USACE jurisdictional determination reviewable

USACE Jurisdictional Determination Immediately Reviewable

USACE jurisdictional determination reviewable

In an 8-0 decision, the U.S. Supreme Court has ruled that landowners can challenge U.S. Army Corps of Engineers’ (“USACE”) jurisdictional determinations under the Clean Water Act (“CWA”).  In United States Army Corps of Engineers v. Hawkes, the eight-Justice Supreme Court concluded that a jurisdictional determination issued by the USACE under the CWA constitute “final agency action” under the Administrative Procedure Act (“APA”), which means those decisions can be immediately reviewed in court.

USACE Jurisdictional Determination Under the CWA

Hawkes involved a provision of the CWA that requires property owners to obtain a permit from the USACE before discharging dredged or fill material into waters covered by the CWA.  In some instances it is difficult to tell if a certain body of water falls within the CWA’s definition of “waters of the United States.”  As a result, the USACE offers landowners the opportunity to seek “jurisdictional determinations” under the CWA prior to undertaking the arduous permitting process.  According to the USACE, each jurisdictional determination is valid for five years, unless new information surfaces during that timeframe.

Lower District Court Dismisses Landowners’ Case

The plaintiffs/respondents in Hawkes were landowners who mine peat, a substance used to make putting greens flat.  These landowners sought a permit from the USACE to discharge material onto wetlands located on property that the landowners owned and hoped to mine.  In connection with the permitting process, the landowners obtained an approved jurisdictional determination from the USACE, which stated that the property contained “waters of the United States” because its wetlands had a “significant nexus” to the Red River of the North, located approximately 120 miles away.  After exhausting their administrative remedies, the landowners sought review of the approved jurisdictional determination in federal court under the APA.  However, the federal district court dismissed the landowners’ case for want of jurisdiction, holding that the revised jurisdictional determination was not a “final agency action for which there is no other adequate remedy in a court.”

Eighth Circuit Reverses Lower District Court

On appeal at the Eighth Circuit Court of Appeals, the Eighth Circuit reversed the lower court’s decision, holding that the lower court had misapplied the U.S. Supreme Court’s decision in Sackett v. EPA.  In Sackett, the Supreme Court unanimously held that a “compliance order” issued under the act – an order reflecting a determination that a party is violating the act and requiring them to come into compliance – constituted final agency action, even though such orders are only enforced through a subsequent judicial proceeding.

While similar, the case in Hawkes differed from that in Sackett because it involved a different step in the administrative process.  Even still, the two cases centered on the same legal issue: whether the agency determination at issue constituted “final agency action” for purposes of the APA.

U.S. Supreme Court Holds that USACE Jurisdictional Determination is “Final Agency Action” for Purposes of APA

Against the above legal backdrop, the Supreme Court determined that USACE jurisdictional determinations constitute “final agency actions” for purposes of the APA, which means landowners are free to challenge such determinations immediately in court.  The Supreme Court followed a two-prong test for determining APA finality.  Both parties admitted that the first prong was met because a jurisdictional determination marks the consummation of the USACE’s decision-making process.  Thus, the remaining issue before the court was whether the USACE’s jurisdictional determination is an action “by which rights or obligations have been determined, or from which legal consequences will flow.”

In its briefing, the USACE characterized the jurisdictional determination as a form of non-binding advice that carries no legal consequences of its own.  Instead, the USACE argued that a jurisdictional determination only helps the parties understand the existing law.  Conversely, the landowners focused on the practical burdens imposed by the jurisdictional determination, which require that a party receiving an affirmative jurisdictional determination to stop using the property, seek a costly permit, or risk an enforcement action, in their opposition.  Additionally, both parties invited a broader consideration of the holding in Bennett v. Spear, arguing about whether the test described above really requires a two-prong analysis, and about the relevance of pragmatism to the Bennett analysis.

The Supreme Court ultimately concluded that the jurisdictional determination meets both of the Bennett analysis requirement.  In concluding that the jurisdictional requirement had legal consequence, the Supreme Court relied primarily on a Memorandum of Agreement (“MOA”) between the USACE and the Environmental Protection Agency (“EPA”).  While the MOA did not feature prominently in the parties opposing briefs, the Supreme Court took full aim at the MOA during oral argument.  The MOA states that “[f]inal determinations” made pursuant to the MOA “will be binding on the Government and represent the Government’s position in any subsequent Federal action or litigation concerning that final determination.”  By its language, the MOA seems to  establish a liability limit, or safe harbor, for the five-year validity period of a negative JD.  As a result, the MOA likely provides a concrete legal consequence that the case otherwise appears to lack.

