The Sackett Decision and Its Implications for Hydraulic Fracturing
With stunning alacrity, the United States Supreme Court issued its opinion [PDF] today in Sackett v. EPA (roughly two months since oral argument), resolutely and unanimously striking down EPA’s position that the Clean Water Act (CWA) does not provide pre-enforcement judicial review of compliance orders. This blog has covered the Sackett case and explored the potential ramifications for EPA’s pursuit of regulatory authority over hydraulic fracturing. In this respect, the opinion is surprisingly broad and is not grounded in distinctions between a non-emergency administrative order (like the CWA order at issue in Sackett) and an emergency-type administrative order under other statutes (e.g., the Safe Drinking Water Act (SDWA) or CERCLA). Accordingly, following Sackett, EPA’s ability to regulate hydraulic fracturing under the guise of emergency SDWA authority appears less clear.
Justice Scalia’s opinion avoids the merits of whether EPA actually had CWA jurisdiction over the Sackett’s property, and instead focuses on whether EPA violated the Sackett’s due process rights by issuing a compliance order without a hearing or judicial review. In essence, the Sackett’s had two options: (1) comply with the order, thus acceding that EPA had jurisdictional authority; or (2) wait to be sued by the Agency meanwhile accruing $75,000/day in penalties for non-compliance.
On the issue of whether the compliance order was a “final agency action” subject to judicial review the Court was clear. Justice Scalia writes “[t]here is no doubt [the compliance order] is agency action” and further, “[i]t has all the hallmarks of APA finality that our opinions establish.” Many of the core hallmarks or factors relied on by the Court would also apply in the emergency SDWA order issued by EPA in the Range Resources case. These include the imposition of future obligations (the Range Resources order imposes extensive obligations, including testing and work plans), an obligation to allow Agency access to the site, the imposition of penalties for non-compliance, and Agency conclusions regarding whether the party is in compliance (both orders contain Findings of Fact and Conclusions of Law).
The Court also held that nothing in the CWA expressly precludes judicial review. With the important caveat that the SDWA scheme differs from the CWA scheme, and that emergency power is different from general CWA jurisdictional authority, the Sackett opinion carries some potentially important implications for the Range Resources matter. First, Justice Scalia prominently noted and relied on the Administrative Procedure Act’s “presumption favoring judicial review of administrative action.” This presumption carries across all federal statutes, including the SDWA.
Second, the Court eschewed EPA’s argument that because the CWA gives the Agency a choice between a judicial proceeding and an administrative action, choosing the latter precludes judicial review. The SDWA provides a similar choice.
Finally, the Court did not agree with the Government’s policy argument that providing pre-enforcement judicial review of CWA compliance orders would make EPA less likely to use such orders. Acknowledging “that might be true,” Justice Scalia essentially signaled that the Court thinks there is a substantial question about the merits of EPA’s order in Sackett, stating “[c]ompliance orders will remain an effective means of securing prompt voluntary compliance in those many cases where there is no substantial basis to question their validity.” This same policy would arguably cut against EPA in favor of full substantive judicial review in the Range Resources matter.
The strongest words were penned by Justice Alito. In the opening salvo of his concurring opinion, he asserted that the position taken by EPA “would have put the property rights of ordinary Americans entirely at the mercy of [EPA] and its employees.” Justice Alito went on to say “[i]n a nation that values due process, not to mention private property, such treatment is unthinkable.”
In sum, the Court’s decision is a stunning rebuke of an EPA that many feel has overreached. The decision likely has much to do with the broader ongoing issues of EPA’s CWA jurisdiction and the meaning of “navigable waters.” In fact, Justice Alito’s concurrence expressly notes that the only true remedy to aggrieved property owners is Congressional clarification of the reach of EPA’s CWA jurisdiction. Nonetheless, the implications for the Range Resources case (and the broader issue of EPA’s mission to regulate hydraulic fracturing in the absence of clear statutory authority) are potentially significant.
Part of what is at issue in the Range Resources case is the level to which EPA must justify the merits of its emergency order before Range Resources is forced to comply (or held not to have complied). Inherent in this issue is determining how much, and when, judicial review is required. Depending on how broadly it gets construed, Sackett may require EPA to demonstrate, prior to enforcing the order, sufficient proof under prevailing judicial standards that Range Resource’s operation caused an imminent and substantial endangerment. While all signs indicate EPA will have a difficult time meeting this threshold (including the fact EPA has admitted there is no imminent danger), the broader consequence may be that EPA abandons its efforts to use its imminent and substantial endangerment SDWA authority to regulate hydraulic fracturing.