US v. Bay Area Battery

• Decision Date: 18 August 1995
• Docket Number: Civ. A. No. 94-50390-LAC.
• Citation: 895 F. Supp. 1524
• Parties: UNITED STATES of America, Plaintiff, v. BAY AREA BATTERY, et al., Defendants.
• Court: U.S. District Court — Northern District of Florida

895 F. Supp. 1524

UNITED STATES of America, Plaintiff, v. BAY AREA BATTERY, et al., Defendants.

Civ. A. No. 94-50390-LAC.

United States District Court, N.D. Florida, Panama City Division.

August 18, 1995.

COPYRIGHT MATERIAL OMITTED

Samuel Alter, Assistant U.S. Attorney, Pensacola, FL, Leslie Allen, Senior Attorney, Environmental Enforcement Section, Environment and Natural Resources Division, United States Department of Justice, Washington, DC, for plaintiff.

Philip Bates, Clark, Partington, Hart, Pensacola, FL, Robert Steinwurtzel, Thomas R. Lotterman, Bonnie S. Kartzman, Swidler & Berlin, Washington, DC, for defendants.

ORDER GRANTING ENTRY OF CONSENT DECREE

COLLIER, District Judge.

Pending is the Government's motion for entry of a consent decree in this action brought under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA). The Government negotiated the decree with 11 companies and individuals identified as potentially responsible parties (PRP's) under CERCLA for the contamination at the Sapp Battery Superfund Site (the Site). Intervenor Jackson Iron & Metal Co. opposes the decree. After reviewing the briefs and evidence, the Court grants the Government's motion.

I Factual Background

In December 1990 and May 1991, the EPA sent letters to approximately 225 companies and individuals identifying them as PRP's for the Site and demanding payment for past response costs. A number of these PRP's banded together to form the Sapp Battery Superfund Site Group (the Group). Throughout 1991, the Environmental Protection Agency (EPA), Department of Justice (DOJ) and the Group attempted to negotiate a consent decree resolving the Group's liability for the Site's cleanup. When negotiations dragged on into 1992, however, the EPA issued Unilateral Administrative Orders under section 106 of CERCLA. These orders required the Group and other PRP's to commence cleaning up the Site by February 1992 or face significant fines. In April 1992, the Group and the Government signed a consent decree which the Court entered in United States v. Aaron Scrap Metals, Inc., case no. 92-50244-LAC (N.D.Fla. March 10, 1993) hereinafter the "the Aaron Scrap decree".

Under the Aaron Scrap decree, the Group is obligated to pay the Government $1 million to partially reimburse the Government for past response costs. The Group further agreed to clean up the soil at the Site at an estimated cost of $15 million. While the Aaron Scrap decree settled the Group's liability for the soil cleanup, it left unresolved the Group's liability for cleaning up the groundwater and natural resource damage. The Group remains liable to the Government and/or private parties for costs in these areas.

While negotiating the Aaron Scrap decree, the Group apparently sought an agreement completely resolving its members' liability for the Site's cleanup. The Group also sought broad protection from contribution claims by other PRP's under section 113(f)(2) of CERCLA. The Government refused both requests, and instead limited the terms of the Aaron Scrap decree to the soil cleanup. The Government further indicated it would pursue non-settling, "recalcitrant" PRP's for the remainder of the Government's nearly $3 million in past costs.

Since signing the Aaron Scrap decree, the Group has filed two CERCLA actions against groups of non-settling PRPs. See Chatham Steel v. Sapp, case no. 93-50064 (N.D.Fla., filed March 9, 1993) hereinafter Sapp ; Chatham Steel v. Airline Auto Salvage, case no. 94-50383 (N.D.Fla., filed Dec. 12, 1994) hereinafter Airline Auto . In these suits, the Group seeks to recoup costs it has incurred pursuant to the Aaron Scrap decree.¹ Ten of the defendants in Sapp and Airline Auto are signatories of the decree in the instant case.²

In early June 1993, the Government began its efforts to collect the remainder of its past costs. The EPA sent out demand letters to the viable, non-de minimis PRP's who had not settled with the Government. The EPA demanded over $2.6 million in past response costs from these PRPs. Seven PRPs responded stating that while they could not pay the full amount, they wanted to cooperate with the Government. The EPA and these PRPs began negotiating the consent decree before the Court today.

Since the Government and the Group were pursuing the same parties for payment, the Government, the Group and the PRPs attempted to negotiate a three-way settlement. These negotiations broke down, however, over differences between the Government and the Group regarding how much the PRPs should pay and how to divide the payments between the Government and the Group. The Government proceeded to negotiate the consent decree without the Group's further participation.

