In a major new legal development for the Clean Water Act’s Section 404 wetlands permitting program, landowners can now challenge the federal government’s claim that areas targeted for fill are “waters of the United States” without first having to seek a permit to fill those waters, according to the Supreme Court’s decision issued on May 31st in United States Army Corps of Engineers v. Hawkes Co., Inc., No. 15-290 (U.S. May 31, 2016) (Hawkes). Until now, landowners could not immediately contest in court a determination by the Corps of Engineers (“Corps”) or the U.S. Environmental Protection Agency that jurisdictional wetlands, ephemeral drainages, vernal pools or any other types of “waters” existed on property targeted for fill. Instead, landowners had to first complete the Section 404 permitting process – a process that can take months or even years – before challenging the underlying jurisdictional determination, or proceed to fill the site without a permit and risk possible civil penalties of up to $37,500 per day, or even criminal prosecution. Under Hawkes, a landowner can now seek judicial review of the Corps’ formal assertion of jurisdiction without waiting for the conclusion of the Section 404 permitting process.
Unanimous Decision a Sharp Rebuke to the Corps and EPA
The Court’s opinion in Hawkes was unanimous (8-0), although some of the justices differed in their reasoning in support of the outcome. Nonetheless, at a time when the Court has been sharply divided on other issues, the unanimity of result in this case is a sharp rebuke to both the Corps and EPA.
At issue were plans by three mining companies to engage in the mining of peat, which is an organic material that forms in waterlogged ground. The companies applied for a Section 404 permit, and were told by the Corps that it would be very expensive and take years to complete the permitting process. The Corps issued an approved jurisdiction determination (“JD”) stating that the property contained jurisdictional “waters” by virtue of a “significant nexus” to a river, located some 120 miles away. The companies administratively appealed the JD within the Corps to no avail, and then sought judicial review in the federal district court. Following established legal precedent, the district court dismissed the case on the grounds that a JD does not constitute a “final agency action,” which is a prerequisite for judicial review under the federal Administrative Procedures Act. The 8th Circuit Court of Appeals reversed, holding that a JD was “final agency action,” and today the Supreme Court affirmed the 8th Circuit’s ruling.
Important Takeaways and Observations from Hawkes
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The underlying merits of the challenge in Hawkes – whether the peat bog was jurisdictional under the Clean Water Act by virtue of its alleged “significant nexus” to a river 120 miles away – was not reached by the Supreme Court. Instead, under the posture of the case, the “waters” of the U.S.” determination will be returned to the District Court with instructions to hear the challenge to the JD, assuming the companies still wish to pursue their case.
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The right to pre-permit judicial review of a JD applies only to “approved” jurisdictional determinations. These are the formal JD’s verified by the Corps (or the EPA in certain circumstances), which typically are based on extensive fact-finding by qualified experts following written guidance established by the Corps and EPA. These are distinguished from “Preliminary Jurisdictional Determinations” (“PJD’s”), which are also officially recognized as a basis for the issuance of a Section 404 permit, but which are not definitive declarations of jurisdiction by the Corps. Instead, PJD’s essentially operate as determinations by the Corps on the scope of jurisdictional waters that the landowner has agreed not to contest. The intent is to avoid a time-consuming, expensive and exacting jurisdictional determination and to instead move more quickly into the permitting process. It was the approved JD – not the PJD – that was the subject of the Supreme Court’s decision in the Hawkes case.
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In order to challenge an approved JD, it still will be necessary for permit applicants to exhaust their administrative appeals within the Corps pursuant to the applicable Corps’ regulations (33 CFR Part 331) before they can file suit in federal court.
Implications of Hawkes
The Court’s decision in Hawkes is significant. Until now, the Corps and EPA held many of the cards in any proposed project that threatened to disturb or fill alleged “waters of the United States.” The landowner faced a Hobson’s choice of filling the potential “waters” and risking a civil or criminal enforcement action, or delaying project plans for months or even years while navigating the Section 404 permitting process. Now, in situations involving marginal claims of jurisdiction, the landowner has one more card to play – the opportunity to seek court review of an approved JD without waiting for the Section 404 permitting process to be completed.
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