Supreme Court Permits Legal Challenges to Army Corps Jurisdictional Determinations
In a ruling that will allow landowners to seek court review and clarification regarding the scope of federally regulated waters on their property, the United States Supreme Court concluded this week in United States Army Corps of Engineers v. Hawkes Co., Inc. that Army Corps “jurisdictional determinations” of protected waters can be challenged in federal court.
The federal Clean Water Act regulates the discharge of pollutants into “waters of the United States” and imposes substantial criminal and civil penalties for discharging any pollutant into covered waters without a permit from the Army Corps. Because it can be difficult to determine whether “waters of the United States” are present on a site, however, the Corps allows property owners to obtain a jurisdictional determination specifying whether a particular property contains such waters. An “approved” jurisdictional determination is considered an administratively appealable “final agency action,” but until now it has been unclear whether such determination also was subject to judicial review.
In Hawkes, three mining companies filed suit after the Army Corps issued a jurisdictional determination finding that a 503-acre property contained “waters of the United States.” After appealing the decision to the Corps’ Mississippi Valley Division Commander, the companies sought judicial review in federal court under the Administrative Procedure Act. The District Court dismissed the case, but the United States Court of Appeals for the Eighth Circuit reversed, finding that the jurisdictional determination could be challenged in federal court.
That Eighth Circuit’s decision, however, conflicted with the Ninth Circuit’s decision in Fairbanks N. Star Borough v. U.S. Army Corps of Engineers and the Fifth Circuit’s decision in Belle Co., LLC v. U.S. Army Corps of Engineers, both of which generally concluded that a jurisdictional determination is not final agency action and therefore not subject to judicial review. The Supreme Court therefore granted certiorari to resolve this conflict and, in a unanimous decision, agreed with the Eighth Circuit.
In affirming, the Court explained that two conditions generally must be satisfied for agency action to be considered “final” under the Administrative Procedure Act: (1) the action “must mark the consummation of the agency’s decision-making process”; and (2) the action “must be one by which rights or obligations have been determined, or from which legal consequences will flow.” The Court’s opinion particularly focused on the second of these requirements. Specifically, the Court observed that an approved jurisdictional determination concluding that a property does not contain jurisdictional waters—a so-called “negative” jurisdictional determination—generally will create a five-year safe harbor from civil enforcement proceedings brought by the federal government and limit the potential liability a property owner faces for violating the Clean Water Act. Employing what it characterized as a pragmatic approach to finality, the Court therefore concluded that a jurisdictional determination properly is subject to judicial review.
The practical consequences of the Court’s ruling are likely to be substantial. For many landowners, it can be difficult to know whether and to what extent the Clean Water Act applies to their property. Meanwhile, the costs of noncompliance—which include exposure to both criminal and civil penalties—can be very high. In the past, however, anyone who questioned a jurisdictional determination did not have the ability to challenge the Corps’ decision in federal court. With the Court’s opinion in Hawkes, that now has changed.