United States v. Cannons Engineering Corp.

Majority - Selya, Circuit Judge

Yes, a district court does not abuse its discretion by approving CERCLA consent decrees that differentiate between PRP classes, employ escalating settlement offers, and bar non-settling parties' claims for contribution and indemnity, provided the settlement is fair, reasonable, and consistent with the statute. The court applies a 'double layer of swaddling' deference: first, to the agency’s expertise and the parties’ agreement; second, to the district court’s informed discretion in approving the decree. The court found the settlement to possess procedural fairness because the government conducted negotiations forthrightly and in good faith. The EPA’s classification of PRPs using a 1% volumetric share cutoff was a permissible exercise of discretion, and the agency was not obligated to allow parties to switch classes or to disclose its negotiating strategy in advance. Appellants were informed that the initial de minimis offer was the most favorable. Substantive fairness was met as the decrees generally adhered to principles of comparative fault based on a volumetric standard. The EPA's choice of a volumetric measure for comparative fault, rather than toxicity, was within its expert discretion and not arbitrary or capricious. Deviations from strict formulaic apportionment, such as premiums for de minimis settlors, were justified by factors like the desire to encourage early, cost-effective settlements, to account for uncertainty, and to reduce transaction costs. The escalating premium in the later DMC decree was deemed fair as a reward for earlier settlement and a consequence for delay. The decrees were found to be reasonable based on their likely efficacy in environmental cleanup, their satisfactory compensation to the public for actual and anticipated response costs, and a consideration of the parties' litigating positions and the foreseeable risks of loss. The urgency of abating environmental danger and the high transaction costs of litigation made settlements, even those netting less than full recovery, reasonable. Finally, the decrees were consistent with the statute's purposes, which include prompt and effective response to hazardous waste problems and ensuring responsible parties bear the costs. The settlements promoted early cleanup activities and accountability based on volumetric contributions. Congress explicitly created a statutory framework in SARA that allows non-settlors to bear a disproportionate amount of liability by granting settling parties immunity from contribution claims (42 U.S.C. § 9613(f)(2)). This provision mandates a dollar-for-dollar reduction of non-settlors' aggregate liability by the settlement amount, not by the settling parties' pro rata share. Non-contractual claims for indemnity are effectively a form of contribution and are similarly barred. The EPA is not required to open all settlement offers to all PRPs or to telegraph its strategy, and can use differentiated settlement tiers. Crown Roll Leaf, Inc.'s exclusion was justified by its failure to comply with statutory information requests, a reasonable condition for settlement eligibility.