Petition for Writ of Certiorari — Hecla Mining Mining Co. v. United States (No. 06-61)

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Supreme Court, U S

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No.

= 06-61 JU 11 2006

Jn The OFFICE OF THE CLERK

Supreme Court of the Anited States

HECLA MINING COMPANY,

Petitioner,

UNITED STATES OF AMERICA

AND THE STATE OF IDAHO,

Respondents.

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Ninth Circuit

PETITION FOR A WRIT OF CERTIORARI

ELIZABETH H. TEMKIN MICHAEL R. THORP

(Counsel of Record) HELLER EHRMAN LLP

TEMKIN WIELGA HARDT 701 Fifth Avenue

& LONGENECKER LLP Suite 6100

1900 Wazee Street Seattle, WA 98104

Suite 303 Tel: (206) 447-0900

Denver, CO 80202 Fax: (206) 447-0898

Tel: (303) 292-4922

Fax: (303) 292-4921

July 11, 2006

COCKLE LAW BRIEF PRINTING CO. (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTION PRESENTED

Federal Rule of Civil Procedure 60(b)(5) authorizes a

district court to grant relief from a judgment on grounds

that it is no longer equitable for the judgment to have

prospective application. Did the Ninth Circuit impermissi-

bly limit the district court’s authority to administer its

consent decrees in concluding, based on Rufo v. Inmates of

Suffolk County Jail, 502 U.S. 367 (1992), that this Court

intends for such relief to be governed by a limited checklist

of factors to the exclusion of other considerations, with the

admissible evidence defined by the “four corners” of the

decree, like a contract?

val

PARTIES TO THE PROCEEDINGS BELOW

AND CORPORATE DISCLOSURE STATEMENT

In addition to the parties named on the caption,

ASARCO Incorporated (“Asarco”) was a party to the

proceedings at the United States District Court for the

District of Idaho and the Ninth Circuit Court of Appeals.

Asarco filed a petition for relief under Chapter 11 of the

Bankruptcy Code on August 9, 2005 in the United States

Bankruptcy Court in the Southern District of Texas.

Asarco has not joined in this petition.

Coeur d’Alene Mines Corporation, Callahan Mining

Corporation, Sunshine Precious Metals, and Sunshine

Mining Company, were parties to the consent decree which

is central to this petition. These parties have not joined in

this petition, or any of the district court or Ninth Circuit

proceedings leading up to this petition.

Hecla Mining Company has no parent corporation. As

of March 2006, Royce & Associates, LLC, investment

advisor to The Royce Funds under the Investment Com-

pany Act of 1940, 15 U.S.C. § 80a-1 et seqg., held 10.8% of

the common shares of Petitioner. No other person or entity

owns 10% or more of Petitioner’s common stock.

TABLE OF CONTENTS

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REASONS FOR GRANTING THE WRIT............-:+0-+

A. The District Courts Administer Thousands of

Long-Lived Consent Decrees and Must Have

the Discretion and Flexibility to Modify These

Decrees as Circumstances Change....................

1. The Ninth Circuit’s decision triggers the

need for this Court to exercise its supervi-

sory power to ensure the district courts’

equitable discretion in the administration

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PETITION FOR A WRIT OF CERTIORARI

Petitioner Hecla Mining Company respectfully peti-

tions for a writ of certiorari to review the judgment of the

United States Court of Appeals for the Ninth Circuit in

this case.

OPINIONS BELOW

The decision of the Court of Appeals for the Ninth

Circuit, dated December 5, 2005, is published at 430 F.3d

972, App. la. The orders of the United States District

Court for the District of Idaho in this case are not pub-

lished, App. 23a-55a. Petitioner, Hecla Mining Company

(“Hecla”), seeks review of the decision of the court of

appeals on a writ of certiorari.

JURISDICTION

On January 18, 2006, Hecla timely filed a petition for

rehearing or rehearing en banc in the court of appeals. On

April 12, 2006, the court of appeals filed an order denying

both, App. 56a. The present petition is timely filed under

28 U.S.C. § 2101(c) and under Rule 13.3 of this Court.

This Court has jurisdiction under 28 U.S.C. § 1254(1)

to review the judgment of a federal court of appeals on a

writ of certiorari.

RELEVANT RULES AND STATUTORY PROVISIONS

Federal Rule of Civil Procedure 60(b)(5) and relevant

provisions of the Comprehensive Environmental Response,

Compensation, and Liability Act, 42 U.S.C. § 9601 et seq.

(“CERCLA”), are set forth in the appendix, App. 59a-66a.

STATEMENT OF THE CASE

A. Overview.

This case involves promises made and then broken by.

the United States. It also involves one of the largest

environmental cleanups ever to take place in this country,

cutting a wide swath of disruption and impacts across

multiple towns and residential neighborhoods in northern

Idaho. Soil cleanups like this one present tremendous

challenges to federal and state environmental agencies

because they necessarily involve a highly intrusive process

requiring the destruction, and then the reconstruction, of

yards, gardens, school yards and parks, plus extensive

face-to-face negotiation with hundreds or, in this case,

thousands of property owners and tenants. The exacting

on-site details and the intrusiveness of the process, multi-

plied thousands of times, explains why the United States

Environmental Protection Agency, short of friends and

supporters in the Coeur d’Alene Basin to begin with,’ was

so anxious that Hecla and the other mining companies,

* By way of example, in 2001, then Idaho governor, the Hon. Dirk

Kempthorne, demanded that EPA step aside and leave further cleanup

to the “good people of Idaho.” Testimony of Governor Dirk Kempthorne

before a United States Environmental Protection Agency hearing on the

Coeur d’Alene Basin Cleanup, November 13, 2001. App. 67a.

undertake the massive soil cleanup contemplated’ for the

Bunker Hill Superfund Site. It also explains why EPA

offered significant inducements to Hecla and others to

enter into the consent decree in question. The district

court found that these inducements were made, that they _

were reasonably relied upon by Hecla and the other

private party signatories, that the United States subse-

quently reneged on the promises, and that this repre-

sented a significant change in the factual circumstances

warranting a modification of the consent decree. The

Ninth Circuit disagreed and reversed.

B. The Site.

The Bunker Hill Superfund Site (“Site”) is one of the

oldest and largest Superfund sites in the nation, located in

a historic mining district, known as the “Silver Valley,” in

northern Idaho. See Bunker Hill Mining and Metallurgical

Complex Operable Unit 3 Record of Decision, September

2002, Figure 1.0-1, Basin Study Area (map showing the

Bunker Hill Superfund Site and Coeur d’Alene Basin),

App. 75a. The original NPL site, a 21 square mile area

known as the “Box,” was among the first sites listed on

CERCLA’s National Priorities List (“NPL”) in 1983. The

Box is the area maximally impacted by emissions from the

historic Bunker Hill smelter complex located in the center

of the Box.’ The area was also impacted by the discharge

of “tailings,” which are wastes generated from the milling

of ore, that-historically were carried downstream fluvially

* None of the defendant signatories to the consent decree at issue

here ever owned or operated the smelter complex. The then owner of

the smelter complex filed for bankruptcy in October 1993.

from upstream mining areas proximate to the drainage of

the South Fork of the Coeur d’Alene River.

C. The Consent Decree.

The 1994 Consent Decree, which is at the heart of this

dispute, was entered by the district court on November 17,

1994, pursuant to its authority and jurisdiction under 42

U.S.C. § 9613(b), and 28 U.S.C. §§ 1331 and 1345. The

1994 Decree was intended to address the cleanup liabili-

ties, under CERCLA and within the original NPL site, of

the following defendant signatories: Asarco, Hecla, Coeur

d’Alene Mines Corporation, Sunshine Precious Metals and

Sunshine Mining Company.’ Coeur d’Alene Mines’ obliga-

tion under the consent decree was limited to a one-time

cash payment. The remaining companies agreed to under-

take EPA’s massive soil cleanup program along the river

and through the small towns scattered through the Box.

The original cost estimate for this work was $40 million.

By 2003, when the district court entered final relief on

Hecla’s motion to modify, the companies had already spent

$44.7 million on the program, and estimated an additional

$18 million in expenditures to finish the job. See District

Court Order Granting in Part and Denying in Part Hecla’s

Request for Final Relief (Nov. 18, 2003), App. 41a, 44a n.3.

(hereinafter, November 2003 Order). When the program is

complete, over 2,500 residential yards, plus many other

* The then extant Sunshine Mining corporate interests filed for

bankruptcy on August 23, 2000. Sunshine Mining’s liabilities under the

1994 Consent Decree, and in the Coeur d’Alene Basin more generally,

were resolved by the district court’s approval, by order dated January

22; 2001, of a consent decree among the United States, the Coeur

d’Alene Tribe, and the various Sunshine Mining entities, resolving all of

Sunshine’s outstanding Box and Basin liabilities.

non-residential properties, will have been remediated. Not

surprisingly, given its breadth and cost, the program has

had a significant impact on the Silver Valley’s social and

economic fabric.

By 2003, when the district court issued its final

ruling, it had been administering the 1994 Consent Decree

for almost a decade.* The district court also was well

aware of the many bankruptcies, and other circumstances,

that were shrinking the already small pool of potentially

responsible parties in a position to help fund Superfund

cleanup at the Site. See notes 2 & 3, supra; note 8, infra;

District Court Order Granting in Part and Denying in

Part Hecla’s and Asarco, Inc.’s Motions to Modify Consent

Decree (Sept. 30, 2001), App. 3la (hereinafter, September

30, 2001 Order).

A key inducement for both Hecla and Asarco in enter-

ing into the 1994 Consent Decree was the United States’

repeated assurances not to expand the NPL listing beyond

the already huge, 21-square mile Box. In 1991, for exam-

ple, then EPA Regional Administrator Dana Rasmussen

wrote to the Idaho Congressman Larry LaRocco:

Let me state unequivocally that is not EPA’s in-

tention to expand the boundaries of the site. We

recognize that there are many other regulatory

* The Honorable Judge Harold L. Ryan entered the consent decree _

and presided over its initial administration. Judge Ryan passed away in

April 1995. The Honorable Judge Edward J. Lodge took over further

administration of the consent decree from the Hon. B. Lynn Winmill in

February 2001. Judge Lodge, continues to preside over Bunker Hill

related matters, as described herein.

tools besides Superfund legislation to affect envi-

ronmental improvements.°

November 7, 1991 Letter from United States Environ-

mental Protection Agency Regional Administrator Dana A.

Rasmussen to Idaho Congressman Larry LaRocco,

App. 76a. (emphasis in original). As the district court

found, this and similar assurances were an essential

“trade off,” on which the companies reasonably relied to

determine “how far their dollars would reach and what

could be done to keep the company afloat.” September 30,

2001 Order, App. 29a.

D. Site Expansion.

In March 1996, eighteen months after entry of the

1994 Consent Decree, the United States did an about face,

reneged on its assurances not to expand the Site, and filed

a major lawsuit in federal court in Idaho seeking to re-

cover millions, if not billions of dollars in response costs

and natural resource damages for alleged hazardous

substance releases throughout the Coeur d’Alene Basin.

See March 22, 1996 Press Release from the United States

Department of Justice, App. 78a. The new Superfund Site

boundaries embraced the entire Coeur d’Alene drainage,

* The parties tothe consent decree recognized that EPA might

utilize Superfund authorities to a limited degree as part of the multi-

media cleanup initiative envisioned by the consent decree. See Septem-

ber 30, 2001 Order, App. 27a-28a & n.1. None of the parties anticipated

that the multi-media cleanup initiative would fail. Jd. The 1994

consent decree does not specifically incorporate EPA’s assurances and

expectations on this issue. However, the definition of the “Site” is

limited to the Box. Plus, EPA did not reserve to itself anywhere in the

consent decree the authority to expand the Bunker Hill NPL Site. See

infra at page 16.

from the Idaho-Montana border on the East, through

Idaho and then on into Washington, down the drainage of

the Spokane River, west of the City of Spokane - an

enormous area covering thousands of square miles. See

also United States v. ASARCO, Inc., 214 F.3d 1104 (9th

Cir. 2000). Any question about the United States’ intent to

“Superfund” the Basin and expand the NPL site was

answered unequivocally by EPA’s announcement in early

1998 of its undertaking a full-blown Superfund cleanup

study for the entire Basin.* See September 30, 2001 Order,

App. 30a-3la & n.2.

The 1996 Basin lawsuit, the so-called “Basin Case,”

was assigned to Judge Lodge. In early motion practice in

1998, involving a statute of limitations question, Judge

Lodge addressed the site expansion issue for the first time,

finding that, in fact, EPA had impermissibly expanded the

Bunker Hill NPL Site from the 21-square mile Box, to

include the entire Basin. United States v. ASARCO, Inc.,

28 F. Supp. 2d 1170, 1180-81 (D. Idaho 1998).’

Trial of the liability phase of the Basin case took place

over a six-month period in 2000. Judge Lodge heard testi-

mony from close to 100 witnesses during more than 78 days

of trial and reviewed 8,695 exhibits. The trial transcript

* EPA claims approximately $60 million in CERCLA study and

other costs in the Basin as of August 30, 2003. The Department of

Justice claims an additional $16.7 million in litigation costs as of

September 30, 2003.

” The Ninth Circuit reversed, finding as a matter of law that the

expansion was permissible under the Administrative Procedure Act.

United States v. ASARCO, Inc., 214 F.3d 1104 (9th Cir. 2000). The

Ninth Circuit did not, however, question Judge Lodge’s factual findings

on the United States’ about-face decision to Superfund the Basin and

expand the Site.

runs to over 16,000 pages. In September 2003, Judge

Lodge issued an order assigning substantial liability to

Hecla and Asarco for at least some parts of EPA’s claims.

Coeur d’Alene Tribe v. ASARCO, Inc., 280 F. Supp. 2d 1094

(D. Idaho 2003). The extent of that liability, and the

companies’ liability for natural resource damages, plus

_ certain defenses, were left to a Phase II Basin case trial

that has yet to occur.”

E. The Motion to Modify.

On January 16, 2001, Hecla filed a motion pursuant to

the 1994 Consent Decree, J 114 (App. 91a), and Federal

Rule of Civil Procedure 60(b), to modify the 1994 Consent

Decree, in light of the changed-circumstances associated

with the expansion of the Bunker Hill NPL Site. Rule

60(b) of the Federal Rules of Civil Procedure authorizes a

federal district court to modify a consent decree finalized

and entered by the court if, among other reasons, “it is no

longer equitable that the judgment should have prospec-

tive application.” Fed. R. Civ. P. 60(b)(5).

Judge Lodge held a two-day evidentiary hearing on

the motion in mid-September 2001 and issued an initial

ruling 11 days later, on September 30, 2001. This was after

completion of the Phase I Basin case trial, but before

issuance of his written, September 2003 Basin case order.

* The Court’s September 3, 2001 Order set a Phase II trial date of

May 11, 2004. That date was rescheduled several times before Judge

Lodge vacated the Phase II trial altogether, pending resolution, now

that Asarco is in bankruptcy, of the issues of the applicability of the

automatic stay and the Idaho District Court’s jurisdiction at this point

to try the Phase II case as to Asarco. Asarco filed for bankruptcy

protection on August 9, 2005.

Judge Lodge held that modification of the 1994 Consent

Decree was warranted under Federal Rule of Civil Proce-

dure 60(b)(5) and this Court’s decision in Rufo v. Inmates

of Suffolk County, 502 U.S. 367 (1992). The district court

found, based on extensive testimony and written evidence,

that expansion of the Bunker Hill NPL Site constituted “a

significant change in factual circumstances and these _

changes were not reasonably anticipated by the Defen-

dants at the time the Consent Decree was signed.” Sep-

tember 30, 2001 Order, App. 30a.

The district court next addressed whether this change

in circumstances had, under Rufo, made compliance with

the 1994 Consent Decree “substantially more onerous.”

“Based on the Court’s familiarity with EPA’s plans for the

Basin,” explained Judge Lodge, “the Court believes the -

overall liability under the RI/FS for the area outside the

Box will be substantial.” September 30, 2001 Order, App.

32a. The court deferred a final decision on how onerous

the change in circumstance might be, and the appropriate

relief, until after EPA completed its RI/FS and issued its

remedy determination.

The EPA issued its remedy determination, known as a

“Record of Decision” or “ROD,” in September 2002. The

ROD calls for a $360 million cleanup in the Basin. In

November 2003, Judge Lodge issued his final decision on

Hecla’s motion to modify, finding that “the Defendants ...

now also have significant and real liability for the cleanup

and restoration of the Basin.” November 18, 2003 Order,

App. 41a. The court then reduced the companies’ remain-

ing obligations under the consent decree by approxi-

mately twenty percent (20%) or $7 million dollars.

November 18, 2003 Order, App. 44a & n.3. By order dated

April 16, 2004, the district court approved the parties’

agreed upon crediting of the $7 million, subject to rights of

appeal. See District Court Order Granting the Joint

Recommendation of the Parties to Modify the Consent

Decree (Apr. 16, 2004), App. 51a-53a.

The United States appealed the November 18, 2003

Order and the April 16, 2004 Order to t .e Ninth Circuit.

The two appeals were consolidated. The United States

claimed that the district court had abused its discretion in

finding that the expansion of the Superfund Site was an

unanticipated change in circumstances that had made

compliance with the 1994 Consent Decree substantially

more onerous. The United States also complained that the

$7 million credit was not suitably tailored to the changed

circumstances found by the district court.

