Petition for Writ of Certiorari — Dico, Inc. v. United States

Supreme Court brief2002

Ask Donna

What actually matters in this document.

Text

— Supreme Court

(i) FiLeo -

01160 7 Apr 2 4 2002

No. 01- OFPICE OF THE CLERK

IN THE

Supreme Court of the United States

DICO, INC.,

Petitioner,

UNITED STATES OF AMERICA,

Respondent.

On PETITION FOR A Writ oF CERTIORARI TO THE

UNITED STATES Court OF APPEALS FOR THE EIGHTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

J. MICHAEL SMITH

Counsel of Record

Jon R. MuTH

S. Grace Davis

MILLER, JOHNSON, SNELL

& CuMMISKEY, P.L.C.

Attorneys for Petitioner

250 Monroe, N.W., Suite 800

P.O. Box 306

Grand Rapids, MI 49501-0306

(616) 831-1700

173599 ce)

COUNSEL PRESS

(800) 274-3321 * (800) 359-6859

OEP HIRE EOIN

<REE TR IT o

QUESTIONS PRESENTED

This petition concerns statutory interpretation and Fifth

Amendment rights under the Comprehensive Environmental

Response, Compensation, and Liability Act (“CERCLA” or

“the Act”), 42 U.S.C. § 9601, et seq.

CERCLA expressly grants to parties that have incurred

environmental cleanup costs under the Act (“PRP’s”) the right

to obtain contribution from other PRPs who have not yet

paid their share of those costs. 42 U.S.C. § 9613(f)(1). These

contribution rights serve a critical public function in

CERCLA’s order: they provide an impetus, that would ~

otherwise not exist, for parties to conduct prompt cleanup of

hazardous waste first, and to sue other PRPs to recover

portions of those cleanup costs /ater.

In contravention of manifest Congressional intent and

federal common law, the Eighth Circuit held in this case that

CERCLA contribution rights are forever inchoate and can

be extinguished through the mechanism of contribution

protection offered by the government pursuant to 42 U.S.C.

§ 9613(f)(2). In so doing, the court below established a

national rule that CERCLA contribution rights are subject to

complete forfeiture by the government, regardless of whether

those rights have become fixed by an administrative or court

order, effectively eliminating the judiciary from an intended

scheme of checks-and-balances.

Therefore, the questions presented are: (1) when, if ever,

does petitioner’s contribution claim become a vested property

right protected by the Fifth Amendment; and (2) whether

CERCLA’s contribution provisions allow the government to

grant contribution protection if it has the effect of

extinguishing a vested contribution claim.

STATEMENT OF THE PARTIES

BP Amoco Oil PLC, BP Amoco PLC, Chevron Chemical

Company, Bayer Corporation, Monsanto Company, and Shell

Oil Company were defendants below and are being served

as respondents herein.

STATEMENT PURSUANT TO RULE 29.6

Petitioner, Dico, Inc., is a wholly-owned subsidiary of

Dyneer Corporation, itself a wholly-owned subsidiary of

Titan International, Inc.

ee Ne ee ee oe

lil

TABLE OF CONTENTS

Page

EEE EE TE Te eee ee ee i

ED cic ckeebsceseecesens il

Statement Pursuant to Rule 29.6 ............... il

EE ee err eee Pe rere eee il

Table of Cited Authorities ............. Perey eT Vv

ED ng bec besebcbnesevinwos<as x

ESSEC E TET CEE ETE ETE l

MOOROUNOME GE TUTIIGIOTIOM ow. 5 ccc cece ccccecs l

Statutory Provisions Involved ................. l

GET POLIO: oo dc vce wcdcnsevscsessucr 2

Yo ES rr ae 2

II. The District Court’s Decision. ........... 6

Ill. The Eighth Circuit’s Decision. ........... 6

Reasons for Granting the Writ ................. 8

I. Certiorari Is Warranted Because The Decision

Below Conflicts With Federal Common Law

And With Manifest Congressional Intent To

Codify A Vested And Constitutionally-

Protected Contribution Right. ............ 9

Contents

Page

A. Congress Codified A Contribution Right

Capable Of Vesting And Thus Becoming

Constitutionally Protected Property

Under The Fifth Amendment. ........ 12

B. Petitioner’s Contribution Right Vested i

When The Government Imposed An :

Unilateral Administrative Order Against

a eee rrr er er ree 15

II. Certiorari Is Necessary Because The Decision

Below Conflicts With Congress’s Intended

Statutory Scheme, Whereby Vested CERCLA

Contribution Rights Trump Contribution

PUOCRONOM CRRMOOR. onc ckccccnsces nese 20

Ill. The Decision Must Be Reversed Because

It Sets An Untenable National Rule

That Significantly Undermines Private

Party Cleanup Of Environmental Waste

ES, 5 Go VaR kee ke anaens 24

Rr OP nee eR GN PURI PE DED Iter eR VA Ae 26 =

TABLE OF CITED AUTHORITIES

Page

Cases

Akzo Coatings, Inc. v. Aigner Corp., 30 F.3d 761

(7th Cir. 1994), rehear. den'd (August 1994) .. . 24, 25

Alliance of Descendants of Texas Land Grants v.

United States, 37 F.3d 1478 (Fed. Cir. 1994),

rehear. den’d (Dec. 1974) ......-.0-- eee eeeee 18

Armstrong v. United States, 364 U.S. 40, 80 S. Ct.

1563, 4 L. Ed. 2d 1554 (1960) ...........---. 17

Board of Regents of State Colleges v. Roth, 408 U.S.

564, 92 S. Ct. 2701, 33 L. Ed. 2d 548 (1972)

ee akdh bean eee ee eee eee 13

Colorado v. ASARCO, Inc., 608 F. Supp. 1484

(D. Colo. 1965) 2... ccccsccceces aeeek ewan 9

Coombes v. Getz, 285 U.S. 434, 52 S. Ct. 435,

76 L.. Bd. G66 C1932) owns ccsccnccsccsecssas 17

Dico v. Amoco Oil Co., Civil No. 4-97-10130

(S.D. Iowa, filed February,1997) ..........--. ee

Eastern Enterprises v. Apfel, 524 U.S. 498,

118 S. Ct. 2123, 141 L. Ed. 2d 451 (1998) ..... 13

Ettor v. City of Tacoma, 228 U.S. 148, 33 S. Ct. 428,

$7 L.. BA TTS GIDRS) onc cc cess csecccavacnans 17

Forbes Pioneer Boat Line v. Board of

Commissioners, 258 U.S. 338, 42 S. Ct. 325,

66 L. Ed. G47 (1922) 202s secs ccsnasenaces 17, 18

Cited Authorities

In Re Aircrash in Bali, Indonesia on April 22, 1974,

684 F.2d 1301 (9th Cir. 1982), cert. denied by,

Pan American World Airways, Inc. v. Causey, 493

U.S. 917, 110 S. Ct. 277, 107 L. Ed. 2d 258

i, FRPP eee rr no ee ee

Johnston v. Cigna Corp., 14 F.3d 486 (10th Cir.

OS), CONE GH A CISOSD co ccenndecsctucencets

Logan v. Zimmerman Brush Co., 455 U.S. 422,

102 S. Ct. 1148, 71 L. Ed. 2d 265 (1982) ......

Mardan Corp. v. C.G.C. Music, Ltd., 804 F.2d 1454

oe Ber pr ere

McCullough v. Virginia, 172 U.S. 102, 19 S. Ct. 134,

43 L. BG. SEB (AGT oc ccccccvevess (oneeuaat

Mullane v. Central Hanover Bank & Trust Co., 339

U.S. 306, 70 S. Ct. 652, 94 L. Ed. 865 (1950)

Omnia Commercial, Co. v. United States, 261 U.S.

502, 43 S. Ct. 437, 67 L. Ed. 773 (1923) ......

Penn Cent. Transport. Co. v. City of New York,

438 U.S. 104, 98 S. Ct. 2646, 57 L. Ed. 2d 631

CIDTE) . . cccnccccccnacesssauuluaaeeeee

Texas Industries, Inc. v. Radcliff Materials, Inc.,

451 U.S. 630, 101 S. Ct. 2061, 68 L. Ed. 2d 500

(1SBL) . .ccccvcaccscbsceeceesaenene

Page

vil

Cited Authorities

United States v. A & F Materials Co., Inc.,

578 F. Supp. 1249 (S. D. errr

United States v. Cannons Engineering Corp.,

720 F. Supp. 1027 (D. Mass. 1989), aff'd, 899

F.2d 79 (istCir. 1990) .......-.-- eee eeeeeee

United States v. Charter Internat'l Oil Co., 83 F.3d

510 (ist Cir. 1996) .......--. 6 eee eee eens

United States v. Dico, 266 F.3d 864 (S.D. lowa 1995),

petition for writ of cert. filed, 70 USLW 3552

(Feb. 19, 2002) (No. 01-1223) ......------+>-

United States v. Maryland Sand, Gravel & Stone Co.,

Civ. No. HAR-89-2869, 1994 W.L. 541069

(D. Md. 1994) ......... 2c cece eee cree eens

United States v. New Castle County, 642 F. Supp.

1258 (D. Del. 1986) .........--0e eee creer

United States v. Northeastern Pharmaceutical and

Chemical Co., Inc., 579 F. Supp. 823 (W.D. Mo.

