Unanimous Supreme Court Allows Pre-Enforcement Review of Clean Water Act Compliance Orders

The U.S. Supreme Court unanimously held on March 21 that an Idaho couple who had received a compliance order from the U.S. Environmental Protection Agency (EPA) for allegedly illegal filling of wetlands could directly challenge the order in court, and did not have to wait until EPA filed a lawsuit to enforce the order in court before obtaining judicial review of its validity. The opinion completely changes the rules of the game in EPA’s enforcement of the Clean Water Act, and gives landowners a powerful new tool to dispute what they see as erroneous EPA determinations.

The Idaho landowners, Michael and Chantell Sackett, received a compliance order after filling a portion of their residential lot near Priest Lake in preparation for the construction of a home. According to the order, EPA had concluded that their property contained wetlands protected by the Clean Water Act, and that they had violated the statute by filling wetlands without a permit from the Army Corps of Engineers. It also ordered the Sacketts immediately to restore the site. Believing that their lot did not, in fact, contain any protected wetlands, the Sacketts sought a hearing with EPA, but their request was denied. They then filed a lawsuit in federal district court challenging the order as “arbitrary and capricious” under the Administrative Procedure Act (APA). The district court dismissed their suit, and the Ninth Circuit affirmed the dismissal.

Writing for the Court, Justice Scalia needed just ten pages to conclude that the EPA’s issuance of the compliance order was a final agency action reviewable under the APA. It was clearly final, he wrote, because it determined the Sacketts’ rights and obligations and because legal consequences flowed from it — including, importantly, a doubling of the penalties they could face in a future EPA enforcement action from as much as $37,500 per day (for violating the statute) to as much as $75,000 per day (for violating the statute and the order as well). The order also made it more difficult for them to obtain an “after-the-fact” permit for their activities. It did not matter, Justice Scalia continued, that the order invited the Sacketts to engage in “informal discussions” of its requirements and to point out any inaccuracies. EPA had no obligation to reconsider its original findings, which were, for all intents and purposes, final.

The Court also rejected various arguments raised by the government that the Clean Water Act impliedly precluded judicial review of compliance orders. (Some other environmental statutes, such as CERCLA, expressly bar pre-enforcement review of EPA orders.) One factor cited by EPA — that allowing pre-enforcement review of compliance orders will make EPA less likely to use them, and thus make enforcement work more cumbersome — is an inevitable result, said Justice Scalia, of the APA’s presumption of judicial review, which is “a repudiation of the principle that efficiency of regulation conquers all.”

The Sackett decision throws open the courthouse doors for landowners who, like the Sacketts, believe that the EPA has acted arbitrarily, capriciously, or illegally in issuing a Clean Water Act compliance order. The specific finding that the Sacketts wanted to challenge — that the property in question contained wetlands that fell within the agency’s Clean Water Act jurisdiction — is likely to be controversial in many cases, given the failure of Congress, the agencies, and the Supreme Court itself to fashion clear rules for deciding whether particular wetlands are “wetlands” for purposes of the Clean Water Act. Now, landowners who believe they have been incorrectly cited for violating the statute need not wait for EPA to drop the other shoe by filing its own lawsuit, all the while accumulating thousands or millions of extra dollars in additional civil penalties. As Justice Alito put it in his concurring opinion, “In a nation that values due process, not to mention private property, such treatment is unthinkable.” After Sackett, it is no longer unavoidable.