United States of America v. E. I. du Pont de Nemours and Company
Filing
25
MEMORANDUM OPINION AND ORDER granting the United States' unopposed 4 MOTION to enter the proposed consent decree; the proposed consent decree is entered with the court's approval this same date; and this action is dismissed and stricken from the docket, with the court retaining jurisdiction pursuant to Article XVII of the consent decree. Signed by Judge John T. Copenhaver, Jr. on 9/25/2015. (cc: counsel of record; any unrepresented parties) (taq)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
UNITED STATES OF AMERICA,
Plaintiff,
v.
Civil Action No. 2:14-25143
E.I. Du PONT de NEMOURS
AND COMPANY
Defendant.
MEMORANDUM OPINION AND ORDER
Pending is the United States= unopposed motion to enter
the proposed consent decree, filed October 17, 2014
I.
The court incorporates here section I.B found in the
April 24, 2015, memorandum opinion and order describing the
complaint in this action.
On August 27, 2014, the United States
filed a proposed consent decree covering the claims alleged.
It
requested that no action be taken pending conclusion of the
public comment period on October 3, 2014.
On October 17, 2014,
the United States moved for entry of the proposed consent
decree.
As noted, on November 12, 2014, it moved to substitute
the proposed consent decree, which the court has allowed.
In sum, the proposed consent decree requires DuPont
(1) to pay a $1,275,000 civil penalty to resolve the United
States’ claims, and (2) as observed by the United States, “to
perform injunctive relief including enhanced training, formal
reviews of its safety procedures, and annual reporting to
resolve the Plaintiffs’ civil claims described in the
complaint.”
(Memo. in Supp. at 2).
The original memorandum in support of the proposed
consent decree was brief, spanning only five and one quarter
pages in length.
The April 24, 2015, memorandum opinion and
order sought further elaboration.
Noting the allegations were
quite serious, the court observed that “the minimal offering
precludes the court from conducting the analysis required by
controlling precedent.”
(Op. at 17).
The court continued as
follows:
For instance, the court is unaware of the regulator’s
basis for arriving at the chosen civil penalty. The
court is also unable to ascertain the strength of the
United States’ case against DuPont and the efforts
undertaken, and the information considered, by both
sides in arriving at the proposed accord.
In comparison, the court notes that the last
consent decree it entered, in the case of United
States v. Alpha Natural Resources, Inc., No 2:14-11609
(S.D. W. Va.), was accompanied by a 29-page memorandum
in support. Attached to the motion to enter the
proposed consent decree were three declarations,
including one by the Lead Environmental Scientist in
Region III of the EPA. That declaration alone, without
2
considering reference to its handling of public
comments, covered approximately thirty pages. Several
pages were devoted to discussing calculation of the
civil penalty in that case.
(Id.)
The United States was directed to file by May 26,
2015, a revised memorandum in support explaining the strength of
its case, the nature of the proposed consent decree, and those
considerations relevant to determining whether the accord is
fair, adequate and reasonable, including the method by which the
civil penalty was calculated and the efforts undertaken, and
materials considered, in arriving at the proposed settlement.
The court also sought from the United States an
inventory of the number and nature of the various per diem
violations applicable to the claims alleged, along with a
disclosure concerning whether the remediation steps to be taken
are already, absent the proposed consent decree, obligations
imposed by statute or regulation.
The court also directed the United States to address
the following matters found in the proposed consent decree:
Citation
Page 3, ¶ 4
Matter Raised
This provision should also require any
successor, assignee, parent, subsidiary, or
like transferee, subsequently exercising
authority and control over the Belle Facility,
to expressly assume in writing all of the
3
Page 6, ¶ 11
Passim
Page 10, ¶ 15
Page 12, ¶ 22
obligations imposed by the proposed consent
decree, with such written agreement to be
delivered to the EPA at least 30 days prior to
any such transfer.
