Army Corps of Engineers v Hawkes Co and Final Agency Actions

In a unanimous decision, the U.S. Supreme Court in Army Corps of Engineers v Hawkes Co 578 U.S._____(2016) addressed whether a “jurisdictional determination” (JD) that wetlands are subject to regulation under the Clean Water Act was a final agency action within the meaning of the Administrative Procedure Act. By a vote of 8-0, the justices voted yes.

The Clean Water Act regulates “the discharge of any pollutant” into “the waters of the United States.” When property contains such waters, landowners who discharge pollutants without a permit from the Army Corps of Engineers may face significant criminal and civil penalties, while those who do apply for a permit face a process that the Supreme Court characterized as “often arduous, expensive, and long.”

Since it can be difficult to determine whether “waters of the United States” are present, the Corps allows property owners to obtain a standalone “jurisdictional determination” (JD) specifying whether a particular property contains “waters of the United States.” A JD may be either “preliminary,” advising a property owner that such waters “may” be present, or “approved,” definitively “stating the presence or absence” of such waters. An “approved” JD is considered an administratively appealable “final agency action,” and is binding for five years on both the Corps and the Environmental Protection Agency.

Three companies that mine peat used for putting greens sought a permit from the Corps to discharge material onto wetlands located on property that respondents own and hope to mine. In connection with the permitting process, the companies obtained an approved JD from the Corps stating that the property contained “waters of the United States” because its wetlands had a “significant nexus” to the Red River of the North. After exhausting administrative remedies, they sought review of the approved JD in Federal District Court under the Administrative Procedure Act (APA), but the District Court found that it lacked jurisdiction, holding that the revised JD was not a “final agency action for which there is no other adequate remedy in a court.” The Eighth Circuit reversed.

The Court unanimously held that the Corps’ approved JD is a final agency action judicially reviewable under the APA. Chief Justice John Roberts authored the Court’s opinion.

As outlined in the decision, two conditions must be satisfied for an agency action to be “final” under the APA: “First, the action must mark the consummation of the agency’s decision-making process,” and “second, the action must be one by which rights or obligations have been determined, or from which legal consequences will flow.” Bennett v. Spear, 520 U. S. 154 (1997). The parties agreed that the first prong was satisfied. As explained in the opinion, the JD “mark[s] the consummation” of the Corps’ decisionmaking on the question whether a particular property does or does not contain “waters of the United States.”

While the government maintained the second condition was not met, the justices disagreed. The Court held that “[t]he definitive nature of approved JDs also gives rise to ‘direct and appreciable legal consequences,’ thereby satisfying Bennett’s second condition as well.” As the Chief Justice further explained:

A “negative” JD—i.e., an approved JD stating that property does not contain jurisdictional waters—creates a five-year safe harbor from civil enforcement proceedings brought by the Government and limits the potential liability a property owner faces for violating the Clean Water Act. Each of those effects is a legal consequence. It follows that an “affirmative” JD, like the one issued here, also has legal consequences: It deprives property owners of the five-year safe harbor that “negative” JDs afford. This conclusion tracks the “pragmatic” approach the Court has long taken to finality.

Since the Court determined that the landowners satisfied both prongs of the test under Bennett v. Spear, it declined to address whether any changes should be made to the doctrine. Like many cases decided this term, that question will likely be decided another day.