In one of the biggest Clean Water Act (“CWA”) cases to reach the US Supreme Court in years, the Court unanimously confirmed landowners’ rights to immediate judicial review of the US Army Corps of Engineers’ (“Corps”) assertions of CWA jurisdiction. This holding will provide an important check on federal claims of jurisdiction under the CWA and is a major win for all public- and private-sector entities engaged in land use and development, including the banking, real estate, retail, energy and agriculture industries. U.S. Army Corps of Engr’s v. Hawkes Co., 578 U.S.                   (May 31, 2016) (“Slip op.”). The holding is especially critical now in light of the “Waters of the United States” Rule (“WOTUS Rule”), which, if implemented, would greatly expand CWA jurisdiction.

A jurisdictional determination (“JD”) sets forth the Corps’ official, binding determination of whether a particular parcel contains jurisdictional features and, if so, where those boundaries lie. In the case before the Court, the Corps issued a JD asserting CWA jurisdiction over a Minnesota peat mine. Hawkes Co. disagreed with the Corps’ JD and sought judicial review. But, as it routinely does in such cases, the  Corps claimed that the JD was not final agency action subject to court review. The Corps insisted that, in order to receive judicial review of its assertion of jurisdiction, Hawkes must either (1) apply for a CWA permit and then challenge the issuance or denial of the permit or (2) proceed without a permit and then defend its position on jurisdiction in any subsequent enforcement action brought by the Corps. The US Court of Appeals for the Eighth Circuit disagreed, and held that JDs are final agency action subject to immediate judicial review. The Corps sought Supreme Court review to resolve a split in the circuits.

Agency action is reviewable under the Administrative Procedure Act (“APA”), where (1) it is “final” and (2) there is no other adequate alternative to APA review in court. 5 U.S.C. § 704. In Bennett v. Spear, the Supreme Court set out two conditions that generally must be met for an agency action to be “final” under the APA. 520 U.S. 154, 177-78 (1997). First, “the action must mark the consummation of the agency’s decisionmaking process.” Id. Second, the action “must be one by which rights or obligations have been determined, or from which legal consequences will flow.” Id.

Concluding that JDs satisfy the APA “finality” requirement, the Supreme Court focused on the definitive nature of a JD, which “gives rise to ‘direct and appreciable legal consequences.’ ” Slip op. at 6. The Court found that JDs bind the Corps and EPA, the two agencies authorized to bring civil enforcement actions under the CWA, for five years and thus provide a safe harbor for landowners from government enforcement. The Court further found that JDs provide a warning of the Corps’ determination of the location of jurisdictional areas, and of the risk of significant penalties in the absence of a CWA permit. Turning to the APA’s “no other adequate alternative” requirement, the Court found that undergoing the CWA permit process or triggering an enforcement action in order to obtain judicial review are not adequate alternatives to direct review of JDs. The Court noted, as it has in prior CWA cases, that the CWA permitting process is “arduous, expensive, and long,” and would add nothing to review of a JD. It also emphasized the APA’s presumption of reviewability. Slip op. at 8.

The Hawkes decision will have significant implications. The government’s view of CWA jurisdiction has expanded over time, exacerbated by the lack of meaningful judicial review. Prior to the Supreme Court’s decision, property owners had little choice but to abide by the aggressive assertions of jurisdiction, or risk the strict liability penalties associated with the CWA. Now, even the prospect of an immediate challenge could help level the playing field as landowners and project proponents will now have a means to immediately challenge and push back on questionable assertions of CWA jurisdiction.

Judicial review will help clarify the proper limits of the Corps’ CWA jurisdiction and provide necessary judicial oversight, particularly in light of the prospect of expanded jurisdiction under the WOTUS rule (which is currently stayed by a nationwide court order). The decision also highlights the Court’s continuing (if not increasing) concern with the ambiguous reach of the agencies’ assertions of CWA jurisdiction. Justice Kennedy observed that the “ominous” reach and “systemic consequences of the [CWA] remain a cause for concern,” and the lack of predictability “continues to raise troubling questions regarding the Government’s power to cast doubt on the full use and enjoyment of private property throughout the Nation.” Slip op. at 1-2 (Kennedy, J., concurring).

It remains to be seen how the government will interpret and respond to this decision. The Corps is not statutorily obligated to issue JDs, and has implied that it could discontinue or reduce the regularity of this practice (which could further exacerbate the due process concerns stated in Justice Kennedy’s concurring opinion). The decision may also be applied to support judicial review of other agency action under the APA — an issue that was heavily discussed during the Court’s oral argument.