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Clean Water Act Tool Used by EPA Questioned at High Court

U.S. Supreme Court justices accused the Environmental Protection Agency of overreaching in enforcing federal statutes, as a majority of the court signaled it may blunt a favorite agency enforcement tool.

Hearing arguments today in a case involving an Idaho couple seeking to build a new home, justices from across the ideological spectrum suggested they will let landowners go straight to a federal judge when the federal agency orders them to correct violations of environmental laws.

The case, which has ramifications for energy companies and manufacturers, may weaken the EPA’s so-called administrative compliance orders. The agency issues as many as 3,000 such orders each year to businesses and individuals, demanding an end to alleged environmental violations and applying so much pressure that those accused typically give in before the agency has to justify the action before a judge.

“Don’t you think most ordinary homeowners would say this kind of thing can’t happen in the United States?” Justice Samuel Alito asked at today’s hearing. He later suggested the EPA’s actions had been “outrageous.”

Justice Antonin Scalia accused regulators of “high- handedness.”

The fight involves a 0.63-acre property near Priest Lake in northern Idaho. In 2007 Chantell and Michael Sackett had begun preparing the land to build a three-bedroom home when EPA officials ordered work to halt. The agency said the property was a wetland and that the Sacketts couldn’t build without obtaining a permit under the Clean Water Act.

Restore Land

The EPA then ordered the Sacketts to restore the land by removing piles of fill material and replanting the vegetation they had cleared. The written order threatened the couple with fines of as much as $32,500 a day.

Scalia faulted the agency for modifying the order, eliminating the requirement to replant the vegetation, only after the Sacketts signaled they planned to sue.

The Sacketts contend they have a constitutional right to seek judicial review of the administrative compliance order right away. A federal appeals court said the couple had to wait until regulators sought to enforce the order by asking a federal court to impose a fine.

General Electric Co. (GE) is supporting the Sacketts as are business groups, including the Chamber of Commerce and the American Petroleum Institute.

GE Sought Review

GE last year unsuccessfully sought Supreme Court review of a similar provision in the federal Superfund law. Depending on how broadly the high court rules in the Clean Water Act case, its decision might affect the EPA’s power under the Superfund law as well.

The Obama administration and the EPA argue that the couple has ample avenues short of going to court for contesting the order without risking fines. Among other options, the Sacketts could apply for a permit, the government said.

Several justices today questioned the adequacy of those options and the government’s contention that Congress didn’t authorize judicial review of administrative compliance orders. Justice Elena Kagan called the government’s reasoning “very strange.”

“Why would the presumption of reviewability not apply?” Kagan asked.

Justice Stephen Breyer, perhaps the court’s staunchest defender of the powers of administrative agencies, said the government “is fighting 75 years of practice” with its argument.

‘What Would You Do?’

Chief Justice John Robert joined Alito in openly empathizing with the landowners.

“What would you do, Mr. Stewart, if you received this compliance order?” Roberts said in a question directed at Malcolm Stewart, the government’s lawyer. “You don’t think your property has wetlands on it and you get this compliance order from the EPA. What would you do?”

Stewart said the Sacketts’s options were “limited” given that they started filling the property before seeking federal government approval.

“They can’t discharge fill, wait to see whether EPA notices, and then insist upon immediate judicial review if EPA notices and objects,” Stewart argued.

Costly Permit

The Sacketts say a permit application would potentially cost hundreds of thousands of dollars. An environmental group, the Natural Resources Defense Council, disputes that contention, saying the Sacketts might be able to get an after-the-fact permit for as little as $2,000.

A high court ruling for the Sacketts wouldn’t necessarily mean they could build their house. Their lawyer, Damien Schiff, said a court reviewing the administrative compliance order would have to be deferential to the EPA, overturning the wetlands designation only if it wasn’t based on “substantial evidence.”

“Even if the Sacketts on remand don’t get their ideal mode of judicial review, something is frankly better than nothing,” Schiff argued.

The case, which the court will decide by the end of June, is Sackett v. EPA, 10-1062.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net.

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