Northwest Federal District Court Approving CERCLA Consent Decree Settlement Must Evaluate Comparativ

In a few years I will be negotiating consent decree settlements for my clients at the Portland Harbor and Lower Duwamish Waterway Superfund Sites. Now as a result of a recent Ninth Circuit case, Arizona v. City of Tucson, 761 F.3d 1005 (9th Cir. 2014), I will need to be sure that the federal district court that enters the consent decree does not just rubber stamp the EPA’s submission of the decree. Rather, the Ninth Circuit held in City of Tucson that the court must evaluate the comparative fault of the settling and non-settling parties to be sure that the settlement is fair, reasonable and based on the CERCLA equitable factors for allocating liability, such as quantity and toxicity of hazardous waste disposed of at the site.

Stated simply, the court must determine if the settlement reflects a rational apportionment of liability among the settling parties. This means that the court must “substantively engage” by independently analyzing these proposed settlements and not simply deferring to the often cursory evaluation of the EPA, the agency usually proposing the settlement.

The upshot of the City of Tucson decision is that parties hoping for a consent decree settlement at a Superfund site in the Northwest will need to take a more active role to ensure that the federal district court has sufficient information to do its independent analysis. By extension, each individual party hoping to be part of the consent decree settlement may have to marshal the evidence to establish that as to itself the amount it is paying to the EPA is fair and reasonable. This will likely cost the individual party more money and could delay expeditious settlements.

At this juncture, it remains to be seen how high federal courts entering consent decrees will set the evidentiary bar to enter them in light of this decision.