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Reardon v. United States

ELR Citation: 22 ELR 20292
Nos. No. 90-1319, 947 F.2d 1509/34 ERC 1070/(1st Cir., 10/29/1991) Aff'd in part, rev'd in part

The court holds that the lien on real property created in §107l) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), which may be imposed to secure payment for government cleanup costs without notice and a pre-deprivation hearing, amounts to deprivation of a significant property interest in violation of the Fifth Amendment Due Process Clause. After removing hazardous substances from property owned by plaintiffs, the U.S. Environmental Protection Agency (EPA) filed a CERCLA §107(l) notice of lien on the property for the amount spent. Plaintiffs sued to have the notice of lien removed, arguing that they were not liable for the cleanup costs as innocent landowners, that the lien was overextensive in covering parcels not involved in the cleanup, and that the filing of the lien notice without a hearing deprived them of property without due process. The district court ruled that CERCLA precluded the court's jurisdiction over the innocent landowner and overbroad lien claims, and although jurisdiction existed to hear the due process claim, the filing of the lien did not amount to a taking of a significant property interest protected by the Due Process Clause. On appeal, the First Circuit ruled in favor of the plaintiffs on the statutory claims, but that decision was withdrawn, paving the way for the First Circuit to consider the appeal en banc.

The court first holds that CERCLA §113(h) bars review of plaintiffs' statutory claims before the commencement of an enforcement or recovery action, but does not bar review of the due process claim. The court notes that the activity of filing liens is, in ordinary language, an enforcement activity. Allowing challenges to the merits of particular liens would defeat some of the purposes of barring §113(h) preenforcement review, including avoiding cleanup delays and waiting until enough facts are known to make innocent landowner determinations. However, the court holds that due process claims do not fit into the literal language of §113(h) because they do not challenge the way EPA administers CERCLA and are not concerned with the merits of any particular removal or remedial action. Rather, due process claims are challenges to CERCLA itself—to a statutory scheme under which the government is authorized to file lien notices without any hearing on the validity of the lien. Moreover, CERCLA does not express a clear congressional intent to preclude the type of constitutional claim plaintiffs make. Extending jurisdiction to plaintiffs' due process claim does not necessarily run counter to the purposes of §113(h), since resolution in a preenforcement proceeding does not have the potential to force EPA to confront inconsistent results.

Turning to the due process claim, the court applies the U.S. Supreme Court's two-part analysis in statutory due process challenges. The court first holds that §107(l)'s lien on real property amounts to a deprivation of a significant property interest within the meaning of the Due Process Clause. EPA's lien has the effect of clouding plaintiffs' title, limiting alienability, and affecting current and potential mortgage. The court notes that while the federal lien does not deprive plaintiffs of possession and use of the property, the effects are significant since a potential buyer or mortgage lender could not identify any limit on the government's interest in the property short of its full value. The court next notes that because CERCLA provides no procedural safeguards for pre-deprivation hearings or for immediate post-deprivation hearings, the government may take its time before suing, and since the removal or remedial action may itself take years to complete, the lien may be in place for a considerable time without an opportunity for a hearing. Although mere postponement of judicial review has been held not a denial of due process if the opportunity for ultimate judicial determination of liability is adequate, the CERCLA statute of limitations on liens throws the ultimate judicial determination so far into the future as to render it inadequate. Further, CERCLA does not require EPA to post a bond when a potential takings' recovery under the Tucker Act is questionable. The court also notes that the government does not have any prior recognized interest in the plaintiffs' property sufficient to define a present, recognized interest in all of plaintiffs' property. Thus, the court holds that a cleanup undertaken by EPA on portions of the plaintiffs' property is too minimal a connection to justify bootstrapping a lien on all the plaintiffs' parcels. The apparent constitutionality of a mechanic's lien is not a basis for upholding the CERCLA lien because a CERCLA lien involves no voluntary agreement, provides for no dissolution, and its use does not predate the Constitution itself.

The court next holds that no exigent circumstances exist to justify the absence ofnotice and a hearing. Nothing in this case suggests that a transfer or encumbrance of the parcels retained by the plaintiffs was imminent. The court holds that the added burden of additional procedural requirements on the government is minimal compared to the risk of loss to plaintiffs' rights. The minimum additional procedural requirements would be notice of an intention to file a notice of lien and provision for a hearing if the property owner claimed that the lien was wrongfully imposed. EPA does not have a legitimate interest in exceeding the limits of its authority under CERCLA and there is nothing wrong with requiring EPA to delay filing a notice of lien until it can show that the statutory prerequisites for filing the notice have been satisfied. Moreover, the fact that the United States, rather than a private party, is seeking the lien, should not weigh in favor of the statute's constitutionality. Whereas a tax lien is a law unto itself and arises from administrative necessity and the Constitution, an EPA lien is just the type of government deprivation the Due Process Clause protects against. Finally, the court holds that because there is no prior neutral proceeding, no double damage remedy, and no post-attachment review for what may be many years, and because EPA is unlikely to be immune from error, the risk to plaintiffs of mistake is not minimal.

A dissenting judge would hold that considering the important governmental interests involved and the relatively insignificant risk of any unwarranted, uncompensable, short-term deprivation of the plaintiffs' property rights, a prompt post-deprivation hearing would satisfy due process analysis and would allow for a constitutional interpretation.

[Previous decisions in this case are published at 20 ELR 20698 and 21 ELR 20639.]

Counsel for Plaintiffs-Appellants
Lynn Wright, Robin F. Price
Edwards & Angell
750 Lexington Ave., New York NY 10022
(212) 308-4411
Lorelei Borland
101 Federal St., Boston MA 02110
(617) 439-4444

Counsel for Defendants-Appellees
George W. Van Cleve, Dep. Ass't Attorney General; Jacques B. Gelin
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

George V. Henderson II, Ass't U.S. Attorney
1107 John W. McCormack Federal Bldg., U.S. P.O. & Courthouse, Boston MA 02109
(617) 223-9400

Before BREYER, Chief Judge, CAMPBELL, TORRUELLA, SELYA, and CYR, Circuit Judges.