U.S. v. Knote

• Decision Date: 20 July 1994
• Docket Number: No. 93-2526,93-2526
• Citation: 29 F.3d 1297
• Parties: , 25 Envtl. L. Rep. 20,153 UNITED STATES of America, Appellant, v. Charles E. KNOTE; Ruth R. Knote; Elizabeth A. Knote, Cape Chemical Company, Inc.; Cape-Kil Pest Control Company, Inc.; and Kem-Pest Laboratories, Inc., Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1297

29 F.3d 1297

39 ERC 1129, 25 Envtl. L. Rep. 20,153

UNITED STATES of America, Appellant, v. Charles E. KNOTE; Ruth R. Knote; Elizabeth A. Knote, Cape

Chemical Company, Inc.; Cape-Kil Pest Control

Company, Inc.; and Kem-Pest

Laboratories, Inc., Appellee.

No. 93-2526.

United States Court of Appeals,

Eighth Circuit.

Submitted Jan. 13, 1994.

Decided July 20, 1994.

Evelyn S. Ying, Washington, DC, argued (Tom C. Clark and David C. Chilton, on the brief), for appellant.

John S. Hahn, Washington, DC, argued (Kirk R. Ruthenberg and Stuart E. Hunt, on the brief), for appellee.

Before BEAM and MORRIS SHEPPARD ARNOLD, Circuit Judges, and STROM, ^* District Judge.

BEAM, Circuit Judge.

The EPA appeals a district court ¹ order requiring it to follow the dispute-resolution process set out in a consent decree governing certain relations between the Knotes, ² their property, and the EPA. According to the EPA, the dispute at hand does not fall within the purview of the decree. We disagree and affirm the district court.

I. BACKGROUND

This litigation arises out of the environmental cleanup of six acres and a building located in Missouri and owned by the Knotes. The EPA and the Knotes agreed to enter into a consent decree concerning the cleanup. At the time the draft decree was presented to the district court, the EPA officially planned to decontaminate the building. Approximately one year after the district court entered the consent decree, the EPA changed its plan and decided to demolish the building instead. The Knotes invoked the decree's internal dispute-resolution process, claiming that the EPA's change of plan was not supported by the data, and that the EPA had violated the decree by refusing to share the data that would show whether demolition was necessary or cost efficient. The EPA refused to follow the decree's dispute-resolution process, ³ arguing that the consent decree did not confine the EPA's choice of response actions. The Knotes requested that the district court order the EPA to abide by the dispute-resolution process set out in the decree. The district court did so, ordered the EPA to analyze and provide the Knotes with the requested data, ⁴ and enjoined the demolition of the building until the dispute-resolution process had been followed.

II. DISCUSSION

A. Jurisdiction

The Knotes first argue that we have no jurisdiction to hear this appeal because the district court's order is not "final," and because the EPA's voluntary compliance pending appeal renders the issue moot. We disagree. See, e.g., Walker v. United States Dep't of Housing and Urban Dev., 912 F.2d 819, 825 (5th Cir.1990) (order interpreting obligations under consent decree final; voluntary compliance pending appeal does not moot issue of whether order exceeded court's authority under consent decree); Kittitas Reclamation Dist. v. Sunnyside Valley Irrigation Dist., 763 F.2d 1032, 1034 n. 1 (9th Cir.) (same), cert. denied, 474 U.S. 1032, 106 S.Ct. 593, 88 L.Ed.2d 573 (1985); see also Miller v. Alamo, 975 F.2d 547, 549-50 (8th Cir.1992); Navarro-Ayala v. Hernandez-Colon, 951 F.2d 1325, 1328-33 (1st Cir.1991); Brewster v. Dukakis, 675 F.2d 1, 3-4 (1st Cir.1982).

B. Merits

The EPA argues that the district court's order results from a misinterpretation of the consent decree. According to the EPA, the consent decree is a simple cash-out agreement in which the Knotes agreed to pay $440,000 in exchange for the EPA's promise not to sue them for the costs of the cleanup. It contends that the decree does not cover response actions, and in fact expressly excludes such actions from its terms. Therefore, the dispute-resolution section of the decree cannot reasonably be thought to apply to disagreements arising from a response action.

According to the Knotes, and the district court, ⁵ the decree was entered into with the understanding that the building in question would be decontaminated rather than demolished. Under this analysis, the decree covers issues relevant to that response action, such as reasonable access to the site by the EPA, sharing of data by the EPA, and negligent or reckless damage to the building by the EPA. The Knotes also argue that they bargained to obtain timely or otherwise unavailable judicial review of arbitrary and capricious decisions by the EPA through the dispute-resolution process.

