Army Corps of Engineers Issues Regulatory Guidance in Response to Hawkes Case

On October 31, the Army Corps of Engineers ("ACOE") issued new guidance as to the types and prioritization of jurisdictional determinations (JDs).  Regulatory Guidance Letter (RGL) 16-01 "Jurisdictional Determinations" has very little new guidance in reality.  However, some key language in the RGL makes clear the real purpose behind the RGL.  

What is a Jurisdictional Determination?

A Jurisdictional Determination (JD) is an official determination of the ACOE as to whether wetlands or streams fall under federal jurisdiction pursuant to the Clean Water Act.  The Corps practice has been to issue either "Approved JDs" or "Preliminary JDs."  

An "Approved JD" is a final legal determination that there are, or that there are not, wetlands or streams under federal jurisdiction. See, 33 U.S.C. 331.2 The "Approved JD" will also identify the geographic limits of the wetlands or streams on the property.  An "Approved JD" can be either issued as a a "Stand Alone Approved JD" or it can be associated with a permit action.  

A "Preliminary JD" is used to expedite the permitting process.  It does not take as much time to issue a "Preliminary JD" because the ACOE simply presumes all the wetlands and streams on the property are jurisdictional.  By presuming all wetlands/streams are under federal jurisdiction, a "Preliminary JD" negates the need for a site visit by the ACOE which expedites the permitting process.  The "Preliminary JD" also will delineate the limits of wetlands on the property.

Hawkes Decision

In United States Army Corps of Engineers v. Hawkes the Supreme Court concluded that JDs issued by the ACOE constitute final agency action under the Administrative Procedure Act thereby allowing immediate review in Court.  This was a big win for property owners who were previously left with administrative appeals before the Army Corps of Engineers to challenge JDs.  

The fact pattern in the Hawkes decision sheds light as to why the ACOE decided to issue the regulatory guidance letter.  The landowner in Hawkes was facing a long and expensive permitting process to allow impacts to wetlands on its property.  Prior to initiating the permitting process, the landowner sought a JD with the hope the wetlands would be determined non-jurisdictional.  When the ACOE determine the wetlands were, in fact, jurisdictional the landowner sought to challenge the determination in Court rather than through an administrative appeal before the ACOE.

Now that the Supreme Court determined JDs can be challenged in Court, the ACOE was concerned that landowners would have a strong incentive to request JDs only to set up legal challenges in Court to the ACOE's jurisdiction.

Real Purpose Behind RGL 16-01

RGL 16-01 is the first RGL issued during the Obama Administration and the first RGL since 2008.  The stated purpose of RGL 16-01 is to clarify the differences behind the an "Approved JD" versus a "Preliminary JD."  The ACOE states the clarification will help the public choose which type of JD may be appropriate for their project.  

The reality is there was little confusion between the types of JDs.  The real purpose of the JD can be found in the following sentence on the first page of the RGL:

"The district engineer should set reasonable priorities on the district's workload and available resources.  For example, it may be reasonable to give higher priority to a JD request when it accompanies a permit request."

This statement makes clear that the ACOE will prioritize processing "Approved JD" request with a permit application versus "Stand Alone Approved JD" request.  The goal is to avoid issuing "Approved JDs" to landowners who may be making the request simply to challenge the JD in court and avoid permitting all together if the court challenge is successful.

Those seeking an "Approved JD" without submitting a permit application may be waiting a long time to get their determination.

Sixth Circuit Issues Stay of the Clean Water Rule

Today, the Sixth Circuit issued a stay of the Clean Water Rule in response to a challenge filed by eighteen states, including Ohio.  The issuance of a stay represents a major set back to EPA in  effort to better define the limits of federal jurisdiction under the Clean Water Act (CWA).  Unlike the stay issued by the North Dakota District Court, this stay applies to implementation of the rule nationwide.

The CWA limits jurisdiction to "navigable waters" which is defined as "waters of the United States, including the territorial seas." 33 U.S.C. Section 1361(7)  Interpretation of the vague term- "waters of the United States"- has been left largely to guidance and the Courts. The most significant decisions were issued by the Supreme Court in Rapanos and SWANCC. Justice Kennedy, plurality decision in Rapanos held that CWA jurisdiction extended to both navigable waters and any non-navigable water that had a "significant nexus" to a navigable waterway.

