SACKETT v. EPA

Transcript: 

ORAL ARGUMENT OF DAMIEN M. SCHIFF ON BEHALF OF THE PETITIONERS

Chief Justice John G. Roberts: We'll hear argument first this morning in Case 10-1062, Sackett v. the Environmental Protection Agency.

Mr. Schiff.

Mr. Schiff: Thank you, Mr. Chief Justice, and may it please the Court:

Mike and Chantell Sackett are here today because 4 years ago the Environmental Protection Agency issued against them a compliance order charging them with violations of the Clean Water Act, requiring that they restore their property to its alleged predisturbance wetlands condition, and imposing upon them the threat of tens of thousands of dollars per day in civil fines if they did not immediately comply with the order.

But in these 4 years, the Sacketts have never been offered a meaningful opportunity for judicial review of the compliance order, an opportunity that they are guaranteed under the Due Process Clause and the Administrative Procedure Act.

Justice Antonin Scalia: Of course, there would have been a daily fine with or without the compliance order, wouldn't there, if they were indeed in violation of the -- the act.

Mr. Schiff: Justice Scalia, the fine would only have been attributable to the statute itself.

But with the compliance order in effect, essentially, the Sacketts are now subject to double liability.

They can be held liable for the statute as well as for actions inconsistent with the compliance order.

Justice Elena Kagan: So, Mr. Schiff, your understanding is that each day your clients are subject to $37,500 of fines for the violation of the statute, and an additional 37.5 for violation of the compliance order?

Is that the way you understand the penalty scheme to work?

Mr. Schiff: Yes -- yes, Justice Kagan.

And it is -- it is in fact, I might add, how the EPA understands the penalty provisions.

In its brief at pages 30 and 31, they essentially concede that the existence of the compliance order does subject the Sacketts to liability for both violations of the statute as well as violations of the compliance order.

Justice Ruth Bader Ginsburg: But the court of appeals did say that there would be no independent liability under the -- for -- for violation of the compliance order.

That is, unless there was a violation of the statute, there would be no penalty for violations of the compliance order.

Mr. Schiff: That is correct, Justice Ginsburg.

The court held that as a predicate for any liability for a compliance order violation, there must be first a finding of a statutory violation.

But that doesn't change the fact, even according to the Ninth Circuit, doesn't change the fact that one can still be held liable for both, that there is a distinct civil liability that is traceable only to the compliance order.

Justice Ruth Bader Ginsburg: What -- what kind of review are you seeking?

I mean, one thing you could say is you dispute that this property is subject to the act.

That might be a question that's reviewable.

Do you seek more than that?

Do you seek review at this stage of anything more than whether the property is subject to the act?

Mr. Schiff: No, Your Honor, we seek review of that jurisdictional question as it is incorporated into the compliance order.

The compliance order is the agency action for which we believe the Sacketts have a right of review under the Administrative Procedure Act.

And our challenge under the APA to the compliance order is precisely that there is no jurisdiction and therefore there has been no statutory violation.

Justice Anthony Kennedy: Can you tell me, what -- what would be the scope of your holding?

How would -- how would -- if you could write the opinion for the Court on this part of your case, what would the rule be?

I mean, health inspectors go into restaurants all the time and say: Unless you fix this, I'm going to give you a citation.

Fire inspectors, the same thing.

And I am -- I'm wondering how your general theory or your general principle that you want us to adopt would fit with that rather routine type of enforcement?

Mr. Schiff: Well, Justice Kennedy, we do not believe that what we are articulating extends as far as -- as creating a right under the APA for review because a health inspector has come onto your property.

All we are arguing is that the compliance order is a final agency action, it has stopped the Sacketts home building, it has imposed upon them significant civil liability, and therefore they should have a right under the APA--

Justice Anthony Kennedy: Well, this is under -- under the APA.

Mr. Schiff: --Correct.

Justice Anthony Kennedy: This is the APA prong of your argument.

Mr. Schiff: Correct, Justice Kennedy.

And we should emphasize that we believe that the Sacketts' due process rights can be satisfied by allowing their APA cause of action to go forward.

Justice Antonin Scalia: It seems to me that -- that there's another distinction, a more significant one, between routine inspections by fire marshals or -- or restaurant inspectors, and that is that if you -- if you disobey their order, you're not subjected to any more substantial liability than -- than you would have been subjected to had they not issued the order.

It isn't the order that -- that produces any -- any new fine, is it?

Mr. Schiff: That is exactly correct, Justice Scalia.

That is -- that's the principal distinction between the compliance order in this case and many of the agency actions that the EPA has set forth in its brief.

Chief Justice John G. Roberts: What if the sanction imposed each day was not the $37,000, but was $10.

If you don't comply, you know, we can bring an action any time to enforce this and you'll be subject to the statutory maximum, but during the period, the additional sanction for the -- under the administrative order, or the compliance order, is $10 a day?

Mr. Schiff: Mr. Chief Justice, I don't believe that would change the Court's finality analysis under Bennett.

The -- the fact that the fine is only $10 as opposed to $37,000 doesn't--

Chief Justice John G. Roberts: But it might go to adequacy of judicial review, the adequacy of the judicial review that would come when the APA brings the enforcement action.

I understood your argument to be that there was a significant extortion impact from the fact that these were such significant fines -- doubled, as you say -- that you could rack up for 5 years.

But if it's only $10 a day, that takes a lot of the wind out of your sails, doesn't it?

Mr. Schiff: --Well, to begin with, Mr. Chief Justice, in addition to the independent liability that the compliance order imposes, there are other legal effects.

Even if the compliance order had no independent liability, there are other legal effects that even EPA has conceded to.

For example, the existence of the compliance order makes it materially, substantially more difficult for the Sacketts to apply for an after-the-fact permit.

A higher--

Justice Anthony Kennedy: To apply for a--

Mr. Schiff: --For an after-the-fact permit.

The -- once an compliance order is issued, an after-the-fact permit is -- can only be applied for under the "clearly appropriate" standard in the Corps' regulations.

But, Mr. Chief Justice, in response to the question, yes, of course, the amount of the fine certainly factors into meaningfulness of review.

It factors into coerciveness.

But even if there were no fines, there is -- attributable to the compliance order, there is still the fact that the Sacketts cannot independently initiate, cannot trigger review of a compliance order.

Justice Antonin Scalia: What do -- what do you care?

I mean, you have the fines, don't you?

So why don't you just argue that?

Why do we have to wrestle with the more difficult situation where there are no fines?

It's conceded that there are fines, isn't it?

Mr. Schiff: That's correct, Justice Scalia.

Justice Antonin Scalia: So, you know, sufficient unto the day the evil thereof.

