Federal Court Addresses Clean Water Act Jurisdiction

On January 24, 2017, the U.S. District Court for the District of Minnesota issued an opinion in the latest iteration of the dispute between Hawkes Co., Inc. and the U.S. Army Corps of Engineers regarding a peat mining operation in Minnesota. Hawkes Co. v. U.S. Army Corps of Eng’rs, Civil No. 13-107 ADM/TNL, 2017 WL 359170 (D. Minn.). This case, which has been developing since 2010, represents one of the latest Clean Water Act  cases to confront the application of the “significant nexus” test developed by Justice Kennedy in Rapanos v. United States, 547 U.S. 715, 778-82 (2006) (Kennedy, J., concurring). After a series of decisions leading to the Supreme Court last year, this most recent decision ended with the District Court setting aside the Corps’ Revised jurisdictional determination and enjoining the Corps from further attempts to assert jurisdiction over the wetland at issue. This case did not reach a decision on the joint Army Corps of Engineers-Environmental Protection Agency “Waters of the United States” Rule, but the Supreme Court has granted certiorari in another case to make a final determination on that rule. See Nat’l Ass’n of Mfrs. v. Dep’t of Def., No. 16-299, 2017 WL 125667 (U.S. Jan. 13, 2017).

Background. In December of 2010, Hawkes Co., Inc. sought a CWA “jurisdictional determination” (JD) by the U.S. Army Corps of Engineers regarding 150 acres of wetlands upon which Hawkes Co. intended to expand its peat mining operation. The Corps, following the Rapanos “significant nexus” test, ultimately found that the 150 acres fell under the Corps’ jurisdiction under the Clean Water Act (CWA), thus Hawkes Co. would be required to obtain from the Corps a § 404 dredge/fill permit. Hawkes Co. disputed the Initial JD and, after an administrative appeal, the Corps was ordered to review the chemical, physical, and biological connections between the 150 acre tract and the nearest navigable water, the Red River, 120 miles away.

The internal review invalidated the Initial JD for numerous reasons, most of which sprung from the Corps’ lack of site-specific measurements and evaluations. Ultimately, the internal review process found that the Corps’ documentation used to establish CWA jurisdiction was insubstantial and speculative with regard to the chemical, physical and biological integrity of the Red River. The Corps made several changes to the wording of the Initial JD and subsequently issued its Revised JD, yet the Corps did not carry out further on-site measurements or evaluations. Rather, the Corps substituted the Initial JD’s speculative language with “more definitive wording.” Hawkes Co., 2017 WL 359170, at *6. In sum, the record used by the Corps in issuing its Initial JD was substantially the same as the one used for the Revised JD.

After a series of disputes over whether the Revised JD was a “final agency action” within the meaning of the Administrative Procedures Act, the Supreme Court held that the Revised JD was a final agency action. U.S. Army Corps of Eng’rs v. Hawkes Co., 136 S. Ct. 1807, at 1813-16 (2016). The Court then remanded the case back to the District Court to determine whether the Revised JD established a “significant nexus” between the Red River and the 150 acre tract. Significantly, however, during oral arguments, Justice Kennedy, the author of the “significant nexus” test, appeared to retreat from his position in Rapanos and stated “the Clean Water Act is unique in both being quite vague in its reach, arguably unconstitutionally vague.” Oral Argument at 19:05 (statement by Justice Kennedy), Corps of Engineers v. Hawkes Co., 136 S. Ct. 1807 (2016) (No. 15-290), https://www.oyez.org/cases/2015/15-290.

The Significant Nexus Test. The “significant nexus” test developed by Justice Kennedy requires the agency asserting CWA jurisdiction over a wetland to establish:

[T]he wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity of other covered waters more readily understood as “navigable.” When, in contrast, wetlands’ effects on water quality are speculative or insubstantial, they fall outside the zone fairly encompassed by the statutory term “navigable waters.”

Rapanos, 547 U.S. at 780. Despite the use of the word “and” between “physical” and “biological,” the test has been read to be satisfied if the relevant agency can prove any one of the three attributes: chemical, physical, or biological connectivity to a navigable water. Hawkes Co., 2017 WL 359170, at *2. The test is not satisfied, however, if the wetland’s “effect on water quality is speculative or insubstantial.” Id.

District Court Ruling. The District Court, in holding the Revised JD was arbitrary and capricious, worked its way through the Corps’ evidence regarding each of the three attributes that can support a significant nexus finding. The court based its ruling on the reasoning that, since the administrative review process found the Corps’ evidence for the Initial JD insubstantial and speculative, id. at *4, the same must be true for the Revised JD as the Corps conducted no water quality assessments, made no site-specific measurements, and carried out no further evaluations of the site, id. at *11. Simply, the Corps relied upon substantially the same record in its Revised JD as it had in its Initial JD. The court then moved on to the question of remedy. The court noted that, under normal circumstances, the next step would be to remand to the Corps for further proceedings and another JD. The court refused to do this, noting that another JD would prolong an already long case and would entitle the Corps to a third “bite of the apple.” Id. at 11. The court also reasoned that, by prolonging the dispute, remand would “fuel . . . the Corps’ ‘transparently obvious litigation strategy’” whereby the Corps “‘achieve[s]the result its local officers desire, abandonment of the peat mining project’—without ever having to establish CWA jurisdiction.” Id. at 12.

Conclusion. The Minnesota District Court’s ruling has been hailed as a victory for land use rights advocates and the agricultural community overall, yet the more pressing question concerning the validity of the Waters of the United States (WOTUS) rule, promulgated jointly by the Corps and the Environmental Protection Agency, still looms large.