Opinions of the United
1994 Decisions States Court of Appeals
for the Third Circuit
5-25-1994
United States of America v. Alcan Alum. Inc., et al.
Precedential or Non-Precedential:
Docket 93-1099
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 93-1099
___________
UNITED STATES OF AMERICA
v.
ALCAN ALUMINUM, INC.;
CHAMPION AUTO GENERATOR SERVICE, INC.;
INTERNATIONAL FLAVORS AND FRAGRANCES, INC.;
KALAMA CHEMICAL, INC.; SCHULTZ ELECTROPLATING, INC.;
S&W WASTE, INC.; McADOO ASSOCIATES, INC.;
PAYSO, INC.; EDWARD L. PAYER; NOREEN PAYER
v.
AT&T TECHNOLOGIES, INC.;
CPS CHEMICALS COMPANY, INC.;
EAST COAST POLLUTION CONTROL, INC.;
KNOLL INTERNATIONAL, INC.;
LEHIGH STRUCTURAL STEEL COMPANY;
JOHN E. POTOCHNY; BEATRICE/HUNT WESSON, INC.;
PROCTER & GAMBLE MANUFACTURING COMPANY;
21 INTERNATIONAL, INC.; SPECIAL METALS CORPORATION;
ACTIVATED METALS & CHEMICALS, INC.;
TELEDYNE VASCO, A Division of Teledyne Industries, Inc.;
TELEDYNE WAH CHANG HUNTSVILLE,
A Division of Teledyne Industries, Inc.;
WITCO CORPORATION, on behalf of itself
and the RICHARDSON COMPANY;
CBP RESOURCES; FIRST VALLEY BANK
The Trustees of the McAdoo Associates
Site Trust Fund ("the Trustees"),
proposed intervenors,
Appellants
_______________________________________________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil Action No. 88-04970)
___________________
1
2
Argued December 2, 1993
Before: SCIRICA and ALITO, Circuit Judges
and BASSLER, District Judge*
(Filed May 25, l994 )
ANTOINETTE R. STONE, ESQUIRE (Argued)
Buchanan Ingersoll
1200 Two Logan Square
18th and Arch Streets
Philadelphia, Pennsylvania 19103
Attorney for Appellants
JOHN T. STAHR, ESQUIRE (Argued)
United States Department of Justice
P.O. Box 23985
L'Enfant Plaza Station
Washington, D.C. 20026
EVELYN YING, ESQUIRE
United States Department of Justice
P.O. Box 23795
L'Enfant Plaza Station
Washington, D.C. 20026
Attorneys for Appellee, United States of America
DOUGLAS F. SCHLEICHER, ESQUIRE (Argued)
Saul, Ewing, Remick & Saul
3800 Centre Square West
Philadelphia, Pennsylvania 19102
Attorney for Appellee,
International Flavors and Fragrances, Inc.
ROBERT B. McKINSTRY, JR., ESQUIRE (Argued)
Ballard, Spahr, Andrews & Ingersoll
1735 Market Street, 51st Floor
Philadelphia, Pennsylvania 19103
Attorney for Appellee, First Valley Bank
3
*The Honorable William G. Bassler, United States District Judge
for the District of New Jersey, sitting by designation.
4
JOEL SCHNEIDER, ESQUIRE
Manta & Welge
One Commerce Square, 37th Floor
2005 Market Street
Philadelphia, Pennsylvania 19103
Attorney for Appellee, Kalama Chemical, Inc.
ALLEN E. ERTEL, ESQUIRE
Allen E. Ertel & Associates
30 West 3rd Street, Suite 301
Williamsport, Pennsylvania 17701
Attorney for Appellee, Schultz Electroplating, Inc.
MARK N. COHEN, ESQUIRE
Margolis, Edelstein & Scherlis
The Curtis Center, 4th Floor
Sixth and Walnut Streets
Philadelphia, Pennsylvania 19106
Attorney for Appellee, S&W Waste, Inc.
HOWARD M. KLEIN, ESQUIRE
Conrad, O'Brien, Gellman & Rohn
1515 Market Street, 16th Floor
Philadelphia, Pennsylvania 19102
Attorney for Appellee, AT&T Technologies, Inc.
DAVID E. LODER, ESQUIRE
Duane, Morris & Heckscher
4200 One Liberty Place
Philadelphia, Pennsylvania 19103-7396
Attorney for Appellee, Lehigh Structural Steel Company
RODNEY B. GRIFFITH, ESQUIRE
JANICE V. QUIMBY-FOX, ESQUIRE
Schnader, Harrison, Segal & Lewis
1600 Market Street, Suite 3600
Philadelphia, Pennsylvania 19103
Attorneys for Appellee, Beatrice/Hunt Wesson, Inc.
5
6
THEODORE L. GARRETT, ESQUIRE
Covington & Burling
1201 Pennsylvania Avenue, N.W.
P.O. Box 7566
Washington, D.C. 20044
FREDERICK W. ROM, ESQUIRE
Lavin, Coleman, Finarelli & Gray
10000 Midlantic Drive, Suite 300 West
Mount Laurel, New Jersey 08054
Attorneys for Appellee, Procter & Gamble Manufacturing Company
RANDALL L. SAROSDY, ESQUIRE
Akin, Gump, Strauss, Hauer & Feld
1333 New Hampshire Avenue, N.W.
Suite 400
Washington, D.C. 20036
Attorney for Appellee, 21 International, Inc.
