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CERCLA UAOs Deemed Constitutional

Siros_Steven_COLORBy Steven M. Siros

 

On June 29, 2010, the United States Court of Appeals for the District of Columbia affirmed a district court's grant of summary judgment in favor of the United States Environmental Protection Agency ("U.S. EPA") in General Electric Company v. Jackson. In a case that was originally filed in 2000, General Electric challenged U.S. EPA's use of unilateral administrative orders ("UAOs") to compel parties to remediate contaminated properties as being violative of the Fifth Amendment's due process clause. More specifically, General Electric argued that the issuance of a UAO violates the rights of Potentially Responsible Parties ("PRPs") to due process, because a PRP cannot challenge an UAO until after the remedial work required by the UAO has been performed.  As a result, according to General Electric, the UAO process, in violation of the Fifth Amendment, deprives the PRP of two types of protected property interests: (1) the money that a PRP must spend to comply with the UAO or face the threat of daily fines and treble damages for non-compliance and (2) an impaired market and brand value, and an impaired ability to obtain financing, all of which, General Electric argued, were a result of the issuance of an UAO. Because the UAO process does not afford a party the right to seek judicial review prior to carrying out the order, General Electric contended that CERCLA's UAO provisions violated the due process clause.


The D.C. Court of Appeals rejected General Electric's due process argument and affirmed the decision of the district court, noting that a party who receives such an UAO can simply refuse to comply with the order (albeit under the threat of substantial penalties), thereby forcing U.S. EPA either to sue in federal court to compel the PRP to perform the work the UAO required or to perform the removal action itself and seek to recover its costs and treble damages from the recalcitrant PRP in a subsequent judicial enforcement and cost recovery action. In either case, a court will determine if the PRP is liable under CERCLA to cleanup the contaminated facility.  The court also rejected General Electric's argument that the damage to a company's reputation that may follow when the Agency issues a UAO is caused by the issuance of the UAO.  The Court noted that any impairment to a company's reputation or market value is not caused by the issuance of the UAO, but by the market's reaction to the news of the UAO.  Thus, the Agency's issuance of an UAO under CERCLA does not constitute a violation of the company's constitutional right to due process. To read the opinion it its entirety, click here.