wet

By Sam O. Lumpkin

On May 31, 2016, the US Supreme Court ruled in United States Army Corps of Engineers v. Hawkes Co., Inc. that a jurisdictional determination issued by the Corps of Engineers under the Clean Water Act constitutes a final agency action that is judicially reviewable under the Administrative Procedure Act.  Justice Roberts wrote the decision of the Court, to which all other justices joined or concurred in the result.

The Clean Water Act prohibits the unpermitted discharge of any pollutant into “the waters of the United States,” including wetlands, without a permit.  However, only wetlands with a “significant nexus” to other waters of the United States are within Corps and EPA Clean Water Act jurisdiction.   Rapanos v. United States, 547 U.S. 715 (2006).  Dredging and filling activities are considered to be the discharge of a pollutant.   As a result, any dredging or filling activities involving a waters of the US within Corps jurisdiction must be approved beforehand by the US Army Corps of Engineers, which is responsible for issuing permits for discharges that would otherwise be forbidden by the Clean Water Act. The Clean Water Act allows imposition of potentially massive criminal or civil penalties for discharging any pollutant without a permit.

Determination of what constitutes a “wetland” or “other waters” of the US often involves expert determinations.  Further, the process for obtaining a Corps permit can itself be time-consuming and expensive – the Court noted that the average applicant for the type of permit at issue in Hawkes spends “788 days and $271,596 in completing the process,” and “[e]ven more readily available ‘general’ permits took applicants, on average, 313 days and $28,915 to complete.” To aid applicants, the Corps issues “jurisdictional determinations” (“JDs”) on a case-by-case basis. JDs are either “preliminary” – advising that there may be waters of the United States on a piece of land – or “approved,” which definitively states the presence or absence and extent of such waters.  The JDs provide some certainty for a landowner or developer as to whether they are required to endure the permitting process. The approved JDs are administratively appealable to the Corps; however, until the Hawkes decision, it was unclear as to whether judicial review of the Corp decision was available.

In Hawkes, the applicant sought a jurisdictional determination and was granted an approved JD stating that the property contained “water of the United States,”with a delineation of where those waters were located. Central to the case was whether the wetlands had a close enough nexus to a major river 120 miles away such that they were within the Corps’ jurisdiction. The applicants administratively appealed the JD under 33 C.F.R. Part 331, and the Corps reaffirmed its decision with revisions to the extent of the wetlands. Not satisfied, the applicants sought review of the JD in a federal district court under the Administrative Procedure Act (APA), which allows district courts to review “final agency actions.” 5 U.S.C.A. § 704. The Corps argued that judicial review was available only at the time of the final permitting decision or on an enforcement action commenced for dredge or fill activity without a permit. The district court agreed with the Corps and dismissed for lack of jurisdiction, holding that a JD is not a “final agency action.” 963 F.Supp.2d 868 (Minn. 2013). The applicants then appealed to the US Court of Appeals for the Eighth Circuit, which reversed. 782 F.3d 994 (2015).

The Supreme Court agreed with the Eight Circuit, holding not only that an “approved” JD is a final agency action, but also that there are no adequate alternatives to the APA for challenging a Corps JD in court. On the issue of finality, the Court noted that  JDs give rise to “direct and appreciable legal consequences,” and they are also binding on the Corps and the EPA for five years following the determination.[1] Unlike other possible agency actions which are merely advisory, such as informal advice from an agency or a preliminary JD, an approved JD follows extensive fact-finding, marks “the consummation of the agency’s decision-making process” and constitutes a final determination of rights and obligations “from which legal consequences will flow.” The Court further held that there are no adequate alternatives to an APA challenge to the Corps’ JD, noting that the only alternatives available were to forego a permit altogether or proceed with the permitting process. Without a permit, the applicant could either proceed with its proposed activity and be exposed to the civil and criminal penalties of the Clean Water Act, or abandon its proposed activity altogether. But the permitting process also poses a highly expensive, time-consuming, and uncertain proposition, for which judicial review would only be available when complete. As a result, the Court held that an approved JD is reviewable in federal district court under the APA.

The Hawkes ruling is a narrow one, and applies only to approved JDs. However, because JDs are literally determinations of the extent of the Corps’ jurisdiction, the scope of the Corps’ authority will likely be subjected to many more challenges than in the past, when such objections would have to wait until the permitting process was complete. As a result, in the future the Corps’ jurisdiction may face additional restraints imposed by federal courts.

Because an adverse ruling on an approved JD is appealable beyond the Corps after Hawkes, a thorough record in the initial JD proceeding is more important than ever. Ordinarily, a consultant will prepare a draft JD for submission to the Corps, which may or may not visit the site in question; the Corps then issues its decision on the record. This process, however, does not offer the applicant any further opportunity to develop the record. Any administrative appeal and subsequent judicial review is limited to the administrative record before the Corps, unless good cause is demonstrated as to why additional information should be admitted. As a result, applicants should ensure that their consultant’s initial submittal is thoroughly documented and, possibly, subjected to legal review prior to submission. Because federal district courts do not possess the same expertise as the Corps, a well-documented and clearly explained initial proposal will aid a district court with the information it needs to review the Corps’ decisions.

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[1]  There were three concurring opinions taking differing positions on whether a Memorandum of Agreement between the Corps and EPA makes the JDs binding on EPA. This aspect could bear further review.