Sackett v. US EPA: Drowning the Agency Enforcement Scheme
-Michael S. Finkelstein, J.D./C.L. 2013, Paul M. Hebert Law Center, Louisiana State University, B.A. 2010, Louisiana State University.
Silent Spring author and environmental advocate Rachel Carson may have turned in her grave this March following the Supreme Court’s unanimous pronouncement in Sackett v. U.S. EPA. In its decision, the Court dealt a detrimental blow to the EPA’s ability to regulate parties through the issuance of administrative compliance orders. The Court ruled that regulated parties can challenge compliance orders before the agency seeks enforcement. Though this case specifically dealt with the EPA, its ramifications may be felt across the entire government agency regulatory scheme. Because the Sackett ruling provides regulated entities with an easy passage to evade enforcement of administrative compliance orders through judicial review, regulatory agencies will be forced to change their administrative processes to evade a flood of litigation.
Functioning as the federal government’s regulatory arm in the area of protecting the environment and ensuring clean air and water across the country, the Environmental Protection Agency (EPA) operates through issuing parties compliance orders, or administrative orders. These orders are documents that contain findings of fact and conclusions of law. Usually, the orders also require that some action be undertaken by a regulated party; for instance, in the environmental realm, the EPA might direct a factory to reduce its carbon emissions to federally-regulated standards.
Orders that require corrective action within a specified time frame have heavy monetary penalties that begin accruing upon non-compliance with the order. Since the penalties are so severe, agencies have been able to obtain compliance with their orders under threat of enforcing those penalties for non-compliance. This scheme has enabled agencies to essentially command action upon issuing a compliance order, without conducting a formal hearing on the merits. Notably, these orders are imposed upon alleged violations, as agencies are allowed to act upon the best evidence made available to them. Such schemes compelling compliance with administrative orders have previously been condemned as unconstitutional and a “patent violation of the Due Process Clause” per the EPA’s practices in regards to the Clean Air Act (CAA).
The EPA is the government agency tasked with implementing and enforcing the Clean Water Act (CWA), the statute at issue in the Sackett case, by prohibiting any discharge without a permit into the navigable waters of the United States. Like all other governmental bodies, the EPA must be able to assert jurisdiction over the parties it attempts to regulate. The EPA gathers its own information to make such a determination, for example, deciding which waters are those that are considered the navigable waters of the United States. As is the case in this example, this determination can involve the agency making both a factual and legal finding.
Administrative agencies such as the EPA are not required to meet the heightened evidentiary burdens as are required in trial in Article III courts. A lower evidentiary burden permits the agency to act and issue compliance orders based on any information available to it. The agency fact-gathering process can include “information that might not be sufficient to meet the strict judicial standards necessary to prosecute an enforcement action” in federal court. Because an agency has not yet attempted enforcement at the point of issuing administrative compliance orders, the orders are not traditionally considered final agency action. Furthermore, compliance orders have not been considered final agency action because, while they do constitute a step in the agency’s deliberative processes, they are not a step in the EPA seeking enforcement.
Under the Administrative Procedure Act, only final agency action is subject to judicial review. Because the compliance order is not a part of an enforcement action, the agency has not yet deprived persons of property in violation of the Constitution and the actions are not subject to review. Thus, as they were not traditionally considered final agency action, compliance orders were not subject to judicial review. The orders have thus gone unchallenged, helping to broaden the EPA’s powers to obtain compliance with administrative orders and creating what has been referred to as the “pre-enforcement review bar.”
Because determining the technical issues inherent in many administrative areas requires a great deal of expertise and knowledge, federal courts afford agency decisions strong deference in the event that a regulated entity seeks judicial review of an agency decision. Regulated entities have generally chosen to cooperate with the EPA’s compliance orders rather than go through the lengthy and expensive process of administrative hearings or filing a claim in district court, where EPA compliance orders are given strong judicial deference and regulated entities risk negative publicity for attempting to evade regulation under administrative orders.
Regulated parties have complained that coercion into compliance through agency-issued administrative orders and the threat of extremely high sanctions deprives the entities of their rights under the due process clause of the Fifth Amendment. In Sackett, Michael and Chantell Sackett challenged the EPA’s ability to issue administrative orders per the CWA, in part challenging the agency’s ability to enforcement orders without the opportunity for judicial review.
In 2007, the Sacketts purchased a plot of land in Idaho several properties north of Priest Lake. They filled in part of their lot with dirt and rock in anticipation of building a home on the property, but did not obtain a permit before doing so. Months after depositing the sediment, the Sacketts received a compliance order from the EPA, containing a number of findings of fact and conclusions of law. The compliance order directed the Sacketts to restore the site to its original condition under the direction of the EPA and to provide EPA officials access to the site as well as all records and documentation related to the site.
