United States v. Robert R. Krilich, Krilich Companies, Inc., Riverwoods Development Corp.United States v. Robert R. Krilich, Krilich Companies, Inc., Riverwoods Development Corp.
In 1992, thе EPA sued Robert Krilich and several corporations he controlled, alleging violations of the Clean Water Act. The parties entered into a Consent Decree resolving the case. However, after the Supreme Court held that the Army Corps of Engineers exceeded its authority in extending the definition of “navigable waters” under the Clean Water Act to include intrastate waters used by migratory birds, Krilich moved the district court to vacate the Consent Decree. The district court refused to do so. Krilich apрeals, and we affirm.
I. Factual and Legal Background
On August 7, 1992, the United States Environmental Protection Agency (“EPA”) filed a civil complaint against the defendants,
1
alleging that they violated the Clean Water Act,
While the suit was pending and the parties were negotiating, this court issued a decision holding that the EPA's construction of “waters of the United States” as including intrastate, nonadjacent or “isolated” wetlands under
IV. DEFINITIONS
10. Except as specifically modified herein, the terms “waters of the United States”; “wetlands”; “dredged material”; “fill material”; “discharge of dredged material”; and “discharge of fill material” shall have the meanings assigned them at40 C.F.R. § 230.3 or33 C.F.R. § 323.2 . “EPA” means the United States Environmental Protection Agency, and “Corps” means the United States Army Corps of Engineers.
* * *
V. WATERS OF THE UNITED STATES
17. For purposes of this Consent Decree, the parties shall treat wetland and open water areas depicted on Exhibit 1, together with the new wetland and open water area created pursuant to Part VII (injunctive relief) and depicted on Exhibit 2, as waters of the United States located on the Royce Renaissance Property.
20A. The Defendants shall continue to treat wetland and open water areas depicted on Exhibit 1 as waters of the United States until the mandate issues in Hoffman Homes, Inc. v. EPA,961 F.2d 1310 (7th Cir.1992) and until proceedings related to any appeal, petition for certiorari, or remand are completed. Following completion of these proceedings, unless pertinent portions of the Seventh Circuit’s April 20, 1992 decision are reversed, Exhibit 1 areas W2A, W2B, W3, W5B, and W9 shall be excluded from the obligations imposed in Paragraph 17.
Thus, the parties expressly excluded some waters on the defendant’s property and agreed to treat the rest of the waters as “waters of the United States.”
Before the parties approved the final Consent Decree,
Hoffman Homes I
was vacated “on Septembеr 4, 1992, before the birds had reason to migrate south.”
United States v. Krilich,
On September 27, 1995, the government moved to enforce the Consent Decree, alleging that Krilich had failed to construct the replacement wetland by the date specified in the Consent Decree and that Kri-lich had violated the Decree by discharging fill material into an area known as W9, which the government contended was a “water of the United States.” The district court agreed with the government regarding Krilich’s failure to perform remediation and imposed civil penalties of $1,307,500.
See United States v. Krilich,
the land he allegedly filled was an “isolated intrastate wetland” which was beyond the federal government’s commerce power to regulate. Because Congress lacked authority to regulate his property, Krilich contended] that the district court lacked subject matter jurisdiction over the EPA’s complaint. And even though he agreed to the terms of the consent decree, which included a provision that the wetlands filled were “waters of the United States,” Krilich [argued] that this does not change the result because you can never consent to subject matter jurisdiction, and lack of jurisdiction can be raised at any time.
Krilich IV,
After SWANCC was issued by the Supreme Court, Krilich brought the present motion in federal district court, arguing that, under SWANCC, the waters affected by the Consent Decree are not subject to the EPA’s authority under the CWA. Therefore, Krilich reasoned, the execution and enforcement of the Consent Decree by the EPA is an ultra vires act and the Consent Decree was void ah initio. Kri-lich identified three bases for the district court’s authority to vacate or modify the Decree: the express reservation-of-jurisdiction clause contained in Paragraph 2 of the Consent Decreе, the court’s inherent power to modify its judgments, and Rule 60(b)(5) in light of a change in the law, namely, the SWANCC decision. 5
In considering Krilich’s motion, the district court assumed that all of the waters at issue were nonnavigable, isolated wetlands that had no surface connection to the nearest stream or nearest navigable body of water.
