The U.S. Supreme Court recently granted certiorari to address the constitutionality of unilateral administrative orders issued by EPA under the Clean Water Act (CWA). These orders, also known as administrative compliance orders (ACOs), require parties to undertake response action when the EPA believes a violation of an environmental statute has occurred. Under the CWA and the Clean Air Act (CAA), EPA may issue compliance orders "on the basis of any information available." Under the express terms of those statutes, a recipient's failure to comply with the order is itself a violation of statute, subjecting the recipient to penalties of $37,500 per day of violation. To make matters worse, the majority of U.S. courts of appeals considering the issue have determined that congressional intent underlying the CWA and CAA bars pre-enforcement judicial review of a compliance order. The result is that massive penalties can accumulate before a recipient can get his day in court to determine the validity of the order. The 4th, 6th, 7th, 9th and 10th Circuit Courts of Appeals have all concluded that this interpretation of the statutory scheme satisfies due process, finding that the order itself has no force or effect, and that to enforce such an order, EPA must pursue an enforcement action in court. The 11th Circuit questioned the constitutionality of the scheme under the CAA but concluded, to avoid a constitutional issue, that only a violation of the CAA itself, and not merely a violation of a compliance order, could give rise to statutory penalties.
The case now before the Supreme Court is Sackett v. EPA, U.S., No. 10-1062. The petitioners, Michael and Chantell Sackett, are owners of an undeveloped parcel of land in Idaho. In 2007, they filled a portion of the land in preparation for building their home. The EPA determined that the fill violated the Clean Water Act because the parcel contained a wetland. Under the CWA, a permit is required for a discharge of fill material into U.S. waters, wetlands included. When the EPA determined that an unpermitted discharge had occurred on the Sacketts' land, it issued an ACO directing the Sacketts to remove the fill material and restore the land to its original condition. The Sacketts petitioned the EPA for a hearing to challenge the agency's determination that their parcel of land contained a wetland. The EPA, however, refused to grant a hearing. The Sacketts then filed suit in U.S. district court seeking injunctive and declaratory relief. They alleged that their property is not subject to CWA jurisdiction, and they challenged the ACO as violating due process. The Sacketts argue that without pre-enforcement judicial review, defendants are essentially coerced into compliance with the ACO for fear of severe penalties. One year of non-compliance for the Sacketts could result in up to $9 million in penalties. The District of Idaho dismissed the Sacketts' case concluding that it lacked jurisdiction to review a compliance order issued under the CWA until and unless EPA sought to enforce the order in court. The Ninth Circuit affirmed. In granting certiorari, the Supreme Court limited review to two issues: (1) whether the Administrative Procedure Act, 5 U.S.C. Section 701. et seq (APA) provides for pre-enforcement judicial review; and (2) if the APA does not provide for pre-enforcement judicial review, whether denial of pre-enforcement judicial review violates due process. Section 704 of the APA provides for judicial review of agency action "made reviewable by statute and final agency action for which there is no other adequate remedy in a court." Section 701 of the APA bars judicial review if the agency acts according to a statute that precludes judicial review.
The EPA widely uses ACOs as an enforcement tool. Depending on how the Supreme Court decides, the effectiveness of ACOs could be greatly diminished - not only for ACOs issued under the CWA, but for ACOs issued under other environmental statutes as well. Compliance orders are frequently issued under CERCLA, a statute that contains an express provision prohibiting pre-enforcement review of issued orders. Interestingly, the constitutionality of such orders was upheld recently by the DC Circuit Court of Appeals. General Electric Co. v. Jackson, 610 F.3d 110 (D.C. Cir. 2010). The Supreme Court declined to review the constitutional challenge, however, without explanation.