A year earlier, in Rapanos v. EPA, the Supreme Court held that wetlands not adjacent to navigable-in-fact waters were not within the scope of the CWA. Following Rapanos, the Sacketts did not believe their property fell under the jurisdiction of the EPA, and they petitioned the EPA for a hearing on the compliance order they had been issued. After the EPA denied the Sacketts a hearing, they filed suit in the United States District Court for the District of Idaho, seeking declaratory and injunctive relief.
The Sacketts complained that the compliance order issued by the EPA violated their due process rights under the Fifth Amendment. The Sacketts further contended that the issuance of the order was “arbitrary [and] capricious” under the Administrative Procedure Act (APA), a claim which, if accepted, would allow the administrative order to be set aside. However, the administrative order could only be set aside, let alone heard in federal court, if the order is considered a “final agency action.”
The District Court for the District of Idaho dismissed the Sacketts’ case for lack of subject-matter jurisdiction. The Court held that the CWA precludes judicial review of compliance orders before the EPA has commenced an enforcement action in federal court. On appeal, the Ninth Circuit Court of Appeals affirmed the district court’s ruling, concluding de novo that the CWA precludes pre-enforcement judicial review of compliance orders. Further, the Ninth Circuit held that the pre-enforcement judicial review bar does not violate Due Process.
The Supreme Court reversed, “conclud[ing] that the compliance order in this case [was] final agency action for which there [was] no adequate remedy other than APA review, and that the Clean Water Act [did] not preclude that review.” Judicial review under the APA may be granted when the underlying legislative enabling act expressly does not preclude judicial review of an agency action. Though there is a presumption favoring judicial review of agency action, that presumption may be overcome where the administrative statutory scheme precludes judicial review. Traditionally, courts have looked to the statutory language of agencies’ enabling acts to decide whether judicial review is precluded by legislation.
In deciding that the CWA does not preclude judicial review under the APA, the SackettCourt reasoned that courts must look to more than the express language of the implementing statute (enabling act). Instead, courts must look to the “statutory scheme as a whole.” Under this standard, the Court held that the EPA’s compliance orders are subject to review because 1) the CWA does not expressly preclude judicial review and 2) the compliance order scheme resembles final agency action under the CWA.
The Court’s holding did not provide any relief for the Sacketts. The Court expressly stated that it refused to resolve this case on the merits: whether the Sacketts’ land constitutes “navigable waters” under the CWA. Without considering the merits issue of what constitutes wetlands under the CWA, and thus, the jurisdiction of the EPA generally, the Court remanded the case back to the district court, where the EPA’s determination through its administrative order carries great deference.If, on remand, the district court determines that the Sacketts are within the EPA’s jurisdiction and in violation of the CWA, the Sacketts must comply with the EPA order despite their years of legal maneuvers and a favorable Supreme Court ruling.
In the meantime, Sackett could prove to be the greatest administrative law decision in decades. Upon considering the effects of judicial court challenges, Sackett presents the perplexing issue of whether the government’s current system of agency regulation will persist or whether agencies must adapt to survive the flood of litigation. In considering the EPA’s administrative compliance orders to be “final agency action,” the Court has substantially altered the legal rights of regulatory agencies as well as regulated parties. The force of the Sackett ruling rests in the decision establishing the precedent to devastate the entire government agency regulatory system. Because administrative orders can be considered “final agency actions,” regulated parties now have an expanded ability to challenge agency action in federal court under the APA.
The Sackett decision also expands what constitutes final agency decisions, subjecting intermediary agency actions to review in federal court. An expansion of what is considered final action opens agencies up to federal court challenges by regulated entities endeavoring to evade administrative order compliance. Substantially greater resources are required for agencies to defend their actions in federal court, as agencies will be forced to assemble administrative records for each compliance order they issue. Having to defend itself against an impending flood of litigation, the agencies, which depend on efficiency to function properly, have their resources stretched until the point at which they can no longer handle the increased use of already-limited resources.
For administrative agencies to survive post-Sackett, including the EPA, the agencies must change their current enforcement schemes in order to maintain low expenditures and continue efforts to operate efficiently. In its opinion, the Court wrote that “[c]ompliance 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.” The Court here made a distinct move to save the power of the compliance order insofar as it will induce voluntary compliance. In this regard, agencies can still obtain compliance and promote their enforcement schemes.