__________________
OPINION OF THE COURT
__________________
SCIRICA, Circuit Judge.
In this appeal we must decide whether a party who has
entered into a consent decree with the Environmental Protection
Agency for the cleanup of a superfund site may intervene in
subsequent litigation over the same site. We believe that,
provided it can demonstrate it has a protectable interest, an
early settlor may intervene in the later litigation as of right.
On these facts, however, the right to intervene hinges on whether
the applicant had a protectable interest at risk. Because it is
unclear from the record whether the intervenor's interest was
7
affected by the subsequent consent decree, we will vacate the
district court's orders denying the motion to intervene and
approving the subsequent consent decree, and remand for a
determination of whether the second consent decree affected the
intervenor's rights under the first decree.
I.
FACTS & PROCEDURE
This appeal arises out of the cleanup of the McAdoo
site, a parcel of land in Schuylkill County, Pennsylvania. Once
used for strip mining, the McAdoo site was used for waste
incineration and recycling from 1975 until it closed in 1979. At
that time there were approximately 6,800 storage drums and
several 10,000 and 15,000 gallon storage tanks of hazardous waste
at the site.
The Air Products Litigation
In 1987 the United States began proceedings over the
release and threatened release of hazardous material at the
McAdoo site.0 On June 3, 1988, the government entered into a
consent decree with 65 Potentially Responsible Parties (PRPs),
the "Air Products defendants," who agreed to reimburse the
government for approximately $790,000 of past costs and to
undertake a remedial program to prevent any future release of
hazardous substances.0 They also agreed to pay all of the long
0
Pennsylvania's Department of Environmental Resources later
intervened as a plaintiff.
0
The Air Products defendants' consent decree did not address
surface or ground water contamination at the McAdoo Site. EPA
has notified the parties that future litigation may be necessary
to address this problem.
8
term operations and maintenance costs. In exchange, the
government agreed not to seek reimbursement for any of its past
remedial costs and to allow the Air Products defendants to seek
reimbursement for as much as 25% of their clean-up costs,
provided the government could successfully recover those costs
from other non-settling PRPs.0
The agreement contained two other notable provisions.
First, it contained a provision reserving the Air Products
defendants' right to sue all non-settling parties for
contribution. Second, it contained a provision stating the
government's "present intent" not to include in any future
settlement over the McAdoo site a covenant not to sue that was
broader than the one contained in the Air Products consent
decree.
The Alcan Litigation
On June 23, 1988 the government began proceedings
against another group of PRPs, the "Alcan defendants." In this
action, the government sought reimbursement for costs it had
previously incurred and a declaration that the Alcan defendants
were liable for future response costs. The Alcan defendants and
the government reached an agreement in January, 1992. The
resultant consent decree was filed in the district court on
August 10, 1992, and notice was published in the Federal Register
on August 19, 1992. 57 Fed. Reg. 37,556 (1992).
0
The Air Products defendants agreed not to seek reimbursement
from the government for any part of the costs of operations and
maintenance.
9
Under the terms of the consent decree the Alcan
defendants agreed to reimburse approximately $2 million of the
government's response costs. In exchange, the government agreed
not to sue the Alcan defendants for: (1) any work covered in the
Air Products consent decree, (2) any of the government's
oversight costs, (3) response costs incurred before June, 1990,
and (4) the government's enforcement costs.0
As required by CERCLA, the district court reserved
approval of the consent decree to allow for public comment. 42
U.S.C. § 9622(d)(2)(1988). On September 16, 1992, the Trustees
of the McAdoo site, on behalf of the Air Products defendants,
objected to the consent decree on the grounds that it would
extinguish their right to sue the Alcan defendants for
contribution. They also argued the covenant not to sue First
Valley Bank over surface or ground water contamination violated a
provision in the Air Products consent decree where the government
stated its intention not to give any other PRP a covenant not to
sue broader than the one contained in the Air Products consent
decree.
The Trustees also moved to intervene in the
government's suit against the Alcan defendants under CERCLA
§113(i), 42 U.S.C. § 9613(i)(1988), and Federal Rule of Civil
0
In addition, the government agreed not to sue First Valley Bank
in connection with either surface or ground water contamination
because it believed First Valley's only ownership interest in the
site was as a secured creditor and secured creditors are exempt
from liability. See 42 U.S.C. §9607(a)(1)(1988) (imposing
liability on a facility's owners), and 42 U.S.C. §
9601(20)(A)(1988) (exempting secured creditors from the
definition of owner).
10
Procedure 24(a).0 On November 24, 1992, the district court
denied the Trustees' motion, holding that § 113(i) was
inapplicable, and that the Rule 24 application was untimely and
did not reflect "a substantial and direct protectable interest in
the litigation." This timely appeal followed.
The district court had jurisdiction under 42 U.S.C.
