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State of Arizona v. Components Inc.

 

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The State of Arizona entered into a settlement agreement with Nucor Corporations that resolved Nucor’s liability under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for ground water contamination within the West Central Phoenix State Superfund Study Area. Components Inc. (Components) challenged the settlement agreement, alleging that the district court did not have sufficient information regarding the extent of the contamination and the probable total cost of cleanup to approve the consent decree. Components asserted that because of this lack of information the district court did not have a reasonable basis to determine Nucor’s share of liability.

The Ninth Circuit reviewed the district court’s approval of the consent decree under an abuse of discretion standard. The court found that the district court did not abuse its discretion in holding that there was sufficient information on the contamination. The state had collected extensive information regarding the scope of the contamination and the manufacturing processes, chemical usage, and disposal practice of hundreds of facilities in the study area. The Ninth Circuit also found that the district court did not abuse its discretion by using the indexed sales method to estimate Nucor’s liability because records regarding disposal methods and volumetric data of waste production were not available.

Components further argued that CERCLA section 122[1] requires a remedial investigation and feasibility study (RI/FS) before settlement is reached and that in this case an RI/FS was not conducted. The Ninth Circuit rejected this argument and held that section 122(e)(3)(A) did not apply to settlements reached by states and potentially responsible parties (PRPs). Instead, section 122(e)(3)(A) only applies to settlements between the United States and PRPs.

Although section 122(e)(3)(A) did not apply in this case, the court stated that even if it did, it would still not invalidate the settlement. The section is only applicable when the settlement is attempting to provide a nonbinding preliminary allocation of responsibility among PRPs. In addition, the section is only applicable to “actual remedial actions.” In this case, the state was seeking to recover costs already incurred from cleaning up the ground water contamination. The state was not seeking to conduct a remedial action.

Components challenged the settlement because it did not include any reopener provisions required by section 122(f)(6)(A). Reopener provisions allow the government to seek further damages from the settling party if previously unknown contamination is discovered. However, the court found that Components waived the issue by not sufficiently raising the issue in the district court. The Ninth Circuit went on to note that even if the issue had not been waived, section 122(f)(6)(A) is only applicable to settlements between the United States and PRPs, not settlements between states and PRPs.


[1] Id.§ 9622.

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