Opinion
CIVIL ACTION NO. 1:CV-93-1482
September 10, 1999
MEMORANDUM [RE: 1456-1]
Re: Consent Decree With Third and Fourth Party Defendants
I. Procedural History
On September 27, 1993, the United States initiated this action pursuant to Sections 107(a) and 113(g)(2) of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") to recover costs expended by the Environmental Protection Agency ("EPA") in responding to the contamination of the Keystone Sanitation Landfill Site ("Site") up until September 27, 1990. The complaint also seeks a declaratory judgment of the liability of Defendants for future response costs that will be incurred in implementing remedial action at the Site. Pursuant to CERCLA's § 107(a) framework, the United States named eleven Defendants as potentially responsible parties ("PRPs"). Eight of the original PRPs — those referred to as the "Original Generator Defendants" — were joined under § 107(a)(3), on the theory that they contracted, agreed, or otherwise arranged to dispose of hazardous waste at the Site or transport such waste to the Site. The other three original PRPs those referred to as the Keystone Defendants — were joined under § 107(a)(1), (2). and/or (3) as the owners or operators of the Site and arrangers and transporters of waste to the Site.
The Generator Defendants consist of QUEBEC OR Printing Fairfield, Inc.; CJ Clark, America, Inc.; The ESAB Group, Inc.; The Genlyte Group, Inc.; Hanover Bronze and Aluminum Foundry, Inc.: Kemper Industries, Inc.; R.H. Sheppard Company, Inc.; and SKF USA, Inc.
The Keystone Defendants consist of Keystone Sanitation Company, Inc.; Kenneth F. Noel, individually and f/d/b/a Keystone Sanitation Company; Anna M. Noel, individually and f/d/b/a Keystone Sanitation Company.
The Original Defendants ("OGD's") thereafter impleaded approximately 180 Third-Party Defendants to obtain, later alia, contribution for response costs pursuant to CERCLA § 113(f) and the Pennsylvania Hazardous Sites Cleanup Act, 35 Pa. Stat. Ann. §§ 6020.702(a) and 6020.1101. Subsequently, certain Third-Party Defendants (a Fourth-Party Plaintiffs') Plaintiffs filed a complaint against approximately 600 Fourth-Party Defendants seeking, inter alia, contribution, which complaint was subsequently amended to add approximately 40 Fourth-Party Defendants.
The United States has since worked diligently towards resolving this mammoth litigation. On October 22, 1997, the United States filed a Notice of Consent Decree. On July 16, 1998, the United States and the Commonwealth of Pennsylvania filed a joint motion to enter the consent decree lodged on October 22, 1997. Owner/Operator Defendants Keystone Sanitation, Inc., Kenneth and Anna Noel, and Waste Management oppose the motion conditionally.
The court will not address the OGD's opposition in light of the disposition of the consent decree filed on their behalf.
II. Discussion
The instant consent decree provides to the 376 settling Third and Fourth Party Defendants Site-wide releases from Plaintiff for liability at the Site, subject to certain limited exceptions, and provides them with protection from contribution actions for matters addressed in the settlement consistent with CERCLA § 113(f)(2), 42 U.S.C. § 9613 (f)(2). The decree also provides for the settling Third and Fourth Party Defendants to reimburse $125 million of the United States' past costs, to pay $2.9 million into a Site Special Account to be used for future work at the Site, and to pay $80,000 for potential future natural resource damage at the Site. The settling defendants and the settling federal agencies also resolve their liability to the Pennsylvania Department of Environmental Protection. The state will receive a payment of $66,775 as reimbursement for its past response costs and state natural resource damages. (Consent Decree, Section VIII.)
The issue before the court is whether the settlement is fair, reasonable, and consistent with the objectives of CERCLA. United States v. Borough of Lemoyne, No. 4:CV-94-0667. slip op. at 15 (M.D. Pa. Nov. 17, 1994); United States v. Cannons Engineering Corp., 899 F.2d 79, 84 (1st Cir. 1990).
The Owner/Operator Defendants oppose entry of the consent decree on the basis that it is premature. They argue that the substantive fairness of the Third and Fourth Party settlements cannot be judged until after the final off-site groundwater remedy has been selected, the Owner/Operator Defendants' proposed alternative remedy has been reviewed, and total Site costs have been determined. The Owner/Operator Defendants cite United States v. Montrose Chemical Corp. of Calif, 50 F.3d 741 (9th Cir. 1995), in support of rejecting the consent decree.
