United States v. Krilich, Robert R.

In the
United States Court of Appeals
For the Seventh Circuit
Nos. 99-2271 & 99-2397
United States of America,
Plaintiff-Appellee,
v.
Robert R. Krilich, Krilich Companies, Incorporated,
Riverwoods Development Corporation, et al.,
Defendants-Appellants.
Appeals from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 92 C 5354--William T. Hart, Judge.
Argued November 9, 1999--Decided April 12, 2000
Before Coffey, Manion, and Evans, Circuit Judges.
Manion, Circuit Judge. 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
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
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.
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.
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.
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.
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).
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
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.
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)).
"[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).
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.
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.
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.
/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. . . .").