1984), aff'd in part, rev'd in part, 810 F.2d 726

(Sth Cir. 1986) ........ 2. eee cece cere tenes

Constitution

Page

9,21

U.S. CONST. Amend. V ...... i, 5, 6, 11, 12, 13, 15, 18

viii

Cited Authorities |

Page |

Statutes

WUBLC. GUAT) .......ccccccceccccceeee: |

42 U.S.C. §§ 9601-9657 .... 20... ccc ccec eee ee. |

A2UBC. §96OE oo... cc ccccccccnceccccceeess |

Oi BOE scien 3 |

42 U.S.C. § 9606(a) .......-ceeccccceccceeeees 2, 16

42 U.S.C. § 9606(b)(1) ..........eeeeeeeeeeees 16 |

MUSE. OO 6.666556 ss 3 |

42 U.S.C. § 9613(f(1) ..... i, 2, 6, 7, 10, 11, 12, 20, 23 |

42 U.S.C. § 9613(f)(2) .... i, 4,6, 10, 11, 12, 19, 20, 23 |

42 U.S.C. § 9613(g)(3) ......00.ceeeeeeeeeeee. 8.17 |

42 U.S.C. § 9613(g)(3)(A) ......eeeeeeeeeeeees 17

42 U.S.C. § 9613(g)(3)(B) ........0eeeeeeee. 2, 12, 17

APUBC. O9G2ID) «oo occinccccccdccccseeccs. 3 :

42 UB.C. $9657 ....5.0cccccrces. 5, 8, 12, 13, 14, 21

Cited Authorities

Page

Miscellaneous

P.L. 99-499 (1986), § 101, ef seg. ...---- eee eeee 9

131 CONG REC. 24450 ....... 0. cece eee e eee: 1]

131 CONG REC. 34645 ......... cece ee eeeee: 10

H.R. Rep. No. 253, 99th Cong., 2d Sess. (1986),

reprinted in 1986 U.S.C.C.A.N. 2835, reprinted

in 1986 U.S.C.C.A.N. 3041 2.2... eee ee ee eee 1]

H.R. Rep. No. 253(I), 99th Cong., Ist Sess., reprinted

in 1986 U.S. Code Cong. & Admin. News 2835

eT Peer eer eT Terr Te ere eee 4 ee

S. Rep. No. 99-11, 99" Cong., 1* Sess. 42 (1985) ... 11

NS nn

TABLE OF APPENDICES

Page

Appendix A — Opinion Of The United States Court

Of Appeals For The Eighth Circuit Dated And

Filed January 24, 2002 .........cccccccccess la

Appendix B — Order Of The United States District

Court For The Souther District Of Iowa, Central

Division Dated And Filed September 29,2000 ... 18a

Appendix C — Order And Judgment Of The United

States District Court For.The Southern District

Of Iowa, Central Division Dated And Filed

Se A EE 6 ca os aves sec ekacee eas 39a

Appendix D — Consent Decree_............... 53a

Appendix E — Relevant Statutes ............... 87a

Petitioner respectfully requests petition for a writ of

certiorari to review the judgment of the United States Court

of Appeals for the Eighth Circuit in this case.

OPINIONS BELOW

The district court’s opinion (per Longstaff, C.J.) denying

petitioner’s motion for an evidentiary hearing and granting

respondent’s motion for entry of the consent decree

(Pet. App. 18a-38a) is not otherwise published. The court of

appeals’ opinion (per McMillian, J., joined by Arnold and

Rosenbaum, J.J. (district judge sitting by designation),

affirming (Pet. App. 1a-17a) is published at 277 F.3d 1012.

The district court’s opinion granting respondent’s motion for

summary disposition (Pet. App. 39a-52a) is not otherwise

published.

STATEMENT OF JURISDICTION

The court of appeals entered its opinion and order on

January 24, 2002. Petitioner invokes this Court’s jurisdiction |

under 28 U.S.C. § 1254(1).

STATUTORY PROVISIONS INVOLVED

The provisions of the Comprehensive Environmental

Response, Compensation, and Liability Act (“CERCLA”),

42 U.S.C. §§ 9601-9657, relevant to this petition are reprinted

in the Appendix at 87a —89a.

LLL

STATEMENT OF THE CASE

I. Introduction.

Petitioner is the plaintiff in a related action, which it filed

seeking contribution for its environmental cleanup costs

from other liable parties under section 113(f)(1) of CERCLA,

42 U.S.C. § 9613(f)(1). Dico v. Amoco Oil Co., Civil No. 4-97-

10130 (S.D. Iowa, filed February, 1997) (“the contribution

claim’’).

In 1994, petitioner received two Unilateral Administrative

Orders from the Environmental Protection Agency (the “EPA”’),

under the authority of section 106(a) of CERCLA, 42 U.S.C.

§ 9606(a), directing petitioner, alone, to remediate the Superfund

site (the “Site’’). It did so at a cost of $5.7 million.!

The issuance of the two UAOs triggered the accrual

of CERCLA’s three year limitations period for contribution

claims. 42 U.S.C. § 9613(g)(3)(B). After the Site was

_ remediated, petitioner timely filed its contribution claim in 1997

against the five chemical companies that are the respondents to

this petition (“respondent-chemical companies”). Those

companies were liable for cleanup costs under CERCLA because

they were once customers of a chemical formulation business

that likely contributed tc the contamination of the Site.

1. Respondent-chemical companies conducted a separate

removal action on the Site pursuant to an Administrative Order On

Consent (“AOC”) that they negotiated with the EPA. The total cost

that they incurred under the AOC was $513,884.37.

Thus, the government forced petitioner alone to expend over

90% of the total PRP remediation costs before the government

completed its study of liability for contamination of the Site.

That study (called a “Non-Binding Preliminary Allocation of

Responsibility”) was completed in April 1998, and assigned 61% of

responsibility and corresponding cleanup costs to petitioner and 39%

of those costs to respondent-chemical companies.

_— ee

LU *

Petitioner maintained its claim through extensive discovery

and trial preparation.’ In 1998 — within approximately 120 days

of trial of the contribution claim — petitioner learned that the

respondent-chemical companies had negotiated a settlement

with the United States (the “government”’), which had never

been a party to the contribution claim and had no claims pending

elsewhere against the respondent-chemical companies.’

The settlement caused a consent decree to be entered against

the chemical companies. On November 29, 1999, the

government filed its complaint in this action pursuant to

CERCLA, 42 U.S.C. §§ 9606, 9607, seeking reimbursement of

its alleged oversight costs and entry of the consent decree that it

filed with its complaint. (Pet. App. 53a-86a, Consent Decree).

Petitioner moved and was permitted to intervene in this action,

and its contribution claim was stayed pending the district court’s

review of the consent decree.’

2. Petitioner conducted 21 months of discovery, including 21 fact

depositions and five expert depositions. As a result, petitioner secured

admissions from the respondent-chemical companies to establish their

liability as “arrangers” and, thus, liable parties under CERCLA.

The only remaining issue for trial was proper allocation of costs between

the parties.

3. In 1998, the government invited the parties to negotiate a

settlement of its alleged oversight costs. Petitioner declined unless the

settlement could address all issues at the Site, including the ongoing

dispute between Petitioner and the EPA on oversight costs on previous

operable units at the site. (See United States v. Dico, 266 F.3d 864

(S.D. Iowa 1995), petition for writ of cert. filed, 70 USLW 3552

(Feb. 19, 2002) (No. 01-1223)). Because of a history of disagreement

with the EPA regarding these oversight costs, petitioner did not view

the EPA as a neutral or fair arbiter of its contribution rights against the

respondent-chemical companies, which had already refused to negotiate

with petitioner.

4. On December 14, 1999, the decree was published in the Federal

(Cont'd)

Petitioner objected to the decree because it granted

unlimited contribution protection to the respondent-chemical

companies under section 113(f)(2) of CERCLA, 42 U.S.C.

§ 9613(f)(2). This protection was provided in Paragraph 22

of the decree, which states:

The parties agree, and by entering this Consent

Decree this Court finds, that the Settling

Defendants are entitled, as of the effective date

of this Consent Decree, to protection from

contribution actions or claims as provided by

CERCLA § 113(f)(2), 42 U.S.C. § 9613(f)(2) for

“matters addressed” in this Consent Degree.

“Matters addressed” are Past Response Costs and

Future Response Costs in connection with

Operable Units No. 2 and 4 whether incurred by

the United States or any other person.

(Pet. App. 70a, J 22).

The contribution protection was the carrot that led the

respondent-chemical companies to the bargaining table and

allowed the government to reap a windfall recovery for itself.

The respondent-chemical companies bought their way out

of petitioner’s contribution claim by paying $2,513,808

plus interest to the government’s Hazardous Substance

Superfund — an amount that was over $1 million above the

government’s alleged oversight costs and included a

settlement premium that was over $150,000 above the

estimated future costs for monitoring of the Site. None of

the settlement monies reimbursed petitioner for its $5.7

million in cleanup costs or its over $300,000 in litigation

costs.

(Cont'd)

filed extensive comments and objections, to which the government made

no substantive response before formally moving to enter the consent

decree on March 10, 2000.

Essentially, two opponents ganged up on petitioner by

cutting out its rights to a judicial resolution of its contribution

claim. Petitioner was already adverse to the government on

issues relating to oversight costs on prior operable units for

the Site (see United States v. Dico, 266 F.3d 864), and it

would be anticipated that the same issues would arise here.

The respondent-chemical companies were immersed in

litigation with petitioner. By cutting their deal the government

received all it could ever claim in oversight costs, plus a

premium, and the respondent-chemical companies resolved

petitioner’s contribution claims at the best price they could

) reasonably anticipate. Petitioner involuntarily paid a large

share of the consideration for respondents’ settlement in the

form of its vested contribution rights and its right to contest

the government’s oversight cost claims. Without petitioner

being stripped of its rights, the settlement would not have

happened. The end result from petitioner’s perspective isa

judicially sanctioned mugging.

Once entered, the consent decree resulted in a forfeiture

of both. petitioner’s contribution rights and its substantial

investment in seeking judicial enforcement of those rights.

See Dico, Inc. v. Amoco, et al., Civ. No. 4-97-10130, Order

(S.D. Iowa, March 13, 2002) (J. Longstaff) (Pet. App. 49a-

51a).

The forfeiture of petitioner’s pending contribution

claim violates petitioner’s right to due process and just

compensation under the Fifth Amendment. It also violates

the express language of section 157 of CERCLA, 42 U.S.C.

§ 9657, which guarantees that contribution protection will

not intrude on vested property rights.

Beyond the claims of the petitioner, the forfeit of

contribution rights contravenes Congress’s manifest intent

to encourage prompt and efficient cleanup of contaminated

sites by preserving federal common law contribution rights

and creating a system of checks-and balances to protect

those rights. It poses a serious disincentive to potentially

responsible parties at other sites, who now have no assurance

that their contribution rights resulting from their cleanup

activities will be immune from forfeiture by government fiat.

II. The District Court’s Decision.

On March 10, 2000, the government formally moved to

enter the consent decree. Petitioner opposed that motion and

simultaneously moved for an evidentiary hearing.

The district court denied petitioner’s motion for an

evidentiary hearing finding, in relevant part, that petitioner

had no constitutional right to an evidentiary hearing and/or

compensation under the Fifth Amendment because the

contribution rights afforded by CERCLA § 113(f)(1)

“continued to be limited by the statutory language” permitting

contribution bars under § 113(f)(2). (Pet. App. 28a).

The district court also granted the government’s motion

to enter the consent decree, finding it to be procedurally and

substantially fair, reasonable, consistent with CERCLA’s

statutory objectives, and constitutional even with respect to

the contribution bar set forth above. The district court entered

the decree on September 29, 2000.

Ill. The Eighth Circuit’s Decision.

