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State v. Ashton Company, Inc.

United States District Court, D. Arizona

July 13, 2016

STATE OF ARIZONA, et al., Plaintiffs,
v.
ASHTON COMPANY, INC., et.al., Defendants.

          ORDER

          Cindy K. Jorgenson United States District Judge

         Pending before the Court is the State of Arizona's Motion to Enter (Doc. 275). The State asserts that, consistent with the Ninth Circuit's ruling in State of Arizona v. City of Tucson et al., 761 F.3d 1005 (9th Cir. 2014), its Motion to Enter, along with the State's prior Motion to Enter Consent Decrees (Doc. 109), the State's Supplement to its Motion to Enter Consent Decrees (Doc. 171), and the Affidavit of Ana Vargas (Doc. 171-1) provides sufficient information for the Court to find that the Consent Decrees are substantively and procedurally fair, reasonable, and consistent with the goals of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"). No objection to the proposed consent decrees has been filed.

         Consideration of Consent Decrees

         The inquiry regarding whether to approve the consent decrees is whether the proposed settlements are procedurally and substantively fair, reasonable, in the public interest, and are consistent with the polices of CERCLA. State of Arizona v. Nucor Corp., 825 F.Supp. 1452 (D.Ariz. 1992), aff'd on other grounds, 66 F.3d 213 (9th Cir. 1995), United States v. Montrose Chemical Corp. of Calif., 50 F.3d 741 (9th Cir. 1995). "[A] party who has resolved its CERCLA liability through a judicially approved consent decree ‘shall not be liable [to other responsible parties] for claims for contribution regarding matters addressed in the settlement.'" State of Arizona v. City of Tucson, 761 F.3d at 1011 (quoting 42 U.S.C. § 9613(f)(2)). In making a determination as to whether the approval of a consent decree is appropriate, a court is to give deference to the government's evaluation of the proposal. Nucor, 825 F.Supp. at 1456, citing United States v. Cannons Engineering Corp., 899 F.2d 79, 84-86 (1st Cir. 1990). However, "where a state, as opposed to the federal government, is a party to a proposed CERCLA consent decree, " the deference provided to the state is not to the same degree as would be afforded the federal government. Arizona v. City of Tucson, 761 F.3d at 1014. Indeed, "[t]he true measure of the deference due depends on the persuasive power of the agency's proposal and rationale." Montrose, 50 F.3d at 746, quoting Cannons, 899 F.2d at 84. Further, "[t]here is a fundamental difference in the review of the sufficiency of evidence to support a settlement and the situation where there is no evidence at all on an important point." Montrose, 50 F.3d at 746.

         While courts have an obligation to "scrutinize" the settlement process to determine whether the proposed decrees are both procedurally and substantially fair, Montrose, 50 F.3d at 747, if the district court finds that a state environmental agency has expertise concerning the cleanup of a site, the court may afford "some deference" to the state's judgment concerning the environmental issues underlying the CERCLA consent decrees. Arizona v. City of Tucson, 761 F.3d at 1014. However, a district court may not defer to the state's judgment that an agreement satisfies Montrose. Id.

         Expertise of the State of Arizona - Department of Environmental Quality

         "In 1986, the Arizona Legislature established the Arizona Department of Environmental Quality ("ADEQ") in response to growing concerns over groundwater quality. The ADEQ is the state regulatory agency charged with responsibility to investigate groundwater contamination and enforce Arizona's environmental laws." Roosevelt Irr. Dist. v. Salt River Project Agr. Imp. & Power Dist., 39 F.Supp. 3d 1059, 1062 (D. Ariz. 2014) (citation omitted). Indeed, the State asserts the ADEQ responsibilities include investigating hazardous sites under Water Quality Assurance Revolving Fund ("WQARF") program. A.R.S. §§281-298 and CERCLA, 42 U.S.C. §§ 9601-9675. Further, the State asserts that, during the past thirty years, ADEQ has entered into over sixty seven (67) other CERCLA settlements in the Arizona District Court, all of which this Court approved.

         ADEQ's history, including judicially approved settlements, exhibits its specialized knowledge and expertise in cleaning up contaminated sites. See generally State v. Arizona v. Motorola, Inc., 805 F.Supp. 748, 754 (D.Ariz. 1992). The Court, therefore, will afford some deference to ADEQ's judgment concerning the environmental issues underlying the consent decrees.

         Procedural Fairness

         To determine procedural fairness, courts "must look to the negotiation process and ‘attempt to gauge its candor, openness and bargaining balance.'" Nucor, 825 F.Supp. at 1456, citing Cannons, 899 F.2d at 84. In considering this, the Court recognizes that, "under CERCLA, the right to draw fine lines, and to structure order and pace of settlement negotiations is an agency prerogative." U.S. v. Grand Rapids, 166 F.Supp.2d 1213, 1221 (W.D. Mich. 2000), citing Cannons, 899 F.2d at 93. The State has asserted that, at the request of several anticipated adverse parties ("AAPs"), the State prepared early settlement offers for all of the AAPs based on the information in its files at that time.[1]

         The State, in its original Motion to Enter Consent Decree, cited United States v. Davis, 261 F.3d 1, 23 (1st Cir. 2001), quoting United States v. Comunidades Unidas Contra La Contaminacion, 204 F.3d 275, 281 (1st Cir. 2000), for the assertion that "[t]here is no reason to doubt that the consent decrees were the result of ‘arms' length, good faith bargaining' between sophisticated parties." Motion (Doc. 109), p. 10. Here, the State asserts the Consent Decrees result from lengthy negotiations between ADEQ and the Defendants. Additionally, the State has openly explained the process of reaching the settlement amounts in this litigation. Further, in this litigation, interested entities have provided input and have engaged in settlement discussions. Additionally, the Court considers that interested entities were provided access to the State's public records in conjunction with its Petition to Perpetuate Testimony of Mr. Blankinship pursuant to Fed.R.Civ.P. 27, received the documentation relied upon by the State for its settlement offers, and the State described facts and methodology in responding to public comments. See e.g. State's Brief (Doc. 157), p. 11.

         In light of CERCLA and WQARF's encouragement of early settlements, see e.g. United States v. Montrose Chemical Corp. of California, 827 F.Supp. 1453, 1458 (C.D.Cal. 1993), the Court finds settlement agreements between the State and the settling parties were the result of procedural fairness.

         Substantive Fairness, Reasonableness, and Public Interest

         Substantive fairness "concerns the issues of corrective justice and accountability." Nucor, 825 F.Supp. at 1458. Indeed, "a party should bear the costs of the harm for which it is legally responsible." Cannons, 899 F.2d at 87. In determining the reasonableness of a settlement, the court should consider the "efficacy of the settlement in compensating the public for actual and anticipated remedial and response costs and the relative strength of the parties' litigating." Nucor, 825 F.Supp. at 1464. The settlement terms must be based on an acceptable measure of comparative fault that apportions liability according to a rational, if necessarily imprecise estimate of how much harm the settling party has caused. Nucor, 825 F.Supp. at 1458-59; Cannons, 899 F.2d at 87. The State's chosen measure of comparative fault should be upheld unless it ...


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