Recently, the U.S. Solicitor General petitioned the U.S. Supreme Court to review the Fifth Circuit’s ruling in Hawkes Co., Inc. v. U.S. Army Corps of Engineers, 782 F. 3d 994 (8th Cir. 2015), due to the conflict with the Fifth Circuit Court’s ruling in Belle Co. LLC v. US Army Corps of Engineers, 761 F.3d 383 (5th Cir. 2014), and determine:
Whether the United States Army Corps of Engineers’ determination that the property at issue contains waters of the United States protected by the Clean Water Act, constitutes final agency action for which there is no other adequate remedy in a court, and is therefore subject to judicial review under the Administrative Procedure Act.
The Clean Water Act (CWA) prohibits “the discharge of any pollutant by any person,” without a permit, into “navigable waters.” Section 404 of the CWA authorizes the Department of the Army, acting through the U.S. Army Corps of Engineers (Corps), to issue permits for the discharge of dredged or fill material in “waters of the U.S.” The Corps is also authorized to provide “jurisdictional determinations” as to whether particular lands contain waters of the U.S., subject to the Section 404 permitting requirements. If the Corps determines that a completed or ongoing discharge violates the CWA, then the government may take administrative action, including the issuance of a warning letter, a “cease and desist” order, an administrative compliance order, an administrative penalty, or a combination of these options.
On March 21, 2012, in a unanimous opinion issued by Justice Scalia, the U.S. Supreme Court held that an EPA compliance order, which reflects an agency determination that a landowner has violated the CWA by discharging pollutants into protected waters without a permit and which requires remedial action, is “final agency action” subject to judicial review under the Administrative Procedures Act (APA). The ruling gave property owners the right to challenge an EPA compliance order from the time it is issued, rather than waiting for the agency to begin enforcement actions.
However, subsequent to Sackett v. EPA, 132 S. Ct. 1367 (2012), two U.S. Courts of Appeals issued conflicting rulings regarding whether the Corps’ jurisdictional determinations themselves are “final agency action” and subject to judicial review. The two rulings are Belle Co. LLC v. US Army Corps of Engineers, and Hawkes Co., Inc. v. U.S. Army Corps of Engineers. In December 2010, Hawkes Co., Inc. (Hawkes) applied for a Section 404 permit from the Corps. In March 2011, the Corps informed Hawkes of the Corps’ preliminary determination that the property contains waters of the United States. In February 2012, after further meetings and visits to the property, the Corps provided Hawkes with an approved jurisdictional determination, which concluded that the property contains waters of the United States. In 2013, respondents filed an action alleging that the Corps’ jurisdictional determination was arbitrary and capricious under the APA. The Corps moved to dismiss, arguing that the jurisdictional determination was not “final agency action” subject to judicial review under the APA and that respondents’ challenge to the jurisdictional determination was not ripe. The district court dismissed the suit, holding that the Corps’ jurisdictional determination was not final agency action. The court distinguished the Sackett case stating that the EPA compliance order at issue there subjected the recipient to several immediate consequences, including the obligation to remediate the property, and also limited the recipient’s ability to obtain a permit. The Eight Circuit reversed the district court ruling and held that a jurisdictional determination is a reviewable “final agency action” under the APA. The court also acknowledged in the ruling that the Fifth Circuit had reached the opposite conclusion in Belle Co. v. United States Army Corps of Engineers.
In Belle Co. v. United States Army Corps of Engineers, the Fifth Circuit held that the Corps’ reversal of its earlier determination that the property in question was not jurisdictional wetlands was not a final agency action warranting judicial review in the federal district courts. The Fifth Circuit reasoned that the jurisdictional determination did not have the same severe consequences that the Supreme Court found in the EPA Administrative Compliance Order at issue in the Sackett case. Unlike a compliance order, the Fifth Circuit explained, a jurisdictional determination is simply a “notification of the property’s classification as wetlands” that “does not state that the recipient is in violation of the CWA,” does not increase the recipient’s exposure to penalties, and does not affect its ability to obtain a permit. The Supreme Court denied cert. in this case, but a petition for rehearing has been filed. (See Belle Co. v. United States Army Corps of Eng’rs, 761 F.3d 383 (5th Cir. 2014), cert. denied sub nom. Kent Recycling 2 Servs., LLC v. United States Army Corps of Eng’rs, 135 S. Ct. 1548 (2015)).
With the recent adoption of the final rule revising the definition of “waters of the U.S.” in the CWA, it is likely that landowners seeking to improve their property will be subject to continued Corps wetland jurisdictional determinations. Therefore, it is important that landowners monitor whether the U.S. Supreme Court grants the petition for writ of certiorari in the Hawkes and Kent Recycling cases to resolve the conflict as to whether a waters of the U.S. jurisdictional determination is subject to judicial review under the APA. The Supreme Court may decide at the December 4, 2015, conference whether to hear the Hawkes and Kent Recycling cases. The Court is expected to issue a decision on the matter on Monday, December 7, 2015.