DC Circuit Rules Cleanup Order Does Not Violate GE's Due Process Rights

Long a sticking point with Superfund lawyers and Superfund defendants, the EPA’s use of the “Uniform Administrative Order” to force companies it believes are in violation of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) to clean up a hazardous waste site was upheld on Tuesday, June 29, 2010, by the U.S. Circuit Court of Appeals for the District of Columbia Circuit. in the case General Electric Company v. Jackson, EPA et al. Case No. 09-5092 (June 29, 2010).

General Electric argued that CERCLA, as well as the way in which EPA administers it, violates the Due Process Clause of the U.S. Constitution when the EPA issues clean-up orders without a hearing before a neutral decisionmaker.  42 U.S.C. 9606. The D.C. Circuit concluded that because the recipient of a clean up order can obtain a hearing in court by refusing to comply with the clean up order, the recipient’s due process rights are satisfied.  This has been the position of the EPA and the courts since the inception of CERCLA.

General Electric went on to argue that CERCLA’s clean up order scheme and EPA‘s implementation of it nonetheless violate due process because the mere issuance of a clean up order can inflict “immediate, serious, and irreparable damage by depressing the recipient‘s stock price, harming its brand value, and increasing its cost of financing.” GE’s argument relied heavily on Ex Parte Young, 209 U.S. 123 (1908), and its progeny.  Under those cases, a statutory scheme violates due process if  “the penalties for disobedience are by fines so enormous . . . as to intimidate the [affected party] from resorting to the courts to test the validity of the legislation [because] the result is the same as if the law in terms prohibited the [party] from seeking judicial [review]‖ at all.”  209 U.S. at 147.

The Court also rejected this argument, concluding that “consequential injuries—injuries resulting not from EPA‘s issuance of the [clean up order], but from market reactions to it—are insufficient to merit Due Process Clause protection.”  The Court pointed to a line of cases interpreting Ex Parte Young to mean that

that statutes imposing fines—even “enormous” fines—on noncomplying parties may satisfy due process if such fines are subject to a “good faith” or “reasonable ground[s]” defense. See Reisman v. Caplin, 375 U.S. 440, 446–50 (1964); Okla. Operating Co. v. Love, 252 U.S. 331, 338 (1920).

Since CERCLA guarantees these safeguards, the Court concluded, GE’s due process rights were not violated.

How will this change things?  Probably not much.  This case is simply the last in a series of efforts by companies rich enough to afford long protracted litigation to attack what seems to be a violation of their property rights.  The issue has always been for corporations that they feel they are being forced to pay for a clean up prior to having their day in court.  The EPA has consistently stated that the purpose of CERCLA is to get action taken on cleaning up a hazardous waste site first, and worry about sorting out who the actual responsible parties are, second.

While GE, as a practical matter, is correct in stating that corporations who have received a clean-up order face a Hobson’s Choice, the legal matter now seems to be settled.  At least until some other lawyer comes up with a novel approach to this issue – or until Congress changes CERCLA.