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General Electric Co. v. Jackson

January 27, 2009

GENERAL ELECTRIC COMPANY PLAINTIFF,
v.
LISA JACKSON,*FN1 ADMINISTRATOR, UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, AND THE UNITED STATES ENVIRONMENTAL PROTECTION AGENCY DEFENDANT.



The opinion of the court was delivered by: John D. Bates United States District Judge

MEMORANDUM OPINION

This case presents a broad constitutional attack on a significant federal environmental program. Plaintiff General Electric Company ("GE" or "plaintiff") challenges the U.S. Environmental Protection Agency's ("EPA") administration of section 106 of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA" or "the Act"), 42 U.S.C.§ 9601 et seq. GE contends that EPA's "pattern and practice" of administering section 106, 42 U.S.C. § 9606, violates the Due Process Clause of the Fifth Amendment. Am. Compl. at ¶ 1. Before the Court are the motions for summary judgment of GE and EPA and its administrator, Lisa Jackson.*fn2 For the reasons that follow, the Court rejects GE's novel, but substantial, challenge. On the record presented, the administrative order regime under section 106 of CERCLA, as administered by EPA, does not offend due process.

BACKGROUND

I. The CERCLA Framework*fn3

CERCLA was enacted to ensure efficient and expedient clean-up of hazardous waste sites resulting from industrial pollution. See Key Tronic Corp. v. United States, 511 U.S. 809, 814 (1994); see also United States v. Bestfoods, 524 U.S. 51, 55 (1998). Congress intended the parties responsible for polluting a site to clean it up themselves, or at least to pay the costs of clean-up. See Control Data Corp. v. S.C.S.C. Corp., 53 F.3d 930, 936 (8th Cir. 1995). Under CERCLA, once EPA identifies a hazardous site, it seeks to identify "potentially responsible parties" ("PRPs"). EPA may then initiate negotiations with PRPs to clean up a site. See 42 U.S.C. § 9622.

EPA has several options if negotiations fail. One option is to perform the clean-up itself, paying for it out of the so-called "Superfund" established by Congress for this purpose. EPA would then bring an action in federal district court under section 107 of CERCLA to recover clean-up costs from responsible parties. Id. §§ 9607(a)(4)(A), 9611(a). Another option is to seek an order from a federal district court compelling a responsible party to clean up a hazardous site. Id. § 9606(a). EPA's third option is to issue a "unilateral administrative order" ("UAO") under section 106, ordering PRPs to clean up a site. Id. EPA may issue a UAO upon a finding "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." Id. EPA's practice of issuing UAOs under section 106 is at the heart of GE's due process challenge in this case.

Under CERCLA, a PRP that believes it is not responsible for the clean-up faces a choice whether or not to comply with a UAO. If the PRP complies, it may seek reimbursement from other PRPs or from EPA itself upon completion of the clean-up. Id. § 9606(b). If the PRP does not comply, then EPA must file a civil action in federal district court to enforce the UAO. Id. § 9606(a). The court reviews EPA's remedy selection (i.e., its selection of a UAO) under the Administrative Procedure Act's "arbitrary and capricious" standard. See id. § 9606(b)(2)(D). The court reviews EPA's selection of the responsible party de novo. See Kelley v. EPA, 15 F.3d 1100, 1108 (D.C. Cir. 1994).

EPA may seek two kinds of monetary penalties if a PRP does not comply with a UAO. First, if the non-complying PRP lacks "sufficient cause" and willfully violates the order, then EPA may seek $32,500 for each day of noncompliance. Id. § 9606(b). Second, EPA may seek punitive damages up to three times "the amount of any costs incurred by the [Superfund] as a result of such failure to take proper action." Id. § 9607(c)(3). But these penalties are not automatic under CERCLA. If the reviewing court finds that the PRP had sufficient cause for noncompliance, then it cannot impose either form of penalty. Id. §§ 9606(b), 9607(c)(3). Even absent a finding of sufficient cause, moreover, the court has complete discretion as to the imposition and amount of any penalty. Id. § 9607(c)(3).