6
Krilich V,
Krilieh appeals, claiming that the district court should have vacated or modified the Consent Decree under either Rule 60(b)(5) or the Consent Decree’s reservation-of-jurisdiction clause in Paragraph 2.
II. Analysis
A. Standard of Review
We review a denial of Rule 60(b)(5) relief for an abuse of discretion.
See Protectoseal Co. v. Barancik,
Although the defendants submitted a professional engineer’s expert repоrt attempting to establish that all the wetlands subject to the Consent Decree are isolated, the district court did not conduct a hearing on that issue, nor did it reach a conclusion. Rather, it assumed that all waters at issue were nonnavigable, isolated wetlands with no surface connection to the nearest stream or nearest navigable body of water.
Krilieh V,
B. Grounds for Relief under Rule 60(b)(5)
A consent decree, while contractual in nature, is enforceable as “a judicial decree that is subject to the rules generally applicable to other judgments and decrees.”
Rufo v. Inmates of Suffolk Co. Jail,
In
Rufo,
the Supreme Court identified instances in which a significant change in law may have occurred. For example, the Court stated, a “consent decree must of course be modified if, as it later turns out, one or more of the obligations placed upon the parties has become impermissible under federal law. But modification of a consent decree may be warranted when the statutory or decisional law has changed to make legal what the decree was designed to prevent.”
Id.
at 388,
Krilich argues that
Initially, Krilich argues that the district court improperly applied the
Rufo
test by reasoning that the parties were not operating under a
misunderstanding
of law and therefore that Krilich was not entitled to vacate the Consent Decree. He argues that the district court should instead have asked whether
SWANCC changed the law.
However, the district court did not improperly apply the
Rufo
test. The district court concluded that
SWANCC
was not a significant change in the law by reasoning that the Consent Decree was drafted in light of a law (as enunciated in
Hoffman Homes
I) that was as favorable to Krilich as was the later
SWANCC
decision. In essence, the district court was determining whether “the statutory or decisionаl law has changed to make legal what the decree was designed to prevent.”
Rufo,
Krilieh also contends that the district court erred in relying upon the fact that the Consent Decree was drafted in light of
Hoffman Homes I,
because it had been vacated and was no longer the governing law of this cirсuit by the time the Decree was entered. Therefore, he claims that we should analyze whether
SWANCC
represents a significant change in the law from the law
-pre-Hoffman Homes I,
wherein we had merely held “that Congress intended the Clean Water Act to regulate all the ‘navigable waters’ within its constitutional reach under the Commerce Clause.”
See Hoffman Homes I,
That brings us to the heart of Krilich’s argument: that
SWANCC
eliminated the EPA’s authority to regulate the wetlands at issue because they are nonnavigable, isolated, intrastate waters. Unfortunately for him, he already agreed that the waters were “waters of the United States.” To get around his stipulation, he contends that the holding in
Hoffman Homes I
is narrower than
SWANCC,
and therefore
SWANCC
does constitute a significant change in law under
Rufo
justifying modification of the Decree. He argues that, in
SWANCC,
the Supreme Court removed from the Corps’ regulatory authority all waters that are not adjacent to bodies of open water,
SWANCC,
Moreover, even if
SWANCC
is a significant change in the law from
Hoffman Homes
I — it is not a significant change that is relevant to this Consent Decree. There is nothing in the Consent Decree establishing that the Migratory Bird Rule was the sole basis for the EPA’s assertion of authority over Krilich’s property, and therefore
SWANCC
is not a relevant change in the law such that this Consent Decree should be modified. The defendants’ own “Motion to Bar Enforcement of Penalty,” filed with the district court in 1998 on remand to the district court from
As the Consent Decree demonstrates, the parties were already operating on the premise that the Migratory Bird Rule did not authorize the EPA to regulate otherwise isolated wetlands, as that was our conclusion in Hoffman Homes I, which the parties expressly incorporated into Paragraph 20A of their agreement. In fact, Paragraph 20A carved out certain wetlands as beyond the EPA’s authority and exempted them from the reach of the Consent Decree’s requirements. But thе parties also agreed that the EPA had authority to regulate Krilich’s other wetlands. SWANCC in no way altered the other regulations interpreting “waters of the United States.”
