Government of Guam v. United States Department of Navy

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
GOVERNMENT OF GUAM, )
)
Plaintiff, )
)
v. ) No. 1:17-cv-2487 (KBJ)
)
UNITED STATES OF AMERICA, )
)
Defendant. )
)
MEMORANDUM OPINION
The island of Guam has been a territory of the United States for more than a
century, and for most of the period between 1898 and the mid -1900s, Guam served as a
central base of operations for the United States Navy in the South Pacific. (Am.
Compl., ECF No. 7, ¶ 6.) Early on, the Navy created a major landfill on the island —the
Ordot Landfill—to support its mission, and this dump was used to dispose of munitions
and chemicals, as well as military and civilian waste, for decades. (Id. ¶¶ 7, 11.) As
relevant here, by the time the United States government relinquished control of Guam
to civilian authorities in the year 1950, the Ordot Landfill contained, and would
continue to receive, significant quantities of trash and hazardous waste that posed a
serious risk to the surrounding environment. As a protectorate of the United States,
Guam is subject to U.S. environmental laws, and pursuant to an agreement with the U.S.
Environmental Protection Agency (“the EPA”) that arose under the Clean Water Act
(“CWA”), 33 U.S.C. §§ 1251–1387, the local Guamanian authorities shut down the
Ordot Landfill in 2011, and commenced the arduous (and quite expensive) task of
cleaning up the landfill and permanently containing its contents so as to prevent
hazardous waste leaks that threatened rivers, waterways, and the Pacific Ocean . (See
id. ¶¶ 12, 14.) The Government of Guam (“Guam” or “Plaintiff”) has now brought the
instant three-count complaint against the United States (“United States” or
“Defendant”) under the Comprehensive Environmental Response, Compensation, and
Liability Act (“CERCLA”), 42 U.S.C. § 9601–75. Guam alleges that, because the
United States substantially contributed to the environmental contamination at the Ordot
Landfill, the United States should pay the full $160,000,000 cost of cleaning up the
dump under CERCLA’s section 107(a)’s cost-recovery mechanism (see Am. Compl.
¶¶ 23, 25 (Count I)), or should at least pay its fair share of the cleanup costs under
CERCLA’s section 113(f)(3)(B)’s contribution mechanism (see id. ¶ 31 (Count III)). 1
Guam also seeks a declaratory judgment that establishes the United States’s liability for
“future removal and remediation costs incurred by Guam[.]” (Id. ¶ 29 (Count II).)
Before this Court at present is the United States’s motion to dismiss Guam’s
complaint under Federal Rule of Civil Procedure 12(b)(6). (See United States’ Mem. in
Supp. of Mot. to Dismiss Guam’s Am. Compl. (“Def.’s Mem.”), ECF No. 27-1.) In its
motion to dismiss, the United States argues that Guam cannot compel the United States
to pay for the closure and remediation of the Ordot Landfill under CERCLA’s section
107(a) because, under the circumstances presented here, CERCLA only provides Guam
with a claim for contribution under section 113(f)(3)(B) (see id. at 28–29), and,
1
In the context of CERCLA, courts commonly refer to the cost -recovery claim embodied in section
9607(a) of Title 42 of the United States Code as a “section 107(a)” action and they call the contribution
claim embodied in section 9613(f)(3)(B) of Title 42 of the United States Code a “section 113(f)(3)(B)”
action. This Memorandum Opinion generally employees that same nomenclature.
2
unfortunately for Guam, any such contribution action must be dismissed as untimely,
per the applicable three-year statute of limitations (see id. at 36–39). 2 The United
States’s argument hinges on the established view that section 107(a) claims and section
113(f)(3)(B) claims are mutually exclusive, and the contention that Guam’s
circumstances fit the latter provision, because Guam previously executed a 2004
Consent Decree with the EPA that purportedly “resolve[d] its liability to the United
States” for the cleanup and closure of the Ordot Landfill, and the United States
considers that agreement to be a cognizable “settlement” for section 113(f)(3)(B)
purposes. See 42 U.S.C. § 113(f)(3)(B). Guam responds that the 2004 Consent Decree
did not “resolve its liability” within the meaning of section 113(f)(3)(B), nor does that
agreement qualify as a CERCLA “settlement,” and thus, Guam maintains that it is not
precluded from bringing a cost-recovery claim under section 107(a). (See Government
of Guam’s Mem. in Opp’n to the United States of America’s Mot. to Dismiss Guam’s
Am. Compl. (“Pl.’s Opp’n”), ECF No. 30, at 15–18.)
On September 30, 2018, this Court issued an Order that DENIED the United
States’s motion to dismiss. (See Order, ECF No. 37.) This Memorandum Opinion
explains the reasons for that Order. In short, the Court concludes that a cost-recovery
action under section 107(a) remains available to Guam because the 2004 Consent
Decree plainly left the issue of liability for the costs associated with the Ordot Landfill
cleanup unresolved, and therefore, section 113(f)(3)(B)’s contribution mechanism was
not triggered. Consequently, and to that extent, the Court finds that the United States’s
2
Page-number citations to the documents that the parties have filed refer to the page numbers that the
Court’s electronic filing system automatically assigns.
3
motion to dismiss Guam’s cost-recovery claim under section 107(a) must be denied. 3
I. BACKGROUND 4
A. The Ordot Landfill
Over one hundred years ago, the United States captured the island of Guam from
Spain and began administering the island as a United States territory. ( See Am. Compl.
¶ 6.) Between 1898 and 1950, the United States Navy “unilaterally governed and
operated” Guam (id.), and at some point during its administration of the island’s
operations, the Navy established the Ordot Landfill to dispose of the waste being
generated on the island (see id. ¶ 7). In 1950, the Navy handed Guam, and the landfill,
over to the newly-established civilian government (see id. ¶ 10), and the Guamanian
authorities continued to operate the Ordot Landfill as a dump until the facility was
officially closed in 2011 (see id. ¶ 14).
Notably, throughout its lifespan, the Ordot Landfill accepted waste from both
military and civilian entities. (See id. ¶ 11.) The Government of Guam alleges that the
United States military deposited “[s]ignificant quantities of munitions and chemicals” at
the dump, including hazardous substances such as DDT and Agent Orange. ( Id.) At the
same time, the Ordot Landfill served as the only public du mp site on the island of Guam
3
The Amended Complaint pleads a cost-recovery claim under section 107(a) and a contribution claim
under section 113(f)(3)(B) “in the alternative.” (Am. Compl. ¶ 31.) Given this Court’s conclusion tha t
Guam can maintain its cost-recovery claim against the United States under section 107(a), the
alternative cause of action in Plaintiff’s amended complaint must be DISMISSED.
4
The following facts are derived from the Government of Guam’s amended complaint and certain
exhibits that are referenced in the complaint and are necessary to this Court’s resolution of the pending
motion. See Azima v. RAK Investment Auth., 305 F. Supp. 3d 149, 159 (D.D.C. 2018) (noting that , in
the Rule 12(b)(6) setting, all reasonable inferences must be viewed “in the light most favorable to the
plaintiff” and that this Court may consider “the facts alleged in the complaint . . . and documents upon
which the plaintiff’s complaint necessarily relies even if the document is produc ed not by the plaintiff
in the complaint but by the defendant in a motion to dismiss” (internal quotation marks and citation
omitted)).
4
until 2011 (see id.), and it appears that even though the landfill “reached capacity in
1986, it continue[d] to receive virtually all of the industrial and municipal waste from
the civilian population of Guam” for a significant period of time thereafter, United
States v. Gov’t of Guam, 02-00022, 2008 WL 216918, at *1 (D. Guam Jan. 24, 2008).
Thus, “[w]hat was once a valley [became] at least a 280-foot mountain of trash.” Id.
(describing the Ordot Landfill back in 2008).
For present purposes, it is important to note that because the Ordot Landfill was
built in the pre-World War II era, it was not designed with modern environmental
practices in mind, and thus, did not have certain safeguards to shield the surrounding
environment from contamination. For example, “[d]uring its years of operation, the
Ordot Landfill was . . . uncapped at its top.” (Am. Compl. ¶ 12.) Consequently, “[t]he
landfill absorbed rain and surface water” from storms and other sources, and thi s water
“percolated through the landfill and picked up contaminants.” ( Id.) In addition, since
the landfill was also “unlined on its bottom[,]” the contaminated water —which is
known as “leachate”—leaked out of the Ordot Landfill into the nearby Lonfit Ri ver, and
the river carried hazardous materials from the landfill out into the Pacific Ocean. ( Id.)
The EPA has been aware of these and other environmental problems with the
Ordot Landfill for many decades; indeed, the agency placed this site on the Nati onal
Priorities List as far back as 1983, which indicated its “priority [status] for the
expenditure of funds to respond to the release or threatened release of hazardous
substances.” (Id. ¶ 13.) Moreover, starting in 1986, the EPA began issuing
administrative orders under the CWA, directing Guam’s civilian government to halt the
further discharge of contaminants from the Ordot Landfill into the rivers and oceans of
5
Guam. See Guam, 2008 WL 216918, at *1. Over the next fifteen years, the EPA
regularly ordered Guam to devise a feasible plan for containing and disposing of the
waste at the landfill, but Guam did not provide a plan that satisfied the agency. See id.
