The Enforcement of CERCLA Section 106 Orders; the Seventh Circuit Suggests a New Twist

Posted on November 2, 2016 by William Hyatt

Superfund practitioners have long known that unilateral orders issued by EPA under Section 106(a) of the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), commonly known as the Superfund statute, can be very potent enforcement tools.  Recipients of such orders who “willfully” choose to defy them, “without sufficient cause,” face the prospect of potentially ruinous civil penalties under Section 106(b) and treble damages under Section 107(c)(3).  The term “sufficient cause” is not defined in CERCLA and has been subjected to very limited judicial interpretation.  Making matters worse, by virtue of Section 113(h), Section 106 order recipients cannot obtain pre-enforcement review of such orders.  Instead, they must wait until EPA brings an enforcement action, or one of the other triggers listed in Section 113(h) occurs (while the penalties and treble damages continue to accumulate, for a period which could last for years), before they can obtain a judicial determination of whether or not their defiance was “without sufficient cause.”  This enforcement scheme has thus far withstood due process challenges on the ground that no penalties or treble damages can be imposed until there is a court hearing.  Waiting for that court hearing can produce extreme apprehension on the part of defiant order recipients.

In United States v. Glatfelter, one of the prodigious number of reported decisions relating to the Lower Fox River Superfund Site, the Court of Appeals for the Seventh Circuit, after concluding that permanent injunctions will not be available to enforce Section 106 unilateral orders, suggested how that apprehension might be relieved:

“Nothing we have said prevents the government from seeking declaratory relief to establish that a PRP lacks sufficient cause for noncompliance, such as the arbitrariness of the selected remedy or a defense to liability.” 

This suggestion may trigger a whole new round of litigation regarding Section 106 orders.  For instance, does a private litigant enjoy the same right to seek declaratory relief?

Following the Yellow Brick Road…

Posted on June 2, 2016 by LeAnne Burnett

The Pacific Legal Foundation (PLF) fairly boasts that it lived up to its tag line “Rescuing Liberty from Coast to Coast” by following its 2012 Supreme Court victory in Sackett v. EPA with its May 31, 2016 victory in United States Corps of Engineers v. Hawkes Co., Inc.  In both Clean Water Act cases the PLF represented the property owners on appeal, arguing that the particular agency action was final, subject to judicial review.  The Supreme Court agreed both times.  Some boasting is due. 

The particulars of each case flow from disputes about the scope of “navigable waters” under the Clean Water Act.  Neither case resolved the merits issue.  Both cases considered only whether the dispute may be brought to court by challenging a pre-enforcement agency action. 

The Sacketts filled in a half acre of their 2/3-acre residential lot near Priest Lake, Idaho with dirt and rock in preparation for building a home.  EPA served a compliance order advising the Sacketts that they violated the Clean Water Act by filling in waters of the United States without a Section 404 dredge and fill permit.  The Order unilaterally prevented further construction and required the Sacketts to remove the fill material then restore the wetland pursuant to an EPA Restoration Work Plan. 

The Sacketts tried to challenge EPA’s order, but were told by EPA, then by the District Court, that they had no right to challenge the order until EPA attempted to enforce it.  The Ninth Circuit Court of Appeals affirmed, setting the Sacketts squarely on the horns of their dilemma.  Disregarding the unilateral compliance order subjected the Sacketts to potential fines of up to $75,000 per day.   Complying with the order meant spending hundreds of thousands of dollars to carry out the EPA’s Restoration Work Plan, and never getting to build on their property. 

The U.S. Supreme Court granted cert, and Justice Scalia, authoring the decision concluded that the compliance order met the Bennett two-prong test for reviewability:  (1) no adequate remedy other than review under the Administrative Procedures Act, and (2) no statute, in this case the Clean Water Act, precluded that review.  Justice Alito, concurring, declared:  “The position taken in this case by the Federal Government -- a position that the Court now squarely rejects -- would have put the property rights of ordinary Americans entirely at the mercy of Environmental Protection Agency (EPA) employees.” And later:  “In a nation that values due process, not to mention private property, such treatment is unthinkable.”    

