ELR Citation: ELR 20159
No(s). s. 88-1786-WF et al (D. Mass. Aug 14, 1989)

The court approves two partial consent decrees in an action brought by the United States, Massachusetts, and New Hampshire under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) to recover response costs incurred at four sites. The Environmental Protection Agency (EPA) originally notified 671 parties that they were potentially responsible parties (PRPs). Plaintiffs negotiated administrative settlements with 300 de minimis PRPs under CERCLA §122(g) prior to filing this action. One of the consent decrees now before the court requires 47 major PRPs to perform remedial actions and to pay over $18 million in response costs. The other decree requires 12 de minimis defendants that did not enter into the administrative settlement to pay 260 percent of their volumetric share of the estimated response costs. Approval of the two pending proposed consent decrees, along with the prior administrative settlements, would resolve the claims of the plaintiffs against 359 PRPs and result in a recovery, including the value of PRP performance and cash payments, of nearly $48 million. Plaintiffs also seek to recover the remainder of their past costs incurred from 25 nonsettling defendants, that refused to accept any of the proposed settlements and are not now eligible to become parties to either proposed consent decree.

The court holds that the proposed consent decrees are consistent with the Constitution and CERCLA. The proposed consent decrees, which call for the performance of work, payment of cash, and de minimis settlements, are consistent with Congress' view that settlements may take different forms. The two de minimis settlements, in which 312 PRPs are participating, are also consistent with Congress' intention that the government negotiate with minor contributors of waste to a site as promptly as possible. Congress provided for de minimis settlements in which de minimis parties could receive complete covenants not to sue for future liability. The de minimis consent decree, which provides de minimis parties with a complete covenant not to sue for future liability, and the major PRP consent decree, which requires settling parties to remain liable only for unknown and unanticipated conditions at the sites and not for contribution, are consistent with Congress' intent. Congress intended to favor settling parties over those that reject settlement offers, by extending to settling parties complete protection from contribution actions. In addressing the reasonableness of the proposed consent decrees, the court observed that Congress provided that the remedy selected by EPA must be upheld unless the agency was arbitrary and capricious in its selection. The court finds that the technical approach of the major PRP consent decree at each of the sites was selected in accordance with the National Contingency Plan. The court holds that the plaintiffs' choices of remedies are reasonable. EPA's choice of remedies is particularly appropriate because EPA is specifically equipped, trained, and oriented in the field of hazardous waste site cleanup.

The court next holds that the proposed consent decrees are fair. They were negotiated at arm's length by experienced counsel on both sides and all parties had an opportunity to participate in the settlement process. Not allowing de minimis PRPs to join the major PRP consent decree was within EPA's discretion and is fair. Allowing PRPs to join the settlement of their choice might frustrate the statutory purpose of encouraging early settlement, particularly by de minimis parties, thus immeasurably complicating CERCLA litigation and injuring the public interest in prompt cleanup. Further, the United States warned the 367 eligible de minimis parties that the de minimis administrative settlement offered was the best offer they would receive, and defendants cannot now claim unfairness in facing substantially higher penalties. Allowing nonsettling defendants to now join the major PRP consent decree would have virtually no economic value to the plaintiffs, since the settling parties have already agreed to assume the cost and risk of conducting the cleanups. The court further holds that the decision to structure the two settlements in different ways and to make separate settlement offers to different parties was not unfair. Neither consent decree is necessarily more attractive than the other. The settlement contained in the major PRP consent decree requires the parties to be jointly and severally liable for performance of the remedies to the plaintiffs' satisfaction and the payment of nearly $18 million toward cleanup, while assuming the risk that unknown environmental conditions or additional cleanup activities may further drive up their costs. Under the de minimis settlement structure, eligible parties have an opportunity to obtain final resolution of liability in this case at a definite cost, thereby capping their exposure and saving them the cost of continued litigation. Thus, the 60 percent premium charged in the de minimis settlements is within the range of being fair and reasonable in order to cover unexpected costs or unknown conditions that the major PRP settlors remain liable for. Further, the court holds that the additional 100 percent premium in the de minimis PRP consent decree is not unfair, because the government warned PRPs that the original administrative settlement would contain the most favorable terms that would be offered. The fact that there are more than 300 de minimis parties that accepted those settlement terms, similarly situated to those that now object, is added evidence of its fairness. While CERCLA does not grant the government discretion to dictate unlimited settlement terms so long as the first settlement offer was reasonable, the court holds that the 100 percent penalty is not unfair.

