U.S. Army Corps of Engineers Narrows the Impact of Recent Court

Decisions That Attempt to Limit Clean Water Act Jurisdiction

ABOUT THIS UPDATE

Implementation of the SWANCC

Decision and the Revised “Tulloch

Rule”.

A. Implementat ion of theSWANCC Decision

In our January update entitled“Solid Waste Agency of NorthernCook County v. U.S. Army Corps ofEngineers,” we addressed the U.S.Supreme Court’s decision to excludenon-navigable, isolated, intrastatewaters from the scope of CleanWater Act jurisdiction. Solid WasteAgency of Northern Cook County vU.S. Army Corps of Engineers, 531U.S. (January 9, 2001)(“SWANCC”). The Supreme Courtruled that the “Migratory BirdRule” was an invalid exercise ofagency jurisdiction under 33 CFR§ 328.3 and called into questionjurisdiction over all isolated watersof the U.S., including vernal pools,prairie potholes and other watersthat traditionally have been coveredunder 33 CFR § 328.3(a)(3).

On January 22, 2001, the U.S.Army Corps of Engineers (“Corps”)

and the Environmental ProtectionAgency (“EPA”) issued a joint policymemorandum to their field officesregarding the scope of agencyjurisdiction under the Clean WaterAct in light of the SWANCC decision.The joint policy memorandum limitsthe potential impact of SWANCCthrough its narrow interpretationsof the Court’s ruling. Thememorandum is generally consistentwith the views expressed in theJanuary update. Following are someof the major points stated in thejoint policy memorandum:

1. Field staff should no longerrely on the use of waters orwetlands by migratory birds as the

sole basis for assertion of regulatoryjurisdiction under the Clean WaterAct. The document does not clarifyhow th i s change wi l l beimplemented to revise jurisdictionaldelineations that were certifiedprior to the SWANCC decision.

2. The memorandum clarifiesthat the Court’s decision affects thescope of regulatory jurisdictionunder all Clean Water Act provisionsthat rely on the definition “watersof the U.S.,” including, but notlimited to, the Section 311 oil spillprogram, the Section 402 NPDESprogram and any regulations of astate or tribal entity that implementthe Section 402 program.

3. The Court’s ruling is strictlylimited to only waters that are“nonnavigable, isolated, andintrastate.” All other waters shouldcontinue to be regulated. By this,the agencies qualified the impact ofthe Court’s decision by requiring

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LO S AN G E L E S OF F I C E

FO R T Y-EI G H T H FL O O R

333 SO U T H HO P E ST R E E T

LO S AN G E L E S

CA L I F O R N I A 90071(213) 620-1780

OR A N G E CO U N T Y OF F I C E

FO U R T H FL O O R

650 TO W N CE N T E R DR I V E

CO S TA ME S A

CA L I F O R N I A 92626(714) 513-5100

SA N DI E G O OF F I C E

N I N E T E E N T H FL O O R

501 WE S T BR O A D WAY

SA N DI E G O

CA L I F O R N I A 92101(619) 338-6500

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SAN FRANCISCO

CAL I FORN IA 94111(415) 434-9100

Land Use & Natural Resources UpdateMarch 2001

that a water body have all three characteristics for it toescape agency jurisdiction.

4. The memorandum states that 33 CFR 328.3(a)(3)can and should be used to regulate isolated waters ifthere is a subsequent nexus to interstate commerceother than the presence of migratory birds. Thememorandum encourages agency staff to consultagency legal counsel on an ad-hoc basis to determinewhether a sufficient connection to interstatecommerce can be established.

5. For example, the memorandum suggests that asufficient nexus could be established if the use,degradation, or destruction of an isolated, intrastate,and non-navigable water could affect other “watersof the U.S.” This broad definition expands agencyjurisdiction to include otherwise non-jurisdictionalareas once a connection with other clearly jurisdictionalareas is established. The memorandum also statesthat impoundments of, tributaries of, and wetlandsadjacent to other waters listed in 33 CFR § 328.3(a)(3)are jurisdictional if the waters they impound aretributaries to or are adjacent to, waters of the U.S.

6. The term “adjacent” is defined as “bordering,contiguous, or neighboring. Wetlands separated fromother waters of the U.S. by man-made dikes or barriers,natural river berms, beach dunes, and the like are‘adjacent wetlands.’” 33 CFR § 328.3(d). This definitionincludes wetlands and waters which may not have a clearsurface connection to navigable waters.

