

consent decree with the EPA, this in spite of the fact that

the EPA’s charge asserted that he had violated section 301

by filling isolated intrastate wetlands.4 In the consent

decree, Krilich agreed to pay a fine of $185,000, remediate

some of the wetlands, and construct a 3.1-acre replace-

ment wetland on the Royce Renaissance property to com-

pensate for the wetlands that had already been filled. The

consent decree included specific deadlines for the con-

struction, and provided for monetary penalties for any

delay.

As noted, the parties agreed to the consent decree

after Hoffman I had been vacated for rehearing. On Octo-

ber 29, 1992, the district court entered final judgment

pursuant to the terms of that consent decree, and that

final judgment was entered before this court issued its

decision on rehearing in Hoffman II.

4 On appeal, the EPA asserts that Krilich also filled

wetlands which were not isolated. The district court assumed

for purposes of Krilich’s Rule 60(b)(4) motion that all of the

wetlands were isolated intrastate wetlands, and because it does

not alter the outcome of this appeal, we also make this

assumption.

5a

After rehearing, on July 19, 1993, this court held in

Hoffman II that the EPA lacked jurisdiction over the wet-

lands at issue in that case because the government had

failed to present evidence that migratory birds actually

used the wetlands as a habitat. Hoffman Homes, Inc. v.

Administrator, United States EPA, 999 F.2d 256 (7th

Cir.1993) (Hoffman II). Because the government did not

prove actual use by the birds, Hoffman II did not reach the

issue of whether that would be a sufficient connection to

interstate commerce to allow Congress to regulate iso-

lated intrastate wetlands.

Throughout and following the proceedings in Hoff-

man I and II, Krilich went about his business constructing

the Royce Renaissance Property. He failed, however, to

complete the 3.1-acre mitigation pond by the date speci-

fied in the consent decree, so the United States moved to

enforce the penalties contained in the decree. The district

court imposed civil penalties against Krilich of

$1,307,500. Krilich appealed from that judgment, arguing

that the deadlines had been modified, that the doctrines

of impossibility and frustration excused his non-perfor-

mance, or that the government was equitably estopped

from enforcing the penalty provisions. This court rejected

those arguments and affirmed the assessment of penal-

ties, but remanded the case to the district court to correct

an error made in calculating the penalty, which the gov-

ernment had pointed out on appeal. United States v.

Krilich, 126 F.3d 1035 (7th Cir.1997).

On remand, Krilich decided to take a different tack —

he moved pursuant to Rule 60(b)(4) to vacate the district

court’s original judgment entered pursuant to the terms

of the consent decree. Krilich argued that the district

6a

court lacked subject matter jurisdiction over the EPA’s

complaint, and therefore that its judgment was void. The

district court rejected Krilich’s argument, and denied his

motion to vacate. Krilich once again appeals.

II.

Analysis

Rule 60(b)(4) provides that “[o]Jn motion and upon

such terms as are just, the court may relieve a party or a

party’s legal representative from a final judgment, order,

or proceeding . . . [if] the judgment is void. .. . ” Fed.

R.Civ.P. 60(b)(4). Krilich contends that the district court’s

judgment, which adopted the consent decree and the

sanctions contained therein, was void because the court

lacked subject matter jurisdiction over the EPA’s case

against him. Specifically, Krilich asserts that the land he

allegedly filled was an “isolated intrastate wetland”

which was beyond the federal government’s commerce

power to regulate. Because Congress lacked authority to

regulate his property, Krilich contends that the district

court lacked subject matter jurisdiction over the EPA’s

complaint. And even though he agreed to the terms of the

consent decree, which included a provision that the wet-

lands filled were “waters of the United States,” Krilich

now argues that this does not change the result because

you can never consent to subject matter jurisdiction, and

lack of jurisdiction can be raised at any time.

In making this argument, however, Krilich confuses

the meaning of “jurisdiction” - “a word of many, too

many meanings” according to the Supreme Court. Steel

Co. v. Citizens for a Better Environment, 523 U.S. 83, 90, 118

7a

S.Ct. 1003, 140 L.Ed.2d 210 (1998). This court recently

examined the problem. “Lawyers and judges sometimes

refer to the interstate commerce element that appears in

many federal crimes as the ‘jurisdictional element,’ but

this is a colloquialism - or perhaps a demonstration that

the word ‘jurisdiction’ has so many different uses that

confusion ensues.” Hugi v. United States, 164 F.3d 378, 381

(7th Cir.1999) (citing Kanar v. United States, 118 F.3d 527,

529-30 (7th Cir.1997)).

