SUPREME COURT KNOCKS DOWN AGENCY BARRIERS TO JUDICIAL REVIEW
For decades administrative agencies have jealously guarded their near authoritarian power by forcing those accused of violating agency rules to proceed through layer upon layer of agency review before a “final agency order” is declared and available for appeal. Often, once the agency deems a regulated company or individual in violation of its rules, it imposes fines and interest upon the fines each day the accused fails to pay. In this way, the party accused is placed in a dire predicament. The accused must either pay or must risk losing in a system that is biased against the accused, often placing at risk hundreds of thousands, if not millions of dollars. As you might well imagine, most companies and individuals never make it through the agency gauntlet, accepting the agency’s punishment or settling with the agency, regardless of how unjust and burdensome the terms, to avoid greater fines, interest, and penalties.
Federal agencies possess legislative and executive or legislative, executive, and judicial powers that they wield with virtually no checks. They rule as if they were absolute monarchs, making the laws that govern those they regulate, accusing those they regulate of violating the laws, and judging the law violations. There is in this no true separation of functions. The judge who made the law is also the prosecutor, depriving all of any real hope of impartial justice. Those who head the agencies are often corrupt and use their power to enhance their own prospects for post-government employment, picking winners and losers based on the effect those choices will have on the agency head’s financial and political future.
That near absolute power combined with byzantine, multi-layered systems of agency review deprive those accused of violating agency regulations of a full and fair hearing on the merits and of a true presumption of innocence until guilt is proven in almost every case. Even after administrative remedies are said to be exhausted and the case proceeds to federal court, in the vast majority of cases the court defers to the agency’s judgment and confirms the agency’s determination, leaving the petitioner subject to fines and legal fees that are often far beyond affordable.
The overall impact of granting federal agencies so much power over the fate of their regulated subjects is to humble the regulated into total submissiveness and subservience and to embolden the regulator into omnipotence. The typical course for regulated parties is to avoid serious challenges to agency authority and jurisdiction, inviting ever greater assumptions of power by the agencies beyond their statutory mandates. Endless growth in government size, scope, and power is the result (in flagrant violation of constitutional and statutory limits).
In Sackett v. EPA, the Supreme Court defeated the EPA’s denial of judicial review, establishing a basis to improve access to federal court. The decision is an important precedent for all beleaguered by the multiple layers of agency review. It is not an ultimate resolution of the problem, but does provide a new weapon in the arsenal of those who try to break free from costly, biased, and seemingly interminable agency proceedings in an effort to secure independent judicial review.
Michael and Chantell Sackett own a 2/3-acre residential lot in Bonner County, Idaho. Their property is separated from Priest Lake by several lots that contain permanent structures. The Sacketts elected to build a home on the lot. To support construction of the foundation for that house, in April and May 2007 contractors filled part of the lot with dirt and rock. Unbeknownst to the Sacketts, the EPA had deemed the Sacketts’ lot a “jurisdictional wetland” because it was “adjacent” to Priest Lake, which is a “navigable water” under 33 U.S.C. Section 1362(7). By filling the land in preparation for construction, the Sacketts had, according to the EPA, “discharged” “pollutants” into “waters of the United States.” EPA deemed the act a violation of 33 U.S.C. Section 1311. The EPA sent the Sacketts a document that has very draconian consequences. It is called a Compliance Order. The order directed the Sacketts “immediately [to] undertake activities to restore the Site in accordance with [an EPA-created] Restoration Work Plan” and to make the site available for inspection by the EPA. Every day the Sacketts fail to comply causes huge fines to be accrued.
The Sacketts disagree with the EPA’s reading of the law and do not believe their property is appropriately considered a wetland, is sufficiently near Priest Lake to be deemed adjacent to it, or causes the discharge of pollutants into the navigable waters of the United States. EPA’s Compliance Order, however, placed them in an untenable position. The order is designed to make contest so burdensome that people will forfeit their rights rather than challenge an apparently omnipotent EPA. There is no escape from the Order as the EPA construes it. Every day that the Sacketts remain out of compliance (fail to fulfill all of the EPA’s demands in the Compliance Order), they are subject to $37,500 in civil fines and an additional $37,500 in penalties. Needless to say, few are as courageous as the Sacketts who, if they lose this fight, stand to be forced to pay $75,000 for each day of their non-compliance (or contest) of the EPA’s Compliance Order. In addition, the Army Corps of Engineers, who must grant a permit for land fill, will not issue one to the Sacketts in the presence of an EPA Compliance Order. The findings of fact in the Compliance Order are not subject to any further EPA review. Judicial review of the EPA Compliance Order is not permitted under the Clean Water Act. Rather, only the EPA can initiate judicial review under 33 U.S.C. Section 1319. Consequently, the Sacketts only recourse was to negotiate with the EPA, albeit the EPA has been entirely unwilling to drop any substantive requirement in its Compliance Order.
