Opinion ID: 2995868
Heading Depth: 1
Heading Rank: 5

Heading: analysis

Text: A. Standard of Review We review a denial of Rule 60(b)(5) relief for an abuse of discretion. See Protectoseal Co. v. Barancik, 23 F.3d 1184, 1186 (7th Cir. 1994). We review a district court’s interpretation of a consent decree de novo. See Alliance to End Repression v. City of Chicago, 119 F.3d 472, 474 (7th Cir. 1997). Although the defendants submitted a professional engineer’s expert report 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. Krilich V, 152 F.Supp.2d at 989. We proceed under the same assumption because, as discussed below, even assuming that the wetlands were isolated, Krilich is nonetheless bound by the Consent Decree. No. 01-2746 11 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, 502 U.S. 367, 378 (1992). Accordingly, parties wishing to modify or vacate a consent decree may do so by resorting to Rule 60(b). In moving to modify or vacate the Consent Decree, Krilich relies upon the third clause of Section (b)(5) of Rule 60, which provides that a judgment may be modified if “it is no longer equitable that the judgment should have prospective application.” Fed. R. Civ. P. 60(b)(5). In interpreting this clause of Rule 60(b)(5), the Supreme Court has set forth a two-part test to determine whether modification is warranted. See Rufo, 502 U.S. at 383. Under that test, a party seeking to modify a Consent Decree “bears the burden of establishing that a significant change in circumstances warrants revision of the decree.” Id. A party may meet the initial burden of establishing a significant change in circumstances “by showing a significant change either in factual conditions or in law.” Id. at 384. Krilich does not contend that there has been a change in factual conditions, only that the Supreme Court’s decision in SWANCC is a significant change in the law. If the moving party meets this initial burden, “the court should consider whether the proposed modification is suitably tailored to the changed circumstance.” Id. at 383. 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 12 No. 01-2746 law has changed to make legal what the decree was designed to prevent.” Id. at 388. See also Agostini v. Felton, 521 U.S. 203, 215 (1997) (granting a Rule 60(b)(5) modification of a permanent injunction based on intervening law). The Rufo Court also noted that “[w]hile a decision that clarifies the law will not, in and of itself, provide a basis for modifying a decree, it could constitute a change in circumstances that would support modification if the parties had based their agreement on a misunderstanding of the governing law.” Id. at 390. Krilich argues that Rule 60(b)(5) provides a basis to modify the Decree, and that the district court abused its discretion by denying him relief thereunder. Specifically, he contends that SWANCC represents a significant change in the law under the third clause of Rule 60(b)(5), thereby requiring the Consent Decree to be vacated, or at a minimum, modified prospectively. He argues that SWANCC establishes that the government never had authority to regulate the waters at issue and that “it is difficult to imagine a more relevant change in the law.” Accordingly, he reasons that SWANCC makes clear that the entry and continued enforcement of the Consent Decree are ultra vires acts by the EPA, requiring the Decree to be vacated. See, e.g., Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380 (1947) (where agency granted crop insurance, and later found out that crop was planted on re-seeded land for which agency could not issue insurance policies, court found insurance policy void ab initio). See also Dunn v. Carey, 808 F.2d 555, 559-60 (7th Cir. 1986) (“Because a consent decree’s force comes from agreement rather than positive law, the decree depends on the parties’ authority to give assent.”). Initially, Krilich argues that the district court improperly applied the Rufo test by reasoning that the parties were No. 01-2746 13 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 decisional law has changed to make legal what the decree was designed to prevent.” Rufo, 502 U.S. at 388. To the extent that the district court did question whether the parties misunderstood the law, Rufo specifically identifies the parties’ misunderstanding of law, as later clarified by another decision, as a circumstance where modification might be warranted. Rufo, 502 U.S. at 390. Krilich 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 circuit 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, 961 F.2d at 1316-17 (citation omitted). However, this argument ignores the fact that notwithstanding the vacation of Hoffman Homes I, the parties agreed to incorporate its interpretation of the law into the Consent Decree and Krilich benefitted from that decision. Under these circumstances, it would not be equitable to compare a change in the law pre-Hoffman Homes 14 No. 01-2746 I to SWANCC. Rather, under Rule 60(b)(5), we must determine whether the law has changed significantly enough such that it would be equitable to modify this Consent Decree that itself incorporated the legal standards set out in 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, 531 U.S. at 168, whereas in Hoffman Homes I, the court defined isolated wetlands as those that “have no hydrological connection to any body of water.” 961 F.2d at 1314. But the precise holding of SWANCC was not so broad. While reaffirming its prior holding that Section 404 encompassed non-navigable wetlands adjacent to navigable waters, 531 U.S. at 16768 (citing United States v. Riverside Bayview Homes Inc., 474 U.S. 121 (1985)), the Court explicitly declined to further determine the exact meaning of “navigable waters.” SWANCC, 531 U.S. at 171. And, it declined to reach any constitutional question. Id. at 174. Rather, in SWANCC, the Supreme Court merely held that the definition of “waters of the United States” under 33 C.F.R. § 328.3(a)(3), as clarified by the Migratory Bird Rule, “exceeds the authority granted to [the Corp] under § 404(a) of the CWA.” Id. This limited holding does not represent a significant change in the law such that it would be equitable to modify or vacate the Consent Decree. No. 01-2746 15 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 our decision in Krilich II, acknowledged that “Paragraph 1 of the Consent Decree recites that jurisdiction is based upon the Clean Water Act and other statutes. Paragraph 10 adopts the regulatory definition of wetlands. The Consent Decree does not rely upon the wetlands as a migratory bird habitat as a basis for Commerce Clause jurisdiction.” Instead, as the defendants argued in that motion, the government merely relied “upon its authority to define wetlands under the regulations.” As the district court noted when the defendants first attempted to challenge subject matter jurisdiction, “there is nothing in the Decree . . . that makes it apparent that the mitigation plan may have been based solely on the filling of isolated wetlands. Neither was there any information indicating that those wetlands’ only possible connection to interstate commerce was their occasional use by migratory birds.” Krilich III, 1999 WL 182333 at  2. Thus, SWANCC has no appreciable impact on this Consent Decree. 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 16 No. 01-2746 and exempted them from the reach of the Consent Decree’s requirements. But the 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 . . . litiga- 9 tion.” Rufo, 502 U.S. at 389. 9 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, 502 U.S. at 383. No. 01-2746 17 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 previously 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, enforce, or modify this Decree.” In analyzing Krilich’s argument, the district court concluded that it could not interpret this clause outside the bounds of Rule 60(b). Krilich V, 152 F.Supp.2d at 990. Krilich argues that such an interpretation makes the clause meaningless. We note, however, that while relying on the reservation-of-jurisdiction clause as an additional basis for modifying the Consent Decree, Krilich does not identify any standard or test broader than the Supreme Court’s test in Rufo that would result in a different outcome. We need not decide, however, whether this reservation-of-jurisdiction clause provided the district court with authority beyond Rule 60(b) for vacating the Consent Decree because the reasons Krilich presented for vacating the Consent Decree are misplaced. As discussed above, the Supreme Court’s decision in SWANCC was not more favorable to Krilich than Hoffman Homes I, which was the basis for the Consent Decree. Nor does SWANCC establish that the Government exceeded its authority in entering into the Consent Decree. Therefore, whether Krilich’s motion was considered under Rule 60(b)(5) or under the reservation-of-jurisdiction clause is immaterial because his claim fails in either case. 18 No. 01-2746