                  FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

NORTHERN CALIFORNIA RIVER              
WATCH, a non-profit corporation,             No. 04-15442
                 Plaintiff-Appellee,           D.C. No.
                v.                        CV-01-04686-WHA
CITY OF HEALDSBURG, and Does                 ORDER AND
1-10 inclusive.                                OPINION
              Defendant-Appellant.
                                       
        Appeal from the United States District Court
          for the Northern District of California
        William H. Alsup, District Judge, Presiding

                Argued and Submitted
      November 16, 2005—San Francisco, California

                    Filed August 6, 2007

Before: Mary M. Schroeder, Chief Judge, Jerome Farris and
         Consuelo M. Callahan, Circuit Judges.

             Opinion by Chief Judge Schroeder




                            9371
        NORTHERN CALIF. RIVER WATCH v. HEALDSBURG      9373


                        COUNSEL

Peter W. McGaw, Archer Norris, Walnut Creek, California,
for the appellant.

Charles M. Tebbutt, Western Environmental Law Center,
Eugene Oregon and Jack Silver, Law Offices of Jack Silver,
Santa Rosa, California, for the appellee.


                         ORDER

  The opinion filed August 10, 2006, slip op. 9299, and
appearing at 457 F.3d 1023 (9th Cir. 2006) is withdrawn, and
a new opinion will be filed in its stead.

  The Petitions for Rehearing and Rehearing En Banc are
otherwise DENIED, no further petitions for rehearing will be
accepted.
9374     NORTHERN CALIF. RIVER WATCH v. HEALDSBURG
                         OPINION

SCHROEDER, Chief Judge:

   Defendant/Appellant City of Healdsburg (“Healdsburg”)
appeals the district court’s judgment in favor of Plaintiff/
Appellee Northern California River Watch (“River Watch”),
an environmental group, in this litigation under the Clean
Water Act (“CWA”). Plaintiff alleges that Healdsburg, with-
out first obtaining a National Pollutant Discharge Elimination
System (“NPDES”) permit, violated the CWA by discharging
sewage from its waste treatment plant into waters covered by
the Act. Healdsburg discharged the sewage into a body of
water known as “Basalt Pond,” a rock quarry pit that had
filled with water from the surrounding aquifer, located next to
the Russian River.

   The issue is whether Basalt Pond is subject to the CWA
because the Pond, containing wetlands, borders additional
wetlands that are adjacent to a navigable river of the United
States. The district court held that discharges into the Pond
are discharges into the Russian River, a navigable water of the
United States protected by the CWA. The court followed the
United States Supreme Court decision in United States v. Riv-
erside Bayview Homes, Inc., 474 U.S. 121 (1985).

   The Supreme Court, however, has now narrowed the scope
of that decision. See Rapanos v. United States, 126 S.Ct. 2208
(2006). In a 4-4-1 decision, the controlling opinion is that of
Justice Kennedy who said that to qualify as a regulable water
under the CWA the body of water itself need not be continu-
ously flowing, but that there must be a “significant nexus” to
a waterway that is in fact navigable.

   In light of Rapanos, we conclude that Basalt Pond pos-
sesses such a “significant nexus” to waters that are navigable
in fact, not only because the Pond waters seep into the naviga-
ble Russian River, but also because they significantly affect
         NORTHERN CALIF. RIVER WATCH v. HEALDSBURG           9375
the physical, biological, and chemical integrity of the River.
We affirm the district court’s holding that Basalt Pond is sub-
ject to the CWA. We also affirm the district court’s ruling that
neither the waste treatment system nor the excavation opera-
tion exceptions in the Act apply to Healdsburg’s discharges.

                       BACKGROUND

   The Clean Water Act of 1972 provides the foundation for
this case. See 33 U.S.C. § 1251. The primary objective of the
CWA is to “restore and maintain the chemical, physical and
biological integrity of the Nation’s waters.” 33 U.S.C.
§ 1251(a). To effectuate this objective, one of the CWA’s
principal sections strictly prohibits discharges of pollutants
into the “navigable waters of the United States” without an
NPDES permit from the Environmental Protection Agency
(“EPA”). 33 U.S.C. § 1311(a). The CWA defines the term
“navigable waters” to mean “waters of the United States,
including the territorial seas.” 33 U.S.C. § 1362(7).

