e-Bulletin: Proposed Army Corps of Engineers Regulation of Wetlands

The Army Corps of Engineers and the Environmental Protection Agency recently published a proposed amendment to federal regulations providing for mitigation of wetlands and other aquatic resources on a "watershed" basis, the effect of which would be that the Corps might substantially expand its regulatory authority over wetlands that are traditionally regulated by local governments. The proposed rule is found at 71 Fed.Reg. 15519 (March 28, 2006). Comments on the proposed rule are due by no later than May 30, 2006.

Under the Corps' existing regulations, the Corps may impose mitigation requirements, in the form of mitigation banks or other requirements, when it grants a dredge-or-fill permit under Section 404 of the Clean Water Act. These mitigation banks or requirements are usually established for development activities affecting wetlands. Under existing regulations, the Corps has a preference for "in site, in kind" mitigation of wetlands activities, meaning that the Corps generally requires the permittee, as a condition of his permit, to impose mitigation measures applicable to the same wetlands he proposes to develop. Under the proposed new rule, there would no longer be a preference for mitigation measures applicable to the same wetlands the permittee proposes to develop, but instead the Corps would encourage the adoption of mitigation measures, such as mitigation banks, that reach other wetlands located anywhere in the same watershed, even though these wetlands may otherwise have no connection to the wetlands that are being developed.

The proposed rule may affect the interests of local governmental agencies that are responsible for regulating land use in two different ways. First, the Corps presumably would have authority under the proposed rule to adopt mitigation requirements applicable to wetlands located anywhere in the same watershed as the wetlands that are being developed, although the Corps may not have jurisdiction over the former wetlands under the Clean Water Act. The Supreme Court is currently considering, in two different cases (Rapanos and Carabell), whether the Corps has jurisdiction over all wetlands located in a particular watershed or instead only has jurisdiction over wetlands that substantially affect navigable waters and interstate commerce. Best Best & Krieger's Rod Walston has argued the latter position in an amicus brief submitted on behalf of several major western water agencies. Thus, the proposed rule may be overbroad by allowing the Corps to assert jurisdiction over wetlands for mitigation purposes even though it may not have jurisdiction over the wetlands under the Clean Water Act, depending on the outcome of the Rapanos and Carabell cases.

Second, even assuming that the Corps has jurisdiction over all wetlands located in a particular watershed, the proposed rule would adopt a preference in favor of the Corps' regulation of wetlands for mitigation purposes even though the wetlands may have no connection to the wetlands being developed, other than that the two wetlands are in the same watershed, and this preference would replace the current preference in favor of "in site, in kind" mitigation. The adoption of the new preference would allow the Corps to substantially expand its regulatory authority by imposing mitigation banking requirements for distant wetlands that have no practical, actual relationship to the wetlands that are being developed. This would, in turn, potentially intrude on the authority of local governments to regulate land use as applied to local wetlands that may be subject to the new federal mitigation requirements.

For these reasons, local governments and other affected parties may have an interest in providing comments to the proposed regulation. If you would like legal assistance on this effort, we urge you to contact your Best Best & Krieger attorney, or any BB&K BB&K's Environmental Law & Natural Resources Practice Group attorney, as soon as possible.