Sackett v. EPA (10-1062)

Oral argument: Jan. 9, 2012

Appealed from: United States Court of Appeals for the Ninth Circuit (Sep. 17, 2010)

After Petitioners Chantell and Michael Sackett began construction on their land, they received a compliance order from Respondent, the Environmental Protection Agency, informing them that their construction project violated the Clean Water Act because it filled in protected wetlands. The Sacketts sought pre-enforcement judicial review of the compliance order under the Administrative Procedure Act, but were denied. The Sacketts assert that Congress intended to provide for pre-enforcement judicial review, and that without such review, the compliance order violates their due process rights. The Environmental Protection Agency maintains that Congress intended to preclude judicial review of compliance orders under the Administrative Procedure Act because compliance orders are not self-executing. The Environmental Protection Agency argues that sufficient procedural safeguards exist under the Clean Water Act to provide adequate review before any penalties are enforced. The Supreme Court's decision will impact the ability of regulated parties to seek review of compliance orders, and will determine what methods the Environmental Protection Agency can utilize to respond to environmental emergencies.

Question presented

Chantell and Michael Sackett own a small lot in a built-out residential subdivision that they graded to build a home. Thereafter, the Sacketts received an Administrative Compliance Order from the Environmental Protection Agency claiming that they filled a jurisdictional wetland without a federal permit in violation of the Clean Water Act. At great cost, and under threat of civil fines of tens of thousands of dollars per day, as well as possible criminal penalties, the Sacketts were ordered to remove all fill, replace any lost vegetation, and monitor the fenced-off site for three years. 

The Sacketts were provided no evidentiary hearing or opportunity to contest the order. And, the lower courts have refused to address the Sacketts' claim that the lot is not subject to federal jurisdiction. Do Petitioners have a right to judicial review of an Administrative Compliance Order issued without hearing or any proof of violation under Section 309(a)(3) of the Clean Water Act?

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Issue

Does a person who was issued a compliance order by the Environmental Protection Agency have the right to judicial review of the order prior to Environmental Protection Agency enforcement?

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Facts

In 2007, Chantell and Michael Sackett purchased an undeveloped, residential plot in a subdivision near Priest Lake, Idaho. See Brief for Petitioners, Chantell and Michael Sackett at 6; see Brief for Respondent, Environmental Protection Agency ("EPA") at 6. In preparation for construction, they filled in the majority of their property with dirt and rock. See Sackett v. EPA, 622 F.3d 1139, 1141 (9th Cir. 2010). However, six months later, the Environmental Protection Agency (“EPA”) issued a compliance order to the Sacketts alleging they filled in wetlands on their property without a permit in violation of the Clean Water Act (“CWA”). See id. The EPA’s initial order required the Sacketts to restore the land to its original condition, and provided for possible civil and administrative fines of over $30,000 per day if the Sacketts failed to comply. See id. 

The Sacketts requested a discretionary hearing from the EPA to contest the EPA's determination that their land was subject to the CWA. See id. at 1141. The Sacketts intended to argue that their property does not contain wetlands as defined in the CWA. See Brief for Petitioners at 9. The EPA denied their request for a hearing, and the Sacketts then filed suit in the United States District Court for the District of Idaho. See Sackett v. EPA, 622 F.3d at 1141. The Sacketts alleged that the EPA’s compliance order: 1) was arbitrary and capricious under the Administrative Procedure Act ("APA"), 2) violated their due process rights, and 3) was based on an unconstitutionally vague statutory standard. See id. The District Court granted the EPA’s motion to dismiss for lack of subject-matter jurisdiction, determining that the CWA precludes judicial review of the compliance order prior to EPA enforcement. See id.

The Sacketts then appealed to the United States Court of Appeals for the Ninth Circuit. See Sackett v. EPA, 622 F.3d at 1141. The Ninth Circuit noted that the CWA does not expressly provide for pre-enforcement judicial review. See id at 1143. In affirming the district court’s finding that pre-enforcement review of compliance orders under the CWA is precluded, the Ninth Circuit relied on Congress’ intent to promote rapid responses to environmental harm without the delay of litigation. See id. at 1144. Further, the court recognized that all other circuit courts addressing the question of pre-enforcement review under the CWA have found that review precluded. See id. at 1143.

The Ninth Circuit noted that the EPA can only bring enforcement actions based on violations of the CWA, not violations of a compliance order per se. See Sackett v. EPA, 622 F.3d at 1145. Thus, the court interpreted the CWA’s language to mean that the Sacketts would not be subject to fines unless the EPA could prove the Sacketts had violated the CWA after initiation of an enforcement action in a district court. See id. The Ninth Circuit held that the Sacketts had not been denied effective access to judicial review. See id. at 1146–47.

