Baccarat Fremont Developers, LLC (Baccarat) appealed a district court's grant of summary judgment to the U.S. Army Corps of Engineers (the Corps) that allowed the Corps to retain jurisdiction, based on the Clean Water Act (CWA),[1] over 7.66 acres of wetlands owned by Baccarat. The Ninth Circuit affirmed the summary judgment, holding first, that in general, no significant hydrological or ecological connection is required between navigable waters of the United States and an adjacent wetland in order for the Corps to assert CWA jurisdiction over the wetland, and further, that Baccarat's 7.66 acres of wetlands were, in any case, significantly connected to navigable waters.
The CWA protects "navigable waters,"[2] which the Act defines as "waters of the United States."[3] The Corps provides, in a regulation, that the term "waters of the United States" encompasses many different categories of waters including "[w]etlands adjacent" to any of the other waters that qualify as "waters of the United States."[4] The regulations further provide that "'adjacent' means bordering, contiguous, or neighboring."[5] According to the Corps' regulations, the CWA thus protects not only "navigable waters," but also wetlands "adjacent" to navigable waters and consequently the Corps may assert jurisdiction over such wetlands.
Baccarat planned to develop a research and manufacturing facility in Fremont, California, on 30.98 acres abutting two flood control channels that connected to the San Francisco Bay and were undisputedly navigable waters.[6] The 7.66 acres of wetlands and the two channels were, at their closest point, sixty-five to seventy-feet apart. Man-made berms with a maintenance road running on top of them separated the wetlands from the channels.
In 1998, following an inquiry from Baccarat, the San Francisco District of the Corps (the District) asserted jurisdiction over the wetlands, based on the finding that the wetlands were adjacent to navigable waters and therefore fell within the purview of the CWA. Baccarat subsequently applied to the Corps for a CWA permit, to fill 2.36 acres of the wetlands. Following the Supreme Court's 2001 decision in Solid Waste Agency of N. Cook County v. U.S. Army Corps of Engineers (SWANCC),[7] however, Baccarat requested that the Corps reconsider its jurisdiction. The Corps reasserted jurisdiction explaining that the outcome in SWANCC did not affect Corps jurisdiction over wetlands adjacent to "a tidal waterway," like Baccarat's.[8] Baccarat appealed the District's decision to the South Pacific Division of the Corps (the Division). The Division agreed with the District that SWANCC did not interfere with the Corp's jurisdiction over adjacent wetlands in general, but nonetheless, remanded to the District for a more thorough assessment of the adjacency of Baccarat's wetlands' to navigable waters.[9]
On remand the District determined that that the wetlands were adjacent to navigable waters because they were in reasonable proximity to the channels; contributed functionally to nearby tidal waters and the overall aquatic environment; were functionally important given the reduction of wetlands in the area; were within the 100 year floodplain of tidal waters; and were part of the same hydric soil unit as the area underlying the tidal waters. The District added that the berms did not defeat adjacency because 33 C.F.R. § 328.3(c) provides "[w]etlands separated from other waters of the United States by man-made dikes or barriers, natural river berms, beach dunes and the like are 'adjacent wetlands.'"
In February, 2002, the District granted Baccarat a CWA permit to fill 2.36 acres of the wetlands under the condition that Baccarat enhance the remaining 5.3 acres of wetlands and create a minimum of 2.36 new acres of on-site wetlands. Baccarat then filed suit in California Superior Court, seeking declaratory and injunctive relief from the Corps' assertion of jurisdiction over the wetlands, but the suit was removed to federal district court where the Corps moved successfully for summary judgment.[10]
The Ninth Circuit applied a de novo[11] standard of review to the district court's grant of summary judgment and construed all evidence in a manner most favorable to the nonmoving party[12] in assessing whether the Corps' assertion of jurisdiction was "arbitrary, capricious, or an abuse of discretion, or otherwise not in accordance with the law" under the Administrative Procedure Act.[13]
The Ninth Circuit concluded that the Corps satisfied the arbitrary and capricious standard because the adjacency of Baccarat's wetlands to navigable waters supported the Corps' jurisdiction over the wetlands. Baccarat argued however, that as a result of SWANCC, mere adjacency to navigable waters was no longer sufficient to support Corps jurisdiction over a wetland, but that a hydrological or ecological connection was also necessary. The Ninth Circuit disagreed with Baccarat's reading of SWANCC stating that the case "did not address the Corps' adjacency jurisdiction."[14] The court pointed out that SWANCC dealt with an entirely different issue, that of isolated ponds and whether their use by migratory birds provided a sufficient nexus with commerce to support jurisdiction.