The Hawkes case, four years later, is the same song, second verse.  This time the U.S. Army Corps of Engineers (USACE) issued the offending decision -- a jurisdictional determination (JD) that waters of the United States existed on 530 acres from which Hawkes Co., Inc. (Hawkes) and its affiliated companies planned to mine for peat.  Hawkes provides peat for golf courses and sports fields, and mining peat on the 530 acres would extend the life of its peat mining business by ten to fifteen years.  The USACE concluded that the property was connected by a “relatively permanent water” (a series of culverts and unnamed streams) that flowed into the Middle River and then into the Red River of the North, a “traditional navigable waterway” about 120 miles away.  With the USACE determination, Hawkes needed a permit to harvest peat.  Moreover, USACE advised that before it issued a permit, it would require additional hydrological and functional resource assessments and an evaluation of upstream potential impacts, the cost of which would exceed $100,000.

Using an analysis, discussed in my colleague’s post Sending a Message on WOTUS, the Court concluded that a JD satisfied both prongs of Bennett, and affirmed the Eighth Circuit, remanding the Hawkes companies to District Court of Minnesota - Minneapolis with the right to litigate the jurisdictional determination, same as the Sacketts.  When the Supreme Court ruled favorably on their case the Sacketts were remanded to the Idaho District Court, where their court battle continues.  Presumably, the battle will continue with the Hawkes’ companies as well. 

At the heart of each battle is whether or not the property actually contains “Waters of the United States.”  Following the procedural “yellow brick road” won’t get anyone out of Oz -- not until a clear definition of waters of the United States emerges.

Sending a Message on WOTUS?

Posted on June 2, 2016 by Patrick A. Parenteau

The May 31 decision in Hawkes may be less important for what it says about the reviewability of jurisdictional determinations (JDs) under the Clean Water Act than for what is says about the far more consequential stakes in the pending challenges to EPA’s Clean Water Rule (aka WOTUS), which will undoubtedly find its way to the Court following a decision by the Sixth Circuit which is expected before the end of the year.

Contrary to my prediction the Court did rule (unanimously) that JDs are final agency actions subject to review under the APA. In an opinion penned by Chief Justice Roberts the Court upheld the conclusion of the Eighth Circuit but substituted a different test for finality, one that emerged during oral argument and one that introduces a novel and perhaps questionable rationale. The key question was whether JDs have legal consequences. In roundabout fashion, Roberts concluded they did because a positive finding of jurisdiction meant that the applicant was denied the advantage of a negative determination (or NJD). That had the effect of denying the applicant the benefit of what Roberts called a “safe harbor” provision contained, not in the statute or implementing regulations, but in a 2015 Memorandum of Agreement between by EPA and the Corps. Roberts read the MOA as creating a legal right – similar to a covenant not to sue – binding the government to a five year commitment not to revisit the NJD, an interpretation the government vigorously disputed as pointed out by Justice Ginsburg in her concurrence.

This ruling could have significant practical effects. Since 2008 the Corps and EPA have issued over 400,000 JDs of which approximately 40% were approved JD’s. Under the MOA, the process has become more formal, giving it at least the appearance if not the reality of adjudication. The formality of the process convinced a number of the Justices, particularly Justices Breyer, Ginsburg and Kagan, that JDs should be considered final actions under the Abbott Labs test. They emphasized the fact that under the MOA the agencies were not simply giving advice to the public. This raises the question whether the agencies may want to rethink the MOA and consider revising the safe harbor provision to make clear it is not binding. The Solicitor raised this possibility during the oral argument (transcript at p 16 lines 16-25).

