Sailing across the Yard - Supreme Court Corrects EPA Compliance Reviewability

This post was written by Christopher Rissetto and Jennifer Smokelin

A unanimous U.S. Supreme Court recently held that the U.S. Environmental Protection Agency’s order directing a homeowner to remove fill material from an area that EPA alleged included regulated wetlands was final, ripe, and immediately reviewable under the Administrative Procedure Act (APA). In this blog post, we provide some background, discuss the issue of finality under the APA, and consider some implications of this decision, especially with respect to the Safe Drinking Water Act. 

Mike and Santell Sackett were surprised when the U.S. Environmental Protection Agency (USEPA) and the Army Corps of Engineers interrupted their initial efforts to build a home near an Idaho lake. The Sacketts had begun to place dirt and gravel fill on their newly purchased property, when USEPA issued a Compliance Order. The Order directed the couple to stop construction and restore “wetlands” that were determined to exist on the property, and claimed that their actions in placing fill in a wetland was a violation of the Clean Water Act (CWA), with the possibility of up to $75,000 per day in potential liability. 

The Sacketts unsuccessfully sought review of the USEPA compliance order on the basis that they were not subject to the jurisdiction of the Agency, as the property did not contain regulated wetlands.  However, USEPA argued that the Sacketts had no right to any review of the issue until EPA brought an enforcement proceeding against them. The U.S. District Court agreed and this decision was affirmed by the Ninth Circuit Court of Appeals, which held that there could be no CWA pre-enforcement review. On March 21, 2012, the U.S. Supreme Court ruled 9-0  against USEPA, reversing the lower courts and holding that USEPA’s Compliance Order was a final agency action and therefore could be reviewed under the Administrative Procedure Act (APA), even if the CWA did not expressly provide such a right of appeal. See Sackett v. United States Environmental Protection Agency, et al., Case 10-1062 (Sackett). The holding in Sackett was direct and unequivocal. Yet the concurring opinion by Justice Alito perhaps best expressed the Court’s true concerns, as Judge Alito observed that: “The position taken  . . . by the Federal Government – a position that the Court now squarely rejects – would have put the property rights of ordinary Americans entirely at the mercy of [USEPA] employees.”

Now, parties adversely affected by USEPA compliance orders (and perhaps orders from other federal agencies) may have an alternative path to judicial review under the APA. Federal agencies will likely consider their Compliance Order authority in a new light, as it no longer can be used to advance agency interests without the possibility of further scrutiny.

Language similar to the CWA enforcement order language can be found in several other federal environmental statutes, including the Comprehensive Environmental Response, Liability, and Compensation Act (CERCLA), the Clean Air Act, the Resource Conservation and Recovery Act (RCRA) and the Safe Drinking Water Act (SDWA). It should be noted there are differences between the CWA and these other laws, which could distinguish them from Sackett. For example, unlike the CWA, CERCLA contains an explicit provision barring pre-enforcement review of a USEPA cleanup order. This provision was challenged last year and the Supreme Court refused to take the case. Look for another challenge of a USEPA cleanup order under CERCLA to test whether the APA’s presumption of reviewability trumps CERCLA’s non-enforcement provision.

In a federal district court suit in the Fifth Circuit where USEPA is seeking an injunction to force a gas drilling company, Range Resources, to comply with a Safe Drinking Water Act (SDWA) emergency order, Range Resources is arguing to the Fifth Circuit that it was entitled to pre-enforcement review and that USEPA is obligated to show facts supporting the underlying elements of the violation in court to secure injunctive relief and impose civil penalties. USEPA will likely deny that Sackett will have any effect on the Range Resources case, citing differences between the CWA and the SDWA.

However, the language in Sackett can arguably be read very broadly and is not limited just to the CWA. There is some broad language on the issue of whether a compliance order is a “final agency action” subject to judicial review. Writing for the majority, Justice Scalia states“[t]here is no doubt [the compliance order] is agency action” and further, “[i]t has all the hallmarks of APA finality that our opinions establish.” Admittedly, Justice Scalia held that the key to the case was the fact that the Clean Water Act does not, as the government claimed, preclude judicial review under the Administrative Procedure Act. However, assuming other environmental statutes similarly do not preclude review under the APA, the opinion leaves open the argument that if the core hallmarks of “final agency action” can be established with regard to an enforcement order under another statute, so too would agency action under that other statute be subject to pre-enforcement review.

Time will tell whether the Fifth Circuit will broadly read Sackett to apply to pre-enforcement review under the SDWA - or indeed whether other courts will apply Sackett to statutes other than the CWA, or other federal agencies besides USEPA. For now, parties adversely affected by federal agency compliance orders should seek legal counsel to determine if there may be an alternative avenue to obtain pre-enforcement review of that order.

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