“[T]he nexus with interstate commerce, which courts

frequently call the ‘jurisdictional element,’ is simply one

of the essential elements of [the offense]. Although courts

frequently call it the ‘jurisdictional element’ of the stat-

ute, it is ‘jurisdictional’ only in the shorthand sense that

without that nexus, there can be no federal crime. . . . It is

not jurisdictional in the sense that it affects a court's

subject matter jurisdiction, ...” Hugi, 164 F.3d at 381 (7th

Cir.1999). Thus, while “[a] link to interstate commerce

may be essential to Congress’s substantive authority, see

United States v. Lopez, 514 U.S. 549, 115 S.Ct. 1624, 131

L.Ed.2d 626 (1995), . . . the existence of regulatory power

differs from the subject-matter jurisdiction of the courts.”

Hugi, 164 F.3d at 380-81. The “subject matter jurisdiction

in every federal criminal prosecution comes from 18

U.S.C. § 3231, and there can be no doubt that Article III

permits Congress to assign federal criminal prosecutions

to federal courts. That’s the beginning and the end of the

‘jurisdictional’ inquiry.” Hugi, 164 F.3d at 381 (quoting

United States v. Martin, 147 F.3d 529 (7th Cir.1998)). And

“once a defendant pleads guilty in a court which has

jurisdiction of the subject matter and of the defendant, as

did the court in the instant case, the court’s judgment

8a

cannot be assailed on grounds that the government has

not met its burden of proving ‘so-called jurisdictional

facts.’ ” Hugi, 164 F.3d at 381 (internal quotations omit-

ted). “Even if the government fails to establish the con-

nection to interstate commerce, the district court is not

deprived of jurisdiction to hear the case.” Hugi 164 F.3d at

381 (quoting Martin, 147 F.3d at 532).

While Krilich attempts to distinguish Hugi and Mar-

tin as criminal in nature and not civil, he fails to explain

why that makes any difference. It does not. In this case,

the interstate connection, i.e. that the waters involved

were “waters of the United States,” is merely an element

of the United States’ Clean Water Act case under section

301; subject matter jurisdiction over this question involv-

ing federal law comes from 28 U.S.C. § 1331. On appeal,

Krilich argues at great length that his wetlands cannot

constitutionally satisfy the “waters of the United States”

element. But “[j]urisdiction under the federal question

statute is not defeated by the possibility that the aver-

ments, upon close examination, might be determined not

to state a cause of action.” Turner/Ozanne v. Hyman/Power,

111 F.3d 1312, 1316-17 (7th Cir. 1997). Moreover, just as a

guilty plea (in which the criminal defendant admits — at

least implicitly — the connection between his conduct and

interstate commerce) forecloses an appellate attack on

subject matter jurisdiction, Krilich cannot now assail the

district court’s subject matter jurisdiction because he

entered into a consent decree in which he agreed that the

waters involved were “waters of the United States.” Cf.

Hugi, 164 F.3d at 380-81; Martin, 147 F.3d at 533.

In response, Krilich also cites United States v. U.S.

Fidelity & Guaranty, Co., 309 U.S. 506, 60 S.Ct. 653, 84

9a

L.Ed. 894 (1940), and Jordon v. Gilligan, 500 F.2d 701 (6th

Cir.1974), to support his position that the consent decree

was void. Those cases held that the judgments entered by

_ the trial courts were void because the defendants were

immune from suit. He also cites Kalb v. Feuerstein, 308

U.S. 433, 60 S.Ct. 343, 84 L.Ed. 370 (1940), which held that

a state court lacked jurisdiction to enter a judgment

against the defendant because a federal statute divested

the court of jurisdiction. These cases, however, involve a

different meaning of “jurisdiction.” As we explained in

Hugi, “some jurisdictional shortcomings are constitu-

tional in nature, for Article III and the eleventh amend-

ment set limits to the duties Congress may assign to the

courts; other jurisdictional deficits are just the result of

statutory limitations; ...” Hugi, 164 F.3d at 380. Both U.S.

