Seventh Circuit Remands “Waters of the United States” Case to Corps of Engineers to Determine Whether there is a “Significant Nexus”

On June 27, the U.S. Court of Appeals for the Seventh Circuit decided the case of Orchard Hill Building Co. v. U.S. Army Corps of Engineers. The Court of Appeals vacated the decision of the District Court granting the U.S. Army Corps of Engineers’ (Corps) motion for summary judgment dismissing the Orchard Hill Building Company’s (Orchard) complaint that the Corps’ jurisdictional determination erroneously found that the waters at issue were “jurisdictional waters” under the Clean Water Act (CWA) subject to the Corps’ jurisdiction. Acknowledging that the Corps and EPA had promulgated a new rule re-defining “waters of the United States” in 2015—which is now being challenged in the courts—the Court of Appeals noted that this case is controlled by the pre-2015 definition of “waters of the United States.” The Court of Appeals remanded the case to the Corps, directing it to determine if there was a significant nexus, as required.

In 1995, Orchard purchased 100 acres of farm land known as the “Warmke parcel” located in Timley Park, IL for the purpose of constructing a new residential development. The first phase of the construction altered the property’s water drainage creating new wetlands. Before Orchard proceeded with the next phase of construction, in 2006, it sought a jurisdictional determination from the Corps that these wetlands, which are not adjacent to a navigable body of water, were not “waters of the United States” subject to the regulatory power of the Corps. The Corps, however, issued a determination that these wetlands were, in fact, waters of the United States, triggering a long and tedious journey through the Corps’ administrative appellate processes.

During this time, the U.S. Supreme Court issued its ruling in Rapanos v. U.S., holding that wetlands which are not adjacent to navigable-in-fact waters can be jurisdictional waters if a “significant nexus” is demonstrated. Rapanos did not produce a majority opinion, and without one to definitively answer the question, courts have held that Justice Anthony Kennedy’s concurrence controls, including the Seventh Circuit in U.S. v. Gerke Excavating, Inc.

The last determination was issued by the Corps in 2013, prompting Orchard to seek review in federal court. On appeal, the Court of Appeals conducted an exacting review of the administrative record assembled by the Corps, and concluded that its jurisdictional determination was not supported by substantial evidence that there was in fact any significant nexus established. The District Court’s ruling was vacated and the Corps has been ordered to reconsider its determination, with the court noting that “this dispute has consumed almost as many years as the Warmke wetlands have acres.”