Lead Opinion
Hаwkes Co., Inc. (Hawkes), wishes to mine peat from wetland property owned by two affiliated companies in northwestern Minnesota. The United States Army Corps of Engineers derailed that plan when it issued an Approved Jurisdictional Determination (“JD”) that the property constitutes “waters of the United States” within the meaning of the Federal Water Pollution Control Act (the “Clean Water Act” or “CWA”), and therefore appellants must have a permit to discharge dredged or fill materials into these “navigable waters.” See 33 U.S.C. §§ 1344(a), 1362(7). Appellants brought this action seeking judicial review of the JD and now appeal the district court’s grant of the government’s motion to dismiss their Amended Complaint. The district court concluded that an approved JD, though the consummation of the Corps’ jurisdictional decisionmaking process, was not a “final agency action” within the meaning of the Administrative Procedure Act, 5 U.S.C. § 704. While the appeal was pending, a panel of the Fifth Circuit reached the same conclusion. Belle Co., LLC v. U.S. Army Corps of Eng’rs,
We сonclude that both courts misapplied the Supreme Court’s decision in Sackett v. EPA — U.S. -,
I.
The CWA requires a permit from the Corps to discharge dredged or fill materials into “navigable waters,” and a permit from the Environmental Protection Agency (or an authorized state agency) to discharge any “pollutant” into navigable waters. See 33 U.S.C. §§ 1311(a), 1342, 1344. The statute defines “navigable waters” to mean “the waters of the United States,” § 1362(7). This broad definition prompted the Corps and the EPA to make “sweeping assertions of jurisdiction” ovеr every stream, ditch, and drain that can be considered a tributary of, and every wetland that is adjacent to, traditional navigable waters. Rapanos v. United States,
The CWA imposes heavy civil and criminal penalties on a person who discharges into navigable waters without a required permit, or in violation of an issued permit. See 33 U.S.C. § 1319; Rapanos,
[I]t is hard for the Government to defend its claim that the issuance of the compliance order was just “a step in the deliberative process” when the agency rejected the Sacketts’ attempt to obtain a hearing and when the next step will either be taken by the Sacketts (if they comply with the order) or will involve judicial, not administrative, deliberation (if the EPA brings an enforcement action).132 S.Ct. at 1373 .
The question in this case is whether the Court’s application of its flexible final agency action standard in Sackett
II.
In reviewing the district court’s Rule 12(b)(6) dismissal, we accept as true the
After obtaining an option to purchase the property subject to regulatory approval, Kevin Pierce and Hawkes met with Corps and MDNR representatives to discuss Hawkes’s plan to expand its operations to include the property, which would extend the life of its peat mining ten to fifteen years. In December 2010, Hawkes applied to the Corps fоr a CWA permit. At a January 2011 meeting, Corps representatives urged Pierce to abandon his plan, emphasizing the delays, cost, and uncertain outcome of the permitting process. Pierce responded that he had an option to purchase and intended to proceed. In March, the Corps sent a letter advising it had made a “preliminary determination” the wetland is a regulated water of the United States and, “at a minimum,” an environmental assessment would be required. At an April meeting, а Corps representative told Pierce a permit would take years and the process would be very costly. During a site visit in early June, another Corps representative told a Hawkes employee that “he should start looking for another job.” In August, the Corps sent Hawkes a letter advising that nine additional information items costing more than $100,000 would be needed, including hydrological and functional resource assessments and an evaluation of upstream potential impacts. In November, Corps representatives met with the land owner and urged that he sell the property to a “wetlands bank,” advising that an environmental impact statement would likely be required, delaying the issuance of any permit for several years.
Appellants challenged the Corps’ preliminary determination. In November, the Corps provided a “draft” JD concluding the property was connected by a “Relatively Permanent Water” (a series of culverts and unnamed streams) that flowed into the Middle River and then into the Red River of the North, a traditional navigable water some 120 miles away. Appellants’ wetland consultant pointed out numerous errors in the analysis. Nonetheless, in February 2012 the Corps issued an Approved JD concluding the property was a water of the United States because of its “significant nexus” to the Red River. See 33 C.F.R. §§ 320.1(a)(6), 325.9. Appellants responded by filing a timely administrative appeal. See 33 C.F.R. §§ 331.2, 331.3, 331.6.
In October 2012, the Corps’ Deputy Commanding General for Civil and Emergency Operations sustained the appeal, cоncluding after detailed analysis that the administrative record “does not support [the District’s] determination that the subject property contains jurisdictional wetlands and waters,” and remanding to the District “for reconsideration in light of this decision.” On December 31, 2012, the Corps nonetheless issued a Revised JD concluding, without additional information, that there is a significant nexus between the property and the Red River of the North, and advising appellants that the Revised JD was a “final Corps permit decision in accordance with 33 C.F.R. § 331.10,” which meant their administrative ■ remedies were exhausted. See 33 C.F.R. § 331.12.
III.
The APA provides for judicial review of a “final agency action for which there is no other adequate remedy in a court.” 5 U.S.C. § 704. The APA “evinces Congress’ intention and understanding that judicial review should be widely available to challenge the actions of federal administrative officials.” Califano v. Sanders,
As a general matter, two conditions must be satisfied for agency action to be “final”: First, the action must mark the consummation of the agency’s decision-making process — it must not be of a merely tentative or interlocutory nature. And second, the action must be one by which rights or obligations have been determined, or from which legal consequences will flow.
