May 31, 2016

Supreme Court Decides United States Army Corps of Engineers v. Hawkes Co., Inc., et al.

On March 31, 2016, the Supreme Court decided United States Army Corps of Engineers v. Hawkes Co., Inc., et al., No. 15-290, holding that an approved jurisdictional determination from the U.S. Army Corps of Engineers as to whether a particular property contains waters of the United States is a final agency action subject to judicial review under the Administrative Procedure Act (APA).

The Clean Water Act regulates the discharge of pollutants into “navigable waters,” which is defined as “waters of the United States.” At times it can be difficult to ascertain whether a particular parcel of property contains “waters of the United States.” The consequences for an incorrect determination can be severe as the Clean Water Act imposes substantial criminal and civil penalties. In addition, the cost of obtaining a permit, both in time and dollars, is significant. The U.S. Army Corps of Engineers (the “Corps”) issues “jurisdictional determinations” (JDs) specifying whether a property contains “waters of the United States” on a case-by-case basis. The JDs come in both a preliminary and an “approved” form. The approved JDs definitively state the presence or absence of such waters and are binding for five years.

Respondents are three companies engaged in peat mining in Minnesota. Peat forms in areas such as wetlands and bogs. The Corps issued an approved JD to the respondents indicating that the property at issue contained “water of the United States” because the wetlands had a “significant nexus” to the Red River of the North, located approximately 120 miles away. Respondents sought judicial review of that determination under the APA. The district court dismissed for lack of subject matter jurisdiction finding there was not final agency action for which there was no other adequate remedy in a court. The Eighth Circuit reversed, and the Supreme Court affirmed the Eighth Circuit.

Two conditions must be satisfied for agency action to be final under the APA — “it must mark the consummation of the agency’s decisionmaking process” and it must be an action “by which rights or obligations have been determined, or from which legal consequences will flow.” The Corps only disputed the second requirement. The Court concluded that the “definitive nature of approved JDs … gives rise to ‘direct and appreciable legal consequences’” in satisfaction of the second prong. The Court emphasized that negative JDs limit potential liability. Likewise, affirmative JDs have the legal consequence of denying “the safe harbor that negative JDs afford.”

Even if a final agency action, to be subject to judicial review in court under the APA there must also be no adequate alternatives to such review. The Corps argued that the respondents do have alternatives — either discharge material without a permit or apply for a permit and seek judicial review of that determination. The Court explained that respondents need not wait for enforcement proceedings and expose themselves to steep civil penalties or criminal liabilities. Nor should they have to apply for a permit, which process can be “arduous, expensive, and long.” Moreover, the permitting process will not “alter the finality of the approved JD.” The Court was not persuaded that the alternatives posed by the Corps were adequate, thus holding that judicial review of approved JDs is appropriate.

Chief Justice Roberts delivered the opinion of the Court, joined by Justices Kennedy, Thomas, Breyer, Alito, Sotomayor, and Kagan. Justice Kennedy filed a concurring opinion, joined by Justices Thomas and Alito. Justice Kagan filed a concurring opinion. Justice Ginsburg filed an opinion concurring in part and concurring in the judgment.

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