Wetlands And Private Development

E. Manning Seltzer*
Robert E. Steinberg**

With recent recognition of the ecological significance of wet-
lands,' private developers are facing increased resistance to pro-
posals to construct facilities in or near wetland areas. While once
permitted, and indeed encouraged, to drain or fill wetland areas
for construction, private developers are now finding environmen-
tal and other groups frequently challenging, both administratively
and judicially proposed industrial and commercial facilities in
coastal or riparian areas. Environmental groups have resolved to
prevent further destruction of valuable wetland areas, which make
an important contribution to the ecosystem by purifying contami-
nated surface waters, protecting ground water supplies, and pro-
viding habitat for a wide variety of fish and wildlife.2

In defending themselves against legal challenges to proposed
facilities which impinge upon wetlands, private developers have a

Attorney, Zorc, Rissetto & Weaver, Washington, D.C., General Counsel, United
States Army Corps of Engineers, 1956-1977" J.D., 1937 Harvard Law School.

** Attorney, Porter, Wright, Morms & Arthur, Washington, D.C., Special Litigation

Counsel, Lands and Natural Resources Division, United States Department of Justice,
1984-86; Special Assistant to Attorney General William French Smith, 1983-84;J.D, 1979,
Washington University School of Law.

1. Wetlands areas are characterized by vegetation growing in soils that are periodically
or normally saturated with water. COUNCIL ON ENVIRONMENTAL QUALITY, OUR NATION'S

WETLANDS, AN INTERAGENCY TASK FORCE REPORT (1978). (Our Nation Wetlands) at 5-7

(1982). Marshes, swamps and bogs are typical types of wetlands. See generally, COUNCIL ON
ENVIRONMENTAL QUALITY, ENVIRONMENTAL TRENDS (1981); K. BRENNAN AND C. GARRA,

WASTEWATER DISCHARGES TO WETLANDS IN SIX MIDWESTERN STATES, SELECTED PROCEED-

INGS OF THE MIDWEST CONFERENCE ON WETLANDS VALUES AND MANAGEMENT (1981).
2. The Corps has concluded that wetlands may serve to filter and purify water draining

into adjacent bodies of water, see 33 C.F.R. § 320.4(b)(2)(vii) (1986), and to slow the flow
of surface runoff into lakes, rivers, and streams thus preventing flooding and erosion. See
33 C.F.R. §§ 320.4(b)(2)(iv) and (v) (1986). In addition, the Corps maintains that adjacent
wetlands may "serve significant natural biological functions, including food chain produc
tion, general habitat, and nesting, spawning, rearing and resting sites for aquatic species.
33 C.F.R. § 320.4(b)(2)(i) (1986).

As noted in National Wildlife Federation v. Hanson, 623 F Supp. 1539, 1543 (E.D.N.C.
1985), "Wetlands are believed to perform important and unique ecological function. For
example, wetlands purify water by holding nutrients and recycling pollutants; they provide
flood protection retarding surface runoff from rainwater and shielding upland areas from
storm damages; and they provide vital food resources and habitat for fish and wildlife. Id.
at 1809.



160 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 12:159

difficult burden. Recent case law has given federal agencies
broad authority to regulate wetlands. Moreover in view of in-
creased pressure for protection of wetlands, the federal govern-
ment is exercising this 3unsdiction to limit development in
wetlands areas. Attempts to overturn agency action under the
Administrative Procedure Act are fraught with difficulty In addi-
tion, a developer s ability to obtain compensation under a taking
theory for restriction on use of property has been limited by the
courts.

In view of these developments, private developers must reas-
sess their approach to obtaining permits and approvals from the
United States Army Corps of Engineers and avoiding a veto of the
permit by the Environmental Protection Agency Given the likeli-
hood that development in wetland areas will meet resistance, pri-
vate developers should evaluate from the outset the wetlands
area, first to determine whether it is functioning, thus entitled to
protection, and second, to consider mitigation measures that
could help maintain the integrity of the wetlands ecosystem.

In the event the project is disapproved at the agency level,
traditional court review of the agency action under the Adminis-
trative Procedure Act should be vigorously pursued. Only after
the developer has obtained an authoritative determination at the
agency level as to the extent of permitted development, and ex-
hausted court review of the agency action, should the developer
seek to establish that the regulatory restriction on development
constitutes a taking for which compensation is required.

.J. REGULATION OF WETLANDS

There are two principal federal statutes that protect wetlands
and other water bodies: the Rivers and Harbors Act of 1899
("RHA") 3 and the Clean Water Act ("CWA"). 4 Section 10 of the
RHA makes unlawful any excavation or construction in navigable
waters without the authorization of the Secretary of the Army 5
Section 404 of the CWA makes unlawful the discharge of dredged
or fill material into the waters of the United States without a per
mit from the Secretary of the Army 6 Responsibility for imple-

3. 33 U.S.C. §§ 401-413 (1982).
4. 33 U.S.C. §§ 1251-1376 (1982).
5. 33 U.S.C. § 403 (1982).
6. 33 U.S.C. § 1344 (1982).



1987] Wetlands

mentation of both statutes has been delegated to the United
States Army Corps of Engineers ("the Corps").7

A. Section 10 of the Rivers and Harbors Act of 1899 and Its Reach

Section 10 of the RHA bars any unauthorized obstruction to
the navigable capacity of "any of the waters of the United States,"
and makes it unlawful to excavate or fill, "or in any manner to
alter or modify" any navigable water without the approval of the
Army Corps of Engineers. 8 The Corps' jurisdiction under this
statute is determined by the extent to which waterbodies consti-
tute navigable "waters of the United States" 9 and the extent to

7 The Corps authority in this area has been viewed as ironic given that the Corps'

basic mandate is construction of large projects that may despoil the environment. See G.

Power, The Fox in the Chicken Coop: The Regulatory Program on the U.S. Army Corps of Engineers,

63 VA. L. R~v. 504, 505 (1977).
The Clean Water Act authorizes the Secretary of the Army to issue permits required for

discharges of dredged and fill material, 33 U.S.C. § 1344 (1982). The Secretary has, in

turn, delegated this authority to the U.S. Army Corps of Engineers, 33 C.F.R. § 325.8

(1986). The Corps evaluates permit applications under guidelines developed by the Envi-

ronmental Protection Agency in conjunction with the Secretary of the Army. 33 U.S.C.

§ 402(b) (1982). Similarly, the Secretary of the Army has delegated to the Corps the au-

thonty to issue or deny RHA Section 10 permits. 33 C.F.R. § 322.5 (1986).
The grant of authority to the Corps to administer the Section 404 program was unsuc

cessfully challenged in Buttrey v. United States, 690 F.2d 1170 (5th Cir. 1982), cert. dented,

461 U.S. 927 (1983). With respect to certain waters, the Corps authority may be trans-

ferred to States that have devised federally approved permit programs, 33 U.S.C.

§ 1344(g) (1982). Absent such an approved program, the Corps retains jurisdiction under

Section 404 of the CWA.

8. Section 10 reads in full as follows:

The creation of any obstruction not affirmatively authorized by Congress, to the

navigable capacity of any of the waters of the United States is prohibited; and it shall

not be lawful to build or commence the building of any wharf, pier, dolphin, boom,

weir, breakwater, bulkhead, jetty, or other structures in any port, roadstead, haven,

harbor, canal, navigable river, or other water of the United States, outside established

harbor lines, or where no harbor lines have been established, except on plans recom-

mended by the Chief of Engineers and authorized by the Secretary of the Army; and it

shall not be lawful to excavate or fill, or in any manner to alter or modify the course,

location, condition, or capacity of, any port, roadstead, haven, harbor, canal, lake,

harbor or refuge, or enclosure within the limits of any breakwater, or of the channel of

any navigable water of the United States, unless the work has been recommended by

the Chief of Engineers and authorized by the Secretary of the Army prior to beginning

the same.
33 U.S.C. § 403 (1982).
9. The Corps has developed list of water bodies that fall under Section 10. The Corps

list, however, is not conclusive. The Corps regulations specifically provide that "absence

from that list should not be taken as an indication that the water body is not navigable.

33 C.F.R. § 329.16(b) (1986). Moreover, as the Corps itself concedes, "conclusive deter-

mination of navigability can be made only by federal courts. 33 C.F.R. § 329.14 (1986).



162 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 12:159

which these activities constitute excavation, fill or alteration of
such waterbodies.

1. The Meaning of a "Navigable Water
of the United States"

In The Daniel Ball v. United States,i ° the Supreme Court set forth
what has become the fundamental test for determining federal
regulatory power over coastal or inland waters of the United

States. Waters subject to federal regulatory jurisdiction, or "navi-

gable waters of the United States," were defined by the Court as
follows:

Those rivers must be regarded as public navigable rivers in law
which are navigable in fact. And they are navigable in fact
when they are used, or are susceptible of being used, in their
ordinary condition, as highways for commerce, over which
trade and travel are or may be conducted in the customary
modes of trade or travel on water And they constitute naviga-
ble waters of the United States within the meaning of the Acts
of Congress, in contradiction from in their ordinary condition
by themselves, or by uniting with other waters, a continued
highway over which commerce is or may be carried on with
other States or foreign countries is conducted by water 11

Although The Daniel Ball was a case brought in admiralty the
Court did not base its decision on federal maritime or admiralty
jurisdiction, but rather on federal power over coastal and inland
waterways under the Commerce Clause. As a result, the test for
federal jurisdiction over navigable waters set out in The Daniel Ball
has been consistently applied by the Supreme Court in cases in-
volving federal power under the Commerce Clause. 12

Since the Rivers and Harbors Act of 1899 was an exercise by

Congress of its Commerce Clause powers,iS courts have followed
the guidelines set forth in The Daniel Ball to determine whether a
waterbody falls within the purview of the RHA.i4 The Corps reg-

10. 77 U.S. (10 Wall.) 557 (1871).
11. Id. at 563.
12. See, e.g., Minnehaha Creek Watershed Dist. v. Hoffman, 597 F.2d 617 621-22 (8th

Cir. 1979) and authorities cited therein.
13. See Wyandotte Transp. Co. v. United States, 389 U.S. 191, 201 (1967); United States

v. Appalachian Elec. Power Co., 311 U.S. 377, 404-05 (1940).
14. Washington Water Power Co. v. FERC, 775 F.2d 305 (D.C. Cir. 1985).



ulations also follow The Daniel Ball guidelines and conform, in
most cases, with the judicial definition.' 5

The Daniel Ball test consists of two parts: first, the body of
water must itself or together with other waters form a highway
over which commerce may be carried on with other states; sec
ond, the body of water must be navigable in fact.

Because Congress only has power to "regulate Commerce," 1 6

interstate commerce along the waterway is a fundamental requi-
site to its being considered a "navigable water of the United
States." As the Supreme Court noted in United States v. The
Montello: '

7

If, however, the river is not of itself a highway for commerce
with other States or foreign countries, or does not form such
highway by its connection with other waters, and is only naviga-
ble between different places within the State, then it is not a
navigable water of the United States, but only a navigable water
of the State.' 8

Other courts have more recently held that bodies of water with no
navigable interstate water linkage are not subject to federal regu-
latory jurisdiction under the RHA.' 9

In some circumstances, a liberal definition of interstate linkage
is adopted. For example, the Corps regulations provide:

A waterbody may be entirely within a state, yet still be capable
of carrying interstate commerce. This is especially clear when
it physically connects with a generally acknowledged avenue of
interstate commerce, such as the ocean or one of the Great
Lakes, and is yet wholly within one state. Nor is it necessary
that there be a physically navigable connection across a state
boundary Where a waterbody extends through one or more
states, but substantial portions, which are capable of bearing
interstate commerce, are located in only one of the states, the

15. Precise definition of navigability" is ultimately dependent on judicial interpreta-
ton and cannot be made conclusively by administrative agencies. However, as the Corps
regulations note, the policies and crtena contained in Corps regulations closely conform
with tests used by federal courts. See 33 C.F.R. § 329.3 (1986).

16. U.S. Const. art. I, § 8.
17 87 U.S. (II Wall.) 430 (1874).
18. Id. at 435. See also Cardwell v. Amencan Bridge Co., 113 U.S. 205 (1885); Miller v.

Mayor of New York, 109 U.S. 385, 395-396; Escanabe v. Chicago, 107 U.S. 678, 682
(1883).

19. See, e.g., Minnehaha Creek Watershed Dist. v. Hoffman, 597 F.2d 617 (8th Cir.

1979); State Water Control Board v. Hoffman, 574 F.2d 191 (4th Cir. 1978); United
States v. Underwood, 344 F Supp. 486, 489-91 (M.D. Fla. 1972).