We don't have to consider more difficult cases.

But as I understand it, you can get review by applying for an after-the-fact permit from the Corps, and the only -- the only expense you would incur in order to get that would be to fill in, as the order requires you to do, which is something like what, $27,500 or so?

Mr. Schiff: Well, Justice Scalia--

Justice Antonin Scalia: Is that such a hard -- a hard hit?

That's a lot less than, you know, 37.5 a day.

Mr. Schiff: --Well, the difficulty, Justice Scalia, is that the Sacketts cannot obtain judicial review of the compliance order within the context of the permitting process.

The compliance order is the order that has caused the deprivation, that is imposed upon the Sacketts this double liability.

Justice Antonin Scalia: Well, but their challenge to the compliance order is simply that they don't have wetlands.

It's the jurisdiction of the EPA.

And surely that can be raised in the -- before the Corps of Engineers, no?

Mr. Schiff: That issue might be raised, Your Honor, but the Sacketts could never get review of that issue within the context of the compliance order, which is, of course, the agency action that has caused their harm.

Moreover, there is frankly no guarantee that the Sacketts could even get into court through the permitting process, because the Corps might very well say: Well, you know, we don't believe that there are wetlands on the property, and so we are not going to issue you a permit, and therefore there is nothing for the Sacketts to then litigate over in Federal court.

Justice Antonin Scalia: How long does it take to get one of those after-the-fact permits?

Mr. Schiff: There is -- there is a study, Your Honor -- in terms of averages, I think it is about a year.

But there's nothing in our record that would show necessarily that the Sacketts are eligible for a nationwide permit.

But more importantly is the fact that the permitting process doesn't provide review of the burden of the deprivation that the Sacketts are enduring right now.

Chief Justice John G. Roberts: Could you -- I don't understand what exactly you might get from the Army Corps of Engineers.

Obviously, they might give you a permit, and I take it that cuts off liability; you can do what you're hoping to do.

They might say you don't get a permit because these are wetlands.

Can they do something in the middle, which is: It's kind of hard for us to tell; you're on your own?

Mr. Schiff: Very much so.

In addition to saying we're not going to issue a permit because we don't believe there are wetlands on the property, they could also say -- under the regulations that EPA cites in its brief -- that we're not even going to entertain your after-the-fact permit application while the compliance order is still outstanding, meaning that you will likely have to comply, be fully deprived, with everything the compliance order says, allow EPA on to your property, requiring significant expensive restoration of your property to its alleged wetlands, state, before you even have the privilege of applying for a permit.

Justice Elena Kagan: Is that -- is that what's critical, Mr. Schiff?

If that were not true, if you could go in, even with the compliance order on your property, and get an adjudication of whether you had wetlands in the context of an after-the-fact permit proceeding, would that be sufficient?

Mr. Schiff: No, it would not, Justice Kagan, because, again, the fact is that the -- the compliance order is -- well, the permitting process is an entirely separate agency action.

It's -- it's an agency action that the Army Corps goes through.

The Sacketts could get no review of the -- of the compliance order.

Justice Elena Kagan: So why does that matter?

You're getting review of the question that you care about, which is the question whether you have wetlands on your property.

And if they said you don't have wetlands on your property, here's a permit, your problems are finished.

Mr. Schiff: Justice Kagan, the difficulty is that that judicial decision would have no impact and would not remedy the deprivation that the Sacketts are currently enduring.

Justice Antonin Scalia: Do they issue permits when there are no wetlands?

I thought it was a permit allowing you to do something on wetlands which otherwise would -- would not be allowed?

Mr. Schiff: That's correct, Justice Scalia.

Justice Antonin Scalia: So if -- if they decide that there's -- that it's not a wetland, what do they -- what do they do?

They do nothing?

Mr. Schiff: That's my understanding.

The Corps would simply state there is nothing to permit because there are no wetlands to fill.

But--

Justice Anthony Kennedy: --But then the compliance order would automatically be vacated?

I mean, doesn't the compliance order presume that they are wetlands?

Hasn't the agency already made that determination?

Mr. Schiff: --The difficulty, Justice Kennedy, is that we are talking about two agencies.

And this -- this is really the -- why -- one additional reason why the permitting process is -- is an inapt solution to the Sacketts' problem.

The Sacketts have been injured by EPA, by the compliance order.

And now--

Justice Samuel Alito: That seems very strange for that, for a party to apply for a permit on -- on the ground that they don't need a permit at all.

If you apply for a permit, is the Army Corps of Engineers going to decide whether you -- whether it's wetlands?

Isn't it presupposed if you're applying for a permit that you need one because there's -- they are wetlands?

Mr. Schiff: --That's -- that's exactly right, Justice Alito.

The -- that underscores how bizarre it is to force the Sacketts to go through a process.

They have been injured by the EPA, by a compliance order, and they are told they must initiate an entirely separate administrative action with an entirely different agency in order to get indirect, tangential, possible review of the compliance order that has turned their world upside down for the last 4 years?

The -- that is why the permitting process cannot provide meaningful judicial review to the Sacketts.

That's why the Administrative Procedure Act is the ready-made answer.

And frankly, there is no indication that Congress intended anything other than the Administrative Procedure Act to provide an adequate administrative review for the -- for the adjudication of compliance orders.

Justice Ruth Bader Ginsburg: What would the standard be -- be called?

You have APA review, so it's just that -- that the EPA acted reasonably in determining that you have wetlands?

Mr. Schiff: Yes, Justice Ginsburg, it would be your typical arbitrary and capricious standard of review, substantial evidence based upon the record that was before the EPA when it made its finding of statutory violation, which is the statutory predicate for the issuance of the complaint.

Justice Antonin Scalia: Well, wait, wait.

Surely you wouldn't go in and -- and try to fight arbitrary or capricious.

It's arbitrary or capricious or

"otherwise in violation of the law. "

Wouldn't you go in and say, that this is in violation of the law?

Mr. Schiff: No, exactly, Justice Scalia.

I mean, I don't mean to limit ourselves to just that one standard of review.

But it would be a--

Justice Antonin Scalia: I don't think that one standard of review would do you very much good, to tell you the truth.

They've thought about this.

Maybe they got it wrong, but to say it's arbitrary or capricious, you are going to lose.

Mr. Schiff: --Well, I certainly hope not, Justice Scalia.

But -- but the difficulty is we don't even know at this point what sort of record the EPA has.

In fact, the law as it stands now is that EPA doesn't even need probable cause to issue a compliance order.

And--

Justice Samuel Alito: Given -- given the rather vague nature of the test that's been adopted for determining whether something is part of the waters of the United States, wouldn't you have a very difficult time showing that a determination that it was, was arbitrary and capricious?

