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Ninth Circuit Limits Judicial Review of Wetlands Determinations by Corps of Engineers

October 29, 2008

As a matter of first impression, the U.S. Court of Appeals for the Ninth Circuit recently held that an approved jurisdictional determination (“approved JD”) issued by the U.S. Army Corps of Engineers (“Corps”) under the Clean Water Act (“CWA”) is not final agency action under the Administrative Procedure Act (“APA”) for purposes of judicial review. Fairbanks N. Star Borough v. U.S. Army Corps of Eng’rs (“Fairbanks”).[1] An approved JD is the agency’s official position as to whether wetlands are present on a site. Under the Fairbanks opinion, even after the Corps renders a decision on an administrative appeal of an approved JD, that decision cannot be appealed to a federal district court or court of appeals. If the Corps determines that wetlands exist on a property sited for development, affected parties must apply for a § 404 permit, or proceed at their own risk with unpermitted dredge or fill activities and likely face enforcement.

Statutory Background

The CWA

Under the CWA, it is unlawful to discharge dredged or fill material into the waters of the United States except in accordance with the § 404 permitting regime, which is jointly administered by the Corps and the U.S. Environmental Protection Agency.[2] The Corps promulgated regulations defining “waters of the United States,” and includes “most wetlands adjacent to waters of the United States that are not themselves wetlands” within that definition.[3] Also by regulation, the Corps established a formal procedure for an “affected party” to obtain the agency’s official position regarding the scope of its regulatory jurisdiction under the CWA.[4] That is, a party may seek “an official Corps determination that jurisdictional [waters under the CWA] are either present or absent on a particular site.”[5] For administrative appeal purposes, an approved JD is a “final Corps agency action.”[6] If an approved JD is upheld on administrative appeal, that decision is the agency’s “last word” on whether it views the property as a wetland subject to regulation under the CWA.… No further agency decisionmaking on that issue can be expected[.]”[7] The question presented by Fairbanks, however, was whether an approved JD constitutes final agency action for purposes of judicial review under the APA.

The APA

Under the APA, only “[a]gency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review.”[8] Under the U.S. Supreme Court’s opinion in Bennett v. Spear, two requirements must be met for agency action to be final under the APA: “First, the action must mark the consummation of the agency's decisionmaking 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."[9]

Factual Background and the District Court Opinion

In 2005, Fairbanks North Star Borough ("Fairbanks" or the “borough”) sought to develop a 2.1-acre tract of property with playgrounds, athletic fields, concession stands, restrooms, storage buildings, roads and parking lots for recreational use by its residents. In October 2005, Fairbanks requested a determination from the Corps “that it could place fill material on its property without further ado.”[10] In response, the Corps issued a preliminary JD in which it determined that the entire parcel contained wetlands. Fairbanks then requested an approved JD. In December 2005, the Corps issued an approved JD in which it again determined that the entire parcel “contains waters of the United States … under our regulatory jurisdiction.”[11] In the approved JD, the Corps also noted that “[§] 404 of the Clean Water Act requires that a permit be obtained for the placement or discharge of dredged and/or fill material into waters of the U.S., including wetlands, prior to conducting the work.” Fairbanks took a timely administrative appeal of the approved JD, which the Corps found to be without merit in May 2006.

Fairbanks then sought judicial review of the approved JD in the U.S. District Court for the District of Alaska. In 2007, the district court granted the Corps’ motion for judgment on the pleadings. The court determined that it lacked subject matter jurisdiction because: (1) the JD did not constitute final agency action under the APA; (2) the JD was not ripe for judicial review; and (3) the CWA precludes review of all pre-enforcement agency actions, including JDs.[12] As of September 2008, Fairbanks had not applied for a § 404 permit, nor had the Corps initiated any pre-enforcement or enforcement action against the borough.

The Ninth Circuit’s Analysis

Fairbanks appealed the district court decision. Among other things, Fairbanks argued that the Corps' approved JD: (1) “prevents Fairbanks from claiming in mitigation that it had acted with good faith;” (2) “effectively requires Fairbanks to submit to the CWA's permitting regime before proceeding with construction;” and (3) “deprives Fairbanks of a ‘negative’ [JD],” upon which the borough might have relied “as a defense to enforcement action.” The Ninth Circuit did not find these arguments persuasive, and affirmed the district court.

