United States v. Krilich, Robert R. ( 2002 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 01-2746
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
ROBERT R. KRILICH, KRILICH COMPANIES, INC.,
RIVERWOODS DEVELOPMENT CORP., et al.,
Defendants-Appellants.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 92 C 5354—William T. Hart, Judge.
____________
ARGUED MAY 14, 2002—DECIDED SEPTEMBER 9, 2002
____________
Before COFFEY, MANION, and EVANS, Circuit Judges.
MANION, Circuit Judge. In 1992, the 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 “nav-
igable 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 appeals, and we affirm.
2 No. 01-2746
I. Factual and Legal Background
On August 7, 1992, the United States Environmental
Protection Agency (“EPA”) filed a civil complaint against
1
the defendants, alleging that they violated the Clean Water
Act, 33 U.S.C. § 1251 et seq. (“CWA”). The government
alleged that Krilich violated Section 301 of the CWA by
discharging fill material without a permit into wetlands
on two Illinois sites that he was developing: the Royce
Renaissance site in Oakbrook, Illinois and the Sullivan
Lake site in Lakemoor, Illinois. Section 301(a) prohibits
the “discharge of any pollutant,” except as otherwise au-
thorized by the CWA. 33 U.S.C. § 1311(a). Section 404 of
the CWA authorizes the Secretary to issue a permit approv-
ing “the discharge of dredged or fill material into the
navigable waters.” 33 U.S.C. § 1344(a). “Navigable waters”
are defined as “waters of the United States.” 33 U.S.C.
§ 1362(7). “Waters of the United States” are further defined
by regulations promulgated under the CWA. 33 C.F.R.
§ 323.2(a). See generally 33 C.F.R. Pt. 328. Section 328.3(a)(3)
further defines “waters of the United States” to include
“[a]ll other waters such as intrastate lakes, rivers, streams
(including intermittent streams), mudflats, sandflats, wet-
lands, sloughs, prairie potholes, wet meadows, playa
lakes, or natural ponds, the use, degradation or destruc-
tion of which could affect interstate or foreign commerce.”
33 C.F.R. § 328.3(a)(3).
While the suit was pending and the parties were nego-
tiating, this court issued a decision holding that the EPA’s
construction of “waters of the United States” as includ-
ing intrastate, nonadjacent or “isolated” wetlands under
1
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”.
No. 01-2746 3
2
40 C.F.R. § 230.3(s)(3) exceeded its authority under the
CWA. See Hoffman Homes, Inc. v. Adm’r, United States Envtl.
Prot. Agency, 961 F.2d 1310, 1316 (7th Cir. 1992) (“Hoffman
Homes I”), vacated by 975 F.2d 1554 (7th Cir. 1992). In Hoffman
Homes I, this court further held that, even if the regula-
tion was reasonable under the CWA, Congress lacked
authority under the Commerce Clause to regulate such
waters based simply on the actual or potential use of such
3
waters by migratory birds. Id. at 1321. Following Hoffman
Homes I, Krilich and the EPA drafted a Consent Decree
to settle their dispute. The Consent Decree acknowl-
edged the potential impact of the Hoffman Homes I deci-
sion by incorporating the following provisions:
IV. DEFINITIONS
10. Except as specifically modified herein, the terms
“waters of the United States”; “wetlands”; “dredged
material”; “fill material”; “discharge of dredged mate-
rial”; and “discharge of fill material” shall have the
meanings assigned them at 40 C.F.R. § 230.3 or 33 C.F.R.
§ 323.2. “EPA” means the United States Environmental
2
40 C.F.R. § 230.3(s)(3), the EPA regulation that defines “waters
of the United States,” is identical to the Army Corps of Engineers
regulation, 33 C.F.R. § 328.3(a)(3), also defining the phrase. As
noted, infra, both are referenced in Paragraph 10 of the Consent
Decree.
3
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).
4 No. 01-2746
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 Prop-
erty.
***
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, No. 90-3810 (7th Cir.
April 20, 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 obliga-
tions 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 September 4, 1992, before
the birds had reason to migrate south.” United States v.
Krilich, 209 F.3d 968, 970 (7th Cir. 2000) (“Krilich IV”).
Thereafter, the parties signed the Consent Decree, incor-
porating the Hoffman Homes I language, notwithstanding
No. 01-2746 5
the fact that it had been vacated. The Consent Decree re-
quired the defendants to undertake certain remediation
and mitigation activities and to pay fines for filling wet-
lands. On October 29, 1992, the district court entered final
judgment under the Consent Decree, and under the terms
4
of the Decree, retained jurisdiction.
Nine months after the Consent Decree was agreed upon
and final judgment entered, this court issued Hoffman
Homes II, wherein we held that the EPA lacked jurisdiction
over the wetlands at issue because the government had
failed to present substantial evidence (under the “Migra-
tory Bird Rule”) that migratory birds actually used the wet-
lands as a habitat. See Hoffman Homes, Inc. v. Adm’r, United
States Envt’l Prot. Agency, 999 F.2d 256, 261-62 (7th Cir.