§§9607 and 9613(b). We have jurisdiction under 28 U.S.C. § 1291
(1988) because the denial of a motion to intervene is a final,
appealable order. See McKay v. Heyison, 614 F.2d 899, 903 (3d
Cir. 1980); Pennsylvania v. Rizzo, 530 F.2d 501, 504 (3d Cir.),
cert. denied, sub nom. Fire Officers Union v. Pennsylvania, 426
U.S. 921 (1976). We review the denial of a motion to intervene
as of right for abuse of discretion. However, our review "is
`more stringent' than the abuse of discretion review we apply to
a denial of a motion for permissive intervention." Brody v.
Spang, 957 F.2d 1108, 1115 (3d Cir. 1992) (quoting Harris v.
Pernsley, 820 F.2d 592, 597 (3d Cir.) (internal citation and
quotation omitted), cert. denied, sub nom. Castille v. Harris,
484 U.S. 947 (1987)). We will reverse only if we find the
district court "has applied an improper legal standard or reached
a decision we are confident is incorrect." Id. (quoting Harris,
820 F.2d at 597).
II.
DISCUSSION
0
The Trustees also sought permissive intervention under Federal
Rule of Civil Procedure 24(b). Because we are unable to
determine whether the Trustees' interest is at stake in the Alcan
litigation we do not reach this issue.
11
In 1986 Congress passed the Superfund Amendment and
Reauthorization Act ("SARA"), Pub. L. 99-499; 100 Stat. 1613
(codified in scattered sections of 42 U.S.C.), which amended
CERCLA, 42 U.S.C. §§ 6911, 6911a, 9601-75. Congress' intent in
passing SARA was to ensure rapid and thorough cleanup of toxic
waste sites. See H.R. Rep. No. 253, 99th Cong., 2d Sess. 55
reprinted in 1986 U.S.C.C.A.N. 2835, 2837. Because Congress
believed it could never provide EPA with adequate money or
manpower, the new law tried to maximize the participation of
responsible parties in the cleanup. Id.
A. Claims under § 113(i).
Among the sections added to CERCLA in 1986 was §113(i),
which permits interested parties to intervene as of right in
actions under CERCLA or the Solid Waste Disposal Act. 42 U.S.C. §
9613(i).0 The government challenges the Trustees' ability to
intervene in its suit against the Alcan defendants arguing that,
under § 113(i), intervention is restricted to persons who wish to
0
Section 113(i) provides:
In any action commenced under this
chapter or under the Solid Waste Disposal Act
in a court of the United States, any person
may intervene as a matter of right when such
person claims an interest relating to the
subject of the action and is so situated that
the disposition of the action may, as a
practical matter, impair or impede the
person's ability to protect that interest,
unless the President or the State shows that
the person's interest is adequately
represented by existing parties.
42 U.S.C. § 9613(i) (1988).
12
raise health or environmental concerns. Agreeing with the
government, the district court held the Trustees could only
challenge the consent decree through CERCLA's public comment
provision, § 122(d)(2). See United States v. Alcan Aluminum,
Inc., No. 88-4970, at 2 n.1 (E.D. Pa. Dec. 1, 1992) (order
denying motion to intervene).
When interpreting a statute we look first to the
language itself. See Reves v. Ernst & Young, 113 S.Ct. 1163, 1169
(1993). Section 113(i) states, without qualification, that "any
person" who meets § 113(i)(2)'s four requirements can intervene
as of right in "any action" commenced under CERCLA. We do not
believe Congress would have used the phrase "any person may
intervene" or "any action under this chapter" if it had intended
to restrict intervention to only those persons raising a
particular, but unidentified, claim.
Moreover, § 113's language mirrors the language in
Federal Rule of Civil Procedure 24(a).0 That language was added
0
Federal Rule of Civil Procedure 24(a) provides in part:
Upon timely application anyone shall be
permitted to intervene in an action . . . (2)
when the applicant claims an interest
relating to the property or transaction which
is the subject of the action and the
applicant is so situated that the disposition
of the action may as a practical matter
impair or impede the applicant's ability to
protect that interest, unless the applicant's
interest is adequately represented by
existing parties.
Fed. R. Civ. P. 24(a) (West 1993).
13
to the rule in 1966 to relax the interest requirement and "to
foster more flexible, pragmatic judicial treatment of
intervention as of right." Carl Tobias, Standing to Intervene,
1991 Wis. L. Rev. 415, 430 (1991); see James W. Moore, 3B Moore's
Federal Practice, ¶ 24.09-1[2], at 24-301 ("The liberalization of
Rule 24(a) was not aimed at revising the nature of the
applicant's interest, but was focused mainly on relaxing the
requirement that the applicant would be bound . . . ). Thus, the
same language the government here claims restricts intervention
was added to Rule 24 to facilitate intervention. See Fed. R. Civ.
P. 24, Notes of Advisory Committee on Rules 1966 Amendment at
100-01 (West 1993); New Orleans Public Serv. Inc. v. United Gas
Pipe Line Co., 732 F.2d 452, 463 (5th Cir.) (en banc), cert.
denied, sub nom. Morial v. United Gas Pipe Line Co., 469 U.S.
1019 (1984). We do not believe Congress would have used the same
language in § 113(i) as was used in Rule 24(a) if it had intended
to reach such a different result.
