Baccarat Fremont v. U.S. Army Corps, 03-16586.

• Citation: 425 F.3d 1150
• Decision Date: 14 October 2005
• Docket Number: No. 03-16586.,03-16586.
• Parties: BACCARAT FREMONT DEVELOPERS, LLC, a California limited liability company, Plaintiff-Appellant, v. UNITED STATES ARMY CORPS OF ENGINEERS; Timothy A. O'Rourke; San Francisco District of United States Army Corps of Engineers; State Water Resources Control Board; Celeste Cantu, Executive Officer of State Water Resources Control Board; San Francisco Regional Water Quality Control Board; Loretta K. Barsamian, Executive Officer of San Francisco Regional Water Quality Control Board; City of Fremont, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

425 F.3d 1150

BACCARAT FREMONT DEVELOPERS, LLC, a California limited liability company, Plaintiff-Appellant, v. UNITED STATES ARMY CORPS OF ENGINEERS; Timothy A. O'Rourke; San Francisco District of United States Army Corps of Engineers; State Water Resources Control Board; Celeste Cantu, Executive Officer of State Water Resources Control Board; San Francisco Regional Water Quality Control Board; Loretta K. Barsamian, Executive Officer of San Francisco Regional Water Quality Control Board; City of Fremont, Defendants-Appellees.

No. 03-16586.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 16, 2005.

October 14, 2005.

Robert R. Moore and David H. Blackwell, Allen, Matkins, Leck, Gamble & Mallory, San Francisco, CA, for the plaintiff-appellant.

Todd S. Kim, U.S. Department of Justice, Washington, DC, James A. Coda and David M. Shapiro, Office of the U.S. Attorney, San Francisco, CA, Mark A. Rigau and Thomas S. Sansonetti, U.S. Department of Justice, San Francisco, CA, Jack M. Kerns, U.S. Army Corps of Engineers, San Francisco, CA, for the defendants-appellees.

Appeal from the United States District Court for the Northern District of California; Claudia Wilken, District Judge, Presiding. D.C. No. CV-02-03317-CW.

Before: D.W. NELSON, W. FLETCHER, and FISHER, Circuit Judges.

WILLIAM A. FLETCHER, Circuit Judge:

Baccarat Fremont Developers, LLC ("Baccarat") seeks to set aside the determination by the Army Corps of Engineers (the "Corps") that under the Clean Water Act ("CWA") it has jurisdiction over 7.66 acres of wetlands located on property owned by Baccarat in Fremont, California. The Corps asserts jurisdiction based on the fact that the wetlands are adjacent to waters of the United States. Baccarat argues that after the Supreme Court's decision in Solid Waste Agency of N. Cook County v. United States Army Corps of Engineers, 531 U.S. 159, 121 S.Ct. 675, 148 L.Ed.2d 576 (2001) ("SWANCC"), adjacency is no longer sufficient to establish the Corps' jurisdiction under the CWA. In Baccarat's view, the Corps failed to demonstrate an adequate hydrological or ecological connection between these particular wetlands and the adjacent waters of the United States. We affirm the district court's grant of summary judgment in favor of the Corps.

I. Background

In July 1997, Baccarat purchased a 30.98 acre site ("the site") near San Francisco Bay in Fremont, California, on which it planned to develop a six-building office, research, and manufacturing facility. The site is roughly rectangular. It is bordered on the north by Cushing Parkway, on the east by Fremont Boulevard, and on the south and west by property owned by the Alameda County Flood Control District ("ACFCD"). Two ACFCD flood control channels run parallel to the southern and western boundaries of the site. The flood control channels are navigable and connect with the Bay.

The site contains 7.66 acres of wetland. The wetlands are separated from the flood control channels by man-made berms, which follow the southern and western boundaries of the site. A maintenance road runs on top of the berms. If the berms were removed, the wetlands would connect directly to the flood control channels. Baccarat asserts that if the berms were removed, the wetlands would drain entirely. At the closest point, the wetlands are 65-70 feet from the flood control channels. The wetlands on the site are separated into six delineated areas, five of which are at issue in this case. The sixth area (designated Wetland 4) receives tidal flow through a culvert from an ACFCD channel, and the Corps' jurisdiction over the wetlands in that area is not in dispute.

In February 1998, at Baccarat's request, the Corps' San Francisco District ("the District") determined that it had jurisdiction under the CWA over 7.66 acres of wetland on the site.

