Landowners whose development efforts have been complicated by unpredictable federal wetlands regulation hoped the Supreme Court would bring some clarity to the issue. But with the Court's June 19 decisions in Rapanos and Carabell, the murky waters of U.S. wetlands regulation only got muddier.

The Clean Water Act gives the U.S. Army Corps of Engineers jurisdiction to regulate “the waters of the United States,” an ambiguous term that leaves the scope of the Corps' jurisdiction unclear. But instead of clarifying the issue, the Court sent the cases (John A. Rapanos et. al. v. U.S., and June Carabell et al. v. U.S. Army Corps of Engineers) back to the 6th Circuit in the most confusing terms possible–splitting its 5-4 opinion in multiple directions, and spawning more uncertainty and litigation in the future.

Writing for the four justices in the plurality, Justice Antonin Scalia said the 6th Circuit had given too much deference to the Corps' determination that it could regulate boggy lands that are not directly connected to navigable waters.

Scalia, however, was not writing for a majority. Four justices dissented, with Justice Anthony Kennedy straddling the middle. In the process, Kennedy created a new legal standard for what constitutes “waters of the United States”–whether a given body of water has a “significant nexus” with navigable waters.

What “significant nexus” actually means will be defined in the lower courts on a case-by-case basis. For landowners, it means the costs of getting permits to develop land and defending their development decisions will rise as agencies test their authority in the courts.

“Subjectivity in the law gives the agencies wiggle room,” says David Dearing, who represented Rapanos in his 6th Circuit appeal. “This decision has left things totally subjective–and in the meantime very confusing for landowners who don't know if their land is subject to federal regulation or not.”

Adjacent Or Isolated?

Rapanos arose from a land-development project that began nearly 18 years ago. The EPA prosecuted John Rapanos for violating the Clean Water Act when he backfilled 54 acres of intermittently boggy ground in 1989. A federal court in Michigan convicted him and slapped him with $185,100 in fines. Rapanos appealed to the 6th Circuit and ultimately the Supreme Court. Rapanos' lawyers argued his land was several miles from any navigable waterway, and therefore not within the federal government's reach.

Similarly, petitioners in Carabell (which the High Court consolidated with Rapanos) challenged federal authority to regulate a parcel of wetlands bounded by a man-made berm that separated the wetland from the nearest permanent body of water by a mile.

Although they agreed on little else in deciding Rapanos, the Supreme Court Justices all agreed that the Court's 2001 decision in Solid Waste Agency of Northern Cook County (SWANCC) v. Army Corps of Engineers barred the Corps from regulating isolated bodies of water that have no connection to navigable waters. It instructed the 6th Circuit to reconsider Rapanos in light of SWANCC.

“All the justices in Rapanos characterize SWANCC as precluding regulation of isolated, non-navigable water bodies,” says Reed Hopper, who represented Rapanos before the Supreme Court.

However, how the courts will define “isolated,” remains unclear.

The plurality's opinion advocates a “commonsense” distinction between navigable waters and remote wetlands: “The phrase 'the waters of the U.S.' includes only those relatively permanent, standing or continuously flowing bodies of water.” Scalia says the Clean Water Act regulates “only those wetlands with a continuous surface connection to bodies that are 'waters of the U.S.' in their own right.”

While Kennedy's opinion concurs in Scalia's result, his decision gives greater deference to regulators. Kennedy writes, “The Corps' adjacency standard is reasonable in some of its applications [and] draws support from the structure of the Act, while the plurality's surface-water-connection requirement does not.”

Kennedy argues for an ecologic analysis to determine whether a wetland has a “significant nexus” with a navigable waterway. Thus like Scalia's “continuous surface-water connection,” the term “significant nexus” is found nowhere in the Clean Water Act–a discrepancy bound to provoke more legal wrangling.

Not only are the standards unclear, but the lower courts also have little guidance as to which one they should apply.

Clear As Mud

Already, a federal court in Texas has taken up the issue, and expressed confusion about the Rapanos opinion. But by combining Scalia's analysis with Kennedy's test, the court determined that a dry ditch did not share a significant nexus with the waters of the U.S. in U.S. v. Chevron Pipe Line Co.

“Significant nexus is a fuzzy term the courts will have to define going forward,” says Robert Graham, who chairs the environmental practice at Jenner & Block. “Essentially the Army Corps' existing regulatory system will be the basis for regulating wetlands, but the test is modified by Kennedy's opinion.”

Unless federal lawmakers clarify policies on wetlands, Rapanos gives landowners good reason to build a strong case for their developments before they begin digging. Likewise, it gives regulators cause to exercise caution when prosecuting landowners.

“The Corps and EPA need to tell their field staff that 'significant nexus' means they have to support their decisions with strong ecological underpinnings,” says Jim Murphy, wetland and water resource counsel with the National Wildlife Federation. “The name of the game is good science and diligence.”