Protecting The EPA From Itself

Americans of all political stripes like clean air, clean water, unspoiled landscapes, and feathered and furry critters. The Environmental Protection Agency ought to be one of the most popular arms of the government.

Then again, Americans don’t like bureaucrats, and they especially don’t like bureaucrats who are arrogant, power-hungry, unresponsive and insensitive – which are the sort the EPA under the Obama administration seems to have in abundance. The agency’s recent assertions of its powers have ranged from the vast, as with last week’s release of rules that effectively outlaw construction of new coal-fired generating plants by limiting carbon emissions far below current technology’s practical levels, to the mundane, demonstrated by issuing thousands of orders each year demanding compliance with a variety of environmental statutes.

Environmental laws need to be enforced, and it is the EPA’s job to enforce them. But recent heavy-handedness risks a public backlash, against both the agency and its mission. The backlash may come from the public, which wants to run its dishwashers and charge its cell phones, but also from the courts, which expect agencies like the EPA to stay within the statutory and constitutional powers that are granted to them.

As a result, it did not come as a big surprise when the EPA suffered a pair of court setbacks recently. First, the Supreme Court ruled that an Idaho couple, Chantell and Michael Sackett, have the right to take the EPA to court to challenge an order prohibiting the couple from building on land the agency has designated as restricted wetland. In the second instance, a federal district judge sharply rebuked the agency for abruptly revoking a permit it had previously issued under the George W. Bush administration for a West Virginia coal mine.

In the Idaho case, the Sacketts had already begun preparing the land on their property for construction, intending to build a three-bedroom house, when they received an administrative compliance order from the EPA. The order demanded that they stop construction, remove piles of fill material and replant vegetation. If they failed to comply, they would face fines of up to $75,000 a day.

The EPA asserted that under the Clean Water Act, the Sacketts had no right to challenge the order in court. Their only recourse was to let the potential fines pile up, quite possibly into the millions of dollars, until the EPA sued them and then make their case. If they did that and lost, they would face financial ruin. The EPA took this position knowing full well that no private individual could be expected to take such a risk.

The Sacketts argued that this state of affairs was “arbitrary [and] capricious,” as defined by the Administrative Procedure Act (APA). The Supreme Court agreed. The Court did not rule on whether the Sacketts will ultimately be able to build on their property, but it did say that individuals and businesses have the right to bring their own court challenge to orders that the EPA issues under the Clean Water Act, rather than waiting to be buried by insurmountable fines.

Unfortunately, the high court did not address a broader question posed by the Sackett case, which is whether the constitutional right of due process requires that all citizens be given an opportunity to challenge administrative orders in court. The Sackett ruling is limited to orders that the EPA issues under the Clean Water Act. There is nothing to stop the agency from taking a similar hard line on orders it issues under other environmental laws, and no reason to believe that the EPA under the Obama administration will stop behaving this way until and unless it is forced.

The second case involved a mountaintop removal coal mine in West Virginia. As I have written before, I believe that the practice of mountaintop removal mining is so wanton in its trade of short-term profit for long-term environmental destruction that it should be flatly outlawed. Ordinarily, I would be happy to see the EPA to stop it.

In this case, however, the agency had already issued a permit allowing Arch Coal to use the process at its Spruce No. 1 mine. The company made business decisions on the basis of that ruling. Then, four years later, after the Obama team took control at the EPA, the agency changed its mind and sought to revoke the permit. In ruling in favor of the mining company, United States District Court Judge Amy Berman Jackson called this action “a stunning power for an agency to arrogate to itself.” She said that the original permit must be allowed to stand.

Ultimately, I think these two decisions will make the EPA stronger, not weaker. There is broad consensus in this country favoring clean air, clean water, wildlife protection and resource conservation, even if we sometimes disagree about the underlying science and the cost-benefit trade-offs. Rather than build on that broad consensus, the EPA has made itself a favorite target for critics of government regulation.

We need to protect our environment, but we also need to respect individual rights and the statutory and constitutional limits of government power. If it wants to stay in the game, the EPA is going to have to start playing by the rules.

About Larry M. Elkin 564 Articles

Affiliation: Palisades Hudson Financial Group

Larry M. Elkin, CPA, CFP®, has provided personal financial and tax counseling to a sophisticated client base since 1986. After six years with Arthur Andersen, where he was a senior manager for personal financial planning and family wealth planning, he founded his own firm in Hastings on Hudson, New York in 1992. That firm grew steadily and became the Palisades Hudson organization, which moved to Scarsdale, New York in 2002. The firm expanded to Fort Lauderdale, Florida, in 2005, and to Atlanta, Georgia, in 2008.

Larry received his B.A. in journalism from the University of Montana in 1978, and his M.B.A. in accounting from New York University in 1986. Larry was a reporter and editor for The Associated Press from 1978 to 1986. He covered government, business and legal affairs for the wire service, with assignments in Helena, Montana; Albany, New York; Washington, D.C.; and New York City’s federal courts in Brooklyn and Manhattan.

Larry established the organization’s investment advisory business, which now manages more than $800 million, in 1997. As president of Palisades Hudson, Larry maintains individual professional relationships with many of the firm’s clients, who reside in more than 25 states from Maine to California as well as in several foreign countries. He is the author of Financial Self-Defense for Unmarried Couples (Currency Doubleday, 1995), which was the first comprehensive financial planning guide for unmarried couples. He also is the editor and publisher of Sentinel, a quarterly newsletter on personal financial planning.

Larry has written many Sentinel articles, including several that anticipated future events. In “The Economic Case Against Tobacco Stocks” (February 1995), he forecast that litigation losses would eventually undermine cigarette manufacturers’ financial position. He concluded in “Is This the Beginning Of The End?” (May 1998) that there was a better-than-even chance that estate taxes would be repealed by 2010, three years before Congress enacted legislation to repeal the tax in 2010. In “IRS Takes A Shot At Split-Dollar Life” (June 1996), Larry predicted that the IRS would be able to treat split dollar arrangements as below-market loans, which came to pass with new rules issued by the Service in 2001 and 2002.

More recently, Larry has addressed the causes and consequences of the “Panic of 2008″ in his Sentinel articles. In “Have We Learned Our Lending Lesson At Last” (October 2007) and “Mortgage Lending Lessons Remain Unlearned” (October 2008), Larry questioned whether or not America has learned any lessons from the savings and loan crisis of the 1980s. In addition, he offered some practical changes that should have been made to amend the situation. In “Take Advantage Of The Panic Of 2008” (January 2009), Larry offered ways to capitalize on the wealth of opportunity that the panic presented.

Larry served as president of the Estate Planning Council of New York City, Inc., in 2005-2006. In 2009 the Council presented Larry with its first-ever Lifetime Achievement Award, citing his service to the organization and “his tireless efforts in promoting our industry by word and by personal example as a consummate estate planning professional.” He is regularly interviewed by national and regional publications, and has made nearly 100 radio and television appearances.

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