U.S. Supreme Court Report: Court Addresses Question of When Businesses Can Challenge Administrative Orders from the Government

85964_8972_02042012.jpgThe United States Supreme Court, which began its current term last October, is considering several cases that could have significant impact on small businesses in New York and New Jersey. An article published in Inc. last fall described five cases that directly affect small businesses and entrepreneurs. One of those cases, Sackett v. Environmental Protection Agency, addresses the question of when individuals or businesses can challenge administrative orders from a government agency. Ordinarily, one must first comply with the administrative order before challenging it in court. This can create an enormous burden on small businesses and individuals, who may have few resources remaining to marshal a defense of their rights.

Sackett deals with an Idaho couple, Mike and Chantell Sackett, who graded a lot and built a house in the northern part of the state in 2007, described as “their dream house near a lake.” The Environmental Protection Agency (EPA) ordered them to stop construction immediately, alleging that their land was part of a wetland protected under the federal Clean Water Act. It further ordered them to perform remediation services on the lot by replacing vegetation and fencing off the site for at least three years. This would obviously deprive them of the use of their property, and it would constitute a significant financial burden for the couple.

The Sacketts had reportedly already conducted their own investigation and confirmed that their 0.63-acre lot was not a legally-defined “wetland.” In order to challenge the EPA’s order, however, they first had to comply with the order or face criminal prosecution and huge fines. The Sacketts brought a lawsuit against the EPA to request review of the agency’s decision before they complied with its order.

The Sacketts lost their case in district court and in the Ninth Circuit Court of Appeals. The Supreme Court granted certiorari in June 2011, narrowing the question to whether or not the Sacketts could seek judicial review of the EPA’s order before it is enforcement, and whether it violates the Due Process Clause if they cannot.

Several weeks before granting certiorari in this case, according to SCOTUSBlog, the Supreme Court had denied it to General Electric Co. GE was also contesting an EPA order, claiming damage to its stock price and credit rating would result from compliance with the order. The Sacketts’ case, in contrast, involved a married couple “of modest means” who lacked the legal ability to challenge an administrative order with which they disagreed and with which they could scarcely afford to comply. The Supreme Court heard arguments in the case on January 9, 2012. The final decision in this case will have an important impact on entrepreneurs and small businesses in their dealings with government agencies.

The New York business attorneys at Samuel C. Berger, PC offer fixed-fee legal services to businesses and investors who want to do business in New York and northern New Jersey. To speak to a member of our skilled legal team, contact us today online or at (212) 380-8117.

More Blog Posts:

Small Business Owners in New York City Report Optimism Going into 2012, New York & New Jersey Business Lawyer Blog, January 26, 2012
Plan to Consolidate SBA into Larger Agency Causes Concern Among Small Business Owners, New York & New Jersey Business Lawyer Blog, January 19, 2012
Trends from 2011 for New Jersey Businesses, New York & New Jersey Business Lawyer Blog, January 5, 2012
Photo credit: workin’ people I by ophelia on stock.xchng.