U.S. Supreme Court to Hear Challenge to Clean Water Act Bar on Pre-Enforcement Review

The U.S. Supreme Court has agreed to review a Ninth Circuit decision barring defendants from obtaining pre-enforcement review of EPA administrative compliance orders issued pursuant to the Clean Water Act (“CWA” or “Act”). Sackett v. EPA.[1] “Pre-enforcement review” refers to the ability of a defendant to obtain judicial review of administrative compliance orders without having to wait to be sued by EPA in an enforcement action. The Supreme Court’s decision to grant certiorari in the CWA case stands in contrast to its decision a month earlier not to hear a case challenging CERCLA’s pre-enforcement bar.[2]

Background

The CWA prohibits the discharge of dredged or fill material into waters of the United States without a § 404 permit.[3] While the U.S. Army Corps of Engineers (“Corps”) administers the § 404 permitting program, the Corps shares enforcement duties for unpermitted discharges of dredged or fill material with EPA.

When EPA[4] determines that an unauthorized discharge has occurred, it has three enforcement options: (1) assess an administrative penalty;[5] (2) initiate a civil enforcement action in U.S. district court;[6] or (3) issue an administrative compliance order directing the violator to remove the discharged material.[7] A party that fails to comply with an administrative order is potentially liable for up to $37,500 for each day of non-compliance.[8]

The petitioners, Chantell and Michael Sackett, own a 0.63 acre undeveloped parcel in Idaho. In 2007, the Sacketts filled a portion of their property without a CWA permit. EPA determined that the fill violated the CWA because the parcel contained a jurisdictional wetland and issued an administrative compliance order requiring the Sacketts to remove the fill and restore the parcel to its original condition. The Sacketts petitioned EPA for a hearing to challenge the wetland determination and, after EPA refused, filed suit in district court. Citing the pre-enforcement bar, the district court dismissed the Sackett’s case for lack of jurisdiction, and the Sacketts appealed to the Ninth Circuit.

The Ninth Circuit’s Decision

In the Ninth Circuit, the Sacketts raised two arguments: (1) whether the APA provides for pre-enforcement review of CWA compliance orders; and (2) whether due process requires EPA to allow pre-enforcement review.

The Ninth Circuit first considered whether the Sacketts could challenge the order under the APA. Section 704 of the APA provides for judicial review of “[a]gency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court.”[9] Judicial review is unavailable under the APA, however, if the agency acts according to a statute that “preclude[s] judicial review.”[10] While the CWA does not provide for review of EPA administrative compliance orders, it also contains no bar against pre-enforcement review.[11] Although a statute is presumed to allow for judicial review of agency action, that presumption may be overcome where “the congressional intent to preclude judicial review is fairly discernible in the statutory scheme.”[12]

Focusing on the CWA’s structure, its legislative history, and the objectives of the overall statutory scheme, the Ninth Circuit joined the Tenth, Seventh, Sixth, and Fourth Circuits in concluding that the congressional intent underlying the CWA bars pre-enforcement review.[13] The court posited that the CWA’s administrative-order scheme sought to remedy environmental problems quickly, without the delay of litigation. According to the Ninth Circuit, pre-enforcement review would not only frustrate this goal, but would also negate EPA’s statutory choice between filing an initial suit in district court and acting unilaterally through an administrative order.[14]

The Ninth Circuit also rejected the Sacketts’ due process arguments. The court concluded that due process was satisfied because: (1) judicial review of the order was available once EPA brought an enforcement action; (2) nothing barred the Sacketts from seeking a § 404 permit to fill their property (the denial of which would could be reviewable in district court); and (3) the CWA authorizes the court, not EPA, to impose penalties based on a “wide range of case-specific equitable factors.”[15]

U.S. Supreme Court Grants Certiorari

The Sacketts’ certiorari petition raised two primary arguments: (1) delaying judicial review while waiting for EPA to bring an enforcement action violates due process in light of the CWA’s penalty scheme for non-compliance; and (2) the Ninth Circuit’s decision conflicts with an Eleventh Circuit decision involving a similar compliance order provision in the Clean Air Act (“CAA”) – TVA v. Whitman.[16]

The petition acknowledged that, while a delay in judicial review does not automatically violate due process, the “practical effect” of the CWA’s coercive penalties for non-compliance violates due process because it “foreclose[s] all access to the courts.”[17] The Sacketts argued that ignoring a compliance order is not a realistic option because of the CWA’s “frightening penalties” for each day of non-compliance: just one month of non-compliance subjects the violator to $750,000, while one year could result in up to $9,000,000 in penalties.[18] The petition challenged the Ninth Circuit’s solution of applying for a § 404 permit, explaining that “in many instances the agencies will not entertain a permit application until the compliance order has been resolved.”[19] In sum, the petition asserted that the Ninth Circuit’s decision “ignores the realities” of the Sacketts’ circumstances by assuming that they can “afford to defy an order, backed by threats of severe financial penalty, issued by the United States government, and simply await an action for sanctions.”[20]

The petition also requested review to resolve a potential conflict between the Circuits. Relying on TVA v. Whitman, the Sacketts argued that due process requires a pre-enforcement hearing because the CWA’s enforcement provisions expose them to penalties merely for disobeying the compliance order, even if a court later found there was no underlying CWA violation.[21] Since the CWA authorizes EPA to issue compliance orders on the basis of “any information available,”[22] the Sacketts reasoned that due process mandates an opportunity to challenge the basis for the order.[23] The arguments mirror the Whitman court’s holding, which interpreted similarly worded provisions in the CAA. The Ninth Circuit rejected the argument in the decision below, interpreting the Act to authorize penalties for non-compliance with an order only when EPA also proved an underlying violation of the CWA.[24]

The Supreme Court granted certiorari on the following questions: (1) may petitioners seek pre-enforcement judicial review of the administrative compliance order under the APA; and (2) if not, does petitioners’ inability to seek pre-enforcement judicial review of the administrative compliance order violate their rights under the Due Process Clause?

Supreme Court Review of Pre-Enforcement Review: CWA vs. CERCLA

The Supreme Court’s decision to consider pre-enforcement review under the CWA comes less than a month after the Court’s decision not to hear a challenge to the bar to pre-enforcement review of EPA orders issued under CERCLA. In General Electric Co. v. Jackson,[25] General Electric (“GE”) challenged CERCLA’s administrative order scheme on due process grounds, using arguments similar to those employed by the Sacketts.[26] Specifically, GE argued (among other things) that the potentially massive penalties available under CERCLA for non-compliance had the practical effect of foreclosing judicial review of administrative orders.[27] After the D.C. Circuit rejected its claims, GE petitioned the Supreme Court for review. The Court denied GE’s petition on June 6, 2011.[28] Both the General Electric and Sackett petitions presented the Court with due process challenges regarding pre-enforcement review of administrative orders. As noted above, however, the CERCLA statute explicitly bars pre-enforcement review under Section 113, while the CWA does not. Consequently, the Sackett petition presented the Court with a question that the General Electric petition did not. The Justices will need to decide the Sackett’s APA arguments before considering the due process arguments they refused to hear in General Electric.

Conclusion

Neither the CWA nor the CAA explicitly precludes pre-enforcement review of administrative compliance orders. EPA has long relied on such orders as one of its chief enforcements tools. Now the effectiveness of that enforcement strategy may be in doubt.

For more information regarding Sackett v. EPA or pre-enforcement review under the CWA, contact Russell Prugh or any member of Marten Law’s Water Quality practice.