United States Court of Appeals For the First Circuit
No. 95-1961 No. 95-1984 No. 95-2019 UNITED STATES OF AMERICA,
Plaintiff, Appellee,
v.
CHARTER INTERNATIONAL OIL COMPANY,
Defendant, Appellant.
ACUSHNET COMPANY, ET AL.,
Proposed Intervenors-Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Robert E. Keeton, U.S. District Judge]
Before
Cyr, Boudin, and Lynch, Circuit Judges.
David B. Broughel, with whom Jeffrey B. Renton, and Day, Berry &
Howard were on brief, for appellant, Charter International Oil
Company.
David M. Jones, with whom Roger C. Zehntner, Irene C. Freidel,
Phoebe S. Gallagher and Kirkpatrick & Lockhart were on brief, for
proposed intervenors-appellees, Acushnet et al.
Evelyn S. Ying, Attorney, United States Department of Justice,
with whom Lois J. Schiffer, Assistant Attorney General, Daniel C.
Beckhard and David C. Shilton, Attorneys, United States Department of
Justice, were on brief, for the United States as appellee.
May 9, 1996
LYNCH, Circuit Judge. The clean-up of a Superfund LYNCH, Circuit Judge.
hazardous waste site in New Bedford, Massachusetts is largely
being accomplished and funded through agreements the
government has reached with private parties who bear some
legal responsibility for the wastes at the site. Those
agreements, by law, must be approved by the United States
Courts as being fair, reasonable, and consistent with the
purposes of CERCLA, the Comprehensive Environmental Response,
Compensation and Liability Act. Multiples of millions of
dollars are involved in these settlements and the stakes are
high, both for the public and for the parties involved. The
allocation of responsibility for payment of those millions --
as between the public treasury and the private sector and
amongst the private players themselves -- has given rise to
complicated settlement dynamics. Those settlements are
subject to both the court approval mechanism enacted by
Congress and to specific statutory clauses providing for (and
protecting against) contribution by some of the potentially
responsible parties ("PRPs") to the settlement sums paid by
other such parties.
The question presented here is whether the district
court abused its discretion in approving a CERCLA consent
decree between the government and Charter International Oil
Company arising out of the Sullivan's Ledge Superfund Site.
What is unusual is that the government and Charter disagreed
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in a very fundamental sense on interpretation of the consent
decree. This, in turn, raises the issue of the extent to
which the scope of "matters addressed" in the decree, an
issue usually resolved in separate contribution actions, was
required to be determined by the district court in its
approval of the consent decree.
Under the rubric of approval of the decree, two sets
of private parties here attempt to battle out the ultimate
allocation of contribution liability in a clean-up with costs
estimated to be in the order of $50 million. Charter urges
that the district court erred in rejecting its
interpretation, which would give Charter complete
contribution protection against prior settlors for its
payment of $215,000 plus interest. The Acushnet Group,
comprised of prior settling parties who have instituted such
a contribution action against Charter, urges that the
district court erred in not resolving all contribution
questions in the course of approving the decree.
We affirm the district court's order.
The Sullivan's Ledge Superfund Site
An old granite quarry in New Bedford was used as a
waste disposal area by the city from 1935 to the 1970s.
Local industries disposed of their wastes, including
hazardous substances, into four pits, extending as deep into
the bedrock as 150 feet. The contaminants from the wastes
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spread to adjacent areas, including some wetlands known as
Middle Marsh.
In 1984, the EPA placed the area, known as the
Sullivan's Ledge Site, on the National Priorities List. See
40 C.F.R. Pt. 300, App. B. It began its Remedial
Investigation and Feasibility Study of the two "operable
units" on the Site: the entire Site save for the Middle Marsh
("first unit") and the Middle Marsh ("second unit"). The EPA
found significant hazardous substances in the groundwater,
soils, and sediments of both units.
In June 1989 EPA issued its Record of Decision ("ROD
I") as to the first unit, calling for excavation of
contaminated soils and sediments, construction of an
impermeable cap over the disposal area, groundwater treatment
and wetlands remediation. The government sued fourteen PRPs
with respect to the first unit (the Acushnet Group), who
settled. See United States v. Acushnet Co., Civ. No. 91-
10706-K (D. Mass.). The district court entered a consent
decree approving and finalizing the settlement (the "1991
Decree").
Under the terms of the 1991 Decree, the Acushnet
Group paid $620,000 to the government for past costs incurred
in connection with ROD I. The Group also agreed to perform
the ROD I remedy, including the first thirty years of
operation and maintenance, and to pay all of the EPA's
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oversight costs for the first five years and half of its
oversight costs through the thirtieth year.
On September 27, 1991, after completing its study of
the contamination in the Middle Marsh wetlands area, the EPA
issued its remedy for the second unit ("ROD II"). On April
26, 1993, the district court entered a consent decree
approving the settlement between the government and fifteen
PRPs (the Acushnet Group and the City of New Bedford).
United States v. AVX Corp., Civ. No. 93-10104-K (D. Mass.)
