Can you appeal a U.S. Army Corps of Engineers’ jurisdictional determination (“JD”) that a water feature constitutes waters of the United States? The Administrative Procedures Act allows such an appeal if it is determined that no further action is available in court. However, the Corps has historically taken the position that its jurisdictional determination is not appealable and it is only when a permit is denied that one can challenge the jurisdictional determination. On December 11, 2015, the Supreme Court granted certiorari in United States Army Corps of Engineers v. Hawkes Co., Inc. Docket No. 15-290. The Petition was filed by the government after the United States Court of Appeals for the 8th Circuit determined that a JD was a final agency action and appealable. Because other circuit courts disagreed the Supreme Court granted certiorari to resolve the split among the circuits.
Hawkes Co. wanted to expand their peat mining operations to include property that the Corps believed was a wetland and waters of the United States. To avoid legal problems they sought a JD from the Corps. After obtaining an option to purchase property subject to regulatory approval, representatives from Hawkes met with the Corps and the Minnesota Department of Natural Resources (MDNR) to discuss their plans. Hawkes applied to the Corps for a Clean Water Act Section 404 permit. The Corps representatives urged Hawkes to abandon the plan, emphasizing the delays, cost, and uncertain outcome of the permitting process. One of the developers responded that he had an option to purchase and intended to proceed. The Corps then sent a letter advising Hawkes that it had made a “preliminary determination” that the wetland was a regulated water of the United States and, “at a minimum,” an environmental assessment would be required. The applicants met with Corps representatives and were told a permit would take years and the process would be very costly. During a site visit subsequent to that meeting another Corps representative told a Hawkes employee that “he should start looking for another job.” The Corps sent Hawkes a letter advising that nine additional information items costing more than $100,000 would be needed, including hydrological and functional resource assessments and an evaluation of upstream potential impacts. Later the Corps representatives met with the land owner and urged that he sell the property to a “wetlands bank,” advising that an environmental impact statement would likely be required, delaying the issuance of any permit for several years.
In February 2012 the Corps issued an Approved JD concluding the property was a water of the United States because of its “significant nexus” to the Red River. The Plaintiffs filed an Administrative Appeal and the Corps’ Administrative Judge reversed the Corps and remanded the case to the Corps District. However, the Corps issued a revised JD reinstating the original JD with a few more facts and stated it was their “final Corps permit decision” with no additional administrative appeal. The Plaintiffs then filed suit in federal district court in Minnesota to challenge the final agency action. However, the Corps moved to dismiss saying it was not a final agency action that was appealable, and the District Court agreed.
Corps regulations provide that an Approved JD “constitute[s] a Corps final agency action.” 33 C.F.R. § 320.1(a)(6). The Corps’ Regulatory Guidance Letter No. 08-02, at 2, 5, describes an Approved JD as a “definitive, official determination that there are, or that there are not, jurisdictional ‘waters of the United States’ on a site,” and stated that an Approved JD “can be relied upon by a landowner, permit applicant, or other affected party . . . for five years.”
In the seminal case Bennett v. Spear, 520 U.S. 154, 177-78, 117 S. Ct. 1154, 137 L. Ed. 2d 281 (1997) the Supreme Court established the grounds for judicial review of agency action:
As a general matter, two conditions must be satisfied for agency action to be “final”: First, the action must mark the consummation of the agency’s decisionmaking process — it must not be of a merely tentative or interlocutory nature. And second, the action must be one by which rights or obligations have been determined, or from which legal consequences will flow.
The Corps argued that the revised JD may have met the first prong of Bennett v. Spear, that it was the consummation of the agency’s decision making process, but not the second. That is, it was not a decision by which rights or obligations have been determined or from which legal consequences flow. For example there was no permit denied nor was there any enforcement order based on the JD.
The District Court agreed with the Corps. The Eight Circuit Court of Appeals, however, referring to Sackett v. EPA, (132 U.S. 1367, 73 ERC 2121, 2012 BL 67234 (U.S. 2012), disagreed. The Court stated that the Revised JD would require appellants either to incur substantial compliance costs (the permitting process), forego what they assert is lawful use of their property, or risk substantial enforcement penalties.
While it was widely speculated that the Supreme Court would grant certiorari in this case, both sides are strident that their respective positions are sound. Argument is expected in March or April of 2016.