B. The EPA’s CWA Lawsuit And The Resulting Consent Decree
The EPA finally filed a lawsuit against Guam in 2002, “asserting that leachate
was discharging from the Ordot Landfill into the Lonfit River and two of its tributaries”
in violation of the CWA. (Am. Compl. ¶ 14.) The EPA’s legal action sought (1) “[a]n
injunction ordering the Government of Guam to comply with the [CWA]”; (2) civil
monetary penalties; (3) and court orders that required Guam to file timely and complete
applications for any required discharge permits and forbade Guam from allowing
further unpermitted discharges from the landfill. (CWA Compl., Ex. 2 to Decl. of
Matthew Woolner in Supp. of Def. United States’ Mot. to Dismiss (“Woolner Decl.”),
ECF No. 27-2, at 13 (Prayer for Relief).) Ultimately, rather than litigating these CWA
claims in court, the parties entered into a consent decree in 2004 to resolve the EPA’s
lawsuit. (See 2004 Consent Decree, Ex. 3 to Woolner Decl., ECF No. 27-2, at 16–45.)
The 2004 Consent Decree between Guam and the EPA required Guam to pay a
relatively modest civil penalty (see id. ¶ 5); mandated that Guam close the Ordot
Landfill and cease the discharge of pollutants into the Lonfit River ( see id. ¶ 8); and
required Guam to construct a new municipal landfill to replace the Ordot Landfill (see
id. ¶ 9). Significantly for present purposes, despite imposing these obligations on
Guam, the Consent Decree specifically provided that the agreement was “based on the
pleadings, before taking testimony or adjudicating any issue of fact or law, and without
any finding or admission of liability against or by the Government of Guam[.]” (Id. at
18 (Therefore Clause).)
6
The 2004 Consent Decree also contained a number of provisions that specified
the claims that the EPA was relinquishing as part of the settlement and the rights the
United States retained notwithstanding the parties’ agreement. First, the Consent
Decree expressly stated that
[e]ntry of this Consent Decree and compliance with the requirements
herein shall be in full settlement and satisfaction of the civil judicial
claims of the United States against the Government of Guam as
alleged in the Complaint filed in this action through the date of the
lodging of the Consent Decree.
(Id. ¶45.) The Consent Decree also provided that
[n]othing in this Consent Decree shall limit the ability of the United
States to enforce any and all provisions of applicable federal laws
and regulations for any violations unrelated to the claims in the
Complaint or for any future events that occur after the date of
lodging of this Consent Decree.
(Id. ¶ 46.) The Consent Decree further stated that “[e]xcept as specifically provided
herein, the United States does not waive any rights or remedies available to it for any
violation by the Government of Guam of federal and territorial laws and regula tions.”
(Id. ¶ 48.)
In accordance with the terms of the Consent Decree, which, as noted, required
the “complete closure of [the] Ordot Dump” and the “implementation of [a] post -
closure plan” (id. ¶ 8(h)), Guam began taking steps to close the Ordot Landfill and to
put an end to the leaching of pollutants from that dump. Guamanian officials officially
ceased operations at the Ordot Landfill in 2011, and “[r]emediation and closure work”
began “in December 2013.” (Id. ¶ 14.) That remediation work, “which include[s]
capping the landfill, installing storm water management ponds, leachate storage tanks
7
and a sewer line, . . . is still ongoing” (id.), and “Guam expects costs of remediation . . .
to exceed approximately $160,000,000” (id. ¶ 15).
C. Procedural History
On March 2, 2017, Guam filed the instant CERCLA action against the United
States to recoup its landfill-closure and remediation costs. (See Compl., ECF No. 1.)
On May 19, 2017, Guam filed the operative amended complaint, which contains thr ee
counts that collectively allege that the United States is liable for at least some, if not
all, of the costs that Guam has incurred in closing and remediating the Ordot Landfill.
(See Am. Compl. ¶¶ 32–34.) The first count contends that, because the United States
Navy contributed hazardous waste to the Ordot Landfill and managed that landfill for
many decades (see id. ¶ 19), Guam is entitled to recover all of the “removal and
remediation costs” it incurred at or “related to the Ordot Landfill, plus inte rest” from
the United States pursuant to section 107(a) of the CERCLA (id. ¶ 25). The second
count seeks “a declaratory judgment of liability” to the effect that the United States will
pay for Guam’s future expenses relating to the remediation of the Ordo t Landfill under
CERCLA’s section 113(g)(2). (Id. ¶¶ 29, 33.) The third count is a claim in the
alternative for contribution under section 113(f)(3)(B) of CERCLA; Guam maintains
that, even if it is not entitled to recover the full costs of remediation a nd closure of the
Ordot Landfill, the United States must nevertheless pay “for all [such] costs in excess
of Plaintiff’s fair and equitable share of costs.” ( Id. ¶ 31.)
On November 27, 2017, the United States filed a motion to dismiss Guam’s
amended complaint under Federal Rule of Civil Procedure 12(b)(6 ) for failure to state a
claim upon which relief can be granted. (See Def.’s Mem.) In its motion, the United
States first argues that Guam cannot recover its costs for remediating the Ordot Landfill
8
under section 107(a) because Guam resolved its liability for that cleanup in the 2004
Consent Decree, and a contribution claim under section 113(f)(3)(B) is “the exclusive
CERCLA remedy for the costs a liable party is compelled to incur pursuant to a
judicially-approved settlement with the United States.” (Id. at 28.) The United States
further asserts that, “because CERCLA imposes a three -year statute of limitations on
contribution claims[,]” Guam “waited far too long after settling its liability in 2004” to
bring its alternative claim for contribution under section 113(f)(3)(B). (Id. at 27.)
Thus, from the United States’s perspective, Guam has no right to recover under either
section 107(a) or section 113(f)(3)(B) at this time, and therefore, the Court sho uld
“dismiss Guam’s amended complaint with prejudice.” (Id. at 40.)
Guam’s opposition challenges the United States’s understanding of the
applicable law on several grounds. Most significantly, Guam argues that its right to
maintain a contribution action under section 113(f)(3)(B) was never triggered because
Guam had not “resolved its liability . . . [for] a response action or for some or all of the
costs of such action” in the context of “an administrative or judicially approved
settlement[,]” as the text of section 113(f)(3)(B) requires. (Pl.’s Opp’n at 20.) Guam
insists that the parties “did not resolve response cost liability” in the 2004 Consent
Decree, because the provisions of that agreement left Guam fully exposed to future
liability under CERCLA. (Id. at 16; see also id. at 26–40.) Moreover, because the
2004 Consent Decree was “expressly limited to the CWA” (id. at 16), Guam argues that
it does not qualify as a “settlement agreement” giving rise to a cause of action for
contribution under CERCLA’s section 113(f)(3)(B) (id.; see also id. at 40–48). Indeed,
Guam asserts that it has not heretofore pursued a contribution claim against the United
9
States precisely because it is not entitled to do so, given that its liability for the Ordot
Landfill cleanup costs remains unresolved. (See id. at 20 n.12.) Thus, in Guam’s view,
a cost-recovery action under section 107(a) is appropriate and legally available, and this
Court should not dismiss the instant cost-recovery claim.
The United States’s motion to dismiss became ripe for decision on January 8,
2018. (See Def.’s Mem.; Pl.’s Opp’n; United States’ Reply in Supp. of its Mot. to
Dismiss (“Def.’s Reply”), ECF No. 33.) This Court held a hearing on May 15, 2018,
and on September 30, 2018, the Court issued an Order denying the United States’ s
motion to dismiss.
II. LEGAL STANDARDS
A. Motions To Dismiss Under Rule 12(b)(6)
Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss a
complaint on the grounds that it “fail[s] to state a claim upon which relief can be
granted.” Fed. R. Civ. P. 12(b)(6). To survive a Rule 12(b)(6) motion to dismiss, a
complaint must comply with Rule 8, which requires a “short and plain statement of the
claim showing that the pleader is entitled to relief[,]” Fed. R. Civ. P. 8(a)(2), and it
must “contain sufficient factual matter, accepted as true, to state a claim to relief that is
plausible on its face,” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation
omitted). A claim is plausible on its face when it contains “factual content that allows
the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id. Therefore, even though a complaint “‘does not need detailed
factual allegations,’ the factual allegations ‘must be enough to raise a right to relief
above the speculative level.’” Wash. All. of Tech. Workers v. U.S. Dep’t of Homeland
10
Sec., 892 F.3d 332, 343 (D.C. Cir. 2018) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007)).
