Originally published as a Schiff Hardin Environmental Update newsletter

On Wednesday, March 21, 2012, the United States Supreme Court unanimously held that administrative orders issued by the U.S. Environmental Protection Agency (USEPA) under the Clean Water Act (CWA) are subject to pre-enforcement judicial review under the Administrative Procedure Act (APA). Sackett, et vir, v. EPA, 566 U.S. ____ (2012). The Court ruled against USEPA and in favor of the couple that brought the suit, the Sacketts, who argued they were entitled to bring a civil action under the APA to challenge USEPA’s issuance of an administrative compliance order issued under § 309 of the CWA.

Background

The Sacketts own property in Idaho near Priest Lake. They planned to build a home on the property and obtained a county permit to do so. Gravel had been placed for the foundation when USEPA issued the Sacketts a compliance order alleging the property contains wetlands subject to the CWA and the Sacketts violated the CWA by filling it in without a permit. The compliance order required the Sacketts to remove the fill or risk civil penalties of up to $37,500 per day. USEPA further contended that this amount can increase to as much as $75,000 per day in situations where USEPA prevails against a person who has been issued a compliance order, but has failed to comply. The Sacketts asked USEPA for a hearing to challenge the determination that their property contains wetlands, but were denied.

The Sacketts then filed suit. The district court granted USEPA’s motion to dismiss the matter for want of subject matter jurisdiction and the Sacketts appealed to the Ninth Circuit. The Ninth Circuit affirmed the district court, finding the CWA precludes pre-enforcement judicial review of enforcement orders. The Supreme Court reversed and remanded the Ninth Circuit Court of Appeals’ decision.

Analysis

The Sacketts premised their suit on Chapter 7 of the APA, which provides for judicial review of “final agency action for which there is no other adequate remedy in a court.” The Supreme Court first found that a compliance order is a final agency action. The Court then reasoned that, because the CWA only allows judicial review brought by USEPA and the Sacketts cannot initiate that process, the Sacketts had “no other adequate remedy in a court.” Finally, the Court held the CWA does not preclude APA review. For these reasons, the Court held the Sacketts were entitled to judicial review of whether USEPA had jurisdiction to issue the compliance order (that is, whether the alleged wetland on the property constitutes “navigable waters” under the CWA) without having to wait for a judicial enforcement action by USEPA.

USEPA warned it is less likely to issue such orders if they are subject to judicial review. The Supreme Court noted, however, that compliance orders will remain an effective means of securing prompt voluntary compliance in instances where there is no real basis to question their validity.

The particular facts of this case may have influenced the unanimous conclusion. It is a case of private citizens — not a corporation — facing the threat of millions of dollars in penalties if they refused to comply with a USEPA order to restore a wetland on their property, with no opportunity (other than the APA) to seek judicial review of whether USEPA even has jurisdiction to issue the order. The threat to liberty and property clearly was high. Justice Alito observed in his concurring opinion that “In a nation that values due process, not to mention private property, such treatment is unthinkable.”