United States v. George A. Whiting Paper Co. , 644 F.3d 368 ( 2011 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 10-2480
U NITED S TATES OF A MERICA, et al.,
Plaintiffs-Appellees,
v.
G EORGE A. W HITING P APER C O ., et al.,
Defendants-Appellees.
A PPEAL OF:
A PPLETON P APERS INC. and NCR C ORPORATION,
Intervenors.
Appeal from the United States District Court
for the Eastern District of Wisconsin.
No. 09-C-692—William C. Griesbach, Judge.
A RGUED JANUARY 12, 2011—D ECIDED M AY 4, 2011
Before
K ANNE and T INDER, Circuit Judges, and
H ERNDON, District Judge.Œ
Œ
The Honorable David R. Herndon, Chief Judge of the United
States District Court for the Southern District of Illinois,
sitting by designation.
2 No. 10-2480
K ANNE, Circuit Judge. In 2009, the United States and
the State of Wisconsin (“the Governments”) filed suit
in federal district court against eleven of the potentially
responsible parties (“PRPs”) in an environmental
cleanup, seeking response costs under the Comprehen-
sive Environmental Response, Compensation, and Lia-
bility Act, 42 U.S.C. § 9601 et seq. (CERCLA). Shortly
thereafter, the Governments filed notice of a de minimis
consent decree pursuant to CERCLA § 122(g). Eventually,
the Governments moved for settlement. Appleton Papers
Inc. and NCR Corporation intervened. The district
court granted the settlement motion over the inter-
venors’ opposition. Later, the Governments moved for
a de minimis settlement with a twelfth defendant, and the
district court granted this motion. Appleton and NCR
appealed the grant of both settlement motions. We affirm.
I. B ACKGROUND
The Fox River in Wisconsin is heavily contaminated
with Polychlorinated biphenyls (“PCBs”). Appleton and
NCR are responsible for much of these PCBs. They con-
tributed significant amounts of Aroclor 1242, the most
prevalent PCB in Fox River. The river also contains
other PCBs, including Aroclor 1254 and Aroclor 1260.
Appleton, NCR, and a few other PRPs are currently
paying to clean up Fox River in compliance with a 2007
Environmental Protection Agency order.
Appleton and NCR are seeking contribution, in a sepa-
rate suit, from many other PRPs. These include the
twelve PRPs subject to the consent decrees in this suit:
No. 10-2480 3
Neenah Foundry Company; Green Bay Metropolitan
Sewerage District; the City of De Pere; Procter & Gamble
Paper Products Company; Union Pacific Railroad Com-
pany; Green Bay Packaging, Incorporated; Heart of the
Valley Metropolitan Sewerage District; Lafarge Corpora-
tion; Leicht Transfer and Storage Company; Wisconsin
Public Service Corporation; International Paper Company;
and George A. Whiting Paper Company (the “de minimis
defendants”).
In 2009, the Governments filed suit against the de
minimis defendants under CERCLA §§ 106 and 107. See
42 U.S.C. §§ 9606, 9607. The Governments then filed two
separate consent decrees—one for the City of De Pere,
the other for the remaining de minimis defendants.
De Pere agreed to pay $210,000 to satisfy its liability.
The others agreed to pay a combined total of $1,875,000.
The Governments estimated that the total cleanup cost
would be, accounting for uncertainty, $1.5 billion. They
also estimated that each of the de minimis defendants
had discharged no more than 100 kilograms of PCBs
and that, in total, 230,000 kilograms of PCBs had been
discharged into the Fox River. The total discharge
estimate is a conservative one, based on a low-end estimate
of Aroclor 1242, not total PCBs. The Governments based
their individual contribution estimates on the de minimis
defendants’ responses to CERCLA § 104(e) information
requests (“§ 104(e) requests”), 1 on discovery responses
1
Section 104(e) requests are a tool by which the federal govern-
ment can obtain information about the creation, storage, use,
(continued...)
4 No. 10-2480
from Appleton and NCR’s contribution suit, and on
statements by the de minimis defendants certifying
that they had turned over all information related to
their use of PCBs.
The Department of Justice filed notice of the consent
decrees in the Federal Register and solicited public com-
ment. Appleton and NCR objected to both settle-
ments, arguing that the settlements underestimated the
de minimis defendants’ contributions. Appleton and NCR
based their objections on studies suggesting that the
Governments had underestimated the amount of Aroclor
1254 and 1260 in the Fox River. These studies also pro-
vided direct evidence of PCB use by some de minimis
defendants. The Governments agreed with NCR on one
point: they recognized that Green Bay Metro Sewerage
may have discharged more than 100 kilograms of PCBs.