   Basalt Pond was created in approximately 1967 when the
Basalt Rock Company began excavating gravel and sand from
land near the Russian River. After the top soil was ripped
away, large machines tore out rock and sand. The result was
a pit. The pit filled with water up to the line of the water table
of the surrounding aquifer. Today, Basalt Pond, measuring
one half mile in length and a quarter mile in breadth, contains
58 acres of surface water. The Pond lies along the west side
of the Russian River, separated from the River by wetlands
and a levee.

   It is undisputed that the Russian River is a navigable water
of the United States. Its headwaters originate in Mendocino
County, California. Its main course runs about 110 miles,
flowing into the Pacific Ocean west of Santa Rosa.

   The horizontal distance between the edge of the River and
the edge of the Pond varies between 50 and several hundred
9376     NORTHERN CALIF. RIVER WATCH v. HEALDSBURG
feet, depending on the exact location and the height of the
river water. Usually, there is no surface connection, because
the levee blocks it and prevents the Pond from being inun-
dated by high river waters in the rainy season.

   In 1971, Healdsburg built a secondary waste-treatment
plant on a 35-acre site located on the north side of Basalt
Pond about 800 feet from and west of the Russian River. Prior
to 1978, Healdsburg discharged the plant’s wastewater into
another water-filled pit located to the north. In 1978, Healds-
burg began discharging into Basalt Pond. Although Healds-
burg did not obtain an NPDES permit, it received a state
water emission permit as well as permission from Syar Indus-
tries, Inc., the current owner and manager of land and opera-
tions at Basalt Pond.

   The wastewater was discharged into Basalt Pond from the
plant at about 420 to 455 million gallons per year between
1998 and 2000. The volume of the Pond itself is somewhat
larger — 450 to 740 million gallons. The annual outflow from
the sewage plant, therefore, is sufficient to fill the entire Pond
every one to two years. Basalt Pond would, of course, soon
overflow in these circumstances were it not for the fact that
the Pond drains into the surrounding aquifer.

   Pond water in the aquifer finds its way to the River over a
period of a few months and seeps into the River along as
much as 2200 feet of its banks. The district court made spe-
cific findings as to the impact of the wastewater ultimately
draining into the Russian River. First, the district court noted
that not all the sewage in the wastewater reached the River.
The wastewater is partially cleansed as it passes through the
bottom and sides of the Basalt Pond. Healdsburg refers to this
process as “polishing” or “percolation.” The wetlands around
Basalt Pond also help cleanse the outflow by passing the
effluent through the wetlands sediment. The filtration is effec-
tive in reducing biochemical oxygen demand and removing
some pollutants, but the filtration is not perfect.
         NORTHERN CALIF. RIVER WATCH v. HEALDSBURG          9377
   The district court found that the concentrations of chloride
in the groundwater between the Pond and the Russian River
are substantially higher than in the surrounding area. Chlo-
ride, which already exists in the Pond due to naturally occur-
ring salts, reaches the River in higher concentrations as a
direct result of Healdsburg’s discharge of sewage into the
Pond. Mr. John Lambie, a water expert for Healdsburg, testi-
fied at trial that the average concentration of chloride appear-
ing upstream in the River is only 5.9 parts per million. In
contrast, the average concentration of chloride seeping from
Basalt Pond into the River is 36 parts per million. At a moni-
toring well between the Pond and the River, the underground
concentration is diluted to some 30 parts per million. Ulti-
mately, a chloride concentration of 18 parts per million
appears on the west side of the River. The district court thus
found that chloride from the Pond over time makes its way to
the River in higher concentrations than naturally occurring in
the River. This finding was further supported by Dr. Larry
Russell, one of River Watch’s trial experts.

