Court Opinion

ID: 768383
Source: CourtListenerOpinion
Date Created: 2012-04-18 09:03:22+00
Date Added: 2024-06-11T17:55:35.331253
License: Public Domain

209 F.3d 968 (7th Cir. 2000)
UNITED STATES of America,    Plaintiff-Appellee,v.Robert R. KRILICH, Krilich Companies, Incorporated,  Riverwoods Development Corporation, et al.,    Defendants-Appellants.
Nos. 99-2271 & 99-2397
In the  United States Court of Appeals  For the Seventh Circuit
Argued November 9, 1999Decided April 12, 2000

Appeals from the United States District Court   for the Northern District of Illinois, Eastern Division.  No. 92 C 5354--William T. Hart, Judge.
Before Coffey, Manion, and Evans, Circuit Judges.
Manion, Circuit Judge.

1
The EPA civilly charged  Robert Krilich with illegally filling a wetland  on property he was developing in suburban  Chicago, Illinois. Krilich entered into a consent  decree with the EPA to settle the dispute, the  terms of which required him, among other things,  to create a substitute wetland by a specific  date, or pay a substantial penalty for any delay.  He failed to complete the new wetland by the  stated time, so the EPA moved to enforce the  terms of the consent decree. The district court  granted that motion and fined Krilich in excess  of $1.2 million. Krilich appealed from that  judgment and we affirmed (although the case was  remanded to correct an error in calculating the  penalty). Krilich then filed a Rule 60(b)(4)  motion to vacate the judgment as void. The  district court denied that motion and he again  appeals. We affirm.

I.
Factual and Legal Background

2
To understand this appeal, we must return to  1992-- both factually and legally. In 1992, the  EPA charged Robert Krilich,1 who was developing  the Royce Renaissance Property in Oakbrook  Terrace, Illinois, with violating section 301(a)  of the Clean Water Act by discharging fill into  "wetlands" without first obtaining a section 404  permit. Section 301(a) of the Clean Water Act  prohibits "the discharge of any pollutant,"  except as otherwise authorized by the Clean Water  Act. 33 U.S.C. sec. 1311. Section 404 of the  Clean Water Act authorizes the Secretary to issue  a permit approving "the discharge of fill  material into the navigable waters."2 33 U.S.C.  sec. 1344. The Clean Water Act defines "navigable  waters" as "waters of the United States," 33  U.S.C. sec. 1362(7), but does not further  describe what is included as part of "waters of  the United States." The Act may not cover all of  the "water in the United States," but it comes  close: The EPA and the Army Corps of Engineers  have promulgated regulations defining "waters of  the United States" to include "intrastate lakes,  rivers, streams (including intermittent streams),  mudflats, sandflats, wetlands, sloughs, prairie  potholes, wet meadows, playa lakes, or natural  ponds, the use, degradation or destruction of  which could affect interstate or foreign  commerce." 33 C.F.R. sec. 328.3(a)(2); 40 C.F.R.  sec. 230.3(s)(3).3

3
Both the EPA and the Corps have long maintained  that this regulatory definition of "waters of the  United States" includes "all waters, including  those otherwise unrelated to interstate commerce,  'which are or would be used as habitat by birds  protected by Migratory Bird Treaties' or 'which  are or would be used as habitat by other  migratory birds which cross state lines.'" Solid  Waste Agency of Northern Cook County v. United  States Army Corps of Engineers, 191 F.3d 845, 848  (7th Cir. 1999) (quoting 51 Fed. Reg. 41,206,  42,217 (1986)). Based on its view that isolated  intrastate waters were "waters of the United  States" because of the actual or potential use by  migratory birds, the EPA charged Krilich with  violating section 301. However, at the time that  the EPA first charged Krilich with violating  section 301 in August 1992, the law of this  circuit was more narrow. This court had just held  that Congress did not have the power to regulate  isolated intrastate waterways based simply on the  supposition that migratory birds, while migrating  to seasonal nesting areas, could potentially use  the waters. Hoffman Homes, Inc. v. Administrator,  United States EPA, 961 F.2d 1310, 1311 (7th Cir.  1992) (Hoffman I) (rejecting the EPA's claim of  jurisdiction "over the intrastate wetland solely  on the ground that migratory birds could,  potentially, use the wetland as a place to feed,  or nest or as a stopover on the way to the Gulf  States for the Winter months"), vacated 975 F.2d 1554 (7th Cir. 1992). But this holding had a  short life; it was vacated on September 4, 1992,  before the birds had reason to migrate south.  Hoffman Homes, 975 F.2d 1554.

4
After Hoffman I was vacated, Krilich entered  into a consent decree with the EPA, this in spite  of the fact that the EPA's charge asserted that  he had violated section 301 by filling isolated  intrastate wetlands.4 In the consent decree,  Krilich agreed to pay a fine of $185,000,  remediate some of the wetlands, and construct a  3.1-acre replacement wetland on the Royce  Renaissance property to compensate for the  wetlands that had already been filled. The  consent decree included specific deadlines for  the construction, and provided for monetary  penalties for any delay.

