Rock Products

OCT 2016

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Page 46 of 63 ROCK products • October 2016 • 45 LAW Jason Moore is senior counsel in the Denver office of Husch Blackwell. He is an environmental and natural resources lawyer who focuses on helping energy companies navigate a wide variety of environmental issues, including permit- ting, enforcement, land use, government relations, chemical regulatory issues, Superfund and RCRA liability, and envi- ronmental due diligence in property and M&A transactions. He can be reached at 303-749-7295 or jason.moore@ The industry has long known that the process for obtaining a Clean Water Act (CWA) Section 404 permit to discharge dredged or fill material into the "waters of the United States" can be, to say the least, both painful and expensive with no guarantee that a permit will ever be issued. However, the U.S. Supreme Court's recent decision in U.S. Army Corps of Engineers v. Hawkes Co. Inc. should come as welcomed news. In that decision, the Court ruled that property owners have the right to seek judicial review of jurisdictional determinations (JDs) regarding "waters of the United States" under the CWA. The decision both reins in the federal government's regulatory jurisdiction under the CWA and signals the Supreme Court's willingness to limit expansion of the CWA's "ominous reach." The CWA prohibits the discharge of any pollutants, including dredge and fill material, into "waters of the United States" without a Section 404 permit. The determination of what waters and wetlands on a given property constitute "waters of the United States" is often a long and complicated process, and the scope of the CWA's jurisdiction has long presented challenging uncertainty for industry and has been the subject of much litigation. Permit Sought In Hawkes, three Minnesota peat mining companies sought a Section 404 permit from the U.S. Corps of Engineers (the Corps) to discharge material onto wetlands located on prop- erty the companies owned and hoped to mine. In the process of obtaining the permit, the companies obtained a revised "approved" JD from the Corps finding that the property con- tained "waters of the United States" because wetlands on the property had a "significant nexus" to the Red River of the North, which is located 120 miles away. Approved JDs affirmatively find the presence or absence of waters of the United States and are binding for five years on both the Corps and the Environmental Protection Agency (EPA), which share authority to enforce the CWA. After exhausting administrative appeals, the companies appealed the JD to a federal district court. The district court dismissed the case, concluding that a revised JD from the Corps was not a "final agency action for which there was no other adequate remedy in a court." The Eighth Circuit reversed, and the U.S. Supreme Court upheld the Eighth Circuit's reversal. Waters of the United States Ruling Welcomed News The Supreme Court Ruled That Property Owners Have The Right To Seek Judicial Review Of Jurisdictional Determinations Regarding Waters Of The United States. By Jason Moore The Supreme Court's analysis turned on two conditions that must be satisfied for an agency action to be "final" under the Administrative Procedure Act. First, "the action must mark the consummation of the agency's decision-making pro- cess," and second, "the action must be one by which rights or obligation have been determined, or from which legal con- sequences will flow." Chief Justice Roberts rejected the federal government's arguments that a party may proceed without a permit and argue in a subsequent government enforcement action that a permit is not required, based on a concern for civil and crim- inal liability risks. The government's second argument was that the applicant may complete the permit process and then seek judicial review if the application is denied. The Court rejected this argument, noting the significant costs involved in the permitting process. Notoriously Unclear The Court acknowledged what the industry has long known, that the reach of the CWA is "notoriously unclear, and the consequences to landowners even for inadvertent violations can be crushing." The Court noted that "[i]t is often difficult to determine whether a particular piece of property con- tains water of the United States, but there are important consequences if it does." Specifically, the Court found that the costs of obtaining a Section 404 permit can be significant, citing one study finding that the average applicant spends more than two years and over $200,000 to complete the permitting process. In the wake of the court decision, the industry may want to revisit whether they are required to secure Section 404

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