   Plaintiffs filed this suit on December 4, 2001, alleging that
Healdsburg is violating the CWA by discharging wastewater
into Basalt Pond. After a four day trial, the district court made
findings of fact to support its holding that Healdsburg dis-
charged sewage into a protected water of the United States in
violation of the CWA. The court’s holding was premised on
the legal conclusion that Basalt Pond is a “water of the United
States” within the meaning of the CWA. See 2004 WL
201502 (N.D. Cal.). This appeal followed.

                        DISCUSSION

A.   Wetlands Constituting Waters of the United States

   [1] Congress passed the Clean Water Act in 1972. The
Act’s stated objective is “to restore and maintain the chemi-
cal, physical, and biological integrity of the Nation’s waters.”
§ 33 U.S.C. § 1251(a). To that end, the statute, among other
9378     NORTHERN CALIF. RIVER WATCH v. HEALDSBURG
things, prohibits “the discharge of any pollutant by any per-
son” except as provided in the Act. § 1311(a).

   [2] After the CWA was passed, an issue arose concerning
the extent to which wetlands adjacent to navigable waters
constitute “waters of the United States.” In 1978, the Army
Corps of Engineers (“ACOE”) issued regulations defining
“waters of the United States” to include “adjacent wetlands.”
33 C.F.R. § 328.3(a)(7). The regulations specifically provide
that “[t]he term ‘waters of the United States’ means,” among
other things, “[w]etlands adjacent to waters.” Id. The regula-
tions further specify that “[w]etlands separated from other
waters of the United States by man-made dikes or barriers,
natural river berms, beach dunes and the like are ‘adjacent
wetlands.’ ” 33 C.F.R. § 328.3(c).

  The Supreme Court has since confirmed that regulable
waters of the United States include tributaries of traditionally
navigable waters and wetlands adjacent to navigable waters
and their tributaries. Riverside Bayview Homes, 474 U.S. 121;
33 C.F.R. 328.3(a)(1),(4),(7). The only question reserved in
Riverside Bayview Homes was the issue of CWA jurisdiction
over truly isolated waters. See Rapanos, 126 S.Ct. at 2255 n.3.

   Thus, the first issue before us is whether Basalt Pond and
the wetlands in it are isolated waters, or whether they consti-
tute covered wetlands within the meaning of the regulations
and within the scope of Riverside Bayview Homes and
Rapanos.

   [3] The applicable regulations define wetlands as “those
areas that are inundated or saturated by surface or groundwa-
ter.” See 33 C.F.R. § 328.3(b). The record here reflects that
the Russian River and surrounding area, including the Pond
itself, rest on top of a vast gravel bed extending as much as
sixty feet into the earth. The gravel bed is a porous medium,
saturated with water. Through it flows an equally vast under-
ground aquifer. This aquifer supplies the principal pathway
         NORTHERN CALIF. RIVER WATCH v. HEALDSBURG         9379
for a continuous passage of water between Basalt Pond and
the Russian River. Beneath the surface, water soaks in and out
of the Pond via the underground aquifer. This action is contin-
uous, 24 hours a day, seven days a week, 365 days a year.
Indeed, the parties have stipulated that the Pond and the River
overlie the same unconfined aquifer and that the land separat-
ing the two is saturated below the water table.

   [4] The Basalt Pond and its surrounding area are therefore
regulable under the Clean Water Act, because they qualify as
wetlands under the regulatory definition. The district court
explicitly found that the Pond is not only surrounded by
extensive wetlands, which connect to the Russian River, but
also that the Pond’s shoreline has receded so substantially that
much of the area that was originally Basalt Pond has turned
into wetland. This case is thus different than our recent deci-
sion in San Francisco Baykeeper v. Cargill Salt Div., 481
F.3d 700 (9th Cir. 2007), because here, the Pond is not iso-
lated; it contains and is surrounded by wetlands, rendering it
regulable under the CWA.

  The remaining question is whether, under Rapanos and its
antecedents, Basalt Pond is a “water of the United States”
because it is sufficiently adjacent to the navigable Russian
River to confer jurisdiction or alternatively because it has a
substantial nexus to the River.