The first sentence of this paragraph states:
“As of June 2011, Defendant has and will
continue to permanently cease operations of the
SAR Unit and the Phosgenation Process at the
Facility.” (Prop. Consent Dec. at 6 (emphasis
added)). The second sentence of this paragraph
states that DuPont “has no plan to resume
operations of the SAR Unit or the Phosgenation
Process at the Facility.” (Id. (emphasis
added)). It is thus unclear if DuPont will
permanently discontinue these two production
components. Additionally, the parties should
advise what procedures will be necessary if
either the SAR Unit or the Phosgenation Process
is proposed for reignition in the future.
At various points in the proposed accord,
certain reporting obligations continue only for
the first and second anniversaries of the
effective date of the proposed consent decree.
The parties should discuss the basis for
choosing to limit temporally the reporting
obligations and explain why the reporting
obligations were not imposed on an annual basis
up to the time the proposed consent decree is
terminated.
The second sentence of this paragraph provides
that certain “certification reports [at
paragraphs 12.a, 13.a, and 14.e] . . . are not
subject to review and approval . . . .” The
parties should explain why those reports are
excepted.
The final sentence of this paragraph mentions
that a certain “certification requirement does
not apply to emergency or similar notifications
where compliance would be impractical.” (Prop.
Consent Dec. at 12). In its present form, the
court is unable to ascertain the precise scope
of this carve out. The parties are directed to
further elaborate upon their intentions
respecting this provision.
4
Page 15, ¶ 31
It is stated in this paragraph that “The United
States may, in the unreviewable exercise of its
discretion, reduce or waive stipulated
penalties otherwise due it under this Consent
Decree.” (Prop. Consent Dec. at 15). The
parties should provide to the court the name or
position of the individual, or individuals, who
are vested with the necessary discretion to
accomplish the reduction or waiver.
In response, the United States filed a 24-page, revised
submission, accompanied by the declaration of Mary A. Hunt and
Michael Welsh, both of whom serve as Risk Management Program (RMP)
Coordinators assigned to the Oil and Prevention Branch of the
Hazardous Site Cleanup Division, EPA Region 3, and Paresh R.
Pandya, a chemical engineer in EPA Region 3 assigned to the Oil
and Prevention Branch of the Hazardous Site Cleanup Division.
Counsel for DuPont was directed to notice an appearance,
after which he or she was directed to file forthwith a certificate
of
authority
disclosing
that
the
corporate
signatory
on
the
proposed consent decree was duly authorized to bind the corporation
on those matters set forth in the accord.
DuPont has complied
with both requirements.
Additionally, the parties have filed a joint position
statement (“joint submission”) respecting the matters set forth
in the tabular material supra.
Although the court originally
contemplated setting an evidentiary hearing in this matter, the
5
revised submissions, along with the matters developed during an
August 14, 2015, hearing, provide the necessary basis for
assessing the fairness, adequacy and reasonableness of the
proposed consent decree.
II.
A.
The Underlying Conduct
The court incorporates here the discussion found in
part I.A of the April 24, 2015, memorandum opinion and order.
That earlier discussion is supplemented by new information
received by the court in the United States’ revised memorandum
in support and its exhibits (referred to jointly as “the
supplemental materials”).
The United States’ supplemental materials discuss in
greater detail the compliance issues and remediation efforts at
the Belle Facility.
For example, in February 2010, shortly
after the January 2010 release events, EPA inspected the Belle
Facility and conducted witness interviews.
An immediate
enforcement response occurred through the issuance of a
unilateral administrative enforcement order (“UAO”).
The UAO
required substantial corrective measures involved with the
6
January 2010 release events.
Defendant complied with the UAO
and it was terminated on December 11, 2011.
EPA then sought
follow-up information from DuPont.
Defendant produced voluminous records and documents in
response to the information request.
EPA reviewed the materials
to determine if compliance issues contributed to the subject
releases.
