Update On Challenging Wetlands Permitting Decisions
Two recent federal appeals court decisions show that landowners can obtain relief for adverse wetlands permitting actions by the U.S. Corps of Engineers – both at the beginning of the permit process and after it concluded.
In Hawkes., Inc. v. U.S. Army Corps of Engineers, 782 F.3d 994, the Eight Circuit held that a landowner can obtain immediate judicial review of a “jurisdictional determination” (JD) by the Corps. JD’s establish the boundary of wetlands that are subject to Clean Water Act (CWA) jurisdiction and thus require a permit to develop. Once a JD is issued that declares wetlands jurisdictional, they cannot be developed until the property owner applies for and obtains a permit under § 404 of the CWA. The Eighth Circuit in Hawkes found that restriction on the right to develop sufficient to qualify a JD as “final agency action” subject to legal challenge under the Administrative Procedure Act. In so holding, the court expressly disagreed with a 2014 Fifth Circuit decision, in Bell Company, L.L.C. v. U.S. Army Corps of Engineers, 761 F.3d 383, which held that JD’s are not final agency action and can only be challenged if and when a subsequent § 404 permit to develop the wetlands is denied. The government has petitioned the full Eight Circuit, “en banc,” to rehear the Hawkes decision, but the decision appears sound and appropriately provides landowners the ability to challenge wetland designations made by the Corps in JDs before having to go through the costly and time consuming process of obtaining a § 404 permit.
In another recent decision, Lost Tree Village Corp. v. United States, 707 F.3d 1286, the Federal Circuit affirmed the right of landowners to obtain relief after the conclusion of the § 404 permitting process, if the Corps denies a permit to develop property containing wetlands and the result of the denial is that no valuable use of the property remains. That is exactly what occurred in Lost Tree, and led the court to affirm a multi-million dollar award of just compensation for a taking when a property parcel was left with no economic use after the Corps denied a § 404 permit that was necessary to develop the parcel. The court in Lost Tree rejected the government’s argument that no taking had occurred because the property retained a nominal monetary value – $25,000, or 0.6% of its fully developed value of $4.2 million. The Federal Circuit decision entitles the landowner to receive $4.2 million plus interest since the date of the permit denial in 2004 and attorneys’ fees incurred in the litigation. In a prior decision in the same case, the Federal Circuit held that only one discrete parcel was relevant to the takings issue, even though that parcel lies within a residential community containing hundreds of other fully-developed parcels.
Although the Corps has significant discretionary authority over wetlands permitting, the decisions in Hawkes and Lost Tree show that legal challenges can succeed when properly targeted to actions by the Corps that unduly limit, or eliminate, development opportunities.