The Supreme Court’s wake-up call to Congress on Clean Water Act jurisdiction

Last month, a unanimous Supreme Court issued a decision with significant implications for federal clean water laws and especially the Obama Administration’s “Waters of the U.S.” regulation. The ruling could energize Congress’ efforts to block the rule.

On May 31, the Court held that landowners could challenge an Army Corps of Engineer’s assertion of Clean Water Act jurisdiction over a parcel of land in Minnesota. For Congress, what might be even more significant than the Court’s unanimity is Justice Anthony Kennedy’s notable concern over the Clean Water Act’s broad reach.  

As background, the case involved an application by the Hawkes Company for a permit to mine peat at a site in northern Minnesota more than 120 miles from the Red River. Pursuant to the Clean Water Act, the Army Corps of Engineers issued a Jurisdictional Determination (JD) that the site contained wetlands regulated under the Act. 

A federal district court dismissed Hawke’s challenge to the Corps’ determination but the Eighth Circuit reversed. 

In upholding the Eighth Circuit, the Supreme Court rejected the Corps’ argument that its determination was not “final” and that Hawkes had adequate alternatives to challenge the determination during an enforcement action or at the end of a permit process

The Court relied on longstanding precedents holding that the Corps’ determination met the two conditions for “finality,” namely that it (1) marked the “consummation of the agency decision-making process “ and (2) it “determined the rights and obligations or from which legal consequences flowed. “ 

In so holding, the court followed its 2012 ruling in Sackett v. U.S., holding that landowners are entitled to immediate judicial review of EPA-issued compliance orders.

Significantly, Justice Roberts recognized the difficult position created by the Corps’ determination, stating, “The Clean Water Act imposed substantial criminal and civil penalties for discharging any pollutant into water covered by the Act without a permit [and] the costs of obtaining such a permit are significant.” 

The Court also premised its holding on a 1989 Memorandum between the Corps and EPA which the Government treated as binding on the agencies, creating a five year “safe harbor” for a property owner from possible enforcement proceedings. 

But it is Justice Kennedy’s concurrence that deserves special notice due to its implications for the Corps and the EPA’s controversial Waters of the United States (WOTUS) rule. That rule, which purported to apply Justice Kennedy’s 2006 “significant nexus” concurring opinion in Rapanos v U.S., asserts jurisdiction over large areas of land many miles from traditionally navigable waters. Thirty states have sued and the Sixth Circuit has issued as nationwide stay of the rule.

While not directly addressing the Administration’s WOTUS rule, Justice Kennedy last month went out of his way to address regulatory overreach, writing that the Clean Water Act’s “reach is notoriously unclear [and] remains a cause for concern.”  He added that the Act “continues to raise troubling questions regarding the Government’s power to cast doubt on the full use and enjoyment of private property….”  

These comments suggest that Justice Kennedy might have concerns that the Administration’s WOTUS rule, particularly its broad and uncertain sweep, misinterprets his “significant nexus” opinion in the Rapanos case. 

The Court’s decision also has deep implications for the Army Corps of Engineers administration of the Clean Water Act Section 404 permit program. First, the Corps will need to ensure that its administrative record fully supports any determination findings in the likely event of future lawsuits, which will further strap the Agency’ s resources 

Second, the Corps could also increase the use of preliminary jurisdictional determinations that are clearly not final agency action in return for even more expedited review of permit applications. 

Third, the Corps could also modify or rescind its 1989 EPA Memorandum or revise its regulations on the determination process. But that would have the perverse effect of increasing property owners’ risk, as they would potentially lose their current “safe harbor.” 

Most likely, last month’s decision will further energize Congressional efforts to block WOTUS implementation through appropriations riders and other means. Given Justice Kennedy’s comments and the fact that Hawkes was a unanimous ruling, WOTUS opponents have a more plausible case that WOTUS has fatal flaws.

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Larry Liebesman and Maj. Gen. (ret) Don Riley are executives with Dawson & Associates, which specializes in federal water policy.  Liebesman is a former environmental litigator at the U.S. Justice Department. Gen. Riley was Deputy Commanding General of the U.S. Army Corps of Engineers from 2008-2010.