Wagner Elec. Corp. v. Thomas

• Decision Date: 20 June 1985
• Docket Number: Civ. A. No. 85-2212-O.
• Citation: 612 F. Supp. 736
• Parties: WAGNER ELECTRIC CORPORATION, McGraw-Edison Company, and Edison International, Inc., Plaintiffs, v. Lee THOMAS, as Administrator of the United States Environmental Protection Agency; Morris Kay, as Regional Administrator of Region VII of the United States Environmental Protection Agency; the United States Environmental Protection Agency; and the Land Clearance for Redevelopment Authority of the County of St. Louis, Missouri, Defendants.
• Court: U.S. District Court — District of Kansas

612 F. Supp. 736

WAGNER ELECTRIC CORPORATION, McGraw-Edison Company, and Edison International, Inc., Plaintiffs, v. Lee THOMAS, as Administrator of the United States Environmental Protection Agency; Morris Kay, as Regional Administrator of Region VII of the United States Environmental Protection Agency; the United States Environmental Protection Agency; and the Land Clearance for Redevelopment Authority of the County of St. Louis, Missouri, Defendants.

Civ. A. No. 85-2212-O.

United States District Court, D. Kansas.

June 20, 1985.

Byron L. Gregory, Louis M. Rundio, Jr., Steven H. Hoeft, Stephen P. Krchma, McDermott, Will & Emery, Chicago, Ill., Charles A. Getto, J. Nick Badgerow, McAnany, Van Cleave & Phillips, Kansas City, Kan., for plaintiffs.

David Lamar Kopp, Asst. Regional Counsel, U.S. E.P.A., Kansas City, Kan., Michael W. Neville, Dept. of Justice, Washington, D.C., Benjamin L. Burgess, U.S. Atty., Julie Robinson Trice, Asst. U.S. Atty., Kansas City, Kan., for defendants Lee Thomas, Morris Kay, and U.S. E.P.A.

William V. North, Shughart, Thomason & Kilroy, Overland Park, Kan., Albert A. Michenfelder, Jr., Steven W. Koslovsky, Ziercher, Hocker, Human, Michenfelder & Jones, Clayton, Mo., for defendant The Land Clearance for Redevelopment Authority of the County of St. Louis, Mo.

MEMORANDUM AND ORDER

EARL E. O'CONNOR, Chief Judge.

Plaintiffs in this action have filed a motion to stay the enforcement of an order issued by defendant Morris Kay in his capacity as Regional Administrator of the Environmental Protection Agency (EPA). A hearing on the motion was held on April 9, 1985, and both sides have presented numerous written briefs. We are now prepared to rule.

I. Statutory Framework.

The challenged EPA order was issued pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. §§ 9601 et seq. Perhaps the best known feature of CERCLA is the "Superfund" established to permit immediate governmental cleanup of hazardous waste sites. See CERCLA § 221, 42 U.S.C. § 9631. At issue in this case, however, are certain other provisions of that Act which permit EPA to replenish the Superfund by bringing a civil action against the party or parties actually responsible for the hazardous wastes.

When the President (and, through delegation of authority, the EPA Administrator) determines 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 particular site, he may pursue one of three options. First, he may file a civil suit to obtain a court order enjoining the responsible party or parties to take such action as may be necessary to remove the hazardous waste threat. CERCLA § 106(a), 42 U.S.C. § 9606(a). Second, he may issue an administrative order directing the responsible party or parties to take the appropriate actions. Id. And, third, once he determines that a party will not comply with a judicial or administrative order issued under CERCLA § 106(a), he may expend Superfund monies to pay a third party for remedying the situation. CERCLA § 104(a)(1), 42 U.S.C. § 9604(a)(1). Where this third option is employed, the responsible party or parties are liable to the Superfund for any money drawn therefrom as a part of a cleanup response. CERCLA § 112(c)(1), 42 U.S.C. § 9612(c)(1). Under any of these three options, the "responsible party or parties" are those specifically defined in CERCLA § 107(a), 42 U.S.C. § 9607(a).

In enacting this statutory framework, Congress provided that each option would carry its own incentive for compliance by a responding party. Refusal to comply with a judicial cleanup order, of course, would carry a contempt sanction. One who "willfully violates, or fails or refuses to comply with, any order" issued by EPA under CERCLA § 106(a) may be forced to pay a civil penalty of up to $5,000.00 a day. CERCLA § 106(b), 42 U.S.C. § 9606(b). And, where a responsible party "fails without sufficient cause" to comply with an EPA cleanup order, thus forcing EPA to expend Superfund monies to accomplish that cleanup, the noncomplying party may be forced to pay "punitive damages" of up to three times the amount expended from the Superfund (in addition to the actual expenditures recoverable under CERCLA § 112(c)(1)). CERCLA § 107(c)(3), 42 U.S.C. § 9607(c)(3).

