Until a couple of weeks ago, the lower Federal courts generally held that an entity subject to a compliance order had to implement the actions required before being in a position to challenge the order and perhaps seek reimbursement for unnecessary expenditures. Not so anymore.
The EPA issued a compliance order which accused the landowners of depositing fill materials on a residential lot they owned, stated that the owners engaged in the discharge of pollutants into a navigable waterway without a permit, in violation of § 301 of the Clean Water Act, 33 U.S.C. Section 1311, and directed the owners to restore the site in accordance with an EPA-created restoration work plan. The EPA denied the owners' request for a hearing, and the owners sued the EPA, claiming that the EPA acted arbitrarily and capriciously in violation of 5 U.S.C. Section 706(2)(A), and violated their right to due process of law, when it issued the compliance order. Like most environmental laws, the penalty for not implementing the compliance order is very large under the CWA (may not "exceed [$37,500] per day for each violation." 21 U.S.C. Section 1319(d)).
The landowners sought declarative and injunctive relief, but the District Court dismissed the claims for want of subject-matter jurisdiction. The Ninth Circuit affirmed, concluding that the Clean Water Act precluded pre-enforcement judicial review of compliance orders and that such preclusion did not violate due process. On appeal, the U.S. Supreme Court unanimously disagreed.
The Court, at 2012 U.S. LEXIS 2320, found that the APA provides for judicial review of "final agency action for which there is no other adequate remedy in a court." 5 U.S.C. Section 704. The compliance order here has all the hallmarks of APA finality. Through it, the EPA determined rights or obligations, and required the landowners to restore their property according to an agency-approved plan and to give the EPA access. The Court also found that legal consequences flow from the order, which, according to the Government's litigating position, exposes the landowners to double penalties in future enforcement proceedings. The order also severely limits their ability to obtain a permit for their fill from the Army Corps of Engineers per 33 U.S.C. Section 1344 and 33 C.F.R. Section 326.3(e)(1)(iv).
Further, the order's issuance marks the consummation of the agency's decisionmaking process for the EPA's findings in the compliance order were not subject to further agency review. The landowners also had "no other adequate remedy in a court," as required by 5 U.S.C. Section 704. A civil action brought by the EPA under 33 U.S.C. Section 1319 ordinarily provides judicial review in such cases, but the landowners could not initiate that process. Each day they failed to implement the order, additional potential liability accrued. The Court also found that applying to the Corps of Engineers for a permit and then filing suit under the APA if that permit is denied also does not provide an adequate remedy for the EPA's action.
Overturning case law that the lower courts have followed for years, the Court found that the CWA is not a statute that "preclude[s] judicial review" under the APA. Instead, the APA was seen as creating a presumption favoring judicial review of administrative action.