Fidelity and Jordon involved what we referred to in Hugi

as the jurisdictional “shortcoming” of immunity. We dis-

tinguished that defect from the interstate commerce ele-

ment which is not jurisdictional in the same sense, but

rather is an element of the offense. The absence of such

an element is separate from the issue of subject matter

jurisdiction. Hugi, 164 F.3d at 380. And Kalb involved the

other jurisdictional shortcoming noted in Hugi - a statu-

tory divestment of power, also distinguished from the

jurisdictional element of the offense. Hugi, 164 F.3d at

380. As explained in Hugi, both of these jurisdictional

shortcomings “affect[ ] a court’s subject matter jurisdic-

tion, i.e., a court’s constitutional or statutory power to

adjudicate a case,” id. at 381, whereas the interstate com-

merce element does not deprive a court of subject matter

jurisdiction. Therefore, Krilich’s reliance on these cases is

misplaced.

10a

In sum, the district court had subject matter jurisdic-

tion over the EPA’s case against Krilich because the suit

civilly charged a violation of a federal statute which is

within the federal courts’ federal question jurisdiction.

And Krilich’s attempt to now assail the court’s subject

matter jurisdiction fails because he entered into a consent

decree stipulating that the waters involved were “waters

of the United States,” and that is merely an element of the

offense and not the basis for federal subject matter juris-

diction.> Accordingly, we Arrirm the district court’s

denial of Krilich’s 60(b)(4) motion to bar the enforcement

of the penalty.

5 Because the district court had subject matter jurisdiction

over the EPA’s complaint based on the terms of the consent

decree, we need not determine whether, in light of the Supreme

Court’s decision in United States v. Lopez, regulation of isolated

intrastate wetlands is beyond Congress’ power under the

Commerce Clause. Compare, United States v. Wilson, 133 F.3d 251

(4th Cir.1997), with Solid Waste Agency of Northern Cook County v.

United States Army Corps of Engineers, 191 F.3d 845, 848 (7th

Cir.1999), petition for cert. filed, 68 U.S.L.W. 3480 (U.S. Jan. 14,

2000) (No. 99-1178). See also Cargill, Inc. v. United States, 516 U.S.

955, 958, 116 S.Ct. 407, 133 L.Ed.2d 325 (1995) (Thomas, J.,

dissenting from denial of certiorari) (“In this case, the Corps’

basis for jurisdiction rests entirely on the actual or potential

presence of migratory birds on petitioner’s land. In light of

Lopez, I have serious doubts about the propriety of the Corps’

assertion of jurisdiction over petitioner’s land in this case. ...”).

lla

APPENDIX B

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

UNITED STATES OF

AMERICA,

Plaintiff, No. 92 C 5354

v.

ROBERT R. KRILICH,

KRILICH COMPANIES,

INC., RIVERWOODS

DEVELOPMENT CORP.,

LAKEMOOR CLUB, INC.,

AUSTIN STATE BANK

TRUST, etc., and

MANUFACTURERS

AFFILIATED TRUST CO.,

etc.,

Defendants.

i i i i i a eo oe

MEMORANDUM OPINION AND ORDER

In 1992, the parties to this case entered into a consent

decree regarding Clean Water Act (“CWA”) violations

involving wetlands in an area being developed by defen-

dants.! Following consideration by the court, the pro-

posed decree, as modified, was entered on October 29,

1992 (the “Decree”). The United States subsequently con-

tended that defendants had violated certain provisions of

1 For present purposes, it is unnecessary to make any

distinctions among the defendants.

12a

the Decree. The issue was presented on stipulated and

asserted facts and briefed by the parties. It was held none

of the facts claimed to be in dispute were material and a

ruling was issued on the basis of the documents that had

been presented. Defendants were held to have violated

deadlines for a mitigation plan that were contained in the

Decree and therefore were subject to a substantial penalty

under the terms of the Decree. See United States v. Krilich,

948 F. Supp. 719 (N.D. Ill. 1996) (“Krilich I”). In an opinion

dated October 15, 1997, this holding was upheld on

appeal, except that the government conceded that there

had been a miscalculation of the penalty. See United States

v. Krilich, 126 F.3d 1035 (7th Cir. 1997). On December 15,

1997, a modified judgment in the amount of $1,257,500

was entered on the docket. On November 2, 1998, defen-

dants moved to bar enforcement of this penalty. That

motion, which should be construed as being pursuant to

Fed. R. Civ. P. 60(b), is presently pending for ruling.