In Montrose the court found there was "no evidence on [the] record from which the district court could have made any determination with respect to estimates of responsibility and damage." Id. at 746-47. The court went on to note "that the proper way to gauge the adequacy of settlement amounts to be paid by settling PRPs is to compare the proportion of total projected costs to be paid by the settlors with the proportion of liability attributable to them, and then to factor into the equation any reasonable discounts for litigation risks, time, savings, and the like, that may be justified." Id. at 747 (citing United States v. Charles George Trucking, Inc., 34 F.3d 1081, 1087 (1st Cir. 1994).
The court has reviewed the declarations of Leo J. Mullen, an EPA Civil Investigator for cost recovery in CERCLA actions, and Cynthia Tibbott, senior Environmental Contaminants Specialist for the United States Fish and Wildlife Service. The court believes that the cost estimates presented by Mullen are sufficient to support the United States' projected remedial costs. The court points out that:
CERCLA's policy of encouraging early settlements is strengthened when a government agency charged with protecting the public interest "has pulled the laboring oar in constructing the proposed settlement." . . . Although "the true measure of the deference due depends on the persuasive power of the agency's proposal and rationale," a district court reviewing a proposed consent decree "must refrain from second-guessing the Executive Branch." . . . Such deference is appropriate given [t]hat so many affected parties, themselves knowledgeable and represented by experienced lawyers, have hammered out an agreement at arm's length and advocate its embodiment in a judicial decree."Montrose, 50 F.3d at 746 (citations omitted). To the extent that the total remedial costs are subject to variation, the court is mindful of the general federal policy rewarding early settlements in CERCLA cost recovery actions.
Congress explicitly created a statutory framework that left nonsettlors at risk of bearing a disproportionate amount of liability. . . . Disproportionate liability, a technique which promotes early settlements and deters litigation for litigation's sake, is an integral part of the statutory plan. . . . Congress purposed that all who choose not to settle confront the same sticky wicket of which appellants complain.United States v. Cannons Engineering Corp., 899 F.2d 79, 91-92 (1st Cir. 1990), see also, Arizona v. Nucor Corp., 825 F. Supp. 1452 (D. Ariz. 1992), aff'd, 66 F.3d 213 (9th Cir. 1995). Accordingly, the court will not reject the decree as premature.
The Owner/Operator Defendants also argue that the consent decree is not substantively fair based on the EPA's own statement. They cite to an editorial, which states, in pertinent part:
in October [1997], EPA also proposed to settle with 376 third and fourth-party defendants for $4.25 million. These defendants generated 74% of the waste at Keystone. But their $4.25 million liability is only 22% of the $21.5 million cleanup costs. Any lesser amount would be unlikely to get Court approval.
(Owner/Operator Def.'s attachment to Opp. to consent decree, Ex. E.)
The Owner/Operator Defendants argue that assuming total Site costs are $23 million, the cash out of $4.25 million represents at most 18.5% of total Site costs. Thus, they argue, the proposed consent decree falls short of the 22% which EPA believes is likely to be required.
The court points out that the writer is not expressing agency policy but only guessing what this court might or might not approve. As settling parties note, the writer assumed that settling Third and Fourth Party Defendants are responsible for 74% of waste sent to the Site. Settling Third and Fourth Party Defendants argue that
while the potential volumetric contribution of waste to the Site by all Third and Fourth Party Defendants was calculated to be about 70% of the total volume, about 15% to 20% of the total volume is attributable to Third and Fourth Party Defendants which are defunct, non-viable, nonsettling parties, or which fell into the de micromis settlements. The settling Third and Fourth Party Defendants were potentially responsible for approximately 55% to 60% of the waste volume delivered to the Site. Thus. the $4.25 million settlement represents 57% of the share remaining to be allocated among generators.
(Third Party Def.'s Reply Br. at 10; see also Gov't Br. In Supp. of Entry of Consent Decree, Ex. 2, Decl. of Leo L. Mullen, and Ex. B E.)
In determining the fairness and reasonableness of the settlement, this court must also consider the composition of the waste, the type of business involved, the size of business and financial resources of the settling parties. According to Leo Mullen, most of the waste disposed by settling Third and Fourth Party Defendants was municipal solid waste which went to the Site while non-municipal solid waste containing hazardous substances went to other facilities. (Gov't Br. In Supp. of Entry of Consent Decree, Ex. 2, Decl. of Leo J, Mullen at ¶ 130.) Many of the Fourth Party Defendants are restaurants, convenience stores, apartment buildings, camp grounds, and retail operations. (Id. at ¶ 35.) In light of these facts, this court believes the settlement is reasonable,
III. Conclusion
Considering that the funds are already in escrow giving the government the ability to respond promptly to problems at the Site, and that the settling Third and Fourth Party Defendants are bearing an appropriate amount of the costs and responsibility for the remedy, the court finds the objectives of CERCLA are being met. Accordingly, the court will enter the consent decree.