Mr. Schiff: --There is no question, Justice Alito, that there -- there -- yes, it would be a difficult time.

But that, just because the Sacketts might have an uphill battle I don't believe is any reason to say that they should have no opportunity.

I mean, as it stands now, they have been told you cannot build your home, you must convert your property into wetlands, and you are being charged $37,500 per day if you don't immediately comply; and yet you get no day in court?

Justice Elena Kagan: And Mr. Schiff, is the way you see this operating that you bring an action contesting on the basis of the arbitrary and capricious clause or otherwise not in accordance with law?

If then the court rules against you but you continue to fail to comply, does the EPA then have to bring a separate enforcement action?

Mr. Schiff: Yes.

The only way EPA can actually take money away from the Sacketts is by filing a civil action, but that would be true whether or not the Sacketts bring an APA cause of action.

Chief Justice John G. Roberts: Would collateral estoppel apply to you because of the judicial determination on the compliance order in the subsequent enforcement action?

In other words, you lose.

You seek APA review and the court says: We think it's a wetland.

And then the EPA brings an enforcement action.

They have to establish it's a wetland.

Don't they just attach a copy of the decision?

Mr. Schiff: Well, not necessarily Mr. Chief Justice, because, one, the standard of review would be different.

It would be -- under the APA, it would be the traditional deference afforded to agency action.

Not--

Chief Justice John G. Roberts: I guess I am back to Justice Scalia's question.

This -- it struck me as a purely legal, jurisdictional issue, are these wetlands or not?

And I don't know why you give deference to the agency's determination on a legal jurisdictional issue like that.

Mr. Schiff: --No, you are correct, Mr. Chief Justice.

I mean more in terms of the substantial evidence standard that usually supports agency action under the APA.

But -- but certainly here the Sacketts also contend, regardless of questions of Rapanos and connection to navigable waters, the Sacketts contend that there are no wetlands at all on this property, and that ultimately is -- is of course a factual question that would be informed by what's in the record.

Justice Elena Kagan: But to go back to the Chief Justice's--

Justice Anthony Kennedy: If they are wrong about that, if there is a finding in the APA process that these are wetlands, is that the end of it?

Or within that, the context of that review, can you say, well, they are wetlands, but only to a minor extent, and these conditions were onerous and -- and far more than necessary to protect the wetlands?

Can you argue that in the APA review, or is it just up or down, wetlands you lose, not wetlands you win, that's it?

Mr. Schiff: No.

I mean -- Justice Kennedy, we would argue that, even if there are wetlands on the property, which we do not believe there are, that -- that the compliance order would still be invalidated if there were not a significant nexus between the -- the alleged wetlands on the property and some navigable water in the vicinity.

But -- but--

Justice Sonia Sotomayor: Who would review that and where?

Going back to Justice Kagan's question of -- let's assume you went through an APA process and they found it was wetlands and that the compliance terms were -- had a substantial nexus.

What happens when you go into an enforcement action?

Mr. Schiff: --Well, at that point then both sides get to create a new record, consistent with what the Ninth Circuit held.

That--

Justice Elena Kagan: --So the Chief Justice's suggestion that there would be preclusion you do not agree with?

Mr. Schiff: --No.

In addition to the fact that the standards of review would be different, preponderance of the evidence in a civil action as opposed to substantial evidence in the APA, it would also be the fact that -- that, even as the Ninth Circuit understood a civil action, when it goes forward both sides have an opportunity to create a new record, or to -- to establish by preponderance of the evidence the elements of -- of the offense.

Justice Sonia Sotomayor: So does anything get estoppel?

Mr. Schiff: I'm sorry, Justice--

Justice Sonia Sotomayor: Does anything get estoppel?

Assuming it's not a legal question, would the factual findings that there is a substantial nexus between the remedy ordered and the violation, would that get estoppel?

Mr. Schiff: --It -- it would be difficult to imagine a case of estoppel, because again, in the APA context it's just based upon the record at the time the compliance order is issued.

And so the records are always going to be different, because the civil action will build upon that administrative record.

And then secondly.

In terms of the differing standards of review, I suppose one could find a -- a purely factual question perhaps that -- that where the standards of review wouldn't matter, or a purely legal question, but--

Justice Antonin Scalia: This wouldn't be a problem if -- if this procedure were not employed.

If there were not this -- this prior compliance order that issues before actual suit by the -- by -- by EPA to hold you liable for violating the act, then you'd just have one -- one suit, and the -- the issue would be clear as to what burden the agency has to sustain.

But it's -- it's really the dual nature of this process that creates the difficulty, isn't it?

Mr. Schiff: --Yes, Justice Scalia, to some extent it is, of course, the process that -- that--

Justice Antonin Scalia: But that's in the statute.

The agency didn't make that up, right?

The statute provides for compliance orders and it calls them "compliance orders", doesn't it?

Mr. Schiff: --It -- it -- it does indeed, and so even if the Sacketts on remand don't get their ideal mode of judicial review, something is frankly better than nothing.

They have been told for 4 years they cannot build their home, they have been threatened with ruinous civil penalties, and to date they have had no opportunity for their day in court.

The -- the Sacketts cannot trigger an enforcement action.

I mean, perhaps if Congress had written the statute differently to allow for some sort of judicial review that the Sacketts could -- could initiate for a compliance order, that might -- that might answer, Justice Scalia, your -- your concerns.

But that is not the statute we have.

We have a statute where Congress has said EPA can issue a compliance order, and we have in combination with that the presumption in favor of judicial review of final agency action; we have the avoidance canon; all that point to allowing for the Sacketts to get their day in court and at the same time to satisfy and to vindicate Congress's intent.

Congress wanted EPA to be able to issue these -- these compliance orders.

Congress gave significant statutory penalties for violating these compliance orders.

But at the same time, there has to be balance.

One cannot tell landowners--

Justice Antonin Scalia: Of course, you know, you are not going to be out of the woods.

Even if you get this APA review, okay, some of the factual questions that go to whether these are wetlands or not are going to be decided giving substantial deference to the agency's determination of the facts, right?

Mr. Schiff: --No; that is correct, Justice Scalia.

That's--

Justice Antonin Scalia: And so even if you lose on that, you might still think you can win when the EPA finally brings a -- a civil action seeking to impose a penalty, where the burden will be on the EPA without -- without any deference to its fact-finding.

So, you still won't know where you are, will you?

Mr. Schiff: --Well--

Justice Antonin Scalia: You've have lost one but you may win the other.

You will have to roll the dice.

Mr. Schiff: --Well, respectfully, Justice Scalia, it's more than rolling the dice.

It's subjecting the -- the Sacketts to an interminable Damoclean sword.

