Significant Superfund Ruling: 9th Circuit Rejects De Minimis CERCLA Settlements

Pillsbury Winthrop Shaw Pittman LLP
Anthony B. Cavender

August 7, 2014

Over a strong dissent, the U. S. Court of Appeals for the Ninth Circuit rejected the lower court’s approval of several proposed de minimisconsent decree settlements. The Arizona Department of Environmental Quality (ADEQ) had negotiated these settlements with a number of potentially responsible parties (“PRPs”) at the Broadway-Patano Landfill, a former hazardous waste site located in Tucson, Arizona; the site is being cleaned up at an expected cost of $75 million. Several parties claiming to be de minimis PRPs approached the ADEQ seeking early settlements of their alleged liability. Their allocations at the site ranged from 0.01% to 0.2% of the overall liability, and the ADEQ’s review of the record agreed with these conclusions. A proposed Consent Decree was filed with the U.S. District Court for Arizona. Although opposed by many intervenors, the court approved the Consent Decree. An appeal followed; the case is State of Arizona v. Raytheon, et. al., decided August 1, 2014.

The Court of Appeals held that the lower court was obliged to independently scrutinize the terms of the settlement, and that it had erroneously deferred to the ADEQ’s judgment that these settlements were in the public interest. In its decision, the lower court noted that the allocation was based on a record consisting of 800 witness interviews, and a 100,000 page record, and it did not feel compelled to second guess the ADEQ. The Court of Appeals held that no special deference was owed to a state agency interpreting a federal statute such as CERCLA. The dissent argued that the majority will now require the lower court to “wade deep into the abyss of liability allocation” and gauge the accuracy of the state agency’s decision which will require expertise that most courts do not possess. In addition, the majority did not acknowledge the significant role the states play in the CERCLA cleanup process. The majority, in a footnote, criticizes the dissent for engaging in a de novo review of the evidence by concluding that there was evidentiary support for the settlements. The dissent, for its part, rejected this criticism.

This article is being provided for informational purposes only and not for the purposes of providing legal advice or creating an attorney-client relationship. You should contact an attorney to obtain advice with respect to any particular issue or problem you may have. In addition, the opinions expressed herein are the opinions of Mr. Cavender and may not reflect the opinions of Synergy Environmental, Inc., Pillsbury Winthrop Shaw Pittman LLP or either of those firms’ clients.

 

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