March 29, 2012

Courts 'Put the Brakes' on EPA's Clean Water Act Authority

Holland & Knight Alert
Rafe Petersen

Supreme Court Unanimously Rules EPA Enforcement Orders May Be Challenged and the D.C. District Court Overturns EPA's 'After the Fact' Permit Veto

In a significant victory for private property rights in the contentious Clean Water Act (CWA) arena, two major decisions - one by the U.S. Supreme Court and another by the federal D.C. District Court - were issued during the week of March 19, 2012. These two decisions significantly limit authority of the U.S. Environmental Protection Agency (EPA) under the CWA.

The Supreme Court Decision

In Sackett v EPA,1 authored by Justice Scalia, the Supreme Court unanimously held that landowners have a right to challenge EPA CWA enforcement orders in federal court before being required to comply with such orders. In this case, EPA sent a compliance order to the private landowners, the Sacketts, who were building their long-planned single family home near a lake in Idaho. The pre-enforcement order required the Sacketts to restore an area the EPA claimed was illegally-filled wetland. EPA threatened the Sackets with civil penalties of up to $37,500 per day if they did not immediately comply. The Sacketts filed suit in federal court claiming a violation of their due process rights under the Fifth Amendment of the U.S. Constitution as well as a claim that EPA’s action was “arbitrary and capricious” under the Administrative Procedure Act (APA) under the theory that the area in question was not jurisdictional wetlands.

The district court dismissed the Sackett’s claims and the Ninth Circuit affirmed concluding that the CWA “precluded pre-enforcement judicial review of compliance orders.”2 Thus, the Sacketts were in the untenable position of believing that the area in question was not wetlands but having no way to challenge EPA’s determination in court unless they first complied with EPA’s order. All the while, potential fines would be incurred.

The Supreme Court overturned the Ninth Circuit’s decision holding that because such orders in fact determine rights and obligations and represent the culmination of the agency’s decision-making, they are challengeable as “final agency action” under the APA. This decision is certain to have far reaching effects, changing how the EPA enforces the CWA as well as other environmental statutes.

The Federal D.C. District Court Decision

The second decision, Mingo Logan Coal Company v. EPA,3 involved EPA’s authority under CWA Section 404(c) to “veto” CWA permits issued by the U.S. Army Corps of Engineers. In this case, EPA exercised its veto authority against a Corps permit authorizing fill of wetlands and waters for mountaintop mining in West Virginia. Like the Sackett case, the facts appear to be sympathetic to the landowner; in this case, a mine owner and permittee, who pursued a CWA permit for over 10 years. The permitting process involved detailed environmental review, including extensive involvement by EPA. Four years after the Corps finally issued the permit, EPA exercised its veto claiming that, based on new information, continued mining in streams covered by the permit would have “unacceptable” impacts.

In the opinion, Judge Jackson for the D.C. District Court held that EPA had resorted to “magical thinking” to grant itself broad new authority under the CWA, finding that Congress intended for permits to be final and that EPA’s veto authority could only be exercised prior to permit issuance. The ruling, if unchallenged or upheld, will likely “put the brakes” on EPA’s aggressive use of its veto authority and should provide comfort to holders of CWA permits that they may rely on those permits without fear of a later EPA veto.

The Significance of the Decisions

Sackett v. EPA

The Sackett case is important for its holding that CWA Section 309(a) compliance orders are final agency actions subject to appeal, finding that such orders in fact determine “rights and obligations” and represent the “consummation” of agency deliberations.4 In reaching this decision, Justice Scalia rejected the government’s main reason for liberally using these orders and their argument that Congress intended for compliance orders to achieve efficient and quick remediation - a goal that would be hindered by judicial review, noting:

... 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 questions whether the regulated party is within the EPA’s jurisdiction.5

The Sackett decision is also noteworthy for what the court did not decide. First, the court did not reach the issue of whether the Sacketts could challenge the terms of the underlying compliance order. As stated in Justice Ginsburg’s concurrence:

