Summary of a Recent
Judicial Development in
Clean Water Act

Farmer's Suit Against Army Corps
of Engineers Continues

Harrison M. Pittman
Center Staff Attorney

The United States Court of Federal Claims has denied a motion for summary judgment filed by the Army Corps of Engineers ("Corps") in an action in which a farmer alleged that the government effectively took his property without just compensation when the Corps ordered him to cease maintenance and operation of a drainage system on his property and to restore the property to a prior wetland condition. Brace v. United States, 51 Fed. Cl. 649, 653 (2002) ("Brace II"). The Corps alleged that the farmer operated the drainage system in violation of § 404 of the Clean Water Act ("CWA"), 33 U.S.C. §§ 1251-1387. The court ruled that in light of the intervening decision in Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers, 531 U.S. 159 (2001), there was a genuine issue of material fact with respect to whether there was a nexus between the farmer's property and an interstate water pursuant to the CWA. See id. at 653. The court also ruled that there was not sufficient information to allow summary judgment in favor of the government with respect to whether a taking had occurred. See id. at 652.

The facts and background information of the present case are found in Brace v. United States, 48 Fed. Cl. 272 (2000) ("Brace I"). See also United States v. Brace, 41 F.3d 117 (2d Cir. 1994). Brace II represented the latest judicial development in litigation between the government and the plaintiff. This litigation has lasted for over a decade and this article discusses the full history of the litigation that has occurred between the government and the plaintiff.

Clean Water Act

The CWA was enacted to "'restore and maintain the chemical, physical, and biological integrity of the Nation's waters.'" See Brace I, 48 Fed. Cl. at 276-77 (quoting 33 U.S.C. § 1251(a)). Under the CWA, Congress prohibited "the discharge of pollutants into 'navigable waters' except in certain circumstances provided by the statute, such as by obtaining a permit issued by the [Corps] pursuant to section 404 of the CWA." Id. at 277 (citing 33 U.S.C. § 1311(a), 1344). Section 404 proscribes the "'discharge of dredged or fill material into the navigable waters' without obtaining a permit from the Army Corps of Engineers.'" Id. at 275, n.1 (quoting 33 U.S.C. § 1344).

Under the CWA, "navigable waters" are defined as "'waters of the United States, including the territorial seas.'" Id. (quoting 33 U.S.C. § 1362(7)). Much of the CWA's legislative history suggests that Congress intended that the phrase "navigable waters" be accorded the broadest possible constitutional interpretation. See id. (citing S. Rep. No. 92-1235, at 144 and Avoyelles Sportsmen's League, Inc. v. Marsh, 715 F.2d 897, 914 (5th Cir. 1983)). For example, the Senate Committee on Public Works stated that:

The control strategy of the Act extends to navigable waters. The definition of this term means the navigable waters of the United States, portions thereof, tributaries thereof, and includes the territorial seas and the Great Lakes. Through a narrow interpretation of the definition of interstate waters the implementation [of the] 1965 Act was severely limited. Water moves in hydrologic cycles and it is essential that discharge of pollutants be controlled at the source. Therefore, reference to the control requirements must be made to the navigable waters, portions thereof, and their tributaries.

Id. (citations omitted).

The Court of Federal Claims explained that the Corps originally adopted a narrow interpretation of the phrase "navigable waters." See id. (citations omitted). This narrow interpretation "excluded most wetlands that are generally non-navigable and other isolated or shallow waters from Section 404's jurisdiction." Id. The Corps was required to adopt the "full regulatory mandate of the CWA" when a federal district court struck down the Corps' narrow interpretation of "navigable waters." Id. (citing Natural Resources Defense Council, Inc. v. Callaway, 392 F.Supp. 685 (D.D.C. 1975)). In Callaway the district court held that "'Congress by defining the term 'navigable waters' [for purpose of the CWA], to mean 'the waters of the United States, including territorial seas,' asserted federal jurisdiction over the nation's waters to the maximum extent permissible under the Commerce Clause of the Constitution.'" Id. (quoting Callaway, 392 F.Supp. at 686).

