The U.S. Supreme Court has unanimously ruled that landowners can sue the Environmental Protection Agency (“EPA”) to challenge its issuance of an administrative “compliance order” claiming their land is a “wetland” subject to its regulatory jurisdiction under the Clean Water Act (“CWA”). The Court’s decision in Sackett v. Environmental Protection Agency, 566 U.S. – (2012) may well open the way for landowners to challenge other types of administrative decisions by the EPA and U.S. Army Corps of Engineers asserting CWA jurisdiction over lands. It may also enable those receiving administrative enforcement orders under other federal statutes, such as the Clean Air Act, to challenge those orders in federal district courts. By its decision, the Court has undone, at least partly, the government’s heretofore successful campaign to convince federal courts to refrain from what the agencies call “preenforcement review” of their decisions about jurisdiction over wetlands. Over the last three decades, at the government’s urging, lower courts have generally refused to review such agency decisions until either the agency sues a landowner or a landowner seeks and obtains a permit decision from the agency.

Under the CWA, the Corps and EPA regulate “discharges” of “pollutants” into “navigable waters,” which the Act defines as “the waters of the United States.” The EPA, which is primarily responsible for administering the CWA, administers a permit program under section 402 for pollutant discharges, known as the National Pollutant Discharge Elimination System (“NPDES”). In section 404, Congress carved an exception out of the EPA’s authority and gave the Corps the authority to permit discharges of two particular types of “pollutants,” i.e. “dredged” and “fill materials.” Since the mid-1970s, the EPA and Corps, largely with the acquiescence of the federal courts, have broadly defined “waters of the United States” to include not only rivers, lakes, and other readily recognizable waterbodies, but also “wetlands.” Caught in the political crossfire between those who see wetlands as natural resources and those who view them as private property, the agencies have gradually stretched the meaning of “wetlands” beyond the originally expressed idea of swamps, marshes, and bogs to encompass much drier areas, including some hardwood forests, fields, and cultivated farmland, that may be saturated with rainwater for as little as a few weeks during the course of a year. Both agencies have the authority, through somewhat different procedures, to determine whether areas are waters or wetlands subject to their regulatory jurisdiction and to take actions to enforce the Act and remedy violations.

Preparing to build a house, the Sacketts filled part of their residential lot located near a lake in Idaho. Months later they received a compliance order from the EPA stating that their lot contains jurisdictional wetlands and they had filled those wetlands in violation of the CWA. The order also directed them to restore the site in accordance with a restoration plan approved by the EPA and provide EPA employees access to the site and to all records relating to conditions on the site. The Sacketts, believing their land does not contain wetlands subject to the CWA, asked the EPA for a hearing, but the EPA denied the request.

They then sued the EPA under the Administrative Procedure Act (“APA”), seeking a declaration that the EPA acted arbitrarily and capriciously in issuing the compliance order and an injunction prohibiting enforcement of the order. The federal district court dismissed the suit on the grounds that the CWA precludes judicial review of a compliance order before the EPA brings its own enforcement action in federal court. In keeping with similar decisions in other circuits, the Ninth Circuit Court of Appeals affirmed the district court’s decision.

The Supreme Court reversed and held that the Sacketts may sue the EPA under the APA to challenge its compliance order. Since the APA allows suits to challenge only agency actions that are “final,” the Court first considered whether the EPA’s compliance order qualified. Finding that the order “has all the hallmarks of APA finality” established by its earlier decisions, the Court observed that the order determines rights and obligations by obligating the Sacketts to “restore” their land and give the EPA access to their land and their records. Moreover, legal consequences flow from the order in that violation of the order exposes the Sacketts to additional penalties, $37,500 per day, and the order limits the Sacketts’ ability to obtain a permit from the Corps, since the Corps’ regulations provide that once a compliance order has been issued with respect to certain land, the Corps will not process a permit application for that land unless doing so “is clearly appropriate.” Issuance of the order, the Court noted, also marks the “consummation” of the EPA’s decisionmaking process, as the Sacketts learned when the EPA refused them a hearing on the matter. The order’s invitation to the Sacketts to informally discuss its terms and requirements and inform the EPA of any asserted inaccuracies does not, said the Court, render an otherwise final agency action nonfinal.