A. Though the Corps argues otherwise, we agree with the district court (and every court to consider the issue) that the Revised JD clearly meets the first Bennett factor — it was the consummation of the Corps’ decisionmaking process on the threshold issue of the agency’s statutory authority. See Belle Co.,
1. In our view, this analysis seriously understates the impact of the regulаtory action at issue by exaggerating the distinction between an agency order that compels affirmative action, and an order that prohibits a party from taking otherwise lawful action. Numerous Supreme Court precedents confirm that this is not a basis on which to determine whether “rights or obligations have been determined” or that “legal consequences will flow” from agency action.
—In Bennett, the Court held that a Fish and Wildlife Service biological opinion satisfied the second factor bеcause it required the Bureau of Reclamation to comply with its conditions and thereby had “direct and appreciable legal consequences.”
—In Abbott Laboratories, the Court held that prescription drug labeling regulations were a final agency action subject to pre-enforcement judicial review because they “purport to give an authoritative interpretation of a statutory provision” that puts drug companies in the dilemma of incurring massive compliance costs or risking criminal and civil penalties for distributing “misbranded” drugs.
—In Frozen Food Express v. United States,
—In Columbia Broadcasting System v. United States,
2. The Corps argues, and the district court further concluded, that the Revised JD is not a final agency action “for which there is no other adequate [judicial] remedy,” 5 U.S.C. § 704, because appellants have two other adequate ways to contest the Corps’ jurisdictional determinаtion in court — complete the permit process and appeal if a permit is denied, or commence peat mining without a permit and challenge the agency’s authority if it issues a compliance order or commences a civil enforcement action. These other CWA remedies were held not to preclude judicial review of the EPA compliance order in Sackett,
In this case, the contention ignores the prohibitive cost of taking either of these alternativе actions to obtain judicial review of the Corps’ assertion of CWA jurisdiction over the property. First, as a practical matter, the permitting option is prohibitively expensive and futile. The Supreme Court reported in Rapanos,
Second, appellants’ other option — commencing to mine peat without a permit and await an enforcement action — is even more plainly an inadequate remedy. Appellants “cannot initiate that process, and each day they wait for the agency to drop the hammer, they accrue” huge additional potential liability. Sackett,
The prohibitive costs, risk, and delay of these alternatives to immediate judicial review evidence a transparently obvious litigation strategy: by leaving appellants with no immediate judicial review and no adequate alternative remedy, the Corps will achieve the result its local officers desire, abandonmеnt of the peat mining project, without having to test whether its expan
In our view, a properly pragmatic analysis of ripeness and final agency action principles compels the conclusion that an Approved JD is subject to immediate judicial review. The Corps’s assertion that the Revised JD is merely advisory and has no more effect than an environmental consultant’s opinion ignores reality. “[I]n rеality it has a powerful coercive effect.” Bennett,
The judgment of the district court is reversed and the case is remanded for further proceedings not inconsistent with this opinion.
Notes
. The Court has consistently taken a "pragmatic” and "flexible” approach to the question of finality, and to the related question whether an agency action is ripe for judicial review. See Abbott Labs. v. Gardner,
. The question of ripeness "turns оn ‘the fitness of the issues for judicial decision' and ‘the hardship to the parties of withholding court consideration.’ " Pac. Gas & Elec. Co.,
Concurrence Opinion
concurring.
I view whether a JD is reviewable under the APA as a close question. In Sackett, the Supreme Court concluded that a compliance order issued by the EPA “severely limits [petitioners’] ability to obtain a permit for their fill from the Army Corps of Engineers [because] [t]he Corps’ rеgulations provide that, once the EPA has issued a compliance order with respect to certain property, the Corps will not process a permit application for that property unless doing so ‘is clearly appropriate.’ ” Sackett v. EPA — U.S.-,
I also note other differences between the compliance order in Sackett and the JD in the present case. A compliance order, once issued, begins the accumulation of penalties (potentially doubled) for each day the landowner remains in violation. Id. A JD, however, has no such penalty scheme. Indeed, 33 U.S.C. § 1319(d), the CWA’s enforcement section on civil penalties, makes no mention of JDs. While the existence of a JD may affect a court’s assessment of a party’s “good faith” while determining civil penalties, I agree with the other courts that have considered this issue that any penalties resulting from a JD are far more “speculative” than those threatened in Sackett. Belle Co., LLC v. U.S. Army Corps of Eng’rs,
Despite these dissimilarities with the circumstances in Sackett, I agree that Hawkes is left without acceptable options to challenge the JD, absent judicial review. Hawkes’s choice is to either (1) follow through on their peat-mining plans until either the EPA issues a compliance order or the Corps commences an enforcement action, to both of which Hawkes could raise lack of CWA jurisdiсtion as a defense; or (2) apply for a permit (on the grounds that no permit is required) and, if the application is denied, appeal the denial in court. But what happens if Hawkes is, after all, granted a permit yet maintains it never needed one in the first place? It must decline the permit and challenge the original jurisdiction in court. This roundabout process does not seem to be an “adequate remedy” to the alternative of simply allowing Hawkes to bring the jurisdictional challengе in the first instance and to have an opportunity to show the CWA does not apply to its land at all.
In my view, the Court in Sackett was concerned with just how difficult and confusing it can be for a landowner to predict whether or not his or her land falls within CWA jurisdiction — a threshold determination that puts the administrative process in motion. This is a unique aspect of the CWA; most laws do not require the hiring of expert consultants to determine if they even apply to you or your property. This jurisdictional determination was precisely what the Cоurt deemed renewable in Sackett. See Sackett,
. "No permit application will be accepted nor will the processing of an application be continued when the district engineer is aware of enforcement litigation that has been initiated by other Federal, state, or local regulatory
