The Supreme Court Holds that Army Corps’ Jurisdictional Determinations are Final Actions Subject to Judicial Review

by Jackson Walker

On May 31, 2016, in United States Army Corps of Engineers v. Hawkes Co., the US Supreme Court unanimously held that a U.S. Army Corps of Engineers’ (Corps) approved jurisdictional determination (JD) is a final agency action judicially reviewable under the Administrative Procedure Act (APA). This holding redefines the rights of landowners in challenging a Corps’ claim of Clean Water Act (CWA) jurisdiction over property, and will have significant implications for the Environmental Protection Agency’s (EPA) and the Corps’ administration of the CWA.

The CWA regulates the discharge of pollutants into “the waters of the United States.” Persons who discharge pollutants into such waters without a permit from the Corps (for discharges of dredged or fill materials) or EPA (for discharges of pollutants) are subject to criminal and civil penalties under the CWA. The permitting process can be costly and time-consuming. The determination that a parcel of land has jurisdictional waters, therefore, is significant in that it establishes whether the activity can continue without the need to obtain a permit, or otherwise, whether a permit is required. The problem is that it can be quite difficult to determine whether “waters of the United States” are present on a parcel of land. As a result of this difficulty, landowners may obtain a “jurisdictional determination” from the Corps. A JD may be either “preliminary,” stating that such waters “may” be present, or “approved,” which definitively states the presence or absence of such waters. According to the Corps’ regulations and guidance, approved JDs are a “final agency action” for purposes of administrative appeals within the agency, and remain valid for five years. The Corps has taken the position, however, that these jurisdictional determinations are not subject to judicial review.

Uncertainties surrounding the jurisdictional reach of CWA as a result of the Supreme Court’s plurality opinion in the Rapanos decision, the Sixth Circuit’s nationwide stay against enforcement of EPA’s “Clean Water Rule,” and other factors, leave recipients of JDs with a real dilemma, even upon receiving a JD. The Hawkes case dealt with the issue of whether an approved JD constitutes a final agency action for purposes of judicial review under the APA.

The Hawkes case involved three companies engaged in mining peat in Minnesota, which sought to expand their operations to an adjacent tract that they owned. In 2010, Hawkes applied to the Corps for a Section 404 permit to obtain authorization to discharge dredged or fill material in wetlands on the site. In 2012, the Corps issued an approved JD stating that he property contained “water of the United States” because its wetlands had a “significant nexus” to the Red River of the North, located some 120 miles away. Hawkes administratively appealed the decision to the Corps’ Mississippi Valley Division Commander, who remanded the case for further fact finding. On remand, the Corps reaffirmed its original conclusion and issued a revised JD affirming CWA jurisdiction over the property. Hawkes sought judicial review of the revised JD under the APA. The district court held that the revised JD was not a “final agency action for which there is no other adequate remedy in a court,” as required by the APA prior to judicial review. The Eighth Circuit reversed, concluding that the JD was a final agency action and subject to judicial review.1

The Supreme Court started its analysis by reviewing the conditions that must be satisfied for an agency action to be “final” under the APA. Relying on its holding in Bennett v. Spear2 the Supreme Court stated that two conditions must generally be satisfied. First, “the action must mark the consummation of the agency’s decision making process,” and second, “the action must be one by which rights or obligations have been determined, or from which legal consequences will follow.”3 The Corps argued that the revised JD did not meet the second prong of the Bennett test and, thus, was not a “final agency action.” The Supreme Court disagreed and concluded that both Bennett prongs were satisfied. It stated that an approved JD satisfied the first Bennett prong as it marks the consummation of the Corps’ decision making on the question of whether a particular property does or does not contain jurisdictional waters and is issued after extensive fact finding. The Court also noted that the Corps itself describes approved JDs as final agency actions under its regulations. The Court further stated that the definitive nature of an approved JD also gives rise to “direct and appreciable legal consequences” thus satisfying the second Bennett prong. In the case of a negative JD (an approved JD stating that property does not contain jurisdictional waters), the Court concluded that it creates a five year safe harbor from civil enforcement proceedings brought by the government and limits the potential liability a property owner faces for violating the CWA. Likewise, in the case of an “affirmative” JD, such as the one issued in Hawkes, there are legal consequences according to the Court: it deprives property owners of the five year safe harbor that negative JDs afford.

The Corps next argued that even if the revised JD was a “final agency action” there are adequate alternatives for challenging it in court, and thus judicial review under the APA was not available. The Corps contended that two alternatives were available: (1) respondents may proceed without a permit and argue in a government enforcement action that a permit was not required, or (2) they may complete the permit process and then seek judicial review. The Supreme Court rejected these arguments and concluded that neither alternative is adequate. The Supreme Court stated that parties do not need to wait for enforcement proceedings before challenging final agency action where such proceedings carry the risk of “serious criminal and civil penalties.” The Supreme Court also rejected the notion that the permitting process is an alternative by finding that the long and expensive permitting process is irrelevant to the finality of the approved JD and its suitability for judicial review.

This holding will have broad implications for jurisdictional determinations under the CWA, especially in light of the agency’s efforts to expand the reach of “waters of the United States.” While the decision may encourage negotiated resolution of jurisdictional determinations, it may perversely lessen EPA’s and the Corps’ willingness to resolve jurisdictional issues prior to the formal permitting process.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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