20 ELR 10295 | Environmental Law Reporter | copyright © 1990 | All rights reserved

No Way Out? The Plight of the Superfund Nonsettlor

Editors' Summary: A principal purpose of CERCLA is to fix liability for cleanups on "responsible parties" through prompt response actions and settlements. Liability of all responsible parties connected with a CERCLA facility is joint and several, and consequently EPA's remedial investigations make little effort to ascertain all responsible parties and their proportional liability. Rather, EPA typically moves against a few large contributors, leaving the allocation of individual responsibility and enlargement of the class of potentially responsible parties (PRPs) to those entities. The Superfund Amendments and Reauthorization Act of 1986 (SARA) has a central purpose of encouraging settlements between government and PRPs. Yet, PRPs who do not settle, claiming that the proposed settlement will not exact a fair share of the cleanup costs from settlors, have been severely limited in obtaining judicial review. The author examines the case law surrounding partial settlements, nonsettlors' rights to fair-share hearings, nonsettlors' liability for remaining cleanup costs, efforts of nonparty PRPs to intervene, and possible constitutional issues raised by the effect of settlements on nonparty PRPs. He asserts that while EPA's historical approach to Superfund settlements has been administratively expedient, it has overlooked nonsettlors' substantial and good-faith reasons for opting not to settle. The author contends that allowing nonsettlors an opportunity to limit their liability in subsequent rounds of litigation, by being allowed to raise equitable considerations during the limited judicial oversight currently available, will provide fairness and will probably not defeat CERCLA's goal of prompt cleanups and settlements.

Mr. Neuman is a partner in the Washington, D.C., office of Schnader, Harrison, Segal & Lewis, where he practices environmental law and litigation. Mr. Neuman formerly served as a trial attorney with the United States Department of Justice, Environmental Defense Section; as an attorney with EPA's Office of General Counsel; and with a Manhattan lawfirm specializing in environmental law. Mr. Neuman received his J.D. in 1974 from Boalt Hall (University of California at Berkeley) where he served as Developments Editor for the Ecology Law Quarterly.

[20 ELR 10295]

Unfortunately for [the nonsettlor], CERCLA, as we read it, is not a legislative scheme which places a high priority on fairness to generators of hazardous waste.¹

As federal implementation of the Superfund program under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)² enters the 1990s, it has become increasingly clear that the program's success will largely depend on the ability of the government and private parties to reach reasonable settlements. The Superfund Amendments and Reauthorization Act of 1986 (SARA)³ has a central purpose of encouraging such settlements and contains provisions designed to foster that goal.⁴ Yet, even as the Environmental Protection Agency (EPA) achieves more settlements under SARA,⁵ the settlement process has become the subject of time-consuming litigation.

The substantial and countervailing interests that are implicated in the Superfund cleanup and settlement process⁶ frequently crystallize when a court is asked to approve a settlement between EPA and potentially responsible parties (PRPs), in the face of claims by nonsettling PRPs that the settlement will not exact a "fair share" of the cleanup costs from the settlors. The federal government typically relies on SARA's scheme of joint and several liability,⁷ coupled with Congress' desire to achieve settlements,⁸ in urging courts to approve proposed settlements with limited judicial review. However, nonsettlors point out that SARA provides contribution protection to those who settle with the government.⁹ Thus, nonsettlors often urge the courts to look carefully at proposed settlements to ensure that they reflect the settling PRPs' proper share of cleanup liability. Nonsettlors [20 ELR 10296] argue that proposed settlements could leave them liable for uncollected cleanup costs that are out of proportion to their fair share of those costs.

Courts are increasingly being asked to resolve these competing concerns and a host of related issues, including:

* What factors courts should consider in deciding whether to approve a proposed partial settlement and how searching must a court's review of the evidence be to support judicial approval of the decree.

* Whether nonsettlors will remain liable to the government for the full uncollected balance of cleanup costs if they lose their rights to contribution against settlors or will their liability be limited according to principles of comparative fault (i.e., who bears the risk that the government may have recovered less from the settling PRPs than fairness would dictate, the government or the nonsettlors?).

* Whether nonsettling PRPs who are not parties to a case can intervene and object to the proposed settlement based on fair share arguments.

* Whether SARA violates due process if it requires nonsettlors to pay the full balance owed to the government and extinguishes their contribution rights against the original settling parties.

Although a few decisions have accommodated some of the concerns of nonsettlors, the majority of cases provide nonsettlors with little comfort. Most courts have held that the potential unfairness of a consent decree is merely one of many factors to weigh in approving a settlement; that nonsettlors remain jointly and severally liable to the government for the uncollected balance; and that the nonsettlors do not have contribution rights against the settling parties. The federal government favors this approach, believing that it provides a powerful incentive for reluctant PRPs to join a proposed settlement, even if they justifiably believe that the settlement is unfair.¹⁰

On the other hand, courts have held in two cases (one pre-SARA and the other post-SARA) that a nonsettlor's future liability to the government would be limited to its fair share of the cleanup costs.¹¹ These holdings, while protecting nonsettlors against potential abuses in the settlement process, are viewed with alarm by EPA because they threaten to leave settlements open to collateral attack in subsequent litigation by EPA against nonsettlors to recover the balance of cleanup costs.

Background: Pre-SARA Case Law and EPA's 1985 Settlement Policy

Prior to SARA, it was widely accepted that CERCLA imposed joint and several liability in cases of indivisible harm.¹² However, the full ramifications of that principle were unclear, and courts were required to determine related issues bearing significantly on the settlement process, with little or no congressional guidance. For example, most courts concluded that CERCLA authorized private contribution suits among PRPs.¹³ In United States v. Conservation Chemical Co.,¹⁴ the court held that if the government settled for less than full cleanup costs with some PRPs, the liability of nonsettlors would be limited by principles of comparative fault. In Conservation Chemical, nonsettlors objected to a proposed settlement decree between the government and four settling defendants. Although the court observed that CERCLA was silent and provided "no clear guidance as to the effect of settlement upon non-settling parties,"¹⁵ it held that liability among PRPs should be apportioned based on comparative fault. Comparative fault, in turn, would depend on such factors as whether a PRP was an owner/operator, prior owner/operator, generator or transporter, and within the generator class, the volume, toxicity, and migratory potential of each PRP's wastes.¹⁶

Referring to the Restatement Second of Torts,¹⁷ the court noted three possible solutions for resolving the issue of nonsettlor liability where a settlement with the government does not fully satisfy EPA's claim. First, under the 1939 Uniform Contribution Among Tortfeasors Act,¹⁸ a nonsettlor could obtain contribution from the settlors. Second, under the 1955 Uniform Contribution Among Tortfeasors Act (UCATA),¹⁹ the nonsettlors would not be entitled to contribution unless the settlement was not made in good faith. And third, under the 1977 Uniform Comparative Fault Act (UCFA),²⁰ the government's claim [20 ELR 10297] against nonsettlors would be reduced by the proportionate share of the settling party.

The Conservation Chemical court found, after observing that each solution has its drawbacks, that CERCLA required liability among PRPs to be apportioned "in a fair and equitable manner."²¹ The court reasoned that it would not tolerate either a "'windfall' or a 'wipeout' which arbitrarily or unreasonably ignores the comparative fault of the parties, where there is a reasonable basis for allowing that comparison to be made."²² Ultimately, the court concluded that the effect of a partial CERCLA settlement on nonsettlors would be governed by the UCFA, in that nonsettlors would be liable only for their proportionate share, which might be less than the amount of EPA's settlement.²³

The Conservation Chemical court's resolution of this issue differed from EPA's position. On February 5, 1985, EPA published an Interim CERCLA Settlement Policy that was intended to spur settlements.²⁴ In this policy, EPA took the position that settlements under CERCLA are governed by the UCATA. Under that approach, parties who settle with EPA would be protected from contribution actions by nonsettlors and the government's claim against nonsettlors would be reduced by the amount of the settlement.

The Superfund Amendments and Reauthorization Act of 1986

When Congress took up CERCLA reauthorization in 1985, one of the most prominent issues was the Superfund settlement process and, more specifically, how to cut litigation costs and hasten cleanup by encouraging settlement. In response, Congress enacted SARA, which contained numerous provisions to facilitate settlements.²⁵ For example, in § 113(f)(1), Congress explicitly created a cause of action for contribution among PRPs and provided that in resolving contribution claims, a court "may allocate response costs among liable parties using such equitable factors as the court determines are appropriate."²⁶ In § 113(f)(2), Congress granted settlors protection from contribution suits by nonsettlors regarding matters addressed in the settlement.²⁷

SARA also created new procedures and authority for EPA to use to foster settlement. For example, under § 122,²⁸ EPA is authorized to: enter into "mixed funding" settlements under which federal funds could be contributed toward the cost of cleanup;²⁹ issue covenants not to sue settlors;³⁰ and enter into expedited cash-out settlements with parties whose connection to a site is "de minimis."³¹ Settlements in which PRPs agree to undertake cleanup work must be entered as a consent decree.³² However, de minimis cash-out settlements may be in the form of administrative settlements or judicially approved consent decrees.³³ Section 122 contains several provisions reaffirming that a party who has settled with the government in either an administrative or judicial settlement receives contribution protection against nonsettlors.³⁴

Post-SARA Case Law

Factors to Consider in Approving Partial Settlements

A settlement worked out between EPA and private parties is typically presented to a federal district court in the form of a proposed consent decree, which the court is asked to approve and enter. Although consent decrees have attributes of a contract and are to be construed pursuant to contract law, a court's approval of a consent decree has been held to be a judicial act.³⁵ Accordingly, before approving and entering a decree, a court must independently satisfy itself that the decree is fair, adequate, reasonable, in the public interest, and consistent with the Constitution and the mandate of Congress.³⁶

[20 ELR 10298]

In applying these criteria to proposed Superfund decrees that are contested by nonsettlors, courts have identified the following questions as relevant: (1) Did the parties negotiate at arm's length and in good faith, and does the settlement reflect a compromise based on litigation risks?³⁷ (2) Does the settlement further the public interest and the goals of CERCLA?³⁸ (3) Were nonsettlors precluded from settlement discussions?³⁹ and (4) Does the amount to be paid by the settlors reflect a reasonable sum as a basis for settlement?⁴⁰

Recently the U.S. Court of Appeals for the First Circuit summarized the factors to be considered by district courts. These factors include:

* Procedural Fairness. Was the negotiating process conducted with candor, openness, and bargaining balance, and is the settlement a product of fair play?

