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Focus on Regulation

Clean Water: Supreme Court Holds Pre-Enforcement Review of CWA Compliance Orders Is Available Under APA

In its March 21, 2012 decision in Sackett v. EPA, the U.S. Supreme Court determined that plaintiffs have a pre-enforcement right to challenge the EPA’s assertion of Clean Water Act (CWA) jurisdiction in administrative compliance orders issued by the Agency.  Implications of the Sackett decision are discussed below, as well as in other articles including Bloomberg and E&E Publishing.  In addition, on April 11, 2012 the American Bar Association (ABA) will hold a teleconference on the decision, entitled Sackett v. EPA: New Rules on Judicial Review of Federal Enforcement Actions.  Adam Kushner, environmental partner at Hogan Lovells, and former Director of the Office of Civil Enforcement, will participate as a panel member.

Sackett v. EPA arose from a dispute about CWA jurisdiction over wetlands.  In 2007, Michael and Chantell Sackett began constructing a new home near Idaho’s Priest Lake. Shortly thereafter, EPA notified the Sacketts that they had impermissibly filled a wetland and issued an administrative compliance order directing them to “restore” the property to its original condition.   The Sacketts’ challenge to EPA’s wetlands determination was denied review by the Ninth Circuit. EPA argued that the question would be addressed later during judicial proceedings to enforce the compliance order, an event that only EPA – and not the Sacketts – could initiate.

The Supreme Court ruled unanimously that the Sacketts had a right to pre-enforcement review of the jurisdictional issue raised by the compliance order.  Writing for the Court, Justice Scalia interpreted both the Administrative Procedure Act (APA) and the CWA to reach this conclusion.  Noting that, among other things, the compliance order imposed a legal obligation to restore the property and subjected the Sacketts to a larger penalty amount than would have been applied absent the order, the Court held that the order constituted final agency action under the APA. It held further that the nothing in the CWA precluded the presumption of reviewability under the APA.

The Court’s ruling may affect longstanding EPA enforcement practices across several environmental statutes.  Before Sackett, the Agency had sole discretion over the timing of enforcement actions. It decided when to issue compliance orders and when to enforce them. Now, post Sackett, EPA can still decide when to issue an order but, once it does, it must be prepared to immediately defend its position on jurisdiction in court.  Because EPA uses compliance orders as an enforcement tool for other environmental statutes, opportunities to challenge the Agency’s jurisdiction at the compliance order stage may spill over into other environmental statutory regimes.

The full weight of Sackett’s effect will only become apparent over time but we can expect significant short-term adjustments to EPA’s enforcement strategy. Notably, EPA may have to expend more resources in individual cases.  It is less clear, however, how helpful the new pre-enforcement review right will be for individuals subject to compliance orders, as EPA certainly will argue that pre-enforcement challenges brought pursuant to Sackett should be decided under a standard that is deferential to EPA.  Hogan Lovells’ Environmental Practice Area will continue to monitor Agency practice as EPA responds to the ruling.