Supreme Court Gives Landowners Right to Pre-Compliance Judicial Review of Clean Water Act Orders Issued by US EPA in Sackett v. EPA

In a highly anticipated decision, the United States Supreme Court has ruled unanimously that the Clean Water Act (CWA) allows parties to seek and obtain judicial review of administrative compliance orders issued by US EPA under its authority. The Court’s unanimous decision in Sackett v. Environmental Protection Agency, et al. (March 21, 2012) provides aggrieved property owners new recourse to address agency orders they believe lack jurisdictional authority. It also deals a major blow to EPA’s and U.S. Army Corps of Engineers’ (“Corps”) top compliance tool under the CWA, and potentially provides a basis for claiming that pre-enforcement review is available with respect to administrative compliance orders issued under other environmental statutes, such as the Clean Air Act (CAA) and the Resources Conservation and Recovery Act (RCRA).

The CWA prohibits the discharge of fill material into wetlands without a permit from the Corps. The EPA and Corps share CWA enforcement authority. EPA has three enforcement options: (1) administrative penalties; (2) civil enforcement actions in U.S. district court; or (3) administrative compliance orders (ACOs), which can compel alleged violators to remove illegally placed fill material. Failure to comply with an ACO can result in up to $37,500 of potential liability for each day of non-compliance, in addition to the $37,500 of potential liability per day for the underlying CWA violation.

Case Background

The facts of the underlying case are clear. The Sacketts own a small, undeveloped parcel in Idaho. In 2007, in preparation for building a house, they filled a low-lying part of their property without a CWA permit. EPA determined that the filling violated the CWA because the parcel contained a jurisdictional wetland, and issued an ACO requiring the Sacketts to remove the fill and restore the parcel to its prior condition. The ACO also threatened the Sacketts with substantial daily fines. The Sacketts sought a meeting with EPA to address their contention that the area filled was not, in fact, a jurisdictional wetland under the CWA, but EPA refused to meet. The Sacketts were faced with a choice: either comply with the order (at substantial cost), or wait and see if the EPA would sue. Given the potential penalties of $75,000/day in the event of losing a suit, most parties comply with the EPA orders, even if they have legitimate concerns about the propriety of the agency’s determinations.

The Sacketts instead filed suit in district court. The district court held that an opportunity for judicial review of an agency order prior to compliance with it was not provided under the CWA, except where the EPA first sued. Because EPA had not yet sued, the court dismissed the Sacketts’ suit for lack of jurisdiction.

The Sacketts appealed to the Ninth Circuit, arguing that the federal Administrative Procedure Act (APA) allows judicial review of CWA compliance orders even where the agency has not sued, and that Constitutional due process requires EPA to allow pre-enforcement review. The Ninth Circuit affirmed the district court, joining numerous other federal circuits that had previously concluded that: 1) the CWA implicitly bars pre-enforcement review under the APA; and 2) that the pre-enforcement bar did not violate the landowners’ constitutional due process rights.

Supreme Court Holding

While the Supreme Court had originally ordered the parties to brief the due process arguments, the Sackett opinion completely sidesteps those issues, instead focusing on (1) whether the ACO was subject to judicial review under the APA, and (2) whether the CWA precludes judicial review of an ACO, under the APA or otherwise.

The APA provides for judicial review of “final agency action for which there is no other adequate remedy in a court.” The Court found that the ACO was indeed “final agency action,” and that the CWA provided no means of contesting the order, at least not until the agency chose to sue. On the issue of whether the CWA precludes judicial review, the Court noted that the CWA has no provisions explicitly precluding judicial review of ACOs in the absence of an agency suit. The Court also forged new ground, finding that the CWA does not implicitly preclude such pre-enforcement review under the APA, either.

Effects of Sackett Opinion on CWA Enforcement

Prior to this decision, the only means to challenge EPA’s or the Corp’s jurisdictional authority to issue an ACO under the CWA was to refuse to comply, and wait for an EPA suit. Given the threat of substantial, additional penalties accruing on a daily basis, few recipients of an ACO pursued this strategy. After Sackett, however, parties may contest ACOs issued under the CWA in district court immediately – thus limiting the potential for substantial penalties to accrue. This should effectively lower the bar – making litigation a better option for some – while perhaps inducing EPA to be more conservative in its use of ACOs.

Potential Effects on ACOs Issued Under Other Environmental Laws

Like the CWA, the CAA and RCRA have no explicit preclusion of pre-enforcement judicial review. After Sackett, it is more likely that courts will find similarly that those statutes have no implicit bar, either. The outlook is more complex, however, for cleanup orders issued under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). Unlike the other statutes, CERCLA § 113(h) expressly bars pre-enforcement review of §106(a) orders, except in limited circumstances. Because Sackett relied on the CWA’s lack of an explicit preclusion to reach its conclusion, EPA can be expected to argue that Sackett has no effect on CERCLA, though challenges likely will be made.

EPA’s CERCLA unilateral administrative orders (UAOs) (similar to CAOs) have been the subject of considerable attacks on due process grounds in the past. In General Electric v. Jackson, GE argued that CERCLA § 106 unconstitutionally violates due process because it authorizes the EPA to issue UAOs to clean up contaminated sites and effectively prohibits prior judicial review by making the risk of non-compliance penalties so onerous that no PRP would ever risk them. GE was unsuccessful in that effort in the U.S. Court of Appeals – D.C. Circuit, and last year, the Supreme Court declined to hear the case. The question is whether Sackett is suggesting the Court will treat the next due process challenge to CERCLA UAOs differently. At least one justice appears prepared to expand upon Sackett. In Justice Alito’s concurrence, he describes the difficult choices faced by parties subject to ACOs and waiting to be sued by EPA, and cites due process concerns with this scenario:

If the owners do not do the EPA’s bidding, they may be fined up to $75,000 per day …And if the owners want their day in court to show that their lot does not include covered wetlands, well, as a practical matter, that’s just too bad. Until the EPA sues them, they are blocked from access to the courts, and the EPA may wait as long as it wants before deciding to sue. By that time, the potential fines may easily have reached the millions. In a nation that values due process, not to mention private property, such treatment is unthinkable.

While the Court refused to hear the due process challenge to CERCLA UAOs in General Electric v. Jackson, at least Justice Alito is signaling that a different case on the same issue may find a more receptive Supreme Court.