Did the Supreme Court Mean It When It Said Landowners Must Have a Practical Way of Challenging an Agency's Jurisdiction?

In my last post, I wrote about how the nationwide stay would likely remain in effect for WOTUS, the new rule written to redefine the meaning of the Waters of the United States under the Clean Water Act by the U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers. As I implied last month, if WOTUS survives the rule challenges, one effect may be that there are fewer Jurisdictional Determination (JDs).

If that happens, then it would make two cases that are being litigated by the Pacific Legal Foundation before the U.S. Supreme Court even more important. In U.S. Army Corps of Engineers v. Hawkes Co., Case No. 15-290 (2015), The Supreme Court will decide whether a JD can be challenged in court, or whether a landowner has to face the unenviable choice of having to spend tens of thousands of dollars to get a permit denied versus moving forward with a project without asking permission and risking fines and criminal penalties.

In Hawkes, a peat mining company wanted to mine in wetlands. The Corps issued a JD claiming jurisdiction, and issued the JD even after an administrative challenge. The peat company sued, but the district court dismissed, finding that the JD was not a challengeable final agency action. The Eighth Circuit reversed, splitting with the Ninth and Fifth Circuits.

The Eighth Circuit said that all final agency actions for which there is no other adequate judicial remedy must be able to be challenged. To be final, an agency’s action must be the end of the decisionmaking process, and it must have legal consequences for someone. Like every other court that has addressed the issue, the Eighth Circuit found that a JD was the end of a decisionmaking process. It disagreed with other courts, though, and found that the JD jad legal consequences, since the “prohibitive costs, risk, and delay of these alternatives to immediate judicial review” were inadequate substitutes. It held that the Supreme Court had mandated judicial review as a remedy in such cases in Sackett v. EPA, 132 S.Ct. 1367 (2012).

Another very similar case has been pending before the Supreme Court since late 2014. The Supreme Court initially denied certiorari of Kent Recycling Services, Inc. v. U.S. Army Corps of Engineers, Case No. 13-30262 (2014) (also known by the name of another plaintiff below, Belle Co., LLC). After the Hawkes decision by the Eighth Circuit, PLF moved for rehearing, which has yet to be decided.

Oral argument in Hawkes will be on March 30, 2016, so both cases should be decided soon. Ultimately, the Supreme Court will be decided a simple question: did it mean what it said in Sackett, that landowners must have a practical way to challenge an agency’s assertion of jurisdiction over their land?

Sackett v. EPA: One Year Later

Now that the Pacific Legal Foundation has won another big property rights victory with the Koontz decision, it seems appropriate to return to last year's Sackett decision, which PLF also argued. Recall that, in Sackett , the U.S. Supreme Court held that landowners could bring a civil action to challenge a compliance order under the Administrative Procedure Act. In doing so, the Court decided that regulatory efficiency doesn't trump everything.

In a timely article, Russell Prugh at Marten Law has taken a look at the decisions decided under Sackett since that case came down. He writes:

What one finds from reviewing these early cases is that:

1. They are fact-specific;
2. They are not limited to the CWA;
3. They turn on the court’s finding of whether the action challenged was “final”; and
4. Whether the agency action is deemed final turns on whether the court sees it “just a step in the deliberative process” or as leaving nothing left to do but to refer the case to a government lawyer to enforce.

And he concludes:

The theme that emerges from the early cases interpreting Sackett is that courts have focused on a case-by-case analysis of whether the agency action challenged subjects the complainant to enforcement, or rather is simply a step in the decision-making process. The answer is often not clear, and different trial courts could go either way, adding uncertainty to the outcome of any challenged action. Courts are most apt to allow pre-enforcement review in cases factually similar to Sackett – cases involving administrative enforcement orders under the CWA. See Hardesty. But the core holding in Sackett could also find a place in challenges to other types of agency action, even outside the environmental context, as it did in Furie. As cases such as Furie demonstrate, the key inquiry continues to be whether the action challenged is “just another step in the deliberative process” or whether the only action left to be taken is government enforcement.

As a matter of fact, as another blogger points out, EPA has recognized that Sackett applies to a wide variety of cases:

EPA has now formally acknowledged that the Sackett decision has implications for other statutes. In a memorandum dated March 21, 2013, EPA’s Office of Enforcement and Compliance Assurance has concluded that it is important to advise recipients of EPA unilateral orders under other programs of their opportunity to seek pre-enforcement judicial review of such orders.

