Opinion ID: 149671
Heading Depth: 1
Heading Rank: 3

Heading: Costs of Compliance, Fines, and Damages

Text: The parties agree that the costs of compliance and the monetary fines and damages associated with noncompliance qualify as protected property interests. They disagree, however, as to whether judicial review is available before any deprivation occurs. EPA contends that CERCLA gives PRPs the right to pre-deprivation judicial review: by refusing to comply with a UAO, a PRP can force EPA to file suit in federal court, where the PRP can challenge the order's validity before spending a single dollar on compliance costs, damages, or fines. GE responds that noncomplianceand thus predeprivation judicial reviewis but a theoretical option. According to GE, daily fines and treble damages are so severe that they ... intimidate [ ] PRPs from exercising the purported option of electing not to comply with a UAO so as to test an order's validity via judicial review. Appellant's Br. 49. PRPs are thus forced to comply and spend substantial sums prior to any hearing before a neutral decisionmaker. Because the government is never relieved of its duty to provide some notice and some opportunity to be heard prior to a final deprivation of a property interest, GE argues, CERCLA's failure to provide any realistic avenue for predeprivation review is fatal to the Act's constitutionality. Appellant's Br. 24 (quoting Propert v. District of Columbia, 948 F.2d 1327, 1332 (D.C.Cir.1991)) (internal quotation marks omitted). GE's argument hinges on the Supreme Court's decision in Ex Parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908), and its progeny. Under those cases, a statutory scheme violates due process if the penalties for disobedience are by fines so enormous ... as to intimidate the [affected party] from resorting to the courts to test the validity of the legislation [because] the result is the same as if the law in terms prohibited the [party] from seeking judicial [review] at all. Id. at 147, 28 S.Ct. 441. The Supreme Court has made clear, however, that statutes imposing fineseven enormous fines-on noncomplying parties may satisfy due process if such fines are subject to a good faith or reasonable ground[s] defense. See Reisman v. Caplin, 375 U.S. 440, 446-50, 84 S.Ct. 508, 11 L.Ed.2d 459 (1964); Okla. Operating Co. v. Love, 252 U.S. 331, 338, 40 S.Ct. 338, 64 L.Ed. 596 (1920). Courts have also held that there is no constitutional violation if the imposition of penalties is subject to judicial discretion. Wagner Seed Co. v. Daggett, 800 F.2d 310, 316 (2d Cir.1986); cf. Brown & Williamson Tobacco Corp. v. Engman, 527 F.2d 1115, 1121 & n. 8 (2d Cir.1975). CERCLA guarantees these safeguards. Indeed, the statute offers noncomplying PRPs several levels of protection: a PRP faces daily fines and treble damages only if a federal court finds (1) that the UAO was proper; (2) that the PRP willfully failed to comply without sufficient cause; and (3) that, in the court's discretion, fines and treble damages are appropriate. 42 U.S.C. §§ 9606(b)(1), 9607(c)(3). As to the first of these findingsthe propriety of the UAOthe district court reviews EPA's determination de novo: although the PRP must prove that it is not liable by a preponderance of the evidence, EPA's liability determination warrants no judicial deference. See Kelley v. EPA, 15 F.3d 1100, 1107-08 (D.C.Cir.1994) (Congress ... designated the courts and not EPA as the adjudicator of the scope of CERCLA liability.). As to the second, CERCLA's willfulness and sufficient cause requirements are quite similar to the good faith and reasonable grounds defenses the Supreme Court has found sufficient to satisfy due process, and GE does not argue otherwise. See Reisman, 375 U.S. at 446-50, 84 S.Ct. 508 (penalty for challenging a summons did not violate due process where fines were unavailable for a goodfaith challenge); Okla. Operating Co., 252 U.S. at 337, 40 S.Ct. 338 (permanent injunction against enforcement of daily fines for noncompliance with allegedly confiscatory rates would be appropriate if plaintiff had reasonable ground to contest them); see also Solid State Circuits, Inc. v. EPA, 812 F.2d 383, 391-92 (8th Cir. 1987) (finding that CERCLA's sufficient cause defense is constitutionally equivalent to a good faith defense and thus satisfies due process). Moreover, PRPs receive added protection from the fact that the district court has authority to decide not to impose fines even if it concludes that a recipient without sufficient cause, willfully violate[d], or fail[ed] or refuse[d] to comply with a UAO. 42 U.S.C. § 9606(b)(1); see also id. § 9607(c)(3) (district court may impose treble damages if a person who is liable ... fails without sufficient cause to comply with a UAO). Given these safeguards, we have no basis for concluding that [t]he necessary effect and result of [CERCLA] must be to preclude a resort to the courts ... for the purpose of testing [a UAO's] validity. Young, 209 U.S. at 146, 28 S.Ct. 441. Contrary to GE's claim, then, PRPs face no Hobson's choice. We therefore join three of our sister circuits that have rejected similar Ex Parte Young challenges to CERCLA's UAO regime. Employers Ins. of Wausau v. Browner, 52 F.3d 656, 664 (7th Cir.1995); Solid State Circuits, 812 F.2d at 391-92; Wagner Seed Co., 800 F.2d at 316; see also City of Rialto v. West Coast Loading Corp., 581 F.3d 865, 872 (9th Cir.2009) (expressing approval of this holding); cf. S. Pines Assocs. v. United States, 912 F.2d 713, 717 (4th Cir.1990) (rejecting due process challenge to Clean Water Act compliance orders because recipients are not subject to ... penalties until EPA pursues an enforcement proceeding.). Given the foregoing, we need not address EPA's argument that the statute is, at a minimum, constitutional in emergency situations. Nor for the same reason need we consider GE's response that EPA does not actually issue UAOs in emergencies.