US v. Telluride Co.

• Decision Date: 20 April 1994
• Docket Number: Civ. A. No. 93-K-2181.
• Citation: 849 F. Supp. 1400
• Parties: UNITED STATES of America, Plaintiff, v. The TELLURIDE COMPANY, and Mountain Village, Inc., d/b/a Telluride Mountain Village, Inc., Defendants.
• Court: U.S. District Court — District of Colorado

849 F. Supp. 1400

UNITED STATES of America, Plaintiff, v. The TELLURIDE COMPANY, and Mountain Village, Inc., d/b/a Telluride Mountain Village, Inc., Defendants.

Civ. A. No. 93-K-2181.

United States District Court, D. Colorado.

April 20, 1994.

Rebecca A. Lloyd, Dept. of Justice, Environmental Defense Section, Denver, CO, for U.S.

Steven B. Moores, Ass't Regional Counsel, EPA, Region VIII, Denver, CO, Allan Morrissey, Office of Enforcement, EPA, Washington, DC, for E.P.A.

David S. Neslin, Melanie Dummer Mills, Arnold & Porter, Denver, CO., for defendants.

ORDER DENYING MOTION TO APPROVE CONSENT DECREE

KANE, Senior District Judge.

The United States government commenced this action under the Federal Water Pollution Control Act Amendments of 1972 (the "Clean Water Act"), 33 U.S.C. §§ 1251-1387, seeking injunctive relief and civil penalties against The Telluride Company, Mountain Village Company, Inc., and Telluride Ski Area, Inc. (collectively, "Telco"), developers of the Telluride ski resort in Telluride, Colorado. The complaint alleges that, during its expansion of the ski area and construction of a residential community, golf course and parking facilities, Telco illegally filled approximately 44.5 acres of wetlands without a permit and in violation of the Clean Water Act.

On October 15, 1993, the same day the complaint was filed, the government lodged with the court a consent decree proposing a full settlement of the litigation. Notice of the decree was published in the Federal Register in accordance with 28 C.F.R. § 50.7 (1993), and the government received public comment on the proposed settlement. On January 21, 1994, the government requested that I approve and enter the decree. Both the government and Telco have filed briefs in support of that request. They further move for an expedited ruling on the motion. For the reasons explained below, I cannot conclude that the proposed consent decree is fair, reasonable and adequate or in the public interest. Therefore, I deny the motion to enter the decree.

I. Standard of Review.

The government and Telco urge me to approve this consent decree, invoking the familiar refrain that the court should encourage the settlement of litigation whenever possible. "Parties to a lawsuit may always compromise their dispute. But where the parties wish to incorporate their settlement into a judicial decree — where they seek the imprimatur of judicial approval — the court must give the agreement more scrutiny." Sierra Club v. Coca-Cola Corp., 673 F.Supp. 1555, 1557 (M.D.Fla.1987). This is not the typical litigation between private parties. Indeed, substantial public interests are at stake. In suits affecting the public interest, my role is more searching. See Janus Films, Inc. v. Miller, 801 F.2d 578, 582 (2d Cir.1986); Friends of the Earth v. Archer Daniels Midland Co., 780 F.Supp. 95, 99 (N.D.N.Y.1992). Contrary to what the parties' one-sided presentation might suggest, I may not nor would I merely imprimit their decision as though possessed of a clerical rubber stamp. United States v. Akzo Coatings of Am., Inc., 949 F.2d 1409, 1424 (6th Cir.1991); United States v. Cannons Eng'g Corp., 899 F.2d 79, 84 (1st Cir.1990).

I examine a proposed consent decree settling litigation under the Clean Water Act to determine whether it is fair, reasonable and equitable and does not violate law or public policy. See United States v. Metropolitan St. Louis Sewer Dist. (MSD), 952 F.2d 1040, 1044 (8th Cir.1992); Sierra Club, Inc. v. Electronic Controls Design, Inc., 909 F.2d 1350, 1355 (9th Cir.1990); Earth Island Institute, Inc. v. Southern Cal. Edison Co., 838 F.Supp. 458, 463 (S.D.Cal. 1993). Nearly any consent decree can be viewed simultaneously as "a crackdown or a sellout." William A. Rodgers, Jr., 2 Environmental Law: Air and Water, § 4.40 at 584 (1986). Both views are represented in this case. My role, however, is not to substitute my judgment of what constitutes an appropriate settlement or to reform the decree. Akzo Coatings, 949 F.2d at 1409; cf. Berger v. Heckler, 771 F.2d 1556, 1568 (2d Cir.1985) ("The court is not entitled to expand or contract the agreement of the parties as set forth in the consent decree....") Nevertheless, I may not abdicate my responsibility to ensure that the decree upholds the important policies underlying the Clean Water Act simply because the government advises me that I should defer to the EPA's judgment.

