By Allowing Immediate Judicial Review in Clean Water Act Case, Supreme Court May Hamper Agencies’ Ability to Advise Regulated Communities
Before the Supreme Court’s recent ruling in Army Corps of Engineers v. Hawkes, landowners had to endure the expensive and time consuming Clean Water Act (CWA) permitting process before they could appeal a Jurisdictional Determination (JD) made by the Corps. A JD is the Corps’ final scientific and legal opinion as to what areas are “waters of the United States” (WOTUS) under the Corps’ jurisdiction, which triggers that permitting process.
The Hawkes Court unanimously decided that a JD is final agency action that may be immediately appealed.
Hawkes appears to give the regulated community a fast-lane to the courthouse to challenge administrative actions with which they disagree. But it may have unexpected consequences, in particular:
- generating more litigation over the Corps’ WOTUS decisions – either landowner challenges to avoid the CWA, or, potentially, enviro challenges to enforce the CWA. This outcome could provide landowners and enviros a boost when interacting with the Corps.
- deterring government agencies from giving regulatory advice, because of that potential for more litigation. This outcome may altogether transform administrative practice.
Potential Long-Term Impacts: Corps Could Issue Fewer JDs, Especially If the New Clean Water Rule Survives
Whether Hawkes will generate more frequent WOTUS litigation will depend on two additional factors.
First is whether the Corps responds to Hawkes by reducing the number of JDs it issues. The Corps is under no statutory obligation to issue JDs, which are a creature of its own making. Indeed, in its brief, the Corps suggested it might issue fewer JDs if landowners could immediately contest them in court.
This response would be bad news for both landowners and the Corps. Without JDs, developers would be deprived of the agency’s valuable expertise in close cases, resulting in the Corps’ having to police developers rather than assist them. That dynamic could ultimately compromise overall CWA compliance.
Second, Hawkes’ long-term impact depends on the fate of the 2015 Clean Water Rule, which the Sixth Circuit recently stayed after business groups, states, and enviros all brought legal challenges.
As we discussed in an earlier post, the new Rule aims to make WOTUS determinations more predictable and uniform. Easier WOTUS determinations under the Rule would reduce the need for fact-intensive JDs, thus tending to moderate the number legal challenges to JDs.
The Rule is bound to end up before the Supreme Court. Should it fail to survive, Hawkes’ tendency to generate JD litigation could be a lasting one.
Could Hawkes Restrict Agency Influence More Generally?
Hawkes may have the effect of diminishing the power enjoyed by regulatory agencies across the country. Other agencies such as the EEOC, the Department of Labor, and the IRS, issue opinions and advisory rulings to their respective regulated communities. Before Hawkes, such advice was generally unreviewable.
But by adopting the Court’s reasoning in Hawkes – discussed below – regulated entities might challenge such advice as being unduly coercive. So far, at least two federal circuit courts have allowed these Hawkes-type challenges to proceed. (Rhea Lana is one example from the D.C. Circuit.)
This trend could handicap agencies’ ability to advise and educate the regulated community. Agencies may need to temper the content of their communications with the private sector so as not to create a “comply or else” atmosphere.
The Facts: Mining Wetlands and the Current WOTUS Regime
The case began when the Hawkes Company, seeking to mine peat in Minnesota, applied to the Corps for a Section 404 “dredge and fill” permit. Section 404 of the CWA prohibits discharges of fill or pollutants into WOTUS without a permit. At an applicant’s request, the Corps will issue a JD to determine whether WOTUS is present.
The Corps makes JDs available because determining WOTUS can be a notoriously difficult task, one fraught with scientific complexity and judgment calls. The problem stems from the complex legal framework underlying WOTUS (which the new Clean Water Rule intends to simplify).
In this case, the Corps determined that Hawkes’ property contained WOTUS because its wetlands had a significant nexus to a river 120 miles away. The finding effectively required Hawkes to undertake a lengthy, and costly, Section 404 permitting process. Hawkes instead appealed to federal district court.
The legal question was whether Hawkes could appeal the Corps’ JD at this early stage.
The Legal Landscape: A Circuit Split Over JD Reviewability
The Administrative Procedure Act allows courts to review only certain “final” agency actions.
Case law sets out a three-part test for reviewability. First, the action must be the culmination of the agency’s decision-making process. Second, it must “give rise to direct and appreciable legal consequences.” And third, it must leave the affected party no adequate alternatives to review in court.
Until the Eighth Circuit’s decision in Hawkes, it was well established that JDs were not reviewable. Thus, a party could only challenge a JD after it either obtained, or was denied, a “dredge and fill” permit, or in the event that the Corps or EPA brought enforcement proceedings against them.
The Decision: The Supreme Court Chooses a Pragmatic Approach to Reviewability
Siding with the Eighth Circuit, the Supreme Court found that “approved JDs” (as opposed to preliminary JDs) are subject to immediate judicial review because they are the Corps’ definitive ruling on the WOTUS question (thus “final”), and carry significant legal consequences.
A negative JD – finding no WOTUS present – confers a five-year safe harbor from enforcement actions by the Corps and the EPA. A positive JD has consequences of its own – it warns the recipient that proceeding without a permit will subject it to civil and criminal penalties. Fines for CWA violations can surpass $30,000 per day.
In light of these consequences, the Court ruled, a positive JD leaves recipients with no adequate alternatives to judicial review. Otherwise, a recipient is left to: (1) abandon the use of the property, (2) seek potentially unnecessary – and expensive – permits, or (3) risk fines and even imprisonment by proceeding with a potentially lawful use of the land.
Judicial Backlash Against the CWA: Part of a Trend Allowing Review of Agency Determinations
Hawkes echoes the Supreme Court’s recent decision in another CWA case, Sackett v. EPA, which was also unanimous. In Sackett, EPA issued an administrative compliance order requiring that residential landowners remove fill material from purported WOTUS or risk large fines. As in Hawkes, the Court ruled that landowners have a right to pre-enforcement judicial review of these compliance orders and need not wait until EPA drops the hammer to get their day in court.
Taken together, Hawkes and Sackett may signal that conservative critiques of the CWA’s overreach are now mainstream for the federal judiciary.
Indeed, Justice Kennedy wrote a terse concurring opinion in Hawkes, in which Justices Thomas and Alito joined, calling the CWA’s reach “ominous,” and noting “troubling questions regarding the Government’s power to cast doubt on the full use and enjoyment of private property throughout the Nation.” (Kennedy’s forcefulness is somewhat ironic, given his “significant nexus” test was the foundation for the Corps’ JD in this case.)
While the power of this strain of thought in the Supreme Court may be limited without the late Justice Scalia on the bench, it could play a role in many of the lower federal courts. Because Hawkes increases the courts’ influence in shaping both the CWA and administrative decisions more generally, the case merits close attention.
Image Credit: Izee