In a unanimous decision, the U.S. Supreme Court ruled on May 31, 2016, that property owners could file suit against the U.S. Army Corps of Engineers over the agency’s determination that their land contains “waters of the United States” covered by the Clean Water Act.   Army Corps of Engineers v. Hawkes Co., 578 U.S. – (2016). The decision makes it easier for landowners to challenge the decision of federal regulators that the use of property is restricted by the Clean Water Act.

Hawkes Co., Inc., a company engaged in mining peat, purchased a piece of land in northern Minnesota to mine high-quality peat.  Hawkes applied to the Army Corps of Engineers and the Minnesota Department of Natural Resources for a permit to begin extracting peat from the land.  Eventually, the Corps issued a judicial determination finding the property contained wetlands that had a “significant nexus” to waters of the United States, which are protected under the Clean Water Act.

Hawkes challenged the judicial determination and filed an action for immediate judicial review.  The question before the Supreme Court was whether the judicial determination constituted a final agency action and thus was open to judicial challenge.  The Corps contended it was simply giving landowners advice and that allowing challenges to such determinations would lead to an outbreak of litigation over what the agency considered to be simply a step in the process. 

The Supreme Court rejected the Corps’ argument and held the judicial determination was a final agency action subject to judicial review under the Administrative Procedure Act (“APA”).  The Court held that two conditions must be satisfied for an agency action to be considered “final” under the APA:  first, the action must be the consummation of the agency’s decision-making process; and second, it must determine the rights or obligations that create legal consequences.   

Because judicial determinations are not reconsidered and mark the end of a fact-finding process, the agency’s decision-making process is complete and thus satisfies the first condition. Similarly, the jurisdictional determination binds both the Corp and the Environmental Protection Agency – the two public entities entitled to sue to enforce the Clean Water Act – and therefore creates legal consequences, which satisfies the second condition. 

This is a very good decision for industry. It now allows the process to be significantly sped up and it allows for resolution before action is taken which the U.S. Army Corps of Engineers then determines is a violation of the Clean Water Act.