According to the 5th Circuit in Belle v. Army Corps of Engineers, nothing has changed with regard to the inability of a property owner to challenge an Army Corps of Engineers (ACOE) decision that federally protected wetlands exist on the owner's property.
The initial step in the federal wetland permitting process is the ACOE's determination whether federally protected wetlands are present on a property- called the Jurisdictional Determination or JD. The ACOE must use the "significant nexus" test to determine whether wetlands are isolated or connected to a federally protected waterway.
The "significant nexus" test arose from the Supreme Court's determination in Rapanos v. U.S. The "significant nexus" test involves a complex evaluation of whether the wetlands significantly affect the chemical, physical and biological integrity of federally protected streams and rivers.
In the years since the Rapanos decision, the EPA and ACOE have been unable to develop clear technical guidance for the application of the "significant nexus" test. The lack of clear guidance have left property owners with uncertainty in regards to the cost and time it would take to develop properties that contain wetlands.
A JD that concludes federally protected wetlands exist means a property owner will be required to obtain a 404 permit from the ACOE and a 401 permit from the State EPA to fill the wetlands. The 404/401 permitting process can be long and costly. Therefore, property owners have a strong incentive to challenge JDs if they believe the determination lacks technical support.
Nevertheless, Courts have held that JDs are not reviewable. Many had hope the Supreme Court's determination in Sackett may serve as a basis to allow challenges to JDs.
Sackett- Compliance Order can be Challenged
In Sackett, the Supreme Court revisited the issue of what constitutes final agency actions under the Clean Water Act. The Sacketts had filled a portion of their undeveloped property with dirt and rocks in preparation for building a house. The U.S. EPA issued a compliance order that contained findings that the property contained wetlands with the Sackett's had filled. The EPA order directed the Sacketts to restore the wetlands or face penalties.
The Sacketts tried to challenge the EPA order, but EPA denied their request for hearing stating it was a non-appellable administrative order. Both the District Court and Ninth Circuit agreed with EPA.
The Supreme Court reversed, finding the order constituted a final agency action under the Administrative Procedures Act (APA) and could be challenged. The Court said the order was appeallable because it determined the rights and obligations of the property owner. The Court focused on the fact the Sacketts had to restore the wetlands or face penalties for failure to comply.
The Sackett Case and Jurisdictional Determinations
In Belle v. U.S. Army Corps of Engineers, Belle Company and Kent Recycling (hereinafter "Belle") challenged the ACOE jurisdictional determination that their property contained wetlands subject to regulation under the Clean Water Act (CWA). The District Court dismissed the suit, concluding the JD was not " final agency action" and is not reviewable.
Belle's argued the Sackett case required the Court to determine the JD was reviewable. The 5th Circuit agreed a JD met the first prong of the test for determining an reviewable action- consummation of the Agency's decision making process. However, the 5th Circuit determined a JD fails to meet the second prong- an action "by which rights or obligations have been determined, or form which legal consequences will flow."
The 5th Circuit distinguish the JD from the Sackett Order on the following grounds:
- The Sackett Order imposed legal obligations because it ordered the Sacketts to promptly restore their property. The JD does not require Belle to do or refrain from doing anything on its property;
- The Sackett Order contained coercive consequences for violating the order because the Sacketts were exposed to penalties for non-compliance. The JD contains no such penalty scheme.
- The Sackett Order prevented the submission of a 404 permit. The JD, by contrast, elicits a permit application.
- The Sackett Order determined a violation of the CWA had occurred. A JD makes no such determination.
Practical Consequences of Non-Reviewable JDs
While there may be a sound legal rationale for the holding that JDs are not reviewable, this decision has significant practical consequences for property owners. If an owner believes the ACOE issued a JD without proper technical support or misapplied the "significant nexus" test, the owner has little legal recourse to challenge the ACOE determination.
If the owner doesn't believe the wetlands are protected under the Clean Water Act, they are left with the false choice of either:
- Filling the wetland and face significant penalties and a requirement to restore the wetlands if ACOE's determination is upheld; or
- Proceed with securing 404/401 permits for the filling activity which in many cases will be very costly and slow development.