EPA issued the Clean Water Rule in attempt to better define how the significant nexus test should be applied as well as establish which waterways were exempt from coverage.  The rule was harshly criticized as an overreach by EPA. Soon after its release, the rule was challenged by a number of states and business groups.  

States sought a stay of the effectiveness of the rule while the Court considers their challenge.  The issuance of a stay prevents EPA from using the the Clean Water Rule to define federal jurisdiction over wetlands or streams.  In order to be granted a stay, the states challenging the rule had to demonstrate they were likely to win on their challenge to the legality of the rule.  In addressing this issue the Court said the following:

Meanwhile, we conclude that petitioners have demonstrated a substantial possibility of success on the merits of their claims. Petitioners first claim that the Rule’s treatment of tributaries, “adjacent waters,” and waters having a “significant nexus” to navigable waters is at odds with the Supreme Court’s ruling in Rapanos, where the Court vacated the Sixth Circuit’s upholding of wetlands regulation by the Army Corps of Engineers. Even assuming, for present purposes, as the parties do, that Justice Kennedy’s opinion in Rapanos represents the best instruction on the permissible parameters of “waters of the United States” as used in the Clean Water Act,3 it is far from clear that the new Rule’s distance limitations are harmonious with the instruction.

Now that the stay has been issued, the Army Corps of Engineers (ACOE) will have to revert back to the prior methods for issuing Jurisdictional Determinations (JDs) which were largely based on internal guidance.  

In practical experience, the ACOE has been aggressive in asserting jurisdiction over wetland and streams even before the Clean Water Rule.  However, the rule would have provided them more legal support for their determinations when they are challenged.

With the Court's grant of a stay, it seems pretty likely the rule will be overturned and EPA will have to go back to the drawing board.

EPA Releases "Waters of the U.S." Rule

On May 27, 2015, US EPA and the Army Corps of Engineers (ACOE) released the final version of the rule which defines federal jurisdiction over waterways (referred to as the "Clean Water Rule").  

Those who support the rule argue that it merely puts in place existing guidance and practice. Supporters also argue that the final rule will provide much needed clarity regarding wetland and stream permitting requirements.

"[The new rule] will provide the clarity and certainty businesses and industry need about which waters are protected by the Clean Water Act, and it will ensure polluters who knowingly threaten our waters can be held accountable."  President Obama

Opponents argue the rule amounts to a massive power grab by the federal government.  There is already pending Congressional action to block the rule.

“Our analysis shows yet again how unwise, extreme and unlawful this rule is,” American Farm Bureau Federation President Bob Stallman said

Background on Rule

The Clean Water Act was passed more than 40 years ago, yet the scope and reach of the Act is still being debated.  Congress created the uncertainty by limiting the Act  to "navigable waters" which is defined as "waters of the United States, including the territorial seas."  33 U.S.C. Section 1361(7)

Interpretation of the vague term- "waters of the United States"- has been left largely to guidance and the Courts.  The most significant decisions were issued by the Supreme Court in Rapanos and SWANCC. The Court found CWA jurisdiction extended to both navigable waters and any non-navigable water that had a "significant nexus" to a navigable waterway.

Following the Supreme Court decision, many determinations as to whether wetlands or streams were protected under the Clean Water Act were made on a case-by-case basis using Justice Kennedy's "Significant Nexus" Test.  The Army Corps and EPA followed with guidance documents interpreting how the Significant Nexus Test should be applied in practice.  

The case-by-case approach led to a tremendous amount of uncertainty and also a lot of litigation over application to the test.  As discussed in prior posts, the Army Corps became increasingly expansive in finding federal jurisdiction utilizing the Significant Nexus Test.  Furthermore, property owners and developers did not have a clear path to challenge the Corps determinations (called "Jurisdictional Determinations" or JDs).

While both regulators and business/property owners called for more certainty, both had very different ideas as to the scope of the jurisdictional rule.  The EPA and Army Corps erred on the side of being expansive in the federal government's jurisdiction so as to not leave out important waterways or wetlands.  The final Clean Water Rule will replace existing guidance going forward.