As a result of the Callaway decision, the Corps modified its interpretion of the CWA and its coverage of "navigable waters" "to cover all freshwater wetlands that are defined as areas that are 'periodically inundated' and 'normally characterized by the prevalence of vegetation that requires saturated soil conditions for growth and reproduction' as well as those that are adjacent to other covered waters." Id. (citations omitted). Soon thereafter, in 1977, the Corps redefined its interpretation of what constituted a "wetland" by eliminating the "periodically inundated" requirement and by terminating the requirement that wetlands be adjacent to a navigable water. See id. The Corps' 1977 revised definition of wetlands consisted of "those areas that are inundated or saturated by surface or ground water at a frequency and duration sufficient to support, and that under normal circumstances do support, a prevalence of vegetation typically adapted for life in saturated soil conditions. Wetlands generally include swamps, marshes, bogs, and similar areas." Id. 278. The Corps issued a definition in 1982 that was substantively identical to the 1977 revised definition. See id. The 1982 regulations were in place when Brace I was litigated and decided. See id.

Facts

Robert Brace, the plaintiff, purchased two plots of land from his father in December, 1975. See id. at 274. One plot of land was approximately 80 acres. See id. The other plot of land was approximately 60 acres and contained the wetland site at issue. See id. Prior to the time that Brace purchased these two plots, the Agricultural Stabilization and Conservation Service ("ASCS"), predecessor to the Farm Service Agency ("FSA"), prepared a drainage plan for the 60-acre parcel after it identified parts of the site containing wetlands. See id.

Brace claimed that he "cleared, leveled, and drained the wooded and vegetated property" from 1976 to 1987. Id. The government repudiated this claim, contending that Brace conducted this activity from 1985 to 1987. See id. Brace later began growing crops "on the site in 1986 and 1987, although [he] state[d] that he began to grow crops on the property in 1976." Id. The Corps asserted that Brace conducted these activities in violation of § 404 of the CWA because he engaged in these "dredge and fill activities in waters of the United States without a permit required by section 404 of the [CWA]." Id. at 274-75.

In 1987 and 1988 the government "issued three orders directing plaintiff to refrain from further disturbing the site so that it could naturally revegetate the area with indigenous plant species." Id. at 275. The first of these orders was issued on July 15, 1987, and "was an Administrative Order issued by the [EPA]." Id. The second order was a Cease and Desist Order and was issued by the Army Corps of Engineers on July 23, 1987. See id. The final order was issued on May 3, 1988, "when the EPA issued another Administrative Order . . . after finding that plaintiff was engaged in dredge and fill activities in waters of the United States without a permit required by section 404 of the Clean Water Act." Id. Despite these orders, Brace continued "to mow down vegetation at the site which prevented re-vegetation of indigenous plants." Id.

In 1988, Brace requested that the Agricultural Stabilization and Conservation Service ("ASCS"), predecessor to th Farm Service Agency, give his property the status of "'commenced conversion from wetlands' prior to December 12, 1985." This status was granted by the ASCS "based on the plaintiff's ongoing farming activity commencing prior to December 1985." Id.

The government brought an enforcement action against Brace in the United States District Court for the Western District of Pennsylvania on October 4, 1990. See id. The district court determined that Brace's activities "were exempt from the permit requirements of section 404 of the CWA." Id. The U.S. Court of Appeals for the Third Circuit reversed this decision on November 22, 1994, holding that Brace was "liable for the violations asserted in the orders." Id. The Third Circuit remanded the matter to the district court. See id.

On September 3, 1996, the district court enjoined Brace "from operating and maintaining the drainage system for [the parcel containing] the wetland site." Id. The district court also ordered Brace to disassemble his drainage system and to restore the portion of his land "consisting of approximately thirty acres to its prior wetlands conditions." Id. The district court made its order binding upon transferees of the wetland property. See id.

Brace complied with this order by removing the drainage system. See id. He then brought an action alleging that as a result of his having to remove the drainage system, "a substantial portion [of his property] is permanently unusable by him for his farming operation and at least thirty acres have been taken for public purposes for public benefit and use, without just compensation." Id. The Corps responded by filing a motion for summary judgment. See id.

The district court denied that motion for summary judgment, stating that "the court has carefully examined the briefs and affidavits and determined that there are genuine issues of material facts in dispute and that the Fifth Amendment takings analysis requires the full development of a factual record at trial." Id. at 275-76. The government subsequently filed a second motion for summary judgment. See Brace II, 51 Fed. Cl. at 649. In Brace II the district court revisited the Corps' first motion for summary judgment as well as its second motion for summary judgment. See id. at 650. The court denied both motions. See id.

