The United States Supreme Court recently held that an enforcement order issued by the United States Environmental Protection Agency (“EPA”) under the Clean Water Act (the “Act”) constituted “final agency action” and that the Act did not preclude judicial review of the order. (Sackett v. EPA, No. 10-1062 (U.S. March 21, 2012).

The dispute arose after landowners, the Sacketts, placed fill material on their property in the beginning stages of building their house. The Sacketts then received an order from the EPA, which stated that their residential lot qualified as a wetland and that their construction project violated the Act. Specifically, the order stated that by placing the fill material on the property, the Sacketts unlawfully discharged a pollutant as prohibited by the Act. The order directed the Sacketts to take various actions, including restoring the “wetland” on their property pursuant to an EPA-created plan and providing EPA access to their property and any related documentation. According to the order, the Sacketts faced fines of up to $75,000 for each day of non-compliance.

After the EPA denied the Sacketts’ request for a hearing, the Sacketts brought suit in the United States District Court for the District of Idaho seeking declaratory and injunctive relief. Primarily, the Sacketts argued that EPA’s issuance of the order was unreasonable. Additionally, the Sacketts claimed that the order violated their Fifth Amendment due process rights by depriving them of “life, liberty, or property” in a fundamentally unfair way. The District Court dismissed their claims. The Ninth Circuit Court of Appeals affirmed, concluding that the Sacketts had no right to judicial review of administrative compliance orders such as the one issued by the EPA.

On appeal to the Supreme Court, the Sacketts sought judicial review under Chapter 7 of the Administrative Procedure Act (the “APA”), which allows for judicial review after a “final agency action for which there is no other adequate remedy in a court.” Thus, the Court had to determine whether the EPA’s issuance of the order was a “final” action and whether the Sacketts had any other “adequate remedies.”

Concluding that EPA’s issuance of the order constituted a final agency action, the Court noted that “it [had] all of the hallmarks of APA finality that our opinions established.” In making its determination, the court considered whether the order “determined [the Sacketts’] rights or obligations,” whether “legal consequences flow[ed] from the issuance of the order,” and whether any other adequate remedy existed.

Quickly dispensing with the first question, whether the order determined the Sacketts’ rights and obligations, the Court found that EPA’s order clearly imposed legal obligations by requiring expensive (and perhaps unnecessary) restoration and to give EPA access to their property and any relevant documentation. These qualified as “rights or legal obligations.”

The Court also concluded that legal consequences flowed from the EPA’s issuance of the order. For example, the Sacketts faced fines of up to $75,000 for each day of non-compliance and significantly limited the Sacketts’ ability to obtain a fill permit from the Army Corp of Engineers. The EPA’s issuance of the order signaled the “consummation” of the EPA’s decision-making process – evidenced by the Sacketts’ inability to obtain a hearing before the EPA.

The Court also ruled that no other adequate remedy existed, noting that the most common means of obtaining judicial review occurs when EPA brings a civil action – a process that the Sacketts could not initiate. Neither would obtaining a fill permit from the Army Corps of Engineers constitute an adequate remedy.

Because the Act did not expressly preclude judicial review, the Court examined the Act, placing special emphasis on the APA’s “presumption favoring judicial review of administrative action.” Dismissing EPA’s argument that Congress passed the Act to respond to previously inefficient water pollution regulation, the Court concluded that the APA’s presumption of judicial review refuted EPA’s efficiency concerns. Specifically, the Court stated that “there is no reason to think that the "…" Act was uniquely designed to enable strong-arming of regulated parties into ‘voluntary compliance’ without the opportunity for judicial review – even judicial review of the question whether the regulated party is within the EPA’s jurisdiction.” As such, the Court in a unanimous opinion reversed the lower courts’ decisions. The Court did not decide; however, whether the Sacketts’ actions actually violated the Act – it only decided whether they were entitled to pre-enforcement judicial review of the EPA’s order.