City of Healdsburg (the City) appealed a district court's judgment in favor of Northern California River Watch (River Watch) that found the City in violation of the Clean Water Act (CWA)[1] for discharging sewage from a waste treatment plant into Basalt Pond (the Pond) without a permit. The precise issue was whether the Pond's waters and the surrounding area were subject to the CWA as "wetlands" "adjacent" to the Russian River (the River), a navigable river of the United States. The district court held that the Pond and its surrounding wetlands were subject to the CWA because they had a significant nexus to the River. The Ninth Circuit affirmed the district court's holding that the wetlands were covered by the CWA. The court also affirmed the district court's determination that two exceptions in the CWA, which the City had asserted as defenses, did not apply. The Ninth Circuit therefore held that the City, by discharging wastewater into the Pond without a National Pollutant Discharge Elimination System (NPDES) permit, had violated the CWA.

The Pond was actually a man-made pit filled with water, which an excavation company created by removing large amounts of sand and gravel from an area of land near the River. The pit and the River both sat on top of the same underground aquifer, and the pit eventually filled with water up to the line of the water table, creating a man-made pond. Depending on the height of the River's water, the distance between its edge and the edge of the Pond varied between fifty and several hundred feet, but a levee separated the River and the Pond such that their waters usually had no surface connection.

 The CWA protects "navigable waters,"[2] which the act defines as "waters of the United States."[3] Regulations promulgated by the Army Corps of Engineers (the Corps) specify that "waters of the United States" include wetlands that are adjacent to "waters of the United States."[4] The regulations define wetlands as "those areas that are inundated or saturated by surface or groundwater."[5] The regulations further specify that "adjacent wetlands" include "[w]etlands separated from other waters of the United States by man-made dikes or barriers."[6] 

In 1971, the City built a secondary waste treatment plant on the north side of the Pond, and in 1978, began discharging into the Pond.  The City did not obtain an NPDES permit, and had only a state water emission permit and the permission of the Pond's landowner.  The district court found that wastewater from the Pond percolated into the River through the wetlands, which filtered some pollutants and reduced the biochemical oxygen demand.  Chloride, of which the Pond had high levels due to naturally occurring salts and the City's wastewater, reached the River in high concentrations. The court found that, in addition to these physical and chemical connections, the Pond and its wetlands were connected to the River ecologically because they supported the same bird, mammal, and fish species. The district court concluded that because the River was a navigable water under the CWA, the Pond and its wetlands were subject to the CWA: the Pond, the wetlands, and the River had sufficient chemical, physical, and ecological connections to trigger CWA jurisdiction. The court held that such connections satisfied the requirement under the Supreme Court's holding in United States v. Riverside Bayview Homes, Inc. (Riverside Bayview) that "the relationship between waters and their adjacent wetlands provides an adequate basis for a legal judgment that adjacent wetlands may be defined as waters under the Act."[7]

On review, the Ninth Circuit first held that the Pond and its surrounding areas constituted wetlands under the CWA. The City argued that the Pond "should be characterized as an 'adjacent waterbody,' but not an 'adjacent wetland.'"[8] The Ninth Circuit reasoned that such a distinction was meaningless, because both the Pond and the wetlands, being "inundated or saturated by surface or groundwater,"[9] qualified as wetlands under the plain language of the regulations. The Ninth Court also rejected, without discussion, the possibility that the Pond and its wetlands were not covered by the CWA because they were man-made.[10]

The Ninth Circuit next addressed whether the Pond's wetlands, which were adjacent to the River, were subject to the CWA as "waters of the United States."[11] The district court had held that such wetlands were waters of the United States subject to the CWA because they satisfied Riverside Bayview's significant nexus requirement. After the district court issued its decision, however, the U.S. Supreme Court issued Rapanos v. United States,[12] which reexamined Riverside Bayview, but was a 4-4-1 plurality decision that provided no majority opinion. The Ninth Circuit followed Marks v. United States[13] and relied on Justice Kennedy's Rapanos concurrence, which narrowed the holding of Riverside Bayview.

 Justice Kennedy concluded in Rapanos that mere adjacency to navigable waters is not enough to make a wetland subject to the CWA. Rather there must be a "significant nexus,"[14] as described in Riverside Bayview, between the adjacent wetland and the navigable water.  But, Kennedy narrowed Riverside Bayview by defining a significant nexus as existing "if the wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity of other covered waters more than readily understood as navigable."[15] Justice Kennedy also specified that a "mere hydrologic connection should not suffice in all cases; the connection may be too insubstantial for the hydrologic linkage to establish the required nexus."[16] Justice Kennedy's concurrence also clarified that Solid Waste Agency of Northern Cook County v. United States Army Corps of Engineers (SWANCC),[17] which held that wetlands are not subject to the CWA if they are not connected to other waters covered by the CWA, did not overrule Riverside Bayview.

The Ninth Circuit applied Kennedy's concurrence and reviewed the district court's factual findings. The Ninth Circuit held that the physical, chemical, and ecological connections, which the district court had found existed between the Pond's wetlands and the River, were more than a mere hydrological link. Such connections, the Ninth Circuit held, sufficed as a significant nexus under Rapanos and justified the district court's finding that the Pond and its wetlands were subject to the CWA.

The Ninth Circuit also affirmed the district court's finding that two exceptions in the CWA did not apply to the Pond.  The first exception provided that waste treatment systems are not waters of the United States.[18] The court held this exception applies when the discharge is into a self-contained water body or into a water body already incorporated into a permitted treatment system. Because the Pond was neither self-contained nor part of an already-permitted system, the court held that this exception did not apply to the City's discharges into the Pond. The court also explained that, while this exception applies to discharges into waste treatment systems, "the CWA, however, still extend[s] to discharges from treatment ponds."[19]

The Ninth Circuit then turned to the second exception, which applies to "waterfilled . . . pits excavated in dry land for the purpose of obtaining fill, sand, or gravel."[20] The district court had held that this exception only applies to ongoing excavation operations and that there were no ongoing excavation operations at the Pond. The Ninth Circuit affirmed, explaining that, although the Pond was created through excavation, the exception did not apply because neither the City nor the owner of the Pond was currently using the Pond for excavation purposes.

The Ninth Circuit thus affirmed the district court's finding that a water-filled gravel pit and its wetlands, which a levee separated from a navigable river, were subject to the CWA because they had a significant nexus to the adjacent river.  The Ninth Circuit also affirmed the district court's determination that two exceptions to the CWA did not apply. By those holdings, the court held that the City had violated the CWA by discharging wastewater into the Pond without an NPDES permit.  In affirming the district court on the first issue, the court relied on Justice Kennedy's concurrence in Rapanos, making it the law for the Ninth Circuit. As a result, a wetland's adjacency to, or hydrologic connection with, a navigable water may not bring a wetland within the jurisdiction of the CWA.  Rather, there must be a "significant nexus" between the wetland and the adjacent navigable water body.