Supreme Court Opens Door to Suits Challenging Federal Agency Actions

by Polsinelli

On March 21, 2012, the U.S. Supreme Court issued a unanimous decision effectively broadening the circumstances under which parties may go to court to seek review from final agency actions. The decision – Sackett v. EPA, 2012 U.S. Lexis 2320 – involved review of a compliance order issued by the Environmental Protection Agency (EPA) pursuant to the Clean Water Act (CWA), but could have implications with respect to the review of agency actions under other federal statutes as well.

The Administrative Procedure Act (APA) provides a basis for review of many final agency actions, but Section 701(a)(1) of the APA states that judicial review is not available under the APA to the extent that judicial review precluded by other federal statutes. For purposes of this provision, it is well-established that statutes may preclude judicial review by implication as well as by doing so expressly. For many years lower courts had concluded that the CWA – which provides for judicial review of penalty orders but does not provide for judicial review of compliance orders – should be read to preclude judicial review of compliance orders. As a result, there has been no means to challenge CWA compliance orders in court until EPA files suit itself to enforce them, at which point EPA would typically seek penalties for noncompliance with the order. The harshness of this result is illustrated by the facts presented in the Sackett case.

The Sackett family owned a vacant residential lot in Idaho, and had added fill to a portion of the property in preparation for construction. The Sacketts then received an administrative compliance order from EPA alleging that the parcel was a wetland subject to CWA protections, and ordering them to remove the fill material and restore the parcel in accordance with an EPA-created plan, or face penalties of up to $75,000 per day. The Sacketts filed suit in federal court pursuant to the APA, challenging the order as unlawful. The U. S. District Court dismissed the suit, and the U.S. Court of Appeals for the Ninth Circuit upheld the dismissal, holding that the CWA precludes review of compliance orders before EPA actually seeks to enforce them. As a result, the Sacketts were left with no means to challenge the EPA order without incurring the risk of substantial penalties for noncompliance with its terms.

The Supreme Court's Ruling

The Supreme Court reversed, holding that the EPA compliance order was a final agency action, and that the implication that the CWA precludes judicial review of such orders is not sufficiently compelling to overcome the APA's general presumption that final agency actions are reviewable. The Court distinguished three prior decisions in which it had found an implied preclusion of judicial review in other statutes, but articulated no clear basis to draw the line between statutes that should be read to preclude judicial review of agency actions and those that should not. What the decision does suggest is that the lower courts have been drawing that line incorrectly for many years in CWA cases, and may have been doing so under other statutes as well. Accordingly, parties subject to administrative compliance orders or similar agency actions may now have better opportunities to challenge those actions in court.

For More Information

For more information on the impact of this ruling, contact one of our Environmental and Natural Resources attorneys or:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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