Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-12-15691/USCOURTS-ca9-12-15691-0/pdf.json

Nature of Suit Code: 893
Nature of Suit: Environmental Matters
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

STATE OF ARIZONA,

Plaintiff-Appellee,

v.

CITY OF TUCSON,

Intervenor-Plaintiff–Appellee,

v.

ASHTON COMPANY INCORPORATED

CONTRACTORS AND ENGINEERS;

BALDOR ELECTRIC COMPANY; DON

MACKEY OLDSMOBILE CADILLAC,

INC.; DUNN-EDWARDS

CORPORATION; DURODYNE, INC.;

FERSHA CORPORATION; FLUOR

CORPORATION; GENERAL DYNAMICS

CORPORATION; GOODYEAR TIRE &

RUBBER COMPANY; LOCKHEED

MARTIN CORPORATION; HOLMES

TUTTLE FORD, INC.; INDUSTRIAL

PIPE FITTINGS, LLC; TUCSON

FOUNDRY & MANUFACTURING

INCORPORATED; ROWE ENTERPRISES

INCORPORATED; PIMA COUNTY

COMMUNITY COLLEGE DISTRICT;

ROLLINGS CORPORATION; TEXTRON

INCORPORATED; ABB

INCORPORATED; COMBUSTION

No. 12-15691

D.C. No.

4:10-cv-00634-

CKJ

OPINION

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2 ARIZONA V. RAYTHEON CO.

ENGINEERING INCORPORATED;

TEXAS INSTRUMENTS, INC.; TUCSON

DODGE INCORPORATED; WARNER

PROPELLER & GOVERNOR

COMPANY, LLC; FLUOR

ENTERPRISES, INC.,

Defendants-Appellees,

v.

RAYTHEON COMPANY; PIMA

COUNTY,

Intervenors-Appellants,

UNIVERSITY OF ARIZONA; ARIZONA

BOARD OF REGENTS; TOMKINS

INDUSTRIES, INC.; TUCSON AIRPORT

AUTHORITY; TUCSON ELECTRIC

POWER COMPANY,

 Intervenor-Defendants–Appellants.

Appeal from the United States District Court

for the District of Arizona

Cindy K. Jorgenson, District Judge, Presiding

Argued and Submitted

February 10, 2014—San Francisco, California

Filed August 1, 2014

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ARIZONA V. RAYTHEON CO. 3

Before: Consuelo M. Callahan and Milan D. Smith, Jr.,

Circuit Judges, and Edward R. Korman, Senior District

Judge.*

Opinion by Judge Milan D. Smith, Jr.;

Partial Concurrence and Partial Dissent by Judge Callahan

SUMMARY**

Environmental Law

The panel affirmed in part and reversed in part the district

court’s order approving consent decrees in an action under

the Comprehensive Environmental Response Compensation

and Liability Act.

The panel reaffirmed that a district court has an obligation

to independently scrutinize the terms of CERCLA consent

decrees by, among other things, comparing the proportion of

total projected costs to be paid by the settling parties with the

proportion of liability attributable to them. The panel

concluded that the district court properly declined to issue

declaratory relief regarding intervening parties’ future

CERCLA liability because the intervenors did not request

such relief in their complaints. The panel further held that the

district court erred in entering the parties’ proposed CERCLA

* The Honorable Edward R. Korman, Senior District Judge for the U.S.

District Court for the Eastern District of New York, sitting by designation.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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4 ARIZONA V. RAYTHEON CO.

consent decrees, because the court failed to independently

scrutinize the terms of the agreements, and in so doing,

afforded undue deference to the Arizona Department of

Environmental Quality.

Judge Callahan concurred in part and dissented in part. 

She agreed with Part I of the majority’s decision where it

concluded that the district court properly denied the

intervenors’ request for declaratory relief. She dissented

from Part II of the majority’s decision because she would

conclude that the district court properly approved the

proposed consent decrees.

COUNSEL

Jennifer B. Anderson (argued), Kevin D. Neal, Lori L.

Voepel, and Erin E. Richardson, Jones, Skelton & Hochuli,

PLC., Phoenix, Arizona; Harlan C. Agnew, Pima County

Attorney’s Office, Tucson, Arizona; Cynthia T. Kuhn, Kuhn

Young Law Firm, PLLC, Tucson, Arizona; Charles A.

Bischoff, Jorden Bischoff &Hiser, PLC, Scottsdale, Arizona;

James J. Dragna and Denise G. Fellers, Bingham &

McCutchen, Los Angeles, California; James Francis Murphy,

Adler Murphy & McQuillen LLP, Chicago, Illinois; and

Robert M. Jackson, Honigman Miller Schwartz & Cohn,

Detroit, Michigan, for Intervenor–Defendants–Appellants.

Jeffrey Cantrell (argued), Tom Horne, Tamara Huddleston,

and AnthonyYoung, Office of the Arizona AttorneyGeneral,

Phoenix, Arizona, for Plaintiffs-Appellees.

Patrick J. Paul (argued) and Martha E. Gibbs, Snell & Wilmer

LLP, Phoenix, Arizona; Christopher D. Thomas and Matthew

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ARIZONA V. RAYTHEON CO. 5

L. Rojas, Squire Sanders, LLP, Phoenix, Arizona; Eric

Lukingbeal, Robinson & Cole LLP, Hartford, Connecticut;

Edward A. Cohen, Thompson Coburn LLP, St. Louis,

Missouri; Carla A. Consoli and Jon Weiss, Lewis and Roca

LLP, Phoenix, Arizona; Richard M. Yetwin, Michael R.

Urman, John C. Richardson, and John Charles Emerson

Barrett, DeConcini McDonald Yetwin & Lacey, P.C.,

Tucson, Arizona; Randolph G. Muhlestein, Musick Peeler &

Garrett, LLP, Los Angeles, California; John F. Cermak, Jr.

and Sonja A. Inglin, Baker & Hostetler LLP, Los Angeles,

California; Phillip F. Fargotstein and Theresa DwyerFederhar, Fennemore Craig PC, Phoenix, Arizona; Joel L.

Herz, Law Offices of Joel L. Herz, Tucson, Arizona; Charles

S. Price and Mariscal Weeks, McIntyre & Friedlander, PA,

Phoenix, Arizona; Mary T. Holohan, Fluor Enterprises, Inc.,

Irving, Texas; Howard T. Roberts, Jr., Goering, Roberts,

Rubin, Brogna, Enos & Treadwell-Rubin, P.C., Tucson,

Arizona; Alan N. Bick and Heather D. Hearne, Gibson, Dunn

& Crutcher LLP, Irvine, California; Jeffrey G. Baxter and

Sean E. Brearcliffe, Rusing Lopez & Lizardi, PLLC, Tucson,

Arizona; Dennis A. Rosen, Law Offices of Dennis A. Rosen,

Tucson, Arizona; Mitchell J. Klein, Polsinell Shughart, PC,

Phoenix, Arizona; Jeremy A. Lite, Quarles & Brady LLP,

Tucson, Arizona; Stephen D. Hoffman, Lewis Brisbois

Bisgaard & Smith, LLP, Phoenix, Arizona, for DefendantsAppellees.

