Cedar Chemical Corp. v. United States

18 Cl. Ct. 25, 20 Envtl. L. Rep. (Envtl. Law Inst.) 20778, 30 ERC (BNA) 2101, 1989 U.S. Claims LEXIS 173, 1989 WL 97486
CourtUnited States Court of Claims
DecidedAugust 18, 1989
DocketNo. 535-88 L
StatusPublished
Cited by1 cases

This text of 18 Cl. Ct. 25 (Cedar Chemical Corp. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Cedar Chemical Corp. v. United States, 18 Cl. Ct. 25, 20 Envtl. L. Rep. (Envtl. Law Inst.) 20778, 30 ERC (BNA) 2101, 1989 U.S. Claims LEXIS 173, 1989 WL 97486 (cc 1989).

Opinion

OPINION

RADER, Judge.

The Federal Insecticide, Fungicide and Rodenticide Act (FIFRA), 7 U.S.C. §§ 136-136y (1982 & Supp.1987), requires the Environmental Protection Agency (EPA) to indemnify owners who “suffered losses by reason of suspension or cancellation” of their pesticide registration. 7 U.S.C. § 136m(a)(3). In 1986, the EPA took action leading toward cancellation of Cedar Chemical Corporation’s (Cedar or plaintiff) pesticide Dinoseb.1 Therefore, plaintiff entered into negotiations with the EPA over the future of Dinoseb.

As a result of these negotiations, Cedar and the EPA entered into a Stipulation and Settlement Agreement (Agreement) that set forth the parties' resolution of the Dino-seb controversy. Under the Agreement, plaintiff consented to the cancellation of Dinoseb and the EPA agreed to process expeditiously Cedar’s indemnification claim on its stock of unsold Dinoseb. The Agreement was contingent upon the EPA Administrator’s (Administrator) entry of a final order cancelling the registration of Dino-seb.

On June 10, 1988, with plaintiff’s concurrence, the EPA cancelled Dinoseb’s registration. Before indemnification could occur, an association of growers and food processors (unrelated to plaintiff) filed a lawsuit challenging the cancellation order. Northwest Food Processors Ass’n v. Reilly, 869 F.2d 542 (9th Cir.1989). Contending that this litigation bars finality of the cancellation order, the Attorney General has not certified Cedar’s claim for payment.

Plaintiff filed suit in the United States Claims Court seeking enforcement of the December 31, 1987 Agreement. This case is now before this court on plaintiff’s summary judgment motion. Plaintiff requests immediate payment with prejudgment interest under the Contract Disputes Act of 1978 (CDA). 41 U.S.C. §§ 601-613 (1982 & Supp. Ill 1985).

After oral argument, this court denies plaintiff’s motion.

FACTS

FIFRA sets up a framework for the regulation of herbicides used in the United [27]*27States. Under FIFRA, a distributor must register its herbicide with the EPA before marketing the product. The EPA may suspend or cancel the registration of any unsafe chemical. Cancellation withdraws a herbicide from the market.

On October 7, 1986, the Administrator of the EPA issued an emergency order suspending the registration of Dinoseb. On October 20, 1986, Cedar and other registrants filed a timely request for an adjudicatory hearing to contest the proposed cancellation. Ten days later, Cedar withdrew its request.2 By operation of law, the withdrawal caused the immediate and final suspension of plaintiffs product. On the same date, plaintiff and four other registrants filed a request for a hearing on final cancellation. This request led to negotiations between plaintiff and the EPA.

During pendency of the negotiations, the parties questioned the source of indemnification funds. Congress had under consideration a bill barring use of appropriated funds for indemnification. On December 22, 1987, the President signed this bill (in-eluding the indemnification funding bar) into law as Pub.L. No. 100-202. The indemnification funds bar stated:

None of the funds in this Act shall be available for any indemnity payment under section 15 of the Federal Insecticide, Fungicide and Rodenticide Act.

Pub.L. No. 100-202, 101 Stat. 1329-199 (1987).3

The parties generally welcomed this action because it clarified the source of indemnification funding.4 The source of indemnification payments would no longer be uncertain,5 but would come from the Judgment Fund.6 Before authorizing payment from the Judgment Fund, the Attorney General must certify that “no appeal shall be taken from a judgment or that no further review will be sought from a decision.” 7 The parties to the pending Dino-seb agreement, however, did not anticipate difficulty with the payment from the Judgment Fund.

On December 31, 1987, a week after enactment of Pub.L. No. 100-202, Cedar and [28]*28the EPA signed the Agreement. The Agreement provided that Cedar would not contest the cancellation of its product’s registrations. In return, the EPA agreed to accept Cedar’s stock of Dinoseb by no later than December 31, 1988. The EPA also consented to process swiftly Cedar’s indemnification claim on its unsold stock.8

By virtue of Pub.L. No. 100-202, EPA no longer possessed funds or authority to pay indemnification claims. Instead, under 31 U.S.C. § 1304 (1982), the General Accounting Office (GAO) paid these claims from the Judgment Fund after receiving certification of finality from the Attorney General. EPA’s part in this process was to certify to the Attorney General that EPA and Cedar had settled their dispute and that Cedar was entitled to indemnification. By its finding in Paragraph 13 of the Agreement, EPA fulfilled its role in the process leading to payment from the Judgment Fund. The Agreement also was contingent upon entry of the Administrator’s final cancellation order.

On June 10, 1988, the Administrator issued the final order cancelling the registration of Dinoseb. Immediately after the order was issued, several growers and food processing companies, without any affiliation with plaintiff, instituted a lawsuit to block the cancellation order. These processors contended that Dinoseb was essential to the green pea, snap bean, cucurbit, and caneberry crops of the Pacific Northwest.9 Accordingly, they challenged the Administrator’s decision to cancel Dinoseb based on the Agreement. Northwest Food Processor’s Ass’n v. Thomas, Civ.Act.No. 88-641-RE (D.Or. Oct. 5, 1988).

The Processor’s Association contended that FIFRA required a full hearing before cancellation; a settlement agreement was not an adequate basis for cancellation. By challenging the adequacy of the Agreement, this litigation put enforcement of the settlement contract in doubt. In October 1988, the district court ruled that the United States Court of Appeals for the Ninth Circuit had exclusive jurisdiction under FI-FRA, 7 U.S.C. § 136n, to review the cancellation order. Alternatively, the district court granted EPA’s summary judgment motion and upheld the cancellation order. The Processor’s Association appealed. On March 20, 1989, the Ninth Circuit issued an order upholding the validity of the cancellation order. Northwest Food, 869 F.2d at 542. This recent Ninth Circuit order is still subject to challenge. The Processor’s Association may elect either to petition for a rehearing en banc or to appeal to the United States Supreme Court.

Meantime, with institution of the lawsuits challenging the cancellation order, the Attorney General could not certify that the Agreement was final.

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18 Cl. Ct. 25, 20 Envtl. L. Rep. (Envtl. Law Inst.) 20778, 30 ERC (BNA) 2101, 1989 U.S. Claims LEXIS 173, 1989 WL 97486, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cedar-chemical-corp-v-united-states-cc-1989.