Clean Water Act Update: Adjacent Wetlands Rule for Establishing Clean Water Act Regulatory Authority Does Not Apply to a Non-Wetland Diked Pond

By Robert Uram and Aaron Foxworthy

In San Francisco Baykeeper v. Cargill Salt Division, the Ninth Circuit Court of Appeals provided further guidance on the limits of Clean Water Act (“CWA”) regulatory authority.  ___ F.3d ___; Case No. 05-15051, slip op. at 2666 (9th Cir., filed March 8, 2007).  Cargill argued that a non?navigable, non?wetland pond does not fall within the Environmental Protection Agency’s definition of jurisdictional water of the United States simply by virtue of its adjacency to a navigable waterway.  The Court of Appeals agreed, holding that pursuant the agency’s CWA regulations, wetlands are the only waterbodies that  fall within CWA regulatory authority based on their adjacency to navigable waters of the United States.  Since the waterbody in question was a diked pond, not a wetland, the adjacency rule did not apply.  Baykeeper argued that the pond was nevertheless subject to regulatory authority because attendant circumstances indicated it had a “significant nexus” to navigable waters.  The court rejected this argument finding no indication in previous case law that the significant nexus test is intended to apply to waterbodies other than wetlands, and that, in any event, the evidence presented by Baykeeper did not indicate that water ever flowed from the pond to adjacent navigable waters.

Cargill operates a salt manufacturing facility at the edge of San Francisco Bay.  Cargill maintains a waste containment pond adjacent to Mowry Slough, undisputedly a navigable water of the United States subject to CWA regulatory authority.  The pond and the Slough are separated by an earthen levee.  Baykeeper brought suit pursuant to section 402 of the CWA, which prohibits the discharge of pollutants to “waters of the United States” without a permit.  Baykeeper argued that the pond is a water of the United States because of its adjacency to a water of the United States, and therefore, Cargill required a permit for discharge of salt manufacturing waste to the pond.

The district court agreed with Baykeeper, finding that the same characteristics that justify protection of adjacent wetlands also apply to adjacent ponds.  As to the pond in question, the district court also found it persuasive that the soils between the pond and the Slough were saturated, that the levee separating the two leaked, and that the levee allowed Slough water to enter the pond at certain very high tides (there was no evidence, however, that water flowed the other direction, i.e., from the pond to the Slough, during high tide).

On appeal, the Ninth Circuit reversed.  The court looked to the definition of “waters of the United States” set out in CWA regulations: “[w]aters of the United States means [among other things] …‘Wetlands’ adjacent to [waters of the United States].”  40 CFR § 122.2.  The court found this section of the regulation to be unambiguous.  “[T]he only areas that are defined as waters of the United States by virtue of their adjacency are wetlands.”  Slip op. at 2674.  Given the lack of ambiguity in the regulation, the court turned its attention to whether the regulation was nevertheless unreasonable.  The court found that in promulgating its regulations, EPA had made a reasonable distinction between adjacent wetlands and adjacent non-wetland waterbodies, and neither Baykeeper nor the district court had shown that the regulation was unreasonable in making such a distinction.  Thus, the court found EPA's regulatory definition warranted deference from the court, and under that definition, non-wetland ponds cannot be considered waters of the United States by virtue of their adjacency.

In addition, the court rejected Baykeeper’s characterization of Supreme Court precedent that all waterbodies with a "significant nexus" to navigable waters should be subject to CWA regulatory authority.  The court found no basis in the cited Supreme Court decisions to expand the CWA regulatory authority to all adjacent waterbodies with a significant nexus to navigable waters.  In any event, the court also rejected Baykeeper’s contention that the pond had a significant nexus to the Slough.  “By any permissible view of the evidence, the effect of Cargill’s pond on the Slough is speculative . . . [since] there is no evidence that any water ever flowed from the pond to the Slough.”  Id.  Thus, the court rejected Baykeeper’s "adjacency-plus-nexus" argument for the non-wetland pond.

Lastly, the court declined to consider Baykeeper’s characterization of the pond as either a tributary to the Slough or as a waterbody whose use or misuse could affect interstate commerce, two additional categories of waters of the United States.  The court noted that Baykeeper and Cargill entered into a settlement agreement whereby Baykeeper waived its right to assert theories on appeal other than "the Adjacent Waters Theory upon which the District Court based its ruling."  Slip op. at 2682.  The court found these last arguments to be precluded by the waiver.

This case affirms the limits set by federal regulations for CWA regulatory authority, specifically that waterbodies other than wetlands are not subject to regulation solely by virtue of their adjacency to waters of the United States.

For further information please contact Robert Uram and Aaron Foxworthy.  Robert Uram is a member of the Real Estate, Land Use, and Environmental Practice Group in the firm’s San Francisco Office.  Aaron Foxworthy is an associate in the Real Estate, Land Use and Environmental Practice Group in the firm’s San Francisco Office.

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