(the "1993 Decree"). The 1993 settlors agreed to perform the
remedy set forth in ROD II and to pay half of the EPA's
oversight costs with respect to the second unit.
Charter was offered the opportunity to participate in
the 1991 Decree but declined it, saying that the price tag
was too high for what it believed its liability to be. The
parties to both the 1991 and 1993 Decrees understood that the
government had a larger total claim relating to the Site than
the recovery it had obtained from the initial settlors and
that the government planned to seek further recovery from
parties who had not yet settled. That is exactly what the
government did, bringing a series of lawsuits against non-
settling PRPs,1 including suit against Charter.
1. The government brought a cost recovery suit for its shortfall on the first unit against two non-settlors. United
States v. Cornell-Dubilier Electronics, Inc., Civ. No. 92-
11865-K (D. Mass.). The initial Cornell-Dubilier complaint
sought approximately $2.8 million and a declaratory judgment
-5- 5
Proceedings Against Charter
The government pursued Charter under a theory of
successor liability for a company, Pacific Oil, which had
dumped soot from oil burners into the Sullivan's Ledge
landfill.2 In June 1992 the government initiated
independent settlement negotiations with Charter. On
December 2, 1993, the proposed consent decree was lodged in
the district court and notice was published in the Federal
Register.3 58 Fed. Reg. 65,397 (Dec. 14, 1993). In
that the defendants were liable for the government's future response costs not covered by the 1991 Decree. After entry of the 1993 Decree, the government amended its Cornell-
Dubilier complaint, adding three new defendants and seeking
an additional $1 million for costs relating to the second unit. The City of New Bedford, a defendant in Cornell-
Dubilier, has agreed to a proposed decree for unrecovered
costs from the first unit in satisfaction of the claims asserted against it in the Cornell-Dubilier suit.
Similarly, seeking to recover its claims against parties not settling in the initial rounds, the Acushnet Group filed suit against twelve parties, excluding Charter. See Acushnet
Co. v. Coaters, Inc., Civ. No. 93-11219-K (D. Mass.).
2. Charter disputes the contention that the soot contained high concentration levels of hazardous substances. Further, there were two companies that used the name "Pacific Oil": Durfee Fuels, a Massachusetts corporation and Pacific Oil Company, a Rhode Island corporation. Charter claims that it was Durfee Fuels (to which it was not a successor) and not the Pacific Oil Company (to which it was) that dumped the soot.
3. Section 122(d)(2) of CERCLA requires the Attorney General to provide persons who are not parties to a proposed consent decree an opportunity to comment on the proposed consent decree "before its entry by the court as a final judgment." 42 U.S.C. 9622(d)(2)(B). Further, the Attorney General is obligated to "consider, and file with the court, any written comments, views, or allegations relating to the proposed
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response, the Acushnet Group filed comments voicing its
concern that the decree might be interpreted to afford
Charter contribution protection against the claims of
settlors in the 1991 and 1993 Decrees. Charter responded in
turn, asserting that the prior settlors' contribution claims
against it were indeed impaired by the decree. In August
1994, the government made it clear to Charter that its
position was that the decree did not grant Charter complete
contribution protection against the claims of prior settlors
and that it would press this interpretation with the court.
Given their differing interpretations of the decree, the
government offered to let Charter withdraw, but Charter
declined.
On February 2, 1995, the government moved for entry
of the Charter consent decree. It presented to the district
court its position that the decree did not provide Charter
with complete contribution protection against prior settlors.
The district court consolidated the consent decree action and
the contribution action filed by the Acushnet Group against
Charter for the limited purpose of conducting a hearing to
determine the impact of the contribution protection issue on
entry of the decree. The Acushnet Group objected in the
government's case to entry of the decree, but only if the
judgment." Id.
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decree were interpreted to provide Charter with complete
contribution protection.4
At the consolidated hearing, the court heard
arguments on the proper interpretation of the decree. It
gave Charter another opportunity to withdraw from the decree,
but Charter again declined. The district court entered the
decree, rejecting Charter's assertion that the decree
afforded it complete contribution protection against prior
settlors. The Acushnet Group's contribution action against
Charter is currently pending before the district court. See
Acushnet Co. v. Charter Int'l Oil, Civ. No. 94-10989-REK (D.
Mass.).
The Consent Decree on Appeal
Two questions are raised by this appeal. The first
is whether the district court abused its discretion in
approving the consent decree.5 See United States v.
DiBiase, 45 F.3d 541, 544 (1st Cir. 1995). The second is
whether its interpretation of the decree was correct, a
question which, to the extent it involves issues of law,
4. Charter's answer to the Acushnet Group's complaint in contribution asserted that the claims were barred because the proposed decree between Charter and the government would provide full contribution protection to Charter under Section 113(f)(2) of CERCLA, 42 U.S.C. 9613(f)(2).
5. Although jurisdictional issues over the Acushnet Group's proposed "intervention" in this appeal lurk in the background, we need not resolve them since the Group's challenge fails on the merits. See Menorah Ins. Co. v. INX
Reins. Corp., 72 F.3d 218, 223 n.9 (1st Cir. 1995).