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6 ARIZONA V. RAYTHEON CO.

OPINION

M. SMITH, Circuit Judge:

In this appeal, we address a district court’s obligation to

scrutinize the terms of a proposed consent decree under the

Comprehensive Environmental Response Compensation and

Liability Act, 42 U.S.C. § 9601–75 (CERCLA). In so doing,

we reaffirm that a district court has an “obligation to

independently scrutinize the terms of [such agreements],” by,

inter alia, comparing “the proportion of total projected costs

to be paid by the [settling parties] with the proportion of

liability attributable to them.” United States v. Montrose

Chem. Corp. of Cal., 50 F.3d 741, 747 (9th Cir. 1995)

(internal quotation marks and emphasis omitted).

We conclude that the district court properly declined to

issue declaratory relief regarding the intervening parties’

(Intervenors) future CERCLA liability. We further hold that

the district court erred in entering the parties’ proposed

CERCLA consent decrees, because the court failed to

independently scrutinize the terms of the agreements, and in

so doing, afforded undue deference to the Arizona

Department of Environmental Quality(ADEQ). We therefore

affirm in part, reverse in part, and remand for further

proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

This case concerns liability under CERCLA and its state

law counterpart, the Arizona Water Quality Assurance

Revolving Funds (WQARF), A.R.S. § 49-281–391, for

cleanup costs resulting from the contamination of the

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ARIZONA V. RAYTHEON CO. 7

Broadway-Patano Landfill Site (the Site)—a hazardous waste

site in Tucson, Arizona.

In January 2009, following an extensive investigation by

the ADEQ, the State of Arizona filed a petition in the United

States District Court for the District of Arizona, seeking to

preserve the testimony of Ernest Joseph Blankinship—an

elderly witness who had extensive knowledge of the Site’s

contamination. During the course of the proceedings, several

parties, who were potentially responsible for the Site’s

contamination (i.e., potentially responsible parties),

approached the State seeking to enter into early settlement

agreements, releasing them from additional liability under

CERCLA and WQARF.

On June 18, 2010, the State sent early settlement offers to

those parties who requested early agreements, and the State

ultimately reached eighteen proposed agreements with

twenty-two parties. The proposed agreements require the

settling parties to pay specified damages to the State, in

exchange for a full release of liability under CERCLA and

WQARF. Consistent with Section 113(f)(2) of CERCLA, the

proposed agreements further release the settling parties from

any obligation to pay contribution to non-settling parties in

the future. See 42 U.S.C. § 9613(f)(2).

In order to obtain judicial approval of the proposed

agreements under 42 U.S.C. § 9613(f)(2), the State initiated

this action against the settling parties(Defendants-Appellees),

alleging liability for the Site’s cleanup under CERCLA and

WQARF. Shortly thereafter, the State filed public notice of

its intent to enter into consent decrees with the DefendantsAppellees. A number of non-settling parties filed comments

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8 ARIZONA V. RAYTHEON CO.

objecting to the proposed consent decrees and the State filed

responses.

On March 11, 2011, the State filed a motion to enter the

consent decrees. The State’s motion explained that the total

estimated cost of remediation was $75 million, and that the

State calculated the liability of the settling parties to be de

minimis—0.01% to 0.2% of the total cost. Several potentially

responsible parties, who were not parties to the settlements,

subsequently moved to intervene in the action.1 The district

court granted these motions over the State’s objection.2

1 The State informed Intervenors that the State considered them to be

potentially responsible parties for contamination at the Site. The State sent

each Intervenor a settlement offer, but Intervenors rejected these

agreements.

2 After granting the motions to intervene, the court ordered the parties

to brief whether additional discovery was necessary prior to the court’s

ruling on the State’s motion to enter consent decrees. The State took the

position that additional discovery was not necessary. Intervenors

disagreed. The court ultimately declined to order formal discovery, but

instead ordered the State to supplement its motion to enter consent decrees

with “additional information regarding the [] formula/methodology used

to calculate settlement amounts.” On appeal, Intervenors challenge the

district court’s order denying formal discovery.

“[B]road discretion is vested in the trial court to permit or deny

discovery, and its decision to deny discovery will not be disturbed except

upon the clearest showing that denial of discovery results in actual and

substantial prejudice to the complaining litigant.” Hallett v. Morgan,

296 F.3d 732, 751 (9th Cir. 2002) (internal quotation marks omitted).

Here, the district court did not abuse its discretion in ordering the State to

provide additional information through supplemental briefing, in lieu of

ordering formal discovery.

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ARIZONA V. RAYTHEON CO. 9

Intervenors opposed the State’s motion to enter the

consent decrees. In so doing, they primarily argued that the

State did not provide sufficient information for the parties or

the court to determine whether the consent decrees were

substantively “fair, reasonable, and consistent with

CERCLA’s objectives.” Montrose, 50 F.3d at 748.

Intervenors’ brief in opposition to the motion further

requested a court order declaring that the State could not, in

the future, hold Intervenors jointly and severally liable for

costs related to the Site’s cleanup.3

The district court denied Intervenors’ request for

declaratoryrelief and issued a twelve-page opinion approving

the consent decrees. The district court’s opinion lays out the

procedural background of this case and the legal framework

under which proposed CERCLA consent decrees are

reviewed. Although the district courtrecognized its obligation

to independently scrutinize the terms of the settlements, the

district court did not engage in a substantive analysis of the

settlements’ terms. In approving the consent decrees, the

court declined to even discuss the parties’ individual or

aggregate settlement amounts, and merely deferred to the

ADEQ’s judgment that “the public interest is best served

through entry of th[e] agreement[s].” Intervenors timely

appealed.

3 Throughout this litigation, the State has asserted that WQARF

prohibits the State from holding Intervenors jointly and severally liable in

future litigation. CERCLA contains no such limitation. See Burlington N.

& Santa Fe Ry. Co. v. United States, 556 U.S. 599, 614 (2009) (liability

under CERCLA is generally joint and several).

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10 ARIZONA V. RAYTHEON CO.

JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction under 28 U.S.C. § 1291. We review

a district court’s grant or denial of declaratory relief for abuse

of discretion. Cal. Ass’n of Rural Health Clinics v. Douglas,

738 F.3d 1007, 1011 (9th Cir. 2013). We also review the

approval of a consent decree for abuse of discretion. Turtle

Island Restoration Network v. U.S. Dep’t of Commerce, 672

F.3d 1160, 1165 (9th Cir. 2012) (citing Montrose, 50 F.3d at

746). For the following reasons, we affirm in part, vacate in

part, and remand.

DISCUSSION

I. The District Court Properly Denied Intervenors’

Request for Declaratory Relief

We affirm the district court’s order denying Intervenors’

request for declaratory relief, because this request was not

properly before the district court.

Under the Declaratory Judgment Act, 28 U.S.C.

