In Sackett’s Wake: Ensuring the Viability of EPA’s System of Voluntary Compliance after Sackett v. US EPA

-John Simmons, J.D./C.L. 2013, Paul M. Hebert Law Center, Louisiana State University

The most important administrative law decision since Chevron v. Natural Resource Defense Counsel[1] or business as usual? That is the question confronting administrative law scholars in the wake of the Supreme Court’s recent opinion in Sackett v. Environmental Protection Agency.[2] It touched off a number of scholarly responses,[3] including a thoughtful post on this blog by Michael Finkelstein.[4]Finkelstein laments the Sackett court’s holding that the issuance of compliance orders was final agency action and that judicial review of those orders was not precluded by statute.[5] He predicts that the ruling will do significant damage to the EPA’s system of gaining voluntary compliance through the use of the compliance orders.[6]

While logically sound, his conclusion overstates the point. The Sackett opinion stands as a fair and potentially narrow middle of the road opinion, tracking the Court’s precedent with regards to the finality and reviewability of agency action. It is unlikely to lead to the “parade of horribles” imagined by Finkelstein.[7] Further, the agency can prevent the predicted avalanche of litigation by engaging in rule making to define the bounds of the Clean Water Act. Failure to do so will lead to continual challenges to the agency on the fringe or perceived fringe of their authority.

By now, the reader is likely familiar with the saga of Michael and Chantell Sackett, but their story is worth a retelling. The Sacketts purchased a lot in Priest Lake, Idaho, near but not adjacent to a lake.[8] Prior to building a home on the lot, they filled in wetlands on their property, and that caused the EPA to issue a compliance order.[9] The EPA stated that by filling in the portion that they had, the Sacketts were in violation of the Clean Water Act because they had polluted the navigable waters of the United States.[10] The order dictated that they either mitigate the pollution or subject themselves to penalties totaling $75,000 a day for failure to comply.[11] The Sacketts believed that the EPA was mistaken, and that they had not polluted navigable waters in violation of the Clean Water Act.[12] That belief was based upon a 2006 Supreme Court opinion, Rapanos v. United States, wherein a plurality of the Court held that wetlands that are not adjacent to water which is “navigable in fact” ways were not subject to the Clean Water Act.[13]

The Sacketts were then stuck squarely on the horns of a dilemma. They could either repair the damage to their property, which they had a good faith belief fell outside the scope of the Clean Water Act, or they could wait for the EPA to file an enforcement action in federal court, all the while accruing additional penalties.[14] They chose option three: they sought injunctive and declaratory relief in the district court for the district of Idaho.[15] The district court dismissed the Sacketts case for lack of subject matter jurisdiction because they did not believe the agency action to be final, and the Ninth Circuit affirmed.[16] However the Supreme Court reversed the dismissal on the jurisdictional question alone.[17]

Justice Scalia’s concise opinion for a unanimous court held that the issuance of compliance orders under the Clean Water Act was subject to judicial review.[18] While no prior Supreme Court case had addressed this question, a circuit split had developed over the use of compliance orders.[19]The Court applied longstanding precedent in determining the finality of agency action: has the action determined rights or obligations of the affected parties? Does it constitute the consummation of the agency’s decision making on the topic? Are the affected parties allowed any other adequate remedy in court?[20] Justice Scalia answered that all of these indicated agency finality.[21] However, that did not end the analysis, for the Administrative Procedure Act’s presumption of judicial review can be precluded by the specific statute governing the agency.[22] Justice Scalia examined the Clean Water Act and noted that it was not such a statute, as nothing in it either expressly or impliedly precluded judicial review.[23]

Justice Scalia addressed the concerns of commenters such as Finkelstein and the EPA’s policy based argument near the end of the opinion.[24] The EPA argued that Congress enacted the Clean Water Act to respond “to the inefficienc[ies] of then-existing remedies for water pollution” and that Congress’s efficiency based motivations overcame the APA’s presumption of reviewability.[25] Justice Scalia responded by noting that the APA’s incorporation of judicial review reflected a judgment that efficiency of regulation was not the only concern.[26] He finished by explaining 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.”[27]

Justice Scalia’s point is that when the compliance order rests on firm ground, the affected parties will comply because there is little benefit in not—engaging in long and expensive litigation with absolutely no hope of victory is not the behavior of rational actors. Where the agency is on the fringe or perceived fringe of its authority, it can expect challenges because of people like the Sacketts, who believe they fall outside the scope of the Act. This language may have acted as the prompt for Justice Alito’s concurrence, wherein he attacks the EPA and Congress for not recognizing that the Clean Water Act’s boundaries were “notoriously unclear” and “require some specification.”[28] Justice Alito denounces the EPA for doing nothing to add clarity to the reach of the Act and its seemingly ad hoc approach to the reach of the Act.[29]

The Court had already rejected the agency’s claim of nearly boundless authority to regulate under the Clean Water Act in Rapanos v. United States[30] and Chief Justice Roberts warned of exactly this type of situation arising from the lack of clarity of the reach of Clean Water Act.[31] In the wake of Rapanos, and with the allowance of pre-enforcement judicial challenges now after Sackett, the EPA must work to elicit some guideposts for the Clean Water Act. If they do not and continue to push on the fringe of their authority, then Finkelstein’s anticipated flood of litigation may well occur.[32] Though Justice Scalia’s opinion in Sackett was limited to the language of the Clean Water Act, it may not be the only act subjected to these pre-enforcement challenges, as the Sackett ruling may allow challenges to compliance orders issued under the Clean Air Act and the Resource Conservation and Recovery Act.[33]

Finkelstein outlines a plan to “save” the compliance orders, but he misses the forest for the trees.[34] Finkelstein proposes an internal appeals process, with the compliance order not having effect until after the mandatory internal appeal or the suspension of penalties until an enforcement order in federal court.[35] Adding levels to the process will increase the expense and decrease the effectiveness of compliance orders without addressing the real issue—the scope of the Act. Suspending the penalties until the entry of a judgment will mean that few, if any, affected parties will comply because the threat of accrual is precisely what compels compliance under compliance orders. So while Finkelstein’s plan may well “save” compliance orders as a tool, it will render them largely toothless. In order to preserve compliance orders as a viable tool, the agency must engage determine the scope of its authority under the Clean Water Act.

Failure to take that action, or continuing to operate on the fringe of their authority, could lead to a catastrophe for the EPA. There are legal scholars who believe that the system of compliance orders violate the due process of those subjected to them,[36] and their numbers may well include Justice Alito.[37] Any step in that direction would decimate environmental regulation, as compliance orders would be worthless and the EPA would spend more time in expensive litigation. To prevent that, the EPA should work hard to determine the reach of its authority under the Clean Water Act. Engaging in a rule making task, while potentially politically difficult, ensures that the agency is acting within a limited reach and will lead to fewer challenges on the whole. Additionally, it could subvert any potential due process problems before those issues are raised. Only time will tell if the predicted “parade of horribles” comes to pass, but the EPA must take this ruling as a chance to clarify their reach in environmental regulation. The important task of preserving our nation’s resources is too important to be handled in an ad hoc manner.

Preferred citation: John Simmons, In Sackett’s Wake: Ensuring the Viability of EPA’s System of Voluntary Compliance after Sackett v. US EPA, LSU J. Energy L. & Res. Currents (January 3, 2013), http://sites.law.lsu.edu/jelrblog/?p=186.