Appleton and NCR claimed Green Bay Metro Sewerage
had discharged up to 324 kilograms. The Governments
made an even more cautious estimate of 480 kilograms,
and Green Bay Metro agreed to a corresponding pay-
ment of $325,000. The remaining de minimis defendants’
payments remained the same.
After the notice and comment process, the Governments
moved for settlement in the district court. Appleton and
NCR intervened and opposed the motions for settle-
ment. The district court approved both settlement
1
(...continued)
disposal, and release of hazardous substances and pollutants.
42 U.S.C. § 9604(e)(2).
No. 10-2480 5
decrees and granted the motions for settlement. Appleton
and NCR then appealed.
II. A NALYSIS
In reviewing the consent decrees, we are constrained
by a double dose of deference. See United States v.
Cannons Eng’g Corp., 899 F.2d 79, 84 (1st Cir. 1990). First,
the trial court must defer to the expertise of the agency
and to the federal policy encouraging settlement. In re
Tutu Water Wells CERCLA Litigation, 326 F.3d 201, 207
(3d Cir. 2003). Thus, the district court must approve a
consent decree if it is reasonable, consistent with
CERCLA’s goals, and substantively and procedurally
fair. Id. We, in turn, defer to the district court’s decision—
reviewing only for an abuse of discretion. Cannons
Eng’g, 899 F.2d at 84.
A. No Rational Basis
The district court concluded the consent decrees were
substantively fair. Appleton and NCR argue that this
conclusion has no rational basis in the record. A consent
decree is substantively fair if its terms are based on com-
parative fault. Tutu Wells, 326 F.3d at 207; Cannons
Eng’g, 899 F.2d at 87. The calculation of comparative
fault “should be upheld unless it is arbitrary, capricious,
and devoid of a rational basis.” Cannons Eng’g, 899 F.2d
at 87 (“[W]hat constitutes the best measure of compara-
tive fault . . . should be left largely to the EPA’s exper-
tise.”).
6 No. 10-2480
Rarely does an appellate court conclude the district
court had no factual basis to approve a consent decree.
Appleton and NCR can point to only one such holding. In
United States v. Montrose Chem. Corp., the Ninth Circuit
reversed the approval of a consent decree because the
record included no information—not even an unsup-
ported estimate—about the total cost of cleanup or the
settling parties’ comparative fault. 50 F.3d 741, 747 (9th
Cir. 1995). We need not decide whether an unsupported
estimate would be a sufficient factual basis to affirm a
consent decree—the Governments’ estimate here has
adequate support in the record.
According to Appleton and NCR, the only bases for
the de minimis defendants’ comparative fault are the
Governments’ unsupported conclusions. In reality, the
record includes information about each of the de minimis
defendants’ discharges of PCBs. Whiting Paper, Green
Bay Metro Sewerage, Green Bay Packaging, Heart of the
Valley, International Paper, Procter & Gamble, and Union
Pacific 2 all responded to § 104(e) requests. The de minimis
defendants that did not respond to § 104(e) requests
provided certified statements about their use of PCBs
and about any potential discharges. The record also
included deposition transcripts and written discovery
responses produced in related litigation. Finally, the
record included information drawn from the public
comment process.
2
Union Pacific provided certified responses to relevant § 104(e)
requests that had been served on other parties.
No. 10-2480 7
Contrary to Appleton and NCR’s argument, these
sources are not devoid of content. In fact, Appleton
and NCR used the information from Green Bay Metro
Sewerage’s § 104(e) responses to demonstrate that Green
Bay Metro Sewerage’s discharges exceeded the Govern-
ments’ original estimate. Given the amount of relevant
information in the record, we find that the record
provides a rational basis on which the district court could
conclude the consent decrees were substantively fair.
B. Consideration of non-1242 Aroclors
Appleton and NCR next argue that the consent decrees
are not substantively fair because the estimates of the
de minimis defendants’ comparative fault do not account
for non-1242 Aroclors. This argument rests on a false
premise. In truth, the estimates of the individual
de minimis defendants’ comparative fault account for
discharges of all PCBs—not just Aroclor 1242. According
to Appleton and NCR, the Governments relied on
surveys of PCB pollution—which focus on Aroclor
1242—to derive individual estimates. But the Govern-
ments actually relied on § 104(e) responses and other
direct information about the de minimis defendants’
discharges. These sources cover discharges of all PCBs.
The Governments did consider only Aroclor 1242 in
their estimate of the total amount of PCBs discharged
into the Fox River. But Appleton and NCR wisely do not
contest this choice: including non-1242 Aroclors in this
estimate would have only decreased the de minimis de-
fendants’ comparative fault.
