- D.C. Circuit Upholds Unilateral Administrative Orders against Due Process Challenge; Only Way to Challenge Orders before Clean-Up Is Through Non-Compliance
- July 16, 2010
- Law Firm: Alston Bird LLP - Atlanta Office
On June 29, 2010, the United States Court of Appeals for the D.C. Circuit joined three of its sister circuits in holding that the EPA's issuance of unilateral administrative orders ("UAOs") pursuant to CERCLA does not violate due process. General Electric brought the appeal, contesting two district court decisions that rejected GE's facial and pattern and practice challenges to the statute.
When the EPA determines that environmental clean-up is required at a contaminated site, one of its options under CERCLA is to issue a UAO instructing potentially responsible parties ("PRPs") to clean up the site. Before issuing a UAO, the EPA must take certain steps, including making a determination "that there may be an imminent and substantial endangerment to the public health or welfare or the environment" at the site, compiling an administrative record, and providing for public notice and comment.
GE challenged the UAO provision of CERCLA on due process grounds, arguing that the lack of judicial review before the issuance of a UAO violated due process. GE contended that the only way to obtain pre-deprivation judicial review was constitutionally inadequate: a PRP would have to refuse to comply with the UAO, prompting the EPA to file an enforcement action in which the EPA could attempt to recover daily fines and treble damages from the PRP for non-compliance. GE's was thus arguing that the UAO provision of CERCLA fell within Ex Parte Young and its progeny, which hold that a statutory scheme violates due process when the fines for non-compliance are so enormous as to deter a party from testing the validity of the law through non-compliance.
The D.C. Circuit rejected GE's argument, holding that CERCLA provided adequate safeguards against imposition of severe penalties for simple non-compliance with a UAO. The Court relied on CERCLA's requirement that daily fines and treble damages may only be imposed when the PRP has "willfully" failed to comply "without sufficient cause" and further noted that the district court's imposition of fines and/or damages is discretionary. The Court also rejected GE's argument that the negative effect a UAO has on a company's stock price and brand value constitutes deprivation of a protected property interest.
The D.C. Circuit's decision thus confirms what the Fourth, Seventh, and Ninth Circuits have already held: a PRP who wishes to challenge the validity of a UAO before complying with it must refuse to comply and wait to be sued by the EPA, risking fines and treble damages in the process.