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April 19, 2012

Property Owner May Challenge EPA’s Clean Water Act Compliance Order Under the Administrative Procedure Act

Property Owner May Challenge EPA’s Clean Water Act Compliance Order Under the Administrative Procedure Act

Sackett v. Environmental Protection Agency [U.S. Supreme Court No. 10-1062, decided March 21, 2012]

By Andrea A. Matarazzo

Michael and Chantell Sackett purchased residential property in Bonner County, Idaho.  Their property lies near Priest Lake, but is separated from the lake by several lots with permanent structures.  The Sacketts wanted to build a house on their property and filled half an acre with dirt and rock to prepare for construction.  Months later, the Environmental Protection Agency (“EPA”) served them with a compliance order stating that their property was subject to the Clean Water Act (“CWA”) and that they were in violation by filling in that half acre.  The EPA stated the lot contained “navigable waters” and that the construction project violated the CWA.  The CWA states, “the discharge of any pollutant by any person … without a permit, into ‘navigable waters,’” is  prohibited.  The civil penalty may not exceed $37,500 per day for each violation.  This amount doubles when the EPA prevails against a person who has been issued a compliance order but has failed to comply.  The Sacketts requested a hearing from the EPA but were denied.


The Sacketts filed suit seeking declaratory and injunctive relief in Federal District Court on the basis that the compliance order was “arbitrary [and] capricious” under the Administrative Procedure Act (“APA”), and that they were deprived constitutional due process in violation of the Fifth Amendment.  The District Court dismissed the Sacketts’ claims for want of subject matter jurisdiction, and they appealed to the Ninth Circuit.  The Ninth Circuit affirmed the District Court’s ruling, indicating that the CWA “precluded pre-enforcement judicial review of compliance orders and that such preclusion did not violate due process.”  The Sacketts sought relief in the U.S. Supreme Court under Chapter 7 of the APA, which provides for review of “final agency action for which there is no other adequate remedy in a court.”


The U.S. Supreme Court considered whether the Sacketts could bring a civil action under the APA to challenge the EPA’s compliance order.  In so doing, the Court considered whether the compliance order was the EPA’s final agency action.  Pursuant to the compliance order, the Sacketts were to restore their property, there was the possibility of double penalties in future proceedings, and they could not obtain a permit for their fill from the Army Corps of Engineers.  When the Sacketts unsuccessfully requested an EPA hearing, the findings that the compliance order contained were not subject to further agency review.


The APA’s judicial review provision requires that the individual seeking APA review of final agency action have “no other adequate remedy in a court.”  In CWA enforcement cases, judicial review is by way of a civil action by the EPA.  The Sacketts could not initiate that process and each day that they waited for the EPA to file suit, they accrued an additional $75,000 in liability.


In ruling that the Sacketts were entitled to a remedy, the Court noted that nothing in the CWA expressly precludes judicial review under the APA or otherwise, and concluded as follows:


The APA’s presumption of judicial review is a repudiation of the principle that efficiency of regulation conquers all.  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.  Compliance orders will remain an effective means of securing prompt voluntary compliance in those many cases where there is no substantial basis to question their validity.


We conclude that the compliance order in this case is final agency action for which there is no adequate remedy other than APA review, and that the Clean Water Act does not preclude that review. We therefore reverse the judgment of the Court of Appeals and remand the case for further proceedings consistent with this opinion.


Authored by:

Andrea A. Matarazzo

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