8 No. 10-2480
Appleton and NCR’s only argument, then, is that the
evidence it has presented about the presence of non-1242
Aroclors shows that the consent decrees lack a rational
basis. We reiterate that a district court should defer to
the Governments’ expertise in weighing ambiguous and
conflicting evidence of substantive fairness. Cannons Eng’g,
899 F.2d at 88. And we will only disturb the district
court’s decision if Appleton and NCR can show that the
court ignored a material factor or made “a serious
mistake in weighing” the relevant factors. Id. at 84.
Appleton and NCR have not met this heavy burden.
They point to studies suggesting that Aroclors 1254 and
1260 are more toxic than Aroclor 1242. This, they argue,
shows the consent decrees lack rational basis because
the non-1242 Aroclors do not weigh more heavily in the
decrees’ comparative fault calculations. But the Govern-
ments point to evidence suggesting that Aroclor 1242 is
just as toxic as Aroclors 1254 and 1260. The district court
considered all the relevant evidence and decided the
Governments’ approach was rational. We are poorly
suited to evaluate the merits of the conflicting positions.
See Kalamazoo River Study Grp. v. Rockwell Int’l Corp., 274
F.3d 1043, 1051 (6th Cir. 2001) (upholding district court’s
decision to defer to the EPA’s conclusion that Aroclors
1242 and 1254 are equally toxic). The district court
did not abuse its discretion by deeming the Govern-
ments’ toxicity calculations reasonable.
Appleton and NCR also point to evidence suggesting
the Governments have underestimated the amount of non-
1242 Aroclors discharged into Fox River. Even if we
No. 10-2480 9
were to disregard the Governments’ evidence of the
amount of non-1242 Aroclors in Fox River, Appleton and
NCR’s evidence would not demonstrate a lack of sub-
stantive fairness. Appleton and NCR cannot show that
the de minimis defendants—rather than any of the numer-
ous other PRPs—are responsible for the purportedly
uncounted non-1242 Aroclors.
C. Unresolved Issue of Divisibility
We note that Appleton and NCR appeal only the
district court’s approval of the consent decrees at issue
here. Any divisibility decision made—or not yet made—in
related litigation is beyond the scope of this appeal. The
only relevant issue, then, is whether the district court
abused its discretion by affirming the consent decrees
before deciding whether the de minimis defendants’
liability was divisible from that of other PRPs.
By its nature, a consent decree eliminates many
possible outcomes that would have been better for one
side or the other. See United States v. Armour & Co., 402 U.S.
673, 681 (1971) (“[I]n exchange for the saving of cost
and elimination of risk, the parties each give up some-
thing they might have won had they proceeded with
the litigation.”). Appleton and NCR have not shown
that the settlement amounts do not account for the risk of
divisibility. Under Appleton and NCR’s theory, parties
could never negotiate away the risk of which side would
prevail in a divisibility dispute, even when—as here—the
cost of resolving that dispute might exceed the total
settlement amount.
10 No. 10-2480
Neither the Governments nor the de minimis defendants
have an interest in disputing divisibility here. Appleton
and NCR are free to dispute the divisibility of their
own liability in the appropriate suit. Accordingly, the
district court did not abuse its discretion by approving
the consent decrees before a divisibility determination.
D. Insufficient Discovery
Appleton and NCR claim more discovery was needed
before the district court could approve the settlement
agreement. They do not make clear when the discovery
should have taken place or who should have been in-
volved. Appleton and NCR did not move for discovery
in this case, so they cannot appeal the denial of any
such motion. To the extent they argue that the Govern-
ments and the de minimis defendants should have
engaged in discovery in order to establish a factual
basis for the consent decree, we have already addressed
their concerns. To the extent Appleton and NCR chal-
lenge discovery limitations in separate litigation, their
argument is beyond the scope of this appeal.
E. Improper Consideration of Equitable Factors
Appleton and NCR argue that the district court, in its
approval of the consent decrees, considered equitable
factors in violation of CERCLA § 122(g). By not making
this argument until oral argument, they forfeited it. See
Ceta v. Mukasey, 535 F.3d 639, 649 n.16 (7th Cir. 2008).
No. 10-2480 11
Even if not forfeited, Appleton and NCR’s argument
has no merit. Section 122(g) puts forth criteria for iden-
tifying de minimis defendants. It does not limit the factors
a district court can consider in determining whether a
settlement decree is fair, reasonable, and consistent
with CERCLA. See 42 U.S.C. § 9622(g). Moreover, while
the district court’s order does mention comparative
liability, an equitable factor, its decision rests on its ap-
praisal of comparative fault—an appropriate and neces-
sary factor for consideration. See Tutu Water Wells, 326
F.3d at 207; Cannons Eng’g, 899 F.2d at 87.
III. C ONCLUSION
Because the district court did not abuse its discretion
in approving the consent decrees between the Govern-
ments and the de minimis defendants, we A FFIRM its
decisions.
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