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Environmental Alert: The Supreme Court again makes waves over the Clean Water Act

It seems that over the past 30 years, the U.S. Supreme Court makes waves each time it weighs in on issues involving the federal Clean Water Act. The latest “wave” rolled to shore on March 21, 2012 when the Supreme Court announced its decision in the case of Sackett v. Environmental Protection Agency. In a 9-0 decision, the court found that the U.S. EPA could not issue and enforce a compliance order for illegally filling wetlands without providing the cited parties with an opportunity to appeal.

Historical Recap

In writing the court’s opinion, Justice Scalia noted prior Supreme Court Clean Water Act decisions that had made a “splash” on the environmental seascape. In The United States v. Riverside Bayview Homes, Inc., 474 U.S. 121 (1985), the court had upheld the regulation that construed the term “navigable waters” to include “freshwater wetlands” that were not actually navigable themselves, but were adjacent to navigable-in-fact waters. Later, in Solid Waste Agency of Northern Cook County v. Army Corps of Engineers, 531 U.S. 159 (2001), the court held that seasonal ponds in abandoned sand and gravel pits that were not adjacent to open water were not part of “navigable waters,” subject to jurisdiction under the Clean Water Act. Finally, the court in Rapanos v. United States, 547 U.S. 715 (2006), found that a wetland not adjacent to navigable-in-fact waters did not fall within the scope of the Clean Water Act. But the court in Rapanos reached its decision by a 4-1-4 vote, with Justice Scalia writing for the prevailing plurality, and Justice Kennedy writing a separate decision which concurred with the decision but utilized a different rationale. It is against the background of this historical recap of decisions that Justice Scalia quotes Justice Roberts in his concurring opinion in Rapanos that interested parties would lack guidance “on how precisely to read Congress’s limits on the reach of the Clean Water Act” and would be left “to feel their way on a case-by-case basis. Justice Scalia then writes “The Sacketts are interested parties feeling their way.”

Background

The Sacketts own a 2/3-acre residential lot in Bonner County, Idaho. Their property is separated from a nearby lake by several lots containing permanent structures. The Sacketts planned to erect a home on their lot, and in preparation for construction filled a part of the lot with dirt and rocks. Some months later, they received from the EPA a compliance order containing “Findings and Conclusions” that included:

  • A finding that the Sacketts’ property contained jurisdictional wetlands.
  • A finding that the wetlands were adjacent to the nearby lake within the meaning of the Clean Water Act, that the lake was a navigable water, and that it was also among the “waters of the United States” within the meaning of regulations promulgated pursuant to the Clean Water Act.
  • A finding that the Sacketts discharged fill material into wetlands on their property without a permit, thereby violating the Clean Water Act.

The Sacketts were also ordered to undertake activities to restore the site in accordance with an EPA-created Restoration Work Plan and “to provide and/or obtain access to the site, access to all records and documentation related to conditions at the site to EPA employees and their designated representatives.” Under the terms of the Clean Water Act, a civil penalty of up to $37,500 can be imposed for each day of violation. An additional penalty of $37,500 per day can be assessed for every day that a violation continues after the issuance of a compliance order similar to the one received by the Sacketts. The Sacketts asked the EPA for an administrative hearing on the compliance order issued, but their request was denied. They then brought a lawsuit in the United States District Court for the District of Idaho seeking declaratory and injunctive relief. Their complaint contended that the EPA’s issuance of the compliance order was “arbitrary and capricious” under the federal Administrative Procedure Act (5.U.S.C. §706(2)(A)) and that it deprived them of “life, liberty, or property, without due process of law,” in violation of the Fifth Amendment. The District Court dismissed the Sacketts’ suit for want of subject matter jurisdiction, and the United States Court of Appeals for the Ninth Circuit affirmed, concluding that the Clean Water Act “precludes pre-enforcement judicial review of compliance orders.”

The government’s position

The Sacketts’ lawsuit was premised on Chapter 7 of the federal Administrative Procedure Act which provides for judicial review of “final agency action for which there is no other adequate remedy in a court.” The court wasted little time in determining that the compliance order issued to the Sacketts was “Final,” notwithstanding the fact that the order contained language inviting the Sacketts to “engage in informal discussion of the terms and requirements” of the order with EPA and to inform the agency of “any allegations therein which they believe to be inaccurate.” The court found that such language conferred no entitlement to further agency review, and that “(t)he mere possibility that an agency might reconsider in light of informal discussion and invited contentions of inaccuracy does not suffice to make an otherwise final agency action non-final.”

