Owner Can Challenge Wetland Finding

JUNE 15, 2016

Read the full decision: U.S. Army Corps of Engineers v. Hawkes Co., 136 S. Ct. 1807 (2016)(link is external)

In a case where NAR joined as party to an amicus brief, the Supreme Court of the United States upheld the right of property owners to challenge in court an Army Corps of Engineers determination that their property contains "waters of the United States."

The Hawkes Company ("Company") is a business engaged in mining and processing peat. As part of the regulatory approval process for a new peat processing site, the Company applied for permit under the Clean Water Act ("CWA") to the U.S. Army Corps of Engineers ("Corps"). The Corps issued an "approved" jurisdictional determination ("JD") that the property contained wetlands and a permit was required to conduct peat mining.

The Company sought judicial review of the Corps' wetlands determination but the trial court dismissed the lawsuit, holding that the JD was not a "final agency action" which could be reviewed in court. A federal appeals court reversed and held that the property owners could challenge the JDs in court – click here to read more about the earlier decision. The Corps appealed this ruling.

The Supreme Court affirmed the appellate court, holding that the JDs were a final agency action subject to judicial review. The Court agreed that Corps-issued "approved" JDs are a final agency action because the determination that the property contains wetlands is binding on the Government for at least 5 years, and that direct legal consequences flow from that determination. In particular, a JD that indicates waters are present becomes applicable for a 5-year period and requires a permit to develop the property.

The Court also concluded that the property owners have no reasonable alternative to challenging a JD. The Government had argued that if property owners could not challenge a JD in court they could still: (1) proceed to develop or use the property without the required permit, and if the Government initiated enforcement the owners would defend against that challenge by arguing that the property was incorrectly identified as containing protected waters; or (2) seek a permit to use the property and appeal if the application for the permit was unsuccessful. The Court held that neither of these alternatives were reasonable - the owner should not have to risk the severe fines and penalties, including criminal liability, attendant to use of the property without a permit in order to contest the JD. The Court also noted that the permit process is onerously expensive and should not operate as a prerequisite to challenging the JD. Therefore, the Court upheld the Company's right to challenge the JD in court.

Justice Kennedy added a concurring opinion in which he joined the Court's opinion in full, but also took the opportunity express his concern about the broad scope of the definition of regulated "waters of the United States," as applied by the Government. Justice Kennedy commented that "the reach and systemic consequences of the Clean Water Act remain a cause for concern," and 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 throughout the Nation."

U.S. Army Corps of Engineers v. Hawkes Co., 136 S. Ct. 1807 (2016)"


Compliments of Realtor.org http://www.realtor.org/legal-case-summaries/owner-can-challenge-wetland-finding