The words "fair, reasonable and equitable" have more than a superficial meaning. Fairness incorporates both procedural and substantive components. "To measure procedural fairness, a court should ordinarily look to the negotiation process and attempt to gauge its candor, openness, and bargaining balance." Cannons Eng'g, 899 F.2d at 86. Substantive fairness flows from procedural fairness. "To the extent that the process was fair and full of `adversarial vigor,' the results come before the court with a much greater assurance of substantive fairness." Id. at 87 n. 4 (quoting City of New York v. Exxon Corp., 697 F.Supp. 677, 693 (S.D.N.Y. 1988)); see also Akzo Coatings, 949 F.2d at 1433 ("In determining whether a decree is `fair,' courts have considered ... `the strength of plaintiff's case, the good faith efforts of the negotiators, the opinions of counsel, and the possible risks involved in the litigation if the settlement is not approved.'"). A consent decree that is substantively fair incorporates "concepts of corrective justice and accountability: a party should bear the cost of harm for which it is legally responsible." Cannons Eng'g, 899 F.2d at 87. Substantive fairness thus mirrors the requirement that the decree be equitable.

Likewise, "the evaluation of a consent decree's reasonableness will be a multifaceted exercise." Id. at 89. At least three factors are relevant in discerning whether the decree is reasonable: (1) whether the decree is technically adequate to accomplish the goal of cleaning the environment, (2) whether it will sufficiently compensate the public for the costs of remedial measures, and (3) whether it reflects the relative strength or weakness of the government's case against the environmental offender. Id. at 89-90. Overlaid on this evaluation is the most important factor: whether the consent decree is in the public interest and upholds the objectives of the Clean Water Act, the primary of which is "to restore and maintain the chemical, physical and biological integrity of the Nation's waters." 33 U.S.C. § 1251(a); see Akzo Coatings, 949 F.2d at 1435 ("Protection of the public interest is the key consideration in assessing whether a decree is fair, reasonable and adequate."); United States v. Seymour Recycling Corp., 554 F.Supp. 1334, 1339 (S.D.Ind.1982).

II. The Proposed Consent Decree.

The stated purpose of the consent decree is to cause Telco "to come into full compliance with the Clean Water Act and the provisions of applicable federal laws and regulations governing discharges of dredged or fill material into waters of the United States." (Consent Decree, ¶ 1 at 3). To this end, the decree first enjoins Telco from any future discharges at the development site in violation of the Clean Water Act. Second, it requires Telco to restore a total of 15.43 acres of wetlands at the ski area in accordance with a work plan attached to the decree. In addition, Telco must complete a mitigation project at Menoken Farms, a site located approximately sixty miles from Telluride, also in accordance with the work plan. The plan requires Telco to construct 26.5 acres of new wetlands at Menoken Farms and to monitor the site for at least three years. Finally, Telco must pay a civil penalty of $143,000 and undertake an additional wetlands preservation project in San Miguel County, Colorado amounting to $42,000 or pay that sum to the government if no suitable project is identified. Telco has not admitted liability for any Clean Water Act violation under the decree.

III. Analysis of the Consent Decree.

I am deeply concerned that this consent decree was not developed in a manner that was procedurally or substantively fair. I also question whether the decree is reasonable, particularly with respect to whether it is technically adequate, fully compensates the public for the alleged violations and takes into consideration the risks of litigation. Ultimately, because of these shortcomings, I cannot conclude that it fulfills the objectives of the Clean Water Act.

The record before me is limited. The Department of Justice commenced this litigation on October 15, 1993, the same day it lodged the proposed consent decree with the court. The EPA had previously referred the case to the Department, pursuant to a memorandum agreement between the two entities, on or about September 27, 1993, on a "prereferral negotiation basis." (See U.S.Mem. Br.Supp.Mot. Enter Consent Decree, Ex. C-26) (attaching letter to Richard B. Stewart). The EPA advised the Department that it would "attempt to settle this matter within sixty days of referral and, together with the Department of Justice, memorialize the settlement in a consent decree to be filed simultaneously with the complaint." (Id.) The EPA further stated that it "seeks a significant civil penalty from the defendants in order to deter other developers from ignoring the requirements of Section 404 of the Clean Water Act," in the minimum amount of $185,000. (Id.)

Therefore, unlike many other environmental enforcement cases, this proposed decree was not the product of the parties' desire to settle long-running litigation through which the strength and weaknesses of each side's case was revealed. Compare United States v. Hercules, Inc., 961 F.2d 796, 798 (8th Cir.1990) (decree entered after ten years of litigation). This case was filed merely as the vehicle by which the parties' settlement agreement could receive judicial approval and, if necessary, enforcement when breached. Here, the adversary system has...