The result is an "ability to pay" decree (the Decree) between the Government and 11 businesses and individuals. By all accounts, the PRPs signing the Decree do not have the financial resources to pay their "full" shares of the Site's cleanup cost. Several of the businesses have operated at a loss in recent years. The individuals involved range in income from impoverished to middle class. In negotiating the Decree, the Government required the PRPs to individually document their financial condition through tax returns, balance sheets and sworn affidavits.

The Government used this information to calculate payment amounts for each settling PRP. For the companies involved, the Government claims these figures represent the most each company can pay and still stay in business. As for the individual settlors, the Government asserts their payments allow them to compensate the Government without selling off significant assets or filing for personal bankruptcy.

In exchange for these payments, the Government is granting each settlor a complete release from liability under CERCLA for the Site's cleanup. In other words, the settlors are being allowed to "cash out." With certain reservations and reopeners, the Government covenants not to sue the settlors under sections 106 and 107 of CERCLA. The Government further grants the settlors contribution protection under Section XII.B of the Decree:

With regard to claims for contribution against Settling Defendants for matters addressed in this Consent Decree, the Parties hereto agree that the Settling Defendants are entitled to such protection from contribution actions or claims as is provided by CERCLA Section 113(f)(2), 42 U.S.C. § 9613(f)(2). For the purposes of this Section, and except as provided in Paragraphs X.B-E reservation of rights, matters addressed in this Consent Decree shall be Settling Defendants' liability pursuant to Sections 106 or 107(a) of CERCLA for implementation of response actions at the Site, including liability for Response Costs incurred by the United States or response costs incurred and to be incurred by any other person with respect to the Site.

This last provision lies at the heart of the Group's opposition to the Decree. As discussed below, the Decree's contribution protection insulates the settlors from damages in the Sapp and Airline Auto actions.

Though the Group is not part of the settlement, the Decree contains several provisions in its favor. For one, the Group will receive 20 percent of the settlement amount, with the Government keeping 80 percent. The Decree also requires the settling PRPs assist the Group in locating other PRPs. Finally, the Decree requires the settlors assign to the Group any rights they have under insurance policies covering their CERCLA liability.

The Government lodged the Decree with the Court on December 27, 1994. As required by law, notice of the proposed Decree was published in the Federal Register on January 5, 1995. See 60 Fed.Reg. 1801 (Jan. 5, 1995). The 30-day public comment period expired on February 6, 1995.

During the comment period, the Government received one set of comments from the Group. In its comments, the Group strongly objected to the Decree. Jackson Iron & Metal Co., intervening in this action on behalf of the Group, has also filed a brief opposing the Decree. Since lodging the Decree with the Court, the Government and the settling PRPs have agreed to certain minor modifications of the Decree. The Government therefore moves for entry of the Decree, as modified.

II Discussion

The Group raises several objections to the Decree. The Group complains the Decree treats them unfairly because the settlors are getting a better deal than the Group received in Aaron Scrap. For example, the settlors in the instant case are being permitted to cash out, while the Group was not. At the same time, the Group complains the settlors are not paying their "fair share" of the costs. In particular, the Group challenges the Government's calculations of what several settlors could pay towards the cleanup. The Group also believes it should get more than 20 percent of any recovery. Perhaps the Group's most significant complaint, however, is the Government foreclosing the Group from recovering damages from the settlors who are also defendants in the Sapp and Airline Auto actions.

In reviewing a proposed consent decree, a court's function is "`satisfy itself that the settlement is reasonable, fair, and consistent with the purposes that CERCLA is intended to serve.'" United States v. Cannons Engineering Corp., 899 F.2d 79, 85 (1st Cir.1990) (quoting H.R.Rep. No. 253, Pt. 3, 99th Cong., 1st Sess. 19 (1985) reprinted in 1986 U.S.Code Cong. & Admin.News 3038, 3042). Though the decision to approve or reject a consent decree is left to a district court's discretion, see United States v. Hooker Chemical & Plastics Corp., 776 F.2d 410, 411 (2d Cir.1985), the court must exercise its judgment deferentially.

It is not the Court's place to determine whether the decree represents an optimal settlement in the Court's view. United States v. Cannons Engineering Corp., 720 F.Supp. 1027, 1036 (D.Mass.1989), aff'd, 899 F.2d 79 (1st Cir.1990). "Where a court is...