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Wetlands Legal Saga Reaches Ninth Circuit Again, a Decade Later

Nov. 19, 2020, 11:45 PM

The EPA faced tough questioning Thursday as federal appeals judges weighed the latest phase in a long-running wetlands enforcement clash that once reached the U.S. Supreme Court.

The U.S. Court of Appeals for the Ninth Circuit is considering whether to reverse a lower court’s ruling last year that Chantell and Michael Sackett’s Idaho property contained wetlands protected by the Clean Water Act. The appeals court issued its first decision on related issues in the case a decade ago, only to have the Supreme Court reverse it.

The Environmental Protection Agency has since withdrawn the compliance order that prompted the original legal fight. The EPA says the case is now moot, but the Sacketts pressed the Ninth Circuit to keep their appeal on track so they can get clarity on whether they can build on their Idaho lot without a Clean Water Act permit.

“Far from being a complete resolution of EPA’s action, the withdrawal letter really only says that they won’t take further action for now,” said Pacific Legal Foundation attorney Anthony Francois, representing the Sacketts.

The withdrawal of the compliance order doesn’t fully resolve the couple’s concerns, he said. The EPA won’t clarify whether it’s reversing its claim of regulatory authority over the property’s wetlands, nor has it promised it won’t take enforcement action in the future.

Ninth Circuit Judge Michelle Friedland, in a surprising move, suggested at the end of arguments that the two sides should return to mediation to consider settling the case. Attorneys from both sides suggested that was a possibility.

‘Where Do They Need to Stop?’

During oral arguments, Friedland appeared sympathetic to the Sacketts’ argument, pressing the EPA on why it hasn’t taken further steps to officially scrap its determination that their land includes federal wetlands.

“If the agency is unwilling to stop saying it’s a wetland, then I have a very hard time seeing how this case is not still live,” she said.

Justice Department lawyer Brian C. Toth, representing the EPA, responded that the determination has no legal significance and isn’t a final agency action subject to judicial review. He added that the agency could still consider withdrawing it but questioned how far it needs to go.

“Do we have to withdraw the field notes, as well?” he said. “I’ll put that to EPA if they need to. But it’s sort of—I’m not trying to be insulting—it’s sort of a point of, where do they need to stop? Do they have to repudiate every document in the administrative record?”

The legal dispute comes amid a familiar state of uncertainty for federal water jurisdiction. The Trump administration earlier this year finalized a new interpretation for what counts as “waters of the U.S.” subject to federal oversight, but the rule is subject to multiple lawsuits and is likely to change sometime after President-elect Joe Biden takes office.

No ‘Simple Answer’

Friedland expressed frustration that the EPA was attempting to have its cake and eat it, too.

“Can they build on this land tomorrow?” she asked, getting to the heart of the Sacketts’ grievance. Toth said he didn’t have an answer because new regulations are in place.

Friedland later asked if the parties would consider going back into a mediation process to explore settlement options.

“I wouldn’t be opposed to exploring that,” Toth said. Francois agreed.

The Ninth Circuit panel also included Judge Ronald M. Gould, who authored the 2010 appellate opinion that the Supreme Court later reversed. He noted Thursday that he’s intent on understanding the intricacies of the procedural questions in the case so that doesn’t happen again.

“I wish there were some simple answer here we could give you from the bench, but there isn’t,” he said.

Twelve-Year Saga

The Sacketts’ legal saga began when the EPA in 2008 issued a compliance order saying the couple had violated the Clean Water Act by starting home-building work on their Priest Lake, Idaho, property without a federal permit for disrupting wetlands. The order came with the threat of daily fines if the Sacketts didn’t restore the site.

The couple sued the EPA, but the agency said its compliance order didn’t amount to a final action subject to judicial review. The case went to the Supreme Court, galvanizing a broad coalition of property rights advocates against the EPA. The justices in 2012 unanimously concluded that the Sacketts were entitled to challenge the compliance order in court.

The litigation has churned on ever since. A federal district court in Idaho finally ruled last year that the EPA correctly determined the wetlands on the Sacketts’ property fall under the Clean Water Act’s permitting program. The couple then took the case to the Ninth Circuit.

The Sacketts and their lawyers expressed relief earlier this year when EPA enforcement chief Susan Parker Bodine withdrew the compliance order, but said they wouldn’t be satisfied until they knew for sure that construction on their Priest Lake lot wouldn’t trigger a new round of EPA enforcement.

Which Standard?

The dispute touches on a constant source of debate in environmental law: how the EPA defines which wetlands and waterways are covered by the Clean Water Act—and, relatedly, how it should interpret the Supreme Court’s famously fractured 2006 decision in Rapanos v. United States, which featured five different opinions.

The Idaho district court that reviewed the Sacketts’ case said wetlands on the their property were covered by the Clean Water Act under the “significant nexus” test laid out in a concurrence from then-Justice Anthony Kennedy. The Obama administration embraced that standard in its 2015 water jurisdiction rule.

The Trump administration has since adopted a new rule that leans more heavily on a narrower standard featured in a plurality opinion penned by the late Justice Antonin Scalia.

District Judge Jill A. Otake, sitting by designation on the Ninth Circuit panel, asked whether the Trump administration’s regulation renders invalid the EPA’s earlier determination that the Sacketts’ property is subject to the Clean Water Act.

“Your Honor, if the agency were to clarify that, I think this would be a lot simpler question,” Francois said. “But instead they’re defending it.”

The case is Sackett v. EPA, 9th Cir., No. 19-35469, oral arguments held 11/19/20.

To contact the reporter on this story: Ellen M. Gilmer in Washington at egilmer@bloomberglaw.com

To contact the editors responsible for this story: Anna Yukhananov at ayukhananov@bloombergindustry.com; Rebecca Baker at rbaker@bloombergindustry.com

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