If -- if the only way they can get review is simply waiting, well, when will EPA let the sword drop and bring a civil action to enforce its compliance order?

Who knows how long it is?

With EPA's theory of continuing violation, the statute of limitations never even runs.

And so you have the Sacketts who are forever subject to this cloud over themselves, cloud over their title -- they can't get anyone to come on to their property to build their home.

Justice Ruth Bader Ginsburg: Is there no limitation on the compliance order?

Just, it can be there forever until the EPA decides to bring an enforcement action?

Mr. Schiff: As -- Justice Ginsburg, as EPA interprets the statute of limitations for collecting civil penalties, so long as the "discharge", quote unquote, remains in place, it is considered a continuing limitation, and so the statute of limitations never even begins to run.

And so Sacketts might build their home and 10 years down the road be surprised that here comes EPA with its civil action.

Oh, now the Sacketts get judicial review, but at a significant cost.

They can't even enjoy the home that they might build because there is always this cloud hanging over them, a cloud that can be dispelled if they can simply have an opportunity, which, Justice Scalia, may not be the best opportunity, but something is better than nothing, an APA cause of action to review the EPA's assertion of its authority over their property.

Justice Ruth Bader Ginsburg: I asked you earlier, in this APA review would there be any further question after the determination is it wetlands, is it not.

And you had said no, that would be it.

But you answered another question that would suggest it may be wetlands but it shouldn't -- there should be -- you should be allowed to build your home anyway.

Mr. Schiff: Allow me to clarify, Justice Ginsburg.

In this APA cause of action, the Sacketts challenge the jurisdictional predicate, and that is really a two-part determination.

One is, are there wetlands on the property; and two, are those wetlands sufficiently connected to navigable waters to justify Federal regulation.

And both of those fit into our first claim for relief, our APA cause of action.

And so in this case that is what our APA cause of action on remand would look like.

We would say let's look at the record that EPA has assembled at the time it issued the compliance order and does that record support the finding of statutory violation.

Justice Sonia Sotomayor: You are conceding that the compliance order, assuming there is a violation, is all right?

You are not challenging any of the terms of the compliance order other than the finding of a violation?

Mr. Schiff: That is correct, Justice Sotomayor, yes, that is correct.

That is all that we are challenging.

Mr. Chief Justice, if I may reserve the balance of my time.

Chief Justice John G. Roberts: Thank you, counsel.

Mr. Stewart.

ORAL ARGUMENT OF MALCOLM L. STEWART ON BEHALF OF THE RESPONDENTS

Mr. Stewart: Mr. Chief Justice and may it please the Court:

I would like to begin with the question of double penalties because I think it helps to clarify exactly what the compliance order does and does not do in terms of altering the legal regime to which the Sacketts are subject.

The compliance order is intended to specify the violation that EPA believes to have occurred and the measures that EPA believes are necessary in order to achieve prospective compliance.

And the statute does provide separately for penalties for violating the statute and penalties for violating the compliance order.

As an exercise of our duty of candor to the Court, we acknowledged in our brief that the government reads the statute to allow the legal possibility of double penalties, that is up to $37,500 per day for violating the statute, up to 37,500 per day for violating the compliance order.

I think that's really a theoretical rather than a practical--

Justice Stephen G. Breyer: You say "practical".

The order itself says that.

It says you don't do it you are going to get penalized 32.5, which is now 37.

Mr. Stewart: --That language in the order would have been accurate even if the statute didn't authorize penalties for violating the order itself.

That is, even if the statute authorized penalties only for violating the act, it would have been accurate for EPA to say: We believe this is what is necessary to achieve compliance and if you don't do it you will potentially be subject to these civil penalties, namely civil penalties for violating the statute.

But the reason I say that it's, the double penalties, is a theoretical possibility -- let me say that again.

If there were no provision for penalties for violating the compliance order, only penalties for violating the statute, EPA could accurately have said: We believe that the following steps are necessary in order to achieve perspective compliance with the act, and if you don't do these things you will be subject to the following penalties because you will then be in violation of the act and you will be subject to the penalties--

Justice Elena Kagan: But, Mr. Stewart--

Chief Justice John G. Roberts: I don't follow -- I didn't follow that.

What is your response to the assertion that you are subject to double penalties?

Mr. Stewart: --It is--

Chief Justice John G. Roberts: One for violating the act, two for violating the compliance order.

Mr. Stewart: --The first is it is a legal possibility; we are not aware of any case in which a district court has ever imposed penalties of greater than the 37,000--

Chief Justice John G. Roberts: Well, you don't doubt that -- you don't doubt that they have the authority to do that?

Mr. Stewart: --They have the authority to do that.

I guess the other thing I would say is the possibility that penalties would be increased doesn't distinguish this scheme from the sort of regime that Justice Kennedy referred to or the sort of regimes that we've discussed in our brief.

That is, it's very common for law enforcement agencies of all sorts to give warnings to regulated parties: We think you are violating the statute.

Justice Samuel Alito: Has the--

Justice Sonia Sotomayor: But, Mr. Stewart--

--I'm sorry.

Chief Justice John G. Roberts: Justice Alito.

Justice Samuel Alito: --Has the United States adopted a rule or adopted a policy that it will never seek anything more than the penalty for the underlying violation?

It will not seek an additional penalty for violation of a compliance order?

Mr. Stewart: We have not adopted a policy to that effect.

I guess what I do want to clarify--

Justice Samuel Alito: So it's more than theoretical, then.

I don't really understand what you are saying.

You are saying that we may ask for more, but it's unlikely courts will actually provide for more.

Mr. Stewart: --I guess the two -- I don't know that we have ever asked for more than the 37,500 per day.

Now, I think it is often the case that what district courts will do is within the 37,500 statutory maximum they will say: We are imposing a greater penalty for the period after the compliance order was issued because it shows greater culpability to continue with the violation after you have been warned.

But that's not a feature of the compliance order that distinguishes it from all manner of other agency--

Justice Antonin Scalia: Your order could have read, it could have read:

"Notice is hereby given that violation of or failure to comply with the foregoing Order. "

--cap "O" --

"may subject respondents to: One, civil penalties of up to 32.5. "

--now 37.5 per day.

That's how it reads.

It could have read:

"Violation of or failure to comply with the Environmental Protection Act may subject respondents to civil penalties. "

It's quite specific that it is violation of -- failure to comply with the foregoing Order, which includes not letting -- filling in immediately and so forth.

It says what it says.

It's the violation of the order that -- that the additional penalties are attached to.

Mr. Stewart: --And again, we don't dispute that violating the order could as a realistic matter cause the penalties to be greater within the statutory maximum.