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calls for fuller appellate review. See AMF, Inc. v. Jewett,
711 F.2d 1096, 1100-01 (1st Cir. 1983). On the facts of this
case, the first question cannot be answered without
addressing the second.
In approving a consent decree, the district court
must determine three things: that the decree is fair, that
it is reasonable, and that it is faithful to the purposes
that CERCLA is intended to serve. DiBiase, 45 F.3d at 543;
United States v. Cannons Eng'g Corp., 899 F.2d 79, 85 (1st
Cir. 1990). This assessment entails, in part, an appraisal
of what the government is being given by the PRP relative to
what the PRP is receiving. What is being given by the PRP is
clear: $215,000 plus interest. It is what is being received
which implicates the district court's interpretation of the
decree and the issue of contribution protection.
We turn to the statutory scheme. In enacting the
1986 amendments to CERCLA known as SARA (the Superfund
Amendments and Reauthorization Act of 1986), Congress
provided settling parties with certain immunity from later
contribution actions arising from "matters addressed" in the
consent decree. Cannons, 899 F.2d at 91; 42 U.S.C.
9613(f)(2). As to such matters, "only the amount of the
settlement -- not the pro rata share attributable to the
settling party -- [is] subtracted from the liability of the
non settlors." Cannons, 899 F.2d at 91.
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Thus, because approval of a consent decree under
CERCLA results in contribution protection to the settling
party, it also affects the rights of PRPs who are not parties
to the decree. The contribution issue, in turn, depends on
the scope of "matters addressed" in the settlement, for:
A person who has resolved its liability to the United States . . . in a judicially approved settlement shall not be liable for claims for contribution regarding matters
addressed in the settlement. Such settlement
does not discharge any of the other potentially liable persons unless its terms so provide, but it reduces the potential liability of the others by the amount of the settlement.
42 U.S.C. 9613(f)(2) (emphasis added).
This statutory framework contemplates that PRPs who
do not join in a first-round settlement will be left with the
risk of bearing a disproportionate share of liability.
"Disproportionate liability, a technique which promotes early
settlements and deters litigation for litigation's sake, is
an integral part of the statutory plan." Cannons, 899 F.2d
at 92.
Further, the legislative history of SARA shows that
Congress contemplated that there would be partial settlements
which would leave settling parties liable for matters not
addressed in the agreement:
This protection attaches only to matters that the settling party has resolved with the [government]. Thus, in cases of partial settlements where, for example, a party has settled with the [government] for a surface
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clean up, the settling party shall not be subject to any contribution claim for the surface clean up by any party. The settlor may, however, remain liable in such instances for other clean up action or costs not addressed by the settlement such as, in this example, a subsurface clean up.
Statement of Senator Stafford (sponsor of S. 51, the Senate
bill for the 1986 SARA Amendments), 131 Cong. Rec. 24,450
(1985).
Here, two groups are settlors and each seeks, on
opposite sides of the coin, the value of the contribution
proviso. The Acushnet Group, which settled earlier, wants
its contribution rights against Charter arising from the
Sullivan's Ledge Site clean-up maximized. Charter, a later
settlor, wants to cut off all contribution claims against it.
For purposes of establishing the scope of contribution
protection afforded to Charter by the decree under 42 U.S.C.
9613(f)(2), it would be necessary to determine the scope of
"matters addressed" by the decree.
This case, however, involves approval of a consent
decree and is not a suit for contribution. The district
court believed, as do we, that it was required to resolve
only certain aspects of the dispute over "matters addressed"
in order to fulfill its responsibilities in evaluating the
consent decree. Not every aspect of interpretation of a
consent decree (or even the precise contours of "matters
addressed") need be resolved in the course of approval of the
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decree.6 Rather, the court must address so much of the
interpretation of the consent decree as needed to rule on the
decree's fairness, reasonableness and fidelity to the
statute.7 See United States v. Charles George Trucking,
Inc., 34 F.3d 1081, 1088-89 (1st Cir. 1994). There may be
prudential reasons, as this case demonstrates, not to resolve
more as to "matters addressed" than is necessary. Such
reasons, for example, may be related to uncertainty as to the
specific fact situations in which contribution claims may
arise or to the absence of parties whose interests may be
affected.8 As Aristotle noted, wisdom does not seek for
6. For example, in order to achieve an agreement the parties may, on relatively minor matters, engage in purposeful ambiguity, leaving to another day a battle which may never need to be fought. If that ambiguity is not material to the tripartite test for approving a consent decree, it would not be necessary to resolve it. Perforce, it may be preferable to leave it unresolved.
7. Although the option was open to it, the district court chose not to consolidate the approval of the consent decree and the contribution action, for all purposes. District courts may find such a consolidation useful, if the cases so warrant, to expedite and clarify matters. But they are not required to do so. See Fed. R. Civ. P. 42(a); 9 Moore's
Federal Practice 42.02.
