Supreme Court Allows Pre-Enforcement Challenge to EPA Administrative Order

In a unanimous decision authored by Justice Scalia, the Supreme Court on March 21 ruled that administrative orders issued by EPA are subject to pre-enforcement judicial review under the Administrative Procedure Act.  In that case, Sackett v. Environmental Protection Agency, No. 10-1062, EPA issued a compliance order alleging that landowners had illegally placed fill material in wetlands, without a permit required under section 404 of the Clean Water Act.  The order directed the landowners to restore the property.  The landowners requested a hearing from EPA, taking the position that EPA lacked jurisdiction to regulate the wetlands because the wetlands did not meet the definition of "waters of the United States" under the Clean Water Act.  EPA denied the request, and the landowners sued under the APA.

The Court ruled that the order was a "final agency action" subject to the APA, and that the landowners could therefore challenge the order.  The Court considered it significant that EPA took the position that the landowners could be liable not only for penalties of up to $37,500 per day of violation for violating the statute, but also an additional $37,500 per day for not complying with the compliance order, and took EPA to task for expecting the landowner to wait until EPA files a judicial action as potential penalties continued to pile up.  The Court further noted that the fact that the government had not yet brought a judicial action against the defendants was not a justification to deny the defendants the right to challenge EPA's administrative order.

The ruling removes a significant source of uncertainty for landowners who have previously been forced to decide whether to comply with an EPA administrative order, or to refuse to comply and run the risk of substantial penalties if the order was later determined to be valid.  However, Justice Ginsburg, in a noteworthy concurrence, pointed out that the Court's ruling allowing pre-enforcement review applied only to the landowners' challenge to EPA's authority to regulate their land under the Clean Water Act, but did not address whether pre-enforcement review would be allowed to challenge the terms and conditions of EPA's administrative order.

--Josh Bloom