* Substantive fairness. Is the settlement based on a rational (if necessarily imprecise) estimate of the relative fault of each PRP?

* Reasonableness. Will the decree be an effective vehicle for cleanup, satisfactorily compensate the public for the costs of cleanup, and adequately account for the relative strengths and risks of the parties' litigating positions?

* Fidelity to the statute. Does the settlement achieve the statutory goals of achieving prompt cleanup and shifting the costs of cleanup to PRPs?⁴¹

Application of these factors will heavily stack the deck against objecting nonsettlors. While settlements are always favored as a judicial policy,⁴² a central purpose of SARA is to promote rapid settlements and cleanup. Thus, courts in Superfund cases presumptively favor specific proposed settlements, and typically accord substantial deference to the government's interest in negotiating settlements.⁴³

For example, in In re Acushnet River and New Bedford Harbor: Proceedings re Alleged PCB Pollution,⁴⁴ the court approved a settlement in which the former owner/operator of a site paid only $ 2 million, although cleanup was expected to cost up to $ 34 million. The court observed that even if the settling party caused most of the pollution, it might "well deserve a premium, at least in the view of the sovereigns, for being the first defendant to settle."⁴⁵ Under this rationale, the fair-share considerations intended by nonsettlors (their relative responsibility for contamination at a site) would have very little significance.⁴⁶

Similarly, in United States v. McGraw-Edison Co.,⁴⁷ the court approved a settlement in which the government recovered 83 percent of cleanup costs over the objections of nonsettlors. The court noted that the decree "adequately and fairly addresses the concerns of Congress in enacting CERCLA that serious environmental problems be dealt with quickly and reasonably."⁴⁸ Without examining comparative fault issues among settlors and nonsettlors, the court found that the settlement was reasonable, avoided protracted and expensive litigation, and protected the public interest by providing an effective and expeditious remedy.⁴⁹

If a court must accord deference to the judgment of parties that have negotiated in good faith, it also "must eschew any rubber stamp approval in favor of an independent evaluation" of a proposed consent decree.⁵⁰ Thus, a fundamental issue becomes how a court determines that a consent decree should be approved and entered. If a court is to do more than rely on CERCLA's goals of expediting cleanup while minimizing litigation, how is it to meaningfully discharge its oversight function, particularly with respect to the fair-share issue?

In United States v. Rohm & Haas Co.,⁵¹ the district court extensively addressed these issues. The court stated that it must measure a decree's reasonableness against § 122's goal of expediting effective remedial actions and minimizing [20 ELR 10299] litigation, in the overal context of CERCLA.⁵² Thecourt then identified specific factors that determine whether a CERCLA settlement is fair and reasonable: (1) the strength of the government's case; (2) the good-faith efforts of the negotiators; (3) the possible risks and transaction costs involved in litigation; and (4) the effect of the proposed settlement on nonsettling parties.⁵³

The Rohm & Hass court stated that it did not need to determine if the settlement "precisely reflects what we feel to be the most likely volumetric share of the waste dumped at [the site]," since that would effectively require a trial on the very issues the settlement was designed to avoid.⁵⁴ The party objecting to the decree argued that the court must decide, based on the paper record, which side's view of the evidence as to fair share was more plausible, and that the court must disapprove the settlement if it found that the objecting party was more likely correct about the settlors' volumetric contribution. The court rejected these arguments, holding that its task was not to engage in a fact-finding mission, but only to ensure that the settlement was a reasonable compromise. The court held that a reasonable settlement did not require the most convincing analysis of the record, but only a reasonable analysis when weighed against the range of plausible interpretations of that record.⁵⁵

However, the Rohm & Hass court, in order to satisfy itself that the settlement was reasonable, conducted an exhaustive review of the paper record. In the court's view, it was required to examine

the relative merit, based on therecord, of the Government's calculation of the volumetric share of waste deposited at [the site] by each [settlor], bearing in mind that we are not to pick and choose among plausible readings of the record evidence, but merely determine whether the government's version is within the range of reasonableness and fairness.⁵⁶

To satisfy itself that this standard had been met, the court conducted a painstaking analysis of the deposition testimony and other record material. The court concluded that the nexus between the settlors and the site was tenuous based on the record, and that settlement, over one PRP's objections, was the best alternative.⁵⁷

The Rohm & Haas opinion points up the fundamental limitations a district court faces in reviewing a proposed CERCLA consent decree. It demonstrates that even when a court eschews a rubber-stamp approach in favor of a thorough and independent evaluation, it will have little basis, and less incentive, to reject the decree based on fair-share arguments. In virtually all CERCLA cases, the recollections of waste haulers and site owner/operators are likely to be questionable, the documentation linking some generators to a specific site subject to attack, and the evidence generally incomplete.⁵⁸ Thus, prior to trial, many individual generators will assess their volumetric share at somewhere between near-zero and the maximum volume that the paper record might support. Essentially, the Rohm & Haas court concluded that the settlement was reasonable because the settlement figure fell somewhere within the range of the settlors' potential exposures.⁵⁹ The court found the most important reason for approving the settlement was that it would "remove ten small-volume contributors from the litigation, streamline the trial and contribution stages of this case, and substantially reduce associated transaction costs — a result which fully accords with the purpose for which § 122(g) was enacted."⁶⁰

Thus, the court's searching analysis of the record regarding fair-share issues did not ensure that the settlement necessarily reflected an accurate volumetric apportionment, but rather that the settlement was the product of bona fide, good-faith negotiations between the parties.⁶¹ There is little more that courts can do if CERCLA's intent to foster settlements is given paramount importance.

[20 ELR 10300]

Right to Fair-Share Hearing

In several cases, nonsettlors have unsuccessfully asked the courts to conduct evidentiary hearings on the fairness of proposed settlements prior to entering the decree. Courts have uniformly rejected these requests, reasoning that to engage in detailed fact-finding regarding the fair-share issue would vitiate the purpose of the proposed settlement and Congress' intent to encourage settlements under CERCLA. As one court stated, "I see no reason to subvert the very purpose of this settlement agreement, which is to avoid the costs of extended litigation, by ordering a hearing on whether the settlement represents the percentage of responsibility that would be adjudicated against [the settlor] if the case were tried."⁶²

The unassailable logic of these holdings is that it would defeat the primary purpose of settlement if the courts were required to adjudicate the very matters that are being settled. In this respect, the decisions under CERCLA are no different from the general case law governing judicial approval of consent decrees under other federal statutes.⁶³ However, Superfund cases such as Rohm & Haas are noteworthy because they not only deprive nonsettlors of a "fairness" evidentiary hearing prior to judicial approval of the settlement, but would also hold nonsettlors fully liable to the government for the balance of cleanup costs even if the settlors paid less than their fair share. For example, the court noted in Rohm & Haas that in federal class action securities litigation, nonsettlors' liability has been limited by comparative fault principles because that approach "obviates the need for a court to evaluate the fairness of a settlement to nonsettlors by placing the risk of a bad settlement on the plaintiff class."⁶⁴ By placing the risk of a bad settlement on nonsettlors while effectively depriving them of a meaningful way to avoid that risk, CERCLA would impose an extraordinarily harsh result, and one that has been recognized as unfair under other statutes.

The Rohm & Haas court acknowledged that the bind imposed on the nonsettlor was unfair, but concluded that CERCLA does not place a high priority on fairness to hazardous waste generators.⁶⁵ In reaching the same result, the court in City of New York v. Exxon Corp.⁶⁶ stated that if disadvantaged nonsettling parties disagree, their disputes are with Congress.⁶⁷ More recently, the First Circuit reached the same conclusion in United States v. Cannons Engineering,⁶⁸ holding that "Congress has made its will explicit and the courts must defer . . . . Disproportionate liability, a technique which promotes early settlements and deters litigation for litigation's sake, is an integral part of the statutory plan."⁶⁹ However, the question may still be raised whether Congress intended the results reached in these cases. If nonsettlors are barred from seeking contribution from settlors and may not adjudicate fair-share issues prior to entry of a consent decree, did Congress also intend that nonsettlors must, in every case, be held liable to EPA for the entire balance of cleanup costs, regardless of equitable considerations?

