NEW ORLEANS – The U.S. Court of Appeals for the Fifth Circuit has affirmed a district court’s dismissal of a suit brought against the U.S. Army Corps of Engineers, agreeing with the lower court’s determination that courts lack the subject-matter jurisdiction to hear cases regarding property classifications.

The suit began in 2012, after Belle Company attempted to sell a portion of its property to Kent Recycling to be used as a solid waste landfill. In February of 2012, the defendant, United States Army Corps of Engineers, issued a “jurisdictional determination,” known as a JD, classifying the private property as “wetlands” and subjecting it to regulation under the Clean Water Act. The Corps instructed Belle Company to complete an application for a 404 permit, the type of permit necessary to build on wetlands and other “navigable waters.” After unsuccessfully appealing the Corps’s decision through the agency’s appeal process, Belle Company and Kent Recycling sued, alleging that the JD issued by the Corps was “unlawful,” and therefore subject to review under the Administrative Procedure Act.

The Administrative Procedure Act (APA), executed in 1946, is a federal statute that governs administrative federal governmental agencies. The act ensures that federal agencies comply with relevant statues, and establishes the process for judicial review of agencies’ actions.

In their initial argument before the district court, Belle Company and Kent Recycling argued that the Corps’s JD was “unlawful” and that it should “be set aside” so that they may continue with their exchange of land. The district court dismissed the suit for lack of subject-matter jurisdiction, concluding that the JD issued by the Corps is not a “final agency action” and therefore not reviewable under the process established under the Administrative Procedure Act. Belle Company and Kent Recycling then appealed the district court’s decision, arguing that the JD issued by the Corps was indeed a “final agency action.”

The Fifth Circuit Court affirmed the district court’s decision, outlining the factors that qualify an agency’s actions as “final” and subject to judicial review. Citing its own 1994 decision, the Fifth Circuit began its ruling by stating that the United States can only be sued when a statute allows it; so a federal governmental agency can only be sued as explicitly allowed by statutes of the APA. The APA authorizes judicial review only “for final agency action for which there is no other adequate remedy in court.” If there is no final action, the court determined, the judicial branch lacks authority to hear the case.

The court then stated the three qualifying factors that an agency’s action must have in order to be considered “final”: the action must mark the “consummation of the agency’s decision making process;” it must determine rights, obligations, or legal consequences; and it must have no other remedy in court.

The court then agreed with the appellant regarding the first qualifying factor, ruling that the JD did in fact “mark the consummation of the agency’s decision making process.” Because the Corps’s JD was subjected to the “extensive” administrative appeal process, and was upheld, the court ruled that it did satisfy one necessary component of a “final” action.

However, the court found that the JD was not final because it was not an action “by which rights or obligations have been determined, or from which legal consequences will flow.” The court ruled that the JD is merely a “notification of the property’s classification, but does not oblige Belle to do or refrain from doing anything” – It notifies Belle that it must obtain the proper 404 permit, which, despite being a costly process, does not prohibit Belle from doing anything. The JD did not accuse Belle of violating any statute, so it enacted no legal consequences or penalty scheme.

Based on its finding that the Corps’s JD was not a “final agency action,” the Fifth Circuit Court of Appeals affirmed the district court’s dismissal for lack of subject-matter jurisdiction.

The case was heard by Judges Thomas M. Reavley, W. Eugene Davis and Stephen A. Higginson.

Case no. 13-30262.

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