On petitioner’s appeal, the Eighth Circuit affirmed in an

opinion remarkable for its brevity and limited analysis.

The circuit court held that petitioner had no vested property

interest in the contribution claim at the time the government

moved for entry of the consent decree. (Pet. App. 10a).

The opinion below cites only the statutory language itself to

support its holding. Its entire analysis is that petitioner:

... did not have a right to contribution at the time

the government moved for entry of the consent

decree. The basis for [petitioner’s} statutory

contribution claim. . . is § 9613(f)(1)..., which

is subject to and limited by § 9613(f)(2)....

In other words, [petitioner] never had a vested

property interest to be taken. [/d. at 9a-10a.]

For the same circular reason, the circuit court rejected

petitioner’s contention that the consent decree was manifestly

unreasonable and inconsistent with CERCLA, which

included the argument that the decree is unconstitutional.

The Eighth Circuit stated:

Regarding [petitioner’s] argument based upon

the contribution protection provided to the

[respondent-chemical companies], we emphasize

that such protection is explicitly authorized under

42 U.S.C. § 9613(f)(2). [/d. at 16a.]

The legal principle established by the Eighth Circuit is

that a PRP who has remediated a site under an Unilateral

Administrative Order can never have a vested and, thus,

constitutionally protected property right based on CERCLA

§ 9613(f)(1), no matter how vigorously such rights are

exercised, or whether the rights have been reduced to a fixed

amount by an administrative or court order.

This petition for a writ of certiorari followed.

REASONS FOR GRANTING THE WRIT

The petition should be granted for three reasons.

First, the Eighth Circuit’s opinion incorrectly interprets the

CERCLA statute by ignoring manifest Congressional intent

to codify a contribution right that is capable of vestiture, and,

in fact, vests when a PRP’s liability under CERCLA is

established in an administrative or court order against that

PRP. See CERCLA, 42 U.S.C. §§ 9613(g)(3), 9657. It also

conflicts with decisions of this Court and of other circuits

which establish that parties can have vested property rights

in claims that have become fixed or have been reduced to

judgment.

Second, the Eight Circuit’s decision subverts

Congressional intent to enact a statutory scheme that protects

contribution rights once they become vested property rights

and it disengages CERCLA’s important statutory checks and

balances on governmental settlement authority and power.

It establishes a rule in conflict with the common law and

statutory text. It tells the government that it can always strip

contribution rights from a party who has remediated a site;

no matter the time, the circumstances, the amount of

investment in the assertion of the claims, or even the

reduction of the claims to judgment.

Third, the Eighth Circuit’s judgment, as a practical

matter, sets a national rule that undermines a PRP’s incentive

to focus on prompt remediation first and on remediation costs

second. Review should be granted to prevent this irreversible,

nationwide harm.

I. Certiorari Is Warranted Because The Decision Below

Conflicts With Federal Common Law And With

Manifest Congressional Intent To Codify A Vested

And Constitutionally-Protected Contribution Right.

As originally enacted, CERCLA did not expressly

provide for a right to contribution among parties found to be

jointly and severally liable under the Act. However, in

construing the 1980 statute, courts found an implied right of

contribution among PRPs. Mardan Corp. v. C.GC. Music,

Ltd., 804 F.2d 1454, 1457 n.3 (9th Cir. 1986) (listing cases

recognizing an implied right of contribution of CERCLA);

United States v. New Castle County, 642 F. Supp. 1258, 1266-

69 (D. Del. 1986) (discussing legislative history); Colorado

v. ASARCO, Inc., 608 F. Supp. 1484, 1486-1490 (D. Colo.

1985); United States v. A & F Materials Co., 578 F. Supp.

1249, 1255-57 (S. D. Ill. 1984); United States v. Northeastern

Pharmaceutical and Chemical Co., Inc., 579 F. Supp. 823,

844-45 (W.D. Mo. 1984), aff’d in part, rev'd in part, 810

F.2d 726 (8th Cir. 1986).°

Congress clarified and confirmed this “implied night”

of contribution in the 1986 SARA amendments to CERCLA,

P.L. 99-499, § 101, et seq., which added the following

two-part provision regarding contribution:

5. Cases claiming that there never was an implied right of

contribution under CERCLA, repeatedly cite to Jexas Industries, Inc.

v. Radcliff Materials, Inc., 45 U.S. 630, 638, 101 S. Ct. 2061, 2065, ©

68 L. Ed. 2d 500 (1981), for the proposition that statutory contribution

rights do not exist as a matter of federal common law. See United

States v. Cannons Engineering Corp., 720 F. Supp. 1027, 1050

(D. Mass. 1989), aff'd, 899 F.2d 79 (1st Cir. 1990). However, Texas

Industries and its progeny are inapposite. Those cases do not address

CERCLA. And those cases stand for the proposition that rights created

by Congress can be subsequently limited or repealed by Congress.

First, in this case, the contribution rights at issue were codified, not

created, by Congress. Second, Congress is not limiting those rights;

the EPA and the United States Department of Justice are.

(f) Contribution

(1) Contribution

Any person may seek contribution from any

other person who is liable or potentially liable under

section 9607(a) of this title, during or following any

civil action under section 9606 of this title or under

section 9607(a) of this title. Such claims shall be

brought in accordance with this section and the

Federal Rules of Civil Procedure, and shall be

governed by Federal law. In resolving contribution

claims, the court may allocate response costs among

liable parties using such equitable factors as the

court determines are appropriate. Nothing in this

subsection shall diminish the right of any person to

bring an action for contribution in the absence of a

civil action under section 9606 of this title or section

9607 of this title.

(2) Settlement

A person who has resolved its liability to the

United States or a State in an administrative or

judicially approved settlement shall not be liable for

claims for contribution regarding matters addressed

in the settlement. Such settlement does not discharge

any of the other potentially liable persons unless its

terms so provide, but it reduces the potential liability

of the others by the amount of the settlement.

42 U.S.C. §§ 9613(f)(1), (2) (emphasis added) (respectively

referenced as “subsection (f)(1)” or “subsection (f)(2)”).°

6. See House of Judiciary Committee “Explanation of Purpose

and Intent,” 131 Conc. Rec. 34645 (Section 113 “clarifies the

availability of judicial review regarding contribution claims and

(Cont'd)

This petition seeks a resolution by this Court of the

inherent tension between these competing contribution

provisions — subsection (f){1), which expressly recognizes

a PRP’s right of contribution and vests jurisdiction for

allocation of response costs in the judicial branch, and

subsection (f)(2), which curtails that right and shields PRP’s

who settle with the government from contribution claims by

other PRPs.

The Eighth Circuit opinion incorrectly resolves the

conflict in favor of the settlement protection afforded under

(f)(2). It holds that subsection (f)(1) creates a contribution

“right” that is a priori not a vested right because it is always

subject to complete divestiture by the settlement protection

afforded in subsection (f)(2). The Eighth Circuit, therefore,

found that petitioner’s contribution claim was not, and

implicitly could not ever become, a property right protected

by the Fifth Amendment.

The Eighth Circuit’s sweeping holding is remarkable

for its lack of case law, statutory or analytical support.

(Cont'd)

settlements”); S. Rep. No. 99-11, 99th Cong., Ist Sess. 42 (1985)

(the bill “clarifies and confirms existing law” by adding contribution

provision); 131 Conc. Rec.- Senate 24450 (statement of Sen. Stafford,

sponsor of S. 51) (amendment would “remove any doubt as to the

right of contribution . . . . despite several recent district court cases

correctly confirming that we intended the law to confer such a right”).

H.R. 2817 and S. 51 were the House and Senate bills, respectively,

that ultimately became the SARA amendments.

See also H.R. Rep. No. 253, 99th Cong., 2d Sess., pt. 1, at 79

(1986), reprinted in 1986 U.S.C.C.A.N. 2835, 2861; id. pt. 3, at 18,

reprinted in 1986 U.S.C.C.A.N. at 3041; H.R. Rep. No. 253, 99th

Cong., Ist Sess., pt. 1, at 80 (1986), reprinted in 1986 U.S.C.C.A.N.

2835, 2862; id. pt. 3, at 18-19, reprinted in 1986 U.S.C.C.A.N. at

3041-42.

Are Se

The holding explicitly rests on a mere recitation of the

language in subsections (f)(1) and (f)(2). And it implicitly

rests on an erroneous assumption that Congress intended to

create a self-limiting and purely inchoate contribution nght

— aright that could never vest, but was always subject to

forfeit.

The Eighth Circuit’s assumption is contradicted by

federal common law and by two separate statutory provisions.

First, section 157 of the Act, 42 U.S.C. § 9657, is manifest

evidence of Congressional intent to codify a right that is

capable of vesting and is protected by the Fifth Amendment

when it does vest.

Second, CERCLA’s separate limitation period for

contribution actions arising out of Unilateral Administrative

Orders is a manifestation of Congress’s intent that, when the

government enters such an order against a PRP, that PRP’s

contribution rights vest and the government cannot

subsequently usurp those rights without providing due

process and just compensation under the Fifth Amendment.

See 42 U.S.C. § 9613(g)(3)(B).

A. Congress Codified A Contribution Right Capable

Of Vesting And Thus Becoming Constitutionally

Protected Property Under The Fifth Amendment.

The Fifth Amendment prohibits the government

from extinguishing rights and taking “private property”

without providing just compensation and procedural due

process. U.S. Const. Amend. V.’ A two-step inquiry that

turns on notions of “justice and fairness” determines

whether a constitutionally-proscribed taking has occurred:

7. In relevant part, the Fifth Amendment provides: “. . . nor shall

private property be taken for public use, without just compensation.”

U.S. Const. Amend. V.

TT ts Tow = See

(1) is the subject matter constitutionally-protected property

within the meaning of the Fifth Amendment; and (2) if so,

has there been a taking of that property? See Eastern

Enterprises v. Apfel, 524 U.S. 498, 523-24, 118 S. Ct. 2123,

2146, 141 L. Ed. 2d 451 (1998).

Constitutionally protected “property” is not created by

the Constitution; instead, it is created and its “dimensions

are defined by existing rules or understandings that stem from

an independent source,” such as state or federal statutes,

regulations or common law. Board of Regents of State

Colleges v. Roth, 408 U.S. 564, 577, 92 S. Ct. 2701, 2709;

33 L. Ed. 2d 548 (1972). A cause of action is a species of

property entitled to Fifth Amendment protection. Logan v.

Zimmerman Brush Co., 455 U.S. 422, 428-29, 102 S. Ct.