In particular, EPA has directed enforcement staff to immediately begin adding the following language to typical unilateral orders under FIFRA, Clean Air Act, Safe Drinking Water Act and EPCRA: “Respondent may seek federal judicial review of the Order pursuant to [insert applicable statutory provision providing for judicial review of final agency action.]”

The foregoing language applies, inter alia, to stop sale, use or removal orders under FIFRA §13, stop work or compliance orders under Clean Air Act §§113(a) and 167, and emergency and compliance orders under EPCRA §§ 325(a).

With respect to compliance and corrective action orders under RCRA §§3008(a), 3008(h), 9003(h) and 9006(a), EPA’s Memorandum directs enforcement staff to include language advising respondents that they may seek administrative review in accordance with 40 CFR Part 22 or 24 as applicable.

EPA’s March 21, 2013 Memorandum states that EPA believes that the reasoning in Sackett does not lead EPA to believe that similar language is appropriate for unilateral orders issued under statutory authorities other than those discussed in the Memorandum, and it is noteworthy that the EPA Memorandum makes no reference to unilateral orders under CERCLA.

This is good news for landowners facing all sorts of environmental enforcement actions by EPA.

Why Citizens are Baffled by Code Enforcement Proceedings

Even local governments receiving the benefits of Mother Teresa's good works and missions can't help themselves. Here's an excerpt:

Thirty-three years ago, Mother Teresa of Calcutta came to Miami to put her merciful motto of love into action: “To serve the poorest of the poor.”

Since then, each morning a group of sisters of the congregation of the Missionaries of Charity, donning their distinctive white blue-bordered saris, passes through the gates of their beloved Overtown convent — where they live without air conditioning, washing machines or television — and cross the street to enter the world of the poor: a soup kitchen founded by Mother Teresa. 

On a recent morning, following the Liturgy of the Hours prayer inside a tiny chapel with the image of Our Lady of Fatima, the sisters, accustomed to listening to candid words from grateful men, woman and children, found a notice of violation with a potential property lien from a City of Miami Code Enforcement inspector posted on an electrical pole. 

Apparently the sisters had never obtained a permit for feeding — for free and without using public funds — hundreds of homeless who see in their eyes the universal symbol of compassion and dignity represented by Mother Teresa. 

“What kind of violation are we doing?” asked convent superior Lima Marie. “Taking care of the homeless and feeding them is a violation?” 

The sisters felt intimidated because the notice ends with a threat: operating “a business without all required licenses is illegal under state and city law and is punishable by criminal arrest and/or closing the business.” 

With such aggressive language, it is obvious that city government shows no respect toward these religiously devoted women and lacks the basic sensitivity to differentiate between a business without a license and charity work.

Why not work proactively with citizens who are quite obviously benefiting the community? As with many enforcement actions, here, the power is the only justification for the means. If you're not seeing a theme in my posts here, see the Sackett case. Different context, similar hubris.

U.S. Supreme Court to Hear Third Property Rights Case This Term, Consider New Deal Agriculture Statute

The U.S. Supreme Court announced earlier this week that it would hear its third property rights case this term. The case is Horne v. U.S. Department of Agriculture, No. 12-236 (cert. granted Nov. 20, 2012). In the case below, the Ninth Circuit held that it lacked jurisdiction to hear a takings claim:

Under a federal marketing program for California raisins, the government seeks to stabilize prices by taking some of the annual crop off the market. A federal committee each year recommends to the Agriculture Department the part of the crop that it believes should be held off the market. A packer or processor may buy raisins from the growers for the part of an annual yield that can be marketed, but the part ordered to be withheld must be kept in reserve. These so-called “reserve tonnage” amounts, though, can be sold in markets where competition does not exist, such as school-lunch programs. The proceeds from selling those raisins are used to pay the costs of running that part of the program. 

A group of grape vineyard operators in California were accused by the Department of setting up a program to evade the reserve pool requirement by processing their own grapes into raisins, then selling them. They countered that they were only producers, not processors, and so were not covered by the marketing order and its reserve set-aside. The Department sought to compel them to obey the marketing order, and the vineyards ultimately were ordered to pay $483,844 in civil penalties. 

