Hoffman Homes, Inc. v. Administrator, U.S. E.P.A., 90-3810

Citation961 F.2d 1310
Decision Date20 April 1992
Docket NumberNo. 90-3810,90-3810
Parties, 60 USLW 2674, 22 Envtl. L. Rep. 21,148 HOFFMAN HOMES, INCORPORATED, formerly known as Hoffman Group, Petitioner, v. ADMINISTRATOR, UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Respondent.
CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)

Virginia S. Albrecht (argued), Thomas C. Jackson, Albert J. Beveridge, Saone B. Crocker, Beveridge & Diamond, Washington, D.C., for petitioner.

William K. Reilly, E.P.A., Daniel W. Pinkston (argued), Dept. of Justice, Land & Natural Resources Div., Washington, D.C., Thomas J. Martin, Jr., E.P.A., Region 5, Office of Regional Counsel, Chicago, Ill., Catherine Winer, E.P.A., Office of General Counsel/Water Div., Washington, D.C., for respondent.

Ronald A. Zumbrun, Robin L. Rivett, James S. Burling, Charles A. Klinge, Pacific Legal Foundation, Sacramento, Cal., for amicus curiae, Pacific Legal Foundation.

Before WOOD, Jr. * and MANION, Circuit Judges, and ROSZKOWSKI, Senior District Judge. **

MANION, Circuit Judge.

The Environmental Protection Agency, pursuant to section 309 of the Clean Water Act, 33 U.S.C. § 1319(g), imposed an administrative penalty of $50,000 on Hoffman Homes, Inc. for discharging "dredged or fill materials" into "navigable waters" without a permit in violation of sections 301 and 404 of the Clean Water Act, 33 U.S.C. §§ 1311 and 1344. Hoffman admits that it filled an 0.8 acre, intrastate wetland area without a permit. Hoffman appeals, however, arguing that the Clean Water Act does not give the EPA regulatory authority over the wetland. The EPA claims jurisdiction over the intrastate wetland solely on the ground that migratory birds could, potentially, use the wetland as a place to feed, or nest or as a stopover on the way to the Gulf States for the winter months. Because this goes beyond the limits of the Clean Water Act and the Commerce Clause, we reverse.

I.

The relevant facts in this case are not in dispute. Hoffman owns a 43-acre parcel of land in Hoffman Estates, Illinois, which it developed into a housing subdivision known as "Victoria Crossings." In preparation for construction of Victoria Crossings, Hoffman filled and graded parts of the site, including an 0.8 acre, bowl-shaped depression at the northeast border of the site. Before it was filled by Hoffman, this small depression was lined with relatively impermeable clay so that rain water could not drain off quickly and would collect in the bottom. The EPA found that the bowl-shaped depression, known as "Area A," was an intrastate wetland. 1 Area A had no surface or groundwater connection to any other body of water. It did not perform sediment trapping or flood control functions for any body of water, was not used for industrial or fishing purposes and was not visited by interstate travelers for recreational or other purposes. In fact, there is not even any evidence that migratory birds, or any other wildlife, actually used Area A for any purpose.

In March 1986, an employee of the Army Corps of Engineers drove by the Victoria Crossings site and noticed that construction had begun. The Corps investigated the site and determined that Hoffman had violated the Clean Water Act (the "Act") by placing fill material into Area A. 2 The Corps issued a cease and desist order requiring Hoffman to stop filling Area A and to apply for an after-the-fact permit. Hoffman stopped filling the wetlands and applied for a permit. Because of objections from the EPA, however, the Corps refused to issue a permit, and in December 1987, the EPA issued a Compliance Order pursuant to section 309(a) of the Act, 33 U.S.C. § 1319(a). The order stated that Hoffman had filled wetlands without a permit in violation of section 301 of the Act, 33 U.S.C. § 1311, ordered Hoffman to cease its filling activities and required that Hoffman restore Area A in accordance with EPA-approved plans. In January 1988, the EPA filed an administrative complaint against Hoffman to enforce the Compliance Order and assess administrative penalties. 3

After a lengthy evidentiary hearing, the Administrative Law Judge ("ALJ") held that Area A was a wetland within the meaning of the Clean Water Act and EPA regulations. The ALJ concluded, however, that the EPA did not have authority to regulate Area A. The ALJ held that Area A was not subject to regulation under the Clean Water Act because it had no effect on interstate commerce. The EPA appealed, and the EPA Chief Judicial Officer ("CJO") reversed the ALJ's decision. The CJO held that the EPA has statutory authority to regulate discharges of fill materials into intrastate wetlands that have a "minimal, potential effect" on interstate commerce. The CJO then found that the EPA established this minimal, potential effect on interstate commerce by showing that migratory birds could potentially use Area A. The CJO fined Hoffman $50,000 for filing Area A. Hoffman appeals this decision arguing that the EPA does not have regulatory authority over Area A. 4

II.