5
As noted, the parties agreed to the consent  decree after Hoffman I had been vacated for  rehearing. On October 29, 1992, the district  court entered final judgment pursuant to the  terms of that consent decree, and that final  judgment was entered before this court issued its  decision on rehearing in Hoffman II.

6
After rehearing, on July 19, 1993, this court  held in Hoffman II that the EPA lacked  jurisdiction over the wetlands at issue in that  case because the government had failed to present  evidence that migratory birds actually used the  wetlands as a habitat. Hoffman Homes, Inc. v.  Administrator, United States EPA, 999 F.2d 256  (7th Cir. 1993) (Hoffman II). Because the  government did not prove actual use by the birds,  Hoffman II did not reach the issue of whether  that would be a sufficient connection to  interstate commerce to allow Congress to regulate  isolated intrastate wetlands.

7
Throughout and following the proceedings in  Hoffman I and II, Krilich went about his business  constructing the Royce Renaissance Property. He  failed, however, to complete the 3.1-acre  mitigation pond by the date specified in the  consent decree, so the United States moved to  enforce the penalties contained in the decree.  The district court imposed civil penalties  against Krilich of $1,307,500. Krilich appealed  from that judgment, arguing that the deadlines  had been modified, that the doctrines of  impossibility and frustration excused his non-  performance, or that the government was equitably  estopped from enforcing the penalty provisions.  This court rejected those arguments and affirmed  the assessment of penalties, but remanded the  case to the district court to correct an error  made in calculating the penalty, which the  government had pointed out on appeal. United  States v. Krilich, 126 F.3d 1035 (7th Cir. 1997).

8
On remand, Krilich decided to take a different  tack--he moved pursuant to Rule 60(b)(4) to  vacate the district court's original judgment  entered pursuant to the terms of the consent  decree. Krilich argued that the district court  lacked subject matter jurisdiction over the EPA's  complaint, and therefore that its judgment was  void. The district court rejected Krilich's  argument, and denied his motion to vacate.  Krilich once again appeals.

II.
Analysis

9
Rule 60(b)(4) provides that "[o]n motion and  upon such terms as are just, the court may  relieve a party or a party's legal representative  from a final judgment, order, or proceeding . . .  [if] the judgment is void . . . ." Fed. R.Civ.P.  60(b)(4). Krilich contends that the district  court's judgment, which adopted the consent  decree and the sanctions contained therein, was  void because the court lacked subject matter  jurisdiction over the EPA's case against him.  Specifically, Krilich asserts that 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 contends 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 now argues 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.

10
In making this argument, however, Krilich  confuses the meaning of "jurisdiction"--"a word  of many, too many meanings" according to the  Supreme Court. Steel Co. v. Citizens for a Better  Environment, 523 U.S. 83, 90 (1998). This court  recently examined the problem. "Lawyers and  judges sometimes refer to the interstate commerce  element that appears in many federal crimes as  the 'jurisdictional element,' but this is a  colloquialism--or perhaps a demonstration that  the word 'jurisdiction' has so many different  uses that confusion ensues." Hugi v. United  States, 164 F.3d 378, 381 (7th Cir. 1999) (citing Kanar v. United States, 118 F.3d 527, 529-30 (7th  Cir. 1997)).

11
"[T]he nexus with interstate commerce, which  courts frequently call the 'jurisdictional  element,' is simply one of the essential elements  of [the offense]. Although courts frequently call  it the 'jurisdictional element' of the statute,  it is 'jurisdictional' only in the shorthand  sense that without that nexus, there can be no  federal crime . . . . It is not jurisdictional in  the sense that it affects a court's subject  matter jurisdiction, . . ." Hugi, 164 F.3d at 381  (7th Cir. 1999). Thus, while "[a] link to  interstate commerce may be essential to  Congress's substantive authority, see United  States v. Lopez, 514 U.S. 549, 115 S. Ct. 1624,  131 L. Ed. 2d 626 (1995), . . . the existence of  regulatory power differs from the subject-matter  jurisdiction of the courts." Hugi, 164 F.3d at  380-81. The "subject matter jurisdiction in every  federal criminal prosecution comes from 18 U.S.C.  sec. 3231, and there can be no doubt that Article  III permits Congress to assign federal criminal  prosecutions to federal courts. That's the  beginning and the end of the 'jurisdictional'  inquiry." Hugi, 164 F.3d at 381 (quoting United  States v. Martin, 147 F.3d 529 (7th Cir. 1998)).  And "once a defendant pleads guilty in a court  which has jurisdiction of the subject matter and  of the defendant, as did the court in the instant  case, the court's judgment cannot be assailed on  grounds that the government has not met its  burden of proving 'so-called jurisdictional facts.'"  Hugi, 164 F.3d at 381 (internal quotations  omitted). "Even if the government fails to  establish the connection to interstate commerce,  the district court is not deprived of  jurisdiction to hear the case." Hugi 164 F.3d at  381 (quoting Martin, 147 F.3d at 532).

