NFIB

NFIB Legal Foundation Decries 4th Circuit Decision on Private Land Use
09/11/2003

The NFIB Legal Foundation today decried Wednesday's ruling by the 4th Circuit requiring Newdunn Associates LLP, a firm in Norfolk, Virginia, to file with the Army Corps of Engineers for approval to develop its land -- land that the U.S. Supreme Court has said the Corps has no authority to regulate. The Legal Foundation filed an amici curiae brief with the U.S. Court of Appeals for the 4th Circuit in the case of U.S. v. Newdunn Associates, L.L.P. last October arguing that the wetlands at issue were not adjacent to "navigable waters" and, therefore, outside the Corps' jurisdiction.

"For small-business owners this ruling means that the federal government has the authority to regulate even more of their activity," said NFIB Legal Foundation Executive Director Karen Harned. "Those hoping to develop their own property, if it contains wetlands, must go through a series of regulatory and bureaucratic hoops that will cost significant time and money."

The costs associated with obtaining federal wetlands permits are very difficult for small businesses to absorb, deterring expansion and job creation. According to a recent study, on average, it takes 313 days to obtain a nationwide permit at a cost of $28,915. For individual permits, it takes an average of 788 days with costs of over $271,596 -- more than many small businesses gross in one year.

In a 2001 decision - Solid Waste Agency of Northern Cook County (SWANCC) v. U.S. Army Corps of Engineers, 531 U.S. 159 (2001) - the U.S. Supreme Court held that the Clean Water Act (CWA) only gives the Corps jurisdiction over "navigable waters." Because the wetlands at issue in Newdunn are over a mile away from navigable water, the U.S. Supreme Court asked the lower court to reexamine the original decision against Newdunn. That decision, which charged Newdunn with civil penalties for developing wetlands without a permit, was overturned in 2002 by the district court for the Eastern District of Virginia. It held that the wetlands in question were not directly adjacent to navigable waters and, consequently, not subject to regulation by the Corps. The government appealed the district court decision.

In Newdunn, the Corps argued that it had jurisdiction over remote wetlands well outside the scope of what the Supreme Court said it could regulate in SWANCC. The Corps claimed jurisdiction over the wetlands at issue by saying they are "connected" to "navigable waters." However, that connection is tangential at best - beginning with rain-generated surface water runoff, which occasionally runs through a spur ditch and man-made, roadside ditches and finally to "navigable water" over a mile a way.

"The Clean Water Act gives the Corps jurisdiction over 'navigable waters,'" said Harned. "The idea that a man-made, roadside ditch is "navigable" is ridiculous. This decision only adds to the confusion small-business owners face when trying to determine whether they need a wetlands permit."

Although Newdunn is a civil case, the CWA carries criminal penalties as well. The Foundation is gravely concerned with recent court decisions that give the Corps jurisdiction over land far from navigable waters. These decisions extend federal criminal liability to virtually all land everywhere in the United States.

"By siding with the Corps in this case the 4th Circuit leaves America's small businesses up a creek without a paddle," Harned said. "The NFIB Legal Foundation will continue to fight to make sure that the letter and spirit of the U.S. Supreme Court's decision in SWANCC is upheld."

---

The NFIB Legal Foundation is a 501(c)(3) public interest law firm created to protect the rights of America's small-business owners by providing advisory material on legal issues and by ensuring that the voice of small business is heard in the nation's courts. The National Federation of Independent Business (NFIB) represents the consensus views of its 600,000 members in Washington and all 50-state capitals.

CONTACT: Mike Donohue, 202.554.9000