1993) (“Hoffman Homes II”). Unlike Hoffman Homes I, we did
not reach the question of whether the Migratory Bird
Rule was within the limits of Congress’ power under the
Commerce Clause.
On September 27, 1995, the government moved to en-
force the Consent Decree, alleging that Krilich had failed
to construct the replacement wetland by the date specified
in the Consent Decree and that Krilich 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 gov-
ernment regarding Krilich’s failure to perform remedia-
tion and imposed civil penalties of $1,307,500. See United
States v. Krilich, 948 F.Supp. 719, 728 (N.D. Ill. 1996) (“Krilich
I”). With respect to the allegation that Krilich had improp-
4
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.”
6 No. 01-2746
erly discharged fill material into W9, the district court
concluded that “pertinent portions” of Hoffman Homes I
had not been “reversed” by Hoffman Homes II within the
meaning of Paragraph 20A of the Consent Decree. Id. at
725. Therefore, the district court concluded that, under
the Decree, W9 was not a “water of the United States” and
accordingly denied the government’s motion to impose
a penalty for filling that area. Krilich appealed the dis-
trict court’s decision to impose penalties for his failure
to perform remediation, id., and this court affirmed, but
remanded the case to the district court to correct an error
made in calculating that penalty. See United States v. Krilich,
126 F.3d 1035, 1037-38 (7th Cir. 1997) (“Krilich II”). On
remand, in November 1998, Krilich moved pursuant to
Rule 60(b)(4) to vacate the district court’s original judg-
ment entering the Consent Decree, arguing that the court
lacked subject matter jurisdiction over the EPA’s complaint.
Specifically, Krilich argued 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 contend[ed]
that the district court lacked subject matter jurisdic-
tion over the EPA’s complaint. And even though he
agreed to the terms of the consent decree, which in-
cluded 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, 209 F.3d at 971. The district court rejected
Krilich’s argument, United States v. Krilich, 1999 WL 182333(N.D. Ill. March 25, 1999) (“Krilich III”), and on appeal this
court held that “the district court had subject matter juris-
No. 01-2746 7
diction 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.”
Krilich IV, 209 F.3d at 973. Additionally, we held that
Krilich’s argument failed “because he entered into a con-
sent decree stipulating that the waters involved were
‘waters of the United States.’ ” Id. Finally, we stated that, be-
cause the district court had subject matter jurisdiction based
on the terms of the Consent Decree, we did not need to
reach the question of whether the regulation of isolated
intrastate wetlands exceeded Congress’ power under the
Commerce Clause. Id. at 973, n. 5.
Last year, nine months after we issued Krilich IV, the
Supreme Court rendered a decision holding that 33 C.F.R.
§ 328.3(a)(3), as clarified by the Migratory Bird Rule, “ex-
ceeds the authority granted to [the Army Corps of Engi-
neers] under § 404(a) of the CWA.” Solid Waste Agency of
Northern Cook Co. v. United States Army Corps of Engineers,
531 U.S. 159, 174 (2001) (“SWANCC”). In interpreting
Section 404(a), the Court concluded that nothing in the
text of the CWA indicated that Congress intended to al-
low the jurisdiction of the Corps of Engineers to extend to
“ponds that are not adjacent to open water.” Id. at 168. The
Supreme Court did not reach the question of whether
Congress could exercise such authority consistent with
its power to legislate under the Commerce Clause. Id. at
162, 174.
After SWANCC was issued by the Supreme Court, Krilich
brought the present motion in federal district court, argu-
ing that, under SWANCC, the waters affected by the Con-
sent 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 ab initio. Krilich
8 No. 01-2746
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 Con-
sent Decree, the court’s inherent power to modify its
judgments, and Rule 60(b)(5) in light of a change in the law,
5
namely, the SWANCC decision.
In considering Krilich’s motion, the district court as-
sumed that all of the waters at issue were nonnavigable,
isolated wetlands that had no surface connection to the
6
nearest stream or nearest navigable body of water. Krilich
V, 152 F.Supp.2d at 989. Even so, the district court denied
the defendants’ motion, holding that even if the Consent
Decree were ultra vires, it did not have the authority to
vacate or modify it. The court reached this conclusion for
5
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 Rule
60(b)(5), the court treated his motion as one under Rule 60(b).
United States v. Krilich, 152 F.Supp.2d 983, 990 (N.D. Ill. 2001)
(“Krilich V”). The district court noted that its inherent authority
to modify its judgments was not more expansive than the
authority provided in Rule 60(b). Id. Additionally, the dis-
trict court concluded that its powers under Paragraph 2 were
not broader than its authority under Rule 60(b). Id. Krilich
abandons his reliance upon the court’s inherent authority on
appeal, but as explained below, continues to argue that both
Rule 60(b)(5) and Paragraph 2 of the Consent Decree serve as
independent bases for modification.
6
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.