But, as I was saying, in many situations agencies give warnings to regulated parties: If you keep doing this you may be subject to penalties.

Justice Antonin Scalia: It could -- it could as a theoretical matter double the penalties.

Mr. Stewart: That's correct.

Justice Antonin Scalia: You are just saying as a practical matter it doesn't often do that.

Mr. Stewart: As a practical matter we are not aware of any case in which the penalties imposed have been greater than the per day statutory maximum provided--

Justice Antonin Scalia: I'm not going to bet my house on that.

Mr. Stewart: --In terms -- I think, first of all, we would say that until we floated the theoretical possibility in our opening brief, the Sacketts seemed to be entirely unaware of it.

That is, all of the Sacketts calculations as to the penalties to which they would be exposed if they continue to engage in their present conduct were premised on the idea that 37,500 was the statutory maximum.

But the main point I want to--

Justice Sonia Sotomayor: Mr. Stewart--

Justice Anthony Kennedy: They were getting a good night's sleep?

They are getting a good night's sleep before they read your brief?

[Laughter]

Mr. Stewart: --I don't think that -- I guess that's really my point, that the one thing the Sacketts have never argued is: If it were just the 37,500 per day for violating the statute, we would be willing to build our house and take our chances, but once you double that we are not willing to take the risk any longer.

Chief Justice John G. Roberts: That's not their argument today, either.

Mr. Stewart: Right.

The one point before I move on that I do want to make clear is, in a wide variety of contexts agencies will issue warnings to regulated parties that they are believed to be in violation of a statute.

And it is common under schemes where the amount of the sanction is up to the judge's discretion that penalties will -- may be greater for conduct that occurs after the person has been warned.

Justice Sonia Sotomayor: --Counsel, but those situations are slightly different because the act doesn't specify any specific remedies that apply to any specific property.

It just says: You violate the act by filling in wetlands.

It doesn't say that you violate the act by not removing the fill and not planting trees and not doing this or doing that.

What it says is: You violate the act if you don't comply with the compliance order that tells you to do those things.

So it's a very theoretically violation that's going on.

One is in the affirmative act prohibited by the statute; that's the violation of the statute.

And the other is the violation of the remedial steps that the compliance order is the only thing that has set forth.

Mr. Stewart: I don't think that's correct, Your Honor.

First as to of the requirement in earlier versions of the compliance order that herbaceous plants be planted, et cetera, those were removed from--

Justice Sonia Sotomayor: But those are not in the statute.

They are permitted by the statute, but they're not set forth as requirements under the statute.

Mr. Stewart: --EPA's view of the statute is that without regard to the issuance of a compliance order, once fill material is deposited in waters of the United States EPA's view of the penalty provisions would be that the violation continues for as long as the fill remains in the wetlands.

Justice Sonia Sotomayor: That has nothing to do with the fact that the act doesn't specifically tell you to remove it.

Mr. Stewart: The act doesn't specifically -- and the act doesn't specifically tell the person to remove it, but that's our interpretation of the statute.

And its either right or wrong.

That is, if we are wrong about that, if the only days on which penalties can be assessed for violating the statute itself are days on which fill was actually discharged, then the provisions of the compliance order that directed the Sacketts to remove the fill and restore the property would be beyond the scope of a proper compliance order under 13--

Chief Justice John G. Roberts: Counsel, you referred a couple of times to the EPA's view of the statute.

I take it that's your view as well?

Mr. Stewart: --That's our view as well.

I'm just saying that hasn't been definitively resolved by this Court.

But the position that we've taken again with respect to the statute itself is that in computing the daily penalties and asking how many days of violation were there, the district court should take into account not just the days on which fill was actually deposited.

But the days on which fill remained in the wetlands.

And Petitioners have specifically expressed agreement this morning with that view of the statute.

I think the view of the Petitioners' amici is to the same effect, because in many of the amicus briefs there are calculations of the very large penalties to which people could be subject if they didn't adhere to compliance orders and they are all premised on the idea that every day fill remains in the wetlands--

Justice Antonin Scalia: What about those provisions of the original order?

I must say I was not edified by the fact that when litigation was threatened or actually brought the EPA modified its order: Oh, you don't have to plant the trees.

Does it do this as a matter of practice, issue compliance orders that go well beyond what the EPA would -- would demand?

Mr. Stewart: --I don't know about well beyond.

I think -- every version of the compliance order said to the Sacketts: If you think that there are things in here that are wrong or compliance measures that you regard as infeasible, you are welcome to tell us.

And I think--

Justice Antonin Scalia: Well, that's very nice.

[Laughter]

That's very nice, when you have received something called a compliance order, which says you are subject to penalties of 32.5 for every day of violations.

Mr. Stewart: --I think the portion of the order dealing with the planting of plants, which is the primary one that was eliminated in the final iteration of the order, is really removed from what the Sacketts have been complaining about.

That is, the Sacketts--

Justice Antonin Scalia: It shows the high-handedness of the agency, it seems to me, putting in there stuff that is simply not required by the EPA.

Mr. Stewart: --Well, I think in the main what every version of the compliance order required was appropriate if you accept the initial determination that there was a violation that these were waters of the United States.

Chief Justice John G. Roberts: What would you -- what would you do, Mr. Stewart, if you received this compliance order?

You don't think your property has wetlands on it and you get this compliance order from the EPA.

What would you do?

Mr. Stewart: Well, as we know from documents that have -- were not in the record of the case, but have been provided to--

Chief Justice John G. Roberts: If they weren't in the record, I don't want to hear about them.

You appreciate that rule, that we don't consider things that aren't in the record.

You get a compliance order, you don't think your property has wetlands, what do you do?

Mr. Stewart: --I think at that stage your options would be limited.

You could apply for an after-the-fact permit--

Chief Justice John G. Roberts: You wouldn't do that, right?

You know you will never get an after-the-fact permit if the EPA has sent you a compliance order saying you've got wetlands.

Mr. Stewart: --Or you could simply comply with the compliance order at the cost of, it's been estimated, $27,000.

Once the compliance order has been resolved, there would be no further impediment--

Chief Justice John G. Roberts: That's what you would do?

You would say, I don't think there are wetlands on my property but EPA does, so I'm going to take out all the fill, I'm going to plant herbaceous trees or whatever it is, and I will worry about whether to -- that way, I'll just do what the government tells me I should do.

Mr. Stewart: --It may be that the Sacketts at that point were in an unattractive position.

But I think in determining whether it's an unfair position or how the statutory scheme is supposed to operate we ought to look not just at the opportunities that were available to them at that moment but the opportunities that they had forgone already?

