Source: https://www.martenlaw.com/newsletter/20161128-wetland-jurisdictional-determination-cwa
Timestamp: 2019-04-18 18:41:54+00:00

Document:
In March 2016, the U.S. Supreme Court decided in United States Army Corps of Engineers v. Hawkes Co., Inc. (“Hawkes”), that a party is entitled to judicial review of an approved jurisdictional determination (“JD”) by the U.S. Army Corps of Engineers (“Corps”). A JD is the agency’s official position on whether proposed development requires a permit under the Clean Water Act (“CWA”). Prior to the decision, a majority of the U.S. Circuit Courts of Appeals held that a JD was not “final agency action” that could be challenged in court. Thus, a party faced with an unfavorable JD was faced with two unpleasant choices: a) pursue a costly and time consuming CWA permit, even if it seems grossly in error; or b) proceed with the planned activity without permitting and risk civil and even criminal enforcement actions for non-compliance.
Hawkes concluded that the Administrative Procedure Act (“APA”) affords affected parties with an avenue to challenge a JD before proceeding down either of these two paths. Given the uncertainty surrounding CWA jurisdiction in the wake of the Court’s 2006 decision, Rapanos v. United States and the ongoing federal rulemaking effort to clarify the CWA’s reach, Hawkes will have an immediate and significant impact on the regulated community.
Hawkes is an extension of the Supreme Court’s 2012 decision in Sackett v. EPA, which held that a party subject to a compliance order under the CWA could obtain “pre-enforcement review” to challenge that order under the APA. Pre-enforcement review refers to the right to seek APA review before the agency takes legal action to enforce the order. Since the Hawkes decision, federal courts have grappled with whether the Court’s reasoning provides support for judicial review of agency action in other environmental contexts. This article examines the Hawkes decision and lower court rulings interpreting the decision’s reach.
The CWA prohibits discharge of dredged or fill material into the “waters of the United States” except in accordance with the § 404 permitting regime, which is jointly administered by the Corps and the U.S. Environmental Protection Agency. Whether a particular dredge and fill project involves the statutory threshold of “waters of the United States” remains unclear following: (1) the Supreme Court’s plurality opinion in the 2006 Rapanos decision, (2) the June 2015 “Clean Water Rule” promulgated by EPA and the Corps, (3) the Sixth Circuit’s nationwide stay against enforcement of the Clean Water Rule pending the legal challenge; and (4) most recently, the upcoming change in administration.
The Corps has established a regulatory procedure for an “affected party” to obtain the agency’s official JD—i.e., a written determination from the Corps regarding whether a wetland is subject to CWA jurisdiction. A JD is a “written Corps determination that a wetland … is subject to regulatory jurisdiction under [the CWA].” For administrative appeal purposes, an approved JD is a “final Corps agency action.” If an approved JD is upheld at the intra-agency appeal, that decision is the agency’s “last word” on whether it considers the property to be subject to regulation under the CWA.
Before the Supreme Court’s Hawkes decision, a landowner that had already exhausted its administrative remedies could not appeal an approved JD. Instead, the landowner (or interested party) could only attempt to apply for a permit (even if they believed that effort to be futile), seek judicial review of that permit process if unsuccessful, and/or proceed with the planned project at the risk of criminal or civil enforcement, either by the Corps or in a citizen suit.
In the unanimous 2012 Sackett decision, the Supreme Court held that an EPA administrative compliance order issued under the CWA is “final” for purposes of APA judicial review. The Court ruled that the compliance order in that case—requiring the petitioners to restore altered wetlands without a permit, subject to $75,000 in fines for non-compliance—constituted “final agency action” under the APA, because it: (1) “determined” the Sacketts’ “rights or obligations” by requiring them to restore the wetlands on their property; (2) exposed them to legal consequences—specifically stiff penalties for non-compliance; (3) and marked the “consummation” of the agency’s decisionmaking process because no further agency review was available. Likewise, the Court concluded the Sacketts had no adequate remedy to challenge the order, because—as EPA conceded—the Sacketts had to wait until the EPA brought an enforcement suit to challenge the significant penalties for non-compliance.
The Hawkes case involved a peat miner in Minnesota who sought to expand its operations to an adjacent property. The Corps issued a JD stating that the property fell within CWA jurisdiction due to its connection to Red River of the North located “some 120 miles away.” Hawkes subsequently filed suit challenging the JD in federal district court, which concluded that it lacked jurisdiction to hear the challenge. On appeal, the Eighth Circuit reversed, concluding that the Corps’ JD constituted final agency action that was ripe for review under the APA. Since the Eighth Circuit’s decision conflicted with decisions from the Fifth and Ninth Circuits, the Supreme Court granted certiorari to resolve the split.
