USA v. Government of Guam
Filing
1736
Order DENYING 1716 Emergency Motion for Stay Pending Appellate Review. Because Morrico has indicated it will seek a stay with the appellate court, in order to allow for an orderly emergency motion practice before the Ninth Circuit, the court direc ts the Receiver to delay the awarding of the new invitation for bid until April 28, 2017. If a stay is not ordered by the Ninth Circuit Court of Appeals by said date, the Receiver is directed to proceed with the procurement process and awarding of co ntract so as not to further delay obtaining the cab forward refuse trucks that are critical to the safety needs of GSWA and the public, as well as the operations of GSWA and its ability to expeditiously achieve compliance with the Consent Decree. Signed by Chief Judge Frances M. Tydingco-Gatewood on 4/7/2017. (fad, )
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DISTRICT COURT OF GUAM
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TERRITORY OF GUAM
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UNITED STATES OF AMERICA,
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CIVIL CASE NO. 02-00022
Plaintiff,
vs.
GOVERNMENT OF GUAM,
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ORDER
re Emergency Motion for Stay
Pending Appellate Review
Defendant.
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Pending before the court is an Emergency Motion for Stay Pending Appellate Review
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(“Motion for Stay”), filed by Morrico Equipment LLC (“Morrico”). See ECF No. 1716. The
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motion is precipitated by the court’s January 27, 2017 Order directing the court-appointed Receiver
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to proceed with a new invitation for bid for the procurement of cab forward1 refuse trucks. See ECF
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No. 1712. Morrico appealed the court’s decision to the U.S. Court of Appeals for the Ninth Circuit,
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see Notice of Appeal, ECF No. 1714, and thereafter requested this court to stay its Order pending
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resolution of its appeal. Based on the relevant filings from Morrico,2 the Receiver and the United
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“Cab forward” trucks are also known as “flat nose” or “cab over” trucks. Decl. R. Chace
Anderson at ¶7, ECF No. 1686. As explained to the court at the hearing held on January 13, 2017,
the driver’s compartment in a cab forward truck sits over the front axle and engine compartment,
which places the driver closer to the front of the truck. On the other hand, the driver compartment
on a conventional cab truck is located behind the engine compartment housed under the hood and
sticks out at the front of the truck.
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On March 22, 2017, Morrico filed a Declaration of Allan Morrison. See ECF No. 1734.
This declaration was filed after briefing on the Motion for Stay had been completed, and Morrico
United States of America v. Government of Guam, Civil Case No. 02-00022
Order re Emergency Motion for Stay Pending Appellate Review
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States3 and having heard argument on the matter, the court now issues the following Order.
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BACKGROUND
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A. The Consent Decree and Appointment of a Receiver
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On August 7, 2002, the United States initiated the present action and sought injunctive relief
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and civil penalties against the Government of Guam for violations of the Clean Water Act, 33 U.S.C.
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§§ 1251 et seq. The parties thereafter entered into a Consent Decree, which became final when
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approved by the court on February 11, 2004. See Consent Decree, ECF No. 55. Among other things,
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the Consent Decree established a schedule for the Government of Guam to close the Ordot Dump
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and also construct and operate a new municipal solid waste landfill.4 Id. at ¶¶8-9. The Consent
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Decree required operations at the Ordot Dump to cease by October 23, 2007. Id. at ¶8(i).
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Additionally, as part of the closure of the Ordot Dump, the Consent Decree required the Government
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of Guam to submit a post-closure care and monitoring plan. Id. at ¶¶8(b), (c) and (h).
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Following the entry of the Consent Decree, the Government of Guam failed to meet critical
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deadlines. Concerned about the Government of Guam’s lack of progress and failure to raise the
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financial resources necessary to complete the Consent Decree projects, on December 6, 2006, the
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United States petitioned the court to hold a status hearing and then later moved to enforce the
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Consent Decree. See ECF Nos. 56 and 68-69. After conducting monthly status hearings and site
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visits, the court concluded that the “problem of a highly dysfunctional, largely mismanaged, overly
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bureaucratic, and politically charged solid waste system . . . is beyond correction by conventional
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did not seek leave of court before it filed the declaration. See CVLR 7(h). Accordingly, the court
declines to consider the contents of this declaration.
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The Government of Guam, the defendant in this action, was given an opportunity to
respond to the Motion for Stay. See Order (Feb. 6, 2017), ECF No. 1722. The Government of Guam
chose not to file a response. This is consistent with the Government of Guam’s position on the
Receiver’s Motion for Clarification when the Government of Guam stated that the issue raised in
said motion “involves an operational issue” and thus the “Government of Guam takes no position
on said motion.” GovGuam Resp. to Mot. for Clarification, ECF No. 1698 (emphasis added).
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After extensive scientific studies and research, the Government of Guam selected the
Layon site in 2005 as the best location for the new landfill.
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Order re Emergency Motion for Stay Pending Appellate Review
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methods.” Order Re: Appointment of Receiver (the “Appointment Order) at 1, ECF No. 239. After
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much deliberation and upon consideration of the Government of Guam’s lengthy history of violating
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the Clean Water Act and failure to comply with the Consent Decree,5 the court appointed Gershman,
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Brickner & Bratton, Inc. as the Receiver with “full power and authority to enforce the terms of the
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Consent Decree, and assume all of the responsibilities, functions, duties, powers and authority of the
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Solid Waste Management Division6 of the Department of Public Works.” Id. at 15. In the
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Appointment Order, the court authorized the Receiver “[t]o enter[] into future contracts deemed
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necessary” and to “follow the procedures required in Guam’s statutes and regulations, unless, in the
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best judgment of the Receiver, such compliance would unreasonably delay the progress in meeting
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the mandates of the Consent Decree[.]” Id. at 16.
