                  FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

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

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

                   Filed August 10, 2006

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

             Opinion by Chief Judge Schroeder




                            9299
            N. CAL. RIVER WATCH v. HEALDSBURG          9301


                        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.


                        OPINION

SCHROEDER, Chief Judge:

  Defendant/Appellant City of Healdsburg (“Healdsburg”)
appeals the district court’s judgment in favor of Plaintiff/
9302         N. CAL. RIVER WATCH v. HEALDSBURG
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 contains wetlands adjacent to a navigable
river of the United States. The district court held that dis-
charges 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. Riverside 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 navigable 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. Adjacency of wetlands
to navigable waters alone is not sufficient. Id. at 2236-52.

   In light of Rapanos, we conclude that Basalt Pond and its
wetlands possess such a “significant nexus” to waters that are
navigable in fact, because the Pond waters seep directly into
the navigable Russian River. We affirm the district court’s
holding that Basalt Pond is subject to the CWA. We also
affirm the district court’s ruling that neither the waste treat-
ment system nor the excavation operation exceptions in the
Act apply to Healdsburg’s discharges.
              N. CAL. RIVER WATCH v. HEALDSBURG              9303
                       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 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 fifty and several hundred
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
9304         N. CAL. RIVER WATCH v. HEALDSBURG
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 discharged into Basalt Pond from the plant
was 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 directly 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.

   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
              N. CAL. RIVER WATCH v. HEALDSBURG             9305
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 adjacent to the Pond. As
such, 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 Rus-
sell, 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
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
9306         N. CAL. RIVER WATCH v. HEALDSBURG
Corps of Engineers (“ACOE”) issued a regulation 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 first issue is therefore whether Basalt Pond and its sur-
rounding are “wetlands adjacent to waters” within the mean-
ing of the regulations. If so, we must decide whether such
adjacent wetlands constitute “waters of the United States”
protected under the Act.

   [3] Appellant contends that Basalt Pond should be charac-
terized as an “adjacent waterbody,” but not an “adjacent wet-
land.” This is not a meaningful distinction, however, because
the Pond itself and its surrounding area are wetlands under the
regulatory definition. The applicable regulations define wet-
lands as “those areas that are inundated or saturated by sur-
face or groundwater.” See 33 C.F.R. § 328.3(b). The record
here reflects that the Russian River and surrounding area 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 underground
aquifer. This aquifer supplies the principal pathway for a con-
tinuous passage of water between Basalt Pond and the Rus-
sian River. Beneath the surface, water soaks in and out of the
Pond via the underground aquifer. This action is continuous,
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 separating the
two is saturated below the water table.

   Because Basalt Pond and surrounding wetlands were cre-
ated by quarrying, they are man-made. This fact is not deter-
              N. CAL. RIVER WATCH v. HEALDSBURG               9307
minative of whether they qualify as navigable waters. See
Leslie Salt Co. v. United States, 896 F.2d 354, 359-60 (9th
Cir. 1990) (rejecting a district court’s interpretation of the reg-
ulations as creating a distinction between man-made and natu-
ral waters). Since Basalt Pond contains wetlands, the only
remaining question is whether the adjacent wetlands consti-
tute waters of the United States subject to the CWA.

   [4] The Supreme Court has consistently held, when inter-
preting the meaning of “adjacent wetlands” in the regulations,
that in order for the Act to apply there must be some relation-
ship between wetlands and an identifiable navigable water.
The leading case is Riverside Bayview Homes, 474 U.S. 121
decided in 1985. The Supreme Court there upheld CWA juris-
diction over wetlands that directly abutted a navigable creek.
The Court held that “the relationship between waters and their
adjacent wetlands provides an adequate basis for a legal judg-
ment that adjacent wetlands may be defined as waters under
the Act.” Id. at 134. The Court left open the question of
whether the CWA also protected wetlands other than those
adjacent to open waters. Id. at 131-32.

   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.” The case involved
ponds that had been formed as a result of an abandoned sand
and gravel pit mining operation and were not “adjacent wet-
lands.” 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
9308         N. CAL. RIVER WATCH v. HEALDSBURG
significant nexus. The Court explained that, “[i]t was the sig-
nificant nexus between wetlands 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, however, the Supreme Court discussed the
intersection between Riverside Bayview Homes and
SWANCC. United States v. Rapanos, 126 S.Ct. 2208 (2006).
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
             N. CAL. RIVER WATCH v. HEALDSBURG             9309
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 or 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,
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 wetlands
not directly adjacent to navigable waters, but adjacent to trib-
utaries of navigable waters, are protected under the CWA.
Justice Stevens argued that Riverside Bayview Homes is still
the controlling precedent and does not require a “significant
nexus” test.

