Ohio Environmental Law Blog : Ohio Environmental Lawyer & Attorney : Joseph Koncelik : Frantz Ward Law Firm : Environmental Regulation, Land Use, Compliance : Cleveland, Ohio

Back in June, the Supreme Court agreed to hear the case of Sackett v. EPA which could forever change the way EPA enforcement actions are defended.  While the case involves an EPA administrative enforcement order for unauthorized filling of a wetland, the ruling potentially impacts EPA enforcement under all its major statutes- RCRA (hazardous waste), Clean Air Act (CAA), Clean Water Act (CAA), and even CERCLA.

What is at issue?

When EPA believes a violation of its regulations has occurred it has the power to issue an administrative order compelling the alleged violator to remedy the issue.  EPA takes the position that the person/entity subject to that order cannot challenge the Order's validity prior to EPA taking a formal enforcement action in Court (referred to as "pre-enforcement review"). 

EPA's position leaves the person or company subject to the order with a Hobson's choice- either comply and incur the costs upfront or defy the order and face penalties for its noncompliance.

The courts have almost universally upheld EPA's position that its compliance orders cannot be challenged until it takes an enforcement action.  However, the Supreme Court has agreed to take a fresh look at this issue in the Sackett case.

Synopsis of Sackett Case

The Sacketts were building a residential home on their property.  EPA alleges that, during construction of the home, the Sacketts filled a 1/2 wetland without a permit. Filling a wetland without a permit is a violation of Section 404 of the Clean Water Act.   EPA issued an administrative order requiring the Sacketts to remove the fill and restore their property to its original condition.

Sacketts could either spend the money to remove the fill and restore the property or they faced penalties for non-compliance with EPA's order of up to $37,500 per day.  To give an idea of the risk the Sacketts must take if they did not comply, one month's worth of penalties could equal $750,000.

Sacketts petitioned EPA for a hearing to challenge EPA conclusion that their property had a jurisdictional wetland.  EPA did not grant the hearing, so the Sacketts filed suit making the following challenges:

1. No Bar to Pre-Enforcement Review of EPA's Order-  The Sacketts argue that the Clean Water Act ("CWA"), unlike CERCLA (Superfund), contains no express statutory bar to pre-enforcement review of administrative orders.  Therefore, the should be able to challenge the validity of EPA's order without risking being subject to civil penalties for non-compliance with the Order.
2. If there is a Bar to Pre-Enforcement Review it Violates Due Process under the Constitution-  In the alternative, if the Court finds that the CWA does contain an implied bar against pre-enforcement review, such a bar violates the U.S. Constitutional guarantee of Due Process.

 Game Changer?

If the Supreme Court agrees with the Sacketts, companies and individuals would be provided much better options when facing an EPA order.  Rather than immediately complying or risking penalties, they could challenge the EPA's order in Court.  Importantly, the challenge could be made before EPA has the legal authority to assert civil penalties for failure to comply with the Order.

This case involves EPA's enforcement authority under all its major statutes (CWA, RCRA, CAA and CERCLA).  This means EPA efforts to immediately compel action under any of these statutes through administrative orders would be practically be eliminated.  It would likely mean that EPA would, in many cases, skip the administrative order step and immediately sue in Court.

Legal Arguments

Implied Bar Against Pre-Enforcement Review

Only CERCLA contains an express bar in the statute against pre-enforcement review of administrative orders issued under the Act.  While the other environmental statutes (CWA, RCRA and CAA) don't contain such an express bar, the Administrative Procedures Act (APA) states that a bar exists if the "the congressional intent to preclude judicial review is fairly discernible in the statutory scheme."

The Ninth Circuit in Sackett said the bar was implied in the CWA because Congress intended EPA to have the authority to remedy violations quickly.  Similar arguments have been successful in other cases challenging EPA's authority involving other statutes.

The Supreme Court will review the Ninth Circuit's determination that an implied bar exists.

Bar Against Pre-Enforcement Review Violates Due Process

Even if the Court finds the implied bar exists, it could still say such a bar violates the Constitution.  At issue will be whether the negative ramifications of receiving a Unilateral Administrative Order constitute property deprivations protected by the Due Process Clause

General Electric ("GE") challenged EPA's Administrative Order authority when it received an CERCLA Order requiring clean up.  GE argued that its stock price could suffer, its brand would take a hit and it could face higher financing costs.  GE said all of these negative ramifications were enough a property deprivation to require due process (i.e. the ability to challenge the Order pre-enforcement).

The D.C. Circuit rejected GE's arguments.  It said GE could always challenge any penalties for noncompliance once EPA brought an enforcement action in Court.  It also found the consequential impacts on GE from receiving the Order were not significant enough to merit due process protection.

Conclusion

The odd thing is that the Supreme Court agreed to hear the Sackett case.  Only three weeks earlier it rejected GE's petition on the Due Process issue.  Also, regarding the existence of an implied bar, there appears to be no split among Circuits on the issue that typically is a basis for the Supreme Court to review an issue. 

