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U.S. Supreme Court Affirms Army Corps Jurisdictional Determinations as Judicially Reviewable Final Agency Actions

On May 31, 2016, the United States Supreme Court unanimously held in United States Army Corps of Engineers v. Hawkes Co., Inc. that an Army Corps of Engineers jurisdictional determination (“JD”) is a judicially reviewable final agency action under the Administrative Procedure Act (the “APA”). No. 15-290, slip op., 578 U.S. ___ (May 31, 2016).

Many know that the Clean Water Act (“CWA”) prohibits the unpermitted discharge of pollutants to “waters of the United States.”  What exactly “waters of the United States” comprise is a different story, for a different day.  The application process for a CWA discharge permit is a costly endeavor, both in dollars and minutes.  Failure to obtain a permit, or failure to comply with an issued permit, is even more costly, with some violations carrying criminal penalties.  Thus, an applicant may request a JD from the Corps, which indicates whether a stream, wetland, or water body is a “water of the United States.”

JDs come in two forms – preliminary JDs, which are non-binding indicators that “waters of the United States” may be on a property, and approved JDs, which are official Corps determinations that jurisdictional waters are either present or absent at a site.  Approved JDs are valid for five years and may be immediately appealed through the Corps’ administrative appeal process.  Preliminary JDs however, are merely advisory in nature and not appealable.

Prior to Hawkes, the Corps maintained that approved JDs were not judicially reviewable under the APA.  Until the Eighth Circuit Court of Appeals decided otherwise, parties were effectively left with two options to challenge an approved JD – apply for a permit knowing the application could be denied and challenge denial after expending substantial resources in the application process, or discharge pollutants without a permit and claim a permit was not needed.

The facts underlying Hawkes are straightforward.  Three companies engaged in the mining of peat in Minnesota sought to expand operations to a nearby plot of land.  In 2010, they applied for a CWA Section 404 permit, and in 2012, the Corps issued an approved JD indicating the subject property contained “waters of the United States” due to its wetlands having a “significant nexus” to the Red River of the North, located 120 miles away.  The companies appealed to the Corps, who on remand, reaffirmed its original conclusion by issuing a “revised JD” to that effect.  The companies sought judicial review via the APA, but the district court held that the revised JD was not a final agency action “for which there is no other adequate remedy in a court.”  The Eighth Circuit reversed, and the Court granted certiorari.

Prior to Hawkes, the Court heard a similar CWA action in Sackett v. Environmental Protection Agency, which applied a two-prong test first set out in Bennett v. Spear.  The Bennett test determines the finality of an agency action through the presence of two conditions – that the action marks the consummation of an agency’s decision-making process, and that such an action is one by which rights or obligations have been determined, or from which legal consequences will flow.

Throughout the matter, the Corps never disputed that an approved JD satisfies the first Bennett condition – and frankly, it couldn’t considering the Corps deems such a “final agency action” at 33 CFR § 320.1(a)(6).  However, the Corps could not persuade the Court that an approved JD did not meet the second Bennett prong.  The Court discussed in detail a negative JD, which is an approved JD indicating no jurisdictional waters exist.  Because such binds the agency for five years in subsequent federal action or litigation, creating an effective “five-year safe harbor” for the acquiring party, the Court found this to give rise to direct and appreciable legal consequences.

To many, the Hawkes holding is predictable and significant.  It provides private parties the opportunity to challenge designated jurisdictional waters on their properties under the APA.  It may even spur an increase in the issuance of preliminary JDs, or result in the EPA and Corps reserving judgment in jurisdictional matters.  Whatever the direct effect, the Hawkes decision will have an undoubted influence on the “waters of the United States” rulemaking, sure to see its day in the Supreme Court.

Lieberman & Blecher is experienced at assisting clients with jurisdictional water and wetlands issues at the federal, state, and local levels.  Please contact our office if you feel our attorneys can be of assistance.

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