Wetlands19871



164 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 12:159

entirety of the waterway up to the head (upper limit) of naviga-
tion is subject to Federal junsdiction.20

The regulations also provide that interstate commerce may exist
on an intrastate voyage which occurs only between places within
the same state. "It is only necessary that goods may be brought
from, or eventually be destined to go to another State." 2i

In Sierra Pacific Power Co. v. FERC22 and Minnehaha Creek Water-
shed District v. Hoffman,23 rivers with admittedly navigable sections
were held not navigable under the federal definition because the
crucial interstate sections were not navigable, although upstream
sections had been used for commerce. In Loving v. Alexander 24

however the Fourth Circuit distinguished these cases finding a
similar river navigable because the plaintiff had not introduced
affirmative evidence of nonnavigability

Besides an interstate linkage, The Daniel Ball test also requires
that the stream be "navigable in fact." Although the interstate
linkage requirement has remained essentially unchanged, the fed-
eral courts have broadened significantly The Daniel Ball definition
of "navigability -25 The prevailing doctrine of navigability char
acterizes a waterway as a navigable water of the United States if,
for the purposes of interstate commerce: (1) it presently is being
used or is suitable for use; or (2) it has been used or was suitable
for use in the past; or (3) it could be made suitable for use in the
future by reasonable improvements. 26

Obviously a stream that is presently used for interstate com-
merce or suitable for such use will be considered a navigable
stream. Provided the waterway can be used for purposes of inter
state transportation and commerce, the manner or form of use is
immaterial. 27 For example, in United States v. Appalachian Electric
Power Co. 28 the Supreme Court concluded that sufficient com-
merce was shown by the historical use of canoes, bateaux and

20. 33 C.F.R. § 329.7 (1986).
21. Id.
22. 681 F.2d 1134, 1139 (9th Cir. 1982), cert. denied, 460 U.S. 1082 (1983).
23. 597 F.2d 617 623 (8th Cir. 1979).
24. 745 F.2d 861, 867 (4th Cir. 1984).
25. See Hardy Salt Co. v. Southern Pacific Transp. Co., 501 F.2d 1156, 1167 (10th Cir.

1974), cert. denied sub. nom., Sanders Brine Shrimp Co. v. Southern Pac. Transp., 419 U.S.
1033 (1974).

26. See 33 C.F.R. § 329.9 (1986).
27 The Montello, 87 U.S. (II Wall.) at 441.
28. 311 U.S. 377 (1940).



Wetlands

other frontier crafts. 29 The transportation of logs in connection
with commercial ventures also has been recognized as evidence of
a river s legal navigability 30

The Corps regulations conform with the judicial inter
pretation:

The types of commercial use of a waterway are extremely va-
ned and will depend on the character of the region, its prod-
ucts, and the difficulties or dangers of navigation. [I]t is
sufficient to establish the potential for commercial use at any
past, present, or future time. Thus, sufficient commerce may
be shown by histoncal use of canoes, bateaux or other frontier
craft, as long as the type of boat was common or well-suited to
the place and penod. Similarly the presence of recrea-
tional craft may indicate that a waterbody is capable of beanng
some forms of commerce, 31

Even though a waterway is not presently used for commerce or
is presently incapable of such use because of the presence of ob-
structions or changed conditions, a water which was navigable at
some time in the past will retain its character as "navigable in
law " This basic principle of "continuing navigability" was estab-
lished by the Supreme Court in Economy Light & Power Co. v. United
States3 2 and has been subsequently followed by the courts33 and in
the Corps regulations defining navigable waters of the United
States.3 4 As noted by the Corps, "once having attained the char
acter of navigable in law the Federal authority remains in exist-
ence, and cannot be abandoned by administrative officers or
court action."'35

Navigability may also be found in a waterbody s potential for
supporting interstate commerce in the future.3 6 A river or stream
which meets this "future use" test falls within the definition of a
"navigable water of the United States" even though it has never
been used for purposes of interstate commerce. This test can be
satisfied in either of two ways. First, if the waterway in its natural
condition is capable of supporting interstate commerce, it meets

29. Id. at 414-16. See also, Economy Light & Power Co. v. United States, 256 U.S. 113,
117 (1921).

30. St. Anthony Falls Water Power Co. v. St. Paul Water Comm rs, 168 U.S. 349 (1897).
31. 33 C.F.R. § 329.6 (1986).
32. 256 U.S. 113 (1921).
33. See, e.g., Appalachian Elec. Power Co., 311 U.S. at 408.
34. 33 C.F.R. § 329.9 (1986).
35. 33 C.F.R. § 329.9(a) (1986).
36. 33 C.F.R. § 329.9(b) (1986).

1987]



166 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 12:159

the future use cntelon.3 7 Second, if "reasonable improvements"
could at some time transform the waterway into a useful avenue
of interstate traffic, the waterway is also considered legally naviga-
ble for purposes of federal regulation.3 8 The improvement need
not exist, be planned, nor even authorized; it is sufficient that the
improvements could potentially be made.3 9

An artifical waterway even one which is privately developed
and maintained, may also be a navigable water of the United
States. 40 As with natural waters, an artificial waterway is regarded
as navigable in law if it is capable of use for purposes of interstate
commerce. 4 1 This rule has been applied to hold private, artifi-
cially created canals, open to navigable waters at one or both
ends, subject to federal regulation.4 2

Moreover a stream may be navigable despite the existence of
obstructions which render continuous navigation impracticable.
As noted in the Corps of Engineers regulations:

A stream may be navigable despite the existence of falls, rapids,
sand bars, bridges, portages, shifting currents, or similar ob-
structions. Thus, a waterway in its original condition might
have had substantial obstructions which were overcome by
frontier boats and/or portages, and nevertheless be a "chan-
nel" for commerce, even though boats had to be removed from
the water in some stretches, or logs being brought around an
obstruction by means of artificial chutes. However the ques-
tion is ultimately a matter of degree, and it must be recognized
that there is some point beyond which navigability could not be
established.

4 3

37 See The Montello, 87 U.S. at 441; The Daniel Ball, 77 U.S. at 563. See also Appa-

lachian Elec. Power Co., 311 U.S. at 407-08, 416.

38. Appalachian Elec. Power Co., 311 U.S. at 407-08; Rochester Gas & Elec. Corp. v.

Federal Power Comm n, 344 F.2d 594, 596 (2d Cir. 1965), cert. denied, 382 U.S. 832 (1965);

United States v. Cannon, 363 F Supp. 1045, 1050 (D. Del. 1973); United States v. Under-

wood, 344 F Supp. 486, 492 (M.D. Fla. 1972); United States v. Crow, Pope & Land Enter.

Inc., 340 F Supp. 25, 33, 35 (N.D. Ga. 1972).

39. Appalachian Elec. Power Co., 311 U.S. at 408.

40. 33 C.F.R. § 329.8 (1986).
41. Weiszman v. District Eng United States Army Corps of Eng'rs, 526 F.2d 1302,

1305 (5th Cir. 1976).

42. Id. See also United States v. Sexton Cove Estates, Inc., 526 F.2d 1293, 1299 (5th Cir.

1976).
43. 33 C.F.R. § 329.10 (1986).



Wetlands

2. Obstructions To Navigable Capacity

After determining whether a particular body of water is a navi-
gable water of the United States, the Corps next determines
whether the applicant will engage in the kind of activity requiring
a permit under Section 10 of the RHA. Section 10, in addition to
requiring authorization for the construction of any wharf, pier
breakwater jetty or other structure, speaks in terms of effect, and
requires authonzation for any "obstruction to navigable capacity"
or for any activity that may "alter or modify the course, location,
condition, or capacity" of any navigable water 44

The Supreme Court has consistently interpreted the language
"obstruction to navigable capacity" as not requiring an unlawful
obstruction "in" a navigable waterway For example, in United
States v. Rio Grande Dam & Irrigation Co.45 the Court noted that the
"obstruction" language prohibits:

anything, however done which tends to destroy the naviga-
ble capacity of one of the navigable waters of the United
States. [I]t would be to improperly ignore the scope of this
language to limit it to acts done within the very limits of naviga-
tion of a navigable stream. 46

Although Rio Grande interpreted the language of Section 10 of the
Rivers and Harbors Act of 1890, subsequent Supreme Court deci-
sions also rendered a broad interpretation to the similar language
of Section 10 of the Act of 1899 47

More recent cases have confirmed that a project need not be
located "in" a navigable waterway to create an unlawful obstruc
tion. For example, in Sierra Club v. Andrus48 the Ninth Circuit held
that the pumping of water from the Sacramento-San Joaquin
Delta into the canals and aqueducts of the California water pro-
ject falls within the reach of Section 10. The plaintiffs challenged
the legality of the construction and operation of three of the
pumping facilities. Two of these facilities were located at least
two miles from navigable waters and connected thereto by man-
made inlets. The third was a proposed 42 mile artificial channel
designed to divert fresh water from the Sacramento River to the

44. 33 U.S.C. § 403 (1982).
45. 174 U.S. 690 (1899).
46. Id. at 708.
47 See, e.g., United States v. Republic Steel Corp., 362 U.S. 482 (1960); Sanitary Dist.

of Chicago v. United States, 266 U.S. 405 (1925).
48. 610 F.2d 581 (9th Cir. 1979), revdon other grounds, 451 U.S. 287 (1981).

1987]



168 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 12:159

two pumping plants. In United States v. M.C.C. of Florida, Inc. 49 the
court held that dredging and filling caused by the propellers of
tugboats fell within Section 10, noting that the Supreme Court
has consistently found the Act s coverage to be broad,50 and be-
cause M.C.C. violated the Corps cease and desist order 51

B. Section 404 of the Clean Water Act and Its Reach

As with jurisdiction under Section 10 of the RHA, the principal
criteria for determining CWA Section 404 jurisdiction are the
types of waters included and the types of activities regulated.
While both criteria have been given a broad interpretation, Sec
tion 404 covers fewer activities than Section 10 because it is lim-
ited to "point sources" or discharges of dredged or fill material. 52

Section 404, however covers many more waterbodies than Sec
tion 10,53 including "freshwater wetlands" that are adjacent to
"waters of the United States."5 4

49. 772 F.2d 1501 (1 ith Cir. 1985).
50. Id. at 1504-05, cting United States v. Republic Steel Corp., 362 U.S. 482 (1960) and

Wyandotte Transp. Co. v. United States, 389 U.S. 191 (1967).
51. 772 F.2d at 1505.
52. In Unted States v. Tull, 769 F.2d 182 4th Cir. 1985), cert. granted in part, 106 S.Ct

2244 (1986), the applicant argued that the regulation of his property under the Clean
Water Act went beyond the proper reach of the Commerce Clause. The Court noted that
this argument had been rejected in United States v. Byrd, 609 F.2d 1204, 1210 (7th Cir.
1979). Byrd was cited with approval by the Supreme Court in Hodel v. Virginia Surface
Mining & Reclamation Ass n, 452 U.S. 264, 282 (1981), where the Court noted that we
agree with the lower federal courts that have uniformly found the power conferred by the
Commerce Clause broad enough to permit congressional regulation of activities causing
air or water pollution. 452 U.S. at 282. See Tull, 769 F.2d at 185.

53. As noted by the United States Court of Claims in Deltona Corp. v. United States,
657 F.2d 1184, 1186 (Ct. Cl. 1981): "It is now well settled that Congress, by adopting this
1972 definition [of navigable waters], asserted federal junsdiction over the nation waters
to the maximum extent permissible under the Commerce Clause of the Constitution.
(quoting National Resources Defense Council, Inc. v. Callaway, 392 F Supp. 685, 686
(D.D.C. 1975)); accord, e.g., Conservation Council v. Castanzo, 398 F Supp. 653, 674
(E.D.N.C. 1975), affirmed, 528 F.2d 250 (4th Cir. 1975).

54. The Clean Water Act is comprehensive statute designed "to restore and maintain
the chemical, physical and biological integrity of the Nation waters. 33 C.F.R. § 1251(a)
(1986). Section 301(a) of the CWA contains an absolute prohibition against the discharge
of pollutants into the Nation's waters, except those discharges made in compliance with
standards promulgated and permits issued under the Act. 33 U.S.C. § 1311 (a) (1982). See
33 C.F.R. §§ 323.2(a), 323.3(a) (1986).



19871 Wetlands

1 Waters Covered By Section 404

What constitutes "waters of the United States" under Section
404 has been defined broadly 55 Although initially construing the
Act to cover only waters navigable in fact, the Corps in 1975, pur
suant to the decision of National Resources Defense Council v. Cal-
laway, 56 issued interim final regulations redefining "waters of the

55. Under the Clean Water Act, the term "navigable waters" is defined as waters of the
United States, including terrtonal seas. 33 U.S.C. § 1362(7) (1982). Both the Corps and
EPA have defined "waters of the United States" to include some water bodies that are
purely intrastate. See, 33 C.F.R. § 323.2(3) ("All other waters such as intrastate lakes, nv-
ers, streams the use, degradation or destruction of which could affect interstate or
foreign commerce including any such waters from which fish or shellfish are or could be
taken and sold in interstate or foreign commerce; or which are used or could be used for
industrial purposes"). See also, 40 C.F.R. §§ 122.2 and 233.3 (1986), EPA guidelines
adopting similar definmon.