Pursuing that route, however, runs the risk of further alienating Justice Kennedy and the government can ill afford to lose his potentially crucial vote if and when the Clean Water Rule reaches the Court. In his concurring opinion, joined not surprisingly by Justices Alito and Thomas, Kennedy went out of his way to take several pot shots at the Clean Water Act and the agencies implementation of it. Referring to “the Act’s ominous reach” Kennedy said it “continues to raise troubling questions regarding the Government’s power to cast doubt on the full use and enjoyment of private property throughout the Nation.”  During oral argument Kennedy offered the view that the CWA is “arguably unconstitutionally vague, and certainly harsh in the civil and criminal penalties it puts into practice.”

It is too soon to write the obituary for the Clean Water Rule. But Kennedy’s vote is more in doubt now than when he authored the concurring opinion in Rapanos showing a more sophisticated and nuanced understanding of both the values enshrined in the CWA and the constitutional issues it raises. Kennedy’s “significant nexus” test, widely accepted as controlling by the lower courts, was the blueprint EPA and the Corps used to write the rule. Given these more recent statements, that may not be enough to win his approval. The fate of the rule may well depend on how soon and by whom the vacancy on the Court is filled.

Revisiting CERCLA Pre-Enforcement Review

Posted on February 22, 2016 by Mark W. Schneider

As a private practitioner and former trial attorney at the U.S. Department of Justice, I have advocated for timely and cost-effective cleanups that protect public health and the environment.  Unfortunately, only a minority of cleanups under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) have met these criteria.  Of the many impediments to the thorough, prompt and cost-effective remediation of contaminated sites, and sediment sites in particular, one of the most significant is CERCLA’s bar on pre-enforcement review of the U.S. Environmental Protection Agency’s (EPA) remedial decisions.  To promote more effective and timely cleanups of sediment sites, I suggest that CERCLA be amended to eliminate the current bar on pre-enforcement review.  By allowing potentially responsible parties (PRPs) to seek and obtain judicial review of EPA decisions or failures to make decisions, more progress would likely be made on more sites.

CERCLA Section 113(h) states that, with limited exceptions, “No Federal court shall have jurisdiction … to review any challenges to removal or remedial action selected under section 9604 of this title, or to review any order issued under section 9606(a) of this title ….”  42 U.S.C. § 9613(h).  Despite many challenges, courts have generally upheld the validity of this provision.  As a result, PRPs typically cannot challenge EPA's decisions unless EPA has sought to compel performance under an enforcement order or if EPA is acting under a consent decree.  As the “opportunity” for challenge may not come until years after EPA has made its cleanup decision, most PRPs are not willing to face the risk of losing a remedy challenge and the potential imposition of treble damages.  

CERCLA should be amended to allow parties to challenge agency action or inaction at other times in the process, such as during the preparation of remedial investigations and feasibility studies.  At many sediment sites, EPA has delayed remediation and required parties to incur hundreds of millions of dollars during investigations.  If PRPs had the opportunity to obtain judicial review of agency action and inaction earlier in the process, they could seek to compel the agency to act in a way that is consistent with CERCLA’s requirements.

Having worked at the Department of Justice when CERCLA Section 113(h) was drafted, I recall my colleagues stating at the time that a bar on pre-enforcement review was necessary to avoid the challenges of having a non-expert federal judge address complex scientific questions and to prevent PRPs from tying up EPA in litigation.  I offer three suggestions in response to these concerns.  First, if a federal judge were confronted with a particularly complex issue, the court could appoint a special master to handle the proceedings.  Second, to encourage PRPs to seek prompt resolutions, a CERCLA amendment could require PRPs to fully comply with an agency’s directives pending resolution of the judicial dispute and impose a penalty on those parties whose challenge of agency action was unsuccessful.  Third, agencies could seek an expedited hearing of disputed issues.

While it is very unlikely that Congress would consider a CERCLA amendment to address only this issue, PRPs should raise this issue the next time amendments are being considered.  It will succeed only through the concerted efforts of advocates who seek more and better cleanups and those who seek prompt and reasonable government decision-making.