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Sackett Case Could Change EPA’s Enforcement of Federal Environmental Laws

October 24, 2011

Sackett, v. EPA, [1] one of two environmental cases currently on the Supreme Court’s 2011-12 docket, has the potential to change the way federal environmental statutes are enforced and how recipients of EPA orders respond to those orders. Sackett squarely presents the issue as to whether pre-enforcement review is available for EPA administrative orders other than CERCLA orders. “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. CERCLA has an express provision prohibiting pre-enforcement review. The Clean Water Act (“CWA”), the Clean Air Act and RCRA do not. EPA has long made the argument that these statutes contain an “implied bar” to such challenges. Most courts have agreed.[2] However, the Supreme Court has never decided the issue and has taken up the Sackett case in order to do so.

The Sackett case is framed as a question of both statutory interpretation and constitutional law. The Court is to consider whether a pre-enforcement review bar can be “implied” into the CWA – as EPA has argued. In the alternative, the Court granted cert on the question of whether such an implied ban would violate the due process clause of the U.S. Constitution.

Background

The decision on review in Sackett came from the Ninth Circuit,[3] whose opinions have not fared well at the Supreme Court in the past few years. In the last term, the Supreme Court reversed the Ninth Circuit in 19 out of 26 cases, a 79% reversal rate.[4] The Sackett case was reviewed in this newsletter at the time certiorari was granted. See U.S. Supreme Court to Hear Challenge to Clean Water Act Bar on Pre-Enforcement Review, Marten Law Environmental News (July 13, 2011).

Sackett arises under the CWA, which prohibits the discharge of fill material into wetlands without a permit under § 404 of the Act. Administration of the § 404 permit program is ordinarily conducted by the United States Army Corps of Engineers, but the Corps shares enforcement authority with EPA. When EPA 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]

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.

EPA argued that review of an agency order was barred unless the agency first sued (which it had not) and insisted that the Sacketts comply, threatening penalties if they did not. The district court agreed, and dismissed the Sacketts’ suit for lack of jurisdiction. The Sacketts appealed to the Ninth Circuit, where they raised two arguments: (1) that the Administrative Procedure Act (“APA”) allows pre-enforcement review of CWA compliance orders; and (2) that due process requires EPA to allow pre-enforcement review.

The Ninth Circuit rejected the APA argument, finding that judicial review is unavailable under the APA if the agency acts according to a statute that “preclude[s] judicial review.”[9] While the CWA does not provide for review of EPA administrative compliance orders, it contains no bar against pre-enforcement review. The Ninth Circuit held that where the statute is silent on the issue, the presumption in favor of judicial review may be overcome only where “the congressional intent to preclude judicial review is fairly discernible in the statutory scheme.”[10] The court held that that the CWA’s administrative-order scheme sought to remedy environmental problems quickly, without the delay of litigation. It held that 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.[11] It is precisely this choice that makes Sackett so important.

The Ninth Circuit also rejected the Sacketts’ due process arguments, finding 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.”[12]

The Sacketts’ Cert Petition and Questions Accepted for Review

In their petition for certiorari, the Sacketts argued 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.”[13] The Sacketts pointed to the CWA’s “frightening penalties” for each day of non-compliance: just one month of non-compliance subjects the violator to $750,000 in penalties, while one year could result in up to $9,000,000 in penalties.[14] 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.” The Sacketts argued that the Ninth Circuit decision “ignore[d] 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.”[15]

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? A copy of the docket in the case as well as all of the merits briefs can be reviewed at this link.