Liability of Nonsettlors to Government for Remaining Cleanup Costs

In one post-SARA case, a court concluded that the liability of nonsettlors to EPA would be limited by considerations of comparative fault. In United States v. Laskin,⁷⁰ the nonsettling defendants asked the court either to conduct a hearing on the amount of each party's liability before approving the proposed settlement or to preserve the nonsettlors' rights of contribution against the settlors. The court rejected both alternatives as contrary to the statute. But the court also found that the issues of fair share could properly be addressed at a later time when the government or the settlors sued the nonsettlors for cleanup costs. The court noted its concern over nonsettling parties' potential liability in excess of their potential share of the damages.⁷¹

Over EPA's strong objection, the Laskin court concluded that the nonsettlors' liability to the government and the settlors should be governed by the UCFA.⁷² Thus, any claims against a nonsettlor would "be reduced by the greater of the amount of the settling defendants' combined equitable share of the obligation or the amount of the settlement."⁷³ The court made it clear that this meant the [20 ELR 10301] federal government, not the nonsettlors, would bear the risk that the settlors did not pay enough.⁷⁴

The federal government has vigorously opposed arguments by nonsettlors that they can be held liable only for their fair share of cleanup costs. Instead, the government contends that nonsettlors remain jointly and severally liable for the balance of cleanup costs not collected from the settlors. The government fears that a court otherwise might have to revisit the fairness of the original settlement, with all of the attendant transaction costs.⁷⁵ The government points to the following CERCLA language as support for its position: "[A] settlement does not discharge any of the other potentially responsible parties unless its terms so provide, but it reduces the potential liability of the others by the amount of the settlement."⁷⁶ EPA contends that this language makes it clear that nonsettlors remain liable for the full balance of cleanup costs without regard to comparative fault. In the government's view, by enacting this provision, Congress clearly intended to adopt the UCATA⁷⁷ rather than the UCFA. The EPA contends that the statutory language is clear on this point,⁷⁸ and some courts have agreed.⁷⁹

On the other hand, § 113(f)(2) of CERCLA is not identical to the key provision of the UCATA. If Congress had clearly intended to rely on the latter, the best way to manifest that intent would have been to use its language. Instead, Congress provided that a settlement would reduce the potential liability against nonsettlors by the amount of the settlement. In Laskin, the court accepted the arguments presented by nonsettlors that this language does not compel EPA to seek 100 percent of the remaining cleanup costs against nonsettlors, and it does not prohibit a court from awarding some lesser amount in appropriate circumstances.⁸⁰

The legislative history is inconclusive. The government has relied heavily on a statement in the SARA House Report that nonsettling parties are to "remain potentially liable for the amounts not received by the government through settlement."⁸¹ But again, the use of the word "potentially" suggests that nonsettlors should not necessarily be held liable for the full balance of cleanup costs if equitable considerations warrant otherwise.⁸² The government also relies on statements in the House and Senate Reports that § 113(f)(2) was intended to confirm existing law.⁸³ Yet the law at that time included the Conservation Chemical decision, which applied principles of comparative fault to nonsettlors.⁸⁴

Further, it is questionable whether the underlying principles of the UCATA are applicable to Superfund. A primary purpose of the UCATA's pro tanto rule, which reduces a nonsettlor's liability only by the amount of the settlement, is to ensure that the plaintiff can be made whole for its injury. As the nonsettlor pointed out in Laskin,⁸⁵ this rationale does not apply in Superfund cases. In such cases, EPA does not need to recover from nonsettlors to be made whole. Rather, it may draw upon the $ 8.5 billion [20 ELR 10302] federal Superfund created under CERCLA, funds that have primarily been raised from a tax on the petroleum and chemical industries.⁸⁶

EPA also argues that application of comparative fault principles to its claims against nonsettlors would be fundamentally inconsistent with the basic structure and goals of CERCLA. In the federal government's view, application of the UCFA to nonsettlors would vitiate the joint and several liability scheme of the statute and "fly in the face" of CERCLA's goal of obtaining quick settlements.⁸⁷ The obstacles to settlement would be compounded, since the concept of fair share is not necessarily clear cut in the Superfund context. PRPs and the government constantly wrestle with issues that include: how to allocate liability among transporters, owner/operators, and generators; whether to apportion generators' liability solely on the basis of volume or whether to consider the toxicity of wastes generated; and what "premium" may be appropriate to charge de minimis PRPs in exchange for an early cast-out settlement. These factors greatly complicate any effort to determine what a PRP's fair share is. Thus, if these judgments are left open to second-guessing by nonsettlors in subsequent litigation, EPA fears that a significant disincentive to settle will thereby be created.

While these concerns are superficially compelling, they are open to question. First, EPA is not required to sue nonsettlors for cost recovery, or collect 100 percent of its costs in every case.⁸⁸ Yet, EPA seems to suggest that if it decides to sue nonsettlors and litigate to a final judgment, the court is required to award EPA the full amount of its unpaid cleanup costs. As the Laskin nonsettlor pointed out, it makes little sense to construe the statute in a way that allows EPA to exercise its equitable discretion but to prohibit courts from exercising theirs.

Nor is it clear that allowing comparative fault principles to govern cost recovery actions against nonsettlors will adversely affect the CERCLA settlement process, as the federal government fears. First, it is doubtful that limiting the liability of nonsettlors to their fair share would significantly encourage PRPs to avoid settling with the government. The incentive to settle would remain powerful, because of the desire to minimize transaction costs and the statutory contribution protection awarded to settlors. The notion that a PRP would reject the opportunity to settle with the government now, in the hope of obtaining the benefit of a more limited standard of liability later, assumes that the proposed settlement would require that PRP to pay an amount that is clearly out of proportion to its fair share.⁸⁹ But if this were so, a rational PRP might well sit out the settlement anyway. Moreover, if a settlor were forced to pay a significantly greater amount than its fair share due to the recalcitrance of a nonsettlor, the settlor could sue the nonsettlor for contribution.⁹⁰ It is therefore not clear whether the threat of holding nonsettlors liable to EPA for the full uncollected balance would create a significant inducement for PRPs to settle as early as possible.

A second concern is whether the application of comparative fault to nonsettlors would significantly deter EPA from settling. The Rohm & Hass court was persuaded that this would be the case, because EPA would be forced "to concern itself with the relative culpability of all PRP's including those with which it settled," and thus the government would not save in terms of litigation expenses and enforcement resources by settling.⁹¹ Whether EPA may be deterred from settling is, to a great extent, a function of its perception of the likelihood that nonsettlors can and will mount a significant challenge to the fairness of the original settlement. However, for the reasons discussed above, this likelihood may be much smaller than EPA suggests. Further, EPA frequently performs, or requests from PRPs, some type of PRP allocation to ensure itself that the amounts paid by the settlors approximate their fair share. Andthe Rohm & Hass court, while rejecting the application of comparative fault principles to nonsettlors, nonetheless required the government, the settling PRPs, and even itself to engage in a very detailed analysis of the evidentiary record as to the volume of waste potentially attributable to each settlor. The transaction costs associated with this exercise were not trivial. Consequently, it is questionable whether application of comparative fault principles to Superfund nonsettlors would significantly increase the transaction costs for EPA and settling parties in comparison with either the agency's present practice or the exercise required of it in Rohm & Haas.

The determination of fair share at virtually every Superfund site is fraught with uncertainties and imprecision due to the imperfect information that is available and the various criteria that can be used to allocate comparative fault. It is difficult to argue with cases, such as Cannons Engineering, that accord EPA substantial discretion in determining whether to accept a settlement. However, to accord EPA deference does not require that a nonsettlor be denied all subsequent opportunities to demonstrate that it is entitled to a more limited assessment than that which might be dictated by the earlier settlement. In fact, in subsequent cost recovery actions against nonsettlors, EPA likely would still be entitled to a presumption that the prior settlement was reasonable. Allowing nonsettlors a full opportunity [20 ELR 10303] to adjudicate and attempt to rebut that presumption would not pose a significant threat to the Superfund settlement process. Similarly, allowing nonsettlors to raise equitable issues, such as fair share, as an affirmative defense would not threaten the process. For example, a nonsettlor might have to prove, based on evidence available at the time of the earlier settlement, that its liability should be reduced by more than the amount of the settlement. These alternatives would strike a proper balance between the interests of EPA and the PRP community.

Intervention: The Rights of Nonparty PRPs

Efforts of Nonparties to Intervene

In cases such as Rohm & Haas, Laskin, and City of New York, the government reached partial settlements with fewer than all party-defendants after initiating litigation; the nonsettlors were apprised of the proposed settlement and accorded the opportunity to contest it by virtue of their status as parties to the litigation. In many cases, however, the terms of Superfund settlements are negotiated in advance of litigation, and a complaint is filed concurrently with the proposed consent decree, which the court is then asked to approve. For example, if the government commenced negotiations with 100 PRPs and reached settlement with 90, the complaint would be filed against the 90 settlors together with the proposed decree, and the 10 nonsettlors would not be parties to that litigation. The nonsettlors, however, would be faced with the prospect of a separate lawsuit by the government to recover the balance of cleanup costs, as well as possible contribution actions by the settlors. In those circumstances, how can a nonsettlor raise objections to a proposed settlement?

