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Hawkes Co. Inc. v. United States Army Corps of Engineers

United States District Court, D. Minnesota

January 24, 2017

Hawkes Co., Inc., Pierce Investment Co., and LPF Properties, LLC, Plaintiffs,
United States Army Corps of Engineers, Defendant.

          Gregory R. Merz, Esq., and Nancy Quattlebaum Burke, Esq., Gray Plant Mooty Mooty & Bennett, PA, Minneapolis, MN, on behalf of Plaintiffs.

          Daniel R. Dertke, Esq., United States Department of Justice, Washington, D.C., Friedrich A.P. Siekert, Esq., United States Attorney's Office, Minneapolis, MN, and Molly McKegney Hunt, Esq., United States Army Corps of Engineers, St. Paul, MN, on behalf of Defendant.




         On October 28, 2016, the undersigned United States District Judge heard oral argument on Plaintiffs Hawkes Co., Inc. (“Hawkes”), Pierce Investment Co. (“Pierce Investment”), and LPF Properties, LLC's (“LPF”) Motion for Summary Judgment [Docket No. 49] and Defendant United States Army Corps of Engineers' (the “Corps”) Cross Motion for Summary Judgment [Docket No. 79]. For the reasons set forth below, Plaintiffs' Motion is granted and the Corps' Cross Motion is denied.


         This case arises from a determination made by the Corps that it has jurisdiction, under the Clean Water Act, 33 U.S.C. § 1251 et seq. (“CWA”), over 150 acres of wetlands located more than 90 river miles and 40 aerial miles from the nearest navigable water, the Red River of the North (“Red River”). Plaintiffs seek judicial review pursuant to the Administrative Procedures Act, 5 U.S.C. § 702 et seq. (“APA”), of this jurisdictional determination. Plaintiffs argue that the determination must be reversed as arbitrary, capricious, and contrary to law because the administrative record lacks sufficient evidence to support the exercise of CWA jurisdiction over the specific wetlands at issue.

         A. Proposed Expansion of Peat Mining Operations

         Plaintiff Hawkes is a peat mining company that plans to mine peat from 150 acres of wetlands (the “Wetlands”) located on a 530-acre parcel of land owned by affiliated corporations Pierce Investment and LPF, also Plaintiffs. Administrative Record (“AR”) [Docket No. 65] 87.[1]The Wetlands are located in Marshall County, Minnesota and contain high quality peat that Hawkes seeks to mine for use in the construction of golf greens. Id. Hawkes is already mining peat from nearby land. Expanding operations to include the 150 additional acres would extend the life of Hawkes' mining operations for approximately 16 more years. AR 88.

         B. Clean Water Act and Significant Nexus Test for Jurisdiction

         Hawkes' expanded peat mining project would involve the filling or discharge of materials onto the Wetlands. The CWA prohibits the discharge of materials into “navigable waters, ” which are broadly defined as “waters of the United States.” 33 U.S.C. §§ 1251(a), 1311(a), 1362(6). The Corps has authority under the CWA to issue permits for the discharge of dredged or fill materials into navigable waters, including wetlands. See 33 U.S.C. § 1344. The Corps determines whether particular property qualifies as “waters of the United States” (and is thus subject to its permitting jurisdiction under the CWA) by issuing a document called an “Approved Jurisdictional Determination” or “JD.” 33 C.F.R. §§ 320.1(b), 325.9, 331.2.

         To determine whether the wetlands at issue are “waters of the United States” under the CWA, the Corps has applied the “significant nexus” test established by Justice Kennedy in his concurring opinion in Rapanos v. United States, 547 U.S. 715, 778-82 (2006) (Kennedy, J., concurring).[2] Under this standard, the Corps has jurisdiction over the wetlands in question if a “significant nexus” exists between the wetlands and navigable waters in the traditional sense. Id. at 779. “The required nexus must be assessed in terms of the [CWA's] goals and purposes, ” which are “to ‘restore and maintain the chemical, physical, and biological integrity of the Nation's waters.'” Id. (quoting § 33 U.S.C. § 1251(a)). The rationale for regulating wetlands under the CWA is that “wetlands can perform critical functions related to the integrity of other waters-functions such as pollutant trapping, flood control, and runoff storage.” Id. at 779-80 (citing 33 C.F.R. § 320.4(b)(2)). Accordingly, wetlands satisfy the significant nexus test if:

the wetlands, either alone or in combination with similarly situated lands in the region, significantly affect the chemical, physical, and biological integrity of other covered waters more readily understood as “navigable.” When, in contrast, wetlands' effects on water quality are speculative or insubstantial, they fall outside the zone fairly encompassed by the statutory term “navigable waters.”

