Supreme Court Ruling a Victory for Property Rights

A unanimous decision handed down by the U.S. Supreme Court this week is a huge victory for property rights advocates and very good news for NAHB's members.

In Sackett v. U.S. Environmental Protection Agency, the high court agreed with NAHB arguments (submitted in the form of two amicus briefs) that a property owner who receives a Compliance Order from the EPA or Army Corps of Engineers should be able to obtain judicial review in court.

The case involved property owners Michael and Chantell Sackett, who owned an undeveloped half-acre lot in a residential area near Priest Lake, Idaho. When the Sacketts began the process of building their dream home by preparing the lot for development, the EPA accused them of placing fill material into a jurisdictional wetland and issued a Compliance Order requiring them to immediately remove that material and restore the wetland -- or face thousands of dollars in fines for every day they did not do so.

When the EPA denied the Sacketts' request for an administrative hearing to challenge the order, they filed an action in district court seeking relief, but both the district court and the Court of Appeals for the Ninth Circuit held that the Clean Water Act (CWA) precluded pre-enforcement judicial review of administrative compliance orders.

On March 21, every member of the U.S. Supreme Court was in agreement in deciding that "there is no reason to think that the Clean Water Act was uniquely designed to enable the strong-arming of regulated parties into 'voluntary compliance' without judicial review." Moreover, two of the Justices (Ginsburg and Alito) wrote concurring opinions in which they explained that because the EPA had determined its jurisdiction over the Sacketts' property, judicial review was appropriate.

This decision is extremely important to our industry because home builders (like the Sacketts) are often subject to Administrative Compliance Orders with no means to challenge them, unless the government decides to file an enforcement action or the builder applies for and is denied a CWA Section 404 permit.

As of now, this is no longer the case. Instead, any builder who receives a CWA Compliance Order can now challenge that order in federal court. In addition, whereas builders have previously had no place to turn when the EPA or Army Corps determines that a wetland or water body on their property falls under the agency's jurisdiction, Justices Ginsburg and Alito have now indicated that they may in fact seek relief in court.

In an official NAHB reaction statement, Chairman Barry Rutenberg summed it up in saying, "This ruling provides a check on EPA's capricious expansion of its regulatory authority. Finally, home owners and home builders have a way of challenging EPA compliance orders before they face big fines."