8. The arguments of the Acushnet Group and Charter, that the district court was required to determine in the course of approving the consent decree all aspects of all possible contribution claims, prove too much. The district court noted that "[t]o the extent that there is uncertainty about the precise implication" that the settlement agreement may have, "it may be necessary in later proceedings for this or another court to interpret both the statute and the agreement." It would have been premature for the district court to issue a broad order without specific facts on which to base its ruling. Cf. Charles George Trucking, 34 F.3d at
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greater precision than the nature of the subject admits.
Aristotle, Nicomachean Ethics I.3, 1094b23-28 (Martin Ostwald
ed. & trans., 1962).
Interpretation of the Decree
We dispose first of an initial argument. The United
States urges that, by consenting to entry of the decree,
Charter has waived its right to challenge the district
court's interpretation of the decree. We disagree. "[I]t is
possible for a party to consent to a judgment and still
preserve his right to appeal," so long as he "reserve[s] that
right unequivocally." Coughlin v. Regan, 768 F.2d 468, 470
(1st Cir. 1985). Charter's Notice of Objection makes clear
that it objected to, and intended to preserve its right to
appeal, any interpretation of the decree that afforded it
less than full protection against contribution claims arising
out of the Sullivan's Ledge Site. That suffices.
Charter says the decree must be interpreted so that
the "matters addressed" by it encompass all aspects of the
clean-up and remediation of the Sullivan's Ledge Site,
including all "matters addressed" in the 1991 and 1993
Decrees. Charter argues, consequently, that it cannot be
reached for contribution at all. The government says that
1088. The district court was also appropriately concerned that not all potentially affected parties were before it. The district court did what was necessary in order to decide the issues on approval of the decree and it was certainly not error to go no further.
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the "matters addressed" in the Charter decree do not include
the clean-up work that the prior settlors are performing
under their consent decrees. Therefore, it asserts that the
Charter decree does not cut off completely the contribution
rights of prior settling parties against Charter under
Section 113(f) of CERCLA for costs of remediation of the
Site. The government further says that the "matters
addressed" in the consent decree encompass only the
government's "remainder" case against Charter for that
portion of the overall site liability that was not addressed
in the prior settlements, i.e., the government's claim for
the past and future response costs that were not reimbursed
or covered by the prior settlements and for implementation of
those aspects of RODs I and II that are not performed by the
prior settlors.
The district court did rule on this dispute as to
"matters addressed," and ruled against Charter. It left
other aspects to be resolved in the parallel contribution
action brought by the Acushnet Group against Charter.
In reviewing the district court's ruling on the
"matters addressed" by the decree we look to the decree's
"four corners." See United States v. Armour & Co., 402 U.S.
673, 681-82 (1971). In United States v. ITT Continental
Baking Co., 420 U.S. 223 (1975), the Court expounded on the
"four corners" rule of Armour:
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Since a consent decree or order is to be construed for enforcement purposes basically as a contract, reliance upon certain aids to construction is proper, as with any contract. Such aids include the circumstances surrounding the formation of the consent order, any technical meaning words used may have had to the parties, and any other documents expressly incorporated in the decree.
Id. at 238.
The district court held that it would not interpret
the decree as Charter contended and that such an
interpretation "would be extreme in its consequence as to
what the government gave up compared with the
disproportionately small cash sum the government received in
return." It further stated that such an interpretation would
be "disapproved as contrary to the public interest."
The determination of interpretation of the decree is
iterative and proceeds incrementally, as in most areas of
law, with priorities for reaching different levels of
analysis. Cf. Lomas Mortgage, Inc., v. Louis, No. 95-1956,
F.3d , , slip op. at 9-10 (1st Cir. 1996) (statutory
interpretation starts with the plain meaning of the statute,
but where the statute is ambiguous, legislative history may
be considered); Massachusetts v. Blackstone Valley Elec. Co.,
67 F.3d 981, 987 (1st Cir. 1995) (same). As in most contract
interpretation questions, we start here with the text. See
Fashion House, Inc. v. K Mart Corp., 892 F.2d 1076, 1083 (1st
Cir. 1989).
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Unfortunately, apparently due to EPA policy at the
time,9 there is no explicit "matters addressed" clause in
the agreement. Charter argues that, nonetheless, the
district court should have interpreted "matters addressed"
broadly in light of the contribution protection and covenant
not to sue clauses of the agreement, as well as extrinsic
evidence, particularly of the parties' negotiating history.
In the absence of explicit language, the parties
agree, citing to contribution cases from other circuits, one
must first look elsewhere to determine "matters addressed."
Different circuits have taken somewhat different approaches.
In Akzo Coatings, Inc. v. Aigner Corp., 30 F.3d 761 (7th Cir.
1994), the Seventh Circuit started with the decree itself,
and, in the absence of an express "matters addressed" clause
looked to various factors including "the particular location,
time frame, hazardous substances, and clean-up costs covered
by the agreement." Id. at 766. That court recognized, over
a dissent, that its "flexible, fact-based approach" would not
offer the "settling parties the same degree of repose as one
9. The absence of specific language concerning "matters addressed" might be thought to be of concern to the EPA and the public. Having the scope of "matters addressed" specifically agreed upon should lead to greater certainty and finality. That certainty and finality are attractive inducements to settle. The uncertainty and continuing litigation which this case exemplifies could reasonably be thought to be a deterrent to others to settle with the government. Charter advises us that the EPA, in 1995, changed its policy to require that "matters addressed" be specified.
