In a highly unusual case that has led to a near unanimous call for legislative change by environmental lawyers in Connecticut, a Superior Court judge ruled that the Connecticut Department of Energy & Environmental Protection (“DEEP”) can unilaterally revoke a consent order that it negotiated with a company requiring the investigation of a contaminated site. The lawsuit was initially brought by DEEP, among other reasons, to enforce the consent order. However, after the defendant filed a counterclaim against DEEP alleging that the department had not acted reasonably and breached the order, the department unilaterally revoked the order and moved to dismiss the counterclaim. The court held that the state statute that authorizes the department to issue, modify, or revoke orders, allows the department to revoke consent orders.
Although the state agency may have had good reason to revoke the consent order in this case to help it improve its position in the litigation, that decision undermines the public policy in favor of encouraging negotiated settlements in environmental matters. Most environmental consent orders are carefully negotiated, with give and take on each side. If a private party knows that the environmental agency can simply revoke a consent order at any time, why would that party make concessions to resolve a dispute through an administrative order on consent?
The U.S. Supreme Court in United States v. ITT Continental Baking Company long ago recognized that administrative consent orders and judicial consent decrees are in the nature of contracts and should be construed basically as contracts. Therefore, the federal courts typically place a heavy burden on a party seeking to modify a consent decree. Even the Connecticut court which ruled that DEEP can unilaterally revoke consent orders questioned the wisdom of such authority.
It remains to be seen whether the Connecticut state legislature will clarify that the state environmental department lacks the authority to unilaterally withdraw from an agreement that it negotiated. A bill, S.B. 431, was recently proposed by the Judiciary Committee of the State General Assembly to reverse the Superior Court decision. The general assembly has until May 4, 2016, when the session ends, to pass such legislation. If the legislation does not pass, and DEEP retains such authority, it is likely to find it much more difficult to settle administrative orders on consent in Connecticut.