OP, can you provide a link to the original story? Need moar info.
He dammed a Creek not a dry gully (He stopped the flow of water)
HE WILL LOOSE
the arguement can be made that IF he returned the flow of the creek after his pond filled (he included a spillway or overflow device), he hasn't impeded the waterbody. Discharge of his "dredged" material into a "water of the U.S." is another issue all together.
With how obstinate this guy is, there's a possibility this could get nasty, even a Ruby Ridge situation if the government doesn't rule in his favor. So much BS that the fed can tell you what to do with your own land.
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