The Supreme Court recently held that a landowner may appeal a determination that its property contains waters that are regulated under the federal Clean Water Act (CWA). See U.S. Army Corps of Engineers v. Hawkes Co., Inc.,No. 15-00290 (May 31, 2016). The Court’s decision resolved a circuit split between the Courts of Appeals for the Eighth and Fifth Circuits. By allowing access to the courts sooner, Hawkes may relieve some of the regulatory burden on landowners. It remains to be seen whether lowering the bar to judicial review also will influence the outcome of any borderline jurisdictional determinations.

The CWA requires a permit for the discharge of fill material or other pollutants into “waters of the United States,” which includes certain streams, wetlands and other water bodies. The initial step in determining whether a permit may be required is a jurisdictional determination (JD) by the US Army Corps of Engineers (Corps). There are two types of JDs: preliminary and approved. A preliminary JD advises a property owner that waters subject to the CWA may be present, while an approved JD definitively states that such waters are present or absent. The issue presented in Hawkes was whether an approved JD was judicially reviewable in federal court.

Hawkes Company Inc. is a Minnesota peat mining business. In planning to expand its mining operations to a new tract, Hawkes sought a JD. The Corps issued an approved JD stating that the property at issue contained “waters of the United States” because its wetlands had a “significant nexus” to the Red River. The effect of the JD was to force Hawkes to either obtain a dredge-and-fill permit under Section 404 of the CWA, risk an enforcement action, or abandon the effort entirely. Hawkes sought judicial review of the JD under the Administrative Procedure Act (APA). The US District Court for the District of Minnesota held that the JD was not an appealable “final agency action” under the APA, and that to be entitled to judicial review, Hawkes would either have to apply for a permit and be denied, or be the subject of an enforcement action for undertaking the mining without a permit.

The US Court of Appeals for the Eighth Circuit reversed the district court, holding that the JD was immediately appealable.

The Supreme Court affirmed the Eighth Circuit. Applying the two-part test laid out in the seminal decision in Bennett v. Spear, 520 U.S. 154, 177-178 (1997), the Court held that the JD was an appealable “final agency action” because (1) it “‘mark[s] the consummation’ of the Corps’ decision-making process” and (2) legal consequences flow from approved JDs. The key dispute in Hawkes was the second prong of the test, i.e., whether an approved JD carries legal consequences. In deciding that issue, the Court relied in part on a memorandum of agreement between the EPA and the Corps stating that the agencies are bound to follow an approved JD in enforcement actions and other litigation for at least five years after the JD’s publication, creating a “safe harbor” for property owners.

While Hawkes is a victory for landowners, it is important to note the limitations of the decision. First, it applies only to approved JDs, not preliminary ones, which likely are not appealable. Second, as the Court's rationale for finding approved JDs appealable relies, in significant part, on a policy contained in an EPA-Corps memorandum of agreement, it is possible that the EPA and the Corps will modify or revoke that policy in an effort to render all JDs non-appealable.