Yesterday, in a unanimous ruling, the U.S. Supreme Court held in
USACE v. Hawkes Co. that approved jurisdictional
determinations ("JD") are final actions which can be
reviewed by the courts. Under the Clean Water Act a permit is
required to discharge pollutants into waters of the United States.
Due to the complexity of the statute and implementing regulations
and guidance documents it is often very difficult to determine if a
particular piece of property contains wasters of the United States.
Prior to Hawkes, if a landowner disagreed with a JD they
faced potentially significant enforcement action, both civil and
criminal, for discharging without a permit or they were required to
spend hundreds of thousands of dollars and years to obtain a
wetland permit from the Army Corps of Engineers before they could
appeal the Corp's determination that the property was a
"water of the United States."
Hawkes involved three companies in the business of mining
peat in Minnesota. In 2010 the Hawkes companies applied for a
Section 404 permit to conduct mining operations on a 530-acre tract
near their existing operations. The U.S. Army Corps of Engineers
("Corps") advised that the permitting process would be
very expensive and take years to complete. The Corps also advised
that if Hawkes wanted to proceed with their application they needed
to submit various assessments which would cost an estimated
$100,000. In 2012 the Corps issued an approved JD stating the
property contained "water of the United States" due to a
"significant nexus" to the Red River located 120 miles
away. Hawkes sought judicial review but the District Court
dismissed holding the JD was not "final agency action."
In 2015, the Eighth Circuit Court of Appeals reversed. In July 2014
the Fifth Circuit Court of Appeals decided that the Corps JDs are
not final agency actions subject to judicial review since they did
not determine legal rights or consequences.
The Corps' agued to the Supreme Court that the JD was not
"final agency action" and that even if it were there are
adequate alternatives for challenging in court. The Corps contended
that if Hawkes disagrees with the Corps' JD, Hawkes can either
discharge fill material without a permit, risking EPA enforcement
action and can argue that no permit was required during the
enforcement process or apply for a permit and then seek judicial
review if dissatisfied with the permit. The Supreme Court ruled
that neither alternative is adequate. Regarding the enforcement
risks, the Court ruled that respondents need not assume such risks
while waiting for EPA to "drop the hammer" in order to
have their day in count. The Court also rejected the apply for a
permit and then appeal by stating "the permitting process adds
nothing the JD."
To constitute "final agency Action, two conditions must be
satisfied: First the action must mark the consummation of the
agency's decision making process. The Corps' agreed this
condition was satisfied since an approved JD will remain valid for
a period of five years. The second requirement is the action must
be one by which rights or obligations have been determined, or from
which legal consequences will follow. The Court held the second
condition is also met since the approved JD gives rise to
"direct and appreciable legal consequences." The Court
noted under an agreement with the EPA, that a "negative"
JD stating that a property does not contain jurisdictional waters
will generally bind the Corps and the EPA for five years. The Court
stated that it follows that affirmative JDs have legal consequences
as well.
This is a very important decision for project developers and
landowners. Many projects have not gone forward due to the time and
costs associated with obtaining a Section 404 permit from the
Corps. The Hawkes decision will now provide opportunities for
addressing disputes with the Corps regarding Section 404 permitting
issues.
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