Featured Expert Column – Environmental Law and Policy
By Samuel B. Boxerman, Sidley Austin LLP with Ben Tannen, Sidley Austin LLP
On May 31, 2016, the US Supreme Court held that a Clean Water Act (CWA) “jurisdictional determination” (JD) was final agency action subject to review under the Administrative Procedure Act (APA) U.S. Army Corps of Engineers v. Hawkes, Co. Hawkes empowers landowners to challenge decisions that the CWA applies to a specific parcel of property immediately after that determination, rather than after an enforcement action or completion of the lengthy and burdensome permitting process. The judgment was unanimous, with seven of eight justices signing on to Chief Justice Roberts’ opinion for the Court; Justice Ginsburg concurred in the judgment.
The underlying dispute involved the CWA’s most controversial provision: Section 404, which prohibits the discharge of pollutants from a point source into “waters of the United States” without a permit.1 Section 404 directs the Army Corps to issue permits authorizing the discharge of dredged or fill material into waters of the United States, including wetlands.
Prior to issuing a permit, the Army Corp must evaluate whether a permit applicant’s property contain waters of the US. The Army Corp issues two different types of jurisdictional determinations to landowners. A preliminary JD “advises a property owner ‘that there may be waters of the United States on a parcel.’” An approved JD definitively states the Army Corps’ opinion on whether a parcel contains waters of the United States. An approved JD can be appealed administratively within the Corps, and under a 1989 memorandum of agreement (MOA) between the Army Corps and U.S. EPA, an approved JD is binding for five years on both agencies in permitting and enforcement decisions.
The Respondents in Hawkes were three companies that mined peat in wetlands in Minnesota. They applied to the Army Corps for a Section 404 permit to discharge dredged or fill material into wetlands as part of their business operations. Early in the permitting process, the Army Corps issued an approved JD stating that the property contained waters of the US. After an administrative appeal was unsuccessful, Respondents sought judicial review of the approved JD. The district court dismissed the case for lack of subject matter jurisdiction, finding that the JD was not final agency action reviewable in court. The Eighth Circuit reversed, and the Supreme Court granted certiorari.
Based upon familiar principles regarding final agency action, the Court held the action was final and that adequate alternatives to APA review were unavailable. To be final, agency action must be (1) “‘the consummation of the agency’s decision-making process’” and (2) an action “‘by which rights or obligations have been determined, or from which legal consequences will flow.’”
The Army Corps had conceded that an approved JD was the end of the agency’s decision-making. The Court then held that “[t]he definitive nature of approved JDs” means they have “‘direct and appreciable legal consequences.’” Because Army Corps regulations and the 1989 MOA state that approved JDs are valid for five years, they create a five-year safe harbor from CWA enforcement for a property owner that receives an approved JD finding his or her land does not contain any waters of the United States.2 Thus, the Court reasoned, a JD determining that a parcel does contain waters of the United States also creates legal consequences—the denial of that safe harbor.
The Court next dispensed with the Army Corps’ contention that a property owner who receives an unfavorable JD has adequate alternatives to APA review. The government had asserted that recipients have two available alternatives—(1) discharging without a permit, which risks a CWA enforcement action during which they could then argue that no permit was required, or (2) applying for a permit and then seeking judicial review of any final permit. The Court held that both alternatives were inadequate. An enforcement proceeding would expose a JD recipient to civil penalties and even potential criminal liability, and waiting for a permit would entail undertaking what the Court described as “an arduous, expensive, and long” permitting process. Thus, the Court held that approved JDs were reviewable final agency action.
The legal analysis in Hawkes was a relatively straightforward application of established principles surrounding what constitutes final action. As a practical matter, however, the ruling is significant, in that property owners no longer are forced to choose between proceeding to develop their property at their peril or delaying a project while awaiting the “arduous” permit process to run its course. This certainly should shift the balance of power between the government and property owners, by giving property owners immediate access to judicial review. It likewise could result in the government interpreting its jurisdiction more judiciously when it knows its decisions are more likely to be reviewed in court.
The decision offers one additional nugget that could prove to be very significant. A brief concurrence by Justice Kennedy, joined by Justices Thomas and Alito, indicates that at least three justices may be prepared to question whether the current jurisdictional reach of the CWA itself is too broad. According to Justice Kennedy, “the reach and systemic consequences of the Clean Water Act remain a cause for concern” and suggested that the CWA itself might not “comport[ ] with due process.” EPA and the Army Corps rely extensively on Justice Kennedy’s earlier concurrence in a CWA case, Rapanos v. United States, in attempting to justify the agencies’ 2015 “Clean Waters” proposed regulation. It remains to be seen whether the concurrence in Hawkes means the final rule will be in hot water when litigation over its validity reaches the Supreme Court.
Notes
- How the Corps and the U.S. Environmental Protection Agency (EPA) define and interpret what are “waters of the United States” is controversial. In 2015, the Corps and EPA issued their “Clean Water Rule” which purports to define the phrase. See Clean Water Rule: Definition of “Waters of the United States,” 80 Fed. Reg. 37054 (June 29, 2015). This rule has been challenged in 11 federal district courts and three federal circuit courts and has been stayed nationwide by the Sixth Circuit. Ohio v. U.S. Army Corps of Eng’rs, No. 15-3799 (6th Cir. Oct. 9, 2015).
- Some commentators have suggested that if the agencies were to revoke their 27-year old MOA, it could undermine the Court’s decision.