II. Procedural History

GE filed its Complaint on November 28, 2000, and amended it on March 14, 2001. GE challenges CERCLA in two ways. First, GE alleges that the text of CERCLA itself facially violates the Due Process Clause. Am. Compl. at ¶¶ 21-28, 50, 54. Second, GE alleges that EPA's "pattern and practice" of administering the UAO regime under section 106 violates GE's due process rights. Id. at ¶¶ 17-20, 51-52, 54.

In March 2001, EPA moved to dismiss GE's Amended Complaint on jurisdictional grounds. EPA argued that this Court lacked subject matter jurisdiction because section 113(h) of CERCLA bars judicial review of a section 106 order until the clean-up is complete. This Court agreed and granted EPA's motion to dismiss. General Electric I, 257 F. Supp. 2d at 12. On appeal, however, the D.C. Circuit reversed and instructed this Court to consider the merits of GE's due process challenge on remand. General Electric II, 360 F.3d at 194. The court of appeals agreed that section 113(h) bars review of "as-applied, or particularized challenges," but concluded that section 113(h) does not bar "facial, or 'systemic'" challenges to CERCLA. Id. at 192. The court of appeals relied primarily on two cases to reach its holding: Johnson v. Robison, 415 U.S. 361, 373-74 (1974), and McNary v. Haitian Refugee Center, Inc., 498 U.S. 479, 492-94 (1991). Robison was a facial constitutional challenge to the Veterans' Readjustment Benefits Act, 38 U.S.C. § 211(a). Section 211 of that Act barred review of individual benefit determinations, but the Supreme Court held that section 211 did not extend to facial constitutional challenges to the statute. Robison, 415 U.S. at 367. McNary was a challenge to the Immigration and Naturalization Service's "pattern and practice" of administering the Special Agricultural Workers (SAW) provisions of the Immigration Reform Control Act, 8 U.S.C. § 1160. Section 210(e) of that Act barred judicial review "of a determination respecting an application" for SAW status, but the Supreme Court held that section 210(e) did not apply to "general collateral challenges to unconstitutional practices and policies used by the agency in processing applications." McNary, 498 U.S. at 492. Because Robison and McNary permitted facial and pattern and practice claims to proceed in the face of provisions similar to CERCLA's section 113(h), the D.C. Circuit instructed this Court to consider GE's due process challenges to CERCLA on remand. 360 F.3d at 194.

In May 2004, EPA filed a motion for summary judgment. EPA argued that GE's challenge was solely a facial one and that it had to be analyzed under the Salerno doctrine. See United States v. Salerno, 481 U.S. 739 (1987). Under Salerno, a plaintiff pursuing a facial challenge must establish that a statute is unconstitutional in every application. Id. at 745. EPA argued that, at the very least, CERCLA is constitutional in emergency situations and hence GE's facial challenge had to fail. This Court agreed and granted EPA's motion for summary judgment on GE's facial (or textual) challenge to CERCLA in March 2005. General Electric III, 362 F. Supp. 2d at 330. Considering only the text of CERCLA, this Court held that section 106 does not deprive PRPs of property interests without a sufficient judicial hearing. Id. at 338-42. Nor is section 106 as written so coercive as to deprive PRPs of procedural due process under Ex parte Young and its progeny. Id. at 342-43. This Court held that "[t]he ability of the PRP to choose, under the language of the statute, whether to comply with a section 106 order is key." Id. at 339. By choosing not to comply, a PRP receives a pre-deprivation hearing in a federal district court. That court also has the sole discretion to impose penalties for noncompliance, thereby releasing any unconstitutional pressure that might otherwise be inherent in the statute. Finally, the Court held that because section 106 would be constitutional in a true emergency situation even if a PRP were deprived of a property interest before an adequate judicial hearing, GE's facial challenge failed under Salerno. Id. at 343-44.