According to the federal government, the only procedural mechanism for nonparties (including PRPs) to be heard is to submit written comments on the proposed decree. Under § 122(d)(2) of CERCLA⁹² and Justice Department regulations,⁹³ the Attorney General must lodge a proposed CERCLA consent decree with the court and provide interested nonparties at least 30 days to submit written comments. The Attorney General must consider all comments and may revoke the government's consent to the proposed settlement based on those comments. The federal government contends that this procedure adequately protects nonsettlors' interests, while simultaneously arguing that fair-share issues are not relevant to the determination whether the decree should be entered.⁹⁴

Some nonsettlors, discontent with this procedure, have moved to intervene as party defendants, contending that intervention is necessary for them to protect their rights to contribution under CERCLA. In United States v. Acton Corp.,⁹⁵ 116 settling PRPs agreed to implement an estimated $ 36 million EPA-approved cleanup plan and pay EPA's future oversight costs in excess of $ 500,000. The government filed a complaint against the settlors and the proposed settlement. Sixteen of the nonsettling PRPs filed written comments opposing entry of the decree. Before the Acton decree was reviewed by the court, the federal government filed suit against all 24 nonsettlors in United States v. Armstrong World Industries, Inc.,⁹⁶ seeking to recover the balance of EPA's costs. The Armstrong defendants' then moved to intervene in Acton or, alternatively, to consolidate the two cases. They challenged the Acton decree, claiming that EPA had unlawfully delegated its negotiating authority to a group of self-interested PRPs, resulting in the Armstrong defendants exclusion from the Acton settlement on the same terms as similarly situated PRPs. Further, the Armstrong defendants claimed that the Acton settlement did not exact a fair share from the settlors.

The nonsettlors sought intervention under Rule 24 of the Federal Rules of Civil Procedure and under § 113(i) of CERCLA.⁹⁷ EPA opposed the motion to intervene and argued that § 113(i) authorizes intervention only for citizen groups that wish to participate in the formulation of a specific cleanup plan. The government also argued that the Armstrong defendants could not intervene under Rule 24 because their contribution rights were not a legally protectable interest sufficient to justify intervention "as of right."⁹⁸

The court rejected the settling parties' arguments and allowed the Armstrong defendants to intervene.⁹⁹ The court found that the plain language of § 113(i), which allows any person to intervene under specified circumstances, refuted EPA's construction. The court further found that CERCLA did not preclude intervention separately under Rule 24.¹⁰⁰ Moreover, the court had little difficulty finding that the nonsettlors' statutory contribution rights, which would be extinguished upon approval of the consent decree, constituted a legally protectable interest sufficient to justify intervention.¹⁰¹

Although the reasoning of the Acton opinion is persuasive, EPA's position that nonsettlors' contribution rights are not legally protectable interests finds some support in United States v. Browning-Ferris Industries Chemical Services, Inc.¹⁰² There, Marathon Petroleum Company moved to intervene and object to the proposed settlement in order to protect its contribution rights against [20 ELR 10304] the defendant. The court denied Marathon's motion. It stated that the government "is seeking to do that which the Act expressly authorizes — settle with a potentially liable person. Marathon's contribution rights are not a direct and substantial part of the government's present attempt to impose liability on [defendant]."¹⁰³ The court concluded that Marathon's contribution claim against Browning-Ferris did not constitute an interest in the litigation.¹⁰⁴

However, the facts of Browning-Ferris are unusual and, as the Acton court found,¹⁰⁵ limit its precedential effect. First, the Browning-Ferris court noted that Marathon had a separate claim for contractual indemnification against Browning-Ferris, which it was already pursuing in separate litigation. Thus, Marathon's rights would not be extinguished by entry of the proposed consent decree. Moreover, Marathon had previously settled its liability to the government in a consent decree and, in the court's view, was really claiming that its settlement was not as good as the consent decree that the government was offering to Browning-Ferris. Under those circumstances, the court was not inclined to allow Marathon to effectively reopen its own settlement.¹⁰⁶

When nonsettlors are granted a right to intervene and object to settlements, they face the problem of how well they can protect their interests given the limited standard of judicial review that applies to consent decrees. Nonsettlors who succeed in becoming parties to the litigation, but are provided no meaningful vehicle to make their fair-share case, have not necessarily accomplished anything.¹⁰⁷

Possible Constitutional Issues Raised by the Effect of Settlements on Nonparty PRPs

As the prior discussion indicates, the litigation posture of EPA, supported by several cases, puts nonsettlors in the following dilemma: (1) they have no right of contribution against settlors; (2) they are liable to the government for the full balance of cleanup costs irrespective of fair-share considerations; (3) they are not entitled to a fair-share hearing prior to entry of a proposed settlement decree; and (4) they are not even entitled to a determination that, based on the paper record, their view of relative apportionment among PRPs is more plausible than is the settling parties' view. Further, they may not intervene in a case where a proposed settlement will cut off their contribution rights against the settling defendants. Rather, they may only submit written comments on the proposed settlement. Moreover, comments that demonstrate that the settlors are not paying anywhere near their fair share are irrelevant. A PRP caught in this bind might well wonder if this is consistent with due process.

The starting point for analysis is the Supreme Court's recent opinion in Martin v. Wilks.¹⁰⁸ There, white firefighters contended that the city of Birmingham was improperly basing promotion decisions on race, pursuant to prior consent decrees that had settled civil rights litigation to which the white firefighters had not been parties. The Supreme Court held that the plaintiffs could challenge employment decisions that were based on the prior consent decrees because the plaintiffs could not be bound by the judgment of a case to which they were not parties. Citing the "deeply rooted" principle that everyone should have their day in court, the majority held that "[a] judgment or decree among parties to a lawsuit resolves issues as among them, but it does not conclude the rights of strangers to those proceedings."¹⁰⁹

This holding appears to support nonsettlors in their efforts to challenge Superfund settlements. However, Wilks also stated an exception to its general rule: "[W]here a special remedial scheme exists expressly foreclosing successive litigation by nonlitigants, as for example in bankruptcy or probate, legal proceeding may terminate preexisting rights if the scheme is otherwise consistent with due process."¹¹⁰ This holding raises questions whether CERCLA is a special remedial scheme that expressly forecloses successive litigation by PRPs who were not parties to a prior settlement, and if so, whether the scheme is consistent with due process.

While the government has successfully argued that CERCLA is a special remedial scheme that forecloses the ability of nonsettlors to relitigate the terms of a prior settlement to which they were not parties, not all courts have agreed.¹¹¹ Moreover, even if a court agrees that EPA's position comports with CERCLA's underlying goals, this is not necessarily the same as finding that CERCLA expressly forecloses subsequent litigation by nonsettlors within the meaning of Wilks. Indeed, CERCLA contains no explicit statutory provision comparable to those found in the probate and bankruptcy statutes that the Supreme Court held up as examples of laws that expressly foreclose successive litigation by nonlitigants.¹¹² Assuming, however, that CERCLA could be construed to expressly foreclose such litigation, the remaining issue under Wilks is whether that prohibition is consistent with due process.

In Cannons Engineering,¹¹³ a nonsettlor contended that it would be deprived of due process if the settlors gained contribution protection and it were left liable to EPA for the full balance of cleanup costs without regard to comparative fault. The objecting party argued that it would be unfairly saddled with more than its fair share of liability due to EPA's improper settlement tactics, which allegedly precluded it from joining in the best possible settlement. The court rejected this argument, finding that the nonsettlor had no protectable right that could invoke due process [20 ELR 10305] protection. Citing two Supreme Court cases,¹¹⁴ it held that a right of contribution from a joint tortfeasor exists only if Congress intended to create such a right or if a court determines that such a right should be created to implement a federal statute. The Cannons Engineering court held that no common law federal right to contribution exists in a CERCLA case. It found that § 9613(f)(1) establishes and defines, rather than removes, the right of a joint tortfeasor to contribution in CERCLA cases. The court further held that in providing contribution protection to settlors, Congress did not violate due process, since it has the power to create new rights or limit existing rights if there is a valid legislative purpose.¹¹⁵

The "valid legislative purpose" that the court had in mind was Congress' intent to "encourage early settlement, particularly by de minimis parties . . . ."¹¹⁶ As noted, this was unquestionably a primary purpose behind SARA. However, Congress was concerned with the fairness of settlements. During the early years of Superfund implementation, Congress held oversight hearings on the settlements reached in United States v. Seymour Recycling Corp.¹¹⁷ and several other cases, which had been widely criticized as sweetheart deals.¹¹⁸ During consideration of the Superfund amendments, Senator Stafford, a primary sponsor of SARA, expressed concern that absent judicial review, the "pressure to produce settlements" could lead EPA to negotiate settlements that would be unfair to nonsettlors.¹¹⁹ In short, Congress was not only concerned that EPA settle quickly, but also that it settle fairly.

According to EPA and some courts, Congress intended the traditional process of judicial review and approval of proposed consent decrees to ensure the fairness of settlements.¹²⁰ While that process may prove adequate in many cases, it is worth noting that the highly criticized Seymour decree was approved and entered by a district court that espoused the very standard of review advocated by the government.¹²¹ Similarly, in the securities class action litigation context, one court has concluded that holding nonsettlors liable for the full balance uncollected from the settlors encourages only bad settlements in which settling defendants pay less than their share of liability.¹²²

In Cannons Engineering and similar cases, courts have found basic fairness in proposed settlements because many PRPs had agreed to the settlement terms after apparent arm's-length negotiations, and because all PRPs apparently had ample opportunity to participate in the settlement process.¹²³ Even if judicial examination of these factors can sufficiently protect against the dangers of unfair settlements, it is clear that a different result must obtain when a PRP never receives advance notice of the settlement process. For example, in United States v. Alcan Aluminum, Inc.,¹²⁴ the government sued several recalcitrant PRPs who had elected not to settle under a prior consent decree entered into between EPA and 65 settlors. During their own investigation, some of these nonsettlors found documents in EPA's files that allegedly linked additional companies to the site. The defendants impleaded the additional companies as third-party defendants, seeking contribution. However, several of these third-party defendants had never been notified by EPA of their potential, or alleged, link to the site and had no inkling of any potential involvement until defendants served them with summonses and third-party complaints.