In evaluating whether a complaint has managed to set forth sufficient factual
allegations, a court must “accept the plaintiff’s factual allegations as true and construe
the complaint liberally, granting plaintiff the benefit of all inferences that can
reasonably be derived from the facts alleged.” Sickle v. Torres Advanced Enter. Sols.,
LLC, 884 F.3d 338, 345 (D.C. Cir. 2018) (internal quotation marks, alterations, and
citation omitted). The court generally may not consider matters beyond the pleadin gs,
see Patterson v. United States, 999 F. Supp. 2d 300, 306 (D.D.C. 2013), but a limited
exception to this rule does allow a court to consider “any documents either attached to
or incorporated in the complaint and matters of which [the court] may take judi cial
notice[,]” Equal Emp. Opportunity Comm’n v. St. Francis Xavier Parochial Sch., 117
F.3d 621, 624 (D.C. Cir. 1997). A court may also review “documents upon which the
plaintiff’s complaint necessarily relies even if the document is produced not by the
plaintiff in the complaint but by the defendant in a motion to dismiss.” Mills v.
Hayden, 284 F. Supp. 3d 14, 17 (D.D.C. 2018).
Finally, to the extent that a defendant’s 12(b)(6) motion rests on the ar gument
that a plaintiff’s claim falls outside the applicable statute of limitations, “courts should
hesitate to dismiss a complaint on statute of limitations grounds based solely on the
face of the complaint.” Momenian v. Davidson, 878 F.3d 381, 387 (D.C. Cir. 2017)
(internal quotation marks and citation omitted). “A complaint wi ll be dismissed under
Rule 12(b)(6) as ‘conclusively time-barred’ if ‘a trial court determines that the
allegation of other facts consistent with the challenged pleading could not possibly cure
11
the deficiency.’” Id. (quoting Firestone v. Firestone, 76 F.3d 1205, 1209 (D.C. Cir.
1996)). Put another way, only “[i]f no reasonable person could disagree on the date on
which the cause of action accrued [may] the court [] dismiss a claim on statute of
limitations grounds.” Wash. Metro. Area Transit Auth. v. Ark Union Station, Inc., 268
F. Supp. 3d 196, 204 (D.D.C. 2017) (internal quotation marks and citation omitted).
B. Legal Actions Brought Under CERCLA
Congress enacted CERCLA in 1980 “in response to the serious environmental
and health risks posed by industrial pollution.” United States v. Bestfoods, 524 U.S. 51,
55 (1998). The statute is designed to “promote the timely cleanup of hazardous waste
sites and to ensure that the costs of such cleanup efforts [a]re born by those responsible
for the contamination[,]” Burlington N. & Santa Fe Ry. Co. v. United States, 556 U.S.
599, 602 (2009) (internal quotation marks and citation omitted), and to achieve these
goals, Congress “impose[d] strict liability for environmental remediation” of any
hazardous waste, including waste that was initially “disposed of according to then-
acceptable practices before [it was] known to be hazardous[,]” Lockheed Martin Corp.
v. United States, 833 F.3d 225, 227 (D.C. Cir. 2016). Thus, CERCLA “reach[es] back
indefinitely into the past to make a[n] [entity] liable for the clea nup of hazardous
materials it may have [properly] disposed of decades ago.” John L. Ropiequet,
Environmental Law Litigation Under CERCLA, 47 Am. Jur. Trials § 1 (April 2018
Update).
The instant case centers on the text of two of CERCLA’s remedial provisions:
(1) section 107(a)’s cost-recovery mechanism, which is codified at section 9607(a) of
Title 42 of the United States Code, and (2) section 113(f)(3)(B)’s contribution
mechanism, which is codified at section 9613(f)(3)(B) of Title 42 of the United States
12
Code. These two provisions work in harmony to encourage response actions such as
“removal[s]” (i.e., carting away hazardous waste from a given waste site) or
“remediation[s]” (i.e., taking action that ensures that hazardous waste will never escape
from its current waste site), 42 U.S.C. § 9601(23)–(25); see also Asarco LLC v. Atl.
Richfield Co., 866 F.3d 1108, 1117 (9th Cir. 2017), and they provide the actor with the
means to ensure that the costs of such response activities are covered, while assuring
any payor that such costs will ultimately be allocated properly among all “potentially
responsible parties” (hereinafter referred to as “PRPs”), see United States v. Atl.
Research Corp., 551 U.S. 128, 139 (2007).
Specifically, section 107(a) “creates a cause of action through which entities that
have incurred costs cleaning up contaminated sites ma y sue to recover cleanup costs
from” four categories of PRPs, Lockheed Martin, 833 F.3d at 227—the present owners
of the facility; the past owners of the facility; individuals who disposed of hazardous
waste at that site; and individuals who transported hazardous waste to these facilities,
see 42 U.S.C. § 9607(a)(1)–(4). When sued, such PRPs are usually subject to joint-and-
several liability for the entire cost of cleaning up the hazardous waste site, meaning that
a single defendant sued under section 107(a) can be held legally responsible for all of
the cleanup costs even if other PRPs also disposed of hazardous pollutants at that site.
See, e.g., Chem-Nuclear Sys., Inc. v. Bush, 292 F.3d 254, 259 (D.C. Cir. 2002). But see
Bernstein v. Bankert, 733 F.3d 190, 201 (7th Cir. 2013) (explaining that, while joint-
and-several liability is the default presumption, if “the defendant can demonstrate that
there is a reasonable basis for determining the contribution of each cause to a single
harm[,]” then a court considering a section 107(a) claim may apportion the costs of the
13
cleanup in proportion to the responsibility of the PRPs for those costs).
Through section 113(f), Congress has provided a mechanism for PRPs who have
been held liable for cleanup costs to seek contribution from other responsible parties,
thereby ensuring that the costs of cleaning up hazardous waste sites are divided fairly
among all PRPs. See Cooper Indus., Inc. v. Aviall Servs., Inc., 543 U.S. 157, 162–63
(2004). As relevant here, a PRP may bring an action for contribution under
section 113(f)(3)(B) if that PRP
has resolved its liability to the United States or a State for some or
all of a response action or for some or all of the costs of such action
in an administrative or judicially approved settlement[.]
42 U.S.C. § 9613(f)(3)(B); see also Atl. Research Corp., 551 U.S. at 132 n.1 (“Section
113(f)(3)(B) permits private parties to seek contribution after they have settled their
liability with the Government.”). 5
Thus, when coupled together, the remedies available under sections 107(a) and
113(f) serve to ensure that PRPs pick up the tab for the cleanup costs that occur with
respect to hazardous waste sites and that PRPs share the costs in an equitable manner.
In this way, sections 107(a) and 113(f) provide “complementary yet distinct” causes of
action. Id. at 138. And because these statutory provisions establish “distinct
remed[ies] available to persons in different procedural circumstances[,]” Bernstein, 733
F.3d at 202, every circuit to have addressed the issu e has held that claims for cost-
recovery under section 107(a) and claims for contribution under section 113(f) (3)(B)
are exclusive, in the sense that a CERCLA plaintiff cannot seek to advance both claims
5
Section 113(f)(1) parallels section 113(f)(3)(B), insofar as it bestows upon PRPs a cause of action for
contribution, but only once they have been found liable in the context of a fully litigated section 106(a)
or section 107(a) action. See 42 U.S.C. § 9613(f)(1).
14
against the same defendant at the same time, see Justin R. Pidot & Dale Ratliff, The
Common Law of Liable Party CERCLA Claims, 70 Stan. L. Rev. 191, 226–27 (2018). 6
What is more, courts routinely evaluate the availability of a cost-recovery claim under
section 107(a) by determining whether the circumstances that give rise to a contribution
claim under section 113(f) have occurred. See, e.g., Asarco, 866 F.3d at 1127
(examining whether a settlement agreement has “resolved liability” in order to assess
the availability of a section 107(a) claim); Bernstein, 733 F.3d at 207–08 (same). The
instant dispute concerns whether, and to what extent, Guam can pursue either of these
remedies in this case. 7
III. ANALYSIS
In its motion to dismiss, the United States maintains that Guam is precluded from
seeking cost-recovery under CERCLA’s section 107(a) because the prescriptions of
section 113(f)(3)(B) apply to the circumstances presented here . As noted, and as the
amended complaint itself suggests, cost-recovery claims under CERCLA section 107(a)
and contribution claims under CERCLA section 113(f)(3)(B) are exclusive of one
another, such that Guam is permitted to proceed against the United States for full cost
6
See also Asarco, 866 F.3d at 1117; Bernstein, 733 F.3d at 206; Solutia, Inc., v. McWane, Inc, 672 F.3d
1230, 1236–37 (11th Cir. 2012); Morrison Enters., LLC v. Dravo Corp., 638 F.3d 594, 603–04 (8th Cir.
2011); Agere Sys., Inc. v. Advanced Envtl. Tech. Corp. , 602 F.3d 204, 229 (3d Cir. 2010); Niagara
Mohawk Power Corp. v. Chevron U.S.A., Inc., 596 F.3d 112, 128 (2d Cir. 2010); ITT Indus., Inc. v.
BorgWarner, Inc., 506 F.3d 452, 458 (6th Cir. 2007).
7
Although not pivotal to the outcome of this case , it is noteworthy that the two causes of action at the
center of this dispute have different statutes-of-limitations periods. See Asarco, 866 F.3d at 1117. The
CERCLA plaintiff who intends to file a lawsuit under section 107(a) must do so within six years of the
“initiation of physical on-site construction of the remedial action.” 42 U.S.C. § 9613(g)(2)(B).