In Brace II, Brace continued to argue that "the government effectively took his property without just compensation when [he] was ordered to cease maintenance and operation of [the] drainage system on his property and to restore portions of the property to a prior condition which would exhibit wetland characteristics." Id. Brace also continued to argue that the government's action interfered with his reasonable, investment-backed expectations of being able to conduct a normal farming operation. See id. He based this argument on the fact that he purchased the property at issue from his father in 1975, which was after the passage of the CWA, but before the Corps redefined its interpretation of a "wetland" in 1977 - a redefinition that expanded the Corps' § 404 jurisdiction to his property. Id. (see also Brace I, 48 Fed. Cl. at 276). The court noted that since Brace I "the parties have stipulated that the relevant parcel for the purpose of an economic analysis is the . . . parcel of approximately 60 acres which contains the 30 acre wetland site, though the precise acreage of the parcel as a whole remains is dispute." Id.

The Court of Federal Claims first reexamined the Corps' first motion for summary judgment. See id. In Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104 (1978) the United States Supreme Court established three factors to apply when determining whether a regulatory taking has occurred. See id. at 651. The factors were: "(1) the character of the governmental action or regulation; (2) the economic impact of the regulation on the claimant; and (3) the extent to which the regulation has interfered with reasonable investment-backed expectations." Id. at 651 (citing Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211, 224-25 (1986) and Kaiser Aetna v. United States, 444 U.S. 164, 175 (1979)).

Since its holding in Penn Central, the Supreme Court has recognized "'two discrete categories of regulatory action as compensable without case-specific inquiry into the public interest advanced in support of the restraint.'" Id. (quoting Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1015 (1992)). The first type of regulatory action that the Court deemed to be a categorical taking "'encompasses regulations that compel the property owner to suffer a physical 'invasion' of his property.'" Id. (quoting Lucas, 505 U.S. at 1015). The second type of regulatory action that the Court considered to be a categorical taking "'is where the regulation denies the owner all economic and beneficial use of land.'" Id. (quoting Lucas, 505 U.S. at 1015). The Court described the second type of regulatory taking as "'extraordinary' and 'relatively rare.'" Id. (quoting Lucas, 505 U.S. at 1017-18).

In Palm Beach Isles Assocs. v. United States, 231 F.3d 1365 (Fed. Cir. 2000), the Federal Circuit noted that "'[s]ince Lucas, it has consistently been the law of [the Court of Appeals for the Federal Circuit] that the standard three-part Penn Central regulatory takings analysis is proper in all non-categorical, or partial takings cases.'" Id. (quoting Palm Beach Isles, 231 F.3d at 1367). Determining whether a regulatory taking has occurred "involves a 'weighing of private and public interests.'" Id. (quoting Florida Rock Indus., Inc. v. United States, 791 F.2d 893, 904 (Fed. Cir. 1986) and Agins v. City of Tiburon, 447 U.S. 255, 261 (1980)). The Federal Circuit explained that the Supreme Court "has implicitly recognized that the third Penn Central criterion, by itself, may be determinative over a takings claim." Id. (citing Good v. United States, 39 Fed. Cl. 81, 95 (1997) and Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1005 (1984)).

Based on the first and third Penn Central factors, the court in Brace I determined that "under either factor the government's action did not constitute a taking." Id. (citing Brace I, 48 Fed. Cl. at 278-79). The Brace I court also determined that there was not sufficient information to make a ruling with respect to the second Penn Central factor. See id. Because there was insufficient information, the Brace I court denied the government's motion to dismiss and ordered the parties to provide additional information to the court. See id. (citing Brace I, 48 Fed. Cl. at 284). The Brace II court made a similar determination.

In Brace II, the Court of Federal Claims concluded that:

In the instant case, the court has already found no taking to have occurred under the third prong of the Penn Central test. Thus, should plaintiff be found to have suffered a significant economic impact as a result of the regulation, the court's earlier finding that plaintiff did not have reasonable investment-backed expectations linked to the 30 acre wetlands prior to purchase might have been sufficient to support allowing defendant's motion for summary judgment, under other circumstances . . . . The absence of a factual record combined with recent developments in takings jurisprudence, however, does not support allowing defendant's motion for summary judgment.

Id. at 652.

The court added that it could not grant the Corps' motion for summary judgment because the size of the plaintiff's parcel as a whole had not been determined. See id. The court noted that this information is relevant in determining what the "'parcel as a whole' is for purposes of the analysis under the second Penn Central prong." Id. The court explained that "'[t]he economic analysis . . . is often expressed in the form of a fraction, the numerator of which is the value of the subject property encumbered by the regulation and the denominator of which is the value of the same property not so encumbered.'" Id. (quoting Walcek v. United States, 49 Fed. Cl. 248, 258 (2001)). The court stated that "'in order to derive this fraction, the court must first define the subject property to be valued.' The paucity of this information, relevant to the analysis under the second Penn Central prong and establishing whether the Army Corps of Engineers has jurisdiction over the 30 acres, does not allow the court to grant the defendant's motion for summary judgment." Id. (quoting Walcek, 49 Fed. Cl. at 258).

