U.S. Supreme Court Allows Pre-Enforcement Judicial Reviews of Clean Water Act Administrative Compliance Orders

March 22, 2012
by JONATHAN E. RINDE
MGKF Special Alert

Yesterday, the U.S. Supreme Court decided that administrative compliance orders issued under the Clean Water Act ("CWA") are final agency actions that can be immediately challenged in federal court under the Administrative Procedure Act ("APA"). Sackett v. EPA, No. 10-1062 (March 21, 2012). Although the opinion in Sackett concerned the question of whether certain property was wetlands subject to the CWA's jurisdiction, the ramifications of this decision could have far-reaching effects with respect to all enforcement actions issued pursuant to CWA, and other environmental statutes which are silent on whether final agency actions can be subject to pre-enforcement judicial review.

The Sacketts sought to build a home on property in northern Idaho which the U.S. Environmental Protection Agency ("EPA") contended was wetlands which were subject to its permitting jurisdiction under the CWA. After the Sacketts began to fill their property in preparation for construction of their home, EPA issued an enforcement order stating that the Sacketts had to remove fill from areas EPA deemed to be jurisdictional wetlands or face severe civil penalties that accrued each day of the alleged violation. The Sacketts sued EPA in federal district court contending that the area in question was not jurisdictional wetlands and therefore the enforcement order should be stricken. EPA contended that the CWA prohibited pre-enforcement judicial review of its enforcement order, and that the Sacketts had to wait for EPA to bring a lawsuit to enforce its order before they could have their day in court. The district court ruled in favor of EPA and dismissed the Sacketts' lawsuit, and the Ninth Circuit Court of Appeals affirmed.

Although widely anticipated, the Supreme Court's unanimous decision overturning the lower courts' dismissal of the Sacketts' lawsuit provides a stunning rebuke of EPA's position. In delivering the opinion of the Court, Justice Scalia stated that "nothing in the [CWA] expressly precludes judicial review" of final administrative actions. Further, the Court stated that "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 EPA's jurisdiction."

In his concurring opinion, Justice Alito also used blunt language to describe the harm to the regulated community if it did not have the opportunity to access the courts in these situations, noting that "[i]n a nation that values due process, not to mention private property, [the denial of pre-enforcement judicial review of an EPA enforcement order under the CWA] is unthinkable." Given the continuing questions regarding the extent of federal jurisdiction over wetlands and other waters, which was most recently addressed by the Court in Rapanos v. US, 547 U.S. 715 (2006), Justice Alito further noted that EPA's latest informal guidance on the scope of CWA's regulatory reach is "far from providing clarity and predictability."

Similar to the CWA, the Clean Air Act, the Resource Conservation and Recovery Act, and the Toxic Substances Control Act do not expressly prohibit judicial review of administrative orders. Administrative orders are a major tool in EPA's enforcement strategy - it is reported that EPA issues approximately 1,300 such orders each year. Presumably, many of these orders can now be challenged by the parties as soon as they receive them, rather than having to wait until EPA files an enforcement action. Although some may fear that EPA will now be less likely to issue compliance orders, Justice Scalia noted that the "APA's presumption of judicial review is a repudiation of the principle [advanced by EPA] that efficiency of regulation conquers all."

It remains to be seen how the Sacketts will fair in the lower courts, or whether others will be able to successfully litigate EPA administrative orders issued under other environmental statutes. However, the regulated community now has an opportunity to challenge CWA administrative orders without having to wait for EPA to first file suit, alleviating concerns that civil penalties may continue to accrue without a right to challenge EPA's allegations.

For questions concerning the impact of Sackett v. EPA, please contact Jonathan E. Rinde (jrinde@mgkflaw.com; 484-430-2325).