It is undisputed that CERCLA requires no administrative hearing before EPA issues a cleanup order under § 106(a) or elects to expend Superfund monies under § 104(a)(1). Accordingly, a responding party's liability for daily penalties and/or punitive damages may accrue prior to any administrative or judicial hearing. See Aminoil, Inc. v. United States Environmental Protection Agency, 599 F.Supp. 69, 73 (C.D.Cal.1984). The assessment of such penalties or damages, however, may come only after EPA prevails in an enforcement or recovery action filed in the United States District Court. Should a responding party convince the court that it is not a "responsible party," it escapes liability for such sums.

A party choosing not to contest an EPA cleanup order may simply comply therewith. Since EPA would then be barred from seeking either daily penalties or punitive damages, the complying party could thus limit its loss exposure to the actual cost of cleanup. Such a complying party also retains the option of later establishing in court that it was not "responsible" for the hazardous wastes. Having made such a showing, however, that party is not entitled to seek reimbursement from EPA for amounts expended in the cleanup effort. Aminoil, 599 F.Supp. at 73-74. That party's sole remedy is to identify the true responsible party or parties, and to seek reimbursement from them. See CERCLA § 112(c)(2), 42 U.S.C. § 9612(c)(2).

II. Administrative Action in this Case.

In this case, the EPA Administrator chose not to seek a judicial injunction requiring these plaintiffs to initiate cleanup activities. Rather, he opted to issue an administrative order directing them to do so. Thus, on March 19, 1985, EPA filed with its Regional Hearing Clerk a notification that the Regional Administrator might issue an administrative order under CERCLA § 106(a). A copy of this notice was received by the plaintiffs on the next day. The notice included the EPA's proposed findings of fact, conclusions of law, determination, and order. Plaintiffs were given until 5:00 p.m. on March 22nd to submit a written response to EPA's regional office in Kansas City, Kansas. The notice quite plainly stated that:

Circumstantial exigencies having been considered, Region VII will not extent (sic) this deadline. Only evidence timely submitted will be considered. Nethier (sic) oral argument nor oral testimony will be recieved (sic).

... This administrative proceeding constitutes the named potential respondents only pre-enforcement opportunity to show that sufficient cause exists for noncompliance with the proposed order.

... Any order that may issue as a result of the pending determination will be unilateral. Therefore, no dialogue over the substantive provisions contained in the attached proposed order will be exchanged.

Notice of March 19, 1985, at 2-3.

On March 22, 1985, plaintiffs submitted a six-page response to this proposed order. They objected to the procedures used in issuing the proposed order and requested: (1) that the deadline for presenting evidence be extended to April 30, 1985, (2) that they be granted a hearing at which they could cross-examine any witnesses EPA might use to support the "evidence" in the notice, and (3) that a record of that hearing be preserved for purposes of judicial review. On the day before, such requests had already been presented in person to an official at EPA's regional office. All such requests had been denied at that time.

The final administrative order was issued on March 27, 1985, and differs in only minor respects from the proposal of eight days earlier. Among the order's findings of fact are the following:

(1) Plaintiffs (inter-related corporations) owned an allegedly contaminated site in St. Louis County, Missouri, until 1983.

(2) During 1967 and 1968, a facility located at that site produced utility transformers containing polychlorinated biphenyls (PCBs).

(3) PCBs have been designated as a hazardous substance in accordance with various federal environmental laws, and were confirmed to be present in certain portions of the site.

(4) Pursuant to a written agreement executed on October 27, 1982, and performed by July 1, 1983, the entire site was transferred on a donative basis from plaintiffs to the Land Clearance Redevelopment Authority, County of St. Louis, Missouri ("LCRA").

Among the order's conclusions of law are that plaintiffs and LCRA are all "responsible parties" within the meaning of CERCLA § 107(a), 42 U.S.C. § 9607(a), and 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 hazardous substance from the facility within the meaning of" CERCLA § 106(a), 42 U.S.C. § 9606(a). Plaintiffs have been ordered to conduct all surveys and other studies necessary for the development of a cleanup plan. Said plan is to be submitted to the EPA for its approval and then implemented by the plaintiffs. Apparently accepting LCRA's assertion that it lacks the financial resources to participate in a cleanup operation, see Transcript of April 9, 1985, Hearing, at 29, the order limits LCRA's responsibility to providing plaintiffs and other necessary parties with access to the site.

The order notes that it is "effective upon receipt" by these plaintiffs and LCRA, and that "all times for performance of response activities shall be calculated from that time and date." Order of March 27, 1985, at 13. The order also contains a separate section captioned "Penalties for...