Pointing to the legislative history, the government
asks us to find a more limited meaning behind the statute's broad
language.0 "But we do not resort to legislative history to cloud
0
The House Judiciary Committee report, states:
Finally, the Committee amendment adds a new
subsection 113[i] to CERCLA to provide that
any person may intervene as a matter of right
when that person claims a direct public
health or environmental interest in the
subject of a judicial action allowed under
this section, and when the disposition of the
action may impair or impede the person's
ability to protect that interest.
14
a statutory text that is clear." Ratzlaf v. United States, 114
S.Ct. 655, 662 (1994); see also Negonsott v. Samuels, 113 S.Ct.
1119, 1122-23 (1993) ("[W]here [Congress's] will has been
expressed in reasonably plain terms, that language must
ordinarily be regarded as conclusive.") (quoting Griffin v.
Oceanic Contractors, Inc., 458 U.S. 564, 570 (1982)). Thus,
although we recognize a House report suggests a more limited
construction, we cannot ignore the clarity of § 113's language.
Consequently, we believe that any interested party can intervene
under § 113(i).
B. Intervention under Rule 24(a) and § 113(i).
Because of their similarity, courts apply essentially
the same test when determining whether to grant an application
for intervention under both Rule 24(a) and § 113(i). See, e.g.,
Utah v. Kennecott Corp., 801 F. Supp. 553, 571-72 (D. Utah 1992);
Arizona v. Motorola, Inc., 139 F.R.D. 141, 144 (D. Ariz. 1991);
United States v. Acton Corp., 131 F.R.D. 431, 433 (D.N.J. 1990).0
As we explained in Brody and Harris, cases under Rule 24(a), an
applicant can intervene as of right where:
(1) the application for intervention is
timely; (2) the applicant has a sufficient
interest in the litigation; (3) the interest
may be affected or impaired, as a practical
matter by the disposition of the action; and
(4) the interest is not adequately
represented by an existing party in the
litigation.
H.R. Rep. No. 253, 99th Cong., 1st Sess., pt. 3, at 24 (1985)
reprinted in 1986 U.S.C.C.A.N. at 3047.
0
Although inapplicable in this case, there is one difference
between the two tests. Under Rule 24 the burden of proving all
four parts of the test falls on the applicant. Under § 113(i)
the existing parties must show the applicant's interest is being
adequately represented in order to prevent intervention. United
States v. Pitney Bowes, Inc., 1994 U.S. App. Lexis 1318, at *9
(2d Cir. Jan. 26, 1994); Motorola, 139 F.R.D. at 144.
15
Brody, 957 F.2d at 1115; Harris, 820 F.2d at 596.
The district court denied the Trustees' motion to
intervene because it found their motion was untimely, and it
believed the Trustees did not have a protected interest at stake
in the litigation. The Trustees claim their application was
timely because it was filed less than two months after they
learned the consent decree might jeopardize their right to sue
for contribution, and because the government persuaded them to
refrain from intervening earlier by giving them false assurances
that the Alcan consent decree would not compromise their rights.
They also claim their right to seek contribution is a legally
protectable interest which the consent decree, if approved, would
extinguish.
16
1. Timeliness
The Alcan litigation began on June 23, 1988. The
consent decree was filed on August 9, 1992 and the Trustees moved
to intervene on September 22, 1992. Arguing the Trustees waited
more than four years before moving to intervene, the government
claimed the Trustees' motion was untimely. The district court
also believed the Trustees' motion was untimely, stating, "upon
consideration of the current status of the litigation and the
knowledge of the Trustees regarding the discussions leading up to
the current consent decree, the motion is untimely." We
disagree.
The government misconstrues the timeliness requirement.
As used here, timeliness is not just a function of counting days;
it is determined by the totality of the circumstances. See NAACP
v. New York, 413 U.S. 345, 366 (1973). See generally, James W.
Moore, 3B Moore's Federal Practice § 24.13 (timeliness is not
merely a function of when the motion was filed relative to the
filing of the action). Although the point to which the
litigation has progressed is one factor to consider, it is not
dispositive. NAACP, 413 U.S. at 366; National Wildlife Fed'n v.
Burford, 878 F.2d 422, 433 (D.C. Cir. 1989), rev'd. on other
grounds, sub nom. Lujan v. National Wildlife Fed'n, 497 U.S. 871
(1990). Moreover, the timeliness requirement is "`an elemental
form of latches or estoppel.'" Stallworth v. Monsanto, 558 F.2d
257, 266 (5th Cir. 1977) (citation omitted). As such, timeliness
should not prevent intervention where an existing party induces
the applicant to refrain from intervening. Cf. id. at 267 ("Since
17
the plaintiffs urged the district court to make it more difficult
for the appellants to acquire information about the suit early
on, we do not think they should now be heard to complain that the
appellants should have . . . appreciated its significance
sooner."). Consequently, where a party takes reasonable steps to
protect its interest, its application should not fail on
timeliness grounds. Cf. NAACP, 413 U.S. at 367.
This occurred here. The record demonstrates that the
Trustees were aware of the Alcan litigation, and kept in touch
with the government's counsel in order to protect their rights.