Meanwhile, an action under section 113(f) must commence no later than three years after “the date of
judgment in any [CERCLA action]” or within three years of the entry of “a judicially approved
settlement with respect to such costs or damages.” Id. § 9613(g)(3)(B).
15
recovery under section 107(a) only if Guam’s right to contribution under section
113(f)(3)(B) has not been triggered. 8 Thus, the key questions that the pending motion
to dismiss presents is whether the 2004 Consent Decree “resolve[d] [Guam’s] liability”
for the response action or response costs that Guam undertook with respect to the Ordot
Landfill and also qualifies as a “settlement” within the meaning of section 113(f)(B)(3).
(Compare Def.’s Mem. at 28–31 (discussing the resolution of liability issue) and id. at
31–34 (arguing that a settlement under the CWA can trigger a section 113(f)(3)( B)
action) with Pl.’s Opp’n at 22–40 (contending that Guam’s liability for the Ordot
Landfill cleanup costs was not resolved in the 2004 Consent Decree) and id. at 40–47
(contending that a CWA consent decree cannot qualify as a “settlement” under section
113(f)(3)(B)).)
For the reasons explained below, this Court concludes that the 2004 Consent
Decree did not trigger Guam’s contribution rights under section 113(f)(3)(B). In
accordance with the persuasive reasoning of the Sixth and Seventh Circuits in CERCLA
cases that are substantially similar to this one, this Court finds that whether or not an
agreement for the removal or remediation of hazardous waste “resolves” liability for
section 113(f)(3)(B) purposes turns on the terms of the agreement, and that, here, the
2004 Consent Decree did not resolve Guam’s liability for the Ordot Landfill cleanup
given the broad, open-ended reservation of rights, the plain non-admissions of liability,
and the conditional resolution of liability that that agreement contains . Thus, the
8
Although the D.C. Circuit has not yet made this particular pronouncement and Guam’s counsel
refused to concede at the motion hearing that Guam cannot maintain both a section 107(a) cost-
recovery claim and a section 113(f) contribution claim simultan eously (see Hr’g Tr. at 16:4–13), the
amended complaint quite clearly seeks full cost recovery under section 107(a) and pleads contribution
under section 113(f) “in the alternative” (Am. Compl. ¶¶ 31, 34), and a party cannot amend its
complaint through subsequent argument, see Hudson v. Am. Fed’n of Gov’t Emps., 308 F. Supp. 3d 388,
396 (D.D.C. 2018).
16
statutorily prescribed conditions for bringing a contribution claim under
section 113(f)(3)(B) have not been satisfied, which means that Guam is not precluded
from maintaining its section 107(a) claim against the United States.
A. To “Resolve” Liability Within The Meaning Of Section 113(f)(3)(B), The
Agreement At Issue Must Decide Or Determine That The Claimant PRP
Is Liable For The Costs Of A Response Action
CERCLA nowhere defines the phrase “resolved its liability,” which, as noted, is
one of the veritable linchpins of section 113(f)(3)(B). See 42 U.S.C. § 9613(f)(3)(B)
(providing an action for contribution to “[a] person who has resolved its liability to the
United States or a State for some or all of a response action” (emphasis added)).
Therefore, consistent with ordinary principles of statutory construction, this Court must
interpret that phrase in accordance with its plain meaning. See S.D. Warren Co. v. Me.
Bd. of Envtl. Prot., 547 U.S. 370, 376–77 (2006) (citation omitted). The ordinary
meaning of the verb “resolve” is “[t]o find an acceptable or even satisfactory way of
dealing with []a problem or difficulty[.]” Black’s Law Dictionary 1504 (10th ed. 2014);
see also Merriam-Webster Dictionary Online (defining “resolve” to mean “to deal with
successfully,” “reach a firm decision about,” or “work out the resolution” of
something). 9 Thus, Congress’s invocation of the word “resolved” suggests an “element
of finality[,]” Asarco, 866 F.3d at 1122, meaning that the issue has been “decided,
determined, or settled—finished, with no need to revisit[,]” Bernstein, 733 F.3d at 211.
One reasonably concludes, then, that “resolving” liability requires the parties to have
reached a “firm decision about liability” such that the “the question of liability” is no
longer “susceptible to further dispute or negotiation.” Asarco, 866 F.3d at 1122.
9
See https://www.merriam-webster.com/dictionary/resolve (last visited June 27, 2018).
17
Given this understanding, it is clear to this Court—as it was to the Sixth,
Seventh, and Ninth Circuits—that liability with respect to cleaning up a hazardous
waste site is not “resolved” simply and solely because interested parties have “sign[ed]
a settlement agreement” concerning the response actions that will be taken at the site,
Bernstein, 733 F.3d at 213, or because one or more PRPs have “cut a check” made
payable to the United States, Fla. Power Corp. v. FirstEnergy Corp., 810 F.3d 996,
1006 (6th Cir. 2015). Instead, “[t]o meet the statutory trigger for a contribution action
under [section 113(f)(3)(B)], the nature, extent, or amount of a PRP’s liability must be
decided, determined, or settled, at least in part, by way of agreement with the EPA.”
Bernstein, 733 F.3d at 212 (emphasis in original); see also Asarco, 866 F.3d at 1122
(endorsing and adopting that definition); Fla. Power, 810 F.3d at 1003 (same).
Of course, there exists no formulaic means of determining when a particular
settlement agreement has “decided, determined, or settled” the “nature, extent, or
amount” of an entity’s liability, Bernstein, 733 F.3d at 212, and, for present purposes,
therein lies the rub. Each superfund dispute is unique, and every settlement agreement
comes about through individualized negotiations between parties who have
idiosyncratic concerns that inform the final contents of the contract they create. Th e
circuits appear unanimous in their conclusion that, to best evaluate the parties’ intent
given this conglomeration of circumstances, a court must “look to the specific terms of
the agreement” and ascertain whether, based on the provisions in the settleme nt
agreement, the parties intended to resolve the plaintiff’s liability within the meaning of
section 113(f)(3)(B). Fla. Power, 810 F.3d at 1001; see also Asarco, 866 F.3d at 1125
(“Whether this test is met depends on a case-by-case analysis of a particular
18
agreement’s terms.”); Bernstein, 733 F.3d at 213 (“Whether or not liability is resolved
through a settlement simply is not the sort of question which can or should be decided
by universal rule. Instead, it requires a look at the terms of the settlement on a case-by-
case basis.”).
In this regard, when the agreement that is subject to interpretation is a federal
consent decree, its “construction . . . is essentially a matter of contract law.” Segar v.
Mukasey, 508 F.3d 16, 21 (D.C. Cir. 2007) (internal citation and quotation marks
omitted). Moreover, contracts to which the United States is a party must be interpreted
according to the precepts of federal common law. See Boyle v. United Techs. Corp.,
487 U.S. 500, 504 (1988) (“We have held that obligations to and rights of the United
States under its contracts are governed exclusively by federal law.”). Therefore, a
consent decree between the federal government and another party must also be
interpreted in light of the federal common law of contracts. See United States v. Volvo
Powertrain Corp., 854 F. Supp. 2d 60, 64 n.1 (D.D.C. 2012); see also Bowden v. United
States, 106 F.3d 433, 439 (D.C. Cir. 1997) (explaining that this circuit typically derives
the rules governing the federal common law of contracts from the Second Restatement
of Contracts since “those principles represent the ‘prevailing view’ among the
states”). 10
Where the courts of appeals diverge is with respect to how one best interprets
10
Guam’s suggestion that the 2004 Consent Decree must be interpre ted according to the precepts of
state contract law—in this case, the law of Guam—ignores the different practices of this Circuit with
respect to this issue. (See Pl.’s Opp’n at 20–22.) The Sixth Circuit appears to have taken the approach
that state common law governs with respect to its interpretation of administrative orders by consent and
consent decrees. See Fla. Power, 810 F.3d at 1001 (applying Ohio law to an administrative order by
consent); John B. v. Emkes, 710 F.3d 394, 407 (6th Cir. 2013) (applying Tennessee law in interpreting a
consent decree). But, that view is flatly inconsistent with the D.C. Circuit’s precedent; therefore, this
Court will look to federal common law here.
19
agreement language that expressly eschews liability and reserves the right to sue, when
the court undertakes to evaluate whether a particular agreement “resolve [d] [the]
liability” of a CERCLA plaintiff for section 113(f)(3)(B) purposes. Compare, e.g.,
Asarco, 866 F.3d at 1124–25 and Chitayat v. Vanderbilt Assoc., 702 F. Supp. 2d 69, 81
(E.D.N.Y. 2010) with Fla. Power, 810 F.3d at 1004–05; Bernstein, 733 F.3d at 212–14;
and DMJ Assocs., LLC v. Capasso, 181 F. Supp. 3d 162, 168 (E.D.N.Y 2016). The
Sixth, Seventh, and Ninth Circuits have considered settl ement agreements that contain
non-admissions with respect to liability, conditional releases of liability for the claims
addressed therein, and unambiguous reservation-of-rights clauses—agreements much
like the 2004 Consent Decree at issue here (see, e.g., 2004 Consent Decree ¶¶ 45–46,
48)—and have reached different conclusions regarding whether agreements that contain
such clauses should be deemed to have “resolved” liability such that they trigger a
claimant’s right to bring a contribution action under section 113(f)(3)(B). As explained
below, this Court believes that the Sixth and Seventh Circuits have the better approach.
