By Noah Feldman, Bloomberg View
The Supreme Court Tuesday made it a little faster and cheaper for property developers to proceed with projects that might be subject to the federal Clean Water Act.
The pro-business decision was grounded on technicalities of administrative law that determine when a project must undergo a lengthy and expensive permitting process. But its core effect was to protect developers from getting bogged down by uncertainty over the far-reaching environmental statute.
On its face, the Clean Water Act is pretty simple. It prohibits “the discharge of any pollutant” into “the waters of the United States” without a permit. And the law sets substantial civil and criminal penalties for violating it.
In practice, determining what counts as the “waters of the U.S.” isn’t simple at all. The U.S. Army Corps of Engineers has first dibs on deciding. Its regulations include “mudflats, sandflats, wetlands, sloughs, prairie potholes, wet meadows, [and] playa lakes” in the definition. The Corps has applied the designation to half of Alaska (!). In the lower 48, the area of land covered by the “waters of the U.S.” is equal to the landmass of California.
It takes an average of 788 days and $271,596 to get an individualized permit from the Corps to discharge your pollutant as part of an industrial project -- assuming you get the permit at all. So it’s helpful for a developer to know up front whether the Corps thinks a project site qualifies as U.S. waters.
Standard practice is to go to the Corps and ask for a “jurisdictional determination” before starting the permitting process. The determination isn’t a permit; but it says whether you are or aren’t within the waters of the U.S., and it binds the Corps for five years.
The issue in the Supreme Court case was what you can do if you don’t like what the Corps tells you: can you go straight to court and challenge the determination? Or do you have to wait until your permitting process is over?
One of the basic principles of administrative law is that courts can’t review agency actions until those actions are final. You can see why: If every agency action could be attacked in court during a long and complex administrative process, nothing would ever get done. Most agencies spend lots of time listening to citizens’ arguments and responding to them in the course of their bureaucratic processes -- or at least that’s what they’re supposed to do. The idea of the finality requirement is to let the process run its course, and only then allow the courts to review the process to make sure it's been performed adequately and rationally.
In Tuesday's case, three peat-mining companies operating in Marshall County, Minnesota, got a jurisdictional determination from the Corps that required their sites to be permitted. They asked for a revision from the Corps, and got it. Still dissatisfied, they went to federal court to challenge the Corps’ determination.
The federal district court sent them away, concluding that the revised determination wasn’t final and that the peat-mining companies should go through the permitting process.
The Supreme Court said that the determination was definitive enough to count as final. It described its own approach as “pragmatic.” And it explained that there’s no adequate alternative to getting a determination. Without one, you’d have to either proceed without a permit, risking penalties, or else go through the long and costly permitting process and challenge that at the end of the process.
The holding does indeed make pragmatic sense, since it will relieve developers of uncertainty while they go forward with their projects.
The environmental costs would seem to be low or insignificant: developers who would have won anyway will win sooner; and those who would have lost will also lose sooner.
But there was a subtle catch to the court’s decision, one that interested several of the justices. Not just the Corps, but also the U.S. Environmental Protection Agency can enforce the Clean Water Act. So does a jurisdictional determination by the Corps bind the EPA?
The majority opinion, by Chief Justice John Roberts finessed the issue. It cited a memorandum of agreement between the Corps and the EPA saying that both would be bound by the Corps’ determinations. That meant, said Roberts, that the determination was really final.
Before the Supreme Court, the solicitor general’s office said the memorandum wasn’t really binding. That would be upsetting to developers, because it would imply that they could be sued by the EPA even after getting a determination from the Corps.
Justice Anthony Kennedy wrote separately to warn that it would be “ominous” if the EPA failed to follow its memorandum with the Corps. Justice Elena Kagan wrote separately to say that for her, the whole case rested on the idea that the memorandum is binding.
Justice Ruth Bader Ginsburg also wrote separately -- to say that in her opinion the EPA wasn’t bound by its memorandum. Her position would allow the EPA to bring charges against a polluter even if the polluter had a determination from the Corps in hand. That’s a small boon to environmentalists; but potentially bad for developers.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.