§§ 2201–02, “any court of the United States, upon the filing

of an appropriate pleading, may declare the rights and other

legal relations of any interested party seeking such

declaration . . . .” 28 U.S.C. § 2201.

A request for declaratory relief is properly before the

court when it is pleaded in a complaint for declaratory

judgment. Kam-Ko Bio-Pharm Trading Co. Ltd-Australasia

v. Mayne Pharma (USA) Inc., 560 F.3d 935, 943 (9th Cir.

2009). Requests for declaratory judgment are not properly

before the court if raised only in passing, or by motion. Id.

(denying “motion for declaratory judgment” because such a

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ARIZONA V. RAYTHEON CO. 11

motion is “inconsistent with the Federal Rules” (internal

quotations marks omitted)).

Here, Intervenors’ request for declaratory relief was not

properly before the district court. Intervenors did not request

this relief in their complaints. Rather, they requested an order

regarding their future liability in their brief opposing the

State’s motion to enter the consent decrees. If Intervenors

wish to obtain a declaratory judgment, they must either file a

separate action seeking such relief, or move to amend their

complaints on remand. Id.

II. The District Court Erred in Entering the Consent

Decrees

We vacate and remand the district court’s order approving

the consent decrees, because the court failed to independently

scrutinize the terms of the agreements, see Montrose, 50 F.3d

at 747–48, and in so doing, afforded undue deference to the

ADEQ.

A. Legal Standard

1. CERCLA

“CERCLA is a comprehensive statute that [among other

things] grants the President broad power to command

government agencies and private parties to clean up

hazardous waste sites.” Key Tronic Corp. v. United States,

511 U.S. 809, 814 (1994). We have explained:

[T]he Federal Government may clean up a

contaminated area itself . . . or it may [seek an

injunction to] compel responsible parties to

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12 ARIZONA V. RAYTHEON CO.

perform the cleanup . . . . Under the first

option . . . the government pays for the

cleanup [using Superfund money] under

§ 9604 and then seeks recovery for its costs

from [potentially responsible parties] under

§ 9607. This option has an obvious drawback

for the government: It must pay first and sue

for recovery of costs later (often in protracted

litigation). The second option—compelling

[potentiallyresponsible parties]to perform the

cleanup—therefore has its advantages.

City of Rialto v. W. Coast Loading Corp., 581 F.3d 865, 869

(9th Cir. 2009) (internal quotations and citations omitted).

CERCLA also encourages states, localities, and private

parties to assist in the cleanup of hazardous waste sites.

Under Section 104, a state may enter into a contract with the

Environmental Protection Agency (EPA), pursuant to which

both the state and the EPA engage in cleanup efforts on a

cost-sharing basis. 42 U.S.C. § 9604(c), (d). A state may also

independently engage in CERCLA remediation efforts, so

long as those efforts are not inconsistent with the EPA’s

National Contingency Plan. See New York v. Shore Realty

Corp., 759 F.2d 1032, 1047–48 (2d Cir. 1985).

CERCLA imposes strict liability on certain classes of

parties who are potentially responsible for a site’s

contamination. Burlington, 556 U.S. at 608; Anderson Bros.,

Inc. v. St. Paul Fire and Marine Ins. Co., 729 F.3d 923, 929

(9th Cir. 2013). Under Section 107(a), the federal government

or a state can sue responsible parties for “all costs of removal

or remedial action incurred by the United States Government

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ARIZONA V. RAYTHEON CO. 13

or a State . . . not inconsistent with the [EPA’s] [N]ational

[C]ontingency [P]lan.” 42 U.S.C. § 9607(a)(4)(A).4

CERCLA liability is generally joint and several, see

Anderson, 729 F.3d at 926, 930, and a defendant seeking to

avoid joint and several liability “bear[s] the burden of proving

that a reasonable basis for apportionment exists,” Burlington,

556 U.S. at 614. A defendant who is held jointly and

severally liable under Section 107 may, however, seek

contribution from other responsible parties under Section

113(f)(1). 42 U.S.C. § 9613(f)(1); Cooper Indus., Inc. v.

Aviall Servs., Inc., 543 U.S. 157, 162–63 (2004).

2. Early Settlements 

“Congress sought through CERCLA . . . to encourage

settlements that would reduce the inefficient expenditure of

public funds on lengthy litigation.” Chubb Custom Ins. Co. v.

Space Sys./Loral, Inc., 710 F.3d 946, 971 (9th Cir. 2013)

(quoting In re Cuyahoga Equip. Corp., 980 F.2d 110, 119 (2d

Cir. 1992)). Consistent with this objective, Section 113(f)(2)

provides that a party who has resolved its CERCLA liability

through a judicially approved consent decree “shall not be

liable [to other responsible parties]for claims for contribution

4 The state need not obtain EPA authorization to engage in CERCLA

remediation efforts and to recover costs under Section 107. Shore Realty,

759 F.2d at 1047–48 (“[W]e reject [the] argument that the State’sresponse

costs are not recoverable because the State has failed to . . . obtain[] EPA

authorization . . . . Congress envisioned states’ using their own resources

for cleanup and recovering those costs from polluters under section

9607(a)(4)(A). We read section 9607(a)(4)(A)’s requirement of

consistency with the [National Contingency Plan] to mean that states

cannot recover costs inconsistent with the response methods outlined in

the [EPA’s National Contingency Plan].”).

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14 ARIZONA V. RAYTHEON CO.

regarding matters addressed in the settlement.” 42 U.S.C.

§ 9613(f)(2). This statutory framework contemplates that

potentially responsible parties who do not enter into early

settlement agreements mayultimately bear a disproportionate

share of the CERCLA liability. For this reason, potentially

responsible parties who do not enter into such agreements

have standing to intervene in CERCLA actions to oppose the

entry of CERCLA consent decrees. United States v. Aerojet

Gen. Corp., 606 F.3d 1142, 1150–53 (9th Cir. 2010).

3. Standard of Review

In order to approve a CERCLA consent decree, a district

court must conclude that the agreement is procedurally and

substantively “fair, reasonable, and consistent with

CERCLA’s objectives.” Montrose, 50 F.3d at 748. “Fair” and

“reasonable” are comparative terms. Id. at 747. Thus, in order

to approve a CERCLA consent decree, a district court must

find that the agreement is “based upon, and roughly

correlated with, some acceptable measure of comparative

fault, apportioning liability among the settling parties

according to rational (if necessarily imprecise) estimates of

how much harm each [potentially responsible party] has

done.” United States v. Charter Int’l Oil Co., 83 F.3d 510,

521 (1st Cir. 1996) (quoting United States v. Cannons Eng’g

Corp., 899 F.2d 79, 87 (1st Cir. 1990)).