The Ninth Circuit agreed with the United States and

reversed the district court’s decision. The Ninth Circuit

held that a district court’s authority in equity to modify a

consent decree under Rule 60(b)(5) is limited by contract

principles and whether the changed circumstance at issue

was anticipated in the contract.’ See Court of Appeals

Opinion, United States of America v. ASARCO, Inc., App.

13a-15a. The Ninth Circuit also found that, even if the

district court was allowed to consider extrinsic evidence,

the evidence was conflicting, and therefore, not sufficient,

in the Ninth Circuit’s view, to support modification of the

1994 Consent Decree. Id., App. 19a-20a. Based on its

reading of Rufo, the Ninth Circuit also raised a new issue

as to whether the companies had made a reasonable effort

* The Ninth Circuit found that the 1994 Consent Decree did

anticipate site expansion. For the reasons noted in note 5, supra, Hecla

contends that this finding is erroneous.

to comply with the 1994 Consent Decree. This question

was not considered by the district court and therefore no

evidence on the issue was presented below. Nonetheless,

the Ninth Circuit found that the companies had not made

a reasonable effort to comply.

The Ninth Circuit denied Hecla’s Petition for Rehear-

ing or Rehearing En Banc by Order dated April 12, 2006.

This petition follows.

REASONS FOR GRANTING THE WRIT

A. The District Courts Administer Thousands of~

Long-Lived Consent Decrees and Must Have

the Discretion and Flexibility to Modify These

Decrees as Circumstances Change.

1. The Ninth Circuit’s decision triggers the

need for this Court to exercise its supervi-

sory power to ensure the district courts’

equitable discretion in the administration

of consent decrees.

The district courts have continuing jurisdiction over

thousands of consent decrees and judgments involving

issues of vital public interest and enormous social and

economic impacts, including decrees addressing “institu-

tional reform” (i.e., prison overcrowding, school desegrega-

tion, voting and public housing cases are examples),

antitrust and other business or trade practices, environ-

mental protection, employment and labor relations, patent

and trademark and securities regulation. Such decrees

often involve goals the implementation of which may take

years to achieve. As a result, these consent decrees often

remain in place for extended periods of time. In many

cases, the complexity of the decree, the timeframe for

implementation and the fact that circumstances change

over time require the district courts to exercise broad

discretion to properly and effectively administer and, as

necessary, modify these decrees while they remain opera-

tive.

The environmental decree at issue in this case is a

good example of judicial settlements which are of enor-

mous public significance and likely to require modification _

during their long lives in order to do justice to the parties

and the public. See supra at page 1, Overview.

Thanks in no small measure to the knowledge that

they may seek appropriate modification if circumstances

change, defendants like Hecla have entered into long-lived

environmental consent decrees with the United States by

the hundreds if not thousands. In most instances, the full

nature and extent of the work to be undertaken pursuant

to the decree is not known — or even knowable — when the

decree is entered. Thus, the defendant must rely upon its

ability either to negotiate changes with EPA or to go to the

district court for an appropriate modification should

circumstances dictate. The Ninth Circuit’s decision effec-

tively eliminates this second option and, in so doing, will

have a chilling effect on consent decrees as an effective

vehicle for maximizing cleanups and, in turn, minimizing

litigation.

The voluntary participation by potentially responsible

parties (“PRPs”) in the cleanup of contaminated sites is

critical to the success of both EPA and state remediation

programs. EPA has identified 44,000 potentially hazardous

waste sites and continues to discover about 500 additional

sites per year. EPA places what it considers the most

seriously contaminated sites on the NPL. At the end of

fiscal year 2002, there were 1,233 sites on the NPL. See

U.S. General Accounting Office, Superfund Program:

Current Status and Future Fiscal Challenges (GAO-03-

850, July 31, 2003), App. 93a. According to EPA, PRPs

have undertaken the work and funded more than 70

percent of the remedial actions begun at sites other than

federal facilities in fiscal years 2000 through 2002. Id.,

App. 97a. Since the inception of the Superfund program

through 2002, PRP commitments have exceeded $20

billion. Jd., App. 94a. EPA has repeatedly emphasized its

“continued commitment to maximize PRP involvement in

financing and conducting cleanups” and that “in the past

few years, PRPs have led the majority of new remedial

actions, accelerating the pace of Superfund cleanups.

Early involvement of PRPs also kept transaction and

cleanup costs at a minimum.” U.S. Environmental Protec-

tion Agency, Office of Emergency and Remedial Response:

Progress Toward Implementing Superfund, Fiscal Year

1998, App. 102a, 105a.

The language of CERCLA itself reflects Congress’

intent to ensure cooperative efforts between EPA and

PRPs in cleaning up contamination. Section 122, 42 U.S.C.

§ 9622, for example, details over multiple pages the

importance and key elements of CERCLA settlements.

Section 122(d)(1)(A), 42 U.S.C. § 9622(d)(1)(A) provides

that agreements between EPA and PRPs under this

section “shall be entered in the appropriate United States

district court as a consent decree.” The importance of these

consent decrees, their flexibility and that they can be

modified to accommodate changed circumstances were

underscored by former Assistant Attorney General of the

Environment and Natural Resources Division of the

United States Department of Justice, Lois J. Schiffer, in

July 19, 2005 testimony before the Subcommittee on

Administrative Oversight and the Courts of the Senate

Judiciary Committee:”

[S]ettling environmental cases with consent de-

crees provides far more flexibility to the parties

in establishing what the state or local govern-

ment must do to come into compliance with the

environmental law. The parties, rather than the

court, set the schedule. Each party compromises

to come up with a more workable solution than a

judge-decided ruling may provide. Moreover, a

component of consent decree flexibility is that

consent decrees can be modified. While both court-

established remedies and consent decrees may be

modified, courts may well be more willing to

change an order not crafted by the judge. With

consent decrees, there are effective tools for deal-

ing with changed circumstances, including changed

financial circumstances, in a state or local gov-

ernment.

A Review of Federal Consent Decrees, S. Hrg. 109-181,

Before the Subcommittee on Administrative Oversight and

the Courts of the Senate Judiciary Committee, 109th

Cong. 97, 100 (2005) (testimony of Lois Schiffer, former

Assistant Att’y Gen. of the United States) (emphasis in

original), App. 109a."

Ms. Schiffer’s remarks were particularly addressed to the effect of

consent decrees on state and iocal governments, bu’ «7 «ually germane

to decrees where the U.S. government settles with p ~ «te parties.

" The consent decree in this case specifically previded: “Nothing in

this Decree shall be deemed to alter the Court’s powers pursuant to

Federal Rules of Civil Procedure 60, or otherwise.” Consent Decree,

4 114. App. 91a.

Affirming the federal district court’s discretion in

modifying consent decrees is also critical vis-a-vis this

Court’s supervisory powers over both the circuit and

district courts. If the appellate courts can second-guess the

district courts without restraint, consent decree modifica-

tions will be routinely appealed by the losing litigant

wanting to second-guess the district court’s opinion. This

will only clog the appellate courts with matters properly

left to the district courts’ fact finding role and discretion.

The Ninth Circuit’s usurpation of the district court’s

role in determining Rule 60(b)(5) motions is inconsistent

with this Court’s rulings, as well as decisions of other

courts of appeal. It is critical that this Court ensure that

the courts of appeal understand the proper relationship

between the district courts and the circuit courts with

respect to Rule 60(b) motions:

If the District Court takes into account the rele-

vant considerations [all of which are not likely to

suggest the same result]” and accommodates

them in a reasonable way, then the District

Court’s judgment will not be an abuse of its dis-

cretion, regardless of whether an appellate court

would have reached the same outcome in the

first instance. Cf. Lemon v. Kurtzman, 411 U.S.

192, 200, 93 S.Ct. 1463, 1469, 36 L.Ed.2d 151

(1973) (“In shaping equity decrees, the trial court

is vested with broad discretionary power; appel-

late review is correspondingly narrow”).

Rufo, 502 U.S. at 394 (Justice O’Connor, concurring).

” In contrast, the-Ninth Circuit seized upon the fact that the

evidence below was conflicting, as somehow justifying its substituting

its view of the facts for the findings of the district court.

Certiorari is therefore appropriate on this matter to

ensure the proper administration and supervision of the

federal courts.

2. The Supreme Court should settle the issue

of the scope and applicability of Rule

60(b)(5) after Rufo.

Historically, relief from judgments was available in

federal courts through a variety of remedies such as coram

nobis, coram vobis, audita querela, or bill of review. See,

Moore & Rogers, Federal Relief from Civil Judgments,

1946, 55 Yale L.J. 623, 659-682. In United States v. Swift

& Co., 286 U.S. 106 (1932), this Court recognized “the

power of a court of equity to modify an injunction in

adaptation to changed conditions, though it was entered

by consent.” Jd. at 114. In that case, however, the motion

for modification was denied, the Supreme Court holding:

“Nothing less than a clear showing of grievous wrong

evoked by new and unforeseen conditions should lead us to

change what was decreed after years of litigation with the

consent of all concerned.” Jd. at 119. In 1946, Rule 60(b)(5)

was promulgated.

In Rufo v. Inmates of Suffolk County Jail, 502 U.S.

367 (1992), this Court construed the district courts’ power

to modify consent decrees when “it is no longer equitable

that the judgment sheuld have prospective application,” in

accordance with Federal Rule of Civil Procedure 60(b)(5).

The Court noted that Swift did not represent a hardening

of the traditional flexible standard for modification of

consent decrees. Jd. at 379. It went on to state that the

“grievous wrong” standard was not intended to take on a

“talismanic quality, warding off virtually all efforts to

modify consent decrees.” Jd. at 380. Instead, the language

of Rule 60(b)(5) “permits a less stringent, more flexible

standard” for relief from a final judgment and allows a

court to decide when “it is no longer equitable that the

judgment has prospective application.” Jd.

The Rufo Court then turned to the case before it, an

institutional reform dispute, and outlined a set of princi-

ples to be followed by the district courts in determining

motions to modify in such cases. According to the Supreme

Court, the relevant factors are:

(1) Whether a significant and unanticipated

change in circumstances exists;

(2) Whether the changed circumstances have

made compliance with the decree substantially

more onerous;

(3) Whether the proposed modification to the.

decree is suitably tailored to the changed circum-

stances; and

(4) Even if the changed circumstances were an-

ticipated, whether the movant agreed to the de-

cree in good faith, made reasonable efforts to

comply with the decree and it would be inequita-

ble to deny relief.

Id. at 383-385.

These considerations are not a rigid prescription, but

rather are to be applied in a flexible manner, within the

broad, equitable discretion of the district court. As recog-

nized by the Third Circuit Court of Appeals:

We believe that the generally applicable rule for

modifying a previously issued judgment is that_set

forth in Rule 60(b)(5), i.e., “that it is no longer equi-

table that the judgment should have prospective

application.” It would be a mistake to view either

Rufo or Swift as encapsulating a universal for-

mula for deciding when that point has been

reached. Instead, each of those cases represents a

response to a particular set of circumstances. A

court of equity cannot rely on a simple formula

but must evaluate a number of potentially com-

peting considerations to determine whether to

modify or vacate an injunction entered kb; con-

sent or otherwise.

Building and Const. Trades v. N.L.R.B., 64 F.3d 880, 888

(3rd Cir. 1995). “[D]ifferent considerations may have

greater or lesser prominence in different cases, not be-

cause the cases are characterized one way rather than

another but because equity demands a flexible response to

the unique conditions of each case.” Id.

In this case, the Ninth Circuit rejected Rufo’s flexible

discretion standard and reverted to a very limiting ap-

proach, with an impossibly high bar, reminiscent of Swift.

First, the Ninth Circuit incorrectly placed a new

threshold burden on Rule 60(b)(5) motions by holding that

consent decrees are contracts and that absent ambiguity,

what the defendants did or did not anticipate must be

discerned within the consent decree’s four corners. Ninth

Circuit Court of Appeals Opinion, United States of America

v. ASARCO, Inc., App. 13a-20a. This new, threshold

requirement is inconsistent with Rufo’s “less stringent,

more flexible” approach. “A consent decree no doubt

embodies an agreement of the parties and thus in some

respects is contractual in nature. But it is an agreement

that the parties desire and expect will be reflected in, and

be enforced as, a judicial decree that is subject to the rules

generally applicable to other judgments and decrees.”

Rufo, 502 U.S. at 378. In fact, in Rufo, this Court stated

that, on remand, it expected the district court to determine

the issue of what the movant did or did not anticipate on a

“fully developed record.” Jd. at 386 & n.10. Likewise, in

Agostini v. Felton, 521 U.S. 203, 215 (1997) this Court

stated: “The court cannot be required to disregard signifi-

cant changes in law or facts if it is satisfied that what it

has been doing has been turned through changed circum-

stances into an instrument of wrong.”

Other courts of appeal, and even the Ninth Circuit in

cases prior to this case, have agreed that the district court

may consider extrinsic evidence with respect to the issue

of whether the movant anticipated the changed circum-

stances. See, e.g., Bellevue Manor Assocs. v. United States,

165 F.3d 1249, 1258 (9th Cir. 1999) (“Instead the Rufo-

Agostini approach allows courts to fulfill their traditional

equity role: to take all the circumstances into account in

determining whether to modify or vacate a prior injunction

or consent decree”); Building and Const. Trades v.

N.L.R.B., 64 F.3d 880, 889 (3rd Cir. 1995) (consideration of

affidavit); ALC v. Sacha A. Lichine Estate Selections, Ltd.,

45 F.3d 582, 584 (1st Cir. 1995) (four-day evidentiary

hearing); Waste Management of Ohio, Inc. v. City of Day-

ton, 182 F.3d 1142, 1146 (6th Cir. 1977) (“Case law clearly

suggests that a district court is not required to remain

blind to all but the words contained in the four corners of a

consent decree ... ”). By limiting Rule 60(b)(5) modifica-

tion to a “four corners” review, the Ninth Circuit stripped

the district courts of their authority in equity and the

flexibility Rufo dictates for consent decree modification.

This case presents a good example of how limiting

review to the “four corners” of the consent decree can lead

to an erroneous result. The district court had years of

experience in administering this consent decree and

addressing related disputes. The district court held a two-

day evidentiary hearing on the motion to modify, which

included live testimony from six witnesses and deposition

testimony by a seventh. Based upon the totality of the

evidence, including the language of the consent decree

itself, the district court made the following finding of fact:

“(T]he Court finds at the time the consent decree was

entered, the Defendants did not anticipate the EPA using

its remedial CERCLA authority to clean up the Basin.”

September 30, 2001 Order, App. 28a.

The Ninth Circuit chose to disregard this finding and

the evidence and limited its review to the “four corners” of

the consent decree. It concluded that the United States

had expressly reserved its right to “Superfund” the Basin

in the consent decree and, therefore, that the defendants

actually anticipated the change. Nowhere in the consent

decree, however, did the United States reserve the right to

“Superfund” the Basin. EPA’s authority to place a site on

the NPL (i.e., make it a Superfund site) is contained in

CERCLA § 105(c), 42 U.S.C. § 9605(c). The consent decree

contains no reservation of rights with respect to CERCLA

§ 105. See Consent Decree, {J 85, 86, & 90 (reservation of

rights); { 4.AD (definition of “site”), App. 83a, 84a, 87a.

Moreover, listing a site on the NPL does not come within

the definition of “response action,” see CERCLA § 101(25),

42 U.S.C.-§ 9601(25), nor does it have anything to do with

“liability.” See Honeywell International, Inc. v. E.PA., 372

F.3d 441, 443 (D.C. App. 2004). Without NPL listing author-

ity, EPA is, by statute, 42 U.S.C. § 9604(c)(1), limited to

short-term response actions. EPA could never have developed

a $360 million Basinwide CERCLA remedy, and demanded

Hecla pay for it, without reneging on its commitment to

not list the site on the NPL.

The Ninth Circuit also ignored that the consent decree

itself anticipates an approach to Basin cleanup without an

NPL listing. While the district court found that EPA had

reserved CERCLA remedial authorities in the consent

decree, it also found that EPA had agreed to forego a

singular reliance on its “remedial authority” under CER-

CLA, based in part on the consent decree itself. Both the

1991 and 1992 Records of Decision, “which it is undisputed

are an enforceable part of the Consent Decree,” see Sep-

tember 30, 2001 Order, App. 28a, specifically endorse the

“multi-media approach” to a Basinwide CERCLA remedy.

Id. The Ninth Court erred in finding that the language of

the consent decree did not anticipate this alternative to

“Superfunding” the Basin.

In addition to restricting the scope of the evidence

which a district court may consider with respect to a

motion to modify, the Ninth Circuit impermissibly substi-

tuted its judgment for the wide-ranging discretion of the

district court in deciding Rule 60(b) motions. Appellate

courts review rulings on Rule 60(b) motions for abuse of

discretion. See Browder v. Director, Dept. of Corrections of

Ill., 434 U.S. 257, 263, n.7 (1978). “Determining what is

‘equitable’ is necessarily a task that entails substantial

discretion ... As a result, an appellate court should

examine primarily the method in which the District Court

exercises its discretion, not the substantive outcome the

District Court reaches.” Rufo, 502 U.S. at 393-394 (Justice

O’Connor, concurring) (emphasis in original).

