On April 10, 2015, the United States Court of Appeals for the Eighth Circuit held that the issuance of a jurisdictional determination (JD) by the U.S. Army Corps of Engineers (Corps) pursuant to the Clean Water Act (CWA) constitutes a final agency action subject to immediate judicial review under the Administrative Procedure Act (APA). Hawkes Co., Inc. v. United States Army Corps of Engineers, No. 13-3067, slip. op. (8th Cir. Apr. 10, 2015). The Eighth Circuit's decision squarely conflicts with the Fifth Circuit's recent decision in Belle Company L.L.C v. United States Army Corps of Engineers, 761 F.3d 383 (5th Cir. 2014), thereby creating a split between the circuits, which is one of the key factors that the United States Supreme Court considers when determining whether to grant a petition for writ of certiorari1.
Under section 404 of the CWA, the discharge of dredged or fill materials into "navigable waters" requires a permit from the Corps. "Navigable waters" are defined as "waters of the United States." Due to this broad definition, and particularly with respect to wetlands, it is often unclear whether "waters of the United States" exist on a piece of property. Thus, public agencies or private parties may apply to the Corps for a JD to determine whether and the extent to which "waters of the United States" exist on their land.
In the instant case, Hawkes Co., Inc., et al. (Hawkes) sought to mine peat from wetland property located in northwestern Minnesota. Hawkes initiated the CWA permitting process in December 2010. Despite various administrative challenges, the Corps issued a final JD in December 2012, finding that the wetlands were in fact "waters of the United States," and therefore subject to CWA jurisdiction.
Hawkes sought judicial review of the JD, arguing the wetlands did not satisfy the applicable tests for CWA jurisdiction set forth by the Supreme Court in Rapanos v. United States, 547 U.S. 715, 726-727 (2006) (plurality opinion). The Corps sought to dismiss the action, arguing the JD did not qualify as a final agency action subject to judicial review under the APA. In determining whether the JD was a final agency action, the district court applied the test set forth by the Supreme Court in Bennett v. Spear, 520 U.S. 154, 177-78 (1997): (1) the action must "mark consummation of the agency's decisionmaking process -- it must not be of a merely tentative or interlocutory nature," and (2) "the action must be one by which rights or obligations have been determined, or from which legal consequences will flow." The district court held in favor of the Corps and dismissed the action, finding that while the JD satisfied the first prong of the Bennett test, it did not satisfy the second prong.
The district court based its decision on the reasoning set forth by the Supreme Court in Sackett v. EPA, 132 S. Ct. 1367 (2012). In Sackett, the Environmental Protection Agency (EPA) issued an administrative compliance order against a person for depositing fill into jurisdictional wetlands without a permit, ordering, among other things, that the site be restored. Applying the Bennett v. Spear test, the Supreme Court held that the compliance order was a final agency action because it required the Sacketts to restore property they had altered without a permit or subject them to considerable penalties if they chose to disobey.
The district court distinguished the Court's decision in Sackett, reasoning that Hawkes faced no legal obligations or changes in its rights as a result of the JD; the JD did not compel affirmative action from Hawkes, as did the compliance order in Sackett. Thus, the district court held the JD did not constitute a final agency action because it failed to satisfy the second prong of the Bennett v. Spear test.
On appeal, the Eighth Circuit reversed, holding the district court, and the Fifth Circuit in Belle Company L.L.C v. United States Army Corps of Engineers, misapplied the Supreme Court's decision in Sackett. The court stated that the lower court's analysis "seriously understates the impact of the regulatory action at issue by exaggerating the distinction between an agency order that compels affirmative action, and an order that prohibits a party from taking otherwise lawful action." In other words, the Eighth Circuit held that because the JD altered and adversely affected Hawkes' right to use its property in conducting a lawful business activity, this was sufficient to satisfy the second prong in Bennett; it was not dispositive that the JD did not compel affirmative action from Hawkes.
The Eighth Circuit was also unpersuaded by the Corps' argument that Hawkes had two other ways to contest the JD – complete the permitting process and appeal if the permit was denied, or commence peat mining without a permit and subject itself to an enforcement action and/or considerable penalties. Noting the prohibitive costs, risks and delays associated with both options, the court found that as a practical matter, both of these remedies were entirely inadequate2. Thus, the Eighth Circuit held that "a properly pragmatic analysis of ripeness and final agency action principles compels the conclusion that the [final] JD is subject to immediate judicial review."