Baccarat then sought a permit from the District to fill 2.36 of those acres. On January 29, 2001, Baccarat requested that the Corps reconsider its jurisdiction over the wetlands on the site in light of the Supreme Court's decision in SWANCC. By a letter dated May 8, 2001, the District reaffirmed its determination of jurisdiction, explaining that SWANCC "did not eliminate the Corps' authority to regulate wetlands adjacent to a tidal waterway." The District noted that the flood control channels are "within 250 feet of the site's western and southern boundaries," and that under 33 C.F.R. § 328.3(c), the presence of the man-made berms did not defeat adjacency. Finally, the District noted that water from the wetlands would flow into the flood control channel during storms if not for the man-made berms.

Baccarat appealed the District's determination to the Corps' South Pacific Division ("the Division"). After an appeal conference and site visit, the Division issued its decision on October 25, 2001. The Division rejected Baccarat's contention that SWANCC modified the Corps' jurisdiction over adjacent wetlands. However, the Division found that the District had not provided sufficient evidence for its adjacency determination, and that the District's finding that the wetlands would drain into the ACFCD channels but for the berms was irrelevant to the jurisdictional determination. The Division remanded to the District.

On January 28, 2002, the District determined once again that the wetlands on the site are adjacent to tidal waters and thus subject to the Corps' jurisdiction under the CWA. In an accompanying Memorandum for Record, the District set forth six reasons for so holding: (1) that barriers such as berms do not defeat adjacency pursuant to 33 C.F.R. § 328.3(c); (2) that the wetlands are in reasonable proximity to the ACFCD flood control channels; (3) that the wetlands serve important functions that contribute to the aquatic environment in general and to the nearby tidal waters in particular; (4) that the wetlands' functions are particularly important given the reduction of wetlands in the San Francisco Bay area; (5) that the wetlands are within the 100 year floodplain of tidal waters; and (6) that the wetlands are part of a hydric soil unit that is contiguous with the area covered by tidal waters. The District noted that it agreed with the Division that it was irrelevant to the jurisdictional determination that the wetlands would drain into the ACFCD channels but for the berms. The District's January 28, 2002, decision was the Corps' final decision under 33 C.F.R. § 331.10.

On February 6, 2002, the Corps offered Baccarat a permit to fill 2.36 acres of wetland, subject to the condition that it (1) create on-site a minimum of 2.36 acres of seasonal freshwater wetlands and (2) enhance the remaining 5.3 acres of existing brackish wetlands. Baccarat signed the permit, reserving the right to seek judicial review of the Corps' jurisdictional determination. The permit was issued on March 1, 2002.

Baccarat sued the Corps in California Superior Court, seeking declaratory and injunctive relief from the Corps' determination that it has jurisdiction under the CWA. Baccarat also named as defendants 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 suit was removed to federal district court. The district court granted the City of Fremont's motion to dismiss for lack of jurisdiction, and remanded to state court Baccarat's claims against the state defendants. The district court granted summary judgment to the Corps, holding that the Corps has jurisdiction.

II. Discussion

A. Standard of Review

We review the district court's grant of summary judgment de novo. Universal Health Servs., Inc. v. Thompson, 363 F.3d 1013, 1019 (9th Cir.2004). Viewing the evidence in the light most favorable to the nonmoving party, we ask whether there are any genuine issues of material fact in dispute and whether the district court applied the relevant substantive law correctly. Far Out Prods., Inc. v. Oskar, 247 F.3d 986, 992 (9th Cir.2001).

Under the Administrative Procedure Act ("APA"), we may set aside an agency decision if it is "arbitrary, capricious, or an abuse of discretion, or otherwise not in accordance with the law." 5 U.S.C. § 706(2)(A). The arbitrary and capricious standard is appropriate for the resolution of factual disputes implicating substantial agency expertise. Marsh v. Oregon Natural Res. Council, 490 U.S. 360, 375-76, 109 S.Ct. 1851, 104 L.Ed.2d 377 (1989). In reviewing an agency decision under the APA, we ask whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment. Id. at 378, 109 S.Ct. 1851. We 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.

Pacific Coast Fed'n of Fishermen's Ass'ns, Inc. v. National Marine Fisheries Serv., 265 F.3d 1028, 1034 (9th Cir.2001) (citation omitted).

B. The Corps' Adjacency Jurisdiction

We conclude that the Corps has jurisdiction over wetlands under the Clean Water Act, 33 U.S.C. §§ 1251 et seq. The CWA prohibits the discharge of pollutants into navigable waters. See 33 U.S.C. §§ 1311(a), 1344(b), 1344(d) and 1362(12). "The term `navigable waters' means the waters of the United States." 33 U.S.C. § 1362(7). The Corps has issued a regulation defining "waters of the United States" as follows:

(a) The term "waters of the United States" means (1) All waters which are currently used, or were used in the past, or may be susceptible to use in interstate or foreign commerce, including all waters...