In this case, the Ninth Circuit disregarded the district

court’s findings of fact based on the evidence adduced at

the court’s two-day hearing and came to its own conclusion

as to whether it was “equitable” to grant the motion to

modify. In doing so, it disregarded Rufo’s admonition that

even if the movant did anticipate the changed circum-

stances, the motion to modify could still succeed if the

movant were able to “convince the court that it agreed to

the decree in good faith, made a reasonable effort to

comply with the decree, and should be relieved of the

undertaking under Rule 60(b).” Rufo, 502 U.S. at 385. The

Ninth Circuit acknowledged that the district court had not

reached this issue, but declined a remand, stating that the

Panel had “a fully-developed record to review.” See Ninth

Circuit Court of Appeals Opinion, App. 21a.

We do not accept that Defendants have made

reasonable efforts to comply with the decree, or

have met their heavy burden in this case, where

the cost of compliance is unknown and the proper

baseline against which to measure any increase

in liability remains indeterminate.

Id., App. 22a.

Nothing in the record supports the Ninth Circuit’s

conclusion on this point. In the proceedings before the

district court and on appeal, neither the United States nor

the State of Idaho ever took the position or produced

evidence that the defendants had failed to make reason-

able efforts to comply with the decree. To the contrary, in

an early ruling on the motion to modify, the district court

ordered the defendants to “fully comply with all obliga-

tions under the Consent Decree for 2002 and beyond until

further order of this court.” District Court Order Granting

the United States’ Emergency Request for Clarification or

Modification of the September 30, 2001 Order (Oct. 15,

2001), App. 37a. Then, two years later, in issuing its final

order, the district court modified’ the decree so as to “allow

for almost all of the required work to be completed while

still achieving the goals necessary to safeguard and

monitor human health and to protect the environment.”

November 18, 2003 Order, App. 45a. These quotations in

fact suggest that compliance with the consent decree was

ongoing and not an issue. If this is now the decisive issue

in the case, the matter should be remanded to the district

court for decision.

CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted,

ELIZABETH H. TEMKIN

Counsel of Record

TEMKIN WIELGA HARDT

& LONGENECKER LLP

1900 Wazee Street

Suite 303

Denver, CO 80202

Tel: (303) 292-4922

Fax: (303) 292-4921

Counsel for Petitioner

July 11, 2006

INDEX OF APPENDIX MATERIALS

Court of Appeals Opinion: United States of America

v. ASARCO, Inc., 430 F.3d 972 (9th Cir. Dec. 5,

ED ertisninscleiding eadtiasatelinicssdeatiotctneninnacdesducesteuintacs App. la

District Court Order Granting in Part and Denying

in Part Hecla’s and Asarco, Inc.’s Motions to Mod-

ify Consent Decree (Sept. 30, 2001).................... App. 23a

District Court Order Granting the United States’

Emergency Request for Clarification or Modifica-

tion of the September 30, 2001 Order (Oct. 15,

SUM io: dead desde tl fidaine sda aiionisuscandaesa aan sdsbdcinbcucoanein App. 36a

District Court Order Granting in Part and Denying

in Part Hecla’s Request for Final Relief (Nov. 18,

RPE RRER ERE ER GReh ct id Oc BARR al eer EP OE PROM App. 39a

District Court Order Granting the Joint “Recom-

mendation of the Parties to Modify the Consent

Ehmewae GAG, 1G, BOI) oon cscosatscccsccssescscccerscovessers App. 5la

Court of Appeals Order Denying Petition for Rehear-

ing and Rehearing En Banc (Apr. 12, 2006).......... App. 56a

Federal Rule of Civil Procedure 60(b)(5) ................ App. 59a

Oe aa ee iiss ccaip sian ateissorubsicrviavdssanecastes App. 6la

Me ae EE Povcnssishecdaodcsinanescoadipiinsdiatpiacedensuns App. 6la

Oe es. I vith ptenieiew ncaa ati cescdentinetesositsebeten App. 62a

iat I iacecevscucivesssnasersniicsotennubiadeiaidahie App. 64a

OE A, FB PM tciivicectineticccescnsnbesensernesrevses App. 66a

Testimony of Governor Dirk Kempthorne before a

United States Environmental Protection Agency

hearing on the Coeur d’Alene Basin Cleanup,

NG Mai MINE So hedica decnrcesoretusdetsadieddindedaucoonssnicccgae’ App. 67a

eee

INDEX OF APPENDIX MATERIALS - Continued

Bunker Hill Mining and Metallurgical Complex

Operable Unit 3 Record of Decision, September

2002, Figure 1.0-1, Basin Study Area (map show-

ing the Bunker Hill Superfund Site and Coeur

@ Alene Basitn) i si<iescsecssisecdugenvqutbeetocecetovinsss cenveceses App. 75a

November 7, 1991 Letter from United States

Environmental Protection Agency Regional Ad-

ministrator Dana A. Rasmussen to Idaho Con-

gressman Larry LaRocco............sscccssserseeeesereseess App.-76a

‘March 22, 1996 Press Release from the United

States Department of Justice............esceeeseseeeees App. 78a

Excerpts from Consent Decree, entered November

17, TOG. cccscdacccigsndst cada tae detente esesees App. 8la

Paragraph AD, defining the Bunker Hill Super-

Fearn GRGG: <ccosincxvansiericalensaniedia ep aedanaatmminderrnerssees App. 82a

Paragraphs 85-94, containing the governments’

FOOT VALID s.c.cninces Gini deca ealatarmeavbantiaeersktiesicouneses App. 83a

Paragraph 114, regarding modification under

Federal Rule of Civil Procedure 60(b)................. App. 91a

U.S. General Accounting Office, Superfund Pro-

gram: Current Status and Future Fiscal Chal-

lenges (GAO-03-850, July 31, 2003).......0 App. 92a

U.S. Environmental Protection Agency, Office of

Emergency and Remedial Response: Progress

Toward Implementing Superfund, Fiscal Year

TOD. .vinssiscvccigdsedatmmia asada i siecnerteesses App. 100a

A Review of Federal Consent Decrees, S. Hrg. 109-

181, Before the Subcommittee on Administrative

Oversight and the Courts of the Senate Judiciary

Committee, 109th Cong. 97, 100 (2005) (testi-

mony of Lois Schiffer, former Assistant Att’y Gen.

Pg ee ee App. 106a

App. la

430 F.3d 972

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellant,

and

STATE OF IDAHO,

Plaintiff,

ASARCO INCORPORATED;

HECLA MINING COMPANY,

Defendants-Appellees,

and

COEUR D’ALENE MINES

CORPORATION; CALLAHAN MINING

CORPORATION; SUNSHINE PRECIOUS

METALS, INC.; SUNSHINE MINING

COMPANY, INC.,

Defendants.

UNITED STATES OF AMERICA,

Plaintiff-Appellant,

and

STATE OF IDAHO,

Plaintiff,

No. 04-35052

D.C. No.

CV-94-00206-EJL

No. 04-35479

D.C. No.

CV-94-00206-EJL

App. 2a

COEUR D’ALENE MINES

CORPORATION; CALLAHAN MINING

CORPORATION; HECLA MINING

COMPANY; SUNSHINE PRECIOUS

METALS, INC.; SUNSHINE MINING

COMPANY, INC.,

Defendants-Appellees.

UNITED STATES OF AMERICA,

Plaintiff,

and

STATE OF IDAHO,

Plaintiff-Appellant, No. 04-35106

v. D.C. No.

ASARCO INCORPORATED; CV-94-00206-EJL

HECLA MINING COMPANY, OPINION -

Defendants-Appellees,

and

COEUR D’ALENE MINES

CORPORATION; CALLAHAN MINING

CORPORATION; SUNSHINE PRECIOUS

METALS, INC.; SUNSHINE MINING

COMPANY, INC.,

Defendants.

Appeal from the United States District Court

: for the District of Idaho

Edward J. Lodge, District Judge, Presiding

Argued and Submitted

June 7, 2005 — Seattle, Washington

App. 3a

Filed December 5, 2005

Before: Warren J. Ferguson, Robert R. Beezer,

and M. Margaret McKeown, Circuit Judges.

Opinion by Judge Ferguson

COUNSEL

Ronald M. Spritzer (briefed and argued) and Greer S.

Goldman (briefed), Environmental and Natural Resources

Division, U.S. Department of Justice, Washington, D.C.,

for plaintiff-appellant United States.

Curt A. Fransen, Deputy Attorney General, Coeur d’Alene,

Idaho, for plaintiff-appellant State of Idaho.

Elizabeth H. Temkin, Denver, Colorado, for defendant-

appellee Hecla Mining Company.

OPINION

FERGUSON, Circuit Judge:

In 1994, the United States and the State of Idaho

(together, “Plaintiffs”) entered into a consent decree with

various mining companies, including Hecla Mining Com-

pany and Asarco Inc. (together, “Defendants”), requiring

the latter to perform certain cleanup actions in exchange

for specific liability releases in the seriously contaminated

Bunker Hill Superfund Site. The site, also known as “the

Box,” is a twenty-one square mile area surrounded by the

Coeur d’Alene River Basin (“the Basin”) in northern Idaho.

In 2001, the District Court modified the consent decree for

the Box (“the Box Decree” or “the decree”) because it found

that Defendants faced unanticipated lability outside the

App. 4a

Box that made compliance with the decree substantially

more onerous.

In 1996, the United States had filed an action under

the Comprehensive Environmental Response, Compensa-

tion, and Liability Act (CERCLA)’ to recover from Defen-

dants costs incurred in cleaning up environmental ©

contamination in the heavily mined 1500 square mile

Basin. In 2003, after the Environmental Protection Agency

(EPA) had completed a remedial investigation and feasibil-

ity study of, as well as a record of decision (ROD) for, the

Basin, the District Court reduced Defendants’ cleanup

obligation under the Box decree by $7 million.

Plaintiffs presently contend that the District Court

abused its discretion when it relied on extrinsic evidence,

rather than the plain terms of the decree, to find that

Defendants did not anticipate the EPA’s contested action

outside the Box. Because the decree in fact expressly

reserved the United States’ authority to take such action,

we reverse the Court’s modification order. In so doing, we

hold. that in modifying a consent decree under Rule

60(b)(5) of the Federal Rules of Civil Procedure, a court

must first interpret the terms and provisions of the decree

as it would a contract to determine if the moving party

anticipated a signi ‘ant change in factual conditions,

thereby making moduication improper.

* CERCLA was enacted in 1980 and reauthorized and amended in

1986 by the Superfund Amendments and Reauthorization Act of 1986,

Pub. L. No. 99-499, 100 Stat. 1613 (Oct. 17, 1986). 42 U.S.C. § 9601 et

seq.

App. 5a

I. BACKGROUND

A. Bunker Hill Superfund Site

The EPA listed the Bunker Hill Superfund Site

(hereinafter “the Box”), a twenty-one square mile area in

Shoshone County, Idaho, on its National Priorities List in

1983 as one of the country’s most contaminated sites. Over

one hundred years of mining and sixty-five years of smelt-

ing activity, as well as various natural and man-made

events, had caused widespread contamination in the area.

The EPA’s record of decision for the Box explained that, in

particular, “[sloils, surface water, ground water, and air

throughout the [slite have been contaminated by heavy

metals, to varying degrees, through a combination of

airborne particulate deposition, alluvial deposition of

tailings dumped into the river by mining activity, past

waste disposal practices, and contaminant migration from

onsite sources.”

Section 104 of CERCLA permits the President to

respond directly to releases or threatened releases of

hazardous substances, such as those existing in the Box,

by undertaking “response actions” consistent with the

National Oil and Hazardous Substances Pollution Contin-

gency Plan (“NCP”). See 40 C.F.R. § 300.1-.86 (1985).

Before selecting a response action, however, the NCP

requires that the EPA first conduct a remedial investiga-

tion and feasibility study, which is designed to “assess site

conditions and evaluate alternatives to the extent neces-

sary to select a remedy” that will “eliminate, reduce, or

control risks to human health and the environment.” 40

C.F.R. § 300.430(a)(1)-(2). Potential response actions

include a “remedial action,” which is a cost-effective, long-

term plan for a permanent remedy, and a “removal action,”

which is generally a short-term action intended to address

App. 6a

only emergency situations. 42 U.S.C. § 9601(24), (23); see

ROGER W. FINDLEY & DANIEL A. FARBER, ENVIRONMENTAL

Law 186-87 (5th ed. 2000).

For purposes of the remedial investigation and feasi-

bility study of the Box, the EPA divided the twenty-one

square miles into populated and non-populated areas. The

agency eventually issued a ROD for the populated areas in

1991 and a ROD for the non-populated areas in 1992.

Taken together, the records of decision supported a reme-

dial action in the Box targeting widespread heavy metal

contamination in soils, surface water, and ground water

and seeking to reduce associated risks to human health,

particularly children’s exposure to lead.

Between 1992 and 1994, Plaintiffs engaged in settle-

ment negotiations with potentially responsible parties

(“PRPs”), including Defendants, after filing a complaint

against them to recover costs for the EPA’s remedial action

in the Box.’ The parties agree that at the time of their

negotiations the EPA expressed its intent not to use

CERCLA remedial authority to clean up contamination (or

“superfund” the area) outside the Box. Instead, it planned

to address the environmental contamination in that area

through the Coeur d’Alene Basin Restoration Project (“the

Basin Restoration Project”), a cost-effective, long-term

* While sections 106 and 107 of CERCLA authorize the Attorney

General to sue responsible parties who have contributed to contaminat-

ing a Superfund site, including past, remote, and future owners,

operators, generators, arrangers, and transporters, section 122(a) of

CERCLA encourages settlement agreements between the United States

and PRPs for expediting effective remedial action and minimizing

litigation. See FINDLEY & FARBER, supra, at 202. The State of Idaho

joined the complaint against Defendants pursuant to relevant state law

and section 107 of CERCLA. See 42 U.S.C. § 9607.

App. 7a

approach, not a “response action,” that was designed to be

a public and private venture among local, state, and

federal agencies, the Coeur d’Alene Tribe, and private

property owners in the Basin (including Defendants).

In 1994, the District Court entered the parties’ set-

tlement as a consent decree in which Defendants, among

other PRPs, agreed to perform certain cleanup actions in

the Box’s populated areas and Plaintiffs assumed primary

responsibility for the Box’s non-populated areas. The

parties agree that the United States explicitly reserved in

the decree the right to pursue PRPs for “liability arising

from the past, present, or future disposal, release, or

threat of release of Waste Materials outside the Site.”

Consent Decree (CD) J 90(2). In addition, no party dis-

putes that, under the decree, the United States “retain[ed]

all authority and reserveld] all rights to take any and all

response actions authorized by law.” CD { 93 (emphasis

added). Moreover, the parties recognize that the decree

limited the United States’ covenant not to sue the PRPs

strictly to the Box. CD { 84a.

B. Modification of Consent Decree

In March 1996, nearly two years after the District

Court had approved the consent decree for the Box, the

United States, at the request of the EPA, the Department

of the Interior, and the Department of Agriculture, filed an

action to recover from PRPs, among other things, damages

under CERCLA for injury to natural resources in the

heavily mined Basin, that is, the area outside the Box.’ In

* The State of Idaho is not a party to the Basin litigation. It

nonetheless asserts that the consent decree for the Box should remain

distinct from the unresolved disputes concerning the Basin.

App. 8a

early 1998, the EPA publicly announced that it would be

conducting a remedial investigation and feasibility study

of the Basin. Three years later, in January 2001, Defen-

dants filed a motion in the District Court of Idaho to

modify the consent decree, contending that the EPA's

decision to superfund the Basin constituted an unantici-

pated change in factual circumstances that made compli-

ance with the Box decree substantially more onerous.

In particular, Defendants alleged that the EPA had

repeatedly assured them that it would not expand the

Superfund site from the Box to the Basin.* Despite recog-

nizing that the decree specifically reserved the United

States’ right to superfund the Basin, the Distriet Court

relied on oral and written assurances that the EPA had

allegedly given Defendants prior to and after entering the

decree to find that the latter did not anticipate the con-

tested action. The Court found that between 1991 and

early 1998, the EPA consistently stated “that actions

outside the Box would be coordinated with the broader

objectives of the Coeur d’Alene Restoration Project .. . and

regulatory tools other than remedial authority under

CERCLA.” The Court explained that “[t]his finding [was]

based on repeated representations and references to the

‘multimedia approach’ in letters, in the 1991-and 1992

RODs . .. in conversations with EPA management, in the

‘We note that Defendants previously challenged the EPA’s

expansion of the Superfund site boundaries from the Box to the Basin

in United States v. Asarco Inc., 214 F.3d 1104 (9th Cir. 2000). We held

there that while the EPA gave adequate notice of the expansion, the

D.C. Circuit had exclusive jurisdiction to rule on any challenge to the

expanded boundaries. Jd. at 1107. Defendants subsequently filed a

notice with this Court indicating that they were not filing an appeal in

the D.C. Circuit, in effect abandoning their formal challenge to the

EPA’s expansion of the Superfund site boundary lines.

App. 9a

{Basin Restoration Project] Framework document and in

Department of Justice pleadings to the Court in this case

and in United States v. Asarco, et al., 96-122-N-EJL.” On

September 30, 2001, the Court held that modification of

the decree was appropriate because enforcement of the

decree as it stood would drive “the mining industry out of

business” and “bleed[] the companies to death.”

