Supreme Court gives landowners and developers the right to challenge Army Corps’ wetlands jurisdiction determinations
It is an all too common scenario. A developer or landowner will need to fill a wetland in order to develop a property. There are two basic choices–either apply for a permit under Section 404 of the Clean Water Act (Act), or fill the wetland and risk civil or criminal enforcement. A middling option has been to seek from the U.S. Army Corps of Engineers (Corps) a “jurisdictional determination,” by which the Corps will provide its view as to whether the wetland is a “water of the United States” and, therefore, subject to permitting under the Act. However, if the project proponent disagreed with the Corps’ determination that filling the wetland requires a permit, that determination could not be immediately challenged. As a result, the landowner or developer is left to either spend resources to apply for a permit or risk federal enforcement.
That is no longer the case with the Supreme Court’s May 31 ruling in United States Army Corps of Engineers v. Hawkes Co. In a unanimous opinion authored by Chief Justice John Roberts, and contrary to the Corps’ position, the Court ruled in Hawkes that an “approved” jurisdictional determination from the Corps with regard to whether certain wetlands are “waters of the United States,” and therefore within the purview of the Clean Water Act, constitutes a “final agency action” that may be subject to judicial review.
The Clean Water Act itself is quite vague with regard to the jurisdictional bounds of the reach of the Act. That picture is murkier than ever after the U.S. Supreme Court’s trilogy of decisions with regard to Clean Water Act jurisdiction—United States v. Riverside Bayview Homes, Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers (SWANCC), and Rapanos v. United States—and the recent Corps and U.S. Environmental Protection Agency (EPA) joint rule refining the definition of “waters of the United States.”
In response to that problem, the Corps has established a mechanism by which a prospective permit applicant can get direction from the Corps as to whether a wetland is jurisdictional. Specifically, the Corps can issue an advisory “preliminary” jurisdictional determination or a more formal “approved” jurisdictional determination. The Corps’ regulations state that an approved jurisdictional determination is a final agency action. Consistent with that view, a memorandum of understanding (MOU) between the Corps and EPA provides that the approved jurisdictional determination is binding on both agencies for five years. Notwithstanding the regulatory provisions and the MOU, the Corps has historically taken the position that an approved jurisdictional determination is nonetheless not a reviewable final agency action under the Administrative Procedures Act (APA).
At issue in Hawkes was whether three peat mining companies in Minnesota could challenge an approved jurisdictional determination by the Corps that specified that the wetlands in question were “waters of the United States” because they had a “significant nexus” to navigable water 120 miles away from the wetlands. As such, the companies would have had to spend over $100,000 applying for an individual wetlands permit under Section 404 of the Clean Water Act. The mining companies disagreed with the Corps’ determination and sought judicial review in federal district court. The district court held that the jurisdictional determination was not a final agency action under the APA and, therefore, was not ripe for review. The Eighth Circuit reversed, and the Corps thereafter petitioned the Supreme Court for review.
The Supreme Court, citing Bennett v. Spear, 520 U.S. 154 (1997), considered the matter under Bennett’s two-prong test to assess whether an agency action was reviewable: (1) the action “must mark the consummation of the agency’s decision-making process” and (2) the action “must be one by which rights or obligations have been determined, or from which legal consequences will flow.” As Corps regulations and the MOU provide that an approved jurisdictional determination constitutes final agency action, and remains valid for five years, the court had little trouble determining that the jurisdictional determination was a definitive ruling, thereby satisfying the first prong of the Bennett test.
As for whether the determination gave rise to “direct and appreciable legal consequences,” the court noted that in accordance with the “long-standing” MOU between the Corps and EPA, a negative jurisdictional determination created a five-year “safe harbor” for the property owner and, conversely, an affirmative determination, effectively denying that safe harbor, similarly results in legal consequences. Lastly, for an action to be reviewable under the APA, it is necessary that there are no “adequate alternatives” to judicial review. In Hawkes, the court held that there are no adequate alternatives—a property owner need not risk an enforcement action before challenging the determination, nor should the property owner simply accede to the determination, apply for a permit (at a substantial cost in view of the voluminous information and numerous analyses that need to be submitted), and only then be entitled to seek review.
Ultimately, the court’s consideration of the matter was one of pragmatism. At oral argument, and as reflected in the court’s ruling, justices on both sides of the ideological spectrum challenged the Corps’ position that a property owner could simply disregard an affirmative jurisdictional determination, forge ahead with a project, and thereafter risk serious Clean Water Act civil and criminal penalties for discharging to “waters of the United States” without a permit. That reasoning was not dissimilar to the court’s 2012 ruling in Sackett v. EPA, also unanimous, holding that an EPA compliance order constituted a reviewable final agency action. As such, the decision in Hawkes did not come as any great surprise.
However, it is important to note that “preliminary” jurisdictional determinations were not subject to the court’s review in Hawkes. Presumably, such preliminary determinations will remain immune from judicial (or even administrative) review. As a result, one consequence of the court’s decision may be that the Corps will be reluctant to issue approved jurisdictional determinations, and limit any direction to unreviewable advisory preliminary determinations. Although that will provide the project proponent with some sense of how the Corps may view the jurisdictional nature of a particular wetland, and provide some comfort, in the end it does not provide any formal assurances.
Furthermore, at oral argument, the government’s lawyer suggested that if the court were to rule that approved jurisdictional determinations are reviewable, then the Corps may simply choose to terminate the MOU with the EPA. In response to that suggestion, the chief justice, acknowledging that absent jurisdictional determinations the “only available avenue for obtaining review would be in an enforcement action or at the end of the permitting processing,” noted, “True enough. But such a ‘count your blessings’ argument is not an adequate rejoinder to the assertion of a right to judicial review under the APA.”
Regardless of what actions the Corps does or does not take with regard to revising its jurisdictional determination procedures, the one thing that is certain is there remains little guidance for property owners and developers to rely on when assessing whether a Clean Water Act permit is necessary with regard to discharges to waters that are not clearly within or outside of Clean Water Act jurisdiction.
Ultimately, the court’s ruling in Hawkes, in conjunction with the rulemaking jointly released on May 27, 2015, by the Corps and the EPA refining the definition of “waters of the United States” (which has been stayed on a nationwide basis pending appeal in the Sixth Circuit and which has generated significant controversy over the reach of the Clean Water Act) signals that the EPA’s and Corps’ authority under the Clean Water Act will continue to be highly scrutinized.
Indeed, Justice Anthony Kennedy’s concurrence in Hawkes, joined by Justices Clarence Thomas and Samuel Alito, noted that the Clean Water Act, “especially without the [jurisdictional determination] procedure were the government permitted to foreclose it, continues to raise troubling questions regarding the government’s power to cast doubt on the full use and enjoyment of private property throughout the nation.” That concern, in concert with the concerns raised by the more conservative justices in both SWANCC and Rapanos with regard to the overall constitutionality of the CWA, ensures no safe haven for the act.
It is likely that regardless of what the Sixth Circuit decides on the joint Corps/EPA “waters of the United States” rule, the Supreme Court will grant review of that decision, with Hawkes and the court’s consideration of the practical considerations of the scope of the Clean Water Act fresh in its mind. By the time that occurs, there presumably will be a ninth justice sitting on the court. The identity of that justice may very well determine the scope of the Clean Water Act.
Joshua Bloom is a Principal at Meyers Nave in the firm’s Land Use and Environmental Law Practice Groups. He can be reached at email@example.com or 510.808.2000.