Justice Sonia Sotomayor: --Could I ask you--

Justice Samuel Alito: Mr. Stewart, if you related the facts of this case as they come to us to an ordinary homeowner, don't you think most ordinary homeowners would say this kind of thing can't happen in the United States?

You don't -- you buy property to build a house.

You think maybe there is a little drainage problem in part of your lot, so you start to build the house and then you get an order from the EPA which says: You have filled in wetlands, so you can't build your house; remove the fill, put in all kinds of plants; and now you have to let us on your premises whenever we want to.

You have to turn over to us all sorts of documents, and for every day that you don't do all this you are accumulating a potential fine of $75,000.

And by the way, there is no way you can go to court to challenge our determination that this is a wetlands until such time as we choose to sue you.

Mr. Stewart: Well, the first thing I would say is as a matter of standard EPA practice the compliance order would not be the first communication from the agency that would alert the landowner to the belief that there was a violation.

The record in this case does not make clear whether that agency practice was followed in this case, but EPA's typical practice is to alert landowners through prior communications that a violation is existing.

Justice Samuel Alito: Well, so what?

Somebody from the EPA says we think that your backyard is a wetlands, so don't build.

So what -- what does the homeowner do, having bought the property.

Well, all right, I'm just going to put it aside as a nature preserve?

Mr. Stewart: At the time that that sort of letter is issued, there is no compliance order and there is no impediment to an after-the-fact permit.

That is, at that point the landowner could ask for a permit.

Chief Justice John G. Roberts: In other words, what the landowner is supposed to do -- the agency says, because you didn't apply for a permit, you are in trouble, because you didn't give us a chance to say whether we were going to take away your constitutional rights or not, so we can do it.

Mr. Stewart: Well, the first two things I would -- the first thing I would say is it's not simply a hypothetical means of challenging CWA coverage to seek a permit.

That is, in both SWANCC, Solid Waste Agency of Northern Cook County and Carabells, which was one of the two companion cases that this Court adjudicated in Rapanos, that was the way that the suit got into Federal court.

The landowners applied for permits, they were denied, they sought judicial review of the permit denials and argued, inter alia, that there was no need for a permit because the relevant tracts were not waters of the United States.

The second thing I would say is it's often the case that judicial review is contingent upon complying with some sort of deadline or some sort of prerequisite, and once a person has missed the deadline that person may as a practical matter be in the same position as if judicial review had not been made available at all.

Justice Antonin Scalia: Suppose the Corps of Engineers agrees that it is not a wetland and its basis for refusing to issue the permit is: We don't give a permit; you don't need a permit.

Mr. Stewart: It would issue a letter either to the effect that there was no wetland or that it was a wetland that was not covered by--

Justice Antonin Scalia: Is that binding on the Environmental Protection Agency?

Mr. Stewart: --Yes, we would--

Justice Stephen G. Breyer: How can they bring an action -- I would like some clarification here.

The Corps's regs say the Corps will accept an after-the-fact permit.

I mean one after -- if they applied tomorrow, the day after getting this order, you would run up against the reg, which says we won't give you any after the fact, we won't even consider this matter, until any required initial corrective measures are made.

And then, just to be safe, they say that no permit application will be accepted unless the Corps determines that concurrent processing of an after-the-fact permit application is clearly appropriate, "clearly".

So I looked at those two things and said: Of course you can't apply to the Corps of Engineers; they are not going to accept it unless you have a very unusual case.

So I expect you to tell me why I'm wrong about that, if I am, or how many after-the-fact permit applications has the Corps of Engineers accepted.

Maybe there are a lot.

Mr. Stewart: --It's not precluded, but I would agree with you: It's very unlikely that without complying with the order--

Justice Stephen G. Breyer: All right, I agree.

If we agree then, look, for 75 years the courts have interpreted statutes with an eye towards permitting judicial review, not the opposite.

And yet -- so here you are saying that this statute that says nothing about it precludes review, and then the second thing you say is that this isn't final.

So I read the order.

It looks like about as final a thing as I have ever seen.

So tell me why I am wrong on those two points.

Mr. Stewart: --Well, we are not arguing that the statute precludes all judicial review.

That is, the question whether the Clean Water Act applied to this tract could have been keyed up for a court in either of two ways.

Justice Stephen G. Breyer: You're arguing on the final part--

Justice Elena Kagan: You are arguing that the presumption of reviewability does not apply.

Mr. Stewart: To this particular order.

Justice Elena Kagan: And that seems a very strange position.

Why would the presumption of reviewability not apply?

Mr. Stewart: First because the order doesn't express the final -- the agency's final view both in the sense that it invites the Sacketts to provide further comment--

Justice Ruth Bader Ginsburg: But they asked for a hearing.

Didn't they ask EPA for a hearing on whether their lands fell within the statute?

They did ask for a hearing and the EPA said no.

Mr. Stewart: --EPA said no to a formal hearing, but I think that would be characteristic agency practice.

That is, when the agency is exercising what is essentially its prosecutorial function, that is, warning regulated parties we may do -- we may sue you if you don't do the following things.

It would be quite common for enforcement personnel to entertain informal overtures from the regulated party or his legal representative, but I think it would be extraordinary, for instance, for a U.S. Attorney's office to grant a formal hearing to a potential criminal defendant in order to discuss the -- in order to resolve the question criminal charges should be brought.

But--

Justice Ruth Bader Ginsburg: There's -- there's one thing I do want you to tell us is, EPA has three choices.

It can go to compliance order; it can issue an administrative -- trigger an administrative penalty where there would be APA review; or it can bring an enforcement action.

How does the agency decide which of those three routes it's going to take in a given case?

Mr. Stewart: --I think the admin -- the agency's normal practice would be to issue an administrative compliance order before initiating judicial proceedings.

That is, the statute doesn't require it, but the EPA ordinarily would not commence a lawsuit without first giving the regulated party one final opportunity to come into compliance.

Justice Ruth Bader Ginsburg: What about this administrative order that, the administrative order internally within EPA subject to judicial review?

When does it use that as opposed to compliance order?

Mr. Stewart: It could use that.

It would typically use that for violations that it perceived to be less serious.

The statutory cap on penalties is much lower than the cap in the judicial enforcement actions.

I think it would probably be the case that it would issue an administrative compliance order in those situations as well.

Now, one of the things that the administrative -- the cover letter to the administrative compliance order does say is: Even if you comply, you are still not immune from the possibility of enforcement proceedings with respect to past violations.

Justice Antonin Scalia: Can -- can the EPA issue a warning instead of using this order procedure?

Compliance order procedure?

Mr. Stewart: Oh, absolutely.

I mean, there is no express statutory authorization for that, but I think most agencies regard it as within their ordinary authority to enforce the statute to send less formal communication.