The Court also concluded that JDs met the second Bennett prong because their “definitive nature … gives rise to ‘direct and appreciable legal consequences.” In doing so, the Court relied on the “pragmatic approach” to finality reflected in prior decisions by first examining the consequences of a “negative” JD—i.e., a JD in which the Corps concludes a party’s property is outside the CWA’s reach. That decision not only binds the Corps for five years, it also creates a five-year “safe harbor” from CWA enforcement by EPA as well, under a memorandum of agreement between the two agencies. Although citizen suit enforcement is still possible, private suits cannot impose CWA liability for violations that are not ongoing. Thus, a negative JD has legal consequences satisfying the second Bennett prong because it “both narrows the field of potential plaintiffs and limits the potential liability a landowner faces for discharging pollutants without a permit.” Conversely, an affirmative JD (the type at issue in Hawkes) also has legal consequences, because it deprives a party the five-year safe harbor from CWA enforcement and warns that unpermitted discharges expose a party to significant criminal and civil penalties. According to the Court, an affirmative JD is final agency action because of these legal consequences.
The Court reject the Corps’ assertion that, because a recipient of the JD is afforded judicial review of a rejected permit or enforcement action, there were adequate alternatives to judicial review of a JD under the APA. “As we have long held, parties need not await enforcement proceedings before challenging final agency action where such proceedings carry the risk of ‘serious criminal and civil penalties.’ “ As in Sackett, unpermitted discharges would expose Hawkes to $37,500 per day in civil penalties as well as the potential for criminal enforcement. Relying on that earlier decision, the Court explained that Hawkes “need not assume such risks while waiting for EPA to ‘drop the hammer’ in order to have [its] day in court.” Likewise, due to the arduous and expensive nature of the permitting process, the Court did not view judicial review of a denied permit as an adequate alternative to judicial review.
Although the Hawkes decision is less than six months old, litigants are already relying on the decision in an attempt to force APA judicial review in a number of different contexts.
In White Oak Realty, plaintiffs successfully relied on Hawkes to challenge a letter from the Corps outlining certain mitigation requirements as final agency action under the APA. Following Hurricanes Katrina and Rita, Congress authorized the Corps to repair the damaged levee systems through the addition of “borrow material” (clay and soil). In response to the vast demand for this material, the Corps set up a program to pre-qualify sources of borrow material on private land. When plaintiffs sought to pre-qualify their land as a source of borrow material, the Corps wrote a letter outlining mitigation that would be required to avoid certain unavoidable environmental impacts caused by the material removal. Plaintiffs filed suit under the Water Resource Development Act to challenge the Corps’ determination that mitigation was required.
The federal defendants moved to dismiss, arguing that the letter did not constitute final agency action subject to judicial review because the letter merely stated the Corps’ “opinions on the borrow program requirements and the legal authority upon which it relie[d].” The Corps also argued that unlike the JD in Hawkes, the letter did require affirmative action from the plaintiffs and allowed them to “do as they choose with the property.” Drawing heavily on the recent Hawkes decision, the court disagreed and concluded that it had jurisdiction to hear plaintiffs’ claims. The court noted that, just as the JD in Hawkes notified the property owner that a permit would be required prior to taking certain actions on the property, the instant letter required plaintiffs to show proof of mitigation before supplying borrow material to the Corps. The court found this requirement a “direct and appreciable legal consequence” for the property owner that permitted judicial review. The court also noted that the Corps failed to identify an alternative route for the property owner to challenge the decision that mitigation would be required.
In Gulf Restoration Network, environmental plaintiffs relied on Hawkes in an unsuccessful attempt to challenge the Corps’ public notice and comment procedures for a project involving a proposed oil pipeline in southern Louisiana. When the pipeline proponent sought a CWA § 404 dredge and fill permit, the Corps issued a public notice and sought public comment on the proposed permit during a 30-day period in June 2015. Following the close of the comment period, plaintiffs alleged certain deficiencies in the public notice associated with the permit and sent a letter to the Corps requesting that the agency reopen the public comment period. When the Corps refused, plaintiffs filed suit. The Corps sought to dismiss the suit, arguing that there was no final agency action subject to judicial review.
Relying on Hawkes, the environmental plaintiffs argued that the Corps decision to close the public comment period constituted a final agency action subject to judicial review. The court rejected plaintiffs’ arguments, concluding that the Corps’ decision was “interlocutory action” that did not mark the consummation of the agency’s decision-making process. According to the court, the notice and comment procedure exists to evaluate the permit’s impact on the public interest and to inform the Corps before it takes final action. Because the comment period is “a mere step on the way to permit approval or denial,” the court concluded that the plaintiffs’ challenge must wait until the permitting process was complete. Since the Corps had not decided whether to issue the proposed permit when the public comment period closed, the court found no legal consequences that flowed from the Corps’ decision.
Nor did the court agree that the plaintiffs suffered an “informational injury” when the Corps refused to reopen the comment period. The court concluded that plaintiffs’ claimed injury was not a deprivation of information but rather an alleged exclusion from effective participation in the permitting process. Thus, since the plaintiffs’ injury was “procedural rather than informational,” they did not face a legal consequence as contemplated in Hawkes and its predecessors.