1148, 71 L. Ed. 2d 265 (1982) (quoting Mullane v. Central

Hanover Bank & Trust Co., 339 U.S. 306, 70S. Ct. 652, 94

L. Ed. 865, 313 (1950)). The determination of whether a

particular claim constitutes constitutionally-protected

property involves an “essentially ad hoc, factual inquir[y]”

that turns on the nature of the property right and the

governmental taking. Penn Cent. Transport. Co. v. City of

New York, 438 U.S. 104, 124, 98 S. Ct. 2646, 2659, 57

L. Ed. 2d 631 (1978).

The Eighth Circuit’s holding that CERCLA contribution

rights are incapable of becoming vested property rights is

incorrect because it erroneously and impliedly assumes that

Congress created the right. As shown above, the right

was codified and clarified, but was not created, by Congress.

Long before the SARA amendments to CERCLA, federal

common law recognized an “implied” right of contribution.

The Eighth Circuit's holding is also contrary to manifest

Congressional intent to codify a contribution right capable

of rising to the level of a vested, constitutionally-protected

property right. That intent is expressed in section 157 of the

Act, entitled “Separability of provisions; contribution,”

which provides: :

If any provision of this chapter, or the

application of any provision of this chapter to any

person or circumstance, is held invalid, the

application of such provision to other persons or

circumstances and the remainder of the chapter

shall not be affected thereby. If an administrative

settlement under section 9622 of this title has the

effect of limiting any person’s right to contribution

‘from any party to such settlement, and if the effect

of such limitation would constitute a taking

without just compensation in violation of the fifth

amendment of the Constitution of the United

States, such person shall not be entitled, under

laws of the United States, to recover compensation

from the United States for such taking, but in any

such case, such a limitation on the right to obtain

contribution shall be treated as having no force

or effect.

42 U.S.C. § 9657 (emphasis added).

If Congress intended to create only an inchoate

contribution right, it would not have enacted the italicized

clause above. In that clause, Congress clearly anticipates that

contribution rights will vest and, equally clearly, proscribes

the government from “taking” those rights in the course of

providing contribution protection. The Eighth Circuit’s

holding is untenable because it renders this provision

surplusage and, in so doing, subverts explicit Congressional

intent to codify a right that could vest.

B. Petitioner’s Contribution Right Vested When The

Government Imposed An Unilateral Administrative

Order Against Petitioner.

Petitioner’s appeal presented the circuit court with a case

of first impression because no published federal precedent

had determined how or when a CERCLA contribution claim

vests and becomes a property nght protected by the Fifth

Amendment. One unpublished case tackled the issue in dicta.

United States v. Maryland Sand, Gravel & Stone Co., Civ.

No. HAR-89-2869, 1994 W.L. 541069 (D. Md. 1994).°

The opinion below ignores the Maryland Sand case, however,

and avoids this issue by determining that petitioner could

never have a vested contribution right. In so doing, the Eighth

Circuit established a rule that conflicts with Congressional

8. In Maryland Sand, two non-settling PRP’s claimed that the

government violated their constitutional due process rights by

negotiating a consent decree without them because the terms of the

decree foreclosed their potential, statutory contribution claims against

the settling PRP’s. Jd. at *10. The district court held that the non-

settling parties had no constitutionally protected interest in a potential

contribution claim because neither had filed a claim at the time that

the consent decree was negotiated and entered. Jd. The court found

that “... a close reading of CERCLA’s contribution provisions

indicates that the right to seek contribution does not exist until a

recovery action has been initiated.” /d. (emphasis added). The court

further speculated that, even if it had found that the right to

contribution was constitutionally protected property “at the time the

EPA settled with other PRPs,” meaning before a contribution action

had been filed, such a right would be limited to PRPs who had not

reached a settlement with the EPA. /d. at 10 n.29.

Under Maryland Sand, petitioner’s contribution rights became

fixed when it filed its contribution claim in 1997 — three years before

the government moved to enter its consent decree with respondents-

chemical companies. Petitioner maintains that its contribution rights

vested at an earlier point in time — when the government imposed

two UAOs against it.

intent and well-established federal common law recognizing

that rights in a cause of action vest when they become “fixed.”

CERCLA provides the government with three means of

implicating private parties in environmental cleanup. It can

file an abatement action, commonly referred to as a cost

recovery claim, in federal court. 42 U.S.C. § 9606(a). Or it

can opt to take the administrative route and either

(1) negotiate an Administrative Order on Consent with the

private party or, (2) when negotiation is not possible, issue

an Unilateral Administrative Order against that party.

42 U.S.C. § 9606(a). The government has unbridled authority

to determine both the route that it will take and the parties

with whom it will travel.

If the government decides to issue an UAQO, the subject

of that Order has no choice but to comply. CERCLA imposes

daily fines up to $25,000 for violations of any terms of an

UAO. 42 U.S.C. § 9606(b)(1). The benefit the government

secures under an UAO is significant. It obtains immediate

remediation of the Site by a private party, without having to

compromise, negotiate, or incur any costs (other than

“oversight” costs, which virtually all of the federal circuits

have determined the government can recover from PRPs).

By contrast, as its name indicates, an Administrative

Order on Consent requires negotiation and some compromise

by the government before remediation begins. And when the

government files a cost recovery claim, it must incur litigation

costs and the attendant delays before the defendants to the

action remediate the site.

There is a toll, however, that the government must pay

for the expediency of an UAO. It surrenders any right that it

may have had to bargain away the contribution rights of the

subject of the UAO. This toll is manifest in the limitations

period that Congress established for contribution claims

arising out of UAOs. While § 113(g)(3) of the Act prescribes

an across-the-board three year limitations period for

contribution claims, it establishes a distinct accrual date for

contribution actions based on administrative orders. Congress

determined that the limitation period runs from “the date

of judgment in any action under this chapter for recovery

of such costs or damages,” or from “the date of an

administrative order under . . . section 9622(h) . . . or entry

of a judicially approved settlement with respect to such costs

or damages.” 42 U.S.C. §§ 9613(g)(3)(A) and (B) (emphasis

added), respectively. In prescribing these distinct accrual

dates, Congress recognized that a PRP’s liability under

CERCLA becomes fixed at different points in time depending

upon the process that the EPA chooses to impose such

liability. For an administrative order, the right accrues when

the order is entered.

The only reasonable interpretation of the Act is that the

contribution rights that it recognizes vest when they accrue

for purposes of the statutory limitations period. First, this

interpretation is consistent with well-established federal

precedent. When the government chooses to use an UAO,

liability becomes fixed at the date of issuance — when

liability exists independent of the statute. Federal common

law recognizes that a cause of action vests when the

individual party’s claim becomes “fixed,” whether the cause

of action derives from statutory or common law rights.

See Armstrong v. United States, 364 U.S. 40, 80S. Ct. 1563,

4 L. Ed. 2d 1554 (1960) (claim based on state law

materialman’s lien was vested property right); Coombes v.

Getz, 285 U.S. 434, 439-48, 52 S. Ct. 435, 76 L. Ed. 866

(1932) (holding that repealed rule of law created vested

contraci rights in a corporate charter); Forbes Pioneer Boat

Line v. Board of Commissioners, 258 U.S. 338, 339-40,

42 S. Ct. 325, 66 L. Ed. 647 (1922) (recognizing vested right

to a fixed sum of money); Ettor v. City of Tacoma, 228 U.S.

148, 155-58, 33 S. Ct. 428, 57 L. Ed. 773 (1913) (holding

that a statutory right to compensation for property damage

caused by street-graders was vested and could not be

retroactively destroyed); Omnia Commercial, Co. v. United

States, 261 U.S. 502, 508, 43 S. Ct. 437, 437-38, 67 L. Ed.

773 (1923) (holding that assignee’s rights under steel

production contract were vested property rights); Alliance

of Descendants of Texas Land Grants v. United States,

37 F.3d 1478, 1481 (Fed. Cir. 1994), rehear den’d, en banc

suggestion den'd, (Dec. 1974); In Re Aircrash in Bali,

Indonesia on April 22, 1974, 684 F.2d 1301, 1312 (9th Cir.

1982), cert. denied by, Pan American World Airways, Inc.

v. Causey, 493 U.S. 917, 110 S. Ct. 277, 107 L. Ed. 2d 258

(1989) (recognizing, in dicta, that claims for compensation

are Fifth Amendment property rights, including the plaintiff’s

wrongful death claims). In these cases, the rights were

deemed to have “vested” because they were manifested in

real property, contracts, or fixed sums of money and thus

existed independent of the statute or common law that created

them. This Court has also held that statutory rights vest once

they are reduced to judgment. McCullough v. Virginia,

172 U.S. 102, 123-24, 19 S. Ct. 134, 43 L. Ed. 382 (1898);

see also Johnston v. Cigna Corp., 14 F.3d 486, 491 (10th

Cir. 1993) (quoting McCullough and noting that it “remains

valid law”).

Second, if a PRP’s contribution rights did not vest when

the UAO was entered, then PRPs would be forced into an

untenable and unavoidable “Catch 22.” If a PRP did not file

its contribution claim within three years of the UAO, it would

lose that claim. But, even if it filed suit within that time

period, it would be at risk to incur substantial costs pursuing

an ephemeral remedy that is subject to forfeit by the

government at any time and without any compensation to

the PRP. In fact, in this case, the limitations period for

petitioner’s contribution claim, which accrued in 1994,

expired in 1997 — almost two years before the government

and the respondent-chemical companies notified petitioner

that they were engaged in serious settlement negotiations that

may have the effect of extinguishing petitioners two-year-

pending, multi-million dollar contribution claim.

Third, the only way to effectuate Congressional intent

to encourage prompt remediation is to interpret the date of

the UAO as the date of vesting. Congress provided the

government with authority to offer contribution protection

under subsection 113(f)(2) in order to lure private parties to

the negotiation table and, in so doing, allow the parties and

the government to buy their way out of protracted litigation

and to focus on remediation. However, when the government

issues an UAO, there is no negotiation, no threat of protracted

and expensive litigation, and no right to implicate other

potentially liable parties under the Act. In fact, in this case,

the government forced petitioner to remediate the Site under

two UAO’s before the government completed its

investigation of the Site and before it fully pursued other

responsible PRPs.

Contrary to evident Congressional intent, the opinion

below allows the government to force cleanup through an

UAO, and the draconian penalties that follow from failure

to comply, and to deprive the recipient of all opportunity to

seek contribution from others who may be equally or even

more responsible. Indeed, that is what happened here.

Petitioner, whose predecessor company owned the Site for

only a matter of months while pesticide formulation was

being operated by a tenant, paid the lion’s share of pesticide

cleanup made necessary by the respondent-chemical

companies’ pesticide formulation activities which had taken

place over two decades.

