Law360, New York (March 11, 2011) -- The Fourth Circuit recently joined several other Circuits in embracing Justice Anthony Kennedy's "significant nexus test" from Rapanos as the controlling test for finding jurisdiction under the Clean Water Act over wetlands which are not adjacent to navigable waterways.1 Precon Dev. v. U.S. Army Corps of Eng'rs, No. 09-2239, 15-16 (4th Cir. Jan. 25, 2011), citing Rapanos v. United States, 547 U.S. 715 (2006)(Kennedy, A., concurring).

In an analysis that reflects the continuing confusion among the courts about the reach of the Clean Water Act, the Fourth Circuit appeared to up the ante on what level of evidence is required to establish a significant nexus, arguably going beyond what other Circuits have required.

At issue in this case was whether the U.S. Army Corps of Engineers has jurisdiction over 4.8 acres of wetlands — adjacent to a drainage ditch and seven miles upstream from the nearest river — such that it could prohibit the landowner, Precon Development, from dredging and filling the wetlands under Section 404 of the Clean Water Act.

Applying Kennedy's test, the court looked at whether the Corps had established that the wetlands have a "significant nexus" to a traditionally "navigable waterway."2 Precon at 15-16. Because neither Kennedy nor the Corps of Engineers has provided much guidance on how exactly this nexus must be shown, the Fourth Circuit undertook a detailed analysis of the types of evidence that would be useful in establishing the required nexus.

The court did not question that there was a connection between the wetlands and the Northwest River, the closest navigable waterway. Nor did they question the significance per se of the services the wetlands provided as habitat for wildlife and water purification. However, they did question the impact and significance of the wetlands to the downstream navigable waterway.

Ultimately, the Fourth Circuit found the physical observation data presented by the Corps regarding the wetlands and adjacent tributaries to be insufficient to support a significant nexus determination between these wetlands and the Northwest River, seven miles downstream. Id. at 24-30.

The Corps' administrative record was thus held to be inadequate to support its conclusion that it had jurisdiction over the wetlands at issue, and the case was remanded back to the Corps to reevaluate their jurisdictional determination.

BACKGROUND AND FACTS

Precon Development, the developer of a 658-acre Planned Unit Development in Chesapeake, Va., had been granted permits to fill 77 acres of wetlands between 2004 and 2006.3 Precon at 3. However, when Precon announced that it would need to fill 4.8 additional acres of wetlands, to build an additional 10 residential lots within the PUD, the Corps denied the permit. Id.

The Corps' based their determination on the fact that 1) the wetlands site is adjacent to a drainage ditch, which qualifies as "waters of the United States," and 2) that the tributaries and their adjacent wetlands have "a significant nexus that has more than a speculative or insubstantial effect on the Northwest River." Id. at 5, 12.

The relevant wetlands sit adjacent to a man-made drainage ditch that flows seasonally and joins a larger, perennial drainage ditch approximately 900 feet downstream of the site wetlands. Id. at 3-4.

The site wetlands do not technically abut the ditch — i.e. there is no continuous surface connection — because the material that was excavated to create the drainage ditch was piled up alongside the ditch, creating a man-made berm between the wetlands and the ditch. Id. These drainage ditches continue into another perennial tributary three miles downstream before ultimately flowing into the Northwest River seven miles downstream from the site wetlands.

Precon, who had revised its development plans to reduce the impact on the wetlands from 10.7 to 4.8 acres, appealed the Corps' significant nexus determination and contested the Corps' jurisdiction over these wetlands.

The district court upheld the Corps' jurisdiction determination, finding that the Corps had permissibly defined the scope of its review area as including 448 acres of similarly situated wetlands and that substantial factual findings supported the determination that these wetlands had a significant nexus to the Northwest River.

The Fourth Circuit deferred to the Corps' definition of similarly situated wetlands, but found the administrative record inadequate to support a significant nexus determination.4 Thus, the Fourth Circuit remanded the case to the Corps of Engineers to reevaluate whether Clean Water Act jurisdiction extends to the wetlands in this case.

ANALYSIS

Justice Kennedy provided a framework for determining what constitutes a significant nexus in his Rapanos concurrence, and the Corps of Engineers has attempted to elaborate on what constitutes a significant nexus and how it can be proven in its 2007 Rapanos Guidance Document.5

However, significant confusion remains as to when the Corps of Engineers has jurisdiction over wetlands which are not adjacent to navigable waterways, and how the Corps of Engineers must prove the existence of a significant nexus.