In approving a CERCLA consent decree, the district court

has an “obligation to independently scrutinize the terms of

[the agreement].” Montrose, 50 F.3d at 747 (internal

quotation marks omitted). In so doing, the court must “gauge

the adequacy of settlement amounts to be paid by settling

[parties by comparing] the proportion of total projected costs

to be paid by the settlors with the proportion of liability

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ARIZONA V. RAYTHEON CO. 15

attributable to them, and then . . . factor into the equation any

reasonable discount for litigation risks, time savings, and the

like . . . .” Id. (emphasis omitted); Charter Int’l Oil, 83 F.3d

at 515 (holding that the district court’s assessment must

include “an appraisal of what the government is being given

by the [settling party] relative to what the [settling party] is

receiving”). A district court abuses its discretion where it

does not fulfill its obligation to engage in this comparative

analysis. Montrose, 50 F.3d at 746–47.

We have further explained that the district court’s review

of a CERCLA consent decree may not be made in an

“informational vacuum,” or where the record contains “no

evidence at all on an important point.” Id. But, the mere fact

that evidence sufficient to evaluate the terms of an agreement

is either before the court or purportedly in the parties’

possession is not alone sufficient. The district court must

actually engage with that information and explain in a

reasoned disposition why the evidence indicates that the

consent decrees are procedurally and substantively “fair,

reasonable, and consistent with CERCLA’s objectives.” Id.

at 748. As we have explained in other contexts: “Without

some indication or explanation of how the district court

arrived at [its conclusion], it is simply not possible for this

court to review [the district court’s determination] in a

meaningful manner,” and we have no way of knowing

whether the district court abused its discretion. Padgett v.

Loventhal, 706 F.3d 1205, 1208 (9th Cir. 2013) (internal

quotation marks omitted).

B. Application

Although the district court recognized its obligation to

independently scrutinize the settlements, “[a]cknowledging

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16 ARIZONA V. RAYTHEON CO.

that obligation and fulfilling it . . . are two different things.”

Montrose, 50 F.3d at 746. And here, the district court failed

to adequately review the agreements.

Montrose requires that the district court “gauge the

adequacy of settlement amounts to be paid by settling

[parties]” by engaging in a comparative analysis. Id. at 747.

But nowhere in the district court’s opinion is there an analysis

comparing each party’s estimated liability with its settlement

amount, or an explanation of why the settlements are “fair,

reasonable, and consistent with CERCLA’s objectives.” Id.

at 748. The court’s entire numerical analysis is found in a

single footnote, which provides: “The State’s analysis

indicates that, based upon a preliminary estimate of remedial

action costs of $75 Million, the range of liability for each

settling party extended from 0.01% of the estimated total

clean up costs to 0.2%, or as expressed in dollar figures, from

$10,000.00 to $150,750.00.” The opinion goes on to

acknowledge, however, that the State did not provide any

evidence supporting this estimated liability, or even

“information from which the [district court could] confirm

that the settling parties are [in fact] de minimis contributors.”

The opinion even fails to mention the parties’ individual or

aggregate settlement amounts.

Rather than engaging in the analysis that Montrose

requires, the district court merely accepted the State’s

representation that the settlements were substantively fair and

reasonable because: “[t]he State . . . informed the Court of the

factual bases(files, interviews, documents) for its conclusions

. . . [and] explained the methods (software, past costs,

estimates) to reach remediation costs.” In so doing, the court

did not fulfill its responsibilities to independently assess the

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ARIZONA V. RAYTHEON CO. 17

adequacy of the agreements and to provide a reasoned

explanation for its decision.

In declining to substantively engage with the parties’

proposed agreements, the district court further explained that

“review of the specific evidence relating to each party would

require [the district court] to conduct an in-depth review of

the evidence, second guess the agency, and deny the required

deference to [the] ADEQ.” According to the district court, it

must defer to the ADEQ’s judgment “unless it is arbitrary,

capricious, and devoid of any rational basis.”5

As the First Circuit has observed, “almost all of the law

regarding approval of CERCLA consent decrees comes from

cases in which the [EPA is] a party.” City of Bangor v.

Citizens Commc’ns Co., 532 F.3d 70, 89 (1st Cir. 2008). In

such cases, the approval of a CERCLA consent decree

“reaches the appellate level ‘encased in a double layer of

swaddling.’” Montrose, 50 F.3d at 746 (quoting Cannons,

899 F.2d at 84); see also United States. v. George A. Whiting

Paper Co., 644 F.3d 368, 372 (7th Cir. 2011). The first layer

of swaddling requires the district court to “refrain from

second-guessing the Executive” and to defer to the EPA’s

expertise. Montrose, 50 F.3d at 746 (quoting Cannons,

5 The State argues that under 42 U.S.C. § 9607(f)(2)(C) the State’s

judgment is entitled to a “rebuttable presumption of correctness.” But this

“presumption of correctness” specifically applies to an appointed trustee’s

natural resource damage assessment that is performed pursuant to the

procedures set out in 42 U.S.C. § 9651(c). No such assessment is at issue

here.

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18 ARIZONA V. RAYTHEON CO.

899 F.2d at 84).6 This is so, because “considerable weight [is]

accorded to [a federal] executive department’s construction

of a statutory scheme it is entrusted to administer . . . .”

Mead, 533 U.S. at 227–28 (internal quotation marks omitted).

We then defer to the district court’s judgment and review its

approval of the proposed agreement for abuse of discretion.

Montrose, 50 F.3d at 746.

But where a state, as opposed to the federal government,

is a party to a proposed CERCLA consent decree, we do not

defer to the state to the same degree as we would the federal

government.7 Bangor, 532 F.3d at 93–94. In Montrose we

6 The deference we owe to a federal agency’s administration of statutes

it is charged with enforcing varies with the circumstances. United States

v. Mead Corp., 533 U.S. 218, 227–28 (2001). While the courts of appeals

agree that the EPA is afforded significant deference when it seeksjudicial

approval of a proposed CERCLA consent decree, courts have not

established whether the deference that we afford the EPA is the deference

described in Chevron U.S.A., Inc. v. Natural Resources Defense Council,

Inc., 467 U.S. 837 (1984), the deference described in Skidmore v. Swift &

Co., 323 U.S. 134 (1944), or some other type of deference.

7 Our dissenting colleague faults us for discussing deference and

suggests that the issue of whether the district court abused its discretion

in approving the consent decrees can be separated from “[the] different

issue” of the degree to which a district court ought to defer to a state’s

decision to enter into an early settlement under CERCLA. While these two

issues may be “different,” they are inextricably intertwined. We cannot

decide whether a judge abused her discretion in approving a consent

decree without deciding what degree of deference is owed to the party

proposing the agreement. This is so because the threshold issue in

deciding whether a district court abused its discretion is whether the

district court “identified the correct legal rule to apply to the relief

requested.” Perry v. Brown, 667 F.3d 1078, 1084 (9th Cir. 2012) (internal

quotation marks omitted). For this reason, if the district court applied the

wrong deferential standard of review in assessing the consent decrees, we

must hold that the court abused its discretion for that reason alone.

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ARIZONA V. RAYTHEON CO. 19

adopted the First Circuit’s “double-swaddling” test to review

CERCLA consent decrees sponsored by the EPA.

