We predicted that the U.S. Supreme Court would affirm an Eighth Circuit decision holding that a landowner can obtain immediate judicial review of a wetlands “jurisdictional determination” (JD) by the U.S. Army Corps of Engineers, and the Court did affirm that decision near the end of last Term. See U.S. Army Corps of Engineers v. Hawkes Co., Inc., 136 S. Ct. 1807 (2016). The high Court held that approved JDs expressing the Corps’ view on the scope of wetlands subject to federal permitting jurisdiction constitute “final” agency action that is subject to judicial review even though JDs are typically issued near the beginning, not the end, of the wetlands permit application process. Recognizing the practical impact of a potentially erroneous JD – it requires the landowner either to submit to the extensive and costly wetlands permitting process or to proceed without a permit and risk enforcement action – the Court determined that landowners may avoid those equally unattractive options by obtaining a prompt judicial determination of the JD’s validity (discussed on our blog July 1, 2015).

In Hawkes, the landowners immediately filed suit to challenge a JD finding that 150 acres of wetlands were subject to the Corps’ permitting requirements. Although their challenge to the JD was delayed somewhat by their trip to the Supreme Court, on remand, the Hawkes’ challenge was upheld by the district court in a recent decision invalidating the JD and holding that the wetlands it addressed are not subject to federal permitting jurisdiction. Hawkes Co. Inc., et al. v. U.S. Army Corps of Engineers, 2017 WL 359170, (D.Minn. Jan. 24, 2017). The JD in question determined that the wetlands on the Hawkes’ property had a “significant nexus” to a navigable river (the Red River) nearly 50 miles away, which required a finding that the wetlands “significantly affect the chemical, physical, and biographical integrity” of that river. Before the landowners in Hawkes filed suit, they pursued an administrative appeal of the JD to the designated Corps Review Officer, arguing that the Corps had not provided site-specific data showing that the wetlands have more than a “speculative” or “insubstantial” effect on the chemical, physical, or biographical integrity of the Red River. The decision in that administrative appeal agreed that the administrative record lacked sufficient documentation to support a finding that the wetlands on the Hawkes’ property had a nexus to the Red River that was more than speculative or insubstantial. The decision identified specific reasons the record was deficient as well as the actions needed to complete the record, and remanded the matter to the Corps staff.

On remand, the Corps staff issued a Revised JD, but did not conduct any additional site evaluations or add any significant material to the administrative record. Instead, the Revised JD merely recharacterized the record material and added additional argument about the wetlands’ nexus to the Red River. As the district court explained, “the Revised JD [was] based on essentially the same information and documentation that was already determined by the Review Officer to be insufficient for establishing more than a speculative or insubstantial nexus between the Wetlands and the Red River.” The district court therefore declared the Revised JD to be arbitrary and capricious and held it invalid. Importantly, the court also rejected the Corps’ claim that the proper remedy was another remand to the Corps to cure the deficiencies in the Revised JD. Noting that the Corps had two opportunities already to demonstrate that the Hawkes’ wetlands had a significant nexus to the Red River, the court found that “[a]llowing the Corps a third bite at the apple would force Plaintiffs back through a ‘never ending loop.’” Rather than subjecting the Hawkes to further protracted permitting and litigation activity, the court enjoined the Corps from asserting jurisdiction over the wetlands in question.

The district court’s remand decision in Hawkes is significant both for its invalidation of the Corps’ Revised JD as arbitrary and capricious and for the injunction remedy it imposed in lieu of allowing the Corps another opportunity to establish jurisdiction over the Hawkes’ wetlands.