While some courts, such as the Sixth Circuit, rely mainly on qualitative evidence and do not require any laboratory analysis or measurements, in Precon the Fourth Circuit requires a much more rigorous assessment to prove that the nexus is significant.

Justice Kennedy's Standards for Evaluating the Nexus

Justice Kennedy premised his concurrence on the Clean Water Act's stated objective "to restore and maintain the chemical, physical, and biological integrity of the nation's waters." Rapanos at 759, citing 33 U.S.C. §1251(a).

To that end, the Clean Water Act has been broadly construed to extend beyond traditionally navigable waters in order to protect water quality and aquatic ecosystems.

Because the plurality's requirements for Clean Water Act jurisdiction — relatively permanent standing water or continuous flow and a continuous surface connection between wetlands and adjacent water bodies — will in many circumstances fail to protect downstream water quality, Kennedy put forth the more protective "significant nexus" standard for evaluating when waters come within CWA jurisdiction:]

"[W]etlands possess the requisite nexus, and thus come within the statutory phrase 'navigable waters,' if the wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity of other covered waters more readily understood as 'navigable.' When, in contrast, wetlands' effects on water quality are speculative or insubstantial, they fall outside the zone fairly encompassed by the statutory term 'navigable waters.'" Rapanos at 780.

In particular, wetlands possessing this significant nexus are those that "perform critical functions related to the integrity of other waters — functions such as pollutant trapping, flood control, and runoff storage." Id. at 779. Justice Kennedy's opinion does not require particular types of evidence, and, as Precon highlights, significant variability remains among the courts in terms of the level of proof and quantitative evidence courts require from the Corps of Engineers.

Evidence Required to Show a Significant Nexus

Prior to this case, the Sixth Circuit had most directly addressed this issue of the evidence necessary to demonstrate a "significant nexus." In United States v. Cundiff, the Sixth Circuit held that Kennedy's significant nexus test does not require "'laboratory analysis' of soil samples, water samples, or ... other tests." Precon at 24, citing United States v. Cundiff, 555 F.3d 200, 211 (6th Cir. 2009).

Instead, the Sixth Circuit deferred to the district court's holding that a significant nexus can be demonstrated through qualitative, rather than quantitative, physical evidence.

This evidence included assertions from experts that dredging and filling the wetlands undermined the wetlands ability to store water, which affected the frequency of flooding and the release of pollutants to the downstream river. Id. at 210-211 (noting that filling the wetlands caused "visible acid mine runoff previously stored in wetlands to flow more directly to the Green River").

The Fourth Circuit began its evidentiary discussion by agreeing with the Sixth Circuit that no laboratory tests or particular quantitative measurements are necessary to establish significance. Precon at 24.

However, the court went on to require a greater showing of physical evidence — either quantitative or qualitative — than that accepted in the Sixth Circuit, maintaining that the Corps needs to present enough evidence of both the nexus and its significance in order to engage meaningfully in an examination of whether there is a significant nexus or whether the wetland has merely "speculative or insubstantial" effects. Id. at 24-25.

This evidentiary hurdle is all the higher when the wetlands are located at such a great distance (seven miles) from the traditionally navigable waterway. Id. at 28.

As the Corps of Engineers noted in its 2007 Rapanos Guidance Document, "[a]s the distance from the tributary to the navigable water increases, it will become increasingly important to document whether the tributary and its adjacent wetlands have a significant nexus rather than a speculative or insubstantial nexus with a traditional navigable water."6

Because the site wetlands in Precon lie farther upstream from traditionally navigable water than the wetlands in Carabell, one of the consolidated cases in Rapanos, it makes sense that the Fourth Circuit has required more documentation than either Kennedy seemed to be requiring in Rapanos or the Sixth Circuit required. Precon at 28.

Thus, to the extent that the Fourth Circuit required more documentation because the wetlands lie over seven miles away from navigable waterway, the opinion appears to be in line with both Rapanos and the Corps of Engineers' 2007 Rapanos Guidance Document.

However, to the extent that the opinion seems to require evidence that the navigable waterway suffers from the problems the wetlands would serve to correct (such as flooding, siltation, and nutrient overloading), the opinion seems to go beyond what has previously been required to show a "significant nexus."