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Discussion

The Supreme Court will decide whether parties can seek judicial review of administrative compliance orders issued without a hearing under Section 309(a)(3) of the Clean Water Act (“CWA”) prior to the EPA commencing an enforcement action.

Judicial Workload and Administrative Discretion 

The Sacketts contend that judicial review of compliance orders will not unduly burden courts or the EPA. See Brief for Petitioners at 47–48. They argue that judicial review will benefit both the EPA and the regulated community by resolving disputes early and preventing unnecessary administrative proceedings. See id. at 48. The National Association of Home Builders argues that, because the definition of wetlands in the CWA is unclear, denying judicial review for compliance orders based upon this term creates a significant risk that the Sacketts (and others like them) will be erroneously deprived of their rights. See Brief of Amici Curiae for National Association of Home Builders et al. in Support of Petitioners at 36–37. Moreover, the Sacketts assert that judicial review will not greatly increase the number of lawsuits. See Brief for Petitioners at 48. The Sacketts contend that most parties deal with the EPA on a regular basis and will prefer to maintain an amicable relationship by negotiating rather than suing. See id. Additionally, the Sacketts argue that judicial review of administrative compliance orders will not hinder the EPA’s ability to respond quickly to environmental hazards, since the EPA can use other enforcement tools for emergencies. See id. at 46–47. The Chamber of Commerce asserts that the regulated individual may suffer serious deprivation that outweighs the EPA's interest in requiring immediate compliance when the environmental risk is low, as in this case. See Brief of Amicus Curiae the Chamber of Commerce ("Chamber of Commerce") in Support of Petitioners at 17–18.

In contrast, the EPA contends that compliance orders help regulated parties comply with the CWA before risking potential civil liability in an enforcement action. See Brief for Respondent at 22. The EPA emphasizes that issuing a compliance order may begin a discussion between the regulated party and the EPA about the disputed facts and remedies without needing to go to court. See id. at 17. The EPA maintains that allowing such discussion benefits the regulated community, preserves the EPA's discretion, and reduces the burden on courts by narrowing the questions brought before them. See id. at 37–39. The EPA argues that requiring judicial review before an enforcement action would reduce the agency’s ability to concentrate its resources on serious environmental hazards. See id. at 22. The EPA asserts that judicial review would force the agency into litigation instead of directing its administrative resources toward impending environmental dangers. See id. at 22–23. The EPA also maintains that judicial review of advisory agency orders must be precluded to preserve agency discretion. See id. at 23.

Potential Burdens on Regulated Entities

According to the Chamber of Commerce, the significant fines stipulated in compliance orders force entities to risk high financial penalties. See Brief of the Chamber of Commerce at 8–9. The Chamber of Commerce contends that these fines can reach $70 million if the EPA waits five years to bring an enforcement action. See id. at 9. Because of this high financial risk, the Chamber of Commerce claims that most regulated parties will not risk waiting for an enforcement proceeding. See id. at 10. Under these circumstances, the Chamber of Commerce argues, the EPA effectively adjudicates guilt without due process. See id. at 7. Given the apparent difficulty of determining what meets the definition of wetlands under the CWA, the Chamber of Commerce asserts that most parties will comply, even if they disagree with the EPA, rather than risk litigation. See id. at 12–13.

In response, the EPA emphasizes that a compliance order itself does not impose any burdens. See Brief for Respondent at 17. The EPA maintains that, although the order lists possible fines, any actual monetary penalty will be assessed only after a court has addressed the relevant equitable circumstances and found a party guilty of violating the CWA. See id. at 15–16. Moreover, the EPA asserts that the Sacketts could have contacted the EPA through informal procedures to discuss the compliance order. See id. at 17. The EPA argues that the Sacketts could have reached an agreement with the EPA and therefore would not have faced the risk of fines and litigation. See id. at 18. Finally, the EPA maintains that the Sacketts could have asked the United States Army Corps of Engineers for an after-the-fact permit to fill their land. See id. at 31–32. The Corps and the EPA work together to issue permits for filling land subject to the CWA. See id. The EPA argues that an after-the-fact permit would have validated the Sacketts' activities and protected them from an enforcement action. See id. at 31–32.

