Thanks to HBADE Board member Richard Forsten for alerting us to this significant court decision.
In a surprising 8-0 unanimous decision on May 31st, the U.S. Supreme Court endorsed NAHB’s long-held position that courts should be able to review federal decisions that determine whether and how a property owner can develop a piece of land so that the owner doesn’t have to go through the time- and money-consuming federal permit process before a decision can be made. This ruling that will have far-reaching effects on landowners, real estate developers, farmers, oil and gas and mineral extraction companies, golf course owners and government agencies. This ruling is important since the U.S. Army Corps of Engineers (Corps) and U.S. Environmental Protection Agency (EPA) have long held that preliminary JDs were not appealable. The decision will be far reaching and will have a lasting and significant impact.
The court ruled in the case of Army Corps of Engineers v. Hawkes Co. Inc. and concluded that when the government conducts a Clean Water Act jurisdictional determination (JD) the recipient landowners can contest the decision in court. The verdict marks the culmination of a 25-year NAHB battle for regulatory certainty.
“NAHB commends the Supreme Court,” chair Ed Brady said in a statement released this morning. “This common-sense ruling represents a clear victory for property owners to assert their rights if they disagree with an arbitrary edict by the federal government.”
“Previously, the only way to contest such a ruling in court was to obtain a federal Clean Water Act permit, which is costly and time-consuming, or proceed without a permit and risk ruinous Clean Water Act penalties,” Brady added. “Today’s ruling will allow property owners to be able to dispute a JD in court without first seeking a permit that they believe is not required in the first place.”
When the Corps conducts a JD, it determines whether “waters of the United States” are located on a parcel of property. The government has argued that before property owners can ask for a court review of the JD, they must first either obtain or be denied a wetlands development permit, or to go forward with their project without a permit and face an enforcement action.
Of course, permits are costly and time-consuming to obtain, and enforcement actions are even worse. Nonetheless, district and appellate courts have agreed with the Corps.
Then, in 2015, the U.S. Court of Appeals for the 8th Circuit took an about-face. Basing its opinion on the Supreme Court’s decision in Sackett v. EPA, the Eighth Circuit held in Hawkes v. Corps that JDs are judicially reviewable. The Corps then asked the Supreme Court to review the case, which it did.
The Decision’s Impact
JDs are important because it is impossible for a developer to know whether a feature is jurisdictional simply by looking at it. However, once the Corps issues a JD, it carries significant legal and financial consequences on everything from lending practices to state rules and regulations.
NAHB has filed amicus briefs and lobbied federal officials, urging the Corps and the courts to recognize that JDs have significant consequences for property owners and should be judicially reviewable. NAHB joined with other groups and filed an amicus brief at the Eighth Circuit. NAHB then filed the only amicus brief in support of Supreme Court review, and filed another amicus brief when the court decided to take the case.
Chief Justice John Roberts wrote the opinion for the court, which followed the reasoning behind NAHB’s amicus brief. It recognized the uncertainly surrounding whether a water feature is a “water of the United States” and the expense involved in determining whether the federal government has regulatory jurisdiction over that feature.
From a legal perspective, we hope to see a more even-handed manner in making jurisdictional determinations than we have seen from the Corps in the past.