“All good things come to those who wait,” certainly is not an expression that applies to property owners who receive wetlands jurisdictional determinations (JD) from the Army Corps of Engineers with which they disagree. In fact, if you have been on the receiving end of an adverse JD, the only available courses of action ranged between unpalatable and downright prejudicial.
This was the reality that confronted Hawkes Co, Inc., a family-owned peat mining company in Minnesota. Hawkes disputed an Army Corps JD that would have required it to obtain a permit to expand its existing mining operations to include a 530-acre parcel. The events laid out in a recent opinion by the Eighth Circuit Court of Appeals read like a stereotype of the bureaucracy run amok.
Corps officials reviewed the Hawkes’ Clean Water Act application, but discouraged them from ever expecting a positive outcome. At one point during the informal administrative process, one company official was told that “he should start looking for another job.” Months later, after first suggesting that only a NEPA environmental assessment would be required, the Corps recommended that the Hawkes sell their land to a wetlands bank because now a full environmental impact statement would have to be done, delaying issuance of a permit for years.
Following existing procedures, the company filed an appeal to the Corps District’s ranking officer. Surprisingly, that officer sustained the appeal, finding that the record had not supported the JD that the property contained wetlands and “waters of the United States.” Upon remand, however, the District reaffirmed its original stance, claiming that there was “significant nexus” between the Hawkes’ property and the Red River of the North, a navigable water approximately 120 miles away.
The company challenged this administrative ruling in federal district court, but faced the standard argument that the Corps has been making for years – that a JD is not a “final agency action.” Only a permit denial could be challenged in court. Following existing precedent from a couple of other circuits, the federal district court judge dismissed the case. The company appealed.
Here’s where common sense kicked in.
In a short and plainly worded opinion, the Eighth Circuit reversed. The Corps argued, as it has done repeatedly, that the family had two ways to contest the JD. Either complete the permit process and appeal if the permit is denied OR commence the challenged activity without a permit and challenge the Corps’ authority if it issued a compliance order or took civil enforcement action.
“Wait a minute,” the Hawkes argued. “You mean we would either need to pursue a permit that we’ve been told for over 2 years you would never grant, or we need to risk getting an enforcement order from the Corps, making us subject to severe financial penalties?” “Yes,” said the Corps, “but at least you have options!” (Forgive the creative license, but the lower court briefing followed that hypothetical conversation.)
The Eighth Circuit had finally had enough. “First, as a practical matter, the permitting option is prohibitively expensive and futile.” (That IS a direct quote from the opinion!) The court firmly rejected putting the property owner in the “Catch-22” scenario where it could never recover the time or money they would have had to expend for a permit, that in theory, they were never legally obligated to obtain.
The second option was even more easily turned aside. “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.”
These terrible choices would in essence get the Corps what its local District officials obviously wanted – abandonment of the peat mining – without ever facing review on its expansive JD in light of the current Supreme Court interpretation of “waters of the United States.” The court saved its best comment for last, writing that the Corps’ legal position that a JD was “merely advisory and has no more effect than an environmental consultant’s opinion ignores reality.”
While it is refreshing to read an appellate court coming to terms with the costs and frustrations of the Section 404 program, it also makes you feel for property owners like the Hawkes who find themselves still stymied after nearly five years of a futile application process and subsequent litigation. Hopefully, history will not re-PEAT itself, when they go back before the district court.