This Court disagreed, however, that GE's facial and "pattern and practice" claims were one and the same. See id. at 333-36. EPA argued that when the court of appeals remanded the case to this Court, it had held that only facial claims cleared the section 113(h) jurisdictional hurdle. Therefore, EPA reasoned, only GE's facial challenge was before this Court on remand. To be sure, this Court recognized that some isolated language from the D.C. Circuit's opinion did support EPA's position. But the D.C. Circuit's opinion, read as a whole, firmly undercut that position. This Court noted that the court of appeals clearly distinguished between facial, systemic, and particularized challenges. Id. at 334 (citing General Electric II, 360 F.3d at 192). Moreover, the court of appeals held that facial and systemic challenges are treated similarly in analyzing jurisdictional provisions like section 113(h). The rationale, the court of appeals reasoned, is that neither facial nor systemic challenges impair the policy considerations underlying such jurisdictional bars. General Electric II, 360 F.3d at 194. Section 113(h), and provisions like it, are meant to ensure prompt responses to agency action and to avoid litigation until the responses are complete. Because neither facial nor systemic challenges would delay the clean-up at any particular site, they are treated the same for purposes of section 113(h). Id.

The Court found this key point inescapable given the cases that the court of appeals relied upon in reaching its holding. General Electric III, 362 F. Supp. at 335 (citing General Electric II, 360 F.3d at 192-93). For example, the court of appeals relied in significant part on McNary, a pattern and practice case challenging INS's administration of certain immigration law provisions.

In McNary, the Supreme Court held that such a pattern and practice claim cleared a jurisdictional hurdle analogous to section 113(h). See McNary, 498 U.S. at 492. Because the Supreme Court allowed such a claim to proceed in McNary, the court of appeals reasoned, GE should be permitted to proceed with its claim here as well. See General Electric II, 360 F.3d at 193. Bound by the court of appeals's decision to remand GE's pattern and practice claim, this Court thus rejected EPA's argument that GE's facial and pattern and practice challenges were exactly the same. General Electric III, 362 F. Supp. 2d at 334-36. At the time of the Court's decision, GE had not yet been able to develop the factual record to support its claim that EPA's administration of section 106 denies PRPs procedural due process in fact, even if the statute does not do so in theory. The Court, therefore, permitted GE to proceed with discovery on that claim.

Discovery lasted over two years, closing in August 2007. During the course of discovery, the Court issued rulings on motions to compel in September 2006 and February 2007. See General Electric v. Johnson, No. Civ.A.00-2855, 2006 WL 2616187 (D.D.C. Sept. 12, 2006) (General Electric IV); General Electric v. Johnson, No. Civ.A.00-2855, 2007 WL 433095 (D.D.C. Feb. 5, 2007) (General Electric V). The parties produced tens of thousands of documents, conducted numerous fact and expert depositions, and exchanged reports and rebuttal reports for six experts. GE Memorandum in Support of its Motion for Summary Judgment ("GE Mem.") at 9-10. The factual record in this case is now, to put it bluntly, extensive.

Before the Court at this time are the parties' cross-motions for summary judgment based on that record. The crux of GE's argument is that EPA's administration of section 106 violates the Due Process Clause because, applying the framework of Mathews v. Eldridge, 424 U.S. 319 (1976), section 106 as administered deprives PRPs of protected liberty and property interests without a hearing, and because PRPs are forced to comply with UAOs, thereby offending Ex parte Young, 209 U.S. 123 (1908). EPA counters that GE has not suffered the pre-hearing deprivations it alleges and that such deprivations do not require greater process than EPA already provides consistent with CERCLA. EPA further argues that an Article III court conducts de novo review of penalties available for UAO noncompliance before any penalties can attach, thereby curing any coercive practices allegedly undertaken by EPA.