In reviewing a district court's interpretation of a consent decree, we basically look to rules of contract interpretation. United States v. ITT Continental Baking Co., 420 U.S. 223, 238, 95 S.Ct. 926, 935, 43 L.Ed.2d 148 (1975); United States v. City of Ft. Smith, 760 F.2d 231, 233-34 (8th Cir.1985). Our review is de novo where the district court's interpretation of the decree is based solely on the written document, and clearly erroneous where the interpretation is based on extrinsic evidence. See Towers Hotel Corp. v. Rimmel, 871 F.2d 766, 770-71 (8th Cir.1989). However, even when interpreting the meaning of a consent decree "as written," we are not to ignore the context in which the parties were operating, nor the circumstances surrounding the order. ITT, 420 U.S. at 243, 95 S.Ct. at 938. This is because a consent decree is a "peculiar sort of legal instrument that cannot be read in a vacuum. It is a kind of private law, agreed to by the parties and given shape over time through interpretation by the court that entered it." Sennewald v. University of Minnesota, 847 F.2d 472, 475 (8th Cir.1988) (R. Arnold, J., concurring). We therefore give a large measure of deference to the interpretation of the district court that actually entered the decree. Id.

The district court found that the consent decree had been arrived at with the understanding that the Knotes would be left with a decontaminated and usable site and building. Hence, the provisions which give the EPA reasonable access, provide for data sharing as to the cleanup, put restrictions on marketability until the successful conclusion of the cleanup, and reserve any rights the Knotes might have to be compensated for the EPA's negligent or reckless damage to their property. The EPA argues that the district court clearly erred in determining the context of the decree because it misunderstood the sequence of events. As the EPA notes, the Knotes agreed to the language of the draft consent decree in August of 1990, and the issuance of the Record of Decision (ROD), the last administrative action necessary for the EPA to choose decontamination as its official response action, did not take place until December of 1990. Therefore, according to the EPA, the Knotes could not have relied on a planned end result of a decontaminated building in agreeing to the language of the decree.

However, the district court's express consideration and rejection of the EPA's timing argument belies the EPA's assertion that the district court misunderstood the sequence of events. United States v. Knote, 818 F.Supp. 1280, 1284 (E.D.Mo.1993). The district court's discussion shows that it had a complete understanding of the sequence of events and the importance the EPA attached to that sequence; it simply disagreed that the sequence was determinative of the controversy. The district court found that the feasibility study underlying the December 1990 ROD was completed before the Knotes agreed to the draft consent decree, and that they relied on that study in so doing. Id. The EPA has made no argument or showing that this finding was error.

Further, while the parties agreed to the draft decree in August of 1990, it was not even presented to the district court, or for notice and comment, until July of 1991, well after the official December 1990 ROD was issued. Just as the consent decree did not spontaneously spring up in final form to be entered by the district court in September of 1991, we find incredible any proposition that the content of the December 1990 ROD was a complete surprise to the Knotes. ⁶ The parties delay in presenting the draft decree to the district court until well after decontamination became the official plan is consistent with the court's finding that the negotiations were based on a consensus that the building would be decontaminated and not destroyed. The EPA's timing argument does not convince us that the same decree would have been presented to the court had demolition been the outcome of the 1990 ROD. In view of the district court's superior knowledge of the situation, the EPA's failure to support its contention of clear error with anything other than the date of the official ROD, and the parties conduct in delaying presentation of the draft decree to the court until well after the final ROD issued, we find no error in the district court's understanding of the context of the decree. Thus, it is in that context that we consider the decree as written.

The decree has twenty-one separate sections, each addressing a particular point. Two sections, III and XI, contain the language that the EPA claims exempts amendment of its decision to decontaminate the building from the ambit of the decree. Section III deals with access to the site, and Section XI deals with the EPA's reservation of causes of action arising out of the contamination.

Section XI provides that "except as provided in Section X, [nothing] shall in any way limit or restrict the response and enforcement authority of the United States to initiate appropriate actions under Sections 104, 106 and 107 of CERCLA ... against Defendants or against any other person or entity not a party to this Decree." EPA Appendix at 31 (emphasis added). Section X, which immediately precedes the above reservation, outlines the EPA's covenant not to bring a civil suit against the Knotes under certain sections of CERCLA or RCRA for releases of hazardous substances currently at or around the site. The reservation of rights in Section XI, although citing Section 104 (a source of response action authority) is internally limited to reserving...