US v. Union Elec. Co.

• Decision Date: 14 August 1996
• Docket Number: No. 1:92CV00078 GFG,1:92CV00088 GFG.,1:92CV00078 GFG
• Citation: 934 F. Supp. 324
• Parties: UNITED STATES of America, Plaintiff, v. UNION ELECTRIC COMPANY, et al., Defendants. STATE OF MISSOURI, et al., Plaintiffs, v. UNION ELECTRIC COMPANY, et al., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

934 F. Supp. 324

UNITED STATES of America, Plaintiff, v. UNION ELECTRIC COMPANY, et al., Defendants.

STATE OF MISSOURI, et al., Plaintiffs, v. UNION ELECTRIC COMPANY, et al., Defendants.

Nos. 1:92CV00078 GFG, 1:92CV00088 GFG.

United States District Court, E.D. Missouri, Southeastern Division.

August 14, 1996.

COPYRIGHT MATERIAL OMITTED

Madeleine B. Cole, Office of U.S. Attorney, St. Louis, MO, Barry M. Hartman, Elizabeth L. Loeb, Steven Novick, Michael McNulty, U.S. Dept. of Justice, Washington, DC, Sarah Toevs-Sullivan, U.S. E.P.A., Region VII, Kansas City, MO, Amy Svoboda, U.S. E.P.A., Office of Enforcement, Washington, DC, for plaintiff U.S.

John F. Cowling, George M. Von Stamwitz, Armstrong and Teasdale, St. Louis, MO, Alphonse McMahon, GE Plastics, Mt. Vernon, IN, for defendant Union Electric Company.

Alphonse McMahon, GE Plastics, Mt. Vernon, IN, for all other defendants.

ORDER AND MEMORANDUM

GUNN, District Judge.

This matter is before the Court on the federal government's Motion to Re-enter Consent Decree.

This action was brought by the United States pursuant to sections 106 and 107 of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"). 42 U.S.C. §§ 9606, 9607. The government seeks approval of a consent decree lodged with this Court. The Consent Decree requires certain potentially responsible parties ("PRPs") to pay some of the costs associated with cleaning up the Missouri Electrical Works Site ("MEW Site") in Cape Girardeau, Missouri.

Pursuant to the mandate of the Eighth Circuit, the Court granted the Motion to Intervene of various parties (the "Intervenors") on November 29, 1995. United States v. Union Elec. Co., 64 F.3d 1152 (8th Cir. 1995). The Intervenors are non-settling PRPs, and they contest court approval of the consent decree. In an Order dated April 11, 1996 the Court found that an evidentiary hearing was not necessary.

I. Background

In June of 1992, the United States filed suit against 179 PRPs for injunctive relief and the recovery of costs for the cleanup of the MEW Site. The State of Missouri filed an identical suit less than one month later against the same PRPs. The two cases were consolidated and the Consent Decree was lodged with the Court.

The MEW Site was owned at all relevant times by Missouri Electrical Works, Inc. ("MEW"), an electrical equipment sale and repair shop located near Cape Girardeau, Missouri. Since 1953, MEW has repaired or scrapped more than 16,000 transformers at the MEW Site. The total amount of transformer oil that was not recycled during MEW's operation is estimated at 28,000 gallons. Apparently, solvents, hazardous chemicals, and electrical equipment, including thousands of transformers containing oil contaminated with polychlorinated biphenyl ("PCB"), were disposed of at the MEW Site adjacent to the shop.

The Environmental Protection Agency ("EPA") began to investigate the MEW Site in the mid-1980s. EPA found that the soil at the MEW Site is contaminated with PCBs, specifically Aroclor 1260. It also determined that there is some groundwater contamination; however, later studies contradicted that finding and the current status of groundwater contamination, if any, is uncertain.

In 1988, EPA and a group of PRPs formed the Missouri Electric Works Steering Committee ("MEWSC") through an Administrative Order on Consent. MEWSC was to conduct a remedial investigation and feasibility study at the MEW Site.

From 1988-91, EPA sent general notices to all PRPs and special notice letters inviting PRPs to participate in settlement negotiations. MEWSC as well sent letters inviting participation and keeping all PRPs informed of its activities. The negotiations involving the federal government, the State of Missouri, and MEWSC resulted in the Consent Decree. EPA sent a copy of the decree to all PRPs and invited their participation. PRPs were given an opportunity for final objections to the ultimate settlement package.

The Intervenors are service shop owners and their trade association. The Intervenors either sold 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. The Intervenors object to the entry of the Consent Decree.

II. Provisions of the Consent Decree

The Consent Decree generally requires that, subject to oversight by EPA, the settling PRPs (1) design and implement specific remedial action for the soil contamination and operate and maintain the MEW Site consistent with such action; (2) perform a groundwater design investigation; and (3) reimburse certain future and past response costs incurred by the government. (Consent Decree, Exh. A at 13-14, 16-18, 20-25, 29-30, 52-54.)