Defendants argue that relief from the judgment

should be granted because this court lacked jurisdiction

to enforce the mitigation plan deadlines. It is argued that

subject matter jurisdiction was lacking because the land

that allegedly was improperly filled did not constitute a

wetland under the CWA or did not have a sufficient

connection with interstate commerce in order to invoke

federal jurisdiction. Alternatively, defendants argue that

the penalty should not be enforced because the Decree

should be modified in light of more recent precedents

supporting that the filled lands do not fall within the

purview of the CWA. As is explained below, defendants’

contentions are without merit.

13a

Defendants contend that jurisdictional issues-rnay be

raised at any time. Defendants, however, cite cases in

which the jurisdictional issue was raised while the case

was still pending. See, e.g., Clinton v. City of New York, 524,

[sic] U.S. 417, 118 S. Ct. 2091, 2098 (1998) (jurisdictional

issue raised for the first time in the Supreme Court);

United States v. Stillwell, 900 F.2d 1104, 1110 n.2 (7th Cir.),

cert. denied, 498 U.S. 838 (1990) (jurisdictional issue of

sufficient interstate commerce nexus raised for the first

time in court of appeals). The present case is different.

Here, a judgment was previously entered and the time for

filing any further appeal had expired well before the

present motion was filed. Still, the jurisdictional issue

may be raised at any time. See Fed. R. Civ. P. 60(b)(4);

Hertz Corp. v. Alamo Rent-A-Car, Inc., 16 F.3d 1126, 1129-31

(11th Cir. 1994); R.C. v. Nachman, 969 F. Supp. 682, 692

(M.D. Ala. 1997), aff'd by unpublished order, 145 F.3d 363

(11th Cir. 1998); C.A. Wright, A. Miller, & M.K. Kane,

Federal Practice & Procedure § 2862 at 324-25 (2d ed. 1995).

In the present posture, however, the applicable standard

is different than when the jurisdictional issue is raised

while a case is still pending. “Want of jurisdiction is not

waivable - until the loser has exhausted his appellate

remedies, after which courts will not treat the judgment

as void unless the jurisdictional error is egregious .. . . If

it is not egregious, the courts say that the court that

issued the judgment in excess of its jurisdiction had juris-

diction to determine jurisdiction, and its jurisdictional

finding, even if erroneous, is therefore good against col-

lateral attack, like any other erroneous but final judg-

ment.” In re Edwards, 962 F.2d 641, 644 (7th Cir. 1992). See

also Nachman, 969 F. Supp. at 692-93; Honneus v. Donovan,

14a

691 F.2d 1, 2-3 (1st Cir. 1982); Kansas City Southern Ry. Co.

v. Great Lakes Carbon Corp., 624 F.2d 822, 825 (8th Cir.),

cert. denied, 449 U.S. 955 (1980); Wright, Miller, & Kane,

§ 2862 at 326-31.

The Decree required that defendants implement a

mitigation plan because of allegedly improper filling of

specified wetlands. Defendants now contend that the

areas filled,2 which allegedly were isolated wetlands,

were not “navigable waters” as that term is used in the

CWA, see 33 U.S.C. § 1344(a),3 and therefore this court

lacked jurisdiction under the CWA. It is also contended

that the isolated wetlands are not in interstate commerce

and therefore could not be the subject of federal legisla-

tion. The government contends that the question of

whether the isolated wetlands were navigable waters is

not a question that goes to the court’s subject matter

jurisdiction. However, at least one case has held that it is

a requirement for subject matter jurisdiction. See Patterson

Farm, Inc. v. City of Britton, $.D., 22 F. Supp. 2d 1085, 1091

(D.S.D. 1998). See also United States v. United Homes, Inc.,

1999 WL 117701 (N.D. Ill. March 1, 1999) (question of

whether pollutant fell within Corp of Engineers jurisdic-

tion under the CWA is a question that goes to the court’s

2 In Krilich I, the question of whether area W9, an isolated

wetland, was a navigable water was at issue. It was held that,

under the terms of the Decree which had a specific provision

regarding area W9, W9 was not a navigable water and therefore

not subject to certain provisions of the Decree. Id. at 721-25. The

mitigation plan presently at issue is based on filled lands other

than area W9.

