November 01, 2011

Supreme Court Preview

Channing J. Martin

During its 2010 term, the U.S. Supreme Court issued a blockbuster decision in American Electric Power Co. v. Connecticut, 564 U.S.__ , 131 S. Ct. 2527 (2011), holding that the Clean Air Act displaces the ability of courts to impose federal common law remedies to address greenhouse gas emissions. Similar headlines are unlikely to be generated by the two environmental cases that will be heard by the Court during its 2011 term—Sackett v. Environmental Protection Agency, No. 10-1062, and PPL Montana, LLC v. Montana, No. 10-218but the decisions in those cases will nevertheless have important implications for environmental, energy, and resource practitioners.

The Sackett petitioners seek a determination that preenforcement review of an agency decision on the jurisdictional status of property as wetlands is available under the Administrative Procedure Act (APA), 5 U.S.C. § 500, et seq. They seek review of a compliance order issued by the U.S. Environmental Protection Agency (EPA) under the Clean Water Act (CWA). Four circuit courts of appeal have considered this issue and are aligned in rejecting preenforcement review. It is, therefore, surprising that the Court granted certiorari, particularly since it denied certiorari only three weeks earlier in General Electric Co. v. Jackson, 610 F.3d 110 (D.C. Cir. 2010), a case upholding the bar against preenforcement review under the Comprehensive Environmental Response, Compensation, and Liability Act.

The Sacketts filled a half acre of their property with dirt and rock so they could construct a home near Priest Lake in Idaho. EPA issued a CWA compliance order alleging the Sacketts filled wetlands without obtaining a CWA section 404 permit. The order required the Sacketts to remove fill material and restore the property to its original condition. It also threatened civil penalties of up to $32,500 per day for failure to comply. The Sacketts sought administrative and then judicial review of the order without success. The Ninth Circuit affirmed the trial court’s dismissal of the action, concluding that the CWA precludes judicial review of such orders until EPA has filed an enforcement action in federal court. Sackett v. EPA, 622 F.3d 1139 (9th Cir. 2010).

In its order granting certiorari, the Court indicated that it would review whether the APA provides for preenforcement review of the compliance order and, if not, whether that violates the Due Process Clause. By agreeing to consider whether the APA authorizes preenforcement review, and not simply whether the CWA precludes it, the Court has broadened the implication of its decision to other statutes. Moreover, by addressing whether a bar on preenforcement review violates the Due Process Clause, the Court’s decision could significantly affect the ability of EPA and other federal agencies to issue administrative orders. Such a ruling could change the respective bargaining power of regulators and regulated parties alike.

In PPL Montana, the State of Montana maintains that it owns three riverbeds as an incident of state sovereignty and that PPL Montana, the owner and operator of hydroelectric projects located on the rivers, owes it $41 million in retroactive lease payments. PPL Montana contends that, as owner of the riparian land on both sides of the river, it owns the riverbeds and may continue to occupy them without payment.

The parties agree that the appropriate legal test is whether, under federal law, the rivers were “navigable” when Montana was admitted to the Union in 1889. The parties do not agree, however, on how the constitutional test is to be applied. PPL Montana argues navigability is not established because the sections of rivers on which its dams exist were not navigable when the state was admitted to the Union. The state argues navigability is established because the rivers as a whole were generally navigable when the state was admitted to the Union and that present day usage is probative on this issue.     

The state trial court ruled on a motion for summary judgment that Montana had title to the riverbeds, and it awarded the state $41 million. The Supreme Court of Montana affirmed. In petitioning for certiorari, PPL Montana argued to the U.S. Supreme Court that the decision below “provides a roadmap for cash-strapped states to take (and collect back-rent from) riverbed lands heretofore believed to belong to private landowners and the federal government by the simple expedient of declaring them to have belonged to the State all along.” It is a safe bet that power utilities and states around the nation will be watching the outcome of this case closely.

The Court will hear oral argument in PPL Montana this December. Oral argument in Sackett has not yet been scheduled. Decisions in both cases are expected by June 2012.

Trends, Vol. 43, No. 2, November/December 2011, Section of Environment, Energy, and Resources, American Bar Association.

Channing J. Martin

Channing J. Martin is chair of the Environmental Law Group at Williams Mullen in its Richmond, Virginia, office. He is the Section’s budget officer.