United States: Administrative Limitations Of Army Corps Of Engineers' Authority Over Upland Areas

When dealing with the United States Army Corps of Engineers (ACE), a wetland fill applicant may think that it has finally met the proverbial 800-pound gorilla. The ACE often seeks to exercise its jurisdiction to activities in areas beyond waters and wetlands to upland portions of a permit applicant’s property. Given the vast resources of the federal government to support the ACE’s assertion of jurisdiction, many landowners acquiesce rather than challenge the ACE.

Some courts, however, do not share the ACE’s broad view of its jurisdiction. Recent decisions by federal courts have placed into question how far the ACE can go to regulate wetlands.¹ Nonetheless, the ACE often attempts to exercise control over activity in upland areas.

At no time is the ACE’s exercise of authority more tenuous than when the ACE attempts to constrain activity on upland areas because the developer requires a permit to fill or dredge. Because of the proximity of a development to a wetland area and the need of a developer to impact wetlands, the ACE often considers the environmental effects of upland development in addition to its review of fill or dredging in wetland areas. At this point, the ACE may have overstepped its congressionally delegated authority.

This article reviews the basis for the exercise of the ACE authority and what happens when the ACE attempts to consider environmental effects of upland development, instead of the area over which the ACE has direct authority. It is the author’s position that without congressional approval to regulate development on upland areas, the ACE’s attempts to do so exceed its jurisdiction.

The Clean Water Act (CWA) is the vehicle that provides the ACE with its authority to regulate discharges into wetlands. Section 404 of the CWA provides that the Secretary of the Army, acting through the ACE, may issue permits for the discharge of dredged or fill material into the navigable waters of the United States. 33 USC 1344(a).² CWA defines "navigable waters" as "the waters of the United States, including the territorial seas." 33 USC 1362(7). The ACE regulations define "waters of the United States" to include wetlands. 33 CFR § 328.3. The Supreme Court has upheld the ACE’s exercise of jurisdiction over wetlands. United States v Riverside Bayview Homes, Inc, 474 US 121; 106 S Ct 455; 88 L Ed 2d 419 (1985). However, simply because Congress has acted to regulate certain environmental matters does not mean all environmental matters are the federal government’s concern. Save Barton Creek Ass’n v Federal Highway Administration, 950 F2d 1129, 1144, reh’g den 957 F2d 869 (CA 5), cert den 505 US 1220; 112 S Ct 3029; 120 L Ed 2d 900 (1992).

When reviewing applications for fill or dredge permits, the ACE regulations provide that the ACE conduct a review of various factors in making its decision. 33 CFR 320.4. The items for the ACE consideration include an assortment of factors.³ The "public interest" aspect of the ACE’s review is especially broad, as is demonstrated by the following:

33 CFR 320.4(a). It appears that this review offers the ACE virtually unfettered discretion to do whatever it thinks is in "the public interest." The question is, however, does the enabling legislation allow such discretion?

It almost seems intuitive that under our federal form of government, an agency, as an arm of the executive branch, can only exercise the authority granted to it by the legislative branch. One commentator put it this way:

Williams, J.S., Securing Fairness and Regularity in Administrative Proceedings, 29 Ad.L.Rev. 1, 33-34 (1977). This restrictive view of administrative authority is found in the Administrative Procedures Act (APA), which describes the fundamental principle that a federal agency may regulate only in areas that Congress has delegated to it:

5 USC 558(b). Agency activity beyond that which Congress delegated to it is improper.⁴

In 2000, the United States Supreme Court considered the issue of when a federal agency overreaches and steps beyond its statutory authority granted to it by Congress and begins affecting areas over which it has no authority. In FDA v Brown & Williamson Tobacco Corp, 529 US 120, 120 SCt 1291, 146 LEd2d 121 (2000), the Supreme Court ruled that the Food and Drug Administration (FDA) exceeded its authority when it attempted to regulate the sale and distribution of cigarettes and smokeless tobacco, finding that the Federal Food, Drug, and Cosmetic Act did not authorize the FDA to regulate tobacco either as a drug or as drug-delivering devices. In its initial discussion concerning its jurisdictional analysis, the Supreme Court made the following observations concerning the limits on agency jurisdiction:

Id., 529 US at 125-126.