3 The CWA defines “navigable waters” as “waters of the

United States.” 33 U.S.C. § 1362(7).

15a

subject matter jurisdiction). Whether the presence of nav-

igable waters is an issue going to the court’s subject

matter jurisdiction need not be determined because the

question of whether there is a sufficient nexus to inter-

state commerce is clearly a jurisdictional issue that can be

raised at any time. Stillwell, 900 F.2d at 1110 n.2.

At the time the Decree was being negotiated, defen-

dants were well aware of the jurisdictional issue they

now attempt to raise. Hoffman Homes, Inc. v. Administrator,

United States EPA, 961 F.2d 1310 (7th Cir. 1992) (“Hoffman

I”), is specifically referred to in the Decree and some of

the requirements of the Decree were conditioned on

whether Hoffman I might be reversed.* See Krilich I, 948

F. Supp. at 721-24. The jurisdictional issue that is now

raised could have been raised by defendants at the time

Krilich I was being litigated. More importantly, there is

nothing in the Decree nor any other pleadings filed prior

to defendant’s present motion that makes it apparent that

the mitigation plan may have been based solely on the

filling of isolated wetlands. Neither was there any infor-

mation indicating that those wetlands’ only possible con-

nection to interstate commerce was their occasional use

4 After the parties agreed to the Decree, but before the

Decree was approved by the court, Hoffman I was vacated for

rehearing. Subsequently, the same result was reached, but

without having to reach the question of whether isolated

wetlands could support jurisdiction under the CWA. See

Hoffman Homes, Inc. v. Administrator, United States EPA, 999 F.2d

256 (7th Cir. 1993) (“Hoffman II”). See also Krilich I, 948 F. Supp. at

721-25 (discussing Hoffman I and Hoffman II and their effect on

the construction of certain terms of the Decree).

16a

by migratory birds.> Moreover, both presently and in

1996, precedent in this circuit supports that isolated wet-

lands are a sufficient basis for CWA regulation. See Rueth

v. United States EPA, 13 F.3d 227, 231 (7th Cir. 1993);

United States v. Hallmark Construction Co., 14 F. Supp. 2d

1069, 1072-75 (N.D. 111. 1998); Solid Waste Agency of

Northern Cook Cy. v. United States Army Corps of Engineers,

998 F. Supp. 946, 954-55 (N.D. Ill. 1998). See also United

States v. Hallmark Construction Co., 30 F. Supp. 2d 1033,

1041-42 (N.D. Ill. 1998). At least one other circuit is in

accord. See Leslie Salt Co. v. United States, 55 F.3d 1388 (9th

Cir.), cert. denied, 516 U.S. 955 (1995). One circuit has

reached a contrary conclusion. See United States v. Wilson,

133 F.3d 251, 257 (4th Cir. 1997). There was and continues

to be a colorable basis for exercising jurisdiction over the

Decree’s subject matter and it cannot be held that juris-

diction in this case was totally wanting. See Nachman, 969

F. Supp. at 692-93. The December 1997 judgment is not a

void judgment that is subject to being vacated for lack of

subject matter jurisdiction.

Defendants’ other argument is that the Decree should

be vacated in light of a change in the law represented by

the Commerce Clause holding in United States v. Lopez,

514 U.S. 549 (1995), and Wilson's application of that hold-

ing in construing the provisions of the CWA as regards

5 The government disputes defendants’ present

contentions that the only basis for these wetlands falling into

the purview of the CWA is as isolated wetlands that are visited

by migratory birds. For present purposes, resolution of that

factual dispute is unnecessary and it will be assumed that the

pertinent wetlands are all isolated wetlands that are visited by

migratory birds.

17a

isolated wetlands. See Wilson, 133 F.3d at 255-57. Lopez

was decided after the Decree was entered, but before

Krilich I was decided in 1996. Wilson was issued on

December 23, 1997, eight calendar days after the Decem-

ber 15, 1997 modified judgment in the present case.

It is true that, pursuant to Fed. R. Civ. P. 60(b)(5),

consent decrees may (or even must) be modified or

vacated in light of changed circumstances, including sig-

nificant changes in the law or factual conditions. Agostini

v. Felton, 521 U.S. 203, 117 S. Ct. 1997, 2006 (1997); Rufo v.