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B. Financing Consent Decree Projects and Post-Closure Care for the Ordot Dump
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The Receiver initially estimated the capital needed to achieve compliance with the Consent
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Decree would be approximately $159.7 million, of which approximately $40 million would be
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required for the closure of the Ordot Dump. See Quarterly Report (Oct. 22, 2008) at 13, ECF
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No. 269-1. The Quarterly Report cautioned that the estimates were “subject to change as the
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competitive bidding process provide[d] the final measure of the cost for [the Consent Decree]
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projects.” Id. at 13. The Receiver further stated that the “estimates related to the Ordot Dump’s
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closure” would “require a full reexamination” as the time for the project to actually begin drew near
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because
there was “a significant amount of remedial investigation that remain[ed] to be
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For a more thorough recitation of the background of this case, including the events that
led to the appointment of a Receiver, the court incorporates by reference the Appointment Order,
ECF No. 239
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Guam Public Law 31-020 converted the Solid Waste Management Division (“SWMD”),
which was then a sub-entity of the Department of Public Works (a department within the Executive
Branch of the government of Guam), to an autonomous, public corporation of the Government of
Guam to be known as the Guam Solid Waste Authority (“GSWA”). 10 GUAM CODE
ANN. § 51A103. The court thereafter vested the Receiver with “full power and authority over
GSWA, to the full extent of its previously granted authority over SWMD.” Order (Sept. 2, 2011)
at 9, ECF No. 798.
United States of America v. Government of Guam, Civil Case No. 02-00022
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accomplished . . . to determine the extent of environmental damage that ha[d] occurred [at the Ordot
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Dump] and devise acceptable plans to mitigate the damage identified.” Id. at 14.
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The Receiver also identified various financing options for the Government of Guam’s
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consideration for funding the Consent Decree projects. Id. at 15-20. The Receiver recommended
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that the Consent Decree projects be funded through a revenue bond guaranteed by Section 30 funds
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received by the Government of Guam. Id. at 21. The Government of Guam, however, opted to
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finance the Consent Decree projects through the sale of approximately $202.4 million in Limited
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Obligation Bonds, which pledged Section 30 funds as the source of repayment. See ECF No. 455
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at 3. Because the Government of Guam had deposited an initial amount of $20 million dollars for
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the Consent Decree projects, approximately $139.7 million of the total fond funds was deposited
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into the Project Construction Fund. See ECF No. 455-1 at 16.
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The Receiver ceased operations at the Ordot Dump on September 1, 2011, and the new Layon
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Landfill was opened the following day. See Minutes, ECF Nos. 795 and 796. Although the Receiver
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was able to open the new landfill under budget, financial concerns persisted.
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The cost for the Ordot Dump closure increased from the Receiver’s original 2008 estimates,
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and on May 21, 2013, the Receiver informed the court and the parties that “it is likely that there will
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not be enough money from the [Limited Obligation] Bonds to cover all of the projects” related to
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the Consent Decree. See Quarterly Report (May 21, 2013) at 33, ECF No. 1067-1. These unfunded
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projects included: (1) upgrades to the residential transfer stations, (2) Route 4 safety enhancements,
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(3) upgrades to Dero Road and (4) post-closure care for the Ordot Dump. The court directed the
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Receiver and the Government of Guam to meet and discuss the development of a plan for additional
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financing or funding to pay for the unfunded projects. The Receiver and the Government of Guam
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could not agree on whether all the additional projects were required under the Consent Decree, and
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if required, how to finance these projects.
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Ultimately, after briefing and hearings, the court issued separate orders as to each of the
United States of America v. Government of Guam, Civil Case No. 02-00022
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unfunded projects.7 Pertinent to the instant matter is the Order concerning the funding for the post-
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closure care costs for the Ordot Dump. See Order (May 27, 2015), ECF No. 1582. Pursuant to U.S.
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EPA regulations, an owner or operator of a municipal solid waste landfill (“MSWLF”) is required
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to continue monitoring and maintaining the landfill once it is closed to protect against the release of
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hazardous constituents to the environment. The federal closure and post-closure care regulations are
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set forth in Title 40, Code of Federal Regulations, Part 258, Subpart F - Closure and Post-Closure
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Care.8
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Post-closure care expenses, by their very nature, are normally considered operating expenses
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instead of capital costs. As the Receiver noted, “[t]ypically, funds are set aside throughout the life
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of a landfill to provide for post-closure care after the facility is closed.” See Quarterly Report
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(May 21, 2013) at 39, ECF No. 1067-1. However, as with many other things related to the Ordot
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Dump, the Government of Guam did not set aside funds for this expense during its operation. Thus,
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the court ordered the Receiver to fund these costs on an ongoing basis from the monies the Receiver
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had been setting aside in a special account.9
Order (May 27, 2015) at 10, ECF No. 1582. If,
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See Order (Apr. 20, 2015) (upgrades to transfer stations), ECF No. 1571, Order (May 1,
2015) (Dero Road upgrades), ECF No. 1574, Order (May 27, 2015) (post-closure care for Ordot
Dump), ECF No. 1582, and Order (June 29, 2015) (Route 4 safety enhancements), ECF No. 1592.
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Post-closure care activities consist of monitoring and maintaining the waste containment
systems and monitoring groundwater to ensure that waste is not escaping and polluting the
surrounding environment. The required post-closure care period is 30 years from site closure, but
this can be shortened or extended by the director of an approved state program as necessary to ensure
protection of human health and the environment. 40 C.F.R. § 258.61(b).
Pursuant to Section 258.61(a), specific post-closure care requirements consist of maintaining
the integrity and effectiveness of the final cover system, leachate collection system, goundwater
monitoring system and methane gas monitoring system. Any use of the land during this period must
not disturb the integrity or operation of any of the waste containment systems or the monitoring
systems.
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From 2011 to early 2014, the Receiver had been giving the Government of Guam GSWA
revenues equivalent to the $4.5 million spent in Section 30 funds to pay the debt service on the
limited obligation bonds. Beginning in May 2014, however, the Receiver began withholding these
funds and accumulating them in a special account for purposes of paying for the remaining Consent
Decree projects as well as the post-closure care of the Ordot Dump. See Order (Sept. 12, 2014), ECF
No. 1405.
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however, these funds were insufficient to meet the post-closure care funding obligations before the
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end of the Receivership, then the court ordered the Receiver to develop a financing plan that
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included a dedicated funding mechanism which secured the funds necessary to fully implement all
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post-closure care and monitoring actions. Id.
