Justices Suggest Corps Water Jurisdiction Finding Reviewable

By Lars-Eric Hedberg

March 30 — U.S. Supreme Court justices suggested during oral argument March 30 that a Clean Water Act jurisdictional determination is a judicially reviewable final agency action because legal consequences flow from it.

The U.S. Army Corps of Engineers had presented the question to the court after the U.S. Court of Appeals for the Eighth Circuit ruled that such a determination issued to a Minnesota peat farmer is final agency action, creating a split from the Fifth and Ninth circuits which ruled that it is not a reviewable action (Hawkes Co. v. U.S. Army Corps of Eng'rs, 782 F.3d 994, 80 ERC 1265, 2015 BL 101976 (6th Cir. 2015)).

The corps had issued a determination to Hawkes Co.—which sought to mine peat from land in northern Minnesota—that wetlands on the property were waters of the U.S. and thus protected by the Clean Water Act. Hawkes challenged the determination in district court on the grounds that the wetlands weren't within the corps' regulatory reach.

Arguing on behalf the corps, Deputy Solicitor General Malcolm Stewart told the court that an approved jurisdictional determination is not final agency action because, despite the practical implications of delaying review, it does not alter a landowner’s legal rights and obligations.

“The determination expresses the corps' opinion about whether a particular tract contains waters protected by the Clean Water Act,” Stewart said. “That stated opinion may affect the recipient's assessment of the options available to it, but it does not affect the actual legal status of those options.”

M. Reed Hopper, counsel for Hawkes Co. and attorney at the Pacific Legal Foundation, told the court that a determination represents final agency action because it is a site-specific adjudication that represents the official view of the corps and is binding upon the parties for five years. The determination, according to Hopper, actually does decide rights and obligations.

Under Section 704 of the Administrative Procedure Act, judicial review is only available for final agency action. According to the Supreme Court, the action marks “the consummation of the agency's decision-making process” and “must be one by which ‘rights or obligations have been determined,' or from which ‘legal consequences will flow' ” (Bennett v. Spear, 520 U.S. 154 (1997)).

“The person who is subject to it has to take certain steps because of the law,” Justice Stephen Breyer said, “One, spend $150,000 to try to get an exception and fail, or two, do nothing, or three, violate it and possibly go to prison—those sound like important legal consequences that flow from an order that, in respect to the agency, is final, for it has nothing left to do about that interpretation.

“So we have harm flowing from a change in legal relations, we have an agency that has nothing left to do on this particular matter, and we have a court that is perfectly suited to review it,” he added.

Justice Ruth Bader Ginsburg also took up this view in her questioning.

“It's a deliberate attempt [by the corps] to make this determination formal and binding on the agency,” Ginsburg said. “This is the agency's position. It's a final adjudication of [the corps'] position on the jurisdictional question.”

Comparable Agency Communications

Justice Elena Kagan questioned both sides on how the determination compares to other kinds of programs where government agency compliance offices offer advice to parties seeking it.

Although the Clean Water Act doesn't require landowners to seek jurisdictional determinations, an approved determination indicates the agency will probably require a landowner to obtain a Section 404 dredge-and-fill permit under the law.

“Whether it's tax opinion letters, or SEC opinion letters, or FCC or whatever, how [does] this program compare to those and where you could draw sensible lines, because mostly we want government agencies to do these things,” she said. “We think that this helps people, to actually know what the government thinks about particular factual situations.”

Stewart said that if the court was drawing lines, the determination at issue in the case “would be fairly far removed from anything that ought to be judicially reviewable, because in many of the instances the informal advice that agencies are giving is about the perceived legality or illegality of specific contemplated private conduct.”

Hopper, however, said the agency communications Kagan described were advisory in nature and more akin to a preliminary jurisdictional determination, than an adjudicatory approved or final determination.

Government Reaction to Adverse Ruling

Justice Sonia Sotomayor posed a question that revealed some insight into how the government may react to an adverse ruling.

“Mr. Stewart, may I ask you, please don't panic by asking this question…But assuming we disagree with you that that should be appealable, what's the narrowest way to write this that the government would like?” she asked.

Stewart said that the corps and EPA could revoke a memorandum of agreement and change their policy on jurisdictional determinations.

“If the court ruled against us on the ground that it understood the EPA and the corps to have entered into a binding agreement, such that the EPA would be foreclosed from taking action based on its disagreement with the corps' jurisdictional determination, I think if that were the gravamen of the opinion, it would be one that if the agencies wanted to fix it, they easily could, simply by issuing a new MOA clarifying their view of the—the JD's effect,” said Stewart.

Judicial Review Raises Questions

Later in the argument, Justice Ginsburg raised a related issue with Hopper—if the EPA and corps change their policy and refuse to provide jurisdictional determinations (the statute is silent on them), Hawkes Co. is exposed to the same jurisdictional issues under the statute.

Implicit in this comment is the fact that the landowner is left with the same set of options—proceed without a permit, conduct no development on the land, or seek a permit from the corps. Moreover, an expensive and lengthy litigation in the district and court of appeals may follow.

“So because the agency has provided something that at least is some benefit to the public it served, it becomes subject to immediate review, where, if it had done nothing, all we had was the statute. Then your client is still left with the same choices, right?” Ginsburg asked.

Sotomayor also said that if the court rules that the determinations are final agency action, the agencies could change their practice.

Hopper responded that his client can only challenge the agency practice that exists today.

Clean Water Act Constitutional?

Lastly, Justice Anthony Kennedy, long considered the swing vote on the court before the passing of Justice Antonin Scalia, raised the issue of whether the Clean Water Act is constitutional.

“I think underlying Justice Kagan's question is that the Clean Water Act is unique in both being quite vague in its reach, arguably unconstitutionally vague, and certainly harsh in the civil and criminal sanctions it puts into practice,” he said.

The court is expected to issue an opinion by June 2016.

All of the amicus briefs submitted in the case supported the position of Hawkes Co. .

By Lars-Eric Hedberg

To contact the reporter on this story: Lars-Eric Hedberg in Washington at lhedberg@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

For More Information

The transcript of the U.S. Supreme Court argument in is available at http://src.bna.com/dI6.