Currently in litigation is the issue of whether isolated waters, which serve as habitat for
migratory birds or endangered species, constitute waters of the United States under the
Clean Water Act. See, National Wildlife Federation v. Laubsher, G-86-37 (S.D. Tex. 1986).
The court is likely to find that such habitat is covered, given the fact that migratory birds
and endangered species may be regulated under the Commerce Clause, and regulation of
such species extends to protecting their habitat. See, e.g., Utah v. Marsh, 740 F.2d 799
(10th Cir. 1984); Palila v. Hawaii Dep't of Land and Natural Resources, 471 F Supp. 985
(D. Haw. 1979), aff'd, 639 F.2d 495 (9th Cir. 1981).

The Corps has recently issued final rule for its regulatory program, which provides
more specific definition of "waters of the United States. 51 Fed. Reg. 41,206 (1986).
While incorporating certain existing definitions of the terms, the Corps has noted other
waters that are included within the definition:

a. Which are or would be used as habitat by birds protected by Migratory Bird Trea-
ties; or
b. Which are or would be used as habitat by other migratory birds which cross state
lines; or
c. Which are or would be used as habitat for endangered species; or
d. Used to irrigate crops sold in interstate commerce.

The Corps has further indicated that the following waters are not considered "waters of
the United States

a. Non-tidal drainage and irrigation ditches excavated on dry land.
b. Artificially irrigated areas which would revert to upland if the irrigation ceased.
c. Artificial lakes or ponds created by excavating and/or diking dry land to collect
and retain water and which are used exclusively for such purposes as stock watering,
irrgation, settling basins, or rce growing.
d. Artificial reflecting or swimming pools or other small ornamental bodies of water
created by excavating and/or diking dry land to retain water for primarily aesthetic
reasons.
e. Waterfilled depressions created in dry land incidental to construction activity and
pits excavated in dry land for the purpose of obtaining fill, sand, or gravel unless and
until the construction or excavation operation is abandoned and the resulting body of
water meets the definition of waters of the United States.

33 C.F.R. § 328.3(a) (1986).
56. 392 F Supp. 685 (D.D.C. 1975).



170 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 12:159

United States" to include not only actually navigable waters but
also tributaries of such waters, interstate waters and their tributa-
ries, and nonnavigable intrastate waters whose use or misuse
could affect interstate commerce. 57 Moreover the Corps has con-
strued the CWA to cover all "freshwater wetlands" that are adja-
cent to other covered water 58

In United States v. Riverside Bayvew Homes, Inc. 59 the Supreme
Court held that the Corps definition of waters for purposes of
Section 404 as including wetlands adjacent to navigable waters,
even if not inundated or frequently flooded by navigable waters,
was a reasonable interpretation of the statute.60  Riverside
Bayview Homes, Inc. owned 80 acres of low-lying marsh land
near the shores of Lake St. Clair in Michigan. In 1976, the com-
pany began placing fill material on the property as part of its
preparation for construction of a housing development. The
Corps of Engineers, believing the property to be an adjacent wet-
land, filed suit seeking to enjoin the company from filling the
property without the Corps permission. The district court held
that the property was a wetland subject to the Corps permit au-
thonty 61 The Sixth Circuit reversed, construing the Corps regu-
lations to exclude from the category of adjacent wetlands those
that were not subject to flooding by an adjacent navigable water
at a frequency sufficient to support the growth of aquatic vegeta-
tion. 62 The court adopted this construction of the regulation be
cause a broader definition might result in the taking of private
property 63 The court also expressed doubt that Congress in-
tended to allow regulations of wetlands that were not the result of
flooding by navigable waters. 64

57 40 Fed. Reg. 31,320 (1975).
58. Id. In 1977, the Corps' definition of wetland was modified to contain this lan-

guage, and in 1982, the 1977 regulations were replaced by substantively identical regula-
tions that remain in force today. 33 C.F.R. § 323.2 (1986). Before 1977 the definition of
wetland required that the area be "periodically inundated. 33 C.F.R. 120(d)(2)(h)
(1976).

59. 106 S. Ct. 455 (1985).

60. The Corps' regulation also covered certain wetlands not necessarily adjacent to
other waters, 33 C.F.R. §§ 323.2(a)(2) and 323.2(a)(3) (1986), but the Court did not con-
sider these provisions. Riverside Bayview, 106 S. Ct. at 458 n. 2.

61. Riverside Bayview, 106 S. Ct. at 458.

62. 729 F.2d 391 (6th Cir. 1984).

63. Id. at 400.

64. Id. at 402.



The Supreme Court overruled the Sixth Circuit's restrictive
definition of waters covered by Section 404. At the outset, the
Court noted that neither the imposition of a permit requirement,
nor the denial of a permit, necessarily constitutes a taking and
thus a narrow reading of the Corps regulatory jurisdiction over
wetlands to avoid a "serious taking problem" was inappropri-
ate.65 "Purged of its spurious constitutional overtones," the
Court viewed as quite simple the question of the Corps' assertion
of broad jurisdiction to regulate under Section 404.66 The Court
observed that the Corps regulations clearly extend its authority
to all wetlands adjacent to navigable or interstate waters and their
tributaries, and that saturation by either surface or ground water
is sufficient to bring an area within the category of wetlands, pro-
vided that the saturation is sufficient to and does support wetland
vegetation.67 The Court held that the Corps interpretation of its
authority is reasonable in view of the language, policies, and leg-
islative history of Section 404. The Court observed that Congress
chose to define waters covered by the CWA broadly and noted
that Congress intended to allow regulation of waters that might
not satisfy the traditional test of navigability by defining "naviga-
ble waters" as "waters of the United States." 68 The Court further
noted that the breadth of congressional concern with protection
of water quality and aquatic ecosystems suggests that the Corps
interpretation of "waters" to encompass wetlands adjacent to wa-
ters of the United States is a reasonable interpretation of the
CWA.6 9

The Court maintained that attempts were made during the en-
actment of 1977 amendments of the Clean Water Act to restrict
the Corps Section 404junsdiction to waters navigable in fact and
to wetlands periodically inundated by these waters, but Congress
rejected these measures to curb the Corps jurisdiction because of
its concern for protection of wetlands. 70 The Court concluded
that Congress failure to overrule an agency s construction of leg-
islation, which the agency is charged with implementing, is some

65. 106 S. Ct. at 459.

66. Id. at 460.
67 Id.
68. Id. at 461.
69. Id.
70. H.R. 3199, 95th Cong., Ist Sess., 123 CONG. REC. 26710-711, 38950, 38994, 39196,

39209-10 (1977).

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172 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 12:159

evidence of the reasonableness of that construction, particularly
where the administrative construction has been brought to Con-
gress attention through legislation designed to supplant it. 7 1

Before the Supreme Court decision in Riverside Bayview lower
federal courts had given broad definition to the regulatory re-
quirement that wetlands be "adjacent" to waters of the United
States. For example, in United States v. Lee Wood Contracting, Inc. 72

the court held that, notwithstanding the fact that several large
parcels of land and farms were located between the wetlands and
river in question, the wetlands were adjacent because they were
"neighboring." 73 Similarly in United States v. Tilton,74 a district
court found "adjacency" despite the fact that the swamp was sep-
arated from the river by a road or a berm. 75

In addition to the question of whether the wetland is adjacent
to a water of the United States, the question also arises whether
the waterbody meets the definition of a "wetland" as defined by
the Corps. Wetlands are defined by the Corps regulation as an
area that is "inundated or saturated by surface or ground water at
a frequency and duration sufficient to support a prevalence of
vegetation typically adapted for life in saturated soil condi-
tions." 76 The principal case interpreting this regulatory defini-
tion is Avoyelles Sportsmen s League, Inc. v. Alexander 77 in which the
court noted there are three areas of analysis necessary to deter
mine whether a tract of land is or is not a wetland under the
Corps definition: (1) the type of soils; (2) the degree and fre
quency of inundation and saturation; and (3) the type of vegeta-
tion.78 Interpreting key terms in this definition, the court held
that "typically adapted for life" does not mean that vegetation
must spend all of its life in inundated or saturated soils. Rather
the definition will be satisfied if the species has the ability to live,
to exist, and to tolerate those soils. 79 Moreover the court inter
preted the phrase "prevalence of vegetation" to mean "the domi-

71. Riverside Bayview, 106 S. Ct. at 464.

72. 529 F Supp. 119, 120 (E.D. Mich. 1981).

73. Id. at 121.

74. 705 F.2d 429 (1 ith Cir. 1983).

75. Id. at 431.

76. 33 C.F.R. § 323.2(c) (1986).
77 511 F Supp. 278, 289 (W.D. La. 1981), aff'd in part, 715 F.2d 897 (5th Cir. 1983).

78. Id. at 289, aff'd, 715 F.2d at 912-13.
79. Id. at 290, aff'd, 715 F.2d at 913.



Wetlands

nance of tolerant or aquatic species to the virtual exclusion of
purely upland, intolerant or nonaquatic species. '"80

Submerged grasslands were determined by the court in Bayou
St. John Improvement Assoc. v. Sands"' not to constitute wetlands.
Plaintiff had contended they were wetlands because they per
formed certain biological functions that are attributed by the
Corps' regulations to wetlands. The court rejected this argu-
ment, finding that the actual definition of wetlands requires inter
mittent or temporary inundation, not constant inundation as
here. Additionally the court noted that plaintiff presented no ev-
idence as to the other components of the definition: soil type and
vegetation.

2. Activities Covered by Section 404

Along with the issue of whether the developer has undertaken
an activity affecting a water within the Corps Section 404jurisdic
tion is the issue of whether the activity itself is covered by Section
404. Section 404 requires that there be a discharge of dredged or
fill material into a water of the United States. Although dredging
alone is sufficient to provide jurisdiction under Section 10 of the
RHA, mere dredging of one area (subject to Section 404 junsdic
tlon) and discharge in another (not subject to Section 404) is ar
guably not within the Corps Section 404 jurisdiction.

For example, in United States v. Lambert82 the District Court of
Flonda held that it did not consider back-spill from a dragline to
constitute the discharge of pollutant under Section 404 when the
dredged soil simply falls back into the area from which it has just
been taken. 83 Moreover the Corps revised regulation states that
"the term discharge of dredged material' does not include de
minmus, incidental soil movement occurnng dunng normal
dredging operations.18 4

Whether courts will support this interpretation remains to be
seen. In Weisman v. District Engineer U.S. Army Corps of Engineers,85

the Fifth Circuit held that discharge of "sediment" from the
dredging amounted to a violation of the statutory prohibition

80. Id. at 291, aff'd, 715 F.2d at 913.
81. 13 Envti. L. Rep. 20011, 20013 (E.D. La. June 17 1982).
82. 589 F Supp. 366 (M.D. Fla. 1984).
83. Id. at 373.
84. C.F.R. § 323.2(d) (1986).
85. 526 F.2d 1302 (5th Cir. 1976).

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174 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 12:159

against the discharge of a pollutant.8 6 Moreover in United States
v. M. C.C. of Florida, Inc. 87 the Eleventh Circuit concluded that the
redepositing of the soil dredged by the propellers of the com-
pany s tugboats constituted a "discharge of a pollutant" within
the meaning of the CWA, even though the redepositing did not
add any further substances to the water The court noted that
"given the broad objectives of the Clean Water Act, we are in
agreement with the Fifth Circuit that the word addition as used
in the definition of the term discharge, may reasonably be un-
derstood to include redeposit. "88

A number of activities are exempt from the permit require
ments of Section 404. The Clean Water Act specifically allows

discharge of dredged or fill material "from normal farming, silvi-

culture, and ranching activities,"8 9 "for the purpose of construc

tion or maintenance of farm or stock ponds or irrigation
ditches," 90 and "for the purpose of construction or maintenance
of farm roads or forest roads, or temporary roads for moving
mining equipment." 9i These exemptions, however have been
construed narrowly 92 To be exempt from the permit require-
ment, the applicant must demonstrate that the proposed activities
both satisfy the requirements of Section 404(f)(1) and avoid what
is known as the "recapture provision" in 404(f)(2), which pro-
vides that even discharges resulting from exempt activities re

quire permits where an area is converted to a new use or where
"the flow or circulation of navigable waters may be impaired or
the reach of such waters be reduced." 93

In two recent appellate court decisions, the Corps assertion of
regulatory jurisdiction over attempts to farm wetland areas was

upheld. In United States v. Akers, 9 4 the Ninth Circuit held that a

86. Id. at 1306.
87 772 F.2d 1501 (lith Cir. 1985).
88. Id. at 1506, citing Avoyelles Sportsmen League Inc. v. Marsh, 715 F.2d 897 (5th

Cir. 1983).
89. 33 U.S.C. § 1344(0(A) (1982).
90. Id. at § 1344(0)(C).
91. Id. at § 1344(i)(E).
92. See, e.g., United States v. Akers, 785 F.2d 814, 819 (9th Cir. 1986), cert. denzed, 107 S.

Ct. 107 (1986); Conant v. United States, 786 F.2d 1008, 1010 (lith Cir. 1986); United
States v. Huebner, 752 F.2d 1235, 1240-41 (7th Cir. 1985), cert. denied, 106 S. Ct. 62
(1985); Avoyelles Sportsmen's League, Inc. v. Marsh, 715 F.2d 897 925-26 (5th Cir.
1983).