Thus, the Eighth Circuit’s decision merits review and

reversal by this Court because it ignores manifest

Congressional intent and established precedent that

recognizes that petitioner’s contribution rights vested when

the government entered an Unilateral Administrative Order

against it.

II. Certiorari Is Necessary Because The Decision Below

Conflicts With Congress’s Intended Statutory

Scheme, Whereby Vested CERCLA Contribution

Rights Trump Contribution Protection Clauses.

The Eighth Circuit opinion cannot stand because it

overrides Congressional intent, rather than effectuates it.

Congress recognized three limits on contribution protection.

It is the circuit court’s summary disavowal of the third limit

that warrants certiorari in this case.

The first limitation imposed by Congress is an internal

one that is exercised by the parties to the settlement.

The limit stems from Congress’s mandate that contribution

protection exists only for “matters addressed in the

settlement.” 42 U.S.C. § 9613(f)(2). Contribution protection

is thus neither automatic, as the government had argued to

the district court, nor determined solely by reference to

CERCLA’s statutory provisions. It must, instead, be

bargained for and set forth in the consent decree itself.

In this case, the respondent-chemical companies and the

government negotiated the “matters addressed” clause so

as to broadly encompass petitioner’s contribution claim.

(Pet. App. 70a).

The second limit Congress prescribed is external; it is

imposed by court review in accordance with equitable

principles. Section 113(f)(1), which establishes a PRP’s right

to contribution under CERCLA, requires that “[i]n resolving

contribution claims, the court may allocate response costs

among liable parties using such equitable factors as the court

determines are appropriate.” 42 U.S.C. § 9613(f)(1). Based

on this provision, a court cannot impose an inequitable

resolution when resolving contribution claims, whether that

resolution occurs in a contribution case or in a judicially

approved settlement.

Congress’s third limit is imposed by the United States

Constitution and is ultimately enforced by the Courts, either

before or after a Decree is executed and/or entered. This limit

is expressly imposed on administrative settlements, where

(and arguably because) there is no pre-execution judicial

review of consent decrees. 42 U.S.C. § 9657 (Pet. App. 89a).

It is contained in section 157 of the Act, which expressly

voids a contribution bar to the extent that the bar “has the

effect of limiting any person’s right to obtain contribution

from any party to such settlement, and if the effect of such

limitation would constitute a taking without just

compensation in violation of the Fifth Amendment of the

Constitution. . . .” 42 U.S.C. § 9657 (emphasis added).

Where there is pre-entry judicial review of settlements,

section 157’s constitutional limit is implied. Congress trusted

that the courts would insure that settlement terms, including

the scope of the definition of the “matters addressed” by

the decree, were constitutional. And, in fact, this is just

one of the required checks a reviewing court must conduct

before approving a consent decree. See Cannons Eng’g Corp.,

720 F. Supp at 1036.

The legislative history surrounding the passage of the

SARA amendments evidences Congress’s concern that

consent decrees not trample constitution rights of non-settling

PRPs in any case. See H.R. Rep. No. 253(1), 99th Cong., Ist

Sess., reprinted in 1986 U.S. Code Cong. & Admin. News

2835, 2862. It also indicates that Congress never endorsed

the instant situation where the district court refused to

consolidate petitioner’s contribution claim with the

government’s action to enter the consent decree, (which

action was filed two years after the filing of the contribution

claim), and then entered the consent decree which usurped

the contribution claim in its entirety and with no

compensation to petitioner. Instead, Congress intended and

recognized that:

.. . Private parties may be more willing to assume

the financial responsibility for some or all of the

cleanup if they are assured that they can seek

contribution from others.

In addition to encouraging settlement, the section

will help bring an increased measure of finality

to settlements. Responsible parties who have

entered into a judicially approved good faith

settlement under the Act will be protected from

paying any additional response costs to other

responsible parties in a contribution action.

The section contemplates that if an action under

section 106 or 107 of the Act is under way, any

related claims for contribution or indemnification

may be brought in such an action. This provision

should also encourage private party settlements

and cleanup since the actuality of being brought

into litigation as a third-party defendant,

concurrent with the original litigation, has the

effect of bringing all such responsible parties to

the bargaining table at an early date. In addition,

this provision will lessen any ill will that is created

between the government and the original

defendants selected by the government for naming

in the original suit. This provision allows all

counterclaims, cross-claims and third-party

actions to be dealt with in a single action if the court

is so inclined. District courts should carefully

manage cases filed pursuant to this section to insure

that the litigation is conducted in an expenditious

[sic] manner and is not unduly delayed by the

concurrent maintenance of third party actions.

Among the tools available to the court for

management are the exercise of strict judicial control

over multi-party proceedings, designation of a

representative defendant for service of papers, as

well as use of the procedures set forth in the Manual

for Complex Litigation.

As with joint and several liability issues, contribution

claims will be resolved pursuant to Federal common

law. Although the only defenses to liability remain

those set forth in Section 107(b), courts are to resolve

such claims on a case-by-case basis, taking into

account relevant equitable considerations.

Id. at 2682 (italicized emphasis added) (bold italics in original).

Congress thus fully contemplated that CERCLA’s contribution

protection would be evaluated and administered in relation to

pending claims for contribution protection and would be

resolved according to equitable principles. Nowhere did

Congress provide for the automatic, uncontestable forfeiture of

contribution nights.

The circuit court opinion has the statutory scheme

backwards. The Eighth Circuit has held that, to they extent they

conflict, the contribution protection clause in section (f)(2)

trumps the contribution rights afforded under section (f)(1).

Under the Eighth Circuit’s holding, equitable and constitutional

limits are deleted from the Congressional text, and the

government and settling PRPs have unprecedented , unlimited

and unrestrained power to extinguish any and all third-party

claims and rights no matter how vested or valuable these rights

may be. This is an indefensible result.

Because the Eighth Circuit’s holding subverts

Congressional intent and negates CERCLA’s intended checks

and balances, it merits review and reversal by this Court.

Ill. The Decision Must Be Reversed Because It Sets An

Untenable National Rule That Significantly Undermines

Private Party Cleanup Of Environmental Waste

Nationwide.

The Eighth Circuit’s judgment, as a practical matter, sets

a national rule that completely undercuts a PRP’s incentive

to focus on prompt remediation first and itself and its

remediation costs, second. Review should be granted to

prevent this irreversible, nationwide harm.

In Akzo Coatings, Inc. v. Aigner Corp., 30 F.3d 761 (7th

Cir. 1994), rehear. den'd. (August 1994), the Seventh Circuit

refused to interpret the phrase “matter addressed” in a

contribution bar clause to include the non-settling PRPs’ cost

recovery claims. The Court’s refusal is based on a recognition

that contribution rights must be enforceable to accomplish

prompt remediation, one of CERCLA’s key statutory

objectives. The court reasoned:

We are convinced that a contrary outcome would

leave firms like Akzo in an untenable position. A

party served with a unilateral order under section

106 has little choice but to comply; the statute

places strict limits on prior judicial review of such

orders and authorizes fines of up to $25,000

per day for a party who refuses to obey....

To subsequently preclude a compliant party from

seeking contribution for the sums it has expended

simply because it had the misfortune to be drafted

by the EPA before a remedial plan could be

prepared and a settlement negotiated will not

expedite cooperative environmental remediation.

If defendants were permitted to settle with the

government for part of the clean-up costs of a site,

and then become immune from suit for

contribution by private entities who paid for other

cleanup costs, it would defeat the policy of

CERCLA. Settling PRPs should not be made to

pay twice for the same clean-ups, but they also

should not get a windfall because they settled.

Id. at 768-769 (italicized emphasis added) (bold italics in

original) (citations omitted). A similar warning was heralded

by the First Circuit, which recognized that:

[ijn addition, the government has a serious

disincentive to collude with later settlors to cut

off the right of prior settlors.... It is the

government that is the repeat player in the world

of CERCLA clean-ups. Should the government

develop a reputation for cheating early settlors,

that would deter settlement in later cleanups . . .

and hence, in the long run, hurt the government’s

interests.

United States v. Charter Internat 'l Oil Co., 83 F.3d 510, 518

n.11 (1st Cir. 1996) (holding that the consent decree at issue

did not extinguish contribution rights of previously-settling

PRP’s) (italics in original).

The potential dangers of unfettered governmental

double-recovery and settling-PRP windfalls have been

actualized in this case. Petitioner was issued two Unilateral

Administrative Orders and incurred over $5.7 million and

90% of clean-up costs before the government and respondent-

chemical companies ever expressed an interest in settlement.

Nonetheless, the government used petitioner’s two-year

pending contribution claim to force other PRP’s to the

bargaining table and then forfeited that claim in its entirety

with no compensation to petitioner. This action is not only i

arbitrary, it undermines one of the few incentives that ;

CERCLA provides PRPs to focus on environmental cleanup

first and the millions that they spend towards that end later.

The rule established by the opinion below must be

reviewed and reversed.

CONCLUSION

For the foregoing reasons, the petition for a writ of

certiorari should be granted.

Respectfully submitted,

J. MICHAEL SMITH

Counsel of Record

Jon R. MuTH

S. GRACE Davis

MILLER, JOHNSON, SNELL

& CumMISKEY, P.L.C.

Attorneys for Petitioner

250 Monroe, N.W., Suite 800

P.O. Box 306

Grand Rapids, MI 49501-0306

(616) 831-1700

“ae Pe . ‘ahaa ‘ 4 fy

oe no nar aca uc ES i

: Net Rate See Mors , SI : ¢

i 4 s < * SNe E .

, ta Nap eeees ae 1 Ter bata ty I Re ROS ee Sa aia we

APPENDIX

APPENDIX A — OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE EIGHTH CIRCUIT

DATED AND FILED JANUARY 24, 2002

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

No. 00-3906

United States of America,

Plaintiff-Appellee,

Vv.

BP Amoco Oil PLC; BP Amoco PLC;

Chevron Chemical Company; Bayer Corporation;

Monsanto Company; Shell Oil Company,

Defendants-Appellees.

DICO, Inc.,

Intervenor-Appellant.

Appeal from the United States District Court

for the Southern District of lowa

Submitted: June 13, 2001

Filed: January 24, 2002

Appendix A

Before McMILLIAN and RICHARD S. ARNOLD, Circuit

Judges, and ROSENBAUM, ' District Judge.

McMILLIAN, Circuit Judge.

The United States of America (“the government”), on

behalf of the Administrator of the United States Environ-

mental Protection Agency (“EPA”), brought the present action

pursuant to the Comprehensive Environmental Response,

Compensation, and Liability Act (“CERCLA”), 42 U.S.C.

