In a unanimous decision that could herald major changes in federal and state environmental enforcement, yesterday the Supreme Court upheld a property owner’s right to challenge the basis for a Clean Water Act compliance order alleging unlawful filling of wetlands, before the Environmental Protection Agency (“EPA”) had filed suit to enforce it.  Previously, EPA and every Circuit Court to consider the issue had denied pre-enforcement review of such orders, requiring landowners to apply for a fill permit in order to challenge EPA’s assertion of jurisdiction or risk substantial penalties for violating EPA’s directives.

The significance of the Supreme Court’s ruling in Sackett v. EPA is likely to extend beyond the Clean Water Act, however, as administrative agencies frequently issue interim decisions – similar to the EPA’s compliance order in Sackett – while claiming that such actions are either non-final or statutorily precluded from pre-enforcement review.  Writing for the Court, Justice Scalia found that the order “has all the hallmarks of … finality” and “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.”  Similar reasoning could apply to other federal environmental statutes as well, aside from the federal Superfund law which is “uniquely designed” in its express preclusion of certain pre-enforcement review.

Sackett arose out of an Idaho couple’s filling of part of a residential lot, which the EPA later determined to be regulated wetlands.  EPA issued a compliance order directing the landowners to remove the fill and implement a Restoration Work Plan, and threatening penalties of up to $75,000 per day of non-compliance.

The landowners sued, arguing that EPA had incorrectly classified their property as a wetland and its compliance order was arbitrary and capricious as a result.  Both the District Court and the 9th Circuit Court of Appeals dismissed their challenge for lack of jurisdiction, holding that the Clean Water Act precluded pre-enforcement review of compliance orders, and that such limitation did not violate the Due Process Clause because the landowners could still apply for a wetlands fill permit from the U.S. Army Corps of Engineers (“Army Corps”) or ignore the order and challenge EPA’s wetlands determination in defense of an EPA civil enforcement action.  

The Supreme Court reversed.  As a threshold matter, the Court ruled that the compliance order was “final agency action” subject to challenge under the Administrative Procedure Act (“APA”), because it determined the landowners’ legal obligations and marked EPA’s final determination as to the scope of its jurisdiction.  The Court rejected the argument that the landowners were required to apply for and challenge the denial of a wetlands fill permit, instead holding: “The remedy for denial of action that might be sought from one agency does not ordinarily provide an ‘adequate remedy’ for action already taken by another agency.”

Finally, the Court found that the Clean Water Act does not limit the courts’ pre-enforcement jurisdiction, finding no evidence in the statutory text or legislative history to overcome the APA presumption of judicial review.  It thus did not determine whether denial of review would have violated the landowners’ Due Process rights, but a concurrence from Justice Alito suggests that he would have upheld the Sacketts’ constitutional argument that without the opportunity for judicial review they would have been deprived of property rights without due process.    

In addition to the compliance orders at issue in Sackett, the Supreme Court’s reasoning may expand judicial review over a broad range of interim administrative decisions.  For instance, federal and state agencies often issue “jurisdictional determinations” defining the boundaries of regulated wetlands, limiting the use of such property where no alleged violation has yet occurred.  Future litigation will likely determine whether such determinations can be challenged under the APA and its state counterparts, as well as whether Clean Air Act Administrative Compliance Orders – which EPA has historically interpreted as not subject to pre-enforcement review – are affected by the Supreme Court’s ruling.

For more information on the Sackett decision and judicial review of agency actions, contact Daniel Riesel.