After finding additional violations, EPA prepared a
judicial referral requesting that the Department of Justice
(“DOJ”) take action to resolve that which EPA found to exist.
In August 2013, DOJ officially notified defendant of
the EPA referral and provided an opportunity for settlement
discussions.
During several months of discussions, defendant
provided additional information concerning the claims alleged.
The parties’ settlement negotiations ultimately consumed a year,
during which numerous in-person meetings occurred, along with
many teleconferences, letters, and email messages in an attempt
to arrive at appropriate injunctive relief and a civil penalty.
The United States consulted technical specialists, EPA
scientists, and specialists in other federal agencies to discuss
the violations and potential remedies.
The parties exchanged
multiple drafts concerning proposed injunctive relief and the
elements forming the basis for the penalty provision.
7
III.
Our court of appeals has observed that Aa consent
decree >has elements of both judgment and contract,= and is
subject to >judicial approval and oversight= generally not present
in other private settlements.@ Szaller v. American Nat. Red
Cross, 293 F.3d 148, 152 (4th Cir. 2002) (quoting Smyth v.
Rivero, 282 F.3d 268, 279-80 (4th Cir. 2002)); see also Local
No. 93, Int'l Assn. of Firefighters, AFL-CIO v. Cleveland, 478
U.S. 501, 519 (1986); United States v. ITT Continental Baking
Co., 420 U.S. 223, 237 n.10 (1975) (citation omitted); Alexander
v. Britt, 89 F.3d 194, 199 (4th Cir. 1996).
It has expanded upon this principle in Smyth,
observing that a court is expected, when presented with a
proposed consent decree, to scrutinize the accord and make
certain findings prior to entry:
Because it is entered as an order of the court, the
terms of a consent decree must also be examined by the
court. As Judge Rubin noted in United States v.
Miami,
Because the consent decree does not merely
validate a compromise but, by virtue of its
injunctive provisions, reaches into the
future and has continuing effect, its terms
require more careful scrutiny. Even when it
affects only the parties, the court should.
. . examine it carefully to ascertain not
only that it is a fair settlement but also
8
that it does not put the court's sanction on
and power behind a decree that violates
Constitution, statute, or jurisprudence.
664 F.2d at 441 (Rubin, J., concurring). In other
words, a court entering a consent decree must examine
its terms to ensure they are fair and not unlawful.
Smyth, 282 F.3d at 280.
The standards governing consideration of a proposed
consent decree are described further by United States v. North
Carolina, 180 F.3d 574, 581 (4th Cir. 1999):
In considering whether to enter a proposed consent
decree, a district court should [1] be guided by the
general principle that settlements are encouraged.
Nevertheless, a district court should not blindly
accept the terms of a proposed settlement. See Flinn
v. FMC Corp., 528 F.2d 1169, 1173 (4th Cir.1975).
Rather, before entering a consent decree the court
must satisfy itself that [2] the agreement Ais fair,
adequate, and reasonable@ and [3] Ais not illegal, a
product of collusion, or against the public interest.@
United States v. Colorado, 937 F.2d 505, 509 (10th
Cir. 1991). In considering the fairness and adequacy
of a proposed settlement, the court must assess the
strength of the plaintiff's case. See Flinn, 528 F.2d
at 1172-73. While this assessment does not require the
court to conduct Aa trial or a rehearsal of the trial,@
the court must take the necessary steps to ensure that
it is able to reach Aan informed, just and reasoned
decision.@ Id. (internal quotation marks omitted). In
particular, the Acourt should consider the extent of
discovery that has taken place, the stage of the
proceedings, the want of collusion in the settlement
and the experience of plaintiffs' counsel who
negotiated the settlement.@ Carson v. American Brands,
Inc., 606 F.2d 420, 430 (4th Cir. 1979) (en banc)
(Winter, Circuit Judge, dissenting), adopted by Carson
v. American Brands, Inc., 654 F.2d 300, 301 (4th Cir.