§§ 9601-9675, in the United States District Court? for

the Southern District of Iowa, against BP Amoco Oil PLC,

BP Amoco PLC, Chevron Chemical Company, Bayer

Corporation, Monsanto Company, and Shell Oil Company,

seeking reimbursement of costs incurred by the government

in cleaning up a site located in Des Moines, Iowa, contaminated

with trichloroethylene (“TCE”) and other hazardous

substances. Dico, Inc. (“Dico’’), an intervenor in the action,

now appeals from a final order of the district court granting

the government’s motion to enter a proposed consent decree

(“the consent decree”’), denying Dico’s request for an evidentiary

hearing on the government’s motion to enter the consent

decree, and denying Dico’s motion to consolidate this action

with Dico v. Amoco Oil Co., No. 4-97-10130 (S.D. Iowa

1997) (“the contribution action”). United States v. BP Amoco

Oil PLC, No. 4-99-10671 (S.D. Iowa Sept. 29, 2000) (“slip op.”).

For reversal, Dico argues that the district court (1) abused its

1. The Honorable James M. Rosenbaum, United States District

Judge for the District of Minnesota, sitting by designation.

2. The Honorable Ronald E. Longstaff, United States District

Judge for the Southern District of Iowa.

Appendix A

discretion and violated Dico’s constitutional rights in failing

to hold an evidentiary hearing and (2) abused its discretion

in approving and entering the consent decree. For the reasons

set forth below, we affirm.

Jurisdiction was proper in the district court based upon

28 U.S.C. § 1331. Jurisdiction is proper in this court based

upon 28 U.S.C. § 1291. The notice of appeal was timely filed

pursuant to Fed. R. App. P. 4(a).

Background

The following is a summary of the factual and procedural

background, as set forth in the district court’s order of

September 29, 2000. See slip op. at 1-5.

In 1974, TCE was detected in water coming from

underground wells located near property owned by Dico and

maintained by the Des Moines Water Works. The EPA

designated the area the “Des Moines TCE Site” and placed it

on the national priority list. The Des Moines TCE Site was

divided into several “operable units.” Operable Unit-2

(“OU-2”) and Operable Unit-4 (“OU-4”) (together “OU-2/4”)

are within Dico’s property. Each was found to be

contaminated with TCE, and OU-4 was also found to be

contaminated with herbicides and pesticides.

Dico’s corporate predecessor, Di-Chem, had operated a

chemical formulation business on the Dico property until the

1970s. In 1994, pursuant to two Unilateral Administrative

Orders issued by the EPA, Dico conducted two removal actions

at OU-2/4. A group of former customers of Di-Chem (BP Amoco

Appendix A

Oil PLC, BP Amoco PLC, Chevron Chemical Co., Bayer Corp.,

Monsanto Co., and Shell Oil Co.) conducted a third removal

action pursuant to an Administrative Order on Consent.

The EPA also incurred costs associated with the removal

actions at OU-2/4.

In 1996, the EPA signed a Record of Decision (“ROD”),

which confirmed the completion of the three removal actions

at OU-2/4. The former Di-Chem customers requested

settlement negotiations with the government regarding the

costs associated with the OU-2/4 cleanup efforts. Pursuant

to CERCLA, 42 U.S.C. § 9622(e)(3), the EPA undertook a

nonbinding preliminary allocation of responsibility (““NBAR”’)

and allocated 61% of the responsibility to Dico and 39% to

the former Di-Chem customers collectively. In April 1998,

the EPA formally notified the former Di-Chem customers

and Dico that they were potentially responsible parties

(“PRPs”) and provided them each with copies of the NBAR

and a proposed consent decree. The PRPs were also notified

that settlement with the government would provide protection

from liability in the contribution action brought by Dico,

arising out of the same remediation. Dico did not respond to

the letter and did not participate in the settlement

negotiations, despite repeated invitations by the government

to do so. On November 2, 1998, when an agreement was

imminent between the government and the former Di-Chem

customers, the government sent Dico a reminder that a final

consent decree would include contribution liability protection

for the “settling defendants.”

On November 29, 1999, the government filed the present

action in the district court and simultaneously lodged the

proposed consent decree, as signed by the government and

Appendix A

the former Di-Chem customers (hereinafter referred to as

“the settling defendants”). As required by CERCLA,

42 U.S.C. § 9622(d)(2), the consent decree was published in

the Federal Register, in response to which Dico submitted

objections and comments. Dico also moved in the district

court to intervene in the present action and to consolidate it

with the contribution action, which it had filed against the

settling defendants in 1997. The district court granted Dico’s

motion to intervene, but deferred ruling on Dico’s motion to

consolidate the two actions.

On March 10, 2000, the government formally moved to

enter the consent decree. Dico requested an evidentiary

hearing on the government’s motion to enter the consent

decree, arguing that (1) a hearing was necessary because the

government had failed to provide a fair and complete record

and (2) it had a vested property interest in the contribution

action, which, under the Fifth Amendment, could not be

“taken” without due process (i.e., an evidentiary hearing)

and just compensation.

Upon review of the parties’ submissions, the district court

entered the order from which Dico now appeals. The district

court denied Dico’s request for an evidentiary hearing,

reasoning that a hearing was not necessary to supplement the

record because Dico had been provided sufficient opportunities

to supplement the record before and after the consent

decree had been lodged in the district court. See slip op. at 5-9.

The district court also rejected Dico’s assertion of a

constitutional right to an evidentiary hearing, reasoning that

Dico never had a right to contribution because its statutory

contribution claim was at all times limited by 42 U.S.C.

Appendix A

§ 9613(f}(2) (“A person who has resolved its liability to the

United States or a State in an administrative or judicially

approved settlement shall not be liable for claims

for contribution regarding matters addressed in the

settlement.”). See id. at 8-9. Next, the district court

granted the government’s motion to enter the consent decree.

Upon careful consideration of the parties’ arguments and the

record before it, the district court concluded that the consent

decree had resulted from a fair process, that it was

substantively fair, and that it was reasonable and consistent

with CERCLA. See id. at 9-17. The district court then denied

as moot Dico’s motion to consolidate the contribution action

with the action at bar. See id. at 17.

Judgment was entered accordingly, and Dico appealed.

Both the government and the settling defendants oppose

Dico’s appeal.

Discussion

Denial of Dico’s motion for an evidentiary hearing

Dico first argues that the district court improperly denied

its motion for an evidentiary hearing. Dico contends that the

administrative record was incomplete, biased, and inaccurate,

and that an evidentiary hearing was the only meaningful way

for Dico to rebut the government’s evidence. Dico asserts,

among other things, that the district court erroneously relied

on the settlement process as a basis for concluding that Dico

had been given an opportunity to supplement the record.

On the contrary, Dico argues, the settlement process offered

nothing more than an opportunity for Dico to bargain away

Appendix A

its contribution rights. Dico also points out that it was notified

of the potential settlement between the government and the

settling defendants only after Dico had already invested

approximately $5.7 million in response costs and $300,000 in

litigation costs. Therefore, Dico argues, its refusal to participate

in the settlement negotiations was justified. Dico further

maintains that a hearing was necessary to examine the

evidentiary basis for a nine-page sworn statement by Daniel

Shiel, an EPA attorney, whose statement was submitted by the

government in support of its motion for entry of the consent

decree. Shiel’s statement (hereinafter “the Shiel declaration’”’)

purported to explain, among other things, the government’s

methodology in assigning 61% and 39% of the responsibility

to Dico and the settling defendants, respectively, using eight

specific factors.* According to Dico, the Shiel declaration

3. The district court set forth the eight factors used in the EPA’s

analysis as follows:

1) distinguishable costs (based on specific wastes of

specific waste types); 2) degree of involvement in

management or operations at the facility; 3) degree of

care (including measures taken by a party to prevent or

minimize contamination); 4) fault (culpability and actual

cause of the contamination); 5) degree of cooperation

(degree to which a PRP cooperates or assists in cleanup

efforts); 6) financial capability (whether the PRP is

financially viable); 7) financial benefits derived from

waste-producing activity; and 8) financial benefits

derived from remediation.

United States v. BP Amoco Oil PLC, No. 4-99-10671, slip op.

at 11 n.4 (S.D. Iowa Sept. 29, 2000) (citing NBAR Guidance,

published at 52 Fed.Reg. 19919 (May 28, 1987)).

Appendix A

was the government’s primary evidence in support of the EPA’s

61/39 liability allocation, the Shiel declaration did not include

or identify supporting documentation, and Dico was entitled to

examine Shiel under oath regarding the bases for his assertions.

Likewise, Dico contends, the government’s allegations of

costs were not adequately supported by the evidence in the

record and therefore should have been subjected to

examination, which only an evidentiary hearing could have

adequately provided.

Alternatively, Dico argues that its constitutional nghts

were violated as a result of the district court’s denial of its

motion for an evidentiary hearing. Dico maintains that it paid

well more than its fair share of the remediation costs and

also notes that it filed its contribution claim before the

government ever sought to have the consent decree entered.

Therefore, Dico contends, at the time it filed its motion

for an evidentiary hearing, its contribution claim had become

a vested property interest,* which could not be “taken” without

4. In support of its argument that it had a vested property interest

in its contribution claim, Dico cites 42 U.S.C. § 9657, which provides

in part:

If an administrative settlement under section 9622 of this

title has the effect of limiting any person’s right to obtain

contribution from any party to such settlement, and if

the effect of such limitation would constitute a taking

without just compensation in violation of the fifth

amendment of the Constitution of the United States, such

person shall not be entitled, under other laws of the

United States, to recover compensation from the

United States for such taking, but in any such case, such

limitation on the right to obtain contribution shall be

treated as having no force and effect.

Appendix A

just compensation and due process of the law, as recognized

in Mathews v. Eldridge, 424 U.S. 319, 349 (1976) (due process

requires that procedures be tailored, in light of the decision

to be made, to ensure a meaningful opportunity to be heard).

We review the district court’s denial of Dico’s request for

an evidentiary hearing for an abuse of discretion. United States

v. Union Elec. Co., 132 F.3d 422, 430 (8" Cir. 1997) (Union

Electric) (quoting United States v. Metropolitan St. Louis

Sewer Dist., 952 F.2d 1040, 1044 (8" Cir. 1992) (“It is within

the sound discretion of the trial court to decide whether an

evidentiary hearing is necessary before ruling on a proposed

consent decree.”)). We agree with the district court that

Dico was given a meaningful and sufficient opportunity to

present arguments and submit evidence in opposition to the

government’s motion to enter the consent decree. Therefore,

while Shiel’s live testimony might have been helpful in this

context, we cannot say that it was an abuse of discretion for

the district court to decide that an evidentiary hearing was

not necessary. Accord United States v. Cannons Engineering

Corp., 899 F.2d 79, 93-94 (1* Cir. 1990) (Cannons Engineering)

(holding that district court did not abuse its discretion in

declining to hold evidentiary hearing on government’s motion

for entry of consent decrees).

