Supreme Court Sides with Private Property Owners Over the EPA In CWA Decision

On March 21, 2012, the U.S. Supreme Court unanimously sided with property owners against the Environmental Protection Agency (the "EPA") in Sackett v EPA, No. 10-1062, where the court addressed the question of whether a regulated party can obtain pre-enforcement review of an EPA administrative compliance order under the Clean Water Act ("CWA").

The Sacketts bought an undeveloped 2/3s acre lot near Priest Lake, Idaho. The are several developed lots with homes that stand between the Sacketts' lot and the lake.  Back in the spring of 2007, the Sacketts brought in some fill dirt to prepare their lot for construction.  In November 2007, the EPA issued a compliance order asserting that the Sacketts' lot was subject to the CWA because it contained "wetlands" and therefore the Sacketts violated the CWA because they didn't obtain a required permit from the Army Corps of Engineers (the "Corps"). The Sacketts were given one year to restore the lot and were warned that their failure to comply with the order could lead to civil penalties of up to $32,500/day. The Sacketts requested a formal administrative hearing and were denied. The District Court and Court of Appeals sided with the EPA and denied the Sacketts their day in court to challenge the EPA's jurisdiction.

The Supreme Court disagreed with the lower courts and sided with the Sacketis, holding that the EPA's compliance order is a final agency action that is reviewable under the APA.  In the past, the EPA could issue a compliance order and require a property owners to restore their land according to an EPA-approved plan. If they fail to comply the penalties can be doubled in any future enforcement action, which only the EPA controls if and when it is brought. Also, the order would for all practical purposes prevent the property owners from obtaining a permit from the Corps, as the Corps' own regulations provide that it will not process a permit application once the EPA has issued a compliance order, unless doing so is "clearly appropriate."  In addition, once the EPA denies the administrative hearing, the compliance order's findings and conclusions are not subject to any further agency review.  This puts property owners into a catch-22 that they can't escape.  The Supreme Court's decision at least gives property owners a potential escape hatch under the CWA.

A couple of take-away quotes from the Court:

"The position taken in this case by the Federal Government--a position that the Court now squarely rejects--would have put the property rights of ordinary Americans entirely at the mercy of Environmental Protection Agency (EPA) employees." (Justice Alito)
"The APA's presumption of judicial review is a repudiation of the principle that efficiency of regulation conquers all. And there is no reason to think that the Clean Water Act was uniquely designed to enable the strong-arming of regulated parties into 'voluntary compliance' without the opportunity for judicial review--even judicial review of the question whether the regulated party is within the EPA's jurisdiction." (Justice Scalia)
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