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based solely on the facial breadth of the decree." Id. at
767-68. The dissent preferred a broader reading, reasoning
that more comprehensive contribution protection would lead to
more settlements. See id. at 773 (Easterbrook, J.,
dissenting). The Tenth Circuit in United States v. Colorado
& Eastern R.R. Co., 50 F.3d 1530, 1538 (10th Cir. 1995), took
a related "fact-specific approach," laying the earlier and
the later "consent decrees [and their
attachments] . . . . side by side and comparing the matters
covered in relation to the remediation completed . . . . at
the date of the [second] consent decree."
We reject any argument that Section 113(f)(2)
itself warrants a broad understanding of "matters addressed"
by the decree, just as Colorado & Eastern, 50 F.3d at 1537-
38, and Akzo, 30 F.3d at 765, 770, rejected this argument.
The statute does not dictate any particular method for
assessing the scope of the decree. See Akzo, 30 F.3d at 765.
Thus, the district court appropriately rejected Charter's
argument based on paragraph 16 of the proposed decree, which
provides:
With regard to claims for contribution against [Charter] for matters addressed in this Consent Decree the parties hereto agree that [Charter] is entitled to such protection from contribution actions or claims as is provided by CERCLA Section 113(f)(2), 42 U.S.C. 9613(f)(2).
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This language simply repeats the statutory contribution
language of Section 113(f)(2), without defining "matters
addressed." Charter says that this language in the decree
would be meaningless unless its interpretation is adopted.
That is not so. The language may provide protection to
Charter should the government later recover from other
parties a part of its claim.
We confine ourselves to the text of the decree and
find the answer there, thus not reaching the issue of what
other interpretive guides, if any, are permissible under
CERCLA. We are unpersuaded by Charter's argument that the
text of the decree supports its reading. We believe that the
text of the decree as to: (i) the scope of the claims
purported to be brought and settled; (ii) the definition of
the response costs being reimbursed by the settlement; and
(iii) the explicit references to the prior decrees,
forecloses Charter's interpretation.
Charter relies heavily on the decree's covenant not
to sue clause, which prevents the government from suing
Charter "pursuant to Sections 106 and 107(a) of CERCLA and
Section 7003 of RCRA relating to the Site, including for
reimbursement of Response costs or for implementation of ROD
I or ROD II." But that the government has promised not to
sue Charter says nothing about the intention as to whether
other, prior settling parties were to have their rights of
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contribution against Charter extinguished by this agreement.
The one does not necessarily follow from the other.
Untoward and congressionally unintended consequences
would flow from Charter's reading. As the Seventh Circuit
observed in Akzo:
If the covenant not to sue alone were held to be determinative of the scope of contribution protection, the United States would not be free to release settling parties from further litigation with the United States, without unavoidably cutting off all private party claims for response costs.
30 F.3d at 766 (quoting brief of United States as amicus). We agree. The government may have reasons to give such a
covenant unrelated to an intent to grant broad contribution
protection against prior settlors.
We find dispositive instead the text of the decree
establishing that Charter was sued on the government's
remainder case, that the government sought and Charter agreed
to reimburse the government for its response costs as to that
remainder case, and that the remainder case was defined
against the backdrop of the prior settlements.
The text describing the scope of the claims to be
brought and settled undermines Charter's proposed
interpretation:
The United States in its complaint seeks reimbursement of response costs incurred and to be incurred by EPA and the Department of Justice for response actions in connection with the release or threatened release of hazardous substances at the Sullivan's Ledge Superfund Site in New Bedford, Bristol
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County, Massachusetts . . . and a declaration of the defendants' liability for further response costs.
Neither the complaint nor the decree asserts a claim against
Charter for the remediation work being done by the Acushnet
Group. A reading of a decree which far exceeds the relief
sought by plaintiffs' complaint would be strained and
doubtful. See Navarro-Ayala v. Hernandez-Colon, 951 F.2d
1325, 1341 (1st Cir. 1991). Even crediting the argument that
some settlements may exceed the boundaries of claims made in
the complaint,10 there is nothing in this decree to lead to
that result.11
10. Cf. Charles George Trucking, 34 F.3d at 1090 (consent
decree may resolve claims for damages not pleaded specifically, if the parties so intend, so long as the claims are within the general scope of the pleadings).
