64 F.3d 1152 (8th Cir. 1995), 94-3606, United States v. Union Elec. Co.

Docket Nº:94-3606.
Citation:64 F.3d 1152
Party Name:Fed.R.Serv.3d 633, 26 Envtl. UNITED STATES of America and State of Missouri, Plaintiff-Appellees, Flanders Electric Motor Service, Inc.; Liberty Motor And Machinery Co.; Bradford Electric Co.; Mt. Vernon Electric Motor Service, Inc.; Roy G. Letourneau Co.; John Benson Electric Co.; Cotter Electric Co.; Chicago Electric Co.; Delta-Y Electric Co.; Po
Case Date:August 30, 1995
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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Page 1152

64 F.3d 1152 (8th Cir. 1995)

Fed.R.Serv.3d 633,

26 Envtl.

UNITED STATES of America and State of Missouri, Plaintiff-Appellees,

Flanders Electric Motor Service, Inc.; Liberty Motor And

Machinery Co.; Bradford Electric Co.; Mt. Vernon Electric

Motor Service, Inc.; Roy G. Letourneau Co.; John Benson

Electric Co.; Cotter Electric Co.; Chicago Electric Co.;

Delta-Y Electric Co.; Power Equipment Co.; Cardinal

Electric; and Electrical Apparatus Service Assoc.,

Intervenors-Appellants,

v.

UNION ELECTRIC CO., et al., Defendants-Appellees.

No. 94-3606.

United States Court of Appeals, Eighth Circuit

August 30, 1995

Submitted April 12, 1995.

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[Copyrighted Material Omitted]

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Jane Fedder Lazaroff, argued, St. Louis, MO (Joseph G. Nassif, Bruce D. Ryder and Linda W. Tape, on the brief), for appellant.

Jeffrey P. Kehne, argued, Washington, DC (Elizabeth Edmonds and David C. Shilton, on the brief), for the USA.

Thomas Blumeyer Weaver, St. Louis, MO (John R. Cowling and Shelley A. Woods, on the brief), for Union Electric.

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Before FAGG and BOWMAN, Circuit Judges, and BENNETT, [*] District Judge.

BENNETT, District Judge.

This litigation, under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. Secs. 9601-9675, raises a narrow but significant procedural question of first impression in this circuit: whether non-settling potentially responsible parties (PRPs) under section 107 of CERCLA should be allowed to intervene in order to oppose a consent decree that the United States government has reached with settling PRPs. This is a consolidated suit brought by the United States (EPA) and the State of Missouri pursuant to 42 U.S.C. Sec. 9607, to secure clean-up of hazardous substances at the site of an electrical equipment repair and salvage company and to recover the government's response costs. Appellants, non-settling PRPs, are appealing an order of the United States District Court for the Eastern District of Missouri denying appellants' motion to intervene pursuant to Sec. 113(i) of CERCLA, 42 U.S.C. Sec. 9613(i), and Fed.R.Civ.P. 24(a) and (b), and further denying appellants' motion to deny entry of a Consent Decree.

The parties on appeal are the plaintiff-appellees the United States (EPA) and the State of Missouri, which has deferred to the EPA in all respects on appeal; 179 defendants-appellees, known as the "settling PRPs," who were PRPs sued in the district court and who had agreed to entry of the Consent Decree; and intervenors-appellants, a group of twelve "non-settling PRPs," all service shop owners, and their trade association, the Electrical Apparatus Service Association (intervenors-appellants are referred to herein as "the non-settling PRPs"). We reverse and remand.

I.

  1. Factual Background

    The subject of this lawsuit is the clean-up of the Missouri Electric Works Site (MEW Site) in Cape Girardeau, Missouri. An electrical equipment sale and repair shop once occupied the MEW Site, and, over a period of nearly forty years, engaged in the business of salvaging, selling, and repairing electrical equipment, including transformers. Beginning in the 1950s, transformers frequently used coolant oil containing polychlorinated biphenyls (PCBs), which, although useful in reducing the risk of transformer fires and explosions, posed a significant threat to the environment owing to their toxicity and persistence. Regulation of PCBs began in the late 1970s, but before that time, for many years, leakages and spills of PCB-laced coolant oils had been common at the MEW Site during the routine business of MEW.

    The EPA discovered PCB contamination at the MEW Site in the early 1980s. Pursuant to CERCLA, the EPA identified as PRPs approximately 735 companies that had sold used transformers to MEW, junked transformers with MEW, or sent transformers to MEW for repair. The non-settling PRPs are service shop owners who either sold electrical transformers directly to MEW for resale, sold transformers to third parties who resold them to MEW, or sent transformers owned by others to MEW for repair. However, the non-settling PRPs did not not send any transformers to MEW to be scrapped or otherwise disposed of. Many of the PRPs identified by the EPA joined a "PRP Group," which, for approximately two years, actively negotiated with the EPA concerning allocation of clean-up costs. The non-settling PRPs assert that the allocation formula arrived at in these negotiations "grossly overstated" their potential liability, because it did not allocate response costs in a way that reflected the comparative responsibilities of the various PRPs and did not correlate costs of remedial action with contaminants contributed by the parties.

