ELR Citation: ELR 20893
No(s). CIV. S-89-871 LKK (E.D. Cal. Feb 1, 1994)

The court holds that the doctrine of unconstitutional conditions does not bar the federal government from recovering its costs of conducting a remedial investigation/feasibility study (RI/FS) even though its offer to allow a potentially responsible party (PRP) to conduct the RI/FS was conditioned on the PRP stipulating to severe penalties for its failure to complete future unspecified work and waiving its right to judicial review of the penalties. The government proposed the offer in settlement negotiations of a cost recovery action under the Comprehensive Environmental Response, Compensation, and Liability Act. The court first holds that the doctrine of unconstitutional conditions applies to settlement offers. The court further holds that the government's offer implicated a constitutional right, because the PRP had a due process right to judicial review of the penalties for which it was potentially liable under the settlement. The court holds, however, that the government's offer was justified, because the government's ability under the offer to satisfy its statutory obligations without prolonged litigation is a legitimate governmental interest. But the court denies the government's motion for summary judgment of the PRP's defense that the government allededly retaliated for the PRP's refusal to waive its due process rights. Genuine issues of fact exist as to whether the PRP's insistence on the availability of judicial review and the good-faith exception to the imposition of penalties for failing to perform future work was the cause of the breakdown of negotiations. And genuine issues of fact exists as to whether the government conducted its investigation improperly and whether, if it conducted the investigation improperly and increased investigation costs, these results were the product of retaliation for the PRP's refusal to waive its due process rights.

[A prior decision in this litigation is published at 23 ELR 20767.]

Counsel for Plaintiff
James C. Collins
Thelen, Marrin, Johnson & Bridges
Two Embarcadero, San Francisco CA 94111
(415) 392-6320

Counsel for Defendants
Patrick J. Cafferty Jr.
Munger, Tolles & Olson
33 New Montgomery St., Ste. 1900, San Francisco CA 94105
(415) 512-4000