93. 33 U.S.C. § 1344(f(2) (1982).
94. 785 F.2d 814 (9th Cir. 1986), cert. dented, 107 S. Ct. 107 (1986).



Wetlands

farm owner was properly enjoined from constructing a dike and
filling wetland areas without a Corps permit because the farm
owner failed to demonstrate that the farming activity was part of
an established and ongoing farming operation, and that the dike
and fill activities would not change the hydrological structure of
the wetlands. In Conant v. United States,95 the Eleventh Circuit
held that the Corps had jurisdiction to order an individual to
cease construction of a fish pond in a wetland area, because the
action was not a "farming, silviculture or ranching operation" and
did not fall within the statutory exemption from the Section 404
permit requirements.

It should be further noted that the Corps has authority under
Section 404(e) of the CWA to issue general permits with a nation-
wide, statewide, or regional application. The general permits ef-
fectively eliminate individual permit requirements. In July 1982,
the Corps issued regulations establishing nation-wide permits. 96

These regulations provide, for example, a general authorization
for "repair rehabilitation or replacement of any previously au-
thorized, currently serviceable structure or of any currently ser
viceable structure constructed prior to the requirement for
authorization," if certain conditions are met.9 7

II. PERMIT DETERMINATION UNDER RHA SECTION 10 AND CWA
SECTION 404

The Army Corps of Engineers has been delegated the authonty
for issuing permits under Section 10 of the RHA and Section 404
of the CWA. Enforcement of these provisions and even approval
of permits, however do not remain exclusively in the domain of
the Corps. Environmental groups can bring enforcement actions
under Section 404,98 even though comparable actions under Sec
tion 10 are not permissible. 99 Moreover Section 404(c) of the
CWA gives the Environmental Protection Agency ("EPA") the au-
thority to prohibit the discharge of dredged and fill materials into

95. 786 F.2d 1008, 1010 (1 lth Cir. 1986).

96. 33 C.F.R. § 325.5 (c)(2) (1982).
97 See Orleans Audubon Soc. v. Lee, 742 F.2d 901 (5th Cir. 1984).
98. The citizens suit provision of the CWA is Section 505(a), 33 U.S.C. § 1365(a)

(1982), which permits any citizen to commence civil action against any person alleged to
be in violation of an effluent standard and/or limitation under the Act, in order to enforce
the limitation and/or to assess civil penalties for its violation.

99. In California v. Sierra Club, 451 U.S. 287 292-98 (1981), the Court held that the
RHA did not authorize private actions to be brought for violations of its provision. See

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176 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 12:159

wetlands (and other waters of the United States) when there
would be unacceptable adverse effects from the proposed devel-
opment on wildlife, municipal water supplies, fisheries, shellfish,
and/or recreation. 10  It is the Corps, however that makes the ini-
tial determination of whether to grant or deny the permit.

A. The Corps Determination Under Section 10 and Section 404

In determining whether to issue a permit, the Corps evaluates a
number of factors. Originally the Corps placed primary if not ex
clusive emphasis on how a proposed project would affect naviga-
tion; however consistent with subsequent judicialiol and legis-

Louisiana v. M/V Testbank, 752 F.2d 1019, 1031 (1985), cert. dented, 106 S. Ct. 3271
(1986).

Prior to California v. Sierra Club, many courts had held that private litigant could bring
an enforcement action under Section 10, finding the private right of action implicit in the
RHA. E.g., Potomac River Ass'n v. Lundeberg Maryland Seamanship School, Inc., 402 F
Supp. 344, 357 (D. Md. 1975); River v. Richmond Metropolitan Auth. 359 F Supp. 611,
639 (E.D. Va. 1973), aff'd, 481 F.2d 1280 (4th Cir. 1973); Alameda Conservation Ass v.
California, 437 F.2d 1087 1092-93 (9th Cir. 1971), cert. denied, 402 U.S. 908 (1972), as
interpreted by Sierra Club v. Leslie Salt Co., 354 F Supp. 1099, 1104 (N.D. Cal. 1972).
See also Lavagnino v. Porto-Mix Concrete, Inc., 330 F Supp. 323, 325-26 (D. Colo. 1971).
But see Red Star Towing & Transp. Co. v. Dep't of Transp., 423 F.2d 104, 105 (3d Cir.
1970) ("An unconsenting State is immune from suits brought by individuals under the
admiralty junsdiction of the federal courts."); Hooper v. United States, 331 F Supp.
1056, 1058 (D. Conn. 1971) (Section 404 does not create new civil remedy).

100. 33 U.S.C. § 1344(c) (1982).
101. In Appalachian Electrc, the Supreme Court explicitly rejected the view that Con-

gress may regulate navigable waters only for purposes of navigation. The Court noted:
In our view, it cannot properly be said that the constitutional power of the United
States over its waters is limited to control for navigation. In truth the authonty of
the United States is the regulation of commerce on its waters. Navigability, in the
sense just stated, is but part of this whole. The point is that navigable waters are
subject to national planning and control in the broad regulation of commerce granted
the Federal Government. The license conditions to which objection is made have an
obvious relationship to the exercise of the commerce power. Even if there were no
such relationship, the plenary power of Congress over navigable waters would em-
power it to deny the privilege of constructing an obstruction in those waters. It may
likewise grant the privilege on terms.

311 U.S. at 426-27
Although Appalachian Electric involved the Federal Power Commission authority to li-

cense the construction of dams and did not squarely decide whether the Corps of Engi-
neers has authority to deny RHA permit on the basis of nonnavigational factors, other
courts have explicitly held that the permit can be denied based on nonnavigational factors.
For example, in Zabel v. Tabb, 430 F.2d 199 (5th Cir. 1970), cert. denied, 401 U.S. 910
(1971), the court held that the Secretary of the Army may deny permit on nonnaviga-
tional grounds provided he acts within the rule of reason against arbitrary action. Id. at
207-09. The court noted that the Secretary not only may reject permit on ecological



Wetlands

lative 102 actions, the Corps began considering factors besides
protecting navigation.

The Corps has on several occasions set forth the criteria for
evaluating whether to issue or deny a Section 10 permit. 10 3 Its
initial regulations were first significantly revised in 1974, in part
because of court decisions allowing the Corps to deny a permit
solely on the basis of ecological factors 10 4 and because of its statu-
tory responsibility to consider environmental factors under the
National Environmental Policy Act of 1969 105 Compared to ear
lier regulations, the 1974 regulations reflected a more aggressive
commitment to the consideration of nonnavigational factors in
determining whether to grant or deny a permit.

In 1982 the Corps issued new regulations for evaluating
whether to grant Section 10 permits. 0 6 These regulations signifi-
cantly expanded the criteria controlling the Corps determination
of whether to issue a permit by requiring that a "public interest
balance process" consider the favorable and detrimental impacts
of a particular project. 10 7 The EPA also has issued guidelines

grounds, but he must weigh the effect project will have on conservation before he issues
permit. Judge Brown summed up the court' holding that
nothing in the statutory structure compels the Secretary to close his eyes to all that
others see or think they see. The establishment was entitled, if not persuaded by
them, to deny that which might have been granted routinely five, ten or fifteen years
ago before man explosive increase made all, including Congress, aware of civiliza-
tion potential destruction from breathing its own polluted air and dnnking its own
infected water and the immeasurable loss from silent spnng like disturbance of na-
ture' economy.

Id. at 201.
102. Consideration of nonnavigational factors was spurred when Congress enacted the

Fish and Wildlife Coordination Act, 16 U.S.C. §§ 661-664 (1970). This statute generally
provides that "wildlife conservation shall receive equal consideration in federal decision-
making. Id. § 661. The Act specifically directs each federal agency such as the Corps of
Engineers to consult with the Fish and Wildlife Service before it grants permit for modi-
fication of any waterbody. Thus, before the Corps can grant permit, it must consult with
the Fish and Wildlife Service with view toward conservation of wildlife resources. Later
enactments also encouraged or required consideration of other nonnavigational factors.
For example, the National Environmental Policy Act of 1969 specifically mandates that
every federal agency shall consider ecological factors when dealing with activities which
may have an impact on the human environment. As federal agency, the Corps had no
choice once NEPA became law but to take environmental factors into account when re-
viewing permit applications.

103. See, Zabel, 430 F.2d at 211.
104. Id. at 214.
105. 42 U.S.C. §§ 4321 and 4332 (1982).
106. See 45 Fed. Reg. 62,739-43 (1980).
107 Id. at 62,736.

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178 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 12:159

which simultaneously govern the Section 404 permit process.10 8

Both the Corps regulations and EPA guidelines must be observed
by the permit applicant. 10 9

The Corps regulations prescribe twelve "general policies" for
evaluating permit applications, five of which are particularly criti-
cal. First, the Corps must conduct a "public interest review " bal-
ancing the "benefits which reasonably may be expected to accrue
from the proposal" against "its reasonably foreseeable detri-
ments."1 0 The provision recites an exhaustive list of sixteen fac
tors that are germane to this inquiry and then states that no
permit will be granted unless it is found to be not "contrary to the
public interest." 'ii Second, the Corps is instructed to consult
with the Fish and Wildlife Service and the National Manne Fisher
ies Service, and to accord "full consideration" to their views.' 12

A third provision mandates that "due consideration" be given the
proposal's effect on the enhancement, preservation, or develop-
ment of "historic, cultural, scenic, conservation, recreational or
similar values." 113 Fourth, the Corps regulations require a de
nial of a permit where certification or authorization of the pro-
posed work is required by Federal, State and/or local law and that
certification or authorization has been denied. 1 4 Finally the
Corps regulations declare that wetlands serve seven functions
that are "important to the public interest"' 1 5 and that "no permit
will be granted which involves the alteration of wetlands identi-
fied as important" under these seven criteria unless the Corps
makes a finding that under the public interest review analysis "the
benefits of the proposed alteration outweigh the damage to the
wetlands resources." 1 6 In making this latter determination, the
Distnct Engineer has to consider whether the proposed activity
"requires access or proximity to or siting within the special
aquatic environment" and whether "practicable alternative sites"
are available.i 1 7 The applicant has the burden of providing infor

108. 40 C.F.R. § 231.1(b) (1986).
109. See 33 C.F.R. § 323.6(a) (1986); 40 C.F.R. § 230.2(a) (1986).
110. 33 C.F.R. § 320.4(a) (1986).
111. Id.
112. 33 C.F.R. § 320.4(c) (1986).
113. 33 C.F.R. § 320.4(e) (1986).
114. 33 C.F.R. § 320.4()(1) (1986).
115. 33 C.F.R. § 320.4(b)(2) (1986).
116. 33 C.F.R. § 320.4(b)(4) (1986).
117 Id., citing 40 C.F.R. § 230.10(a)(3).



mation as to the project's water-dependency and data on practica-
ble alternative sites.

The EPA guidelines, like the Corps' regulations, recognize wet-
lands as requiring special protection. The guidelines state that:

From a national perspective, the degradation or destruction of
special aquatic sites, such as filling operations in wetlands, is
considered to be among the most severe environmental im-
pacts covered by these Guidelines. The guiding principle
should be that degradation or destruction of special sites may
represent an irreversible loss of valuable aquatic resources.1 i8

Accordingly for all proposed projects, the guidelines prohibit is-
suance of a permit if there is a "practicable alternative,"' 1 9 which
is defined as one that "is available and capable of being done after
taking into consideration cost, existing technology and logistics
in light of overall project purposes" 120 that would have "less ad-
verse impact on the aquatic ecosystem.'' 121 The guidelines fur
ther provide:

Where the activity associated with a discharge which is pro-
posed does not require access or proximity to or siting
within the special aquatic site (i.e., is not water dependent'),
practicable alternatives that do not involve special aquatic sites
are presumed to be available, unless clearly demonstrated other
wise. (emphasis added).1 22

B. EPA Veto Authority Under CWA Section 404(c)

While primary responsibility for issuance of permits rests with
the Corps, the Corps decision is expressly made subject to the
EPA Administrator's veto power 123 Section 404(c) provides, in
pertinent part, that the EPA Administrator*

is authorized to prohibit the specification (including the with-
drawal of specification) of any defined area as a disposal site
whenever he determines, after notice and opportunity for pub-
lic hearings, that the discharge of such matenals into such area
will have an unacceptable adverse effect on municipal water

118. 40 C.F.R. § 230.1(d) (1986).
119. 40 C.F.R. § 230.10(a) (1986).
120. 40 C.F.R. § 230.10(a)(2) (1986).
121. 40 C.F.R. § 230.10(a) (1986).
122. 40 C.F.R. § 230.10(a)(3) (1986).
123. While the Corps has general responsibility for the permit program, EPA continues

to carry ultimate responsibility for overall concerns of the CWA, including determinations
of what constitutes navigable waters" for purposes of Section 404. Avoyolles
Sportsmen League, 715 F.2d at 903 n. 12.

