Supreme Court's Sackett Opinion Prompts EPA to Drop Case Against Range Resources
Last Friday, the United States Environmental Protection Agency withdrew a compliance order it previously had issued to Range Resources, and also dismissed an action the Agency had filed against Range in federal court. The EPA's retreat appears to have been prompted by the Supreme Court's unanimous decision against the Agency the week before in Sackett v. Environmental Protection Agency.
The case against Range arises out of complaints by the owners of two water wells in Parker County, Texas, which is in the Dallas/Fort Worth area. After receiving complaints from the well owners about the quality of their water, the EPA conducted an investigation and concluded that Range's oil and gas operations might have caused contamination of the two water wells with benzene and methane. Relying on certain emergency powers granted to the EPA by the Safe Drinking Water Act, the EPA ordered Range to do various things, including supplying the owners of the water wells with a replacement water supply and undertaking a long term remediation project. The EPA issued the compliance order without holding a hearing.
Range complied with certain aspects of the order, such as supplying the well owners with an alternative source of water, but Range contended that it had not caused the alleged contamination. Range declined to comply with other aspects of the compliance order and requested a hearing. The EPA refused to grant a hearing and threatened to fine Range tens of thousands of dollars per day if Range did not comply with all aspects of the compliance order. The EPA contended that the law did not give Range the right to a hearing regarding the compliance order, even though EPA asserted that Range could face large fines if it did not comply with the order.
When Range did not promptly agree to comply with all portions of the order, EPA brought an action against Range in the United States District Court for the Northern District of Texas. Two days later, Range brought an appeal of the EPA's actions to the United States Fifth Circuit Court of Appeals, seeking review of the EPA's compliance order and the Agency's refusal to grant a hearing. The district court stayed the EPA's action, pending resolution of Range's appeal to the Fifth Circuit. The Fifth Circuit held oral argument on the appeal in October 2011 and the case has pending before the appellate court since then.
The EPA's contention that Range was not entitled to a hearing was similar to the contentions made by the EPA in Sackett. The Sacketts are a couple who planned to build a home on a residential lot they own in Bonner County, Idaho. The lot is near Priest Lake, though several other lots that contain permanent structures are located between the lake and the Sacketts' property. After the Sacketts filled in part of their lot with dirt and rock in preparation for construction, the EPA issued an administrative compliance order that purported to require the Sacketts to do several things, including restoring the lot to its original condition. The compliance order stated that the lot was a "wetland," and that the Sacketts' pre-construction activities violated wetlands regulations enacted pursuant to the Clean Water Act.
The Sacketts requested a hearing in which they could contest whether their property should be classified as a wetland. And it is conceivable that the Sacketts would have prevailed in such a hearing, if the EPA had agreed to grant a hearing. An Supreme Court Justice Alito has noted, "[t]he reach of the Clean Water Act is notoriously unclear." Nevertheless, the EPA denied the Sacketts' request for a hearing and threatened to fine them $75,000 per day if they did not obey the compliance order ─ $37,500 for the alleged Clean Water Act violation and an additional $37,500 for not obeying the EPA's compliance order.
The Sacketts brought a petition for review with the United States Court of Appeals for the Ninth Circuit, but that court sided with the EPA, which argued that the Sacketts were not entitled to a hearing to challenge the compliance order. The United States Supreme Court agreed to review the case, and a unanimous Court agreed with the Sacketts that they were entitled to a hearing. Justice Scalia wrote for the Court, and both Justice Ginsberg and Justice Alito wrote concurring opinions. Justice Alito noted that the EPA's assertion that no one is entitled to a hearing challenging a compliance order "would have put the property rights or ordinary Americans entirely at the mercy of Environmental Protection Agency (EPA) employees." He stated, "In a nation that values due process, not to mention private property, such treatment is unthinkable."
The Court's opinion and the two concurring opinions were issued on March 21, 2012. The next day, the Department of Justice sent a Rule 28(j) letter to the United States Fifth Circuit, informing it of the Supreme Court's decision in Sackett. A week later, on March 29, the EPA withdrew the compliance order it had issued to Range, and the day after that the EPA voluntarily dismissed the action it had filed against Range in the Northern District of Texas. The EPA's withdrawal of the compliance order and its dismissal of its district court action made Range's appeal to the Fifth Circuit moot, so Range dismissed the appeal on March 30.
As Justice Alito noted in his opinion, the Court's opinion in Sackett is a step forward, but real relief will require Congressional action to clarify the Clean Water Act. Although individuals now will be entitled to a hearing to contest the EPA's issuance of a compliance order, persons still could face substantial fines if the EPA prevails in proving that someone has breached Clean Water Act regulations (and the same is true for the Safe Drinking Water Act violations). Further, the Clean Water Act is ambiguous enough that it is impossible to know in advance the ultimate success of any challenge to an EPA determination that someone has violated the Act. That uncertainty, combined with fines that can amount to tens of thousands of dollars for each day of noncompliance, guarantees that most Americans will not be able to risk challenging an EPA action. Most persons who receive a compliance order will have little choice but to obey the order, rather than risk the financial disaster that could result from an unsuccessful challenge. As Justice Alito described the situationin Sackett:
The Court's decision provides a modest measure of relief. At least, property owners ... will have the right to challenge the EPA's [compliance orders]. But the combination of the uncertain reach of the Clean Water Act and the draconian penalties imposed for the sort of violations alleged in this case still leaves most property owners with little practical alternative but to dance to the EPA's tune."