No valid legislative purpose would be served by holding those third-party defendants jointly and severally liable for the balance of costs that EPA failed to recover from the original settlors. The goal of encouraging prompt settlement is not advanced with respect to a party that had no notice of, and literally no opportunity to participate in, the negotiations leading to a settlement. Such a party is simply not the type of nonsettlor Congress had in mind when it enacted the bar to statutory contribution. Therefore, an unnotified party must be allowed to sue settlors for contribution; it must also be allowed to litigate its fair share in subsequent cost recovery litigation brought by the government and in suits for contribution brought by other PRPs. This result is not only consistent with CERCLA, but is required by due process. Under the holding in Cannons Engineering, the legislature may limit or abolish statutory and common law rights, but only to attain a permissible legislative purpose.¹²⁵ In the case of a nonsettlor who lacked notice, no legislative purpose would be served by denying it the right to litigate its fair share.

The due process concern in this situation is buttressed by the absence of advance notice to the PRP. In a recent [20 ELR 10306] Supreme Court decision,¹²⁶ the Court held that the government must give actual notice of a probate proceeding to all known or reasonably ascertainable creditors of a decedent before their rights against the estate could be extinguished under a probate nonclaim statute. By analogy, this case suggests that in the Superfund context, the EPA must give actual notice to all known or reasonably ascertainable PRPs, or else their rights to raise fair-share issues at a later date cannot be extinguished consistent with due process.¹²⁷

Conclusion

Since the inception of Superfund, EPA has had a tendency to pejoratively tag all nonsettlors as "recalcitrants." This has undoubtedly been administratively expedient, but it overlooks the fact that nonsettlors may have substantial and good-faith reasons for not joining a settlement, including their lack of notice. The federal government's chief contention, that allowing nonsettlors to limit their liability according to fair-share notions would undermine CERCLA's liability scheme and deter settlements, has considerable appeal. However, for the reasons discussed in this article, the government's concerns may be exaggerated, and its construction of the statute open to question. Accordingly, it may be reasonable to allow nonsettlors the opportunity to demonstrate that the amount that EPA may recover from them should be reduced by equitable considerations. Congress provided for limited judicial oversight of proposed settlements as a means to ensure the fairness of settlements. If Congress intends to maintain this minimal judicial role, allowing nonsettlors an opportunity to limit their liability in subsequent rounds of litigation comports with notions of fairness and probably would not encourage recalcitrance or thwart CERCLA's goal of achieving prompt cleanups and settlements. These issues should be fully aired when Superfund again comes up for reauthorization.

1. United States v. Rohm & Haas Co., 721 F. Supp. 666, 686, 20 ELR 20127, 20136 (D.N.J. 1989).

2. Pub. L. No. 96-510, 94 Stat. 2767 (1980).

3. Pub. L. No. 99-499, 100 Stat. 1613 (1986). SARA and CERCLA are codified together at 42 U.S.C. §§ 9601-9675, ELR STAT. CERCLA 001-075.

4. See generally Note, Superfund Settlements: The Failed Promise of the 1986 Amendments, 74 VA. L. REV. 123 (1988).

5. EPA announced that during 1989, it achieved 218 Superfund settlements valued at over $ 1 billion. This figure is more than five times the dollar value of cleanup work in enforcement settlements since SARA was enacted and nearly double the value of settlements reached in 1988. EPA, Enforcement Accomplishments Report: FY 1989, Feb. 1990, at 64.

6. During their internal deliberations, potentially responsible parties typically divide themselves into separate subgroups based on factors that include whether they are generators, transporters, or site owner/operators; the volume and toxicity of the wastes for which they are responsible; whether they qualify for special consideration as de minimis parties; and whether they have undertaken any cleanup actions at the site. The complexity associated with these inter- and intragroup conflicts is compounded by the potential involvement of states, natural resource trustees, and citizen groups and disputes over the appropriate cleanup standards and methods. Because the cost of Superfund cleanups averages between $ 20 and $ 30 million, the stakes are high and the interests of individual parties substantial.

7. E.g., United States v. Monsanto Co., 858 F.2d 160, 19 ELR 20085 (4th Cir. 1988), cert. denied, __ U.S. __, 109 S. Ct. 3156 (1989); O'Neil v. Picillo, 682 F. Supp. 706, 18 ELR 20893 (D.R.I. 1988), aff'd, 883 F.2d 186 (1st Cir. 1989).

8. Note, supra note 4, at 133-45 (discussing SARA provisions pertaining to settlements).

9. CERCLA § 113(f)(2), 42 U.S.C. § 9613(f)(2), ELR STAT. CERCLA 039; CERCLA § 122(h)(4), 42 U.S.C. § 9622(h)(4), ELR STAT. CERCLA 059.

10. Historically, PRPs who have not joined in a settlement have been branded by EPA as "recalcitrants," regardless of the validity of their concerns about any particular settlement.

11. United States v. Conservation Chem. Co., 628 F. Supp. 391, 401-02, 17 ELR 20158, 20163 (W.D. Mo. 1985); United States v. Laskin, No. 84-2035Y (N.D. Ohio Feb. 27, 1989). In addition, several cases have held that contribution among PRPs will be determined by comparative fault principles. E.g., United States v. Western Processing Co., Inc., 19 CHEM. W. LIT. REP. 1383 (W.D. Wash. 1990); O'Neil v. Picillo, 682 F. Supp. 706, 726-27, 18 ELR 20893 (D.R.I. 1988), aff'd, 883 F.2d 176, 20 ELR 20115 (1st Cir. 1989), cert. denied sub nom. American Cyanamid Co. v. O'Neil, 110 S. Ct. 1115 (1990); Lyncott Corp. v. Chemical Waste Mgmt. Inc., 690 F. Supp. 1409 (E.D. Pa. 1988); Edward Hines Lumber Co. v. Vulcan Materials Co., 26 Env't Rep. Cas. (BNA) 1662 (N.D. Ill. 1987).

12. E.g., United States v. Chem-Dyne Corp., 572 F. Supp. 802, 13 ELR 20986 (S.D. Ohio 1983); United States v. Wade, 577 F. Supp. 1326, 14 ELR 20096 (E.D. Pa. 1983); United States v. Conservation Chem. Co., 628 F. Supp. 391, 17 ELR 20158 (W.D. Mo. 1985); United States v. Northeastern Pharm. & Chem. Co., 579 F. Supp. 823, 14 ELR 20212 (W.D. Mo. 1984), rev'd in part, 810 F.2d 726, 17 ELR 20603 (8th Cir. 1986), cert. denied, 484 U.S. 848 (1987). Under these cases, PRPs could avoid joint and several liability only by establishing that a reasonable basis existed for apportioning liability.

13. See Colorado v. ASARCO, Inc., 608 F. Supp. 1484, 1492, 15 ELR 20523, 20527 (D. Colo. 1985) (citing cases).

14. 628 F. Supp. 391, 17 ELR 20158 (W.D. Mo. 1985).

15. Id. at 401, 17 ELR at 20162.

16. Id.

17. § 886A comment on caveat (1977).

18. 12 U.L.A. 57 (1975).

19. Section 4 of the UCATA provides:

When a release or a covenant not to sue or not to enforce judgment is given in good faith to one of two or more persons liable in tort for the same injury or the same wrongful death:

(a) It does not discharge any of the other tortfeasors from liability for the injury or wrongful death unless its terms so provide; but it reduces the claim against the others to the extent of any amount stipulated by the release or the covenant, or in the amount of the consideration paid for it, whichever is the greater; and

(b) It discharges the tortfeasor to whom it is given from all liability for contribution to any other tortfeasor.

12 U.L.A. 98 (1975).

20. Section 6 of the UCFA provides:

A release, covenant not to sue, or similar agreement entered into by a claimant and a person liable discharges that person from all liability for contribution, but it does not discharge any other persons liable upon the same claim unless it so provides. However, the claim of the releasing person against other persons is reduced by the amount of the released person's equitable share of the obligation, determined in accordance with the provisions of Section 2.

12 U.L.A. 50 (1988 pocket part).

21. 628 F. Supp. at 401-02, 17 ELR at 20163-64.

22. Id. at 402, 17 ELR at 20164.

23. Id.

24. 30 Fed. Reg. 5034 (1985).

25. See generally Note, supra note 4.

26. CERCLA § 113(f)(1), 42 U.S.C. § 9613(f)(1), ELR STAT. CERCLA 039.

27. Section 113(f)(2), 42 U.S.C. § 9613(f)(2), ELR STAT. CERCLA 039, provides:

Settlement. — A person who has resolved its liability to the United States or a State in an administrative or judicially-approved settlement shall not be liable for claims for contribution regarding matters addressed in the settlement. Such settlement does not discharge any of the other potentially liable persons unless its terms so provide, but it reduces the potential liability of the others by the amount of the settlement.

See Smith Land & Improv. Corp. v. Celotex Corp., 851 F.2d 86, 89, 18 ELR 21026, 21027 (3d Cir. 1988) ("A party which has resolved its liability to the government is not liable for contribution."). But see United States v. Royal N. Hardage, No. Civ. 86-1401-P (W.D. Okla. 1989) (where court held that a consent decree terminated nonsettlors' rights to contribution under § 113(f)(1), but could not cut off their rights to cost recovery under § 107(a)). Transcript of Proceedings, Sept. 22, 1989, at 70). This holding vitiates the underlying purpose of the statutory contribution protection by leaving settlors exposed to subsequent litigation by nonsettlors. The fact that a nonsettlor's cause of action will sound in "cost recovery" rather than "contribution" will matter little to a prospective settlor.