In short, the Sacketts were forced to accept the EPA Compliance Order or be fined and penalized into oblivion. There would be no resort to federal court for an impartial determination of the merits of EPA’s position. Like in so many other cases, the EPA deprived the Sacketts of an opportunity to receive independent redress for their grievances. They would be crushed under the powerful weight of an agency that possessed the hallmark characteristics of tyranny—unbridled discretion and absolute power (the law maker is the law enforcer and is the judge).
Bravely, the Sacketts sued the EPA in federal court, arguing that under Chapter 7 of the Administrative Procedure Act (APA), they were entitled to judicial review of what was a “final agency action for which there is no other adequate remedy in a court,” 5 U.S.C. Section 704. On the merits, the Sacketts argued that the EPA Compliance Order violated the APA because it was “arbitrary, capricious, and contrary to law” and that it deprived them of their property without due process of law in violation of the Fifth Amendment. The United States District Court for the District of Idaho dismissed the claims, concluding that under the Clean Water Act the court lacked subject matter jurisdiction (meaning that the challenge was not one for which the Sacketts had a right to appeal to the court from the agency). The United States Court of Appeals for the Ninth Circuit affirmed the district court’s judgment.
The decisions of those two courts are in line with dozens of others that likewise have dismissed appeals from administrative agency actions that the agencies declared not to be final (despite the very real effect the actions have had on determining the rights and obligations of parties). This time, however, the Supreme Court in a unanimous decision reversed the lower courts.
The Supreme Court concluded that the absence in the Clean Water Act of a provision expressly denying a right to judicial review arising from EPA issuance of a Compliance Order caused the APA presumption in favor of judicial review to be controlling. In his opinion for a unanimous court, Justice Scalia reasoned, “[t]he government warns that the EPA is less likely to use the orders if they are subject to judicial review. That may be true—but it will be true for all agency actions subjected to judicial review. The APA’s presumption of judicial review is a repudiation of the principle that efficiency of regulation conquers all. And there is no reason to think that the Clean Water Act was uniquely designed to enable the strong-arming of regulated parties into ‘voluntary compliance’ without the opportunity for judicial review—even judicial review of the question whether the regulated party is within the EPA’s jurisdiction.” The Court concluded that the EPA Compliance Order was a final agency action for which there was no adequate remedy at law other than the APA, and that the Clean Water Act (silent as to whether an EPA Compliance Order was appealable to federal court) did not preclude judicial review.
There are many instances in which actions by the Bureau of Land Management over western range lands; actions by the Food and Drug Administration against the makers of foods, dietary supplements, and drugs; actions by the Drug Enforcement Administration against physicians and other distributors of controlled and scheduled listed substances; actions by Medicare against providers, including physicians; and actions by the Environmental Protection Agency, among others, determine the rights and obligations of parties through actions that are not, according to those agencies, final and appealable. Thanks to Sackett v. EPA, those actions, if they do not afford an opportunity for judicial review, may now be brought to federal court nonetheless.
Sackett is not an ultimate resolution of the underlying problem Congress has created, but it is a move in the right direction. Because agencies of the federal government in fact operate without any true separation of functions (enabling the law-maker to be the law-enforcer and ultimate judge), the administrative courts are more often than not kangaroo courts, rubber stamps for the position adopted by the agency’s leaders. Justice depends on impartiality. Bias reigns in the administrative courts and, even when on occasion a brave ALJ bolts from the agency line, the agency leaders ordinarily pass final judgment and are quick to reverse any decision not in lock step with the leaders’ preferences.
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Congress should abolish the administrative courts, prohibit deference to agency findings of fact and conclusions of law, and expand judicial review to compel agencies to file suit in federal court against those they accuse of rule violations, enabling the accused to receive immediate review in a trial de novo on the merits in every case, without any deference to the agency’s findings and conclusions. Moreover, Congress should prohibit imposition of penalties and interest for non-compliance unless there has been a final and binding decision by the federal courts against the accused. Penalties and interest should only accrue for failure to pay after the time specified for payment under that final and binding decision. Allowing the accumulation of penalties and interest without a final and binding judicial decision deters the exercise of the right to sue the government in defense of one’s life, liberty, and property and is an assault on the presumption of innocence. Until we treat federal agencies as equal before the law with those they accuse, we will never see justice meted out with impartiality. The indispensable element underlying our Declaration of Independence and our Constitution is individual sovereignty. Government was to be our servant, not our master. Equal justice under law is meaningless unless agency accusers stand before the bar of justice on an equal footing with those they accuse.
© 2012 Jonathan W. Emord - All Rights Reserved