In conclusion, the agencies’ narrow interpretationof SWANCC excludes from Corps and EPA jurisdictionthose waters that are isolated, non-navigable,intrastate and that do not impact others waters of theU.S. The memorandum does not clarify how waterswill be removed from certified jurisdictionaldelineations for projects that are currently in thepermitting process. We recommend that alldelineations be reviewed to identify potentiallyisolated waters and to evaluate potential interstatecommerce connections.

B. Practical Reinstatement of the “Tulloch Rule”

In 1993, the Corps issued a regulation that definedthe term “discharge of dredged material” as including“any . . . redeposit of dredged material, includingexcavated material into waters of the U.S. which isincidental to any activity. . . . “ 65 FR 50109 (August16, 2000). This rule, commonly known as the “TullochRule,” states that incidental fallback from an activitycould and should be considered a discharge, and

therefore should be regulated under Section 404 ofthe Clean Water Act.

Over the past decade, the Corps has faced abarrage of litigation regarding the validity of this rule.American Mining Congress v. Corps, 951 F.Supp. 267(D.D.C 1997); aff’d sub nom, National MiningAssociation v. Corps, 145 F.3d. 1339 (D.C. Cir. 1998).In these cases, the courts have stated that the Corpsdoes not have the authority to regulate incidentalfallback material as a discharge under Section 404 ofthe Clean Water Act. The D.C. Appellate Courtspecifically requested that the Corps further definethe parameters of its jurisdiction in this area.

On January 17, 2001, the Corps issued a final rulethat defined the phrases “discharge of dredgedmaterial” and “incidental fallback” in an attempt toclarify the Corps’ jurisdictional limit under Section404. 66 FR 4550. The main points stated in the finalrule are discussed below.

1. The rule states that the Corps does not have theauthority to regulate “incidental fallback” underSection 404 of the Clean Water Act.

2. The rule defines incidental fallback as theredeposit of small volumes of dredged material that isincidental to excavation activity in waters of the U.S.when such material falls back to substantially thesame location from which it was initially removed.This narrow definition excludes any fallback that takesplace in either large volume, or in a location thatdiffers from the original excavation location.

3. As Sheppard, Mullin, Richter & Hampton LLPsuggested in comments filed on behalf of a client, theCorps eliminated a proposed rebuttable presumptionthat specified activities are subject to regulation andinstead stated that the “use of mechanized earthmoving equipment to conduct landclearing, ditching,channelization, in-stream mining, or other mechanizedexcavation activity in waters of the U.S. is likely toresult in regulable discharges of dredged material.”66 FR 4552. As a result of this qualification, the Corpshas effectively maintained the same policy embodiedin the previous assumption, but has removed theproject applicant’s burden to formally rebut thepresumption.

4. The rule states that if there is project-specificevidence which suggests that a particular earthmoving project causes only incidental fallback, theCorps will consider this evidence and exclude certainprojects as appropriate.

ABOUT THE AUTHORS

Jillian Blanchard is an associate and member of the RealEstate & Land Use Department in the firm’s San Franciscooffice. Ms. Blanchard specializes in land use and planningissues. She has provided legal and strategic advice to landdevelopment companies and local governments onimplementation of land use plans involving compliancewith federal, state and local laws and negotiation withenvironmental groups and agencies. She specializes inpermitting issues under the Clean Water Act and theEndangered Species Act.

Robert J. Uram is a partner in the Land Use and NaturalResources Practice Group in the firm’s San Francisco office.Mr. Uram has more than 25 years of experience as a naturalresource specialist. He is a nationally-recognized expert infederal administrative law and many state and federalnatural resource laws, including the National EnvironmentalPolicy Act, the Endangered Species Act, the CaliforniaSurface Mining and Reclamation Act, the wetland provisionsof the Clean Water Act, Federal Land Pol icy andManagement Act, National Forest Planning Act, theSurface Mining Control and Reclamation Act and the MiningLaw of 1972. His current practice focuses almost exclusivelyon wetlands and endangered species issues.

The Corps narrowly interpreted the incidentalfallback exclusion in an effort to maintain itsjurisdiction over as many activities as possible. In thefinal rule, the Corps reasserts its jurisdiction over mostactivities covered by the original Tulloch Rule withminor technical exceptions. This rule will affect in-stream mining activities that may have been excludedfrom the Corps’ jurisdiction after the Tulloch Rule wasinvalidated in 1997-8. Project applicants should nowassume that all earth moving activities are jurisdictionalunder Section 404 unless the discharge meets thelimited definition of incidental fallback or unlessspecific evidence exists to verify minimal movement ormaterial discharge.

