Opinion ID: 483602
Heading Depth: 1
Heading Rank: 5

Heading: shall be liable for--

Text: (A) all costs of removal or remedial action incurred by the United States Government or a State not inconsistent with the national contingency plan; (B) any other necessary costs of response incurred by any other person consistent with the national contingency plan; and (C) damages for injury to, destruction of, or loss of natural resources, including the reasonable costs of assessing such injury, destruction, or loss resulting from such a release. 42 U.S.C. Sec. 9607(a). 7 Section 107(c)(3) of CERCLA provides: (3) If any person who is liable for a release or threat of release of a hazardous substance fails without sufficient cause to properly provide removal or remedial action upon order of the President pursuant to section 9604 or 9606 of this title, such person may be liable to the United States for punitive damages in an amount at least equal to, and not more than three times, the amount of any costs incurred by the Fund as a result of such failure to take proper action. The President is authorized to commence a civil action against any such person to recover the punitive damages   . 8 For a discussion of some of the difficulties a private party may face in bringing a cost recovery action, see generally Note, Private Cost Recovery Under CERCLA 69 Minn.L.Rev. 1135 (1985) 9 Although coming too late to do them any good, the hardship posed by the dilemma Paradyne and Solid State supposedly faced upon being served with the clean-up order has been ameliorated significantly by the recent amendments to CERCLA. Section 106(b) of CERCLA has been amended to allow a person who receives and complies with a clean-up order a right of action against the Superfund for costs incurred in performing the required clean-up provided certain conditions are met. The amendment states: (2)(A) Any person who receives and complies with the terms of any order issued under subsection (a) may, within 60 days after completion of the required action, petition the President for reimbursement from the Fund for the reasonable costs of such action, plus interest. Any interest payable under this paragraph shall accrue on the amounts expended from the date of expenditure at the same rate as specified for interest on investments of the Hazardous Substance Superfund established under subchapter A of chapter 98 of the Internal Revenue Code of 1954. (B) If the President refuses to grant all or part of a petition made under this paragraph, the petitioner may within 30 days of receipt of such refusal file an action against the President in the appropriate United States district court seeking reimbursement from the Fund. (C) Except as provided in subparagraph (D), to obtain reimbursement, the petitioner shall establish by a preponderance of the evidence that it is not liable for response costs under section 107(a) and that costs for which it seeks reimbursement are reasonable in light of the action required by the relevant order. (D) A petitioner who is liable for response costs under section 107(a) may also recover its reasonable costs of response to the extent that it can demonstrate, on the administrative record, that the President's decision in selecting the response action ordered was arbitrary and capricious or was otherwise not in accordance with law. Reimbursement awarded under this subparagraph shall include all reasonable response costs incurred by the petitioner pursuant to the portions of the order found to be arbitrary and capricious or otherwise not in accordance with law. (E) Reimbursement awarded by a court under subparagraph (C) or (D) may include appropriate costs, fees, and other expenses in accordance with subsections (a) and (d) of section 1412 of title 28 of the United States Code. Superfund Amendments and Reauthorization Act of 1986, Pub.L. No. 99-499, 1986 U.S. Code Cong. & Admin.News (100 Stat.) 1628 (to be codified at 42 U.S.C. Sec. 9606(a)(2)). Thus, we note that, in the future, parties wishing to avoid treble liability may apparently perform any required clean-up, with the assurances that if recovery is unavailable from a third party and they are not a responsible party, recovery may be had from the Superfund. 10 Recent amendments to CERCLA apparently now provide for a six-year statute of limitations on cost recovery actions and a three-year statute of limitations on claims for damages arising out of injury to or loss of natural resources. See Superfund Amendments and Reauthorization Act of 1986, Pub.L. No. 99-499, 1986 U.S. Code Cong. & Admin.News (100 Stat.) 1647 (to be codified at 42 U.S.C. Sec. 9612(d)) 11 We emphasize that the only issue properly before this Court is the constitutionality of CERCLA's treble damage provision. The question of the proper interpretation of that section as a matter of statutory construction is only before this Court insofar as it may be necessary to determine its constitutionality. In this regard, we reiterate the admonition of the district court in United States v. Reilly Tar & Chemical Corp., 606 F.Supp. 412 (D.Minn.1985), wherein it stated: It is a well established principle of statutory construction that where a court has a choice between interpreting a statute in a constitutional and unconstitutional manner, a court is bound to select that interpretation which upholds the statute constitutionally. Id. 606 F.Supp. 419 n. 3. As a result, absent a more fully developed record, we will not engage in the delicate matter of finally construing the statute; instead, we assume that in the future the EPA and the courts will construe the statute in a constitutional manner. Thus, we need only consider the most stringent standard that may be constitutionally applied to a party seeking to avoid imposition of treble damages under CERCLA Sec. 107(c)(3). As a matter of statutory construction, the courts or the EPA remain free to adopt a more liberal subjective good faith construction. We note, however, without deciding the issue, that the legislative history of the recent CERCLA Amendments states: The phrase without sufficient cause is currently set forth as a defense to liability for treble damages in section 107(c)(3) of CERCLA. The government has argued and the courts have interpreted this phrase to mean that a party will not be liable for treble damages for failing to comply with an EPA order when the party has a reasonable good faith belief that it has a valid defense to that order. See Wagner Electric Corp. v. Thomas, [612 F.Supp. 736] No. 85-2212-0 (D.Kan. June 20, 1985); United States v. Reilly Tar & Chemical Corp., 606 F.Supp. 412, 421 (D.Minn.1985). To avoid potential unfairness that might arise from the limitation on the timing of review of section 106 orders, this amendment expressly extends the sufficient cause defense to the penalty provision in section 106. The amendment contemplates that the phrase sufficient cause will continue to be interpreted to preclude the assessment of penalties or treble damages when a party can establish that it had a reasonable belief that it was not liable under CERCLA or that the required response action was inconsistent with the national contingency plan. The court must base its evaluation of the defendant's belief on the objective evidence of the reasonableness and good faith of that belief. Given the importance of EPA orders to the success of the CERCLA program, courts should carefully scrutinize assertions of sufficient cause and accept such a defense only where a party can demonstrate by objective evidence the reasonableness and good faith of a challenge to an EPA order. The amendment also contemplates that courts will continue to interpret sufficient cause to encompass other situations where the equities require that no penalties or treble damages be assessed. H.R.Rep. No. 253(I) 99th Cong., 2d Sess. 82, reprinted in 1986 U.S. Code Cong. & Admin.News 2835, 2864. Thus, it appears from the last sentence of the quoted passage that Congress intended courts to remain flexible and to refuse to award the EPA punitive damages if to do so would be patently unjust in light of the public and governmental interests at stake. We fully expect that as the EPA and the courts face concrete cost recovery and treble damage cases, section 107(c)(3) of CERCLA will develop accordingly. 12 For example, in response to the Court's queries at oral argument regarding the EPA's position on who qualifies as a responsible party and on access issues such as those raised by Solid State and Paradyne, the EPA supplied the Court with a supplemental memorandum which stated in part: [T]he Court requested counsel for the Environmental Protection Agency (EPA) to furnish it with copies of any policy statements the Agency may have prepared to guide the Regional EPA offices when they intend to issue an administrative cleanup order under section 106 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. 9606, against responsible parties who are not landowners or current lessees of the site to be cleaned up. Counsel has determined--through consultation with EPA's Office of General Counsel and Office of Enforcement and Compliance Monitoring--that no such policy statements exist at this time.