Supreme Court weighs review of Army Corps’ jurisdiction decisions

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The Supreme Court may decide as soon as Monday to review a high-profile case on whether an Army Corps of Engineers determination that property qualifies for Clean Water Act protections can be challenged in court.

In Kent Recycling Services LLC v. Army Corps of Engineers, the justices are presented with the question of whether a corps “jurisdictional determination” for a wetland qualifies for judicial review.

Business and farm groups, property right activists, and Louisiana Sen. David Vitter — who was formerly the top Republican on the Senate Environment and Public Works Committee — have all urged the court to take up the case.

They contend that a corps decision that property is jurisdictional, and therefore qualifies for Clean Water Act protections, places significant burdens on its owner — including having to apply for costly permits or being subjected to penalties to the tune of thousands of dollars per day.

“These are not legitimate options,” the petitioner, Kent Recycling, said in court documents.

The case presents the high court the opportunity to go one step further than it did in a 2012 Supreme Court Clean Water Act case, Sackett v. U.S. EPA. Then, the justices unanimously ruled that an EPA compliance order is a final agency action that can be challenged in court.

If the court does review the case, it could have significant implications for the Obama administration’s proposed Waters of the United States jurisdictional rule, which is set to be finalized this year.

Kent Recycling concerns a tract of southern Louisiana land and dates back to 1991 when its owner, Belle Co. LLC, tried to sell the property to Kent Recycling for use as a landfill.

At the time, the corps told Belle that the land qualified as a “prior-converted cropland” and wasn’t subject to Clean Water Act jurisdiction. EPA later confirmed that policy.

In 2003, however, the corps reversed itself, saying its previous correspondence wasn’t valid. Two years later, it put new regulations on the books that said prior-converted wetlands would be exempt from Clean Water Act protections only if they were still being used for agriculture.

The Belle property wasn’t, and in 2011 the corps issued a final determination that the property qualified as jurisdictional and therefore the company would have to apply for a permit.

Both companies challenged the jurisdictional determination, or JD, in court.

The 5th U.S. Circuit Court of Appeals, however, sided with the corps last July and drew a significant distinction between a JD and EPA compliance orders that were at issue in Sackett.

“By contrast, the JD is a notification of the property’s classifications as wetlands but does not oblige Belle to do or refrain from doing anything to its property,” wrote Judge Stephen Higginson, who was appointed by President Obama.

Further, the compliance order made the Sacketts subject to future enforcement proceedings, including fines.

“The JD erects no penalty scheme,” Higginson said. “It imposes no penalties on Belle. And neither the JD nor Corps regulations nor the [Clean Water Act] require Belle to comply with the JD.”

Therefore, he concluded, a JD is not a final agency action that is eligible for court review under the Administrative Procedure Act (Greenwire, July 31, 2014).

The case is slated to be considered at the justices’ private conference tomorrow. It takes the votes of four justices to grant a case, and at this point in the court’s term an order on whether it has taken up or denied review is likely to come Monday, or the justices may hold the petition for future consideration.

‘Incredibly significant’ consequences

Several Clean Water Act lawyers who typically represent property owners and industry interests hope the justices will take up the case.

They note, as Kent Recycling did, that a jurisdictional determination can force a property owner to either abandon a project, go through a permit process that typically takes two years and costs up to $270,000, or proceed without a permit and risk fines of up to $37,500 per day.

“It imposes a lot of hardship on the people trying to develop land because if they go ahead, they do so at their own peril,” said Richard Schwartz, a Clean Water Act lawyer at Crowell & Moring. “The consequences are incredibly significant, and there should be judicial review.”

Tim Bishop of Mayer Brown in Chicago, who has argued water cases before the Supreme Court, was more emphatic.

Under the Clean Water Act, he said, “a designation immediately affects how you can use your property and its value. It is truly absurd to hold that a designation has no legal consequences.”

Vitter, the American Farm Bureau and the National Federation of Independent Business have also asked the Supreme Court to review the case.

The corps makes several counterarguments. Procedurally, it notes that Kent Recycling is not the actual owner of the property — Belle is. Kent Recycling had an option to buy the land if it can be used as a solid-waste landfill.

Belle, the corps notes in court documents, has stopped pursuing the case after the 5th Circuit ruling. Kent Recycling, under the government’s reasoning, therefore lacks standing and can’t prove it is directly harmed by the JD.

Further, the corps said Belle has since proposed to use the property as part of a mitigation bank — that is, to preserve it as wetlands to compensate for impacts on other water bodies.

“Belle’s action raises questions about the continued existence of the petitioner’s option to purchase the property and the extent of its continuing interest in the property,” the Justice Department wrote in a court brief. “In addition, if Belle succeeds in transforming the property into a mitigation bank, it is unlikely that this case would remain live.”

The government also supported the 5th Circuit’s conclusions regarding the difference between a JD and the compliance orders from Sackett. And it pointed out that the 9th U.S. Circuit Court of Appeals reached the same conclusion.

Pat Parenteau, an environmental law professor at Vermont Law School, agreed with that assessment and didn’t think the court would bite on reviewing the case.

“I don’t think it’s anything like Sackett,” he said. “There is no sanction here at all.”