On April 10, 2015, the U.S. Court of Appeals for the Eighth Circuit unanimously held that Clean Water Act (CWA) jurisdictional determinations (JDs)—determinations of whether a water body is subject to federal jurisdiction under the CWA—issued by EPA or the Army Corps of Engineers (Corps) can be challenged in court even before agency enforcement actions based on the JDs. Hawkes Co., Inc. v. U.S. Army Corps of Engineers, 782 F.3d 994 (8th Cir. 2015).

Peat is the decayed remains of plants that accumulate over centuries in wetlands. It is collected by harvesters such as these and has numerous uses, including as a substitute for certain  petroleum-based products. (Source: www.http://news.minnesota.publicradio.org)

Peat is the decayed remains of plants that accumulate over centuries in wetlands. It is collected by harvesters such as these and has numerous uses, including as a substitute for certain petroleum-based products. (Source: www.http://news.minnesota.publicradio.org)

The case involved a proposed expansion of a peat mining operation on wetlands property in Marshall County, Minnesota. Plaintiffs submitted an application to the Corps for a CWA section 404 permit (on the grounds that no permit was required). After numerous meetings with plaintiffs, the Corps made a final jurisdictional determination that the property was a “water of the United States”—due to its “significant nexus” to the Red River—and thus subject to regulation by the Corps under the CWA. Accordingly, any filling of the wetlands would require a CWA section 404 permit. Plaintiffs appealed the JD to the U.S. District Court, which in August 2013 granted the Corps’ motion to dismiss. The current appeal followed.

At issue was whether the JD constituted “final agency action” subject to judicial review. The Eighth Circuit wrote that for agency action to be subject to judicial review under the federal Administrative Procedure Act, two conditions must be satisfied: First, the action must mark the consummation of the agency’s decision-making process—it must not be of a merely tentative or interlocutory nature. There was little doubt that the JD marked the consummation of the Corps’ decision-making process; the court cited the agency’s own regulations, which describe a JD as “a Corps final agency action.” 33 CFR § 320.1(a)(6).

A closer call was whether the JD met the second condition for “final” agency action, which requires that the agency action must be “one by which rights or obligations have been determined, or from which legal consequences will flow.” The parties debated the correct application of the US Supreme Court’s decision in Sackett v. EPA, 132 S. Ct. 1367 (2012). In Sackett, the US EPA issued administrative compliance order requiring a person to restore wetlands (which EPA had determined to be jurisdictional) into which the person had deposited fill without a section 404 permit. The Supreme Court held that the compliance order constituted final agency action and was subject to immediate judicial review. The district court in Hawkes distinguished Sackett on the grounds that unlike a compliance order, which requires a party to take action or face substantial penalties, a JD does not itself command a party to do or forbear anything; it is simply “a bare statement of the Corps’ opinion.”

The Eighth Circuit disagreed. It cited numerous cases for the proposition that for purposes of determining whether “rights or obligations have been determined” or whether “legal consequences will flow” from agency action, there is no difference between an agency order that compels affirmative action and an order that prohibits a party from taking otherwise lawful action. The Court noted that the Corps’ JD required the 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.” Accordingly, the JD is much more than “a bare statement of the Corps’ opinion.”

The Court also sharply disagreed with the district court’s holding that a JD was not a final agency action subject to judicial review because the appellants had other “adequate remedies.” 5 USC § 704. Specifically, the district court held that the appellants could either complete the permit process and appeal if the Corps denies the permit, or they could commence peat mining and then challenge the agency’s authority if it commences an enforcement action. The Eighth Circuit rejected this position, finding these alternative too costly to be “adequate,” and chastising the Corps for suggesting otherwise:

The prohibitive costs, risk, and delay of  these alternatives to immediate judicial review evidence a transparently obvious litigation strategy: By leaving appellants with no immediate judicial review and no adequate alternative remedy, the Corps will achieve the result its local officers desire, abandonment of the peat mining project, without having to test whether its expansive assertion of  jurisdiction — rejected by one of their own commanding officers on administrative appeal — is consistent with the Supreme Court’s limiting decision in Rapanos.

The Court thus concluded that the JD constituted final agency action, reversed the district court judgment and remanded the case for further proceedings.

Notably, the Eighth Circuit’s decision creates a split with the 5th Circuit Court of Appeals, which, in July 2014 ruling, held that JDs are not judicially reviewable. Belle Co., L.L.C. v. U.S. Army Corps of Engineers, 761 F.3d 383 (5th Cir. 2014). A week after the Eighth Circuit’s Hawkes decision, one of the parties in Belle Co. case resubmitted a petition for writ of certiorari to the Supreme Court. (The Supreme Court denied the party’s initial petition on March 23, 2015. The case is titled Kent Recycling Services, LLC v. United States Army Corps of Engineers before the Supreme Court.)