INSIGHT: US high court case could muzzle environmental agency

12 January 2012 16:23  [Source: ICIS news]

By Joe Kamalick

US Supreme Court hears major case on environmental lawWASHINGTON (ICIS)--The US Supreme Court this week took up a case whose outcome could have broad implications – and even pose a major setback – for federal environmental law enforcement.

In Sacketts v. Environmental Protection Agency (Case No. 10-1062), the US high court is essentially being asked to determine whether those targeted by a US Environmental Protection Agency (EPA) enforcement action are entitled to a third-party hearing on the merits of the case before the agency imposes a fine, restoration order or some other penalty.

In 2005 Michael and Chantell Sackett purchased a half-acre (0.2ha) lot in a suburban development near Priest Lake, Idaho, where they planned to build a vacation home.

The Sacketts, who operate a contracting and excavation business, began work on the property by bringing in some fill material (such as earth and gravel) to level the lot.

Three days later, an EPA official arrived at the lot, told a worker there to stop excavating immediately, and issued the Sacketts an administrative compliance order (ACO). The order said that the lot was “wetlands” protected under the Clean Water Act (CWA), and that the Sacketts would have to remove the fill material from the lot or face high daily fines until they complied with the order.

The Sacketts argued that their lot was not wetlands, and sought a hearing before EPA officials to contest the agency’s jurisdiction. EPA refused, so the Sacketts filed suit in federal court to challenge the agency’s jurisdiction and its enforcement process.

The district court and a federal appellate court both found in favour of EPA, and the Sackets sought remedy from the Supreme Court, which agreed to hear their appeal.

The fact that the high court accepted the Sacketts’ appeal is itself a measure of the case’s significance and potential.

As many as 10,000 cases each year are appealed at the Supreme Court – after working a costly and tortuous trail through lower courts – but the high court typically agrees to consider only about 100 of them.

The nine justices of the Supreme Court said they would hear the Sacketts’ complaint, and that their case raised two key questions.

First, are the Sacketts entitled to judicial review (that is, a hearing) on EPA’s enforcement action before the agency imposes a penalty? 

In many – or even most – US federal enforcement actions in other areas of law, an underlying federal regulatory process statute, the 1946 Administrative Procedure Act (APA), provides that someone subject to an agency prosecution may immediately request a hearing before an administrative law judge. 

Such a hearing would determine whether the enforcement agency has jurisdiction, and whether its case is valid and supported by evidence. If the administrative law judge rules that the enforcement agency is correct, a fine or other order is imposed. But if the judge finds in favour of the targeted person or company, the case is over and the person walks.

Second, the justices said, they will consider whether the Sacketts, in being refused a formal pre-enforcement hearing, were denied their rights under the Fifth Amendment of the US Constitution, known as the “Due Process” Clause.

This case has opened what might be called a “Pandora’s busload” of potential consequences for US property rights and federal environmental enforcement.

Another measure of how far-reaching this lawsuit’s consequences might be is seen in the crowd of stakeholders that have joined the litigation fight.

A wide range of trade groups, business interests and state governments have filed amicus curiae (or “friend-of-the-court”) briefs with the Supreme Court in support of the Sacketts. Among them are the American Petroleum Institute (API), CropLife America (agrochemicals), the Fertilizer Institute, the National Mining Institute (NMI), manufacturers, electric utilities, commercial and residential real estate groups, a building owners’ group and others.

The US Chamber of Commerce filed a separate amicus brief in support of the Sacketts.

Similarly, a clutch of environmental groups has also chimed in with amicus briefs, arguing that EPA is right and that the high court should so declare.

In the environmentalists’ brief, the Natural Resources Defense Council (NRDC) and others argue that EPA’s ACO to the Sacketts, directing them to remove fill materials already deposited on their lot or face fines, was not a “final” action by the agency, and therefore is not subject to judicial review or other pre-enforcement hearing.

The NRDC brief also contends that the Sacketts were invited by EPA officials to discuss the matter informally, but that the landowners declined.

“If, however, ACOs are deemed to be final agency action subject to immediate review, the subjects of such orders will have essentially unilateral ability to force EPA to proceed to enforcement immediately, eliminating the agency’s enforcement discretion,” the NRDC brief says.

That, in turn, would have a chilling effect on EPA enforcement actions, the environmentalists argue.

If EPA was required to go into a pre-enforcement hearing, NRDC said, “such a rule would create a perverse incentive for EPA to remain silent in situations where it believes violations exist unless it is prepared to immediately litigate in federal court”.

That is exactly the point, according to the Chamber of Commerce.

In its brief, the Chamber charges that EPA slaps enforcement actions by the thousands on persons or companies in a capricious manner, all too often without sufficient jurisdiction or evidence of wrongdoing.

“This is a problem of staggering proportions,” the Chamber said.

“Unable to resist the temptation to bypass traditional remedies, EPA issues numerous unilateral orders every day, in routine, non-exigent [non-emergency] circumstances. And it does so under a wide variety of environmental statutes for the very purpose of evading the need to prove its case before a neutral decision-maker.”

“This practice leaves recipients with no realistic choice but to comply with its [EPA’s] orders,” the Chamber contends.

Those who decline to comply with an EPA administrative compliance order can face fines of up to $37,500/day (€29,625/day), the Chamber noted, “approaching a total of $70m if EPA waits five years to bring suit” to conclude an enforcement action.

“No matter how wrong an administrative order may be, individuals, families and small businesses simply cannot risk bankruptcy as the price of seeking judicial review,” the Chamber said, adding that even major corporations are reluctant to risk that level of penalty fines and the potential for years of negative impact on their stock prices.

The pro-Sacketts amicus briefs also argue that many other US federal enforcement agencies and their authorising statutes provide targeted companies and individuals with the opportunity for a pre-enforcement hearing or prompt judicial review when an enforcement order is issued.

The Chamber cited such pre-enforcement hearing options in consumer product safety law, occupational safety regulations, Federal Trade Commission actions, the Securities Exchange Act, the Atomic Energy Act and others.

“Holding EPA to that bedrock constitutional [due process] requirement would hardly bring the modern administrative state to its knees,” the Chamber contends.

But it would, according to NRDC.

The environmentalists’ brief says that it is unrealistic to think that EPA could grant formal hearings as a matter of routine every time it issues an administrative order.

Both the environmentalist and business briefs note that, under various environmental statutes, EPA issues as many as 6,000 orders annually.

If EPA was required to grant oral hearings in most of its thousands of orders, NRDC argued, there would be serious financial and staffing questions about the agency’s ability to administer those statutes.

No-one can say for sure how broadly EPA enforcement activity would be affected if the Supreme Court finds in favour of the Sacketts, but it would surely make enforcement more complex, costly and time-consuming for the agency.

And it would be constitutionally correct and fair, the business community contends.

($1 = €0.79)

By: Joe Kamalick
+1 713 525 2653

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