Id. at 780. The test is met if the wetlands in question significantly affect any one of the three attributes-physical, biological, or chemical.

         Conversely, a wetland will not satisfy the significant nexus test if its effect on water quality is speculative or insubstantial. Bailey, 571 F.3d at 798 (citing Rapanos, 547 U.S. at 780). “Justice Kennedy created the significant nexus test specifically because he was disturbed by the assertion of jurisdiction over wetlands situated along a ditch ‘many miles from any navigable-in-fact water, ' carrying ‘only insubstantial flow toward it.'” Precon Dev. Corp., Inc. v. U.S. Army Corps of Eng'rs, 633 F.3d 278, 295 (4th Cir. 2011) (quoting Rapanos, 547 U.S. at 786 (Kennedy, J., concurring)).

         When, as here, the Corps seeks to regulate wetlands based on adjacency to a non-navigable tributary, it must establish a significant nexus on a case-by-case basis. Rapanos, 547 U.S. at 782 . “Given the potential overbreadth of the Corps' regulations, this showing is necessary to avoid unreasonable applications of the statute.” Id. Although the significant nexus test “does not require laboratory tests or any particular quantitative measurements in order to establish significance, ” the Corps must present “some evidence of both a nexus and its significance.” Precon, 633 F.3d at 294. “Otherwise, it would be impossible to engage meaningfully in an examination of whether a wetland ha[s] ‘significant' effects or merely ‘speculative' or ‘insubstantial' effects on navigable waters.” Id. Moreover, the use of conditional language to assess the significance of the tributaries to which the wetlands are connected “could suggest an undue degree of speculation, and a reviewing court must identify substantial evidence supporting the Corps' claims” of jurisdiction. Rapanos, 547 U.S. at 786.

         C. Initial Jurisdictional Determination

         In December 2010, Hawkes applied to the Corps for a permit to begin mining peat from the Wetlands. AR 80. On February 7, 2012, the Corps' St. Paul District (“District”) issued an Approved Jurisdictional Determination (the “Initial JD”) in which it concluded that the Corps has jurisdiction over the Wetlands based upon a significant nexus between the Wetlands and the Red River, the nearest traditional navigable water. See generally AR 421-42. The Red River is located at least 93 river miles and 42 aerial miles from the Wetlands. See AR 120.[3]

         The Initial JD determined that the Wetlands are part of a contiguous 591-acre wetland complex (the “Wetland Complex”) that flows through a man-made ditch, then into an unnamed seasonal tributary, then to the Middle River, and ultimately to the Red River. AR 427, 430. More specifically, water from the 151-acre Wetlands flows south under a county road via two 24" culverts, and onto neighboring wetlands located on the other side of the road. AR 430, 439. The water then continues to flow south through the neighboring wetlands until it reaches a 448-linear foot wetland drainage feature that directs the water east. AR 430, 440. The drainage feature connects with a 512-linear foot man-made ditch that cuts through an upland pasture or hayfield of a neighboring farm. Id. The 512-foot upland ditch does not have a continuous ordinary high water mark.[4] AR 430. Water travels through the upland ditch and is discharged into an unnamed seasonal tributary. Id. The seasonal tributary then flows approximately 1, 500 feet southeast before merging with another stream and entering the Middle River, which flows into the Red River. AR 427, 430, 436.

         The Initial JD acknowledged that water flow in the seasonal tributary connecting Wetlands to the Red River had not been observed during the Corps' field investigations. See AR 436 (“Flow in the unnamed tributary has not been quantitatively assessed and the only direct observations of the [tributary] were made in December of 2011 at which time there was standing water in pools but no continuous flow.”); AR at 428 (“Surface flows were not observed in the tributary by the Corps staff.”). Nevertheless, the Initial JD stated that “[a]lthough not verified, surface flows [in the tributary] are believed to occur in response to snowmelt and precipitation and would most likely be present between March and June and after significant precipitation events in other portions of the growing season.” AR 429.

