Key Points

• Ninth Circuit reaffirms the “significant nexus” test for determining whether filling certain wetlands in 2007 violates the Clean Water Act
• The narrower test for determining the Clean Water Act’s jurisdiction under the 2020 Navigable Waters Protection Rule did not apply since it postdated the 2007 filling of the wetlands.
• Wetlands in California are also subject to State Wetlands Procedures so that, even if the Biden Administration yet again redefines the Clean Water Act’s jurisdiction, the state will continue its significant role in regulating wetlands.

For decades, wetlands have plagued regulators. The federal government can regulate water quality under the Clean Water Act, while land use regulation is typically a state and local power. The transition from land to water, however, is not always clear. Difficulties delineating where the land ends and where the water begins—as with marshes, swamps, bogs, or wetlands—make it challenging to know whether you need a federal or state permit, both, or neither.

The Ninth Circuit recently addressed this challenge in Sackett v. EPA. There, the court held that construction work that filled in wetlands required a federal permit. This holding may have limited practical application for future projects in California. But the court’s analysis provides a helpful reminder about challenges that landowners and project proponents face when determining whether projects involving wetlands require a permit.

Background on federal regulation of wetlands

Both the U.S. Environmental Protection Agency and the Army Corps of Engineers regulate “waters of the United States” under the Clean Water Act. The Act prohibits, in part, dredging or filling “waters of the United States” without a “section 404 permit.”

But what is a “water of the United States” has been notoriously unclear. In its 2006 opinion Rapanos v. United States, the U.S. Supreme Court weighed in on the issue with a fractured decision that enjoyed no majority opinion. Justice Scalia’s plurality opinion found that “waters of the United States” extend only to relatively permanent, standing, or flowing bodies of water and to wetlands with a continuous surface connection to those permanent waters. But Justice Kennedy’s concurring opinion—to which no other justice joined—found that the Clean Water Act also requires some “significant nexus” between wetlands and traditional navigable waters.

Shortly after Rapanos, the Ninth Circuit held in Northern California River Watch v. City of Healdsburg that Justice Kennedy’s “significant nexus” test was the controlling law from the fractured Rapanos decision.

The Obama and Trump administrations then spent over a decade playing regulatory volleyball. First, the Obama Administration followed Justice Kennedy’s “significant nexus” test to define “waters of the United States” broadly. Then, as we reported, the Trump Administration replaced that definition with a narrower rule that tracks Justice Scalia’s plurality opinion that requires wetlands to have a continuous surface connection to permanent waters.

Now, the Biden Administration recently announced that it will again revise the definition of “waters of the United States.”

Background in California’s regulation of wetlands

Recognizing that these ebbs and flows in federal jurisdiction over wetlands created uncertainty and potential regulatory gaps, California’s State Water Resources Control Board outlined steps for establishing a statewide wetland permitting program. These efforts led to the State Wetland Definition and Procedures for Discharges of Dredged or Fill Material to Waters of the State (“State Wetlands Procedures”), which went into effect on May 28, 2020. The State Wetland Procedures not only intend to fill potential federal regulatory gaps, but also intend to provide a uniform definition that regional water quality control boards must follow.

The Sacketts’ wetlands project

While Sackett v. EPA did not involve California property, the Ninth Circuit case still has implications for California properties. The Sacketts’ property is 300 feet from the navigable Priest Lake, one of Idaho’s largest lakes. Across the street is a large wetlands complex that drains into a tributary, which feeds a creek that empties into Priest Lake. After the Sacketts bought their property, they obtained building permits and began backfilling wetlands on their property with sand and gravel. The EPA then inspected and took photographs of the property.¹

The EPA issued a compliance order in 2007 requiring the Sacketts to immediately restore the wetlands, otherwise risk over $40,000 in civil penalties per day.

The Clean Water Act can regulate wetlands on the Sacketts’ property

The Sacketts challenged the compliance order in 2008, and the case has wound through the courts ever since. This journey includes a trip to the Supreme Court in 2012, which held that the compliance order was a “final agency action” subject to judicial review.²

The case then made its way back to the Ninth Circuit. After the district court affirmed the EPA’s authority to issue the compliance order, the EPA withdrew the order. Still, the Sacketts maintained their appeal. The Ninth Circuit then found in the EPA’s favor for three reasons.

First, the EPA withdrawing the compliance order did not moot the case. Unless the EPA would disavow the prior jurisdictional determination of the Sackett’s property, the EPA could later return with another compliance order. Thus the parties’ dispute remained “alive and well.”

Second, the court rejected the Sacketts’ argument that Justice Scalia’s narrow plurality opinion in Rapanos controlled. The court instead reaffirmed its holding in Healdsburg that, at least in the Ninth Circuit, Justice Kennedy’s “significant nexus” test controls.

Third, the court applied the regulations in effect when the EPA issued its 2007 compliance order. While the 2020 Navigable Waters Protection Rule later narrowed the Clean Water Act’s scope, that regulatory change was not retroactive. So the new rule could not affect the Sacketts’ case.

For these reasons, the Ninth Circuit applied the “significant nexus” test. It then found that the wetlands on the Sacketts’ property were adjacent to and could significantly affect the integrity of navigable water (Priest Lake). The court thus found that the Clean Water Act can regulate the Sacketts’ property.

Takeaways from Sackett for California properties

Given Sackett, developers and public agencies in California should consider these four takeaways:

1. The 2020 Navigable Waters Protection Rule currently regulates federal permitting of dredging or filling wetlands, which follows Justice Scalia’s test that wetlands have a continuous surface connection to a relatively permanent body of water.
2. But if a project fills wetlands before June 22, 2020, then the Navigable Waters Protection Rule does not apply and may be subject to Justice Kennedy’s significant nexus test.
3. As the Biden Administration considers revising the Navigable Waters Protection Rule, we can expect the Clean Water Act’s regulation of wetlands to change again soon.
4. Whatever changes may come from the federal government, you should consider whether your projects require a waste discharge requirement or similar authorization under California’s State Wetlands Procedures.
   
   

Unfortunately, knowing whether and how federal or state laws regulate wetlands is complicated. You often may need a wetlands scientist or a lawyer to assist. But whomever you enlist to delineate wetlands on your property, be sure they consult the State Wetlands Procedures.

For more information about how these laws may affect you, please watch the August 31, 2021 “Rules on Projects Impacting Wetlands and Other Waters,” presented to the Bar Association of San Francisco and featuring Hanson Bridgett attorney, Sean Herman.

Should you have any further questions or concerns about how these laws affect you,contact our Water Law attorneys.

² Sackett v. EPA, 566 U.S. 120 (2012)