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The Receiver presented its plan for financing the post-closure care of the Ordot Dump in its
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October 21, 2015 Status Report. See ECF No. 1634-1. After giving the Government of Guam an
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opportunity to submit its own proposed alternative financial plan and allowing the parties to
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comment on each proposal, the court ultimately adopted the Receiver’s proposed financial plan. See
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Order (May 2, 2016) at 15, ECF No. 1668.
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Under said plan, beginning in fiscal year (“FY”) 2016 through approximately FY2023,
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approximately $2 million will be set aside annually and deposited into the Ordot Dump Post-Closure
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Reserve. Id. at 10. These funds will come from the approximately $4.5 million in annual revenue
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that was previously used to reimburse the Government of Guam for debt service. In FY2016 and
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2017, the Receiver will be responsible for depositing said funds into the Ordot Dump Post-Closure
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Reserve, for a total of $4 million during the remaining Receivership period. Id. To assure the
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needed funds are set aside and remain available post-Receivership, the court will appoint a trustee
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when the Receivership ends to manage the funds in the Ordot Dump Post-Closure Reserve. Id.
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Additionally, all commercial refuse haulers on island will be ordered to make their payments through
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the trustee, and, upon receipt of said funds, the trustee will deduct what is needed to fully fund the
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Ordot Dump Post-Closure Reserve10 and pass the balance through to GSWA for operations. The
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trustee will continue these monthly set asides into the Ordot Dump Post-Closure Reserve until the
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reserve is fully funded, which is anticipated to occur in FY2023. Quarterly Report (Oct. 21, 2015)
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at 49-50 and Table 17, ECF No. 1634-1.
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The Ordot Dump was environmentally closed on March 28, 2016. See Minutes, ECF
No. 1665.
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The Receiver recommended that this amount not exceed $374,758.08 per month. See
Quarterly Report (Oct. 21, 2015) at 51, Fig. 41, ECF No. 1634-1.
page 7 of 21
United States of America v. Government of Guam, Civil Case No. 02-00022
Order re Emergency Motion for Stay Pending Appellate Review
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C. Procurement of Refuse Trucks and Related Proceedings
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On September 18, 2014, GSWA issued an Invitation for Bid (“IFB”) GSWA-001-15
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(“IFB #1”) to solicit bids for refuse collection trucks. IFB #1 specifically required that the cab and
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body should be “cab forward.” See Decl. R. Chace Anderson at ¶6a,11 ECF No. 1686.
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On September 25, 2014, Morrico submitted a written pre-bid question to GSWA requesting
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that the bid specification allow for a conventional cab design. Office of the Public Auditor (“OPA”)
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Decision (Feb. 20, 2015), Findings of Fact at ¶5.12 On October 1, 2014, GSWA issued Addendum
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1 to IFB #1, which amended certain specifications but did not amend the cab forward specification
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to permit a conventional cab design. Id. at ¶6.
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On October 9, 2016, Morrico filed a protest of the cab forward specification, and GSWA
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denied the protest as untimely and advised Morrico that the cab forward specification was necessary
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to meet GSWA’s needs. Decl. R. Chace Anderson at ¶6a, ECF No. 1686.
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On November 6, 2014, Morrico appealed the matter to the OPA. OPA Decision (Feb. 20,
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2015), Findings of Fact at ¶12, Ex. 1 to Decl. K. Fowler, ECF No. 1694. On February 20, 2015, the
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OPA determined that Morrico’s protest was timely and that the cab forward specification
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unnecessarily restricted competition in violation of Guam law.
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Accordingly, the OPA ordered GSWA to immediately amend the IFB to allow vendors to bid
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conventional cab models for the refuse collections trucks. Id. at ¶3.
Id., Conclusion at ¶¶1-2.
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On March 6, 2015, GSWA filed a Verified Complaint for Judicial Review in the Superior
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Court of Guam. See Findings of Fact and Conclusions of Law at ¶21, GSWA v. Brooks, Superior
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Court of Guam Civil Case No. CV0185-15, attached as Ex. B to Request for Judicial Notice, ECF
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No. 1706. A bench trial was held on August 2, 2016, and the Superior Court of Guam took the
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The Declaration of Mr. Anderson contains two paragraphs numbered 1. See ECF No.
1686 at 1 and 2. To avoid confusion, the second paragraph numbered “1” which follows
paragraph “6” shall hereinafter be referred to as paragraph “6a.”
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No. 1694.
The OPA Decision is appended as Exhibit 1 to the Declaration of K. Fowler, ECF
United States of America v. Government of Guam, Civil Case No. 02-00022
Order re Emergency Motion for Stay Pending Appellate Review
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matter under advisement following a status hearing held on September 12, 2016. Id. at ¶¶32 and 36.
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On October 14, 2016, the Receiver issued IFB GSWA-002-017 (“IFB #2”), pursuant to the
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authority granted to it by the court’s Appointment Order. Decl. R. Chace Anderson at ¶16, ECF No.
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1686. Similar to IFB #1, IFB #2 also sought to procure “cab over” trash trucks. Id. and Ex. F thereto.
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Upon motion of Morrico, however, the Superior Court of Guam stayed IFB #2 and refrained GSWA
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from purchasing any new trucks. Id. and Ex. G thereto.
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On November 4, 2016, the Receiver filed an Ex Parte Motion for Clarification. ECF
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No. 1685. Therein, the Receiver requested that the court clarify its Appointment Order, specifically
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with regard to the Receiver’s authority to depart from Guam law if, in the best judgment of the
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Receiver, compliance with Guam law would unreasonably delay the progress in meeting the
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mandates of the Consent Decree.13 The court permitted the parties and Morrico to respond to the
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Receiver’s motion. See Order (Nov. 18, 2016), ECF No. 1691.
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On December 16, 2016, the Superior Court of Guam issued its Findings of Fact and
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Conclusions of Law with regard to the Receiver’s Verified Complaint for Judicial Review and
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affirmed the OPA’s Decision. See Ex. B to Request for Judicial Notice, ECF No. 1706.
