Solid State Circuits, Inc. v. U.S.E.P.A., s. 86-1592

• Decision Date: 18 February 1987
• Docket Number: 86-1593,Nos. 86-1592,s. 86-1592
• Citation: 812 F.2d 383
• Parties: , 55 USLW 2461, 17 Envtl. L. Rep. 20,453 SOLID STATE CIRCUITS, INC. Paradyne Corporation, Appellant, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Appellee. SOLID STATE CIRCUIT, INC., Appellant, Paradyne Corporation, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Appellee,
• Court: U.S. Court of Appeals — Eighth Circuit

Page 383

812 F.2d 383

25 ERC 1617, 55 USLW 2461, 17 Envtl.

L. Rep. 20,453

SOLID STATE CIRCUITS, INC. Paradyne Corporation, Appellant, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Appellee.

SOLID STATE CIRCUIT, INC., Appellant, Paradyne Corporation, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, Appellee,

Nos. 86-1592, 86-1593.

United States Court of Appeals,

Eighth Circuit.

Submitted Nov. 10, 1986.

Decided Feb. 18, 1987.

John Price, Springfield, Mo., for appellant.

Sarah P. Robinson, Washington, D.C., for appellee.

Before HEANEY and BOWMAN, Circuit Judges, and MORRIS S. ARNOLD, ^* District Judge.

HEANEY, Circuit Judge.

In this appeal, appellants challenge the district court's finding that the punitive damages provision of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. Sec. 9607(c)(3), does not violate their due process rights. We affirm.

I. FACTUAL BACKGROUND

On March 6, 1985, after two months of negotiations, the United States Environmental Protection Agency (EPA) issued a clean-up order to Solid State Circuits, Inc. (Solid State) and Paradyne Corporation (Paradyne) pursuant to section 106(a) of CERCLA, 42 U.S.C. Sec. 9606(a). The order contained factual findings including: (1) from April, 1968, to October, 1973, Solid State conducted manufacturing operations in a leased building in Republic, Missouri; (2) Solid State used trichloroethylene (TCE) and a copper based plating solution in its operation, and stored the used chemicals in an unlined pit in the basement of a building at the site; (3) TCE and copper are harmful to humans; (4) in 1982, corporate ownership of Solid State was transferred to Paradyne; (5) recent soil and groundwater samples from the vicinity of the site show TCE and copper contamination; (6) the contamination poses a threat to the drinking water of Republic, Missouri, the aquifers underlying the site, and the health of humans and animals in the vicinity. The order concluded that Solid State's handling of the TCE and copper was the cause of the contamination and the chemicals posed an "imminent and substantial endangerment to the public health, welfare, or the environment." The order directed Solid State and Paradyne, as responsible parties, to obtain access to contaminated areas, to provide security at the facility, to submit a detailed clean-up plan to the EPA, and to notify the EPA within two days of their intent to comply with the order. No party contends that either applicable EPA regulations or CERCLA provided for an administrative hearing at which the findings of fact or conclusions of law in the order could have been challenged.

On March 14, 1985, Solid State and Paradyne filed suit in federal district court to enjoin the EPA from enforcing the order, from assessing daily penalties for failure to comply with the order, and from assessing treble damages for failing to comply with the order. As part of the suit, Paradyne attempted to raise, as defenses to the EPA's order, that it was not a responsible party under CERCLA and that even if it were, it could not gain access to the contaminated site under reasonable terms to perform required clean-up operations because it has no property interest whatsoever in the site. Paradyne and Solid State also challenged the constitutionality of the treble damage and fine provisions of CERCLA, 42 U.S.C. Sec. 9606(b) and Sec. 9607(c)(3), on the ground that the provisions deprived them of their due process rights to challenge the validity and applicability of the EPA's order without facing ruinous fines and penalties. See Ex Parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908).

On April 18, 1985, the EPA, pursuant to section 104 of CERCLA, 42 U.S.C. Sec. 9604, began the clean-up it had ordered Paradyne and Solid State to perform. The clean-up was completed by November of 1985.

On May 20, 1985, the EPA moved to dismiss the suit by Paradyne and Solid State. The EPA argued that the court had no jurisdiction to review the merits of an order issued pursuant to section 106 of CERCLA because the statute does not provide for pre-enforcement review of such orders. In addition, the EPA argued that since it had begun its own clean-up of the site, it would not seek to enforce its order or to collect daily penalties for noncompliance. Thus, the EPA argued that the court should dismiss the case because the issues whether to enjoin enforcement of the order or collection of daily penalties were moot, and because the issue whether to enjoin assessment of treble damages was not yet ripe inasmuch as the EPA can only assess such damages as part of a separate action in federal district court under CERCLA Sec. 107, and no such action had yet been brought.

