On Monday, January 9, 2012, the United States Supreme Court heard oral arguments in Sackett v. United States Environmental Protection Agency, No. 10-1062. According to news agencies attending the oral argument, the Justices seemed skeptical of EPA’s contention that its administrative compliance orders issued under the Clean Water Act were not subject to judicial review until and unless EPA brought an enforcement action. Reportedly, Justice Antonin Scalia called EPA’s practice of dealing with private property to be high-handed, while Justice Samuel Alito considered EPA’s actions to be “outrageous.” The decision, expected this Spring, would impact not only the Clean Water Act enforcement authority, but also, the Clean Air Act, and possibly orders issued under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA or “Superfund”) as well.
The case involves an administrative compliance order (ACO) issued by the EPA under the Clean Water Act (CWA) to two ordinary citizens. ACO’s are a principal civil enforcement tool used by the EPA, and they require parties to undertake response action when the EPA believes a violation of the CWA has occurred. Under the CWA, EPA may issue compliance orders “on the basis of any information available,” which can include an anonymous phone tip or a newspaper article. Under the express terms of the CWA, a recipient’s failure to comply with the order can subject the recipient to penalties of $37,500 per day. The issue before the Supreme Court on Monday centered on whether these ACO’s are constitutional if timely judicial review is precluded.
The Petitioners, Michael and Chantell Sackett, are owners of an undeveloped parcel of land in Idaho, for which they paid $23,000. In 2007, they filled a portion of the land in preparation for building their home. The EPA, however, determined that the Sacketts had violated the CWA because their parcel contained a wetland. Under the CWA, a permit is required for filling a wetland. The EPA issued an ACO to the Sacketts, directing them to restore their land to its original condition and remove the fill material. The Sacketts petitioned the EPA for a hearing to challenge the agency’s determination that their parcel contained a wetland, but the agency refused, claiming that the Order was not subject to judicial review until and unless EPA sought to enforce the Order in court.
The questions presented to the U.S. Supreme Court on Monday were: (1) whether the Sacketts can seek pre-enforcement judicial review of the ACO pursuant to the Administrative Procedure Act (APA), and (2) if not, whether the Sacketts’ inability to seek pre-enforcement judicial review of the ACO violates their due process rights under the Constitution. The Petitioners argued in their brief that Congress intended to allow review of ACO’s under the APA when it enacted the CWA. Not only has the Supreme Court held that judicial review of agency action is presumed, but if the CWA was meant to preclude judicial review, it has to be “fairly discernible” from the statute. The APA provides that, absent a statutory prohibition, final agency action is reviewable. Interestingly, CERCLA contains an express provision prohibiting pre-enforcement review of ACOs. The CWA, however, does not.
The EPA, on the other hand, argued in its brief that an ACO does not constitute “final agency action” such that judicial review would be presumed or available. Further, the EPA argued that Congress intended to preclude pre-enforcement judicial review of ACOs. Because the CWA authorizes the EPA to either file a civil action or issue an ACO when it determines that a regulated entity is in violation of the CWA, EPA posits that Congress intended the agency to have an enforcement option that obviates the need for judicial intervention. Pre-enforcement judicial review would eliminate that choice.
The Petitioners also argued that the ACO violated their due process rights under the Constitution. For one, the Petitioners argued, the ACO deprived them of the only permitted economically viable use of their land – building a home. It also denied them the right to exclude others from their property – principally EPA employees who under the ACO can “move freely” on the property. The EPA, on the other hand, argued in its brief that the Court should not consider the Petitioners argument on this point because the Petitioners did not raise this argument before the District Court or the 9th Circuit Court of Appeals. Nevertheless, EPA also argued that the ACO did not deprive the Sacketts of any property interest, and that the CWA contains adequate procedural safeguards before petitioners may be subject to penalties. Specifically, any penalty would be imposed only after EPA enforced the order and a judge found an underlying violation of the CWA. Moreover, judges have significant discretion regarding the appropriate amount of penalties. The EPA also argued that the Sacketts could have asked the U.S. Army Corp of Engineers to consider the possible issuance of a fill permit, the denial of which the Sacketts could have sought judicial review.
The Petitioners argued that these modes of review put forth by the EPA are not meaningful. First, judicial review is not meaningful if the Sacketts are subject to a “Damoclean Sword,” never sure of whether or when the EPA will seek enforcement and penalties, which in the Sacketts’ case could be over $40 million dollars. Even a 99% reduction in the maximum penalty, the Petitioners noted, would be a hefty fine. Moreover, the Petitioners argued, the permitting process is not a remedy because in challenging a permitting decision, the Sacketts could not challenge the compliance order itself. The permitting process is also expensive (the average cost of an individual CWA permit is over $250,000), especially for two ordinary citizens like the Sacketts.
Interestingly, although the Sacketts are ordinary citizens, most of the amici on their side are business interests. In fact, three weeks before the Supreme Court granted review of the Sacketts’ case, it denied certiorari to General Electric Co., who had put forth a nearly identical legal grievance under CERCLA. If the Sacketts prevail, the decision will hugely impact the way EPA uses enforcement tools against corporations and other businesses. There are no amici on EPA’s side.