Nonetheless, we declined to apply or discuss this test in

Arizona v. Components Inc., 66 F.3d 213, 215 (9th Cir. 1995),

a case involving a state sponsored CERCLA settlement,

which we decided just six months after Montrose. In

Components, we merely held that there was sufficient

evidence before the district court for it to review the statesponsored consent decree and that the district court properly

reviewed that evidence. Id. at 216–17. We declined to discuss

what, if any deference, was owed to the state agency’s

interpretation of CERCLA.

The First Circuit has similarly declined to apply its

“double-swaddling” standard to CERCLA consent decrees

sponsored by state agencies. In Bangor, the First Circuit held:

Federal courts generally defer to a state

agency’s interpretation of those statutes it is

charged with enforcing, but not to its

interpretation of federal statutes it is not

charged with enforcing.

We choose to accord some deference to [the

state’s] decision to sign onto the [c]onsent

[d]ecree, but not the same amount of

deference we would accord the EPA in a

consent decree involving the United States.

We give deference in recognition that the state

agency has some expertise. This lesser

deference does not displace the baseline

standard of review for abuse of discretion.

Bangor, 532 F.3d at 94 (internal citations omitted).

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20 ARIZONA V. RAYTHEON CO.

We find the reasoning of the First Circuit on this issue

persuasive, and we hold that where state agencies have

environmental expertise they are entitled to “some deference”

with regard to questions concerning their area of expertise.

But “[a]state agency’s interpretation of federal statutesis not

entitled to the deference afforded [to] a federal agency’s

interpretation of . . . statutes” that it is charged with

enforcing. Orthopaedic Hosp. v. Belshe, 103 F.3d 1491, 1495

(9th Cir. 1997) (emphasis added); see also Bangor, 532 F.3d

at 94. Applying these principles, if the district court finds that

the ADEQ has expertise concerning the cleanup of the Site,

it may afford “some deference” to the ADEQ’s judgment

concerningthe environmental issues underlying the CERCLA

consent decrees at issue in this case.

8 The ADEQ is not

entitled to deference, however, concerning its interpretation

of CERCLA’s mandate. Nor may the district court abdicate

its responsibility to independently determine that the

agreements are “fair, reasonable, and consistent with

CERCLA’s objectives,” Montrose, 50 F.3d at 748, by

deferring to the ADEQ’s judgment that the agreements satisfy

Montrose.9

8 State agencies, including those charged with enforcing environmental

laws, may vary from state to state in terms of their competence, their

resources, and their philosophies concerning the enforcement of

environmental laws. These considerations are ones that a district judge

may properly take into account in assessing the deference owed to an

agency’s expertise.

9 The dissent concedes that whether a particular agreement is “fair,

reasonable, and consistent with CERCLA’s objectives,” Montrose,

50 F.3d at 748, “may present questions of statutory interpretation.” See

Orthopaedic Hosp., 103 F.3d at 1495–96 (“[a] state agency’s

interpretation of federal statutes is not entitled to the deference afforded

[to] a federal agency’s interpretation of . . . statutes” that it is charged with

enforcing).

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ARIZONA V. RAYTHEON CO. 21

CONCLUSION

Even if the EPA had been a party to the proposed consent

decrees in this case, the district court would have failed to

fulfill its duty to independently scrutinize the parties’

agreements, as required by Montrose. That error is

compounded where, as here, the court deferred completely to

a state agency’s judgment that the proposed agreements were

fair, reasonable, and consistent with federal law. See id.

For these reasons, we vacate the district court’s order

entering the consent decrees, and we remand for the court to

reconsider the agreements under the principles set forth in

this opinion. In reaching this conclusion, we express no

opinion as to whether the consent decrees at issue in this case

ought to be affirmed on remand, after the district court has

fulfilled the responsibilities discussed in this opinion.10

AFFIRMED IN PART, VACATED IN PART, AND

REMANDED.

10 The dissent has undertaken a review of the record de novo, and,

having done so, concludes that there is sufficient evidence in the record to

approve the consent decrees. This is contrary to the law of our circuit. The

decision of whether to approve consent decrees in the first instance is

entrusted to the sound discretion of the district court, not to our court. For

this reason, if a district court fails to engage in the appropriate analysis, we

are required to remand for the district court to complete its work. See

Montrose, 50 F.3d at 743, 748.

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22 ARIZONA V. RAYTHEON CO.

CALLAHAN, Circuit Judge, concurring, in part, and

dissenting, in part:

I agree with Part I of the majority’s decision where it

concludes that the district court properly denied the

intervening parties’ (“Intervenors”) request for declaratory

relief and did not abuse its discretion in denying the

Intervenors’ request for formal discovery. However, because

I would conclude that the district court properly approved the

proposed consent decrees, I dissent from Part II of the

majority’s decision.

The issue on appeal is whether the district court abused

its discretion in approving consent decrees that the State

of Arizona entered into with a number of potentially

responsible parties (“PRPs”) under the Comprehensive

Environmental Response, Compensation, and Liability Act

(“CERCLA”), 42 U.S.C. §§ 9601–75. In the process of

deciding that question, however, the majority raises and

decides— incorrectly in my opinion—a different issue: the

degree to which a district court ought to defer to a state’s

decision to enter into an early settlement with PRPs under

CERCLA. Although the majority recognizes that state

agencies may have environmental expertise and be entitled to

“some deference” with regard to “environmental issues,” it

goes on to suggest that the states and their environmental

agencies are entitled to no deference in their decisions to

enter into early settlements with PRPs. In doing so, the

majority fails to recognize the critical role that Congress

envisioned for the states under CERCLA and expands the

level of scrutiny required for state-sponsored CERCLA

settlements. The majority’s decision is inconsistent with the

principles that guide our review of consent decrees in general

and the decisions of our sister circuits in this context. The

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ARIZONA V. RAYTHEON CO. 23

decision will ultimately make it more difficult for states to

play the role that Congress envisioned for them in

remediating the numerous polluted sites that blight our

nation. Applying the proper level of deference in this case,

I would hold that the district court did not abuse its discretion

when it approved the consent decrees.

I

Arizona brought this action seeking remediation coststhat

it incurred and expected to incur under CERCLA, 42 U.S.C.

§ 9607(a), and Arizona’s parallel law, the Water Quality

Assurance Revolving Fund (“WQARF”), Arizona Revised

Statutes § 49-285. As the majority acknowledges, several

PRPs approached Arizona early on during its investigation

seeking to enter into settlements. Arizona sent early

settlement offers to all PRPs. After reaching agreements with

some of them, Arizona filed the present action and shortly

thereafter, filed a motion seeking approval of the consent

decrees.

The district court subsequently ordered Arizona to

supplement its motion. Arizona then submitted an affidavit

with supporting materials from Ana I. Vargas, an Arizona

Department of Environmental Quality (“ADEQ”) chemical

engineer. Vargas explained that ADEQ relied on EPA

guidelines that allocate responsibility by PRP category (i.e.,

owner/operator, transporter, generator/arranger). Applying

these guidelines, ADEQ reviewed the available information

to come up with responsibility allocations for each PRP. For

example, owners’ and operators’ allocations were largely

based on length of ownership or operation, while generators’

and transporters’ allocations were based primarilyon volume. 