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180 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 12:159

supplies, shellfish beds and fishery areas ., wildlife, or recrea-
tional areas. 124

Regulations issued under Section 404(c) set forth broad stan-
dards in determining when to apply this statutory veto power
They provide that "when the Regional Administrator has reason
to believe after evaluating the information available to him
that an unacceptable adverse effect' could result he may initi-
ate [404(c) proceedings]." 12 5

In Newport Gallera Group v. Deland,126 plaintiff developer sought
to enjoin the EPA from conducting public hearings pursuant to
Section 404(c) on plaintiff's proposed construction of a regional
shopping mall on certain wetlands located in Attleboro, Massa-
chusetts. Plaintiff argued that EPA s Section 404(c) powers are
extraordinary and highly restricted, and can be exercised only if
the Regional Administrator has "reason to believe" that an unac
ceptable adverse effect could result from the proposed project. 27

The United States District Court for the District of Columbia re
jected this argument. The court observed that Section 404(c) sets
out no threshold requirements for initiation of Section 404(c)
proceedings and that the only specific limitation - the finding of
an unacceptable adverse effect on any of the five designated re
source areas - applies only to actions that the Regional Adminis-
trator may take after the notice and heanng process.' 28 The
limitations on the Regional Administrator's initiations of Section
404(c) are found only in regulations which require that he have
''reason to believe that an 'unacceptable adverse effect could
result."129

Although the EPA has commenced proceedings under Section
404(c) on only seven or eight occasions since passage of the
CWA,is ° it is expected that it will more frequently invoke this pro-
vision to review Corps decisions and ensure protection of wet-
lands. Moreover the EPA can be expected to continue to use its
authority to determine what constitutes "waters of the United
States" for purposes of Section 404 to maintain a broad definition
of waters subject to the CWA.

124. 33 U.S.C. § 1344(c) (1982).
125. 40 C.F.R. § 231.3(a) (1982).
126. Newport Gallena Group v. Deland, 618 F Supp. 1179, 1180 (D.D.C. 1985).
127 Id. at 1181-82.
128. Id. at 1182.
129. Id. See 40 C.F.R. § 231.3(a) (1986).
130. 618 F Supp. at 1182.



C. Judicial Review of Corps Determinations

The Corps determination of whether to grant or deny a permit
under Section 10 and Section 404, and EPA s exercise of its veto
authority under Section 404, constitute final agency action re-
viewable under the Administrative Procedure Act ("APA").isi

The agency action is reviewed under the arbitrary and capricious
standard, 132 and judicial review is limited to the contents of the
administrative record.133 Courts are typically reluctant to con-
duct de novo review on the Corps wetland determination, 13 4 and
normally proceed by way of summary judgment. 13 5 Some courts,
however have allowed trial testimony in reviewing the Corps
wetlands determinations. 3 6 Courts are usually more willing to
allow some trial testimony in cases where the Corps has granted a
permit.137

Regardless of whether the court takes testimony or decides the
case on summary judgment, the party challenging the Corps de

131. See 5 U.S.C. § 701. Typically, courts will hold that the question of whether the
proposal is subject to permit requirements is matter that should first be decided at the
agency level and such cases are dismissed on ripeness grounds. See, e.g., USI Properties v.

EPA, 517 F Supp. 1235 (D.P.R. 1981); Signal v. Alexandria, 17 Env't Rep. Cas. (BNA)

1852, 1853-54 (C.D. Cal. 1980). Some courts, however, have rejected ripeness arguments.
See, eg, Puerto Rico v. Alexander, 438 F Supp. 90, 94 (D.D.C. 1977).

132. Taylor v. District Eng'r, United States Army Corps of Eng rs, 567 F.2d 1332, 1336
(5th Cir. 1978); Deltona Corp. v. Alexander, 504 F Supp. 1280, 1284 (M.D. Fla. 1981),
af'd, 682 F.2d 888 (11 th Cir. 1982); Hart and Miller Islands Area Envtl. Group, Inc. v.
United States Army Corps of Eng rS, 621 F.2d 1281 (4th Cir. 1980), cert. denied, 449 U.S.
1003 (1980).

133. Buttrey v. United States, 690 F.2d 1170 (5th Cir. 1982), cert. denied, 461 U.S. 927
(1983); Joseph G. Morretti, Inc. v. Hoffman, 526 F.2d 1311, 1312 (5th Cir. 1976).

134. Smithwick v. Alexander, 17 Env't Rep. Cas. (BNA) 2131, 2132 (4th Cir. 1981).

135. Parkview Corp. v. Department of Army Corps of Eng'rs, 469 F Supp 217 (E.D.
Wis. 1979).

136. Bayou des Families Dev. Corp. v. United States Army Corps of Eng rs, 541 F

Supp. 1025, 1034 (E.D. La. 1982). Courts have rejected the argument that an applicant
has right to jury trial when the government seeks civil penalties under the Clean Water

Act. United States v. Tull, 769 F.2d 182, 186 (4th Cir. 1985), cert. granted in part, 106 U.S.
2244 (1986).

137 See, e.g., Action for Rational Transit v. West Side Highway Project, 536 F Supp.
1225 (S.D.N.Y. 1982), aff'd, 699 F.2d 614 (2d Cir. 1983). Although courts may be reluc
tant to take testimony, the Corps is usually required to give petitioner an administrative
hearing if it so requests, although not trial-type hearing. Buttrey v. United States, 690
F.2d 1170, 1174 (5th Cir. 1982), cert. denied, 461 U.S. 927 (1983). In AJA Associates v.
Army Corps of Engrs, slip op. C.A. No. 85-5151 (E.D. Penn. April 18, 1986), district
court held that the Corps had not met the minimal heanng requirements, by failing even
to provide the applicant with "paper hearing. The court noted that the CWA authorizes
the Secretary of the Army, acting through the Chief of Engineers to "issue permits, after
notice and opportunity for public hearings. 33 U.S.C. § 1344(a), (e) (1982).

1987] Wetlands



182 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 12:159

termination has a difficult burden. 38 Courts typically uphold the
Corps determination. 139 In those few cases in which the courts
find an arbitrary action by the Corps, the usual remedy is a re-
mand. 40 The courts, however have issued several recent opin-
ions which bear directly on the decisionmaking process of the
Corps as well as the EPA. In reviewing the issuance of a Section
404 permit, the question arises as to whether the activity imping-
ing on the wetland should be permitted to go forward in view of
alternative sites for development. The courts have confirmed that
alternative sites must be available to the applicant and consistent
with project purposes to warrant denial of a permit.

In Hough v. Marsh,14i residents of Edgartown, Massachusetts
filed suit challenging a Corps permit authorizing the filling of a
coastal tract to construct two private residences. The District En-
gineer found that project was not "water dependent," but con-
cluded that the applicant had overcome the presumptions set
forth in the Corps regulation because the project was "nonethe
less necessary because of the absence of feasible alternatives."i' 42

The court rejected plaintiffs argument that water dependency
was a prerequisite for issuance of a permit. The court, however
noted that a "more persuasive showing than otherwise concern-
ing lack of alternatives" is necessary for projects not considered
water dependent. 43 The court further noted that a review of

138. In Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 415 (1971), the
Supreme Court made clear that court review under the APA is highly deferential and that
final agency action is entitled to presumption of regularity. The reviewing court is not
empowered to substitute its judgment for that of the agency. Id. at 416. Rather, re
viewing court' duty is to hold the agency to certain minimal standards of rationality,
and not to "inject its opinion in place of that of the agency who, because of its particular
expertise, has been entrusted with the decisionmaking power. Ethyl Corp. v. EPA, 541
F.2d 1, 36 (D.C. Cir.), cert. denied, 426 U.S. 941 (1976). See also National Wildlife Federa-
tion v. Hanson, 623 F Supp 1539, 1544 (E.D.N.C. 1985).

139. See, e.g., United States v. DeVriendt, 791 F.2d 935 (6th Cir. 1986) (affirmed without
opinion); Loving v. Alexander, 745 F.2d 861 (4th Cir. 1984); Orleans Audubon Soc. v.
Lee, 742 F.2d 901, 907 (5th Cir. 1984).

140. Taylor, 567 F.2d at 1338-40 (5th Cir. 1978).
141. 557 F Supp. 74 (D. Mass. 1982).
142. Id. at 83.
143. Id. See 1902 Atlantic, Ltd. v. Hudson, 574 F Supp. 1381, 1398 (E.D. Va. 1983)

(court agrees with Hough that the so-called water dependency requirement is not prereq-
uisite, but rather one more factor to be considered by the defendant in the general bal-
ancing process when issuing permit).



Wetlands

practicable alternatives must be constrained by the applicant s
primary project.14 4

More recent court decisions have confirmed the conclusions
reached by the District Court in Hough. For example, in Louisiana
Wildlife Federation, Inc. v. York, I 45 plaintiff brought suit asserting

that the Corps had improperly conducted its alternative analysis
in approving six Section 404 permits for clearing hundreds of
acres of wetlands for cultivation of soybeans. Plaintiff argued that
alternatives could not be viewed in terms of the applicant s objec
tive of increasing soybean production. The court, however
found that the Corps was not only permitted to consider the ap-
plicant s objective, but indeed required to consider that objec
tive. 14 6 Because there was no alternative that could fulfill the
applicant s objective, the court approved the Corps finding of no
"practicable alternatives." 47

The Fifth Circuit reversed on grounds unrelated to the lower
court s alternative analysis. The Fifth Circuit, however rejected
plaintiff's argument that it was inappropriate for the Corps to
view alternatives with the applicants purpose and objectives in
mind. 14 8 The Fifth Circuit observed:

not only is it permissible for the Corps to consider the appli-
cant's objective; the Corps has a duty to take into account the
objectives of the applicant's project.149

144. Hough, 557 F Supp. at 83. See Roosevelt Campobello Int'l Park Comm v. EPA,

684 F.2d 1041, 1047 (ist Cir. 1982) (EPA properly focused on applicant' economic needs
for deep water port site).

145. 603 F Supp. 518 (W.D. La. 1984), aff'd in part and vacated in part, 761 F.2d 1044
(5th Cir. 1985).

146. 603 F Supp at 528.
147 Id. at 529.
148. York, 761 F.2d at 1048.
149. Id. In National Audubon Soc. v. Hartz Mountain Dev. Corp., No. 83-1534D

(DN.J. October 24, 1983), 14 Envtl. L. Rep. 20724, 20730-31, an applicant proposed con-
struction of retail/office building on site which would require that 127 acres of wetlands

be filled. The court denied plaintiff' request for injunctive relief, finding no practicable
alternative from plaintiff' perspective. Even though numerous other sites were being de
veloped by other parties for the same purposes, these sites were not practicable alterna-
tives for the applicant because they were being developed and thus were unavailable to the
defendant.

Based on this case law, the Corps has recently taken the position that it generally ac
cepts an applicant's determination that proposed activity is needed and will be economi-
cally viable. 51 Fed. Reg. 41,209 (1986). However, the Corps recently promulgated
regulation gives it authority to look at the economic impacts and need for project, and
make an independent review of the need for the project. The new Corps regulations
provide:

1987]



184 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 12:159

It should be noted, however that even though courts have
ruled in the applicant s favor in allowing the Corps to consider
only practicable alternatives that are consistent with the devel-

oper's objectives, the courts generally uphold the Corps determi-
nation. Accordingly in those cases where the Corps and EPA
apply the alternatives analysis to find a practicable alternative re
quiring that the permit be denied, i50 the developer will face a dif-
ficult challenge in order to overturn the government's permit
decision. It is thus essential that the developer make every effort
to obtain a favorable ruling at the agency level.

III. THE REGULATORY TAKING OPTION

In those instances when private developers have been unable to
reverse an agency determination to deny a permit, the private de-
velopers may seek to obtain damages from the government based
on a "regulatory taking" theory Since Justice Holmes decision
in Pennsylvanza Coal Co. v. Mahon,15 1 where the Supreme Court
first recognized that a restnctive zoning and land-use regulation
that "goes too far" can constitute a taking,1 52 private developers
who have been denied an environmental permit have had the op-
tion to seekjust compensation for the government's restriction of
the use of their property 15 While the Supreme Court has held
that governmental land-use regulations may amount to a taking of

The district engineer may determine that the impacts proposed project on the pub-
lic interest may require more than cursory evaluation of the need for the project.
The depth of the evaluation would depend on the significance of the impacts and in
unusual circumstances could include an independent economic analysis.

Id. at 41,208.
150. See Bersani v. E.P.A., CA No. 86-CV-722 (N.D.N.Y. filed July 1, 1986).

151. 260 U.S. 393 (1922).
152. Id. at 415.
153. In addition to the fact that regulatory takings have been difficult to prove, the court

has held that "just compensation" is the fair market value of the property on the date it is
appropriated and allows the owner to receive what willing buyer would pay in cash to
willing seller at the time of the taking. Kirby Forest Indus. Inc. v. United States, 467 U.S.
1, 10 (1984). "Considerations that may not reasonably be held to affect market value are
excluded. United States v. 50 Acres of Land, 469 U.S. 24, 29 (1984), quoting, Olson v.
United States, 292 U.S. 246, 255 (1934). "Deviation from this measure ofjust compensa-
tion has been required only 'when the market value has been too difficult to find or when
its application would result in manifest injustice to the owner or the public. 50 Acres of
Land, 469 U.S. at 29, quoting, United States v. Commodities Trading Corp., 339 U.S. 121,
123 (1950).