The court holds that it was not arbitrary and capricious for the plaintiffs to categorize de minimis generators as those responsible for less than one percent of the volume of waste at a site. This definition is consistent with CERCLA, which bases the de minimis definition on a generator's proportional contribution to the waste at a site. A one percent volumetric share standard is not unreasonable or an abuse of discretion. Further, the method used must be assessed as it applies to the group as a whole, and not as it may impact one party. The court finds that determining the precise percentage of hazardous substances in the waste sent by each of the more than 350 generators would have required extensive discovery and analysis, and frustrated and delayed settlements and cleanup. Further, the transshipment formula used in this case is consistent with CERCLA and is not unfair. The court also holds that CERCLA's provisions and penalties for noncompliance with information requests do not preclude the governments' authority to seek reimbursement and remediation under other sections of the law.

The court grants the settling defendants' motions to dismiss the cross-claims of nonsettling defendants for contribution, indemnification, negligence, breach of contract, and injunctive relief, because the court approves the consent decrees and defendants' argument is thus moot. The court further holds that reducing the exposure of nonsettling defendants by the amount paid by settling defendants is without merit because the plain language of CERCLA §113(f)(2) provides that in a settlement, the joint and several liability of nonsettling defendants is reduced by the amount of the settlement. The court next holds that there is no common-law federal right to contribution in a CERCLA case, and defendants' due process rights were thus not infringed when cross-motions for contribution were denied. Further, the court holds that defendants' equal protection rights were not violated because CERCLA is social and economic legislation and generators of hazardous waste are not a suspect class, and CERCLA's adoption of the Uniform Contribution Among Tortfeasors Act, by encouraging early settlements and limiting the use of public funds for site cleanup, is rational. As to indemnification, the court holds that any of the parties intending to be protected by indemnification should have negotiated mutually acceptable indemnification provisions and included them in their contracts. CERCLA imposes strict, joint, and several liability on generators, so there is no equitable reason to recognize defendants' equitable indemnification claims. Further, implying an equitable right to indemnify would utterly undermine the contribution protection provisions of CERCLA. The court denies defendants' cross-claim for mandatory injunctive relief directing the cleanup of the sites because injunctive relief is only available to the government under CERCLA and the state statutes. Finally, the court grants plaintiffs' motion under Rule 54(b) of the Federal Rules of Civil Procedure to have the two partial consent decrees entered as final judgments because they resolve all liability of the settling defendants on cognizable claims for relief brought by plaintiffs under CERCLA.

Counsel for Plaintiff
M. Ellen Carpenter
Kern, Sosman, Hagerty, Roach & Carpenter
24 School St., Boston MA 02108
(617) 720-1800

Mark Pearlstein
U.S. Attorney's Office
107 John W. McCormack Post Office & Courthouse, Boston MA 02109-4583
(617) 223-9403

David Bruce Hird, Jerry M. Schwartz
Land and Natural Resources Division
Department of Justice, P.O. Box 7611, Ben Franklin Station, Washington DC 20044
(202) 633-1307

Counsel for Defendants
Mark O'Connor
Rich, May, Bilodeau & Flaherty, P.C.
The Old South Bldg., 294 Washington St., Boston MA 02108-4675
(617) 482-1360

Kevin F. Maloney
Barron & Stedfeld
18 Tremont St., Boston MA 02108
(617) 723-9800