1. The Sixth And Seventh Circuits Correctly Concluded That Contracts
Containing Non-Admissions Of Liability, Broad Reservations Of
Rights, And Conditional Covenants Not To Sue Do Not Resolve
Liability
At issue in the Seventh Circuit’s Bernstein decision was whether two written
agreements between the EPA and several different PRPs ( agreements that were
denominated “Administrative Orders by Consent” (“AOCs”)) had resolved those PRPs’
liability for the purpose of section 113(f)(3)(B). See 733 F.3d at 212–16. In the latter
of the two agreements, the EPA had “select[ed] a removal action and cleanup
objective[]” for the PRPs to perform. Id. at 207. Yet, the written agreement also
specifically stated that “[e]xcept as expressly provided in” the covenants not to sue,
20
“nothing in this [o]rder constitutes a satisfaction of or release from any claim or cause
of action . . . under CERCLA, other statutes, or the common law.” Id. at 203.
Furthermore, while the covenants not to sue warranted that the EPA would not proceed
to sue the PRPs under section 107(a), the agreement “conditioned” that promise “upon
the complete and satisfactory performance” of the terms of the AOC. Id. That AOC
also stated that the agreement would not “constitute any admission of liability by any
(or all) of the Respondents nor any admission . . . of the basis or validity of U.S. EPA’s
findings, conclusions or determinations[.]” Id. at 204. Thus, the Seventh Circuit panel
astutely observed that the agreement contained “reservations of rights, conditional
covenants, and express disclaimers of liability.” Id. at 214.
In analyzing the agreement for section 113(f)(3)(B) purpos es, the Seventh
Circuit panel took particular stock in the fact that the parties had expressly disclaimed
any resolution of liability; given that fact alone, the panel noted that it was “very
difficult to say . . . that the agreement between the parties co nstituted a resolution of
liability.” Id. at 212. And in light of this express disclaimer of liability and other
indicia within the terms of the contract, the court concluded that, while the PRPs had
“‘settled’ with the EPA[]” insofar as the PRPs had “agreed to perform certain actions in
order to remedy an instance of environmental contamination[,]” the parties had not
“settl[ed] the issue of liability for that contamination—which is what the statute
requires[.]” Id. (emphasis in original).
The panel further addressed—and rejected—the EPA’s argument that the
covenants not to sue within the AOC demonstrated that the parties had intended to
resolve their liability. See id. The Seventh Circuit noted that, while the AOC included
21
promises by the agency not to sue the PRPs concerning the response actions the
agreement covered, within the AOC, the parties had expressly conditioned those
covenants not to sue upon the PRPs’ “complete performance” of th e removal and
cleanup actions, see id. at 212–13, and in the Seventh Circuit’s view, such conditional
clauses did not demonstrate that the parties had intended to resolve liability, because
those clauses’ terms made it emphatically clear that “the resolution of liability would
not occur until performance was complete,” as that would be “the first time at which the
covenant would have any effect[,]” id.
Ultimately, the Seventh Circuit explained its conclusion with respect to the
resolution of liability this way: “[t]he parties to a settlement may choose to structure
their contract so that liability is resolved immediately upon execution of the contract.
Or, the parties may choose to leave the question of liability open through the inclusion
of reservations of rights, conditional covenants, and express disclaimers of liabi lity.”
Id. at 213–14 (citation omitted). The panel concluded that the terms and circumstances
of the settlement agreement in Bernstein indicated that the parties had opted to do the
latter, and it therefore held that the settlement agreement between the EPA and the
pertinent PRPs had not resolved liability within the meaning of section 113(f)(3)(B).
See id. at 214; see also, e.g., NCR Corp. v. George A. Whiting Paper Co., 768 F.3d 682,
691–92 (7th Cir. 2014) (applying these same principles in determining whether a PRP
has resolved its liability within the meaning of section 113(f)(3)(B)).
The Sixth Circuit has recently employed similar reasoning to reach similar
results. See, e.g., Fla. Power, 810 F.3d at 1003–04. Thus, that court has plainly stated
that broad reservations of rights, conditional covenants not to sue, and/or language that
22
“explicitly condition[s] the resolution of liability on performance” can prevent a
settlement agreement from being interpreted as one that resolves liability under
CERCLA. Id. at 1003–04; see also ITT Indus., Inc. v. BorgWarner, Inc., 506 F.3d 452,
459 (6th Cir. 2007) (holding that the EPA’s reservation of rights “to adjudicate
Plaintiff’s liability for failure to comply with the A OC, for costs of response . . . costs
of injunctive relief” and so on demonstrates no intent to resolve liability). Moreover,
like the Bernstein court, the Sixth Circuit appears to find that disclaimers of liability
weigh against the conclusion that the parties intended to resolve liability w ithin the
meaning of section 113(f)(3)(B). See Fla. Power, 810 F.3d at 1004 (“This provision
parallels the non-admission of liability provisions in the ITT Industries and Bernstein
AOCs.” (citations omitted)); ITT Indus., 506 F.3d at 460 (“[P]articipation in this
Consent Order does not constitute an admission of liability[.]”).
This reasoning was on full display in the Sixth Circuit’s Florida Power case. In
that case, the court examined whether two Administrative Orders of Consent resolv ed
liability within the meaning of section 113(f)(3)(B)—AOCs that expressly provided that
“[f]ollowing satisfaction of the requirements of this Consent Order, plaintiff shall have
resolved its liability to EPA[.]” 810 F.3d at 1004 (alterations omitted). In both AOCs,
the EPA also “broadly reserved its ‘right to take any enforcement action pursuant to
CERCLA or any other available legal authority . . . for any violation of law or this
Consent Order[,]’” id. at 1003 (alteration omitted), and while one of the AOCs also
contained an express disclaimer of liability, the other AOC contained no statement on
liability either way, see id. at 1004. Taking all of these provisions into consideration,
the Sixth Circuit held that these agreements did not resolve liability within the meaning
23
of section 113(f)(3)(B), because the AOCs “expressly condition[ed] the resolution of
liability on performance of the contract, as opposed to resolving liability on the
contract’s effective date[,]” and also “broadly reserve[d] th e EPA’s rights.” Id. at 1005.
In this regard, courts concluded that there were “no material differences between the
AOCs in [the Sixth Circuit’s ITT case] and Bernstein that warrant[ed] a different
outcome[.]” Id. at 1004. 11
2. The Ninth Circuit Mistakenly Characterizes Settlements That Contain
Conditional Releases, Non-Admissions, And Broad Reservations Of
Rights As Agreements That “Resolve” Liability For The Purpose Of
CERCLA Section 113(f)(3)(B)
By contrast, the Ninth Circuit considered whether a settlement agreement
“resolved [the] liability” of a PRP within the meaning of section 113(f)(3)(B) just last
year, and it appears to have charted its own course in analyzing the effect of disclaimers
of liability, conditional releases, broad reservations of ri ghts, and the like. See Asarco
LLC v. Atl. Richfield Co., 866 F.3d 1108 (9th Cir. 2017). The panel in Asarco
determined (unpersuasively, in this Court’s view) that the Sixth and Seventh Circuits
had misunderstood Congress’s intent with respect to section 113(f)(3)(B), see id. at
1124–25, and it concluded that conditional covenants and disclaimers of liability in a
settlement agreement are essentially irrelevant to the determination of whether a PRP
had resolved its liability, see id. at 1125.
The Asarco court began the relevant analysis by accepting the premise that, in
11
In ITT, the Sixth Circuit held that an Administrative Order by Consent “did not resolve any of the
plaintiff’s liability for at least two reasons.” Fla. Power, 810 F.3d at 1002. “First, the EPA broadly
reserved its rights to take legal action to adjudicate the plaintiff’s liability for failure to comply with
the AOC, for costs of response (past, present, or future), for costs of injunctive relief or enforcement,
criminal liability, and other damages. And, “[s]econd, the plaintiff had not conceded the question of its
liability, and the AOC expressly stated that the plaintiff’s ‘participation in this Consent Order does not
constitute an admission of liability.’” Id. (quoting ITT, 506 F.3d at 460).
24
order to qualify as having resolved liability for the purpose of section 113(f)(3)(B), “a
settlement agreement must determine a PRP’s compliance obligations with certainty and
finality.” Id. at 1124 (citations omitted). But the panel then proceeded to disclaim the
significance of certain terms of an agreement that ordinarily indicate the parties’
intention to leave the matter of liability for the compliance obligations that the PRP
agrees to undertake open and unresolved. For example, the circuit stated that it
“disagree[d] with the Sixth and Seventh Circuits’ holdings in Florida Power and
Bernstein” concerning conditional covenants not to sue, id., not because those circuits
were wrong to reason that such language means that liability is not resolved until the
competition of performance, as a matter of fact, but because, as a matter of policy,
settlement agreements of this nature ordinarily and necessarily contain such conditional
language, and thus, none would ever count as resolutions of liability for section
113(f)(3)(B) purposes if interpreted in this fashion, see id. (explaining that “CERCLA
prevents a covenant not to sue from taking effect until the President certifies that
remedial action has been completed”; therefore, if such a condition served as a barrier
to resolution of liability under section 113(f)(3)(B), “it is unlikely that a settlement
agreement could ever resolve a party’s liability” (alterations, internal quotatio n marks,
and citation omitted)). Put another way, the Asarco court appears to have viewed a
covenant not to sue that is conditioned on completed performance as merely a
mechanism for enforcement of the agreement’s terms, rather than a statement regarding
the status of liability for the claims addressed in the agreement, and thereby flatly
rejected the Seventh Circuit’s conclusions regarding the significance such language.