The settling defendants agree to establish and maintain financial security in the amount of $17.6 million and a trust fund to assure completion of the work. Id. at 42, 44. Settling defendants must pay for all costs but will be reimbursed by the government for 20% of some costs incurred in the design and construction of the remedial action, the groundwater design investigation and additional response actions conducted necessary to achieve certain performance standards. Id. at 46. Additionally, special provisions in the Consent Decree apply to the cashout payments of settling federal agencies and various de minimis settling defendants. Id. at 85-86, 91, 101. The de minimis settling defendants each contributed less than fourtenths of one percent (0.4%) of the hazardous substances to the Site. Id. at 5.

MEWSC developed a cost Allocation Formula to determine the liability of all parties to the settlement. Id. App.K. Basically, the Formula makes liability volumetrically proportional to the amount of oil contained in types of electrical equipment at the MEW Site. Id. App. K at 2. An individual PRP's share of the liability is dependent upon that PRP's relationship to the various equipment at the Site. Id.

III. Entry of the Consent Decree

Before entering a consent decree, this Court must find that the settlement is procedurally fair, substantively fair, reasonable, and consistent with CERCLA. United States v. Hercules, 961 F.2d 796, 800 (8th Cir.1992); United States v. Cannons Eng'g Corp., 899 F.2d 79, 84-86 (1st Cir.1990); Arizona v. Nucor Corp., 825 F.Supp. 1452, 1456 (D.Ariz.1992), aff'd sub nomine, Arizona v. Components, Inc., 66 F.3d 213 (9th Cir.1995).

A. Procedural Fairness

"To measure procedural fairness, a court should ordinarily look to the negotiation process and attempt to gage its candor, openness, and bargaining balance." Cannons, 899 F.2d at 86. The Intervenors complain that EPA refused to negotiate with them separately and that MEWSC was controlled by PRPs who believed in spreading liability among as many parties as possible. The PRPS in charge of MEWSC, according to the Intervenors, were only interested in decreasing their own liability. The Intervenors assert that their interests were not represented by MEWSC and that they were effectively denied access to the group's discussions and negotiations due to high participation fees. They further contend that their involvement as nonmembers of MEWSC was meaningless.

The initial assessment to cover MEWSC's expenses was $200 per member; however, the initial assessment was $2,500 for PRPs who had equipment at the site with a total rating of over 90 kilovoltampere. The two tier assessment system was designed to minimize the impact on di minimis members. Under the Group Agreement which every member signed, those paying the higher assessment are given more voting power than the di minimis members. Members were required to pay the assessment or face exclusion from MEWSC. The Group Agreement also provides that members whose interest or actions were regarded as contrary to the interests of the group could be removed by a vote of two-thirds of the group's voting power.

The Court has reviewed the Group Agreement and minutes from the many MEWSC meetings. The Court finds that there was no unfairness in MEWSC's management and operation. The Intervenors had ample opportunity to participate in the negotiations which lasted for several years. The membership fees were not unreasonable, and MEWSC made an effort to keep the nonmembers informed of the group's activities and invited them to attend many of the group's meetings. The Intervenors remained informed about MEWSC's activities throughout its negotiations with the EPA.

There is nothing inherently unfair about EPA's choosing to negotiate and settle with MEWSC. Under CERCLA, EPA is "at liberty to negotiate and settle with whomever it chooses." Bliss, 133 F.R.D. at 569 (citing Cannons, 899 F.2d at 93.) "EPA's practice of negotiating with a representative group of PRPs, then having them resolve the details of the settlement among themselves, is a practical and reasonable process for achieving settlements." United States v. Acton Corp., 733 F.Supp. 869, 873 (D.N.J.1990). See also United States v. Charles George Trucking, Inc., 34 F.3d 1081, 1086 (1st.Cir.1994).

Furthermore, in this case, EPA was not unwilling to negotiate with the Intervenors separately. EPA invited the Intervenors to make a settlement offer; the Intervenors declined. EPA and the Intervenors exchanged letters on numerous occasions regarding the possibility of separate settlement and on the Intervenors' claims of nonliability for many transactions with MEW. The Intervenors were not ignored. EPA also expressed a willingness to review MEWSC's proposed allocations. Some PRPs were able to convince the EPA to reduce their allocations. Again, "what the Intervenors do not appreciate is that a failure of all parties to reach an agreement with the government is not necessarily indicative of procedural unfairness." United States v. Union Elec. Co., 863 F.Supp. 1001, 1006 (E.D.Mo.1994).

The record in this case demonstrates that the EPA and MEWSC attempted an open and candid dialogue among...