If the EPA can implement a scheme to avoid the Sackett pitfall of compelled enforcement without an opportunity for judicial review, it can preserve its ability to control the fact-finding process while still maintaining judicial deference in the event of a federal court challenge. The EPA may do so either by only imposing penalties only after obtaining an enforcement order in federal court or by guaranteeing an administrative appeals process before seeking a judgment in court and before penalties for non-compliance begin to accrue. An internal appeals process will ensure that intermediary agency actions are not considered final agency decisions, but are merely “a step in the deliberative process.” As a result, compliance orders will not be subject to judicial review. Further, an appeals process will reinforce the weight of a compliance order in the event that it is challenged in district court. If an agency decision is brought for review after an internal agency appeal, the agencies will be armed with a greater argument that their decisions deserve strong deference by the courts. Given stronger deference from the courts, the agencies will be able to stave off increasing litigation and recuperate the effectiveness of their compliance orders.
As administrative agencies face the threat of increased federal court challenges following Sackett, they must change their processes for seeking enforcement and in obtaining final agency decisions. Creating an internal appeals process will secure the agencies stronger deference from the courts and ensure that agency decisions are upheld upon judicial review. For the EPA, victorious court challenges and retroactive penalties for non-compliance with EPA orders will push back the flood of federal court challenges, save the agency’s ability to obtain voluntary compliance through issuing administrative orders, and allow the EPA to continue to effectively regulate our nation’s natural resources.
Preferred citation: Michael S. Finkelstein, Sackett v. US EPA: Drowning the Agency Enforcement Scheme, LSU J. Energy L. & Res. Currents (October 10, 2012), http://sites.law.lsu.edu/jelrblog/?p=89.
 Sackett v. U.S. EPA, 132 S. Ct. 1367 (2012).
 Id. at 1374.
 See id.at 1370–71.
 See id. at 1370–71. Determining findings of fact and conclusions of law are traditionally considered to be within the province of the courts.
 Lowell Rothschild, Before and After Sackett v. U.S. Environmental Protection Agency, The Federal Lawyer, July 2012, at 47.
 Id. at 47–48.
 Andrew C. Hanson, A SIP Call for Clarity: An Analysis of the Effect of the Eleventh Circuit’s Decision in Sierra Club v. Tennesee Valley Authority on State Implementation of the Federal Credible Evidence Rule, 33 Colum. J. Envtl. L. 283, 285 (2008).
 In TVA v. Whitman, the Eleventh Circuit ruled that it was unconstitutional for the EPA to impose civil and criminal penalties for the violation of an administrative compliance order. See Tennessee Valley Authority (TVA) v. Whitman, 336 F.3d 1236, 1259 (11th Cir. 2003). Such an issue is the exact same one as brought by the Sacketts in their case, seeking to obtain an identical declaration in regards to the Clean Water Act in their case as the TVA court pronounced on the Clean Air Act.
 The Clean Water Act (CWA) developed from the Water Pollution Control Act of 1948 (P.L. 80-845), the first major U.S. law to address water pollution. The CWA was put into its current form as the result of the 1972 Federal Water Pollution Control Act Amendments (P.L. 92-500), which expanded the government’s ability to regulate the environment by enabling the EPA to set standards for water quality and pollutant discharge. U.S. Environmental Protection Agency History of The Clean Water Act, http://www.epa.gov/lawsregs/laws/cwahistory.html(last visited Sept. 16, 2012).
 See, e.g., Rapanos v. United States, 547 U.S. 715, 726–729 (2006).
 This ruling is atypical of that one that is within the traditional realm of the courts; yet the EPA has asserted power to make these determinations as part of its administrative scheme. See id.
 Agencies are established through Congress first passing an enabling act that act sets out the agency’s scheme statutorily. Though most administrative agencies are classified generally under the executive branch, they are legislative in their ability to set regulations similar to federal statutes, executive in their enforcement of these regulations, and judicial in their ability to act as a finder of fact and to execute judgments. While some agencies fall more closely under the control of the President, there are also independent agencies insulated from direct Presidential supervision. These independent agencies act like a fourth, headless, branch of government, though Congress controls their budgets.
 Rothschild, supra note 5, at 47. See generally, Hanson, supra note 8.
 Rothschild, supra note 5, at 47.
 Id. at 47–48.
 Before the EPA can impose sanctions against regulated entities for noncompliance with administrative orders, it must first bring a civil enforcement action in federal district court. Sackett v. U.S. EPA, 622 F.3d 1139, 1143 (9th Cir. 2010). The EPA, however, prefers to operate through parties complying with the administrative orders it issues because compliance with these orders allows the EPA to operate in a more cost-effective manner. Rothschild, supra note 5, at 47–48. Compliance orders are a step in the agency’s factual determination but have not been considered final agency action as they are not fundamental to the enforcement action. See Sackett, 622 F.3d at 1143; see also Sackett v. U.S. EPA, 132 S. Ct. 1367, 1373 (2012).
