U.S. Army Corps of Engineers v. Hawkes Co. (15-­290)

Issues 

Under the Administrative Procedure Act, are jurisdictional determinations by the U.S. Army Corps of Engineers that property contains “waters of the United States” (as defined by the Clean Water Act) subject to immediate judicial review?

Oral argument: 
March 30, 2016

Peat miner Hawkes Co., Inc. owns property in Minnesota that contains wetlands. Hawkes requested a jurisdictional determination (“JD”) from the U.S. Army Corps of Engineers (the “Corps”) to determine if Hawkes could mine on new land. Under the Clean Water Act (“CWA”), the Corps can issue JDs to inform landowners if their land contains “waters of the United States” and are thus subject to certain licensure requirements. The Corps surveyed the property and issued an affirmative JD. The Supreme Court will decide whether JDs are final agency actions subject to judicial review under the Administrative Procedure Act (“APA”). To appeal an administrative decision under the APA, the decision must be final and impose legal obligations. The Corps asserts that JDs are not final agency actions because they are merely informational, and argues there are other options for landowners to obtain judicial review. Hawkes argues that other methods of review are prohibitively costly, and that JDs practically impose legal obligations on landowners. The Court’s decision could affect how often agencies defend their actions in court.

Questions as Framed for the Court by the Parties 

Does the United States Army Corps of Engineers’ determination that the property at issue contains “waters of the United States” protected by the Clean Water Act, 33 U.S.C. 1362(7); see 33 U.S.C. 1251 et seq., constitute “final agency action for which there is no other adequate remedy in a court,” 5 U.S.C. 704, and is therefore subject to judicial review under the Administrative Procedure Act, 5 U.S.C. 701 et seq.?

Facts 

Hawkes Co., Inc., is a mining company that excavates peat from wetland areas in Minnesota. Hawkes wanted to expand its operations to wetlands near its current operations. See Hawkes v. United States Army of Eng’rs, 782 F.3d 994, 998 (8th Cir. 2015). After purchasing an option on the new property, Hawkes met with the U.S. Army Corps of Engineers (the “Corps”) to request a Clean Water Act (“CWA”) permit to authorize the expansion. See id. at 998. Under the CWA, the Corps can issue permits to “discharge dredged or fill materials into ‘navigable waters.’” See id. at 996. The Corps issued a Jurisdictional Determination (“JD”) that the property fell under its jurisdiction. See id. The Corps’ “preliminary determination” stated that an environmental assessment on the property would be required. [CM1] See id. at 998. But the Corps indicated that the CWA permit “would ultimately be refused.” See id. at 1001. Hawkes challenged the preliminary determination, and maintained that the property was not “navigable water.” See id. at 998. The Corps, through an administrative appeal process, issued a Revised JD concluding that the property fell under its jurisdiction. See id. at 998. The Revised JD meant that Hawkes had no administrative methods to challenge the JD. See id. at 998.

Hawkes filed suit in the U.S. District Court for the District of Minnesota, seeking judicial review of the Corps’ affirmative JD. See Hawkes, 782 F.3d at 999. Hawkes argued that the Corps misapplied its jurisdictional tests. See id. The district court dismissed the suit, finding that the revised JD did not constitute a “final agency action” from which Hawkes could appeal. See id. at 999.

The Administrative Procedure Act (“APA,”) governs “the procedures and practices of administrative law,” including how individuals can appeal agency decisions. See Hawkes, 782 F.3d at 999.  The APA states that judicial review is available only after a “final agency action for which there is no other adequate remedy in a court.” See id. To determine if an action is final, courts apply a two-part test. See id. First, the action must not be of “a tentative or interlocutory nature”— the action should embody the agency’s full decision-making authority. See id. Second, the action must be one “from which legal consequences will flow,” or one “by which rights or obligations have been determined.” See id.