The government’s principal argument was based on Section 701(a)(1) of the Administrative Procedure Act which excludes review under its terms “to the extent that other statutes preclude judicial review.” While the provisions of the Clean Water Act contain no express language precluding judicial review, the government argued that Congress had expressed inferences of an intent to prelude judicial review from the statutory scheme as a whole. In support of their position, they made three arguments:

  1. Congress had written the Clean Water Act to provide the EPA with two enforcement options. One option was through an enforcement lawsuit in court, while the other was through an administrative order. The government reasoned that if administrative orders were to become subject to judicial review, then their usefulness as a non-judicial enforcement tool would be thwarted. The government also pointed out that its compliance orders are not self-executing, requiring the filing of a lawsuit to compel any action or collect any fine.
  2. The government argued that the Clean Water Act does contain a provision authorizing prompt judicial review of monetary penalties imposed following an administrative hearing. The government further argued that if Congress had wanted an opportunity for judicial review of compliance orders they would have explicitly added a provision similar to the judicial review for monetary penalty decisions.
  3. The government argued that the provisions of the Clean Water Act were intended to bar pre-enforcement review because it was Congress’s intent to respond to the inefficiency of then-existing remedies for water pollution with laws that enabled prompt, voluntary compliance.

The Supreme Court’s ruling

The Supreme Court, however, refused to draw inferences of a congressional intent to preclude judicial review from the government’s interpretation of the Clean Water Act’s provisions. In response to the government’s argument that imposing judicial review would compromise the effect Congress intended compliance orders to have, the court stated, “Compliance orders will remain an effective means of securing prompt, voluntary compliance in those many cases where there is no substantial basis to question their validity.”

In a concurring opinion, Justice Alito expresses his sympathy for property owners, as well as the court’s continued frustration with the language of the Clean Water Act and the government’s unwillingness to address it:

The court’s decision provides a modest measure of relief. At least, property owners like petitioners will have the right to challenge the EPA’s jurisdictional determination under the Administrative Procedure Act. But the combination of the uncertain reach of the Clean Water Act and the draconian penalties imposed for the sort of violations alleged in this case still leaves most property owners with little practical alternative but to dance to the EPA’s tune.

Real 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. When Congress passed the Clean Water Act in 1972, it provided that the Act covers “the waters of the United States.” 33 U.S.C. §1362(7). But Congress did not define what it meant by “the waters of the United States;” the phrase was not a term of art with a known meaning; and the words themselves are hopelessly indeterminate. Unsurprisingly, the EPA and the Army Corps of Engineers interpreted the phrase as an essentially limitless grant of authority. We rejected that boundless view, see Rapanos v. United States, 547 U.S. 715, 732-739 (2006) (plurality opinion); Solid Waste Agency of Northern Cook County v. Army Corps of Engineers, 531 U.S. 159, 167-174 (2001). But the precise reach of the Act remains unclear. For 40 years, Congress has done nothing to resolve this critical ambiguity, and the EPA has not seen fit to promulgate a rule providing a clear and sufficiently limited definition of the phrase. Instead, the Agency has relied on informal guidance. But far from providing clarity and predictability, the Agency’s latest informal guidance advises property owners that many jurisdictional determinations concerning wetlands can only be made on a case-by-case basis by EPA field staff.

Allowing aggrieved property owners to sue under the Administrative Procedure Act is better than nothing, but only clarification of the reach of the Clean Water Act can rectify the underlying problem.

And while the reach of the Clean Water Act remains unclear, the impact of the Sackett decision on other federal environmental laws will likely require clarification as well. CERCLA does contain language specifically barring pre-enforcement judicial review of administrative orders, but the Clean Air Act and the Resource Conservation and Recovery Act (RCRA) do not. Will compliance orders issued under these laws now be subject to judicial review pursuant to the Sackett decision? Expect the EPA to re-examine its approach to issuing compliance orders in light of this decision.

For more information, please contact:

Theodore J. Esborn
216.348.5735
tesborn@mcdonaldhopkins.com

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© 2012 McDonald Hopkins LLC All Rights Reserved. This Alert is designed to provide current information for our clients, friends and their advisors regarding important legal developments. The foregoing discussion is general information rather than specific legal advice. Because it is necessary to apply legal principles to specific facts, always consult your legal advisor before using this discussion as a basis for a specific action.