Thus, ADEQ allocated each generator a share of liability

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24 ARIZONA V. RAYTHEON CO.

based on volume and other factors which was multiplied by

0.60 (corresponding to the 60% allocation for

generators/arrangers),which resulted in a final apportionment

of liability for the generator. Vargas also provided a

breakdown of ADEQ’s $75 million total cost estimate, of

which, the settlements totaled $512,000. ADEQ then

multiplied each PRP’s share of liability by the cost estimate

to arrive at an individualized settlement offer for each PRP. 

Accordingly, under ADEQ’s formula, each settling defendant

paid damages directly corresponding to ADEQ’s estimated

apportionment of liability.

The allocations were based upon ADEQ’s review of 800

witness interviews and 100,000 pages of documents and its

analysis of “information about the site to determine those

areas about which it had no information.” Arizona provided

that information to the Intervenors. Although Vargas did not

specify how ADEQ arrived at each PRP’s specific allocation

or settlement figure, she explained that ADEQ had proceeded

in accord with EPA guidelines, which provide that “EPA will

not provide a detailed explanation for the results due to the

enforcement-sensitive nature of the discussions involved.”

The Intervenors argued that Arizona had not supplied

enough information for the court to approve the consent

decrees because it had not specified what information it used

to arrive at each PRP’s apportionment of liability or the cost

calculation for each PRP. In its decision approving the

consent decrees, the district court observed that courts “give

deference to the government’s evaluation of” proposed

consent decrees, citing Arizona ex rel. Woods v. Nucor Corp.,

825 F. Supp. 1452, 1456 (D. Ariz. 1992), aff’d on other

grounds sub nom. Arizona v. Components Inc., 66 F.3d 213,

215 (9th Cir. 1995). The court then reviewed the record, and

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ARIZONA V. RAYTHEON CO. 25

relying heavily on Vargas’s affidavit, determined that

Arizona had provided sufficient information for it to evaluate

the settlements. The district court noted: “The State’s

analysis indicates that, based upon a preliminary estimate of

remedial action costs of $75 Million, the range of liability for

each settling party extended from 0.01% of the estimated

total clean up costs to 0.2%, or as expressed in dollar figures,

from $10,000.00 to $150,750.00.” The district court further

explained:

The State has informed the Court of the

factual bases (files, interviews, documents)

for its conclusions. It has explained the

methods (software, past costs, estimates) to

reach remediation costs. Although the Court

agrees with Intervenors that the State has not

provided the Court with specific factual

details as to each settling party (e.g., witness

N of the 800 witnesses stated that settling

party X deposited a specified tonnage of a

specified type of waste), such in-depth review

of the facts and circumstances is not

appropriate. Indeed, although Intervenors

argue that such review is needed, Intervenors

have not pointed to any controlling precedent

that requires such in-depth review.

The district court observed that it was not its “role to

determine whether the settlement agreement is the best

possible settlement that ADEQ could have achieved, but

rather whether it is within the reaches of the public interest.” 

It concluded that the proposed consent decrees were

reasonable and in the best interests of the public.

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26 ARIZONA V. RAYTHEON CO.

II

The majority concludes that the district court applied the

wrong level of deference to ADEQ’s judgment. It declares

that “where state agencies have environmental expertise they

are entitled to ‘some deference’ with regard to questions

concerning their area of expertise.” However, it then

concludes that the district court erred in deferring to ADEQ’s

judgment that the agreements were “fair, reasonable, and

consistent with CERCLA’s objectives.”1

I cannot agree. Congress gave the states a critical role to

play in CERCLA enforcement that will be severely

undermined by the majority’s decision. Moreover, we defer

to the EPA’s decision to settle with PRPs in light of: (a) our

recognition of CERCLA’s policy of encouraging settlements;

(b) recognition that the settlements are constructed by a party

acting in the public interest; (c) respect for the EPA’s

expertise; and (d) respect for an arms-length agreement. 

These considerations are equally applicable to state

1

I note that the parties did not raise the level of deference owed to

ADEQ as a consequence of it being a state agency before the district court

or on appeal. I would hold that the Intervenors forfeited any such

argument by failing to raise it in their opening brief. See Avenetti v.

Barnhart, 456 F.3d 1122, 1125 (9th Cir. 2006) (finding that the Social

Security Commissioner waived an argument that deference applies to an

administrative law judge’s interpretation of a disability listing by failing

to argue it in his opening brief). The majority reaches this issue by

proclaiming ipse dixit that it is “inextricably intertwined” with the “correct

legal rule.” Curiously, although we were confronted with the same exact

scenario in Arizona v. Components, 66 F.3d 213, 215 (9th Cir. 1995), we

affirmed the district court. What the majority has really done is invented

a new legal rule, retroactively evaluated the district court’s decision

against it, and faulted the district court for failing to anticipate it.

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ARIZONA V. RAYTHEON CO. 27

environmental agencies, which accordingly are also entitled

to significant deference.2

A

Congress enacted CERCLA “in response to the serious

environmental and health risks posed byindustrial pollution.” 

Burlington N. & Santa Fe Ry. Co. v. United States, 556 U.S.

599, 602 (2009). “The Act was designed to promote the

timely cleanup of hazardous waste sites and to ensure that the

costs of such cleanup efforts were borne by those responsible

for the contamination.” Id. (internal quotation marks

omitted). CERCLA provides a number of powers to the

President, who has delegated most of his authority to the

EPA, “[t]o ensure the prompt cleanup of hazardous waste

sites.” Pakootas v. Teck Cominco Metals, Ltd., 452 F.3d

1066, 1072 & n.11 (9th Cir. 2006).

Although states do not have as large of a role as the EPA

does in enforcing CERCLA, Congress envisioned a crucial

role for the states in remediating hazardous waste sites. Most

significantly, Congress provided that the various categories

of PRPs “shall be liable for” certain remediation costs

“incurred by the United States Government or a State or an

Indian Tribe.” 42 U.S.C. § 9607(a) (emphasis added); see

also Niagara Mohawk Power Corp. v. Chevron U.S.A., Inc.,

596 F.3d 112, 120 (2d Cir. 2010) (“CERCLA empowers the

federal government and the states to initiate comprehensive

cleanups and to seek recovery of expenses associated with

those cleanups.” (emphasis added)).

2 The importance of this issue is underscored by the fact that the States

of Colorado and Nevada filed a letter brief supporting Arizona’s position

less than one month after the issue was initially raised.

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28 ARIZONA V. RAYTHEON CO.

Congress also envisioned that states would play a central

role by enforcing CERCLA through early settlements. One

of CERCLA’s central purposes is to encourage “early

settlement between PRPs and environmental regulators.” 

Anderson Bros., Inc. v. St. Paul Fire & Marine Ins. Co.,

729 F.3d 923, 929–30 (9th Cir. 2013) (citation and alteration

marks omitted). PRPs have a strong incentive “to participate

in settlement talks at the earliest possible opportunity because

‘non-settling PRPs may be held jointly and severally liable

for the entire amount of response costs minus the amount of

the settlement.’” Id. at 930 (citation and alteration marks

omitted). This is because settlements provide settling parties

with protection against contribution actions from other PRPs:

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.

