On April 10, 2015, the U.S. Court of Appeals for the Eighth Circuit gave a northwestern Minnesota peat mining operation something the company wanted very much -- judicial review of a wetlands jurisdictional decision issued by the U.S. Army Corps of Engineers. Hawkes Co., Inc., et. al v. U.S. Army Corps of Engineers, slip op. No. 13-3067 (8th Cir. April 10, 2015). In so doing, the Eighth Circuit built on the U.S. Supreme Court’s decision in Sackett v. EPA, 132 S. Ct. 1367 (2012), which had made Clean Water Act administrative orders subject to court scrutiny, and continued the Eighth Circuit’s focus on curtailing what it sees as government agency overreaching, as recently expressed in Iowa League of Cities v. EPA, 711 F.3d 844, 868 (8th Cir. 2013).

In Hawkes, a peat miner wanted to expand its operations to an adjoining parcel of property. Because mining a peat bog is a “wetlands dependent” activity under Minnesota law, the company initiated a permit application with the Corps of Engineers’ local district office to obtain a “jurisdictional determination” (JD) on whether the bog was a “jurisdictional” wetland (i.e., was it subject to permitting regulations as “waters of the United States”). The Corps of Engineers ultimately issued a Revised JD finding that the peat bog was jurisdictional, because it was connected to a series of unnamed culverts and streams that ultimately drained into the navigable Red River of the North, located 120 miles away. The peat mining company disagreed, and filed an action seeking judicial review of the Corps’ jurisdictional determination. The district court denied review under the Administrative Procedure Act (APA, 5 U.S.C. § 704) and Sackett, because the company still could either apply for a dredge and fill permit and appeal any permit denial, or proceed with its mining activities without a permit and wait for an administrative cease and desist order.

The Eighth Circuit reversed, using a two-prong standard for review of final agency decisionmaking: 1) is the agency decision final; and 2) does the decision determine rights and obligations, or will legal consequences flow from the decision? The Hawkes Court easily answered the first question with a yes – the Corps of Engineers’ own regulations and guidance documents specify that an approved jurisdictional determination constitutes the Corps’ final agency action. Slip op. at 7-8.

The second prong of the APA review standard engaged much more of the Hawkes Court’s attention. The Court found that the extensive costs and prolonged duration of the permitting process, when combined with the Corps district office’s repeated indications that it would never grant a dredge and fill permit, rendered the permitting option “prohibitively expensive and futile.” Slip op. at 10. “Moreover, even if appellants eventually complete the permit process, seek judicial review of the permit denial, and prevail, they can never recover the time and money lost in seeking a permit they were not legally obligated to obtain. Cf. Iowa League of Cities v. EPA, 711 F.3d 844, 868 (8th Cir. 2013).” Slip op. at 10-11.

The Court went further with its expressions of discomfort regarding the Corps’ wetlands enforcement process in the absence of a permit:  “Second, appellants’ other option -- commencing to mine peat without a permit and await an enforcement action -- is even more plainly an inadequate remedy. Appellants ‘cannot initiate that process, and each day they wait for the agency to drop the hammer, they accrue’ huge additional potential liability. Sackett, 132 S. Ct. at 1372. Because appellants were forthright in undertaking to obtain a permit, choosing now to ignore the Revised JD and commence peat mining without the permit it requires would expose them to substantial criminal monetary penalties and even imprisonment for a knowing CWA violation. Thus, like the compliance order at issue in Sackett, the Revised JD increases the penalties appellants would risk if they chose to begin mining without a permit. See 33 U.S.C. § 1319(c).”

Slip op. at 11. The Hawkes Court concluded that a Corps of Engineers’ jurisdictional determination is immediately subject to judicial review, because it has “immediate coercive effect” and the “draconian penalties” available under the Clean Water Act would leave the peat miner with no reasonable options than to acquiesce to the Corps’ demands. Slip op at 12.

What can we take away from this new decision? First, it continues the Eighth Circuit’s recent trend of allowing immediate judicial review when agency actions impact business operations or decisions in what the Court believes is an unfair or unduly burdensome way. Second, the Court paid particular attention to Corps representatives’ acts discouraging pursuit of a permit, as well as internal dissent within the Corps about the status of the peat bog -- confirming that, as always, facts and evidence do matter and government agencies are supposed to make decisions after gathering those facts, not before.