9
1981) (en banc)(per curiam).
Id. at 581 (emphasis supplied).
IV.
In determining whether the proposed consent decree is
fair, adequate and reasonable, the court has considered the
entirety of the revised submissions.
The court first notes the general principle that
settlements are encouraged.
That is particularly the case here,
where the proposed consent decree is sponsored by the
environmental regulator authorized by Congress to enforce the
federal laws allegedly violated.
Indeed, the court has
previously observed as follows:
The EPA and DEP are governmental agencies that
employ individuals specially trained and familiar with
the relevant scientific disciplines and governing law.
The decision to avoid what might well have been a
costly and time-consuming diversion of limited agency
resources appears to have been a reasonable one under
the circumstances.
United States v. Patriot Coal Corp., No. 2:09-0099, 2009 WL
1210622, at *5 (S.D. W. Va. Apr. 30, 2009).
Settlement also
avoids the pretrial and trial events that would otherwise have
consumed a significant amount of time and expense by the
10
parties, including the public fisc, along with a substantial
redirection of judicial resources.
Second, the proposed consent decree is entirely legal.
That document and the efforts that preceded it appear to be a
substantial undertaking.
The court originally harbored
misgivings respecting the proposed civil penalty and the
defendant’s continuing compliance obligations in the event of a
sale or transfer of the Belle Facility.
Those concerns have
been substantially resolved.
Respecting the proposed penalty, the court has now
learned through the Pandya and Hunt declarations that the
penalty amount exceeds the economic benefit calculated by EPA
for the violations at issue.
The methodology for the
calculation is also discussed at length.
The amount was agreed
upon after weighing the economic benefit, the extent and
environmental impact of the alleged violations, the penalties
assessed in similar settlements, consideration of the statutory
penalty factors, and the United States’ assessment of the
litigation risk associated with its claims.
Aside from those
considerations, the court has now learned that defendant has or
will expend at least $9,105,000 to comply with the injunctive
11
relief in complying with the UAO and the proposed consent
decree.
Respecting the question of defendant’s continuing
obligations under the proposed consent decree, the parties have
clarified that DuPont remains responsible for compliance
irrespective of any transfer or sale of the Belle Facility.
Specifically, following the August 14, 2015, hearing wherein the
court continued to express concerns about the matter, counsel
for DuPont filed a notice pleading on September 11, 2015,
attaching as Exhibit 1 a document executed by Chemours and
DuPont entitled “First Amendment to Environmental Compliance
Agreement” which Agreement is referred to therein as the
“Consent Decree Agreement.”
DuPont additionally placed of
record on that date the same parties’ “Environmental Compliance
Agreement.”
The Environmental Compliance Agreement and the
First Amendment to Environmental Compliance Agreement are, with
the parties’ earlier expressed consents via email, attached to
the proposed consent decree and incorporated in their entirety
therein.
The “First Amendment to Environmental Compliance
Agreement” provides pertinently as follows:
WHEREAS, on January 28, 2015, DuPont and Chemours
. . . executed the Consent Decree Agreement, pursuant
to which Chemours acknowledged the applicability of
12
the Consent Decree, and accepted legal responsibility
for satisfaction of all provisions of the Consent
Decree; . . . .
. . . .
WHEREAS, on June 1, 2015, Chemours sold to Optima
Belle, LLC ("Optima") certain process units at the
Belle Plant that are subject to the Consent Decree . .
. ;
WHEREAS, pursuant to an agreement executed
between Chemours and Optima, dated March 2015 and
titled "Agreement Governing Satisfaction of EPA
Consent Decree" (the "Optima Agreement"), Chemours
retained responsibility for satisfying all obligations
of the Consent Decree subsequent to the transfer of
the Optima Processes from Chemours to Optima;
WHEREAS, the Optima Agreement preserves to
Chemours all legal rights necessary for Chemours to
satisfy the obligations of the Consent Decree,
including a legal right of access to all Optima
Processes;
. . . .