12
While Krilich attempts to distinguish Hugi and  Martin as criminal in nature and not civil, he  fails to explain why that makes any difference.  It does not. In this case, the interstate  connection, i.e. that the waters involved were  "waters of the United States," is merely an  element of the United States' Clean Water Act  case under section 301; subject matter  jurisdiction over this question involving federal  law comes from 28 U.S.C. sec. 1331. On appeal,  Krilich argues at great length that his wetlands  cannot constitutionally satisfy the "waters of  the United States" element. But "[j]urisdiction  under the federal question statute is not  defeated by the possibility that the averments,  upon close examination, might be determined not  to state a cause of action." Turner/Ozanne v.  Hyman/ Power, 111 F.3d 1312, 1316-17 (7th Cir.  1997). Moreover, just as a guilty plea (in which  the criminal defendant admits--at least  implicitly--the connection between his conduct  and interstate commerce) forecloses an appellate  attack on subject matter jurisdiction, Krilich  cannot now assail the district court's subject  matter jurisdiction because he entered into a  consent decree in which he agreed that the waters  involved were "waters of the United States." Cf.  Hugi, 164 F.3d at 380-81; Martin, 147 F.3d at  533.

13
In response, Krilich also cites United States v.  U.S. Fidelity & Guaranty, Co., 309 U.S. 506  (1940), and Jordan v. Gilligan, 500 F.2d 701 (6th  Cir. 1974), to support his position that the  consent decree was void. Those cases held that  the judgments entered by the trial courts were  void because the defendants were immune from  suit. He also cites Kalb v. Feuerstein, 308 U.S. 433 (1940), which held that a state court lacked  jurisdiction to enter a judgment against the  defendant because a federal statute divested the  court of jurisdiction. These cases, however,  involve a different meaning of "jurisdiction." As  we explained in Hugi, "some jurisdictional  shortcomings are constitutional in nature, for  Article III and the eleventh amendment set limits  to the duties Congress may assign to the courts;  other jurisdictional deficits are just the result  of statutory limitations; . . ." Hugi, 164 F.3d  at 380. Both U.S. Fidelity and Jordan involved  what we referred to in Hugi as the jurisdictional  "shortcoming" of immunity. We distinguished that  defect from the interstate commerce element which  is not jurisdictional in the same sense, but  rather is an element of the offense. The absence  of such an element is separate from the issue of  subject matter jurisdiction. Hugi, 164 F.3d at  380. And Kalb involved the other jurisdictional  shortcoming noted in Hugi--a statutory divestment  of power, also distinguished from the  jurisdictional element of the offense. Hugi, 164 F.3d at 380. As explained in Hugi, both of these  jurisdictional shortcomings "affect[ ] a court's  subject matter jurisdiction, i.e., a court's  constitutional or statutory power to adjudicate a  case," id. at 381, whereas the interstate  commerce element does not deprive a court of  subject matter jurisdiction. Therefore, Krilich's  reliance on these cases is misplaced.

14
In sum, the district court had subject matter  jurisdiction over the EPA's case against Krilich  because the suit civilly charged a violation of a  federal statute which is within the federal  courts' federal question jurisdiction. And  Krilich's attempt to now assail the court's  subject matter jurisdiction fails because he  entered into a consent decree stipulating that  the waters involved were "waters of the United  States," and that is merely an element of the  offense and not the basis for federal subject  matter jurisdiction.5 Accordingly, we AFFIRM the  district court's denial of Krilich's 60(b)(4)  motion to bar the enforcement of the penalty.

Notes:

1
 The EPA's charge was against Robert R. Krilich  individually, and numerous corporations which he  controlled. For simplicity, we refer to them  merely as "Krilich."

2
 Section 404(a) authorizes the Secretary to issue  permits allowing fill materials to be discharged  into "navigable waters" but it does not mention  "wetlands." See 33 U.S.C. sec. 1344(a).

3
 The Army Corps of Engineers and the EPA share  responsibility for administering and enforcing  the Clean Water Act. 33 U.S.C. sec.sec.  1319(a)(3), 1344.

4
 On appeal, the EPA asserts that Krilich also  filled wetlands which were not isolated. The  district court assumed for purposes of Krilich's  Rule 60(b)(4) motion that all of the wetlands  were isolated intrastate wetlands, and because it  does not alter the outcome of this appeal, we  also make this assumption.

5
 Because the district court had subject matter  jurisdiction over the EPA's complaint based on  the terms of the consent decree, we need not  determine whether, in light of the Supreme  Court's decision in United States v. Lopez,  regulation of isolated intrastate wetlands is  beyond Congress' power under the Commerce Clause.  Compare, United States v. Wilson, 133 F.3d 251  (4th Cir. 1997), with Solid Waste Agency of  Northern Cook County v. United States Army Corps  of Engineers, 191 F.3d 845, 848 (7th Cir. 1999),  petition for cert. filed, 68 U.S.L.W. 3480 (U.S.  Jan. 14, 2000) (No. 99-1178). See also Cargill,  Inc. v. United States, 516 U.S. 955, 958 (1995)  (Thomas, J., dissenting from denial of  certiorari) ("In this case, the Corps' basis for  jurisdiction rests entirely on the actual or  potential presence of migratory birds on  petitioner's land. In light of Lopez, I have  serious doubts about the propriety of the Corps'  assertion of jurisdiction over petitioner's land  in this case. . . .")