In a unanimous decision, the U.S. Supreme Court overturned the lower courts’ ruling and held that Michael and Chantell Sackett, Petitioners, may bring a civil action under the Administrative Procedure Act (APA) to challenge the Environmental Protection Agency’s (EPA) issuance of an administrative compliance order for alleged violation of Section 309 of the Clean Water Act (CWA), 33 U.S.C. section 1319, requiring Petitioners to take certain actions to restore their property to its natural condition or be faced with penalties up to $75,000 per day.  (Sackett v. EPA, 566 U.S. ___ (2012).)

Petitioners, who own a 2/3-acre residential lot in Bonner County Idaho near Priest Lake used dirt and rock to fill part of their lot prior to building a home.  Some months later, Petitioners received a compliance order from the EPA with findings and conclusions which listed several violations of the CWA.  On the basis of the findings and conclusions, the Petitioners were required to restore the site in accordance with an EPA Work Plan.  Petitioners did not believe their property was subject to the CWA and requested a hearing with the EPA, which they were denied.  The Petitioners then brought suit in the District Court, claiming that issuance of the compliance orders was arbitrary and capricious under the APA and deprived them of “life, liberty or property, without due process,” in violation of the Fifth Amendment.  The District Court dismissed for lack of subject matter jurisdiction.  The Ninth Circuit Court of Appeals affirmed and concluded that the CWA precludes pre-enforcement judicial review of compliance orders and does not violate due process under the Fifth Amendment.

The Supreme Court considered whether the compliance order was a “final agency action” under the APA.  The Court determined that the compliance order represented the conclusion of the agency’s consideration as: a) the Petitioners were required to restore their property;  b) legal consequences flowed from the issuance of the order;  c) the compliance order exposed Petitioners to double penalties in a future enforcement proceeding;  d) Petitioners were not allowed to receive a permit for fill with the U.S. Army Corps of Engineers (Corps’ regulations  do not allow the issuance of a permit with an outstanding EPA compliance order); e) Petitioners were not granted a hearing with EPA, and thus, the findings and conclusions of the compliance order were not subject to further agency review;  and f) the APA’s judicial review provision requires that a person have no other adequate remedy in court.  The Court stated that the compliance order “has all the hallmarks of APA finality” and therefore, is subject to judicial review.

The Court stressed that it was not deciding the merits of Petitioners case, only that they had a right to file a complaint now that the EPA’s compliance order is final.  Justice Ginsberg wrote in a separate opinion that she had concurred with the Court’s opinion on the understanding that the merits of the case were still open to debate.

In a separate concurring opinion, Justice Alito argued that “in a nation that values due process, not to mention private property, such treatment [by the EPA] is unthinkable.”  Justice Alito also took this opportunity to call out Congress, the EPA and the Corps for their failure to provide “clarity and predictability” in dealing with the CWA’s definition of “waters of the United States.”  Justice Alito opined
“[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.”

Key Points:

The Court’s ruling gives property owners relief from the EPA’s  practice of issuing “compliance orders” to property owners notifying them that their property is a federally protected wetland, and requiring them to stop using their land and restore it to its prior condition, under penalty of  severe fines.  In many cases, the EPA may then wait months or years before actually suing the property owner to collect the fines, which accrue daily. In the meantime, the EPA has operated under the belief that the property owners cannot challenge issuance of the compliance order in court, and instead must wait until the EPA sues them to collect the fines, which may have accrued to millions of dollars.   Under the Court’s ruling, CWA compliance orders are final agency actions, and are subject to pre-enforcement judicial review under the APA.

Written By: Tina Thomas and Michele Tong
For questions relating to this blog post or any other California land use, environmental and/or planning issues contact Thomas Law Group at (916) 287-9292.

The information presented in this article should not be construed to be formal legal advice by Thomas Law Group, nor the formation of a lawyer/client relationship. Readers are encouraged to seek independent counsel for advice regarding their individual legal issues.