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Superior Court of Guam ordered GSWA to immediately amend IFB #1 to allow vendors to bid
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conventional cab models for the refuse collection trucks. Id. at 9.
The
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On January 27, 2017, the court issued the Order re Ex Parte Motion for Clarification (the
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“Clarification Order”). See ECF No. 1712. Based on the evidence presented to the court, the court
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found that the “cab forward specification is critical to the safety needs of GSWA and the public and
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that GSWA can no longer wait to procure these trucks.” Id. at 10. Although the court approved the
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Receiver’s exercise of authority in issuing IFB #2, based on concerns expressed by the OPA and
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Superior Court of Guam decisions, the court ordered the Receiver to issue a new invitation for bid
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for the cab forward refuse collection trucks and include in its procurement record all papers and
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The Appointment Order permitted “any party . . . to apply to this court at any time for
further orders and directions as may be necessary or appropriate to carry out or construe [the
Appointment Order.]” Appointment Order at 19, ECF No. 239.
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Order re Emergency Motion for Stay Pending Appellate Review
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materials used by GSWA to develop the cab forward specification, including a copy of the court’s
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order and the declaration of Thomas D. Parker.14 Id. at 10-11.
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On February 1, 2017, Morrico filed a Notice of Appeal of the court’s Order re Ex Parte
Motion for Clarification. See ECF No. 1714.
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On February 3, 2017, Morrico filed the Motion for Stay, along with its Memorandum in
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Support. See ECF Nos. 1716-17. The Receiver filed is Opposition on February 17, 2017, see ECF
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No. 1727, and on February 17, 2017, the United States filed its Response to the Motion for Stay.
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See ECF No. 1729. On March 3, 2017, Morrico filed a Reply brief. See ECF No. 1730. On
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March 21, 2017, the court heard argument on the matter, see Minutes, ECF No. 1735.
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DISCUSSION
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A. Legal Standard for Motion to Stay Pending Appeal
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As the Supreme Court has stated:
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A stay is an “intrusion into the ordinary processes of administration and judicial
review,” Virginia Petroleum Jobbers Assn. v. Federal Power Comm’n, 259 F.2d 921,
925 (C.A. D.C. 1958) ( per curiam ), and accordingly “is not a matter of right, even
if irreparable injury might otherwise result to the appellant,” Virginian R. Co. v.
United States, 272 U.S. 658, 672 (1926). The parties and the public, while entitled
to both careful review and a meaningful decision, are also generally entitled to the
prompt execution of orders[.]
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Nken v. Holder, 556 U.S. 418, 427 (2009).
Accordingly, the party requesting a stay bears the burden of showing that circumstances
justify a stay. Id. at 433-34.
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The Supreme Court has also stated that a stay is “‘an exercise of judicial discretion,’ and
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‘[t]he propriety of its issue is dependent upon the circumstances of the particular case.’” Id. at 433
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(quoting Virginian R. Co., 272 U.S. at 672-73). “The fact that the issuance of a stay is left to the
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court’s discretion does not mean that no legal standard governs that discretion. A motion to a court’s
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discretion is a motion, not to its inclination, but to its judgment; and its judgment is to be guided by
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sound legal principles.” Nken, 556 U.S. at 434 (internal quotations and citations omitted).
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The United States filed the Declaration of Thomas D. Parker to support its Response to
the Ex Parte Motion for Clarification. See ECF Nos. 1696-97.
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In determining whether a stay should be issued, the district court should consider the
following factors:
(1) whether the stay applicant has made a strong showing that he is likely to succeed
on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3)
whether issuance of the stay will substantially injure the other parties interested in the
proceeding; and (4) where the public interest lies.
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Nken, 556 U.S. at 434 (quoting Hilton v. Braunskill, 481 U.S. 770, 776 (1987)).
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“The first two factors of the traditional standard are the most critical.” Nken, 556 U.S. at 434.
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“Once an applicant satisfies the first two factors, the traditional stay inquiry calls for assessing the
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harm to the opposing party and weighing the public interest. These factors merge when the
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[g]overnment is the opposing party.” Id. at 435.
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The parties do not dispute this legal standard. Thus, the court will now evaluate the factors
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set forth in the Nken decision.
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B. Whether Morrico has made a strong showing that it is likely to succeed on the merits
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Morrico argues that it has a substantial case for relief on the merits because there are serious
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legal questions raised regarding the Clarification Order at issue here. First, Morrico contends that
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the court erred by granting to the Receiver in the Appointment Order the authority and discretion to
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deviate from compliance with Guam law. Morrico contends that this authority granted to the
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Receiver violates federal law that requires a “receiver . . . [to] manage . . . the property in his
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possession . . . according to the requirement of the valid laws of the state[.]” 28 U.S.C. § 959(b).
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The court finds that Morrico can not succeed on this argument because it is moot.
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The Receiver followed the local laws when it issued IFB #1 to procure refuse collection
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trucks in September 2014. In August 2016, the Receiver advised the court that the series of protests
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by Morrico had delayed the acquisition of vehicles to GSWA’s operations, and that such delay “puts
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at risk the quality of service to its customers, the revenue needed to operate GSWA, and the ability
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of GSWA to achieve compliance with the Consent Decree.” Order (Aug. 12, 2016) at 7, ECF No.
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1677. The court directed the Receiver to keep the court updated on the status of the procurement
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appeals since “[a]ny compromise to the service provided to residential customers will negatively
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impact the revenue needed to operate GSWA and will in turn affect GSWA’s ability to complete all
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Consent Decree related projects.” Id. at 8. After the Superior Court of Guam stayed GSWA’s
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IFB #2, the Receiver immediately petitioned this court to clarify the authority granted to it and to
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approve its exercise of authority in issuing IFB #2. See Motion for Clarification at 8, ECF No. 1685.
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While the court agreed with the Receiver’s exercise of authority in issuing IFB #2, the court ordered
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the Receiver not to proceed with said IFB #2 but to issue a new invitation for bid. Clarification
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Order at 10-11, ECF No. 1712.