In its Fairbanks opinion, the Ninth Circuit focused its analysis on whether the approved JD constituted final agency action that could trigger judicial review under the APA. With respect to the first prong of Bennett v. Spear, the court agreed with the borough that, when the Corps’ Review Officer upheld the district engineer’s approved JD, the finding marked “the consummation of the agency’s decisionmaking process” for determining whether the Corps considers a property subject to its CWA regulatory jurisdiction. The court found “no question that the Corps has asserted its ultimate administrative position regarding the presence of wetlands on Fairbanks' property.”[13]

Under the second prong of Bennett v. Spear, however, the court determined that approved JDs are not actions “by which rights or obligations have been determined, or from which legal consequences will flow.” The Corps argued that approved JDs merely assist affected parties in determining “where they stand on potential permitting issues and necessarily entail the possibility of further administrative proceedings, like permit applications. As such, the determination is “only a step leading to an agency decision, rather than the final action itself.”[14] The Ninth Circuit found that JDs “do not include determinations that a particular activity requires a … permit,”[15] and determined that an approved JD does not “impose an obligation, deny a right, or fix some legal relationship.” The court reasoned that Fairbanks’ “rights and obligations remain unchanged by the approved [JD],” which “does not itself command Fairbanks to do or forbear from anything; as a bare statement of the agency's opinion, it can be neither the subject of ‘immediate compliance; nor of defiance.”[16] Consequently, it lacks the “status of law or comparable legal force.”[17] In what may be a distinction without much of a difference, the court reasoned that in any later enforcement action, Fairbanks “would face liability only for noncompliance with the CWA’s underlying statutory commands, not for disagreement with the Corps’ [JD].”[18]

Accordingly, the Ninth Circuit determined that the approved JD failed to satisfy the second requirement of Bennett necessary to confer jurisdiction in federal court. Because “finality is a jurisdictional requirement to obtaining judicial review under the APA,” the Ninth Circuit decided that the district court correctly dismissed Fairbanks' action.[19] It therefore affirmed the lower court’s dismissal on the pleadings for lack of jurisdiction, holding that the Corps’ approved JD is not final agency action within the meaning of the APA.[20] The Ninth Circuit did not reach the issues of ripeness and statutory preclusion of judicial review in its Fairbanks opinion.

The Ninth Circuit summarized its decision as follows: “At bottom, Fairbanks has an obligation to comply with the CWA. If its property contains waters of the United States, then the CWA requires Fairbanks to obtain a [§] 404 discharge permit; if its property does not contain those waters, then the CWA does not require Fairbanks to acquire that permit. In either case, Fairbanks' legal obligations arise directly and solely from the CWA, and not from the Corps' issuance of an approved [JD].”[21]

Conclusion

As explained by the U.S. Supreme Court, “the burden of federal regulation on those who would deposit fill material in locations denominated ‘waters of the United States’ is not trivial.”[22] Under the Ninth Circuit’s opinion in Fairbanks, if the Corps issues “positive” JDs in which it determines that wetlands exist on properties sited for development, then municipalities, counties, and other developers must submit to that regulation and apply for a § 404 permit, and cannot challenge the wetlands determination in federal court unless and until a permit application is denied and the applicant exhausts its administrative appeal options. If the decision is made to proceed with development without a § 404 permit, those who place dredged or fill material into waters of the United States over which the Corps has asserted jurisdiction can face enforcement action for violating the CWA. The jurisdictional question may be raised in such an enforcement action, but this latter course of action is risky since an adverse ruling will likely mean the imposition of substantial administrative or civil penalties, or even criminal sanctions.[23]

For more information on the CWA, contact Jessica Ferrell or any member of the Water Quality or Permitting & Environmental Review practice groups.

[1] No. 07-35545, 2008 U.S. App. LEXIS 19351 (9th Cir. Sept. 12, 2008) (citing Greater Gulfport Prop., LLC v. U.S. Army Corps of Eng'rs, 194 F. App'x 250 (5th Cir. 2006) (unpublished) (holding that district court lacked jurisdiction to review Corps' approved JD); Comm'rs of Pub. Works v. United States, 30 F.3d 129 (4th Cir. 1994) (unpublished) (same)).

