ELR Citation: ELR 20308
No(s). 92-5010 (2d Cir. Nov 12, 1992)

The court holds that a district court has jurisdiction under §113(b) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) to approve a settlement agreement that resolves bankruptcy claims arising out of an action in the Southern District of New York and a CERCLA cost recovery claim arising out of an action in the Eastern District of Pennsylvania. The court holds that the district court has jurisdiction over the bankruptcy claims under 28 U.S.C. §1334(b)—because the agreement compromises claims related to the bankruptcy action then before it—and over the cost recovery action under CERCLA §113(b)'s broad grant of original jurisdiction to the federal district courts. Section 113(b)'s grant remains in full force even when the government has already begun an action against other parties in a different district. The exclusive jurisdictional grant to the district courts means only that no court other than a federal district court may hear and determine CERCLA controversies. The court holds that the district court in the Southern District of New York did not abuse its discretion in denying a motion to transfer that portion of the settlement agreement compromising the CERCLA claim to the Eastern District of Pennsylvania. The bankruptcy and environmental claims were related, and keeping the entire action in New York is consonant with the policy of consolidation. The strong bankruptcy code policy that favors centralized and efficient administration of all claims in the bankruptcy court outweighs any similar policy expression found under CERCLA. The court also holds that the district court did not err in approving the settlement between the United States, the Resolution Trust Corporation, and a trustee in a related bankruptcy action as fair, reasonable, and consistent with the goals of CERCLA. The usual deference given the U.S. Environmental Protection Agency coupled with the abuse of discretion standard for reviewing the district court's action in approving a settlement precludes upsetting the settlement order. Moreover, the possibility of the bank's insolvency before satisfying its fixed claims, and the settlement's comportment with the two main objectives of CERCLA further indicates the fairness and reasonableness of the settlement.

Counsel for Appellant
Duane A. Siler, Timothy A. Vanderver
Patton, Boggs & Blow
2550 M St. NW, Washington DC 20037
(202) 457-6000

Counsel for Appellee
Vicki L. Plaut
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Before Pierce and Mahoney, JJ.