NOW, THEREFORE, . . . the Parties agree to
clarify the Consent Decree Agreement through this
First Amendment as follows:
. . . .
1. All provisions of the Consent Decree Agreement
remain in fi1ll force and effect, except to the extent
modified by this First Amendment.
2. Paragraph 2 of the Consent Decree Agreement is
replaced with the following paragraph:
2. Chemours further acknowledges that Chemours
shall take legal possession of the Belle Plant
Processes subject to the rights and obligations
set forth in the Consent Decree. DuPont and
13
Chemours expressly recognize that neither the
transfer of the Belle Processes to Chemours nor
execution of this Agreement has the effect of
modifying in any way the obligations imposed
under the Consent Decree.
3. Paragraph 5 of the Consent Decree Agreement is
replaced with the following paragraph:
5. Chemours shall accept responsibility for
satisfaction of all provisions of the Consent
Decree after the Effective Date. Because DuPont,
as a named party to the Consent Decree, remains
responsible to the United States, through the
EPA, for ensuring the satisfaction of the
provisions of the Consent Decree, Chemours
further commits that, for the full period during
which DuPont is subject to the Consent Decree,
in the event that Chemours defaults on its
obligations hereunder to satisfy all provisions
of the Consent Decree:
a. Chemours shall take such actions as may
be necessary to ensure that DuPont shall
have such legal right of access to the
Belle Plant Processes necessary for DuPont
to satisfy any remaining obligations under
the Consent Decree; and
b. Chemours shall promptly provide to
DuPont all information reasonably
requested by DuPont for DuPont to satisfy
any remaining reporting and certification
requirements under the Consent Decree.
Chemours' obligations under this paragraph shall
remain in full force and effect notwithstanding the
transfer of any legal interest in the Belle Plant
Processes to any third party, including but not
limited to Optima.
(First Am. at 3-6).
These provisions are understood to require
DuPont to fulfill its obligations under the proposed consent
14
decree irrespective of any transfer of ownership in the facility
and to permit DuPont access to the facility and its records for
that purpose.
Respecting the strength of the United States’ case,
the extent of discovery that has taken place, the stage of the
proceedings, and the experience of counsel who negotiated the
settlement, the court now has necessary information from the
declarations.
In sum, the United States and counsel for
defendant engaged in months of arm’s length negotiations and had
the opportunity to explore each other’s positions at length.
Negotiations were conducted by qualified counsel for each party,
who relied on engineers, from both EPA and defendant, with
technical knowledge to develop opinions on appropriate relief.
All told, the proposed consent decree is the product of several
years of investigations and nearly a year of negotiations.
As noted, the parties were additionally directed to
address the following matters.
The summarized responses are
found in the third column below:
Citation
Page 3, ¶ 4
Matter Raised
This provision should
also require any
successor, assignee,
parent, subsidiary, or
like transferee,
15
Parties’ Response
The transferee is not
required to
expressly assume the
obligations to
implement injunctive
Page 6, ¶ 11
Passim
subsequently exercising
authority and control
over the Belle
Facility, to expressly
assume in writing all
of the obligations
imposed by the proposed
consent decree, with
such written agreement
to be delivered to the
EPA at least 30 days
prior to any such
transfer.
The first sentence of
this paragraph states:
“As of June 2011,
Defendant has and will
continue to permanently
cease operations of the
SAR Unit and the
Phosgenation Process at
the Facility.” (Prop.
Consent Dec. at 6
(emphasis added)). The
second sentence of this
paragraph states that
DuPont “has no plan to
resume operations of
the SAR Unit or the
Phosgenation Process at
the Facility.” (Id.
(emphasis added)). It
is thus unclear if
DuPont will permanently
discontinue these two
production components.
Additionally, the
parties should advise
what procedures will be
necessary if either the
SAR Unit or the
Phosgenation Process is
proposed for reignition
in the future.