Justice Elena Kagan: But doesn't most of -- 14--

Justice Antonin Scalia: So they can just dispense with this compliance order and tell the Sacketts: In our view, this is a warning; we believe you are in violation of the act; and you will be subject to -- you are subject to penalties of 37.5 per day for that violation; and to remedy the violation, in our judgment, you have to fill in and you have to plant, you know, pine trees on the lot.

It could do that.

Mr. Stewart: They could use the letter for that mechanism.

And--

Justice Antonin Scalia: And there would be no review of that.

Mr. Stewart: --We would certainly argue there would be no review of that.

And if the Court said that there was review of the administrative compliance order based on features that were distinct to the order, namely, the fact that it is couched as an order, the fact that penalties can be imposed for violation of the order itself, an opinion along those lines wouldn't suggest that.

Justice Stephen G. Breyer: --Is there anything you've got by -- I mean, I'm -- You've got me now into the area, we are applying the APA and the question is Abbott Labs and is it final.

Well, here there doesn't seem anything more for the agency to do, and here the person whom the order is directed against is being hurt a lot.

So the only thing I -- left in my mind here is the order itself does say: Come in and talk to us about this.

Which may suggest it isn't final.

So do you have any information on that point?

That is, have you looked up or has the APA told you that really when we issue these things, in fact people come in and modify them at X percent of the time.

Mr. Stewart: We don't have statistics on that.

Now -- 24--

Justice Stephen G. Breyer: Is there any impression that you could tell us?

Mr. Stewart: --I -- I would have the impression that it's in a nontrivial number of cases, the landowner does approach EPA.

Now it's -- 4--

Justice Stephen G. Breyer: Do--

Mr. Stewart: --I will say that the statistics I do have are that only a very small percentage, you know, a rough estimate somewhere on the order of 3 % of wetlands-related compliance orders under of the Clean Water Act ultimately culminate into lawsuits for enforcement.

Justice Elena Kagan: --But Mr. Stewart, you--

Mr. Stewart: That would encompass both the cases in which the landowners came in and talked to EPA and those in which they just complied.

I'm sorry.

Justice Elena Kagan: --Mr. Stewart, you suggested that, that some communication occurs before this compliance order.

And my guess would be that most of the back and forth between the agency and the person does happen before the compliance order rather than after.

And the notion that the person can come in after the compliance order and say you were wrong, well they can, but they can do that with respect to any administrative action.

So, am I wrong about that?

That really the back and forth here takes place before the compliance order issues rather than after?

Mr. Stewart: I think you are right as a matter of typical agency practice that there would be an invitation well before the compliance order was issued to come in and give your side of the story, and you are probably right that if we got to the point where a compliance order was issued, then the likelihood that further communications would sway the agency substantially might be reduced.

So I would take your point there--

Justice Sonia Sotomayor: --Mr. Stewart -- I'm sorry, finish your answer.

Mr. Stewart: --So yes, I would agree with that.

Justice Sonia Sotomayor: Your cut-off.

You are saying if we were troubled by the additional penalties, and you were going to suggest something.

If we were troubled by that aspect of the order alone and you haven't dealt with the permit issue after the fact, what would be your approach to the case then?

Mr. Stewart: Well, I guess the two things, one of which may be more troubling rather than less troubling, is to say that if you are troubled by this, then there are a lot of other things that might be troubling as well.

Because it's often the case that warnings are issued to regulated parties, and it's often the case that if the regulated party continues with the conduct after receiving the warning, the penalties may be enhanced.

Justice Stephen G. Breyer: --This is not a warning.

I mean, you only have to look at it.

I was quite moved by the fact when I looked at it, it didn't say a warning.

It said: This is an order.

It looks extremely formal.

I even overstated in your favor the question of negotiating because it doesn't say negotiating about changing the order; it says negotiating about amending the order.

And -- so this is not just a warning, is it?

Mr. Stewart: It -- it is not -- it is phrased as an order.

But the only thing that EPA is authorized to do under section 1319(a)(3) is to order people to do what they were already legally complied -- required to do.

That is, order them to comply with their legal obligations.

Justice Antonin Scalia: Can't you usually obtain a declaratory judgment if prosecution is threatened and you think that there is no basis for it, and you can't -- you are not -- you're not compelled to just stand there and wait for the prosecutor to, to drop the hammer?

Can't you normally bring a declaratory judgment action, saying there is no basis for prosecution?

Mr. Stewart: There is no -- the Court has held that there is no constitutional bar to that, and that a declaratory judgment remedy can be made available in that circumstance.

But, again, I think it would cause a huge upheaval in the practices of many agencies to say that declaratory relief is typically available when the agency issued an informal warning.

Justice Antonin Scalia: Well, in those -- maybe with an informal warning, but when you have something as formal as this which shows that the agency does intend to prosecute, why wouldn't you be able to bring a declaratory judgment action?

Mr. Stewart: Again, I don't think there would be any value to agencies or to regulated parties to encourage the agencies to hedge their bets or to say less than what they really mean.

That is -- 17--

Justice Stephen G. Breyer: The more -- that's what I am trying to get you to talk about just for one minute.

You are talking about a huge upheaval.

My honest impression is that it is the government here that is fighting 75 years of practice because -- because the issue is the Abbott Labs issue of finality.

And of course a warning isn't reviewable.

But this seems to meet the test where that fails.

Now please correct me if I am wrong about the agency practice.

I can't find support for you on that.

Mr. Stewart: --The Court in Abbott Labs emphasized that that was an industry-wide regulation having the force of law and that the basis for challenging it was a purely legal ground.

And one of the reasons that we think judicial review of the administrative compliance order within this scheme would make no sense, would be out of keeping with the rest of the statutory regime, is that it wouldn't solve the problem.

As the discussion in the first part of the argument made clear, petitioners share our view that the administrative compliance order would be subject to review if it's reviewable under a deferential standard.

And if the Court held that the order was not arbitrary and capricious, that still wouldn't eliminate the possibility that if we pursued an enforcement action the Petitioners could argue that they were actually in violation.

Justice Ruth Bader Ginsburg: But how would it work if you say it's lesser standard under the APA?

But the question is, is this wetlands or is it not?

Mr. Stewart: It's more than just is it wetlands.

It's are these wetlands that have the requisite connection to traditional navigable waters.

And that can turn in part on factual and scientific judgments.

Justice Ruth Bader Ginsburg: But as far -- as far as the EPA is concerned, they are finished with that question.

This is not something that, well, we might look at it again tomorrow based on new evidence.

The -- the determination that these are qualifying wetlands, that has been made?

Mr. Stewart: I think they have reached that conclusion for now.