Section 404 of the Act prohibits any discharge of dredged or fill materials into "navigable waters" without a permit; it does not mention "wetlands." See 33 U.S.C. § 1344. "Navigable waters" is defined in the Act as "waters of the United States." 33 U.S.C. § 1362(7). There is no further guidance in the Act as to what "navigable waters" or "waters of the United States" includes.

The EPA, however, has promulgated regulations which further define "waters of the United States." The EPA regulations define "waters of the United States" to include three types of wetlands: (1) interstate wetlands, 40 C.F.R. 2309.3(s)(2); (2) wetlands adjacent to other "waters of the United States," 40 C.F.R. 230.3(s)(7); and (3) intrastate, non-adjacent wetlands, "the use, degradation, or destruction of which could affect interstate or foreign commerce," 40 C.F.R. § 230.3(s)(3). 5 Area A is an intrastate, non-adjacent (or "isolated") wetland. According to the EPA definition of "waters of the United States," therefore, the EPA has jurisdiction over such an isolated wetland if "the use, degradation, or destruction" of the wetland "could affect interstate commerce."

The EPA's regulatory construction of the Clean Water Act "is entitled to deference if it is reasonable and not in conflict with the expressed intent of Congress." United States v. Riverside Bayview Homes, Inc., 474 U.S. 121, 131, 106 S.Ct. 455, 461, 88 L.Ed.2d 419 (1985) (citing Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-45, 104 S.Ct. 2778, 2781-83, 81 L.Ed.2d 694 (1984)). Accordingly, we must decide whether it is reasonable--in light of the language, policies and legislative history of the Clean Water Act--for the EPA to exercise jurisdiction over intrastate, isolated wetlands. 6

Section 404 of the Clean Water Act and the definition of "navigable waters" as "waters of the United States" originated as part of the Federal Water Pollution Control Act Amendments of 1972. The only guidance as to the meaning of "navigable waters" and "waters of the United States" in the legislative history of the 1972 Amendments is the oft-repeated sentence: "The Conferees fully intend that the term 'navigable waters' be given the broadest possible constitutional interpretation." See H.R.Rep. No. 92-911, p. 131 (1972); S.Conf.Rep. No. 92-1236, p. 144 (1972), reprinted in, 1972 U.S.Code Cong. & Admin.News 3668, 3776, 3822; 118 Cong.Rec. 33692, 33699 (1972) (Oct. 4, 1972 Senate Debate, statement of Senator Muskie); 118 Cong.Rec. 33756-57 (1972) (Oct. 4, 1972 House Debate, statement of Rep. Dingell). There is no mention of wetlands in the legislative history of the 1972 Amendments, however. In fact, the only specific examples in the legislative history of the types of "waters" that the Clean Water Act was intended to cover are actual waters: lakes, streams, rivers, tributaries, and the territorial seas. See S.Rep. No. 92-414, p. 77 (1972), reprinted in, 1972 U.S.Code Cong. & Admin.News 3668, 3742-43; 118 Cong.Rec. 33692, 33699 (1972) (Oct. 4, 1972 Senate Debate, statement of Senator Muskie); 118 Cong.Rec. 33756-57 (1972) (Oct. 4, 1972 House Debate, statement of Rep. Dingell). Thus, there is no indication in the 1972 legislative history that "waters"--no matter how broadly interpreted--include wetlands.

Nonetheless, relying primarily on the above snippet from the legislative history, some circuits, including this one, have concluded that Congress' grant of authority under the Clean Water Act extends to all waters, and their adjacent wetlands, within constitutional reach under the Commerce Clause. See United States v. Tull, 769 F.2d 182, 184 (4th Cir.1985), rev'd on other grounds, 481 U.S. 412, 107 S.Ct. 1831, 95 L.Ed.2d 365 (1987); United States v. City of Fort Pierre, 747 F.2d 464, 465 (8th Cir.1984); United States v. Lambert, 695 F.2d 536, 538 (11th Cir.1983); United States v. Byrd, 609 F.2d 1204, 1209 (7th Cir.1979). See also National Wildlife Federation v. Consumers Power Co., 862 F.2d 580, 589 (6th Cir.1988) (impoundment of waters); Utah v. Marsh, 740 F.2d 799, 802 (10th Cir.1984) (intrastate lake). No circuit, however, has concluded that section 404 jurisdiction extends to wetlands which are not adjacent to "waters of the United States."

In United States v. Riverside Bayview Homes, Inc., 474 U.S. 121, 106 S.Ct. 455, 88 L.Ed.2d 419 (1985), the Supreme Court affirmed the view that section 404 jurisdiction extends to adjacent wetlands. The Court focused on the stated purpose of the Clean Water Act " 'to restore and maintain the chemical, physical, and biological integrity of the Nation's waters.' " Id. at 132, 106 S.Ct. at 462 (quoting section 101 of the Clean Water Act, 33 U.S.C. § 1251). The Court found that Congress intended the Clean Water Act to protect "aquatic ecosystems" and that this intent "demand[s] broad federal authority to control pollution, for '[w]ater moves in hydrologic...

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