United States Army Corps of Engineers v. Hawkes Co.

Transcription

1 United States Army Corps of Engineers v. Hawkes Co. U.S. Supreme Court Holds That Determinations of Clean Water Act Jurisdiction by Army Corps of Engineers Are Judicially Reviewable SUMMARY The Supreme Court held yesterday in 1 that when the Army Corps of Engineers definitively determines that a particular property contains waters covered by the Clean Water Act, the Corps determination constitutes final agency action that is judicially reviewable under the Administrative Procedure Act. The decision will make it easier for landowners to challenge the Corps determinations that their property is subject to the Clean Water Act s requirements, without first having to comply with onerous permitting requirements or risk an enforcement action. BACKGROUND The Clean Water Act (CWA) prohibits entities from discharging pollutants into the waters of the United States without first obtaining a permit issued by the U.S. Army Corps of Engineers (Corps). 2 Corps regulations authorize the issuance of jurisdictional determinations (JDs) to assist landowners in ascertaining whether their property contains waters of the United States: preliminary JDs advise whether property may contain such waters, and approved JDs definitively state whether the property does contain such waters. Unlike preliminary JDs, approved JDs are subject to an administrative appeal process and are valid for five years. 3 A Memorandum of Agreement between the Corps and the Environmental Protection Agency (EPA) provides that approved JDs are binding on the Government and represent the Government s position in any subsequent Federal action or litigation concerning that final determination. 4 New York Washington, D.C. Los Angeles Palo Alto London Paris Frankfurt Tokyo Hong Kong Beijing Melbourne Sydney

2 Hawkes Co., Inc. operates a peat-mining business in Minnesota and sought to expand its operations to certain wetlands. Hawkes therefore applied for a discharge permit from the Corps. In connection with the permitting process, the Corps issued an approved JD finding that the property contained waters subject to the CWA. When Hawkes administrative appeal was unsuccessful, it brought suit in federal district court challenging the JD under the Administrative Procedure Act (APA). The district court held that the Corps JD was not final agency action for which there is no other adequate remedy in a court, as required by the APA. 5 The Eighth Circuit reversed, creating a conflict with the Fifth and Ninth Circuits, and the Supreme Court granted review. THE SUPREME COURT S DECISION In an 8-0 decision authored by Chief Justice Roberts, the Supreme Court held that an approved JD is final agency action subject to judicial review. Under Bennett v. Spear, an agency action is final for APA purposes if it marks the consummation of the agency s decisionmaking process and is one by which rights or obligations have been determined, or from which legal consequences will flow The parties agreed that an approved JD satisfies Bennett s first condition, because it represents a definitive ruling from the Corps that the property at issue contains jurisdictional waters. 7 The Court held that an approved JD also satisfies Bennett s second condition, because it gives rise to direct and appreciable legal consequences. 8 Under the Memorandum of Agreement between the Corps and the EPA, an approved JD binds the two agencies authorized to bring civil enforcement proceedings. 9 As a result, when the Corps finds that a property does not contain jurisdictional waters, it effectively creates a five-year safe harbor from [civil enforcement] proceedings for a property owner. 10 Conversely, when the Corps determines that a property contains jurisdictional waters, it denies that same safe harbor to the landowner. 11 Having determined that an approved JD is final agency action, the Court rejected the Corps arguments that there were adequate alternatives to immediate judicial review. 12 First, the Corps contended that Hawkes could discharge without a permit and challenge the JD in a subsequent enforcement proceeding. The Court reaffirmed, however, that private parties need not await enforcement proceedings before challenging final agency action where such proceedings carry the risk of serious criminal and civil penalties. 13 Second, the Corps argued that Hawkes should complete the permitting process and seek review if dissatisfied with the results of that process. But the Court concluded that the permitting process, which is typically quite costly and lengthy, adds nothing to the finality of the approved JD or its suitability for judicial review. 14 In a concurring opinion, Justice Kennedy, joined by Justices Thomas and Alito, addressed the Government s argument that the Corps-EPA Memorandum of Agreement was nonbinding and could be revoked or amended in the EPA s discretion. Justice Kennedy noted that the CWA s reach is notoriously unclear and the lack of a binding JD procedure would raise due process concerns. 15 Justice Kagan

3 concurred to note her view that the Memorandum of Agreement is central to finding that an approved JD carries direct legal consequences, while Justice Ginsburg concurred in part and concurred in the judgment to disclaim reliance on the Memorandum of Agreement and state her view that the JD is nevertheless final agency action. 16 IMPLICATIONS This decision represents a victory for property owners seeking greater certainty regarding their rights and obligations under the CWA. Property owners can now immediately litigate CWA jurisdictional issues in federal court after an unsuccessful administrative appeal of an approved JD, rather than having to risk the threat of civil and criminal liability or incur the costs of completing the permitting process. The Court s decision is consistent with other recent cases such as Sackett v. EPA in which the Court has favored earlier judicial review of agency action to provide clarity to regulated individuals and entities. * * * Copyright Sullivan & Cromwell LLP

4 ENDNOTES U.S., No (May 31, 2016) (slip op.). Id. at 1-2. Id. at 3. Id. at 6 (quoting Memorandum of Agreement IV C 2, VI A). 5 U.S.C U.S. 154, (1997) (internal quotation marks and citations omitted). Slip op. at 5-6. Id. at 6. Id. Id. Id. at 7. Id. at 8. Id. (internal quotation marks omitted). Id. at 9. Id. at 1-2 (Kennedy, J., concurring). Id. at 1 (Kagan, J., concurring); id. at 1 (Ginsburg, J., concurring). -4-

5 ABOUT SULLIVAN & CROMWELL LLP Sullivan & Cromwell LLP is a global law firm that advises on major domestic and cross-border M&A, finance, corporate and real estate transactions, significant litigation and corporate investigations, and complex restructuring, regulatory, tax and estate planning matters. Founded in 1879, Sullivan & Cromwell LLP has more than 800 lawyers on four continents, with four offices in the United States, including its headquarters in New York, three offices in Europe, two in Australia and three in Asia. CONTACTING SULLIVAN & CROMWELL LLP This publication is provided by Sullivan & Cromwell LLP as a service to clients and colleagues. The information contained in this publication should not be construed as legal advice. Questions regarding the matters discussed in this publication may be directed to any of our lawyers listed below, or to any other Sullivan & Cromwell LLP lawyer with whom you have consulted in the past on similar matters. If you have not received this publication directly from us, you may obtain a copy of any past or future related publications from Stefanie S. Trilling ( ; trillings@sullcrom.com) in our New York office. CONTACTS New York David H. Braff braffd@sullcrom.com Matthew J. Brennan brennanm@sullcrom.com Robert J. Giuffra Jr giuffrar@sullcrom.com Richard H. Klapper klapperr@sullcrom.com Sharon L. Nelles nelless@sullcrom.com Richard C. Pepperman II peppermanr@sullcrom.com Mark F. Rosenberg rosenbergm@sullcrom.com Matthew A. Schwartz schwartzmatthew@sullcrom.com Karen Patton Seymour seymourk@sullcrom.com Washington, D.C. Daryl A. Libow libowd@sullcrom.com Brent J. McIntosh mcintoshb@sullcrom.com Jeffrey B. Wall wallj@sullcrom.com Los Angeles Robert A. Sacks sacksr@sullcrom.com Michael H. Steinberg steinbergm@sullcrom.com Palo Alto Brendan P. Cullen cullenb@sullcrom.com -5- SC1: