United States v. Bp Amoco Oil PlcUnited States v. Bp Amoco Oil Plc
The United States of America (“the government“), on behalf of the Administrator of the United States Environmental Protection Agency (“EPA“), brought the present action pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA“),
Jurisdiction was proper in the district court based upon
Background
The following is а summary of the factual and procedural background, as set forth in the district court‘s order of September 29, 2000. See slip op. at 1014-16.
In 1974, TCE was detected in water coming from underground wells located near property owned by Dico and maintained by the Des Moines Water Works. The EPA designated the area the “Des Moines TCE Site” and placed it on the national priority list. The Des Moines TCE Site was divided into several “operable units.” Operable Unit-2 (“OU-2“) and Operable Unit-4 (“OU-4“) (together “OU-2/4“) are within Dico‘s property. Each was found to be contaminated with TCE, and OU-4 was also found to be contaminated with herbicides and pesticides.
Dico‘s corporate predecessor, Di-Chem, had operated a chemical formulation business on the Dico property until the 1970s. In 1994, pursuant to two Unilateral Administrative Orders issued by the EPA, Dico conducted two removal actions at OU-2/4. A group of former customers of Di-Chem (BP Amoco Oil PLC, BP Amoco PLC, Chevron Chemical Co., Bayer Corp., Monsanto Co., and Shell Oil Co.) conducted a third removal аction pursuant to an Administrative Order on Consent. The EPA also incurred costs associated with the removal actions at OU-2/4.
In 1996, the EPA signed a Record of Decision (“ROD“), which confirmed the completion of the three removal actions at OU-2/4. The former Di-Chem customers requested settlement negotiations with the government regarding the costs associated with the OU-2/4 cleanup efforts. Pursuant to CERCLA,
On March 10, 2000, thе government formally moved to enter the consent decree. Dico requested an evidentiary hearing on the government‘s motion to enter the consent decree, arguing that (1) a hearing was necessary because the government had failed to provide a fair and complete record and (2) it had a vested property interest in the contribution action, which, under the Fifth Amendment, could not be “taken” without due process (i.e., an evidentiary hearing) and just compensation.
Upon reviеw of the parties’ submissions, the district court entered the order from which Dico now appeals. The district court denied Dico‘s request for an evidentiary hearing, reasoning that a hearing was not necessary to supplement the record because Dico had been provided sufficient opportunities to supplement the record before and after the consent decree had been lodged in the district court. See slip op. at 1016-18. The district court also rejected Dico‘s assertion of a constitutional right to an evidentiary hearing, reasoning that Dico never had a right to contribution because its statutory contribution claim was at all times limited by
Judgment was entered accordingly, and Dico appealed. Both the government and the settling defendants oppose Dico‘s аppeal.
Discussion
Denial of Dico‘s motion for an evidentiary hearing
Dico first argues that the district court improperly denied its motion for an evidentiary hearing. Dico contends that the administrative record was incomplete, biased, and inaccurate, and that an evidentiary hearing was the only meaningful way for Dico to rebut the government‘s evidence. Dico asserts, among other things, that the district court erroneously relied on the settlement process as a basis for concluding that Dico had been given an opportunity to supplement the record. On the contrary, Dico argues, the settlement process offered nothing more than an opportunity for Dico to bargain away its contribution rights. Dico also points out that it was notified of the potential settlement between the government and the settling defendants only after Dico had already invested approximately $5.7 million in response costs and $300,000 in litigation costs. Therefore, Dico argues, its refusal to participate in the settlement negotiations was justified. Dico further maintains that a hearing was necessary to examine the evidentiary basis for a nine-page sworn statement by Daniel Shiel, an EPA attorney, whose statement was submitted by the government in support of its motion for entry of the consent decree. Shiel‘s statement (hereinafter “the Shiel declaration“) purported to explain, among other things, the government‘s methodology in assigning 61% and 39% of the responsibility to Dico and the settling defendants, respectively, using eight specific factors.33 According to Dico, the Shiel deсlaration was the government‘s primary evidence in support of the EPA‘s 61/39 liability allocation, the Shiel declaration did not include or identify supporting documentation, and Dico was entitled to examine Shiel under oath regarding the bases for his assertions. Likewise, Dico contends, the government‘s allegations of costs were not adequately supported by the evidence in the record and therefore should have been subjected to examination, which only an evidentiary hearing could havе adequately provided.
We review the district court‘s denial of Dico‘s request for an evidentiary hearing for an abuse of discretion. United States v. Union Elec. Co., 132 F.3d 422, 430 (8th Cir. 1997) (Union Electric) (quoting United States v. Metropolitan St. Louis Sewer Dist., 952 F.2d 1040, 1044 (8th Cir. 1992) (“It is within the sound discretion of the trial court to decide whether an evidentiary hearing is necessary before ruling on a рroposed consent decree.“)). We agree with the district court that Dico was given a meaningful and sufficient opportunity to present arguments and submit evidence in opposition to the government‘s motion to enter the consent decree. Therefore, while Shiel‘s live testimony might have been helpful in this context, we cannot say that it was an abuse of discretion for the district court to decide that an evidentiary hearing was not necessary. Accord United States v. Cannons Engineering Corp., 899 F.2d 79, 93-94 (1st Cir. 1990) (Cannons Engineering) (holding that district court did not abuse its discretion in declining to hold evidentiary hearing on government‘s motion for entry of consent decrees).
We further conclude that Dico‘s constitutional argument is without merit. To begin, we agree with the district court that Dico did not have a right to contribution at the time the government moved for entry of the consent decree. The basis for Dico‘s statutory contribution claim against the settling defendants is
Grant of the government‘s motion to enter the consent decree
Dico next contends that the district court improperly granted the government‘s motion for entry of the consent decree. Dico maintains that the consent decree is fatally flawed in all essential respects: procedural and substantive fairness, reasonableness, and consistency with the meaning and purposes of CERCLA. See Cannons Engineering, 899 F.2d at 85 (“Reasonableness, fairness, and fidelity to the statute are... the horses which district judges must ride.“).
Dico further argues that the consent decree is substantively fair. Dico cites Cannons Engineering, 899 F.2d at 87, for the proposition that, to be substantively fair, settlement terms must be “based upon, and roughly correlated with, some acceptable measure of comparative fault, apportioning liability among the settling parties according to rational (if necessarily imprecise) estimates of how much harm each PRP has done.” Dico maintains that the EPA lacked a rational basis for: (1) assigning Dico 61% responsibility for the overall OU-2/4 response costs compared with 39% respоnsibility assigned to the settling defendants, (2) assigning to Dico the entire amount of “volatile organic chemicals” (VOC) remediation and oversight costs, and (3) including complete protection for the settling defendants from contribution liability to Dico. Dico contends that the district court merely rubber stamped the EPA‘s actions by wholly adopting Shiel‘s unsubstantiated and contradicted conclusory allegations which purported to justify the consent decree based upon the eight factors: distinguishable costs, degree of involvement, degree of care, fault, degree of cooperation, financial capability, financial benefit from waste-producing activities, and financial benefits from the remediation. Regarding distinguishable costs, Dico argues that the district court blindly adopted Shiel‘s claim that Dico should pay 100% of the VOC remediation costs, even though the NBAR allegedly suggested that those costs were indistinguishable from costs for which the settling defendants were responsible. Regarding degree of involvement and financial benefit from the waste-producing activities, Dico argues that the evidence in the record does not show that either Dico or any of its corporate predecessors conducted or benefitted from the formulation process, while the settling defendants were arrangers of the formulation process and thus were more involved in, and benefitted more from, the generation of hazardous wastes. As to Dico‘s degree of care and fault, Dico argues that short term releаses and flooding at the OU-2/4 area caused contamination for which Dico cannot be blamed. As to the degree of cooperation, Dico contends that the district court ignored Dico‘s removal actions and only considered its decision not to participate in the settlement negotiations. Regarding relative financial capabilities, Dico argues that, contrary to the EPA‘s and the district court‘s apparent assumptions, the settling defendants have vastly greater resources than Dico. Finally, as to financial benefits, Dico suggests that it has suffered more of a loss than a benefit because it has already paid the vast majority of the response costs. Dico thus concludes that the district court abused its discretion in holding that the consent decree fairly allocates liability among the parties.
