Supreme Court: Property Owners Can Challenge EPA Decision Before Fines Imposed

Published August 1, 2012

An Idaho couple does not have to wait until the U.S. Environmental Protection Agency follows through on its threat to impose $75,000 per day in fines before challenging EPA’s claim that the Clean Water Act (CWA) forbids them from building a home on their land. 

EPA Created Dilemma

EPA issued Mike and Chantell Sackett a compliance order instructing them to forego plans to build a home on a half-acre of land. EPA claimed the land constitutes a wetland that is entitled to protection under the Clean Water Act. The couple sought a formal EPA hearing, but EPA declined to hold one. 

The Sacketts then sued in federal court. EPA claimed the couple had no standing to sue because they had yet to suffer any harm or adverse action. The Sacketts could sue, EPA argued, only if they affirmatively defied EPA and began racking up $75,000 per day in fines.

This put the couple in a difficult dilemma: abide by EPA’s questionable ruling and give up any opportunity to build on their land, even though EPA may be overreaching in its wetland determination, or begin building and face financial ruin if they fail to convince a federal court to overrule EPA’s determination.

Court Rejects Bullying Tactics

The Supreme Court ruled unanimously that the Sacketts had a right to immediate judicial review under the Administrative Procedure Act and could challenge EPA’s determination prior to building their home and becoming subject to exorbitant EPA fines. 

“The EPA used bullying and threats of terrifying fines, and has made our life hell for the past five years,” Mike Sackett said in a public statement after the ruling. “Now the Supreme Court has come to our rescue.”

Heavy-Handed EPA Treatment

James Burling, director of property rights litigation for the Pacific Legal Foundation, which represented the Sacketts, says EPA is so used to getting its way and is so removed from consequences for its heavy-handedness that fairness doesn’t mean anything to the agency.

“Anybody from the outside looking at the facts of this case would say that no court should have ever taken [EPA’s side in the underlying dispute] because the facts were so bad for the EPA’s argument,” says Burling.

“This case means a lot to the ordinary homeowners and landowners, at least with respect to EPA administrative compliance orders, who can now subject EPA to judicial review,” Burling explained.

In an internal memorandum made public during the case, EPA said it wanted to be “onerous, tough and scary” to landowners, which it appeared to be in subjecting the Sacketts to $75,000 per day in fines if the couple considered challenging EPA by beginning construction of a home on their land.

“Without exaggeration, you have an agency that needs to be taken down a notch or two,” said Burling.
“Our goal here was to tell the story of the Sacketts as individuals,” Burling explained. “The regulatory state can keep big corporations in check, and corporations have the means to fight back, but as in this case, the state can grind down and destroy the individual. And if the Supreme Court gets that story, then the individual can prevail.”

Time to Rein in EPA

Jonathan H. Adler, director of the Center for Business Law and Regulation at Case Western Reserve University School of Law, says the Sacketts’ case should never have gone all the way to the Supreme Court.

“Threatening landowners with these kinds of penalties without proof of jurisdiction is pretty crazy. The EPA and the Army Corps of Engineers need to take more seriously their regulatory jurisdiction instead of using 25-year-old regulations that are seriously out of date and have twice been rejected by the courts,” Adler said.

“This case sought to answer the question: What is the scope of federal power vs. landowners in the context of the federal Clean Water Act? I think it says something about the sorry state of property rights protection that getting something as small as a chance to challenge the EPA’s ruling in court is seen as a big deal,” said Adler.

“EPA was created with the best of intentions, but the agency has become something entirely different than what was intended,” said Heartland Institute science director Jay Lehr. “EPA has grabbed powers that were never granted and is exercising those powers to beat down citizens and protect its own interests rather than protect the environment. It is time to restore EPA to its original mission.”

Definition Needed

William Perry Pendley, president and chief legal officer of the Mountain States Legal Foundation, points out the Supreme Court is frustrated by Congress’ unwillingness to rein in EPA.

“After the Court’s ruling, Justice Alito told Congress that it needs to do its job and amend the Clean Water Act to clearly define what constitutes navigable water. In other words, the authority of the EPA needs to be defined by Congress,” Pendley said.

Pendley nevertheless applauded the Supreme Court’s decision.

“Before, all you could do was comply with the agency or get yourself thrown in jail while being simultaneously fined up to $100,000 per day. Now you can go to court on it, and they have to bring in their experts and prove why your land is navigable water,” said Pendley.

Kenneth Artz ([email protected]) writes from Dallas, Texas.