On November 18, 1991, the Trustees' counsel wrote a letter to the
government attorney handling the case, confirming the content of
their November 1, 1991 telephone conversation. That letter
indicates that when, during the course of their conversation, the
Trustees' counsel voiced concerns about the possibility of the
Alcan consent decree destroying the Trustees' contribution right,
the government's attorney assured him that the consent decree
would not compromise the Trustees' claim.0 That letter, which
0
The letter states in part:
In addition, as we have discussed, the
settlement of the Non-Settlors' Litigation
which the United State[s] currently
contemplates will not protect any of the Non-
Settlors from claims for contribution for
costs related to the Operation and
Maintenance ("O&M") of the Site remedy. In
short, O&M will not be a covered matter in
any such settlement. . . . If the United
States should change its position with
respect to any Non-Settlor and that Non-
Settlor's liability for O&M, please let me
know promptly. In the meantime, I look
18
the government does not challenge, demonstrates the Trustees'
intent to contest any consent decree that compromised their right
to contribution and that the Trustees refrained from taking
earlier action, in part, because of assurances given by the
government.
Under these circumstances, the Trustees had no reason
to believe they should try to intervene because the government
led them to believe their interests were not at stake in the
litigation.0 Since the government induced the Trustees to
refrain from intervening earlier, and the Trustees reasonably
relied on that representation, the government cannot credibly
complain the motion was untimely. Stallworth, 558 F.2d at 267.
We also believe that, to the extent there is a temporal
component to the timeliness inquiry, it should be measured from
the point which an applicant knows, or should know, its rights
are directly affected by the litigation, not, as the government
contends, from the time the applicant learns of the litigation.
In so holding, we are breaking no new ground. The Court of
forward to hearing from you once any Consent
Decree between the Non-Settlors and the
United States is ready to be executed by the
parties to it.
Letter from Robert Frank to Arnold Rosenthal (Nov. 18, 1991).
0
Because the Trustees demonstrated their intent to challenge the
consent decree if the decree jeopardized their contribution right
and the government does not dispute that the letter accurately
reflects the assurances it gave to the Trustees, this case is
distinguishable from NAACP, 413 U.S. at 367-68, where the Court
held it was not an abuse of discretion to deny a motion to
intervene where the applicant had failed to take steps to protect
its interest after it became aware of the litigation. Id.
19
Appeals for the District of Columbia Circuit came to the same
conclusion in National Wildlife Federation v. Burford, 878 F.2d
422 (D.C. Cir. 1989), rev'd. on other grounds, sub nom. Lujan v.
National Wildlife Fed'n, 497 U.S. 871 (1990). There, ASARCO, a
company that had staked mining claims on lands affected by a
Bureau of Land Management policy sought to intervene in
litigation challenging the implementation of that policy.
ASARCO's motion was filed 3 years after the litigation began,
but, due to a change in the way the agency construed its policy,
only 73 days after ASARCO learned its interests were directly
affected. Id. at 433-34. After the district court denied
ASARCO's motion to intervene on timeliness grounds the District
of Columbia Circuit reversed stating:
the salient factor is not when ASARCO's
motion to intervene was filed with respect to
the filing of NWF's original suit . . . .
Rather, the relevant time from which to
assess ASARCO's right of intervention is when
ASARCO knew or should have known that any of
its rights would be directly affected by this
litigation.
Id. at 433-34.
The Court of Appeals for the Fifth Circuit came to the
same conclusion in Stallworth v. Monsanto Co., 558 F.2d 257 (5th
Cir. 1977). There, a group of black employees sued Monsanto over
civil rights violations resulting from Monsanto's seniority
system. When the two sides began settlement negotiations
Monsanto sought court approval to alert its white employees to
the possible impact the proposed settlement would have on them.
The plaintiffs opposed Monsanto's motion and the court agreed.
20
Id. at 260-61. When a group of white employees eventually sought
to intervene under Rule 24(a) the plaintiffs opposed arguing the
motion was untimely. Id. at 262, 267. When the district court
denied the motion to intervene, the Fifth Circuit reversed.
Holding that timeliness should be measured from the point an
applicant knows, or should know, of the risk to its rights, the
court explained:
[A] rule making knowledge of the pendency of
the litigation the critical event would be
unsound because it would induce both too much
and too little intervention. It would
encourage individuals to seek intervention at
a time when they ordinarily can possess only
a small amount of information concerning the
character and potential ramifications of the
lawsuit, and when the probability that they
will misjudge the need for intervention is
correspondingly high. Often the protective
step of seeking intervention will later prove
to have been unnecessary, and the result will
be needless prejudice to the existing parties
and the would-be intervenor if his motion is
granted, and purposeless appeals if his
motion is denied. In either event, scarce
judicial resources would be squandered, and
the litigation costs of the parties would be
increased.
558 F.2d at 264-65.
We agree. To the extent the length of time an
applicant waits before applying for intervention is a factor in
determining timeliness, it should be measured from the point at
which the applicant knew, or should have known, of the risk to
its rights. The point at which the applicant should have known
its rights were at risk is usually a factual determination.
Nonetheless, where a party induces an applicant to refrain from
21
intervening and there is reasonable reliance, the applicant's
motion should not fail on timeliness grounds.
Here, the Trustees moved to intervene 43 days after
notice of the lodging of the consent decree, the point at which
they became aware of the potential risk to their contribution
claim. On these facts we believe their application was timely.
2. Air Products Defendants' Interest in the
Litigation.
