U.S. Supreme Court Allows Pre-Enforcement Review of Administrative Compliance Orders Issued by EPA Under the Clean Water Act

March 23, 2012

On March 21, 2012, the United States Supreme Court issued a unanimous opinion in Sackett v. EPA, 556 U.S. ___ (2012), that an administrative compliance order issued by the Environmental Protection Agency (“EPA”) under the Clean Water Act was a final agency action properly subject to pre-enforcement review under the Administrative Procedure Act (“APA”).  Although the Supreme Court’s holding was limited to a determination that nothing in the Clean Water Act expressly or impliedly precluded pre-enforcement review, the opinion may signal greater availability of pre-enforcement review of administrative compliance orders issued by EPA under other federal environmental statutes that do not include a specific prohibition of such review.

Background on Sackett v. EPA

Sackett involved a two-thirds acre property in Idaho situated near to, but separate from, a lake falling within the definition of navigable waters, which made it subject to the jurisdiction of the Clean Water Act, 33 U.S.C. §1251 et seq.  The Sacketts filled in a portion of their property in preparation for construction of a house.  Subsequently, the EPA issued an administrative compliance order under § 309 of the Clean Water Act, 33 U.S.C. §1319, which found that the Sacketts’ lot contained wetlands subject to regulation under the Act.  The order found further that by filling in a portion of the wetlands without first obtaining a § 404 permit under 33 U.S.C. §1344, the Sacketts had discharged pollutants in violation the Act.  The order directed the Sacketts to take immediate remedial action to restore the site or face substantial civil penalties for noncompliance.

The Supreme Court’s environmental jurisprudence had not, to this point, clearly delineated the reach of EPA’s jurisdiction under the Clean Water Act.  In 2006, the Court held in Rapanos v. United States, 547 U.S. 715 (2006), that a wetland not adjacent to navigable waters fell outside the Act’s jurisdiction.  But because none of the various rationales commanded a majority in the case, Rapanos left the precise reach of the Clean Water Act muddled.  In the wake of Rapanos, neither Congress nor the EPA acted to clarify the scope of the Act’s jurisdiction, leaving interested parties with little guidance as to whether property is subject to regulation.

The Sacketts disagreed with EPA’s assessment that their property was a wetland subject to the Clean Water Act’s jurisdiction, and sought a hearing with EPA to address the issue.  EPA denied this request, and the Sacketts then filed suit in federal district court, challenging the order as arbitrary and capricious under the APA and violative of due process requirements.  Because EPA had not yet initiated a civil action to enforce compliance with the order, the district court held that it lacked subject matter jurisdiction to review the order.  The Ninth Circuit affirmed, concluding that the Clean Water Act precluded pre-enforcement review of § 309 administrative compliance orders, and that such a prohibition did not violate due process requirements.  The Sacketts appealed the decision to the Supreme Court.

Analysis of the Holding in Sackett v. EPA

In a unanimous decision, the Supreme Court overturned the Ninth Circuit’s decision and held that the Sacketts could seek pre-enforcement review of the compliance order under the APA.  Writing for the Court, Justice Scalia concluded that the order was final agency action for which there is no adequate remedy other than APA review, and that nothing in the Clean Water Act expressly or impliedly precluded pre-enforcement judicial review.  The Court found that the order “has all of the hallmarks of APA finality” such as imposing serious legal obligations on the Sacketts.  (Slip op. at 5.)  The Court also found that the Act’s language was insufficient “to overcome the APA’s presumption of reviewability for all final agency action.” (Id. at 8.)  In the Court’s view there was “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.”  (Id. at 9-10.)  Consequently, because the order constituted final agency action and the Clean Water Act did not otherwise prevent APA review, the Court held that the Sacketts were entitled to challenge the order prior to an enforcement action by EPA.