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Thus, while Morrico now objects to the authority the court granted the Receiver in the
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Appointment Order to deviate from compliance with Guam law, Morrico’s objection is moot since
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the court has not authorized the Receiver to proceed with IFB #2.
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Morrico next asserts this court erred when it attempted to “retroactively resurrect the
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Receiver’s void act of issuing” IFB #2. Motion for Stay at 6, ECF No. 1717. This argument, too,
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is irrelevant, because contrary to Morrico’s assertions, the court did not “revive” IFB #2. The court’s
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Clarification Order specifically instructed the Receiver to “issue a new invitation for bid and to
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include in the procurement record all papers and materials used by GSWA to develop the cab
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forward specification, including a copy of [the Clarification Order] and [Thomas] Parker’s
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Declaration.” Clarification Order at 10-11, ECF No. 1712. The court finds that Morrico can not
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succeed on this issue since it, too, is moot since the Receiver was not authorized to proceed with the
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procurement of refuse collection trucks under IFB #2 but was instead ordered to issue a new
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invitation for bid.
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Morrico also asserts that the court erred by engaging in appellate review over the
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procurement appeals before the OPA and the Superior Court of Guam.
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mischaracterizes the nature of the court’s ruling. As noted above, the Appointment Order permitted
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any party to petition the court for further directions as may be necessary to carry out or construe its
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provisions. Appointment Order at 19, ECF No. 239. This is exactly what the Receiver did when it
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Morrico, again,
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page 12 of 21
1
filed the Motion for Clarification. After giving the parties and Morrico15 an opportunity to respond
2
to the motion and present argument, the court made certain findings of fact with regard to the cab
3
forward design and the impact further procurement delay would have on GSWA’s operations and
4
ability to expeditiously comply with the Consent Decree.
5
The court acted well within its authority to make such findings. The Consent Decree is not
6
merely an agreement between the parties – the United States and the Government of Guam. Rather,
7
it is also a final judgment and order of this court, and the All Writs Act, 28 U.S.C. § 1651,
8
“empowers a district court to protect its judgment from a subsequent action that frustrates the
9
purpose of the settlement agreement and order.” Sandpiper Village Condo Ass’n v. Louisiana-
10
Pacific, 428 F.3d 831, 841 (9th Cir. 2005). Based on this authority, the court issued its Appointment
11
Order and subsequently the Clarification Order, to help ensure that there would be no further delay
12
to procuring the refuse trucks since further delay risked the quality of service to GSWA customers,
13
the revenue needed to operate GSWA, and the ability of GSWA to achieve compliance with the
14
Consent Decree. While the court’s findings and conclusions differ from those of the OPA and the
15
Superior Court of Guam, the court’s actions can not be characterized as improper appellate review
16
of the Guam procurement proceedings. This court’s independent findings and conclusions differ
17
because the court was presented with additional information by way of Thomas Parker’s Declaration
18
that was not available to the OPA and the Superior Court of Guam. Morrico has not made a
19
substantial case for relief on this claimed error that the court improperly conducted appellate review.
20
Morrico further argues that the court’s Clarification Order “ran afoul of the Younger16
21
abstention doctrine” because it had the effect of “enjoin[ing] the proceedings pending in Guam
22
15
23
24
25
26
27
In its response, the United States argued that Morrico has no standing to appeal the court’s
Clarification Order because Morrico is not a party to this action nor did Morrico move to intervene
in this case. U.S. Resp. at 6-7, ECF No. 1729. The court agrees that there is a question as to whether
Morrico has appellate standing absent intervention, but that inquiry is best left to the Ninth Circuit
Court of Appeals to resolve.
16
Younger v. Harris, 401 U.S. 37 (1971). Younger involved a facial First Amendment-based
challenge to the California Criminal Syndicalism Act, and the Supreme Court held that absent
extraordinary circumstances federal courts should not enjoin pending state criminal prosecutions.
United States of America v. Government of Guam, Civil Case No. 02-00022
Order re Emergency Motion for Stay Pending Appellate Review
page 13 of 21
1
courts and render[ed] any ability to enforce the Superior court Judgment a nullity.” Mem. P. & A.
2
Supp. Mot. for Stay at 10, ECF No. 1717. The court disagrees with this contention and finds that
3
Younger abstention is not applicable to the facts before the court.
4
The Supreme Court has stated that “[f]ederal courts . . . have no more right to decline the
5
exercise of jurisdiction which is given, than to usurp that which is not given. Jurisdiction existing,
6
. . . a federal court’s obligation to hear and decide a case is virtually unflagging. Parallel state-court
7
proceedings do not detract from that obligation.” Sprint Comms., Inc. v. Jacobs, 134 S. Ct. 584, 593
8
(2013) (internal citations and quotations omitted). Younger recognized an exception to this general
9
rule.
10
The Supreme Court’s concern for comity and federalism has led it to expand the protection
11
of Younger beyond state criminal prosecutions, but it has reaffirmed that “only exceptional
12
circumstances justify a federal court’s refusal to decide a case in deference to the states. New
13
Orleans Pub. Serv., Inc. v. Council of City of New Orleans, 491 U.S. 350, 368 (1989) (“NOPSI”).
14
NOPSI identified three such “exceptional circumstances.” First, Younger precludes federal intrusion
15
into ongoing state criminal prosecutions. Id., 491 U.S. at 368. Second, certain “civil enforcement
16
proceedings” warrant Younger abstention. Id. Finally, federal courts should refrain from interfering
17
with pending “civil proceedings involving certain orders . . . uniquely in furtherance of the state
18
courts’ ability to perform their judicial functions.” Id. The Supreme Court has affirmed that these
19
three “exceptional” categories define Younger’s scope. Sprint, 134 S. Ct. at 591.
20
Based on these precedents, the Ninth Circuit has recognized that
21
24
[i]n civil cases, therefore, Younger abstention is appropriate only when the state
proceedings: (1) are ongoing, (2) are quasi-criminal enforcement actions or involve
a state’s interest in enforcing the orders and judgments of its courts, (3) implicate an
important state interest, and (4) allow litigants to raise federal challenges. If these
“threshold elements” are met, we then consider whether the federal action would
have the practical effect of enjoining the state proceedings and whether an exception
to Younger applies.
