This month we revisit the rights of parties under the Clean Water Act’s wetlands regulations (readers will recall that in September 2015, we examined who can determine what property is or includes wetlands). This month, we will determine what rights a party has if they disagree with a decision maker’s determination that particular property is wetlands for purposes of the Clean Water Act.
Readers may remember that Section 404 of the Clean Water Act prohibits the filling of any wetlands without a permit from the U.S. Army Corps of Engineers. The Clean Water Act’s definition of wetlands is notoriously vague and circular. The U.S. Army Corps of Engineers and the Environmental Protection Agency both define wetlands as “those areas that are inundated or saturated by surface or groundwater at a frequency and duration sufficient to support, and that under normal circumstances do support, the prevalence of vegetation typically adapted for life in saturated soil conditions.” See Corps of Engineers Wetlands Delineation Manual, Technical Report Y-87-1, January 1987, p. 9 (citing Federal Register 1982 with respect to the Corps of Engineers and Federal Register 1980 with respect to the EPA).
Additionally, wetlands characteristically have soils present that are classified as hydric. Id., at 10. The Delineation Manual does not include a definition of the term “hydric.” Merriam-Webster defines hydric to mean very wet. So essentially, the Delineation Manual defines wetlands to mean an area that supports wetlands plant and animal life, and where very wet soils are present.
Even a casual observer will realize that these definitions are not helpful in determining whether a particular wet area on property constitutes a wetlands for which a permit is required or not. In addition, the definitions themselves ensure that the outlines and borders of wetlands will change over time. New wetlands will be created and old wetlands will disappear. The Corps of Engineers and the EPA have developed, therefore, a process by which an individual seeking to develop of a piece of property can obtain from the Corps of Engineers a “jurisdictional determination.” The Corps of Engineers will visit the property in question with the prospective developer and issue a determination as to whether any part of the property will be deemed wetlands for purposes of the Clean Water Act permitting process. Under the Corps’ rules, a developer who receives a jurisdictional determination may rely upon the determination for five years. That is, the Corps will not take any action that is contrary to the determination in the five-year period after the determination is issued.
What remedies are available to a developer who disagrees with the conclusion of the Corps as set forth in a jurisdictional determination? According to the Corps, the developer may immediately appeal the determination through the Corps’ administrative appeals process as set forth in 33 CFR Part 331. In that process, a board established by the Corps reviews the determination. Developers were skeptical of this process because of the perceived lack of independence of the appeal board. The Corps and the EPA have consistently maintained, though, that a jurisdictional determination is not a “final agency action” for purposes of the Administrative Procedure Act. That Act provides that only a final agency action may be appealed to a court. The Corps and the EPA have taken the position that only a permitting decision or enforcement decision (i.e., a decision to issue a compliance order penalty) constitutes a wetlands “final agency action” that can be appealed to a judge. The problem with the Corps’ interpretation has been that obtaining a permit can take months or years and cost tens or hundreds of thousands of dollars. Conversely, proceeding without a permit could subject a developer to civil and criminal penalties including fines of hundreds of thousands of dollars or jail sentences.
The judicial odyssey began when the U.S. Supreme Court held that an enforcement order is appealable to a court, as opposed to a Corps of Engineers appeals panel. Sackett v. U.S. Envtl. Prot. Agency, 132 S. Ct. 1367 (2012). In Sackett, the EPA had issued an order that the developer/homeowners remove fill from their property. The EPA could impose an administrative penalty of $75,000 per day for failure to comply with the order. The Sackett court relied on the tests for “finality” of an agency action established in 1997 in Bennett v. Spear, 520 U.S. 154 (1997). The Sackett Court, using the Bennett tests, held that the enforcement order was final and therefore appealable because “[t]hrough the order, the EPA determined rights or obligations,” because the order’s findings and conclusions were not subject to further review by the EPA and because there was no other appropriate course for relief for the Sacketts under the Clean Water Act.
In 2014, the Fifth Circuit, relying on Bennett and Sackett, ruled that a jurisdictional determination is not a final agency action subject to judicial review, holding that the determination merely alerts a landowner that a permit will be required in the future if the landowner pursues plans to develop the subject property. Belle Co., LLC v. U.S. Army Corps of Eng’rs, 761 F.3d 383, 387, (5th Cir. 2014), cert. denied, 135 S. Ct. 1548 (2015). The Firth Circuit stated that a property owner must wait until either a permit is denied, or a permit with conditions is issued or the court takes some enforcement action for work on the property that is not permitted before filing an appeal. The Eighth Circuit reached a contrary result in US Corp. of Army Corp. of Engineers v. Hawkes Company, 785 F. 3d 994 (Eight Circuit 2015). Because of the split in circuits, the Supreme Court agreed to review the Eighth Circuit decision.
The Supreme Court helped the oral arguments in the Hawks case on March 30, 2016. At oral arguments, the Justices appeared to believe that the Corps’ interpretation did not comport with the Administrative Procedure Act. The Court’s questioning suggested that the Justices are aware that significant legal consequences can flow from a jurisdictional determination. Justice Breyer, for example, stated that once a jurisdictional determination is issued, the Corps has nothing left to do with respect to that particular matter and that a court that is suited to review the agency’s determination. With the current vacancy on the Supreme Court leaving a 4-4 ideological split, predicting Court outcomes has become extremely difficult. A 4-4 split on the Hawkes case would leave in place for this case only the right of Hawkes to appeal its jurisdictional determination, but would have no precedential effect on later courts, or on the Sackett decision.