Environmental Practice
APRIL 2012
U.S. Supreme Court Holds that Clean Water Act Administrative Compliance Order can be Challenged in Court
BEIJING
In its March 21, 2012, decision in No. 10-1062, Sackett v. EPA, the Supreme Court of the United States unanimously held that an administrative compliance order EPA issued under the Clean Water Act was immediately reviewable in federal court under Chapter 7 of the Administrative Procedure Act (“APA”) even though the order purported to require only “voluntary compliance” subject to further administrative consideration. Until the Court’s ruling in Sackett, a recipient of an EPA compliance order under the Clean Water Act typically had only two options: comply with the order, which might include costly expenditures, or risk hefty penalties for noncompliance while waiting for the Agency to initiate enforcement litigation. In Sackett, the Court held that the EPA compliance order at issue in the case was final agency action subject to judicial review, and that the Clean Water Act does not preclude such review.
CHARLOTTE CHICAGO GENEVA HONG KONG HOUSTON LONDON
The case arose in the spring of 2007, when Chantell and Michael Sackett filled areas of a vacant residential lot with gravel and dirt in preparation for construction of a new home. EPA issued an administrative compliance order to the Sacketts, stating that their residential property qualified as a wetland under the Clean Water Act, and that they violated the Act when they filled the land without a permit. The compliance order required the Sacketts to remove the fill material, restore the wetland to its original condition, and monitor the site for three years. If the Sacketts failed to comply with the order, they faced penalties of up to $75,000 per day if found guilty in an EPA enforcement action. The Sacketts asked EPA for a hearing to reconsider its classification of their land and the terms of the compliance order, but EPA refused.
LOS ANGELES MOSCOW NEW YORK NEWARK PARIS
The Sacketts filed suit in the U.S. District Court for the District of Idaho, claiming that the compliance order was arbitrary and capricious under section 706(2)(A) of the APA and that the compliance order was issued without a hearing in violation of their due process rights. The District of Idaho dismissed the Sacketts’ claim for lack of subject matter jurisdiction.1 The Sacketts appealed to the U.S. Court of Appeals for the Ninth Circuit, which affirmed, holding that the Clean Water Act precludes pre-enforcement review of administrative compliance orders.2 The U.S. Supreme Court granted certiorari to address whether the Clean Water Act permitted pre-enforcement review of the compliance order, and, if not, whether the Sacketts’ inability to obtain such review would violate their rights under the Due Process Clause of the Fifth Amendment.
SAN FRANCISCO SHANGHAI WASHINGTON, D.C.
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1
Sackett v. U.S. EPA, No. 08-cv-185-N-EJL, 2008 WL 3286801 (D. Id. Aug. 7, 2008).
2
Sackett v. U.S. EPA, 622 F.3d 1139, 1143 (9th Cir. 2010).
2
The Supreme Court did not reach the due process question because it reversed the lower courts and held that the administrative compliance order was final agency action subject to judicial review under the APA. The Court held that EPA’s issuance of the compliance order has “all the hallmarks” of a final agency action because the order “determined ‘rights or obligations,”’ “legal consequences . . . flow from the issuance of the order,” and the order “marks the ‘consummation’ of the agency’s decisionmaking process.” The Court then held that the Clean Water Act does not preclude the judicial review that the APA extends to such final agency action. In doing so, the Court reaffirmed that there is a strong presumption in favor of judicial review of agency action, and declared that nothing in the text of the Clean Water Act overcomes that presumption. Justice Scalia, writing for the Court, stated that “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.”
are satisfied, even where the issuing agency has characterized the challenged action as “non-final” or seeking only “voluntary compliance.” Notwithstanding such characterizations, Sackett supports immediate judicial review of agency orders that, in a court’s independent judgment, exhibit the “hallmarks of finality,” are not realistically subject to further administrative review or suggest that such review would be futile or speculative, and are not issued pursuant to statutory or regulatory provisions that can properly be read to prohibit judicial review.
Sackett does not alter the longstanding rule that the reviewability of a particular administrative order is a case-specific inquiry. And Sackett’s controversial facts, which multiple Justices openly characterized as “outrageous” and “high-handed” at oral argument, may cause lower courts to distinguish the case from more run-of-the-mill compliance order cases.