11. We note the potential problem of the government not honoring its agreement with prior settlors by collusively agreeing with subsequent settlors on language in their agreement broader than the claims the government made against those subsequent settlors. Cf. Akzo, 30 F.3d at 774
(Easterbrook, J., dissenting) (making an analogous point about the government inducing PRPs to enter large settlements with promises of broad contribution protection and then later urging the district court to arrive at a narrow reading). That is not this case. The district court here expressed its skepticism that the earlier settlement empowered the government to do whatever it wished about impairing the contribution rights that were retained by the prior settling parties. The government has expressly disavowed any such intention. In addition, the government has a serious disincentive to collude with later settlors to cut off the rights of prior settlors just to extract a higher second-round settlement in a single clean-up proceeding. It is the government that is the repeat player in the world of CERCLA clean-ups. Should
the government develop a reputation for cheating early settlors, that would deter settlements in later clean-ups
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The definition of response costs in the decree also
does not support Charter's interpretation. The decree
defines Charter's $215,000 payment as being "in reimbursement
of Response Costs," which are defined as the government's
response costs. The decree says "the United States has
incurred, and will continue to incur, response costs which
have not been recovered under the 1991 Consent Decree or the
1993 Consent Decree." The decree estimates the government's
shortfall to exceed $4 million in such response costs. The
decree also indicates that the government evaluated the
$215,000 to be paid by Charter in terms of these unrecovered
costs of at least $4 million and the risk that some
remediation work may not be completed by other settlors. The
amount was not evaluated against the total costs of clean-up
at the Sullivan's Ledge Site.
Further, as the government points out, the Charter
decree explicitly refers to the earlier decrees. In the
prior settlements the Acushnet Group did not give up the
right to seek contribution from those who were not part of
those settlements. The prior settlements are explicitly
referenced and described in the Charter decree. Under such
circumstances we may consider these prior settlements in
interpreting the decree. Cf. ITT Continental Baking, 420
(and reduce the amounts early-round settlors are willing to pay) and hence, in the long run, hurt the government's interests.
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U.S. at 238. In light of these considerations, we hold that
the text of the decree supports the government's
interpretation and not Charter's and so affirm the district
court's ruling on this point.
Charter argues that the decree is ambiguous and that
extrinsic evidence of the negotiating history of the parties
demonstrates that Charter was intended to be protected from
all contribution claims. Cf. Thomas Hobbes, Leviathan Ch. XI,
at 84 (Michael Oakeshott ed. 1962) (1651) (men call
indeterminate that which they wish to contest because they
have interests at stake). While in routine contract
interpretation extrinsic evidence may be considered when the
disputed terms are ambiguous, we do not find the decree
ambiguous, and such evidence may not be considered to
contradict the written terms of the agreement. See Brennan
v. Carvel Corp., 929 F.2d 801, 808 (1st Cir. 1991).
Even so, we doubt, but do not decide, whether in
interpreting a CERCLA consent decree it would be appropriate
to rely on the type of extrinsic evidence Charter proffers.
This court has at times considered certain types of extrinsic
evidence in interpreting decrees in public institution civil
rights actions. See Navarro-Ayola, 951 F.2d at 1343. But
CERCLA settlements, unlike ordinary contract formation, take
place in a unique statutory framework. That framework
requires that before a decree is entered by the court, notice
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of the decree be published, there be an opportunity for
public comment, and that the Attorney General take account of
the commentary and reserve the right to withhold consent
should the commentary show the decree to be inappropriate.
42 U.S.C. 9622(d)(2). That public comment is part of the
record before the district court. Id. The statutory
structure thus assumes that the public will be given access
to the relevant documentary information on the decree. The
evidence of the negotiating history which Charter proffered
was not within the information the public had available.12
It is worth asking why the court should enter a
consent decree when there was a fundamental dispute over the
effect of the decree. There are two responses. The first is
that Charter expressed its intent to live with whatever
interpretation the court ultimately gave the decree. There is
no unfairness to Charter. When Charter said that it had not
understood the government's position to be that Charter would
not be afforded complete contribution protection, the
government offered to allow Charter to withdraw from the
agreement. Charter declined. Charter knew the government
would present a contrary interpretation to the district
12. Even were we to adopt Charter's method of analysis, we see nothing in the negotiating materials that indicates that the government intended to undercut its earlier settlements with the Acushnet Group or that it ever agreed with Charter's view on the scope of contribution protection afforded by the decree.
-23- 23
court. Charter also knew that courts are required to give
some deference to the judgment of the Attorney General that
the settlement is appropriate.13 Charles George Trucking,
34 F.3d at 1085. In addition, the district court gave
Charter the opportunity to withdraw from the settlement in
the face of a contrary government position and the court's
statement that it would most likely rule against Charter's
interpretation. Charter again declined. Counsel for Charter
informed the court that, win or lose in its interpretation of
the decree, Charter preferred to have an agreement with the
government. Such an agreement, Charter acknowledged, would
both provide it with some contribution protection and get it
out of costly litigation with the government. Indeed, on
appeal, Charter does not ask us to vacate the decree. Rather
its position is that the decree should be upheld and that its
interpretation should be substituted for that of the district
court.
Second, while a different case might lead to a
different result, we think that the policies behind CERCLA
are better served here by holding Charter to the consequences
of its roll of the dice. Perhaps mindful of the huge
13. We reject the Acushnet Group's argument that the district court is required to defer to the Attorney General's judgment to the extent of exercising no independent judgment of its own. See Charles George Trucking, 34 F.3d at 1085
(although in entering a decree a district court must defer to the EPA's judgment and to the parties' agreement, it has a responsibility to exercise its independent judgment).