The District Court nevertheless withheld deciding on

actual modifications to the consent decree until the EPA

had completed the Basin’s remedial investigation and

feasibility study and ROD. The EPA issued the ROD in

September 2002, and the Court issued an order on No-

vember 18, 2003 reducing Defendants’ financial obligation

under the decree by $7 million.° The Court subsequently

approved the parties’ allocation of the $7 million in an

April 16, 2004 order. Plaintiffs timely appealed the Court’s

last two orders, which this Court has consolidated for

purposes of this appeal.

II. STANDARD OF REVIEW

Motions for relief from judgment under Rule 60(b) are

reviewed for abuse of discretion. Casey v. Albertson’s Inc.,

* The District Court arrived at $7 million by considering the

original, undisputed estimated cost for the Box ($40 million), the

expenditures to date ($44.7 million), and the estimated cost of the

remaining work in the Box ($27 to $35 million in present value).

Although the Court conceded that “[Defendants’] liability for the Basin

is still unknown,” it 1) subtracted $40 million from $44.7 million, which

is $4.7 million; 2) added that amount to $31 million (the middle figure

in the range of estimated remaining costs for the Box), which is $35.7

million; and 3) calculated 20% of that amount, which is $7.14 million.

Notably, the District Court failed to explain the basis for reducing

Defendants’ obligations by approximately 20%.

App. 10a

362 F.3d 1254, 1257 (9th Cir. 2004) (citing SEC uv.

Coldicutt, 258 F.3d 939, 941 (9th Cir. 2001)). “A district

court abuses its discretion if it does not apply the correct

law or if it rests its decision on a clearly erroneous finding

of material fact.” Casey, 362 F.3d at 1257 (citing Bateman

v. United States Postal Serv., 231 F.3d 1200, 1223 (9th Cir.

2000)). Here, because the facts are generally undisputed,

we face a mixed question of law and fact. A mixed question

of law and fact exists when there is no factual dispute, the

rule of law is clear, and the question is whether the facts

satisfy the legal rule. Pullman-Standard v. Swint, 456

' U.S. 273, 289 n.19 (1982). Mixed questions of law and fact

are reviewed de novo. United States v. City of Spokane,

918 F.2d 84, 86 (9th Cir. 1990).

IlI, DISCUSSION

The District Court modified the consent decree under

Rule 60(b)(5) of the Federal Rules of Civil Procedure,

which provides in relevant part that a court may relieve a

party from a final judgment when —

the judgment has been satisfied, released, or dis-

charged, or a prior judgment upon which it is

based has been reversed or otherwise vacated, or

it is no longer equitable that the judgment should

have prospective application(.]

(emphasis added.) “[This} Rule codifies the courts’ tradi-

tional authority, inherent in the jurisdiction of the chan-

cery, to modify or vacate the prospective effect of their

decrees[.]” Bellevue Manor Assoc. v. United States, 165

F.3d 1249, 1252 (9th Cir. 1999) (internal quotations and

citations omitted).

App. lla

In Rufo v. Inmates of Suffolk County Jail, the Su-

preme Court articulated the applicable two-prong stan-

dard for modifying a consent decree under Rule 60(b)(5).

502 U.S. 367 (1992). The moving party must satisfy the

initial burden of showing a significant change either in

factual conditions or in the law warranting modification of

the decree. Jd. at 384. The district court must then deter-

mine whether the proposed modification is suitably tai-

lored to resolve the problems created by the changed

factual or legal conditions. Jd. at 391. In particular, “[i]f

the movant cites significantly changed factual conditions,”

as Defendants do here, “it must additionally show that the

changed conditions make compliance with the consent

decree ‘more onerous,’ ‘unworkable,’ or ‘detrimental to the

public interest.’” Small v. Hunt, 98 F.3d 789, 795 (4th Cir.

1996) (quoting Rufo, 502 U.S. at 384). A court should not

ordinarily modify a decree, however, “where a party relies

upon events that actually were anticipated at the time it

entered into a decree.” Rufo, 502 U.S. at 385 (citation

omitted).

Defendants bore the initial burden in the District

Court of showing that the EPA’s decision to superfund the

Basin constituted a significant and unanticipated change

in factual conditions warranting modification of the

decree. See id. at 384-85. “If it is clear that [Defendants]

anticipated changing conditions that would make per-

formance of the decree more onerous but nevertheless

agreed to the decree, [Defendants] would [then] have to

satisfy a heavy burden to convince a court that [they]

agreed to the decree in good faith, made a reasonable

effort to comply with the decree, and should be relieved of

the undertaking under Rule 60(b).” Jd. at 385. We refer to

this latter requirement as the heavy burden standard.

App. 12a

We recognize Defendants’ valid concern that Rule

60(b)(5) should be treated as a flexible standard. Defen-

dants correctly maintain that the Rule is designed to

provide judges with discretion and flexibility in modifying

a decree. In Rufo, the Supreme Court explains that

“[b]ecause such decrees often remain in place for extended

periods of time, the likelihood of significant changes

occurring during the life of the decree is increased.” Id. at

380 (citation omitted). But the likelihood of significant

changes occurring over the life of the decree does not mean

that courts have unbridled discretion to modify a decree

when a party actually anticipated the changed factual

circumstances in question. Rufo makes clear that “on such

terms as are just, a party may be relieved from a final

judgment or decree where it is no longer equitable that the

judgment have prospective application|[.]” Jd.

Accordingly, we address two questions in this appeal.

First, did Defendants anticipate at the time they entered

into the decree that the EPA would superfund the Basin?

Second, if so, did Defendants satisfy the heavy burden

standard established in Rufo? We find that Defendants

indeed anticipated that the EPA might superfund the

Basin and, in addition, failed to meet the heavy burden

standard because they did not make a reasonable effort to

comply with the decree. Thus, we need not address

whether the actual modification of the decree is suitably

tailored under Rufo’s second prong in order to conclude

that the District Court abused its discretion in modifying

the consent decree.

App. 13a

A. Defendants Anticipated the EPA’s Contested Action

The parties do not challenge on appeal the consent

decree’s unequivocal terms or conditions. In fact, they

agree that under the decree, the United States “retain[ed]

all authority and reserve[d] all rights to take any and all

response actions authorized by law.” CD J 93. Moreover,

Defendants notably stated in their answering brief to this

Court that “[t]he companies in this case have never ques-

tioned [the] EPA’s authority to exercise CERCLA authori-

tie® outside the Box. In this regard, the governments are

correct that the Decree’s- reservation of rights confirms the

parties’ expectation that the EPA might take such action.”

The District Court also found in no uncertain terms “no

legally binding commitment either in the Consent Decree

or in the related Records of Decision that would prohibit

the EPA from using full CERCLA remedial authority

outside the Box.”

The exact issue here, then, is whether the District

Court erred in modifying Defendants’ obligation under the

decree on the basis of extrinsic evidence that suggests that

Defendants did not anticipate the contested action. Ulti-

mately, we must determine to what extent contract princi-

ples apply when modifying a consent decree as a matter of

equity under Rule 60(b)(5).

1. Consent Decrees

Without question courts treat consent decrees as

contracts for enforcement purposes. A consent decree, like

a contract, must be discerned within its four corners,

extrinsic evidence being relevant only to resolve ambiguity

in the decree. In United States v. Armour & Co., for exam-

ple, the Supreme Court found that defendant, a meat

App. l4a

packing company, did not violate the terms of the meat

packers consent decree of 1920, which forbade meat

packing companies from owning grocery stores, by allow-

ing Greyhound to buy an ownership share of its stock

while simultaneously owning grocery subsidiaries. 402

U.S. 673, 682-83 (1971). The Court reasoned that if the

government wanted to prevent a single corporation like

Greyhound from owning both meat packing companies and

grocery stores, it should have provided such a prohibition

in the decree. After all, “{clonsent decrees are entered into

by parties to a case after careful negotiation has produced

agreement on their precise terms.... Naturally, the

agreement reached normally embodies a compromise; in

exchange for the saving of cost and elimination of risk, the

parties each give up something they might have won had

they proceeded with the litigation.” Jd. at 681.

The Supreme Court rearticulated its Armour holding

in United States v. ITT Continental Baking Co., where it

considered extrinsic evidence to interpret a vague term in

a consent decree. 420 U.S. 223 (1975). The case involved a

Federal Trade Commission consent order prohibiting

baking companies such as ITT Continental from “acquir-

ing” other baking companies. In construing the term

“acquiring” in the decree, the Court took into account

evidence of events surrounding the negotiation of, and

other documents incorporated in, the decree. The Court

explained that “[sjuch reliance [on extrinsic evidence] does

not in any way depart from the ‘four corners’ rule of

Armour” because where contract terms are ambiguous,

“reliance upon certain aids to construction is proper, as

with any other contract.” Jd. at 238.

This Court has applied contract principles in accor-

dance with Supreme Court precedent when interpreting

App. lida

consent decrees. See Molski v. Gleich, 318 F.3d 937, 956

(9th Cir. 2003) (Graber, J., specially concurring) (stating

that “{i]n construing a consent decree, we apply the same

principles used to interpret a contract.”) (citing Thompson

v. Enomoto, 915 F.2d 1383, 1388 (9th Cir. 1990)); Gates v.

Shinn, 98 F.3d 463, 468 (9th Cir. 1996) (discussing how

“[a] consent decree is ... ‘in some respects contractual in

nature’” and, as such, “[c]ourts must find the meaning of a

consent decree ‘within its four corners[]’”) (citing Ru/fo,

502 U.S. at 378; Armour & Co., 402 U.S. at 681-82);

Enomoto, 915 F.2d at 1388 (explaining that “[iJn constru-

ing consent decrees, courts use contract principles”).

2. Modification Under Rule 60(b)(5)

Defendants contend, however, that a court need not

interpret a consent decree within its four corners in order

to modify it. Since Rule 60(b)(5) is a rule grounded in

equity, Defendants maintain that courts must instead

weigh the totality of the circumstances when determining

if a moving party anticipated a contested change in factual

circumstances.

We disagree with Defendants because modification of

a consent decree invariably hinges on interpretation of the

very terms of the decree. That is, in order to discern if

Defendants anticipated that the EPA might superfund the

Basin, we must first interpret the decree, which embodies

the parties’ careful negotiation and enforceable commit-

ments. Only if the decree’s terms are ambiguous — for

example, if it is not clear in the decree whether Defen-

dants anticipated the EPA’s contested action — do we

consider extrinsic evidence.

App. 16a

This case does not present a novel issue. The Fourth

Circuit’s decision in Thompson v. HUD illustrates how a

court, in modifying a consent decree, must necessarily first

interpret the terms of the decree. 220 F.3d 241 (4th Cir.

2000). Thompson involved a group of African American

public housing residents who entered into a consent decree

with the United States Department of Housing and Urban

Development (HUD) requiring that new family housing

financed with public funds be located in non-impacted

areas (areas without high concentrations of minority

residents or public housing). The decree purported to

eliminate racial segregation and discrimination in Balti-

more’s public housing system. But instead of abiding by

the decree, the local defendants decided that a more viable

plan than the one agreed to would be to construct senior

housing in impacted areas. The district court modified the

consent decree to allow local defendants to seek federal

funds for their new plans.

The Fourth Circuit reversed the district court on the

ground that a particular section in the consent decree, into

which the parties knowingly and voluntarily entered,

“provide(d] that, until the other obligations under the

Decree ha[d] been satisfied, any new construction of public

housing built with public housing funds must be located in

a non-impacted area.” Id. at 247. The plain terms of the

decree, despite the viability of the senior housing plans,

“maldje[] it clear that the parties contemplated that new

construction would be required or desired during the life of

the Consent Decree.” Jd. Because the local defendants

anticipated this change in factual circumstances, the

Fourth Circuit found that modification of the decree was

unwarranted.

App. 17a

The Fourth Circuit’s decision .a United States v.

Bishop Processing Co., although predating Rufo, further

supports our understanding that a court must first inter-

pret the decree in deciding whether to modify it on the

basis of changed factual circumstances. 423 F.2d 469 (4th

Cir. 1970). There, the Fourth Circuit refused to modify a

consent decree to include limitations that appeared no-

where in the agreement. The Bishop Processing Company,

operator of a rendering and animal reduction plant,

entered into a consent decree with the United States and

the states of Delaware and Maryland; the decree required

Bishop to cease all manufacturing and processing of

malodorous air pollution upon a filing of an affidavit by

the Director of Delaware’s Air Pollution Control Division

stating that Bishop was discharging malodorous air

pollution across state lines. After being ordered twice to

cease operations, Bishop contended that the decree was

entered into with various “understandings” about investi-

gative procedures to be used by the Director, procedures

inconsistent with the ones that the Director had used in

reporting Bishop’s actions. Jd. at 472.

Our sister circuit found Bishop’s “understandings”

unavailing because “Bishop had ample opportunity to

propose incorporation in the decree of any protection it

may have felt necessary, and to object to procedures it

deemed contrary to its understanding of the decree’s

terms.” Id. It added that “[Bishop] cannot now ask the

court to revise the decree by inserting language or to

interpret it to embrace matters which, if present at all,

were lurking in the recesses of Bishop’s corporate mind.”

Id.

Here, as in Thompson, the plain terms of the consent

decree reveal the parties’ expectation that a particular

App. 18a

change in factual circumstances might occur during the

lifetime of the decree. In fact, the decree provided that the

United States reserved its “rights to take any and all

response actions authorized by law” and to pursue Defen-

dants for liability for response costs incurred outside the

Box. CD {J 93, 84a. As in Bishop, Defendants also had

“ample opportunity to propose incorporation” of a provi-

sion in the decree prohibiting or limiting the EPA from

superfunding the area outside the Box. Bishop, 423 F.2d at

472. Indeed, Defendants conceded at oral argument and in

their answering brief that the “EPA refused to provide any

commitments in the Box Decree as to its intentions outside

the Box.” The District Court itself recognized that “if such

a [binding] commitment [on the Basin] had been reached

... Such a commitment would have been drafted into the

decree.” As in Bishop Processing Co. and Thompson, we

find that the decree in this case is plain in its terms and,

as such, Defendants anticipated that the EPA might

superfund the area outside the Box.

Defendants’ reliance on Bellevue Manor Assoc. v-

United States as a case establishing a totality of the

circumstances test for modification is unavailing. 165 F.3d

1249 (9th Uir. 1999). Bellevue does not announce such a

test. We merely expanded Rufo’s application in Bellevue to

all petitions brought under Rule 60(b)(5), which “is rou-

tinely used to challenge the continued validity of consent

decrees, which courts often liken to contracts.” Id. at 1253

(footnote and citation omitted). In particular, we found

that a purely private commercial contract between HUD

and private landlords who participated in a federal rent

subsidy program could be challenged under Rule 60(b)5)

because the Rule’s plain language does not except final

judgments interpreting commercial contracts, and courts

App. 19a

have applied the Rule in essentially private cases. In

short, Bellevue does not support Defendants’ position.

Were we to replace the unambiguous language in the

consent decree, providing that the EPA could superfund

the Basin, with Defendants’ contrary “understanding” that

the EPA promised it would not do so, we would defy the

decree’s specific purpose. The decree purports to hold

Defendants, who are potentially responsible parties,

accountable for eliminating the waste and contamination

in the Box’s populated areas. To hold otherwise would also

Strip the decree of its broader purpose, “which is to enable

parties to avoid the expense and risk of litigation while

still obtaining the greater enforceability (compared to an

ordinary settlement agreement) that a court judgment

provides.” Jeff D. v. Kempthorne, 365 F.3d 844, 852 (9th

Cir. 2004) (citations omitted).

3. Extrinsic Evidence

Even assuming that the consent decree’s terms are

ambiguous, there is conflicting evidence at best as to the

EPA’s promises to Defendants that it would not superfund

the area outside the Box. Indeed, in its November 24, 1992

letter to Defendants regarding the Bunker Hill Site/Coeur

d’Alene Basin, the EPA explained that “[it] [did] not

currently intend to expand the use of CERCLA remedial

authorities beyond those actions outlined in the Bunker

Hill [ROD].” (emphasis added.) It also “stated that “[t]he

success of [the Basin Restoration Project] depends on

cooperation and coordination with affected private parties

and public land management agencies.” (emphasis added.)

The EPA’s statements were statements of present intent,

not enforceable promises.

App. 20a

Additionally, when the EPA’s attorney asked Asarco’s

lawyer, James L. Woods, during his September 21, 2001

deposition whether “anyone from EPA ever t[old] {him}

that the Agency would never, ever exercise Superfund

remedial authority outside of the Box” or “expand the

bounds of the Superfund site,” Woods replied with the

following:

I believe — can I point to a specific statement to

that effect, no. But I had the clear intention that

that’s what they were saying. The direct answer

to your question is I do not recollect a specific

statement to that effect.

Woods’s statement demonstrates that even if we were to

consider extrinsic evidence, Defendants cannot prove that

the EPA promised them, unequivocally or explicitly, that it

would not superfund the area outside the Box.

Accordingly, while the District Court found that “all of

the parties to the Consent Decree hoped the [Basin Resto-

ration Project] would be successful in cleaning up the

Basin,” we find that these expectations are not a basis for

modifying the decree. Mere hopes do not translate into

enforceable promises. The EPA expressly reserved in the

decree the right to superfund the area outside the Box

and, as such, Defendants anticipated this change in

factual circumstances. The District Court erred in conclud-

ing that Defendants did not anticipate this change in

circumstances on the basis of extrinsic evidence.

