On July 30, 2014, the United States Court of Appeals for the Fifth Circuit held that the issuance of a jurisdictional determination (JD) by the U.S. Army Corps of Engineers (Corps) is not a final agency action subject to judicial review under the Administrative Procedure Act (APA). Belle Company L.L.C v. United States Army Corps of Engineers, No. 13-30262, slip op. (5th Cir. July 30, 2014). As a result of this first Court of Appeals decision to address the reviewability of a JD, if a party seeking a Clean Water Act (CWA) section 404 permit disagrees with the Corps, it must complete the permitting process and obtain a permit or permit denial – potentially at great expense – before it can seek judicial review of the underlying JD.
Under section 404, the discharge of dredged or fill material into waters of the United States is illegal unless authorized by a permit issued by the Corps. A public agency or private developer seeking to dredge and fill is obliged to submit an application to the Corps identifying the scope of the project and its impacts on potential waters of the United States, which the Corps will then use in determining whether and the extent to which waters of the United States exist on the property. This process results in a decision issued by the Corps known as a jurisdictional determination.
The plaintiff property owner in the case sought to conduct clearing and excavation activities on a plot of land in Louisiana, with the ultimate intent of constructing a landfill on the property. The Corps issued an initial JD that stated that a portion of the proposed landfill site was considered waters of the United States, specifically, wetlands. The property owner appealed the decision through the Corps' administrative appeals process, which upheld the initial JD. The property owner sought judicial review of the JD under the APA, which provides a means to review final agency action. The trial court held that the JD did not constitute a "final agency action," and, therefore granted the Corps' motion to dismiss the case.
On appeal, the Fifth Circuit affirmed the District Court's decision. The court explained that, to constitute a final agency action, the action must meet two requirements: (1) the action must not be tentative or interlocutory, and (2) the action must be one by which rights or obligations have been determined, or from which legal consequences will flow.
The Court distinguished its decision from Supreme Court precedent in Sackett v. EPA, 132 S. Ct. 1367 (2012), which held that an order issued by the U.S. Environmental Protection Agency ordering compliance with the Clean Water Act for a past violation constitutes a final agency action. Specifically, the Court found that, unlike the compliance order in Sackett, the JD was merely a notification of the property's classification as wetlands, and did not oblige the property to do or refrain from doing anything to the property. That obligation – to refrain from discharging dredged or fill material into waters of the United States – was present under section 404 whether or not the property owner had requested the JD. Further, the court noted that the JD did not impose any penalties on the property owner, and the use of the JD in assessing future penalties was speculative, whereas in Sackett, the compliance order caused penalties to accrue pending restoration of the property. Additionally, the Court noted that the JD did not limit the property owner's ability to obtain a 404 permit from the Corps, but informed the property owner of the necessity of a 404 permit to avoid an enforcement action. Finally, the Court distinguished the two scenarios because the JD does not state that the property owner was in violation of the CWA or render any regulatory opinion, whereas a compliance order resolved that the CWA had been violated and imposed penalties and required the plaintiffs in Sackett to restore their property.