On January 24, 2001, the Bush Administrationadopted an Executive Order pursuant to which alldepartment or agency heads appointed by the newPresident shall have the authority to review all rulesadopted at the close of the Clinton Administration andapprove all regulatory action. 66 Fed. Reg. 7702(January 24, 2001). Regulatory review appliesautomatically to all proposed or final regulations thathave not yet been published in the Federal Register.With regard to all regulations that have already beenpublished in the Federal Register but have not takeneffect, the effective date of these regulations will bepostponed for 60 days pending executive review.

On February 15, 2001, the Executive Order wasapplied to the Corps’ final rule regarding thedefinition of discharge material. 66 Fed. Reg. 10367.The agencies postponed the implementation of therevised “Tulloch Rule” from February 16, 2001, toApril 17, 2001, in order to allow for the appropriateexecutive review of the regulation. Consequently, thefinal rule addressed in this update may be subject tofurther revision pending review by the BushAdministration.

If you have any questions concerning the contents of thisnewsletter, please contact any of the attorneys listed below:

LAND USE & NATURAL RESOURCES ATTORNEYS

© 2001, Sheppard, Mullin, Richter & Hampton LLP

SHEPPARD MULLIN SEMINARS

SHEPPARD MULLIN PUBLICATIONS

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San FranciscoPhilip F. Atkins-Pattenson ........................ (415) 774-2933Jillian B. Blanchard ........................................... 774-2939Peter Coppelman ............................................. 774-2994James Donahue................................................ 774-2988Ella Foley-Gannon ............................................ 774-2977Judy Hawthorne-Waters ................................... 774-3210James B. Hodge ............................................... 774-3233Kristen A. Jensen............................................. 774-2948Jim R. Karpiak .................................................. 774-2984David P. Lanferman .......................................... 774-2916David M. Madway ............................................ 774-2982M. Elizabeth McDaniel ..................................... 774-2946Joseph E. Petrillo .............................................. 774-3209Hanh Pham ...................................................... 774-3241Tyson H. Powell ................................................ 774-2980Maria C. Pracher .............................................. 774-2908Renee Robin..................................................... 774-3215Thomas D. Roth ............................................... 774-2976Theodore A. Russell .......................................... 774-2912John H. Sears ................................................... 774-3205Joan H. Story .................................................... 774-3211Robert A. Thompson ....................................... 774-3213Robert J Uram .................................................. 774-3285Lori A. Wider ................................................... 774-3221Michael B. Wilmar ............................................ 774-3242William R. Wyatt .............................................. 774-3286Peter F. Ziblatt .................................................. 774-2913

To receive a copy of the publications listed below, or to add acolleague to our mailing list to receive future Update newslet-ters, please call Sharon Siebert at (213) 617-5568 or visit ourwebsite at www.smrh.com.

“Another Setback for Non-Competition Clauses,” byJulie A. Dunne, February 2001.

“SWANCC v. U.S. Army Corp of Engineers,” by Robert J. Uramand Jillian Blanchard, January 2001.

“What the State Giveth, The Feds Taketh Away,” byJulie A. Dunne, January 2001.

“New Hart-Scott-Rodino Legislation” by T. William Opdyke andJustin Sanders, January 2001.

“New Disability Law,” by Tracey A. Kennedy, December 2000.

“If It’s Done Right, You, Too, Can Be An At Will Employer,” byTracey A. Kennedy, November 2000.

“Temporary Employees Now Easier Targets For Unions,” byJohn Collins, October 2000.

“Mandatory Arbitration of Statutory Employment Claims,”Orange County Business Journal, by Greg S. Labate,September 2000.

“Employment Arbitration Agreements Are Legal Again - ForNow At Least,” by Jeffrey S. Sloan, September 2000.

“Employee Rights to Investigatory Interviews,” byMelissa P. Lopez, August 2000.

“The Competitor Collaboration Guidelines: Old Wine in NewBottles,” by Carlton A. Varner, June 2000.

“Read My Mind - The Perils of Surfing the Web at Work,”Orange County Business Journal, By Robert S. Beall andMary Lynch, June 2000.

To register or for more information regarding future seminars,please call Sharon Siebert at (213) 617-5568 or visit ourwebsite at www.smrh.com.

“Breakfast With Your Labor Lawyer - Preventing Violence inthe Workplace” - Wednesday, April 11, 2001, Westin SouthCoast Plaza, Costa Mesa, California, 8:00 - 9:30 a.m.Cost: $25 (breakfast will be served).

“Breakfast With Your Labor Lawyer - Mid Year Update” -Wednesday, May 23, 2001, Westin South Coast Plaza, CostaMesa, California, 8:00-9:30 a.m. Cost: $25 (breakfast will beserved).

Applicability of the legal principles discussed may differ substantially

in individual situations. The information contained herein should

not be construed as individual legal advice.