LEGAL STANDARD

Summary judgment is proper when the pleadings and evidence demonstrate that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The moving party may successfully support its motion by "informing the district court of the basis of its motion, and identifying those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Fed. R. Civ. P. 56(c)). The court must regard the non-movant's statements as true and accept all evidence and make all inferences in the non-movant's favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). The moving party may point to the absence of evidence proffered by the non-movant to succeed on summary judgment. See Celotex, 477 U.S. at 322. Where, as here, the Court would be the trier of fact if the case were to proceed to trial, "the 'Court is not confined to deciding questions of law, but also may . . . draw a derivative inference from undisputed subsidiary facts, even if those facts could support an inference to the contrary, so long as the inference does not depend upon an evaluation of witness credibility.'" OAO Alfa Bank v. Ctr. for Public Integrity, 387 F. Supp. 2d 20, 39 (D.D.C. 2005) (quoting Cook v. Babbitt, 819 F. Supp. 1, 11 & n.11 (D.D.C. 1993)); see also Ramallo v. Reno, 931 F. Supp. 884, 888 (D.D.C. 1996).*fn4

ANALYSIS

I. Applicability of Salerno

EPA argues that the standard from United States v. Salerno, 481 U.S. 739 (1987), should apply to GE's pattern and practice claim. EPA Memorandum in Support of its Motion for Summary Judgment ("EPA Mem.") at 17-19. Under Salerno, a plaintiff facially challenging a statute's constitutionality must establish that the statute is unconstitutional in every application. Salerno, 481 U.S. at 745. Notwithstanding some debate within the Supreme Court on this "no set of circumstances" prong of Salerno, see City of Chicago v. Morales, 527 U.S. 41, 55 n.22 (1999), the D.C. Circuit continues to apply Salerno to facial challenges based on statutory text. See Nebraska v. EPA, 331 F.3d 995, 998 (D.C. Cir. 2003); Chemical Waste Mgmt. v. EPA, 56 F.3d 1434, 1437 (D.C. Cir. 1995). Indeed this Court did so earlier on GE's textual challenge to CERCLA. See General Electric III, 362 F. Supp. 2d at 343-44. EPA argues now that GE's pattern and practice claim is tantamount to a facial challenge, and that the remedy GE seeks through the present claim -- a remedy "that would apply universally to EPA's conduct" -- is no different than the remedy GE sought in the facial challenge this Court considered (and rejected) previously. EPA Mem. at 17. EPA assures this Court that other federal courts apply Salerno to similar facial challenges to agency rules and policies. Therefore, EPA argues, Salerno should apply to GE's pattern and practice claim just as it applied to GE's previously-rejected facial claim based on the text of CERCLA.

The Court will not apply the Salerno standard to GE's pattern and practice claim.*fn5

Salerno applies to challenges based on hypothetical applications of a statute, not to challenges based on the particular facts of a case. See Salerno, 481 U.S. at 745 & n.3; Reno v. Flores, 507 U.S. 292, 300-01 (1991) (applying Salerno because plaintiffs did "not challenge [an INS regulation's] application in a particular instance; [the regulation] had not yet been applied in a particular instance -- because it was not yet in existence -- when [plaintiffs'] suit was brought."). But GE's challenge here does not hypothesize how section 106 could be applied in the abstract. Rather, GE's pattern and practice claim is based on how EPA actually administers section 106. GE supports its claim -- drawn from an extensive record after considerable discovery -- with evidence about its own experiences and the experiences of other PRPs, including a raft of deposition testimony, expert reports, and EPA manuals. GE's claim is therefore more analogous to the McNary line of cases, which involved a pattern and practice claim based on INS's actual administration of the SAW provisions of the Immigration Reform Control Act. See McNary, 498 U.S. at 487-90. No court in that case -- beginning with the District Court and ending with the Supreme Court -- even cited to Salerno. This is not the type of generally-discouraged facial challenge to the text of a statute to which Salerno is generally applied, see General Electric III, 362 F. Supp. 2d at 343 n.9, and hence the Court will not apply Salerno to GE's pattern and practice claim, which has already been distinguished from a pure facial challenge.