... whether the Sacketts could challenge not only EPA’s authority to regulate their land under the Clean Water Act but also, at this pre-enforcement stage, the terms and conditions of the compliance order, is a question today’s opinion does not reach out to resolve.6

Second, the Supreme Court failed to reach the Sackett’s due process constitutional claim. For those inclined to read the tea leaves, however, the Supreme Court’s recent denial of certiorari of a similar constitutional claim against a pre-enforcement order under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), another statute administered by EPA, which may have telegraphed that due process challenges might not receive a favorable hearing.7

Finally, Justice Alito used his concurrence as a vehicle to chastise Congress and the agency for failing resolve the “notoriously unclear” reach of the Clean Water Act,8 noting that the Sackett’s plight exemplified the impact of that failure on property owners.

Implications of the Sackett Decision

The implications of the Sackett decision will take time to sort out. Certainly, there will be an immediate effect on EPA’s use of administrative orders, which have been a frequent enforcement tool (in 2011, EPA issued approximately 1,324 compliance orders under various statutes).9 Given the risk of future challenges to such orders, EPA will likely look towards other enforcement tools such as issuing notices of violation. While such notices do not create the immediate threat of penalties, EPA can be expected to aggressively pursue recipients of such notices as a way of coercing compliance without the risk of judicial review.

Sackett might also trigger a spate of lawsuits challenging the Corps’s assertion of jurisdiction over wetlands and streams. Justices Ginsburg and Alito both stated in their respective concurrences that the “Sacketts may immediately litigate their jurisdictional challenge in federal court”10 and that “property owners like petitioners will have the right to challenge the EPA’s jurisdictional determinations under the Administrative Procedure Act.”11 Up until now, the EPA has been successful in preventing landowners from challenging jurisdiction prior to enforcement actions. This left many landowners without any avenue of relief where the Corps and EPA had asserted jurisdiction over arguably questionable areas, such as drainage swales and ephemeral “water features.” Sackett will now likely open the door to challenge such assertions of jurisdiction, even in the absence of an EPA Section 309(a) enforcement action. Also, given the prospect of substantially more litigation, the EPA may well take Justice Alito’s admonishments to heart and pursue a rulemaking thereby setting a clearer standard for both landowners and agency officers to use in these determinations.

Additionally, Sackett will likely have major implications for other environmental statutes. Although some statutes, most notably CERCLA, include express provisions barring pre-enforcement judicial review, most are not explicit about whether such challenges are barred, leaving courts to engage in a statute-by-statute analysis. For example, the Clean Air Act (CAA) allows for use of compliance orders under Section 113 (a), with provisions similar to CWA Section 309(a). Additionally, the Resource Conservation and Recovery Act (RCRA) allows for administrative orders under several provisions, none of which include an express bar to review. Although some lower courts have declined to allow judicial review of RCRA enforcement orders, based on reasoning very similar to that rejected in Sackett, these determinations can be expected to be reexamined in light of Sackett.12 Future suits challenging such orders, including orders under statutes where the bar on pre-enforcement review had seemed to be settled law, should be expected.

Mingo Logan Coal Company v. EPA

The Mingo Logan case examined the extent of EPA’s ability to set aside CWA permits issued by the Corps after the fact. The mining company worked with the Corps and EPA in a contentious, multi-year CWA permitting process after which EPA declined to press its concerns any further.13 Four years after the permit was issued and work was underway, EPA cited to “new information” and issued a veto, relying on CWA Section 404(c), which authorizes EPA to “prohibit the specification (including the withdrawal of specification) ... whenever [EPA] finds ... that the discharge ... will have an unacceptable adverse effect on municipal water supplies, shellfish beds and fishery areas ... wildlife or recreational areas ... .”14

