By Robert J. Uram, Ella Foley-Gannon and S. Keith Garner

On February 6, 2006, in National Ass’n of Homebuilders v. U.S. Army Corps of Engineers, Nos. 04-5221 et al., 36 ELR 20032 (D.C. Cir. Feb. 6, 2006), the United States Court of Appeals for the D.C. Circuit issued a unanimous ruling in favor of several major trade associations, holding that the validity of the Army Corps of Engineers regulation of “incidental fallback” that can result from activities such as ditch digging and excavation is ripe for review, and requiring the lower court to consider the legality of permit requirements for this type of discharge of dredged material into waters of the United States.

Known as the “Tulloch Rule,” the regulation provides that the Corps will “regard the use of mechanized earth-moving equipment” in streams and wetlands as resulting in “a discharge” of pollutants, thereby requiring a permit under the federal Clean Water Act (“CWA”) unless “project-specific evidence” shows that the dredging results in “only incidental fallback.” (33 C.F.R. § 323.2(d)(2)(i) and 40 C.F.R. § 232.2(2)(i).) The regulation defines incidental fallback as the “redeposit of small volumes of dredged material incidental to excavation activity” if the material “falls back to substantially the same place as the initial removal.” (33 C.F.R. § 323.2(d)(2)(ii) and 40 C.F.R. § 232.2(2)(ii).) The case was remanded to the district court for a ruling on the merits, which is expected later this year.

The associations, including the National Stone, Sand, and Gravel Association, the National Association of Home Builders, the National Public Projects Coalition, and the American Road and Transportation Builders Association, challenged the validity of the rule. The associations argued that, while the extent of the Corps’ authority under the CWA is limited to activities that result in “additions” of pollutants to waters of the U.S., the decision to regard any earth-moving activity as resulting in discharge unless shown otherwise creates an impermissible rebuttable presumption that all dredging results in unlawful discharge and that its definition of incidental fallback which includes a volume determinant with no measurable criteria exceeds the scope of the Corps’ authority under CWA § 404. The trial court had dismissed the challenge, holding that the associations’ claims would not become “ripe” for review until a project proponent either went through the permit process or was subject to an enforcement action.

The D.C. Circuit held that the trial court must consider the associations’ claims, concluding that “it is obvious that Industry will face hardship if review of its challenge is denied for, if left intact, [the Tulloch Rule] will subject to the permitting process every party that engages in dredging which results in more than ‘incidental’ fallback, as determined using the regulation’s allegedly unlawful framework and volume determinant.” The appellate court determined that “the legality of the two challenged features of the regulation will not change from case to case or become clearer in a concrete setting.” As a result, the case was remanded for a ruling on the merits.

The challenged regulations affect activities including ditch digging, channelization and excavation, activities the associations contend do not involve adding pollutants to waters of the U.S. The associations contend that not knowing in advance what constitutes a redeposit of soil forces developers into a longer and more expensive regulatory process with no clarity on whether a section 404 permit will ultimately be required by the Corps. The associations contend that the current rule results in increased costs for the regulated community which, under the rule, is required to come to the Corps not only when a Section 404 permit is required, but also when one is not required. While a project proponent can proceed without a permit if they are confident that only incidental fallback will result from the project, they run the risk that the Corps or EPA could bring an enforcement action if either agency believes that more than incidental fallback results from the activity.

For more information please contact Robert Uram, Ella Foley-Gannon and Keith Garner. Robert J. Uram is a partner in the Real Estate, Land Use and Environmental Practice Group in the firm’s San Francisco office. Ella Foley-Gannon is a Partner in Land Use and Natural Resource Practice Group in the firm’s San Francisco Office. Keith Garner, AICP, is an associate in the Real Estate, Land Use and Environmental Practice Group in the firm’s San Francisco office.