The fact that the Court agreed to hear the case suggests some on the Court are uncomfortable with the current state of the law.

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U.S. EPA's Office of Inspector General released a report regarding the effects of the Supreme Court's decision in Rapanos on enforcement of Section 404 of the Clean Water Act.  The report, titled Comments Related to Effects Jurisdictional Uncertainty On Clean Water Act Implementation, contains some interesting observations and discussion.  Bottomline, the lack of clarity for determining whether wetlands or waterways fall within the jurisdiction of the Clean Water Act has led to U.S. EPA dropping hundred of enforcement cases. 

Overall, CWA enforcement activities (for Sections 311 (oil spills), 402 (National Pollutant Discharge Elimination System), and 404) have decreased since the Rapanos ruling. An estimated total of 489 enforcement cases (Sections 311, 402, and 404 combined) have been affected such that formal enforcement was not pursued as a result of jurisdictional uncertainty, case priority was lowered as a result of jurisdictional uncertainty, or lack of jurisdiction was asserted as an affirmative defense to an enforcement action.

Some interesting observations by the EPA lawyers who are  trying to provide advice to those enforcing the Clean Water Act:  Here are two notable comments about the legal terms that are causing uncertainty:

Traditional navigable waterways evade easy definition; even the Supreme Court has been vague on the precise scope of traditional navigable waterways. Traditional navigable waterways have arisen in multiple legal contexts over the years, not just in CWA discussions. Many stakeholders find the Appendix D definition to be still too broad to adequately serve the jurisdictional issues created by the Rapanos decision. The OGC attorneys noted that there had been considerable discussion about the scope of traditional navigable waterways in Fall 2007. Traditional navigable waterways continue to be an issue in some "isolated (a)(3)" elevations.

"Adjacency" was not addressed by the Supreme Court. Although there are 1-2 sentences on it in the interim June 2007 guidance, it remains an imprecise term. However, OGC staff is working with various program offices to create a follow-up to the June 2007 Rapanos guidance where adjacency, among other things, will be addressed. The real debate involves the interpretation of one aspect of the "adjacency" definition: "neighboring." This "neighboring" term was a cornerstone of the debate in the Carabell case.

The blog Great Lakes Law provides a good summary of the aftermath of the Rapanos Decision as well as discussing the possible legislative fix currently being debated in Congress:

Rapanos / Carabell vs. United States resulted in a divided Court issuing a confusing 4-4-1 divided ruling that cast doubt on whether non-navigable tributaries and their associated wetlands were protected by the Clean Water Act. The Rapanos decision has put at risk safeguards for approximately 60% of the nation’s stream miles (exclusive of Alaska) and their neighboring wetlands.

If nearly 60% of the rivers and wetlands are "unprotected" under federal law, it would seem there would be strong pressure on the States to fill the void.  That pressure is being felt in Ohio where it has proposed a new permit program for impacts to streams.  This proposed rule, if it goes final, would likely be challenged.  This could lead to the State of Ohio's own Rapanos-type decision in the State Supreme Court.  Although that is a long way off.

Outside of new regulations, some states have legal authority that appears broader then federal jurisdiction over waterways.  I wonder whether in any of the 500 cases the U.S. EPA  has dropped they attempted to make a reverse referral to the States for enforcement.   For instance, Ohio Revised Code 6111 has a very broad definition of "Waters of the State" which could form the basis of a State enforcement action:

“Waters of the state” means all streams, lakes, ponds, marshes, watercourses, waterways, wells, springs, irrigation systems, drainage systems, and other bodies or accumulations of water, surface and underground, natural or artificial, regardless of the depth of the strata in which underground water is located, that are situated wholly or partly within, or border upon, this state, or are within its jurisdiction, except those private waters that do not combine or effect a junction with natural surface or underground waters.

Many are pinning their hopes on a Congressional fix that would expand federal jurisdiction beyond navigable waters or those with a "significant nexus" to a navigable water.   Legislation has been proposed- the Clean Water Restoration Act.  It would redefine fedral waterways covered by the Clean Water Act by dropping the term "navigable" as a qualifier to which waters are covered.  It would also add the following language regarding federal

WATERS OF THE UNITED STATES.—The term ‘waters of the United States’ means all waters subject to the ebb and flow of the tide, the territorial seas, and all interstate and intrastate waters and their tributaries, including lakes, rivers, streams (including intermittent streams), mudflats, sandflats, wetlands, sloughs, prairie potholes, wet meadows, playa lakes, natural ponds, and all impoundments of the foregoing, to the fullest extent that these waters, or activities affecting these waters, are subject to the legislative power of Congress under the Constitution."

This language would certainly capture virtually every water way.   However, it is very controversial.  Especially out West.  Perhaps with Democratic control this legislation will begin to move, but it still faces a huge challenge.  As a result, states will be feeling increasing pressure, like Ohio has, to exercise existing authority in an attempt to fill the void left by the Rapanos decision.

(Photo: whiskymac/everystockphoto.com)

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