Challenges to Pre-Enforcement Review Under Other Federal Environmental Statutes

Sackett has broad implications that extend beyond the CWA, as none of the major federal environmental statutes except CERCLA contain an explicit provision barring pre-enforcement review of administrative orders. 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.”[16] Section 701 denies judicial review, however, if the agency acts according to a statute that “preclude[s] judicial review.”[17] “Whether and to what extent a particular statute precludes judicial review is determined not only from its express language, but also from the structure of the statutory scheme, its objectives, its legislative history, and the nature of the administrative action involved.”[18] Although a statute is generally 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.”[19]

• CWA

EPA has authority to issue administrative orders for CWA violations under section 309(a)(3).[20] However, EPA lacks authority to address an “imminent and substantial endangerment” to health or the environment through administrative orders. Instead, the Agency must seek relief in district court in such situations.[21] As noted above, the CWA neither expressly provides for, nor prohibits, pre-enforcement review of EPA administrative compliance orders. In Sackett, the Ninth Circuit concluded that the CWA “impliedly” precludes pre-enforcement review after considering the Act’s structure, legislative history, and the objectives of the statutory scheme. The Ninth Circuit’s decision was consistent with the four other circuits that had previously considered the issue under the CWA.[22]

• RCRA

EPA has authority to issue administrative orders under several RCRA provisions, including orders to address RCRA violations pursuant to section 3008(a) and orders to remedy an “imminent and substantial endangerment to health or the environment” pursuant to section 7003.[23] The language of the CWA and RCRA’s statutory provisions is substantially similar.[24] Like the CWA, RCRA lacks an express bar to pre-enforcement review of administrative orders. Courts have held that RCRA impliedly precludes pre-enforcement review of orders issued pursuant to sections 7003, 3008, and other provisions.[25] Moreover, courts interpreting RCRA’s pre-enforcement bar have relied on the reasoning offered by decisions interpreting the CWA to reject pre-enforcement review.[26]

• Clean Air Act

EPA has authority to issue administrative orders pursuant to several Clean Air Act (“CAA”) sections, including sections 113 and 303.[27] CAA section 113 authorizes orders to remedy CAA violations,[28] while section 303 authorizes EPA to issue orders necessary to abate an “imminent and substantial endangerment” to public health if a suit in federal district court “is not practicable to assure prompt protection of public health or welfare.”[29] EPA’s CAA imminent and substantial endangerment authority is limited by the fact that EPA must commence an enforcement action in district court within 60 days.[30]

Like the CWA and RCRA, the CAA neither explicitly provides for nor explicitly bars pre-enforcement review of administrative orders; however, the CAA differs from these statutes in that it contains a provision, section 307(b)(1), that provides for review of “any other final [agency] action.”[31] Section 307 also limits judicial review, providing that “[n]othing in [the CAA] shall be construed to authorize judicial review of regulations or orders of [EPA] under [the CAA], except as provided [in section 307].”[32] Therefore, courts presented with a request for pre-enforcement review have focused on whether an administrative order constitutes final agency action. Courts interpreting section 113 orders are split, with some decisions allowing pre-enforcement review and others barring it.[33] Although CAA decisions have focused on whether the order constitutes “any other final action,” courts have considered the lack of pre-enforcement review under other environmental statutes as persuasive.[34]

• CERCLA

CERCLA section 106(a) authorizes EPA to issue a unilateral administrative order to compel a potentially responsible party to conduct a response action at a contaminated site.[35] In contrast to the CWA, RCRA, and the CAA, CERCLA section 113(h) explicitly bars pre-enforcement review, stating that “[n]o Federal court shall have jurisdiction … to review any order issued under section 9606 (a) of this title.”[36] This provision was added in 1986, as part of Congress’ SARA amendments to CERCLA. Courts deciding cases under the SARA amendments have had no trouble finding that Congress meant what it said in adopting the statutory pre-enforcement bar.

A Tale of Two Cases: General Electric v. Jackson

The due process arguments raised by the Sacketts had previously been presented by General Electric (“GE”) as part of a challenge to unilateral administrative orders (“UAOs”) brought by GE and rejected by the D.C. Circuit. In General Electric v. Jackson, GE argued that EPA’s issuance of UAOs without a pre-deprivation hearing violated the Due Process Clause. GE bolstered its argument by conducting extensive discovery of EPA’s patterns and practices in issuing UAOs at multiple Superfund sites across the country. EPA countered GE’s position by noting that CERCLA’s UAO provisions give potentially responsible parties (PRPs) a right to judicial review before they are forced to pay fines or incur cleanup costs, and that pre-hearing reductions in stock price, increases in financing costs, and adverse effects on brand reputation that might follow issuance of a UAO do not qualify as property deprivations protected by the Due Process Clause.

