U.S. Supreme Court Upholds Hawkes Ruling that Wetland “Jurisdictional Determinations” Are Subject to Judicial Review

June 13, 2016

On May 31, the U.S. Supreme Court in U.S. Army Corps of Engineers v. Hawkes Co., Inc., 578 U.S. ____ (2016) (Hawkes), unanimously upheld the Eighth Circuit Court of Appeal’s ruling on the ability to appeal an approved “jurisdictional determination” (JD) by the U.S. Army Corps of Engineers (the Corps).  In other words, a decision by the Corps as to whether a particular property contains waters subject to federal regulatory jurisdiction under the Clean Water Act and, if so, where those “jurisdictional waters” are located, is subject to judicial review.

Background

The scope of federal regulatory jurisdiction under the Clean Water Act has been the subject of significant uncertainty, particularly in the case of wetlands.  This uncertainty creates difficulty for landowners who are unable to easily determine whether their properties contain jurisdictional waters.  If a property does contain these waters, then the landowner must go through a lengthy and expensive process to obtain a permit before discharging any dredged material, fill material, or other pollutant into those waters. A landowner that fails to do so faces stiff penalties.  In order to help landowners determine what they must do, the U.S. Army Corps of Engineers (the Corps) allows landowners to obtain a JD that specifies whether their property contains jurisdictional waters.  An “approved” JD definitively states that a property contains or does not contain jurisdictional waters, and is binding on the U.S. Environmental Protection Agency (EPA), the Corps, and the landowner for five years.

In Hawkes, three companies engaged in peat mining sought a discharge permit from the Corps to allow the discharge of material onto wetlands located on their property.  As part of this process, the companies sought a JD from the Corps.  The Corps issued an approved JD that determined the wetlands on the property were subject to federal jurisdiction because the wetlands had a “significant nexus” to a river located 120 miles to the north.  The companies disagreed with this determination, and filed suit asking for judicial review of the JD under the Administrative Procedures Act (APA).  The Eighth Circuit held that the Corps’ approval of a JD constituted a reviewable “final” agency action, and the Corps sought Supreme Court review of that decision.

The Supreme Court’s Ruling

The Supreme Court upheld the Eighth Circuit’s decision that an approved JD is a judicially-reviewable final agency action.  Final agency actions are actions that (1) mark the consummation of the agency’s decision-making process, and (2) determine rights or obligations and/or create legal consequences.  The Court found that the two elements of a final agency action were both present.  First, the parties did not dispute that an approved JD marks the end of the Corps’ decision-making process regarding the presence or absence of jurisdictional waters on a property.  Second, the Court held that the approved JD determined rights and obligations, and created legal consequences because the JD is binding on the EPA, Corps, and landowner for five years.  If an approved JD found no jurisdictional waters present, the landowner would have, in effect, a five-year safe harbor period from enforcement, creating a right in the landowners’ favor.  Conversely, a JD finding jurisdictional waters present denies a landowner that five-year safe harbor, which is also a legal consequence.

The Court also rejected the Corps’ contention that judicial review under the APA was inappropriate because defending an agency enforcement action, or challenging the result of a permitting decision after engaging in the lengthy and costly permit process, represent adequate alternatives to APA review.  The Court found neither of the Corps’ proposed alternatives adequate.  A landowner must not be required to assume the risk of an enforcement proceeding, “while waiting for EPA to ‘drop the hammer.’”  The permit process represents an inadequate alternative because permitting is arduous, expensive, and time-consuming, and does not impact the finality of the approved JD or its suitability for judicial review.

Potential Implications of the Ruling

Several statements in Hawkes, particularly in Justice Kennedy’s concurring opinion, demonstrate the Court’s concern regarding the vagueness and breadth of the Clean Water Act in light of the Act’s harsh civil and criminal sanctions.  In the majority opinion, Chief Justice Roberts noted that “it is often difficult to determine whether a particular piece of property contains waters of the United States,” and that “[i]f respondents discharged fill material without a permit, in the mistaken belief that their property did not contain jurisdictional waters, they would expose themselves to civil penalties of up to $37,500 for each day they violated the Act, to say nothing of potential criminal liability.” Justice Kennedy echoed these remarks, referring to the CWA’s reach as “ominous” and “notoriously unclear,” stating that “the reach and systemic consequences of the Clean Water Act remain a cause of concern” and “the consequences to landowners even for inadvertent violations can be crushing.”  Justice Kennedy also noted that the Clean Water Act “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,” particularly if the Corps were to foreclose the JD procedure.

These statements may be relevant to another jurisdictional case pending before the Court, In re EPA, where the plaintiffs have argued EPA’s regulation defining the “waters of the U.S.” (i.e., jurisdictional waters) impermissibly expands the scope of federal jurisdiction under the Clean Water Act far beyond the initial concept of traditional navigable waters.