1987] Wetlands

property 154 several recent cases make clear that a taking will only
be found where the developer has exhausted all options for its
land and when the permit denial has the effect of preventing all
economically viable uses.i 55

A. Background

The Just Compensation Clause of the Fifth Amendment states
in unequivocal terms: "Nor shall private property be taken for
public use, without just compensation."i' 56 When a governmental
entity exercises its powers of eminent domain to condemn private
property for a public use, there is no question that the Fifth
Amendment requires that compensation be paid.' 57 More diffi-
cult is the issue whether a governmental entity must pay just com-
pensation when a police power regulation may be said to have
effected a taking by restricting use of private property

For many years, the Court held that an exercise of police pow-
ers, however arbitrary or excessive, cannot as a matter of federal
constitutional law constitute a taking within the meaning of the
Fifth Amendment.15 8 As long as a police power regulation had a
proper purpose, and means rationally related to that purpose, the

154. See, e.g., Connolly v. Pension Benefit Guaranty Corp., 106 S. Ct. 1018 (1986); Riv-
erside Bayview Homes, Inc. v. United States, 106 S. Ct. 455 (1985); Williamson County
Regional Planning Comm v. Hamilton Bank of Johnson City, 105 S. Ct. 3108 (1985);
San Diego Gas & Elec. Co. v. San Diego, 450 U.S. 621 (1981).

155. MacDonald, Sommer & Frates v. Yolo County, 106 S. Ct. 2561 (1986); Florida

Rock Indus., Inc. v. United States, 791 F.2d 893 (D.C. Cir. 1986), cert. dented, 107 S. Ct.
926 (1987).

156. U.S. CONST., amend. V The Just Compensation Clause was made applicable to

the states through the Fourteenth Amendment. San Diego Gas & Elec. v. San Diego, 450
U.S. 621 (1981); Webb' Fabulous Pharmacies Inc. v. Beckwith, 449 U.S. 155, 160 (1980);
Chicago B. & Q. R. Co. v. Chicago, 166 U.S. 226, 239 (1897).

157 When the government action involves physical intrusion on the land, such "physi-
cal seizure may operate as de facto exercise of the power of eminent domain so as to
require compensation. United States v. Dow, 357 U.S. 17 21 (1958) (pipeline right-of-
way); United States v. Cress, 243 U.S. 316 (1917) (flooding); United States v. Clarke, 445
U.S. 253 (1980); United States v. Dickinson, 331 U.S. 745, 747-48 (1947). The closer
particular government regulation is to actual physical seizure the more likely it is that the
regulaion will be found to interfere so unreasonably with the property that it is character-
ized as "taking. Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982).
Similarly, if the restmction on the land furthers governmental enterprise, it may be con-
sidered taking since the government has used the property to its own benefit. See, e.g.,
Armstrong v. United States, 364 U.S. 40, 49 (1960); Penn Central Transp. Co. v. New York
City, 438 U.S. 104 (1978).

158. Mulger v. Kansas, 123 U.S. 623 (1887). See also Hadacheck v. Sebastian, 239 U.S.
394 (1915); Reitman v. City of Little Rock, 237 U.S. 171 (1915).



186 COLUMBIA JOURNAL OF ENVIRONMENTAL LAw [Vol. 12:159

Court refused to find a taking no matter how much financial loss
it caused.' 59

In Pennsylvania Coal Co. v. Mahon, 160 Justice Holmes overruled
this precedent, stating "ITjhe general rule at least is, that while
property may be regulated to a certain extent, if regulation goes
too far it will be recognized as a taking." 16i Since this decision,
and particularly in recent years, the Court has frequently recog-
nized the vitality of the general principle that a regulation can ef-
fect a Fifth Amendment taking. 162 The Court, however has yet to
hold that a land-use regulation constitutes a taking. While enun-
ciating several criteria to determine whether a regulation consti-
tutes a taking, the Court has infrequently applied these factors
because in cases before the Court there has not been a final deci-
sion as to how the allegedly confiscatory regulation applied to the
property '63 Accordingly when a regulation that goes too far
should be recognized as a taking remains, as one distinguished
commentator has observed, "the most haunting jurisprudential
problem in the field of contemporary land use law one that
may be the lawyer's equivalent of the physicist s hunt for the
quark. " 164

B. Determining Whether A Regulation Has Effected A Taking

"The determination that governmental action constitutes a tak-
ing is, in essence, a determination that the public at large, rather
than a single owner should bear the burden of an exercise of
state power in the public interest."i 65 AsJustice Holmes noted in
Pennsylvania Coal, the determination of a taking is "a question of
degree-and therefore cannot be disposed of by general proposi-
tion." 166 To this day there is no set formula to determine where

159. Mulger, 123 U.S. at 667-68.
160. 260 U.S. 393 (1922).
161. Id. at 415. Pennsylvania Coal has been interpreted as constitutional challenge to

the regulatory measure that was invalid as an exercise of the public power. San Diego Gas
& Elec. v. City of San Diego, 450 U.S. 621, 649 n. 14 (1981).

162. See note 147 supra.
163. See notes 171-207, tnfra.
164. C. HAAR, LAND-USE PLANNING 766 (3rd ed. 1976). See generally, Berger, A Policy

Analysts of the Taking Problem, 49 N.Y.U. L. REV. 165 (1974); Michelman, Property, Utility and
Fairness: Comments on the Ethical Foundations ofjust Compensation Law, 80 HARV. L. REV. 1165
(1967); Sax, Takings and the Police Power 74 YALE L.J. 36 (1964).

165. Agins v. City of Tiburon, 447 U.S. 255, 260 (1980).
166. 260 U.S. 393, 413 (1922).



regulation ends and taking begins. 167 Instead, the Court relies as
much on "the exercise of judgment as the application of
logic."' 168 Courts engage essentially in an ad hoc factual inquiry
allowing the resolution of the issue to turn upon the particular
circumstances of each case.169

While the Court has eschewed the development of any set
formula for identifying a "taking forbidden" by the Fifth Amend-
ment, the Court has identified several factors which have particu-
lar significance. The Supreme Court recently restated these
factors in Connolly v. Pension Benefit Guaranty Corp. 170 where it
observed:

To aid in this determination, we have identified three fac
tors which have particular significance: (1) the economic im-
pact of the regulation on the claimant; (2) the extent to which
the regulation has interfered with distinct investment-backed
expectations; and (3) the character of the government ac
tion. 171

C. Application of the Regulatory Taking Test

1. Supreme Court Avoidance of the Regulatory Taking Issue

The issue of whether a particular regulation can be said to ef-
fect a taking of property has been presented frequently to the
Supreme Court in recent years. The Supreme Court, however
has consistently resisted any determination on the regulatory tak
ing issue, refusing to adjudicate the constitutionality of the regu-
lation that purports to limit development until the developer has
exhausted all options that might permit development. The Court

167 MacDonald, Sommer & Frates, 106 S. Ct. at 2566 (1986); Goldblatt v. Hempstead,

369 U.S. 590, 594 (1962).
168. Andrus v. Allard, 444 U.S. 51, 65 (1979).

169. United States v. Central Eureka Mining Co., 357 U.S. 155, 168 (1958).

170. 106 S. Ct. 1018 (1986).

171. Id. at 1026. The genesis of these criteria was Penn Central Transp. Co. v. New

York City, 438 U.S. 104 (1978), in which the Court analyzed whether the restctions im-

posed by New York City Landmark Preservation law upon construction proposal for

Grand Central Station effected "taking within the meaning of the Fifth Amendment.

After canvassing the appropriate inquiries necessary to determine whether land use re-
striction effected taking, the Court identified the economic impact of the regulation on

the claimant and the character of the governmental action as particularly relevant consid-
erations. 438 U.S. at 124. The Court then announced three-part inquiry which is still in

effect, although the test was modified in Pruneyard Shopping Center v. Robins, 447 U.S.
74, 83 (1980), where the Court redefined the second prong of the test to provide that the
claimant invest-backed expectation must be reasonable.

Wetlands1987]



COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 12:159

has stated that "it cannot determine whether a regulation has
gone too far until it knows how far the regulation goes."' 72

In Agins v. City of Tiburon,l7 3 the Court held that a zoning ordi-
nance which authorized the development of single-family resi-
dences on the developers 5-acre tract did not effect a taking of
property on its face because the developer had not made applica-
tion for any improvements to the property Similarly in San Diego
Gas & Electrc Co. v. San Diego,174 the Court dismissed an appeal
because the City's rezoning and adoption of an open space plan
had deprived the utility of all beneficial use of the property The
Court noted that "further proceedings were necessary to resolve
the federal question whether there had been a taking at all."' 75

The Court also found the regulatory taking claim premature in
Williamson County Regional Planning Commission v. Hamilton Bank of

Johnson City 176 in which the developer failed either to seek a vari-
ance that would have allowed it to develop the property in ac
cordance with the proposed plan or to avail itself of state
procedures which might obtain "just compensation." As ex
plained by the Court in Williamson:

[T]he difficult problem [is] how to define 'too far, that is,
how to distinguish the point at which regulation becomes so
onerous that it has the same effect as an appropnation of prop-
erty through eminent domain or physical possession.
[R]esolution of that question depends, in significant part, upon
an analysis of the effect the Commission s application of the
zoning ordinance and subdivision regulations had on the value
of respondent's property and investment-backed profit expec
tations. That effect cannot be measured until a final decision is
made as to how the regulations will be applied to respondent s
property 177

Most recently the Court addressed the ripeness issue in Mac
Donald, Sommer & Frates v. Yolo County 178 In this case, the land
developer submitted a proposal to the Yolo County Planning
Commission to subdivide certain agricultural property into resi-

172. MacDonald, Sommer & Frates, 106 S. Ct. at 2566.
173. 447 U.S. 255 (1980).
174. 450 U.S. 621 (1981).
175. Id. at 633.
176. 105 S. Ct. 3108 (1985).
177 Id. at 3124. The Court has also found the regulatory taking claim premature in

Penn Central Transportation Co., 430 U.S. 104 (1970), and Hodel v. Virginia Surface Min-
ing & Reclamation Assn., Inc., 452 U.S. 264 (1981).

178. 106 S. Ct. 2561 (1986).



dential lots. The Commission rejected the proposal because the
proposal failed to provide adequate public street access, sewer
services, water supplies and police protection. Based on a line of
California Supreme Court precedent, 79 the Califorma Court of
Appeals determined that a landowner cannot recover in inverse
condemnation based upon land-use regulation, and that even if
an inverse condemnation action was available, plaintiff had failed
to state a claim because the denial of plaintiff's proposal cannot
be equated with a refusal to permit less intensive but still valuable
development.I 80 While rejecting the view that a developer cannot
recover under a taking theory for land use regulations, the
Supreme Court affirmed, citing precedent establishing that it
must know the "nature and extent of permitted development
before adjudicating the constitutionality of the regulations that
purports to limit it." 18 1 The Court stated:

Here, in comparison to the situations of the property owners in
the three preceding cases, appellant has submitted one subdivi-
sion proposal and has received the Board's response thereto.
Nevertheless, appellant still has yet to receive the Board's "fi-
nal, definitive position regarding how it will apply the regula-
tions at issue to the particular land in question." In Agms, San
Diego Gas & Electnc, and Williamson Planning Comm n, we declined
to reach the question whether the Constitution requires a mon-
etary remedy to redress some regulatory takings because the
records in those cases left us uncertain whether the property at
issue had in fact been taken. Likewise, in this case, the holdings
of both courts below leave open the possibility that some devel-
opment will be permitted, and thus again leave us in doubt re
garding the antecedent question whether appellant's property
has been taken. 182

2. Regulatory Taking Decisions

Although the Supreme Court has often been able to avoid de
termining whether a particular regulation constitutes a taking, the
Court has on occasion applied its "regulatory taking" test. A
number of lower courts have also applied the test.

179. Agins v. City of Tiburon, 24 Cal. 3d 266, 274-77 598 P.2d 25, 29-31 (1979), aff'd,
447 U.S. 255 (1980). See generally, Cunningham, Inverse Condmnation as Remedy for "Regu-
latory Takings 8 HASTING CONSTITrrioNAL L. Q. 517 (1981).

180. 106 S. Ct. at 2564-2565. The California Supreme Court denied appellant' peti-
tion for heanng, and the appellant perfected an appeal to the Supreme Court. Id.