GE’s claims were dismissed at the district court level, based on section 113(h)’s pre-enforcement bar. The D.C. Circuit reversed the district court, holding that section 113(h) bars “any challenges to removal or remedial actions under § 104 or any orders under § 106(a), [but] not … facial constitutional challenges to the CERCLA statute itself. … We hold that the plain text of § 113(h) does not bar GE’s facial constitutional challenge to CERCLA.”[37] On remand, GE pressed both a facial challenge and a “pattern and practice” challenge, arguing that EPA’s issuance of UAOs to PRPs without a prior hearing “denies PRPs the necessary protections of procedural due process.”[38] The district court reasoned that its previous decision allowing a facial constitutional challenge also allowed for “a broader systemic challenge” to EPA’s administration of CERCLA.[39]

Following two years of discovery, the parties cross-moved for summary judgment. The district court once again granted summary judgment to EPA, finding that while the UAO process does result in pre-hearing deprivations of protected property rights, “GE has not shown that EPA’s pattern and practice of administering section 106 of CERCLA violated due process.”[40]

GE appealed this decision to the D.C. Circuit, raising arguments similar to those presented by the Sacketts, namely, that when presented with a UAO, a PRP has only two options: it can comply with the UAO, in which case it has no opportunity to challenge the UAO through a meaningful hearing until the response action is completed (a period lasting on average more than 3 years) and then seek reimbursement only of a portion of its UAO-related costs. Alternatively, the PRP can refuse to comply with the UAO, in which case it again has no opportunity to challenge the UAO through a meaningful hearing and is subject to penalties of $37,500 for each day of noncompliance and, once the response is performed by EPA, to punitive treble damages on top of the costs of the ordered response action.

The DC Circuit rejected GE’s arguments,[41] and it petitioned for certiorari, presenting largely the same arguments advanced by the Sacketts. GE maintained that when consequential impacts from government action are “significant” they “merit due process protection.”[42] GE argued that “UAOs impair the recipients’ ability to alienate property and secure financing in a manner analogous to government imposition of a lien or attachment.”[43] GE noted that the First Circuit had accepted this argument and held that the property interests “merit due process protection.”[44]

The Supreme Court denied GE’s petition for certiorari without opinion.[45]

Potential Implications

The Court has three options in deciding Sackett: (1) affirm the Ninth Circuit; (2) reverse the Ninth Circuit finding that the CWA does not impliedly bar pre-enforcement review; or (3) reverse the Ninth Circuit because a lack of pre-enforcement review violates due process.

Because only CERCLA contains an express statutory bar to pre-enforcement review, rejection of the “implicit bar” or acceptance of the Sacketts’ due process arguments will change the landscape for courts presented with pre-enforcement challenges to administrative orders and upend conventional wisdom about how to defend cases arising under such orders. Rejection of an implied bar to review will have broad implications for orders issued under RCRA, the CAA, and the CWA, especially where courts have looked to CWA decisions as persuasive authority.

A strong opinion in Sackett that accepts the due process challenge could even provide PRPs with a means to challenge CERCLA’s pre-enforcement bar. Although the Court does not have to reach that issue to decide in favor of the Sacketts, such a result could present a basis to challenge even the statutory pre-enforcement bar contained in CERCLA section 113.

We will continue to monitor the case and will prepare a subsequent article as soon as the opinion is released.

For more information, contact any member of our Environmental Litigation practice group.

[1] Supreme Court Docket No. 10-1062.

[2] See, e.g., Acker v. EPA, 290 F.3d 892, 895 (7th Cir. 2002) (denying pre-enforcement review under Clean Air Act because administrative order not final agency action within meaning of section 7607(b)(1)); Ross Incineration Servs., Inc. v. Browner, 118 F. Supp. 2d 837, 842-47 (N.D. Ohio 2000) (RCRA bars pre-enforcement review of section 7003 orders); Laguna Gatuna, Inc. v. Browner, 58 F.3d 564, 565-66 (10th Cir. 1995) (denying pre-enforcement review of administrative order issued under Clean Water Act).