The vineyards went to court, contending that the reserve set-aside requirement amounted to a “taking” of their private property without just compensation, as required by the Fifth Amendment. A federal district court judge ruled for the Department, finding that the vineyard operators were, in fact, functioning as processors or packers. Transfer of title to the reserve raisins was not a “taking,” the judge concluded. 

The Ninth Circuit Court ultimately ruled that it lacked jurisdiction to hear the “takings” claim, and that the vineyards should take that plea to the Court of Federal Claims under the so-called ”Tucker Act,” which allows lawsuits against the government seeking monetary compensation for taking private property for public use. The vineyards then took the issue of where they may sue to the Supreme Court, resulting in Tuesday’s grant of review.

My fellow bloggers are already noting that this situation sounds a lot like an exaction. This case has an interesting parallel with Koontz v. St Johns River Water Management District, No. 11-1447 (cert. granted Oct. 5, 2012). In both cases, the courts below held that the property owner needed to give in to the government's demand for their property before challenging the demand. With any luck, the Court will make clear two cases arising out of very different contexts that unlawful government demands for property may be challenged in court without giving in first. In that sense, the Court's ruling in either of these cases could end up seeming a bit like Sackett v. EPA, where the Court gave landowners the right to take EPA to court to challenge environmental compliance orders.

You can follow the case's progress over at SCOTUSblog. More background is available from the LA Times. The briefs from the petition for certiorari stage are below.

Join Us at the 2012 National Conference of Private Forest Landowners Tomorrow

I'm part of a panel discussion tomorrow at the 2012 National Conference of Private Forest Landowners, organized by the Forest Landowners Association. The panel will discuss the important legal issues facing the private forest landowner today. Others on the panel are Scott Jones, CEO of the Forest Landowners Association, and Stephen Schrock, a partner at Morris, Manning & Martin who specializes in transactional law related to timberlands. We hope to field more questions than just lecture. We've even promised not to bring powerpoints to keep things less stuffy!

My part in the panel discussion will focus on the litigation that forest landowners need to know about. We'll talk about the U.S. Supreme Court's recent Sackett v. EPA decision, as well as the forest roads permitting controversy, including the potential effects of EPA's recent regulatory notice and the Solicitor General's recent brief to the U.S. Supreme Court.

If you'll be in the Jacksonville area, it's not too late to register. Hope to see you there!

Background on Sackett from the Environmental Consultant

Earlier this month I wrote about how the U.S. Supreme Court gave the Sacketts the right to take the EPA to court over the EPA's compliance order finding the their property to be wetlands. Take a look at the interesting discussion going on at the LinkedIn page of ABA Section on the Environment, Energy, and Resources Law's. Ray Kagel, Jr., of Kagel Environmental, LLC writes about the background of the Sackett case. His firm had involvement early on working with the Sacketts. It seems their neighbor had also been subject to EPA enforcement actions:

When Mike and Chantell Sackett asked us (Kagel Environmental, LLC), to perform a wetland assessment of their personal homesite property located at Priest Lake, Idaho, we agreed to their request since we had already traveled to northern Idaho to provide expert testimony at a federal trial whereby Sackett's neighbor, Jack Barron, had been criminally charged for allegedly filling 4 acres of wetlands associated with the construction of his retirement home. Upon digging several soil [test] pits on the approximate .6 acre Sackett homesite, it became clearly evident to us that the major portion of Mike and Chantell's property was NOT a jurisdictional wetland. To their demonstrated courage and resolve, their unshakable belief in our professional [wetlands] opinion, and to the credit and excellent legal representation by the Pacific Legal Foundation, a unanimous Supreme Court handed down a serious spanking to the EPA as a consequence of their "high handedness" against private property owners everywhere. My firm anticipates a return to the Sackett homesite to complete a more comprehensive identification and/or delineation of jurisdictional wetland resources later this year in hopes of helping Mike and Chantell to reach final, and satisfactory resolution to a nightmarish ordeal that unfortunately is far from unique to the Sacketts'. By the way, after an 8-day trial whereby EPA and Corps of Engineers wetland experts tried to convince a 12 member jury that his entire 4-acre homesite was jurisdictional wetlands, the jury determined that Mr. Barron's wetland consultants demonstrated stronger scientific evidence to the contrary, and Barron was therefore acquitted of all 4 felony counts upon which he'd been indicted.