The decision in Sackett may thus have broad implications for the availability of pre-enforcement judicial review of administrative compliance orders issued under the Clean Water Act and other statutes, notably the Safe Drinking Water Act (“SDWA”).3 EPA has used its authority to issue administrative compliance orders under the SDWA to regulate hydraulic fracturing, but EPA’s postSackett approach to litigation challenging such orders, notably the pending litigation involving Range Resource, suggests that practice may end. On December 7, 2010, EPA issued an emergency administrative compliance order under § 1431(a) of the SDWA ordering Range Resources Corp. to cease alleged ongoing contamination of Texas drinking water from hydraulic fracturing operations. After Range Resources refused to comply, EPA commenced an enforcement action in the U.S. District Court for the Northern District of Texas.4 Range Resources then challenged EPA’s compliance order in the U.S. Court of Appeals for the Fifth Circuit,5 alleging that the judicial review process for emergency administrative compliance orders issued under the SDWA is unconstitutional. On March 29, 2012, following the Supreme Court’s decision in Sackett, EPA withdrew its compliance order, and on March 30, 2012, voluntarily dismissed its enforcement action against Range Resources. Range Resources then voluntarily dismissed its appeal. EPA’s post-Sackett withdrawal of its compliance order and related enforcement proceeding against Range Resources suggests that EPA may be reconsidering its practice of regulating fracking through SDWA administrative compliance orders.
That said, Sackett may increase the availability of judicial review of EPA and other administrative compliance orders under Chapter 7 of the APA because the decision strongly supports review where a court concludes that the finality factors the Court articulated
The Sackett opinion and Justice Alito’s concurrence are also likely to bolster legislative efforts to amend the Clean Water Act, notably recent efforts by Senator Rand Paul (R-KY) and others to curtail the Act’s reach. The Clean Water Act prohibits the discharge of
Justice Alito stated in his concurring opinion that allowing judicial review of compliance orders is appropriate, but that “[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.” Specifically, Justice Alito opined that until Congress clarifies the meaning of “waters of the United States,” the combination of the uncertain reach of the Act and the extreme penalties imposed for violations “leaves most property owners with little practical alternative but to dance to the EPA’s tune.”
Impact of the Decision on Future Litigation and Legislative and Administrative Efforts
Because Sackett did not reach the question whether the unavailability of APA review would violate due process, the opinion would not directly affect litigation under, for example, section 113(h) of Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Last year, the Supreme Court declined to review General Electric Co.’s claim that the preclusion of pre-enforcement judicial review of unilateral administrative orders issued under section 113(h) violated due process. Because the Court relied on the fact that the Clean Water Act does not expressly preclude judicial review, it does not appear that the Sackett decision will impact administrative compliance orders issued under statutes like CERCLA that expressly preclude judicial review.
3
4
U.S. EPA v. Range Resources Corp., No. 3:11-CV-00116-F (N.D. Tex.).
5
Range Resources Corp. v. EPA, No. 11-60040 (5th Cir.). Oral arguments were heard in the case on October 3, 2011
3
dredged or fill material into “navigable waters,” which are defined as “the waters of the United States, including the territorial seas.”6 The Supreme Court most recently interpreted “waters of the United States” in Rapanos v. United States7 to include waters that are relatively permanent and wetlands with a significant nexus to traditional navigable waters. Senator Paul and the co-sponsors of his Defense of Environment and Property Act of 20128 seek to reduce the scope of the Clean Water Act by eliminating the use of the significant nexus test and limiting the definition of “navigable 6
33 U.S.C. § 1362(7).
7
547 U.S. 715 (2006).
8
S.2122, 106th Cong. (2012).
9
H.R.4304, 106th Cong. (2012).
waters” to include only waters that are navigable-in-fact and “permanent, standing, or continuously flowing bodies of water that form geographical features commonly known as streams, oceans, rivers, and lakes that are connected to waters that are navigablein-fact.” The bill was introduced on February 16, 2012 but has not yet advanced to a vote. Rep. Thomas J. Rooney (R-FL) also introduced the an identical version of the bill in the House of Representatives on March 29, 2012.9
If you have any questions regarding any matters discussed in this briefing, please contact any of the Winston & Strawn attorneys listed below or your usual Winston & Strawn contact. Charlotte Nash Long Chicago Eleni Kouimelis Doressia Hutton Stephanie Sebor Washington, D.C. Jay Holloway Elizabeth Papez May Wall Liz Williamson
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