US Supreme Court Allows Challenges to Army Corps of Engineers’ Jurisdiction Determinations
The Supreme Court, in a unanimous opinion authored by Chief Justice Roberts, has ruled that an “approved” jurisdictional determination from the Army Corps of Engineers (USACE) 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. At issue in United States Army Corps of Engineers v. Hawkes Co. was whether three peat mining companies in Minnesota could challenge a jurisdictional determination by USACE 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 USACE 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 Administrative Procedure Act (APA) and, therefore, was not ripe for review. The Eighth Circuit Court of Appeals reversed and USACE, thereafter, petitioned the Supreme Court for review.
The 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 USACE regulations and guidance 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 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 APA, it is necessary that there are no “adequate alternatives” to judicial review. Here, 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 considered the matter in a pragmatic way. At oral argument, and as reflected in the Court’s ruling, justices on both sides of the ideological spectrum challenged the USACE 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. The Court’s ruling in Hawkes, in conjunction with recent rulemaking jointly released by USACE and the Environmental Protection Agency 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 EPA’s and USACE’s authority under the Clean Water Act will continue to be highly scrutinized. Of course, in the near term, there remains little guidance for property owners and companies 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. It is likely that regardless of what the Sixth Circuit decides on the joint USACE/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.