The court noted that the language of the statute was “poorly written,” but that a review of the statute as a whole and the legislative history did not give EPA such “open ended veto” authority. Even considering deference to the agency under the so-called Chevron test,15 Judge Jackson concluded EPA’s position was not a permissible interpretation of the statute. In a harshly worded opinion, Judge Jackson stated that EPA’s decision to veto well after the permit was issued “has the air of a disappointed player’s threat to take his ball and go home when he didn’t get to pitch.”16 The court noted that:

... the idea that a permit, in particular a permit which EPA refused to suspend or modify ? will simply evaporate upon EPA’s say so is at odds with the exclusive permitted authority accorded the Corps in section 404(a) and the legal protection Congress declared that a permit would provide in section 404(p).17

Specifically, Judge Jackson found that allowing EPA such unfettered discretion “would leave permittees in the untenable position of being unable to rely on the sole statutory structure for measuring their CWA compliance: the permit.”18 To further support her reasoning, Judge Jackson cited the National Stone, Sand and Gravel Association and the U.S. Chamber of Commerce amici briefs on the importance of finality and the adverse effects that such an “open ended risk of cancellation” would have on the ability of construction and mining companies to secure credit for their operations.19

Implications of the Mingo Logan Decision

While Mingo Logan is a district court case and subject to potential appeal, it is significant in that it ended a long string of decisions where the courts deferred to EPA’s expansive view of its CWA authority to protect the aquatic environment. The court stressed the fact that EPA’s actions clashed directly with the finality of the permit process envisioned by Congress, recognizing the important reliance that permittees place on the finality of permits in making important business decisions.


Both Sackett and Mingo Logan are important decisions that reign in EPA’s expansive view of its authority under the CWA. These decisions send a strong signal to EPA that courts will not always defer to the agency’s position that the CWA empowers EPA with unreviewable authority to protect the aquatic environment regardless of the impact of those actions on the regulated community and the public.


1 Sackett v. EPA, 566 US ____ (2012).

2 Sackett v EPA, No. 2:08-cv-00185-EJL, 2008 WL 3286801 (D. Idaho August 7, 2008), 622 F.3d. 1139 (9th Cir. 2010).

3 Mingo Logan Coal Co. v. EPA, C.A. No. 10- 0541 (ABJ) (March 23, 2012).

4 Sackett v. EPA, Slip Op. at 5, noting there was an unfair continuing risk of civil penalties accruing while the Sacketts waited indefinitely for the "agency to drop the hammer" of filing suit in federal court.

5 Sackett v. EPA, Slip Op. at 9-10.

6 Sackett v. EPA, Slip Op. at 11 (Ginsburg, J., concurring).

7 In Gen'l Elect. v. Jackson, petition for certiorari denied June 6, 2011, the Supreme Court declined to hear an appeal of a constitutional challenge to a CERCLA pre-enforcement order, although CERCLA is a statute that does include an express bar against pre-enforcement judicial review of cleanup orders.

8 Sackett v. EPA, Slip Op. at 12 (Alito, J., concurring).


10 Sackett v. EPA, Slip Op. at 11 (Ginsburg, J., concurring).

11 Sackett v. EPA, Slip Op. at 13 (Alito, J., concurring).

12 See Ross Incineration Servs., Inc. v. Browner, 118 F. Supp. 2d 837, 843-44 (N.D. Ohio 2000); Amoco Oil v. EPA, 959 F. Supp. 1318, 1321-24 (D. Colo. 1997).

13 In a Nov. 2, 2006 email, William Hoffman of EPA told the Corps that "we have no intention of taking our Spruce mine concerns any further from a Section 404 standpoint." Mingo Logan Slip. Op. at 6.

14 Mingo Logan Slip. Op. at 11.

15 Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984).

16 Mingo Logan Slip. Op. at 27, n. 11.

17 Mingo Logan Slip. Op. at 18.

18 Mingo Logan Slip. Op. at 31.

19 Mingo Logan Slip. Op. at 31.

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