B. Defendants Made No Reasonable Effort to Com-

ply with the Decree

Because the District Court concluded that changed

factual cireumstances were not anticipated, it did not

App. 21a

apply the appropriate heavy burden standard established

in Rufo. When a party anticipates changing conditions

that would make performance of the decree more onerous,

“the party [must] satisfy a heavy burden to convince a

court that it agreed to the decree in good faith, made a

reasonable effort to comply with the decree, and should be

relieved of the undertaking under Rule 60(b).” Rufo, 502

U.S. at 385. We must therefore decide whether to remand

to the District Court, or determine on the basis of the

record before us whether Defendants meet this burden.

The Fourth Circuit addressed a similar situation in

Thompson, 220 F.3d 241. There, the district court also

rejected the plaintiffs’ contention that any change in

circumstances was anticipated at the time of the consent

decree, and so did not analyze the defendants’ modification

request under the proper heavy burden standard. The

Fourth Circuit did not remand the case, however, because

it had a. “[fully-developed] record [that] reveal{ed] no

evidence that the Loca. Defendants made a reasonable -

effort to comply with the requirements .. . of the Consent

Decree, as required by Aufo.” Id. at 248. The local defen-

dants, for example, neither investigated funding the senior

housing project through use of monies not prohibited by

the decree nor evaluated locating the senior village in a

non-impacted area.

Here, as in Thompson, a remand is not required. The

District Court held an evidentiary hearing on the modifi-

cation request, and we have a fully-developed record to

review. See Bellevue, 165 F.3d at 1257 (explaining that a

“{rlemand is not necessary where the issue has been fully

briefed on appeal, the record is clear and remand would

‘impose needless additional expense and delay ... ’”

(quoting In re Pintlar Corp., 133 F.3d 1141, 1145 (9th Cir.

App. 22a

1998))). In seeking to justify a modification to the decree,

Defendants allege that the EPA’s decision to superfund the

Basin has significantly impacted their financial footing.

The record before us, however, does not provide any

definitive indication that Defendants’ financial situation is

in peril or that its situation has significantly changed as a

result of the EPA’s decision to superfund the Basin.

Rather, Defendants’ allegations are at best speculative

given that it is unclear what liability Defendants now face

in the Basin compared to what they would have faced

under the Basin Restoration Project. We do not accept that

Defendants have made reasonable efforts to comply with

the decree, or have met their heavy burden in this case,

where the cost of compliance is unknown and the proper

baseline against which to measure any increase in liability

remains indeterminate.

Because Defendants have not made any reasonable

efforts to comply with the decree, we find that they should

not be relieved under Rule 60(b)(5) of their obligations in

the Box.

IV. CONCLUSION

For the foregoing reasons, ve reverse the District

Court’s order modifying the consent decree at issue in this

case.

REVERSED.

App. 23a

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF IDAHO

UNITED STATES OF AMERICA)

and STATE OF IDAHO

Plaintiffs,

Case No.

CV94-206-N-EJL

vs.

ASARCO INCORPORATED;

COEUR D’ALENE MINES

CORPORATION; CALLAHAN

MINING COMPANY;

SUNSHINE PRECIOUS

METALS; SUNSHINE

MINING COMPANY,

Defendants.

ORDER

(Filed Sept. 30, 2001)

i ie a a

Pending before the Court in the above-entitled matter

is Defendant Hecla and Asarco’s Motions to Modify Con-

sent Decree (Docket Nos. 55 and 56). The Court heard oral

argument on the motion on August 22, 2001. The Court

then scheduled a limited evidentiary hearing regarding

_ the EPA’s position on cleanup of the Coeur d’Alene Basin.

Having now fully considered the testimony, the exhibits

admitted into evidence and the briefs and arguments of

counsel the-Court is prepared to rule on the motions.

Defendants Hecla and Asarco seek to have the Court

modify the 1994 Consent Decree concerning the Bunker Hill

Superfund Site (the “Box”) based on three factors which they

contend make compliance with the Consent Decree substan-

tially more onerous than originally anticipated. First, the

App. 24a

Defendants claim the settlement agreement between the

United States and Sunshine Defendants in civil case USA

v. Asarco, et al., 96-122-N-EJL, releasing Sunshine Defen-

dants from further liability under the 1994 Consent

Decree justifies modification. The Court orally ruled this

factor was not a basis for modification. of the Consent

Decree. When the Consent Decree was entered it was

certainly foreseeable that certain of the settling defen-

dants could end up filing for bankruptcy and that the

remaining, solvent defendants would still have responsi-

bility under the Consent Decree for completing the work.

Moreover, the Consent Decree is not substantially mare

onerous on Hecla and Asarco as the Sunshine Defendants

were not paying a significant portion of the actual costs

incurred. Finally, to allow modification to Hecla and

Asarco’s obligations based on the settlement of the Sun-

shine Defendants would be against the public interest as it

would give unjust enrichment to Defendants who have not

to settled the related natural resources damages action.

Second, Defendants claim the EPA and the state of

Idaho’s work plans under the Consent Decree have made

. the amount and cost of remedial work substantially

greater than the Defendants expected. Again, the Court

orally ruled this factor was insufficient to justify a modifi-

cation of the Consent Decree. The Defendants admit that

the estimated costs at the time the Consent Decree was

entered were simply that, “estimated” costs. While it is

true the actual work completed has cost millions more

than “estimated” the Defendants knew there was a risk of

actual costs exceeding estimated costs and that they would

still be liable for the actual costs. The Plaintiffs have also

paid more than they estimated for the work in the non-

populated areas of the Box. Additionally, the Consent

App. 25a

Decree provides an administrative process for the Defen-

dants to object to work plans they believe exceed the scope

of the Consent Decree. This administrative process has

previously been used by the Defendants to reduce their

costs on certain Consent Decree work.

Third, the Defendants claim the EPA’s change in

position on how it would approach clean up in the Basin

(versus the Box) justifies a modification of the consent

decree. This is the issue the Court held an evidentiary

hearing on to shed light on the following issues: 1)

whether or not there is an ambiguity in the Consent

Decree regarding the EPA’s alleged commitment on clean

up of the Basin and 2) even if the EPA’s alleged commit-

ment was not a term of the Consent Decree, does the

Court by reason of its continuing jurisdiction over the

Consent Decree and the provision of Fed R. Civ. P. 60(b)(5)

have authority to modify a decree on such terms as are

just.

Rule 60(b), provides in part:

On motion and upon such terms as are just, the

court may relieve a party or a party’s legal repre-

sentative from a final judgment, order, or pro-

ceeding for the fillowing reasons: ... (5) the

judgment has been satisfied, released, or dis-

charged, or a prior judgment upon which it is

based has been reversed or other wise [sic] va-

cated, or it is no longer equitable that the judg-

ment should have prospective application; or (6)

any other reason justifying relief from the opera-

tion of the judgment... .

In Rufo v. Inmates of Suffolk County, 502 U.S. 367 (1992),

the Supreme Court held the party seeking modification of

consent decree bears the burden of establishing that a

App. 26a

significant change in circumstances warrants revision of

decree. The Ninth Circuit has held “the Rufo standard

applies to all Rule 60(b)(5) petitions brought on equitable

grounds.” Bellevue Manor Associates v. United States, 165

F.3d 1249, 1257 (9th Cir. 1999).

The district court should exercise flexibility in consid-

ering a request for modification, however, a modification

will not be warranted in all circumstances. Rufo at 383.

Modification may be warranted based on a significant

change in factual conditions or in law. Jd. at 384. Specifi-

cally, the Court recognized three situation’s that could

warrant revision of a decree: 1) “when changed factual

conditions make compliance with the decree substantially

more onerous;” 2) “when a decree proves to be unworkable

because of unforeseen obstacles;” or 3) “when enforcement

of the decree without modification would be detrimental to

the public interest.” Jd. at 384. “[Hlowever, modification

should not be granted where a party relies upon events

that actually were anticipated at the time it entered into a

decree.” Id. at 385.

It is the issue of “anticipation” that the parties hotly

dispute. Plaintiffs maintain the EPA’s authority and right

to apply CERCLA remedial authority to the Basin could

and should have been anticipated by Defendants. Defen-

dants argue, based on the repeated representations of the

EPA prior to and during decree negotiations, Defendants

could not have reasonably anticipated EPA would seek to

“superfund” the entire Basin.

Based on the evidence received, the Court makes the

following findings:

The Court does not find there is any ambiguity in the

Consent Decree. The Court finds the decree clearly sets

App. 27a

forth the agreements of the parties as it relates to the

Bunker Hill Superfund Site. As stated in a previous order,

both sides of a contract of this nature are presumed to

know the relevant CERCLA law when they entered into

the Consent Decree, so the Court finds it was understood

by the parties that the EPA had the “authority” to apply

remedial CERCLA authority outside the Box and hold the

potentially responsible parties (“PRPs”) liable for alleged

injury outside the Box. There is no legally binding com-

mitment either in the Consent Decree or in the related

Records of Decision that would prohibit the EPA from

using full CERCLA remedial authority outside the Box. In

fact, the documents expressly limit EPA’s covenant not to

sue to the Box. The language in the documents is consis-

tent with the testimony of the EPA’s negotiating attorney

who indicated the Defendants consistently sought a

binding commitment on the Basin and the EPA consis-

tently rejected such broad relief. This Court has great

respect for the attorneys who represented Hecla and

Asarco during the negotiations, and if such a commitment

had been reached, the Court is confident such commitment

would have been drafted into the decree.

The Court does find, however, based on assurances

given and consistent statements of intent made between

1991 and February of 1998, that actions outside the Box

would be coordinated with the broader objectives of the

Coeur d’Alene Basin Restoration Project (““CBRP”) and

regulatory tools other than remedial authority under CER-

CLA.’ This finding is based on the repeated representations

’ The Court acknowledges the Defendants knew EPA might use

some CERCLA authority other than “remedial authority” outside the

Box. The Defendants’ witnesses testified it was understood during

(Continued on following page)

App. 28a

and references to the “multi-media approach” in letters, in

the 1991 and 1992 Records of Decision (which it is undis-

puted are an enforceable part of the Consent Decree}, in

conversations with EPA management, in the CBRP

Framework document and in Department of Justice

pleadings to the Court in this case and in United States v.

Asarco, et al., 96-122-N-EJL.

The Supreme Court rejected the argument that a

decree can only be modified when a change in facts is both

“unforeseen and unforeseeable.” Rufo at 385. Since there

was no legal commitment outside the Box, it was arguably

“foreseeable” that the EPA might change their course of

action. However, such was not anticipated based on the

oral and written assurances given. For these reasons, the

Court finds at the time the Consent Decree was entered,

the Defendants did not anticipate the EPA using its

remedial CERCLA authority to clean up the Basin.

Ms. Rasmussen, EPA Regional Administrator for

Region 10, acknowledged that she had “apparent author-

ity” to speak for EPA and that she would expect one to rely

on statements made by her. She did not believe she made

the statements attributed to her, but she also admitted she

does not have a recollection of any meetings with the

management of Hecla or Asarco or statements made. Mr.

Brown, Chairman and President of Hecla, on the other

hand, had a specific recollection of the meetings and

statements made and the exhibits support his understand-

ing. The credibility of his recollection is enhanced by the

negotiations that CERCLA clean up and removal authority for emer-

gency and non-time critical sites in the Basin as well as action under

the natural resources damages sections of CERCLA were possible

remedies which would be used by the EPA.

App. 29a

circumstances then existing and the significance of the

same to the survival of the mining companies.

The Government’s argument that the Regional Direc-

tor could not legally bind the United States Government

nor the state of Idaho is not relevant because the Consent

Decree is not being held invalid nor does modification

under Rule 60(b)5 require “actual authority.”

The Court further finds that the statements and

testimony of the United States and the state of Idaho’s

witnesses concerning the negotiations surrounding the

matters to be included in the Consent Decree are credible

and supported by the wording of the Consent Decree itself.

That does not negate, however, the Court’s ability to

determine whether or not the trade offs within the Super-

fund site were made in light of the assurances given.

Based on the testimony given, it is difficult for this Court

to believe that reputable business men, accountable to

financial institutions, as well as stockholders, would not

foremost be concerned with how far their dollars would

reach and what could be done to keep the company afloat.

The Court finds that all of the parties to the Consent

Decree hoped the CBRP would be successful in cleaning up

the Basin. Only after the Consent Decree was signed and

approved by the Court and a few years had passed were

the Defendants able to “anticipate” that the CBRP would

not meet the goals of the EPA. Defendants were first put

on notice of the change in circumstance as to how cleanup

of the Basin would be approached in early 1998 when the

EPA publicly announced that it would be conducting an

App. 30a

Remedial Investigation Feasibility Study (RI/FS) on the

Basin.”

The Court clearly has continuing jurisdiction over the

Consent Decree and the authority under the law (60(b)5)

to modify a decree on such terms as are just. The Court

concludes as a matter of law that Defendants have carried

their burden in establishing there has been a significant

change in factual circumstances and these changes were

not reasonably anticipated by the Defendants at the time

the Consent Decree was signed.

The next issue to resolve is whether the change in

position by the EPA to conduct a Basin-wide RI/FS has

made compliance with the decree “substantially more

onerous.” Plaintiffs argue the change has not made com-

pliance more onerous as Defendants have continued to

conduct the work and, in fact, waited for three years since

the announcement on the Basin RI/FS to file their motion

to modify the Consent Decree. Plaintiffs also argue the

obligations under the Consent Decree for clean up of the

Box have not increased based on the EPA’s decision to

exercise remedial CERCLA authority in the Basin. These

arguments are correct factual statements, however, they

* EPA’s policy is that it may revise NPL site boundaries at any

time. The Ninth Circuit has held that EPA gave adequate notice of the

expansion of the Superfund site boundaries from the Box to the Basin

when the EPA filed the complaint in United States v. Asarco, et al., 96-

122-N-EJL. United States v. Asarco Incorporated, 214 F.3d 1104 (9th

Cir. 2000). The Ninth Circuit also ruled any challenge to the expanded

boundaries would need to be filed in the United States Court of Appeals

for the District of Columbia. Jd. at 1107. The Defendants filed a notice

with the Court indicating they were not filing an appeal in the District

of Columbia. See Docket No. 887 in United States v. Asarco, et al., 96-

122-N-EJL.

App. 3la

ignore the financial reality of the EPA’s decision to conduct

a Basin-wide RI/FS.

Once the EPA’s decision was made to conduct an

RI/FS and such decision was announced publicly, the

financial impact on both Hecla and Asarco was significant.

No longer were their sources of credit or equity available

to finance operations which fund payments under the

Consent Decree. Third parties questioned the companies

regarding the potential liability to the companies for

remedial clean up of the Basin. While the Plaintiffs argue

it is speculative how much liability Hecla and Asarco will

have under the RI/FS as PRPs, based on the damages and

injuries presented to this Court by the United States in

the natural resource damages action, significant potential

liability is more probable than not. The only real specula-

tion in this situation is what other companies, if any,

remain in business (and that have not already settled)

that could potentially share the financial burden of clean-

ing up the Basin under the RI/FS.* The certainty and

finality bargained for dissipated and created a greater risk

for investors. When financing could not be obtained the

mining companies had to sell assets and this resulted in

additional layoffs of workers.

Now instead of being financially committed to just the

Box the Defendants are exposed to liability far beyond

what was contemplated. Financial institutions have

reacted accordingly. While Defendants acknowledge they

faced liability outside the Box under the CBRP, such

liability was understood to be somewhat more flexible,

* Based on testimony in United States v. Asarco, et al., 96-122-N-

EJL, the RI/FS is expected to be complete in December 2001.

App. 32a

include cooperation from a number of agencies (both State

and Federal) as well as private enterprise and provide for

a time line that would encourage voluntary action.

The Plaintiffs arguments that the change in direction

outside the Box does not make obligations inside the Box

substantially more onerous is unpersuasive. However, the

Court does not have the necessary facts before it to quan-

tify how much more onerous compliance has become.

While the Court is aware of the scope of the RI/FS being

conducted based on testimony in United States v. Asarco,

et al., 96-122-N-EJL, it is unclear to the Court how much

increased liability Defendants Hecla and Asarco will face

under the Basin RI/FS than they had under the “multi-

media approach” to clean up of the Basin.

Based on this Court’s familiarity with EPA’s plans for

the Basin, the Court believes the overall liability under

the RI/FS for the area outside the Box will be substantial.

The Court is putting the parties on notice that it believes

it is highly likely the Defendants will be able to establish

that compliance under the Consent Decree has become

substantially more onerous. Then the Court will have to

determine whether the Defendants’ proposed modification

is “suitably tailored to the changed circumstances.” Rufo

at 370-71. Absent the Basin RI/FS being finalized and a

Record of Decision being issued, it is impossible for the

Court to tailor an appropriate modification.

Defendants requested a modification equal to a

reduction in their obligations in the amount of $14.5

million dollars plus a reduction in on-going monitoring

App. 33a

costs.* The Plaintiffs indicated at the evidentiary hearing

that this was the first time they had heard of the mone-

tary request being sought by the motions to modify. The

Court agrees with the Plaintiffs that they have had insuf-

ficient time to consider, prepare or present evidence on the

appropriateness of the Defendants’ requested modification.

_ In conclusion, the Court finds the changed circum-

stances were not anticipated and were not the result of

fault by any party subsequent to the negotiation process.