This was interesting to me because I had been wondering why the EPA started looking at the Sacketts' property. It will be interesting to see how Mr. Kagel's firm is able to help the Sacketts reach a final resolution in their case.

EDIT 4/28/12: Here is a story about Jack Barron's plight.

Property Owners Win the Right to Take EPA to Court

In January, I wrote about the U.S. Supreme Court hearing Sackett v. EPA. On March 21, the Sacketts won their case. Landowners should be happy with this opinion. As the Wall Street Journal wrote, "these are hard times for economic liberty, but the [Court has] offered a modest reason to hope." One attorney wrote about the decision:

Justice Antonin Scalia found it easy to give Mike and Chantelle Sackett their day in court. Writing for a unanimous Supreme Court in the case of Sackett v. EPA, Justice Scalia said that the EPA could not find that the Sacketts had illegally filled wetlands on their property, order them to remove the fill, and then threaten them with penalties without allowing them to appeal the order. The outcome in the case had been widely predicted based on the sympathetic plight of the plaintiffs, which had moved the case into the mainstream media and the stump speeches of presidential candidates. When due process allows a driver to appeal a parking ticket before paying it, providing the Sacketts the opportunity to seek judicial review of EPA’s administrative enforcement order without having to wait for EPA to first sue them was not much of a stretch.

Justice Alito had asked during oral argument: "If you related the facts of this case as they come to us to an ordinary homeowner, don't you think most ordinary homeowners would say this kind of thing can't happen in the United States?" This time, the Court was on the side of ordinary homeowners. Following this line of thought, another commentator described the potential property rights implications of the case:

The Court stressed that it was not deciding whether Michael and Chantell Sackett will win their court case, but only that they had a right to file it at their choosing, now that the EPA “compliance order” is final. The decision reflected the strongly negative reaction most of the Justices had to the denial of a right to sue when this case was argued in January. Justice Samuel A. Alito, Jr., who was among those protesting most strongly at that hearing, wrote a separate opinion Wednesday complaining that the scope of the Clean Water Act’s application to private property is unclear, and Congress or the EPA should move to clarify it. Alito also argued that the treatment of the Sacketts, and others denied a right to sue EPA, was “unthinkable” in a country that values due process.

When the Sacketts take the EPA to court, they are expected to argue that their property is not even a wetland. Stay tuned.

Property Owners Ask U.S. Supreme Court for the Right to Challenge EPA Compliance Order in Court

Today, the U.S. Supreme Court heard Sackett v. EPA, a case with important implications to anyone owning property with wetlands--or something close enough to wetlands to attract the the Environmental Protection Agency's (EPA) attention.

In the case before the Court, EPA stopped the Sacketts from building on a residential lot they owned. Because the EPA alleged the Sackett's lot contained protected wetlands, it issued a compliance order. If the Sacketts did not comply, they would have been subject to fines of up to $37,500 per day, or more. So far, the Sacketts have been denied review of the compliance order:

Stymied, the Sacketts sought a hearing to contest the EPA's order. They insisted the half-acre lot, which they had bought for $23,000, was not wetlands. But their hearing request was turned down by a federal judge in Idaho and by the 9th Circuit Court of Appeals in San Francisco. 

Agreeing with the EPA, the judges said the compliance order was like a warning to the landowners that they were violating the law. They weren't entitled to a hearing under the law until the agency had imposed a fine on them, the appeals court said.

The Sacketts, with the help of the Pacific Legal Foundation, have had to take their case all the way to the U.S. Supreme Court, just to try to get the right to have a court review EPA's actions. Thus, the question before the Supreme Court is this:

When the Environmental Protection Agency believes that a landowner is engaged in a violation of environmental laws, it may issue an administrative compliance order requiring the landowner to take certain actions and seek judicial enforcement of the order if the landowner does not comply. May the landowner challenge the administrative compliance order in court before the EPA seeks judicial enforcement?

At oral argument, many of the justices seemed skeptical of what Justice Scalia called EPA's "high handed" approach and attitude. Robert Thomas found the most telling quote of the day: Justice Alito asked, "Don't you think most ordinary homeowners would say this kind of thing can't happen in the United States?" 

The New York Times wrote that a win for the Sacketts would be a win for those who want to "evade the requirements of the Clean Water Act." But what's so difficult about requiring the EPA to support its actions before a judge?