The district court concluded that the Revised JD met the first part of the test since it represented a final agency action. See Hawkes, 782 F.3d at 999. But, the court maintained that the Revised JD did not meet the second part of the test, because it is was not an action “by which ‘rights or obligations have been determined” or from which “legal consequences will flow.” See id. at 1000. According to the court, Hawkes could still seek a permit regardless of the Revised JD. See id.

The U.S. Court of Appeals for the Eighth Circuit disagreed with the district court on the second point. Instead the Eighth Circuit held that the Revised JD was a decision from which legal consequences or obligations flowed. See Hawkes, 782 F.3d at 1000. The court reasoned that the environmental assessments required for a permit were “prohibitively expensive.” See id. at 1001. Additionally, the Eighth Circuit maintained that the assessment was pointless, because the Corps was going to refuse the permit. See id. at 1001. Thus, the Eighth Circuit concluded that legal consequences flowed from the Revised JD. See id. at 1001.

The Corps petitioned the U.S. Supreme Court for writ of certiorari, which the Court granted on December 11, 2015.

Analysis 

The APA allows federal courts to review federal administrative agency’s actions. As discussed, two conditions must be met. First, the action must be the “consummation” or final aspect of the agency’s decision-making process. Second, the agency’s action must be one that determines the reviewing party’s rights or obligations, or the action must implicate legal obligations on the part of the reviewing party.

IS A JURISDICTIONAL DETERMINATION A FINAL AGENCY ACTION?

Is the JD just “guidance?”

The Corps argues that Hawkes’ suit is not yet ripe, because the Corps’ Revised JD was not a final agency action. Instead, the Corps claims that JD’s are only guidance. The Corps claims that JDs are informational, and merely assist landowners in assessing their rights, the value of their assets, and their obligations under the CWA. See Brief for Petitioner at 21–23. Property owners who do not receive JDs can proceed without licensure if they are confident that their land does not contain any waters regulated by the CWA. Id. at 21. The Corps argues that providing JDs is an example of the “administrative practice of responding to inquiries from potentially regulated parties . . . concerning factual circumstances.” See id. at 23–24. The Corps maintains that JDs do not determine or impose legal obligations, because they contain no directives. See id. at 26.

However, Hawkes maintains that an undesirable JD effectively forces property owners to abandon the use of regulated land, or seek a potentially unnecessary permit at a great cost. See Brief for Respondent at 3. Hawkes contends that the permit, which could cost up to $100,000, would be potentially unnecessary because, when reviewed by a court, it is possible the court will determine the CWA does not apply to their land. Id. at 31. Hawkes claims that independent legal consequences are unnecessary, because the CWA imposes general obligations that are brought to bear on landowners through JDs. See id. at 20–22. Hawkes claims that JDs contain all of the marks of legal consequences. JDs authorize enforcement of the CWA, increase landowners’ potential liability by exposing them to the EPA’s scrutiny, and require landowners to obtain a permit or face sanctions for using their land without one. See id. at 22, 28–29.

Does the Revised JD affect the standard for obtaining a permit?

The Corps argues that an affirmative JD does not affect the standard of review for obtaining a permit, nor does it change a landowner’s obligation to obtain a permit. Brief for Petitioner at 26–27. This is because the CWA as a statute imposes legal obligations, not the JD. Id at 27.  The Corps argues that having a practical effect on how landowners’ assess their obligations is insufficient legal effect to make it a final agency action. Id. at 35–36.

But Hawkes contends that since JDs can be appealed within the Corps on “exactly the same basis as a formal permit,” they constitute final agency decisions, like formal permit decisions. See Brief for Respondent at 25. Furthermore, Hawkes asserts that JDs are similar to other types of agency actions that the Court has found to be final under the APA. See id. at 31–37.

ARE THERE ALTERNATIVE OPPORTUNITIES FOR JUDICIAL RESOLUTION OF THE ISSUE OF CWA COVERAGE?