For authority on adjacency the Ninth Circuit referred instead to United States v. Riverside Bayview Homes, Inc.,[15] in which the Supreme Court upheld the Corps' jurisdiction over wetlands adjacent to navigable waters. In Riverside Bayview Homes, the Court concluded that the Corps could assert jurisdiction over all wetlands adjacent to navigable waters because "the Corps' ecological judgment about the relationship between waters and their adjacent wetlands provides an adequate basis for a legal judgment."[16] Baccarat argued that Riverside Bayview Homes indicated that the Corps could only assert jurisdiction over those adjacent wetlands that showed evidence of a hydrological and ecological connection to navigable waters, otherwise the assertion of jurisdiction would not be factually based. The Ninth Circuit countered that under Riverside Bayview Homes, the Corps' determination that a majority of adjacent wetlands had important ecological connections to navigable waters provided sufficient basis for the Corps' regulation asserting jurisdiction over all wetlands adjacent to navigable waters.
The Ninth Circuit then distinguished one of its prior cases, Headwaters, Inc. v. Talent Irrigation District,[17] which had suggested that in order for a tributary to fall under Corps jurisdiction it must "exchange water, at least intermittently" with navigable waters.[18] The court emphasized that Headwaters, Inc. pertained to tributaries not to adjacent wetlands. The Ninth Circuit further supported its conclusion by likening the situation in Baccarat to a Sixth Circuit decision, Carabell v. U.S. Army Corps of Eng'rs,[19] in which the Sixth Circuit had emphasized Congress' "unequivocal acquiescence to, and approval of, the Corps' regulations interpreting the CWA to cover wetlands adjacent to navigable waters."[20] The Ninth Circuit concluded that the Corps did not have to establish a connection between Baccarat's wetlands and the flood control channels to establish CWA jurisdiction over the wetlands because, as the Corps' regulations indicate, and as the Supreme Court in Riverside Bayview Homes upheld, adjacency alone suffices.
Finally, the court added that even if the CWA did require the Corps to demonstrate a connection between navigable waters and adjacent wetlands in order to assert jurisdiction over the wetlands, the District had already done so on remand from the Division. The Ninth Circuit ultimately upheld the district court's grant of summary judgment because the Corps' assertion of jurisdiction over Baccarat's wetlands was not arbitrary and capricious
In summary, the Ninth Circuit concluded that the result in SWANCC did not alter the Supreme Court's prior conclusion in Riverside Bayview Homes that the Corps' jurisdiction over wetlands adjacent to navigable waters, as established in the Corps' regulations, is appropriate under the CWA. The Ninth Circuit consequently, determined that Baccarat's wetlands fell under the Corps' jurisdiction because they were adjacent to recognized navigable waters--flood control channels that were linked to San Francisco Bay. The court added that Baccarat's wetlands would have fallen within the Corps' jurisdiction even if adjacent wetlands had to be hydrologically and ecologically connected to navigable waters to be protected under the CWA because the Corps had sufficiently demonstrated such a link.
[4] 33 C.F.R. § 328.3 (2005).
[5] Id. § 328.3(c).
[6] "The parties agree[d] that the . . . flood control channels contain waters of the United States." Baccarat Fremont Developers, LLC v. U.S. Army Corps of Eng'rs, 425 F.3d 1150, 1154 (9th Cir. 2005).
[9] To confirm jurisdiction initially, the District had only noted that the channels were within 250 feet of Baccarat's property, that under 33 C.F.R § 328.3(c) man-made berms do not defeat adjacency, and that water would have flowed from the wetlands into the channels during storms if not for the berms. The Division deemed this assessment inadequate and noted in particular that whether the wetland's water would have flowed into the channels but for the berms, was irrelevant to the question of Corps jurisdiction. Baccarat, 425 F.3d at 1152.
[10] Baccarat also brought suit against Lt. Colonel O'Rourke of the Corps, the State Water Resources Control Board and its Director, Celeste Cantu, the San Francisco Regional Water Quality Control Board and its Executive Officer, Loretta K. Barsamian, and the City of Fremont. The district court granted Fremont's motion to dismiss and remanded the claims against state defendants to state court.
[13] 5 U.S.C. § 706(2)(A) (2000). The arbitrary and capricious standard applies where resolution of factual disputes implicating substantial agency expertise is required. Marsh v. Oregon Natural Res. Council, 490 U.S. 360, 375-76 (1989). A court may reverse under the arbitrary and capricious standard only if the agency has "relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise." Baccarat, 425 F.3d at 1154 (citing Pac. Coast Fed'n of Fishermen's Ass'ns, Inc. v. Nat'l Marine Fisheries Serv., 265 F.3d 1028, 1034 (9th Cir. 2001)).