However, the USACE argued that the MOA only applies to certain “special cases” defined in the MOA, and not to ordinary cases like the instant case.  During oral argument, Chief Justice Roberts resisted the USACE’s interpretation of the MOA under the MOA’s plain text.  The government’s position was further rejected in the Court’s final opinion.  The concurring opinions also discussed the MOA at length, given the fact that it is quite unusual to hinge a decision on a contested memorandum with little briefing.

Significance of Supreme Court’s Reliance on MOA

The Supreme Court’s reliance on the contested MOA is significant for two reasons.  First, the Court never addressed the possibility of deferring to the USACE’s interpretation of its own MOA.  Some might take the Court’s lack of discussion regarding deference to the USACE as another example of what has been perceived as anti-deference mood in recent Roberts Court opinions.

Second, if the Court’s determination turned solely on the MOA, then the landowners’ victory may be potentially short-lived.  During oral argument, the USACE stated that if it in fact had to lose the case, it preferred that it be via the MOA.  As the USACE’s lawyer explained, ““if the agencies wanted to fix it, they easily could, simply by issuing a new MOA clarifying their view of the – the [jurisdictional determination’s] effect.”

Questions Remain

The question left hanging by the Court’s decision is whether the opinion identifies any legal consequences of the jurisdictional determination beyond the MOA.  The best example that the opinion identifies legal consequences independent of the MOA is the Court’s discussion of the jurisdictional determination’s practical consequences.  There, the Court stated that the jurisdictional determination effectively “warns that if [property owners] discharge pollutants…without obtaining a permit…, they do so at the risk of significant criminal and civil penalties.”  However, does this sort of warning, alone, satisfy Burnett?  The Court’s opinion is unclear on this point.  Furthermore, to the extent the jurisdictional determination’s practical consequences constitute an independently cognizable legal effect, it has made the waters of the finality doctrine much murkier.

Hawkes Decision Already Impacting Other Cases

While the ink was still drying on the Supreme Court’s decision in Hawkes, the U.S. Supreme Court dealt another blow to the CWA.  Less than seven days after the Hawkes decision, the Court granted a Kent Recycling’s petition for rehearing in light of the Court’s ruling in Hawkes. A lower federal court will now have to review Kent Recycling’s case against the backdrop of Hawkes.

In Kent Recycling’s case, Kent Recycling planned on buying wetlands that were exempt from federal control since they were converted into croplands before 1985.  The company planned on turning the land into a waste disposal site, but the Army Corps of Engineers said it couldn’t, citing a recent policy getting rid of the old croplands exemption.  Kent Recycling sued the Corps, but lost in two lower courts, which held the Clean Water Act did not allow people to challenge a federal takeover of privately-owned wetlands until after a lengthy permitting process had been completed.

Hawkes May Open Litigation Floodgate, but USACE Might Have Something to Say About It

The Court’s decision in Hawkes represents a significant victory for landowners and other project proponents, who will now be able to immediately challenge an USACE jurisdictional determination.  Before both the Supreme Court’s and Eighth Circuit’s decisions in Hawkes, the prevailing precedent, Belle Co. v. U.S. Army Corps of Engineers, a Fifth Circuit opinion, reinforced the Army Corps’ view that jurisdictional determinations are not reviewable.

While challenging a USACE jurisdictional determination in court will not be without cost, it is likely that landowners will prefer the cost of litigation to the prohibitive costs associated with obtaining a USACE permit.  As the Supreme Court noted, the average applicant for an individual permit in 2002 spent 788 days and $271,596 to complete the application process.  That cost has likely increased in the intervening years and does not account for the cost of mitigation projects or design changes required as part of the permit.  Discharging without a permit may be an even less attractive option, as the CWA authorizes civil penalties of $37,500 per day and potential additional criminal penalties.

Finally, and perhaps most importantly, the Court’s decision in Hawkes will not doubt result in increased litigation over USACE jurisdictional determinations, whether those challenges come from landowners or the government.  Such challenges could, in turn, lead to further judicial definition of the CWA’s reach. The Supreme Court’s opinion in Hawkes suggests that at least several justices would be willing to revisit the Court’s previous opinions on CWA jurisdiction.

How the USACE will react to the decision is anybody’s guess, but as the USACE argued to the Supreme Court, the CWA does not require the USACE to issue standalone jurisdictional determinations. Thus, the Army Corps could potentially modify the timing of its jurisdictional determinations or even choose to not make them independent of permitting decisions. The Government also noted that it could modify or revoke the memorandum of understanding between the Army Corps and EPA that makes jurisdictional determinations binding on both agencies. If litigation of jurisdictional determinations proves burdensome for the agencies, they may choose to change how the jurisdictional determination process works in some way.

* Photo Cred.

Copyright 2016