EPA Gets Epic Smackdown from Supreme Court

EPA Gets Epic Smackdown from Supreme Court

REUTERS/Lee Celano

When Mike and Chantell Sackett bought land in Idaho zoned for residential construction and acquired the necessary permits for building a home, they believed their dream of owning a custom-made house would become a reality. Instead, the EPA sent the Sacketts into a five-year nightmare of regulatory war over the supposed status of their lot as a wetland, and demanded that the Sacketts entirely undo their work on the land to comply with the Clean Water Act. 

The Sacketts tried to appeal but were threatened with fines of up to $37,500 per day, and when they tried to go to court to appeal that, they discovered that the EPA had to allow them to go to court.  The Sacketts sued in federal court, and yesterday finally prevailed in a unanimous Supreme Court decision that has far-reaching implications for the EPA and overreaching government intrusion.

The EPA tried its best to keep the federal courts out of the dispute and the Sacketts in limbo, in part by claiming that the agency had not committed a “final agency action,” which would allow the Sacketts to file suit under the Administrative Procedure Act (APA), the aegis under which the case proceeded to the Supreme Court.  The EPA argued that, at some undefined point in time, they might reconsider their demand to the Sacketts for compliance, even though the Sacketts risked double fines (up to $70,000per day) for not reversing their work on the land. 

Justice Antonin Scalia scoffed at the argument in the decision writing that “the mere possibility that an agency might reconsider in light of “informal discussion” and invited contentions of inaccuracy does not suffice to make an otherwise final agency action nonfinal.” 

Nor did Scalia and the other members of the court buy the notion that a compliance order was just “a step in the deliberative process … rather than a coercive sanction that itself must be subject to judicial review,” as the Obama administration argued.  Scalia points out that sanctions signal that deliberation has come to an end.  Besides, Scalia wrote for the unanimous majority, the Sacketts had tried to get a hearing with the EPA, which the agency rejected – hardly a sign that deliberation over the issue had much of a chance of continuing. 

These arguments represent the arrogance of a bureaucracy that has little interest in oversight, and less in intellectual honesty.  The idea that a compliance order and its accompanying stratospheric fines don’t equal a final result only makes sense from the perspective of those giving the order.  It doesn’t take much common sense to see that a couple trying to build a home on land that didn’t even appear in the EPA’s inventory of wetlands could hardly afford to run up $70,000 in fines each day they didn’t act on a compliance order. 

Clearly, the EPA and the Obama administration offered a loophole that would have allowed the EPA and other government agencies to levy compliance orders without any oversight at all, had the Supreme Court accepted their arguments.  That would have created a situation where defendants in these agency actions not only had to prove their innocence rather than the agency prove their guilt – it would have also left defendants with no opportunity at all to prove their innocence.
In fact, that’s exactly what the EPA and the Obama administration did argue, saying that the Clean Water Act showed Congress’ intent to streamline enforcement of pollution laws, and that making compliance orders subject to judicial review would make the EPA less likely to use them.  “That may be true,” Scalia writes, “but it will be true for all agency actions subjected to judicial review. The APA’s presumption of judicial review is a repudiation of the principle that efficiency of regulation conquers all.”

The Supreme Court’s unanimous ruling in favor of judicial review will have a big impact on the EPA, and other government agencies as well.  The agency used their interpretation of the APA and its enabling laws (like the Clean Water Act and the Clean Air Act) to stymie appeals on its orders and force immediate compliance.  At the same time, the massively large fines are imposed to keep property owners from fighting the EPA’s orders.

Now that the Supreme Court has struck down the EPA’s dodge on finality, every compliance order can be challenged in court, forcing the EPA and other agencies to meet at least some evidentiary standard above Because We Say So. 

The unanimity of this decision may seem surprising to some, given the partisan nature in which we look at the Supreme Court.  However, the government argument on Sackett boiled down to the principle that courts had no role in deciding whether the EPA properly enforced Congressional laws like the Clean Water Act – at least until the EPA gave people permission to go to court. 

While none of the opinions specifically mention the issue of separation of powers, the Supreme Court’s justices couldn’t have appreciated the notion that the legislative and executive branches could combine to keep courts from reviewing actions that carried immediate and significant consequences.

Regardless of the motivation, Sackett stands the current agency-law model on its head for property owners.  While the Supreme Court declined to consider Sackett under the Due Process Clause of the Fifth Amendment, as Ilya Somin pointed out in disappointment, the court did find that property owners have the right to substantial due process when government agencies act in a confiscatory manner, at least through the APA. 

The decision represents a refreshing change in direction for the American government, and a start toward new respect for property rights in the US.  That can only help bolster our economic strength, and pull the reins in at least a little on the regulatory leviathan that can transform the dream of building a home into a legal nightmare.