Today, the Eighth Circuit Court of Appeals issued a precedent-setting decision in Hawkes v. United States Army Corps of Engineers, holding that jurisdictional determinations issued under the Clean Water Act are subject to immediate judicial review.
Under the Clean Water Act, the discharge of dredged or fill material into navigable waters requires a permit from the United States Army Corps of Engineers (other types of discharges require a permit from the United States Environmental Protection Agency or its state-agency designates). Although on its face seemingly straightforward, the question of what constitutes “navigable waters” has long perplexed agencies, the regulated public and the courts alike. Indeed, as Justice Alito noted in Sackett v. EPA, the Supreme Court’s most recent Clean Water Act decision, “[t]he reach of [that statute] is notoriously unclear,” such that “[a]ny piece of land that is wet at least part of the year is in danger of being classified … [as] covered by the Act.” That uncertainty is made all the more significant given the substantial penalties—almost $40,000 per day—that landowners would incur should they proceed with unpermitted activity in areas subsequently determined to be within the Act’s scope.
To provide property owners some measure of assistance in determining whether their land is subject to Clean Water Act regulation, the Corps has instituted by regulation a process for the solicitation of “jurisdictional determinations.” Under this system, a landowner may ask the Corps for its opinion on whether an area is jurisdictional. The Corps then provides its answer, which is generally valid for five years.
In Hawkes, the plaintiff property owner sought a jurisdictional determination from the Corps concerning several hundred acres on which it wanted to mine peat. After an extended and highly contested administrative proceeding, the Corps concluded that it had jurisdiction over the plaintiff’s acres. The plaintiff thereupon brought suit, challenging the Corps’ determination under the Administrative Procedure Act. Under that Act, an aggrieved party may seek judicial review of “final” agency action for which no other adequate review is available. To be final, an agency action must be the consummation of the administrative process, and it must produce legal consequences. The Corps argued—and the district court agreed—that the case should be dismissed because a jurisdictional determination is not final. The plaintiff appealed to the Eighth Circuit, which reversed.
In holding that jurisdictional determinations are reviewable, the Eighth Circuit made several key points.
First, agreeing with other courts that have addressed the issue, it concluded that a jurisdictional determination is the consummation of the administrative process, at least with respect to the Corps’ views on jurisdiction.
Second, disagreeing with two other circuit court decisions (Fairbanks North Star Borough v. U.S. Army Corps of Eng’rs and Belle Co. v. U.S. Army Corps of Eng’rs), the Eighth Circuit concluded that a jurisdictional determination produces sufficiently severe consequences to warrant immediate judicial review. The court explained that a jurisdictional determination forces landowners “either to incur substantial compliance costs (the permitting process), forego what they assert is lawful use of their property, or risk substantial enforcement penalties.” The court also emphasized a jurisdictional determination causes adverse things to happen to a landowner, notwithstanding that the determination is “not-self-executing.”
Third, the Eighth Circuit concluded that landowners like Hawkes have no other adequate remedy for challenging a jurisdictional determination. The Corps had argued that adequate remedies could be found either in the permitting process or as a defendant in an enforcement action brought by the Corps. But this argument, according to the court, “ignores the prohibitive cost of taking either of these alternative actions.” To begin with, “as a practical matter, the permitting option is prohibitively expensive and futile.” Similarly, to proceed in the face of the jurisdictional determination “would expose [Hawkes] to substantial criminal monetary penalties and even imprisonment for a knowing [Clean Water Act] violation.”
Underlying the Eighth Circuit’s decision is a concern that the Corps’ position would provide it an unfair (and legally unjustified) leverage over property owners whose land lies at the margins of the agency’s regulatory authority. As the court explained, the “prohibitive costs, risk, and delay of these alternatives to immediate judicial review evidence a transparently obvious litigation strategy: by leaving [Hawkes] with no immediate judicial review and no adequate alternative remedy, the Corps will achieve the result its local officers desire,” namely, the “abandonment of the peat mining project, without having to test whether its expansive assertions of jurisdiction” is supportable.
The Eighth Circuit’s decision is an important one, not just for those landowners arguably regulated under the Clean Water Act, but for all entities that must deal with the federal administrative state. It underscores that courts should employ “a properly pragmatic analysis of ripeness and final agency action principles” to determine whether an aggrieved party should have the right to immediate judicial review. That generous approach bodes well for the regulated public.