Justice Ginsburg filed a concurring opinion (J. Ginsburg, slip op. at 11) acknowledging the availability of pre-enforcement review of EPA’s authority to regulate property under the Act, but stressing that the Court did not reach the issue of whether pre-enforcement review of the terms and conditions of an order is also permitted.

Justice Alito also filed a concurring opinion (J. Alito, slip op. at 12-13) in which he observes that, for property owners, “real relief requires Congress to do what it should have done in the first place: provide a reasonably clear rule regarding the reach of the Clean Water Act.”  By using “hopelessly indeterminate” definitions and failing to resolve the “notoriously unclear” reach of the Clean Water Act, Justice Alito emphasizes the concern that Congress has “left most property owners with little practical alternative but to dance to the EPA’s tune.”  (Id.)

Impact of Sackett v. EPA

Sackett presents a greater opportunity for pre-enforcement review of administrative compliance orders issued by EPA under other federal environmental statutes.  It also continues the Court’s strict construction approach to reading the statutory language and requirements in federal environmental statutes, as it did in prior opinions interpreting statutory language in the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. §9601 et seqSee Burlington Northern & Santa Fe Railway Co. v. United States, 556 U.S. 599 (2009); United States v. Atlantic Research Corp., 551 U.S. 128 (2007), Cooper Industries, Inc. v. Aviall Services, Inc., 543 U.S. 157 (2004).  Thus, the Court’s decision may justify pre-enforcement review of orders under other environmental statutes in which Congress did not include an express prohibition of such review, such as the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. §6901 et seq., and the Clean Air Act, 42 U.S.C. §7401 et seq.  EPA may even be less likely to issue administrative orders in the first instance knowing that such orders may be more readily subject to judicial review.  In contrast, for statutes that do contain clear prohibitions of pre-enforcement review–for example, as some have argued, CERCLA § 113(h) (“No Federal court shall have jurisdiction . . . to review any order issued under section 9606 (a) . . . in any action except . . . [a]n action to enforce an order issued under section 9606 (a)”)–action by Congress may be necessary to permit such challenges.  As part of that process, Congress may be asked to address its rationale for why pre-enforcement review is available under only certain environmental statutes.

The scope of pre-enforcement review available under the Court’s opinion is yet to be determined.  The holding permits pre-enforcement challenges to EPA’s threshold determinations regarding whether a property is subject to regulation, but whether it also permits pre-enforcement challenges to the terms of administrative compliance orders remains to be seen.  Although Justice Ginsburg’s concurrence suggests the Court did not resolve the issue, lower courts may still permit such review.

The Court’s opinion also indicates–and Justice Alito’s concurrence forcefully states–that the jurisdictional reach of the Clean Water Act is in serious need of clarification.  As the Court first observed in Rapanos and reiterates in Sackett, the lack of guidance from Congress or the EPA has left interested parties “to feel their way on a case-by-case basis.”  (Slip op. at 3.)  Should Congress fail to act to provide clearer guidance on the reach of the Clean Water Act, the Court’s opinions indicate that the Court itself may even be prepared to revisit the issue.

Finally, Sackett continues the Supreme Court’s trend of greater receptiveness to arguments based on statutory interpretation as opposed to constitutional violations.  The Court unanimously accepted the argument that the language of the Clean Water Act should be subject to a less expansive interpretation than given by the lower courts, but declined to even reach a question it had originally directed the parties to brief–i.e., whether denying pre-enforcement judicial review of EPA’s order violated the Sacketts’ constitutional rights of due process.  Similarly, the Court recently denied certiorari in General Electric v. Jackson, a case which had urged the Court to rule on the constitutionality of unilateral administrative cleanup orders issued by EPA under Section 106 of CERCLA, 42 U.S.C. § 9606(a), after the D.C. Circuit had rejected arguments that CERCLA § 106 orders violate constitutional due process requirements.

Gibson, Dunn & Crutcher has particular expertise in environmental law and regulation, including legal challenges to their enforcement and interpretation. 

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