Air Date: Week of October 7, 2011

The justices of the United States Supreme Court. Top row (left to right): Associate Justice Sonia Sotomayor, Associate Justice Stephen Breyer, Associate Justice Samuel Alito, and Associate Justice Elena Kagan. Bottom row (left to right): Associate Justice Clarence Thomas, Associate Justice Antonin Scalia, Chief Justice John Roberts, Associate Justice Anthony Kennedy, and Associate Justice Ruth Bader Ginsberg. (Photo: United States Federal Government)

The Supreme Court will hear two low-profile, high-impact environmental cases in this new session. Richard Lazarus, a law professor at Harvard University, tells host Bruce Gellerman that he thinks the signs so far do not bode well for the Environmental Protection Agency. One case the U.S. Supreme Court has declined to hear alleges state-owned, foreign oil companies conspire to fix the price of gasoline. Host Bruce Gellerman talks with William Gotfryd, one of the attorneys who tried to get the case on the Court’s docket.

Transcript

GELLERMAN: It’s Living on Earth, I'm Bruce Gellerman. The question, “What’s a navigable river?” doesn’t seem like such a tough one - it's a river used for business or transportation.

But it turns out it's not that simple, and it’s going to take the Supreme Court to come up with an answer. The nation’s highest court has agreed to hear two environmental cases this session - one about ownership of rivers in Montana, the other to settle a dispute in Idaho over whether a landowner can challenge the EPA’s authority.

The cases involve thorny constitutional issues, which Richard Lazarus is practiced in handling. He’s argued environmental cases before the Supreme Court, and teaches at Harvard Law School. Professor Lazarus says, in the Montana case, a hydroelectric utility claims the state has no right charging the company for use of a riverbed.

LAZARUS: Today, it seems sort of odd, but one of the most essential attributes of state sovereignty is ownership of the beds of navigable waters. It’s so important, that every state, when it became part of the Union, that’s one thing the Supreme Court guaranteed them under the "equal footing" doctrine. There was nothing more important than the beds of navigable waters. The navigable waters were the highways of commerce - you couldn’t have transportation, you couldn’t have the power provided by those water bodies, without the navigable waters.

GELLERMAN: As I understand it, there are 10 hydroelectric dam on these rivers in Montana, and the owners of those rivers are saying, “Hey! It’s not navigable!”

LAZARUS: Right. What the owners are saying is, "We’ve been dong this for 100 years plus and you never said you owned these beds before. And now you’re claiming you own them, and we owe you tens of millions of dollars back rent, and we’re going to owe you millions of dollars of rent in the future.

In this area for instance: the Great Falls Reach of the Upper Missouri River - if you look at that, it doesn’t look very navigable. But the Montana courts said, and the state of Montana says: "you don’t do this piece by piece. You look to the river as a whole, and it’s quite navigable on one side of that reach, it’s quite navigable on the other side of that reach, so you should call the whole thing navigable."

And what the utilities are saying - the hydroelectric facilities are saying - is: "No, no, not so fast. You do this segment by segment."

GELLERMAN: This puts the judges in a strange situation. I mean, they've got to figure out really what’s navigable, right?

LAZARUS: Well, they don’t have to decide whether, in fact, these beds are navigable. What the court will say is whether or not the lower courts applied the right test of navigability, and whether you apply that test to the river as a whole, or segment by segment, and whether you look to the condition of the river at the time of statehood, or whether you look to the condition of the river now. All the court will answer are those very broad legal issues. And then it will send it back to the lower courts to actually apply those tests to the facts.

GELLERMAN: I’m reminded what John Paul Getty, the oilman, once said: “The meek shall inherit the earth, but not the mineral rights.” And the question is now: who owns the rights to underneath the river?

LAZARUS: Well, that’s right and in this case it’s rent, and other cases it can be mineral rights. Absolutely. These are very valuable pieces of real estate. My expectation in this case is, the court will probably be fairly sympathetic to the hydroelectric facilities' argument.

GELLERMAN: So lets move on to Idaho and a case there where a couple known as the Sacketts owns a small piece of undeveloped land - less than an acre - and they fill it in. And the EPA says, you’ve violated the Clean Water Act, and then they order them to clean it up and restore it. The question here is whether they have a right to a hearing before the EPA can enforce their rules.

LAZARUS: The Sackett couple would like to have immediately brought a suit to challenge the legality of that order. But under settled law, you can’t challenge an administrative and compliance order submitted by EPA.

GELLERMAN: So the EPA says you’ve gotta do it, you’ve gotta do it. And then you can sue us later.

LAZARUS: Well, right. What it means is: you either gotta do it, or if you don’t do it, and we bring a lawsuit against you, you can challenge us then, but if we’re found to be right, you may well have to pay penalties to failing to comply with the order.