MEMORANDUM [Re: 1527-1] Re: Consent Decree With Original Generator Defendants
I. Procedural History
On September 27, 1993, the United States initiated this action pursuant to Sections 107(a) and 113(g)(2) of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") to recover costs expended by the Environmental Protection Agency ("EPA") in responding to the contamination of the Keystone Sanitation Landfill Site ("Site") up until September 27, 1990. The complaint also seeks a declaratory judgment of the liability of Defendants for future response costs that will be incurred in implementing remedial action at the Site. Pursuant to CERCLA's § 107(a) framework the United States named eleven Defendants as potentially responsible parties ("PRPs"). Eight of the original PRPs — those referred to as the "Original Generator Defendants" — were joined under § 107(a)(3). on the theory that they contracted, agreed, or otherwise arranged to dispose of hazardous waste at the Site or transport such waste to the Site. The other three original PRPs ¶ those referred to as the Keystone Defendants — were joined under § 107(a)(1), (2), and/or (3) as the owners or operators of the Site and arrangers and transporters of waste to the Site,
The Generator Defendants consist of QUEBECOR Printing Fairfield, Inc.; CJ Clark, America, Inc.; The ESAB Group, Inc.; The Genlyte Group, Inc.; Hanover Bronze and Aluminum Foundry, Inc.; Kemper Industries, Inc.; R.H. Sheppard Company, Inc.; and SKF USA, Inc.
The Keystone Defendants consist of Keystone Sanitation Company, Inc.; Kenneth F. Noel, individually and f/d/b/a Keystone Sanitation Company; Anna M. Noel, individually and f/d/b/a Keystone Sanitation Company.
The Original Defendants ("OGD's") thereafter impleaded approximately 180 Third-Party Defendants to obtain, inter alia, contribution for response costs pursuant to CERCLA § 113(f) and the Pennsylvania Hazardous Sites Cleanup Act, 35 Pa. Stat. Ann. §§ 6020.702(a) and 6020.1101. Subsequently, certain Third-Party Defendants ("Fourth-Party Plaintiffs") Plaintiffs filed a complaint against approximately 600 Fourth-Party Defendants seeking, inter alia, contribution, which complaint was subsequently amended to add approximately 40 Fourth-Party Defendants.
The United States has since worked diligently towards resolving this mammoth litigation. On April 5, 1996, May 23, 1996, and November 24, 1998, the United States lodged a trilogy of proposed de micromis consent decrees. The United States then lodged a proposed consent decree with Third- and Fourth-Party Defendants on October 22, 1997. Thereafter, on January 12, 1998. the Commonwealth of Pennsylvania, Department of Environmental Protection ("Commonwealth") filed a motion to intervene as a party-plaintiff, The court granted the motion by order dated March 6, 1998. The Commonwealth filed its complaint in intervention on March 9, 1998, naming as intervenor-Defendants the OGD's and the Keystone Defendants.
On June 23, 1998, the United States and the Commonwealth lodged a proposed consent decree with the OGD's. The notice and comment period has expired with respect to each of the aforementioned proposed consent decrees. By memorandum and order dated July 28, 1999, the court approved the three de micromis consent decrees. With this memorandum, the court wilt address the United States and the Commonwealth's motion to enter the consent decree with the OGD's and-any objections thereto.
II. Discussion
The instant consent decree obligates the eight OGD's to implement the underground component of the remediation of the Site. The OGD's are also required to install protective filters and monitor nearby residential drinking wells. Furthermore, the OGD's will be required to pay $125,000 toward natural resource damage to the Site, reimburse to the Commonwealth $13,000 in past costs and $30,000 of tho state natural resource damages. The total cost to the OGD's is estimated to be between $4.85 million and $7.4 million. In exchange, the consent decree provides QGD's with protection against contribution claims.
