Issue Date: July 19, 2010
GE Loses Challenge To Superfund Law
A lengthy court fight by General Electric to get the Environmental Protection Agency to change how it compels companies to pay for cleanups at Superfund waste sites has ended in disappointment for the company. The U.S. Court of Appeals for the District of Columbia Circuit ruled on June 29 that it is constitutional and legal for EPA to issue “unilateral administrative orders” for the site cleanups.
For 10 years, GE had argued that a provision in the Comprehensive Environmental Response, Compensation & Liability Act, or the Superfund law, gives EPA too much power to force companies to pay for cleanup of abandoned waste sites. The lawsuit, filed in 2000, alleged that one provision of the law, Section 106, violates the Fifth Amendment of the U.S. Constitution by taking away a person’s “property” without adequate procedural safeguards. This provision, GE alleged, lets EPA issue unilateral administrative orders (UAOs) to a company for Superfund cleanups but does not give the company a process to challenge that order.
GE also maintained in its argument that EPA’s mere issuance of UAOs negatively impacts a company’s stock price, brand value, and its cost of financing. And because noncompliance can lead to high fines and treble damages, companies are intimidated into complying with the order even if they think that they are not responsible.
The appeals court unanimously rejected GE’s arguments on every point, affirming earlier rulings from the U.S. District Court for the District of Columbia in 2005 and 2009. Writing for the court, Circuit Judge David S. Tatel stated that any consequential injuries or losses that a company might suffer resulting from EPA’s order are not because of the UAO, but from market reactions to it, and therefore “are insufficient to merit Due Process protection” under the Constitution.
The court also ruled that procedural safeguards are available to companies. In the opinion, Tatel wrote that if a company does not agree with a UAO, it can simply choose to not comply. EPA will then have to file a lawsuit because of the noncompliance, and the company will get a judicial hearing on the merits of the agency’s order. He also wrote that companies are protected from inappropriate fines from EPA for noncompliance because the courts decide whether to impose fines or additional damages, not EPA.
GE has a long history of battling with EPA over waste site cleanups. The court opinion notes that GE has received at least 68 UAOs from EPA for cleanups under the Superfund law and that it is currently participating in response actions for 79 active Superfund sites.
The best-known GE hazardous waste site covers some 200 miles of the Hudson River in New York, which contains sediments contaminated with polychlorinated biphenyls manufactured by the company from 1947 until production of the compounds was banned in the U.S. in 1977. The 2000 lawsuit, however, was not brought to challenge the Hudson River cleanup, and the decision will not affect the work at that site. Although EPA has not issued a UAO to GE for the Hudson River cleanup, the agency has reserved the right to do so, Tatel wrote in his opinion.
GE is studying the court’s opinion and reviewing possible procedural options, but it has made no decisions, according to company spokesman Mark L. Behan. “GE brought the case about because we believed there was a question of fundamental fairness,” he says.
The case, Behan continues, “was a challenge to one provision of the Superfund law which gives EPA unilateral authority to order individuals or companies to perform remedial projects that could potentially involve costs of millions of dollars without the opportunity for judicial review. We believe that this particular section of the law violated the fundamental due process protection of the Constitution.”
“The impact of this decision is to remove any doubt that EPA has the legal authority to issue administrative orders and is free to use it,” says Lawrence Levine, a senior attorney with the Natural Resources Defense Council, an environmental group that filed several amicus briefs in support of EPA. GE has the option of petitioning the Supreme Court on this case, Levine says, but he considers it unlikely that such a petition would be approved because the appeals court and lower district courts have all ruled in favor of EPA on the same matter.
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