 5 U.S.C. § 704 (2012).
 Rothschild, supra note 5, at 47–48.
 The term “pre-enforcement review bar” refers to the inability to obtain judicial review absent a “final agency action.” Rothschild, supra note 5, at 48. While the taking of private property without due process of law is offensive to the Constitution, public expectation of an expeditious administration of justice requires swift agency action to enforce federal regulatory schemes. Id. “Congress has provided a blanket right to review under the [Administrative Procedure Act (APA)] that protects an individual’s due process rights by allowing regulated entities to challenge agency actions that are arbitrary and capricious, an abuse of discretion, or are otherwise not in accordance with the law.” Id. However, because agencies must frequently make swift, intermediary decisions on various issues, these decisions often do not constitute “final agency action” and are accordingly not subject to judicial review. Id. (see source for a more thorough discussion of the pre-enforcement bar).
 See, e.g., Kleppe v. Sierra Club, 427 U.S. 390, 412 (1976) (citing Aberdeen & Rockfish R. Co. v. Students Challenging Regulatory Agency Procedures (S.C.R.A.P. II), 422 U.S. 289, 325–26 (1975)); see also Baltimore Gas & Electric Co. v. Natural Resources Defense Council, Inc., 462 U.S. 87, 103 (1983).
 See Rothschild, supra note 5, at 50–51.
 See, e.g., Tennessee Valley Authority v. Whitman, 336 F.3d 1236 (11th Cir. 2003); “[N]or shall any person… be deprived of life, liberty, or property, without due process of law.” U.S. Const. amend. V.
 Sackett v. U.S. EPA, 132 S. Ct. 1367 (2012).
 Id. at 1370.
 In the order issued by the EPA, the agency asserted jurisdiction by concluding that the Sacketts’ land constituted jurisdictional wetlands in close proximity to navigable waters. Id. at 1370–71.
 Rapanos v. United States, 547 U.S. 715 (2006).
 Sackett v. U.S. EPA, 132 S. Ct. at 1371.
 5 U.S.C. § 706(2)(A)(2012); see also, e.g., Marsh v. Oregon National Resources Counsel, 490 U.S. 360 (1989).
 5 U.S.C. § 704 (2012); Sackett, 132 S. Ct. at 1369, 1371.
 Sackett, 132 S. Ct. at 1371.
 Sackett v. U.S. EPA, 622 F.3d 1139, 1141 (9th Cir. 2010). Agencies cannot exceed the powers granted to them in their enabling act. Id. at 1141–43. An agency’s enabling act can also determine when that agency’s actions are susceptible to judicial review. Id.
 Sackett, 132 S. Ct. at 1371 (citingSackett v. U.S. EPA, 622 F.3d 1139, 1144 (9th Cir. 2010) (citations omitted)).
 Id. (citing Sackett v. U.S. EPA, 622 F.3d 1139, 1147 (9th Cir. 2010) (citations omitted)).
 Sackett, 132 S. Ct. at 1374.
 See id. at 1372–73.
 See id.
 Id. (citing Block v. Community Nutrition Institute, 467 U.S. 340, 349 (1984)).
 Id. at 1372–73.
 Id. at 1372–74.
 In a notably narrow ruling, the Court did not address the petitioners’ Due Process claim, instead remanding the case based on the finality of the EPA’s agency action. See id. at 1374.
 Id. at 1370.
 Id. at 1374. See also Sackett v. U.S. EPA, 677 F.3d 1000 (9th Cir. 2012).
 Aaron Brian, Does Sackett Flush the Clean Water Act, Daily Journal of Commerce, Apr. 23, 2012, http://djcoregon.com/news/2012/04/23/does-sackett-flush-the-clean-water-act.
 Sackett may signal the turning point away from EPA regulation or other federal over-regulation in general. In his concurrence, Justice Alito cautions against the expansiveness of the EPA’s administrative agency power by detailing how the EPA can assert jurisdiction over a party and subject that party to the agency’s mercy. Sackett, 132 S. Ct. at 1375 (J. Alito, concurring). The agency, he writes, can issue a compliance order demanding action; including a cessation of construction, expensive remedial measures, and abandonment of property. Id.
 Rothschild, supra note 5, at 51–52.
 Id. at 52.
 For example, in utilizing agency resources to gather facts to defend challenges of compliance orders in court. See, e.g., id.
 Sackett, 132 S. Ct. at 1374.
 See id. at 1373.
 See id. at 1371–72.