At the end of May, the Supreme Court held, in United States Army Corps of Engineers v Hawkes, Co., that a mining company could challenge a decision by the Army Corps of Engineers as “final” even though the party had not exhausted its administrative remedies. The case represents a significant expansion of the rights of regulated parties to challenge agency actions.
The case arose out of Hawkes’ desire to engage in peat mining in an area that may affect federally protected wetlands. Determining whether federally protected waters are present can be difficult and the penalties for the discharge of pollutants into federally protected wetlands can be great, so Hawkes did what many parties would do in that circumstance – they asked the Army Corps of Engineers for a jurisdictional determination (JD). The Army Corps determined that “waters” were present. Hawkes applied for a permit for its activities, but found that the permit process would require them to prepare assessments that would cost in excess of $100,000, so Hawkes brought suit to challenge the JD.
The District Court dismissed the suit because one may only challenge “final agency action” and the JD was not a “final” action. Under existing case law, a determination is not “final” unless (1) it represents the conclusion of the agency’s decision making process and (2) it has legal consequences. See, Bennett v Spear, 520 U.S. 154 (1997). The government argued that the JD was not final because (1) the agency’s decision making process would not conclude until the end of the permit process and (2) the JD had no legal consequences because both before and after the JD, Hawkes had exactly the same choice: it could start mining, risk an enforcement action and defend the action by challenging the agency’s jurisdiction or it could pursue a permit and, at the end of that process, challenge the agency decision.
The Eighth Circuit Court of Appeals reversed, finding the agency action to be final (792 F3d 994 (8th Cir. 2015) and the Supreme Court affirmed. The parties agreed that the jurisdictional determination was the end of a process and the issue before the court was whether the JD had legal consequences. The Court noted a JD that concludes that “waters” are not present, has legal consequences because it serves as a shield against an enforcement action. The finding that “waters” are present, therefore, has legal consequences because it denies the availability of this shield.
Businesses dealing with regulatory agencies often find the “finality” requirement frustrating. They want to seek a judicial remedy as soon as they feel aggrieved. They don’t want to hear the one needs to exhaust available remedies within the agency before going to court. That path is often costly and time consuming. The Hawkes decision provides some relief from that, taking a more practical approach to what is final and making it possible to challenge agency action even if there are, at least in theory, other available means of redress within the agency.