P R O B A T E   &   P R O P E R T Y
July/August 2004
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Environmental Law Update

Environmental Law Update Editor: Rafe Petersen, Holland & Knight LLP, 2099 Pennsylvania Ave., N.W., Suite 100, Washington, DC 20006-6801, rafe.petersen@hklaw.com.

Environmental Law Update provides information on developments in environmental law as it applies to property, probate, and trust matters. The editors of Probate & Property welcome information and suggestions from readers.

Appellate Court Allows Constitutional Challenge to Superfund Provision to Go Forward

On March 2, 2004, the U.S. Court of Appeals for the District of Columbia Circuit upheld the right of General Electric Company (GE) to challenge the constitutionality of the unilateral administrative order (UAO) scheme authorized by Section 106 of the Comprehensive Environmental Response, Compensation & Liability Act (CERCLA), 42 U.S.C. §§ 9606, and related provisions. The appeals court in General Electric Co. v. Environmental Protection Agency, 360 F.3d 188 (D.C. Cir. 2004), overturned the ruling of the District of Columbia District Court, which had concluded that Section 113(h) of CERCLA, 42 U.S.C. § 9613, prohibited GE’s challenge by depriving the courts of jurisdiction over such suits. Although finding that Section 113(h) bars pre-enforcement review of agency action under Sections 104 and 106(a) as applied to specific enforcement orders, the appellate court held such a bar is not applicable to challenges to the constitutionality of the statutory scheme on its face. Opening this provision to potential constitutional challenge could affect a significant tool in EPA’s enforcement arsenal. If the court on remand were to find that the EPA’s UAO authority violated due process, it could have a significant effect on the ability of EPA to quickly force parties to take cleanup actions.

Under Section 106, EPA is authorized to issue UAOs to parties deemed potentially responsible for the costs of environmental cleanup. In essence, a UAO is a legal document issued by EPA that directs the identified potentially responsible parties (PRPs) to take corrective action or refrain from an activity, detailing the violations and actions to be taken. This can be enforced in court. Indeed, a recalcitrant party is potentially subject to the imposition of penalties of up to $27,500 per day and may further be subject to punitive damages in an amount equal to three times the cost incurred by the government from the Superfund to clean the site. See 42 U.S.C. §§ 9606(b)(1), 9607(c)(3).

At issue was whether GE was precluded from challenging the UAO scheme as a violation of the Due Process Clause of the Fifth Amendment of the U.S. Constitution by failing to provide a hearing before the EPA issued an order or before timely and meaningful judicial review after issuance. GE reasoned that it should not be forced to wait for EPA to initiate an enforcement action before it can obtain review of the constitutionality of the statutory provision. GE stressed the fact that if a company refuses to comply with a UAO, it risks considerable penalties, and if EPA proceeds with the cleanup, then the company could be assessed cleanup costs plus treble damages. GE asserted that the UAO “imposes a classic and unconstitutional Hobson’s choice: Either do nothing and risk severe punishment without meaningful recourse or comply and wait indefinitely before having any opportunity to be heard on the legality and rationality of the underlying order.” 360 F.3d at 190.

EPA defended its action under the theory that Section 113(h) of CERCLA prohibits pre-enforcement review of UAOs. The provision at issue provides the following:

No federal court shall have jurisdiction under Federal law other than under section 1332 of the Title 28 (relating to diversity of citizenship jurisdiction) or under State law which is applicable or relevant and appropriate under section 9621 of this title (relating to cleanup standards) to review any challenges to removal or remedial action selected under section 9604 of this title, or to review any order issued under section 9606(a) of this title. . . .

360 F.3d at 189. Whenever any hazardous substance is released or is threatened to be released into the environment, Section 104 (42 U.S.C. § 9604) authorizes EPA to undertake two types of actions: (1) to remove or arrange for the removal of the hazardous substance and (2) to provide for “remedial actions” relating to the substance. “Removal actions” are short-term remedies that are designed to cleanup, monitor, assess, and evaluate the hazardous substances. In turn “remedial actions” are longer-term, more permanent remedies to “minimize the release of hazardous substances so that they do not migrate to other property or cause substantial danger to present or future public health or welfare or the environment.” 42 U.S.C. § 9601. In turn, under Section 106(a), EPA may issue UAOs after notice to the affected state, directing the responsible parties to clean up the hazardous sites “as may be necessary to protect public health and welfare and the environment.” 42 U.S.C. § 9606(a).

EPA asserted (and the lower court agreed) that Section 113 prevents GE’s suit by postponing review of any action under CERCLA until EPA seeks to enforce its remedial orders in court or the PRP sues to recoup its expenses for undertaking the cleanup. In overturning the lower court holding, the appellate court relied primarily on the “plain language” rule of statutory interpretation. The court’s reading of Section 113(h), as quoted above, led it to conclude that Congress intended only to preclude jurisdiction for pre-enforcement review of specific individual UAOs issued under Section 106 (as well as Section 104 actions). Although specific UAOs could not be challenged in this manner, the court reasoned, the language of Section 113 did not preclude a facial due process challenge to the overarching UAO scheme authorized by Section 106. In allowing the suit to go forward, the circuit panel rejected EPA’s primary argument that, because GE was the subject of multiple Section 106 UAOs, its facial constitutionality lawsuit effectively constituted a challenge to those individual orders. One particularly noteworthy UAO related to the cleanup of the Hudson River, where GE is allegedly liable for an estimated $460 million in cost to remove sediment contaminated with PCBs.

The court acknowledged that Congress wanted CERCLA to speed the cleanup of hazardous waste sites by barring pre-enforcement review of specific individual agency actions and orders. Yet, the court reasoned that this provision was not directed at barring challenges to the constitutionality of the statute itself. The court also rejected EPA’s assertion that consideration of GE’s constitutional claims would frustrate the overall purpose of CERCLA. To the contrary, the court concluded: “A decision on GE’s due process claim that is favorable to GE would afford EPA an opportunity to provide due process review at an early stage. A decision rejecting GE’s due process claim would remove a later impediment to EPA’s enforcement action.” 360 F.3d at 194.

Now that the case has been remanded, the next step will be the trial court’s ruling on the constitutionality of CERCLA’s nearly 25-year-old UAO scheme that essentially requires order recipients to act now and ask questions later. The court’s ruling is potentially of major significance relative to EPA’s ability to require immediate cleanup actions under CERCLA.