See id. (“An agreement may ‘resolve’ a PRP’s liability once and for all without
25
hobbling the government’s ability to enforce its terms if the PRP reneges.” (alteration
omitted)).
The Asarco court used similar logic when it concluded, contrary to the Sixth
Circuit in Florida Power, that “it matters not that a PRP refuses to concede liabil ity in a
settlement agreement.” Id. at 1125. The reasoning that the circuit offers to justify this
view is rooted in policy—i.e., its belief that “Congress’ intent in enacting
section 113(f)(3)(B) was to encourage prompt settlements that establish PRP’s cleanu p
obligations with certainty and finality[,]” and its concern that “requiring a PRP to
concede liability may discourage PRPs from entering into settlements because doing so
could open the PRP to additional legal exposure.” Id. And it sidestepped consideration
of what the parties’ themselves intended with respect to liability when they inserted a
non-admissions clause into the agreements at issue. Thus, notwithstanding the clear
congressional mandate that “liability” for response actions actually be “resolved” by the
settlement, 42 U.S.C. § 9613(f)(3)(B), the Asarco court held that “a covenant not to sue
or release from liability conditioned on completed performance does not undermine
such a resolution, nor does a settling party’s refusal to concede liability.” Asarco, 866
F.3d at 1125.
The primary concern that this Court has with the Ninth Circuit’s reasoning
concerning disclaimers of liability in a settlement agreement in particular is that the
Ninth Circuit’s position results in a situation in which parties who have clearly opted to
set aside the resolution of the PRP’s “liability”—i.e., its legal responsibility—in the
context of an agreement to undertake (or pay for) response actions are nevertheless
deemed to have “resolved its liability” for the purpose of section 11 3(f)(3)(B). As the
26
Seventh Circuit astutely exclaimed, in the face of an explicit disclaimer of liability in a
written settlement agreement, “[i]t is very difficult to say . . . that the agreement
between the parties constituted a resolution of liability. ” Bernstein, 733 F.3d at 212.
And nothing in the statute suggests that Congress intended section 113(f)(3)(B) to be
read to trigger contribution rights based merely on the fact that a settlement agreement
contains terms that specify “a PRP’s obligations for a least some of its response
actions[,]” Asarco, 866 F.3d at 1125 (emphasis added); indeed, the statute Congress
penned plainly requires that any such agreement “resolve[] [the PRP’s] liability[,]” 42
U.S.C. § 9613(f)(3)(B) (emphasis added), and an agreement that delineates “a PRP’s
compliance obligations”—even “with certainty and finality”—Asarco, 866 F.3d at 1124,
does not thereby “resolve[] [the PRP’s] liability” within the plain meaning of that
statutory phrase, 42 U.S.C. § 9613(f)(3)(B) (emphasis added); see also 42 U.S.C.
§ 9607(a) (holding certain listed persons strictly “liable” for specif ied cleanup costs).
In other words, if Congress had intended to provide contribution rights for any person
who has merely entered into a settlement agreement with the United States or a State
concerning a CERCLA response action or its costs, it certainly could have said so.
Instead, Congress mandated that, in order to give rise to the right to bring a contribution
action, the agreement must “resolve [the contribution claimant’s] liability to the United
States or a State for some or all of a response action or for some or all of the costs of
such action[,]” id. § 9613(f)(3)(B), which, in this Court’s view, necessarily means that a
settlement that expressly disclaims liability does not count.
Nor is the Ninth Circuit’s analysis persuasive with respect to the appropriate
evaluation of conditional covenants not to sue. In Bernstein, the Seventh Circuit made
27
clear that the existence of a covenant not to sue in a sett lement agreement was a
contract term that the agency had pointed to in order to support its own section
113(f)(3)(B) contention. Specifically, because the parties in Bernstein had included
such a release in the agreements at issue, the agency argued that the agreements did, in
fact, resolve the liability of the PRPs concerning the cleanup costs and remediation that
the agreements addressed. See Bernstein, 733 F.3d at 212 (noting the EPA had argued
that the AOCs resolved the PRPs liability because “[i]n th e AOCs, the settling PRPs
promised to perform certain removal actions and EPA promised not to sue concerning
those actions”). The Seventh Circuit’s response was the imminently reasonable
assertion that “[i]f the EPA’s covenant not to sue is the contemplat ed ‘resolution of
liability’ in this case . . . then, by the terms of the AOC itself, the resolution of liability
would not occur until performance was complete, which is the first time at which the
covenant could have any effect.” Id. In rejecting this contention, it appears that the
Ninth Circuit misread Bernstein to hold that an agreement that contains such a
conditional covenant cannot by any means be construed as resolving liability for the
purpose of section 113(f)(3)(B), see Asarco, 886 F.3d at 1124 (retorting that “[a]n
agreement may ‘resolve’ a PRP’s liability once and for all without hobbling the
government’s ability to enforce its terms if the PRP reneges” (alteration omitted)),
when Bernstein actually stands for the far more modest proposition that the reasonable
reservation of an agency’s right to enforce the terms of the agreement through a
conditional release or conditional covenant not to sue is not itself indicative of the
parties’ intent to resolve all liability by virtue of the agreement , particularly when the
specified conditions for such resolution have not been satisfied.
28
For what it’s worth, this Court also questions the Ninth Circuit’s view of the
requirements for “resolv[ing] [] liability” under section 113(f)(3)(B) from a practical
perspective. First of all, it is difficult to see how a settlement agreement can
meaningfully “decide[], determine[], or settle[]” the “nature, extent, or amount” of a
PRP’s liability if that agreement has not established that the PRP is in fact liable. Cf.
Queen v. Schultz, 747 F.3d 879, 889 (D.C. Cir. 2014) (suggesting that whether a
defendant is liable must be established before determining the scope of that liability).
Thus, it is hard to know what to do when a settlement agreement expressly disclaims
any finding or admission of liability; apparently, under the Ninth Circuit’s
interpretation, such language must simply be ignored. But see Restatement (Second) of
Contracts § 202(2) (“A writing is interpreted as a whole[.]”); id. § 202(3) (“Unless a
different intention is manifested, where language has a generally prevailing meaning, it
is interpreted in accordance with that meaning[.]”). And this is no rare happenstance,
even the Ninth Circuit acknowledges that parties to a CERCLA settlement may “often
expressly refuse to concede liability under a settlement agreement,” Asarco, 866 F.3d at
1123, and it is certainly odd to give non-admissions of liability that clearly mattered to
the parties when they struck their bargain no effect in the context of a statute that turns
on whether a settlement has resolved the liability of a party, see Collins v. Pension
Benefit Guar. Corp., 881 F.3d 69, 72 (D.C. Cir. 2018 ) (“It is a commonplace of
contract law that we will give the parties’ agreement the meaning they have given it
themselves.”).
The concern that giving effect to the parties’ disclaimer of liability will
discourage PRPs from entering into “prompt settlements that establish PRPs’ cleanup
29
obligations with certainty and finality[,]” Asarco, 866 F.3d at 1125, might well be
justified (see Def.’s Reply at 22–23), but it should not compel a different outcome, for
that result was manifestly insufficient to deter Congress from setting the “resolved its
liability” bar for the triggering of the contribution rights that the statute plainly confers.
Moreover, it is entirely possible that, from a PRP’s perspective, the benefit derived
from entering into a timely settlement agreement that disclaims any finding of liability
outweighs the cost of obtaining the right to contribution under section 113(f)(3)(B),
such that “the timely cleanup of hazardous waste sites” that Congress plainly sought to
promote, Burlington N., 556 U.S. at 602, will occur nonetheless. Thus, even if a PRP
that is considering a disclaimer of liability faces a Sophie’s choice in the context of
section 113(f)(3)(B)—i.e., either settle with a disclaimer and not receive contribution
rights or go to trial on the question of CERCLA liability—it is not necessarily the case
that the PRP would decline to settle, and would opt instead to engage in protracted and
potentially lengthy litigation, with the concomitant risk of being found liable for a strict
liability CERCLA offense, all to the continued detriment of the “air, earth, rivers, and
sea[,]” Rachel Carson, Silent Spring (1962). In any event, resolution of liability in the
context of a settlement is plainly what the pertinent statutory provision demands in
order for the right to contribution to be triggered, and instead of rewriting contractual
agreements, courts should have faith that the relevant stakeholders can effect a prompt
cleanup (as Congress prefers), in a manner that disclaims the PRP’s liability for the
response action (as the PRP desires) while also releasing any other claims (as the
agency is willing to do), within the parameters of the law as written.