II. Standing

EPA next argues that GE lacks standing to raise injuries based on noncompliance with a UAO.*fn6 See EPA Reply Memorandum in Support of its Summary Judgment Motion ("EPA Rep.") at 9-11. Standing "requires a plaintiff to demonstrate the now-familiar elements of injury in fact, causation, and redressability." Lance v. Coffman, 549 U.S. 437, 439 (2007) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-561 (1992)). Here, EPA focuses on injury in fact. EPA points out that GE has complied with every UAO it has been issued but that GE nevertheless concentrates its Mathews v. Eldridge analysis, discussed infra at § IV, on deprivations triggered by noncompliance with a UAO. EPA argues that "[i]f such injuries never occur to GE because GE never disobeys a UAO, then GE does not have standing to base a due process challenge upon them." EPA Rep. at 11.*fn7

The injuries relevant to standing are not, as EPA asserts, injuries arising from an act of noncompliance. The thrust of GE's argument is that EPA's administration of section 106 so amplifies the risks and costs of noncompliance that no rational PRP would choose not to comply with a UAO. The argument thus responds to this Court's holding in General Electric III, where the Court rejected GE's textual challenge to section 106 in part because a PRP theoretically can choose not to comply with a UAO. 362 F. Supp. 2d at 339. If a PRP chooses not to comply, EPA cannot compel compliance without judicial intervention, so a PRP can always obtain a pre-deprivation hearing. Id. The Court recognized, however, that if PRPs are "deprived of any meaningful choice to refuse to comply with [a UAO], that might pose a different situation in assessing whether a deprivation of property has occurred." Id. Responding to the Court's caveat, GE now points to noncompliance-based deprivations -- like a PRP's decreased market value -- as evidence that PRPs are effectively forced to comply with UAOs. Moreover, even if PRPs are not forced to comply, GE uses noncompliance-based deprivations as evidence that PRPs suffer pre-hearing deprivations once a UAO is issued, no matter what they choose to do.

The injury inquiry for standing is limited to whether GE has "set forth" sufficient "specific facts" to support its claim that EPA deprives GE of liberty or property without due process by issuing UAOs to GE. See Lujan, 504 U.S. at 561 (establishing a plaintiff's burden of establishing standing at the summary judgment stage).*fn8 EPA does not dispute GE's showing that EPA has issued 68 UAOs to GE and that GE has complied with all of them. See EPA Memorandum in Opposition to GE's Summary Judgment Motion ("EPA Opp.") at 20. And EPA concedes that "GE [can] establish injury for standing purposes where it does comply with a UAO and incurs response costs." EPA Rep. at 11 (emphasis in original). Therefore, GE has standing to bring this pattern and practice claim and may rely on noncompliance-based injuries to the extent it uses such injuries to establish that PRPs are deprived of a meaningful choice not to comply with a UAO or that PRPs suffer pre-hearing deprivations regardless of whether they comply.

III. Ex Parte Young

GE's first claim is that EPA's pattern and practice of administering section 106 violates procedural due process under Ex parte Young, 209 U.S. 123 (1908). Under Ex parte Young and its progeny, a statutory scheme that imposes penalties on those seeking judicial review is unconstitutional if "the penalties for disobedience are by fines so enormous . . . as to intimidate the company and its officers from resorting to the courts to test the validity of the legislation."