-24- 24
resources going into the transactions costs of CERCLA
litigation, rather than to remediating the sites,14
Congress sought in SARA to encourage earlier resolutions by
agreement. See United States v. SCA Servs. of Ind., Inc.,
827 F. Supp. 526, 530-31 (N.D. Ind. 1993). If a party were
permitted to use the consent decree process to delay, whether
in good faith or by design, and then to undo a decree by
saying its understanding of the base terms was different,
then the congressional purposes would be undercut. Cf.
Menorah, 72 F.3d at 223. Given that Charter voluntarily
chose to consent to the decree, despite the significant risk
of an interpretation contrary to its interests, it was not
unreasonable for the district court to have entered the
decree.
Approval of the Consent Decree
There was no abuse of discretion by the district
court in approving the decree, as based on the government's
14. See Jan Paul Acton & Lloyd S. Dixon, Superfund and
Transaction Costs: The Experience of Insurers and Very Large
Industrial Firms 32 (1992)(estimating that of the
approximately $470 million paid in 1989 by insurers for hazardous waste clean-ups, 88% went to legal costs); see also
Lloyd S. Dixon, The Transactions Costs Generated by
Superfund's Liability Approach 183, in Analyzing Superfund:
Economics, Science and Law, (Richard L. Revesz & Richard B.
Stewart eds., 1995)(noting that for 1991 alone the private sector incurred over $4 billion in transactions costs); William N. Hedeman et al., Superfund Transaction Costs: A
Critical Perspective on the Superfund Liability Scheme, 21
Envtl. L. Rep. 10413, 10423 (1991) (30-60% of hazardous waste clean-up funds go to lawyers).
-25- 25
interpretation. We note that Charter does not seriously
challenge on this point, preferring to argue that its
interpretation is mandated and that its interpretation meets
the tripartite test. The district court, before entering a
consent decree, is obliged to determine that it is fair,
reasonable and consistent with the goals of CERCLA. DiBiase,
45 F.3d at 543; Cannons, 899 F.2d at 85. In turn, "an
appellate court may overturn a district court's decision to
approve or reject the entry of a CERCLA consent decree only
for manifest abuse of discretion." Charles George Trucking,
34 F.3d at 1085.
Under the terms of the decree Charter agreed to pay
$215,000 plus interest, in settlement of the government's
claims of approximately $4 million in unrecovered response
costs for the first and second units. In exchange the
government covenanted not to sue or take administrative
action against Charter "pursuant to Sections 106 and 107(a)
of CERCLA or Section 7003 of RCRA relating to the Site,
including for reimbursement of Response Costs or
implementation of ROD I or ROD II."15 Charter also
15. The government's covenant not to sue is subject to certain reservations, including: (a) that with respect to future liability, the covenant not to sue does not come into effect until certification by the EPA that remedial action for the site under ROD I and Rod II is completed; and (b) reopener provisions which allow the government to seek further relief if previously unknown conditions or information reveal that the remedial actions for the site are not protective of human health or the environment.
-26- 26
receives protection against contribution claims of other
parties from whom the government might subsequently recover
all or part of its multi-million dollar remainder claim.
Fairness & Reasonableness
Fairness has a procedural component (involving the
negotiation process, see Cannons, 899 F.2d at 85), which is
not at issue here, and a substantive component, which is.
Id. at 86. "Substantive fairness introduces into the
equation concepts of corrective justice and accountability:
a party should bear the cost of the harm for which it is
legally responsible . . . . The logic behind these concepts
dictates that settlement terms must be based upon, and
roughly correlated with, some acceptable measure of
comparative fault, apportioning liability among the settling
parties according to rational (if necessarily imprecise)
estimates of how much harm each PRP has done." Cannons, 899
F.2d at 87 (citations omitted); see also Charles George
Trucking, 34 F.3d at 1089 (so long as the basis for a
sensible "approximation `roughly correlated with some
acceptable measure of comparative fault'" exists,
"difficulties in achieving precise measurements of
comparative fault will not preclude a trial court from
entering a consent decree" (quoting Cannons, 899 F.2d at
87)).
-27- 27
A district court's reasonableness inquiry, like that
of fairness, is a pragmatic one, not requiring precise
calculations. See Charles George Trucking 34 F.3d at 1085
(depth of inquiry depends on the context and information
available to the court). The question is whether the decree
provides for an efficient clean-up and adequately compensates
the public for its costs, in light of the foreseeable risks
of loss. See Cannons, 899 F.2d at 89-90. Because the first-
round settlors have already contracted to implement the
clean-up, we review only the adequacy and efficiency of
implementing the cash settlement reached here. This amounts
to asking whether the terms of the settlement are roughly
proportional to Charter's responsibility and whether they
serve the public interest.
Approval of Charter's cash-out settlement of $215,000
plus interest in exchange for both limited contribution
protection and a limited covenant not to sue from the
government cannot be said to constitute a manifest abuse of
discretion. Although $215,000 is small in absolute terms as
compared to the government's total unrecovered response costs
of $4 million, it must be evaluated in context. In
particular, Charter's liability in this case was uncertain.