The “multi-media approach” to clean up the Basin was

undertaken in 1991 and continued until late 1997 when it

was determined by the EPA a different approach to clean

up was necessary. Considering the totality of the circum-

stances surrounding the entry of the Consent Decree, the

EPA’s decision to proceed with a Basin RI/FS is a substan-

tial change in circumstances. Exactly how onerous the

Basin RI/FS will make compliance with the 1994 Consent

Decree is unclear. However, enforcement of the Consent

Decree without modification could be detrimental to the

public interest because enforcement as contemplated is

putting the mining industry out of business. While de-

pressed metal prices might have put some of the mining

companies out of business or in bankruptcy, Mr. Pfahl and

Mr. Brown both testified that the demands being made

* The $14.5 million represents the amount of monies either spent

or expected to be spent on clean up of the Pinehurst area. Defendants

argue they did not cause any of the harm in the Pinehurst area by their

historical operations and this would be a fair reduction in their

obligations under the Consent Decree based on the change in circum-

stances. Plaintiffs argue this would not be a fair modification as clean

up of the Pinehurst area was a trade off in negotiations and Plaintiffs

ended up with clean up responsibility in non-populated areas where the

Defendants had historically operated. :

App. 34a

under CERCLA, and not the market conditions, are

bleeding the companies to death. If the parties are unable

to agree upon a fair and just modification to the Consent

Decree based on this Order, then the Court will conduct

further hearings after the Record of Decision on the Basin

RI/FS is issued and the Court will determine an appropri-

ate remedy.” ~ :

Order

Being fully advised in the premises, the Court hereby

orders that:

1) Plaintiffs Joint Motion in Limine (Docket No. 91)

is DENIED.

2) Deiendants Hecla and Asarco’s Motions to Modify

Consent Decree (Docket Nos. 55 and 56) are GRANTED

IN PART AND DENIED IN PART consistent with this

Order. The Court will conduct further hearings on

this matter after the Record of Decision on the Basin

RLS is completed. The Court orders the Defendants

to continue to remediate the “high risk yards” in the

Box pending a determination of an appropriate modi-

fication to the Consent Decree.

* Plaintiffs argue this Court cannot award a judgment in favor of

the Defendants as such is barred by the United States’ sovereign

immunity and the Eleventh Amendment. The Court has no intention of

awarding a money judgment in favor of Defendants. Rather, the Court

has the authority to modify the consent decree “upon such terms as are

just” pursuant to Rule 60(b) and any reduction in the Defendants’

obligations under the Consent Decree would not be barred by the

Plaintiffs arguments.

App. 35a

ORDERED this 30th day of September, 2001.

/s/ Edward J. Lodge

EDWARD J. LODGE

UNITED STATES DISTRICT JUDGE

App. 36a

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF IDAHO

UNITED STATES )

OF AMERICA, )

Plaintiff,

vs. )

ASARCO INCORPORATED;

COEUR D'ALENE MINES ) ORDER

CORPORATION; CALLA-

HAN MINING COMPANY; ? _.

SUNSHINE PRECIOUS _ ) ‘Filed Oct. 15, 2001)

METALS; SUNSHINE

MINING COMPANY,

Defendants.

Case No. CV94-206-N-EJL

Pending before the Court in the above-entitled matter

is Plaintiffs’ Emergency Request for Clarification or

Modification of the Court’s September 30, 2001 Order

(Docket No. 99). The court’s staff attorney contacted

counsel and indicated that any responsive briefing to the

motion needed to be filed by the morning of October 15,

2001. The Court has reviewed the motion and related

briefing and is now prepared to rule on the emergency

request.

In the Court’s Order of September 30, 2001, it was not

the intent of the Court to modify the Consent Decree in

any particular at this time. The Court’s directive to the

Defendants to continue with “high risk” restoration

projects was to ensure there was not a slow down in the

work required under the Consent Decree and because it

was the Court’s impression from what counsel stated at

App. 37a

the hearing that “high risk” work was the type of work

being done at the present time. The Court now under-

stands that not all of the 145 yard removals scheduled for

this year by agreement of the parties are technically “high

risk” as that term is defined in the Consent Decree.

With only limited time available to complete the yard

removals for this year and because it appears the Defen-

dants acted in good faith based on their interpretation of

the Court’s order,’ the Court is going to allow the Defen-

dants to defer completion of the remediation on the re-

maining non-high risk properties scheduled for this year

until further order of this Court. This decision is based on

the fact there is no specific evidence presented that the

public will face increased exposure by the deferral and

that compliance may otherwise be impossible in light of

the changing weather conditions.

The parties are urged to continue finalizing work

plans for 2002 and the Defendants shall fully comply with

all obligations under the Consent Decree for 2002 and

beyond until further order of this Court. Should the

evidence warrant a modification, it is evident from the

estimated costs for work in 2002 — 2004 that the Court

would have the flexibility it needs to make the modifica-

tion without any money judgment being entered against

the Plaintiffs.

' The parties are advised potential misunderstandings related to

the Court’s orders should be brought to the attention of the Court as

soon as possible instead of canceling contracts and making completion

of the remaining yard remediations unlikely for 2001. The Court is

always available by telephone to resolve matters that may affect public

safety.

App. 38a

Being fully advised in the premises, the Court hereby

orders that the Emergency Request for Clarification or

Modification of the September 30, 2001 Order (Docket No.

99) is GRANTED consistent with this Order.

Dated this 15th day of October, 2001.

/s/ Edward J. Lodge

EDWARD J. LODGE

UNITED STATES

DISTRICT COURT

App. 39a

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF IDAHO

UNITED STATES )

OF AMERICA and

STATE OF IDAHO

Plaintiffs,

vs.

ASARCO INCORPORATED; Case No. CV94-206-N-EJL

COEUR D’ALENE ORDER

MINES CORPORATION; ,

CALLAHAN MINING (Filed Nov. 18, 2003)

COMPANY; SUNSHINE

PRECIOUS METALS; )

SUNSHINE MINING

COMPANY,

Defendants. )

Pending before the Court in the above-entitled matter

are Hecla’s and Asarco’s Request for Final Relief on

Motion to Modify Consent Decree (Docket No. 143) and

Hecla’s Notice of Judicial Appeal (Docket No. 155) regard-

ing the Final Determination by the EPA of the Dispute

Between Hecla and the EPA Concerning the 2003 Reme-

dial Work Plan Under the 1994 Bunker Hill Consent

Decree.

The parties have indicated the Court may rely on the

affidavits filed with the briefing and have not requested a

hearing on the matters. Having fully reviewed the record,

the “ourt finds that the facts and legal arguments are

adequately presented in the briefs and record. Accordingly,

in the interest of avoiding further delay, and because the

App. 40a

Court conclusively finds that the decisional process would

not be significantly aided by oral argument, this matter

shall be decided on the record before this Court without

oral argument.

I. Request for Final Relief on Motion to Modify

Consent Decree

A. Background Facts.

In an order dated September 30, 2001, this Court

determined there had been “a significant change in factual

circumstances [occurred since the Consent Decree concern-

ing only the Box’ was entered] and these changes were not

reasonably anticipated by the Defendants at the time the

Consent Decree was signed.” The EPA’s decision to expand

the Superfund site to include the entire Cocur d’ Alene

Basin, instead of just the Box years after the Consent

Decree was entered has exposed Defendants to a signifi-

cant increase in liability. This Court reserved its decision

on how to specifically modify the Consent Decree obliga-

tions until the Record of Decision (“ROD”) on the Basin

RI/FS was completed. The RI/FS has now been completed

and the ROD estimates remedial cleanup at approximately

$360-370 million. Additionally, this Court has ruled as to

the liability of Hecla and Asarco in the CERCLA natural

resources damages and Clean Water Act case. The amount

of Asarco’s and Hecla’s liability will not be determined

until the second trial in the natural resources case which

is set for January 2005.

’ The “site” referred to in the Consent Decree is referred to as the

“Box” by the parties and the Court, but such is more particularly

described in the Site Description section of the Record of Decision dated

August 1991 to be limited to a 21 square mile area.

App. 4la

Defendants seek the Court to modify the Consent

Decree by eliminating any further liability under the

Consent Decree. Plaintiffs continue to argue this Court

erred in finding modification was applicable and ask that

if a modification is allowed that it be limited to the costs

the State of Idaho and EPA assumed for cleanup in 2002

of approximately $2.9 million. The question to be resolved

by this Court is not have the burdens inside the Box

increased, because the specific burdens for the Box have

remained the same (although the cost of implementing the

burdens has been higher than expected). Rather, this

Court must determine to what extent the obligations

under the Consent Decree should be modified based on the

limited resources of the Defendants who now also have

significant and real liability for the cleanup and restora-

tion of the Basin.

As discussed in the Court’s September 30, 2001 Order,

the fact that costs have exceeded estimated costs is not a

proper reason to modify the Consent Decree. However, the

Court cannot determine the amount of modification that is

appropriate without considering the monies spent to date

and expected to be spent in the future for the Box and the

Basin. It is undisputed that the estimated costs for clean

up of the Box have been-exceeded. Defendants have spent

$44.7 million when the estimate for cleanup when the

Consent Decree was entered was $40 million. Plaintiffs

argue that they have spend [sic] $116 million in non-

populated areas and such was estimated at $68 million

when the Consent Decree was signed.

The Exhibit A to the Consent Decree is the Record of

Decision dated August 1991 and it provides in part:

App. 42a

The residential soils remedy consists of the following:

- Removal of contaminated surficial soil

- Placement of a visual marker if lead in soil

concentration exceed 1,000 ppm below the

depth of excavation

- Replacement of clean soils (these soils will

function as a barrier between residents and

underlying contaminated material)

- Revegetation of yards

- Disposal of contaminated materials

- Dust suppression during remediation

- Institutional controls for barrier manage-

ment

- Long-term environmental monitoring for

evaluation of remedial effectiveness

A Remedial Action Objective is to decrease the

concentration of lead such that 95% or more of the

children in the area have blood lead levels below

10 ug/dL. This remedial action is expected to

achieve community mean soil lead concentrations

of approximately 200 to 300 ppm by removal of

soils exceeding the threshold level of 1,000 ppm

lead. Approximately 1800 residential properties

will be remediated based on this criterion.

Defendants argue since this remedial blood lead level

objective has been met, no further yard removals should

be required under the Consent Decree. Plaintiffs maintain

the work that has been completed has reduced the risks to

human health and the environment and that the remedial

actions provided for in the Consent Decyve must be con-

tinued in order to achieve human safety and protection of

App. 43a

the environment. The Plaintiffs argue the remaining work

under the Consent Decree consists of: remediating ap-

proximately 550 residential yards, certain commercial

properties and rights of way along with certain outlying

properties; implementation of the final remedy for the

Page Pond; and implementation of the institutional control

program. Plaintiffs estimate Defendants remaining

responsibility under the Consent Decree to be $27 to $35

million dollars (present value).’

The Court finds there is important work that remains

to be completed in the Box and that Defendants agreed to

do such work. While it is true that a remedial objective of

lowering blood lead levels appears to have been met, many

yard cleanups still need to be completed in order to ensure

that the overall blood lead levels remain within the tar-

geted goal of 95% or more children in the area have blood

lead levels below 10 ug/dL. Furthermore, the Court is

convinced that based on the nature of the hazardous

substances released by Defendants, an _ institutional

control program (anticipated by the parties and provided

for under the Consent Decree) needs to be established and

barriers need to be constructed to ensure the long-term

health and safety of the residents of this area.

When the Court indivated it would grant some relief

to the Defendants based on the boundaries of the Super-

fund site being expanded to include the Basin, the Court

had no intention of relieving the Defendants of all remain-

ing liability under the Consent Decree. The requested

* Defendants do not appear to disagree with this estimate based on

Mr. Pfahl’s estimate which includes another $18.1 million in remaining

cleanup costs plus an additional $9-$17.7 million for the institutional

control program.

App. 44a

relief by defendants is clearly overbroad. On the other

hand, the requested modification by the EPA and the

State of Idaho to limit the modification to the $2.9 million

the Plaintiffs paid for remediation in 2002 to which they

claim they are entitled to reimbursement from Defendants

is too restrictive in light of the scope of cleanup costs for

the Basin of $360 million. Asarco and Hecla’s liability for

the Basin is still unknown, however the Court can assume

the Defendants’ estimated PRP liability under the ROD

for the Basin and the pending natural resource damages

case will be significant.

Rufo v. Inmates of Suffolk County Jail, 502 U.S. 367,

383 (1992) indicates that modification of a consent decree

should be “suitably tailored to the changed circumstances.”

In this case, the Court finds a suitably tailored modifica-

tion would be as follows:

Defendants Hecla and Asarco shall continue [sic] be

bound under the 1994 Consent Decree except to the extent

modified by the Court. Of the remaining work to be com-

pleted under the Consent Decree, the Court finds the

Defendants’ remaining obligations should be reduced by

$7 million.* Asarco and Hecla remain jointly and severally

liable for the costs under the Consent Decree.

* The Court reached the reduction amount of $7 million as follows:

the Defendants expected to spend $40 million when the Consent Decree

was signed. To date, the Defendants have spent approximately $44.7

million. This is $ 4.7 more than they originally expected to spend.

Additionally, the parties estimate the remaining costs (including the

institutional control program) to be between $27 and $35 million. The

Court used the middle of this range for an estimate of $31 million in

work left to be completed. Adding $31 million plus the $4.7 million

(amount spent over origina! estimate) is $35.7 million in obligations in

excess of what Defendant’s expected. The Court finds the Defendants’

(Continued on following page)

App. 45a

It is not the Court’s intent that the EPA or the State

of Idaho should have to write a check or checks to the

Defendants. Nor should the Defendants have to wait until

the expenditures are finalized (which is likely to be years

in the future considering the long-term nature of the

institutional control program) in order to have the reduc-

tion in liability implemented. Therefore, the Court respect-

fully requests the parties meet and confer as to where the

reduction in liability will occur in light of the estimated

remaining costs. For example, the reduction could occur

via a reduction in yard removals by the parties identifying

which particular pieces of real property will or will not be

remediated by Defendants or the reduction could occur via

a reduction in liability for the long-term institutional

control program. The parties are in a much better position

to determine the best method for achieving the Court’s

modification of the Defendants’ liability that would equal

$7 million. Finally, the parties cooperation and agreement

is without prejudice for the purposes of an appeal.

The Court finds this limited, but tailored modification

by the parties will allow for almost all of the required work

to be completed while still achieving the goals necessary to

safeguard and monitor human health and to protect the

environment.

II. Hecla’s Judicial Appeal of 2003 Work Plan

A. Background on Motion.

Hecla objects to the EPA’s determination that 100 yards

should be cleaned up when Asarco is only contributing $1.5

remaining liability should be reduced by approximately twenty percent

(20%). Twenty percent of $35.7 million is $7.14 million.

App. 46a

million towards the 2003 work plan and this results in

Hecla having to pay $3 million under the 2003 work plan

when historicaily Hecla and Asarco have shared equally

the costs of the annual work plans. The Defendants agreed

to submit work plans for the clean up of 200 yards per

year. After negotiations, the EPA and State agreed the

2003 work plan could be reduced to 100 yards to be com-

pleted by Hecla and Asarco. The EPA and the Idaho

Department of Environmental Quality (IDEQ) argue the

remediation of 100 residential yards is consistent with the

terms of the Consent Decree which make Hecla jointly and

severally liable, so the fact that Asarco is only paying $1.5

million does not control the amount of work that has to be

completed at Asarco and Hecla’s expense.

Hecla complied with the Dispute Resolution section of

the 1994 Consent Decree and EPA Director, Michael

Gearheard, reviewed the matter and concluded the EPA

and IDEQ were “properly within their authority in their

decision to partially approve and partialy disapprove

Hecla’s Work Plan for the 2003 construction season,

including their directive to Hecla to modify its work plan

to provide for the remediation of 100 residential yards

(including high risk yards) plus associated rights-of-way

and commercial properties in the City of Wardner. I

further find that the EPA and IDEQ were also properly

within their authority in their April 30, 2003 decision to

assume the remediation of a minimum of 100 residential

yards.” See Exhibits to Notice of Judicial Appeal, Docke

No. 155.

App. 47a

B. Standard of Review.

Hecla argues for the decision by the EPA should not

be entitled to record review or judged by the arbitrary and

capricious standard while Plaintiffs argue EPA decision

should be accorded record review.

The Consent Decree provides for formal dispute

resolution. If the dispute “pertains to the selection or

adequacy of any response action and all other disputes

that accorded review on the administrative record under

applicable principles of administrative law shall” be

conducted pursuant to 7 69 of the Consent Decree. “[T]he

adequacy of any response action includes, without limita-

tion: (1) the adequacy or appropriateness of plans, proce-

dures to implement plans, or any other items requiring

approval by the EPA under this Consent Decree and (2)

the adequacy of the performance of response actions taken

pursuant to this Consent Decree.” J 69 of Consent Decree.

“Judicial review of EPA’s decision shall be on the adminis-

trative record compiled pursuant to Paragraph 69(a).”

q 69d.

Paragraph 70 is the formal dispute resolution for

disputes “that neither pertain to the selection or adequacy

of any response action nor are otherwise accorded review

on the administrative record under applicable principles of

administrative law.”

