John Gallagher grew up on construction sites. In 1954, his father, a buyer for a Chicago fruit market, and his uncle, a bricklayer, began building modest homes part-time, responding to the region’s post-war housing crunch.
“I was at the job sites at six years old, and on my 10th birthday, I started working in the office, doing filing,” says Gallagher.
Over the years, Gallagher & Henry—still family-owned—has built thousands of homes in Chicago and its surrounding suburbs. But in the mid-1990s, a development in Tinley Park, Illinois, was effectively blocked by a ruling from the U.S. Army Corps of Engineers. Thirteen acres of the development were deemed to be wetlands—though the closest waterway is 11 miles away.
The Corps’ ruling led to a 12-year legal battle that ended in June, when a three-judge panel from the U.S. Circuit Court of Appeals for the 7th Circuit ruled on behalf of Gallagher and his company, who were represented by attorneys from the Texas Public Policy Foundation.
This is a victory not only for the builders specifically, but also for those who believe in limiting the ever-growing powers of the federal government.
Gallagher’s company, doing business as Orchard Hill Building Company, purchased the Warmke tract, former farmland in Tinley Park, in 1995, with plans for a big development. The homes were to be large enough for growing families, but not unaffordable.
The company built about 100 homes in the first phase of the development, then in 2006 went to the Army Corps of Engineers for permits for the second phase.
The Corps decided that according to its interpretation of the Clean Water Act, the 13 acres—now called the “Warmke wetlands” —were off-limits. As wetlands, the Corps contended, the land couldn’t be developed.
The Clean Water Act, passed in 1972, gives power to the Corps and the Environmental Protection Agency to “restore and maintain the chemical, physical, and biological integrity of the nation’s waters.” It bans pollution of “navigable waters,” which includes “waters of the United States.”
But the act doesn’t say what constitutes “waters of the U.S.” The Corps and the EPA have been free to do that themselves—and the definition has only expanded, along with the authority those agencies think they possess.
Eventually, the Corps decided its authority extended to any waters “subject to the ebb and flow of the tide,” rivers that could be used for interstate commerce or recreation, tributaries that flow into those waters, and—importantly—“wetlands adjacent to” any of those.
There’s no evidence that the Warmke wetlands are, in fact, wet (except during storms). During the years and years of administrative and judicial proceedings, the Corps has offered just one piece of evidence: a single observation, made on March 24, 2010, of “intermittent” flow from the Warmke parcel’s stormwater retention system into Midlothian Creek.
When Gallagher sued, the lower courts sided with the Corps because government agencies are entitled to some level of deference.
But in recent years, the Supreme Court has started to rein in the Corps and the EPA. The court specifically rejected that level of deference in the case of Rapanos v. United States (2006), and instead required that the Corps produce site-specific, substantial evidence in the administrative record to support its rulings.
The administrative record in this case does not provide site-specific, substantial evidence supporting the Corps’ finding that the 13 acres have a significant physical, chemical, and biological nexus with the Little Calumet River.
And the Seventh Circuit Court of Appeals agreed.
“This dispute has consumed almost as many years as the Warmke wetlands have acres,” the court ruled. “In that time, the Corps has not provided substantial evidence that the wetlands and those similarly situated have a significant nexus to the Little Calumet River.”
The court threw out the lower court rulings and sent the matter back to the Corps. The government has not appealed for review by the Supreme Court.
Now, it’s up to the Corps to do the right thing and ensure that Gallagher’s 12-year nightmare comes to an end by recognizing that the 13 acres are not subject to federal jurisdiction.
When the government declares that your property is a federal wetland, you lose your right to use or develop that property unless you obtain a permit. Before the government can take such dramatic steps, it should be required to produce real evidence that developing the property will have substantial effects on federal waters.
For Gallagher, the ruling means his family-owned company can start building homes there again.