Finally, Dico argues that the consent decree is manifestly unreasonable and inconsistent with the underlying objectives of CERCLA. Dico contends that, in this particular case, the cоnsent decree penalizes the party that forthrightly remediated at its own expense, takes undue advantage of the party with the weaker bargaining strength, and awards the government costs to which it is not entitled. Therefore, Dico continues, the consent decree violates CERCLA‘s objectives by sending the message that contribution rights are illusory and the best strategy to minimize one‘s exposure is outright refusal to incur any response costs. The end result, Dico concludes, will be to discourage prompt аnd efficient cleanup efforts, to undercut PRP confidence in the CERCLA process, and to render meaningless contribution rights under
To begin, we cannot agree with Dico‘s claims that the settlement process was inherently unfair and that Dico was justified in refusing to participate because its contribution rights were at stake. Nothing in the record suggests thаt the government and the settling defendants were not negotiating in good faith and at arm‘s length. See id. (respect for agency‘s role is heightened where “the cards are dealt face up” and parties with conflicting interests “hammer out an agreement at arm‘s length“). Moreover, Dico failed even to make a good faith effort to participate in the negotiations. Dico had the opportunity, through the settlement process, to express and defend its position and to seek reimbursemеnt of past expenditures; by contrast, Dico‘s refusal even to come to the table precluded its position from ever being heard or considered. As for Dico‘s claim that it was not necessary for the EPA to offer the settling defendants protection against exposure to contribution liability, that assertion is debatable,6 but, in any event, beside the point. By providing contribution protection to the settling defendants, the government neither exceeded nor abused its authority. Indeed, providing protection from exposure to duplicate liability promoted fairness in the overall process.
We next consider the substantive fairness of the consent decree, a matter particularly appropriate for our deferential review. “Substantive fairness introduces into the equation concepts of corrective justice and accountability: a party should bear the cost of the harm for which is it legally responsible.” Id. at 87. In the present case, we agree with the district court‘s conсlusion that the consent decree reflects a reasonable allocation of legal responsibility between Dico and the settling defendants. Dico was not inappropriately assigned complete responsibility for the VOC-related costs, because those costs were found to be related to operations of Dico or one of its corporate predecessors, but could not be traced to the settling defendants. See slip op. at 11-12. As the district court conсluded, the costs resulting from pesticide contamination were reasonably split between Dico and the settling defendants. See id. at 12. Regarding the parties’ relative roles in managing the pertinent operations, the relative degree of care they exercised, their relative fault, and the relative benefits to them from the waste-producing activity, we agree with the district court that there is factual and evidentiary support for the EPA‘s decision to assign most of the responsibility to Dico, as the “entity in charge of the facility.” See id. at 12-13. As to factors such as the degree of cooperation and the benefit of the remediation to the parties, we note that Dico conducted the first and second removal actions at OU-2/4 only after the EPA obtained unilateral administrative orders commanding Dico to do so. See id. at 13. By contrast, the third removal action was performed by the settling defendants pursuant to an administrative consent order. Each of the three removal actiоns benefitted Dico, as the owner of the property. Finally, although the exact amounts of response costs incurred by the parties are subject to debate, it appears from the record that Dico‘s share constitutes significantly less than the 90% Dico claims.
In sum, we hold that the district court did not abuse its discretion in entering the consent decree upon determining that it is sufficiently fair, reasonаble, and consistent with CERCLA.
Conclusion
The judgment of the district court is affirmed.