The Court finds the dispute regarding the 2003 Work

Plan and Hecla’s financial responsibility for that plan are

disputes under { 69 of the Consent Decree as they relate

to the adequacy and appropriateness of plans. Accord-

ingly, the judicial review standard is administrative

record review. The standard for reversing agency action

as if the Court find the agency acted in a manner that

App. 48a

was “arbitrary, capricious, and abuse of discretion or

otherwise not in accordance with the law.” 5 U.S.C.

§ 760(2)(A). The agency action is provided a presumption

of administrative regularity. Citizens to Preserve Overton

Park v. Volpe, 401 U.S. 402, 415 (1971). The Court may

not substitute its judgment for that of the agency absent

the Court finding the agency has acted “arbitrary, capri-

cious, and abuse of discretion or otherwise not in accor-

dance with the law.”

C. Analysis.

On October 15, 2001, this Court issued an order

indicating the 2002 work on “non-high risk” yards was

deferred, but Asarco and Hecla were ordered to fully

comply with all obligations under the Consent Decree until

further order of this Court. Since that Order, Asarco has

entered into a separate consent decree in Arizona which

provides for Asarco to deposit over $100 million in an

environmental trust (“Trust”) for clean up costs related to

numerous sites throughout the United States. For 2003,

the Trust has allotted $1.5 million to support work re-

quired under the Consent Decree. Hecla claims the use of

the Trust Funds violates the terms of the Consent Decree.

The Court respectfully disagrees. The EPA and IDEQ are

planning to supplement the Trust funds to support addi-

tional yard remediations. The net result is that the Trust,

EPA and IDEQ will perform 50% of the work for yard

remediations under the Consent Decree and Hecla is to

perform the 50% balance of work under the Consent

Decree.

The Consent Decree is not ambiguous. The Consent

Decree clearly states the obligations are joint and several.

App. 49a

The failure of one party to complete its share of work,

results in the remaining parties have the duty to complete

the requirements under the Consent Decree. Hecla pro-

posed remediation of 18 yards in 2003 is in contravention

to the clean up it agreed to in the Consent Decree. Asarco’s

settlement negotiations do not impact Hecla’s obligations.

The Plaintiffs agreed Hecla would not have to perform

the 200 yard remediations required under the Consent

Decree for 2003. The EPA decision to hold Hecla responsi-

ble for 50% of the 2003 work plan or 100 yard remedia-

tions is clean-up work legally required by the terms of the

Consent Decree. In fact, under the terms of the Consent

Decree, Hecla could be held responsible for the cost of all

200 yard remediations less the $1.5 million contribution

by Asarco from the Trust. The Court finds Hecla’s Notice

of Judicial Appeal in this matter is without merit. The

EPA decision on the dispute is not “arbitrary, capricious,

and abuse of discretion or otherwise not in accordance

with the law.” The Court adopts as its own response, the

well-reasoned EPA decision on the 2003 work plan.

ORDER

Being fully advised in the promises, the Court hereby

orders:

1. Hecla’s and Asarco’s Request for Final Relief

(Docket No. 143) is GRANTED IN PART

AND DENIED IN PART consistent with

this Order.

2. Hecla’s Judicial Appeal (Docket No. 155) is

DENIED.

App. 50a

ORDERED this 18th day of November, 2003.

/s/ Edward J. Lodge

EDWARD J. LODGE

UNITED STATES

DISTRICT JUDGE

App. 5la

THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF IDAHO

UNITED STATES

OF AMERICA, and the

STATE OF IDAHO,

Plaintiffs,

Case No. CV94-206-N-EJL

Vv.

ASARCO INCORPORATED, ?

COEUR D’ALENE MINES ) JOINT

CORPORATION, ) RECOMMENDATION

CALLAHAN MINING ) AND ORDER

COMPANY; HECLA )

MINING COMPANY; ) (Riled Apr. 16, 2004)

SUNSHINE PRECIOUS ?)

METALS, and SUNSHINE ?

MINING COMPANY,

)

Defendants.

COMES NOW, the United States, the State of Idaho,

Hecla Mining Company and ASARCO, Inc. and in re-

sponse to the Court’s request of November 18, 2003 hereby

submit this recommendation and proposed order.

1. On November 18, 2003, this Court issued an order

modifying the Consent Decree that had been entered in

this case in 1994 (“Order”). In the Order, the Court re-

quested that the parties meet and confer in an attempt to

“determine the best method for achieving the Court’s

modification of the Defendants’ lability that would equal

$7 million.” The Court noted that “the parties cooperation

and agreement is without prejudice for the purposes of an

appeal.” November 2003 Order at p. 6.

App. 52a

2. Pursuant to the Order, the parties have engaged

in such discussions and, without prejudicing any appellate

rights, hereby recommend that the Court modify the order

so that it reflects that the $7 million in liability reduction

be achieved as described below. All work referred to below

relates to work to be performed in the Bunker Hill Super-

fund Site as defined in the Consent Decree.

* Defendants shall perform the clean-up of 160

yards plus associated rights-of-way and commercial

properties in 2004 located in the geographical areas

designated as Wardner, Elizabeth Park, Montgomery

Gulch and Page;

¢ Plaintiffs intend to perform the clean-up of 40

yards plus associated rights-of-way and commercial

properties in 2004;

¢ The first category of costs to be applied toward the

$7 million are the response costs incurred by Plaintiffs in

performing the clean-up of the above referenced 40 yards

and associated rights-of-way and commercial properties;

¢ The second category of costs to be applied toward

the $7 million are the costs incurred by EPA in performing

oversight pursuant to the Consent Decree in 2004;

¢ The third category of costs to be applied toward

the $7 million are the response costs incurred by EPA and

the state in performing clean-up required under this

Consent Decree in 2002 and 2003, less the $1.5 million

paid by the ASARCO Environmental Trust and utilized by

EPA to pay costs incurred in 2003.

* The feuwth category of costs to be applied toward

the $7 million are the response costs incurred by EPA in

App. 53a

performing oversight pursuant to this Consent Decree in

2002 and 2003; and,

¢ Should the first four categories referenced above

not be sufficient to reach the $7 million, the remaining

credit will be applied against EPA costs of oversight in

2005 or clean-up work performed by Plaintiffs in 2005.

3. The above recommendation is contingent upon

amending the 2004 Annual Budget of the ASARCO Envi-

ronmental Trust so that ASARCO may seek up to $1.5

million which shall be used to pay for fifty percent of the

first $3 million in contractor response costs incurred by

the Upstream Mining Group in the performance of the

clean-up of the 160 yards. Should the 2004 Annual budget

not be amended, the parties agree that this recommenda-

tion would be null and void and that further modification

of the Order to address that issue would likely be neces-

sary.

4. Defendants’ obligations to pay the State of Idaho

for its costs of oversight for 2004 or 2005 and pay Panhan-

dle Health District for its costs of implementing the

Institutional Control Program (“ICP”) for 2004 or 2005 in

accordance with the Consent Decree are not affected by

this recommenda*ion and order.

5. Defendants reserve all their rights under the

Consent Decree to challenge EPA and State costs for work

or oversight, including but not limited to, costs submitted

by EPA or the State qualifying for credit hereunder.

App. 54a

Respectfully submitted,

FOR THE UNITED STATES

JOHN C. CRUDEN

Deputy Assistant Attorney General

Environment and Natural

Resources Division

/s/ David L. Dain

DAVID L. DAIN, Senior Attorney

PAUL GORMLEY, Trial Attorney

Environmental Enforcement Section

Environment and Natural

Resources Division

U.S. Department of Justice

P.O. Box 7611

Washington, DC 20044-7611

ALAN BURROW

Assistant United States Attorney

District of Idaho

877 West Main

First Interstate Center, Suite 201

Boise, ID 83702

FOR THE STATE OF IDAHO

LAWRENCE G. WASDEN

Attorney General

State of Idaho

CLIVES J. STRONG

Chief, National Resources Division

/s/ Curt A. Fransen

CURT A. FRANSEN

Deputy Attorney General

Office of the Idaho Attorney General

2005 Ironwood Parkway, Suite 210

Coeur d’Alene, ID 83814-2647

App. 55a

FOR HECLA MINING COMPANY

/s/ Elizabeth H. Temkin

ELIZABETH H. TEMKIN

Temkin, Wielga and Hardt LLP

1900 Wazce Street, Suite 303

Denver, CO 80202

FOR ASARCO, INC.

/s/ Gary D. Babbitt

GARY BABBITT

Hawley Troxell Ennis & Hawley

877 Main St. Suite 1000

Boise, ID 83701

SO ORDERED,

/s/ Edward J. Lodge

EDWARD J. LODGE

UNITED STATES DISTRICT

JUDGE

App. 56a

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellant,

and

STATE OF IDAHO, No. 04-35052

Plaintiff,

v. D.C. No.

ASARCO INCORPORATED; singe rre agg

HECLA MINING COMPANY, ag of Idaho,

Defendants-Appellees,

ond ORDER

COEUR D’ALENE MINES

CORPORATION; CALLAHAN

MINING CORPORATION: (Filed Apr. 12, 2006)

SUNSHINE PRECIOUS

METALS, INC.; SUNSHINE

MINING COMPANY, INC.,

Defendants.

UNITED STATES OF AMERICA,

Plaintiff-Appellant,

and

STATE OF IDAHO,

Plaintiff,

No. 04-35479

D.C. No.

CV-94-00206-EJL

App. 57a

COEUR D’ALENE MINES

CORPORATION; CALLAHAN

MINING CORPORATION;

SUNSHINE PRECIOUS

METALS, INC.; SUNSHINE

MINING COMPANY, INC.,

Defendants-Appellees.

UNITED STATES OF AMERICA,

Plaintiff,

and

STATE OF IDAHO,

Plaintiff-Appellant,

ASARCO INCORPORATED; No. 04-35106

HECLA MINING COMPANY,

Defendants-Appellees, D.C. No.

and CV-94-00206-EJL

COEUR D’ALENE MINES

CORPORATION; CALLAHAN

MINING CORPORATION;

SUNSHINE PRECIOUS

METALS, INC.; SUNSHINE

MINING COMPANY, INC.,

Defendants.

Before: ¥ERGUSON, BEEZER, and McKEOWN, Circuit

Judges.

The panel denies Defendant-Appellee’s Petition for —

Rehearing.

App. 58a

Defendant-Appellee’s Suggestion for Rehearing En

Banc has been circulated to the entire court and no judge

has asked for en banc rehearing. Judges Ferguson and

Beezer recommend denying the Suggestion for Rehearing

En Banc. Judge McKeown votes to deny the Suggestion for

Rehearing En Banc. The Suggestion for Rehearing En

Banc is rejected.

App. 59a

Federal Rule of Civil Procedure 60.

Relief from Judgment or Order

(a) Clerical Mistakes. Clerical mistakes in judgments,

orders or other parts of the record and errors therein

arising from oversight or ormnission may be corrected by the

court at any time of its own initiative or on the motion of

any party and after such notice, if any, as the court orders.

During the pendency of an appeal, stich mistakes may be

so corrected before the appeal is docketed in the appellate

court, and thereafter while the appeal is pending may be

so corrected with leave of the appellate court.

(b) Mistakes; Inadvertence; Excusable Neglect;

Newly Discovered Evidence; Fraud, Etc. On motion

and upon such terms as are just, the court may relieve a

party or a party’s legal representative from a final judg-

ment, order, or proceeding for the following reasons: (1)

mistake, inadvertence, surprise, or excusable neglect; (2)

newly discovered evidence which by due diligence could

not have been discovered in time to move for a new trial

under Rule 59(b); (3) fraud (whether heretofore denomi-

nated intrinsic or extrinsic), misrepresentation, or other

misconduct of an adverse party; (4) the judgment is void;

(5) the judgment has been satisfied, released, or dis-

charged, or a prior judgment upon which it is based has

been reversed or otherwise vacated, or it is no longer

equitable that the judgment should have prospective

application; or (6) any other reason justifying relief from

the operation of the judgment. The motion shall be made

within a reasonable time, and for reasons (1), (2), and (3)

not more than one year after the judgment, order, or

proceeding was entered or taken. A motion under this

subdivision (b) does not affect the finality of a judgment or

suspend its operation. This rule does not limit the power of

App. 60a

a court to entertain an independent action to relieve a

party from a judgment, order, or proceeding, or to grant

relief to a defendant not actually personally notified as

provided in Title 28, U.S.C. § 1655, or to set aside a judg-

ment for fraud upon the court. Writs of coram nobis, coram

vobis, audita querela, and bills of review and bills in the

nature of a bill of review, are abolished, and the procedure

for obtaining any relief from a judgment shall be by

motion as prescribed in these rules or by an independent

action.

App. 6la

42 U.S.C. § 9601 Definitions

* * *

(25) The terms “respond” or “response” mean’ remove,

removal, remedy, and remedial action;,‘ all such terms

(including the terms “removal” and “remedial action”)

include enforcement activities related thereto.

42 U.S.C. § 9604 Response authorities

* * *

specified amount for response actions; consultation by

President with affected States; contracts or cooperative

agreements by States with President prior to remedial

actions; cost-sharing agreements; selection by President of

remedial actions; State credits: granting of credit, ex-

penses before listing or agreement, response actions

between 1978 and 1980, State expenses after December

11, 1980, in excess of 10 percent of costs, item-by-item

approval, use of credits; operation and maintenance;

limitation on source of funds for O & M; recontracting;

siting

(1) Unless (A) the President finds that (i) continued

response actions are immediately required to prevent,

limit, or mitigate an emergency, (ii) there is an immediate

risk to public health or welfare or the environment, and

(iii) such assistance will not otherwise be provided on a

* So in original. Probably should be “mean”.

* So in original.

App. 62a

timely basis, or (B) the President has determined the

appropriate remedial actions pursuant to paragraph (2) of

this subsection and the State or States in which the source

of the release is located have complied with the require-

ments of paragraph (3) of this subsection, or (C) continued

response action is otherwise appropriate and consistent

with the remedial action to be taken’ obligations from the

Fund, other than those authorized by subsection (b) of this

section, shall not continue after $2,000,000 has been

obligated for response actions or 12 months has elapsed

from the date of initial response to a release or threatened

release of hazardous substances

42 U.S.C. § 9605 National contingency plan

* * *

(1) Revision

Not later than 18 months after October 17, 1986, and after

publication of notice and opportunity for submission of

comments in accordance with section 553 of Title 5, the

President shall by rule promulgate amendments to the

hazard ranking system in effect on September 1, 1984.

Such amendments shall assure, to the maximum extent

feasible, that the hazard ranking system accurately

assesses the relative degree of risk to human health and

the environment posed by sites and facilities subject to

review. The President shall establish an effective date for

' So in original. Probably should be followed by a comma.

App. 63a

the amended hazard ranking system which is not later

than 24 months after October 17, 1986. Such amended

hazard ranking system shall be applied to any site or

facility to be newly listed on the National Priorities List

after the effective date established by the President. Until

such effective date of the regulations, the hazard ranking

system in effect on September 1, 1984, shall continue in

full force and effect.

(2) Health assessment of water contamination risks

In carrying out this subsection, the President shall ensure

that the human health risks associated with the contami-

nation or potential contamination (either directly or as a

result of the runoff of any hazardous substance or pollut-

ant or contaminant from sites or facilities) of surface water

are appropriately assessed where such surface water is, or

can be, used for recreation or potable water consumption.

In making the assessment required pursuant to the

preceding sentence, the President shall take into account

the potential migration of any hazardous substance or

pollutant or contaminant through such surface water to

downstream sources of drinking water.

(3) Reevaluation not required

The President shall not be required to reevaluate, after

October 17, 1986, the hazard ranking of any facility which

was evaluated in accordance with the criteria under this

section before the effective date of the amendments to the

hazard ranking system under this subsection and which

was assigned a national priority under the National

Contingency Plan.

App. 64a

(4) New information

Nothing in paragraph (3) shall preclude the President

from taking new information into account in undertaking

response actions under this chapter.

42 U.S.C. § 9613 Civil Proceedings

(a) Review of regulations in Circuit Court of Appeals of

the United States for the District of Columbia

Review of any regulation promulgated under this chapter

may be had upon application by any interested person only

in the Circuit Court of Appeals of the United States for the

District of Columbia. Any such application shall be made

within ninety days from the date of promulgation of such

regulations. Any matter with respect to which review

could have been obtained under this subsection shall not

be subject to judicial review in any civil or criminal pro-

ceeding for enforcement or to obtain damages or recovery

of response costs.

(b) Jurisdiction; venue

Except as provided in subsections (a) and (h) of this

section, the United States district courts shall have

exclusive original jurisdiction over all controversies

arising under this chapter, without regard to the citizen-

ship of the parties or the amount in controversy. Venue

shall lie in any district in which the release or damages

occurred, or in which the defendant resides, may be found,

or has his principal office. For the purposes of this section,

the Fund shall reside in the District of Columbia.

App. 65a

(h) Timing of review

No Federal court shall have jurisdiction under Federal law

other than under section 1332 of Title 28 (relating to

diversity of citizenship jurisdiction) or under State law

which is applicable or relevant and appropriate under

section 9621 of this title (relating to cleanup standards) to

review any challenges to removal or remedial action

selected under section 9604 of this title, or to review any

order issued under section 9606(a) of this title, in any

action except one of the following:

(1) An action under section 9607 of this title to recover

response costs or damages or for contribution.

