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EPA Enforcement Tool Blunted by High Court in Wetlands Case

The U.S. Supreme Court blunted a commonly used Environmental Protection Agency enforcement tool, siding with landowners and companies that said the federal agency was abusing its power.

The justices today unanimously ruled in favor of an Idaho couple blocked by the EPA from building a home on land the agency says is restricted wetlands. The justices said the couple can go directly to court to challenge an EPA order requiring them to restore property they had begun preparing for construction.

The decision weakens the force of so-called administrative compliance orders that the EPA issues on average 1,500 times a year to businesses and individuals. The orders demand an end to alleged violations, applying fines that pressure owners to settle. The government said those orders couldn’t be appealed to a court.

“Until now, the government had free rein to push the limits of its authority under the Clean Water Act because the public had no check on its authority,” Deidre Duncan, a lawyer at Hunton & Williams LLP in Washington who filed an outside brief in the case for the American Petroleum Institute, said in an interview. “That has changed with this decision.”

GE Backing

General Electric Co. (GE) supported the Idaho couple, as did groups including the U.S. Chamber of Commerce. GE last year unsuccessfully sought Supreme Court review of a similar provision in the federal Superfund law, an environmental program to clean up abandoned hazardous-waste sites.

The Clean Water Act, which became law in 1972, gives the federal government control over “waters of the United States,” a phrase that has been fought over for four decades. Photo: Ken Wells/Bloomberg Close

The Clean Water Act, which became law in 1972, gives the federal government control... Read More

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The Clean Water Act, which became law in 1972, gives the federal government control over “waters of the United States,” a phrase that has been fought over for four decades. Photo: Ken Wells/Bloomberg

In its ruling today the court ducked a broader question about whether all of EPA’s administrative actions are subject to court review under a constitutional argument, according to Amanda Leiter, a law professor at American University in Washington.

The ruling will have its primary impact on disputes over the Clean Water Act, the federal law that regulates the release of pollutants into U.S. waters.

“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 the opportunity for judicial review,” Justice Antonin Scalia wrote for the court.

Idaho Lake

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 house when EPA officials ordered the work to halt. The agency said that the property was a wetland and the Sacketts couldn’t build without obtaining a permit under the Clean Water Act.

The EPA then ordered the Sacketts to remove piles of fill material and replant vegetation they had cleared. The order threatened the couple with fines of as much as $32,500 a day.

Today’s ruling doesn’t necessarily mean that the Sacketts can build their house. The decision requires the couple to convince a lower-court judge that the EPA lacked a “substantial basis” to designate their land as a restricted wetland.

The Sacketts in their case said they have a constitutional right to seek judicial review of the administrative order right away. A federal appeals court said the couple had to wait until regulators went to court to enforce the order before they could contest it.

‘Regulation By Sledgehammer’

“That’s regulation by sledgehammer,” Sheldon Gilbert, an attorney at the National Chamber Litigation Center, said in an interview. “No matter how confident that party was of their case” they couldn’t let fines get run up into the millions of dollars while waiting for EPA to go to court, he said.

In a concurring opinion, Justice Samuel Alito said the government’s position would have “put the property rights of ordinary Americans entirely at the mercy” of EPA employees.

President Barack Obama’s administration and the EPA argued that the couple has ample avenues short of going to court for contesting the order without risking fines. Among other options, the Sacketts could have applied for a permit, the government said.

In 2010, the EPA issued more than 1,300 compliance orders, and now will have to deliberate more carefully before going that route in the future -- and be ready to go to court when they do, said Adam Kushner, an attorney at Hogan Lovells in Washington and former director of the EPA’s office of civil enforcement.

“The agency is capable of adjusting,” he said in an interview. “But there are practical resource issues here.”

The case is Sackett v. EPA, 10-1062.

To contact the reporters on this story: Greg Stohr in Washington at gstohr@bloomberg.net; Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net; Steven Komarow at skomarow1@bloomberg.net

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