30
B. The 2004 Consent Decree Did Not “Resolve” Guam’s Liability For The
Ordot Landfill Hazardous Waste Response Actions It Has Undertaken
Of course, as noted earlier, whether or not contractual terms such as a
disclaimer of liability or a covenant not to sue in a settlement agreement with the
United States “resolve[s]” a party’s liability, and thereby gives rise to a right to seek
contribution under section 113(f)(3)(B), must be determined through “a case-by-case
analysis of a particular agreement’s terms.” Asarco, 866 F.3d at 1125. This Court now
turns its attention to various pertinent provisions of the 2004 Consent Decree—namely,
its clear disclaimer of liability, its conditional release of liability for the claims the
United States had brought against Guam in a CWA complaint, and two complementary
reservation-of-rights clauses—and addresses whether, in light of these provisions, the
parties to the 2004 Consent Decree can be said to have “decided, determined, or settled”
the “nature, extent, or amount” of Guam’s liability for the response actions or costs
relating to the Ordot Landfill. Bernstein, 733 F.3d at 212.
1. The 2004 Consent Decree’s Disclaimer Of Liability, Broad
Reservation-Of-Rights Clause, And Conditional Resolution Of
Liability Are Not Indicative Of An Intent To Resolve Guam’s Liability
The very first affirmative representation Guam and the EPA make in the 2004
Consent Decree (following an unremarkable series of “Whereas” clauses) is that the
agreement itself is “based on the pleadings, before taking testimony or adjudicating any
issue of fact or law, and without any finding or admission of liability against or by the
Government of Guam.” (2004 Consent Decree 18, lines 7–9 (emphasis added).) This
“therefore” provision leaves no room for ambiguity; it specifies exactly what materials
the parties had access to at the time they signed the Consent Decree (few); which legal
and factual issues remained unexamined (all of them); and what liability Guam is
31
accepting by virtue of consenting to settlement (none). Thus, this contract language
plainly reflects the parties’ intention to leave the question of liability unresolved,
despite the fact that Guam was proceeding to consent to engage in the immediate
cleanup of the Ordot Landfill by virtue of entering into the agreement. (Id. ¶ 9(a)
(requiring Guam to start taking steps within thirty days of the entry of the consent
decree).) Cf. Bernstein, 733 F.3d at 212 (“They agreed to perform certain actions in
order to remedy an instance of environmental contamination. But they did not settle the
issue of liability for that contamination[.]” (emphasis in original)).
The argument that Guam “resolved its liability” to the United States by executing
the 2004 Consent Decree is thus facially untenable. But that conclusion becomes even
more far-fetched when one considers the broad reservation of rights that the EPA
inserted into this contract. The 2004 Consent Decree agreement specifically provides
that
[n]othing in this Consent Decree shall limit the ability of the United
States to enforce any and all provisions of applicable federal laws
and regulations for any violations unrelated to the claims in the
Complaint or for any future events that occur after the date of
lodging of this Consent Decree.
(2004 Consent Decree ¶ 46 (emphasis added).) And presumably to reinforce the point
that Guam could still be held potentially liable notwithstanding the settlement, the
Consent Decree also states that “[e]xcept as specifically provided herein, the United
States does not waive any rights or remedies available to it for any violation by the
Government of Guam of federal and territorial laws and regulations .” (Id. ¶ 48
(emphasis added).)
Much like the disclaimer of liability clause, the takeaway from these two
32
provisions in the 2004 Consent Decree is that the United States was reserving its right
to pursue any violation of law that Guam may have committed other than those
articulated in the 2002 CWA complaint to which the settlement agreement was
addressed, and the scope of the 2002 CWA complaint was similarly clear: it asserted
that Guam was liable under the CWA and should be ordered to pay monetary penalties
and to cease the discharge of hazardous chemicals into the Lonfit River. (See CWA
Compl. ¶¶ 25–27, 34–35, Prayer for Relief.) Thus, the careful wording of the 2004
Consent Decree’s reservation-of-rights clause makes clear that the United States
retained its rights to sue Guam under countless other environmental statutes for the
response actions and costs relating to any cleanup at the Ordot Landfill, and it can
hardly be viewed as evidencing the parties’ intention that this settlement agreement
resolved Guam’s liability for any response costs or response actions that those other
statutes might demand. See Fla. Power, 810 F.3d at 1006; Bernstein, 733 F.3d at 212–
13; ITT Indus., 506 F.3d at 459–60.
If any more proof that the 2004 Consent Decree did not resolve Gu am’s liability
is needed, one need look no further than paragraph forty-five of the 2004 Consent
Decree, which unequivocally establishes the agreement’s scope, by stating that
[e]ntry of this Consent Decree and compliance with the requirements
herein shall be in full settlement and satisfaction of the civil judicial
claims of the United States against the Government of Guam as
alleged in the Complaint filed in this action through the date of the
lodging of this Consent Decree.
(2004 Consent Decree ¶ 45 (emphasis added).) Again, the parties clearly contemplated
Guam’s compliance with the 2004 Consent Decree as settling and satisfying only the
CWA claims that the EPA had brought against Guam. And because Guam was plainly
33
left fully exposed to other environmental suits and allegations—say, a subsequent suit
brought by the United States to recover costs under CERCLA section 107(a)—the
language above cannot be reasonably interpreted to evince the parties’ intent that the
2004 Consent Decree resolved Guam’s liability for the response costs or actions
associated with the cleanup of the Ordot Landfill under section 107(a) or any other
statute.
Also noteworthy is the fact that paragraph 45 of the 2004 Consent Decree
explicitly conditions the resolution of whatever CWA liability that the 2004 Cons ent
Decree addresses on both the “[e]ntry of this Consent Decree and compliance with the
requirements herein.” (Id. (emphasis added).) Thus, the agreement could not be
clearer that the “entry of this Consent Decree” alone does not settle or resolve any of
the claims against Guam—that is, whatever circumstances might be inferred from a
general conditional covenant not to sue, this agreement states that the resolution of
Guam’s liability for the specified claims does not occur until Guam has actually
complied with all of the Consent Decree’s requirements. 12
In short, it is clear to this Court that, taken together, the terms of the 2004
Consent Decree do not support the conclusion that Guam and the EPA intended to
resolve Guam’s liability for any response actions or costs relating to the Ordot Landfill.
(Id. at 18 (Therefore Clause), ¶¶ 45–46, 48.) Under the terms of that settlement, Guam
and the United States unquestionably reached a consensus that Guam would engage in
12
Indeed, because the Ordot Landfill cleanup is still ongoing (see Am. Compl. ¶ 14), it remains to be
seen whether Guam will actually be released from the specter of liability per this agreement in the
future. See Fla. Power, 810 F.3d at 1004 (explaining that “language” that “explicitly condition[s] the
resolution of liability on performance” goes “a step beyond [] conditional covenan ts not to sue and
reservations of rights” in preventing the resolution of liability).
34
certain response actions to clean up and remediate the d ump, but the 2004 Consent
Decree does not decide—much less determine with finality and certainty—who bears
the ultimate responsibility for the costs of that cleanup. Cf. Bernstein, 733 F.3d at 212.
Consequently, the 2004 Consent Decree did not “resolve[]” Guam’s “liability” within
the meaning of section 113(f)(3)(B), and absent such a resolution, Guam can maintain
its cost-recovery claim under section 107(a), given that the six -year statute of
limitations for the remediation and recovery actions that Guam has and is taking has not
even begun to run. See 42 U.S.C. § 9613(g)(2)(B). 13
2. The United States’s Argument That The 2004 Consent Decree
Resolved Guam’s Liability Distorts Both The Provisions Of That
Contract And Relevant Case Law
To resist the above conclusion, the United States makes several pointed
arguments that are largely aimed at the just-discussed provisions of the 2004 Consent
Decree. In this Court’s view, each of Defendant’s arguments either warps the
underlying text of CERCLA and/or the 2004 Consent Decree beyond recognition, or
advances a dubious reading of case law from the courts of appeals.
For example, the United States maintains that, because the 2004 Consent Decree
“resolved Guam’s liability for the civil penalties paid and the injunctive relief
performed under the decree,” it should be construed as having resolved Guam’s liability
for the purpose of CERCLA’s section 113(f)(3)(B). (Def.’s Reply at 19.) But as has
already been explained, CERCLA has its own (strict) liability provision, see 42 U.S.C.
§ 9607, and the complaint that the 2004 Consent Decree settles requested only civil
13
Because this Court concludes that the 2004 Consent Decree did not resolve liability within the
meaning of section 113(f)(3)(B), it need not consider whether a consent decree that addresses claims
under the CWA can qualify as a “settlement” within the meaning of section 113(f)(3)(B) (see Pl.’s
Opp’n at 22–26; 40–45), or any of Guam’s myriad other contentions ( see Pl.’s Opp’n at 46–51).
35
monetary penalties and an injunction requiring Guam to bring the Ordot Landfill into
compliance with the CWA. (See CWA Compl. ¶¶ 25–27, 34–35, Prayer for Relief.)