Next, the court examined the Corps' second motion for summary judgment. See id. The court noted that Brace's opposition to the government's second motion for summary judgment centered upon "the narrower scope of the . . . [CWA] . . . as provided by the Supreme Court in Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers ("SWANCC"), 531 U.S. 159 (2001)." Id. The SWANCC decision was issued after Brace I had been decided and before Brace II was litigated.

In SWANCC, the Solid Waste Agency of Northern Cook County ("county agency"), a combination of 23 Chicago cities and villages, purchased an abandoned gravel and sand pit in Northern Illinois for the purpose of developing the pit into a disposal site for non-hazardous solid waste. Id. (citing SWANCC, 531 U.S. at 162). The abandoned pit had filled with water over time and had become a habitat for migratory birds. Id. (citing SWANCC, 531 U.S. at 162). After purchasing the site, the county agency "filed for [§ 404] permits from the Army Corps of Engineers as some of the seasonal and permanent ponds where the migratory birds lived needed to be filled." Id. (citing SWANCC, 531 U.S. at 162). The Corps interpreted § 404(a) as giving them authority over the site and denied the county agency's request for a § 404 permit. See id. (citing SWANCC, 531 U.S. at 162-63).

The county agency brought an action in federal district court challenging the Corps' decision to deny the § 404 permit. See id. After the district court ruled in favor of the Corps, the county agency appealed to the U.S. Court of Appeals for the Seventh Circuit. See id. (citation omitted). The Seventh Circuit affirmed the district court's decision, ruling in favor the Corps. See id. (citation omitted). The county agency appealed the decision to the United States Supreme Court. See id. (citation omitted). The Supreme Court reversed the Seventh Circuit's decision. See id. (citing SWANCC, 531 U.S. 161-62).

The Court distinguished SWANCC from the facts presented in United States v. Riverside Bayview Homes, Inc., 474 U.S. 121 (1985), "where it held that the Corps had § 404(a) jurisdiction over wetlands adjacent to a navigable waterway, by pointing out that there 'was the significant nexus between the wetlands and 'navigable waters' that informed [their] reading of the CWA." Id. (citing SWANCC, 531 U.S. at 162). The Court added that "'[i]n order to rule for [the Corps] here, [it] would have to hold that jurisdiction of the Corps extends to ponds that are not adjacent to open water.'" Id. (citing 531 U.S. at 162) (emphasis supplied).

In SWANCC, the Court "refused to hold 'that isolated ponds, some only seasonal, wholly located within two Illinois counties, fall under § 404(a)'s definition of 'navigable waters' because they serve as habitat for migratory birds.'" Id. (citing SWANCC, 531 U.S. at 168). The Court added, "allowing the Corps 'to claim federal jurisdiction over ponds and mudflats falling within the 'Migratory Bird Rule' would result in a significant impingement of the States' traditional and primary power over land and water use.'" Id. (quoting SWANCC, 531 U.S. at 174).

Based on the intervening SWANCC decision, the Court of Federal Claims denied the Corps' second motion for summary judgment, stating that:

[i]t is unclear from the factual record whether a nexus exists between the 30 acres in question and an interstate water. Should the facts indicate that the 30 acres are not connected to an interstate water in any manner, then the Supreme Court's ruling in SWANCC renders the issue of whether a taking occurred moot, as the Army Corps of Engineers no longer has authority to regulate isolated ponds and wetlands not connected to interstate commerce. This lack of authority for the Corps would mean that plaintiff is free to utilize the totality of his property for planting crops.

Id. at 653.

The court noted that even if it operated on the assumption that there was sufficient information on the record, it could only grant the Corps' motion for summary judgment if the wetlands on Brace's property were connected to an interstate water. Id. The court stated that "[t]he Supreme Court's decision in SWANCC clearly shows that the Army Corps of Engineers lacks jurisdiction over plaintiff's land under the CWA if no nexus exists between the wetlands on plaintiff's land and an interstate channel." Id.

The court added that:

[o]nly if the evidence indicated that the wetlands on plaintiff's property were connected to an interstate water, might the court be able to allow defendant's motion for summary judgment. Furthermore, if the evidence indicated that no nexus existed between the wetlands and an interstate channel, defendant's motion for summary judgment could not be granted as the court would have to determine whether the plaintiff is entitled to compensation for the costs involved in converting the relevant acreage back into wetlands under the original consent decree.

Id.

The case was decided on February 11, 2002; this summary was prepared December, 2002.