On May 31, 2016, the U.S. Supreme Court substantially strengthened property rights for landowners whose property has been determined to contain wetlands subject to regulation under the Clean Water Act. In United States Army Corps of Engineers v. Hawkes Co., Inc., 578 U.S. __ (2016), the Court unanimously (8-0) held that an “approved jurisdictional determination” by the U.S. Army Corps of Engineers is a final agency action subject to judicial review. As a result, landowners may now immediately challenge such determinations without having to first complete the exhausting, expensive, and uncertain Section 404 permitting process.

The Clean Water Act prohibits “the discharge of any pollutant” without a permit into “navigable waters,” which it defines as “the waters of the United States.” It is often difficult to determine whether a particular piece of property contains “waters of the United States,” but there are important consequences if it does. The CWA imposes substantial criminal penalties, and civil penalties of up to $37,500 per day of violation, for discharging any pollutant into waters covered by the CWA without a permit from the Army Corps. Moreover, the time and cost to obtain a permit are substantial.

The Army Corps specifies whether particular property contains “waters of the United States” by issuing jurisdictional determinations on a case-by-case basis. “Preliminary” jurisdictional determinations merely advise a property owner “that there may be waters of the United States on a parcel.” In contrast, “approved jurisdictional determinations definitively “state the presence or absence” of such waters. Approved jurisdictional determinations are defined by regulation to “constitute a Corps final agency action” and they are binding for five years on both the Army Corps and the Environmental Protection Agency, which share authority to enforce the CWA.

The Hawkes case arose out of the application by three family-owned and operated companies, referred to as the Hawkes Co., Inc., to the Army Corps for a Section 404 Permit to mine peat (which it uses to provide structural support and moisture for high-quality golf greens) from a wetland on their property. Corps officials responded to the application by noting that the permitting process would be expensive and take years to complete. The Corps eventually issued an “approved” jurisdictional determination, stating that the property contained “waters of the United States” because its wetlands had a “significant nexus” to the Red River of the North, approximately 120 miles away.

The Hawkes Co. appealed the jurisdictional determination to the Army Corps’ Mississippi Valley Division Commander, who remanded for additional fact-finding. On remand, the Corps reaffirmed its conclusion and issued a revised jurisdictional determination. The Hawkes Co. sought review under the Administrative Procedure Act , and the Minnesota District Court dismissed for lack of subject matter jurisdiction, holding that the revised jurisdictional determination was not “final agency action for which there is no other adequate remedy in court,” as required by the APA prior to judicial review. The Eighth Circuit Court of Appeals reversed. The U.S. Supreme Court granted certiorari to address whether the Corps’ approved jurisdictional determination constitutes “final agency action” for which there is no other adequate remedy in a court and is therefore subject to judicial review under the Administrative Procedure Act.

Based on earlier Supreme Court cases, two conditions must be satisfied be for an agency action to be “final” under the APA. “First, the action must mark the consummation of the agency’s decision-making process—it must not be of a merely tentative or interlocutory nature . . . And second, the action must be one by which rights or obligations have been determined, or from which legal consequences will flow.”

Given that the Army Corps itself describes approved jurisdictional determinations as “final agency action” and specifies that an approved jurisdictional determination “will remain valid for a period of five years,” the Court had no trouble concluding that the first requirement was satisfied. The Court held the second requirement was satisfied, too, reasoning that a negative jurisdictional determination—which states that a particular property does not contain jurisdictional waters—creates a five-year safe harbor from civil enforcement proceedings for a property owner, while an affirmative jurisdictional determination denies that safe harbor.

The Court also rejected the Army Corps’ argument that the Hawkes Co. had two adequate alternatives, either to discharge fill material without a permit, risking enforcement action during which Hawkes Co. can argue that no permit was required, or apply for a permit and seek judicial review if dissatisfied with the results. Neither alternative is adequate. Writing for the Court, Chief Justice Roberts explained that landowners “need not assume such risks while waiting for EPA to “drop the hammer” in order to have their day in court.” Nor is it an adequate alternative to judicial review for a landowner to proceed through the arduous, expensive, and long Section 404 permitting process and then seek judicial review of an unfavorable decision.

Justice Kennedy wrote an important concurring opinion, joined by Justices Thomas and Alito, in which he questioned the very foundation of the CWA. According to Justice Kennedy, “the reach and systemic consequences of the Clean Water Act remain a cause for concern . . . The Act, especially without the [jurisdictional determination] procedure were the Government permitted to foreclose it, 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.”

Although the Court ultimately did not address the underlying question in Hawkes—whether the wetlands contained a “significant nexus” with a river located 120 miles away—its conclusion that approved jurisdictional determinations issued before Section 404 permitting processes are completed is extremely important to landowners. Because the Court determined that such determinations are like other federal agency actions that may be challenged in court, Hawkes opens the door for more landowners to try to overturn Army Corps determinations regarding waters that warrant protection under the CWA.