Which Is Worse? EPA Oversight or Citizen Oversight?

by Foley Hoag LLP - Environmental Law

Everyone who represents PRPs in Superfund settlements has his or her own horror stories regarding the scope of EPA’s oversight cost claims.  We all know that oversight costs can end up as an appreciable percentage of total site costs.  We’ve all cringed to go to meetings with EPA and see not just multiple EPA employees in the room, but several disembodied voices from EPA’s Ada, Oklahoma, lab.  Insult to injury is when there are 3 or 4 representatives of EPA’s outside oversight contractor.  Further insult to injury is added for those of us from states such as Massachusetts or New Jersey that have privatized cleanup systems.  We know that many state sites could be federal NPL sites – and vice-versa – and we wonder why the federal sites warrant 10 different people providing oversight and why our client must pay for those costs, when other sites presenting comparable risks are effectively cleaned up without such oversight.

Enter Interfaith Community Organization v. Honeywell, a case under the citizen suit provision of RCRA.  Various plaintiffs brought claims against Honeywell (successor to Allied Signal) for chromium contamination in Jersey City.  Plaintiffs won one case and settled others, as a result of which Honeywell agreed to pay “reasonable” future attorneys’ fees incurred in oversight of Honeywell’s implementation of the cleanup.  The total amount of the fees at issue is actually unclear from the decision.  It mentions two fee applications totaling $3.2 million.  However, it later summarizes objections by Honeywell to various categories of fees totaling more than $4.5 million.  Either way, it was a tidy sum, and one that EPA would be pleased to match.

The decision is noteworthy for two reasons.  First, presented with this sizeable demand, Honeywell made an offer for judgment under Rule 68.  The District Court struck the offer, concluding that Rule 68 did not apply to citizen suits under RCRA because doing so would discourage citizen suits.  The Court of Appeals reversed.  The rather lengthy discussion can be easily summarized.  Rule 68 “does not exempt from its purview any type of civil action.”  Once the Court concluded that Rule 68 does “not abridge, enlarge or modify any substantive right,” it was case closed.  Just because the risk of being on the wrong side of a Rule 68 offer might discourage some citizen suits does not mean that it abridges a substantive right.  Thank goodness.

On the merits, the Court remanded – for the second time – the District Court’s finding that the plaintiffs’ fees were in fact reasonable.  This part of the decision really may have broad application.  The District Court apparently described plaintiffs’ litigation tactics as “distasteful” and “unsavory”, but nonetheless decided that it would “not second guess the staffing decisions of either the [plaintiffs’ law firm] or its experts.”  The Court of Appeals pretty much said that it was the job of the District Court to do precisely that:

This perfunctory statement does not allow for meaningful appellate court review. As we said …, “where the opinion of the District Court “is so terse, vague, or conclusory that we have no basis to review it, we must vacate the fee-award order and remand for further proceedings.”

All I can say is, that’s a heck of a lot of money.  Remember, this is not attorneys’ fees involved in trying a case or obtaining summary judgment or doing discovery.  They’d already won the bloody case.  These were just fees incurred in overseeing the private cleanup by Honeywell.

One might point out that Honeywell, like defendants in CERCLA cases with EPA, voluntarily enter into consent decrees in which they agree to pay oversight costs.  What’s clear from cases such as Honeywell, though, is that such agreements speak more to the extreme coercion inherent in statutes such as RCRA and CERCLA than to any true willingness by defendants to pay such oversight costs.

Will this madness never cease?


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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