The basic premise of administrative law is that an agency acts within the power delegated to it. If the agency acts outside the powers delegated to it, the agency’s decision is improper and must be reversed. See South Carolina Public Service Authority v FERC, 850 F2d 788 (CA DC, 1988). Given that there is no authority for the ACE to exercise jurisdiction outside of areas affected by fill or dredging, the ACE’s exercise in those areas are unlawful.

Recently, the United States Supreme Court considered whether the ACE exceeded its jurisdiction with respect to regulating activities in waters that are isolated from the "waters of the United States." In the case of Solid Waste Agency of Northern Cook County v United States Army Corps of Engineers, 531 US 159, 121 SCt 675, 148 LEd2d 576 (2001), the Supreme Court determined that the ACE’s Migratory Bird Rule⁵ exceeded the agency’s authority to regulate the filling of navigable waters pursuant to the Clean Water Act (CWA), 33 USC § 1344(a). Having determined that the ACE exceeded its Congressionally-delegated authority, the Supreme Court did not consider whether Congress would have the authority under the Commerce Clause to regulate isolated bodies of water.

The petitioner, the Solid Waste Agency of Northern Cook County (SWANCC), attempted to develop a non-hazardous solid waste landfill on a 533-acre tract of property that had formerly been a sand and gravel pit mine. In the years since the mine operation had ceased, the remaining excavation became inundated with water and various seasonal and permanent ponds existed on the site. SWANCC successfully navigated various state and local permits and received an initial determination from the ACE that it had no jurisdiction because the site contained no wetlands.

After the ACE initially rejected jurisdiction, it received information that as many as 121 migratory bird species were observed at the site. The ACE reconsidered its position and exercised jurisdiction, determining that the existence of the migratory birds made the isolated ponds "waters of the United States" by virtue of the Migratory Bird Rule. The ACE ultimately refused to issue a fill permit under 33 USC § 1344(a).

The "Migratory Bird Rule" refers to discussion in the preamble of the ACE’s reassessment of its definition of "waters of the United States" found at 33 CFR § 328.3(a)(3). In the publication of the new rule, the ACE gave several examples of what types of waters the rule intended to bring under the ACE’s jurisdiction. Among the examples given, the ACE identified waters used as habitat by migratory birds as those that the rule would include as "waters of the United States".⁶

SWANCC filed suit against the ACE in federal district court. The federal district court ruled in favor of the ACE on the issue of the exercise of its regulatory jurisdiction and the merits of the denial. On appeal, the Seventh Circuit Court of Appeals concurred with the lower court, finding that the Commerce Clause of the United States Constitution allowed Congress to regulate isolated waters used by migratory birds under "the cumulative impact doctrine" and that the Migratory Bird Rule was a reasonable interpretation of the CWA by the ACE.⁷ SWANCC then appealed to the United States Supreme Court.

The majority opinion of the Supreme Court did not reach a decision on the issue of whether Congress could, if it chose to, regulate isolated waters under its Commerce Clause powers. Instead, it focused on whether Congress under the CWA had actually delegated to the ACE the authority to regulate such waters. Having determined that Congress had not delegated to the ACE the authority, it did not reach the issue of whether Congress could do so.

The ACE supported its position by noting that in 1977 it had expanded its more restrictive definition of "navigable waters" by including "isolated wetlands and lakes". 33 CFR § 323.2(a)(5). According to the ACE, Congress had tacitly accepted this expansion of jurisdiction when it failed to adopt more restrictive language during its 1977 amendments of the CWA. The majority remain unimpressed, however, finding that the ACE presented no tenable evidence that Congress had acquiesced to the more expansive definition presented in the ACE’s 1986 Migratory Bird Rule when it amended the CWA some nine years earlier.

