Strong-Arm Tactics: The Supreme Court Allows Judicial Review of EPA Administrative Orders

March 22, 2012

In a unanimous decision issued March 21, 2012, the U.S. Supreme Court overturned years of appellate decisions in finding that EPA administrative orders were subject to judicial review under the Administrative Procedure Act (APA). While addressed to an order issued pursuant to the Clean Water Act (CWA), the decision applies equally well to orders issued under any of the major environmental statutes except CERCLA, which specifically precludes such review. As a result the Court has taken a major and frequently used weapon from the EPA and allowed enforcement targets far greater leverage.

In the underlying case, EPA issued an administrative order under the CWA against a private landowner accused of filling his land in violation of wetlands regulations and requiring him to restore the land to its original condition. EPA would not provide a hearing although it would allow the landowner to informally discuss any inaccuracies in the order. The landowner brought an action to challenge the order under the APA, but the lower court dismissed his claim for want of jurisdiction, a decision upheld by the U.S. Court of Appeals for the Ninth Circuit.

Without much debate the Court ruled that the EPA’s order was indeed a “final order” as defined under the APA and that neither the language nor the statutory scheme of the CWA precluded review pursuant to the APA. Using arguments that had been previously accepted by a number of circuit courts of appeal, EPA claimed that the need for expeditious resolution of environmental issues and differences between administrative and judicial enforcement indicated congressional intent that the APA should not apply. Yet the Court held that the same case could be made for review of any agency action and there was nothing specific or special in the Clean Water Act to require a different interpretation.

The Court’s decision was not surprising. Despite the longevity and volume of decisions precluding judicial review of administrative orders, there has never been a statutory basis for it, compared to CERCLA in which such review is specifically precluded by the language of the statute. EPA could also not mistake the fact that the Court chose to review this issue in the context of a wetlands order issued against a small private landowner, an area of special fury for the four members who had drafted the stinging Rapanos plurality.

Finally, EPA’s case was sunk by the central unfairness and unjustness of its use of administrative orders. Under EPA’s approach, defendants were required to expend sometimes significant funds in compliance without any hearing or trial on EPA’s authority, the factual validity of its findings or the reasonableness of its remedy. The defendant’s choice was either comply or face an enforcement action in which penalties would essentially be doubled by virtue of its failing to comply with the order. Historically, courts have given EPA broad latitude and great authority in carrying out its mission to protect the environment, but that trend may be ending. The Court concluded by stating that “… there is no reason to think that the Clean Water Act was designed to enable the strong arming of regulated parties into ‘voluntary compliance’ without the opportunity for judicial review ….” In considering future enforcement strategies, EPA should keep in mind that all nine justices signed an opinion which placed disparaging quotes around EPA’s phrase “voluntary compliance” but unreservedly characterized EPA’s action as “strong arming.” The Court could not have been clearer in stating that it would no longer approve broad enforcement authority for EPA on general principle.