Sackett v. U.S. Envtl. Prot. Agency

8 F.4th 1075

Michael SACKETT ; Chantell Sackett, Plaintiffs-Appellants,

v.U.S. ENVIRONMENTAL PROTECTION AGENCY ; Michael S. Regan, Administrator,^* Defendants-Appellees.

No. 19-35469

United States Court of Appeals, Ninth Circuit.

Argued and Submitted November 19, 2020

Submission Withdrawn December 1, 2020

Resubmitted August 9, 2021 Seattle, Washington

Filed August 16, 2021

Anthony L. François (argued) and Damien M. Schiff, Pacific Legal Foundation, Sacramento, California, for Plaintiffs-Appellants.

Brian C. Toth (argued) and David Gunter, Attorneys; Eric Grant, Deputy Assistant Attorney General; Jean E. Williams, Acting Assistant Attorney General; Environment and Natural Resources Division, United States Department of Justice, Washington, D.C.; Karyn Wendelowski, Attorney, United States Environmental Protection Agency, Washington, D.C.; for Defendants-Appellees.

Before: Ronald M. Gould and Michelle T. Friedland, Circuit Judges, and Jill A. Otake,^** District Judge.

FRIEDLAND, Circuit Judge:

Plaintiffs Chantell and Michael Sackett purchased a soggy residential lot near Idaho's Priest Lake in 2004. They planned to build a home on the property, but the project became entangled in a regulatory dispute. Shortly after the Sacketts began placing sand and gravel fill on the lot, they received an administrative compliance order from the Environmental Protection Agency ("EPA"). The order stated that the property contained wetlands subject to protection under the Clean Water Act ("CWA"), and that the Sacketts had to remove the fill and restore the property to its natural state. Instead, the Sacketts sued EPA in 2008, contending that the agency's jurisdiction under the CWA does not extend to their property. The case has been winding its way through the federal courts ever since. When the parties were briefing this appeal, EPA abruptly withdrew its compliance order.

We first consider whether EPA's withdrawal of the compliance order, twelve years after it first issued, moots this case. We hold that it does not. We then decide whether jurisdiction under the CWA extends to the Sacketts’ lot. We hold that it does and thus affirm the district court's grant of summary judgment in EPA's favor.

I.

A.

Congress enacted the CWA "to restore and maintain the chemical, physical, and biological integrity of the Nation's waters." 33 U.S.C. § 1251(a). The Act extends to all "navigable waters," defined as "waters of the United States, including the territorial seas," and it prohibits any person who lacks a permit from discharging pollutants, including rocks and sand, into those waters. Id. §§ 1311(a), 1362(6), (7), (12). If EPA finds that a violation is occurring, one of its enforcement options is to issue an administrative compliance order—as was issued to the Sacketts. Id. § 1319(a). A compliance order describes the nature of the violation and requires the recipient to cease the illegal discharge activity. See id. To enforce a compliance order, EPA may bring an enforcement action in federal district court. Id. § 1319(b).

Since the CWA was enacted, agencies and courts have struggled to identify the outer definitional limits of the phrase "waters of the United States," which in turn defines the scope of the federal government's regulatory jurisdiction under the CWA. The U.S. Army Corps of Engineers (the "Corps") first issued regulations defining "waters of the United States" in the 1970s, shortly after the CWA took effect. Initially, the Corps determined that the CWA covered only waters that were navigable in fact, see 39 Fed. Reg. 12,115, 12,119 (Apr. 3, 1974), but the Corps later adopted different, broader interpretations that remained in effect at the time the Sacketts received the compliance order, see 42 Fed. Reg. 37,122, 37,144 (July 19, 1977) ; 51 Fed. Reg. 41,206, 41,250 –51 (Nov. 13, 1986); 53 Fed. Reg. 20,764, 20,774 (June 6, 1988).

As relevant here, the regulations defined "waters of the United States" to include "wetlands" that are "adjacent" to traditional navigable waters and their tributaries. See 33 C.F.R. § 328.3(a)(1), (a)(5), (a)(7) (2008). "Wetlands" were defined as "areas that are inundated or saturated by surface or ground water at a frequency and duration sufficient to support, and that under normal circumstances do support, a prevalence of vegetation typically adapted for life in saturated soil conditions." Id. § 328.3(b). "Adjacent" was defined as "bordering, contiguous, or neighboring," and the regulations explicitly stated that "adjacent wetlands" included wetlands separated from other waters of the United States by artificial dikes or barriers. Id. § 328.3(c).¹

