United States: Unanimous Supreme Court Allows Judicial Review Of EPA Compliance Order In Sackett v. EPA

Originally published in V&E Litigation Updates E-communication, March 22, 2012

On March 21, 2012, the U.S. Supreme Court issued its decision in Sackett v. EPA, unanimously holding that the Administrative Procedure Act entitles the Sacketts — property owners — to judicial review of an administrative compliance order that the Environmental Protection Agency (EPA) issued under the Clean Water Act (CWA or Act). EPA contended that the administrative order was not final agency action subject to judicial review, but the Supreme Court disagreed. Further case background, along with a prediction of this outcome, is provided in our e-communication dated January 9, 2012, in which we reported on oral argument of the Sackett case before the Supreme Court.

The Sacketts purchased a small plot in a partially built-out subdivision near, but not connected or adjacent to, Priest Lake in Idaho. They filled part of the land with dirt and rock to prepare the lot to build a house. Before the Sacketts could build their house, and without providing the Sacketts an administrative hearing, EPA issued a unilateral "compliance order." The compliance order informed the Sacketts that their property included "wetlands" subject to EPA jurisdiction, and that, by filling their property with dirt and rocks, the Sacketts violated the CWA. The order directed the Sacketts to restore the property to its natural condition and warned that they could otherwise face daily penalties of up to $32,500 (since increased to $37,500) for violating the CWA and a like sum for failing to comply with the compliance order. The Sacketts sought judicial review of the compliance order under the APA in federal district court, but the district court and then the Ninth Circuit concluded that the compliance order was not final agency action subject to review.

The Sacketts sought Supreme Court review of the Ninth Circuit's APA holding. The Supreme Court granted certiorari on whether the APA permitted pre-enforcement judicial review of the compliance order, and ordered briefing on a second question: if judicial review were not available, whether the Sacketts' inability to seek pre-enforcement review violated the Due Process Clause. As we explained in our January 9 e-communication, during oral argument, a majority of the Justices strongly expressed sympathy for the Sacketts and skepticism of the government's position.

Those sentiments carried through to the Court's opinion. The unanimous Court, in an opinion authored by Justice Scalia, rested its decision 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.'" Slip op. at 4 (quoting 5 U.S.C. § 704) (emphases added). With regard to finality, the Court held that the compliance order clearly met every aspect of finality that the Court had previously pronounced — it determined the Sacketts' rights or obligations (by requiring them to "restore" their property to its native, unimproved condition, and to give EPA access to the Sacketts' property and records), legal consequences would flow from it (according to the government's litigation position, the Sacketts could face double penalties for violating the order and could also have difficulty obtaining a dredge and fill permit from the U.S. Army Corps of Engineers (Corps)) and it consummated EPA's decision-making process (the Sacketts were not entitled to any further agency review of the order).

Nor did the Sacketts have any other adequate remedy in court. The government argued that the Sacketts could have effectively challenged the order in court by applying to the Corps for a dredge and fill permit, and then challenging a denial of that permit application in court. The Supreme Court rejected that argument, writing: "The remedy for denial of action that might be sought from one agency" (here, the Corps' denial of a permit application) "does not ordinarily provide an 'adequate remedy' for action already taken by another agency" (here, EPA's issuance of the order). Id. at 6.

The government argued that judicial review was unavailable to the Sacketts because the CWA precludes judicial review of administrative compliance orders, but the Court quickly rejected that argument. Nothing in the CWA expressly proscribes judicial review, and nothing in the statutory scheme, read as a whole, evidences legislative intent to preclude the judicial review that is presumptively available under the APA.

Justice Ginsburg wrote a short concurring opinion to explain that the Court was not asked to decide, and did not decide, whether the Sacketts could challenge the terms and conditions of the compliance order. The concurring opinion states that the Court decided only "that the Sacketts may immediately litigate their jurisdictional challenge in federal court." That challenge of course goes to whether there were "waters of the United States," or "wetlands," on the Sacketts' property at all. Justice Alito wrote a concurring opinion that struck at the very heart of what really made the Sacketts' situation disturbing: no one — not EPA, not the Courts, and certainly not the Sacketts — has a clear definition of what constitutes "waters of the United States." He stated that the reach of the CWA is so "uncertain," and the penalties for violating the Act are so "draconian," that Congress should act to "provide a reasonably clear rule regarding the reach of the Clean Water Act."

The opinion touches on at least two continuing controversies under the CWA. First, the opinion traces the history of the Court's prior cases addressing the scope of "navigable waters" covered by the CWA. That history begins with the Court's 1985 decision of United States v. Riverside Bayview Homes, Inc., continues to the 2001 decision of Solid Waste Agency of Northern Cook County v. Army Corps of Engineers, and finally culminates with the Court's 2006 decision in Rapanos v. United States. The unanimous Court acknowledged that regulated parties have "to feel their way on a case-by-case basis" because of the lack of guidance on "precisely how to read Congress' limits on the reach of the Clean Water Act." Id. at 2–3. Although the Court expressly did not consider the reach of the CWA in deciding the Sackett case, the Court, especially Judge Alito, noted that its decisions have not made the Act's scope clear, leaving parties like the Sacketts to fend for themselves because Congress has not acted and EPA and the Corps have merely adopted "guidance" without the authority of rules.

Second, the opinion may provide a basis for parties to seek APA judicial review, not only of administrative compliance orders, but also of jurisdictional determinations — orders by which EPA or Corps determines that property contains wetlands and is therefore subject to the CWA and its associated regulations. Many of the Court's reasons for finding that the APA provides judicial review of a compliance order indicate that the APA may also provide judicial review of jurisdictional determinations. The Court reasoned that, in passing the Act, Congress probably did not mean to foreclose the "opportunity for judicial review — even judicial review of the question whether the regulated party is within the EPA's jurisdiction." Slip op. at 9-10. Of course, that is the very issue that EPA decides through determinations that wetlands are subject to the jurisdiction of the CWA. Also, Justice Alito read the Court's opinion to mean that "property owners like petitioners will have the right to challenge the EPA's jurisdictional determination under the Administrative Procedure Act." Alito Concurrence at 2. And Justice Ginsburg understood the Court to hold "that the Sacketts may immediately litigate their jurisdictional challenge in federal court." Ginsburg Concurrence at 1.

The majority of CWA jurisdictional determinations are made not by EPA but by the Corps. The Corps can provide two types of jurisdictional determinations: preliminary and approved. The quicker, preliminary process allows the landowner to proceed directly to the permit process based on an assumption that all waters of the United States on the project tract are subject to CWA jurisdiction. The approved jurisdictional determination requires more time and information and is subject to the Corps' administrative appeal process. We expect that, based on the reasoning in the Sackett decision, regulated parties will now begin to seek judicial review of approved jurisdictional determinations after exhausting administrative remedies through the appeals process.

The relief provided by this decision, as Justice Alito writes, "still leaves most property owners with little practical alternative but to dance to the EPA's tune" (or the Corps'). Alito at 2. The time and money associated with a challenge to jurisdiction is daunting. The decision should, however, make it easier for appropriate challenges to the reach of CWA jurisdiction pursued by EPA and the Corps. Perhaps this will push Congress toward that elusive goal of "a reasonably clear rule regarding the reach of the CWA." Id.

The opinion is available here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.