   The Supreme Court has not yet agreed upon a satisfactory
explanation of when wetlands are sufficiently adjacent to nav-
igable waters to confer CWA jurisdiction. The leading case
addressing the issue is Riverside Bayview Homes, 474 U.S.
121, which was decided in 1985. The Supreme Court there
upheld CWA jurisdiction over wetlands that directly abutted
a navigable creek. The Court held that “the relationship
between waters and their adjacent wetlands provides an ade-
quate basis for a legal judgment that adjacent wetlands may
be defined as waters under the Act.” Id. at 134.
9380     NORTHERN CALIF. RIVER WATCH v. HEALDSBURG
   [5] In Solid Waste Agency of Northern Cook County v.
United States Army Corps of Engineers, 531 U.S. 159 (2001)
(SWANCC), the Supreme Court again interpreted the CWA
term “navigable waters” and held that isolated ponds and
mudflats, unconnected to other waters covered by the Act,
were not “waters of the United States, because they were
either not sufficiently adjacent to navigable waterways or did
not have a substantial nexus to such waters.” The case
involved ponds that had been formed as a result of an aban-
doned sand and gravel pit mining operation, but were not “ad-
jacent wetlands.” The ACOE regulations defined the ponds
nevertheless to be “waters of the United States,” because they
were “used as habitat by other migratory birds which cross
state lines.” 40 C.F.R. § 328.3(a)(3)(b). Under this “Migratory
Bird Rule,” ponds that are isolated from navigable waters may
constitute “waters of the United States” if they are used as
habitat by migratory birds. The Supreme Court rejected that
theory and held that the CWA does not protect isolated ponds
without a significant nexus to navigable water. The Court
explained that, “[i]t was the significant nexus between wet-
lands and ‘navigable waters’ that informed our reading of the
[Act] in Riverside Bayview Homes.” Id. at 167.

   The Supreme Court in SWANCC, therefore, invalidated the
Migratory Bird Rule but did not purport to reconsider its prior
holding regarding adjacent wetlands in Riverside Bayview
Homes. In Baccarat Fremont Developers, LLC v. U.S. Army
Corps of Engineers, 425 F.3d 1150 (9th Cir. 2005), we
expressly recognized that SWANCC invalidated the ACOE’s
Migratory Bird Rule, but did not overrule Riverside Bayview
Homes. Our conclusion in Baccarat is consistent with other
circuits that have also held that SWANCC did not overrule
Riverside Bayview Homes. See United States v. Hubenka, 438
F.3d 1026 (10th Cir. 2006); United States v. Johnson, 437
F.3d 157 (1st Cir. 2006).

  In the last term the Supreme Court also discussed the inter-
section between Riverside Bayview Homes and SWANCC.
         NORTHERN CALIF. RIVER WATCH v. HEALDSBURG        9381
Rapanos, 126 S.Ct. 2208. The Rapanos decision involved two
consolidated cases, United States v. Rapanos, 376 F.3d 629
(6th Cir. 2004) (Rapanos I), and Carabell v. U.S. Army Corps
of Engineers, 391 F.3d 704 (6th Cir. 2004).

   The first consolidated case, Rapanos I, involved three land
parcels near Midland, Michigan. The first parcel, known as
the Salzburg site, consisted of roughly 230 acres. The Salz-
burg site included 28 acres of wetlands. The district court
found, on the basis of expert testimony, that water from the
site spilled into the Hoppler Drain, which carried water into
the Hoppler Creek and ultimately into the Kawkawlin River,
which is navigable. The second parcel, known as the Hines
Road site, consisted of 275 acres, which included 64 acres of
wetlands. These wetlands had a surface-water connection to
the Rose Drain, which carried water into the Tittabawassee
River, a navigable waterway. The final parcel, called the Pine
River site, consisted of some 200 acres. This site included 49
acres of wetlands, and a surface water connection linked the
wetlands to the nearby Pine River, which flowed into Lake
Huron. The wetlands at issue in all three parcels were neither
directly adjacent to nor entirely isolated from a navigable
water of the United States.