28. CERCLA § 122, 42 U.S.C. § 9622, ELR STAT. CERCLA 054.

29. Id. § 122(b)(1), 42 U.S.C. § 9622(b)(1), ELR STAT. CERCLA 054-55.

30. Id. § 122(f), 42 U.S.C. § 9622(f), ELR STAT. CERCLA 057-58.

31. Id. § 122(g), 42 U.S.C. § 9622(g), ELR STAT. CERCLA 058-59.

32. Id. § 122(d)(1)(A), 42 U.S.C. § 9622(d)(1)(A), ELR STAT. CERCLA 055.

33. Id. § 122(g)(4), 42 U.S.C. § 9622(g)(4), ELR STAT. CERCLA 058-059.

34. Id. § 122(g)(5) & (h)(4), 42 U.S.C. §§ 9622(g)(5) & (h)(4), ELR STAT. CERCLA 059.

35. United States v. Swift & Co., 286 U.S. 106, 115 (1982); Citizens for a Better Env't v. Gorsuch, 718 F.2d 1117, 1125, 13 ELR 20975, 20978-79 (D.C. Cir. 1983), cert. denied, 467 U.S. 1219 (1984).

36. United States v. Seymour Recycling Corp., 554 F. Supp. 1334, 1337, 13 ELR 20195, 20196 (S.D. Ind. 1982); United States v. Hooker Chem. & Plastics Corp., 540 F. Supp. 1067, 1072, 12 ELR 20701, 20703 (W.D.N.Y. 1982); United States v. Ketchikan Pulp Co., 430 F. Supp. 83, 86, 7 ELR 20369, 20370 (D. Alaska 1977). The First Circuit has stated:

SARA's legislative history makes pellucid that, when such consent decrees are forged, the trial court's review function is only to "satisfy itself that the settlement is reasonable, fair and consistent with the purposes that CERCLA is intended to serve." H.R. REP. NO. 253, pt. 3, 99th Cong., 1st Sess. (1985), reprinted in 1986 U.S. CODE CONG. & ADMIN. NEWS 3038, 3042. Reasonableness, fairness, and fidelity to the statute are, therefore, the horses which district court judges must ride.

United States v. Cannons Eng'g Corp., 899 F.2d 79, 85 (1st Cir. 1990).

37. United States v. Rohm & Haas Co., 721 F. Supp. 666, 680, 20 ELR 20127, 20132-33 (D.N.J. 1989); City of New York v. Exxon Corp., 697 F. Supp. 677, 692-93 (S.D.N.Y. 1988); United States v. Nicolet, Inc., No. 85-3060, slip op. at 10 (E.D. Pa. Aug. 15, 1989).

38. Rohm & Haas, 721 F. Supp. at 680, 20 ELR at 20132-33; Seymour, 554 F. Supp. at 1337, 13 ELR at 20196.

39. United States v. Cannons Eng'g Corp., 720 F. Supp. 1027, 1040, 20 ELR 20159, 20165 (D. Mass. 1989), aff'd, 899 F.2d 79 (1st Cir. 1990).

40. Rohm & Haas, 721 F. Supp. at 680, 20 ELR at 20132-33. In addition, where a settlement prescribes the specific cleanup measures to be taken, courts will consider whether those measures are reasonable. E.g., Conservation Chemical, 628 F. Supp. at 402-08, 17 ELR at 20163-66; Cannons Engineering, 720 F. supp. at 1038, 20 ELR at 20164. This Article, however, is concerned with cases in which nonsettlers challenge the amounts to be paid by settlors, not the nature of any work that settlors may agree to undertake.

41. Cannons Engineering, 899 F.2d at 86-93.

42. See, e.g., Autera v. Robinson, 419 F.2d 1197, 1199 (D.C. Cir. 1969).

43. E.g., United States v. Hooker Chem. & Plastics Corp., 540 F. Supp. 1067, 1080, 12 ELR 20701, 20706 (W.D.N.Y. 1982) (proposed settlement has "strong presumption of validity"); Seymour, 554 F. Supp. at 1337, 13 ELR at 20196; Rohm & Haas, 721 F. Supp. at 681, 20 ELR at 20133; Cannons Engineering, 899 F.2d at 79. As one court has stated, the "public interest deserves considerable weight in making a determination of" whether the decree is reasonable. United States v. Acton Corp., No. 89-3652, slip op. at 7-8 (GEB) (D.N.J. Mar. 2, 1990).

44. 712 F. Supp. 1019, 19 ELR 21210 (D. Mass. 1989).

45. Id. at 1032, 19 ELR at 21216.

46. The In re Acushnet court stated that the effect on nonsettlors is "not determinative, but is merely one factor" in determining whether to approve a decree. Id. at 1029, 19 ELR at 21215. In the court's view, "[a]n evaluation of the Proposed Decree which overemphasized the importance of its potential effect on the non-settlors . . . would frustrate the statute's goal of promoting expeditious resolution of harmful environmental conditions." Id. The court also stated that its function was not to ensure that the settlement "is the best possible settlement . . . but rather . . . 'whether the settlement is within the reaches of the public interest.'" Id. at 1028, 19 ELR at 21214 (quoting City of New York v. Exxon Corp., 697 F. Supp. 677, 692-93 (S.D.N.Y. 1988)); accord Rohm & Haas, 721 F. Supp. at 680-81, 20 ELR at 20132-33.

47. 718 F. Supp. 154, 20 ELR 20119 (W.D.N.Y. 1989).

48. Id. at 159, 20 ELR at 20121.

49. Id. The McGraw-Edison court held that the settlement "is certainly a reasonable percentage to be arrived at by settlement, without the need for protracted and expensive litigation, and is in line with the spirit and intent of CERCLA to provide an effective and expeditious reimbursement and remedial program in accordance with . . . the public interest." Id.

50. Hooker Chemicals, 540 F. Supp. at 1072, 12 ELR at 20703; Accord Seymour, 554 F. Supp. at 1338, 13 ELR at 20196-97; Rohm & Haas, 721 F. Supp. at 680, 20 ELR at 20132-33. Conversely, as the First Circuit put it: "While the district court should not mechanically rubberstamp the agency's suggestions, neither should it approach the merits of the contemplated settlement de novo." Cannons Engineering, 899 F.2d at 84.

51. 721 F. Supp. 666, 20 ELR 20127 (D.N.J. 1989). The nonsettlor objected to a proposed decree that classified the settlors as de minimis parties and allowed them the special de minimis settlement terms provided in § 122(d) of SARA. The issue raised was whether the settlors would pay their fair share as de minimis parties.

52. Id. at 680, 20 ELR at 20132=33.

53. Id.

54. See infra at note 63 and accompanying text (regarding trials on the fair-share issue); see also In re Acushnet, 712 F. Supp. at 1032, 19 ELR at 21216 (court need not determine that settlors' shares are "perfectly calibrated"); City of New York v. Exxon Corp., 697 F. Supp. 677, 692 (S.D.N.Y. 1988) (nonsettlors did not raise any specific problems regarding fairness of settlement terms).

55. Rohm & Haas, 721 F. Supp. at 685-86, 20 ELR at 20135-36. Similarly, the Cannons Engineering court emphasized that the judiciary should accord EPA substantial deference with respect to the fair-share issue:

Even accepting substantive fairness as linked to comparative fault, an important issue still remains as to how comparative fault is to be measured. There is no universally correct approach. It appears very clear to us that what constitutes the best measure of comparative fault at a particular Superfund site under particular factual circumstances should be left largely to EPA's expertise. Whatever formula or scheme EPA advances for measuring comparative fault should be upheld so long as the agency supplies a plausible explanation for it, welding some reasonable linkage between the factors it includes in its formula and the proportionate shares of the settling PRPs.

899 F.2d at 87.

56. 721 F. Supp. at 689, 20 ELR at 20137-38. The court stated that the decree's reasonableness was to be determined based on: (1) the relative costs and benefits of litigating the case; (2) the strength of the plaintiff's case; (3) the negotiators' good-faith efforts and adversarial relationship; (4) the reasonableness of the settlement compared with the settlors' volumetric contributions to the site; (5) the ability of the settlors to withstand a greater judgment; and (6) "finally and most importantly, the effect of the settlement on the public interest as expressed in CERCLA." Id. at 687, 20 ELR at 20136 (emphasis added).

57. "[T]he links between the [settlors and the site] are tenuous at best, forged by a scanty and incomplete documentary record and obtuse recollections of witnesses whose credibility must, in some cases, be sharply questioned." Id. at 694-95, 20 ELR at 20140.

58. See, e.g., City of New York, 697 F. Supp. at 693 (citing weaknesses in government's case).

59. Although the Rohm & Haas court voiced serious skepticism about the government's evidence, it emphasized that its role was not to determine whose view of the evidence was more plausible.