[2] 33 U.S.C. § 1344; Leslie Salt Co. v. United States, 55 F.3d 1388, 1391 (9th Cir. 1995); United States v. Riverside Bayview Homes, Inc., 474 U.S. 121, 123, 106 S. Ct. 455 (1985).

[3] Fairbanks, 2008 U.S. App. LEXIS at 19351 at *3 (citing 33 C.F.R. § 328.3(a)(7)). “The term wetlands means those areas that are inundated or saturated by surface or ground water at a frequency and duration sufficient to support, and that under normal circumstances do support, a prevalence of vegetation typically adapted for life in saturated soil conditions. Wetlands generally include swamps, marshes, bogs, and similar areas.” 33 C.F.R. § 328.3(b).

[4] An “affected party” is “a permit applicant; landowner; lease, easement or option holder (i.e., an individual who has an identifiable and substantial legal interest in the property) who has received an approved JD; permit denial; or has declined a proffered individual permit.” 33 C.F.R. § 331.2; see also JDs, Corps Regulatory Guidance Letter 08-02, at 1 (June 26, 2008).

[5] Fairbanks, 2008 U.S. App. LEXIS 19351 at *11-12.

[6] 33 C.F.R. § 320.1(a)(2), -(a)(6); 33 C.F.R. § 331.2.

[7] Fairbanks, 2008 U.S. App. LEXIS 19351 at *12 (citing Sierra Club v. U.S. NRC, 825 F.2d 1356, 1362 (9th Cir. 1987)).

[8] 5 U.S.C. § 704.

[9] Fairbanks, 2008 U.S. App. LEXIS 19351 at *10 (citing Bennett v. Spear, 520 U.S. 154, 177-78 (1997)).

[10] Id.

[11] Id. at *3-4.

[12] Fairbanks N. Star Borough v. U.S. Army Corps of Eng’rs, No. 06-00026, Order Granting Def. Mot. for J. on the Pleadings, Docket No. 28 (D. Alaska May 18, 2007).

[13] Fairbanks, 2008 U.S. App. LEXIS 19351 at *9-10 (internal brackets, quotations and citations omitted).

[14] Id. at *14 (internal quotations and citations omitted).

[15] Id. (citing 33 C.F.R. § 331.2).

[16] Id. at *16 (citations omitted).

[17] Id. (citation omitted).

[18] The Ninth Circuit’s decision in Fairbanks aligns with the Corps’ regulations governing JDs. See 65 Fed. Reg. 16,486 (March 28, 2000). Still, the Ninth Circuit noted that, although an agency's characterization of its own action as final "provides an indication of the nature of the agency’s action," that characterization is not determinative of the courts’ “finality analysis under the APA.” Fairbanks, 2008 U.S. App. LEXIS 19351 at *12, n.6 (citing Blincoe v. FAA, 37 F.3d 462, 464 (9th Cir. 1994) (per curiam)).

[19] Fairbanks, 2008 U.S. App. LEXIS at 19351 at *6.

[20] Id. at *2 (citing 5 U.S.C. § 704).

[21] Id. at *21 (citations omitted).

[22] Rapanos v. United States,547 U.S. 715, 721, 126 S. Ct. 2208 (2006) (plurality opinion).

[23] For example, for negligent violations of the Clean Water Act, violators can be punished by fines of up to $27,500 per day of violation, imprisonment of up to two years, or both. 33 U.S.C. § 1319(b), -(c)(1), -(d), -(g); 33 C.F.R. § 326.6. For knowing violations, violators can be punished by fines of up to $50,000 per day of a violation, imprisonment of up to three years, or both. 33 U.S.C. § 1319)(c)(2). Any person who knowingly violates the CWA and knowingly endangers another person by placing that person “imminent danger of death or serious bodily injury, shall, upon conviction, be subject to a fine of not more than $250,000 or imprisonment of not more than 15 years, or both.” Organizations convicted for knowing endangerment under the CWA are subject to a fine of up to $1,000,000. If a person is convicted more than once for knowing endangerment under the CWA, the maximum punishment is doubled with respect to both fines and imprisonment. Id. § 1319(c)(3). Persons subject to CWA penalties are entitled to judicial review. See id. § 1319(g)(8).

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