Enforcement and Inspection

Wetlands Settlement Paves Road to Future Development

A recent settlement in a prolonged wetlands case may pave the way for future development—and not just for parties involved. Let’s take a look at how a Clean Water Act (CWA) enforcement case provides hope for development despite a huge fine and other costs.

RoschetzkyIstockPhoto / iStock / Getty Images Plus / Getty Images

Here’s What Happened

John Duarte and his company Duarte Nursery, Inc., located in Tehama County, California, bought a piece of property in 2012 and shortly thereafter sold most of it at a hefty profit. Duarte retained 450 acres for his own use. Less than 10 percent of the remaining property contained federally protected streams and wetlands.

Despite having maps showing the location of federally protected waters and advice from his own environmental consultant, Duarte hired a contractor to conduct “ripping” on the entire 450 acres without a permit from the Army Corps of Engineers (Corps). Ripping involves breaking up highly compacted soils.

Duarte claimed that he was simply conducting normal plowing, which would not require a wetlands permit as a “normal farming activity.” However, this exception applies to established, ongoing farming operations and not for converting federally protected waters to new uses. There had been no plowing on the land in question for over 24 years, so the ripping could not be considered an established farming operation. The ripping, in this case, converted areas of water to dry land for intended new uses.

The Fine and the Fix

Under the terms of the settlement, there is a three-prong penalty that will cost, with remediation, over $1 million.

  • Civil monetary penalty. Duarte will pay a $330,000 penalty.
  • Remediation. Duarte will develop a Corps-approved remediation plan that involves:
    • Smoothing all disturbed soil and reasonably matching the pre-November 2012 grade and hydrology of the impacted federally protected waters, aka, “waters of the United States.” This involves about 22 acres.
    • Planting native grass and seed mix or taking other erosion and sediment control measures to stabilize bare mineral soils.
  • Mitigation. Within a year, Duarte will spend $770,000 in off-site compensatory mitigation, such as:
    • Purchasing vernal pool establishment credits from Corps-approved mitigation banks in the area watersheds;
    • Purchasing credits from the National Fish and Wildlife Foundation’s In-Lieu Fee Program for the Northeastern Sacramento Valley Vernal Pool Service Area; or
    • Any other mitigation approved by the Corps.

Takeaway: Hope for the Future

The settlement allows Duarte to return most of the property to productive use. In addition, embedded in the settlement consent decree is an interesting paragraph that allows Duarte, after 2 years, to seek a revised jurisdictional determination for the site, except for a part designated as a conservation reserve. The Corps will apply the “then-applicable definition of ‘waters of the United States.’” This might suggest that the current rulemaking process concerning the definition of “waters of the United States” is having an impact on how the Justice Department is addressing existing enforcement cases. If the definition is narrowed by the time Duarte seeks a revised jurisdictional determination, the same property could have fewer wetlands-related restrictions.

Given the current uncertainty of the regulations, however, it is advisable to do your homework before undertaking any projects in wetland areas. Otherwise you, like Duarte, could be on the hook for both civil penalties and mitigation costs. Check tomorrow’s Advisor on what is involved should you find yourself required to perform wetlands mitigation.