In particular, and most significantly, the Fourth Circuit concluded that more documentation about the characteristics of the Northwest River is necessary to determine the significance of the wetlands' functions and ecosystem services on the river. Id. at 26-28. Because of distance, and because no evidence was presented about the characteristics of the navigable waterway (the Northwest River), the court held that the significance of the nexus could not be determined.

Evidence Presented

The Corps cited expert testimony about the effects filling the wetlands would have on downstream erosion, sedimentation and pollution of the Northwest River. Id. at 11.

The expert testified that "loss of wetlands on the Edinburgh PUD would result in a major change to the timing and routing of water from the site" and would lead to "increasing sedimentation and pollution of downstream waters including the Northwest River." Id.

The administrative record also contained observations about the ecosystem services these particular types of wetlands (mineral flats) provide, including rapidly cycling nutrients, sequestering carbon, introducing eutrophication by helping to denitrify the water, and providing habitat for state endangered species. Id.

The Fourth Circuit did not take issue with the significance per se of these services provided by wetlands. Nor did they question that there was some connection between the wetlands and the Northwest River.7 However, they did question the sufficiency of this evidence and the speculative nature of some of the other physical observations and data presented.

For example, the Corps presented numerical data about the water storage capacity of the site wetlands and similarly situated wetlands, adjacent drainage ditches, and downstream non-navigable tributaries. Id. at 9-11.

Based on the large water storage capacities of the drainage ditches (93,750 cubic feet and 1.2 million cubic feet, respectively), the Corps concluded that the channels would be able to moderate the effect of flood flows on the Northwest River. Id. at 9.

Also, based on the gradual channel slopes (only .04 percent), the Corps estimated that the water velocities in the channels are slow (around 1 foot per second) and that the extended residence time would allow suspended sediments to settle out of the water, decreasing downstream sedimentation. Id.

These observations, along with the above evidence about the services wetlands provide, led the Corps to find a significant nexus between the site wetlands and the Northwest River.

The Fourth Circuit questioned these conclusions, however, pointing out that the administrative record did not contain any measurements of actual flow or how often the capacity is reached in the ditches. Further, the administrative record contained no information on the river's condition or characteristics, making an analysis of the impact of the wetlands on the river difficult.

The Fourth Circuit noted that "the significant nexus inquiry emphasizes the comparative relationship between the wetlands at issue, their adjacent tributaries, and navigable waters." In particular, the Fourth Circuit opined that "although we know that the wetlands and adjacent tributaries trap sediment and nitrogen and perform flood control functions, we do not even know if the Northwest River suffers from high levels of nitrogen or sedimentation, or even if it is prone to flooding." Id. at 27.

Without knowing whether the Northwest River was prone to flooding or was otherwise contaminated, the court reasoned, they could not determine whether the wetlands' functions of storing runoff and floodwaters and filtering pollutants from runoff were "significant." Id. Thus, the court held that the impact on and significance of the wetlands to the Northwest River could not be ascertained without more factual findings.

Commentary on the Fourth Circuit's holding

The Clean Water Act serves to not only improve impaired waterways, but to protect "pristine" waterways from future degradation due to industrial and other activities. The Clean Water Act's stated objective is "to restore and maintain the chemical, physical, and biological integrity of the nation's waters." 33 U.S.C. §1251(a). Justice Kennedy explained that:

"Where wetlands perform the filtering and runoff control functions, filling them may increase downstream pollution, much as a discharge of toxic pollutants would. Not only will dirty water no longer be stored and filtered but also the act of filling and draining itself may cause the release of nutrients, toxins, and pathogens that were trapped, neutralized, and perhaps amenable to filtering or detoxification in the wetlands." Rapanos at 775.

Thus, whether the Northwest River in its current state is subject to flooding or contamination may arguably be irrelevant to the significant nexus inquiry, because it could be that the wetlands, currently separated by a berm from the drainage ditch, help to contain the pollutants or runoff that would otherwise have flowed out to the river.

Indeed, "given the role wetlands play in pollutant filtering, flood control, and runoff storage, it may well be the absence of hydrologic connection (in the sense of interchange of waters) that shows the wetlands' significance on the aquatic system." Rapanos at 786.

However, the Fourth Circuit's holding requires proof rather than mere speculation about even a lack of hydrologic connection, a requirement which is likely to be difficult and expensive for the Corps to meet.