[3] Sackett v. EPA, 622 F.3d 1139 (9th Cir. 2010).

[4] See 9th Circuit Cases Make Up ‘Staggering’ Percentage of Supreme Court Docket, ABA Journal Law News Now (October 7, 2011).

[5] 33 U.S.C. § 1319(g).

[6] Id. § 1319(b).

[7] Id. § 1319(a). A party that fails to comply with an administrative order is potentially liable for up to $37,500 for each day of non-compliance. Id. § 1319(d); 40 C.F.R. § 19.4.

[8] 33 U.S.C. § 1319(d); 40 C.F.R. § 19.4.

[9] 5 U.S.C. § 701(a)(1).

[10] Sackett, 622 F.3d at 1143 (quoting Block v. Cmty. Nutrition Inst., 467 U.S. 340, 351 (1984)).

[11] Id.at 1142-44.

[12] Id. at 1145-46.

[13] Sacketts’ Petition for Certiorari at 9 (quoting Thunder Basin Coal Co. v. Reich, 510 U.S. 200, 216 (1994)). The petition may be viewed at this link.

[14] Sacketts’ Cert. Petition at 10, 15.

[15] Id. at 14.

[16] 5 U.S.C. § 704.

[17] Id. § 701(a)(1).

[18] Block v. Cmty. Nutrition Inst., 467 U.S. 340, 345 (1984).

[19] Id. at 351.

[20] 33 U.S.C. § 1319(a)(3).

[21] See 33 U.S.C. § 1364. But see id. § 1321(e)(1)(B) (authorizing EPA to issue administrative order to remedy “an imminent and substantial threat to the public health or welfare of the United States” resulting “an actual or threatened discharge of oil or a hazardous substance”).

[22] See, e.g., Laguna Gatuna, Inc. v. Browner, 58 F.3d 564, 565-66 (10th Cir. 1995); S. Ohio Coal Co. v. Office of Surface Mining, Reclamation & Enforcement, 20 F.3d 1418 (6th Cir. 1994); S. Pines Assocs. by Goldmeier v. United States, 912 F.2d 713 (4th Cir. 1990); Hoffman Group, Inc. v. EPA, 902 F.2d 567 (7th Cir. 1990).

[23] 42 U.S.C. §§ 6928(a) (authorizing corrective action orders for RCRA violations); 6973(a) (authorizing orders to abate imminent and substantial endangerments to health and the environment). Other RCRA provisions authorizing EPA administrative orders include section 3008(h) – 42 U.S.C. § 6928(h) (authorizing administrative orders for corrective action at interim status facilities), and section 3013(a) – 42 U.S.C. § 6034(a) (authorizing EPA to require monitoring, testing, analysis, and reporting).

[24] Compare 33 U.S.C. § 1319(a)(3) (authorizing Administrator to “issue an order requiring” compliance with CWA or “bring a civil action” to remedy violation), with 42 U.S.C. § 6928(a) (authorizing Administrator to “issue an order assessing a civil penalty for any past or current violation [and] requiring compliance” or “commence a civil action” for appropriate relief).

[25] See Ross Incineration Servs., Inc. v. Browner, 118 F. Supp. 2d 837, 842-47 (N.D. Ohio 2000) (RCRA bars pre-enforcement review of section 7003 orders); Amoco Oil v. EPA, 959 F. Supp. 1318, 1321-24 (D. Colo. 1997) (holding RCRA bars pre-enforcement review of section 3008(h) administrative order for corrective action); see also United States v. Mobil Oil Corp., No. 96-1432, 1997 WL 1048911, at *5-6 (E.D.N.Y. 1997) (unreported) (“Pre-enforcement review of RCRA § 3013 orders would frustrate Congress’ purpose of freeing the EPA from the burden of answering challenges at every phase of environmental clean-up, and is contrary to RCRA.”).

[26] See Browner, 118 F. Supp. 2d at 843-44 (citing Hoffman Group, Inc. v. EPA, 902 F.2d 567, 569 (7th Cir. 1990)); Amoco, 959 F. Supp. at 1323-24.