The Owner/Operators, consisting of the Keystone Defendants and Waste Management of Pennsylvania ("Waste Management"), and Third- and Fourth-Party Defendants object to the consent decree. These objections are that: (1) Section VI of the decree has the effect of reallocating work to the Keystone Defendants; (2) the consent decree fails to obligate the OGO's to remediate any contamination of surface water and sediment; (3) the allocation of costs leaves Waste Management and the Keystone Defendants with a disproportionate share of Site remediation costs; and (4) the OGD's continue to retain contribution rights against Waste Management and the Keystone Defendants. Additionally, Waste Management and the Keystone Defendants object to the scope of the contribution protection afforded the OGD's. The court will address these objections seriatim.
By memorandum and order dated August 22, 1996. the court determined that Third-Party Defendant Waste Management of Pennsylvania was liable as the successor to the Keystone Defendants.
These Third- and Fourth-Party Defendants' objections are contingent and will be withdrawn upon the court's approval of their proposed consent decree. As the court is issuing a companion memorandum and order on this date entering the consent decree with those parties, it will not address their objections to the instant consent decree with the OGD's.
At the outset, the court notes that the objections to Section VI of the decree appear to be moot. (See letter of July 22, 1999 from the United States to the court (attached to this memorandum).) Thus, the court will proceed to address the next objection.
The Owner/Operators argue that paragraph 59 of the decree relieves the OGD's from any obligation for work pertaining to "sediment or surface water remediation other than monitoring. . . . This provision, the Owner/Operators argue, places future remediation of surface water and sediment outside the scope of groundwater remediation for which the OGD's are responsible. (See Owner/Opers.' Mem. In Opp. To Consent Decree at 12.) As the United States points out, however, the consent decree contains a reopener provision: Paragraphs 134 and 135 reserve to the EPA the right to sue the OGD's to require remediation of surface water and sediment based on any new information. The Owner/Operators argue, however, that paragraph 59 of the decree could be interpreted to bar the United States from pursuing the OGD's for remediation of surface water or sediment.
The court agrees that the language of Paragraph 59 supports this interpretation. That provision reads, in part: "the Settling Generator Defendants shall not be required under this paragraph to perform such further actions if they pertain to sediment or surface water remediation other than monitoring. . . ." Nevertheless, the United States and the Owner/Operators all agree that there is currently no information to suggest that surface water or sediments must be remedied at the site. All that exists is a remote future possibility of such a need.
This court is, however, not inclined to reject settlements reached at arm's length after months and years of negotiations merely because the costs of a longshot contingency might fall upon a non-settling party. Accordingly, the court will not reject the consent decree solely on this basis.
This concern also overlaps with the Keystone Defendants' objection that the settlement with the OGD's leaves them with a disproportionate share of liability, which is discussed infra.
Next, the Owner/Operators contend that the settlement is premature because neither the total site costs nor the value of the OGD's settlement have been determined. The Owner/Operators argue that the total Site remedial costs can vary between 17.8 million and $25.9 million, depending upon the remedy ultimately selected. Based upon United States v, Montrose Chemical Corp. of California, 50 F.3d 741 (9th Cir. 1995), Waste Management argues that the settlement should be rejected. InMontrose the court found there was "no evidence on [the] record from which the district court could have made any determination with respect to estimates of responsibility and damage." Id. at 746-47. The court went on to note "that the proper way to gauge the adequacy of settlement amounts to be paid by settling PRPs is to compare the proportion of total projected costs to be paid by the settlors with the proportion of liability attributable to them, and then to factor into the equation any reasonable discounts for litigation risks, time, savings, and the like, that may be justified." Id. at 747 (citing United States v. Charles George Trucking, Inc., 34 F.3d 1081, 1087 (1st Cir. 1994).
The court has reviewed the declarations of Leo J. Mullen, an EPA Civil Investigator for cost recovery in CERCLA actions, and Cynthia Tibbott, senior Environmental Contaminants Specialist for the United States Fish and Wildlife Service. The court believes that the cost estimates presented by Mullen are sufficient to support the United States' projected remedial costs. The court points out that:
CERCLA's policy of encouraging early settlements is strengthened when a government agency charged with protecting the public interest "has pulled the laboring oar in constructing the proposed settlement." . . . Although "the true measure of the deference due depends on the persuasive power of the agency's proposal and rationale," a district court reviewing a proposed consent decree "must refrain from second-guessing the Executive Branch." . . . Such deference is appropriate given "[t]hat so many affected parties, themselves knowledgeable and represented by experienced lawyers, have hammered out an agreement at arm's length and advocate its embodiment in a judicial decree."Montrose, 50 F.3d at 746 (citations omitted). To the extent that the total remedial costs are subject to variation, the court is mindful of the general federal policy rewarding early settlements in CERCLA cost recovery actions.