         To evaluate this potential flow, the Corps utilized its seasonal stream evaluation protocol, which uses drainage area measurements to predict whether a tributary will have seasonal flow (i.e., continuous flow for at least three months). AR 427. The tributary's drainage area was more than double the threshold size that typically satisfies the Corps' definition of seasonal flow. Id. Thus, the Initial JD found it “reasonable to conclude” that the tributary has seasonal flow. Id.; see also AR 436 n.3 (“The Corps has not quantitatively assessed the flow regime of the tributary but, based on the size of the drainage area, observed flow through the wetlands in June [2011], and direct observations of what are believed to be groundwater supported pools in the stream channel, has preliminarily established that the stream has an intermittent flow regime.”).

         The Initial JD also speculated that groundwater may contribute to the tributary's flow based on the existence of the pools in the midst of a severe drought, but stated that “additional site investigations would be required to confirm this contribution, ” AR 427, and that the groundwater contribution “ha[d] not been confirmed.” AR 428. Additionally, the water quality of the tributary was not formally assessed but was “expected to be good based on adjacent land uses, amount of wetlands in the area, and buffers around the tributary.” Id.

         The Initial JD also discussed functions that are generally performed by wetlands, such as reducing downstream flooding by providing floodwater storage, and reducing downstream pollution by retaining excess nutrients and sediments. AR 438. The general functions of streams and tributaries were also discussed, including their role in transporting nutrients and chemicals to downstream waters. Id.

         The Initial JD also described characteristics of the Red River, including its history of frequent flooding, and its listed status with the Minnesota Pollution Control Agency as impaired for aquatic life and aquatic consumption due to turbidity, as well as mercury and PCB in fish tissue. AR 437. The Initial JD concluded that “[t]he functions of the wetlands . . . combined with the functions provided by the tributary results in a significant nexus to the Red River.” AR 434.

         D. Administrative Appeal

         On April 4, 2012, Plaintiffs administratively appealed the Initial JD to the designated Corps Review Officer. AR 471-518. Plaintiffs argued, among other things, that the Corps had not provided site-specific data showing that the Wetlands have more than a speculative or insubstantial effect on the chemical, physical, or biological integrity of the Red River.

         Regarding the chemical connection, Plaintiffs argued that the Initial JD provided no measurable or quantitative data on how the Wetlands would affect the chemical integrity of the Red River. AR 654. Rather, the Initial JD talked only in generalities about the functions of headwater streams and wetlands and their importance for nutrient transformation. Id.

         As to the physical connection, Plaintiffs contended that any connection was insignificant because there was little to no flow from the Wetlands to the Red River. AR 656. Additionally, Plaintiffs argued that the Wetlands' considerable distance from the Red River caused any connection between them to be speculative and insubstantial at best. AR 478.

         With respect to the biological connection, Plaintiffs argued that the Wetlands provide no fish habitat to support such a connection, the flow in the tributary is too minimal to constitute a significant biological contribution to the Red River, and the Wetlands are ecologically different from the Middle River biome because they are a rich fen, whereas the Middle River is a bottomland forest. AR 659.

         E. Appeal Decision

         On October 24, 2012, the Corps issued an Administrative Appeal Decision (“Appeal Decision”), concluding that the Administrative Record lacked sufficient documentation to support a finding that the Wetlands have a significant nexus that is more than insubstantial or speculative on the chemical, physical, and biological integrity of the Red River. AR 648, 660. The Appeal Decision stated that the Initial JD spoke only to the overall functions provided by stream headwaters and wetlands in general, and did “not speak to how the functions that the specific onsite wetland and tributaries have a significant nexus that is more than speculative or insubstantial on the chemical, physical, or biological integrity of the downstream [traditional navigable water].” AR 660. For each of these attributes-chemical, physical, and biological-the Appeal Decision identified the reasons that the Administrative Record was deficient and the actions needed to complete the record.

         1. Chemical Connection

         a. Deficiencies

         The Appeal Decision noted that the Initial JD's description of the tributary's chemical properties includes statements that “[s]urface flows were not observed in the tributary by the Corps staff, ” that “[w]ater quality has not been formally assessed, ” and that “there is no water quality data for the unnamed tributary.” AR at ...

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