If a party believes that the waters at issue on his own property are not properly subject to the EPA’s authority, whether under the rationale of
Hoffman Homes I, SWANCC
or under some other theory, he should not stipulate otherwise. But that is exactly what Krilich did, to his continued dismay. He expressly agreed that certain waters on his property constituted “waters of the United States,” subject to regulation by the EPA. Like most parties that enter into a settlement or plea agreement, he presumably made a tactical decision that the terms of the Consent Decree were more favorable than the costs or risks of continued litigation. Accordingly, we conclude that
SWANCC
effected no relevant change in decisional law such that the district court should have modified the Consent Decree. Nor does
SWANCC
establish that the EPA’s entry into and continued enforcement of the Consent Decree are
ultra vires
acts. “To hold that a clarification in the law automatically opens the door for relitigation of the merits of every affected consent decree would undermine the finality of such agreements and could serve as a disincentive to negotiation of settlements in ... litigation.”
Rufo,
C. Grounds for Relief under Reservation-of-Jurisdiction Clause
Krilich also argues that the district court had authority to vacate or modify the Decree under Paragraph 2, its reservation-of-jurisdiction clause. As рreviously noted, the reservation clause expressly provided: “The Court shall retain jurisdiction in order to enable any party to apply to the Court at any time for such further relief as may be necessary to interpret,
III. Conclusion
Krilich voluntarily entered into the Consent Decree with the government, agreeing to resolve their dispute without recourse to further litigation. At that time, the parties were operating under the Hoffman Homes I view of the law. The Supreme Court’s later decision in SWANCC did not alter the parties’ reliance on Hoffman Homes I that the EPA could not regulate isolated intrastate wetlands. Therefore, the subsequent release of the SWANCC decision does not justify vacating the Consent Decree. The SWANCC decision does not establish that the Government exceeded its authority in entering into the Consent Decree, so Krilich’s claim that the Decree was void ab initio fails as well. For these and the foregoing reasons, we AFFIRM.
Notes
. The government filed suit against Robert Krilich individually and several corporations which he controlled. Throughout this opinion, we simply refer to "Krilich” or the "defendants”.
.
. The Migratory Bird Rule was intended to clarify the scope of 33 C.F.R. 328.3(a)(3), and provided that "waters of the United States ... also include the following waters: a. Which are or would be used as habitat by birds protected by Migratory Bird Treaties; or b. Which are or would be used as habitat by other migratory birds which cross state lines ....” 51 Fed.Reg. 41217 (1986).
. Paragraph 2 of the Consent Decree provides: "The Court shall retain jurisdiction in order to enable any party to apply to the Court at any time for such further relief as may be necessary to interpret, enforce, or modify this Decree.”
. Even though Krilich brought the action under the Consent Decree’s express reservation-of-jurisdiction clause and under the court’s inherent authority, and only alternatively under
. The defendants submitted an expert report of Gary C. Schaefer, P.E. in support of their motion, contending that all the waters at issue under the Consent Decree were isolated.
.The court analyzed Krilich's motion under
.
. Because we conclude that Krilich did not meet his burden of establishing a change in law warranting modification of the Consent Decree, we need not reach the question whether the proposed modification is suitably tailored to the changed circumstance.
Rufo,