July 01, 2012

Sackett v. EPA: Parties may challenge Clean Water Act compliance orders

Theodore L. Garrett

The U.S. Supreme Court issued its long-awaited decision in Sackett v. EPA, 132 S. Ct. 1367 (2012). In a unanimous decision on March 21, 2012, the Court held that the Sacketts may bring a civil action under the Administrative Procedure Act (APA) to challenge the Environmental Protection Agency’s (EPA’s) compliance order. The Court rejected the government’s argument that EPA is less likely to use orders if they are subject to judicial review, holding that “[t]he APA’s presumption of judicial review is a repudiation of the principle that efficiency of regulation conquers all.”

The Sacketts are individuals residing near Priest Lake in Idaho who filled part of their property with dirt and rock in preparation for building a home. Some months later, EPA issued a compliance order charging the Sacketts with unlawfully filling a wetland. EPA’s order directed the Sacketts to restore their property based on a finding that the Sacketts’ placement of fill materials into wetlands constituted a discharge of pollutants without a permit in violation of the Clean Water Act. The Sacketts disputed that their property is a wetland within the jurisdictional scope of the Clean Water Act. EPA denied them a hearing, and the Sacketts filed for relief in the district court, claiming that EPA’s order was both arbitrary and capricious in violation of the APA and their Fifth Amendment right to due process. They argued that immediate judicial review was imperative, because they and faced severe monetary penalties for noncompliance with EPA’s order. The United States argued that the Sacketts could comply with the EPA order or submit an application for a wetlands permit or defend if EPA brings an enforcement action, but may not seek judicial review of EPA’s compliance order. Both the district court and the Ninth Circuit agreed with EPA and denied the Sacketts any “pre-enforcement” review.

The Supreme Court’s opinion, written by Justice Scalia, concludes that EPA’s compliance order has all the hallmarks of finality under 5 U.S.C. § 704 of the APA: it required the Sacketts to restore their property according to an agency-approved plan, exposed the Sacketts to double penalties in future enforcement proceedings, and severely limited their ability to obtain a section 404 permit from the Army Corps of Engineers. See 33 C.F.R. § 326.3(e)(1)(iv)(2011)(providing that the Corps will not process a permit application when enforcement actions are pending unless doing so is clearly appropriate). The Court held that applying to the Corps of Engineers for a permit and then filing suit under the APA if that permit is denied does not provide an adequate remedy.

The Court had little difficulty in disposing of the government’s argument that the Clean Water Act should be read as precluding judicial review under the APA, 5 U.S.C. § 701(a)(1). The APA creates a presumption favoring judicial review of administrative action, and the Court concluded that nothing in the Clean Water Act’s statutory scheme precludes APA review. The Court was similarly not persuaded that the issuance of a compliance order is simply a step in the deliberative process. Justice Scalia’s opinion concluded that “there is no reason to think 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.” 

Justice Alito’s concurring opinion is of interest because of its emphasis on the fact that the “reach of the Clean Water Act is notoriously unclear.” Citing an amicus brief filed by the Competitive Enterprise Institute, Justice Alito cites EPA’s guidance advising property owners that jurisdictional determinations will be made on a case-by-case basis. He concludes that allowing property owners to sue under the APA is “better than nothing,” but only clarification of the jurisdictional reach of the Clean Water Act can rectify the underlying problem. 

Given the Sackett decision, it will be important to see how EPA responds over time. Will EPA change its procedures to more thoroughly examine the facts and the law before deciding to issue orders? Will EPA rely as much on orders, or will EPA instead shift toward issuing warning or notice letters? If EPA issues orders, will EPA afford affected parties an opportunity for a hearing on the record? Would that hearing be before an Administrative Law Judge or would EPA rely on the Justice Department? As Justice Ginsburg notes in her concurring opinion, the Court’s opinion does not address the issue of what standard lower courts should use in reviewing EPA orders. 

The Sackett decision will be relied upon by parties who are subject to orders under other statutes that EPA administers. For some of the reasons cited by Justice Alito, the Sackett decision also underscores the need for clarification of the reach of the Clean Water Act. Stay tuned.

Theodore L. Garrett

Theodore Garrett is a partner of Covington & Burling LLP in Washington, D.C. and a former chair of the Section. He submitted an amicus curiae brief in Sackett v. EPA on behalf of the Competitive Enterprise Institute.