42 U.S.C. § 9613(f)(2) (emphasis added). Nonetheless, a

settling PRP may still seek contribution from non-settling

PRPs. § 9613(f)(3)(B). Thus, as the First Circuit has

observed: “Congress has . . . recognized a special role for

states in authorizing judicial approval for consent decrees in

which the state is a party, and then authorizing both

contribution protection and contribution claims.” City of

Bangor v. Citizens Commc’ns Co., 532 F.3d 70, 90 (1st Cir.

2008). States can therefore act independently to definitely

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ARIZONA V. RAYTHEON CO. 29

resolve a PRP’s CERCLA liability without authorization

from the EPA. Niagara Mohawk, 596 F.3d at 127.3

Indeed, the EPA itself has recognized that “because of the

number and variety of contaminated sites across the country,

states play a critical role in effectuating the purposes of

CERCLA.” Id. at 126 (alteration marks omitted) (quoting the

EPA’s amicus brief). The EPA has elaborated:

When Congress first enacted [CERCLA] in

1980, it required States to be active partners in

conducting Superfund response actions. . . . 

CERCLA, as amended, strengthens the

partnership between the Federal Government

and State and local authorities. State and

local governments play an important role in

ensuring effective, efficient and wellcoordinated cleanups.

EPA, Pub. No. 9375.5-01/FS, State and Local Involvement In

the Superfund Program (1989).

As a practical matter, state participation in CERCLA

enforcement is absolutely necessary because there are more

contaminated sites than the EPA is capable of addressing on

3 CERCLA also provides special roles for states in other contexts, such

as allowing them to pursue claims for damages to their natural resources. 

See § 9607(f). States are also “given a special role in defining allowable

costs and cleanup standards.” City of Bangor, 532 F.3d at 91. 

Specifically, state remediation efforts are presumed to be consistent with

the “national contingency plan,” which consists of EPA “procedures for

preparing and responding to contaminations.” Id. at 91 & n.8. CERCLA

also gives states the authority to enforce any applicable state or federal

standard. Id. at 91 (citing § 9621(e)).

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30 ARIZONA V. RAYTHEON CO.

its own. As several commentators have explained, under

CERCLA:

the role of the States at national priorities list

(NPL) sites ranges from required cost sharing

at federally funded cleanups to active site

management. A vast number of contaminated

sites do not meet the criteria for inclusion on

the NPL. For these non-NPL sites the federal

government’s role is likely to be limited to

site assessment and emergency response or

removal activities. For many non-NPL sites,

the federal government may not be involved

at all. Thus, if any government-supervised

activity is to occur at non-NPL sites, States

will have to oversee, enforce, or fund

cleanups. For these reasons, the role of the

States in addressing contaminated sites,

independently and in concert with the federal

government, has become increasingly

important.

Linda K. Breggin, James McElfish & John Pendergrass, State

Superfund Programs on Overview of the Environmental Law

Institute’s (ELI’S) 1998 Research, Alb. L. Envtl. Outlook,

Winter 1999, at 1; see also Caroline N. Broun & James T.

O’Reilly, CERCLA Players and Their Roles, in 1 RCRA and

Superfund: A Practice Guide § 10:3 (3d ed. 2013) (indicating

that the states are “key players in Superfund”).

Indeed, there are an estimated 450,000 contaminated sites

in the nation. See Ronald G. Aronovsky, A Preemption

Paradox: Preserving the Role of State Law in Private

Cleanup Cost Disputes, 16 N.Y.U. Envtl. L.J. 225, 232

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ARIZONA V. RAYTHEON CO. 31

(2008) (citing S. Rep. No. 107-2, at 15 (2001)) [hereinafter,

Preemption Paradox]. Yet, less than 2,000 sites are listed on

the EPA’s national priorities list. See U.S. Environmental

Protection Agency, National Priorities List (NPL),

http://www.epa.gov/superfund/sites/npl/ (listing sites as of

Feb. 27, 2014). Thus, without state participation, most

contaminated sites will remain polluted. Preemption

Paradox, supra, at 233 (“The federal government, through

the . . . EPA[], plays an active regulatory role at only a small

percentage of the nation’s contaminated sites. Instead, a state

or local government agency serves as the lead regulatory

authority at the vast majority of sites.”). Practical

considerations also preclude states from proceeding solely

under state law. Although many states—like Arizona—have

their own parallel laws, settling parties, desiring greater

certainty, will insist on CERCLA contribution protection and

judicial approval.4

B

The seminal decision on CERCLA consent decrees is

United States v. Cannons Engineering Corp., 899 F.2d 79 (1st

4 Compare Consolidated Edison Co. of N.Y., Inc. v. UGI Utilities, Inc.,

423 F.3d 90, 95–97 (2d Cir. 2005) (concluding that a state law settlement

did not affect the settling party’s CERCLA liability, and therefore, did not

allow the party to seek contribution under CERCLA), and General Time

Corp. v. Bulk Materials, Inc., 826 F. Supp. 471, 475–76 (M.D. Ga. 1993)

(concluding that a settlement of state law liability did not provide

contribution protection under CERCLA), with Ronald G. Aronovsky,

Federalism and CERCLA: Rethinking the Role of Federal Law in Private

Cleanup Cost Disputes, 33 Ecology L.Q. 1, 66 n.289 (2006) (“Generally,

settlements with some but not all PRPs at a site are difficult to obtain

without contribution protection for the settling party; a PRP will be

unlikely to settle a cleanup cost lawsuit with the plaintiff only then to be

sued for contribution by the non-settling defendants.”).

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32 ARIZONA V. RAYTHEON CO.

Cir. 1990). Drawing on the legislative history of § 9613, the

First Circuit concluded that, when evaluating consent decrees,

“the trial court’s review function is only to ‘satisfy itself that

the settlement is reasonable, fair, and consistent with the

purposes that CERCLA is intended to serve.’”5Id. at 85

(quoting H.R. Rep. No. 99-253, pt. III, at 19 (1985), reprinted

in 1986 U.S.C.C.A.N. 3038, 3042). Thus, the First Circuit

determined that district courts should evaluate consent

decrees according to their fairness, reasonableness, and

fidelity to the statute. Id. at 85–90. As that court

subsequently observed, these factors are “similar to the one[s]

used by courts when reviewing consent decrees generally.” 

City of Bangor, 532 F.3d at 93. We are in accord. See Turtle

Island Restoration Network v. U.S. Dep’t of Commerce,

672 F.3d 1160, 1165 (9th Cir. 2012) (“A district court may

approve a consent decree when the decree is ‘fair, reasonable

and equitable and does not violate the law or public policy.’”

(citation omitted)).