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Analysis

The Clean Water Act (“CWA”) does not expressly provide for judicial review of EPA compliance orders under the Administrative Procedure Act ("APA"). The Sacketts argue that there is a presumption in favor of judicial review, and that Congress didn't intend to preclude judicial review in cases like theirs. In contrast, the EPA asserts that allowing pre-enforcement judicial review would hinder CWA enforcement processes. The Sacketts argue that, if they cannot obtain judicial review under the APA, their procedural due process rights will have been violated because the EPA compliance order deprived them of fundamental rights without an opportunity for meaningful review. However, the EPA maintains that compliance orders do not add or detract from a recipient's pre-order legal rights and obligations under the CWA. Instead, the EPA maintains that the CWA provides adequate procedural safeguards to protect the Sacketts from the imposition of non-compliance penalties without some sort of plenary review.

Pre-Enforcement Judicial Review under the Administrative Procedure Act

The Sacketts assert that the CWA does not preclude them from seeking judicial review of the compliance order issued by the EPA. See Brief for Petitioners, Chantell and Michael Sackett at 33. The Sacketts argue that Congress intended judicial review to be available under the APA because no intent to preclude such review is "fairly discernible" from the statute itself. See id. at 33–34. Under the APA, pre-enforcement judicial review is available for final agency actions that determine legal rights or obligations, or from which legal consequences flow. See id. at 54.

The Sacketts argue that pre-enforcement judicial review should be available for an EPA compliance order. See id. The Sacketts maintain that a compliance order constitutes "final agency action" because there are no further processes associated with it. See id. at 55. The Sacketts argue that the EPA's issuance of the order is the final result of the agency's processes, and represents the end of administrative process. See id. at 55. The Sacketts argue that, like an injunction, the compliance order imposes severe civil penalties for non-compliance; they maintain that the order itself creates legal consequences and determines legal rights. See id. at 39, 55.

However, the EPA asserts that compliance orders are not final agency action. See Brief for Respondent at 24. The EPA maintains that, to constitute a final agency action, an action "must mark the consummation of the agency's decisionmaking process . . . [and] the action must be one by which rights or obligations have been determined, or from which legal consequences will flow." See id. (citations omitted). The EPA argues that, because recipients can still consult with the EPA and propose alternative solutions to alleged violations, a compliance order cannot be characterized as final agency action. See id. at 24–25. Additionally, the EPA argues that a compliance order does not impose new legal obligations. See id. at 27–28. The EPA contends that a compliance order merely articulates the legal obligations imposed by the CWA. See id. at 28–29. The EPA acknowledges that a compliance order could impose penalty fees on the Sacketts if they refuse to comply, or could complicate the process of getting an after-the-fact permit; however, the EPA maintains that the Sacketts would only have to pay non-compliance penalties if a court finds an actual violation of the CWA has occurred. See id. at 30–31.

The Sacketts assert that Congress intended compliance orders to be subject to judicial review under the APA. See Brief for Petitioners at 33. The Sacketts acknowledge that some administrative orders are not subject to judicial review; however, they assert that EPA compliance orders are different because, unlike unreviewable administrative orders, compliance orders are not based on the discretion of a government actor. See id. at 40. Because the CWA does not provide for any agency review under the CWA, the Sacketts assert that Congress must have intended judicial review to be available under the APA; prohibiting any review would be a violation of due process. See id. at 38–40. Additionally, the Sacketts note that Congress modeled the CWA structure and enforcement procedure after the Clean Air Act, which courts have interpreted to enable judicial review of compliance orders. See id at 42, 49 The Sacketts argue that, by analogy, compliance orders issued under the similarly structured CWA should be subject to judicial review. See id.

The EPA, on the other hand, argues that Congress created the enforcement process for the CWA in an effort to make it more efficient, and created compliance orders to provide a means to avoid judicial action through voluntary compliance. See Brief for Respondent at 39–40. Therefore, the EPA argues that subjecting compliance orders to judicial review would undermine the intent of conserving judicial resources at this stage in the enforcement process. See id. at 39. Moreover, the EPA challenges the Sacketts' analogy between the CWA and Clean Air Act (and other environmental statutes); the EPA argues that Congressional amendments of those statutes do not indicate that Congress intended to permit judicial review of compliance orders under the CWA. See id. at 41.

Due Process Rights

The Sacketts assert that a denial of judicial review of the compliance order violates their due process rights because they will have been deprived of fundamental rights with no opportunity for meaningful judicial review. See Brief for Petitioners at 17, 19. The Sacketts assert that the EPA compliance order has violated their right to exclude others from their property and to be safe from unreasonable searches, and has deprived them of the only economically viable use of their property. See id. at 17–19. The Sacketts contend that these rights have been violated without an opportunity for meaningful judicial review. See id. at 20–21.

