More specifically, the Supreme Court held that an ACO constitutes a final agency action which may be challenged in federal court pursuant to the Administrative Procedure Act (APA). Id. at 10.
Background
Chantell and Michael Sackett own a residential lot in Bonner County, Idaho, near Priest Lake. In preparation for constructing a house, the Sacketts filled in most of the lot with dirt and rock.A few months later, the EPA issued an ACO under § 309(a)(3) of the CWA, claiming that the Sacketts had discharged fill material into wetlands on the site without a required dredge/fill permit from the U.S. Army Corps of Engineers in violation of §§ 301 and 502(12) of the CWA. Among other things, the ACO ordered the Sacketts to restore the property to its original condition. 33 U.S.C. § 1319(a)(3); at 3–4.
The Sacketts disputed that wetlands were present on their property and asked EPA for a formal administrative hearing, which EPA denied on the grounds that a formal hearing procedure had not been established for ACOs.
The Sacketts brought suit under Chapter 7 of the APA which provides for judicial review of final agency action for which there is no other adequate remedy. However, the federal district court dismissed the Sacketts’ claim, and the U.S. Court of Appeals for the Ninth Circuit affirmed the district court’s dismissal, on grounds that the CWA precludes judicial review of an ACO prior to EPA enforcement. Id. at 4.
In their briefs to the Supreme Court, the Sacketts argued that they were entitled to a pre-enforcement judicial review of the ACO under the APA and that their Fifth Amendment right to due process had been denied by the lack of a mechanism to challenge the ACO in court before the Sacketts were subjected to legal obligations and “ruinous” penalties.
In response, the EPA argued that an ACO is not reviewable as a final agency action because such orders contain an invitation to enter into informal discussions (which the Sacketts had failed to initiate) and, therefore, the issuance of the ACO is only a step in the agency’s decision-making process.
Of note, EPA has argued to the U.S. Court of Appeals for the Fifth Circuit that an emergency administrative order issued to Range Resources under the SDWA was a final agency action. Brief for Respondent, Range Resources Corp. v. U.S. EPA, No. 11-60040 (5th Cir. filed Jan. 20, 2011).
The EPA also asserted that:
- the CWA distinguishes between administrative orders and enforcement orders, with judicial review allowed only for enforcement orders; and
- had the Sacketts actually sought a permit or consultation, they would have obtained a final, appealable determination of whether the property constitutes wetlands.
The Court's Opinion
In the unanimous opinion delivered by Justice Scalia, the Court concluded that:
- a CWA ACO is a final agency action;
- there is no adequate remedy for this final agency action other than review under the APA; and
- the CWA does not preclude APA review. Accordingly, the Court reversed and remanded to the Ninth Circuit without reaching or even discussing the Sacketts' due process arguments.
In reaching its decision on whether an ACO is final agency action, the Court noted that the ACO had all of the hallmarks of a final agency action. It marked the consummation of the agency's decision-making process, determined rights or obligations, and legal consequences flowed from the order.
Further, the Court rejected the EPA's contention that its invitation to informal discussions precludes the ACO from being final agency action, stating 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 nonfinal." Id. at 5–6.
The Court readily established that there is no adequate remedy to the ACO except for review under the APA by noting:
- that the Sacketts accrue $75,000 in potential liability for every day they wait for the EPA to "drop the hammer"; and
- an action by another agency, here the possible issuance of a permit by the U.S. Army Corps of Engineers, does not ordinarily provide an adequate remedy for an action taken by another agency.
Finally, the Court found that nothing in the CWA expressly precludes judicial review under the APA. The Court also noted that the APA creates a presumption in favor of judicial review of an agency action which could be overcome by inferences of intent drawn from the statutory scheme as a whole.
However, the Court found no language in the CWA that created an inference that Congress intended to preclude ACOs from judicial review and specifically rejected the principle that "efficiency of regulation conquers all." Id. at 7–8.
The Supreme Court reversed the judgment of the Court of Appeals and remanded the case for further proceedings. Id. at 10.
This means that the Sacketts may challenge EPA's authority to regulate their land under the CWA.
It is important to note that the Supreme Court's opinion did not address whether there are wetlands on the Sacketts' property, whether the Sacketts had been denied due process, or whether a regulated party may dispute the terms and provisions of an ACO in a pre-enforcement action.
As Justice Ginsberg and Justice Alito pointed out in their concurring opinions, these are issues for another day.
This article was prepared by Patricia Finn Braddock (pbraddock@fulbright.com or 512 536 4547) and Bob Greenslade (rgreenslade@fulbright.com or 512 536 5241) of Fulbright's Environmental Law Practice, Climate Change Practice and Energy Practice.