I don't think it would be accurate to say that we have done all the research we would want to do if we were going to be required to prove up our case in court.

And that's really the second half of the -- the problem, that if Petitioners claim were reviewable and a court held EPA didn't do sufficient investigation based on the record before it at the time, there was no sound basis--

Justice Samuel Alito: Well, that makes the EPA's conduct here even more outrageous.

We -- we think now that this is -- these are wetlands that -- that qualify, so we're going to hit you with this compliance order, but, you know, when we look into it more thoroughly in the future, we might change our mind?

Mr. Stewart: --I -- I would assume that any prosecutor, any enforcement person, would want to be better prepared when a case actually went to trial then when he was communicating to the potential defendant that there's a real likelihood that we would sue you.

But the other--

Justice Sonia Sotomayor: But you're required to make a finding that there's a violation.

You're not suggesting that the government is going to act willy-nilly and not going to act on sufficient evidence in just -- in sending a letter that says

"we find you are violating the act. "

Mr. Stewart: --Obviously, we would feel that we had sufficient evidence for doing that.

But the second part of the point that I was going to make is, even if a court found that we didn't have sufficient evidence before us at the time the administrative compliance order was issued, and that the order was therefore arbitrary and capricious, that wouldn't provide the Sacketts the protection that they needed, because that wouldn't foreclose EPA from--

Chief Justice John G. Roberts: Well -- that's right.

In other words, you hope you have -- you've looked at it, you hope you have a sufficient basis.

And because of the administrative compliance order, you're really never going to be put to the test, because most land owners aren't going to say, I'm going to risk the $37,000 a day.

All EPA has to do is make whatever finding it wants, and realize that in 99 percent of the cases, it's never going to be put to the test.

Mr. Stewart: --I -- I guess the only point I would make is, if Petitioners had wanted a judicial resolution of the coverage question without subjecting themselves to potential penalties, they could have filed a permit application before discharging, they could have gotten review there.

All we're saying is they can't discharge fill, wait to see whether EPA notices, and then insist upon immediate judicial review if EPA notices and objects.

Chief Justice John G. Roberts: Thank you, counsel.

Mr. Schiff, you have four minutes remaining.

REBUTTAL ARGUMENT OF DAMIEN M. SCHIFF ON BEHALF OF THE PETITIONERS

Mr. Schiff: Mr. Chief Justice, unless the Court has any additional questions--

Justice Stephen G. Breyer: I do, actually, because I see their point better than I did.

This is -- is I think they are worried about.

They're worried that when you get judicial review of this kind of order, the Court doesn't refer on fact-finding that isn't made on a record.

The substantial evidence test applies to fact-finding made on a record, or a 556/557.

And so they'll have a hard time -- or a harder time -- in each of these cases subjecting it to judicial fact-finding.

And they think that the purpose of this, the purpose of this procedure given to them by statute was to call it -- the shots in favor of them, because there might be thousands of these things and they can't prepare all that formal thing.

Now, I -- I see that as a -- as a -- now I understand their concern.

I'm not saying they're right.

I understand their concern.

So if you want to comment, is there some way to accommodate their concern that also accommodates judicial review, or are we just in a kind of -- they're in a Hobson's choice, in a sense.

Mr. Schiff: --Well, Justice Breyer, the difficulty is essentially of EPA's own creation.

I don't understand why -- why EPA would want the power to issue compliance orders that, as the Court has recognized, are -- are tremendously coercive.

And that has--

Justice Stephen G. Breyer: They want the power because they have thousands of these things.

They investigate it, and they find the facts.

They think it's sufficient that judicial fact-finding is carried out before a judge who doesn't have their experience, et cetera.

And therefore, there is a risk of incorrect decision-making, at least two -- under the statute, it would be too pro-homeowner rather too pro-environment.

That's why it is more of a dilemma than I thought.

Mr. Schiff: --I think, Justice Breyer, the fear of it being too pro-homeowner is in fact protected by the fact of the APA standard of review.

We're not talking about -- about the agency being forced to sort of a--

Justice Antonin Scalia: Yes, but maybe the agency is only entitled to deference when in fact it has made a record.

When it hasn't made a record, maybe there's no reason to give it deference.

Mr. Schiff: --You're correct, Justice Scalia.

If there is no record, certainly there's by necessity no substantial evidence, and in that case, the compliance order would be--

Justice Stephen G. Breyer: Well, they -- they might -- the might change their -- their system here if you -- if you win this, and provide for various kinds of preorder procedure or post-order procedure where they would be open to change.

I see a number of possibilities.

Justice Antonin Scalia: But then -- they'll just issue warnings is what they'll do.

Justice Anthony Kennedy: Are there cases in the courts of appeals or the district courts where landowners, having received these notices or compliance orders, are said that there's a taking of the property, inverse condemnation?

Mr. Schiff: --I'm not aware of that, Your Honor, but -- Justice Kennedy -- but -- as this Court I believe held in Riverside Bayview, a takings claim under the Clean Water Act is not considered ripe until a permit application has been -- has been attempted.

Now, if a compliance order is issued, then the permit application might be off the table.

And in fact, one can see that a compliance order might potentially have a total taking effect in this case.

But certainly at this point, we are willing to let EPA have the power.

Yes, let EPA administer the act and issue compliance orders.

But let's also give homeowners a fair shake, too.

Let them have their day in court to contest what the agency has done.

Justice Elena Kagan: Mr. Schiff, I take it that the government agrees that there's not much of a chance that you could get an after-the-fact permit, but its view is you should have gotten a before-the-fact permit.

And putting aside the weirdness which Justice Alito points out of making you go get a permit for something you don't think you need a permit for -- putting that aside, couldn't you have gotten the legal determination that you wanted through that process?

Mr. Schiff: We -- Justice Kagan, we don't deny that by applying for a permit and having the Corps make a decision on the permit that that's one way to get into court.

But the difficulty for the Sacketts and for the thousands of folks in this country who are recipients of compliance orders is that that's small or no solace once EPA has already acted.

You know, once EPA has made the finding of violation and then threatens these ruinous penalties on landowners.

Justice Elena Kagan: Well, I think what EPA is saying was, as long as you knew that your lands were potentially wetlands, you could have gone in from the get-go and -- and sought a determination that they were not wetlands through the permit process.

Mr. Schiff: That's correct, Justice Kagan.

But frankly, the way EPA and the Corps interpret the scope of their jurisdiction, that would make essentially every landowner in this country potentially on notice requiring them to apply for a permit or some other manner and the agency would then probably have even a worse situation; it would be flooded by permits.

Chief Justice John G. Roberts: Thank you, counsel.

Counsel.

The case is submitted.