U.S. Supreme Court Issues Landmark Decision Authorizing Review of Wetland Jurisdictional Determinations
On May 31, 2016, the U.S. Supreme Court issued an eagerly anticipated decision that will benefit landowners and developers by authorizing immediate judicial review of Approved Jurisdictional Determinations (JDs) issued by the U.S. Army Corps of Engineers (Corps). This opportunity for immediate review will enable early resolution of the Corps’ assertion of jurisdiction over wetland areas that could otherwise halt or dramatically affect proposed projects.
In United States Army Corps of Eng’rs v. Hawkes Co., Inc., the Supreme Court unanimously held that applicants for wetland development permits under the federal Clean Water Act have the right to challenge a Corps JD without first seeking a permit based on an unacceptable JD or undertaking the project without a permit (which would almost certainly invite an enforcement action). JDs identify the location and extent of jurisdictional waters on properties and are often a critical factor in determining the future of major development projects. Yesterday’s decision allows a wetland permit applicant to resolve such issues at the beginning of a project and avoids the potentially lengthy, expensive and legally risky alternative paths to obtaining relief.
The Supreme Court held that, despite the Corps’ position that JDs are merely advisory in nature, JDs in fact bear all the earmarks of final agency action that is reviewable in court. Not only do JDs mark the consummation of the Corps decision-making process on Clean Water Act jurisdiction, but they also give rise to “direct and appreciable legal consequences.” Among other consequences, the Court noted that if the Corps found that no jurisdictional waters were present (known as a “negative JD”), this finding would provide a “safe harbor” that protects the applicant against enforcement. In contrast, a Corps JD asserting jurisdiction over a disputed wetland area would have the legal consequence of depriving a property owner of this safe harbor.
This decision is based on both a strong legal foundation and a practical approach to the dynamics of the wetland permitting process. The Court was not persuaded by the Corps’ argument that judicial review was unnecessary because an applicant supposedly has adequate alternatives to challenge a JD. Rather, the Court recognized that obtaining an individual Corps permit is exceedingly arduous, noting that “one study found that the average applicant ‘spends 788 days and $271,596 in completing the process,’ without ‘counting costs of mitigation or design changes.’” Similarly, the Court found that proceeding with project development without a permit was not a reasonable alternative because of the potential for “substantial criminal and civil penalties” for the landowner or developer.
The Hawkes case involved a business seeking to expand a peat-mining operation in Minnesota that applied to the Corps for a determination that a new property did not contain jurisdictional wetlands. After several rounds of review and one administrative appeal (in which the Corps officer found the record did “not support the [Corps’] determination that the subject property contains jurisdictional wetlands and waters”), the Corps issued a JD concluding that the areas slated for peat mining constituted jurisdictional wetlands. The Eighth Circuit reversed the trial court’s dismissal of the peat-mining operator’s complaint seeking review of the JD because the applicant had effectively received a final decision and had no adequate remedies: “the Revised JD requires appellants either to incur substantial compliance costs (the permitting process), forego what they assert is lawful use of their property, or risk substantial enforcement penalties.” Hawkes Co. v. United States Army Corps of Eng’rs, 782 F.3d 994 (8th Cir. 2015). Thereafter, the Supreme Court agreed to hear the case.
Three concurrences accompanied the Supreme Court’s unanimous (8-0) decision upholding the Eighth Circuit. Justice Kennedy, joined by Justices Thomas and Alito warned the Corps: “[B]ased on the Government’s representations in this case, the reach and systemic consequences of the Clean Water Act remain a cause for concern.” Justice Kennedy noted that “the Act’s reach is ‘notoriously unclear’ and the consequences to landowners even for inadvertent violations can be crushing.” He concluded that the Corps’ interpretation of jurisdiction under the Clean Water Act “continues to raise troubling questions regarding the Government’s power to cast doubt on the full use and enjoyment of private property throughout the Nation.”
When viewed in a broader context, this decision is part of a continuing effort by the Supreme Court to provide certainty and predictability to the jurisdictional scope and procedures for wetland permitting under the Clean Water Act. It builds on the decision in Sackett v. EPA, 132 S. Ct. 1367 (2012), in which the Court held for the first time that an administrative compliance order issued by EPA under the Clean Water Act constitutes final agency action subject to immediate judicial review. In parallel to these decisions, the Supreme Court has disapproved interpretations by the Corps and EPA of “waters of the United States” (WOTUS) jurisdiction in several prominent cases, including Rapanos and SWANCC. Most recently, these agencies’ expansive interpretation of Clean Water Act jurisdiction in promulgating the so-called WOTUS rule – assertedly based on Justice Kennedy’s opinion in Rapanos – has come under the microscope in a consolidated set of cases pending in the Sixth Circuit and undoubtedly headed for Supreme Court review.
It remains to be seen how the Corps and EPA will react to the Hawkes decision. In its briefs and at oral argument, the Corps took the position that an affirmance of the Eighth Circuit’s holding would clog the courts with unnecessary litigation and may result in Corps refusals to provide JDs in advance of receiving permit applications. Although it is possible that the Corps could take the dramatic step of refusing to issue JDs, this would stall economically beneficial development, provide no environmental benefit, and further complicate what is already a grueling permitting process. It would also fundamentally undermine the Court’s articulated interest in allowing an applicant to resolve such issues at an early stage and would undoubtedly galvanize legislative responses and court challenges.
In sum, the Hawkes ruling will have a profound impact on wetland permitting for development projects and other land uses. By extending immediate judicial review to JDs, the Supreme Court has provided much needed relief to landowners and developers to address permitting issues that can halt projects or cause dramatic and costly changes to project configurations. From a practical standpoint, it should provide greater certainty regarding the presence and scope of wetlands and the future of proposed projects, and it should reduce unnecessary, time-consuming and costly permitting requirements. Hopefully, the decision will also promote a collaborative dynamic between landowners and the Corps during the JD process, facilitating fairness, due process and equitable resolution of disputes.