The Supreme Court ruled in June that there are limits to the federal government’s authority to regulate wetlands under the Clean Water Act. But in a fractured decision, the court failed to agree on the extent of those limits.

The decision, in which five justices agreed that the Corps of Engineers exceeded its authority in blocking construction on two Michigan wetlands miles from a navigable waterway, leaves it unclear how closely a wetland must be tied to a “navigable water” to be protected by the federal government.

“The court is clearly troubled by the federal government’s view that it can regulate every pond, puddle and ditch in our country,” said Reed Hopper, a Pacific Legal Foundation attorney who represented one of the landowners in the case.

Many observers said the decision would likely spur more court challenges, and may result in federal agencies rewriting their regulations. The ultimate outcome has the potential to affect a huge amount of wetland areas in the Bay watershed.

“While this decision does not rewrite the law, it will almost certainly lead to further efforts by polluters to cut off clean water protections for rivers and creeks throughout the nation,” said David Baron, managing attorney for the group Earthjustice.

A plurality opinion, written by Justice Antonin Scalia, agreed with Michigan landowners Keith Carabell and John Rapanos that the Corps of Engineers and the EPA misinterpreted the Clean Water Act when denying permits.

Carabell wanted to build condominiums on wetlands about a mile from Lake St. Clair in Macomb County, MI. Rapanos filled in wetlands near Midland, MI, on property that is about 20 miles from a river that empties into Lake Huron. Rapanos was prosecuted by the federal government and faced a separate civil lawsuit.

Scalia was hostile to the government’s authority to regulate wetlands, writing that the Army Corps of engineers has “stretched the term ‘waters of the United States’ beyond parody” and “exercises the discretion of an enlightened despot.” He said only wetlands along streams with a “continuous surface connection” to navigable waterways were subject to regulation.

The law, he wrote, does not cover “channels through which water flows intermittently or ephemerally, or channels that periodically provide drainage for rainfall.” He added that a wetland may not be considered adjacent to a navigable waterway by “mere hydrologic connection.”

Scalia gained only three supporters in his opinion—Chief Justice John Roberts, and justices Clarence Thomas and Samuel Alito, Jr. It was the first major environmental ruling for Roberts and Alito.

Justice Anthony Kennedy wrote a separate concurring opinion, saying the Corps needed to determine whether a site it regulates has a “significant nexus” with navigable waters.

He said the Corps must show that, for regulatory purposes, a tributary connection was “significant enough that wetlands adjacent to them are likely, in the majority of cases, to perform important functions for an aquatic system incorporating navigable waters.”

Kennedy did not say whether the wetlands at issue in the case met that test, but agreed to send it back to lower courts for review.

But Kennedy rejected many of the arguments made by Scalia, which he labeled “unduly dismissive” of the national interest. “Important public interest are served by the Clean Water Act in general and by the protection of wetlands in particular,” Kennedy wrote.

Yet he also disagreed with the four dissenters, who he said “would permit federal regulation whenever wetlands lie alongside a ditch or drain, however remote and insubstantial, that eventually may flow into navigable waters.”

In a dissenting opinion, Justices John Paul Stevens, David Souter, Ruth Bader Ginsburg and Stephen Breyer said the Corps used a “reasonable interpretation” of the law, which they noted was intended to “restore and maintain the chemical, physical and biological integrity” of the nation’s waterways.

The fractured opinions led some to call it a 4-1-4 verdict. The Bush administration defended the law and had urged the court to stay out of the case.

Roberts said the result was confusing and that “lower courts and regulated entities will now have to feel their way on a case-by-case basis.”

Stevens predicted developers will be confused about whether they must get permits to do work, and federal regulators will struggle to apply the test spelled out by Kennedy to determine whether land has a connection to a navigable waterway.

The ultimate outcome of the issue has huge ramifications for the Bay. A review by EPA Region III in 2003 concluded that restricting federal jurisdiction to areas that appear to lack a permanent surface water connection to “navigable waters” would remove about 438,000 acres, or 12 percent of the region’s wetlands, from federal protection.

The review concluded that if federal jurisdiction was excluded from wetlands tied to small perennial streams and intermittent or ephemeral headwaters, 1.3 million acres, or about 36 percent of the region’s wetlands, would lose protection.

Region III includes Virginia, West Virginia, Maryland, Delaware, Pennsylvania and the District of Columbia.

Wetlands in headwater areas provide important habitat for wildlife and are particularly important in filtering pollutants before they reach the streams.

The Chesapeake Bay Foundation, in a friend-of-the-court filing in the Supreme Court case, had argued that “the ecological and economic health of the Chesapeake Bay is ‘inseparably bound up’ with the watershed’s non-navigable tributaries and adjacent wetlands.”

Although states in the region have programs to regulate wetlands, state officials have said in the past that they would be under pressure to weaken programs if federal protections were loosened.

— The Associated Press contributed to this report