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Wagner Elec. Corp. v. Thomas

ELR Citation: 15 ELR 20977
Nos. No. 85-2212-0, 612 F. Supp. 736/22 ERC 2079/(D. Kan., 06/20/1985)

The court rules that §106 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), which makes persons violating cleanup orders potentially liable for punitive damages, incorporates a good-faith exemption and does not violate due process.

The court rules that it lacks subject matter jurisdiction to hear pre-enforcement challenges to the merits of the order, but has to be decided on the basis of the administrative record, which was compiled solely by the agency, ruling that plaintiffs could present issue is fit for review, and delay will impose considerable hardship on plaintiff. The court next addresses whether plaintiffs are entitled to a stay of the Environmental Protection Agency's (EPA's) §106 order, applying the preliminary injunction standard. Finding that plaintiffs are at risk of irreparable injury and that the public and EPA interest in cleanup of the site would not be compromised, the court also rules that they have demonstrated the requisite likelihood of success on the merits. The statute subjects plaintiffs to the intimidating risk of punitive damages as the price of exercising their right to judicial review, which could violate procedural due process. The court rules, however, that CERCLA §107(c)(3) prohibits assessment of punitive damages against one who declines to comply with a §106 order because of a good-faith belief that it was not a responsible party.

The court next rules that the lack of an administrative hearing on the order does not make the CERCLA scheme violate the process. Cases suggesting such a rule concerned administratively imposed penalties, but EPA must go to court to collect punitive damages under §106. Also, plaintiffs failed to cite any causal nexus between the lack of a hearing and a chilling effect on their access to the courts. The court rejects EPA's contention that the question of whether plaintiffs' objection to the order was in good faith had to be decided on the basis of an administrative record, which was compiled solely by the agency, ruling that plaintiffs could present any evidence on this point to the reviewing court. The court notes that plaintiffs' unsuccessful arguments on this point are similar to their claim that they are denied meaningful participation in the administrative process, a claim over which the court lacks subject matter jurisdiction until EPA seeks reimbursement in court, but which it finds substantial. Finally, the court notes that its ruling on the good-faith exception to the punitive damages provision of §106 addresses only the legal issue, not the policy one of whether punitive damages should be levied against those refusing to comply with orders.

Counsel for Plaintiffs
Byron L. Gregory, Louis M. Rundio Jr., Steven H. Hoeft, Stephen P. Krchma
McDermott, Will & Emery
111 W. Monroe St., Chicago IL 60603
(312) 372-2000

Charles A. Getto, J. Nick Badgerow
McAnany, Van Cleave & Phillips
4th Fl., 707 Minnesota Ave., P.O. Box 1398, Kansas City KS 66101
(913) 371-3838

Counsel for Defendants
David Lamar Kopp, Ass't Regional Counsel
U.S. Environmental Protection Agency
Eleven-Oak Bldg., 16 Fl., Kansas City MO 64106
(816) 374-5493

Michael W. Neville
Land and Natural Resources Division
Department of Justice, Washington DC 20530
(202) 633-3468