EPA and Army Corps of Engineers imposition of federal Clean Water Act requirements can now be challenged in court without waiting for the agencies to bring an enforcement action, at least in the Eighth Circuit. On April 10, in a major milestone in the history of Clean Water Act jurisprudence, the U.S. Court of Appeals for the Eighth Circuit issued an opinion holding that CWA jurisdictional determinations (JDs) are subject to "pre-enforcement" judicial review. The decision conflicts with a recent case in which the Fifth Circuit held that JDs are not reviewable, setting the stage for a possible Supreme Court resolution of the circuit split.

Until now, if EPA or the Corps determined that a property was within its jurisdiction, and thus subject to CWA permit requirements, a person seeking to do work on that property who disagreed with the agency's determination had only two options: either go through the lengthy and expensive process of obtaining a CWA permit, or proceed without a permit and risk incurring potentially enormous civil penalties for violation of the CWA before having a chance to challenge whether the CWA requirements should even apply. In Hawkes Co. et al. v. U.S. Army Corps of Engineers, a three-judge panel of the Eighth Circuit held that the comply-or-pay dichotomy does not provide the regulated community with "acceptable options" for challenging the necessity of a CWA permit. Read the full decision.

Approved JD Constitutes Final Agency Action Subject to Judicial Review

When Hawkes Co., Inc. sought to mine peat from a property in Minnesota, the Corps issued a JD concluding that the wetland property constituted "waters of the United States" within the meaning of the CWA and, therefore, Hawkes had to obtain a CWA permit. Believing that the property was not within the Corps' jurisdiction and, presumably, not wanting to incur the substantial time and monetary costs associated with CWA permit compliance, Hawkes attempted to challenge the Corps' JD. The district court concluded that the JD was not a "final agency action," so it was not subject to judicial review under the Administrative Procedure Act.

The Eighth Circuit reversed the district court, and expressly disagreed with a recent Fifth Circuit decision (Belle Co., LLC v. U.S. Army Corps of Engineers, 761 F.3d 383 (5th Cir. 2014)) that also held JDs are not reviewable, concluding that "both courts misapplied the Supreme Court's decision in Sackett v. EPA, 132 S. Ct. 1367 (2012)." In its April 10 decision, the Eighth Circuit held that "a properly pragmatic analysis of ripeness and final agency action principles compels the conclusion that an Approved JD is subject to immediate judicial review. . . . Absent immediate judicial review, the impracticality of otherwise obtaining review, combined with 'the uncertain reach of the Clean Water Act and the draconian penalties imposed for the sort of violations alleged in this case . . . leaves most property owners with little practical alternative but to dance to the EPA's [or to the Corps'] tune.' . . . We conclude that an Approved JD is a final agency action and the issue is ripe for judicial review under the APA." Hawkes, Slip Op. at 12 (quoting Sackett, 132 S. Ct. at 1375 (Alito, J. concurring)).

Implications of Hawkes

The Hawkes case is a victory for property owners and industry who, until now, when faced with an agency jurisdictional determination had to "either incur substantial compliance costs (the permitting process), forego what they assert is a lawful use of their property, or risk substantial enforcement penalties." Hawkes, Slip Op. at 12. Now, at least in the Eighth Circuit, the regulated community will have an opportunity to have a court decide if its property truly falls under the federal government's CWA jurisdiction without having to first obtain a permit or incur penalties for non-compliance.

Ninth Circuit Authority

In the Ninth Circuit, jurisdictional determinations are still not subject to pre-enforcement review. See Fairbanks v. U.S. Army corps of Engineers, 543 F.3d 586 (2008). However, the direct conflict the Hawkes decision creates with Fairbanks and the Fifth Circuit's decision inBelle may make the issue a good candidate for review by the Supreme Court.