No. 01-2746 9
7
several reasons, but only one is challenged on appeal:
whether the Decree should be modified under Rule 60(b)(5)
8
due to a change in the law. The district court first noted
that in Hoffman Homes I this court held that “isolated
wetlands” were not subject to CWA regulation. Id. at 994.
The court then noted that the parties took this decision
into account by referencing it in Paragraph 20A of the
Consent Decree and expressly excluding specified wet-
lands that Krilich contended were isolated. Id. The court
also noted the Supreme Court’s decision in SWANCC
holding that the Migratory Bird Rule exceeded the agen-
cies’ authority under the CWA. Id. The district court de-
termined that the Supreme Court’s decision in SWANCC
was no more narrow than Hoffman Homes I, and since
7
The court analyzed Krilich’s motion under Rule 60(b)(4), which
provides for relief if the judgment is void, and determined that
the fact that a party to a consent judgment lacked authority
to consent does not void the judgment itself. Krilich V, 152
F.Supp.2d at 991. Next, the court analyzed Krilich’s motion un-
der Rule 60(b)(1) for mistake of law and rejected this ground as
untimely. Id. at 992. See Fed. R. Civ. P. 60(b) (Rule 60(b)(1) mo-
tion must be brought within one year of entry of judgment).
Third, the district court analyzed Krilich’s motion under the
catch-all provision of Rule 60(b)(6) and concluded that because
Krilich had stipulated that the property in question constituted
“waters of the United States” it was bound by that stipulation.
152 F.Supp.2d at 992. Cf. Krilich IV, 209 F.3d at 972 (Krilich
could not “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.’ ”).
Krilich does not appeal these determinations and, therefore,
we need not review them.
8
Rule 60(b)(5) provides, in part, that a judgment may be mod-
ified if “it is no longer equitable that the judgment should have
prospective application.” Fed. R. Civ. P. 60(b)(5).
10 No. 01-2746
Paragraph 20A of the Consent Decree was crafted with that
decision in mind, the district court concluded that the
Decree was drafted in light of controlling precedent that
was no less favorable to Krilich than SWANCC. Id. at 994-95.
The court also noted that “[e]quity does not require that
the Decree be reopened so that defendants may now liti-
gate whether the wetlands on the property are actually
isolated. Defendants chose not to do so more than eight
years ago and the legal framework has not changed in a
manner that would justify doing it today.” Id. at 995.
Krilich appeals, claiming that the district court should
have vacated or modified the Consent Decree under ei-
ther 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, 23 F.3d 1184,
1186 (7th Cir. 1994). We review a district court’s inter-
pretation 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 engi-
neer’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 naviga-
ble 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 en-
forceable 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). Accord-
ingly, parties wishing to modify or vacate a consent de-
cree 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 pro-
vides 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 par-
ty 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 ex-
ample, 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 impermis-
sible under federal law. But modification of a consent de-
cree may be warranted when the statutory or decisional
12 No. 01-2746
law has changed to make legal what the decree was de-
signed 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 clar-
ifies the law will not, in and of itself, provide a basis for
modifying a decree, it could constitute a change in cir-
cumstances 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 mini-
mum, 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 de-
cree’s force comes from agreement rather than positive law,
the decree depends on the parties’ authority to give as-
sent.”).
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 there-
fore 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 misunder-
stood the law, Rufo specifically identifies the parties’
misunderstanding of law, as later clarified by another de-
cision, 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 sig-
nificant change in the law from the law pre-Hoffman
Homes I, wherein we had merely held “that Congress in-
tended the Clean Water Act to regulate all the ‘navigable
waters’ within its constitutional reach under the Com-
merce 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 deter-
mine 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 there-
fore SWANCC does constitute a significant change in law
under Rufo justifying modification of the Decree. He ar-
gues 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-naviga-
ble wetlands adjacent to navigable waters, 531 U.S. at 167-
68 (citing United States v. Riverside Bayview Homes Inc.,
474 U.S. 121 (1985)), the Court explicitly declined to fur-
ther 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 signifi-
cant 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 Con-
sent 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 Con-
sent 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 De-
cree . . . 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 com-
merce was their occasional use by migratory birds.” Krilich
III, 1999 WL 182333 at * 2. Thus, SWANCC has no apprecia-
ble 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 interpret-
ing “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 other-
wise. But that is exactly what Krilich did, to his con-
tinued 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 presum-
ably made a tactical decision that the terms of the Con-
sent 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 Con-
sent 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 cir-
cumstance. Rufo, 502 U.S. at 383.
No. 01-2746 17
C. Grounds for Relief under Reservation-of-Jurisdic-
tion 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 ap-
ply 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 con-
cluded 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 out-
come. We need not decide, however, whether this reser-
vation-of-jurisdiction clause provided the district court
with authority beyond Rule 60(b) for vacating the Con-
sent 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 imma-
terial because his claim fails in either case.
18 No. 01-2746
III. Conclusion
Krilich voluntarily entered into the Consent Decree with
the government, agreeing to resolve their dispute with-
out 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. There-
fore, 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.
A true Copy:
Teste:
_____________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-97-C-006—9-9-02