60. Rohm & Haas, 721 F. Supp. at 696, 20 ELR at 20141.

61. See supra notes 35 and 37 and accompanying text. In United States v. Acton Corp., No. 89-3652 (GEB) (D.N.J. Jan. 19, 1990), nonsettlors were granted leave to intervene and raise objections to a proposed Superfund settlement decree on the ground that they had been denied the opportunity to settle with EPA on the same terms as similarly situated settlors. In United States v. Cannons Engineering Corp., 720 F. Supp. 1027, 20 ELR 20159 (W.D. Mass. 1989), in contrast, the court relied on the fact that all PRPs had had an opportunity to participate in the settlement process. Some courts have cited as evidence of a settlement's fairness the fact that many PRPs accepted its terms. E.g., City of New York, 697 F. Supp. at 694. In a pending suit, United States v. Alcan Aluminum, Inc., No. 88-4970 (E.D. Pa. 1988), defendant Kalama Chemical Co. has argued that it cannot be held liable as a nonsettlor for the balance of cleanup costs owed to the government because it was denied an opportunity to participate in the settlement. The government contends that it is not obligated to settle with any PRP, and hence Kalama's liability to the government does not depend on this factor.

62. United States v. Thomas Solvent Co., 717 F. Supp. 507, 519 (W.D. Mich. 1989); accord Rohm & Haas, 721 F. Supp. at 687, 20 ELR at 20136; In re Acushnet, 712 F. Supp. at 1031, 19 ELR at 21216; City of New York, 697 F. Supp. at 693; United States v. Nicolet, Inc., No. 85-3060, slip op. at 7 (E.D. Pa. Aug. 15, 1989). In contrast, courts have held evidentiary hearings on the appropriateness of a particular cleanup remedy prescribed by a proposed settlement decree. United States v. Hooker Chemicals & Plastics Corp., 540 F. Supp. 1067, 1072, 12 ELR 20701, 20703 (W.D.N.Y. 1982); United States v. Seymour Recycling Corp., 554 F. Supp. 1334, 1337, 13 ELR 20195, 20196 (S.D. Ind. 1982); Conservation Chemical, 628 F. Supp. at 394, 17 ELR at 20159.

63. See e.g., Citizens for a Better Environment v. Gorsuch, 718 F.2d 1117, 1126, 13 ELR 20975, 20979 (D.C. Cir. 1983) (Federal Water Pollution Control Act); United States v. City of Miami, 664 F.2d 435, 441 (5th Cir. 1981) (en banc) (employment discrimination); Metropolitan Hous. Dev. Corp. v. Village of Arlington Heights, 616 F.2d 1006, 1014 (7th Cir. 1980) (racial discriminatory zoning); City of Detroit v. Grinnell Corp, 495 F.2d 448, 462 (2d Cir. 1974) (private antitrust national class actions).

64. 721 F. Supp. at 686 n.24, 20 ELR at 20136 (citing In re Sunrise Sec. Litig., 698 F. Supp. 1256 (E.D. Pa. 1988)); see also In re National Smelting Shareholders Litig., 722 F. Supp. 153 (D.N.J. 1989); accord Franklin v. Kaypro Corp., 884 F.2d 1222, 1231 (9th Cir. 1989). Application of a comparative fault standard to nonsettlors in securities fraud class actions has been advocated as the fairest approach by some authorities. See T. PATTON, SECURITIES FRAUD: LITIGATING UNDER RULE 10B-5, § 13.4 (1989) (citing authorities). In Sunrise Securities, the court held that merely because the Federal Savings & Loan Insurance Corporation advocated a rule under which nonsettlors' liability would be reduced by only the amount of the settlement "does not require its adoption; while the federal policy of encouraging settlements is important, it does not completely overwhelm the consideration of fairness and deterrence which supports a proportionate rule." 698 F. Supp. at 1256; accord Gomes v. Broadhurst, 394 F.2d 465 (3d Cir. 1967). Under federal maritime law, courts have also grappled with the issue of nonsettlors' liability, with differing outcomes. See, e.g.., Miller v. Christopher, 887 F.2d 902 (9th Cir. 1989).

65. 721 F. Supp. at 686, 20 ELR at 20136.

66. 697 F. Supp. 677 (S.D.N.Y. 1988).

67. Id. at 694.

68. 899 F.2d 79 (1st Cir. 1990).

69. Id. at 91-92.

70. No. 84-2035Y (N.D. Ohio Feb. 27, 1989).

71. Id. op. at 13.

72. See supra note 20.

73. Laskin, slip op. at 13-14.

74. Id. at 15. Recently, another court may have left the possibility of a similar result. In United States v. Acton Corp., No. 89-3652 (GEB) (D.N.J. Mar. 2, 1990), the court approved a CERCLA consent decree over the objections of nonsettlors that they would be forced to pay a disproportionate share. The court said: "Assuming that the United States and the settling defendants seek recovery from the [nonsettlors], the amount of that recovery will be determined by judicial proceedings. Such proceedings will provide [nonsetllors] with any procedural and substantive protections to which they are entitled as a matter of law." Acton, slip op. at 11.

75. Accord In re Acushnet, 712 F. Supp. at 1027, 19 ELR at 21214 (emphasizing that otherwise, the government's resources would be consumed in litigating fair-share issues rather than in achieving cleanup of Superfund sites); Rohm & Haas, 721 F. Supp. at 678-79, 20 ELR at 20131-32. Of course, a consent decree entered under CERCLA is always subject to collateral attack on the grounds that it was the result of fraud, misrepresentation, or mutual mistake of fact. CERCLA § 122(m), 42 U.S.C. § 9622(m), ELR STAT. CERCLA 059; H.R. CONF. REP. No. 962, 99th Cong., 2d Sess. 255, reprinted in 1986 U.S. CODE CONG. & ADMIN. NEWS 3276, 3348; H.R. REP. No. 253(III), 99th Cong., 2d Sess. 32, reprinted in 1986 U.S. CODE CONG. & ADMIN. NEWS 3038, 3055.

76. CERCLA § 113(f)(2), 42 U.S.C. § 9613(f)(2), ELR STAT. CERCLA 039.

77. See supra note 19.

78. U.S. Brief in Support of Motion to Vacate or Reconsider and Modify a Portion of Memorandum of Opinion and Order, United States v. Laskin, No. 84-2035Y, at 9 (N.D. Ohio Feb. 27, 1989) [hereinafter U.S. Laskin Brief].

79. See supra notes 65-68. Reflecting this view, the Cannons Engineering court stated: "The law's plain language admits of no construction other than a dollar-for-dollar reduction of the aggregate liability." 899 F.2d at 92. The court characterized the nonsettlors' argument, that their liability should be reduced not by the amount of the settlement but by the settlors' equitable share, as "quixotic." Id.

80. In four cases, courts have stated that in contribution suits between PRPs liability will be based on comparative fault principles. See supra note 11. The Rohm & Haas court distinguished private party contribution actions from government-initiated suits against PRPs. The court noted that CERCLA § 113(f)(1) specifically directs courts to take equitable considerations into account in private party contribution suits, and reasoned that the absence of such a directive in § 113(f)(2) was further evidence that nonsettlors' liability to the government was not to be based on equitable factors such as comparative fault. 721 F. Supp. at 679 n.14, 20 ELR at 20132.

81. H.R. REP. No. 253, 99th Cong., 1st Sess., pt. 3, at 19 (1985), reprinted in 1986 U.S. CODE CONG. & ADMIN. NEWS 3042.

82. It has been suggested that the word "potentially" in this context merely reflects the fact that a nonsettlor may not be a liable party under CERCLA § 107(a). Once liability is established, the nonsettlor necessarily is jointly and severally liable for the uncollected balance of cleanup costs. However, this explanation does not reveal why Congress deviated from the language of the UCATA, nor does it explain the changes to the original Senate bill discussed at note 82 infra.

83. S. REP. No. 11, 99th Cong., 1st Sess. 43 (1985); H.R. REP. No. 253, 99th Cong., 1st Sess. 79 (1985).

84. Moreover, the bill originally reported by the Senate Environment and Public Works Committee more closely tracked the language of the UCATA regarding nonsettlor liability. It provided:

Where the United States or a State has obtained less than complete relief from a person who has resolved its liability . . . in a good faith settlement, the United States or a State may bring an action for the remainder of the relief sought against any person who has not so resolved its liability.

But, as ultimately enacted, CERCLA § 113(f)(2) provides that a settlement "reduces the potential liability of the others by the amount of the settlement" (emphasis added). Further, the phrase "for the remainder of the relief sought" was deleted entirely from the law. These changes, although not explained in the legislative history, were presumably made for a reason. As has been suggested elsewhere, it is plausible that the reason was to make clear that the amount of a settlement would impose a ceiling on the potential liability of nonsettlors, which could be further reduced based on equitable factors such as fair-share considerations.

85. See U.S. Laskin Brief; supra note 78, at 15. Moreover, the fact that fair-share determinations are not susceptible of scientific or mathematical precision further militates against a rational PRP choosing not to settle, unless it possesses convincing evidence that its proposed settlement share is inequitable.

86. See Perfection Corporation's Opposition to EPA's Motion to Vacate Three Pages of Opinion, at 10, United States v. Laskin, No. 84-2035Y (N.D. Ohio Feb. 27, 1989).

87. See CERCLA § 111, 42 U.S.C. § 9611. Moreover, the statute's legislative history is devoid of any evidence that Congress specifically deliberated over UCATA vis-a-vis UCFA.