   The United States brought an action against the Rapanos
petitioners for civil violations of the CWA. Specifically, the
government claimed that petitioners discharged fill into pro-
tected wetlands, failed to respond to requests for information,
and ignored administrative compliance orders. After a 13-day
bench trial, the district court made factual findings upholding
the Corps’ jurisdiction over wetlands on the three parcels. On
the merits the court ruled in the government’s favor, finding
that violations occurred at all three sites. The United States
Court of Appeals for the Sixth Circuit affirmed, 376 F.3d 629
(2004). The other consolidated case, Carabell, similarly
involved discharges into wetlands that connected through a
series of waterways to a navigable water of the United States,
9382     NORTHERN CALIF. RIVER WATCH v. HEALDSBURG
and the Sixth Circuit similarly held that the wetlands were
covered by the Act. 391 F.3d 704 (6th Cir. 2004).

   In Rapanos, a 4-4-1 plurality opinion, the Supreme Court
addressed how the term “navigable waters” should be con-
strued under the Act. The plurality, written by Justice Scalia
for four Justices, would have reversed on the grounds that
only those wetlands with a continuous surface connection to
bodies that are “waters of the United States” are protected
under the CWA. Justice Stevens, writing the dissent for four
Justices, would have affirmed on the grounds that even wet-
lands not directly adjacent to navigable waters, but adjacent
to tributaries of navigable waters, are protected under the
CWA. Justice Stevens also argued that Riverside Bayview
Homes is still the controlling precedent and does not require
a “significant nexus” test.

  Justice Kennedy, constituting the fifth vote for reversal,
concurred only in the judgment. His concurrence is the nar-
rowest ground to which a majority of the Justices would
assent if forced to choose in almost all cases. See United
States v. Gerke, 464 F.3d 723, 724 (7th Cir. 2006); see also
Rapanos, 126 S. Ct. at 2265 n.13 (J. Stevens dissenting).
Thus, as the Seventh Circuit extensively explained in Gerke,
464 F.3d 724, Justice Kennedy’s concurrence provides the
controlling rule of law for our case. See also Marks v. United
States, 430 U.S. 188, 193 (1997).

   Justice Kennedy said that when wetlands are isolated, or
adjacent only to a non-navigable tributary of a navigable
waterway, those wetlands are regulable under the CWA only
if there is a significant nexus between the wetlands at issue
and the navigable waterway. Rapanos, 126 S. Ct. at 2248. He
explained that a significant nexus exists “if the wetlands,
either alone or in combination with similarly situated lands in
the region, significantly affect the chemical, physical, and
biological integrity of other covered waters more readily
understood as ‘navigable.’ ” Rapanos, 126 S.Ct. at 2248.
         NORTHERN CALIF. RIVER WATCH v. HEALDSBURG          9383
“When, in contrast, wetlands’ effects on water quality are
speculative or insubstantial, they fall outside the zone fairly
encompassed by the statutory term ‘navigable waters.’ ” Id.

   In addressing whether a hydrological connection satisfies
the “significant nexus” test, Justice Kennedy explained that a
“mere hydrologic connection should not suffice in all cases;
the connection may be too insubstantial for the hydrologic
linkage to establish the required nexus with navigable waters
as traditionally understood.” Id. at 2251. Rather, the “required
nexus must be assessed in terms of the statute’s goals and pur-
poses,” which are to “restore and maintain the chemical,
physical, and biological integrity of the Nation’s waters.” Id.
at 2248 (internal quotations and citations omitted).

   [6] Justice Kennedy thus established a substantial nexus
test for the applicability of the Act, concluding that “absent a
significant nexus, jurisdiction under the Act is lacking.” Id. at
2241. But, at the same time, Justice Kennedy also reaffirmed
the holding of Riverside Bayview Homes that wetlands adja-
cent to navigable waterways are covered by the Act, saying
that by virtue of the “reasonable inference of ecologic inter-
connnection,” assertion of jurisdiction “is sustainable under
the Act by showing adjacency alone.” Id. at 2248. This indi-
cates that a significant nexus may be inferred when wetlands
are adjacent to navigable waters.

   In this case, we have both. The Pond is part of a larger wet-
land that is “adjacent” to the River within the meaning of Riv-
erside Bayview Homes. There is also a “substantial nexus”
present under the analysis of Justice Kennedy in Rapanos.