The Sacketts argue that, under a test laid out by the Supreme Court in Federal Deposit Insurance Corporation v. Mallen, the lack of a post-order hearing is a violation of due process. See Brief for Petitioners at 20–21. The Court in Mallen laid out two factors for determining the justifiable length of delay in reviewing a deprivation of property rights: the importance of the property interest, and the harm to that interest caused by the delay. See Federal Deposit Insurance Corp. v. Mallen, 486 U.S. 230, 242 (1988).  Arguing that the private interest in their land is significant, and that the harm caused by delay is grave, the Sacketts conclude that the lack of a post-order hearing violates due process. See Brief for Petitioners at 20–21. Additionally, the Sacketts contend that there are no adequate opportunities for review under the CWA, if such review can only be triggered by EPA enforcement action following a refusal to comply with the compliance order. See id. at 23–24.

The EPA asserts that issuing a compliance order does not add or detract from any legal rights already possessed by the Sacketts under the CWA; the compliance order does not determine what uses of land are permissible under the CWA. See Brief for Respondent at 45. Instead, the EPA maintains that any deprivation would occur only after judicial review in an enforcement action. See id. at 28–30. The EPA argues that, if a court were to find that the property is not subject to the CWA, the compliance order would not be valid, and there would be no requirement to remediate the land or pay non-compliance fees; if, on the other hand, the property is subject to the CWA, the obligations arose under the CWA and were merely expressed through the compliance order. See id. at 30. Additionally, the EPA notes that, in Thunder Basin Coal Company v. Reich, the Supreme Court held that statutes imposing non-compliance fines are constitutional as long as they do not impose penalties automatically. See id. at 48; Thunder Basin Coal Co. v. Reich, 510 U.S. 200, 218 (1994). The EPA maintains that, because the compliance order is not self-executing and is subject to various types of review, the Sacketts did not suffer an unconstitutional deprivation. See id. at 48–49.

The EPA maintains that pre-enforcement judicial review is unnecessary because the CWA provides for review before the recipients of a compliance order must pay any fees. See Brief for Respondent at 49. The EPA notes that penalties are only imposed after plenary review of the allegations and a judicial determination that there has been a CWA violation. See id.. The EPA also notes that judges have discretion to decide the amount of penalties, and can take into account any "good faith" efforts on the part of petitioners. See id. at 49–50. The EPA notes that the Sacketts had the opportunity to seek an after-the-fact permit or attempt to modify the compliance order through consultation with the EPA. See id. at 50, 51. Finally, the EPA points out that the Sacketts are responsible for their difficulties because they neglected to apply for a permit before beginning the construction that is the subject of the alleged CWA violation. See id. at 52.

The Sacketts reject the argument that sufficient safeguards exist under the CWA, asserting that neither the judicial oversight of a later enforcement action nor the permitting process provide meaningful review. See Brief for Petitioner at 29. The Sacketts note that an adjustment of civil penalties for non-compliance depends on a judge's mercy, and that even a 99% reduction in their four year penalty would still leave over $500,000 in civil penalties, a large monetary burden for individuals like the Sacketts. See id. at 30. Moreover, the Sacketts argue that, even if they were able to apply for a permit despite the unresolved compliance order, challenging the denial of an after-the-fact permit would not allow them to challenge the compliance order itself. See id. The Sacketts also assert that applying for a permit would be so expensive that the costs would outweigh the value of the proposed homebuilding. See id.

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Conclusion

In 2007, the Sacketts graded land on their property in preparation for building a home in a residential area near Priest Lake, Idaho. A few months later, the Environmental Protection Agency issued the Sacketts a compliance order, stating that they had filled in federal wetlands in violation of the Clean Water Act. Unable to secure a discretionary hearing with the EPA, the Sacketts sought judicial review of the compliance order under the Administrative Procedure Act prior to the institution of an enforcement action by the EPA. The Sacketts claim that, without such review, their due process rights will be violated because the EPA will have deprived them of fundamental rights without a hearing. In opposition, the EPA argues that Congress intended to preclude pre-enforcement judicial review because compliance orders are not final agency action and because sufficient procedural safeguards exist under the Clean Water Act to provide adequate review before any penalties are enforced. The Supreme Court's decision will influence the burdens regulated individuals and businesses may face, and may impact judicial workload and the EPA's ability to respond quickly to environmental hazards.

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Authors

Prepared by: Cheryl Blake and Jennifer Uren

Edited by: Kelly Halford

Additional Sources

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