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In a unanimous decision released on March 20, 2012, the United
States Supreme Court held that administrative compliance orders
issued by the United States Environmental Protection Agency
("EPA") pursuant to the Clean Water Act ("CWA")
are subject to pre-enforcement judicial review. This decision is
likely to have a considerable impact on the EPA's future
enforcement of environmental laws, providing new avenues for
landowners to challenge the EPA and possibly delaying certain
enforcement actions by the EPA.
Michael and Chantell Sackett, the plaintiffs in Sackett v.
Environmental Protection Agency, 566 U.S. ____ (2012),
purchased a residential lot that was separated from an inland lake
by several developed lots. The Sacketts received an administrative
compliance order from the EPA after filling a portion of their lot
with dirt and rock in order to construct a home. The compliance
order stated that the Sacketts' property was a
federally-regulated wetland under the CWA and that filling the
property violated the CWA. It ordered the Sacketts to restore the
lot to its prior condition pursuant to an EPA-established
Administrative Work Plan and to allow the EPA access to the lot and
all records concerning the lot. If the Sacketts did not comply,
they faced fines of up to $75,000 per day.
An administrative compliance order, such as that issued to the
Sacketts, is a tool used frequently by the EPA to compel compliance
with a number of environmental laws, including the CWA, Clean Air
Act ("CAA"), Resource Conservation and Recovery Act
("RCRA"), and Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA"), without first
commencing a lawsuit. If a party fails to comply with the
administrative compliance order, then the EPA may bring an
enforcement action in court, seeking daily penalties for both the
alleged violation of the law and the subsequent violation of the
order. However, the prospect of incurring hefty fines usually
prompts the receiving party to comply with the terms of the
compliance order without judicial enforcement.
The Sacketts, believing that their property was not a
federally-regulated wetland, wished to appeal the compliance order
immediately. However, they soon discovered that the EPA did not
have a formal appeal process for compliance orders. Instead, the
Sacketts filed a lawsuit, seeking judicial review pursuant to the
Administrative Procedures Act ("APA"), and alleging that
due process requires the EPA to have a system for pre-enforcement
appeals of compliance orders. The district court ruled that it
lacked jurisdiction over pre-enforcement review of the EPA's
compliance orders, and the Ninth Circuit Court of Appeals
affirmed.
The Supreme Court unanimously overruled the lower courts,
holding that an administrative compliance order issued by the EPA
under the CWA is "final" for purposes of judicial review
under the APA, and that the CWA contained no "express"
language barring pre-enforcement judicial review of the compliance
order. Thus, the Sacketts could challenge the administrative
compliance order before the EPA brought an action in court to
enforce it.
While the decision in Sackett dealt with the CWA, it is
likely to affect enforcement with respect to many federal
environmental laws. Neither RCRA nor the CAA currently contain an
express bar on pre-enforcement judicial review of compliance
orders, and thus it is likely that landowners will be able to
challenge any future orders issued pursuant to those acts in court
prior to the commencement of an EPA enforcement action. By
contrast, CERCLA does contain a direct statutory bar on
pre-enforcement judicial review. Since the Court did not reach the
constitutional due process issue brought by the Sacketts, at least
for now it appears that there will continue to be no
pre-enforcement review available for administrative compliance
orders issued under CERCLA.
The EPA has already indicated that the Supreme Court's
decision means that the EPA will issue fewer administrative
compliance orders, opting instead to immediately commence
administrative hearings or federal litigation. Formal litigation
may be more costly and resource-intensive for both landowners and
the EPA. Nonetheless, the Supreme Court's decision is a
positive development for commercial real estate developers and
landowners. Landowners will feel less pressure to simply comply
with a questionable administrative order to avoid incurring hefty
fines when an immediate legal challenge is available. Further, by
controlling the timing of judicial review of the order, a landowner
can decrease any lost time on a particular project that would have
occurred by waiting for the EPA to bring an enforcement action.
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