In this much-anticipated decision, on May 31, 2016, the U.S. Supreme Court unanimously sided with the property owner companies over the U.S. Army Corps of Engineers (“Corps”). The Court held that a Corps’ jurisdictional determination as to whether a property contains a jurisdictional wetland is immediately appealable because it constitutes a final agency action. This decision resolves a split among federal circuits and provides a remedy for property owners that receive an unfavorable jurisdictional determination (“JD”) without forcing them to first suffer potentially costly consequences. The Fifth and Eighth Circuits had been split on the issue.   Belle Co. v. U.S. Army Corps of Eng’rs, 761 F.3d 383 (5th Cir. 2014); Hawkes Co. v. U.S. Army Corps of Eng’rs, 782 F.3d 994 (2014) (please see our April 21, 2105 blog post for a summary of the Eighth Circuit decision).

In Corps v. Hawkes Co., Inc., three Minnesota peat mining companies challenged a Corps’ JD that found that their properties contained “waters of the U.S.,” a term defined by the Clean Water Act and the subject of a recent rulemaking that has since been stayed nationwide pending the resolution of claims that the rule is arbitrary, capricious, and contrary to law. A Section 404 permit is typically required for mining and other excavation activities whenever “waters of the U.S.” (sometimes abbreviated as “WOTUS”) are present.

The Corps was authorized to issue the JD by a 1989 Memorandum of Understanding (“MOA”) between the Corps and U.S. Environmental Protection Agency. The MOA authorizes the Corps to issue both “preliminary” and “approved” JDs. Preliminary JDs merely advise a property owner that there may be WOTUS on a particular property, whereas approved JDs are formal determinations concerning the applicability of the CWA.  Hawkes involved an approved JD.

The Hawkes decision held that approved JDs qualify as “final agency actions” under the test the Court articulated in Bennett v. Spear, 520 U. S. 154 (1997).  For an agency action to be final under that test, “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, 178 (1997). The Court first held that approved JDs determine the rights and obligations of property owners. An approved JD is the Corps’ decision, based on extensive research, as to whether a particular property contains WOTUS. Under the Corps’ regulations, the decision remains valid for five years and is expressly described as a “final agency action.”

Second, the Court held that an approved JD gives rise to “direct and appreciable legal consequences.” An approved JD stating a property does not contain jurisdictional waters limits a property owner’s potential liability and creates a 5-year window shielding the property owner from civil enforcement proceedings. Thus, the Court determined that stand-alone JDs were final agency actions ripe for judicial review. This decision offers certainty to landowners that receive unfavorable approved JDs, providing an option to appeal before having to either risk substantial civil or criminal penalties or embark on the Section 404 permitting process. Please contact any member of the Schiff Hardin Environmental Group with questions about the CWA or the Supreme Court’s decision.