INTRODUCTION :: Imagine there is a river, and a half mile to the river’s east is a twenty-acre wetland. To the east of the wetland is a neighborhood. The river’s eastern bank is seven feet above the mean water line, and the western bank is ten feet above the mean water line. If the river floods to eight feet above the mean water line, it will spill over the eastern bank. The water will flow unfettered for half a mile. However, upon reaching the wetland, much of the flooding water could be absorbed. One acre of wetland flooded to one foot can hold up to 330,000 gallons of water. Therefore, the twenty acres in our hypothetical could absorb up to 6,600,000 gallons of water. This could stop the flooding water, or at least hinder its progress. However, if the wetland were filled in and replaced with a shopping center, this flood control function would be unavailable. The impervious cover of the shopping buildings and accompanying parking lots would prevent the surface absorption of any water, possibly exacerbating flood damage farther down the water’s path. Therefore, the wetland’s mitigating effect on flood damage would be trumped by the shopping center’s exacerbating effect. If the wetland were not under Clean Water Act (CWA) jurisdiction, the shopping center developer could proceed without Environmental Protection Agency (EPA) and U.S. Army Corps of Engineers (Corps) oversight, possibly imposing flood damage externalities on the adjacent neighborhood.
If a CWA § 404 permit were required, the Corps could assure that the developer avoids, minimizes, and mitigates any harm posed to the wetland and, consequently, to the town. However, requiring the would-be-developer to acquire CWA permits would impose a significant financial burden. Recent Supreme Court jurisprudence shows a reluctance to impose such permits unless the CWA’s statutory language makes abundantly clear that doing so comports with its framers’ intent. Discontented with these judicial decisions, House and Senate Democrats have drafted legislation reasserting federal control over waters cut out by the Court, and arguably beyond. The Clean Water Restoration Act of 2009 (CWRA), which cleared the Senate Environmental and Public Works Committee in June of 2009, is the latest of these proposals. Under the current form of the CWRA, it is uncertain how many additional landowners, if any, would be pulled into Corps and EPA permitting authority. This uncertainty is cause for concern
November 2014, Vol. 66, No. 6
Lily Kahng, The Taxation of Intellectual Capital