Beveridge & Diamond

D.C. Circuit Upholds Constitutionality of CERCLA Unilateral Orders

Beveridge & Diamond, P.C., July 6, 2010

On June 29, 2010, the U.S. Court of Appeals for the D.C. Circuit issued its opinion in GE v. Jackson, a case involving a challenge to the constitutionality of unilateral administrative orders (“UAOs”) issued by the U.S. Environmental Protection Agency (“EPA”) under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”).  A copy of the decision can be found here.  Under CERCLA, EPA may issue a UAO to potentially responsible parties (“PRPs”), requiring them to clean up contamination at a site upon a determination “that there may be an imminent and substantial endangerment to the public health or welfare or the environment because of an actual or threatened release of a hazardous substance from a facility.”  42 U.S.C. § 9606(a).  PRPs are subject to daily penalties and potentially treble damages for noncompliance with a UAO if they lack “sufficient cause” for the noncompliance.  42 U.S.C. § 9606(b)(1).  If PRPs comply with a UAO, they can seek reimbursement from the Fund for the reasonable costs of the action once it is completed, if they are able to show that they are not liable under CERCLA or that the ordered action was arbitrary and capricious or otherwise not in accordance with law.

In the present appeal, GE argued that the UAO provisions of CERCLA facially violate the Due Process Clause of the U.S. Constitution by depriving UAO recipients of property without providing for a pre-deprivation hearing before a neutral decision-maker.  GE also argued that EPA’s pattern and practice in administering the UAO provisions denies PRPs due process.  GE argued that two different types of deprivations rise to the level of due process violations: “(1) the money PRPs must spend to comply with a UAO or the daily fines and treble damages they face should they refuse to comply; and (2) the PRPs’ stock prices, brand value, and cost of financing, all of which . . . are adversely affected by the issuance of a UAO.” 
Slip op. at 10. 

In deciding the facial challenge to the UAO provisions, the Court followed all prior cases on this topic and held that the UAO regime satisfies due process requirements.  The Court concluded that the UAO provisions are facially constitutional because EPA must sue noncompliant PRPs in court before EPA can obtain any penalties or damages, and UAO recipients are not subject to penalties or damages if they can show they had “sufficient cause” not to comply.  Slip op. at 12.  The Court also found unpersuasive GE’s argument that a UAO inflicts significant, immediate harm prior to judicial review because the very issuance of a UAO will depress the recipients’ stock price or otherwise harm their reputation, stating that the type of deprivation described by GE was not the type protected under the 5th Amendment.  Slip op. at 13-22.

While the Court found that the district court had jurisdiction to consider GE’s pattern and practice claim, slip op. at 24, and that GE had standing to bring the claim, id at 28, it ruled in favor of EPA on the merits.  The Court held that “even if GE is correct that EPA’s implementation of CERCLA results in more frequent and less accurate UAOs, the company has failed to identify any constitutionally protected property interests that could be adversely affected by such errors.” Slip op. at 29-30.

The Court, while not unsympathetic to GE, was unequivocal:  "We fully understand, as GE argues, that the financial consequences of UAOs can be substantial. We also understand that other administrative enforcement schemes that address matters of public health and safety may provide greater process than does CERCLA.  Such concerns, however, do not implicate the constitutionality of CERCLA or of the policies and practices by which EPA implements it."  Slip op. at 31 (citations omitted).

The speed with which the court issued its decision (the case was argued on May 18) is surprising, especially in a case that GE has been pursuing for ten years.  

The case began in 2000, when GE filed suit in the United States District Court for the District of Columbia, alleging that CERCLA’s UAO regime created an unconstitutional deprivation of property by failing to provide adequate procedural safeguards.  The complaint was dismissed in 2003 (GE I) for lack of jurisdiction, on the grounds that CERCLA Section 113(h) prohibits pre-enforcement due process challenges to CERCLA on any particular UAO.  The appeals court reversed in 2004 (GE II), stating that while an as-applied challenge to a specific UAO might run afoul of Section 113(h), a challenge to the facial constitutionality of the UAO provisions was not based on any particular action or order by EPA, so Section 113(h) did not apply. 

On remand, the district court in 2005 (GE III) dismissed GE’s facial challenge on a motion for summary judgment.  The court declined, though, to dismiss GE’s so-called “pattern and practice” challenge to the UAO regime, “i.e., GE’s argument that EPA’s policies and procedures for issuing UAOs exacerbate CERCLA’s constitutional deficiencies.”  Slip op. at 8.  However, following discovery, the district court granted summary judgment for EPA in 2009 (GE IV) on the pattern and practice challenge, because it concluded that the consequential injuries suffered by GE were not the sort of property interests entitled to due process protection.  GE appealed both GE III and GE IV, which were decided together in GE v. Jackson on June 29, 2010.

GE v. Jackson is the latest in a long line of cases upholding the constitutionality of UAOs.  Shortly after enactment of the 1986 Superfund Amendments and Reauthorization Act (“SARA”), several entities challenged the law’s UAO provisions as facially unconstitutional because they created a material deprivation without a hearing before a neutral decision-maker.  See Solid State Circuits, Inc. v. EPA, 812 F.2d 383, 391–92 (8th Cir. 1987); Wagner Seed Co. v. Daggett, 800 F.2d 310, 316 (2d Cir. 1986); Employers Ins. of Wausau v. Browner, 52 F.3d 656, 664 (7th Cir. 1995).  In these and other cases, the courts universally have found that UAOs are constitutional.

Opponents of the UAO regime hoped that the Court in GE v. Jackson would find the UAO statute unconstitutional, thereby creating a circuit split that might entice the Supreme Court to consider the issue.  Because the D.C. Circuit’s decision dovetailed with those of its sister circuits, however, the Supreme Court is unlikely to grant certiorari should GE seek it.  Thus, for the time being, the constitutionality of the UAO provisions should be considered settled law.  Going forward, while individual parties may still prevail against EPA in disputes over particular UAOs, there appears to be little or no hope of a silver bullet with which to counter EPA's increasing reliance upon this powerful enforcement tool.

For more information, please contact Nico van Aelstyn at (415) 262-4008,, Steve Jawetz at (202) 789-6045,, or Daniel Brian at (415) 262-4016,  

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