In several decisions, the Supreme Court has grappled with the proper interpretation of 33 U.S.C. § 1362(7) ’s phrase "the waters of the United States." In United States v. Riverside Bayview Homes, Inc. , 474 U.S. 121, 106 S.Ct. 455, 88 L.Ed.2d 419 (1985), the Court held that the Corps’ interpretation of that phrase as including wetlands that were not themselves navigable, but which "actually abut[ted] on" traditional navigable waterways, was "a permissible interpretation" of the CWA. Id. at 131–35, 106 S.Ct. 455. Then, in Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers , 531 U.S. 159, 121 S.Ct. 675, 148 L.Ed.2d 576 (2001), the Court rejected the Corps’ attempt to regulate isolated sand and gravel pits that "seasonally ponded," holding that the term "waters of the United States" does not include "nonnavigable, isolated, intrastate waters." Id. at 164, 172–174, 121 S.Ct. 675.

Finally, and most relevant here, in Rapanos v. United States , 547 U.S. 715, 126 S.Ct. 2208, 165 L.Ed.2d 159 (2006), the Court vacated two decisions upholding the application of the CWA to wetlands connected to distant navigable waters via ditches or artificial drains. Id. at 757, 126 S.Ct. 2208. In his plurality opinion, Justice Scalia, joined by three other Justices, articulated one test for determining whether wetlands could be regulated under the CWA, id. at 739, 126 S.Ct. 2208, while Justice Kennedy authored a concurrence articulating a different test, id. at 779–80, 126 S.Ct. 2208. The parties here dispute which Rapanos opinion controls whether EPA has jurisdiction over the Sacketts’ lot.

B.

In 2004, the Sacketts purchased a 0.63-acre lot near Priest Lake, one of the largest lakes in Idaho. The property is bounded by roads to the north and south. To the north, across Kalispell Bay Road, lies the Kalispell Bay Fen, a large wetlands complex that drains into an unnamed tributary. That tributary feeds Kalispell Creek, which, in turn, flows southwest of the Sacketts’ property and then empties into Priest Lake. To the south, across another road, is a row of homes fronting Priest Lake. The Sacketts’ property is 300 feet from the lake.

In May 2007, having obtained building permits from their county, the Sacketts began backfilling the property with sand and gravel to create a stable grade. EPA and Corps officials soon visited the property and, believing the property contained wetlands that might be subject to the CWA, suggested that work stop absent a permit from the Corps.

Six months later, EPA issued the Sacketts a formal administrative compliance order. The order stated that the property contained wetlands subject to the CWA. It went on to explain that the Sacketts’ placement of fill material onto half an acre of their property without a discharge permit constituted a violation of the CWA. The Sacketts were ordered to "immediately undertake activities to restore the Site" in keeping with a "Restoration Work Plan" provided by EPA, and they were given five months to complete the remediation. The order also informed the Sacketts that failure to comply could result in civil and administrative penalties of over $40,000 per day.

C.

On April 28, 2008, shortly before the deadline for compliance, the Sacketts sued EPA, seeking declaratory and injunctive relief. The Complaint alleged that the agency's issuance of the compliance order was arbitrary and capricious under the Administrative Procedure Act ("APA"), 5 U.S.C. § 706(2), because it was premised on an erroneous assertion of jurisdiction under the CWA.²

On May 15, 2008, EPA and the Corps again inspected the site. EPA wetlands ecologist John Olson took field notes on the property and its surroundings, and he completed a seven-page jurisdictional determination ("JD"), in which he concluded that the Sacketts’ lot contained wetlands subject to regulation under the CWA.

That same day, after Olson reported his findings to his superiors at the agency, EPA issued the Sacketts an amended compliance order that extended the dates for compliance but otherwise mirrored the original order. The amended order reiterated that the property contained wetlands subject to CWA regulation, that the Sacketts’ discharge of fill material was pollution in violation of the CWA, and that their continued noncompliance could result in significant monetary sanctions. The amended compliance order "supersede[d] and replace[d]" the original compliance order.

Six weeks later, on July 1, 2008, Olson authored a memorandum (the "July 2008 Memo"), in which he memorialized his observations from the May site visit. The memo contains photographs from the visit that depict flooded soils and wetland vegetation on the Sacketts’ lot in areas not yet covered with fill. Two such photos are included in an appendix to this opinion.

EPA moved to dismiss the Sacketts’ lawsuit, contending that the original compliance order was not "final agency action ... subject to judicial review" under the APA.³ 5 U.S.C. § 704. The district court granted the motion, and our court affirmed, concluding that the CWA precludes pre-enforcement judicial review of compliance orders. See Sackett v. EPA , 622 F.3d 1139, 1147 (9th Cir. 2010). But the Supreme Court granted certiorari and reversed, holding that the original compliance order constituted "final agency action" subject to judicial review under the...