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Supreme Court Rules EPA Administrative Compliance Orders Are Subject to Pre-Enforcement Review


In a unanimous opinion, the United States Supreme Court, in Sackett v. EPA, No.10-1062 (U.S. Mar 21, 2012), has ruled that a regulated entity can immediately challenge an administrative compliance order under the Clean Water Act (CWA) issued by the Environmental Protection Agency (EPA) because such orders are final agency action for which there is no adequate remedy other than Administrative Procedure Act (APA) review and the CWA does not preclude judicial review.  Administrative compliance orders are one enforcement tool utilized by EPA to obtain compliance and, until this decision, could not be challenged unless and until EPA brought an enforcement action in federal district court.

In preparation for constructing a home, Michael and Chantell Sackett added dirt and rock fill to their property which EPA later determined was a wetland.  EPA issued a compliance order that directed the Sacketts to restore the site in accordance with an EPA Restoration Work Plan and to provide to EPA access to the site and all documentation related to conditions at the site.  The Sacketts also faced civil penalties of up to $37,500 per day for the violation and $37,500 per day for violation of the compliance order.

The Sacketts disagreed that their property constituted a wetland and requested a hearing.  When EPA denied their request for hearing, the Sacketts filed suit in federal district court under the APA.  The district court dismissed the action and the Ninth Circuit Court of Appeals affirmed finding that the CWA precludes pre-enforcement judicial reviews of compliance orders.  The Supreme Court examined Chapter 7 of the APA which allows for judicial review of “final agency action for which there is no other adequate remedy in a court” except when other statutes preclude judicial review.

The Court found that the compliance order was final agency action since it established legal obligations for mandated restoration activities, it contained legal consequences in the form of civil penalties and it “marked the consummation of the agency’s decisionmaking process” since it was not subject to further agency review.  The Court further found no other adequate remedy in a court since only EPA could initiate enforcement action and the Sacketts accrue civil penalties while waiting on EPA action.  Finally, the Court found that the CWA does not preclude judicial review of agency action.  Thus, the compliance order was subject to pre-enforcement judicial review.

The Court’s holding dealt only with the ability to seek judicial review of agency administrative orders and did not address whether the jurisdiction of the CWA would apply.  Justice Alito, in his concurring opinion, criticized the “notoriously unclear” reach of the CWA to wetlands and specifically called on Congress to provide clarity:  “allowing aggrieved property owners to sue under the Administrative Procedure Act is better than nothing, but only clarification of the reach of the Clean Water Act can rectify the underlying problem.”  While this case addresses compliance orders issued pursuant to the CWA, programs such as the Resource Conservation and Recovery Act and the Clean Air Act also provide EPA with authority to issues administrative compliance orders.  The reasoning here has the potential to be applied to compliance orders issued pursuant to other statutes.

To view a complete PDF of the March/April 2012 issue of the Environmental Letter, click HERE.

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