25
ReadyLink Healthcare, Inc. v. State Compensation Ins. Fund, 754 F.3d 754, 759 (9th Cir. 2014)
26
(citations omitted).
22
23
27
The Superior Court of Guam proceeding here did not fall within the three exceptional
United States of America v. Government of Guam, Civil Case No. 02-00022
Order re Emergency Motion for Stay Pending Appellate Review
page 14 of 21
1
categories of cases identified in NOPSI. The local proceeding was a procurement appeal between
2
a private litigant (Morrico) and the Receiver, acting on behalf of GSWA, an autonomous agency.
3
It was not a parallel state criminal proceeding, nor was a quasi-criminal enforcement action.
4
Additionally, the Superior Court of Guam’s decision and judgment on the procurement appeal was
5
not a “core” order that implicated Guam’s “interest in enforcing the orders and judgments of it
6
courts.” Sprint, 134 S. Ct. 588. As noted by the Ninth Circuit,
7
8
9
10
“[c]ore” orders involve the administration of the state judicial process – for example,
an appeal bond requirement, Pennzoil Co. v. Texaco, Inc., 481 U.S. [1], 12-14, 107
S. Ct. 1519[, 1526-28], a civil contempt order, Juidice [v. Vail], 430 U.S. [327,]
335–36, 97 S. Ct. 1211[, 1217-48], or an appointment of a receiver, Lebbos v. Judges
of the Superior Court, 883 F.2d 810, 815 (9th Cir. 1989).
ReadyLink Healthcare, 754 F.3d at 759.
11
The Superior Court of Guam’s Findings of Fact and Conclusions of law involves “a single
12
state court judgment” reviewing IFB #1 and Guam procurement law, not the process by which Guam
13
“compel[s] compliance with the judgments of its courts.” Potrero Hills, Potrero Hills Landfill, Inc.
14
v. City of Solano, 657 F.3d 786, 886 (9th Cir. 2011). Although this court’s findings differed from
15
the findings of the Superior Court of Guam, this is irrelevant. The Ninth Circuit has stated that “[i]f
16
the mere possibility of inconsistent federal and state court judgments justified Younger abstention,
17
Younger would swallow whole both Colorado River abstention and preclusion.” ReadyLink
18
Healthcare, 754 F.3d at 760.
19
Assuming, however, that the Superior Court of Guam proceeding fell within one of the three
20
exceptional circumstances, the court still does not believe that the Younger abstention doctrine is
21
applicable. In this case, the proceedings were still ongoing in the Superior Court of Guam when the
22
Receiver filed the Motion for Clarification, however, the proceedings had concluded by the time the
23
court heard argument on the Motion for Clarification and issued its Clarification Order. Although
24
Morrico contends the Superior Court of Guam proceeding implicated an important interest,
25
specifically Guam’s interests in ensuring the Receiver complied with Guam procurement law in
26
acquiring the refuse trucks, the court disagrees.
27
In Potrero Hills, the Ninth Circuit discusses the scope of what constitutes an important state
United States of America v. Government of Guam, Civil Case No. 02-00022
Order re Emergency Motion for Stay Pending Appellate Review
1
2
3
4
page 15 of 21
interest. The court stated:
The key to determining whether comity concerns are implicated in an ongoing state
proceeding – and thus whether the second Younger requirement is met – is to ask
whether federal court adjudication would interfere with the state’s ability to carry out
its basic executive, judicial, or legislative functions. Unless interests “vital to the
operation of state government” are at stake, federal district courts must fulfill their
“unflagging obligation” to exercise the jurisdiction given them.
5
6
Potrero Hills, 657 F.3d at 883 (citation omitted).
7
Here, the procurement appeal before the Superior Court of Guam did not “implicate any
8
important local interests vital to the operation of [the Government of Guam].” Id. It is important
9
to point out that while the Government of Guam is a party to this proceeding, the Government of
10
Guam chose not to take a position on the Motion for Clarification. See GovGuam Resp. to Mot. for
11
Clarification, ECF No. 1698. The Government of Guam stated that the issue before the court
12
involved an “operational issue” not the enforcement of its procurement laws. Id. Based on this
13
position and the Government of Guam’s failure to take a position on the Motion for Stay, it certainly
14
does not appear that any action this court took on the Motion for Clarification “would interfere with
15
[Guam’s] ability to carry out its basic executive, judicial or legislative functions.” Potrero Hills, 657
16
F.3d at 883 (9th Cir. 2011). The essential functions of Guam’s judiciary were not unduly hampered
17
by the Receiver’s Motion for Clarification or this court’s Clarification Order.
18
Finally, the court finds the Younger abstention doctrine to be inapplicable because the
19
Receiver and the United States would not have the ability to raise federal concerns in the Superior
20
Court of Guam proceeding. Again, the local proceeding involved a procurement appeal. The United
21
States was not a party to that action, and it would be highly unlikely that the Superior Court of Guam
22
would have allowed the United States to intervene in that proceeding. The Superior Court of Guam
23
would have no authority to address the Receiver’s concerns about the scope of authority this court
24
had granted to it, nor would the Superior Court of Guam have been in a position to address the
25
United States’ concern that continued delay in the procurement process would jeopardize the funding
26
scheme approved by the court to fund the post-closure care of the Ordot Dump. Because the
27
Younger “threshold elements” are not met, the court need not consider whether the federal action
United States of America v. Government of Guam, Civil Case No. 02-00022
Order re Emergency Motion for Stay Pending Appellate Review
page 16 of 21
1
would have the practical effect of enjoining the state proceedings and whether an exception to
2
Younger applies.
3
Morrico’s final argument is that this court erred when it found that cab forward trucks were
4
safer than conventional trucks and would not unduly restrict competition. The court disagrees with
5
Morrico’s assertion and concludes that the evidence before the court supports such findings.
