State of Arizona v. Raytheon Company, 761 F.3d 1005

Background

Arizona seeks CERCLA/WQARF remediation costs for the Broadway-Patano Landfill Site and moves to have proposed early settlements with PRPs judicially approved.
ADEQ relied on EPA guidelines to allocate fault among PRPs, producing a $75 million remedial-cost estimate and individualized settlement offers totaling $512,000.
Intervening PRPs challenge the settlements, arguing insufficient factual information and the court’s failure to ensure the agreements are fair, reasonable, and consistent with CERCLA’s objectives.
The district court stated it would defer to ADEQ, declined to provide detailed scrutiny of each settlement, and approved the decrees after supplementing the record with ADEQ’s methodology.
We must decide whether the district court properly exercised independent scrutiny and whether it erred by deferring to ADEQ, affecting the decrees’ validity.
The panel ultimately vacates the consent decrees for lack of independent scrutiny and remands for reconsideration, while affirming denial of declaratory relief for intervenors.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the district court abused its discretion by approving CERCLA decrees without independent scrutiny.	Intervenors argue Montrose requires proportional fault analysis and an explanation of settlements.	Arizona argues deference to ADEQ’s expertise is appropriate and full details are unnecessary.	Yes, abuse; remand for independent scrutiny.
Whether the district court properly declined declaratory relief for intervenors’ future CERCLA liability.	Intervenors sought declaratory relief; district court denied as improper under the Declaratory Judgment Act.	State did not file for declaratory relief; relief not properly before court.	Affirmed; declaratory relief properly denied.
What level of deference is owed to a state environmental agency’s CERCLA determinations when approving settlements.	Intervenors contend the court should not defer to ADEQ’s CERCLA interpretations.	Arizona argues some deference is proper to ADEQ’s expertise and methodology.	State-sponsored settlements deserve some deference, but not to the extent of EPA.
Remand for reanalysis under Montrose standards.
Whether ADEQ’s allocation methodology and settlement amounts were adequately supported for judicial approval.	Intervenors assert insufficient detail about ADEQ’s allocations and supporting data.	ADEQ’s methodology was explained and supported, with deference owed to expertise.	Remanded; district court must independently assess proportional liability and settlement fairness.

Key Cases Cited

United States v. Montrose Chem. Corp. of Cal., 50 F.3d 747 (9th Cir. 1995) (require independent scrutiny and proportional fault analysis for CERCLA decrees)
United States v. Cannons Eng’g Corp., 899 F.2d 79 (1st Cir. 1990) (consent decree review should assess fairness, reasonableness, and CERCLA objectives)
City of Bangor v. Citizens Commc’ns Co., 532 F.3d 70 (1st Cir. 2008) (some deference to state agency decisions in CERCLA settlements)
Montrose Chem. Corp. of Cal. v. Adler, 50 F.3d 743 (9th Cir. 1995) (deferral framework for reviewing CERCLA decrees; Montrose standard)
Niagara Mohawk Power Corp. v. Chevron U.S.A., Inc., 596 F.3d 112 (2d Cir. 2010) (state roles and allocation considerations in CERCLA actions)
Burlington N. & Santa Fe Ry. Co. v. United States, 556 U.S. 599 (Supreme Court 2009) (CERCLA liability generally joint and several; policy of settlements)
United States v. Charter Int’l Oil Co., 83 F.3d 510 (1st Cir. 1996) (comparing settlement amounts to proportional fault in CERCLA decrees)
Esso Standard Oil Co. v. Commissioner, 326 F.3d 201 (3d Cir. 2003) (deference considerations in CERCLA settlements)
Commissioner v. Esso Standard Oil Co., 326 F.3d 201 (3d Cir. 2003) (authority on deference to agency determinations)