  [5] Justice Kennedy, constituting the fifth vote for reversal,
concurred only in the judgment and, therefore, provides the
9310         N. CAL. RIVER WATCH v. HEALDSBURG
controlling rule of law. See Marks v. United States, 430 U.S.
188, 193 (1977) (explaining that “[w]hen a fragmented Court
decides a case and no single rationale explaining the result
enjoys the assent of five Justices, the holding of the Court
may be viewed as that position taken by those Members who
concurred in the judgments on the narrowest grounds”). Jus-
tice Kennedy took the view that wetlands come within the
statutory phrase “navigable waters,” if the wetlands have a
“significant nexus” to navigable-in-fact waterways. 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.
“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).

   Justice Kennedy made clear that SWANCC’s holding “is
not an explicit or implicit overruling of Riverside Bayview
Homes. Id. at 2244-45. Rather, SWANCC provides further
clarification of Riverside Bayview Homes’ construction of the
term “navigable waters.” As Justice Kennedy explained in
Rapanos:

    Riverside Bayview and SWANCC establish the
    framework for the inquiry in the cases now before
               N. CAL. RIVER WATCH v. HEALDSBURG             9311
    the Court: Do the Corps’ regulations, as applied to
    the wetlands in Carabell and the three wetlands par-
    cels in Rapanos, constitute a reasonable interpreta-
    tion of “navigable waters” as in Riverside Bayview
    or an invalid construction as in SWANCC? Taken
    together these cases establish that in some instances,
    as exemplified by Riverside Bayview, the connection
    between a nonnavigable water or wetland and a navi-
    gable water may be so close, or potentially so close,
    that the Corps may deem the water or wetland a
    “navigable water” under the Act. In other instances,
    as exemplified by SWANCC, there may be little or
    no connection. Absent a significant nexus, jurisdic-
    tion under the Act is lacking.

Id. at 2241.

   [6] Applying these principles in this case, it is apparent that
the mere adjacency of Basalt Pond and its wetlands to the
Russian River is not sufficient for CWA protection. The criti-
cal fact is that the Pond and navigable Russian River are sepa-
rated only by a man-made levee so that water from the Pond
seeps directly into the adjacent River. This is a significant
nexus between the wetlands and the Russian River and justi-
fies CWA protection under the ACOE regulations and current
Supreme Court jurisprudence. The district court’s findings of
fact support the conclusion that Basalt Pond and its wetlands
“significantly affect the chemical, physical, and biological
integrity of other covered waters understood as navigable in
the traditional sense.” Id. at 2248.

   Moreover, there is an actual surface connection between
Basalt Pond and the Russian River when the River overflows
the levee and the two bodies of water commingle. Thus, there
are several hydrological connections between Basalt Pond’s
wetlands and the Russian River that affect the physical integ-
rity of the River. Basalt Pond drains into the aquifer and at
least 26 percent of the Pond’s volume annually reaches the
9312         N. CAL. RIVER WATCH v. HEALDSBURG
River itself. There is also an underground hydraulic connec-
tion between the two bodies, so a change in the water level
in one immediately affects the water level in the other.

   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 wetlands sup-
port substantial bird, mammal and fish populations, all as an
integral part of and indistinguishable from the rest of the Rus-
sian River ecosystem. Many of the bird populations at the
Pond are familiar along the River, including cormorants, great
egrets, mallards, sparrows, and fish-eaters. Fish indigenous to
the River also live in the Pond due to the recurring breaches
of the levee. As the district court observed, these facts make
Basalt Pond indistinguishable from any of the natural wet-
lands alongside the Russian River that have extensive biologi-
cal 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
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.

   [7] In sum, the district court made substantial findings of
fact to support the conclusion that the adjacent wetland of
Basalt Pond has a significant nexus to the Russian River. The
Pond’s effects on the Russian River are not speculative or
insubstantial. Rather, the Pond significantly affects the physi-
cal, biological and chemical integrity of the Russian River,
and ultimately warrants protection as a “navigable water”
             N. CAL. RIVER WATCH v. HEALDSBURG            9313
under the CWA. Appellant’s discharge of wastewater into
Basalt Pond without a permit, therefore, violates the CWA.

B.   Waste Treatment System Exception

   [8] 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
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
9314          N. CAL. RIVER WATCH v. HEALDSBURG
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).

   [9] 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:

     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)).
              N. CAL. RIVER WATCH v. HEALDSBURG             9315
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.

   [10] 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
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 wetlands are adjacent to, and possess a
significant nexus to the Russian River, a navigable water of
the United States. Healdsburg, by discharging wastewater into
9316        N. CAL. RIVER WATCH v. HEALDSBURG
the Pond without an NPDES permit, therefore, violated the
CWA. The decision of the district court is AFFIRMED.