The Court next considered and rejected the government’s contention that the CWA precludes judicial review of compliance orders under the APA. Nothing in the CWA expressly precludes such review. The government argued that because Congress gave the EPA a choice between bringing a judicial enforcement action and taking administrative action, the scheme of the CWA would be undermined by allowing judicial review of the latter. The Court dismissed that argument as resting on the “question-begging premise” that the relevant difference between the two choices is only judicial review. But, said the Court, “[t]here are eminently sound reasons other than insulation from judicial review why compliance orders are useful,” thus it cannot be supposed that was the reason Congress authorized the EPA to issue such orders.

The government also noted that a compliance order is not “self-executing” and rather can only be enforced by the EPA in a judicial action, arguing that the order thus is but a step in the deliberative process and not a coercive sanction that itself must be subject to judicial review. Rejecting that argument, the Court noted that the APA provides for judicial review of all final agency actions, not just those imposing a self-executing sanction. Moreover, such an order can hardly be considered a step in the deliberative process since “[a]s the text (and indeed the very name) of the compliance order makes clear, the EPA’s ‘deliberation’ over whether the Sacketts are in violation of the Act is at an end.” Suggesting some irritation with the government’s position, the Court added that “the agency may still have to deliberate over whether it is confident enough about this conclusion to initiate litigation, but that is a separate subject.”

Finally, the government noted that Congress passed the CWA partly to provide better remedies for water pollution and warned that the EPA is less likely to use compliance orders if they are subject to judicial review. “That may be true,” the Court responded, “but it will be true for all agency actions subject to judicial review [and t]he APA’s presumption of judicial review is a repudiation of the principle that efficiency of regulation conquers all.” Moreover, added the Court, “there is 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—even judicial review of the question whether the regulated party is within the EPA’s jurisdiction.”

Justice Alito drove home the point in his concurring opinion. “The position taken in this case by the Federal Government—a position that the Court now squarely rejects—would have put the property rights of ordinary Americans entirely at the mercy of [EPA] employees.” He explained the leverage that the government sought by its campaign to limit judicial review:

The reach of the Clean Water Act is notoriously unclear. Any piece of land that is wet at least part of the year is in danger of being classified by EPA employees as wetlands covered by the Act, and according to the Federal Govern­ment, if property owners begin to construct a home on a lot that the agency thinks possesses the requisite wetness, the property owners are at the agency’s mercy. The EPA may issue a compliance order demanding that the own­ers cease construction, engage in expensive remedial measures, and abandon any use of the property. If the owners do not do the EPA’s bidding, they may be fined up to $75,000 per day ($37,500 for violating the Act and another $37,500 for violating the compliance order). And if the owners want their day in court to show that their lot does not include covered wetlands, well, as a practical matter, that is just too bad. Until the EPA sues them, they are blocked from access to the courts, and the EPA may wait as long as it wants before deciding to sue. By that time, the potential fines may easily have reached the millions. In a nation that values due process, not to men­tion private property, such treatment is unthinkable.

Noting that the Court’s decision provides a modest measure of relief by giving landowners the right to challenge the EPA’s jurisdictional determination, Alito turned his attention to Congress: “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 its decision, the Court did not clarify the scope of waters and wetlands regulated under the CWA. Nor did it decide the merits of the Sacketts’ contention that the EPA has no jurisdiction over their lot. Rather it decided simply that they could have their day in court to challenge the EPA’s claim of jurisdiction.

Sackett may prompt landowners believing the EPA or Corps has wrongly claimed jurisdiction over their lands through means other than compliance orders, such as far more common jurisdictional determinations or cease and desist orders, to consider whether and how they may obtain judicial review of such claims without first completing the time-consuming, expensive, and perhaps pointless process of seeking permits from the Corps. The prospect of more readily available judicial review of jurisdictional claims may affect the behavior of the Corps and EPA. It could, as the government and Court noted, lead the EPA to less often resort to compliance orders. It could as well prompt the agencies to more carefully consider whether they can support jurisdictional claims before they make them, whether in compliance orders or any other administrative decisions.

 
David Ivester
Briscoe Ivester & Bazel LLP
155 Sansome Street, 7th Floor
San Francisco, CA 94104
Telephone: (415) 402-2700
Fax: (415) 398-5630

Disclaimer: In our Newsletters and Bulletins, Briscoe Ivester & Bazel LLP intends to present general information to the public and does not intend to provide legal advice pertaining to a particular situation.

 

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