Congress explicitly created a statutory framework that left nonsettlors at risk of bearing a disproportionate amount of liability. . . . Disproportionate liability, a technique which promotes early settlements and deters litigation for litigation's sake, is an integral part of the statutory plan. . . . Congress purposed that all who choose not to settle confront the same sticky wicket of which appellants complain.United States v. Cannons Enginearing Corp., 899 F.2d 79, 91-92 (1st Cir. 1990). Accordingly, the court will not reject the decree as premature.
Next, the Owner/Operators object to paragraph 146 of the decree which reads:
For Matters Addressed in the Settlement, upon entry of this Consent Decree, Settling Generator Defendants agree to the release and waive all claims or causes of action under Section 106, 107 and 113 of CERCLA, 42 U.S.C. § 9606. 9607, and 9613, Sections 7002 of RORA, 42 U.S.C. § 6972, and Sections 701 and 705 of HSCA, 35 P.S. §§ 6020.701 and 6020.705, or claims for similar relief, that they may have, including for contribution, against any person or party; except that in the event United States selects, or enters into a settlement for performance of, a remedial alternative for source control other than the landfill cap selected in the OUI ROD, the Settling Generator Defendants shall retain their claims against the Owner/Operators.
The United States argues that this provision is necessary in the event that the EPA selects a remedial alternative other than the landfill cap selected in the 1990 Record of Decision ("ROD"). Because the alternative proposed by Owner/Operators is a more expensive alternative, the United States argues that it would be premature to require the OGD's to waive their contribution claims with respect to the remedial alternative. Further, it contends that paragraph 146 primarily permits the OGD's to pursue contribution claims if the Owner/Operators fail to settle with the United States and the Commonwealth or in the event of a future settlement with the Owner/Operators, to object to the proposed consent decree negotiated. (See United States' Br. in Supp. at 28.)
The Owner/Operators do not object to paragraph 146 under this interpretation. However, to the extent that it permits the OGD's to retain contribution rights against the Owner/Operators, notwithstanding a consent decree between the United States and the Owner/Operators, their objection stands.
Once again, this court is being asked to address contingencies that may never arise. The court is aware that the United States and the Owner/Operators are in settlement negotiations. The Owner/Operators are free to bargain for, inter alia, protection from contribution claims in their consent decree. If the parties arrive at any terms to which the OGD's object, the court will be required to address and resolve those issues at that time. That the OGD's consent decree allows them to retain their contribution claims at this time does not render it unfair or unreasonable.
The remaining objections consist of four concerns regarding the scope of contribution protection given to the OGD's. These objections are: (1) the inclusion of natural resource damages for which contribution protection is afforded is unfair to non-settlors; (2) claims from "non-liable" parties should not be included in the protection; (3) more statutory claims should be included in the section in which the OGD's agree to forego additional contribution claims; and (4) contribution protection should not extend to actions taken by the OGD's during implementation of the remedy which create new contamination or exacerbate existing contamination at the site.
It appears from their brief that the Owner/Operators accept the United States' explanation as to objections 1, 3 and 4 above and, therefore, the objections are moot. As to objection 2, the United States and Owner/Operators all concede that no private claims exist at present. Whether any may exist in the future is entirely speculative. (Owner/Opers.' Br. In Opp. at 15.)
On this point, the court notes that fairness and reasonableness are comparative terms and cannot be measured in a vacuum. See Montrose, 50 F.3d at 747. Based on the record presently before this court, no private party claims exist and, therefore, the contribution protection clauses are fair, reasonable, and consistent with CERCLA's policies.
The record before this court serves as a factually sufficient basis for the informed decision reached by the settling parties. The settlement appears to have been obtained through arms-length negotiations. Furthermore, approval of this consent decree will benefit the public as it will allow remedial work to proceed at the Site.
According to the declaration of Leo J. Mullen, upon the entry of this decree the total Generator share will be almost fifty percent of the Site-wide costs. This will leave the Owner/Operators with the remaining fifty percent. Mullen estimates that the Owner/Operators were responsible for nearly two-thirds of the volume of waste hauled to the Site. (See Mullen Decl. at ¶ 21.) This court previously noted that this percentage is not an unfair assessment, See United States v. Keystone Sanitation, Inc., 903 F. Supp. 803, 811 (M.D. Pa. 1995).
III. Conclusion
The court finds that the settlement with the OGD's is fair, reasonable, and in accordance with CERCLA policies and objectives. Accordingly, the court will enter the consent decree.