181. Id. at 2567
182. Id.

Wetlands1987]



190 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 12:159

The Supreme Court has most recently applied a taking analysis
in Keystone Bituminous Coal Ass n v. DeBenedictis. 183 In a five-four de-
cision, written by Justice Stevens, the Court held that a Penn-
sylvania statute, designed to minimize subsidence from coal
mining and requiring 50% of coal beneath certain structures be
kept in place for surface support, does not affect a taking of prop-
erty While noting that Justice Holmes in Pennsylvania Coal had
found a taking when a statute had prohibited the mining of coal in
a manner that would cause subsidence of land, the Court in Key-
stone distinguished Pennsylvania Coal on the facts of the case.'8 4

First, the Court distinguished the particular government action
involved. The Court maintained that unlike the statute in Penn-
sylvania Coal, the present statute did "not merely involve a balanc
ing of the private economic interests of coal companies against
the private interests of surface owners,"I 85 but rather sought "to
protect the public interest in health, the environment, and the fis-
cal integrity of the area."'' 8 6 Second, the Court distinguished the
present statute from that in Pennsylvania Coal by finding that the
present statute neither makes it impossible for petitioner to prof-
itably engage in business nor involves undue interference with
petitioners investment-backed expectation. The Court stated
that only a narrowly defined segment of property could not be
mined, and petitioners failed to show that their entire bundle of
rights in the property had been impaired. 8 7

In his dissent, Chief Justice Rehnquist found the majority's at-
tempt to distinguish Pennsylvania Coal unpersuasive. Rehnquist
maintains that the statute in Pennsylvania Coal did, in fact, serve
the public interest and was enacted to avoid unsafe conditions
and environmental damage. l8 Moreover Rehnquist argues that
the fact that a statute may have a valid public purpose does not
resolve the issue of whether a taking has occurred. "A broad ex
ception to the operation of the Just Compensation Clause based
on exercise of multifaceted health, welfare, and safety regulations
would surely allow government much greater authority than we

183. 107 S. Ct. 1232 (1987).

184. Id. at 1236.

185. Id. at 1242.

186. Id. at 1243.

187 Id. at 1246-1248.

188. Id. at 1255.



have recognized to impose societal burdens on individual
landowners." 189

The dissent observed that while the majority recognized a nui-
sance exception to the taking analysis, it did not accept the propo-
sition that the state may completely extinguish a property
interest or prohibit all use without providing compensation.
Rehnquist points out that the majority apparently had refused to
consider the 27 million tons of coal in the ground as a separate
segment because the alleged taking was regulation of property
rather than of physical intrusion. Rehnquist states that this disc
tinction is irrelevant to the consideration of the impact of govern-
ment action on property rights.' 90 Based on the scope of the loss
to petitioners and the complete extinguishment of the petitioners
property right, the dissent would find that a taking has occurred
and that compensation must be paid.

Keystone represents a significant split in the Court on application
of regulatory taking cnteria.191 Under Stevens analysis, an appli-
cant for a wetlands permit would virtually never be able to estab-
lish a taking, because the police power interest in protecting the
environment, that serves as the basis of a government denial of a
wetlands permit, would apparently preclude recovery regardless
of the degree of damage suffered by the permit applicant. Under
a Rehnquist analysis, focus on public purpose would be limited to
the determination whether the government may exercise its tak
ing power 192 The main analysis would be whether the govern-
ment action extinguished the property owners bundle of rights
and deprived the owner of all or most of his interest in the prop-
erty The holding in Keystone creates great uncertainty on whether
it would be possible to prove a taking because of a denied wet-
lands permit, and if such were shown, how a petitioner would
prove the severity of the economic impact.

189. Id. at 1256.
190. Id. at 1258.
19 1. The Court did not evince such disagreement in its taking analysis in Rucklehouse v.

Monsanto Co., 467 U.S. 986 (1984), in which an applicant for pesticide registration under
the Federal Insecticide, Fungiscde and Rodenticide Act ("FIFRA") brought suit, alleging
that the data consideration and data disclosure provisions of FIFRA effected taking of
property without just compensation. The Court determined that the regulation was ra-
tionally related to legitimate government interest, and that Monsanto, knowing the con-
ditions under which it provided data to EPA, did not have reasonable, investment-backed
expectation that the data submitted after the effective date of the FIFRA Amendment
would be kept confidential beyond that which the statute itself protected.

192. Keystone, 107 S. Ct. at 1256.

1987] Wetlands



192 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 12:159

The Supreme Court has "uniformly rejected the proposition
that diminution in property value, standing alone can establish a
taking."' 9 3 The Court has branded as fallacious the "contention
that a 'taking must be found to have occurred whenever the land-
use restriction may be characterized as imposing a servitude on
the claimant s parcel."' 19 4 Instead, the taking issue is resolved by
focusing on the uses the regulation permits, and courts typically
reject regulatory taking claims because the property has residual
value. 195

193. Penn Central Transp. Co., 438 U.S. at 131; Euclid v. Ambler Realty Co., 272 U.S.
365 (1926) (75% diminution in value caused by zoning law); Hadacheck v. Sebastian, 239
U.S. 394 (1915) (87.5% diminution in value).

194. Penn Central Transp. Co., 438 U.S. at 130 n. 26. In Kirby Forest Indus., the Court
noted that at least in the absence of an interference with an owner legal right to dispose
of his land, even substantial reduction of the attractiveness of the property to potential
purchasers does not entitle the owner to compensation under the Fifth Amendment. 467
U.S. at 7

195. The Supreme Court has not as yet provided definitive interpretation of the regu-
latory taking issue. The Court has refused to adjudicate the constitutionality of particu-
lar regulation that purports to limit development until the developer has exhausted all
options that might permit development. See, e.g., McDonald, Sommer & Frates, 106 S. Ct.
2561; Williamson County Regional Planning Comm'n, 473 U.S. 172 (1985); Hodel, 452
U.S. 264 (1981).

The Supreme Court this Term, however, will have several occasions to address the issue
of what constitutes regulatory taking. In First English Evangelical Lutheran Church of
Glendale v. County of Los Angeles, No. 85-1199 (October Term, 1986), the Solicitor Gen-
eral, in an amicus curiae brief has presented radical argument to the Court on the regula-
tory taking issue. The government argues that the Fifth Amendment does not, of its own
force, furnish basis for court to award money damages against the government. Brief
of the United States as Amicus Curiae Supporting Appellee, First English Evangelical Lu-
theran Church of Glendale v. County of Los Angeles, No. 85-1199 (October Term, 1986).
The government finds support for this argument in the text of the Fifth Amendment and
other indicia of the drafters intent. However, the Court has frequently asserted in dicta,
that the Fifth Amendment is not limited to an actual physical appropriation or invasion of
owner property and that taking may result from regulatory restrictions, even temporary
restrictions, on the owner use of its property. In view of this well established proposi-
tion, the Government may be unable to muster a majority ofJustices to adopt its argument
that the Fifth Amendment does not require monetary remedy be available against the
government where regulation is found to result in an unconstitutional taking. It must be
noted, however, that the Court has only accepted the "regulatory taking damage claim in
dicta. Even in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1932), the case where the
Supreme Court first recognized regulation which goes too far can constitute taking, the
action was for injunctive relief and thus the Court did not need to decide whether land-
owner may obtain damages on taking theory.

The Court, however, will likely find the claim in First English premature. The owner of
the land, upon which development had been restricted, had not submitted concrete pro-
posal to the responsible county agency in order to obtain final decision on the extent of
permitted development. Although it may be argued that applellee never contended that



The Court of Claims, in Deltona Corp. v. United States 196 andJent-
gen v. United States, 197 laid down the basic principle that while a
government regulation can effect a taking of property the taking
issue is to be resolved by focusing on the uses the regulation per
mits. In Deltona, the court noted that while the Corps' denial of
the RHA and CWA permits "substantially frustrated Deltona s
reasonable investment-backed expectation [it] neither extin-
guish[es] a fundamental attribute of ownership, [cite omitted],
nor prevents Deltona from deriving many other economically via-
ble uses of its parcel."' 98 InJentgen, the court found that the post-
denial market value of plaintiff's land was close to the original
purchase price value. Furthermore, plaintiff had rejected permits
to develop part of the parcel. The court, following the Supreme
Court's standard, stated that "some diminution in the value of the
property rather than the complete destruction of all economically
viable uses" did not constitute a taking.199

The Federal Circuit Court, in Florida Rock Industries, Inc. v.
United States,200 set forth a standard for evaluating residual value
of property affected by a denial of a development permit. Florida
Rock Industries sought compensation for an alleged taking of
property that occurred by reason of the Corps denial of a permit
to discharge pollutants into a navigable water pursuant to Sec
tion 404 of the CWA. Florida Rock had applied for a Section 404
permit for its limerock extraction activites but the permit applica-
tion was denied because of the environmental impact on the wet-
lands. Florida Rock did not challenge the validity of the Corps
determination, but chose instead to bring a taking action in the
Claims Court.

all uses of the property were not denied to the landowner, and thus that ripeness argu-
ment is inappropriate, the Court may again dismiss this case on ripeness/finality grounds.

The regulatory taking issue has also been presented for Supreme Court review in two

other cases. In Keystone Bituminous Coal Association v. Duncan, No. 85-1092, the Court
will face the question whether the Third Circuit (771 F.2d 707) properly distinguished
Pennsylvania Coal in holding that state can compel mine operator to abandon their coal,
in order to serve the state interest in economic development, without violating the Tak-
ings Clause of the Fifth Amendment. In Nollan v. California Coastal Comm n, No. 86-133,

the Supreme Court will decide whether state court, having determined that the state had

authority under its police power to allow physical invasion of property for public use,

must evaluate whether compensation is owing to the landowner.

196. 657 F.2d 1184 (Ct. Cl. 1981).

197 657 F.2d 1210 (Ct. Cl. 1981).

198. 657 F.2d at 1192.

199. 657 F.2d at 1213.

200. 791 F.2d 893 (D.C. Cir. 1986), cert. denied, 107 S. Ct. 926 (1987).

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194 COLUMBIA JOURNAL OF ENVIRONMENTAL LAw [Vol. 12:159

The Claims Court found that the Corps denial of the permit
constituted a taking because it left the plaintiff no reasonable eco-
nomic uses for the property 201 The court rejected the govern-
ment's uncontroverted evidence that the property could be sold
for a higher price per acre than when it was purchased. The court
also found that the proposed mining operation would not have
polluted the water supply even though the developer did not
challenge the Corps denial of the permit.20 2

An en banc panel of the Federal Circuit Court found the Claims

Court decision in error 203 First, the court held the Claims Court
erred in finding that rock mining would not pollute, noting that
the Claims Court may not usurp the authority of the Corps to
make its public interest analysis, and that a challenge to the
Corps analysis is only appropriate in federal district court. 20 4 As
far as whether the Corps action constituted a taking, the court
noted that a regulation under the Clean Water Act can be a taking
if its effect on a landowner s ability to put his property to produc
tive use is sufficiently severe.20 5 The court noted, however that a
taking does not occur by a mere denial of the "highest and best
use" or the most profitable use that would be available in the ab-
sence of regulation. 20 6 The Federal Circuit further held that the
Claims Court erred in assessing the severity of economic impact
exclusively on the basis of the value of the property for mining
purposes and in refusing to consider any fair market value re
maining in the land and reliable on its sale.20 7

On remand, the Federal Circuit observed that:

The court should consider along with other relevant matters,
the relationship of the owner's basis or investment, and the fair
market value before the alleged taking, to the firm market value
after the alleged taking. In determining the severity of eco-

201. 8 Cl. Ct. 160, 165 (1985).
202. Id. at 172.
203. 791 F.2d 893 (D.C. Cir. 1986).
204. Id. at 898. Florida Rock did not sue in the United States District Court under the

Administrative Procedures Act for review of the permit denial, but rather chose only to file
in the United States Court of Claims under the Tucker Act, 29 U.S.C. § 1491 (1982).

205. 791 F.2d at 901. Citing Deitona Corp. v. United States, 657 F.2d 1184 (Ct. Cl.
1981), cert. dented, 455 U.S. 1017 (1982); Jentgen v. United States, 657 F.2d 1210 (Ct. CI.
1981), cert. denied, 455 U.S. 1017 (1982). The court noted that regulation may have an
adverse effect on market value if the most profitable use is prohibited. Id., citing Andrus v.
Arllard, 444 U.S. 51, 66 (1979); Penn Central, 438 U.S. at 131.

206. 791 F.2d at 901.
207 Id. at 901-903.



Wetlands

nomic impact, the owner s opportunity to recoup its investment
or better, subject to the regulation, cannot be ignored.20 8

The court noted that in applying this legal standard, there is a
"substantial possibility that a taking should be held to have
occurred."

