Legal Bulletins

The U.S. Supreme Court gave private property owners a victory last week in holding that a landowner can challenge an Army Corps of Engineers (Corps) determination that its peat mining operation contained a wetland protected by the Clean Water Act.

In the case of U.S. Army Corps of Engineers v. Hawkes Co., (May 31, 2016), the Court ruled unanimously that a "jurisdictional determination" (JD) by the Corps is a "final agency action" that is subject to immediate judicial review, rather than requiring the landowner to wait until an enforcement action is brought or until the permit process has concluded.

Hawkes Co. sought permission to expand its peat mining operations on land it owned. The Corps issued a JD, finding that the property contained "waters of the United States", because wetlands located on the property had a "significant nexus" to a river located 120 miles away. The company sought to challenge the JD in court, but the trial court dismissed the case on the grounds that the JD was not a final agency action subject to immediate judicial review.

The trial court held that the company could either:

• Apply for a federal permit to fill the wetlands and seek judicial review at the end of the likely long and expensive permitting process; or
• Proceed without a permit and risk Environmental Protection Agency enforcement action, during which the landowner could argue that no permit was required.

The U.S. Court of Appeals for the Eighth Circuit reversed, holding that the JD was subject to immediate challenge in court and that the alternatives were not acceptable. Due to a conflict among the circuits, the Supreme Court granted certiorari to resolve the issue.

The Supreme Court held that a JD is a final agency action subject to immediate judicial review, because a JD marks the end of the Corps' decision making on that issue and has "direct and appreciable legal consequences." The Court rejected the agency's argument that the company had adequate alternatives to judicial review. According to the Court, landowners should not have to risk civil penalties of up to $37,500 per day or potential criminal liability to have their day in court, nor should they have to spend significant time and money going through a potentially unnecessary permitting process that will not alter the finality of the JD.

In a concurring opinion, Justice Kennedy (joined by Justices Clarence Thomas and Samuel Alito) observed that "the reach and systemic consequences of the Clean Water Act remain a cause for concern," in that the scope of the Act is "notoriously unclear" and the consequences "even for inadvertent violations can be crushing." Justice Anthony Kennedy also observed that the Corps' argument that its JDs were not binding and could be revoked in the agency's unfettered discretion would result in the Act having a virtually "unchecked" and "ominous reach."

The Supreme Court's decision in Hawkes continues the Court's recent decisions upholding landowners' private property rights. In light of Hawkes, landowners will now be more likely to challenge JDs, which may lead to more court rulings regarding the breadth and enforceability of the Clean Water Act.

For additional information, please contact Michael C. Powell.

Michael C. Powell
410-576-4175 • mpowell@gfrlaw.com