   [7] The water from the Pond seeps into the river through
both the surface wetlands and the underground aquifer. The
district court’s findings of fact regarding this hydrological
connection support the conclusion that Basalt Pond has a sig-
nificant effect on “the chemical, physical, and biological
integrity” of the Russian River. There is accordingly a sub-
9384     NORTHERN CALIF. RIVER WATCH v. HEALDSBURG
stantial nexus between the Basalt Pond and covered waters
sufficient to confer jurisdiction under the Act pursuant to Jus-
tice Kennedy’s substantial nexus test. See id. at 2241.

   With respect to the physical effect on the River, there is an
actual surface connection between Basalt Pond and the Rus-
sian River when the River overflows the levee and the two
bodies of water commingle. There is also an underground
hydraulic connection between the two bodies, so a change in
the water level in one immediately affects the water level in
the other. Basalt Pond drains into the aquifer and at least 26
percent of the Pond’s volume annually reaches the River
itself. Thus, there are several hydrological connections
between Basalt Pond’s wetlands and the Russian River that
affect the physical integrity of the River.

   In addition to these physical connections between Basalt
Pond and the Russian River, the district court found that there
is also a significant ecological connection. The Pond and its
wetlands support substantial bird, mammal and fish popula-
tions, all as an integral part of and indistinguishable from the
rest of the Russian River ecosystem. Many of the bird popula-
tions at the Pond are familiar along the River, including cor-
morants, great egrets, mallards, sparrows, and fish-eaters. Fish
indigenous to the River also live in the Pond due to the recur-
ring breaches of the levee. As the district court observed,
these facts make Basalt Pond indistinguishable from any of
the natural wetlands alongside the Russian River that have
extensive biological effects on the River itself.

   The district court also found that Basalt Pond significantly
affects the chemical integrity of the Russian River by increas-
ing its chloride levels. The chloride from Basalt Pond reaches
the River in higher concentrations as a direct result of Healds-
burg’s discharge of sewage into the pond. Mr. John Lambie
testified at trial that the average concentration of chloride
appearing upstream in the river is only 5.9 parts per million.
In contrast, the average concentration of chloride seeping
         NORTHERN CALIF. RIVER WATCH v. HEALDSBURG        9385
from Basalt Pond into the River is 36 parts per million, and
the chloride concentration on the west side of the River adja-
cent to the Pond is 18 parts per million.

   [8] In sum, the district court made substantial findings of
fact to support the conclusion that Basalt Pond has a signifi-
cant nexus to the Russian River. The Pond’s effects on the
Russian River are not speculative or insubstantial. Rather, the
Pond significantly affects the physical, biological and chemi-
cal integrity of the Russian River, and ultimately warrants
protection as a “navigable water” under the CWA. Appel-
lant’s discharge of wastewater into Basalt Pond without a per-
mit, therefore, violates the CWA unless it falls within one of
the Act’s exceptions.

B.   Waste Treatment System Exception

   [9] Appellant claims that even if Basalt Pond constitutes a
water of the United States it is exempt from protection under
the CWA’s waste treatment system exception. The CWA
excludes “waste treatment systems” from “waters of the
United States.” The CWA regulations specifically provide
that:

     Waste treatment systems, including treatment ponds
     or lagoons designed to meet the requirements of
     CWA (other than cooling ponds as defined in 40
     CFR 423.11(m) which also meet the criteria of this
     definition) are not waters of the United States.

33 C.F.R. § 328.3(a)(8).

   Claims of exemption, from the jurisdiction or permitting
requirements, of the CWA’s broad pollution prevention man-
date must be narrowly construed to achieve the purposes of
the CWA. See United States v. Akers, 785 F.2d 814, 819 (9th
Cir. 1986). Furthermore, appellant has the burden to prove
that this exception applies to its discharge of wastewater into
9386      NORTHERN CALIF. RIVER WATCH v. HEALDSBURG
Basalt Pond. See United States v. First City National Bank,
386 U.S. 361, 366 (1967); Sierra Club v. Union Oil Company
of California, 813 F.2d 1480, 1484 (9th Cir. 1987) (vacated
on other grounds by Union Oil Co. of California v. Sierra
Club, 485 U.S. 931 (1988)).

