On September 28, 2010, U.S. District Judge K. Michael Moore of the Southern District of Florida entered an order setting aside and enjoining enforcement of the U.S. Army Corps of Engineers’ guidance documents (Issue Paper Regarding “Normal Circumstances”, ECF No. 18-22; Memorandum for South Atlantic Division Commander, ECF No. 18-23), which together had significantly modified the Corps’ interpretation of its wetlands regulation that states: “[W]aters of the United States do not include prior converted cropland.” 33 C.F.R. §328(a)(8). In New Hope Power Company and Okeelanta Corporation v. United States Army Corps of Engineers and Steven L. Stockton, Judge Moore ruled that the documents, cumulatively referred to as the “Stockton Rules” (after the Corps’ Director of Civil Works, Steven L. Stockton) constitute new legislative and substantive rules purporting to extend the Corps’ jurisdiction over prior converted croplands (“PCC”), and were procedurally improper for not following the notice-and-comment procedures of the federal Administrative Procedure Act.

The case involves Plaintiff New Hope’s intention to construct an ash monofill adjacent to its renewable energy incinerator in the Everglades Agricultural Area (“EAA”) of Palm Beach County, Florida. In 1993, the Corps determined the former sugarcane farm lands were PCC and accordingly a Section 404 permit to construct the energy facility was not required. However, after the Corps became aware of the proposed monofill in September 2009, it notified New Hope that “commencement of the proposed work prior to Department of the Army authorization would constitute a violation of Federal laws . . .” New Hope at p.6. Earlier in the year, the Corps’ Jacksonville field office released an Issue Paper (ECF No. 18-22) “announcing for the first time that prior converted cropland that is shifted to non-agricultural use becomes subject to regulation by the Corps.” New Hope at p. 4. The Issue Paper was prepared in response to five pending applications for jurisdictional determinations for construction of limestone quarries within the EAA. As noted in Judge Moore’s order, the Issue Paper was adopted as being an accurate reflection of the Corps’ national position by Stockton (ECF No. 18-23), without provision of a notice and comment period. New Hope at p. 5. The so-called “Stockton Rules” have been implemented and enforced by the Corps nationwide.

The court, after determining the case satisfied jurisdictional requirements under the APA for finality and ripeness, rejected the Corps’ claims that the Stockton Rules were “mere policy statements” not subject to notice-and-comment requirements. Instead, the court recognized that the Stockton Rules represent a “definite shift” in what the Corps considers wetlands. As the court notes, “[b]efore the Stockton Rules, prior converted cropland that was shifted to non-agricultural use was treated as exempt. Following the Stockton Rules, the opposite was true. . . . Thus, the Stockton Rules broadly extended the Corps’ jurisdiction and sharply narrowed the number of exempt prior converted croplands.” New Hope at p. 15.

The Corps’ attempt to improperly expand its wetland regulations pertaining to PCC without going through formal rulemaking procedures was correctly rejected by Judge Moore. Whether the Corps will appeal this decision of national significance remains to be seen.