June 01, 2012

Regulatory Relations in Light of Sackett v. EPA

James Andreasen

The recent Supreme Court decision in Sackett v. EPA, 132 S. Ct. 1367 (2012) may herald a significant change in environmental enforcement, potentially making subject to immediate judicial review many administrative actions previously considered unappealable. Sackett likely will be at least somewhat familiar to most readers. There, a unanimous Supreme Court made appeals of U.S. Environmental Protection Agency (EPA) enforcement orders available under the Clean Water Act (CWA) far sooner than any prior court. The Sackett analysis may apply to orders under other federal environmental statutes, including the Resource Conservation and Recovery Act (RCRA) and the Clean Air Act (CAA). Sackett, in effect, announces a potential sea change in EPA enforcement of the CWA, and possibly of other federal environmental statutes. It is reasonable to expect recipients of EPA enforcement orders to challenge, where appropriate, the scope of EPA authority, including its jurisdiction under the terms of the statute it seeks to enforce.

The facts of the Sackett case relate to the scope of U.S. jurisdiction over nontraditional waters, like wetlands, under the CWA. The Supreme Court has provided guidance on several of the issues in a series of recent cases, including United States v. Riverside Bayview Homes, Inc., 474 U.S. 121 (1985), Solid Waste Agency of Northern Cook Cty. v. Army Corps of Engineers, 531 U.S. 159 (2001) and Rapanos v. United States, 547 U.S. 715 (2006). Each of these cases found the nontraditional water in question was not subject to CWA jurisdiction. But the scope of nontraditional waters jurisdiction remains unclear after Rapanos because no single rationale for that decision captured the approval of a majority of the court. This leaves both the government and the regulated community without clear guidance as to what requires a CWA permit and what does not.

The Sackett opinion does not reach the merits of the jurisdictional dispute. Instead, the Court rejected EPA’s assertion that there could be no pre-enforcement review of a compliance order issued under the CWA. The respondents to that order were owners of a residential plot of about 0.6 acres separated from an admittedly jurisdictional body of water by other lots and buildings. The U.S. Army Corps of Engineers and EPA asserted that half an acre of the property met the definition of a wetland, and was adjacent to a water of the United States, which would require the owner to obtain a permit from the Corps of Engineers (Corps) before filling any portion of the wetland. EPA issued a compliance order concluding that the Sacketts had discharged a pollutant into waters of the United States. EPA directed the Sacketts to restore the site in accordance with EPA’s direction, and provide access to the government to the property.

The Supreme Court held that the Administrative Procedure Act (APA) provides for judicial review of the EPA’s compliance order because the order was a “final agency action for which there is no other adequate remedy in a court,” and no other statute specifically forbids such review. See 5 U.S.C. § 704, 701(a)(1). Although the CWA contains no direct express prohibition on pre-enforcement review of EPA orders issued under 42 U.S.C. § 3319, EPA argued, as it successfully argued for many years, that the CWA nevertheless precludes review of such orders unless and until EPA chooses to enforce them in a civil suit, and that, in any event, the administrative order was not final agency action within the meaning of the APA.

EPA argued that the CWA implicitly prohibited pre-enforcement review of its order because it expressly provides judicial review for administrative penalties, but is silent as to such review for administrative orders. The Court explained that “if the express provision of judicial review in one section of a long and complicated statute were alone enough to overcome the APA’s presumption of reviewability for all final agency action, it would not be much of a presumption at all.” Id. The final argument the Court addressed is that the CWA is intended to respond to inefficiency of prior remedies for water pollution, and that “the EPA is less likely to use the orders if they are subject to judicial review.” The Court reasoned that this “is 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.” Id. at 1374.

The court found EPA’s order was final agency action, rejecting EPA’s assertion that the compliance order is “a step in the deliberative process” because the order is not self-enforcing. The Supreme Court made fairly quick work of the assertion that EPA’s order to the Sacketts was not final agency action. The Court found that the order determined rights and obligations, and imposed a legal requirement that the Sacketts restore their property. Sackett, 132 S. Ct. at 1371–72. The Court also found that legal consequences flow from the order by exposing the Sacketts to double penalties in an enforcement proceeding and limiting their ability to obtain a permit in light of Corps rules that withhold processing of a permit application where EPA has issued such an order. Id.

