Minnesota Peat Mine Wins Wetlands Case Against Army Corps of Engineers

Published March 8, 2017

In a setback for the U.S. Army Corps of Engineers (Army Corps), a federal judge in Minnesota ruled a peat mining company did not need a wetlands permit from the Army Corps or the U.S. Environmental Protection Agency (EPA) to expand its operations onto adjacent private property.

Attorneys for the plaintiff hailed the January 24 decision in the decade-long battle between Grand Forks, North Dakota-based Hawkes Company and the Army Corps as a significant victory for property-rights advocates, affirming the principle of judicial review and restricting the jurisdiction of the Corps over wetlands.

“This decision is not reached lightly, as the Court is aware that peat mining can have a significant impact on the environment,” Judge Ann Montgomery of the U.S. District Court of Minnesota wrote in her opinion.

The Corps’ determination a “significant nexus” existed between the wetlands in question and the Red River of the North was “arbitrary and capricious,” the judge determined.

Permission Denied

The case, U.S. Army Corps of Engineers v. Hawkes Company, Inc., et al., originated in rural Marshall County in northwest Minnesota. Family-owned-and-operated Hawkes collects and processes high-quality peat for golf course greens and sports fields.

Several years ago, to expand its production, Hawkes entered into a contract with two businesses that jointly owned a 150-acre property adjoining the Hawkes operation to mine peat. Before Hawkes or the two owners took any steps to develop the parcel, they requested a determination from the Army Corps whether the site would require a wetlands permit under the 1972 Clean Water Act (CWA) to be developed.

Following a multiyear administrative process that included consultations with EPA, in 2012 the Army Corps issued a “jurisdictional determination” asserting regulatory authority over the property’s peat wetlands based on their “significant nexus” to the Red River of the North, which is located more than 100 miles away from the land Hawkes wished to mine.

Expensive Process

The Corps’ assertion of CWA jurisdiction over the site meant Hawkes, which had already received state permits for operations, would have to seek a federal permit to develop the property, a process that regularly takes several years and costs hundreds of thousands of dollars, with no assurance the permit would be granted.

Hawkes appealed the Corps’ decision to the U.S. District Court of Minnesota, which dismissed the case, arguing the jurisdictional determination was not a final action subject to judicial review. Hawkes appealed the district court’s decision.

The Pacific Legal Foundation (PLF), which represented Hawkes, successfully argued in the Eighth Circuit Court of Appeals the Corps’ jurisdictional determination was subject to judicial review in federal court. In a unanimous decision in May 2016, the U.S. Supreme Court upheld the Eighth Circuit’s decision ruling the case was ripe for judicial consideration and sent the case back to the Minnesota district court for a hearing on the merits.

“The decision is vindication of the principle that federal agencies cannot be judge and jury of their own actions,” said James Burling, PLF’s director of litigation. “It is critically important that people have the right to go to court for a neutral decision on the legality of federal actions.”

‘Transparently Obvious Litigation Strategy’

With the Supreme Court having established the principle of judicial review for Corps actions, Montgomery agreed with Hawkes the Army Corps had failed to present sufficient evidence showing a significant nexus between the wetlands in question and the distant Red River of the North. Montgomery, a Clinton appointee, found the Corps had based its determination on hypothetical surface flow rates while failing to identify any actual flow from the peat land to the river.

In a further rebuke to the Army Corps, Montgomery rejected its request to have the case remanded back to the agency for further consideration, calling it a “transparently obvious litigation strategy.”

“The [Army] Corps already had two opportunities to establish a significant physical, chemical or biological nexus between the wetlands and the Red River,” Montgomery wrote in her opinion. “Allowing the [Army] Corps a third bite at the apple would force the Plaintiffs back through a ‘never-ending loop.'”

‘Abandoned the Rule of Law’

Reed Hopper, senior attorney for PLF’s Northwest Center, who argued the case before the Supreme Court, says the final victory has far-reaching implications.

“This was a well-earned victory for Hawkes, ending more than 10 years of conflict with heavy-handed federal regulators who abandoned the rule of law to advance their own values,” said Hopper. “Beyond the specific victory for Hawkes, however, the win is a victory for millions of landowners nationwide whose rights to challenge Army Corps wetland Jurisdictional Determinations in a court of law was vindicated and finally established as a matter of law for the first time in the history of the Clean Water Act.”

Craig Rucker, executive director of the Committee for a Constructive Tomorrow, says the timing of the decision is significant.

“The ruling comes as the Trump administration appears on the verge of doing away with the Obama administration’s Waters of the United States rule, which, if left in place, would greatly expand federal regulatory authority over private land under the CWA,” said Rucker. “WOTUS would allow federal abuse of regulatory power on a scale even greater than what the peat miner had to endure.” 

Bonner R. Cohen, Ph.D. ([email protected]) is a senior fellow at the National Center for Public Policy Research.