We next address whether the Air Products' defendants
had a sufficient interest in the litigation, the second prong of
the intervention test. The district court held "[the Trustees]
do not have a substantial and direct protectable interest in this
litigation since the Trustees' claim to contribution is not
involved." The Trustees contend they have a statutory right to
sue for contribution which approval of the consent decree would
extinguish. The government claims the district court was correct
because the right to contribution is not a substantive legal
right, but instead is merely a contingency.
a. Sufficient legal interest.
Section 113(f)(1) gives early settling parties a right
to sue other PRPs for contribution.0 The Trustees contend their
contribution right is sufficient to support a motion to
0
42 U.S.C. § 9613(f)(1) provides in part:
Any person may seek contribution from any
other person who is liable or potentially
liable under section 9607(a) of this title,
during or following any action under section
9606 of this title or under section 9607(a)
of this title. . . .
22
intervene. In response, the government points to several cases
in which courts have found the right to sue for contribution to
be merely a contingency rather than a substantive legal right.
See, e.g., Travelers Indem. Co. v. Dingwell, 884 F.2d 629, 638-41
(1st Cir. 1989); Arizona v. Motorola, Inc., 139 F.R.D. 141;
United States v. Vasi, 22 Chem. Waste Litig. Rep. 218 (N.D. Ohio
1991); United States v. Browning-Ferris Industries, 19 Chem.
Waste Litig. Rep. 436 (M.D. La. 1989); United States v. Wheeling
Disposal Serv., Inc., No. 92-0132-CV-W-1, slip. op. (W.D. Mo.
Oct. 1, 1992). But see United States v. Acton Corp., 131 F.R.D.
431, 433-34 (D.N.J. 1990) ("[T]he . . . defendants are not
asserting only an economic interest; they seek to protect a
statutory right that later may be extinguished.").
With the exception of United States v. Browning-Ferris
Industries, 19 Chem. Waste Litig. Rep. 436 (discussed infra at
note 14), however, none of the cases cited by the government is
analogous because they involve either non-settling parties
attempting to intervene in the consent decree of parties who are
settling, see Acton, 131 F.R.D. at 432-33; Vasi, 22 Chem. Waste
Litig. Rep. at 219; Wheeling Disposal, No. 92-0132-CV-W-1, Slip
Op. at 1-3, or non-interested intervenors asserting the rights of
third parties, see New Orleans Public Service Inc. v. United Gas
Pipe Line Co.("NOPSI"), 732 F.2d 452, 466 (5th Cir.) (en banc)
(city asserting the rights of its power supplier), cert. denied,
sub nom. Morial v. United Gas Pipe Line Co., 469 U.S. 1019
(1984); Dingwell, 884 F.2d at 638-41 (insurer asserting the
rights of its insured). Where the proposed intervenor has not
23
yet settled with the government, it is unclear what, if any,
liability it will have. Thus, any contribution right it might
have depends on the outcome of some future dispute in which the
applicant may, or may not, be assigned a portion of liability. In
that situation, courts have properly found the interest of non-
settlor applicants to be merely contingent.0
Here, the applicants have already settled with the
government. When a PRP settles with the government it accepts a
specific liability. Unlike the interest of an applicant who has
not yet settled, which is contingent in the sense that it may
never ripen, the interest of an applicant who has already settled
is contingent only in the sense that it cannot be valued.
However, the fact that the interest cannot be valued does not
mean it does not exist. The act of settling transforms a PRP's
contribution right from a contingency to a mature, legally
protectable interest.0
0
For its part, an applicant who raises the rights of a third-
party has no interest at all.
0
In United States v. Browning-Ferris Industries, 19 Chem. Waste
Litig. Rep. 436 (M.D. La. 1989), the only other court to rule on
a similar set of facts came to a different conclusion. There, as
here, the applicant had previously signed a consent decree with
the government and maintained that a subsequent consent decree,
if approved, would cut off its right to sue non-settling PRPs for
contribution. Id. at 437. The court held the applicant had no
interest in the litigation because §113(f)(3)(C) subordinates the
rights of all others to the rights of the government. Id. at 439.
We agree that § 113(f)(3)(C) subordinates a settlor's
contribution right to the government's right to recover response
costs, but we disagree with the decision in BFI. Section
113(f)(3)(C) makes the settlors' claim subject to the
government's claim, but it does not affect either the creation or
extinction of the settlors' right to sue for contribution.
Therefore, § 113(f)(3)(C) is not helpful in determining whether
an interest exists.
24
Our conclusion is in line with the policies behind the
SARA amendments. Congress amended CERCLA because it wanted to
encourage early settlement. See United States v. Cannons
Engineering Corp., 720 F. Supp. 1027, 1048 (D. Mass. 1989),
aff'd, 899 F.2d 79 (1st Cir. 1990); Motorola, 139 F.R.D. at 148
("Congress created CERCLA to encourage settlement, thereby
reducing `the time and expense of enforcement litigation that
necessarily diverts time and money from cleanup and
restoration.'") (citation omitted). SARA, therefore, gives
preference to early settlors by exposing a non-settling PRP to
liability for the rest of the cleanup cost even if that exposure
exceeds the amount the non-settlor's actions added to the overall
cost of the cleanup. Cannons Engineering, 720 F. Supp. at 1040
(the statutory scheme is designed to discourage `free riders' by
imposing a greater share of clean-up costs on those who delay
agreeing to contribute to remedial action.); see also, Daniel R.
