No Need to Wait: Supreme Court Permits Judicial Review of Wetlands Jurisdictional Determinations

As we reported, four years ago, in Sackett v. EPA, the U.S. Supreme Court held that a recipient of a compliance order from the U.S. Environmental Protection Agency (EPA) for allegedly illegal filling of wetlands could directly challenge the order in court, and did not have to wait until EPA filed a lawsuit to enforce the order before obtaining judicial review of its validity. In a recent opinion the Court extended the rationale of Sackett and again lowered the threshold of judicial reviewability, holding that a landowner can seek judicial review of a mere determination by the U.S. Army Corps of Engineers (Corps) that its property contains wetlands whose filling would require a permit under the Clean Water Act.

The recent case, United States Army Corps of Engineers v. Hawkes Co., involved three companies that sought to conduct peat mining operations on a 530-acre tract in Minnesota. Because there were wetlands on the tract, they applied to the Corps for a permit under Section 404 of the Clean Water Act. The statute requires such a permit for any “discharge of any pollutant” into wetlands that constitute “waters of the United States.” The permit process can be expensive and time-consuming, and discharging fill material into regulated wetlands without a permit is punishable by substantial civil and criminal penalties.

The Corps’ regulations provide for the issuance of “jurisdictional determinations” (JDs) that specify whether a given property contains “waters of the United States.” A preliminary JD advises the landowners that there “may be” waters of the United States on the property, but an approved JD definitively states the “presence or absence” of such features and binds both the Corps and (under a memorandum of agreement between the agencies) EPA for five years.

In Hawkes, the Corps issued an approved JD stating that the companies’ property contained waters of the United States because the wetlands there had a “significant nexus” to the Red River of the North. The companies sought judicial review of the JD under the Administrative Procedure Act (APA), but the district court dismissed the action, finding that the JD was not reviewable under the APA because it was not, in the language of the statute, “final agency action for which there is no other adequate remedy in a court.” The Sixth Circuit reversed, but the Supreme Court granted, the government’s petition for certiorari.

The question whether the JD constituted “final agency action” turned on whether it satisfied a test that the Court had established in an earlier APA case: whether it was an “action . . . by which rights or obligations have been determined, or from which legal consequences will flow.” The Court wasted no time in concluding that it was, as it denied the companies the “safe harbor” that a negative JD would have afforded them for five years. The JD also met the second requirement for APA reviewability – the absence of any adequate alternatives to APA review in court – because both alternatives suggested by the Corps were inadequate. The companies could discharge fill material without a permit and challenge the Corps’ determination in an eventual enforcement proceeding, but, that would expose them to civil penalties of up to $37,500 per day of violation as well as criminal liability. The second alternative – applying for the permit and then seeking judicial review of an unfavorable decision – would necessarily put the companies through a permitting process that can be “arduous, expensive, and long,” and would do nothing to alter the suitability of the JD for judicial review.

Hawkes marks the second time in four years that the Court has lent a helping hand to landowners facing adverse agency wetlands decisions. What Sackett did for landowners swept up in the enforcement process, Hawkes has done for landowners embroiled in the permitting process – provide them with an avenue for judicial review of agency decisions much earlier, thereby reducing the time (and resources) that they must spend before seeking the assistance of the courts in protecting important property rights.