[27] 42 U.S.C. §§ 7413, 7603.

[28] 42 U.S.C. § 7413.

[29] 42 U.S.C. § 7603. In pertinent part, the statute provides:

Notwithstanding any other provision of this chapter, the Administrator, upon receipt of evidence that a pollution source or combination of sources … is presenting an imminent and substantial endangerment to public health or welfare, or the environment, may bring suit on behalf of the United States in the appropriate United States district court to immediately restrain any person causing or contributing to the alleged pollution to stop the emission of air pollutants causing or contributing to such pollution or to take such other action as may be necessary. If it is not practicable to assure prompt protection of public health or welfare or the environment by commencement of such a civil action, the Administrator may issue such orders as may be necessary to protect public health or welfare or the environment. …

Id. EPA also has authority to issue administrative orders under section 112(r)(9) when the Administrator concludes that “an actual or threatened accidental release of a regulated substance” that may cause an “imminent and substantial endangerment to human health or welfare or the environment.” 42 U.S.C. § 7412(r)(9).

[30] 42 U.S.C. § 7603 (“Any order issued by the Administrator under this section shall be effective upon issuance and shall remain in effect for a period of not more than 60 days, unless the Administrator brings an action pursuant to the first sentence of this section before the expiration of that period. …”).

[31] 42 U.S.C. § 7607(b)(1).

[32] 42 U.S.C. § 7607(e).

[33] Compare Acker v. EPA, 290 F.3d 892, 895 (7th Cir. 2002) (denying pre-enforcement review because section 113 administrative order not final action within meaning of section 7607(b)(1)); and Asbestec Constr. Servs., Inc. v. EPA, 849 F.2d 765, 769 (2d Cir. 1988) (same), with Ala. Dep’t of Envtl. Conservation v. EPA, 244 F.3d 748, 749-50 (9th Cir. 2001) (concluding that section 113 order constituted final agency action that was reviewable); and Allsteel, Inc. v. EPA, 25 F.3d 312, 314-15 (6th Cir. 1994) (same).

[34] See, e.g., Acker, 290 F.3d at 895 n.2.

[35] 42 U.S.C. § 9606(a) (“[W]hen the President determines that there may be an imminent and substantial endangerment to the public health or welfare or the environment because of an actual or threatened release of a hazardous substance from a facility [he may take action] including, but not limited to, issuing such orders as may be necessary to protect public health and welfare and the environment.”).

[36] 42 U.S.C. § 9613(h).

[37] General Electric v. EPA, 360 F.3d 188, 189, 194 (D.C. Cir. 2004) (“GE II”). Since the D.C. Circuit issued its decision in GE II, three other courts have addressed “pattern and practice” lawsuits filed against EPA in connection with individual UAOs: City of Rialto v. West Coast Loading Corp., 581 F.3d 865 (9th Cir. 2009); Raytheon Aircraft Co. v. United States, 435 F. Supp. 2d 1136 (D. Kan. 2007); and United States v. Capital Tax Corp., 2007 WL 488084 (N.D. Ill. 2007).

[38] This language comes from the D.C. District Court’s opinion in the case of General Electric Co. v. Johnson, 362 F. Supp. 2d 327, 333 (D.D.C. 2005).

[39] 362 F. Supp. 2d at 335.

[40] General Electric v. Jackson, 595 F. Supp. 2d 8, 39 (D.D.C. 2009).

[41] General Electric v. Jackson, 610 F.3d 110 (D.C. Cir. 2010).

[42] General Electric’s Petition for Cert. at 12 (quoting Connecticut v. Doehr, 501 U.S. 1, 11-12 (1991)). GE’s Petition for Certiorari, EPA’s opposition and the other briefing filed in connection with GE’s cert petition can be viewed by following this link.

[43] Id. at 13.

[44] Id. at 16 (quoting Reardon v. United States, 947 F.2d 1509, 1518 (1st Cir. 1991)).

[45] The Order denying certiorari was issued on June 6, 2011. See SCOTUS Blog at this link.

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