Avery, Enforcing Environmental Indemnification Against A Settling
Party Under CERCLA, 23 Seton Hall L. Rev. 872, 886 (1993) ("The
shifting of responsibility for settlement shortfall to not-
settling PRPs therefore provides a real and meaningful incentive
for PRPs to settle, and creates `a corresponding detriment to
their more recalcitrant counterparts.'").
Permitting intervention should encourage settlements. A
PRP, when deciding whether or not to settle, knows the settlement
will cap its liability. See 42 U.S.C. § 9613(f)(2); Motorola,
139 F.R.D. at 145. It also knows it may be able to reduce its
liability by suing a non-settling PRP for contribution. See 42
25
U.S.C. § 9613(f)(1). Given Congress' intent in amending CERCLA,
and the development of the interest requirement under Rule 24(a),
we believe early settlors have a sufficiently protectable
interest in the litigation to permit their intervention.
The government also contends the Trustees' interest is
merely economic and is insufficient to support a motion to
intervene. Some courts have stated a purely economic interest is
insufficient to support a motion to intervene. See NOPSI, 732
F.2d at 464 ("It is plain that something more than an economic
interest is necessary"); Motorola, 139 F.R.D. at 146 (remote
economic interest is not enough to support intervention). But
the Air Products defendants have more than just an economic
interest.
For example, in NOPSI the Court of Appeals for the
Fifth Circuit rejected the City of New Orleans' application to
intervene in a settlement between its power supplier, NOPSI, and
one of NOPSI's suppliers, United Gas Pipe Line Co. Id. at 455.
The Fifth Circuit found the city's interest in the litigation was
only economic because the City's only concern in the litigation
was to ensure its power costs would not be increased by an
adverse decision against NOPSI. Id. at 464-66. By way of
explanation, the court described the type of interest that would
support a motion to intervene, stating:
What is required is that the interest be one
which the substantive law recognizes as
belonging to or being owned by the applicant.
This is reflected by the requirement that the
claim the applicant seeks intervention in
order to assert be a claim as to which the
applicant is the real party in interest. The
26
real party in interest requirement . . .
`applies to intervenors as well as
plaintiffs' as does also the rule that `a
party has no standing to assert a right if it
is not his own.'"
Id. at 464 (quoting United States v. 936.71 Acres of Land, 418
F.2d 551, 556 (5th Cir. 1969)).
The same is true of Arizona v. Motorola, Inc., 139
F.R.D. 141. There, the U.S. District Court for the District of
Arizona denied the application of Motorola, a defendant in a suit
brought by the State of Arizona and the City of Phoenix, when it
moved to intervene in a second lawsuit brought by the State of
Arizona against the City of Phoenix. Citing the Fifth Circuit's
analysis in NOPSI, the court held Motorola's interest was only
contingent because Motorola was not the real party in interest.
Id. at 144-46.
The rule that emerges from these cases is that a party
has more than an economic interest where it is the real party in
interest and where the applicant would have standing to raise the
claim. NOPSI, 732 F.2d at 464. This rationale favors
intervention here because the Trustees are the true party in
interest with respect to the right to sue non-settlors for
contribution.0 Because we believe the right to seek contribution
0
In order to prove an interest is impeded, the third part of the
intervention test, the applicant must demonstrate "a tangible
threat to [its] legal interest." Brody, 957 F.2d at 1123
(internal quotation marks and citation omitted). We believe that
if, on remand, the district court determines the operations and
maintenance which the Air Products defendants agreed to pay is
addressed in the Alcan consent decree, the Air Products
defendants will have met this burden because § 113(f)(2) makes a
party that settles with the government immune from any future
contribution action "regarding matters addressed in the
27
under § 113(f)(3)(B) is a legally cognizable interest we must
next determine whether that interest is involved in this
litigation.
b. Interest in this litigation.
Under CERCLA, one of the benefits of settling with the
government is that a party becomes immune from contribution
claims "regarding matters addressed in the settlement." 42 U.S.C.
§ 9613(f)(2)(1988).0 It appears the statute allows the
government to immunize a late settlor from an early settlor's
contribution suit by settling with the government. Id.0 It
settlement." 42 U.S.C. § 9613(f)(2)(1988). Since, under those
circumstances, approval of the consent decree might extinguish
the Trustees' right to sue for contribution, this constitutes a
sufficient threat to their interest to permit intervention.
Similarly, we believe the Air Products defendants'
interests are not being adequately represented in this
litigation, the fourth part of the intervention test. An
applicant's rights are not adequately represented where: (1) the
interest of the applicant so diverges from those of the
representative party that the representative party cannot devote
proper attention to the applicant's interest; (2) there is
collusion between the existing parties; or (3) the representative
party is not diligently prosecuting the suit. Brody, 957 F.2d at
1123. We believe that where, as here, neither party represents
the applicant's interests and the existing parties contest
intervention it cannot be said the applicant's interests are
being diligently prosecuted.
0
42 U.S.C. § 9613(f)(2) provides:
A person who has resolved its liability to the
United States or a State in an administrative or
judicially approved settlement shall not be liable for
claims for contribution regarding matters addressed in
the settlement. Such settlement does not discharge any
of the other potentially liable persons unless its
terms so provide, but it reduces the potential
liability of the others by the amount of the
settlement.
