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Supreme Court Holds That Pre-Enforcement Judicial Review of EPA Administrative Orders Is Allowed

The Supreme Court of the United States has just unanimously ruled that administrative orders issued by the U.S. Environmental Protection Agency ("EPA") under section 319 of the Clean Water Act ("CWA") are "final agency actions" subject to judicial review under the Administrative Procedures Act ("APA"). Sackett v. United States EPA, 566 U.S. ____ (2012). 

The Sacketts' Case

The Sacketts own land in Idaho that is just north of Priest Lake, although separated from the lake by several lots with permanent structures. In anticipation of building a home on their property, the Sacketts filled in a portion of their property. Afterwards, the EPA sent the Sacketts a unilateral administrative compliance order pursuant to CWA § 309, which stated that the Sacketts illegally filled in wetlands adjacent to Priest Lake (which lake was considered to be a "navigable water of the United States") in violation of the CWA, and required the Sacketts to immediately restore their property. Failure to comply with the compliance order subjected the Sacketts to fines of $75,000 per day ($37,500 for violating the CWA and $37,500 for violating the order).

In response, the Sacketts initially asked EPA for a hearing on the compliance order, since it was their contention that their property does not contain wetlands adjacent to waters of the United States and, therefore, the EPA had no jurisdiction over their property. After their request for hearing was denied by the EPA, the Sacketts filed a lawsuit in the District Court of Idaho, seeking declaratory and injunctive relief, challenging the EPA's Administrative Order as "arbitrary and capricious" under the APA § 706(2)(A) and alleging that it deprived them of due process under the Fifth Amendment of the U.S. Constitution. The EPA responded that the CWA does not provide for "pre-enforcement judicial review" of administrative orders issued under the Act. In other words, a court cannot review the EPA's compliance order until the EPA takes action to enforce it; only then is it a "final agency action."

The District Court for the District of Idaho dismissed the case holding that the courts did not have jurisdiction to hear the case because the EPA's Administrative Orders were not subject to judicial review under the CWA. The Ninth Circuit Court of Appeals affirmed, concluding that the CWA "preclude[s] pre-enforcement judicial review of compliance orders." Sackett v. EPA, 622 F.3d 1139 (2010).

The Supreme Court of the United States granted certiorari (i.e., agreed to hear the case) and reversed the Ninth Circuit's decision.

The Decision

The Supreme Court, in a 9-0 decision, held that the Sacketts may bring a civil action under the APA to challenge the issuance of the EPA's administrative compliance order.

Final Agency Action; No Other Adequate Remedy in a Court

The APA provides for judicial review of "final agency action for which there is no other adequate remedy in a court." APA § 704.

Justice Scalia, writing for the court, stated that EPA's administrative compliance order has "all the hallmarks of APA finality that [the Supreme Court's] opinions established." First, the EPA "determined" the Sacketts' "rights or obligations," since the compliance order legally obliges the Sacketts to restore their property and to allow EPA to enter onto their property. Second, "legal consequences . . . flow" from the issuance of the compliance order, namely in the form of double penalties associated with failing to comply with the order and the violation of the underlying statute. The compliance order also limited the Sacketts' ability to obtain an Army Corps of Engineers permit to fill in their wetlands under the CWA. Third, the compliance order "marks a consummation" of the EPA's decision making process; the Findings and Conclusions in the order were not subject to any further agency review, since the EPA rejected the Sacketts' request for an agency hearing.

Establishing that the compliance order was a "final agency action," the Supreme Court also concluded that the Sacketts had "no other adequate remedy in a court." APA § 704. Because the CWA does not provide a path for the Sacketts to challenge the administrative compliance order in court, they must wait for the EPA to bring a civil action against them to enforce compliance with the order. SeeCWA § 309. But the EPA is given no mandatory time frame during which they must bring such an enforcement proceeding, and every day the Sacketts wait for EPA to "drop the hammer" they are subjected to $75,000 in potential daily penalties.

It is this issue which the Justices seemed to find the real crux of the matter. As Justice Alito wrote in his concurring opinion:

Any piece of land that is wet at least part of the year is in danger of being classified by EPA employees as wetlands covered by the Act, and according to the Federal Government, if property owners begin to construct a home on a lot that the agency thinks possesses the requisite wetness, the property owners are at the agency's mercy. . . . 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 is 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.

CWA Does Not Expressly Preclude Judicial Review

The Supreme Court also held that "[n]othing in the Clean Water Act expressly precludes judicial review under the APA or otherwise." Finding all of the EPA's arguments otherwise unpersuasive, the Court concluded that while administrative orders are an effective way for resolving issues through "voluntary compliance," judicial review of administrative orders is appropriate when the respondent, like the Sacketts in this case, does not choose "voluntary compliance" with the order. Moreover, that the administrative compliance orders are not self-executing does not bar judicial review under the APA.

Furthermore, the Court determined that just because Congress provided for "prompt judicial review" under other sections of the CWA (see CWA § 309(g)(8)) but did not expressly provide for review of administrative orders, does not over come the APA's presumption of reviewability for all "final agency actions" taken by the EPA pursuant to the CWA.

In conclusion, Justice Scalia wrote:

The Government warns that the EPA is less likely to use the orders if they are subject to judicial review. That may be true-but it will be true for all agency actions subjected to judicial review. The APA's presumption of judicial review is a repudiation of the principle that efficiency of regulation conquers all. And there is no reason to think that the Clean Water Act was uniquely designed to enable the strong-arming of regulated parties into "voluntary compliance" without the opportunity for judicial review-even judicial review of the question whether the regulated party is within the EPA's jurisdiction. Compliance orders will remain an effective means of securing prompt voluntary compliance in those many cases where there is no substantial basis to question their validity.

Nevertheless, Justice Ginsberg, in her concurring opinion noted that this may not be the end of legal challenges relating to the pre-enforcement judicial review of EPA administrative orders:

The Court holds that the Sacketts may immediately litigate their jurisdictional challenge in federal court. I agree, for the Agency has ruled definitively on that question. Whether the Sacketts could challenge not only the 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. Not raised by the Sacketts here, the question remains open for another day and case.

CERCLA Implications?

EPA has the authority to issue administrative orders through various environmental statutes, including the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"). While EPA may lose some of its enforcement power to protect wetlands because of the Supreme Court's decision, the Sackett decision should not worry EPA about its enforcement powers under CERCLA unilateral administrative orders.

Unlike the CWA, CERCLA does expressly preclude pre-enforcement judicial review of an administrative cleanup order issued under CERCLA § 106. See CERCLA § 113(h). Recently, General Electric challenged - unsuccessfully - this "unreviewability" of EPA administrative orders under CERCLA as a violation of Due Process under the U.S. Constitution. See U.S. Supreme Court Refuses to Hear Attack on CERCLA's Constitutionality (Periconi LLC Environmental Law Blog, Sept. 20, 2011). Therefore, because of the express prohibition of judicial review of an administrative order under CERCLA, the Sackett decision is inapposite.

While the Sacketts also claimed that the EPA's unilateral administrative order under the CWA violated their right to due process in their original complaint, the Supreme Court did not address this issue in its decision. Although the Supreme Court refused to hear a similar claim in the General Electric case, Justice Alito's statement in his concurring decision - "In a nation that values due process, not to mention private property, [the Sacketts'] treatment is unthinkable" - may be a foreshadowing of the Court's thinking, should a due process challenge to EPA administrative orders again reach the Court.

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