Id. at 147. Statutes prescribing significant penalties for violators are not per se unconstitutional, however. Rather, if a party challenging a penalty or a statute in "good faith" may not be penalized, then the statute may be constitutional under Ex parte Young. See Reisman v. Caplin, 375 U.S. 440, 446-47 (1964). Here, under section 106(b)(1), a district court must review any penalty EPA seeks for noncompliance with a UAO. The court may only impose penalties if a PRP has failed to comply "without sufficient cause"; moreover, even if the court finds that the non-complying PRP lacks "sufficient cause," the court still has full discretion in deciding whether to impose a civil penalty, or punitive damages, and if so, in what amount. See 42 U.S.C. §§ 9601(b)(1), 9607(c)(3). Courts considering Ex parte Young challenges to sections 106 and 107 have held that the sufficient cause defense operates as a good faith safe harbor, adequately curing any constitutional problems that steep CERCLA fines and penalties could otherwise create. See Employers Ins. of Wausau v. Browner, 52 F.3d 656, 664 (7th Cir. 1995); Solid State Circuits, Inc. v. EPA, 812 F.2d 383, 391 (8th Cir. 1987); Wagner Seed Co. v. Daggett, 800 F.2d 310, 316 (2d Cir. 1986); United States v. Capital Tax Corp., Civ.A.No. 04-4138, 2007 WL 488084 at *6 (N.D. Ill. Feb. 8, 2007). Applying this reasoning in General Electric III, this Court rejected GE's facial Ex parte Young challenge based on the text of CERCLA's UAO provisions, although leaving room for GE to further develop an Ex parte Young challenge in its pattern and practice case. See 362 F. Supp. 2d at 342-43.

GE's pattern and practice claim under Ex parte Young fails for the same reasons previously explained. GE points to four aspects of EPA's UAO policy that supposedly intimidate PRPs into compliance: EPA seeks maximum penalties for noncompliance; EPA seeks multiple penalties for violations at a single UAO site; EPA rejected Justice Department advice that EPA should impose a cap on daily penalties; and EPA labels non-complying PRPs as "recalcitrant." But no matter what EPA arguably does or seeks, a judge ultimately decides what, if any, penalty to impose.*fn9 Indeed, courts routinely exercise their discretion in determining what kinds of daily or punitive penalties to impose for violations of section 106. See, e.g., United States v. Capital Tax Corp., Civ.A.No. 04-4138, 2007 WL 2225900 at *13 (N.D. Ill. Aug. 1, 2007) (awarding $750 daily penalty and zero punitive damages); United States v. Barkman, Civ.A.No. 96-6395, 1998 WL 962018 at *18 (E.D. Pa. Dec. 17, 1998) (awarding $100 daily penalty).*fn10

Nor does EPA's pattern and practice regarding UAOs prevent federal courts from exercising their discretion. In General Electric III, this Court affirmed as satisfying due process requirements CERCLA's judicial review provisions, which provide for de novo review of liability and review of remedy selection under an "arbitrary and capricious" standard. 362 F. Supp. 2d at 341-42. Now, GE argues that EPA's pattern and practice of compiling the administrative record creates an incomplete basis for a reviewing judge's decision, thereby impairing the judge's discretion. Specifically, GE argues that EPA's practice of excluding irrelevant and pre-decisional deliberative documents from the administrative record results in a skewed record. See GE Mem. at 57. But irrelevant documents should be excluded from the record -- the record should only include documents that the agency "directly or indirectly considered." See Maritel, Inc. v. Collins, 422 F. Supp. 2d 188, 196 (D.D.C. 2006); see also James Madison Ltd. by Hecht v. Ludwig, 3 F.3d 1085, 1095 (D.C. Cir. 1996). And "an agency generally may exclude material that reflects internal deliberations." Maritel, 422 F. Supp. 2d at 196. Moreover, GE has not demonstrated that EPA actually has a pattern and practice of excluding documents that should be included in the record. Although GE has provided examples from two sites where an administrative record was arguably incomplete, two anecdotal examples do not form a pattern and practice. Cf. Coser v. Moore, 739 F.2d 746, 751-52 (2d Cir. 1984); Int'l Bhd. of Teamsters v. United States, 431 U.S. 324, 336 (1977). And even ...


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