Split in Circuits as to Whether Army Corps JD's are Appealable

Bringing some level of sanity to the current state of wetland and stream permitting, the Eighth Circuit Court of Appeals has determined that an approved jurisdictional determination (JD) is a final agency action that can be challenged. See, Hawkes Co., Inc. et al v. Corps, Case No. 13-3067 (April 10, 2015). The Eighth Circuit Court decision reached the opposite conclusion as the Fifth Circuit in Belle v. Corps., 761 F. 3d 383 (5th Cir. 2014)(Click here for prior blog post discussion of Belle).

What is a Jurisdictional Determination?

Under the Clean Water Act (CWA), you cannot impact a federally protected stream or wetland unless you obtain a 404 permit from the Army Corps of Engineers (ACOE).See 33 U.S.C. §§ 1344(a), 1362(7). The key issue- what is a "federally protected stream or wetland?"

You might think determining what is federally protected would be an easy question to answer and there must be some easily accessible inventory of wetlands or streams. However, there is no reliable national database of wetlands and streams.  The National Wetland Inventory is based upon outdated information and is totally unreliable.

Due to a lack of such basic information, it falls upon the property owner or developer to comply with the law.  This includes ensuring that they do not impact federally protected wetlands or streams without obtaining the requisite Army Corps 404 permit and State 401 Water Quality Certification.

As a first step, many developers and property owners will hire a wetland consultant to perform a wetland delineation on the property.  The delineation is the consultant's opinion as to whether federally protected wetlands or streams exist on the property.  The delineation will also determine the size and quality of the water resources on the property.

However, the delineation is not a legal determination.  Only the ACOE can determine if wetland or streams are federally protected.  Therefore, although not required, many property owners/developers submit their wetland delineations to the ACOE for concurrence.  This is called a "Jurisdictional Determination" or JD.  See, 33 CFR 320.1(a)6)

The issue that arises is that the ACOE and consultants don't always agree as to whether a wetland or stream is federally protected.  In many instances, the ACOE can be much more aggressive in asserting jurisdiction which triggers a lengthy and costly permitting process for impacts to those water resources.

Due to significant implications of a JD, it can be in the property owner/developers interest to challenge the JD if they believe the ACOE has been overly aggressive.  Until the Eighth Circuit opinion, courts had held that JDs were not final appealable actions.

Facts of Case Highlight the Issues with the Current Wetland Permitting Process

The Eighth Circuit Court recites the factual background that led to the case.  The facts show actions by the ACOE that were aggressive and abusive toward the property owner.  The facts are worth discussing because they demonstrate that extreme frustration that some property owners experience in dealing with the ACOE and the current state of the wetland permitting process:

In March, the Corps sent a letter advising it had made a “preliminary determination” the wetland is a regulated water of the United States and, “at a minimum,” an environmental assessment would be required. At an April meeting, a Corps representative told Pierce a permit would take years and the process would be very costly. During a site visit in early June, another Corps representative told a Hawkes employee that “he should start looking for another job.”

In August, the Corps sent Hawkes a letter advising that nine additional information
items costing more than $100,000 would be needed, including hydrological and
functional resource assessments and an evaluation of upstream potential impacts. In
November, Corps representatives met with the land owner and urged that he sell the
property to a “wetlands bank,” advising that an environmental impact statement would likely be required, delaying the issuance of any permit for several years.

Making matters worse, the property owner's consultant felt that the ACOE preliminary determination that the wetlands were federally regulated was flawed.  As a result, the owner exercised its limited administrative appeal right to challenge the preliminary decision.

The Corps’ Deputy Commanding General for Civil and Emergency Operations sustained the appeal, concluding after detailed analysis that the administrative record “does not support [the District’s] determination that the subject property contains jurisdictional wetlands and waters,” and remanding to the District “for reconsideration in light of this decision.”

Despite the decision, the ACOE decided to re-issue the JD as final still concluding that the wetlands were federally protected.  When the property owner attempted to appeal the final JD, the ACOE, consistent with the Belle Case, determined there was no appeal right from a final JD.

As discussed below, the facts in this case made it very easy for the Court to reach its decision a JD is an appealable action.

Eighth Circuit Determines JD is a Final Appealable Action

The U.S. Supreme Court summarized the test for determining whether a federal agency action is a final appealable action:

As a general matter, two conditions must be satisfied for agency action
to be “final”: First, the action must mark the consummation of the
agency’s decisionmaking process -- it must not be of a merely tentative
or interlocutory nature. And second, the action must be one by which
rights or obligations have been determined, or from which legal
consequences will flow. See, Bennett v. Spear, 520 U.S. 154, 177-78 (1997)

Courts, including Belle, have determined that JDs satisfy the first prong of the test- JDs mark the consumation of the agency decision making process.  For example, the Corps’ Regulatory Guidance Letter No. 08-02, at 2, 5, described an Approved JD as a “definitive, official determination that there are, or that there are not, jurisdictional ‘waters of the United States’ on a site,”
and stated that an Approved JD “can be relied upon by a landowner, permit applicant,
or other affected party . . . for five years”

However, courts, including Belle, held that the second prong of the test was not met-  that the 
JD is not a final agency action “for which there is no other adequate [judicial]
remedy,” 5 U.S.C. § 704,

Courts had held that property owners/developers have two other adequate ways to contest the Corps’ jurisdictional determination in court -- complete the permit process and appeal if a permit is denied, or commence construction without a permit and challenge the agency’s authority if it issues a compliance order or commences a civil enforcement action.

The Eighth Circuit strongly disagreed with this view.  First it noted the time and cost of the typical 404 permitting process citing to the Supreme Court comments in Rapanos, 547 U.S. at 721, that the average applicant for an individual Corps permit “spends 788 days and $271,596 in completing the process.”  The Court said that even if the property owner completed the permitting process and then challenged the JD determination, it would never recover the lost time and money necessary to complete the permitting process.

Second, the Eighth Circuit dismissed the notion a property owner can simply initiate construction and wait to see if the ACOE tried to stop the work from progressing.  The Court noted that commencing construction without a permit and impacting wetlands or streams the ACOE determined were federally protected would expose the property owner/developer to substantial criminal monetary penalties and even imprisonment for a knowing CWA violation.

On this basis, the Eighth Circuit concluded that a JD is appealable.  It noted that to hold otherwise would allow the ACOE to be overly aggressive in asserting jurisdiction knowing the property owner/developer had no realistic legal remedy.  

There is very strong logic to the Eighth Circuit determination.  Now that there is a split in the Circuits we will see whether the Supreme Court hears the forthcoming appeal of the Court's determination.

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