In Belle Company v. U.S. Army Corps of Engineers, 761 F.3d 383 (5th Cir. 2014), the Fifth Circuit distinguished a Corps-issued jurisdictional determination (JD) from an EPA-issued compliance order, and declined to extend “final agency action” status to a Corps’ JD. In Sackett v. EPA, 132 S. Ct. 1367 (2012), the Supreme Court ruled that an EPA-issued compliance order was a final agency action and thus subject to judicial review under the Administrative Procedure Act (APA). Essentially, the Belle decision leaves JD recipients with two options to judicially contest the JD. One may go through the expensive and time-consuming permit process and seek review of the JD in a permit review action. Alternatively, one may initiate work at the site, which could lead to civil or criminal penalties.
The Corps issued a JD to Belle, decreeing that the vast majority of the property on which Belle intended to construct a solid waste landfill was jurisdictional wetlands, effectively killing the project due to mitigation costs and difficulties in obtaining state permit modifications to accommodate that decision. After Belle exhausted its administrative appeals, it sought judicial review in federal district court, claiming that the JD was “final agency action” under the APA. The district court disagreed with Belle.
Test for final agency action
On appeal to the Fifth Circuit, Belle argued that the JD met the familiar two-prong test of Bennett v. Spear, 520 U.S. 154 (1997). Not only did the JD mark the consummation of the agency’s decision-making process, it determined Belle’s rights or obligations and legal consequences flowed from the JD to Belle.
First prong: Consummation of decision-making process
The Fifth Circuit had no trouble finding (as did the district court) that the JD represented the consummation of the Corps’ decision-making process. Issuance of the JD concluded an internal process (the administrative appeal process) for parties such as Belle to solicit the Corps’ “official position” about the property. Additionally, the Corps asserted its final position on the facts through the JD.
Second prong: Determination of rights or obligations
In assessing the second prong, the panel noted that both prior to and after Sackett, all of the courts that had previously considered the question, including the Fifth Circuit, had held that a JD is not a final agency action because it does not determine rights or obligations or have legal consequences. Indeed, the reasoning of Sackett as to the second prong highlights the “determinative distinctions between a JD and an EPA compliance order.” Belle, 761 F.3d at 391. The Fifth Circuit then examined four distinctions it found dispositive.
Obligations. First, the compliance order independently imposed obligations, as it ordered the Sacketts to restore their property and provide access to records. The JD, on the other hand, was merely a notification of the property’s classification as wetlands but did not obligate Belle to do or refrain from doing anything on the property. Belle argued that, under state law, the JD required Belle to modify its existing solid waste permit to include information about the status of wetlands on the property and its plans to protect any wetlands that the landfill’s construction would impact. However, the Fifth Circuit rebuffed that notion, finding that state-agency action “does not transform nonfinal federal-agency action into final action for APA purposes.” Belle, 761 F.3d at 392.
Penalties. Second, the compliance order independently imposed coercive consequences for its violation and exposed the Sacketts to penalties. The JD “erects no penalty scheme,” does not itself impose any penalties, and does not require Belle to comply with it. The possible use of the JD against Belle in future penalty calculations was too “speculative” when compared to the actual accrual of penalties against the Sacketts for failure to restore the property.
Permit. Third, the compliance order limited the Sacketts’ ability to obtain a permit from the Corps based on explicit statements in Corps regulations. The JD created no such hindrance for Belle.
Violation. Fourth, the compliance order determined that the Sacketts’ property contained wetlands and that they had violated the Clean Water Act. The JD, however, does not state that Belle is in violation of the Clean Water Act, does not include an order to comply with the JD, and does not require any steps to alter or restore the property.
After considering the distinctions between Belle’s JD and the Sacketts’ compliance order, the Fifth Circuit found that “the JD is not an action by which rights or obligations have been determined, or from which legal consequences will flow.” Belle, 761 F.3d at 394.
In short, the Fifth Circuit followed its own precedent as to the second Bennett prong. As to Sackett, the Fifth Circuit simply found too many distinctions between a JD and a compliance order to determine that Sackett mandated a similar result for Belle. For now at least, a JD is not a final agency action and thus not subject to judicial review. The Fifth Circuit’s decision in Belle indicates that Sackett’s impact is narrower than some may have anticipated, leaving certain would-be petitioners without immediate judicial recourse.