   The waste treatment system exemption was intended to
exempt either water systems that do not discharge into waters
of the United States or waters that are incorporated in an
NPDES permit as part of a treatment system. See 44 Fed. Reg.
32858 (June 1, 1979); In the Matter of: Borden, Inc./Colonial
Sugars, 1984 1 E.A.D. 895 (E.P.A. 1984). In other words, a
permit is not required to discharge pollutants into a self-
contained body of water that has no connection to a water of
the United States, or into a body of water that is connected to
a water of the United States, but that is part of an approved
treatment system. The exception was meant to avoid requiring
dischargers to meet effluent discharge standards for dis-
charges into their own closed system treatment ponds. See 45
Fed. Reg. 48620-21 (July 21, 1980) (emphasis added). Regu-
lations under the CWA, however, still extend to discharges
from treatment ponds. Id. (emphasis added).

   [10] Basalt Pond may be part of a waste treatment system,
but it does not fall under the exemption because it is neither
a self-contained pond nor is it incorporated in an NPDES per-
mit as part of a treatment system. For these reasons, we hold
that Basalt Pond is not a waste treatment system exempt from
coverage under the Act.

C.     The Excavation Operation Exception

  Healdsburg also argues that Basalt Pond is exempt from
protection under the CWA because it is the site of an ongoing
excavation operation. In its preamble to the revisions to its
CWA regulation, the ACOE stated:
         NORTHERN CALIF. RIVER WATCH v. HEALDSBURG           9387
    For clarification it should be noted that we generally
    do not consider the following waters to be “Waters
    of the United States . . . .”

                           *   *   *

    (e) Waterfilled depressions created in dry land inci-
    dental to construction activity and pits excavated in
    dry land for the purpose of obtaining fill, sand, or
    gravel unless and until the construction or excava-
    tion operation is abandoned and the resulting body
    of water meets the definition of waters of the United
    States (see 33 C.F.R § 328.3(a)).

51 Fed.Reg. 41206, 41217 (1986) (emphasis added). Appel-
lant argues that Basalt Pond is used as part of an active gravel
excavation operation and is, therefore, exempt from NPDES
regulation. The district court correctly found that there is no
merit to this claim.

   The district court found that although Syar operates recla-
mation activities at Basalt Pond, those activities do not consti-
tute an ongoing excavation operation as defined by the
ACOE’s exemption. The Basalt Rock Company, Syar’s pre-
decessor, ceased its excavation of rock or sand from Basalt
Pond in 1984. Syar, through its reclamation activities, has
never extracted rock or sand from the pond. Rather, Syar has
pumped a slurry of sand and sediment into Basalt Pond. These
findings support the conclusion that all excavation operations
at Basalt Pond have been abandoned.

   [11] Syar does continue to use Basalt Pond as a discharge
location for its surface mining operations at other locations,
but this does not constitute ongoing excavation operations.
The excavation operation exemption applies only to ponds
undergoing actual extraction. Basalt Pond is merely tangential
to Syar’s excavation of other lands. Our holding in Leslie Salt
clarifies that the ACOE extraction operations exemption does
9388     NORTHERN CALIF. RIVER WATCH v. HEALDSBURG
not apply to a body of water which might be part of general
commercial activity. 896 F.2d at 359. Rather, the exemption
applies only to bodies of water that are currently and directly
under active excavation. Id.; see also Golden Gate Audubon
Soc., Inc. v. U. S. Army Corps of Engineers (Audubon II), 796
F.Supp. 1306, 1315 (N.D. Cal. 1992). The district court cor-
rectly held that the excavation operations exception does not
apply in this case.

                      CONCLUSION

   The Basalt Pond is part of a larger wetland adjacent to the
Russian River. It also has a significant nexus to the Russian
River, a navigable water of the United States. Healdsburg, by
discharging wastewater into the Pond without an NPDES per-
mit, therefore, violated the CWA. The decision of the district
court is AFFIRMED.