GELLERMAN: Yeah, I think they can be really stiff, like $37,500 dollars a day!

LAZARUS: That’s right. And so, most people when they receive an order, they far prefer to say, "Wait a second. If we think we’re not liable, let us challenge the order; don’t put us in this predicament of guessing whether or not you’re right. We’d like to challenge it right away."

GELLERMAN: What are the implications of this case?

LAZARUS: Well, the implications of that case would be a lot of bad news for EPA. And that is, EPA has long relied on the Clean Water Act - in this case - but on all the environmental statutes, it has relied on the fact that it has enormous leverage over people when they send them administrative compliance orders. It requires them to come to EPA and negotiate, and often settle these things fairly quickly.

But if they lose that, EPA may lose what has been a very important tool in the enforcement arsenal. No one had expected the Supreme Court to grant review in this case. When the Supreme Court grants review unexpectedly - when there is no disagreement in the lower courts on an issue - that tends to mean that they’ve taken it to reverse.

GELLERMAN: The Supreme Court refused to hear a bunch of environmental cases. Why is that?

LAZARUS: Yeah, the Supreme Court every year refuses to hear hundreds and hundreds and indeed thousands of cases. It only hears about one to two percent of the cases for which it receives requests for review. And it chooses only those cases which present a legal issue, which a) at least four justices - that’s how many it takes to grant review - believe is important, and no less significantly, that they think the time is right.

And they want to see an issue which is important not for newspaper headlines, but important because it comes up over and over again and it’s time for the Supreme Court to resolve it. And the one thing the Justices agree about is that if they decide not to hear a case, they are saying nothing at all - zero - about whether the decision below was right or wrong.

GELLERMAN: Well, Professor Lazarus, thanks so much!

LAZARUS: Yup - you’re welcome!

GELLERMAN: Richard Lazarus is a professor of Environmental Constitutional Law at Harvard University. Well, among the cases the Supreme Court refused to put on its calendar this session is Fast Break Foods v Saudi Arabian Oil Company. In their brief, Fast Break and other gasoline retailers charge state-owned, foreign oil companies – like Saudi Oil - conspired to fix the price of gas. William Gotfryd was one of the attorneys representing the retailers.

GOTFRYD: Well, there are some important issues, not only from an economic standpoint, but from a legal standpoint about how far foreign interests who are conspiring can come on to American soil and continue their conspiracy, and that's really at the heart of the case.

GELLERMAN: Well, you were charging that these Russian, Venezuelan, and Saudi Arabian oil subsidiaries are basically colluding - price fixing.

GOTFRYD: Yeah, not a great shock - everybody knows it, nobody's doing much about it.

GELLERMAN: Well, the Supreme Court turned you down.

GOTFRYD: It sure did!

GELLERMAN: They didn’t give you an answer though, right?

GOTFRYD: Uh, no.

GELLERMAN: But you lost out in the lower courts too.

GOTFRYD: Well, that tends to be the case - if you lose in the lower courts, you tend to be disfavored in getting it reversed as you go up the chain.

GELLERMAN: Well, what was the lower court ruling?

GOTFRYD: Well, the lower court ruling was essentially that the issue about whether or not you can attack foreign subsidiaries of national companies is a political question, which is resigned into the political branches of the government. And specifically they looked at the executive branch - the President - with its treaty powers, and said basically this is a presidential issue.

GELLERMAN: So what happens now?

GOTFRYD: Well, that’s an excellent question. I’m not quite sure the American people and more specifically Congress is aware how deeply the tentacles of foreign companies like the OPEC member national oil companies are reaching into the United States commerce directly, and apparently are allowed to price fix on American shores.

Whether or not the people are aware of this, and Congress is aware of it ... I hope they do become aware of it, and decide to take action.

GELLERMAN: Now, I’m reading the OPEC mission statement, and it says, and I’m quoting: “The mission is to coordinate and unify the petroleum policies of its member countries, and to ensure the stabilities of oil markets in order to secure an efficient, economic, and regular supply of petroleum to consumers, a steady income to producers, and a fair return on the capital for those investing in the petroleum industry.”

GOTFRYD: Yup, sounds like price fixing to me!

GELLERMAN: Now, if these companies were American companies, you think they would be allowed to do what you charge they do?

GOTFRYD: Absolutely not! There would be people doing a long time in jail for what they do.

GELLERMAN: Well, the Supreme Court says they’re not going to listen to you, so is there any legal standing you can find? Are you going to pursue this at all?

GOTFRYD: I think we’ll just to have to see how the situation develops. And since my interest is in fair and open trade that’s protected from cartel activities, I’m hoping that Congress decides to wake up and do something serious.

GELLERMAN: Well, Mr. Gotfryd thanks so very much. I really appreciate it.

GOTFRYD: My pleasure.

GELLERMAN: Chicago attorney William Gotfryd.