The CWA is not the only federal environmental statute under which courts have found an implied prohibition against pre-enforcement review of EPA administrative orders. Sackett may affect reviewability of EPA orders under other major environmental statutes, including the CAA and RCRA. RCRA, like the CWA, is silent on prohibiting pre-enforcement review of administrative orders, but courts have held that it precludes such review by implication. For example, in Amoco Oil Co. v. USEPA, 959 F. Supp. 1318 (D. Colo. 1997), a district court dismissed a facility’s challenge to a corrective action order issued under RCRA. Arguably the analysis in Sackett that allows pre-enforcement judicial review of CWA orders may apply to RCRA, which is similar enough in structure that at least one court found the CWA the best comparison for RCRA for purposes of its analysis of pre-enforcement review. See Amoco Oil, 959 F. Supp. 1318 (D. Colo. 1997).

The CAA is a bit different. It expressly contemplates judicial appeal of “any other final action of the Administrator under this chapter” be undertaken within 60 days of publication of that action in the federal register. 42 U.S.C. § 7607(b)(1). However, courts uniformly have held that administrative orders under the CAA are not “final” and therefore are not subject to judicial review. In Solar Turbines Inc. v. USEPA, 879 F.2d 1073 (3d Cir. 1989), the Third Circuit held that the courts lacked jurisdiction to hear a challenge to an EPA order stating that a proposed facility would not comply with the CAA and ordering that construction cease, even though construction was proceeding under an air permit issued by the state under a State Implementation Plan. The Sackett analysis of finality of EPA orders may impact these situations, as well.

Decades after their enactment, RCRA and the CAA remain open to differing interpretations in critical areas. The extent of jurisdiction under the Interstate Commerce Clause is admittedly unclear in light of the Rapanos decision. The extent of such jurisdiction under RCRA also may be unclear. A federal district court recently determined that it lacked jurisdiction over a RCRA citizen suit because the suit addressed groundwater contamination that was contained within a single state. Voggenthaler v. Maryland Square L.L.C., No. 08-CV-1618, 2011 WL 445635 (D. Nev. Feb. 4, 2011). The Voggenthaler court concluded that RCRA could not reach the contamination in question because “the contamination is a local and isolated plume that does not affect either the channels of interstate commerce or the instrumentalities of interstate commerce.” Voggenthaler, slip op at 2. This issue was raised by defendant Sears, but because an appeal was pending on another order in the case, the Voggenthaler court lacked authority to dismiss the case against Sears on the requested grounds. Other courts, however, have supported fairly broad RCRA jurisdiction under the Interstate Commerce Clause. For example, in 1987, a district court in Minnesota held that “RCRA easily passes constitutional muster as an exercise of congressional power under the commerce clause.” United States v. Rogers, 685 F. Supp. 201, 202 (D. Minn. 1987).

At present, in most instances, whether the pollutant releases would be covered by federal or state law may affect only the regulator with whom one works, rather than whether a situation is regulated at all. Nearly all states have enacted their own hazardous waste management programs that mirror RCRA, and EPA approval of those programs gives the state the front line responsibility for enforcement, albeit, at least arguably, with EPA oversight and overfile authority. In an authorized state, the practical requirements for the generator or TSD may be indistinguishable between the federal and state programs. If, however, RCRA does not reach a particular intrastate activity or condition, EPA’s independent authority to conduct enforcement under 42 U.S.C. § 6928(1)(2) might be curtailed.

Beyond jurisdictional issues under the Interstate Commerce Clause, a variety of potentially important issues relating to the scope of federal environmental statutes and, perhaps, their state analogs, remain uncertain. For example, it may not always be clear whether a material that has been in storage for a significant time without use, can or should be considered a waste, and managed as a hazardous waste if it meets the hazardous waste definition under RCRA. Similarly, under the CWA, there remain questions as to whether particular conditions or activities may constitute a “discharge” of a “pollutant” from a “point source.”

The right to challenge agency determinations in court at a meaningful point in the process may be of significant value to the regulatory process in general. For example, the lack of a clear legal test for CWA jurisdiction means the government either must assiduously avoid asserting jurisdiction over any water that might not pass one of the Rapanos tests or boldly seek to assert jurisdiction as it sees may be appropriate within the confines of that case. The former would likely disappoint many who favor environmental protection. The latter appears to all but guarantee that the government will assert jurisdiction in areas where the law is unclear at best. In this author’s opinion, a statute cannot, consistent with the Due Process Clause, simply mean whatever an agency says it means in any given situation. Ultimately, the only way for regulators and the regulated to know the boundaries of the statutes is to take disputed issues to court. The process may be slow, and costs and business considerations may keep some worthy issues out of the courts, but ultimately it is for the courts, not regulators or the regulated community, to determine the proper scope of environmental statutes under the Constitution. In the long run, the slightly altered balance of power in the regulatory context should benefit both the regulated and the regulators, yielding increased certainty and, potentially, improved compliance.

James Andreasen

Mr. Andreasen is of Counsel at Shook, Hardy & Bacon L.L.P., and a member of the editorial board of Natural Resoures & Environment.