In Marine Council, environmental plaintiffs unsuccessfully sought judicial review of biological opinions (“BiOps”) issued by the National Marine Fisheries Service (“NMFS”) pursuant to the Endangered Species Act (“ESA”) concerning the licensing of four hydroelectric dams on the Kennebec River in Maine. NMFS issued the BiOps concerning the Federal Energy Regulatory Commission’s (“FERC”) proposed amendments to several hydropower licenses issued under the Federal Power Act (“FPA”). The environmental plaintiffs challenged NMFS’ decisions in the BiOps that FERC’s proposed license amendments would not jeopardize a distinct population segment of Atlantic salmon in the Kennebec River.
NMFS sought to dismiss the plaintiffs’ claims, arguing that the BiOp challenges were, in reality, collateral challenges to FERC’s licensing amendments under the FPA, and that statute grants the U.S. Courts of Appeals exclusive jurisdiction over such challenges. Relying on Hawkes, the plaintiffs argued that the opportunity to challenge FERC’s licensing amendments in the U.S. Courts of Appeals was not an adequate alternative to the APA for challenging the BiOps issued by NMFS. Plaintiffs argued Hawkes created an “APA presumption of reviewability” where, as here, the review available concerns separate and different agency action. The court disagreed, and dismissed the case for lack of subject matter jurisdiction.
The Supreme Court’s Hawkes decision has dramatically changed the burden on parties faced with a JD that requires a CWA permit under § 404. No longer will those parties be forced to choose between undergoing the arduous and costly permitting process or proceeding without a permit and facing exposure for unpermitted discharges before challenging the Corps’ determination that a proposed project is subject to CWA jurisdiction.
In the broader context, Hawkes continues the trend started by Sackett towards opening up pre-enforcement challenges of agency action under the CWA. Plaintiffs’ attempts to use Hawkes and Sackett in broader challenges in the environmental context have met with mixed results and only time will tell whether the decisions will change the landscape of regulatory action and enforcement in environmental law.
 U.S. Army Corps of Eng’rs v. Hawkes Co., Inc., 136 S. Ct. 1807 (2016).
 Rapanos v. United States, 547 U.S. 715 (2006). For additional analysis of the Rapanos decision and how lower courts have interpreted it, see Jeff Kray, Clean Water Act: “Waters of the United States” Rule Faces Political, Legislative, and Legal Challenges, Marten Law Environmental News (June 3, 2015); Third Circuit Weighs in on Clean Water Act Jurisdiction under Rapanos, Marten Law Environmental News (Dec. 6, 2011); Jessica Ferrell, Almost Infamous – Another Circuit Tries to Determine Scope of Clean Water Jurisdiction After Rapanos, Marten Law Environmental News (Sept. 15, 2009); Jeff Kray, Federal Circuit Courts Split on Application of Supreme Court’s Rapanos Decision, Marten Law Environmental News (Dec. 6. 2006).
 Fairbanks N. Star Borough v. U.S. Army Corps of Eng’rs, 543 F.3d 586, 593 (9th Cir. 2008); see also 33 C.F.R. § 331.
 Hawkes, 136 S. Ct. at 1813.
 Fairbanks N. Star Borough v. U.S. Army Corps of Eng’rs,543 F.3d 586 (9th Cir. 2008); Belle Co. v. U.S. Army Corps of Eng’rs, 761 F.3d 383 (5th Cir. 2014); see also Jessica Ferrell, Ninth Circuit Limits Judicial Review of Wetlands Determinations by Corps of Engineers, Marten Law Environmental News (Oct. 29, 2008).
 Hawkes, 136 S. Ct. at 1814 (quoting Sackett, 132 S. Ct. at 1374-75 (Ginsburg, J., concurring)).
 Id.(quoting Bennett, 520 U.S. at 178).
 Id. at 1815 (citing Abbott Labs. v. Gardner, 387 U.S. 136, 149, 87 S. Ct. 1507, 18 L.Ed.2d 681 (1967); Frozen Food Express v. United States, 351 U.S. 40, 76 S. Ct. 569, 100 L.Ed. 910 (1956)).
 Id. (citing 33 C.F.R. pt. 331, App. C; EPA, Memorandum of Agreement: Exemptions Under Section 404(F) of the Clean Water Act, available here).
 Id. at 1814 (citing 33 U.S.C. §§ 1319(d), 1365(a); Gwaltney of Smithfield, Ltd. v. Chesapeake Bay Foundation, Inc., 484 U.S. 49, 58–59, 108 S.Ct. 376, 98 L.Ed.2d 306 (1987)).
 Id. (quoting Abbott, 387 U.S., at 153, 87 S. Ct. 1507).
 Id. (citing Sackett, 132 S. Ct. at 1372).
 2016 WL 4799101 (E.D. La. Sept. 14, 2016).
 2016 WL 4987256 (E.D. La. Sept. 19, 2016).
 2016 WL 4401987 (D. Me. Aug. 8, 2016).

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