20 9

Most recent federal cases have uniformly rejected taking
claims, 210 and only a few state court cases have found a taking in
such instances. However in 1902 Atlantic Ltd. v. Hudson,21 a fed-
eral district court for the first time ruled that the Corps denial of
a permit to develop an area containing wetlands would constitute
a taking if allowed to stand. The Corps had denied plaintiff per
mission to fill a partially inudated borrow pit, consisting of ap-
proximately eleven acres of sand and mudflat bottom and less
than three-fourth acres of vegetated wetland. Originally the
property was entirely highland and not subject to Corps regula-
tion. The site was then excavated to provide fill for construction
of a highway Subsequently unknown persons constructed a
ditch connecting the pit to a tributary of navigable water The
court ruled that the denial of a permit to plaintiff was arbitrary
and capricious, and would constitute a taking if allowed to
stand. 2i 2 The court held that the permit denial would render the
pit commercially worthless, that it precluded any reasonable ben-
eficial use, and that it denied plaintiff all viable economic use of
the site.2 13

In Annicelli v. South Kingstown,214 the Supreme Court of Rhode
Island held that a town ordinance prohibiting single family resi-
dences in "high flood danger areas" was a taking because it de-
prived plaintiff of all reasonable use of the property The court
reasoned that the regulation was a taking for the public good
rather than the prevention of public harm, and that the police
power may not be used properly to regulate property for the pub-

208. Id. at 905.

209. Id.
210. See, e.g., Park Avenue Tower Assocs. v. City of New York, 746 F.2d 135 (2d Cir.

1984), cert. dented sub nort., 40 Eastco v. City of New York, 105 S. Ct. 1854 (1985); Sadow-

sky v. City of New York, 732 F.2d 312 (2d Cir. 1984); Troy v. Renna, 727 F.2d 287 (3rd

Cir. 1984); Furey v. City of Sacramento, 592 F Supp. 463 (E.D. Cal. 1984); Tirolerland,
Inc. v. Lake Placid 1980 Olympic Games, Inc., 592 F Supp. 304 (N.D.N.Y. 1984).

211. 574 F Supp. 1381 (E.D. Va. 1983).
212. Id. at 1404, 1405-1406.

213. Id. at 1405.
214. 463 A.2d 133 (R.I. 1983).

1987]



196 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 12:159

lic good. 2 15 In Zinn v. State,216 the Supreme Court of Wisconsin
found a temporary taking when the Department of Natural Re-
sources erroneously ruled that a lake which covered plaintiff's
property resulted in title to the land being held in trust. Even
though the owner gained full use of the property after the regula-
tion was repealed, the court found that the length of time was
only a factor in determining whether the owner was deprived of
beneficial use. 2i 7 More typically however the state courts, like
the federal courts, find that the property has residual value, and
that the fact a regulation has some adverse effect on the fair mar
ket value does not result in a taking.2 i 8

IV THE DEVELOPER S COURSE OF ACTION

The need for a developer to present effectively its case to the
agency in the first instance cannot be overemphasized. Given
how infrequently a federal court will overturn an agency s deter
mination on a wetland's permit, and the problems developers
have encountered in attempting to obtain damages on a taking
theory when denied a wetlands permit, it is critical that the devel-
oper be well prepared to explain and justify its proposal before it
files a wetlands application with the Corps.

The Corps, however is only one of several agencies with which
a developer must encounter in order to obtain a wetlands permit.
While the EPA has long commented on wetlands proposals, EPA
is now expected to take a far more active role in reviewing the
Corps decisionmaking process. Moreover the United States Fish
and Wildlife Service is taking a more comprehansive look at the
effect of proposals on wetlands, particularly given the fact that
more than one-third of the nation s endangered species depend
on these areas for survival. 2 19

The developer also cannot ignore other federal and state agen-
cies required authorizations for the project and their comments
on the Corps environmental impact statement and decision doc
ument. Consequently the developer must have a comprehensive

215. Id. at 141.
216. 112 Wis.2d 417 (1983), 334 N.W.2d 67 (1983).
217 112 Wis.2d at 427" 334 N.W.2d at 72.
218. See, e.g., Stilling v. City of Winston-Salem, 311 N.C. 689 (1984), 319 S.E.2d 233

(N.C. 1984); Potomac Sand & Gravel Co. v. Governor of Maryland, 293 A.2d 241 (Md.
1973).

219. J. KUSLER, OUR NATIONAL WETLAND HERITAGE 3 (1983).



Wetlands

strategy in which it can address effectively the issues raised by the
various agencies.

Before submitting its application for a wetlands permit to the
Corps, the developer should already have factual and scientific
support for its position that the permit is in the public interest.
After the developer files its application, the Corps ordinarily is-
sues a public notice of receipt within fifteen days. Environmental
groups may begin fighting a substantial project soon thereafter
The developer has the ability to get a head-start on this opposi-
tion and should take advantage of this opportunity

For a project not dependent upon being in or near water the
issue of alternatives to the project is critical. Recent case law has
made it clear that it is not only permissible for the Corps to con-
sider the applicant s objectives in determining whether there is a
practicable alternative, but that the Corps has a duty to take these
objectives into account. 220 Proving that no alternatives will meet
the applicant s objectives is not an easy task, particularly in view
of the presumption that such alternatives exist.2 2 1

Prior to filing a permit application, the developer should pre-
pare a thorough market study or at least a preliminary study
which shows that there are no practicable alternatives. This
should be used to persuade the Corps and the EPA at the outset
that there is not a praticable alternative.

The market study should not be narrowly focused in scope, but
should make a convincing case that impingement on the wetland
itself is necessary under the specific circumstances presented.
While case law has upheld viewing alternatives based on the de
veloper s objective, an alternative s actual ability to achieve the
developer's objective is debatable; therefore, a developer should
provide the government a market study that shows there is no
realistic alternative which will legitimately meet the objective
sought by the proposed project.

It is also important that the particular wetlands of concern be
studied. In challenging wetlands permits, environmentalists may
take the position that all wetlands are deserving of equal protec
non. In reality however some wetlands serve more important
ecological functions than others. If an applicant can show that
the wetlands upon which the proposed project will impinge are

220. Louisiana Wildlife Fed' v. York, 761 F.2d 1044 (5th Cir. 1985).
221. 40 C.F.R. § 230.10(a)(3) (1986).

1987]



198 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 12:159

not functional, or that mitigation measures suggested will make
the wetlands function better than previously such information
may help convince the agencies that the development is in the

public interest. The funcuonality of the wetlands can only be de-
termined through scientific analysis, and it will often be cost-ef-
fective to conduct a review of the wetlands before a permit
application is filed.

The developer must also give consideration to mitigation meas-

ures that can be proposed.2 22 Because of the strong opposition
that may arise to development in or near wetlands, the developer
should be prepared to make certain concessions from the outset.
Developers should also expect that the government will require
much more than just mitigation before a permit is granted.
Neither the federal agencies nor the public will ordinarily allow a
developer to destroy a wetlands area without requiring the devel-
oper to take steps to improve the existing wetlands or develop an
artificial wetlands. There is a rising sentiment for a "replace
ment" policy in which the developer would be required not only

to mitigate the direct effects of the proposal on the wetland on
which it impinges, but also to improve an existing wetland or to
create an artificial wetland so that the acreage lost to the develop-
ment is fully replaced. Clearly the developer s proposal on meas-
ures to rectify any harm caused by the project is critical, and these
measures must be developed with care and under expert supervi-
sion to avoid unnecessay cost and inefficiencies.

If the Corps denies a wetlands permit, or the EPA vetoes the
Corps approval of a permit, a developer has two basic litigation
options. First, the developer can bring an action under the Ad-
ministrative Procedure Act ("APA"), 2 23 claiming that the agency
determination is arbitrary and capricious. Second, the developer
can bring an action for damages under a taking theory 224 These
options are not mutually exclusive; a developer may bring both an
APA action and a taking claim; however the developer has a diffi-
cult burden of proof in either case.

222. The Corps and EPA's policy on the amount of required mitigation remains un-
clear. Even the Corps' recent regulations do little to clarify this issue, other than to permit
both on-site and off-site mitigation and to explain the concept of compensatory mitiga-
tion or compensating for the impact by replacing or providing substitute resources or
environments. 51 Fed. Reg. 41,208 (1986). The regulations do not clarify when com-
pensatory mitigation will be required or when off-site mitigation would be acceptable.

223. See 5 U.S.C. § 703 (1982).
224. See MacDonald, Sommer & Frates, 106 S. Ct. 2561 (1986).



Wetlands

In APA actions, the courts have generally paid significant defer
ence to an agency s determination that a wetlands permit be de-
nied. In those few cases in which the Corps determination is
overturned, the remedy is to remand the case to the Corps for
reconsideration. Consequently a developer who has not prop-
erly presented his case at the agency level can expect little in way
of relief from a court. It is highly unlikely that a court would
usurp the Corps function and simply order a permit to be issued.

Some developers have avoided the APA review altogether and
sought damages in the Claims Court under a "regulatory taking"
theory 225 Such a claim, however cannot be considered by a
court until there has been a "final and authontative determina-
tion" by the responsible administrative agency with respect to
"the type and intensity of development legally permitted on the
subject property "226 Morever the permit denial must have the
effect of preventing all economically viable uses.227

In determining whether the government regulation has re-
sulted in a taking for which a developer is entitlted to just com-
pensation, a court must examine: 1) the economic impact of the
regulation on the claimant; 2) the extent to which the regulation
has interfered with distinct investment-backed expectations; and
3) the character of the governmental action.2 28

Meeting these standards in the context of a wetlands case is
often difficult because the developer may have bought the land,
knowing that it would need a permit for development. Thus, a
reasonable investment-backed expectation would include an
awareness of the fact the land might not be available to use for
the purposes for which it was obtained. Moreover even when a
permit is not granted, the land nevertheless retains residual value
as property which may be later resold. Finally the actual eco-
nomic impact of a failure to grant a permit, in many cases, is mini-
mal because the developer bought at a low price what basically
amounted to swampland.

An even greater obstacle which may preclude a developer from
obtaining damages under a regulatory taking theory is that the
developer must exhaust all options that might permit develop-
ment before a governmental restriction on use of land will be said

225. See Flonda Rock, 791 F.2d 893 (D.C. Cir. 1986).
226. MacDonald, Sommer & Frates, 106 S. Ct. at 2566.
227 Id.
228. Id.

19871



200 COLUMBIA JOURNAL OF ENVIRONMENTAL LAW [Vol. 12:159

to effect a taking. The Supreme Court has recently decided that it
cannot determine whether a regulation has gone so far as to effect
a taking until it knows how far the regulation goes.229 Denial by a
government entity of one proposal cannot be equated with a re-
fusal to permit less intensive but still valuable development. Ac
cordingly courts will not decide the issue of whether a developer
is entitled to a monetary remedy to redress a regulatory restric
tion on use of his property unless all possibilities for development
of the property have been exhausted.

V CONCLUSION

Recent case law development in the area of wetland law re-
quires that private developers who seek to construct facilities in
wetland areas carefully reassess their legal approach to obtaining
permits and approval for such projects. The Corps broad juris-
diction to require permits before construction of facilities in wet-
land areas has now been confirmed by the Supreme Court, and
the EPA can be expected more frequently to use its veto power
under Section 404(c) of the CWA to the overturn Corps decisions
it believes allow unnecessary damage to wetland areas. Given the
increased public pressure to protect wetlands, both the Corps and
EPA will more carefully scrutinize wetlands proposals.

Developers who seek to challenge agency determinations under
the APA have a difficult burden. In rare cases only will courts find
the agency to have acted arbitrarily and will typically remand the
case to the agency for further development of the record when it
finds a decision to be unsupported. Recent case law in the area of
regulatory takings holds little promise for developers. The
Supreme Court s decision in Yolo County places a burden on the
developer to seek permits for all possible uses of the property in
question before it even considers bringing a regulatory taking
claim. After exhaustion of all these avenues, the private devel-
oper may be successful in proving a taking claim under the stan-
dards set forth in Florda Rock if it can show that the property s fair
market value after the alleged taking has dropped significantly In
many wetlands cases, this burden will be impossible to meet be-
cause the developer bought swamp land at an inexpensive price.

Given these legal standards, it is essential that the private de-
veloper approach development in wetland areas with a view to-

229. See Connolly, 106 S. Ct. 1018.



Wetlands

ward working closely with federal and state agencies so that the
permit is not denied. It is useful for the developer from the out-
set to propose mitigation measures and to limit interference with
wetlands to the maximum extent possible. While such efforts
have not always been successful, a close working relationship with
the agencies can enable a developer to avoid later problems.

When such efforts fail, a developer can resort to litigation. In
view of the difficulty in proving a regulatory taking, the developer
is advised to first seek to overturn the agency decisions as arbi-
trary Only in the event that the APA challenge is unsuccessful,
should a developer seek to bring a regulatory taking claim. In
bringing this claim, the developer will stand a better chance of
success, by focusing on proof that the governmental action is
aimed at providing a public benefit rather than preventing a pub-
lic harm, and showing the seventy of the economic impact of the
government action and that its reasonable investment-backed ex-
pectation cannot be recouped. The private developer must, of
course, show that he has sought and been denied permits for all
possible uses of the land before bringing the regulatory taking
case.

Wetlands serve an important function and their preservation is
essential. It is possible, however for private developers to con-
struct facilities on or near wetlands without unnecessarily harm-
ing environmental interests. Developers can improve existing
wetlands, mitigate damage to wetlands, and perhaps create wet-
lands that can serve the same function as those now existing.
Moreover not all wetlands have the same degree of environmen-
tal importance. Accordingly in proposing development in wet-
lands, developers should take steps to prove that their proposal
can move forward without damaging a wetland area and creating
ecological imbalance. Litigation should be understood as a last
resort in view of recent case law creating difficult bamers in chal-
lenging' the validity of agency action and in obtaining compensa-
tion under a taking theory

1987]