tag: North Carolina Land Use Litigator: SCOTUS Scores Win for Property Owners, Requiring Judicial Review In Face of EPA "Compliance Orders" Made Pursuant to Clean Water Act

Friday, March 23, 2012, 10:28 AM

SCOTUS Scores Win for Property Owners, Requiring Judicial Review In Face of EPA "Compliance Orders" Made Pursuant to Clean Water Act

Some Background
Petitioners Sacketts own property in Bonner County, Idaho. While constructing a home on that property, the Sacketts "filled in part of their lot with dirt and rock". The problem, however, according to the EPA, is that the Sacketts' property "contains wetlands within the meaning of [federal law]" and those wetlands "are adjacent to Priest Lake [which is] a navigable water within the meaning of [the Clean Water Act]".

If the EPA determines, as it did with regard to the Sacketts, that any person is in violation of the Clean Water Act, the EPA shall either issue a compliance order or initiate an enforcement action. Should the EPA succeed in an enforcement action, without having first issued a compliance order, the fine shall "not exceed [$37,500] per day". Should the EPA issue a compliance order and the order is not abided, and the EPA subsequently commences an enforcement action and succeeds in the action, the fine is doubled.

The Case
Back to the Sacketts, and Sackett et al. v. Environmental Protection Agency, et al. (March 21, 2012). The EPA did not commence an enforcement action against the Sacketts but rather issued a compliance order, which rendered "Findings and Conclusions". The Sacketts were not afforded, and did not participate, in any kind of hearing or other process prior to the EPA's issuance of the compliance order.

The Sacketts, who disagreed with the EPA's "Findings and Conclusions" that their property is subject to the Clean Water Act, requested a hearing. The EPA denied the request. At that point, the Sacketts brought a lawsuit in federal court seeking declaratory and injunctive relief. The Sackett's complaint contended that the compliance order was "arbitrary [and] capricious" under the Administrative Procedure Act, and that the compliance order deprived the Sacketts of their due process rights.

The Government, on the other hand, contends that the compliance order is not final, as defined by the APA, such that there is no jurisdiction for review. And, even assuming the decision is final under the APA, the Clean Water Act "precludes judicial review" such that the Sackett's lawsuit is not proper. From a policy perspective, militating against judicial review of compliance orders until enforcement is sought, the Government argued that "Congress passed the Clean Water Act in large part ot respond to the inefficiencies of then-existing remedies for water pollution [and] [c]ompliance orders ... can obtain quick remediation through voluntary compliance".

The trial court dismissed the Sackett's complaint, and the court of appeals affirmed.

The Opinion
The Government takes the loss and property owners notch the victory, though not on due process grounds. Rather, the Court concludes that property owners are entitled to a hearing on compliance orders under the APA.

In his majority opinion, Justice Scalia reasons that the compliance order has "all the hallmarks" of a final agency decision under the APA: (1) it determined "rights and obligations", (2) legal consequences flow from the compliance order--namely, fines, and (3) the compliance order "marks the consummation of the EPA's decisionmaking process.

The Court also concludes that the Clean Water Act does not preclude judicial review, reasoning that "[t]he APA's presumption of judicial review is a repudiation of the principle that efficiency of regulation conquers all." The Court continues, "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".

But will the Court regret its decision to open the floodgates of judicial review and occupy the EPA with litigation in almost every instance of regulatory decisionmaking? One might think the Court doesn't believe that's what is sown: "Compliance orders will remain an effective means of securing prompt voluntary compliance in those many cases where there is no substantial basis to question their validity."

Right, THOSE cases.

Mike Thelen is a lawyer in Womble, Carlyle's Real Estate Litigation practice group. He regularly represents a wide variety of clients, from local governments to businesses, in land use and land development matters in both state and federal venues throughout North Carolina.

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