In addition, the court was careful to specify that it does not wish to place an unreasonable burden on the Corps, asking "only" that in cases involving wetlands running alongside a ditch miles from navigable water, "the Corps pay particular attention to documenting why such wetlands significantly, rather than insubstantially, affect the integrity of navigable waters. Such documentation need not take the form of any particular measurements, but should include some comparative information that allows us to meaningfully review the significance of the wetlands impacts on downstream water quality. Id. at 30.

The Fourth Circuit opinion emphasizes the fact that, and perhaps rightly so, that it is impossible to determine the interconnectedness of wetlands and the navigable waterway without more evidence regarding about the characteristics of that waterway. In addition, according to Kennedy, this information cannot be too speculative, which it necessarily will be without any evidence about the downstream river itself. Rapanos at 786.

In particular, while the question of pollutant trapping is slightly more difficult to justify requiring downstream information for, it is hard to argue that wetlands' flood prevention role is significant if the downstream river suffers, for example, from chronic low flow and never floods.

CONCLUSION

To the extent that the Fourth Circuit required more documentation because the wetlands lie over seven miles away from navigable waterway (as compared to how far away they were in Carabell, the companion case to Rapanos), the opinion appears to be in line with both Rapanos and the Corps of Engineers' 2007 Guidance Document. However, to the extent that the opinion seems to require evidence that the navigable waterway suffers from the problems the wetlands would serve to correct (such as flooding, siltation, and nutrient overloading), the opinion seems to go beyond what other Circuits have required to show a significant nexus. The Fourth Circuit's opinion is significant insofar as it fleshes out and heightens the Corps' evidentiary burden for showing a significant nexus, thereby making it more difficult for the Corps to establish Clean Water Act jurisdiction over certain wetlands. It is also significant in that the court makes clear that it ultimately declined to defer to the Corps' significant nexus determination because the Corps has only issued a nonbinding guidance document — rather than notice-and-comment rulemaking — on what findings are required to determine Clean Water Act jurisdiction. Without that official regulation, the Corps' decisions on jurisdiction will continue to be afforded little deference, and the courts will continue, perhaps inconsistently, to impose their judgments of the showing necessary to establish Clean Water Act jurisdiction.

Footnotes

1. It is important to note, however, that the Fourth Circuit specifically left open the issue of whether Scalia's plurality opinion could serve as an alternate basis for finding jurisdiction under the Clean Water Act. Under Scalia's plurality opinion, wetlands should only fall within Clean Water Act jurisdiction when they are adjacent to a "relatively permanent body of water connected to traditional interstate navigable waters" and have a "continuous surface connection with that water." Rapanos at 742 (plurality opinion).

2. According to Kennedy, when the Corps of Engineers "seeks to regulate wetlands based on adjacency to nonnavigable tributaries," it must establish that a "significant nexus" exists "between the wetlands in question and navigable waters in the traditional sense." Rapanos at 779, 782. Thus, if the wetlands are not adjacent to a navigable waterway, there must be a case-by-case determination of jurisdiction focusing on this nexus. Id.

3. These approvals were based in part on the Corps' understanding that Precon would not be developing any more residential lots in the area. Id. at 4.

4. See Section II.B. for a more detailed discussion of the level of deference the Fourth Circuit applied to the Corps' determinations. Id. at 18-23, citing United States v. Mead Corp., 533 U.S. 218, 234 (2001) and Skidmore v. Swift, 323 U.S. 134, 140 (1944) ("an agency's interpretation may merit some deference whatever its form, given the 'specialized experience and broader investigations and information' available to the agency ..."). On this basis, the court deferred to the Corps' determination that 448 acres of nearby wetlands were similarly situated, but found no "'indicia of reliability or reasonableness'" to support the significant nexus determination. Id. at 30.

5. See U.S. Envt'l Prot. Agency & U.S. Army Corps of Eng'rs, Clean Water Act Jurisdiction Following the U.S Supreme Court's Decision in Rapanos v. United States & Carabell v. United States (Dec. 2, 2008) ("Rapanos Guidance Document"), available at http://www.usace.army.mil/CECW/Documents/cecwo/reg/cwa_guide/cwa_juris_2dec08.pdf.

6. See Rapanos Guidance Document, supra note 5.

7. The Corps also found that there is a subsurface connection between the wetlands and the adjacent drainage ditch. Id. at 10.

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