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Supreme Court Allows Pre-Enforcement Jurisdictional Challenges To EPA Compliance Orders - Applicability Beyond the Clean Water Act Is Unclear

Mar.29.2012

On March 21, 2012, the Supreme Court issued a unanimous opinion finding that regulated parties may challenge administrative compliance orders issued by the Environmental Protection Agency (EPA) under the Clean Water Act (CWA).  In Sackett v. EPA, U.S., No. 10-1062, the Court rejected EPA’s position that such orders are not subject to pre-enforcement judicial review.  Notably, the decision does not address EPA’s jurisdictional reach over wetlands or the definition of “waters of the United States” under the CWA, but it allows the Sacketts to litigate these jurisdictional issues immediately in federal court.  The Court offered a straightforward analysis that such orders are “final agency action” that can be challenged under the Administrative Procedure Act (APA) and that Congress did not preclude such challenges in the CWA.  The Court did not address any constitutional arguments, nor did it opine on whether the holding would apply to other environmental statutory schemes.

Factual Background
The facts of Sackett are relatively straightforward.  An Idaho couple bought land on which to build a home.  Before construction, the Sacketts filled in an area that EPA later deemed to be a wetland, and EPA issued an administrative order to cease construction activity based upon an alleged CWA violation.  EPA ordered the Sacketts to remove all fill material and restore the area to its prior condition, or face penalties of approximately $75,000/day.  The Sacketts attempted informal conversations with EPA, and requested an administrative hearing.  EPA denied the hearing request, and the Sacketts brought suit in the U.S. District Court for the District of Idaho.  District Court Judge Edward Lodge ruled that the CWA enforcement provisions did not provide for judicial review at the point of an administrative enforcement process.  Sackett v. EPA, 2008 WL 3286801 (D. Idaho).  The Sacketts appealed, and the Ninth Circuit upheld the District Court’s decision on similar grounds.  Sackett v. EPA, 622 F.3d 1139 (9th Cir. 2010).  The Sacketts then petitioned for Supreme Court review.

Supreme Court Decision 
The Sacketts’ Petition for Writ of Certiorari addressed a narrow issue, “Do Petitioners have a right to judicial review of an Administrative Compliance Order issued without hearing or any proof of violation under Section 309(a)(3) of the Clean Water Act?”  Justice Scalia authored the unanimous opinion.  The Court determined that a compliance order issued without a hearing or judicial review constitutes “final agency action for which there is no other adequate remedy in a court” under the APA.  Further, the compliance order “has all the hallmarks of APA finality.”  The compliance order (i) was used to determine “rights or obligations” because it required the Sacketts to “‘restore’ their property according to an agency-approved plan” and to “give the EPA access to their property”; and (ii) “legal consequences . . . flow” from the order in the form of “double penalties in a future enforcement proceeding.” 

The Court concluded that the order also limited the Sacketts’ ability to obtain a permit from the Army Corps of Engineers, and that they had no other adequate remedy in court.  That is, EPA’s findings and conclusions were not subject to further agency review, such as a hearing or the initiation of a CWA lawsuit by the Sacketts.  The Court’s decision was based on the finding that the CWA was not a statute that precluded judicial review under the APA, and that the APA created a presumption favoring judicial review of final administrative action.  The Supreme Court reversed the Court of Appeals and remanded the case for further proceedings.

The concurring opinions raise some interesting points.  Justice Ginsberg’s concurrence notes that the Supreme Court’s decision allowed the Sacketts to litigate the jurisdictional issues immediately, but the opinion did not address whether “at this pre-enforcement stage, the terms and conditions of the compliance order” may be challenged.  Justice Alito’s concurring opinion calls on Congress to resolve the confusion over EPA’s jurisdictional reach under the CWA, and is critical of the EPA’s informal guidance for its lack of “clarity and predictability.”

Implications
The greatest impact of Sackett will likely be felt within EPA itself, as the agency will carefully have to build a sufficient record before asserting jurisdiction, determine when CWA administrative orders should issue, and will nonetheless be subject to significant litigation over its jurisdictional determinations.  The dynamic becomes all the more complex in light of the contentious and evolving debate between EPA and the regulated community on the scope of EPA’s CWA jurisdiction, which includes the scope of the meaning of “waters of the United States” and whether a “discharge” from a “point source” has actually occurred.  Should EPA continue to issue administrative orders that push the envelope on these issues, and also neglect to promulgate regulations clarifying the scope of its jurisdiction, the litigation that springs from the application of the Sackett decision may well shape the future limits of EPA’s CWA jurisdiction.

The narrow holding in the Sackett decision raises serious questions on the applicability of the decision beyond judicial review of CWA jurisdictional issues.  The Court did not examine the constitutional questions raised by the parties, and therefore the question of whether denial of pre-enforcement review violates due process will have to wait for another day.  The due process question is critical to challenging orders under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), which explicitly prohibits judicial review of its orders.  Other statutes that, like the CWA, do not expressly prohibit judicial review (e.g., the Clean Air Act and the Resource Conservation and Recovery Act), may be more amenable to securing similar judicial review for their administrative orders.  But it is a near certainty that EPA will argue vigorously in future litigation that Sackett should not be stretched beyond its narrow CWA bounds.

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Kirsten L. Nathanson
Partner – Washington, D.C.
Phone: +1 202.624.2887
Email: knathanson@crowell.com