0
There is some indication in the legislative history that
Congress intended § 113(f) to protect settlors from contribution
28
would appear that if the Alcan consent decree covered the
operations and maintenance which the Air Products defendants
agreed to pay, the Air Products defendants could not sue for
contribution. See supra note 15. Thus, whether the Air Products
defendants have an interest at stake in this litigation depends
on whether the Alcan consent decree addresses operations and
maintenance.
The district court did not expressly determine whether
operations and maintenance was addressed in the Alcan consent
decree. Instead, it stated, "the Trustees may not intervene as
claims by non-settlors, see H.R. Rep. No. 253, 99th Cong., 1st
Sess., pt. 3, at 19, reprinted in 1986 U.S.C.C.A.N. at 3042
(settlement under § 113(f)(2) "gives the settling party
protection from the contribution claims of other potentially
liable parties . . . ."), while retaining settlors' right to sue
for contribution. It is possible that Congress never considered
the prospect of a late settlor asserting § 113(f)(2)'s protection
against an earlier settlor, but the parties have not pointed to
any authority or legislative history on this point. In view of
the clear and unambiguous language of § 113(f)(2), however, the
statute's plain language must be considered conclusive. Reves,
113 S.Ct. at 1169.
If early settlors have no real opportunity to protect
their contribution right, i.e., no opportunity to intervene, we
expect that PRPs may discount the right to sue for contribution
under § 113(f)(1). This may have the unfortunate effect of
removing an incentive to settle early. Although this result may
prove unsatisfactory, we cannot ignore the clear and unambiguous
language of § 113(f)(2). Any change in the statutory scheme must
come from Congress.
We do not believe § 122(d) -- CERCLA's public comment
provision -- adequately protects an early settlor's contribution
right. The right to intervene gives parties, among other things,
the right to participate in discovery, see Fed. R. Civ. P.
26(b)(1), and the right to appeal an adverse judgment, see Bell
Atlantic Corp. v. Bolger, 2 F.3d 1304, 1307 (3d Cir.
1993)("Generally, `only parties to a lawsuit, or those that
properly become parties, may appeal an adverse judgment.'"
(quoting Marino v. Ortiz, 484 U.S. 301, 304 (1988)(per curiam)),
neither of which accompanies the ability to comment.
29
of right under [Rule] 24(a) since they do not have a substantial
and direct protectable interest in this litigation since the
Trustees' claim to contribution is not involved." Order at 2 n.1.
The district court's statement could be interpreted as an
implicit declaration that operations and maintenance is not
covered by the Alcan consent decree, i.e., the Trustees'
contribution claim is not involved in the Alcan litigation
because operations and maintenance is not a part of the consent
decree.
We are hesitant to impose this interpretation, however,
because neither party who negotiated the Alcan consent decree
supports it. The Alcan defendants vigorously challenge this
interpretation. They claim operations and maintenance is a
matter addressed in the consent decree, and approval of the
decree will immunize them from any future contribution claim
regarding operations and maintenance. Under their reading of the
district court's order, the Air Products defendants have an
interest in the litigation, it is simply not a legally
protectable interest. The government, both in its brief and at
oral argument, was unwilling to give an opinion on the issue.
On these facts, the right to intervene hinges on
whether operations and maintenance is addressed in the Alcan
consent decree. But on the record before us we are unable to
make this determination. Moreover, we are uncertain whether the
district court's decision to deny intervention was based on a
belief that the Trustees' interest was not at stake or that the
Trustees' interest, while at stake, was not sufficiently
30
protectable to warrant intervention. Therefore, we will remand
the case to the district court for the purpose of determining
whether operations and maintenance is an issue addressed in the
Alcan consent decree.0
If on remand the district court determines operations
and maintenance is covered in the Alcan consent decree, we
believe the Air Products defendants have a sufficient interest in
the Alcan litigation to warrant intervention.0 On the other
hand, if the district court finds operations and maintenance is
not covered in the Alcan consent decree we do not believe the Air
Products defendants would have the right to intervene since their
interest would not be at issue in the Alcan litigation. We
express no opinion on their right to seek contribution in a later
action.
III.
Conclusion
For the foregoing reasons, we will vacate the district
court orders denying intervention and approving the Alcan consent
decree. We will also remand the case for the district court to
0
The Alcan consent decree does not expressly address operations
and maintenance. Rather, its covenant not to sue makes
references to section V of the Air Products consent decree, the
section which requires the Air Products defendants to pay
operations and maintenance. On remand the district court may
wish to open the record to new evidence. That decision, however,
is within the discretion of the district judge, and we express no
opinion on it.
0
Although we believe the Air Products defendants' interest would
be protectable for intervention purposes, we do not rule out the
possibility that § 113(f)(2) could extinguish their contribution
right if the Alcan consent decree is approved as written.
31
determine whether operation and maintenance, as covered in the
Air Products consent decree, is addressed by the Alcan consent
decree.
32
United States v. Alcan Aluminum, Inc.
Court: Court of Appeals for the Third Circuit
Date filed: 1994-05-25
Citations: 25 F.3d 1174
Copy CitationsCombined Opinion