Clean Water Act Cases in the Supreme Court

Date: March 07, 2016

The Clean Water Act (CWA) has become a major issue of contention for the small business community. That’s been the case for a while. But last year the Environmental Protection Agency and Army Corps of Engineers raised the stakes with their controversial “Waters of the United States” regulation (WOTUS Rule), which purports to define the scope of CWA jurisdiction. Of course we contend that this constitutes an illegal expansion of jurisdiction—a regulatory land grab. And ultimately we think it likely that our lawsuit challenging the WOTUS Rule will end up before the Supreme Court. But in the interim, the Supreme Court is addressing another important CWA case that will affect many small business owners throughout the country. We explain that case here, as well as the Court’s decision last week declining to grant review of another important CWA issue:

Army Corps v. Hawkes

Last week, the NFIB Legal Center filed in Army Corps v. Hawkes, arguing that small business owners should be allowed to have their day in court to contest illegal assertions of CWA jurisdiction when the federal government claims that their property contains regulated waters. In that case Army Corps told a small business that it could not use a property it was buying without obtaining a costly federal permit—which on average costs over $300,000. But the landowner maintains that the property is beyond Army Corps’ regulatory authority and that the company should not be required to obtain a permit in order to use it.

Incredibly the agency maintains that landowners should have no immediate right to contest an illegal assertion of jurisdiction over their land. Instead, it is argued that the landowner must first apply for a potentially unnecessary (and exorbitantly expensive) permit, and that the owner can only then challenge the Corps’ jurisdiction if the permit is denied. But as the NFIB Legal Center argued, that would be absurd. Instead, we urged the Court to make clear that landowners have a fundamental—unconditional—right to go to court when federal regulators have made a final decision affecting their property rights.

We’re optimistic that the Supreme Court will ultimately side with the landowner on this one. To be sure, only a few years ago the Court ruled 9-0 in favor in favor of Mike and Chantelle Sackett on a similar issue. In that case the Sacketts had begun construction on their dream home when they received a letter from EPA asserting that they had illegally discharged pollutants into regulated waters—despite the fact that their property looked like dry land. What is more, they hired an environmental consultant who said that—in his professional opinion—the property was not subject to CWA regulation. Nonetheless, EPA argued, in that case, that the Sacketts had no option to contest its jurisdiction, and that their only option was to restore the property to its natural state at great expense. Since the Supreme Court unanimously rebuffed that argument in Sackett v. EPA, we are hopeful that they will do the same here in Hawkes. The only difference between the two cases is that in Sackett EPA alleged that the family had already violated the CWA, whereas in this case the small business landowner has been forced to leave its property undeveloped in light of the Corps’ assertion of jurisdiction.

Chesapeake Bay TMDL

Meanwhile the small business community suffered a setback last week when the Supreme Court opted against granting certiorari in a case challenging EPA’s TMDL Rule for the Chesapeake Bay. As we’ve explained previously, this EPA action was highly controversial because it not only seeks to regulate pollutants that may be discharged from permitted point sources into waters of the United States, but it goes further—purporting to regulate activities beyond the jurisdictional reach of the CWA. As NFIB argued in a coalition brief, with other industry groups, EPA utterly lacks authority to regulate beyond waters of the United States. And the concern here is that EPA will now use the Chesapeake Bay TMDL as a blueprint for further regulating development in other portions of the country. When viewed in conjunction with the WOTUS Rule, it’s clear that EPA is seeking a general zoning authority over almost the whole country.

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