6
Specifically, the Declaration of Thomas Parker17 states
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The collection truck is a critical safety component in the solid waste industry.
Collection trucks with a cab forward (also referred to as cab over) design, as required
by the Receiver in its solicitation specification, is the industry standard in the United
States for safety reasons. Cab forward trucks have significantly greater visibility for
the driver, which is particularly important in areas that have potential poor sight
distances, narrow roads, the possibility of people or animals entering the roadway
suddenly, or where weather and vegetation can impact visibility. See the Anderson
Declaration documenting that these potential safety hazards are common on Guam.
ECF No. 1686 at 2.
Based on my experience, the majority of residential and commercial
collection trucks manufactured today have the cab forward design because it
represents the industry standard for safety in solid waste management.
Consequently, there are many manufacturers of collection trucks with cab forward
design. Elimination of the cab forward design requirement is inconsistent with the
industry’s standard for safety in solid waste management.
Decl. Thomas D. Parker at ¶¶6-7, ECF No. 1697 (emphasis added).
16
Additionally, the court’s finding is supported by the Declaration of R. Chace Anderson, who
17
has over 20 years o f experience in waste management. Decl. R. Chace Anderson at ¶2, ECF No.
18
1686. In Mr. Anderson’s professional experience and opinion, cab forward trucks are “demonstrably
19
safer refuse collection trucks for both the driver and the community than the conventional cab.” Id.
20
at ¶7. Thus, the court did not err in finding that collection trucks with a cab forward design was safer
21
than conventional cabs, nor did it err when it found that a cab forward specification would not
22
unduly restrict competition since “there are many manufacturers of collection trucks with cab
23
forward design,” Decl. Thomas D. Parker at ¶7, ECF No. 1697. See also Decl. R. Chace Anderson
24
25
26
27
17
Mr. Parker is a Licensed Professional Engineer with “over 30 years of civil and
environmental engineering experience specializing in solid waste management, with particular
expertise in evaluating safety in the solid waste industry.” Decl. Thomas D. Parker at ¶1, ECF
No. 1697.
United States of America v. Government of Guam, Civil Case No. 02-00022
Order re Emergency Motion for Stay Pending Appellate Review
page 17 of 21
1
at ¶9, ECF No. 1686 (“the specification for a cab-forward design is not proprietary. Several
2
manufacturers produce this design so competition is not the issue.”)
3
The court disagrees that Morrico has a substantial case for relief on the merits because there
4
are no serious legal questions regarding the Clarification Order as Morrico contends. Thus, as to the
5
first factor in the Nken decision, Morrico has not made a strong showing that it is likely to succeed
6
on the merits. Nevertheless, the court will go on to address the remaining Nken factors.
7
C. Whether Morrico will be irreparably injured absent a stay
8
With regard to the second factor, Morrico, as the movant, bears the burden of demonstrating
9
that irreparable injury is likely – not just possible – in the absence of a stay. Winter v. Nat. Res.
10
Defense Council, Inc., 555 U.S. 7, 375 (2008). Here, Morrico asserts the court’s Order has caused
11
it to sustain irreparable injury because Morrico has been “stripped . . . of its right to participate in
12
a public procurement for refuse trucks . . . after Morrico already prevailed before the [OPA] . . . and
13
. . . the Superior Court [of Guam.]” Mem. P. & A. Supp. Mot. for Stay at 15, ECF No. 1717.
14
Morrico notes that Guam’s procurement law limits the remedies of a winning protestor to bid
15
preparation costs. 5 Guam Code Ann. § 5425. Thus, without a stay, Morrico contends that it will
16
be irreparably damaged because it can only recover its bid preparation costs if it were to prevail and
17
not any loss of anticipated profits.
18
In support of its claim, Morrico cites to Acrow Corp. of America v. United States , 97 Fed.
19
Cl. 182 (2011), and Essex Eclectro Eng’rs, Inc. v. United States, 3 Cl. Ct. 277 (1983). These cases
20
found that a bid protestor is irreparably harmed when recovery is limited to bid preparation costs in
21
a suit for damages but not loss of anticipated profits. The court takes no issue with these decisions,
22
but finds they are not directly applicable here because the action before this court or the Ninth Circuit
23
Court of Appeals does not involve a bid protest. Additionally, the loss of anticipated profits is only
24
relevant if a bidder can establish it would prevail on the merits. Here, however, Morrico has failed
25
to demonstrate that it has a substantial case for relief on the merits.
26
Additionally, Morrico’s claim that it would have suffered irreparable harm by not having an
27
opportunity to compete in the procurement is unfounded. There is nothing that precluded Morrico
United States of America v. Government of Guam, Civil Case No. 02-00022
Order re Emergency Motion for Stay Pending Appellate Review
page 18 of 21
1
from bidding on the new invitation for bid which this court ordered as long as its bid met the
2
specification of the procurement, including the cab forward design. As noted above, there are many
3
manufacturers of collection trucks with the cab forward design. Just because Morrico chose not to
4
submit a bid does not entitle it to a stay pending appeal.
5
D. Whether a stay will substantially injure other parties and the public’s interest
6
Morrico asserts that there will be no substantial injury to other parties to this proceeding if
7
a stay on the procurement of cab forward trucks is imposed, but the court disagrees.
8
For instance, Morrico contends that the United States’ principal interest in these proceedings
9
is to enjoin further violation of the Clean Water Act, and this interest has been satisfied with the
10
closing of the Ordot Dump and the opening of the Layon Landfill. Mem. P.&A. Supp. Mot. for Stay
11
at 17, ECF No. 1717. The United States, on the other hand, asserts that it has a vital interest in
12
ensuring that the Receiver, on behalf of the Government of Guam, achieves expeditious compliance
13
with the Consent Decree. U.S. Resp. at 10, ECF No. 1729.
14
The Consent Decree required the Government of Guam to submit a post-closure care plan
15
and to implement it. Consent Decree at ¶¶8(b), (c) and (h), ECF No. 55. The court had previously
16
found that “funding the post-closure care of the Ordot dump is one of the most critical issues before
17
the court,” and thus it was “imperative that sufficient funds be set aside to monitor and maintain all
18
of the infrastructure (i.e., the cover system, the landfill gas collection system, the leachate collection
19
system, etc.) over the 30-year post-closure period.” Order (May 27, 2015), at 9, ECF No. 1582.