    In September of 1991, the EPA distributed a proposed Consent Decree to all known PRPs requiring a response within sixty days if a PRP wished to be included in the settlement. On June 29, 1992, the EPA filed suit

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    pursuant to CERCLA Secs. 106 and 107, 42 U.S.C. Secs. 9606 and 9607, against 179 PRPs who had agreed to settle and also filed the proposed Consent Decree. The settlement decree required the settling PRPs to bear various costs of the clean-up of the MEW Site based on the allocation formula found objectionable by the non-settling PRPs. The Consent Decree offered the settling PRPs "such protection from contribution actions or claims as is provided by Sec. 113(f)(2) of CERCLA" for matters addressed in the Consent Decree.

    On November 5, 1992, the non-settling PRPs moved to intervene in this litigation. The non-settling PRPs claimed a legally protectable interest in the preservation of possible contribution claims against settling defendants and an interest in not being unfairly apportioned liability for the MEW clean-up. They also asserted a legal right to intervene under Fed.R.Civ.P. 24(a) and Sec. 113(i) of CERCLA, 42 U.S.C. Sec. 9613(i). On March 9, 1993, the district court denied the motion to intervene.

  2. The Decision Below

    The opinion below appears as United States v. Union Electric Co., 863 F.Supp. 1001 (E.D.Mo.1994). In denying the motion to intervene, the court found that the non-settling PRPs' interest in contribution was not a "significantly protectable interest" because it was too "speculative and contingent" to warrant intervention as of right. Union Electric Co., 863 F.Supp. at 1004. More specifically, the district court denied the motion for intervention on the following grounds. First, the court held that a claim for contribution under CERCLA Sec. 113(f)(1), 42 U.S.C. Sec. 9613(f)(1), is not a "significantly protectable interest" warranting intervention. Id. The court concluded that Congress had included the protection from contribution claims afforded settling PRPs under Sec. 113(f)(2), 42 U.S.C. Sec. 9613(f)(2), in order to encourage early settlement. Id. Therefore, intervention founded on an interest created by Sec. 113(f)(1) should not be used to frustrate the purposes of Sec. 113(f)(2). Id. Next, the district court found that the non-settling PRPs' interest in contribution claims was too speculative and contingent, because in order for that interest to arise, litigation not yet in progress would have to be commenced against the non-settling PRPs, and such litigation might or might not result in the attribution of liability to these PRPs. Id. In the alternative, the court held that the interest of the non-settling PRPs in preventing the settling PRPs from obtaining contribution protection was highly conjectural. Id. The court also denied permissive intervention, because to do so would prolong the settlement process and delay clean-up of the site. Id. at 1005.

    Having denied the non-settling PRPs' motion to intervene, the court also denied the non-settling PRPs' motion to deny entry of the Consent Decree as moot. Id. at 1008. The court then granted the EPA's motion to enter the Consent Decree. Id.

  3. The Appeal

    This appeal presents an issue of first impression in this circuit. That issue is whether the district court correctly held that non-settling PRPs did not have a legally protectable interest in rights to contribution stated in CERCLA Sec. 113(f)(1) sufficient to warrant intervention pursuant to Fed.R.Civ.P. 24 or CERCLA Sec. 113(i), 42 U.S.C. Sec. 9613(i), in a suit by the EPA against PRPs who had agreed to settle when settling PRPs would thereby obtain protection from contribution claims of non-settling PRPs pursuant to CERCLA Sec. 113(f)(2).

    The non-settling PRPs assert that "the only issue presented by the district court's order is whether or not the Intervenor-Appellants claimed an interest related to the subject of the action." Brief of Intervenors-Appellants, at 11. The non-settling PRPs argue that they had a legally protectable interest related to the subject of the action, because their interest in contribution claims was created by the CERCLA statute itself. The EPA and the settling PRPs counter that any interest the non-settling PRPs had was too contingent or speculative to be a protectable legal interest related to the subject of this action, and therefore the non-settling PRPs were properly denied leave to intervene. The EPA and the settling PRPs argue

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    that the non-settling PRPs' interest was contingent upon each member being sued, found liable, and assessed excessive liability. They also argue that it was the intent of Congress in enacting CERCLA that non-settling PRPs suffer exactly the consequence the non-settling PRPs complain of here of losing a right to make contribution claims against settling PRPs. Therefore they argue that no interest in contribution claims on the part of non-settling PRPs should be allowed to interfere with or delay settlement.

    II.

    The non-settling PRPs assert that they should have been allowed to intervene either pursuant to Fed.R.Civ.P. 24, which governs both...

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