Unanimous U.S. Supreme Court Tells U.S. EPA that Clean Water Act Compliance Orders are Subject to Pre-Enforcement Review --- April, 2012

Unanimous U.S. Supreme Court Tells U.S. EPA that Clean Water Act Compliance Orders are Subject to Pre-Enforcement Review

John R. Embick, Esq. -- April, 2012

On March 21, 2012, a unanimous High Court told U.S. EPA (“EPA”) that its compliance orders, issued under the authority of the Federal Clean Water Act may be immediately appealed under the provisions of the Administrative Procedures Act (“APA”).  Prior to this holding, the EPA, and many courts, held the view that such compliance orders could only be reviewed at the time when the agency sought to enforce the order.  The case is Sackett v. EPA, 566 U.S. __(2012).

The background of Sackett is as follows.  The Sacketts (captioned as wife et vir!) owned a building lot near Priest Lake in northern Idaho.  The Sacketts’ lot, a little more than a half acre in size, was not located on the lake shore, and was separated from the water by a several lots and permanent structures.  The Sackett’s applied for and received local permits to build a home and brought in gravel to serve as fill material in order to prepare the site for construction.

According to a number of reports, the Sacketts had consulted a number of experts early on to determine if their property had wetlands on it.  One wetlands expert reportedly advised the Sacketts that the property contained wetlands. The Sacketts dispute that the property contains wetlands, and also dispute that the wetlands are “jurisdictional” wetlands, subject to the jurisdiction of the EPA and the U.S. Army Corps of Engineers.  If the wetlands (assuming that there are some) are not jurisdictional wetlands, then the wetlands would only be subject to state or local regulation. 

After the property was filled, EPA issued a compliance order under section 309 of the Clean Water Act, 42 U.S.C. §1319, to the Sacketts alleging that the placement of fill into navigable waters (wetlands associated with navigable waters (Priest Lake) may be waters of the United States and therefore may be subject to federal regulation) without a permit violated the Clean Water Act, and ordered the removal of the fill and submission of a remediation plan.  The issue of exactly what waters and wetlands are subject to federal control is still somewhat unclear. See, Rapanos v. U.S., 547 U.S. 715 (2006).

Until the Sackett decision by SCOTUS, EPA compliance orders (under the Clean Water Act) could not be judicially reviewed until the agency moved to enforce the order.  The problem with this (for the recipient of a compliance order), is that the Clean Water Act currently permits the agency to seek a maximum penalty of $37,500.00 per day per violation of the Clean Water Act.  The Sacketts actually were in jeopardy of the imposition of a penalty of $75,000.00 per day (one penalty for violating the Clean Water Act, and another penalty for violating the compliance order).

The Sacketts sought a hearing before EPA, but were turned down.  The Sacketts then went to federal court to seek relief.  Neither the District Court, nor the Ninth Circuit Court of Appeals provided any support to the Sacketts. The Sacketts argued that the issuance of the EPA compliance order deprived them of life, liberty or property without due process, in violation of the Fifth Amendment.  The Ninth circuit adopted the view of four other Courts of Appeal and found that the Clean Water Act precludes pre-enforcement judicial review of compliance orders.

Justice Scalia wrote the opinion for the Supreme Court, and Justices Ginsburg and Alito each wrote a concurring opinion.

Justice Scalia’s opinion holds that the compliance order constituted final agency action as defined by the APA (although the Ninth Circuit did not address this issue), and that the Clean Water Act did not bar pre-enforcement review of Clean Water Act compliance orders.  The Court did not address the constitutional due process issue.

The Clean Water Act does not contain an express bar to pre-enforcement review (compare the express bar against pre-enforcement review which is contained in the Superfund law, 42 U.S.C. § 9613(h) (“[n]o Federal court shall have jurisdiction . . . to review any order issued under section 9606 (a) of this title.”)).

EPA argued that the Clean Water Act authorizes the agency to proceed against violators either by judicial action, or by administrative order.  To allow immediate judicial review of an administrative order would render meaningless the distinction between the two enforcement options provided for in the Clean Water Act.   Further, the agency argued, judicial review was available once EPA sought to enforce the administrative order (which was not self-executing), so that due process was assured (eventually).

The decision of the High Court basically seemed to turn on its sense of umbrage at the  magnitude of the risk faced by recipients of an administrative order and the timing of judicial review.    

In her concurring opinion, Justice Ginsburg agreed in the result, but with the understanding that the decision of SCOTUS only addressed pre-enforcement review, and not the underlying merits of the dispute.

In his concurring option, Justice Alito railed at the continuing unclear state of the law regarding the determination of just what are waters of the U.S., and urged Congress and the agencies to come up with a definitive test.

To reiterate, the decision did not address the merits of the underlying dispute (i.e., are wetlands present on the Sacketts’ property, and, if so, are they jurisdictional wetlands?).

The decision has generated much heat in the environmental community, with a number of commentators trumpeting the decision as a huge defeat for EPA, a triumph of liberty and due process, a victory for little citizen David over the agency Goliath, and a serious curb on the authority of the agency. These views are probably frothy and overdone, in our opinion.

The Sackett decision only deals with pre-enforcement review.  The decision certainly takes away a heavy stick which the agency uses to get “voluntary” compliance, but it has been our experience that the agency rarely issues fully unsupported administrative orders.  EPA will now have to anticipate mounting a strong defense of its orders upon their issuance.  Given the huge risk to the recipient of a Clean Water Act compliance order heretofore not subject to pre-enforcement review, the High Court decision seems reasonable and correct.

Compare EPA’s enforcement approach to the customary procedure that the Pennsylvania Department of Environmental Protection (“PaDEP”) currently follows in many enforcement scenarios.  PaDEP usually issues a Notice of Violation (“NOV”) in response to a violation.  The NOV usually (but not always) is not a final action of the agency, does not compel any action on the part of the recipient, and cannot be appealed (to the Environmental Hearing Board (“EHB”)).  Basically, it’s a warning shot.  Frequently, the issuance of an NOV is enough to resolve an issue or dispute.  When PaDEP issues a compliance order (which is final, and directly affects the rights and responsibilities of the recipient), the order may be immediately appealed to the EHB, and PaDEP normally is prepared quickly to defend the order.  We think EPA will move more towards this mode of action, and the enforcement activities of the agency will not be significantly curtailed.   Note, however, that there is a significant structural difference affecting enforcement matters between EPA and the U.S. Department of Justice (“DOJ”) on the one hand, and PaDEP on the other.  In order to initiate court action in most instances, EPA must refer the matter to DOJ for prosecution.  In contrast, PaDEP attorneys are authorized to represent PaDEP in court directly.

We think the most significant impact of Sackett will be that other, similar pre-enforcement review bans (e.g., the Federal Clean Air Act, and the Resource Conservation and Recovery Act), also will be undone.