Fairbanks North Star Borough v. U.S. Army Corps of Engineers
The Fairbanks North Star Borough (Fairbanks) petitioned the Ninth Circuit for review of the United States Army Corps of Engineers’s (Corps) approved jurisdictional determination, which formally expressed the Corps’s view that Fairbanks’s property contained waters of the United States subject to regulation under the Clean Water Act (CWA). The Ninth Circuit held that the Corps’s determination was not a final agency action under the Administrative Procedure Act (APA) and affirmed the district court’s decision to dismiss the case for lack of jurisdiction.
Under section 404 of the CWA, “any discharge of dredged or fill materials” into “waters of the United States” is forbidden unless authorized by a permit. The Corps’s regulations define “waters of the United States” to include “most wetlands adjacent to waters of the United States that are not themselves wetlands.”
Fairbanks wanted to develop a 2.1 acre tract of land into playgrounds, athletic fields, and accompanying facilities for recreational use. Because the project involved the placement of fill material, Fairbanks requested a jurisdictional determination from the Corps to ensure that the property was not subject to the CWA. In response to Fairbank’s request, the Corps issued a letter indicating the parcel contained wetlands subject to CWA regulatory jurisdiction because the entire parcel contained waters of the United States.
Fairbanks timely filed an administrative appeal of the jurisdictional determination, but the Corps found the appeal to be without merit. Soon thereafter, Fairbanks filed suit in the United States District Court for the District of Alaska to set aside the Corps’s determination, asserting that the property could not possibly be a wetland for purposes of the CWA because the presence of shallow permafrost indicated the tract was insufficient to “support . . . a prevalence of vegetation typically adapted for life in saturated soil conditions” and thus precluded the tract from meeting the Corps’s regulatory definition of a wetland. The district court granted the Corps’s motion for judgment on the pleadings, concluding that the determination was not a final agency action for purposes of judicial review, that Fairbanks’s challenge was unripe, and that the CWA statutorily precluded review.
On appeal, the Ninth Circuit reviewed de novo the district court’s dismissal on the pleadings and the determination that the court lacked subject matter jurisdiction. Under the APA, an agency’s decision must be final for the reviewing court to have jurisdiction. To determine whether the Corps’s decision was final, the Ninth Circuit applied the two-prong test articulated in Bennett v. Spear. Under Bennett, for a court to find an agency action is final, the court must first conclude that the action marks the “consummation” of the agency’s decision-making process. Second, the action must “be one by which ‘rights or obligations have been determined,’ or from which ‘legal consequences will flow.’”
Addressing the first prong of the Bennett test, the Ninth Circuit concluded the approved jurisdictional determination by the Corps marked the end of the agency’s decision-making process and represented the Corps’s “considered, definite and firm position about the presence of jurisdictional wetlands” on Fairbanks’s property. Because the determination was valid for five years and because there was no indication that the determination was subject to further consideration or revision, the Ninth Circuit held that the Corps’s determination contained its ultimate decision regarding Fairbanks’s property. Although the Corps argued approved jurisdictional determinations are only one step in the permitting process, the Ninth Circuit was under no obligation to defer to the agency’s opinion of whether the action was final for purposes of judicial review. Thus, the court found that the Corps’s decision was the termination of the agency’s decision-making process.
Turning to the second prong of the Bennett test, the Ninth Circuit held that the Corps’s approved jurisdictional determination did not fix any legal rights or obligations and was not a final agency action for purposes of judicial review. The court reasoned that the Corps’s determination lacked legal force, did not alter or fix a legal relationship, and did not command Fairbanks to take any action. Additionally, the court noted that Fairbanks’s legal obligations flowed directly from the CWA, and not from the Corps’s determination.
Finally, the Ninth Circuit rejected Fairbanks’s arguments regarding the legal consequences of the Corps’s determination. Fairbanks asserted that the decision would prevent it from later claiming it acted with good faith, would effectively require it to apply for a permit under the CWA, and would deprive it of the opportunity to obtain a contrary jurisdictional determination. The court declined to accept Fairbanks’s assertion, instead concluding the borough’s arguments confused the “practical effect of Fairbanks having been placed on notice that construction might require a Section 404 permit” with the legal consequences arising exclusively from the requirements of the CWA.
In sum, although the Corps’s approved jurisdictional determination constituted the agency’s ultimate decision on whether Fairbanks’s property contained wetlands subject to the CWA, the decision did not fix any rights, obligations, or legal relationships. Accordingly, the Ninth Circuit concluded that the Corps’s determination was not a final agency action and affirmed the district court’s dismissal of the case for lack of subject matter jurisdiction.
 33 C.F.R. § 328.3(b) (2008) (“The term wetlands means those areas that are inundated or saturated by surface or ground water at a frequency and duration sufficient to support, and under normal circumstances do support, a prevalence of vegetation typically adapted for life in saturated soil conditions.”).
 Id. at 595.The court explained that “[w]hatever Fairbanks now chooses to do, it will be no more or less in violation of the CWA than if it had never requested an approved jurisdictional determination.” Id. at 596.The court noted that Fairbanks had neither applied for a section 404 permit nor had the Corps initiated any enforcement or pre-enforcement action against Fairbanks. Id. at 590.