U.S. Supreme Court Authorizes Pre-enforcement Judicial Review of Clean Water Act Compliance Orders

Summary: In Sackett v. Environmental Protection Agency, issued in March 2012, the U.S. Supreme Court recognized that property owners have the right to immediately go to court to challenge the validity of administrative compliance orders issued by the EPA under the Clean Water Act. The decision overturns many prior federal appeals court decisions concluding that owners who receive compliance orders, but disagree with the EPA’s position that they are violating the law, have only two choices: comply with the order or run the risk of the EPA bringing a potentially costly civil enforcement action against them. Now, property owners have the additional option of going court to challenge the EPA position that the Clean Water Act applies to them, strengthening the hands of property owners vis-à-vis the EPA.

Michael and Chantell Sackett owned two-thirds of an acre near Priest Lake in the Idaho panhandle. In preparation for building a house, the Sacketts filled in low-lying areas on the property with dirt and rock. A few months later, the EPA sent the Sacketts an “administrative compliance order” informing them that it believed the property contained wetlands subject to Clean Water Act jurisdiction and that they had violated the Act by filling in the wetlands without obtaining a permit. Based on this determination, the order directed the Sacketts to restore the site and also informed them that failure to comply with the order could subject them to significant civil penalties for violating the Clean Water Act and the compliance order itself. The Sacketts, who believed their property did not include wetlands under the jurisdiction of the Act, objected to the EPA order. They requested a hearing before the EPA to respond to the agency’s position that they had filled wetlands, but the EPA denied the request, offering instead to discuss the matter on an “informal” basis. Dissatisfied with the EPA’s response, the Sacketts brought suit in federal court under the Administrative Procedure Act seeking to challenge the validity of the EPA’s determination that their property was subject to the Clean Water Act.

Both the federal District Court and the U.S. Court of Appeals for the Ninth Circuit dismissed the Sacketts’ lawsuit against the EPA for lack of subject matter jurisdiction. Following the established lower federal court precedent on the issue, the courts ruled that judicial review of the EPA compliance orders was precluded unless and until the agency itself sought enforcement of such orders in court.

Sackett Priest Lake Idaho

Reversing the Ninth Circuit, the Supreme Court held that the Sacketts could bring an action pursuant to the Administrative Procedure Act challenging the validity of the Clean Water Act compliance order in advance of any civil enforcement action brought by the government. The Court, in a unanimous decision written by Justice Antonin Scalia, did not reach the issue of the whether the Sacketts had actually violated the Clean Water Act.

The Court concluded that the EPA order was subject to immediate judicial review at the behest of the Sacketts under the Administrative Procedure Act. The Act provides for judicial review in federal court of “final agency action for which there is no other adequate remedy in a court.”  The Court ruled that the EPA order was “final” because it represented the consummation of the agency decision-making process, it imposed legal obligations on the Sacketts and various other legal consequences flowed from the issuance of the order. The Court rejected the argument that the EPA’s invitation for informal discussion negated the finality of the agency’s order.

The Court also ruled that the Sacketts had “no other adequate remedy” in court. In particular, the Court rejected the argument that the possibility that the EPA might initiate a civil enforcement proceeding provided the Sacketts an effective alternative legal remedy.

Finally, the Court rejected the EPA’s argument that the Clean Water Act displaces the Administrative Procedure Act’s general provisions regarding judicial review and prohibits pre-enforcement judicial review of the EPA orders. The Court’s analysis began with recognition that the Administrative Procedure Act creates a general presumption favoring judicial review of administrative action. The Court concluded, based on a review of the various provisions in the Clean Water Act regarding enforcement and judicial review of agency actions, that Congress did not intend for the Act to create a bar to judicial review overriding the normal presumption.

The Supreme Court decision represents a victory for the Sacketts and other property owners seeking to challenge EPA determinations that their properties include wetlands subject to Clean Water Act permitting. The decision gives land owners the opportunity to bring judicial challenges to EPA administrative orders they believe are mistaken and reduces the risk that they will be subjected to significant fines. The decision also has important implications for similar compliance orders issued under the Clean Air Act and the Resource Conservation and Recovery Act.

U.S. Supreme Court

On the other hand, the Court’s decision may impede prompt and effective enforcement of the Clean Water Act. Persons who may be proceeding with illegal development destroying wetlands can now mount lawsuits that can serve, at a minimum, to delay Clean Water Act enforcement. EPA officials may be more hesitant to make questionable wetlands calls if they think their decisions may be met by a direct legal challenge. To avoid potential legal challenges, they also may issue more informal notifications of environmental violations, which may prove somewhat less effective in achieving compliance. Ultimately, the Court’s decision reflects the conclusion that the Administrative Procedure Act’s promise of broad opportunities for judicial review of agency action overrides the public interest in efficient enforcement of the Clean Water Act.

At the same time, as important as the Sackett case is, it is relatively narrow in scope. The decision does not shed any light on what areas qualify as wetlands within the meaning of the Clean Water Act, and provides no hint about whether the Sacketts will ultimately prevail in their challenge to the wetlands designation in their case. While the decision gives property owners a new right to sue, they will have to invest time and money to exercise this new legal right. Finally, the decision does not bar the EPA from continuing to issue administrative compliance orders when it determines that the Clean Water Act has been violated; if the EPA has a sound basis for issuing such orders, most land owners will presumably comply rather than litigate.

Ultimately, the decision may have a long-term salutary effect on Clean Water Act enforcement, advancing the goals of the Act while addressing the concerns of the regulated community. Property owners and others subject to administrative compliance orders have frequently complained that the prior law prohibiting judicial review of EPA orders was fundamentally unfair. Now that the Supreme Court has addressed this concern, there may be greater acceptance of the Clean Water Act in the regulated community.

The Sackett decision provides important new guidance on how property owners objecting to EPA determinations that there are wetlands on their land can bring legal challenges to such determinations in court. The decision strengthens the hands of property owners challenging EPA assertions of jurisdiction, but may also strengthen the Clean Water Act more generally by improving the fairness of the Act’s enforcement.