The ACE also argued that under the Supreme Court’s decision in Chevron USA, Inc v Natural Resources Defense Council, 467 US 837, 104 S Ct 2778, 81 L Ed 2d 694 (1984), the Court should give due deference to the ACE’s interpretation of the CWA. The Supreme Court rejected that argument, as well. It found that to sustain an agency’s determination of its jurisdiction that "invokes the outer limits of Congress’ power",⁸ the Court required a clearer indication from Congress that it intended to grant such jurisdiction, which was lacking here. This determination of jurisdiction would require even greater scrutiny "where the administrative interpretation alters the federal-state framework by permitting federal encroachment upon a tradition state power."⁹ Thus, the Supreme Court ruled that the ACE exceeded its Congressionally-delegated authority by attempting to regulate isolated waters.

The Northern Cook County decision continues a line of federal court cases that have eroded what the ACE believed to be the breadth of its regulatory authority. Federal circuit courts have determined that the ACE could not regulate wetlands that had no direct or indirect surface connection to either navigable or interstate waters,¹⁰ the redeposit of dredged materials could not be considered fill for the purposes of the CWA,¹¹ and the draining of wetlands was not a regulated activity pursuant to the CWA.¹² In fact, the Northern Cook County case represents a continuation of the Supreme Court’s hard look comparing the exercise of agency jurisdiction with the power delegated to a particular agency by Congress as exemplified by the Supreme Court’s decision in FDA v Brown & Williamson Tobacco Corp.

In its decision in Northern Cook County, the Supreme Court appeared to be concerned that the federal government was encroaching upon areas where states traditionally maintained jurisdiction. The Supreme Court stated that "[p]ermitting respondents to claim federal jurisdiction over ponds and mudflats falling within the ‘Migratory Bird Rule’ would result in a significant impingement of the State’s traditional and primary power over land and water use." 121 S Ct at 684 (citing Hess v Port Authority Trans-Hudson Corp, 513 US 30, 44, 115 S Ct 394, 130 L Ed 2d (1994)). The Supreme Court acknowledged that the isolated waters could be regulated by the state, even though the ACE could not.

With respect to ACE and its authority of wetlands, it may regulate filling of wetlands pursuant to section 404 of the Clean Water Act and it may regulate dredging pursuant to section 10 of the Rivers and Harbors Act. Neither of these statutes conveys to the ACE the authority to regulate the actual development of upland properties. Instead, each focuses on the actual filling and dredging of wetlands and the effects of those activities.

The position that the ACE’s jurisdiction is limited to the actual fill or dredging is not a novel one. In fact, the ACE has in the past acknowledged the limits of its jurisdiction in refusing to consider the impacts of overall projects when it had authority only over one discrete portion of the project. For example, in Water Works & Sewer Bd of the City of Birmingham v United States Department of Army, 983 F Supp 1052 (ND Ala, 1997), the City of Birmingham challenged the proposed development of a water supply, treatment and distribution system by a neighboring locality. The City of Birmingham based its challenge, in part, on the alleged failure of the ACE’s public interest review under 33 CFR 320.4(a)(1). The City of Birmingham complained that the ACE failed to consider the broader effects of the construction and maintenance of the entire intake facility or "the structures that help fulfill the purposes of the project" in its public interest review. According to the City of Birmingham, the ACE could not focus solely on the one aspect of the development that required the ACE’s approval, i.e., the construction of the intake structure and pipeline that provided water to the facility. 983 F Supp at 1067. The Court disagreed with the City of Birmingham, finding that the ACE could not review the "totality of all activities", but, rather, could consider only the direct, indirect, and cumulative impacts of the proposed activity." Id.

According to the District Court, "[i]n conducting the public interest review, the Corps is limited in the aspects of the entire project on which it may focus." 983 F Supp at 1066. The District Court found support for its position in the ACE’s regulations:

983 F Supp at 1067 (emphasis in original).

The District Court continued its analysis on the limits of the ACE’s public interest review by looking at other cases. For example, it cited Save the Bay, Inc v United States Corps of Engineers, 610 F2d 322, 327 (CA 5, 1980), for the proposition "that the Corps’ regulations limited its public interest review in certain cases to the federal aspects of a project and that the Corps was not required to consider the entire proposed project in conducting its review." 983 F Supp at 1068. The District Court also looked to Winnebago Tribe of Nebraska v Ray, 621 F2d 269 (CA 8, 1980), which elucidated a three part test to assist in a determination of whether the ACE would have jurisdiction over an entire project based on its ability to issue a permit for a portion of a project:

