Earlier this summer, in United States Army Corps of Engineers v. Hawkes Co., Inc., 136 S.Ct. 1807 (2016), the United States Supreme Court unanimously held that an approved jurisdictional determination made by the United States Army Corps of Engineers under the Clean Water Act is a “final agency action” subject to immediate judicial review under the Administrative Procedure Act. The case gives property owners a more timely chance to challenge federal wetland protection measures on their land. For more details and insights on this important decision, Kelly Fasbinder has authored the following guest post. Kelly recently graduated from Wayne Law and her note “International Women’s Human Rights: United States Stalling Progress From CEDAW Into CIL,” is forthcoming in the Wayne Law Review. She is currently serving as a judicial clerk with the Michigan Court of Appeals. Note that the views and opinions expressed herein are those of the author (Kelly) and do not reflect the opinions of the Michigan Court of Appeals.
The federal Clean Water Act prohibits the discharge of pollutants into the “waters of the United States” without a permit. The United States Army Corps of Engineers issues “jurisdictional determinations” (JDs) to assist landowners in determining whether their property contains “waters of the United States,” thereby necessitating a permit. “Preliminary” JDs advise whether property may contain such waters, while “approved” JDs definitively indicate whether the property contains such waters. Prior to the Hawkes decision, if the Corps issued an approved JD determining that a property contained waters of the United States, the property owner could not seek judicial review of the determination. Instead, the property owner’s only remedy was to undergo the long and expensive permit process or await enforcement in order to seek judicial review of the JD.
However, in Hawkes, plaintiff filed a complaint against the Corps challenging an approved JD, which stated that wetlands located on plaintiff’s property constituted “waters of the United States” within the meaning of the CWA. Plaintiff’s complaint was dismissed in District Court, but the Eighth Circuit Court of Appeals reversed the dismissal and ruled that an approved JD is a final agency action subject to immediate judicial review. See Hawkes Co., Inc v U.S. Army Corps of Engineers, 963 F. Supp.2d 868, 871 (2013), rev’d and remanded by Hawkes Co., Inc v U.S. Army Corps of Engineers, 782 F.3d 994 (8th Cir. 2015). The Corps sought certiorari, and on review, argued that the “JD is not ‘final agency action’ and that, even if it were, there are adequate alternatives for challenging it in court.”
In reaching its decision, the Supreme Court applied the finality test from Bennett v. Spear, 520 U.S. 154, 117 (1997), which established two conditions that generally must be satisfied for an agency action to be “final” under the Administrative Procedure Act: (1) the action must mark “the consummation of the agency’s decision-making process;” and (2) it must be an action “by which rights or obligations have been determined, or from which legal consequences will flow.” The Corps did not dispute that an approved JD satisfies the first Bennett condition, so the Court focused on the second condition of the Bennett test – determining whether an approved JD is an action “by which rights or obligations have been determined, or from which legal consequences will flow.”
The Court held that “an approved JD stating that a party’s property does not contain jurisdictional waters” has two effects that qualify as a “legal consequence” satisfying the second Bennett prong: (1) it binds the Corps and EPA, the “two agencies authorized to bring civil enforcement proceedings under the Clean Water Act . . . creating a five-year safe harbor from such proceedings for a property owner;” and (2) it “limits the potential liability a landowner faces for discharging pollutants without a permit.” The Court also found that approved JDs stating that a party’s property does contain jurisdictional waters, “have legal consequences as well: They represent the denial of the safe harbor that negative JDs afford.” Thus, the Court found that “while no administrative or criminal proceeding can be brought for failure to conform to the approved JD itself,” “[b]ecause ‘legal consequences . . . flow’ from approved JDs, they constitute final agency action.”
Yet, “[e]ven if final, an agency action is reviewable under the Administrative Procedure Act only if there are no adequate alternatives to APA review in court.” The Corps asserted that land owners “have two such alternatives” after receiving an approved JD; “either discharge fill material without a permit, risking an EPA enforcement action during which they can argue that no permit was required, or apply for a permit and seek judicial review if dissatisfied with the results.” However, the Court found that “[n]either alternative is adequate.” Thus, the Court affirmed the decision of the Court of Appeals and now, for the first time, property owners may immediately challenge a Corps’ decision to regulate their property under the CWA. Further, the EPA and Corps already seem to be anticipating the new immediate jurisdictional challenges in a guidance document cautioning employees that the Hawkes decision may result in judicial challenges to JDs earlier in the process, and thus encouraging employees “to continue providing timely, consistent, and accurate determinations regarding the scope of waters covered under the CWA.”
However, the Hawkes decision could have a limited long term effect. In deciding that the second condition of the Bennett test was met - because approved JDs are an action “by which rights or obligations have been determined, or from which legal consequences will flow” – several members of the Court relied heavily on a Memorandum of Agreement (MOA) between the Corps and the EPA that indicated it was binding on both agencies and which created the five year safe harbor after a negative JD (see separate concurring opinions by Justices Kennedy and Kagan). At oral argument for the case, the government indicated how it could “fix” a loss based on the MOA, stating that if the Court concluded the MOA applied to the case at issue and created legal consequences that flow from the JD, the government could “simply issue a new MOA clarifying their view of the the JD’s effect.” It is unclear whether the Hawkes decision recognized any legal consequences - separate from the MOA - that flow from a JD, and thus, revision of the MOA by the government could eliminate the legal consequences the Court concluded flow from an approved JD. While Justice Kennedy’s concurring opinion criticized the government’s claim that it could remove the legal consequences of a JD through revision of the MOA, the Court did not foreclose such a possibility. Thus, if the Court’s conclusion rested exclusively on the MOA, property owners’ ability to immediately challenge a Corps’ decision to regulate their property under the CWA might be short-lived.