88. CERCLA states that EPA "may" bring such an action. CERCLA § 113(f)(3), 42 U.S.C. § 9613(f)(3). CERCLA also authorizes EPA to compromise and settle cost recovery suits. CERCLA § 122(h)(1), 42 U.S.C. § 9622(h)(1). Moreover, the notion of "mixed funding," under which EPA is authorized to contribute a portion of cleanup costs from the Superfund as part of a settlement with PRPs, underscores that EPA is not required to collect every penny of outstanding cleanup costs from PRPs, including nonsettlors. See CERCLA § 122(b)(1), 42 U.S.C. § 9622(b)(1), ELR STAT. CERCLA 054.

89. A rational party would have to include in its calculation the transaction costs it would incur in the government's subsequent lawsuit against nonsettlors. If the amount it is being asked to pay as part of a settlement is reasonably related to its potential exposure, a rational PRP would likely pay that sum in settlement of EPA's claims rather than risk the costs of a subsequent government lawsuit. This analysis, of course, assumes that the PRP community believes it likely that EPA will sue nonsettlors for the balance of cleanup costs. The government is increasingly doing so. See, e.g., United States v. Alcan Aluminium, Inc., No. 88-4970 (E.D. Pa. 1988); United States v. Armstrong World Indus., Inc., No. 89-3652 (D.N.J. 1989); United States v. Clean Harbors of Natick, Inc., No. 89-109-L (D.N.H. 1989).

90. However, it should be noted that under CERCLA § 113(f)(2), settlors' contribution rights against nonsettlors is subordinated to the government's claims against the nonsettlors.

91. 721 F. Supp. at 679 n.14, 20 ELR at 20132; accord In re Acushnet, 712 F. Supp. at 1027, 19 ELR at 21214.

92. 42 U.S.C. § 9622(d)(2), ELR STAT. CERCLA 055-56.

93. Department of Justice Statements of Policy, 28 C.F.R. § 50.7 (1973).

94. United States Opposition to Motion of Armstrong World Defendants to Intervene and/or Consolidate, United States v. Acton Corp., No. 89-3652 (D.N.J. 1989) [hereinafter U.S. Acton Brief].

95. No. 89-3652 (D.N.J. 1989).

96. No. 89-4363 (D.N.J. 1989).

97. 42 U.S.C. § 9613(i), ELR STAT. CERCLA 040.

98. U.S. Acton Brief, supra note 94 at 9-34. The government argued that the nonsettlors' economic interest did not rise to the level of a legally protectable interest. The PRP settlors argued that the nonsettlors contribution rights were "contingent" and thus not legally protectable (citing Travelers Indem. Co. v. Dingwell, 884 F.2d 629 (1st Cir. 1989)). In Dingwell, PRPs settled with the government and thereafter settled their contribution claims against Dingwell, who had joined the settlement with EPA. Dingwell's insurer had not admitted liability to Dingwell for his share of cleanup costs and sought to intervene in the primary action to object to the settlement. The First Circuit upheld the district court's denial of that motion, finding the insurance company's interest insufficient to justify intervention. The Acton court distinguished Dingwell on the grounds that "[t]he relationship between insurer and insured, which factored heavily . . . in Dingwell . . . is completely absent here." Acton, slip op. at 11.

99. United States v. Acton, No. 89-3652 (D.N.J. Jan. 19, 1990).

100. Id. slip op. at 4. The court cited CERCLA § 310(h), which provides: "This chapter does not affect or otherwise impair the rights of any person under any . . . law, except with respect to the timing of review as provided in Section 9613(h) of this title or as otherwise provided in Section 9658 (relating to actions under State law)."

101. 42 U.S.C. § 9659(h), ELR STAT. CERCLA 067; Acton, slip op. at 5-6.

102. No. 89-568-A (M.D. La. Nov. 15, 1989).

103. Id. slip op. at 7.

104. Id.

105. Acton, slip op. at 7.

106. Browning-Ferris, slip op. at 8.

107. The Acton court granted the nonsettlors' motion to intervene but rejected all of the nonsettlors' objections to the decree. United States v. Acton, No. 89-3652 (D.N.J. Mar. 2, 1990). However, the court indicated that the nonsettlors' fair-share arguments might be raised in subsequent cost recovery litigation against them. Acton, slip op. at 11.

108. 109 S. Ct. 2180 (1989).

109. Id. at 2184.

110. Id. at 2184 n.2.

111. See supra notes 11 and 78 and accompanying text.

112. The majority in Wilks cited two statutory schemes that expressly foreclose subsequent litigation — bankruptcy (citing NLRB v. Bildisco & Bildisco, 465 U.S. 513 (1984)) and probate (citing Tulsa Prof. Collec. Servs., Inc. v. Pope, 485 U.S. __, 108 S. Ct. 1340 (1988)); see Wilks, 109 S. Ct. at 2184 n.2. The bankruptcy provision in question expressly provides that a "proof of claim must be presented to the Bankruptcy Court . . . or else lost . . . ." 465 U.S. at 529-30 n.10. The probate provision explicitly requires claims against an estate to be filed within a specified time or be barred.

113. 720 F. Supp. 1027, 20 ELR 20159, aff'd, 899 F.2d 79 n.6.

114. Texas Indus. Inc. v. Radcliff Materials, Inc., 451 U.S. 630 (1981); Northwest Airlines, Inc. v. Transport Workers Union, 451 U.S. 77 (1981).

115. 720 F. Supp. at 1050, 20 ELR at 20170-71, aff'd, 899 F.2d 79 n.6. The court also rejected nonsettlor's equal protection argument. Id.

116. 720 F. Supp. at 1040, 20 ELR at 20165-66.

117. 554 F. Supp. 1334, 13 ELR 20195 (S.D. Ind. 1982).

118. See, e.g., Hearings Before the Subcomm. on Investigations and Oversight of the Comm. on Public Works and Transportation, 98th Cong., 1st Sess. 2 (1980) ("We need to be fully informed why the Federal Government elected to settle [in Seymour, 554 F. Supp. 1334 (S.D. Ind. 1982)] with some two dozen companies . . . for $ 7.7 million giving them a full release from further liability. That amount was about half of that which was offered to others and the deal was described in EPA documents as a 'sweetheart deal.'") (statement of Rep. Levitas); see also Anderson, Negotiation and Informal Agency Action: The Case of Superfund, 1985 DUKE L.J. 261, 283-85.

119. 132 CONG. REC. S14904-05 (daily ed. Oct. 3, 1986) (statement of Sen. Stafford). Senator Stafford's specific concern was with the authority granted to EPA to enter purely administrative settlements, absent any judicial oversight, with de minimis parties. See infra note 127. However, his statement was indicative of a more general congressional concern regarding the possibility of "sweetheart deals." See United States v. Moore, 703 F. Supp. 455, 459, 18 ELR 21274, 21275 (E.D. Va. 1988) (citing legislative history).

120. For example, in City of New York the court cited the House Judiciary Committee's expectation that "judicial examination and approval of the settlement . . . is adequate to protect against improper or 'bad faith' settlements. Before initially approving a consent decree under CERCLA, a court must satisfy itself that the settlement is reasonable, fair, and consistent with the purposes the CERCLA is intended to serve." 697 F. Supp. at 692 n.23 (quoting H.R. REP. No. 235, 99th Cong., 2d Sess. pt. 3, reprinted in 1986 U.S. CODE CONG. & ADMIN. NEWS 2835, 3038, 3042). Accord Cannons Engineering, 899 F.2d at 79.

121. Seymour, 554 F. Supp. at 1337, 13 ELR at 20196.

122. In re Sunrise Sec. Litig., 698 F. Supp. 1256, 1259 (E.D. Pa. 1988).

123. Cannons Engineering, 720 F. Supp. at 1040, 20 ELR at 20165; Rohm & Haas, 721 F. Supp. at 695, 20 ELR 20140-41.

124. No. 88-4970 (E.D. Pa. 1088). In addition, in Acton, the court granted a motion to intervene brought by nonparty nonsettlors who argued that they were denied the opportunity to settle with EPA on terms equal to those offered to similarly situated settlors. Slip op. Jan. 19, 1990. A similar complaint has been raised by nonsettlors in United States v. Clean Harbors of Natick, Inc., No. 89-109-L (D.N.H. 1989).

125. 720 F. Supp. at 1050, 20 ELR 20170-71.

126. Tulsa Professional Collection Serv. v. Pope, 485 U.S. 478, 108 S. Ct. 1340, 1347 (1988).

127. In Cannons Engineering, both the district and appellate courts, in upholding the settlement, relied on the fact that the nonsettlors had had an opportunity to participate in the negotiations leading to the challenged settlements. 899 F.2d at 79. The danger of a PRP not being provided with notice and otherwise being treated unfairly in the settlement process is even greater in connection with administrative settlements that are authorized under CERCLA § 122(g). Senator Stafford expressed strong doubts about the wisdom and constitutionality of extending contribution protection to parties who settle with EPA in administrative settlements. 132 CONG. REC. S14904-05 (daily ed. Oct. 3, 1986). In the case of administrative settlements, due process concerns are heightened because a person has a right to a hearing before an unbiased decision-maker before being deprived of a property interest. E.g., Schweiker v. McClure, 456 U.S. 188, 195-96 (1982). In anticipation of this concern, SARA added § 308 of CERCLA, 42 U.S.C. § 9657, ELR STAT. CERCLA 066, which provides:

If an administrative settlement under Section 9622 of this title has the effect of limiting any person's right to obtain contribution from any party to such settlement, and if the effect of such limitation would constitute a taking without just compensation in violation of the Fifth Amendment of the Constitution of the United States, such person shall not be entitled . . . to recover compensation from the United States for such taking, but in any such case, such limitation on the right to obtain contribution shall be treated as having no force and effect.

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