Developers Left in Limbo after Post-Sackett AJD Pause

While developers are expected to ultimately benefit from the Supreme Court’s reduction of federal jurisdiction over wetlands and tributaries in the Sackett decision, questions remain regarding the application of Sackett to certain water features. Many developers with pending projects (and particularly those with pending permit applications) will face difficult choices regarding how to proceed until the Army Corps resumes issuance of Approved Jurisdictional Determinations (AJDs), a practice paused immediately after the Sackett decision.

AJDs confirm whether wetlands are subject to federal regulation, and obtaining them became a widespread practice due to the scientific and subjective standard that preceded Sackett. Confirming a need for permitting and determining acreage requiring mitigation allowed developers to reasonably account for associated costs (which could reach $1M per acre of impacted wetland) before undertaking a transaction.

The Army Corps paused issuance of AJDs pending promulgation of new regulations in response to Sackett that are—reportedly—anticipated to be published by September 1st. This fast turnaround is only possible due to a lack of notice and comment prior to rule issuance. The prospect of litigation challenging the anticipated regulations seems high, particularly because the lack of public input opportunities creates a wide target for potential challengers. Although Sackett is likely to ultimately reduce mitigation costs by eliminating permitting requirements for many wetlands—an effect that is widely seen as a boon for developers—many who stand to benefit are nonetheless holding their breath for the time being.

With AJDs no longer available, developers are left with a platter of less-than-appealing options:

1. Attempt to apply Sackett without Corps oversight, at risk of potential future enforcement;
2. Accept a “Preliminary Jurisdictional Determination” that assumes all aquatic features are jurisdictional, thereby foregoing any benefits of the Sackett decision; or,
3. Wait for the new rule to be published by September 1, although the new rule will likely face legal challenges and create its own questions regarding the scope of federal jurisdiction over wetlands.

The “right” choice is nearly certain to vary based on the geography of the project and the risk appetite of the developer. There has also been some suggestion that the Corps may not resume issuing AJDs at all following the new rule. So the current “pause” in issuing AJDs and corresponding lack of certainty may be a permanent issue that developers will have to wrestle with going forward.