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Sackett v. EPA: Supreme Court Allows Pre-Enforcement Review of Clean Water Act Compliance Orders

March 22, 2012

In an unanimous decision in Sackett v. EPA, 566 U.S. ___ (2012), the Supreme Court held that compliance orders issued by the Environmental Protection Agency ("EPA") under Section 309 of the Clean Water Act (“CWA”) are subject to immediate judicial review. Sackett overturns decisions barring pre-enforcement judicial review and could alter EPA’s enforcement of the CWA and other environmental laws.

Background

Mike and Chantell Sackett own property situated near Priest Lake, Idaho. In 2007, the Sacketts began filling in the land with dirt and rock to build a house. EPA claimed that the property contains wetlands subject to regulation under the CWA and that the activity constituted an unlawful discharge of pollutants into “navigable waters” without a permit. See 33 U.S.C. §§1311, 1344. EPA then issued a compliance order under Section 309 directing the Sacketts to cease construction activities, restore the land and provide the agency with access to the site. The government noted that failure to comply with the compliance order could subject the Sacketts to penalties up to $75,000 per day of violation.

The Sacketts contested EPA’s finding of jurisdictional wetlands and challenged the compliance order in court, arguing that the order was a “final agency action” subject to judicial review under the Administrative Procedure Act (“APA”) and deprived them of property without due process of law, in violation of the Fifth Amendment. The lower courts dismissed the claims, holding that the CWA precluded pre-enforcement judicial review of compliance orders. According to the lower courts, judicial review is not available until EPA initiates a case to force compliance with the order or collect fines. In the meantime, the Sacketts had only two options: either (1) comply with the order, or (2) refuse, wait for EPA to file an action to enforce the order and expose themselves to the risk of being fined for each day they were not in compliance.
 
Scope of Supreme Court Decision

The Supreme Court unanimously held that the Sacketts could challenge EPA’s authority to issue the compliance order. First, the Court held that the CWA compliance order is a final agency action with respect to EPA’s jurisdictional decision that the Sacketts’ property contains “navigable waters.” The order “has all of the hallmarks of APA finality that our opinions establish.” Slip Op. at 5. Among them, the order determines and imposes legal obligations and marks the consummation of the agency’s decision-making process.

Next, the Court concluded that the CWA does not preclude judicial review of such decisions under the APA. The APA provides judicial review of final agency actions only when that review is not precluded by other statutes. 5 U.S.C. §701(a)(1).  EPA argued that the CWA impliedly precludes pre-enforcement review of compliance orders. The Court rejected this interpretation, finding “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.” Slip. Op. at 9-10. Accordingly, the Court remanded the Sacketts’ case for the lower courts to consider whether their property is “navigable waters,” as EPA claims.

Impact

The Supreme Court’s decision in Sackett has the potential to alter EPA’s administration of the CWA, as well as other environmental statutes that do not explicitly preclude pre-enforcement judicial review of compliance orders. Precisely because such orders have, in the past, not been subject to pre-enforcement review, EPA has relied heavily on their use to threaten strict penalties and prompt voluntary compliance, and the Sackett decision now opens the door to challenge EPA’s authority to issue such orders. Counsel for the Government admitted at oral argument that, at the time the Sacketts’ compliance order was issued, EPA had not done all the research that it would do if the agency were going to prove its case in court. Now EPA will be required to gather more supporting information before it issues a compliance order, knowing that the order will become immediately subject to judicial review. The increased resources needed to support each compliance order will likely lead to a significant drop in the number of such orders. In the future, rather than undertake the necessary research, EPA may use alternative means for obtaining compliance, such as warning letters. Warning letters could be phrased to notify recipients of their potential violations and encourage voluntary compliance or settlement without threatening stiff penalties or purporting to make a final determination on liability.

EPA issues similar enforcement orders under other environmental statutes, all with the understanding that such orders are not subject to pre-enforcement judicial review. Many critics of EPA had hoped that Sackett would affect EPA’s administration of those other statutes, but as is often the case with unanimous opinions, the Court’s rationale was narrower. Sackett turns on the CWA, which is materially different from some other environmental statutes. For instance, CERCLA expressly prohibits pre-enforcement review, and courts have consistently rejected pre-enforcement challenges to CERCLA orders, including constitutional claims such as those raised by the Sacketts. By contrast, the CWA has no express preclusion of judicial review, and in support of its decision, the Supreme Court held only that the CWA does not impliedly preclude judicial review. Because RCRA is more akin to the CWA than CERCLA in this regard, the Sackett decision is more likely to also affect EPA’s issuance of RCRA compliance orders.

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