United States: Supreme Court Decision Alert - March 21, 2012

Originally published March 21, 2012

Keywords: Clean Water Act, pre-enforcement review, Administrative Procedure Act, APA, EPA, judicial review

Today the Supreme Court issued one decision, described below, of interest to the business community.

Clean Water Act—Pre-Enforcement Review

Sackett v. Environmental Protection Agency, No. 10-1062 (previously discussed in the June 28, 2011 Docket Report).

Although the Administrative Procedure Act ("APA") generally provides for judicial review of final agency actions, an APA challenge cannot be maintained if the agency acts under a statute that expressly or implicitly "preclude[s] judicial review." 5 U.S.C. § 701(a)(1). Today, the Supreme Court held in Sackett v. EPA, No. 10-1062, that the Clean Water Act ("CWA") does not bar landowners who receive a compliance order issued by the Environmental Protection Agency ("EPA") from bringing a pre-enforcement suit under the APA to challenge the agency's jurisdiction.

Because compliance orders subject property owners to substantial costs and delays, which pre-enforcement review might mitigate, the Court's opinion is of interest to all businesses that seek to develop lands potentially subject to the CWA.

Petitioners, the plaintiffs below, filled a portion of their property with dirt and rock in preparation for building a house. The EPA issued a compliance order, which both alleged that the property was a wetland subject to the CWA and required that petitioners remove the fill. Petitioners filed suit under the APA, arguing that the property is not subject to the CWA. The Ninth Circuit affirmed the district court's dismissal of petitioners' action on the ground that the CWA "precludes pre-enforcement judicial review of compliance orders." Slip op. 4 (internal quotation marks omitted).

In a unanimous opinion written by Justice Scalia, the Supreme Court reversed. The Court first determined that petitioners satisfied the prerequisites to a suit under the APA, because the EPA's action is final and because petitioners have no other way to challenge the compliance order in court. It then held that the CWA does not bar petitioners' suit. After noting that the CWA does not "expressly preclude[] judicial review" (slip op. 7), the Court rejected the government's argument that, because the CWA gives the EPA the choice of either commencing a judicial enforcement proceeding or issuing a compliance order, judicial review is unavailable when the agency opts for the latter course. The Court similarly concluded that pre-enforcement review is available even though the CWA expressly permits court challenges after "the EPA assesses administrative penalties." Id. at 8. Finally, the Court held that neither its prior cases nor the need for regulatory efficiency required adoption of the government's position. Because it decided that the CWA does not bar petitioners' APA action, the Court did not reach the question whether the lack of pre-enforcement review would violate the Due Process Clause.

Justices Ginsburg and Alito both filed concurring opinions. Justice Ginsburg stressed that today's decision, which concerned a pre-enforcement action that challenged the EPA's jurisdiction, did not decide whether petitioners could bring a pre-enforcement action that challenged the substantive "terms and conditions of the compliance order." Slip op. 1 (Ginsburg, J., concurring). Justice Alito, meanwhile, urged Congress to "provide a reasonably clear rule regarding the reach of the [CWA]" in order to protect property owners, who risk potentially ruinous penalties for non-compliance if they unsuccessfully sue "to show that their lot does not include covered wetlands." Slip op. 2 (Alito, J., concurring).

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