Structure of the Rule- Per Se Jurisdictional and Case-By-Case

The rule extends per se jurisdiction to "traditional navigable waters," "interstate waters," "territorial seas" and "impoundments thereof."  (i.e. "Traditional Jurisdictional Waters").

The rule then creates new categories of per se jurisdictional waters to include those that meet the definitions of "tributaries," "adjacent," and "neighboring" waterways. 

The definition of tributary is broadly defined as:

  • Regardless of flow (i.e. ephemeral, intermittent, and perennial streams);
  • Having a defined bed an bank;
  • Has an "ordinary high water mark:" and
  • Contributes flow either directly or through another water to a Navigable Water

 The definition of adjacent is defined as:

  • bordering, contiguous or neighboring;
  • located at the head of traditional navigable, interstate, territorial seas, or tributaries or impoundments thereof

Neighboring is defined as any water within the following proximity to a Traditional Jurisdictional Water:

  • within 100 feet of the ordinary high water mark;
  • within the 100 year floodplain but not more than 1,500 feet from the ordinary high water mark of Traditional Jurisdictional Waters; and
  • within 1,500 feet of the high tide line of Traditional Jurisdictional Waters and all waters within 1,500 feet of the ordinary high water mark of the Great Lakes.

Following the per se federal jurisdictional waters, the rule still includes the catchall Significant Nexus Test that would capture any other waters that:

  • alone or in combination with other similarly situated waters in the region, significantly affects the chemical, physical or biological integrity of a Traditional Jurisdictional Water;
  • factors used in applying the Significant Nexus Test include:  consider the function of the water in sediment trapping, nutrient recycling, pollutant trapping, transformation, filtering or transport, retention and attenuation of flood waters, runoff storage, contribution of flow, export of organic matter or food resources, and provision of aquatic habitat for species located in traditional navigable water, interstate water, or territorial sea

Waters automatically subject to the Significant Nexus Test include:

  • certain regional water resources automatically fall under the Significant Nexus Test, including:  prairie potholes, carolina bays, pocosins, western vernal pools and Texas coastal prairie wetlands
  • all waters located within the 100-year floodplain of a Traditional Jurisdictional Water and those within 4,000 feet of a high tide line or ordinary high water mark of a jurisdictional water will be subject to the Significant Nexus Test.

Non-Jurisdictional Waterways

The only clear cut non-jurisdictional waterways are those that fall within the rules explicit exclusions, which include:

  1. Ditches- including those with ephemeral flow that are not a relocated tributary or excavated in a tributary, those with intermittent flow that are not relocated tributary, excavated in a tributary or drain wetlands, and those that do not flow directly or through another water into a traditional navigable water, interstate water or territorial sea;
  2. Storm water control features and wastewater recycyling features;
  3. Erosional Features- Including gullies, rills and non-wetland swales that do not meet the definition of "tributary;"
  4. Artificial lakes and ponds created in dry land for certain specified purposes such as farming or swimming; and
  5. Construction or Mining- water filled depressions associated with these activities

Current and Pending Jurisdictional Determinations

Property owners must obtain a wetland and stream delineation using a private consultant, then they submit the delineation to the Army Corp for approval. The Corps approval of a wetland/stream delineation are call Jurisdictional Determinations or JDs.  

A JD allows a property owner or developer to rely on approved delineation for purposes of determining the location, size and quality of wetlands and streams on the property. This can assist the property owner or developer in avoiding wetland impacts or minimizing such impacts as part of development.

The Clean Water Rule will not be effective until sixty (60) days after it is published in the federal register. A key question is what happens to existing JDs that were issued before the Clean Water Rule becomes effective?  The preamble to the rule states that existing JDs will be grandfathered unless:

  1. New information warrants revision of the determination before the JD expiration period; or
  2. If requested by the applicant

What about requests for JDs that are submitted after the publication date but prior to the date the rule is effective?  The Army Corps and EPA state they do not expect to issue JDs during this period.   This summer most property owners and developers will need to wait at least sixty days before being able to obtain a JD. 

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.