U.S. Supreme Court rules that ...

U.S. Supreme Court rules that property owners have right to pre-enforcement judicial review of Environmental Protection Agency compliance orders under Clean Water Act

By Brian R. Paget

Rejecting decades of precedent from lower courts, the U.S. Supreme Court in Sackett v. Environmental Protection Agency unanimously ruled on March 21, 2012 that property owners who received a compliance order from the U.S. Environmental Protection Agency (EPA) alleging violations of the Clean Water Act (CWA) may bring a civil action under the Administrative Procedure Act (APA) to challenge the order.

Mike and Chantell Sackett (the Sacketts) bought a residential lot in Bonner County, Idaho.  The lot lies just north of Priest Lake, but is separated from the lake by several lots containing permanent structures.  In preparation for constructing their own house, the Sacketts filled in part of their lot with dirt and rock.  Some months later, they received a compliance order from the EPA.  The order asserts that the Sacketts’ property is subject to the CWA, asserts that the Sacketts have violated the CWA’s provisions by placing fill material on their property, and directs the Sacketts to immediately restore their property pursuant to an EPA work plan or face potentially-massive fines.

The CWA prohibits, among other things, “the discharge of any pollutant by any person,” 33 U.S.C. §1311, without a permit, into “navigable waters,” §1344, which the CWA defines as “the waters of the United States,” §1362(7).  If the EPA finds that any person is in violation of this restriction, the CWA directs the EPA to either issue a compliance order, as it did here, or initiate a civil enforcement action.  §1319(a)(3).  Failure to comply with the order can result in fines of up to $75,000 per day.  See §1319(d).

The Sacketts, who do not believe that their property is subject to the CWA, asked the EPA for a hearing, but were refused.  The Sacketts then brought this action in the U.S. District Court for the District of Idaho, seeking declaratory and injunctive relief.  Their complaint alleged that the EPA’s issuance of the compliance order was “arbitrary” and “capricious” under the APA, 5 U.S.C. §706(2)(A), and that it deprived them of “life, liberty, or property, without due process of law,” in violation of the Fifth Amendment to the U.S. Constitution.  The District Court dismissed the claims for want of jurisdiction.  The U.S. Court of Appeals for the Ninth Circuit affirmed, concluding that the CWA “preclude[s] pre-enforcement judicial review of compliance orders,” 622 F.3d 1139, 1144 (2010), and that such preclusion does not violate the Fifth Amendment’s due process guarantee, id. at 1147.

The Supreme Court’s Ruling

The U.S. Supreme Court granted the Sacketts’ petition for certiorari, and ultimately issued its ruling on March 21, 2012.  In its ruling, the Court considered “only whether the dispute may be brought to court by challenging the compliance order.”  It did “not resolve the dispute on the merits.”

The APA provides for judicial review of “final agency action for which there is no other adequate remedy in a court.”  5 U.S.C. §704.  The Supreme Court found that the EPA’s compliance order to the Sacketts is such a “final agency action.”  It has all the hallmarks of APA finality.  Through it, the EPA “determined” “rights or obligations,” Bennett v. Spear, 520 U.S. 154, 178, by requiring the Sacketts to restore their property according to an EPA-approved plan and to give the EPA access to their property.  Also, “legal consequences . . . flow” from the order, ibid., because it exposes the Sacketts to potentially-massive penalties in future enforcement proceedings and severely limits their ability to obtain a permit for their fill from the Army Corps of Engineers, see 33 U.S.C. §1344; 33 C.F.R. §326.3(e)(1)(iv).  Moreover, the issuance of the order marks the “consummation” of the EPA’s decision-making process, Bennett, supra, at 178, given that the EPA’s findings in its order are not subject to further EPA review.  The Sacketts also had “no other adequate remedy in a court.”  5 U.S.C. §704.  Although a civil action brought by the EPA under 33 U.S.C. §1319 ordinarily provides judicial review in such cases, the Sacketts cannot initiate that process.  And each day they wait, they accrue additional potential liability.  Applying to the Army Corps of Engineers for a permit and then filing suit under the APA if that permit is denied also does not provide an adequate remedy for the EPA’s order.

The U.S. Supreme Court also found that the CWA is not a statute that “preclude[s] judicial review under the APA, 5 U.S.C. §701(a)(1).  The Court noted that nothing in the CWA expressly precludes judicial review under the APA.  Nor does the CWA impliedly do so.  The APA creates a “presumption favoring judicial review of administrative action.”  Block v. Community Nutrition Institute, 467 U.S. 340, 349 (1984).  While this presumption “may be overcome by inferences of intent drawn from the statutory scheme as a whole,” ibid., the statutory scheme does not support such an inference here.

The Court therefore reversed the judgment of the Court of Appeals and remanded the case for further proceedings consistent with its opinion.

Implications of the Ruling

Sackett v. EPA is noteworthy because it found a right to judicial review where none was thought to exist.  Before Sackett v. EPA, the CWA was thought to preclude pre-enforcement judicial review of EPA compliance orders.  After Sackett v. EPA, that is no longer the case.  The Sacketts will now finally have their day in court.  The Supreme Court opened that door for them and other similarly-situated property owners who receive similar administrative compliance orders from the EPA.  As Justice Alito put it in his concurring opinion, “the property rights of ordinary Americans [were] entirely at the mercy of [EPA] employees” and “[i]n a nation that values due process, not to mention private property, such treatment is unthinkable.”  Those words, along with the rest of the Sackett v. EPA decision, surely provide some solace to property owners, like the Sacketts, who find themselves suffering under the heavy hand of government with little opportunity to fight back.

Sackett v. EPA is also important because it will undoubtedly curtail EPA’s frequent use of compliance orders to compel “voluntary” compliance with environmental statutes.  Sackett v. EPA is a sharp rebuke to that practice.   Given the added resources necessary to defend compliance orders in court, the EPA will surely use such orders less frequently and only when the enforceability of such orders is fairly clear.

These impacts of Sackett v. EPA will extend well beyond the CWA.  The reasoning of the case applies as well to other, similar environmental laws, laws that do not expressly prohibit pre-enforcement review, like the Clean Air Act (CAA) and the Resource Conservation & Recovery Act (RCRA).  Like the CWA, courts should find a right to judicial review under the APA of EPA-issued compliance orders under the CAA and RCRA.

Sackett v. EPA will also provide courts with guidance on the issue of what is a “final agency action” subject to judicial review under the APA.  There has been considerable disagreement in the courts about what constitutes “final agency action” under the APA in a wide variety of environmental contexts, including, for instance, EPA-issued orders related to hydraulic fracking.  The issue has become a bit clearer now with the issuance of the Sackett v. EPA decision.

Finally, Sackett v. EPA is also noteworthy for what it did not decide.  It did not decide whether the Sacketts could challenge the substance of the EPA’s administrative compliance order or only whether they could challenge the EPA’s authority to regulate their land under the CWA.  As Justice Ginsberg noted in her concurring opinion, “whether the Sacketts could challenge not only EPA’s authority to regulate their land under the Clean Water Act but also, at this pre-enforcement stage, the terms and conditions of the compliance order, is a question today’s opinion does not reach out to resolve.”  Sackett v. EPA also did not reach out to resolve the Sacketts’ constitutional due process argument.  For statutes that (unlike the CWA, CAA and RCRA) explicitly prohibit pre-enforcement review, like the Comprehensive Environmental Response & Liability Act (CERCLA), the question remains whether there is a constitutional right to pre-enforcement judicial review of compliance orders issued by the EPA pursuant to such statutes.  These questions remain open for the time being.