20
“[W]ithout assured funding for the maintenance of the Ordot Dump post-closure, the environmental
21
closure of the Ordot Dump [was] at risk.” Id. at 10. Eventually, the court approved the Receiver’s
22
financing plan that included a dedicated funding mechanism and fully funded post-closure care costs
23
for the Ordot Dump within eight years. Order (May 2, 2016) at 13 and 15, ECF No. 1668.
24
The court found that a further delay in procurement of the refuse collection trucks will
25
seriously impact GSWA’s ability to comply with the Consent Decree, specifically with regard to
26
financing and implementing the post-closure care plan. Clarification Order at 8-9, ECF No. 1712.
27
The procurement delay resulted in an urgent need for GSWA to replace its deteriorating fleet of
page 19 of 21
United States of America v. Government of Guam, Civil Case No. 02-00022
Order re Emergency Motion for Stay Pending Appellate Review
1
trucks. See Decl. R. Chace Anderson at ¶17, ECF No. 1686 (“We can no longer wait to procure
2
these trucks. . . . GSWA’s current fleet is well past its useful life expectancy . . . [, and] repairs and
3
maintenance costs has almost doubled” from $405,480.50 in FY2014 to $738,766.34 in FY2016).
4
Delaying the purchase of new trucks would place the quality of service to its residential customers
5
at risk, which in turn would impact a third of GSWA’s revenue since many residential customers
6
stop paying their bills when service is poor. Clarification Order at 9, ECF No. 1712. Additionally,
7
“old equipment in need of more and more maintenance work will destabilize all of GSWA’s revenue
8
since GSWA would have to rapidly spend down its reserves creating an inability for GSWA to pay
9
all of its bills.” Id. Thus, the United States is justified when it states that it has a vital interest at
10
stake here since a further stay of the procurement would negatively affect the Government of Guam’s
11
expeditious compliance with the Consent Decree.
12
Morrico’s assertion that “payment of all remaining Consent Decree projects has been secured
13
out of commercial tipping fees, ” see Mem. P.&A. Supp. Mot. for Stay at 19, ECF No. 1717, is
14
disingenuous.
15
encompasses the use of income generated from large commercial accounts only, the viability of such
16
a plan presumes that GSWA revenue from residential customers remains stable.”
As the court previously stressed,
“[w]hile [the Receiver’s] financial plan
17
Additionally, Morrico claims that GSWA has accumulated over $24 million in its accounts
18
and that “[a]ll GSWA has to do is pay a portion of those [funds] into a reserve fund.” Id. and
19
Erratum, ECF No. 1725. This is incorrect. As noted in the Receiver’s most recent status report,
20
GSWA’s cash position as of June 30, 2016, was $9.9 million. Status Report (Nov. 7, 2016) at 32,
21
ECF No. 1687-1. This represents a little more than six months of operating cash, which the court
22
agrees is reasonable and not excessive for GSWA.
23
Morrico argues that the public has a strong interest in insuring the integrity of Guam’s
24
procurement process. Mem. P.&A. Supp. Mot. for Stay at 17, ECF No. 1717. The court agrees, and,
25
as noted, above, the procurement process can proceed because a cab forward design would not
26
unduly restrict competition since many manufacturers of refuse collection trucks have such a design.
27
In addition to the impact on financing the post-closure care costs, a stay on the procurement
United States of America v. Government of Guam, Civil Case No. 02-00022
Order re Emergency Motion for Stay Pending Appellate Review
page 20 of 21
1
of cab forward trucks will negatively impact the safety of GSWA employees and the public that they
2
serve. Certainly, Morrico would not deny that the public has an interest in ensuring a safe working
3
environment for public employees. Based on the experience of the solid waste professionals –
4
Mr. Parker and Mr. Anderson – cab forward collection trucks are the industry standard for safety
5
reasons since they provide significantly greater visibility for the driver. “[C]ompetition to acquire
6
the lowest cost safe vehicle is GSWA’s goal and it should not be relegated to a less safe vehicle in
7
order to achieve a savings at the expense of the safety of its crew and the public.” Decl. R. Chace
8
Anderson at ¶9, ECF No. 1686.
9
After reviewing the various interests at stake here, the court finds that a further stay of the
10
procurement of cab forward refuse trucks would negatively impact the safety of GSWA employees
11
and the public, the service provided to residential customers, the revenue needed to operate GSWA
12
and in turn affect GSWA’s ability to expeditiously comply with the Consent Decree. Accordingly,
13
the court finds that the parties – both the United States and the Government of Guam – would be
14
substantially injured if a stay were granted and the public interest tips sharply against a stay pending
15
appeal.
16
CONCLUSION
17
Based on the above analysis, the court hereby DENIES the Motion for Stay since Morrico
18
has not met its burden of showing that circumstances justify a stay pending appeal. Because the
19
court has not granted a stay, it will also DENY the Receiver’s request that Morrico post a bond
20
pending appeal.
21
Because Morrico has indicated it will seek a stay with the appellate court, in order to allow
22
for an orderly emergency motion practice before the Ninth Circuit, the court directs the Receiver to
23
delay the awarding of the new invitation for bid until April 28, 2017. If a stay is not ordered by the
24
Ninth Circuit Court of Appeals by said date, the Receiver is directed to proceed with the
25
procurement process and awarding of contract so as not to further delay obtaining the cab forward
26
///
27
///
United States of America v. Government of Guam, Civil Case No. 02-00022
Order re Emergency Motion for Stay Pending Appellate Review
page 21 of 21
1
refuse trucks that are critical to the safety needs of GSWA and the public, as well as the operations
2
of GSWA and its ability to expeditiously achieve compliance with the Consent Decree.
3
IT IS SO ORDERED.
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/s/ Frances M. Tydingco-Gatewood
Chief Judge
Dated: Apr 07, 2017
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