The U.S. Supreme Court recently held in Sackett v. EPA, 132 S. Ct. 1367 (2012), that parties subject to administrative compliance orders issued by the U.S. Environmental Protection Agency (“EPA”) under the Clean Water Act may seek pre-enforcement review. The Supreme Court decided unanimously in favor of the homeowners, holding that the EPA order was a final agency action subject to judicial review under the Administrative Procedures Act.

The EPA issued the order under § 309 of the Clean Water Act, 33 U.S.C. § 1319, after the Sacketts, private homeowners, filled in their land near Priest Lake in northern Idaho to build a home. The Sacketts did not obtain a permit from the Army Corps of Engineers first. The order stated that the property was a wetland and had to be restored to its original condition or its owners would face penalties of up to $75,000 per day. The Sacketts sought a hearing with the EPA, which the agency denied.

The couple filed suit in the U.S. District Court for the District of Idaho alleging that the EPA’s decision was arbitrary and capricious and denied them their due process rights. [Sackett v. EPA, No. 08-cv-185-N-EJL, 2008 WL 3286801 (D. Idaho Aug. 7, 2008)] The Pacific Legal Foundation, a property rights group, represented the homeowners. The Sacketts alleged that their due process rights were violated because they could not challenge the EPA’s finding that the property was a wetland until the EPA filed an enforcement action. In the meantime, they faced daily monetary penalties if they did not comply with the order. Their claims were dismissed for lack of subject matter jurisdiction at both the trial court level and on appeal to the Ninth Circuit. [Sackett v. EPA, 622 F.3d 1139 (9th Cir. 2010)] Both courts followed prior precedent, which held that administrative compliance orders are not a final agency action and are therefore not subject to pre-enforcement review.

In reversing the Ninth Circuit, the U.S. Supreme Court held that the order was a final agency action and the Clean Water Act could not prevent property owners from seeking preenforcement judicial review under the Administrative Procedures Act. Justice Antonin Scalia wrote the Court’s opinion stating that the Clean Water Act does not explicitly preclude preenforcement review 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."

Under the Administrative Procedures Act, 5 U.S.C. § 704, parties may seek judicial review for “final agency action for which there is no other adequate remedy in a court.” The Court held that the order was a final agency action because it determined the Sackett’s rights and obligations by finding that their property was a wetland and had to be restored immediately. Furthermore, there was no other adequate remedy because the agency would not grant the Sacketts a hearing nor begin the enforcement process. Justice Scalia noted that the Sacketts had no other remedy in court because they “cannot initiate that process, and each day they wait for the agency to drop the hammer, they accrue, by the Government’s telling, an additional $75,000 in potential liability.” Finding that there was final agency action and no other remedy in court, the Supreme Court reversed the lower court’s decision and allowed the Sacketts to challenge in court the EPA’s conclusion that their property is a wetland.