At various points in
the proposed accord,
certain reporting
16
relief under the
proposed consent
decree because those
obligations will
continue to be
binding upon the
defendant regardless
of transfer.
The parties have
clarified that the
SAR Unit and the
Phosgenation Process
are permanently
discontinued.
The parties have
adequately explained
the matter at pages 6
Page 10, ¶ 15
Page 12, ¶ 22
obligations continue
only for the first and
second anniversaries of
the effective date of
the proposed consent
decree. The parties
should discuss the
basis for choosing to
limit temporally the
reporting obligations
and explain why the
reporting obligations
were not imposed on an
annual basis up to the
time the proposed
consent decree is
terminated.
The second sentence of
this paragraph provides
that certain
“certification reports
[at paragraphs 12.a,
13.a, and 14.e] . . .
are not subject to
review and approval . .
. .” The parties
should explain why
those reports are
excepted.
The final sentence of
this paragraph mentions
that a certain
“certification
17
through 8 of their
joint submission.
At page eight of the
joint submission, the
parties state as
follows: “In
negotiations, the
parties agreed it was
not necessary to
require EPA review
and approval of
DuPont’s report
certifying that its
SOPs remain current,
accurate and are
being implemented.
DuPont has a separate
legal obligation to
ensure that its SOPs
are current and
accurate under 40
C.F.R. Part 68,
Section 68.69(c),
which continues
beyond the
obligations of this
proposed Consent
Decree.” Id.
At page nine of the
joint submission, it
is stated as follows:
“[T]he United States
Page 15, ¶ 31
requirement does not
apply to emergency or
similar notifications
where compliance would
be impractical.” (Prop.
Consent Dec. at 12).
In its present form,
the court is unable to
ascertain the precise
scope of this carve
out. The parties are
directed to further
elaborate upon their
intentions respecting
this provision.
It is stated in this
paragraph that “The
United States may, in
the unreviewable
exercise of its
discretion, reduce or
waive stipulated
penalties otherwise due
it under this Consent
Decree.” (Prop.
Consent Dec. at 15).
The parties should
provide to the court
the name or position of
the individual, or
individuals, who are
vested with the
necessary discretion to
accomplish the
reduction or waiver.
includes the
language . . . so
that should an
emergency occur
requiring immediate
notice to the United
States, the Defendant
is not required to
follow the formality
of obtaining a
certification (and
the attendant delay)
before providing the
notice.” (Id.)
At page ten of the
joint submission, it
is stated as follows:
“For EPA, the
Regional
Administrator has
authority to reduce
or waive stipulated
penalties. Again,
depending on the
stipulated penalty
amount, for the
Department of
Justice, the Deputy
Chief of the
Environmental
Enforcement Section
and the Assistant
Attorney General for
the Environment and
Natural Resources
Division would have
the authority to
waive or reduce
stipulated
penalties.” (Id.)
Having taken account of all of the applicable factors,
it is apparent that the United States has fairly, reasonably,
18
and adequately obtained compliance without the cost, delay, and
misdirection of resources that might have otherwise happened
during time-consuming civil litigation.
The court, accordingly,
finds that the proposed consent decree is fair, adequate, and
reasonable.
The court further finds the accord is neither
illegal nor the product of collusion and that it serves the
public interest.
In view of these findings, and inasmuch as no
person has opposed entry of the proposed consent decree, the
court ORDERS as follows:
1.
That the United States’ unopposed motion to enter the
proposed consent decree be, and it hereby is, granted;
2.
That the proposed consent decree be, and hereby is,
entered with the court's approval this same date; and
3.
That this action be, and it hereby is, dismissed and
stricken from the docket, with the court retaining
jurisdiction pursuant to Article XVII of the consent
decree.
The Clerk is requested to transmit this written
opinion and order to all counsel of record and to any
unrepresented parties.
DATED: September 25, 2015
John T. Copenhaver, Jr.
United States District Judge
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