We further conclude that Dico’s constitutional argument

is without merit. To begin, we agree with the district court

that Dico did not have a right to contribution at the time the

government moved for entry of the consent decree. The basis

for Dico’s statutory contribution claim against the settling

defendants is § 961 3¢f)(1) (“Any person may seek contribution

from any other person who is liable or potentially liable under

eo Abe + see Net Gale AA se Oe eee

10a

Appendix A

section 9607(a) of this title ...”), which is subject to and

limited by § 9613(f)(2) (“A person who has resolved its

liability to the United States .. . in [a] judicially approved

settlement shall not be liable for claims for contribution

regarding matters addressed in the settlement.”). In other

words, Dico never had a vested property interest to be taken.°

Moreover, an evidentiary hearing would not have been

required as a matter of due process. Due process is a “flexible

concept that varies with the particular situation,” and its

“fundamental requirement . . . is the opportunity to be heard

at a meaningful time and in a meaningful manner.” Winegar

v. Des Moines Independent Community Sch. Dist., 20 F.3d

895, 899-900 (8" Cir. 1994) (citing Zinermon v. Burch,

494 U.S. 113, 127 (1990); Mathews v. Eldridge, 424 U.S.

at 333), cert. denied, 513 U.S. 964 (1994). Due process does

not always require an evidentiary hearing, even where a

significant interest is at stake. See, e.g., United States v.

Papajohn, 701 F.2d 760, 763 (8" Cir. 1983) (due process

does not mandate an evidentiary hearing to establish the

accuracy of a presentence investigation report before such

report can be considered by district court for sentencing

purposes). As we have stated, Dico was, in any event, given

a meaningful opportunity to be heard.

Grant of the government s motion to enter the consent decree

Dico next contends that the district court improperly

granted the government’s motion for entry of the consent

decree. Dico maintains that the consent decree is fatally

5. Because Dico did not have a vested property interest to be

“taken,” 42 U.S.C. § 9657 was not implicated by the district court’s

decision.

<I Grant moa Ree

lla

Appendix A

flawed in all essential respects: procedural and substantive

fairness, reasonableness, and consistency with the meaning

and purposes of CERCLA. See Cannons Engineering,

899 F.2d at 85 (““Reasonableness, fairness, and fidelity to the

statute are . . . the horses which district judges must ride.”).

Dico argues that the consent decree resulted from a

procedurally unfair settlement process. Dico disputes the district

court’s reasoning that Dico, having refused to participate in the

settlement negotiations despite the government’s repeated

invitations, was foreclosed from arguing that the settlement

process was unfair. On the contrary, Dico again argues, the

entire process was fundamentally unfair from the beginning

and therefore Dico was justified in refusing to participate.

According to Dico, it had already paid the vast majority of

the response costs for OU-2/4 when the government invited

it to participate in the negotiations, upon the express

assumption that any resulting consent decree would give the

“settling defendants” protection from contribution liability

to Dico. That offer of contribution protection made by the

government to the other PRPs, Dico argues, was unnecessary

_ and fundamentally unfair to Dico.

Dico further argues that the consent decree is substantively

unfair. Dico cites Cannons Engineering, 899 F.2d at 87,

for the proposition that, to be substantively fair, settlement

terms must be “based upon, and roughly correlated with,

some acceptable measure of comparative fault, apportioning

liability among the settling parties according to rational

(if necessarily imprecise) estimates of how much harm each

PRP has done.” Dico maintains that the EPA lacked a rational

basis for: (1) assigning Dico 61% responsibility for the overall

12a

Appendix A

OU-2/4 response costs compared with 39% responsibility

assigned to the settling defendants, (2) assigning to Dico

the entire amount of “volatile organic chemicals” (VOC)

remediation and oversight costs, and (3) including complete

protection for the settling defendants from contribution

liability to Dico. Dico contends that the district court merely

rubber stamped the EPA’s actions by wholly adopting Shiel’s

unsubstantiated and contradicted conclusory allegations

which purported to justify the consent decree based upon the

eight factors: distinguishable costs, degree of involvement,

degree of care, fault, degree of cooperation, financial

capability, financial benefit from waste-producing activities,

and financial benefits from the remediation. Regarding

distinguishable costs, Dico argues that the district court

blindly adopted Shiel’s claim that Dico should pay 100% of

the VOC remediation costs, even though the NBAR allegedly

suggested that those costs were indistinguishable from costs

for which the settling defendants were responsible. Regarding

degree of involvement and financial benefit from the waste-

producing activities, Dico argues that the evidence in the

record does not show that either Dico or any of its corporate

predecessors conducted or benefitted from the formulation

process, while the settling defendants were arrangers of the

formulation process and thus were more involved in, and

benefitted more from, the generation of hazardous wastes.

As to Dico’s degree of care and fault, Dico argues that short

term releases and flooding at the OU-2/4 area caused

contamination for which Dico cannot be blamed. As to the |

degree of cooperation, Dico contends that the district court

ignored Dico’s removal actions and only considered its decision

not to participate in the settlement negotiations. Regarding

relative financial capabilities, Dico argues that, contrary to

4 a

2 a

C A

13a

Appendix A

the EPA’s and the district court’s apparent assumptions, the

settling defendants have vastly greater resources than Dico.

Finally, as to financial benefits, Dico suggests that it has‘

suffered more of a loss than a benefit because it has already

paid the vast majority of the response costs. Dico thus concludes

that the district court abused its discretion in holding that the

consent decree fairly allocates liability among the parties.

Finally, Dico argues that the consent decree is manifestly

unreasonable and inconsistent with the underlying objectives

of CERCLA. Dico contends that, in this particular case,

the consent decree penalizes the party that forthrightly

remediated at its own expense, takes undue advantage of the

party with the weaker bargaining strength, and awards the

government costs to which it 1s not entitled. Therefore, Dico

continues, the consent decree violates CERCLA’s objectives

by sending the message that contribution rights are illusory

and the best strategy to minimize one’s exposure is outright

refusal to incur any response costs. The end result, Dico

concludes, will be to discourage prompt and efficient cleanup

efforts, to undercut PRP confidence in the CERCLA process,

and to render meaningless contribution rights under 42 U.S.C.

§ 9613(f)(1).

We review the district court’s decision to grant the

government’s motion to enter the consent decree for an abuse

of discretion. Union Electric, 132 F.3d at 430. We will not

reverse unless Dico has shown that the district court committed

a material error of law or a “ ‘meaningful error in judgment.

Cannons Engineering, 899 F.2d at 84 (quoting Anderson v.

Cryovac, Inc., 862 F.2d 910, 923 (1% Cir. 1988)). In the present

case, the district court’s order granting the government’s

> 99

l4a

Appendix A

motion for entry of the consent decree reveals to us that the

district court carefully considered the underlying facts and

legal arguments and did not mechanistically “rubber stamp”

the consent decree, as Dico suggests. We therefore exercise

restraint on review — because we are deferring both to the

EPA’s inherent experience and expertise in handling such

matters and to the district court’s carefully-exercised informed

discretion. Jd. (“on appeal, a district court’s approval of a

consent decree in CERCLA litigation is encased in a double

layer of swaddling”), quoted in Union Electric, 132 F.3d

at 430. Dico therefore bears a heavy burden to establish a

basis for reversal. See Cannons Engineering, 899 F.2d at 84

(“The doubly required deference . . . places a heavy burden

on those who purpose to upset a trial judge’s approval of a

consent decree.”’).

To begin, we cannot agree with Dico’s claims that the

settlement process was inherently unfair and that Dico was

justified in refusing to participate because its contribution

rights were at stake. Nothing in the record suggests that the

government and the settling defendants were not negotiating

in good faith and at arm’s length. See id. (respect for agency’s

role is heightened where “the cards are dealt face up” and

parties with conflicting interests “hammer out an agreement

at arm’s length”). Moreover, Dico failed even to make a good

faith effort to participate in the negotiations. Dico had the

opportunity, through the settlement process, to express and

defend its position and to seek reimbursement of past

expenditures; by contrast, Dico’s refusal even to come to the

table precluded its position from ever being heard or

considered. As for Dico’s claim that it was not necessary for

the EPA to offer the settling defendants protection against

sen mee

sy emp nmret a Pm enree eoe

vs Me EE Oe eT ee

‘

15a

Appendix A

exposure to contribution liability, that assertion is debatable,°

but, in any event, beside the point. By providing contribution

protection to the settling defendants, the government neither

exceeded nor abused its authority. Indeed, providing

protection from exposure to duplicate liability promoted

fairness in the overall process.

We next consider the substantive fairness of the consent

decree, a matter particularly appropriate for our deferential

review. “Substantive fairness introduces into the equation

concepts of corrective justice and accountability: a party

should bear the cost of the harm for which is it legally

responsible.” /d. at 87. In the present case, we agree with the

district court’s conclusion that the consent decree reflects a

reasonable allocation of legal responsibility between Dico

and the settling defendants. Dico was not inappropriately

assigned complete responsibility for the VOC-related costs,

because those costs were found to be related to operations of

Dico or one of its corporate predecessors, but could not be

traced to the settling defendants. See slip op. at 11-12.

As the district court concluded, the costs resulting from

pesticide contamination were reasonably split between Dico

and the settling defendants. See id. at 12. Regarding the

6. 42 U.S.C. § 9613(f}\(2) provides:

A person who has resolved its liability to the United

States or a State in an administrative or judicially

approved settlement shall not be liable for claims for

contribution regarding matters addressed in the

settlement. Such settlement does not discharge any of

the other potentially liable persons unless its terms so

provide, but it reduces the potentially liability of the

others by the amount of the settlement.

16a

Appendix A

parties’ relative roles in managing the pertinent operations,

the relative degree of care they exercised, their relative fault,

and the relative benefits to them from the waste-producing

activity, we agree with the district court that there is factual

and evidentiary support for the EPA’s decision to assign most

of the responsibility to Dico, as the “entity in charge of the

facility.” See id. at 12-13. As to factors such as the degree of

cooperation and the benefit of the remediation to the parties,

we note that Dico conducted the first and second removal

actions at OU-2/4 only after the EPA obtained unilateral

administrative orders commanding Dico to do so. See id. at 13.