The district court agreed it lacked subject matter jurisdiction to engage in pre-enforcement review of the merits of an order issued by the EPA pursuant to section 106 of CERCLA. Thus, the court refused to address the merits of Paradyne's and Solid State's defenses to the order. The court also agreed that the EPA's commencement of the clean-up rendered Paradyne's and Solid State's request for an injunction prohibiting the EPA from seeking to enforce its order or to collect penalties for non-compliance moot. ¹ The court, however, found it had jurisdiction to consider the claim by Paradyne and Solid State relating to the constitutionality of that portion of CERCLA's statutory scheme subjecting them to treble damages for failing to comply with the EPA's order.

The court then proceeded to consider whether the constitutional claim was ripe for review, insofar as the decision to bring an action for treble damages lies within the discretion of the EPA, and the EPA had not yet decided whether to pursue such an action against Paradyne and Solid State. Applying Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967), the court found the issue "purely legal" and fit for determination. The court also found that the statutory scheme challenged by Paradyne and Solid State posed significant hardship due to the necessity of reporting the potential treble liability on public financial filings required by the SEC. Thus, the court found the constitutional claim ripe for review. ²

Proceeding to the merits of the constitutional claim, the court held that there is no violation of due process in the application of the CERCLA statutory scheme, adopting the conclusions of recent opinions in Wagner Electric Corp. v. Thomas, 612 F.Supp. 736 (D.Kan.1985), and United States v. Reilly Tar & Chemical Corp., 606 F.Supp. 412 (D.Minn.1985) (holding that a party's reasonable belief in a valid defense to the merits of an EPA order precludes imposition of treble damages pursuant to CERCLA Sec. 107(c)(3)). Thus, the court refused to enjoin the EPA from seeking to assess treble damages against Paradyne and Solid State pursuant to section 107(c)(3) of CERCLA. Paradyne and Solid State appeal the district court's ruling only with respect to the due process issue.

II. THE STATUTORY SCHEME OF CERCLA

Recognizing the grave consequences arising from delays in cleaning up hazardous waste sites, Congress gave the EPA authority to direct clean-up operations prior to a final judicial determination of the rights and liabilities of the parties affected. Thus, if the EPA has determined that a hazardous substance has been or is likely to be released at a facility, and has issued an order to the responsible party directing clean-up operations, it has several enforcement options available.

First, the EPA may bring an action in federal district court seeking an order directing compliance with its order using the contempt powers of the court as a sanction for non-compliance. See CERCLA Sec. 106(a), 42 U.S.C. Sec. 9606(a). ³ Second, it may bring an action in federal district court seeking to impose fines of up to $5,000 a day for non-compliance. See CERCLA Sec. 106(b), 42 U.S.C. Sec. 9606(b). ⁴ Finally, if the EPA determines that a release of a hazardous substance may pose an imminent and substantial danger to the public health or welfare and that the responsible parties will not properly respond, it may arrange for the required clean-up itself and pay for it using funds from the Hazardous Substance Response Trust Fund (Superfund) created as part of CERCLA. See CERCLA Sec. 104(a), 42 U.S.C. Sec. 9604(a) (authorizing the EPA to conduct clean-up); CERCLA Sec. 221, 42 U.S.C. Sec. 9631 (creating Superfund); CERCLA Sec. 111(a), 42 U.S.C. Sec. 9611(a) (authorizing the EPA to pay clean-up costs from the Superfund). ⁵

Since Superfund money is limited, Congress clearly intended private parties to assume clean-up responsibility. In addition, it sought to ensure that responsible parties would not delay clean-up activities until the EPA felt it necessary to perform the required work itself. Thus, in addition to allowing the EPA to bring an action for actual costs incurred by the Superfund in conducting the clean-up, see CERCLA Sec. 107(a), 42 U.S.C. Sec. 9607(a), ⁶ Congress established a cause of action allowing the EPA, in its discretion, to bring a claim in federal district court to recover up to three times the amount of any costs incurred by the Superfund from any person who is liable for a release or threatened release of a hazardous substance and who fails without sufficient cause to properly comply with the EPA's order. See CERCLA Sec. 107(c)(3), 42 U.S.C. Sec. 9607(c)(3). ⁷

III. ANALYSIS

Because neither CERCLA nor applicable EPA regulations or practice provides for a pre-enforcement hearing at which the merits of the EPA's order could be tested, see e.g., Wagner Seed Co. v. Daggett, 800 F.2d 310, 314-15 (2d Cir.1986) (finding district court without jurisdiction to conduct pre-enforcement review of merits of the EPA order), Paradyne and Solid State argue that the statutory scheme of CERCLA violates their right to due process by depriving them of any meaningful...