EPA enforcement case highlights hat trick for big business

Big business was a big winner in environment and natural resources cases before the Supreme Court in the term that ended last week.

There were just three cases on the docket that fit into that category, but business interests won all three.

The most high-profile ruling was in Sackett v. EPA, in which the court held unanimously that property owners facing potential enforcement actions under the Clean Water Act may seek judicial review before being forced to comply (Greenwire, March 21).

The others were PPL Montana LLC v. Montana, in which the court held that a power company did not have to pay rent for the use of riverbeds that its hydroelectric projects are built on, and Southern Union Co. v. U.S., in which the justices threw out a natural gas distribution company's criminal fine for illegally storing mercury.

Corporate America took a special interest in the efforts of Mike and Chantell Sackett to contest an EPA compliance order they faced after starting to build a house in Priest Lake, Idaho, without having a Clean Water Act permit.


The U.S. Chamber of Commerce -- the most powerful business lobby -- National Association of Homebuilders, National Association of Manufacturers and American Petroleum Institute all filed amicus briefs in support of the Sacketts.

Businesses complain that EPA has abused its enforcement powers in the past and hope that the ruling will put a stop to such conduct in the future. As a result of the decision, anyone facing a compliance order may seek a hearing in federal court before EPA can enforce it. Those in violation of such orders can face fines of up to $37,500 a day.

Paul Clement, a leading Supreme Court advocate at the Bancroft law firm, said at a U.S. Chamber event in June that business "faces very similar EPA regimes" and so had good reason to welcome the ruling.

"Much of the reasoning of Sackett will apply in the corporate context," he added.

Clement speculated that the business community may have benefited from the fact that last year the justices did not take up a separate case that touched on similar themes that was filed by General Electric Co. (Greenwire, July 11, 2011).

"In a way I think that may have been a good break for the business community," Clement said of the court's decision to take Sackett but not the GE case. "The plight of the Sacketts ... is probably a little more sympathetic than the plight of GE."

Neal Katyal, another Supreme Court regular now at the Hogan Lovells firm, said at the U.S. Chamber event that the Sackett case presented a "hard set of facts" for the government, which took a "very aggressive position" over EPA authority.

He was not surprised the court concluded that EPA could not "force someone to wait around for an enforcement action" while fines accrue before having a day in court.

"It does strike me as a decision that is good for both individuals and business," Katyal said.

The other two cases dealt with much narrower issues.

In the February riverbed ruling, the justices reversed a Montana court ruling that required a hydroelectric dam operator to pay rent for the use of the state's riverbeds (Greenwire, Feb. 22).

PPL Montana -- backed by the Obama administration -- had objected to the Montana Supreme Court's conclusion, arguing that the court had incorrectly tackled the key question of whether the rivers were navigable at the time Montana was admitted to the union in 1889.

If the ruling had been upheld, PPL Montana, which owns 10 dams on the three rivers, faced the prospect of paying $40 million in rent for its use of the riverbeds since the company acquired them in 1999.

Clement, who argued the case for PPL, said the case was of interest because the court touched on the question of whether the Montana ruling had been a "judicial taking" in which a court effectively seized property on behalf of the government.

The U.S. Supreme Court had concluded -- unanimously -- that what the Montana court had done "really amounted to a judicial taking," Clement said.

In the mercury storage case, the court held on a 6-3 vote that a jury should get to decide how much a natural gas distribution company should have to pay in criminal fines for illegally storing mercury at a Rhode Island facility (Greenwire, June 21).

The court found that juries, not judges, have to make factual findings that determine how much a criminal fine will be. That includes the question of how long a violation occurred in situations in which fines are imposed on a per-day basis.

The case, which involves a prosecution under the Resource Conservation and Recovery Act, is likely to affect the way the government handles prosecutions of companies under a wide variety of statutes, including other environmental laws such as the Clean Water Act.

Unlike the other two cases, it was a "fairly straightforward" decision for the court, according to Richard Frank, director of the California Environmental Law and Policy Center at the University of California, Davis, School of Law. That is because the outcome was largely determined by an earlier decision on criminal sentencing, Apprendi v. New Jersey.

All three rulings illustrate another trend, Frank suggested: that in environmental cases, environmental groups tend to lose to the government and the government almost always loses to business interests.

"I'm beginning to view the environmental law outcomes in the Supreme Court as analogous to the old schoolyard paper, scissors, rock game," he said.

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