It was not clear whether Pacific Oil, the company which had
contributed to the wastes at the Site, was Charter's
predecessor. The degree to which the predecessor's wastes --
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soot from oil fuel -- contained hazardous substances that
would have contributed to the Site's contamination was also
at issue. Given the potentially high costs of litigating a
difficult case against Charter and the benefit of a certain
cash settlement (and the limited contribution protection),
the $215,000 plus interest payment passes muster. This court
explained in Cannons:
In a nutshell, the reasonableness of a proposed settlement must take into account foreseeable risks of loss. . . . The same variable, we suggest, has a further dimension: even if the government's case is sturdy, it may take time and money to collect damages or to implement private remedial measures through litigatory success. To the extent that time is of essence or that transaction costs loom large, a settlement which nets less than full recovery of clean- up costs is nonetheless reasonable. . . . The reality is that, all too often, litigation is a cost-ineffective alternative which can squander valuable resources, public as well as private.
899 F.2d at 90 (citations omitted). In addition, there are
other non-first-round settlors against whom the government is
currently seeking to recover the remainder of its $4 million
claim.
The question arises as to whether the decree, as
entered, unfairly hurts the interests of third parties. See
Charles George Trucking, 34 F.3d 1085-89 (addressing third-
party challenge to entry of CERCLA consent decree). For
purposes of our review, the district court's determination
that the decree does not represent a complete bar to
-29- 29
contribution claims that first-round settlors expected to
have against those that did not settle along with them is
adequate to pass the abuse of discretion threshold.16 Cf.
Charles George Trucking, at 1088 (in entering a decree it
might be better to leave technical disputes between settling
parties in a class to the discourse between them). As to the
extinguished contribution claims of non-settlors or later
round settlors, protection against those claims was a
reasonable benefit Charter acquired in exchange for settling
before those others.
Fidelity to the Statute
As we noted in Cannons, the two major policy concerns
underlying CERCLA are ensuring that prompt and effective
clean-ups are put into place and making sure that the PRPs
responsible for the hazards created bear their approximate
share of the responsibility. 899 F.2d at 89-91; cf. United
States v. Rohm & Haas Co., 721 F.Supp. 666, 680 (D. N.J.
1989) (noting Congress' goal of expediting effective remedial
16. In the separate contribution action between the Acushnet Group and Charter, Charter had asserted that the consent decree provided it with an affirmative defense against the Acushnet Group's contribution claims. The Acushnet Group, in turn, moved for summary judgment on the issue of whether the decree afforded Charter such a defense. The district court denied the motion without ruling on its merits. It is basically that motion that the parties want us to decide. However, absent unusual circumstances, denial of a summary judgment motion is not independently appealable as a final order. See Pedraza v. Shell Oil Co., 942 F.2d 48, 54-55 (1st
Cir. 1991), cert. denied, 502 U.S. 1082 (1992). No such
circumstances exist here.
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action and minimizing litigation). Both these goals and the
honoring of the settlement dynamics Congress created in SARA
are effectuated here.
CERCLA, through Section 113(f)(2), provides settling
parties with broad contribution protection so as to encourage
them to settle early. See Browning-Ferris, 33 F.3d at 102-
03. However, CERCLA also aims to induce those parties who
settle earlier to do so for higher amounts than they might
otherwise by assuring them the right to seek contribution
protection from those who have not as yet settled.17 See
42 U.S.C. 9613(3)(B); see also S. Rep. No. 11, 99th Cong.,
1st Sess. 44 (1985); cf. Colorado & Eastern, 50 F.3d at 1535
(Section 113(f)(1) was intended to enable those bearing a
disproportionate share of the liability in a clean-up to
recover from others). Hence, a decree that is read not to
provide second-round settlors with complete contribution
protection against prior settlors is consistent with the goal
of enabling the government to enter into early and large
17. An early cash-out settlement may sometimes require the settling party to pay a premium for the risks the government bears out of the uncertainty of the total cost of the remedy. As more is known about the site and as the government decides on the precise remedy, that uncertainty, and hence the premium, is reduced, but not eliminated. Here, there were no settlements until the RODs were issued and the remedy was outlined. Nonetheless, early settlors, even post-ROD, may pay some premium. Settlors who actually perform the remedy, such as the Acushnet Group, assume the risks of the actual costs of performance. Congress may well have thought it fair to require later settlors to bear a share of those risks and premiums.
-31- 31
settlements. Cf. Akzo, 30 F.3d 767 (interpreting "matters
addressed" clause of decree not to bar the claims of a PRP
that had undertaken remedial work prior to entry of the
decree); United States v. Alcan Aluminum, Inc., 25 F.3d
1174, 1186 n.17 (3d Cir. 1994) (in light of the goal of
promoting early large settlements, the assertion of a
contribution defense by a second-round settlor against a
first-round settlor is far more problematic than its
assertion against a non-settlor).
Conclusion
The district court's order entering the consent
decree is affirmed.
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