983 F Supp at 1069 (quoting Winnebago Tribe of Nebraska v Ray, 621 F2d 269, 272 (CA 8, 1980), quoting NAACP v Medical Center, 584 F2d 619, 629 (CA 3, 1978)). As noted by the District Court, the ACE essentially adopted this test in its Appendix B to 33 CFR Part 325. 983 F Supp at 1069-1070.¹³

The ACE’s attempt to exert jurisdiction over an entire project fails when the project is not sufficiently "federal" so that the ACE can extend its long arm over the length and breadth of the proposed development. For example, if an applicant requires a permit solely for the filling of wetlands for road and utility crossings, there is no additional federal involvement. If the development is being conducted with no federal funding and occurs predominantly in unregulated upland areas, it is not sufficiently federal to invoke the ACE’s jurisdiction over an entire project.¹⁴ Therefore, it could not be considered of federal concern as to invoke federal jurisdiction over the entire project.

The ACE exceeds its authority when it focuses its review on harm far removed from the actual fill or dredging that Congress authorized it to regulate. In some cases, the ACE takes a different view, arguing that federal regulations require that it examine secondary impacts that would not occur "but for" regulated activities. But to contend so would misstate the ACE’s authority. As noted above, its regulatory authority is limited to fill and dredging activities.¹⁵

If Section 404 and Section 10 do not provide the ACE with authority over upland properties, what other basis would the ACE possess for exercising jurisdiction over uplands? The likely answer from the ACE might be that the National Environmental Protection Act (NEPA), 42 USC 4321 – 4370, provides the authority for it to consider secondary effects beyond those pertaining to actual fill or dredging proposed by an applicant. However, NEPA provides no additional authority beyond that already provided to the ACE by the enabling statutes.

The Supreme Court has determined that while NEPA "set[s] forth substantive goals for the Nation, . . . its mandate to the agencies is essentially procedural." Vermont Yankee Nuclear Power Corp v Natural Resources Defense Council, Inc, 435 US 519, 558; 98 S Ct 1197; 55 L Ed 2d 460 (1978). Similarly, the Supreme Court determined that "other statutes may impose substantive environmental obligations on federal agencies, but NEPA merely prohibits uninformed – rather than unwise – agency action." Robertson v Methow Valley Citizens, 490 US 332, 351; 109 S Ct 1835; 104 LEd2d 351 (1989)(footnote omitted).¹⁶ The Supreme Court seems to have already decided that the provisions of NEPA add only procedures, but no extra authority to regulate beyond that already delegated by Congress to the executive branch.

In Cape May Greene, Inc v Warren, 698 F2d 179 (CA 3, 1982), the Court of Appeals determined that the United States Environmental Protection Agency (USEPA) acted arbitrarily when it conditioned a grant of funds for the creation of a sewage treatment center on the prohibition of any hookups by a proposed seaside development. The developer of the housing expected to hookup to sewers serviced by a sewage plant for which a local community sought matching funds from USEPA. USEPA, however, conditioned the receipt of the funds on the prohibition of hookups from the coastal development. The developer argued that the restrictive condition went beyond USEPA’s authority.

The Court of Appeals first found that NEPA "does not expand the jurisdiction of an agency beyond that set forth in its organic statute . . . " Id. at 188 (citations omitted). "Thus, [NEPA] provides little, if any, support for an agency taking substantive action beyond that set forth in its enabling act." Id. When an agency goes beyond its authority, the court made the following observations:

Id. at 190 (footnote omitted). The court also determined that "when federal assistance is provided for what is essentially a state or local activity, the congressional preference for having policies initiated at the state level must be respected." Id. at 191.

In Metropolitan Edison Co v People Against Nuclear Energy, 460 US 766; 103 S Ct 1556; 75 L Ed 2d 534 (1983), the Supreme Court addressed what a federal agency must consider when it analyzes a federal action under NEPA. A group of opponents to the siting of a nuclear facility argued that NEPA required the federal agency to consider the effects of psychological health damage resulting from the concern about the risk of nuclear accident. However, the Supreme Court determined that some effects are so attenuated they do not warrant study:

460 US at 774. The case demonstrates that NEPA does not authorize consideration of things too far afield from what is in fact regulated. Granted the ACE could raise concerns about the environment when it claims authority over upland areas. However, the area over which it has authority, the filling of wetlands, cannot be extrapolated to areas where the ACE has no authority. NEPA grants no independent authority for the ACE to regulate uplands, and the Metropolitan Edison case underscores the fact that NEPA has its limits along the causal chain.