By contrast, the third removal action was performed by the

settling defendants pursuant to an administrative consent

order. Each of the three removal actions benefitted Dico,

as the owner of the property. Finally, although the exact

amounts of response costs incurred by the parties are subject

to debate, it appears from the record that Dico’s share

constitutes significantly less than the 90% Dico claims.

Finally, we reject Dico’s assertions that the consent

decree is manifestly unreasonable and inconsistent with

CERCLA. Regarding Dico’s argument based upon the

contribution protection provided to the settling defendants,

we emphasize that such protection is explicitly authorized

under 42 U.S.C. § 9613(f)(2). Moreover, the contribution

protection is reasonable and consistent with the underlying

policies and goals of CERCLA because it prevents duplicate

liability and encourages cooperation with the government,

thereby serving the goals of efficient and effective environmental

cleanup and regulation.

17a

4 7 Appendix A

In sum, we hold that the district court did not abuse its

discretion in entering the consent decree upon determining

that it is sufficiently fair, reasonable, and consistent with

CERCLA.

t Conclusion

The judgment of the district court is affirmed.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

18a

APPENDIX B — ORDER OF THE UNITED STATES

DISTRICT COURT FOR THE SOUTHERN DISTRICT

OF IOWA, CENTRAL DIVISION DATED AND FILED

SEPTEMBER 239, 2000 ,

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF IOWA

CENTRAL DIVISION

CIVIL NO. 4-99-10671

UNITED STATES OF AMERICA,

Plaintiff,

vs.

BP AMOCO OIL, et al.,

Defendant.

ORDER

THE COURT HAS BEFORE IT intervenor Dico, Inc.’s

(“Dico”) motion to intervene and consolidate, filed January

14, 2000. In a memorandum filed February 11, 2000, the

United States resisted the motion to consolidate but did not

resist the motion to intervene. Defendants BP Amoco PLC,

Chevron Chemical Company, Bayer Corporation, Monsanto

Company and Shell Oil Company (collectively “the settling

defendants” or “present defendants”) joined in the United

States’ memorandum response on February 17, 2000.

The Court held a telephonic hearing on February 22, 2000.

In an order issued the same day, the Court granted Dico’s

PES Pe"?

ONDE ILE MOTI ORI BON A LOR

sy pe een kA SY BT YOR

19a

Appendix B

motion to intervene and deferred ruling on its motion to

consolidate pending a ruling as to whether Dico is entitled

to an evidentiary hearing on the United States’ anticipated

motion to enter consent decree.

On March 10, 2000, the United States formally moved

for entry of consent decree. Dico resisted the motion on June

19, 2000 and the United States filed a reply on July 14, 2000.

The settling defendants filed a separate memorandum joining

in the United States’ reply on the same day.

Meanwhile, on June 15, 2000, Dico moved for an

evidentiary hearing on the entry of the consent decree.

The United States resisted Dico’s motion to hold an

evidentiary hearing on July 14, 2000 and Dico filed a reply

on July 24, 2000. Due to its impact on the remaining two

motions, the Court will consider this latter motion first.

I. BACKGROUND

In 1974, trichloroethylene (“TCE”) was found in the

Des Moines Water Works (““DMWwW7”) public drinking water

supply. The Environmental Protection Agency (the “EPA”)

traced the source of the contamination to water drawn into

the north section, or gallery, of underground wells maintained

by the DMWW. The DMWW is located west of the Dico

property, separated from Dico by the Raccoon River. Because

of the proximity to the DMWW, the EPA proposed and ended

up placing the Des Moines TCE Site (“the Site”) on a national

priority list.

20a

Appendix B

The EPA divided the response activities at the Site into

four Operable Units. Operable Unit 2 (“OU-2”), one of the

two operable units at issue in the present case, called for a

removal action to address actions to mitigate the release of

hazardous substances including volatile organic compounds

(“VOCs”) into the ground water. During the course of the

OU-2 remedial investigation, portions of the site were found

to be contaminated with pesticides and herbicides. The area

contaminated with pesticides and herbicides was separated

from the OU-2 study and designated as Operable Unit

(“OU-4”).

There have been three removal actions at OU-2 and

OU-4. Dico conducted two of these removal actions in 1994,

pursuant to two separate Unilateral Administrative Orders

issued by the EPA. The third removal action was conducted

pursuant to an Administrative Order on Consent by the

defendants to the present action. The present defendants were

once customers of Di-Chem, a chemical formulation business

located on the Site until the early 1970s and predecessor to

Dico. Accordingly, the present defendants have been

designated during the course of the investigations and

removal actions as the Di-Chem Customer Group (“DCCG’”’).

The EPA signed a Record of Decision regarding OU-2

and OU-4 in 1996, which affirmed the clean-up work

conducted under the three removal actions and determined

that the only remaining response actions for the Site are long

term Operations and Maintenance (“O&M”) of the removals,

and institutional controls to ensure the property is not used

for residential purposes.

Tne a nines ucecas cde Lee ee

2la

Appendix B

Shortly thereafter, the DCCG indicated a desire to negotiate

a complete settlement with the United States for the OU-2 and

OU-4 costs. The EPA subsequently undertook a Nonbinding

Preliminary Allocation of Responsibility (“NBAR”) as provided

in section 122(e)(3) of CERCLA, 42 U.S.C. § 9622(e)(3).

The NBAR is a process that the EPA uses to promote

expedited settlement. In performing the NBAR, the EPA

considers a number of factors, assigning points to each factor

to be divided between the parties, with a total of 100 points

available for all factors. Based on the NBAR evaluation, the

EPA assigned a 61% share of responsibility to Dico and a

39% share to the DCCG.

In April 1998, the EPA issued a Special Notice Letter to

Dico and DCCG the potentially responsible parties (“PRPs”),

informing them of their potential liability for the OU-2 and -4

costs. With the letter was the NBAR and a proposed Consent

Decree. The proposed Consent Decree indicated that

defendants who reached a settlement with the EPA would be

protected from liability in the contribution action filed by

Dico. Dico did not respond to the Special Notice Letter, and

did not participate in the ensuing settlement negotiations.'

1. Dico claims it did not respond to the Special Notice Letter

because: 1) the EPA had already forced Dico to incur 90 percent of

the clean-up costs, and thus, the EPA had no legitimate claims

remaining against Dico for which settlement could be negotiated;

and 2) Dico had no reason to negotiate a settlement agreement outside

of its pending contribution claim, because the only purpose for such

negotiations would be to “bargain away Dico’s contribution rights.”

Dico’s Memorandum in Opposition to the United States’ Motion to

Enter Consent Decree, at 8. .

paneer

22a

Appendix B

Despite Dico’s lack of participation, the EPA and DCCG

continued to aprise Dico of the settlement negotiations, as

well as specific terms being discussed. On June 12, 1998 and

August 13, 1998, the EPA wrote to Dico and its parent company,

Titan Wheel, to again encourage Dico’s participation in the

settlement. Dico did not respond to these ietters.

On November 2, 1998, counsel for the United States

Department of Justice wrote to notify Dico that a settlement

between the United States and DCCG was imminent,

explicitly reminding Dico that the final Consent Decree

would include contribution protection for the DCCG also

known as the “settling defendants.”

On November 29, 1999, the United States filed the

above-captioned action against the DCCG and lodged the

Consent Decree on the same date. Pursuant to section

122(d)(2) of CERCLA, 42 U.S.C. § 9622(d)(2), the

Department of Justice published the proposed Consent

Decree in the Federal Register for comment. 64 Fed. Reg.

69784 (Dec. 14, 1999). Dico submitted Objections and

Comments to the Department of Justice, and on January 14,

2000, moved to intervene and consolidate this action with

Dico v. Amoco, No. 4-97-CV-10130 (S.D. Iowa 1997). As

mentioned earlier, this Court granted Dico’s motion to

intervene upon consent from the United States and the settling

defendants, but deferred ruling on Dico’s motion to

consolidate. On March 10, 2000, the United States formally

moved to enter the Consent Decree.

ll a ER Cee

23a

Appendix B

Dico now moves for an eviuentiary hearing on the United

States’ motion to enter consent decree, arguing the United

States has failed to provide the Court with a fair and complete

record. Dico also argues it has a constitutional right to an

evidentiary hearing under the Fifth Amendment because

Dico’s Contribution Claim is a vested property interest that

cannot be “taken” by the government without due process

and just compensation.

II. DICO’S MOTION FOR EVIDENTIARY HEARING

“(I]t is within the sound discretion of the trial court to

decide whether an evidentiary hearing is necessary before

ruling on a proposed consent decree.” United States v.

Metropolitan St. Louis Sewer Dist., 952 F.2d 1040, 1044

(8 Cir. 1992) (citing United States v. Cannons Engg Corp.,

899 F.2d 79, 93-94 (1* Cir. 1990)). As explained by the First

Circuit, the need for such a hearing turns on whether “ ‘the

parties have a fair opportunity to present relevant facts and

arguments to the court, and to counter their opponent’s

submissions.’ ” United States v. Comunidades Unidas Contra

La Contaminacion (“Comunidades Unidas ”’), 204 F.3d 275,

278 (1* Cir. 2000) (quoting Cannons Eng’g, 899 F.2d at 94).

A. Whether Administrative Record Warrants

Supplementation

Dico contends in the present case that it has been denied

a fair opportunity to present its facts and arguments to the

Court. In particular, it contends an evidentiary hearing is

necessary to enable this Court to evaluate the consent decree

based on a full administrative record. This Court disagrees.

24a

Appendix B

The evidence shows the EPA first initiated settlement

negotiations on April 23, 1998, by sending letters to all

potentially responsible parties pursuant to section 122(e)(1)

of CERCLA. Declaration of Daniel J. Shiel, at. 1, Exhibit 1

to Memorandum in Support of United States’ Motion to Enter

Consent Decree (“Shiel Declaration”). This letter advised

PRPs the EPA had selected a final remediation action for

OU-2 and -4, and invited settlement offers. Jd. at 2; see also

Exhibit A to Shiel Declaration. After receiving this letter,

the DCCG notified the EPA it was interested in negotiating

as a group. Jd. Although neither Dico nor Titan Wheel

responded to the EPA’s letter, the EPA nevertheless sent a

second letter dated June 12, 1998, inviting Dico to participate

in an upcoming settlement conference. Jd., see also Exhibit

-B to Shiel Declaration. After receiving a proposed settlement

offer from the DCCG, the EPA contacted Dico yet a third

time, urging them to engage in settlement talks. Jd. at 3;