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Real Property & Development Review

U.S. Supreme Court Upholds Rights of Landowners to Challenge EPA Wetlands Determinations in Clean Water Act Compliance Orders

Posted in Environmental

A unanimous Supreme Court in Sackett v. Environmental Protection Agency (EPA), 566 U.S. ___(2012) (No. 10-1062, March 21, 2012) (Ginsberg, J. and Alito, J, concurring), held that the Sacketts, owners of a 2/3-acre residential lot near Priest Lake in Idaho, could bring a civil action under the Administrative Procedures Act (APA) challenging an EPA compliance order under Section 309 of the Clean Water Act (CWA). The EPA compliance order was issued months after the Sackets filled in part of their lot with dirt and rock in preparation for constructing a house. The compliance order determined that the Sacketts had filled a wetland in violation of the CWA, and required them to restore the site according to an agency-approved restoration work plan and give EPA access to their property and records relating to conditions at the site. The compliance order also exposed the Sacketts to liability for civil penalties of up $75,000 per day for each violation.

The Sacketts, who disputed that their property is subject to the CWA, asked the EPA for a hearing on the compliance order. The EPA denied the request. The Sacketts then brought an action in federal court under the APA provision that provides for judicial review of final agency action for which there is no other adequate remedy in a court, claiming that the compliance order was arbitrary and capricious and violated due process. Both the District Court and Ninth Circuit dismissed the Sacketts’ lawsuit for lack of jurisdiction, concluding that the CWA precludes pre-enforcement judicial review of compliance orders and that this does not violate due process. The Supreme Court reversed, concluding: (1) that the compliance order is final agency action that determines the Sacketts’ rights and obligations and exposes them to double penalties in future enforcement proceedings; (2) that the Sacketts had no other adequate remedy in a court, and (3) that the CWA does not preclude review of compliance orders. In so doing, the Court rejected EPA’s claim that judicial review of an enforcement action provides an adequate remedy. As the Court pointed out, the Sacketts could not initiate an enforcement action, only EPA could, and each day they waited for EPA to do so, they accrued an additional $75,000 in potential liability. The Court also rejected EPA’s claim of an adequate remedy from applying for a wetlands permit from the Army Corps of Engineers and, if denied, appealing to court. As the Court noted, the Corps’ regulations do not allow for the processing of permits for which a compliance order has been issued by EPA unless doing so is “clearly appropriate,” but that in any event, the remedy for denial of action that may be sought from one agency does not provide an adequate remedy for action already taken by another. Consequently, the Court remanded the case for consideration of the Sacketts’ substantive claims regarding CWA jurisdiction.