(2) An action to enforce an order issued under section

9606(a) of this title or to recover a penalty for violation of

such order.

(3) An-action for reimbursement under section 9606(b)(2)

of this title.

(4) An action under section 9659 of this title (relating to

citizens suits) alleging that the removal or remedial action

taken under section 9604 of this title or secured under

section 9606 of this title was in violation of any require-

ment of this chapter. Such an action may not be brought

with regard to a removal where a remedial action is to be

undertaken at the site.

(5) An actior. under section 9606 of this title in which the

United States has moved to compel a remedial action.

App. 66a

42 U.S.C. § 9622 Settlements

* * *

(d) Enforcement

(1) Cleanup agreements

(A) Consent decree

Whenever the President enters into an agreement under.

this section with any potentially responsible party with

respect to remedial action under section 9606 of this title,

following approval of the agreement by the Attorney

General, except as otherwise provided in the case of

certain administrative settlements referred to in subsec-

tion (g) of this section, the agreement shall be entered in

the appropriate United States district court as a consent

decree. The President need not make any finding regard-

ing an imminent and substantial endangerment to the

public health or the environment in connection with any

such agreement or consent decree.

App. 67a

GOVERNOR DIRK KEMPTHORNE

Testimony before an Environmental Protection Agency

hearing on the Coeur d’Alene Basin Cleanup

Wallace High School

November 13, 2001

Usually on occasions like this its not unusual for a Gover-

nor to be asked to make comments of welcome. Let me say

tonight I come here to the Silver Valley to deliver a much

different message.

That is I have become so frustrated with EPA that I’m on

the verge of inviting the EPA to leave Idaho.

The bureaucracy of the EPA is absolutely non-responsive

and we've had it. Absolutely had it. I hope the EPA will

listen carefully to the testimony here tonight. Because I’m

convinced that the good people of Idaho have the re-

sources, the ability and the dedication to get the job done

in our state if we would just have the EPA step aside.

If we can find collaboration, if we can find a way to work

together, we stand ready in full partnership. Christie Todd

Whitman, who is the Administrator of the Environmental

Protection Agency, is a personal friend of mine, and I know

her to be a great individual. She’s very pragmatic. But

once again there is a bureaucracy that seems to ignore any

efforts at a solution. And I’m very serious when I say we

have just about exhausted our patience with EPA.

The state, counties, cities and industry are partners and

have a plan that makes sense.

It is time to assure the citizens of these communities that

the talk is over and we will move ahead to execute a

reasonable and a doable plan.

App. 68a

Judge Lodge, in federal court back in December of 2000,

said that before we spend huge sums of money on litiga-

tion, that one last effort must be made to forget our

differences and devise a plan that will meet all the re-

quirements of the law, avoid irreparable harm to the

parties and protect the economic interests of the business

and people of North Idaho.

There you have a federal judge, whose courtroom is

waiting, who said in 2000, ‘don’t bring this back to the

courts. Settle this. Resolve this. Move forward.’ And ladies

and gentlemen, where are we today? We're in that court-

room, in front of that judge, litigating. Spending who

knows how many thousands of dollars with attorneys

litigating other attorneys. That’s no solution, and it’s been

going on far too long.

Now, let me offer you some very definite views on your

proposed action, and how we can accomplish what Judge

Lodge said. I hope that your careful attention to these will

result in a better plan — one that can be accomplished with

less money, more certainty, less disruption and less intru-

sion into the lives of our citizens, more common sense,

and, frankly, less federal presence for much less time.

My comments should not be news to EPA, because Direc-

tor Allred of the Department of Environmental Quality

has been offering this message for two years now.

Now it is time for you to put aside your hypothetical what-

ifs and speculations about what might happen, take a hard

look at the reality, logic and advantages of the State’s

position, and modify your plan accordingly.

My comments tonight are organized into three categories.

The first category relates to the need for certainty; the

App. 69a

second for common sense; and the third outlines what we

need for a course for the future.

The State of Idaho has consistently and fervently stated

that a cleanup plan must provide certainty.

EPA’s Proposed Plan presents an “Interim Action” as the

recommended approach for cleanup. Far from providing

certainty, it suggests that this thirty year, $359 million

dollar plan is a mere first step in a process that continues

far into the future.

Incredibly, you have identified Alternative 3 as the long-

term cleanup alternative, in spite of the fact that the price

tag — a whopping $1.4 billion dollars — cannot be funded

even with the combined resources of Superfund, the

mining companies, and the State of Idaho. How pragmatic

is that? :

Even worse, this alternative would provide, by your own

estimation, only marginally better chances of reaching

water quality standards over centuries of natural attenua-

tion than your so-called “interim action.” Well, as the

saying goes ... not in my house. So now, let me share with

you the things you need to do to correct this:

e EPA must provide certainty by delineating the areas

where remediation work will be done and where it will not

be done. The local communities should not be listed as

cleanup areas, but as areas where programs will be

provided as a service to the communities.

¢ The Lake must not be included in the Superfund Site.

We have a Lake Management Plan that will meet the

environmental needs for the lake. We will continue to

update and implement it.

App. 70a

e EPA must provide a schedule for cleanup, for how

cleanup will be funded, and for when areas will be re-

moved from Superfund, or as you say, de-listed. EPA must

not put our citizens in a nightmare scenario where they

are listed as a Superfund Site, but then not provided [sic]

the resources to be de-listed.

e EPA’s plan must provide certainty that cleanup areas

will be available for future uses and provide opportunities

for economic development.

Next, the cleanup plan for the Coeur d’Alene Basin must

be based on common sense. Here’s what EPA needs to do:

e EPA needs to balance the investment of resources with

the severity of the problems. Blood lead monitoring has

shown a great improvement this year. This is great news.

We never want to have an Idaho child with an elevated

blood lead level. But it is very important that we all

recognize that we do not have a public health emergency

in the Coeur d’Alene Basin. This is a completely different

situation than we had at the Smelter Complex when the

1973 bag house fire caused huge releases of lead oxide in

the environment. These releases combined with years of

smelter operations resulted in average blood lead levels in

children of 50 to 60 micrograms of lead per deciliter of

blood. Our situation today is drastically different.

We're currently within one percent of meeting the CDC

stated goal of no more than five percent of children over 10

micrograms.

Six percent of the children tested this year in the Coeur

d’Alene Basin outside of the Box have blood lead levels

above 10 micrograms with the highest level being 16

App. 7la

micrograms. As these positive trends continue we need to

focus remediation efforts on a common sense approach.

Next, EPA’s proposal to spend $86 million on Community

and Residential Areas is a grossly disproportionate re-

sponse to human health issues. We want our homes and

recreation areas to be safe for all by implementing a

system that:

e Gives people the right to make decisions about their own

property through a voucher system for remediation using

private contractors. i

e Will empower health professionals to identify and

remediate exposure sources and problems fer children

regardless of whether it is from soil, lead-based paint,

drinking water or other source.

¢ Provides infrastructure improvements that will protect

remediated areas from flooding and contaminant migra-

tion by improving storm drain systems and sewer systems.

e Balances risk management with the real identified

threat. When you do that you will see that poverty is just

as damaging to the health of our children as minimal

exposures lead. EPA must recognize that economic im-

provement is as vital to improving human health as

remedial action.

e EPA’s plan also needs to make allowances for more

information as it is developed regarding site-specific

criteria for fish, bioavailability of different lead sources,

and other new scientific information.

¢ And finally, common sense tells us that the local citizens

must have a seat at the table for implementing any

cleanup decision. The State of Idaho has taken the lead in

App. 72a

laying out a way to do that with the establishment of the

Basin Environmental Improvement Project Commission.

The EPA needs to join that commission. We sent a letter in

May to the federal government inviting them to join, they

say they are interested, but have never respcnded. How

long does it take to give us the courtesy of an answer?

Last, I would like to provide you with a course for the

future.

But Id like you to think about something first, and that is,

how did we end up where we are today?

The federal government is saying they want to come into

the Silver Valley and provide environmental improve-

ments. This should be something good for the citizens of

the Valley.

But it is not generally seen that way. Instead, many see

the Superfund program as an onerous burden leading to

loss of jobs, over-statement of environmental problems,

and inefficient use of taxpayer dollars.

We need to turn this around by making the cleanup project

operate like a public works project. We need this proposed

plan to be completely turned around so that remediation

work is a service to the residents and not a mandate that

forces people to do things that don’t make sense. How?

Here are few more things that should be done:

¢ Cooperate with our new Commission to give local con-

tractors the opportunity to compete.

¢ Give citizens the right to make decisions about their own

property and to create opportunities for new business

- developments. A right step in this direction is the privatized -

App. 73a

cleanup program being developed by Director Allred and

the DEQ. EPA should support this effort.

e Provide property owners the documentation they need to

meet disclosure requirements for real estate transactions.

e Design cleanup activities so that they create future

economic opportunities. This can be done by improving a

community’s infrastructure and by creating mechanisms

so that businesses know the rules of how to conduct

business.

e And finally, let’s share the good news with the rest of the

country of how this Valley — this Silver Valley — has made

great strides in improving its environment and continues

to do so.

The evidence is in. The Coeur d’Alene Basin is one of our

nation’s greatest treasures, and the environmental ghosts

of the past no longer need to haunt us.

Let’s do what the State has thoughtfully urged you to do,

and adopt the State’s approach to environmental cleanup

in the Basin.

The State Plan is a very aggressive program which will

manage the risks while providing certainty, common

sense, and hope for the future. It is a plan that recognizes

that we should be writing the last chapter of an incredible

success story, not chapter one of a whole new tragedy.

Judge Lodge also said in December of last year that:

“While the Court strongly urges the parties to continue

settlement negotiations, this Court will be prepared to

commit significant judicial resources to this case in the

new millennium. The Court only hopes this case does not

App. 74a

take an entire millennium to resolve the claims before this

Court.”

So to the EPA I say: Abandon your massive $1.4 billion

plan. Join us, join the people of Idaho, in a common sense

plan, and let’s remediate the few areas that need some

work. Let’s do it in the right way, and declare our success.

Our citizens need to get on with their lives.

App. 76a

Environmental Protection Agency

[LOGO] EPA

November 7, 1991

[Address Omitted In Printing]

Reply To

Attn Of: HW-113

Honorable Larry LaRocco

Representative in Congress

408 Sherman Avenue

Coeur d’Alene, Idaho 83814

Dear Congressman LaRocco:

This is in response to your letter dated October 28,

1991, regarding the Bunker Hill Superfund site in Sho-

shone County, Idaho. .

In that letter, you expressed concern that the Envi-

ronmental Protection Agency (EPA) involvement in area

wide restoration efforts for the Coeur d’Alene River Basin

might lead to an expansion of the Bunker Hill Superfund

site. Let me state unequivocally that it is not EPA’s inten-

tion to expand the boundaries of the site. We recognize

that there are many other regulatory tools besides Super-

fund legislation to affect environmental improvements.

Since the Bunker Hill site is a major source of con-

tamination to the Coeur d’Alene river, we believe that this

cleanup should proceed on a parallel track with the devel-

opment of the basin strategy. The Coeur d’Alene River

basin strategy, along with educational and outreach

efforts, embodies the use of appropriate local, state and

federal regulatory authority and expertise to develop and

implement an effective long-range management plan for

the basin. I have confidence that by working together

App. 77a

these groups can provide the means for environmental

restoration in the basin.

Thank you for your continued interest in this matter.

If you have any further questions, please telephone us or

have your staff contact John Meyer at (206) 553-1271.

Sincerely,

/s/ Dana A. Rasmussen

Dana A. Rasmussen

Regional Administrator

App. 78a

FOR IMMEDIATE RELEASE _ ENR

FRIDAY, MARCH 22, 1996 (202) 616-2771

TDD (202) 514-1888

~- U.S. SUES EIGHT MINING COMPANIES

FOR VAST ENVIRONMENTAL DAMAGE

TO THE IDAHO PAN HANDLE

Coeur d’Alene River Basin Contaminated By Lead,

Arsenic And Other Toxic Materials

WASHINGTON, D.C. — The United States sued eight

companies today for extensive environmental damage

caused by their mining operations in the Coeur d’Alene

River Basin in northern Idaho. The cost of restoring the

river and the surrounding area is estimated in the hun-

dreds of millions of dollars.

The affected area, stretching over 1,500 square miles,

is one of the largest contaminated areas the United States

has ever sought to restore.

The complaint, filed in U.S. District Court in Boise,

Idaho, alleges that more than 70 million tons of mine

wastes have been discharged by the companies into the

Coeur d’Alene River and its tributaries.

Through today’s action, the United States seeks to

restore an area contaminated by more than 100 years of

mining and ore processing activities. The complaint.

alleges that the mining wastes, which have been deposited

into the Basin by the companies, continue to seep into the

soils and waters in the 1,500 square mile area, seriously

injuring or destroying wildlife and vegetation. As a result,

birds, fish and other wildlife and their habitats, along with

federally managed lands, have been damaged.

App. 79a

The Department brought suit against:

b ASARCO Inc., based in New York, New York

bP MHecla Mining Company Inc. of Coeur d’Alene,

Idaho

Pb Sunshine Mining Company Inc. of Boise, Idaho

P Coeur d’Alene Mines Corporation a Coeur

d’Alene, Idaho-based company

P and several affiliates of these companies (MORE)

“Our country’s natural resources are a precious legacy

that we must restore and manage for the benefit of future

generations,” said Lois J. Schiffer, Assistant Attorney

General in charge of the Justice Department’s Environ-

ment and Natural Resources Division. “It is critical that

those who damage our environment with years of mining

activity — not the American taxpayer — pay the clean up

costs.”

Bob Davison, the Department of the Interior Deputy

Assistant Secretary for Fish and Wildlife and Parks,

stated that “this case demonstrates the commitment of the

Department of the Interior, in cooperation with the De-

partment of Agriculture and the Coeur d’Alene Tribe, to

restore the unique natural resources injured by the release

of mining wastes in the Coeur d’Alene Basin.”

To determine the costs needed to restore natural

resources in the basin, the United States and the Tribe are

jointly conducting a damage assessment. The assessment,

which is due to be completed in 1997, is a process in which

the agencies and the Tribe, with input from the public,

collect and analyze scientific information to determine the

extent of injuries to natural resources, and develop a plan

for restoration of those resources. Through this assess-

ment, the United States has determined that a variety of

App. 80a

resources in federal and tribal trusteeship have been, and

continue to be, injured and destroyed by the mining

wastes in the Basin.

In early 1991, the United States and the Tribe invited

the defendants to cooperate in a joint damage assessment

effort. It was the hope of the two governments that the

joint effort would result in a resolution of the claims

without litigation. None of the defendants responded to

the government’s requests.

The U.S. Department of Justice filed today’s com-

plaint on behalf of the U.S. Department of Agriculture, the

U.S. Department of the Interior and the U.S. Environ-

mental Protection Agency. The United States’ lawsuit filed

under the federal Superfund law and Clean Water Act, is

similar to one filed by the Coeur d’Alene Tribe of Idaho,

pending in the same court.

# # #

96-132

App. 8la

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF IDAHO

UNITED STATES OF AMERICA ?

and STATE OF IDAHO, :

Plaintiffs, )

v. ) CIV 94-0206-N-HLR

ASARCO Incorporated, Coeur} CIVIL ACTION NO.

d’Alene Mines Corporation, ) (Lodged May 10, 1994)

Callahan Mining Corporation, )

Hecla Mining Company, )

Sunshine Precious Metals, ) E

Sunshine Mining Company, )

Defendants. )

VII.

[BUNKER HILL CONSENT DECREE]

TABLE OF CONTENTS

Page

I a 2

Cs TEINS TASER SERS Tp 9

I a oe 10

a 11

GENERAL PROVISIONS ..........ccccccececcescesseeceees “18

PERFORMANCE OF THE WORK BY SET-

FLING DEPENDANT SG qcvccovescsccesseseccseceseceees 25

ADDITIONAL RESPONSE ACTIONG.............. 29

EPA PERIODIC REVIEW ....0........cccccccessseeseeses 30

QUALITY ASSURANCE, SAMPLING, and

eC ccnnnesseniacesncscsdeciebeelinicemibeidsesiootans 32

February 11, 1994

« 2 * rs

AC. “Smelter Defendants” means Bunker Hill

Properties, Inc; Bunker Hill Mining Company; Bunker

Limited Partnership; Golconda Mining Company; Gulf

USA Corporation; Highland Surprise Consolidated-Mining

Company; Minerals Corporation of Idaho; Pintlar Corpora-

tion; Silver Bowl, Inc.; Stauffer Chemical Company;

Syringa Minerals Corporation; Union Pacific Railroad and

any other Bunker Hill potentially responsible parties

named or to be named by the Environmental Protection

Agency.

AD. The “Bunker Hill Superfund Site” or “Site”

means an approximately twenty-one (21) square mile area

in Shoshone County, Idaho, running approximately seven

(7) miles in the east-west direction and approximately

three (3) miles in the north-south direction as more accu-

rately, delineated on Attachment C, the Bunker Hill

Superfund Site Allocation Map, excluding any hazardous

substances in the South Fork of the Coeur d’Alene River

which flow into the Site;

AE. “State” means the State of Idaho;

AF. “Statement of Work” or “SOW” shall mean the

document setting forth the Work, as set forth in Attach-

ment B to this Consent Decree, and any modifications

made in accordance with this Consent Decree;

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