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The Agricultural Impact: Wetlands Jurisdictional Determinations are Reviewable in Court The Agricultural Impact: Wetlands Jurisdictional Determinations are Reviewable in Court

The Agricultural Impact: Wetlands Jurisdictional Determinations are Reviewable in Court

On Tuesday, May 31, 2016, the United States Supreme Court issued a unanimous and important decision holding that approved jurisdictional determination (“JDs”) by the United States Army Corps of Engineers (“Army Corps”) for wetland delineations under the Clean Water Act (“CWA”) are final agency actions subject to judicial review. United States Army Corps of Engineers v. Hawkes, No. 15-290 (“Hawkes”). The Supreme Court found JDs satisfy both aspects for a final agency action in that a JD reflects the end of the agency’s decision making process and also fixes certain legal rights and obligations for a property owner. Given these attributes, a JD has significant legal consequences and is reviewable as final agency action under the Administrative Procedures Act. This result is similar to the court’s ruling in 2012 that CWA compliance orders issued by the Environmental Protection Agency are also subject to judicial review. Sackett v. Envt’l Prot. Agency, No. 10-1062 (2012).

Hawkes involved a typically long and arduous wetland compliance scenario. The property owners wanted to mine peat from a portion of their properties in Minnesota and in 2010 submitted an application to the Army Corps for a CWA discharge permit. Early discussions between the applicants and the Army Corps made it clear that the permitting process would be long and expensive with no certain outcome. In this case, 15 months into the process, the Army Corps issued a JD asserting the properties contained wetlands with a significant nexus to the Red River located a mere 120 miles away. Importantly, this was not merely a preliminary determination but a fully approved JD. The property owners challenged that decision in federal district court, which held the JD could not be reviewed, ultimately leading to the Supreme Court.

The Supreme Court brushed aside arguments by the Army Corps that a JD is not reviewable because it could be reviewed either in the context of an enforcement action (if the property owners risked discharging fill material without a permit) or a permit appeal. Precedent makes clear that parties need not await enforcement proceedings – especially ones with criminal liability or potentially ruinous $37,500 per day penalties – to challenge final agency action. Hawkes, Slip Op. 8-9. Likewise, a possible permit appeal is an inadequate alternative when the permit process is likely to be long and expensive. In Hawkes, the Army Corps had requested studies estimated to cost over $100,000. While possibly relevant to the permit, the studies would not change the JD in the least, and so did not affect its finality. Id. The Supreme Court also rejected the Army Corps’ argument that Congress intended to authorize review of CWA coverage decisions only in enforcement actions or permit appeals. As the court noted, the CWA makes no mention of JDs and so its provision of judicial review through enforcement or permit appeals has no bearing on whether JDs are reviewable.

The next step in this saga between property rights and CWA jurisdiction over wetlands is likely to be more substantive than the result in Hawkes. As this week’s opinion shows, the justices are clearly troubled by the uncertain reach of the CWA, the potentially ruinous penalties for violations and the impact on private property rights. The uncertain reach of the CWA could be addressed head on in the challenges to the Army Corps’ 2015 rule revising the CWA definition of “waters of the United States.” See e.g. In re EPA, 803 F.3d 804 (CA6 2015).

For the agriculture community, the justices’ interpretation of the CWA is a step in the right direction.  The recent revision to the “waters of the United States” definition created considerable uncertainty for agriculture landowners with respect to whether certain farm ditches, ephemeral drainages, agricultural ponds, and isolated wetlands located on their property would be subject to CWA jurisdiction. The sentiment from the justices over the uncertain scope of the CWA suggests this issue, if reviewed in a forthcoming challenge, would likely be addressed and hopefully remedied in subsequent opinions.  How the justices will interpret the scope of the CWA, including whether certain agriculture land will be subject to CWA jurisdiction and the consequent permit requirements, still remains to be determined.  Nevertheless, Justice Kennedy, whose vote would likely be determinative if the court reviews the revised “waters of the United States” definition, is clearly concerned with overreach of the CWA stating that “the reach and systemic consequences of the Clean Water Act remain a cause for concern.”  Whatever the fate of the “waters of the United States” definition, this opinion is significant for all landowners by providing an opportunity to challenge JDs and avoid unnecessary expense and delay as well as affirming the binding nature of a JD on both the Army Corps and the EPA.

As to the procedural issue decided in Hawkes, the future is less certain. For years, the Army Corps has sought to mitigate the vague definition of “waters of the United States” by offering the opportunity for property owners to get clarification through the issuance of preliminary determinations and fully approved JDs, while at the same time, trying to keep the courts out of the picture by asserting that JDs are not subject to judicial review. The latter part of that strategy has now been rejected by the Supreme Court. It remains to be seen whether the Army Corps will use that rejection as a reason to abandon the JD process altogether. In a potentially ominous observation, the Supreme Court agreed with the Army Corps that the CWA would only offer review of CWA coverage determinations via enforcement actions or permit appeals if the JD process did not exist. Despite this potential dark cloud, for now, Sackett and Hawkes are important checks on the government’s practice of asserting questionable CWA jurisdiction and then avoiding timely judicial oversight.

For more information about this decision, contact Tom Dimond, or a member of our Environmental group. If you have questions about how the decision impacts agricultural communities, contact Melissa Proffitt, Amy Berg or a member of our Agribusiness team.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.
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