By Carolyn L. McIntosh
On March 21, 2012, the United States Supreme Court decided the case of Sackett v. EPA, 566 U.S. (2012), holding that EPA administrative compliance orders issued under the Clean Water Act (CWA) can be judicially challenged prior to enforcement. This is a win for regulated entities, but does not provide a long-term solution or further clarity under the CWA.
The Sacketts own a residential lot in Bonner County, Idaho, near Priest Lake. To build a house on their lot, they filled in part of their lot, which resulted in an EPA compliance order. The Order stated that the lot contained wetlands and, due to its proximity to Priest Lake, the lot was a “water of the United States” filled by the Sacketts in violation of CWA Section 404 (requiring a permit from the Army Corps of Engineers before filling a “water of the U.S.”) The Order required the Sacketts immediately remove the fill and provide the EPA access to the lot and all documentation associated with the lot or suffer penalties of $37,500 per day—doubled to $75,000 in the event of failure to comply.
The Sacketts’ hearing request to the EPA was denied. The Sacketts then filed suit in the Idaho U.S. District Court asking the Court to review whether their lot was subject to CWA Section 404, before EPA enforcement. The District Court dismissed for lack of jurisdiction and the Ninth Circuit Court of Appeals affirmed, 622 F. 3d 1139 (9th Cir. 2010), holding that the CWA “preclude[s] pre-enforcement judicial review of compliance orders,” 622 F. 3d at 1144.
That a private party, attempting to build their own home, should face penalties of $75,000 per day, without any opportunity for a hearing, seems unjust and implausible, but that was the EPA’s position. The EPA went one step further stating the CWA provides an opportunity for hearing—in the context of an EPA enforcement action, after the potential penalties have mounted—and that opportunity was sufficient to protect the Sacketts’ due process rights. In a unanimous decision, delivered by Justice Antonin Scalia, the Supreme Court reversed, holding that the Order was final agency action, reviewable under the Administrative Procedure Act, before enforcement.
As succinctly stated by the Supreme Court, the CWA:
prohibits…”the discharge of any pollutant by any person,” §1311, without a permit, into the “navigable waters” §1314—which the Act defines as “the waters of the United States,” §1362(7). If the EPA determines that any person is in violation of this restriction, the Act directs the agency to either issue a compliance order or to initiate a civil enforcement action. §1319(a)(3).
However, as further noted by Justice Alito, the “reach of the Clean Water Act is notoriously unclear.”
Sackett does not resolve the fundamental problem faced by the Sacketts—and anyone else placing fill near a water body—the definition of “waters of the United States” is not clear and must be determined case-by-case.
Sackett only decided the CWA does not preclude pre-enforcement review of compliance orders. Judicial review is available under the Administrative Procedure Act (APA), 5 U.S.C. § 704, for final agency action when “there is no other adequate remedy in court.” Id.
The Court readily decided that a compliance order is final agency action given the hearing denial, the penalties, the requirement for immediate fill removal, and limitations on obtaining a Corps permit. The Court next evaluated whether there was any “other adequate remedy” and determined the only other remedy, EPA enforcement, was entirely at the EPA’s election. Noting the APA creates a “presumption favoring judicial review of administrative action,” the Supreme Court determined the CWA does not expressly preclude pre-enforcement review.
The EPA responded that Sackett is “not a game changer.” But it will affect EPA enforcement, beyond the CWA. In FY 2011, the EPA issued 1,324 compliance orders:
- 479 under the CWA (97 for violations of Section 404, 370 under Section 402, and 12 under Section 311).
- 421 under the Safe Drinking Water Act.
- 154 under the Clean Air Act.
- 36 under the Resource Conservation and Recovery Act.
It is also likely the EPA will issue fewer CWA compliance orders, opting instead for notices of violation (NOVs), which are not final agency action. They notify the recipient of one or more purported violations, provide instructions for compliance, generally include an opportunity for a meeting, and do not impose penalties.
Yet, Sackett does not determine whether an APA challenge stays imposition penalties. Justice Alito also cautioned that the decision may still leave no practical alternative other than compliance because of the uncertainties in the meaning of “waters of the United States” and the severity of potential penalties.
Companies should still avoid CWA compliance orders. The APA standard of review is deferential to the EPA and places the burden of proof on challengers to show that the EPA acted arbitrarily or capriciously. Since the definition of “waters of the United States” remains ill-defined, this burden is a very high hurdle. In short, as noted by Justice Alito” [r]eal 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.”
McIntosh is a partner with Patton Boggs LLP. She can be reached at 303-894-6127 or at firstname.lastname@example.org.