The Corps argues that even if JDs constitute final agency actions, there are other adequate judicial remedies available to landowners. See Brief for Petitioner at 45. The Corps claims that the permitting process is the primary avenue of judicial review of a jurisdictional determination. When the Corps denies or conditions a permit, parties are entitled to judicial review of that process. See id. at 45-46. According to the Corps, the process is neither prohibitively expensive, nor burdensome. See id. at 46–47. The Corps claims a landowner can carry out a discharge, and if that landowner is then fined or sanctioned by the EPA or the Corps, the landowner is entitled to challenge that fine or sanction in federal court. See id. at 50. Neither of these methods of reaching a court requires a JD.

Hawkes claims that there is no adequate remedy in court because the cost of seeking a permit prior to judicial review of a JD is very high. Doing so would be wasteful and unnecessary, especially if the landowner should not be covered by the CWA. See Brief for Respondent at 39–42. Hawkes claims that seeking a permit is very expensive. Accordingly, a landowner who successfully challenges a JD only after going through the permitting process would waste a great deal of money. See id. at 42–44. Hawkes challenges the Corps’ assertion that a landowner can obtain judicial review by challenging an enforcement mechanism. In that situation, the landowner cannot initiate the process, and must wait to be sanctioned by either the Corps or the EPA. See id. at 54. Furthermore, the risk of triggering an enforcement action is high because of the size of the penalties and the potential for prison time. Id. at 55–56. Hawkes argues that this is why courts should review JDs.

Discussion 

Agencies and litigants are interested in the Court’s decision here, because it will affect the lengths agencies must go to defend their decisions in court.  

THE ADMINISTRATIVE BURDENS OF JUDICIAL REVIEW

On the one hand, the Corps argues that a JD is a “salutatory administrative practice,” which the Corps gives for the benefit of interested landowners. See Brief for Petitioner, U.S. Army Corps of Engineers at 23–24. The Corps maintains that a landowners’ disagreement with a JD does not warrant “immediate judicial review,” because it is meant as guidance for dealing with the CWA. See id. at 23–24. Immediate judicial review would significantly burden the Corps, considering that the tens of thousands of JDs the Corps issues yearly already strain its resources. See id. Additionally, the Corps argues that treating a JD as a “final agency action” would contravene courts’ longstanding practice of encouraging agencies to help people understand statutes. See id. at 36–37.

On the other hand, the American Farm Bureau (“AFB”) argues that immediate judicial review of JDs would not really burden the Corps. See Brief of Amici Curiae American Farm Bureau et al., in Support of Respondents at 6–7. Even though the Corps issues many JDs every year, the AFB suggests that for easy cases, in which jurisdiction seems clear, parties will try to work with the Corps to reach a solution rather than litigate. See id. at 23.  The AFB suggests that parties will only litigate cases in which the operations at stake are significant enough to warrant clearer JDs. See id. at 24. Additionally, the Cause of Action Institute argues that requiring anything other than immediate judicial review raises due process concerns. See Brief of Cause of Action Institute, in Support of Respondents at 4. Without immediate judicial review, landowners would be significantly hindered from profiting off their lands. See id. at 5–6. Consequently, the Cause of Action Institute maintains that concerns over judicial efficiency do not outweigh the deprivation of landowners’ rights. See id. at 7–9.

Conclusion 

This case will determine whether landowners who receive an affirmative JD can appeal that decision to a court before seeking a permit. The Corps argues that JDs are not final agencies actions and impose no legal consequences, and therefore should not be subject to immediate judicial review. Hawkes argues that JDs constitute final agency actions, because they impose practical legal consequences. The risk of waiting to appeal an affirmative JD is extremely costly and dangerous for landowners. The Court’s decision will likely impact the frequency with which federal courts review claims seeking review of JDs.

Edited by 

Acknowledgments 

The authors would like to thank Jed Stiglitz, assistant professor of law and Jia Jonathan Zhu and Ruyin Ruby Ye Sesquicentennial Fellow, for his valuable insights about this case.