Sackett v. EPA: An Exploration of Administrative Law

The Sacketts are a couple from Idaho, who purchased some property in a subdivision with the intention of building their dream home; instead they got into a nightmare of a situation. Three days after workers began clearing the property to begin work, the Environmental Protection agency (EPA) and the Army Corps of Engineers arrived on the property. They asserted that before any work was done the Sacketts needed a permit to fill in the wetlands.  It was not until seven months and an estimated forty million dollar bill, that the EPA sent a compliance order, without any judicial determination or fact finding hearing. The Sackets wanted to appeal immediately, but the EPA claimed that the Sacketts had no right to sue them, and that they would have to wait until the agency brought a court action.

The Sacketts took the issue to court anyway; and then appealed it all the way up to the United States Supreme Court on January 9, 2012. The Sacketts and the EPA asked the court whether an administrative agency may issue an order, without other process or an opportunity to be heard, requiring certain actions and seek judicial enforcement of the order. They also asked whether the aggrieved party may challenge the order before the agency seeks judicial enforcement. The Sacketts asserted that to allow such actions would violate due process. The EPA asserted that it had the right under the Clean Water Act to act without hearing and that the order could not be challenged.

As it was put at this blog, the argument became “a somewhat dull exploration of administrative law.” Fair warning, this post is (hopefully) a somewhat less dull exploration of administrative law and the Administrative Procedure Act (5 U.S.C. 551 et seq) using Sackett as a method to explore the issues.

Adjudication vs. Rulemaking

The APA divides administrative agencies actions into 2 categories: rulemaking and adjudication. Rulemaking is when the agency makes a determination that some issue within its government needs to be better controlled. A rule is a statement of general applicability:

No person may build on a wetland without taking steps to protect the wetland.

Adjudication is a fact specific determination that affects only one person at the time of making although often sets precedent for future issues with similar facts:

The Sacketts cleared land on a wetland, they should be fined and required to return the property to its original state. 

Adjudication is much like court determinations, and rulemaking is more like congressional actions. Adjudication can be broken into two different types: formal and informal.

Both adjudication and rule making are held to certain due process standards; here, I am interested only in the adjudicative standards. Rulemaking often has such elaborate procedures that it would never fit in a blog post. Challenging the rule, now that's a story we might actually get to. 

With a formal adjudication there is a trial-like procedure. There is a hearing and fact presentation, in front of one or more administrative law judges. The individual compelled to appear is entitled to have counsel. Both sides present arguments and an order is given by the adjudicator. In informal proceedings an order is issued based only on inspections, conferences, negotiations, and official’s determinations of a violation of the rules.  The Sackett case, in part, looks at informal adjudication and whether it provided sufficient due process.

The EPA asserted the Sacketts had no right to appeal the order without the EPA seeking compliance through a suit. A federal appeals court found that they could not make a decision about the EPA’s order, without first having the EPA make a decision whether to force the order.

The Sacketts wanted to have the EPA’s decision reviewed under the APA arbitrary and capricious standard. The arbitrary and capricious standard is the most common for review of agency action. It looks at whether the EPA had substantial evidence based on the record that the Sacketts had violated a rule made by the agency. The record was non-existent though, because the EPA had never held adjudication, formal or informal. Without a record, how could the court possibly consider the issue?

Arbitrary and capricious is the most deferential standard for agency determinations. The long form of the standard is “arbitrary and capricious, an abuse of discretion, or otherwise not in accordance with the law.” This is the standard for informal hearings.  It gives great deference to what the agency found both as the facts and as the determination. The appellate court will not overturn the agency so long as the agency can give reasonable explanation for its decision based on the information available at the time of the decision.

The standard of appellate review for formal hearings is “substantial evidence.” The agency’s decision must be supported by substantial evidence on the record. Under this standard the court looks at the record as a whole. During this re-examination of the record the court will question the agency’s decision more strongly and will uphold it only the decision is supported by substantial evidence.

SCOTUS was not so sure however. They wondered what standard the EPA would actually have to meet to show the order was incorrect, and how the Sacketts could even challenge the EPA’s determination in court without first having the order imposed through a hearing. The administrative agency has not sought enforcement of their order in court, and so has only stalled the Sacketts’ building process indefinitely. Without adjudication, the Sacketts could not challenge this roadblock and therefore, felt stuck and felt as though the EPA had taken their land without either due process or compensation. 

We’ll just have to see what SCOTUS says about the process the Sacketts should have used. I’ll keep you posted.