June 18, 2014

Does Sackett Flush the Clean Water Act?


The United States Supreme Court recently issued its unanimous decision in Sackett v. EPA.The Court found that Michael and Chantell Sackett had the right, pursuant to the Administrative Procedure Act (the "APA"), to seek judicial review of a compliance order issued by the Environmental Protection Agency (the "EPA") under the Clean Water Act (the "CWA"). Prior to this decision, courts had regularly determined that landowners receiving a CWA compliance order had no right to seek judicial review. Rather, landowners could comply with the order or risk daily penalties of $37,500 (or $75,000 if the EPA prevailed in a later action to enforce the order).

The Sacketts own property very near — but not immediately next to — Priest Lake in northern Idaho. The Sacketts brought in fill dirt and rock in preparation for constructing a new home. The EPA determined that the Sacketts' property contained wetlands — which are considered "navigable waters" and subject to federal regulation pursuant to the CWA — and that the Sacketts had illegally filled wetlands without the required permits.

The EPA issued a compliance order requiring the Sacketts to immediately begin restoring their property in accordance with the restoration work plan outlined in the order. The order also gave the EPA access to the property and to any records or documents concerning conditions on the property.

The Sacketts disputed the EPA's determination that their property was subject to the CWA and the EPA's jurisdiction to issue the compliance order. The Sacketts asked the EPA for a hearing, but that request was denied. The Sacketts then filed suit in the District Court for Idaho. The District Court dismissed the suit and the Ninth Circuit Court of Appeals affirmed. The Supreme Court accepted review and unanimously reversed the lower courts' rulings.

The Court was sympathetic to the Sacketts and their limited options — comply with the order or risk significant financial penalties. More important, the Court determined that the EPA compliance order was a "final agency action," which brought it within the scope of the APA. The Court also determined that the CWA did not expressly or implicitly preclude judicial review of compliance orders. Based on these two findings, the Court determined that the Sacketts had the right to seek judicial review of the compliance order. Although the Sacketts had also argued that the order deprived them of due process, the Court did not base its decision on that argument or even discuss whether it had merit. The Court, therefore, did not find a "due process" violation in the EPA's use of compliance orders to enforce the CWA.

The government argued that allowing judicial review of compliance orders would severely limit the EPA's ability to enforce the CWA and properly regulate the waters of the United States. Justice Scalia, who wrote the opinion, stated that "[c]ompliance orders will remain an effective means of securing prompt voluntary compliance in those many cases where there is no substantial basis to question their validity." Although Justice Scalia's prediction may prove accurate, the basis for his statement was not provided in the opinion. Despite this prediction, if a serious deterrent to seeking judicial review does not exist, many landowners may seek review just to delay enforcement or to gain leverage in negotiations with the EPA over the scope of the proposed restoration plan.

This decision changes the landscape for compliance orders issued pursuant to the CWA. A landowner can now challenge the agency's jurisdiction to issue the order in district court. As a practical matter, although Sackett does not "flush" the CWA, it has removed a significant tool that the EPA used to force alleged violators of the CWA to bring their property into compliance. The EPA relied on the threat of significant financial penalties to motivate landowners to take remedial steps. Without such a threat, landowners will probably not be as motivated to comply. At the very least, a landowner can stall the effect of the order while it is under judicial review.

The Sackett decision is less than one month old, so it remains to be seen whether and to what extent it will actually change behaviors. It also remains to be seen whether Congress will step in and amend the CWA to expressly preclude judicial review. It is important to recall that the Court based its decision on the CWA's failure to preclude judicial review of compliance orders. Thus, the Court would rule differently if the federal act in question didpreclude judicial review. For example, Section 113(h) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, CERCLA, expressly precludes judicial review of any challenge to most actions taken and orders issued under that act; thus, there is no right to judicial review of those actions or orders. The Sackett decision does not change that.

Moreover, the Sacketts — and any other landowners who seek judicial review of compliance orders — may ultimately be forced to restore their property if the reviewing court determines that the EPA had jurisdiction. One issue not clarified by the Court is whether the fines imposed by the EPA accrue during judicial review. However, given the tone of the Court's decision and its sympathetic eye toward the Sacketts, it is unlikely that the Court would provide the right to judicial review but condition it on the Sacketts' willingness to expose themselves to significant financial penalties. That issue will probably be addressed in another case applying the Sackett decision. For the time being, however, the Court has invited landowners to seek judicial review of CWA compliance orders. This invitation, by extension, also applies to compliance orders (or their like) issued under any other acts that do not preclude judicial review. Let the judicial reviews begin!

This article is intended to inform the reader of general legal principles applicable to the subject area. It is not intended to provide legal advice regarding specific problems or circumstances. Readers should consult with competent counsel with regard to specific situations. For more information on this topic, please contact marketing@jordanramis.com or call (888) 598-7070.


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