Consequently, under the terms of the agreement, once Guam completes the response
activities laid out in the 2004 Consent Decree, it will have resolved its liability only
with respect to the prescribed fines and any outstanding obligation to bring the landfill
into compliance with the CWA. (See 2004 Consent Decree ¶ 7 (stating that “[t]he
Government of Guam shall correct all compliance problems that form the basis for the
Complaint filed in this action by undertaking the action identified below within the
specified times”).) The allocation of costs for CERCLA purposes is not covered, and
thus would remain unresolved.
In a similarly bewildering reading of the agreement between Guam and the EPA,
the United States argues that the 2004 Consent Decree contains no “specific covenant
not to sue, let alone one” that resolves liability “in a conditional manner.” (Def.’s
Reply at 24.) Yet, as the United States readily admits (see id.), the consent decree
explicitly states that “entry of this consent decree and compliance with the requirements
herein shall be in full settlement and satisfaction of” the complaint’s claims (2004
Consent Decree ¶ 45 (emphasis added)). This language establishes duties that are
inherently conditional—i.e., no release of liability will actually occur until (1) the
Consent Decree has been entered, and (2) Guam has fully complied with the terms of
the Consent Decree. And because the removal and remediation work required in the
2004 Consent Decree is still ongoing (see Am. Compl. ¶ 14), it is still possible for
Guam to fall out of compliance with the 2004 Consent Decree—a circumstance that
would seemingly resuscitate the United States’s CWA claims. See Fla. Power, 810
36
F.3d at 1004 (concluding that language that stated that “[f]ollowing satisfaction of the
requirements of this Consent Order, [plaintiff] shall have resolved [its] liab ility to
EPA” amounted to a conditional resolution of liability (alteration in original)). It is
thus difficult to accept the United States’s suggestion that the 2004 Consent Decree’s
release language is unconditional.
The Eighth Circuit’s decision in Dravo Corporation v. Zuber, 13 F.3d 1222 (8th
Cir. 1994), is not to the contrary. (See Def.’s Reply at 23 (citing Dravo Corp., 13 F.3d
at 1225–26).) There, the Eighth Circuit examined whether the parties had resolved
liability for section 113(f)(2) purposes within the context of a de minimis settlement
that had provided that the defendants “will have resolved” their liability “by enteri ng
into and carrying out” the terms of that settlement. 13 F.3d at 1226 (internal quotation
marks omitted). De minimis settlements constitute a unique type of settlement within
CERCLA’s statutory scheme, and are only available when a particular PRP has m inimal
responsibility for the contamination of a hazardous waste site. See 42 U.S.C.
§ 9622(g)(1). Congress has repeatedly emphasized that the President shall enter into
and encourage de minimis settlements “as promptly as possible[,]” id., “as soon as
possible[,]” id. § 9622(g)(3), and “as soon as practicable[,]” id. § 9622(g)(10). And in
the context of a de minimis settlement that expressly incorporated such statutory
language, the Eighth Circuit concluded that the parties had not intended to leave the
issue of the defendants’ liability unresolved. See 13 F.3d at 1226; see also id.
(reasoning that, in the de minimis settlement context, a statement of resolution “subject
to a condition subsequent” qualifies as a resolution of liability).
Thus, the nature of the settlement (de minimis versus substantive) is an important
37
distinction that differentiates the instant case from the facts of Dravo Corporation. As
the D.C. Circuit and the Supreme Court have both explained, “[i]dentical words [within
a statute] may have different meanings where ‘the subject-matter to which the words
refer is not the same in the several places where they are used, or the conditions are
different, or the scope of the legislative power exercised in one case is broader than that
exercised in another.’” Weaver v. U.S. Info. Agency, 87 F.3d 1429, 1437 (D.C. Cir.
1996) (quoting Atl. Cleaners & Dyers, Inc. v. United States, 286 U.S. 427, 433 (1932)).
This cautionary sentiment is especially apt in the instant case, given that “the language
of CERCLA is not a model of precise crafting[.]” Pakootas v. Teck Cominco Metals,
LTD., 830 F.3d 975, 985 (9th Cir. 2016). As relevant here, Congress has explicitly and
repeatedly authorized the prompt, immediate, and final resolution of liability in the
context of de minimis settlements, but not for other types of settlements of CERCLA
claims. This means that Congress has provided contextual clues that attach different
meanings to the phrase “resolved its liability” as that phrase appears in
sections 113(f)(3)(B) and 122(g)(5), and this difference in context suffices to warrant
different interpretations. Therefore, even if being “subject to condition subsequent”
does not interfere with resolving liability under section 122(g)(5), Dravo Corp., 13 F.3d
at 1226, that holding does not necessarily suggest that, in a context in which liability
must actually be negotiated and established, the parties intended to resolve liability
despite including a condition subsequent for the purpose of section 113(f)(3)(B), see
Fla. Power, 810 F.3d at 1004.
The United States also appears to attach significance to the fact that the instant
case involves a “judicially-approved consent decree that also constituted a final
38
judgment[,]” rather than an “administrative settlement[.]” (Def.’s Reply at 20.) But it
fails to explain why this distinction makes a difference with respect to an evaluation of
its terms, and it does not cite a single case that supports the suggestion that this
distinction matters when it comes to determining whether a settlement agreement
resolves liability under section 113(f)(3)(B). Compare Asarco, 866 F.3d at 1122
(examining whether a consent decree had “determined, decided, or settled” the “nature,
extent, or amount of a PRP’s liability”) with Bernstein, 733 F.3d at 212 (applying the
same inquiry to administrative settlements).
Finally, the United States seeks to distinguish this case from the Sixth Circuit’s
reasoning in ITT Industries and Florida Power by maintaining that the reservation-of-
rights clauses in those cases were “substantially broader” than the reservation of rights
in the 2004 Consent Decree. (Def.’s Reply at 20; see also id. at 20–22.) This Court has
dutifully compared the clauses in each of those cases with the reservation -of-rights
clause at issue here, and it cannot agree with the United States’s characterization. In
ITT Industries, “the EPA expressly reserve[d] its rights to legal action to adjudicate
Plaintiff’s liability for failure to comply with the AOC, for costs of response (past,
present or future), for costs of injunctive relief of enforcement, criminal liabili ty, and
other damages.” 506 F.3d at 459; see id. (“U.S. EPA retains all of its rights under this
Consent Order and CERCLA[.]” (internal quotation marks omitted)). The reservation
of rights in Florida Power was similar; it “broadly reserved [the EPA’s] right to take
any enforcement action pursuant to CERCLA or any other available legal authority . . .
for any violation of law or this Consent Order.” 810 F.3d at 1003 (internal quotation
marks omitted).
39
Neither of these reservation-of-rights clauses is any broader than the one at issue
in this case. Although no mention of CERCLA is made in the relevant portions of the
2004 Consent Decree, the EPA expressly reserved its rights “to enforce any and all
provisions of applicable federal laws and regulations for any violations unrelated to the
claims in the Complaint” (2004 Consent Decree ¶ 46 (emphasis added)), which patently
includes any violations under CERCLA, and to be doubly clear, the agreement also
stated that “except as specifically provided herein, the United States does not waive any
rights or remedies available to it for any violation . . . of federal and territorial laws and
regulations” (id. ¶ 48 (emphasis added)). Therefore, it appears that the United States
has discerned a material difference where there is none: all of these provisions plainly
reserve the right of the United States to take any other action against the signatory of
the agreement for any violation of law, and if the 2004 Consent Decree is narrower, it is
only marginally so, given that the United States only expressly waived its ability to
seek the monetary penalties and compliance actions that it requested for the CWA
violations that were specified in the underlying complaint.
In the final analysis, then, the 2004 Consent Decree between Guam and the EPA
did not “resolve[]” Guam’s “liability” within the meaning of section 113(f)(3)(B), as
evidenced principally by the following provisions: (1) the statement disclaiming any
admission of liability on Guam’s part (see id. at 18 (Therefore Clause)); (2) the broad
reservation-of-rights clauses that benefited the United States (see id. ¶¶ 46, 48); and (3)
the omission of any language that immediately and effectively insulated Guam from
future lawsuits by the EPA under CERCLA sections 106(a) and 107(a).
40
IV. CONCLUSION
For the reasons explained above, this Court has concluded that, in order to
resolve liability within the meaning of CERCLA section 113(f)(3)(B), a settlement
agreement must “decide[], determine[], or settle[]” the “nature, extent, or amount of a
PRP’s liability,” Bernstein, 733 F.3d at 212, and that the 2004 Consent Decree between
Guam and the EPA failed to do so because the provisions within that agreement—from
a conditional release of liability to an overly broad reservation of rights to a clear non -
admission of liability—demonstrate that the parties did not reach an agreement as to
whether Guam was liable for the cost of the Ordot Landfill cleanup, much less
determine the scope of its liability. Consequently, Guam’s right to contribution under
section 113(f)(3)(B) has not yet been triggered, which means that it is not precluded
from proceeding via a cost-recovery action under section 107(a). As a result, this Court
determined, on September 30, 2018, that the United States’s motion to dismiss under
12(b)(6) must be DENIED.
DATE: October 5, 2018 Ketanji Brown Jackson
KETANJI BROWN JACKSON
United States District Judge
41