The federal government’s strategy for regulating development on isolated wetlands because they may provide migratory bird habitat is being challenged in court by two home builder associations.

In January, the home builders filed suit against the U.S. Army Corps of Engineers and the EPA, challenging the agencies’ position that “isolated” wetlands fall under federal regulatory jurisdiction if they are likely to provide habitat for waterfowl or migratory birds.

If successful, the suit could further limit the federal government’s ability to protect Mid-Atlantic wetlands that are not clearly linked to major waterways.

The government’s legal basis for regulating those wetlands has been unclear since December 1997, when the Fourth Circuit of the U.S. Circuit Court of Appeals ruled that the Corps exceeded its authority when it regulated what the court construed to be isolated, intrastate wetlands at a 10,000-acre community being developed in Maryland’s Charles County. [See “Ruling puts some wetlands on shaky ground,” Bay Journal, March 1998.]

The developer in that case was fined $4 million for filling 50 acres of wetlands. At that time, it was the largest judgment for wetlands destruction under the Clean Water Act. But in a 2–1 decision, the court ruled that the regulation was “invalid” because the wetlands were not waters of the United States as defined by the Clean Water Act because they were not directly connected to any navigable waterway used in interstate or foreign commerce.

The ruling affected the federal government’s wetland activities in the Fourth Circuit, which includes Maryland, Virginia, West Virginia, North Carolina and South Carolina.

Within the Bay watershed, the ruling was of particular concern in Virginia which, unlike Maryland, does not have a state program to regulate development in the nontidal wetlands affected by the ruling. Without protecting those wetlands, the state could have difficulty achieving its Bay Program commitment to achieve a “net gain” in wetland acreage.

In North Carolina, which did not have a wetland program until March 1, the Corps estimated that at least 6,000 acres of wetlands had been drained in the southeastern corner of the state since the 1997 ruling.

The Corps chose not to appeal the decision to the U.S. Supreme Court, where a decision against the government would have extended the Circuit Court’s ruling nationwide. Instead, the Corps and the EPA last summer issued guidance to their staff saying that links between isolated wetlands and navigable waterways could be established through other means under the Clean Water Act. [See “Agencies assert their authority to regulate ‘isolated’ wetlands,” Bay Journal, July-August 1998].

For example, the guidance said a direct connection between a wetland and a waterbody used in interstate or foreign commerce could be made by showing that the wetland was used by migratory waterfowl or game birds sought by hunters and photographers or protected by international treaty.

The January suit, filed by the National Association of Home Builders and the Peninsula Housing and Building Association in the U.S. District Court for the Eastern District of Virginia, seeks to have the court rule on the legitimacy of the “migratory bird test” for determining wetland regulation.

“Because the Corps defines wetlands and waters broadly — an area can be dry at the surface year in and year out and still qualify as a ‘wetland’ for regulatory purposes — and because all places on Earth are susceptible to bird use, the agencies’ bird test extends federal authority over millions of shallow depressional areas,” said the National Association of Home Builders.

The two groups argue that Congress, in the Clean Water Act, never intended for the federal government to regulate isolated wetlands. They also say the Corps and EPA exceeded their regulatory authority under the Commerce Clause of the Constitution.

Meanwhile, the Corps has decided not to appeal another court decision that struck down the so-called “Tulloch Rule,” which prohibits landowners from removing soils from wetlands without a permit. The Corps adopted the rule in 1993 to get around what it considered to be a loophole in the Clean Water Act: The Act regulates the dredging and filling wetlands, but not necessarily activities such as land clearing and ditching, which could lead to them being drained.

Under the Tulloch rule, the Corps began regulating those activities under the argument that land clearing or ditching could not take place without some “incidental fallback” of dirt into the wetland. That fallback, the Corps said, constituted a discharge, or filling, of the wetlands which could be regulated.

The rule was quickly challenged by builders, mining interests, road builders and others. The Corps lost three court decisions on the matter, and in December decided not to appeal to the U.S. Supreme Court.

“With these three legal decisions invalidating the Tulloch Rule, I think the courts have given the U.S. Army Corps of Engineers a lesson in environmental law,” said the incoming president of the National Home Builders Association, Charlie Ruma. “Since 1977, Congress has made it clear that the Corps is to provide an efficient wetlands regulatory program. If the Corps practices legislation through regulation and tries to expand its authority beyond what Congress intended under the Clean Water Act like it did with the Tulloch Rule, the Corps will soon find itself with an illegal, invalid regulation.”