Wetlands & Recent Case Law: Twin Eagle & Other Recent Decisions

This paper will discuss a recent state case and a line of federal cases pertaining to wetlands. The state case is Twin Eagle, LLC v. Indiana Department of Environmental Management and Lori Kaplan in her Official Capacity as Commissioner, Cause No. 49F12-0107-CP-002490 ("Twin Eagle"). The federal cases result from the United States Supreme Court's decision in Solid Waste Agency of Northern Cook County v. U.S. Army Corp of Engineers, 531 U.S. 159, 121 S. Ct. 675,148 L. Ed. 2d. 576 (2001) ("SWANCC"). The focus will not be on the SWANCC decision, but rather on reported decisions interpreting that opinion. As part of your materials relating to the state case, there is attached a copy of Judge Michael D. Keele's February 11, 2002 decision in Twin Eagle. Also enclosed are copies of Judge Keele's Order Granting Emergency Stay, the Indiana Department of Environmental Management's ("IDEM") Motion to Transfer Appeal to the Indiana Supreme Court Prior to Consideration by the Indiana Court of Appeals, Twin Eagle's response thereto, and the Order of the Indiana Supreme Court accepting transfer, dated April 11, 2002.

Twin Eagle v. Indiana Department of Environmental Management, et al.

I. Facts of Twin Eagle

A little background on Twin Eagle will be helpful in understanding the issues to be decided by the Indiana Supreme Court. Twin Eagle is the owner of approximately 460 acres of real property in Allen County,

Indiana, which it intended to develop as a residential subdivision. The property included 14.75 acres of wetlands and private ponds that were not "waters of the United States" and 6.77 acres of wetlands and open channels that were "waters of the United States". Subsequent to the SWANCC decision, the United States Army Corps of Engineers ("Corps") issued a letter confirming Twin Eagle's determination that the 14.75 acres were not "waters of the United States", and therefore not within the Corps' jurisdiction.

Prior to the SWANCC decision in January 2001, which decision effectively excluded "isolated wetlands" from the Corps' jurisdiction, Indiana, as did most states, regulated such wetlands pursuant to ß401 of the Clean Water Act, 33 USC ß1251 et seq. ("CWA"). In response to SWANCC, IDEM released a memorandum dated April 11, 2001 to "Interested Persons" announcing IDEM's intention to develop an " interim regulatory process" to continue protection of water resources affected by SWANCC. On June 5, 2001, IDEM issued another memorandum stating its intention to "use IDEM's authority" pursuant to the National Pollutant Discharge Elimination System permitting program and apply it to wetlands, including its intention to "pursue enforcement actions" against those persons who fail to comply. IDEM elaborated on these two memoranda in a press release entitled "Topic Paper: Creation of a State Wetlands Program in the Wake of SWANCC v. United States Army Corps of Engineers". On July 1, 2001, IDEM published these two memoranda in the Indiana Register.

In light of the "interim regulatory process" announced by IDEM, Twin Eagle brought an action for declaratory judgment seeking relief from IDEM's "interim regulatory process". Specifically, Twin Eagle sought relief establishing that: (1) IDEM's newly asserted "interim regulatory process" and NPDES permit requirement constituted improper rulemaking and was ultra vires; (2) IDEM could not require Twin Eagle to seek a NPDES permit for activity that impacted only isolated, non-navigable wetlands or private ponds; (3) IDEM had no independent regulatory authority under its existing regulations or any state law over private ponds and isolated wetlands that are not "waters of the United States"; and (4) private ponds and isolated wetlands are not "waters of the state" subject to IDEM's jurisdiction. As further explained below, the Court found in favor of Twin Eagle on all points and also held that IDEM could not bring an enforcement action for the discharge of dredged or fill material into private ponds or wetlands that were not "waters of the United States".

In response to Judge Keele's Order, IDEM sought and obtained an Emergency Stay Order, the effect of which will be discussed later in this paper. As noted above, IDEM and Twin Eagle also sought judicial review directly to the Indiana Supreme Court which transfer was accepted.

II. Twin Eagle's Arguments

1. IDEM's new permit program under NPDES was not promulgated according to statutory requirements for new rules.

1. IC 4-22-2-1, et seq. detail the specific procedures for implementing new rules. The procedures require solicitation of public comment, public hearing, submission to the attorney general for review, gubernatorial review and submission to the secretary of state, none of which procedures were complied with by the Water Pollution Control Board ("Water Board"), which has the responsibility for adopting rules under the statute. In fact, Twin Eagle argued, the adoption of the "interim regulatory process" by IDEM was an usurpation of the authority vested in the Water Board.

   2. IDEM's authority under NPDES is limited to navigable waters and therefore does not apply to isolated wetlands and private ponds.

1. IDEM's authority is limited to ß401 water quality certification for ß404 Corps permits. Therefore, only if the Corps asserts ß404 jurisdiction does IDEM have ß401 jurisdiction.

2. SWANCC eliminated Corps ß404 and, consequently, ß401 jurisdiction of isolated waters and wetlands. In its June 5, 2001 memorandum, IDEM admitted its intent to use NPDES "until the effective date of new rules authorizing a state wetlands program", thereby conceding it had no regulatory process for wetlands that were not subject to ß404/ß401 regulations.

3. Section 402 of the CWA (the NPDES provisions) is subject to the same limitations as ß401. Section 402(b) of the CWA only authorizes state NPDES programs to govern discharges into "navigable...