February 6, 2009
On January 27, 2009, in General Electric v. EPA, 2009 U.S. Dist. LEXIS 5379 (D.C. Jan. 27, 2009), the United States District Court for the District of Columbia held that the “unilateral administrative order” regime under section 106 of the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), as administered by the Environmental Protection Agency (“EPA”), does not offend due process.
After a previous trip to the D.C. Circuit Court of Appeals and years of discovery, GE contended that EPA’s “pattern and practice” of administering section 106 of CERCLA violates the Due Process Clause of the Fifth Amendment. Under CERCLA, the EPA is authorized to identify hazardous waste sites, identify “potentially responsible parties” (“PRPs”), and then initiate negotiations with the PRPs to clean up the sites. Id. at *4. If the negotiations fail, the EPA may either (1) clean-up the site itself with the “Superfund” established by Congress and then bring an action to recover the costs from the PRP, (2) seek an order compelling the PRP to clean up the site, or (3) issue a “unilateral administrative order” (“UAO”) under section 106 ordering the PRP to clean up the site. Id. at *4-5. This third option was the subject of GE’s challenge.
GE alleged that EPA’s authority to issue UAOs under section 106 violated due process for two primary reasons. First, because due process requires a trial-type hearing for non-emergency adjudicatory agency decisions, GE argued that EPA’s use of UAO’s in all circumstances deprives recipient-PRPs of liberty and property interests.
In reviewing this issue, the district court applied the standard set forth in Mathews v. Eldridge, 424 U.S. 319 (1976), which requires a balancing of private interests, government interests, and the risk of error in determining whether existing procedures are adequate to satisfy constitutional due process requirements. The district court found that EPA was not required to hold a hearing prior to issuing an administrative order because the private interests at issue were primarily financial, that imposing any increased process would generate a substantial impairment of the government’s interests, and that the risk of error was low (with an error rate of just 4.4% in the issuance of UAOs under section 106). Id. at *65, 68-69, 80-81. The district court therefore concluded that “the size and nature of the private interests of the PRP are not so great as to justify increased government costs with only a marginal improvement in the rate of error.” Id. at *86.
Second, GE argued that EPA’s administration of section 106 is unconstitutional because PRPs are forced to comply with UAOs through EPA’s aggressive and intimidating penalties scheme. EPA denied that there is any coercion because prior to the imposition of penalties, a court must review, on a de novo basis, the proposed penalties for UAO noncompliance. The district court agreed with EPA’s analysis, noting that “no matter what EPA arguably does or seeks, a judge ultimately decides what, if any, penalty to impose.” Id. at *24.
In rejecting both of GE’s arguments, the district court concluded that adequate due process protections are already in place under the current CERCLA framework, and that “any broader remedy should be sought from Congress, not the courts.” Id. at *88.
It is uncertain at this point whether or not GE will appeal the decision. In any event, this decision is just one district court’s opinion on the constitutionality of the EPA’s administration of section 106 of CERCLA, and it is by no means the final verdict. However, the decision certainly provides some guidance on the legal framework in which courts will review EPA’s administrative practices in future cases
Gibson, Dunn & Crutcher has particular experience in environmental litigation, including the pursuit and defense of actions pursuant to CERCLA. In amicus briefs prepared by Washington, D.C. office partners Miguel Estrada, Raymond Ludwiszewski, and Michael K. Murphy on behalf of Lockheed Martin Corporation, Gibson Dunn urged the Supreme Court to conclude, as it did in Atlantic Research, that CERCLA provides a cause of action for PRPs.
To learn more about the firm’s Environmental Litigation and Mass Tort practice group, please contact the Gibson Dunn attorney with whom you work, or any of the following:
Patrick Dennis (213-229-7568, email@example.com)
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Peter E. Seley (202-887-3689, firstname.lastname@example.org)
Michael K. Murphy (202-955-8238, email@example.com)
Alan N. Bick (949-451-4211, firstname.lastname@example.org)
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