The focus of the authority given to the ACE under the section 404 of the Clean Water Act and section 10 of the Rivers and Harbors Act is not on the development that will occur as a result of the proposed permit. Congress limited the ACE’s jurisdiction to the proposed fill and dredging. If the fill and dredging does not directly involve any of the resources on the upland portions of an applicant’s property, the ACE’s insistence that it review an applicant’s entire development goes well beyond the authority given to it by Congress. As such, the ACE’s actions in denying a permit based on potential negative secondary effects that are far removed from what is actually regulated is arbitrary and capricious.

1 See, e.g., United States v Wilson, 133 F3d 251 (CA 4, 1997) (ACE could not regulate wetlands that had no direct or indirect surface connection to either navigable or interstate waters because of limitations placed on federal regulations by the Commerce Clause); American Mining Congress v US Army Corps of Engineers, 145 F3d 251 (CA 4, 1997) (redeposit of dredged material does not qualify as regulated filling activities); Save Our Community v EPA, 971 F2d 1155 (CA DC, 1992) (draining of wetlands did not require Section 404 permit).

2 Section 10 of the Rivers and Harbors Act, 33 USC 403, provides that the ACE may issue permits for the excavation of, or the placement of fill into, the navigable waters of the United States.

3 ACE regulations also provide for review of the applicant’s effect on the following: public interest; wetlands; fish and wildlife; water quality; historic, cultural, scenic and recreational values; limits of the territorial sea; property ownership; coastal zones, marine sanctuaries; other federal, state or local requirements; safety of impoundment structures; water supply and conservation; energy conservation and development; environmental benefits; economics; and mitigation. 33 CFR 320.4.

4 Note, however, that courts give some deference to administrative interpretation of statutes when done within the limits of congressional delegation. Chevron USA v Natural Resources Defense Council, 467 US 837, 865-66; 104 S Ct 2778; 81 L Ed 2d 694 (1984).

5 The rule provides that the ACE may exercise jurisdiction under 33 USC § 1344(a) for filling in intrastate waters under the following circumstances:

1. Which are or would be used as habitat by birds protected by Migratory Bird Treaties; or
2. Which are or would be used as habitat by other migratory birds which cross state lines; or
3. Which are or would be used as habitat for endangered species; or
4. Used to irrigate crops sold in interstate commerce.

51 Fed Reg 41 206, 41217.

6 51 Fed Reg 41206, 41217 (1986).

7 SWANCC did not appeal the district court’s determination with respect to the merits of the ACE’s decision, limiting it’s appeal to jurisdictional issues.

8 121 S Ct at 683.

9 Id

10 United States v Wilson, 133 F3d 251 (CA 4, 1997).

11American Mining Congress v US Army Corps of Engineers, 145 F3d 251 (CA4, 1997).

12 Save Our Community v EPA, 971 F2d 1155 (CA DC, 1992).

13 "[T]he NEPA review would be extended to the entire project, including portions outside waters of the United States, only if sufficient Federal control and responsibility over the entire project is determined to exist; that is, if the regulated activities, and those activities involving regulation, funding, etc. by other Federal agencies, comprise a substantial portion of the overall project." 33 CFR Part 325, App B § 7b (emphasis added).

14 See Macht v Skinner, 916 F2d 13, 19 (CA DC, 1990), in which the court determined that ACE’s jurisdiction solely over wetland permits with no other federal requirements was insignificant when compared to the rest of the project and did not sufficiently "federalize" a project.

15 The City of Birmingham court also found that the "necessity" of the work that requires ACE authorization to the viability of the project "did not permit the Corps to consider the entire project." 983 F Supp at 1073.

16 In Robertson, the Supreme Court determined that NEPA did not require a substantive requirement that a mitigation plan be formulated and adopted, only that mitigation be discussed. 490 US at 352.