Inmates of Suffolk County Jail, 502 U.S. 367, 384 (1992);

David B. v. McDonald, 116 F.3d 1146, 1147 (7th Cir. 1997).

Defendants ignore that this rvle is limited to relief from

the prospective application of a decree. See Fed. R. Civ. P.

60(b)(5) (“it is no longer equitable that the judgment

should have prospective application”); Agostini, 117 S. Ct.

at 2018. It is not a basis for vacating or modifying a

previously entered money judgment. Id.; Cincinnati Insur-

ance Co. v. Flanders Electric Motor Service, Inc., 131 F.3d

625, 630 (7th Cir. 1997); Norgaard v. DePuy Orthopaedics,

Inc., 121 F.3d 1074, 1077 (7th Cir. 1997). If defendants are

correct that the present state of the law no longer sup-

ports the continuing vitality of the Decree, all that would

happen would be that the Decree would be vacated effec-

tive today. That would not change the fact that the Decree

was in effect in 1993 when defendants failed to satisfy the

deadlines for implementing the mitigation plan. Presently

vacating the Decree would not preclude the government

from continuing to collect on the December 1997 judg-

ment. Cf. Balark v. City of Chicago, 81 F.3d 658 (7th Cir.),

cert. denied, 117 S. Ct. 507 (1996) (vacating of consent

decree does not preclude plaintiffs from subsequently

18a

pursuing statutory attorney fees for the time period when

the decree was in effect). Since defendants do not com-

plain about any prospective effect of the Decree, it is

unnecessary to reach the merits of whether the Decree

should be vacated in light of alleged changes in the law.

IT IS THEREFORE ORDERED that defendants’

motion to bar enforcement of penalty [109-1] is denied.

ENTER:

/s/ William T. Hart

UNITED STATES

DISTRICT JUDGE

DATED: MARCH 24, 1999

19a

APPENDIX C

RELEVANT STATUTES AND REGULATIONS

33 U.S.C. § 1311 Effluent limitations

(a) Illegality of pollutant discharges except in com-

pliance with law

Except as in compliance with this section and sec-

tions 1312, 1316, 1317, 1328, 1342, and 1344 of this title,

the discharge of any pollutant by any person shall be

unlawful.

* * *

33 U.S.C. § 1344 Permits for dredged or fill material

(a) Discharge into navigable waters at specified dis-

posal sites

The Secretary may issue permits, after notice and

opportunity for public hearings for the discharge of

dredged or fill material into the navigable waters at spec-

ified disposal sites... .

* *, +

33 U.S.C. § 1362 Definitions

Except as otherwise specifically provided, when used

in this chapter:. .. .

(7) The term “navigable waters” means the waters

of the United States, including the territorial seas.

* * *

20a

40 C.F.R. § 230.3 Definitions

For purposes of this Part, the following terms shall

have the meanings indicated:. .. .

(s) The term “waters of the United States”

means:. .. .

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

streams (including intermittent streams), mudflats, sand-

flats, 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 for-

eign 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

(iii) Which are used or could be used for industrial

purposes by industries in interstate commerce;

* * +

33 C.FR. § 328.3 Definitions

For the purpose of this regulation these terms are

defined as follows:

(a) The term “waters of the United States”

means...

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

streams (including intermittent streams), mudflats, sand-

flats, wetlands, sloughs, prairie potholes, wet meadows,

playa lakes, or natural ponds, the use, degradation or

2la

destruction of which could affect interstate or foreign

commerce including any such waters:

(i) Which are or could be used by interstate or for-

eign 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

(iii) Which are used or could be used for industrial

purpose by industries in interstate commerce;

* * *

51 Fed. Reg. 41206

Section 328.3: Definitions. This section incorporates

the definitions previously found in § 323.3 (a), (c), (d), (f)

and (g). Paragraphs (c), (d), (f) and (g) were incorporated

without change. EPA has clarified that waters of the

United States at 40 CFR 328.3(a)(3) also include the fol-

lowing waters:

a. Which are or would be used as habitat by birds

protected by Migratory Bird Treaties; or

b. Which are or would be used as habitat by other

migratory birds which cross states lines; or

c. Which are or would be used as habitat for endan-

gered species; or

d. Used to irrigate crops sold in interstate commerce.

* * .