Supreme Court to Hear Wetlands Jurisdiction Case

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By Amena H. Saiyid

Dec. 11 — The U.S. Supreme Court agreed Dec. 11 to review whether a Clean Water Act jurisdictional determination issued by the U.S. Army Corps of Engineers for a tract of wetlands in Minnesota is a final agency action that is subject to judicial review.

The justices took up the question because three federal appeals courts couldn't agree on whether the non-binding jurisdictional determination was a final agency action that could be challenged in federal courts under the Administrative Procedure Act. Both the nonprofit Pacific Legal Foundation (PLF), which is representing the petitioner Hawkes Co. Inc., and the Justice Department expected the court would accept the petition as both sides had sought review (215 DEN A-7, 11/6/15).

“The court just informed me that the case will be heard in the March-April timeframe with a decision by the end of June,” M. Reed Hopper, the foundation's principal attorney who is litigating the case for Hawkes, told Bloomberg BNA Dec. 11.

Although the Clean Water Act doesn't require jurisdictional determinations, the approval of one indicates that the corps will require the landowner to obtain a Section 404 dredge-and-fill permit for activities that may affect any wetlands or waters on the property, as was the case with Hawkes, a peat farming company in Minnesota.

Punitive Action Feared

Absent the ability to challenge these determinations in court, the PLF said, property owners such as Hawkes whose acreage is designated as “wetlands” can either abandon use of the land, go through the permitting process, which averages more than $270,000 over a two-plus year timeframe, or proceed with property development without a permit, risking fines of up to $37,500 a day and possible imprisonment.

“When Clean Water Act officials assert control over someone's private property, they should be prepared to defend, in court, their claim that the property is, in fact, wetlands. Their decisions should not be insulated from scrutiny and examination, as if the regulators were a law unto themselves,” Hopper said in a Dec. 11 statement.

He added that the right of judicial review is especially important “because regulators can assert Clean Water Act coverage over almost any piece of property if they are creative enough.”

At issue in this instance is the tract of wetlands owned by Hawkes that the corps in February 2012 deemed jurisdictional under the Clean Water Act.

Hawkes challenged the status of the non-binding jurisdictional determination but received an unfavorable opinion from the U.S. District Court for the District of Minnesota. The peat farming company, however, was successful in getting the U.S. Court of Appeals for the Eighth Circuit in April 2015 to agree that the corps' finding was indeed a final agency action (Hawkes Co. v. U.S. Army Corps of Eng'rs, 782 F.3d 994, 80 ERC 1265, 2015 BL 101976 (8th Cir. 2015) ;70 DEN A-1, 4/13/15).

Split Among the Circuits

The Eighth Circuit's decision set up a conflict with two other appellate courts as, in 2014, the Fifth and Ninth circuits ruled to the contrary, holding that jurisdictional determinations weren't final agency actions and couldn't be challenged.

The Supreme Court, however, did not grant review in a separate but similar case involving Kent Recycling Services LLC, a solid waste landfill owner, nor did it consolidate that case with Hawkes, even though the same legal question was at stake, according to Hopper.

“That means the court will either dismiss Kent (unlikely) or stay the case until Hawkes is decided,” Hopper said in an e-mail. “If the court rules in Hawkes' favor, the court would send Kent back to the Fifth Circuit with instructions to reconsider Kent in light of the decision in Hawkes.”

Kent Recycling, a solid waste landfill owner, had sought a rehearing in April from the Supreme Court following the Eighth Circuit's ruling (Kent Recycling Servs. LLC v. U.S. Army Corps of Eng'rs, U.S., No. 14-493, 4/16/15; 77 DEN A-3, 4/22/15)).

In early November, John Cruden, assistant attorney general for the Justice Department's Environment and Natural Resources Division, predicted that the Supreme Court would take up Hawkes, saying that he saw the case as the natural progression to the challenge in Sackett v. EPA (132 U.S. 1367, 73 ERC 2121, 2012 BL 67234 (U.S. 2012)).

Resurrecting Sackett.

In Sackett, which was successfully argued by the Pacific Legal Foundation, the court held that an administrative compliance order issued by the Environmental Protection Agency prior to taking civil enforcement action was indeed subject to judicial review.

“Just as Sackett established that federal wetlands orders may be appealed to the judiciary, in Hawkes we're arguing that the formal designation of a property as ‘wetlands’ by the federal government is also subject to judicial review,” Hopper said. “Anything else would imply that wetlands bureaucrats can do no wrong and make no mistakes. But they're human like the rest of us, so the property owners who are subject to their decrees have the right to ask the courts for a second opinion.”

The Supreme Court in its Dec. 11 order also permitted the National Association of Home Builders to file an amicus brief.

The inability to challenge non-binding jurisdictional determinations for property parcels has been a long-standing issue for home builders, according to Thomas Ward, NAHB vice president for advocacy, who termed the Supreme Court's action a “good development.”

“We have members who would get jurisdictional determinations but they couldn't go to court and challenge them and say, ‘No, this wetland is not a water of the United States,' ” Ward told Bloomberg BNA Dec. 11.

To contact the reporter on this story: Amena H. Saiyid in Washington at asaiyid@bna.com

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