In Cannons, the First Circuit further observed that:

We approach our task mindful that, on

appeal, a district court’s approval of a consent

decree in CERCLA litigation is encased in a

double layer of swaddling. In the first place,

it is the policy of the law to encourage

5 As is relevant here, the courts’ judicial review function originates with

42 U.S.C. § 9613(f)(2). CERCLA separately sets forth procedures—

including judicial approval—for settlements between the United States

and private parties under § 9622, which do not apply here. See City of

Bangor, 532 F.3d at 93. Notably, § 9613(f)(2) refers to “an administrative

or judicially approved settlement,” indicating that administrative

approval is sufficient to provide contribution protection to PRPs settling

with state agencies.

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ARIZONA V. RAYTHEON CO. 33

settlements. That policy has particular force

where, as here, a government actor committed

to the protection of the public interest has

pulled the laboring oar in constructing the

proposed settlement. While “the true measure

of the deference due depends on the

persuasive power of the agency’s proposal

and rationale, given whatever practical

considerations may impinge and the full

panoply of the attendant circumstances,” the

district court must refrain from secondguessing the Executive Branch.

Respect for the agency’s role is

heightened in a situation where the cards have

been dealt face up and a crew of sophisticated

players, with sharply conflicting interests, sit

at the table. That so many affected parties,

themselves knowledgeable and represented by

experienced lawyers, have hammered out an

agreement at arm’s length and advocate its

embodiment in a judicial decree, itself

deserves weight in the ensuing balance. The

relevant standard, after all, is not whether the

settlement is one which the court itself might

have fashioned, or considers as ideal, but

whether the proposed decree is fair,

reasonable, and faithful to the objectives of

the governing statute. Thus, the first layer of

insulation implicates the trial court’s

deference to the agency’s expertise and to the

parties’ agreement. While the district court

should not mechanistically rubberstamp the

agency’s suggestions, neither should it

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34 ARIZONA V. RAYTHEON CO.

approach the merits of the contemplated

settlement de novo.

899 F.2d at 84 (citations omitted). Thus, the First Circuit’s

rationale for deferring to the EPA rested on: (a) CERCLA’s

policy of encouraging settlements; (b) its recognition that the

settlements are constructed by a government actor committed

to protect the public interest; (c) respect for the agency’s

expertise; and (d) respect for an arms-length agreement

reached by sophisticated parties. The court distilled these

factors from decisions discussing judicial approval of consent

decrees in a variety of circumstances. See id. (citing cases). 

The court further explained that the “second layer of

swaddling” is the deferential nature of appellate review for a

district court’s decision approving a consent decree. Id. We

adopted this framework in United States v. Montrose

Chemical Corp., 50 F.3d 741, 743, 746 (9th Cir. 1995).

C

Few courts have been called upon to consider what level

of deference district courts should accord to state-sponsored

consent decrees. Nonetheless, two of our sister circuits have

addressed this issue and provided persuasive guidance. In

City of Bangor v. Citizens Communications Co., 532 F.3d 70

(1st Cir. 2008), the First Circuit decided to accord “some

deference” to the state agency. It explained:

The question becomes what deference, if

any, should be given to a state agency which

is not charged with implementing CERCLA. 

We recognize the [Maine Department of

Environmental Protection (“DEP”)] does have

a mandate under state law to “prevent, abate

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ARIZONA V. RAYTHEON CO. 35

and control the pollution of the air, water and

land and preserve, improve and prevent

diminution of the natural environment of the

State.”

Federal courts generally defer to a state

agency’s interpretation of those statutes it is

charged with enforcing, but not to its

interpretation of federal statutes it is not

charged with enforcing.

We choose to accord some deference to

Maine’s decision to sign onto the Consent

Decree, but not the same amount of deference

we would accord to the EPA in a consent

decree involving the United States. We give

deference in recognition that the state agency

has some expertise. The lesser deference does

not displace the baseline standard of review

for abuse of discretion.

Id. at 94 (citations omitted). Arguably, the First Circuit

overstated the case when it suggested that states are “not

charged with implementing CERCLA,” as they do have

substantial roles under the statute as discussed above. 

Nonetheless, the First Circuit recognized that state agencies

are still due “some deference” when courts evaluate a state

environmental agency’s decision to enter into a consent

decree.

In Commissioner v. Esso Standard, Oil S.A., 326 F.3d

201, 205 (3d Cir. 2003), the district court approved a

CERCLA consent decree between the Virgin Islands’

Department of Planning and Natural Resources and several

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36 ARIZONA V. RAYTHEON CO.

settling PRPs. The Third Circuit affirmed. Id. at 210. In

doing so, the court accorded deference to the territorial

agency, explaining: “there is deference to the administrative

agencies’ input during consent decree negotiations and the

law’s policy of encouraging settlement. Where the

appropriate agency has reviewed the record and has made a

reasonable determination of fault and damages, that

determination is owed some deference.” Id. at 207. Thus,

although the Third Circuit did not explicitly address how this

level of deference differed from the level of deference owed

to the EPA, it plainly recognized that the EPA was not a party

and still accorded deference to the territorial agency.

We previously had an opportunity to address this issue,

but declined to do so. In Arizona ex rel. Woods v. Nucor

Corp., 825 F. Supp. 1452, 1459 (D. Ariz. 1992), the nonsettling PRPs argued that the district court lacked sufficient

technical data to approve the settlement, including

information regarding the extent of contamination, cleanup

cost, and apportionment of liability. The district court

reviewed the information submitted byArizona (including an

affidavit from Vargas) and found that the there was adequate

support for the settlement. See id. at 1459–65. Throughout

its analysis, the court suggested that it was according ADEQ

deference, noting that its role was “not to determine the best

method for measuring fault and apportioning liability, but

rather to uphold the method proposed by the ADEQ unless it

is ‘arbitrary, capricious, and devoid of a rational basis.’” Id.

at 1459. We affirmed on appeal without discussing the level

of deference owed to a state environmental agency, holding

that the district court did not abuse its discretion. See Arizona

v. Components Inc., 66 F.3d 213, 215 (9th Cir. 1995). The

most noteworthy aspect of our decision in Componentsis that

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we did not do what the majority does here: fault the district

court for deferring to ADEQ.

Thus, although we have not specifically addressed the

issue, both the First and Third Circuits have accorded at least

some deference to state or territorial agencies that entered

into CERCLA consent decrees. City of Bangor, 532 F.3d at

94; Esso Standard, 326 F.3d at 207. The Eighth Circuit has

also suggested that state agencies are entitled to deference

when enforcing federal environmental laws. See Comfort

Lake Ass’n, Inc. v. Dresel Contracting, Inc., 138 F.3d 351,

357 (8th Cir. 1998) (according “considerable deference” to

administrative enforcement agreement between a state agency

and a polluter for violations of the federal Clean Water Act). 

These decisions conflict with the majority’s suggestion that

state environmental agencies are entitled to no deference in

determining whether an agreement is fair, reasonable, and

consistent with CERCLA’s objectives.6

Moreover, the factors discussed by the First Circuit in

Cannons support extending significant deference to state

environmental agencies. See 899 F.2d at 84. Like the EPA,

state environmental agencies possess expertise and are

charged with protecting the public interest. Although

Congress did not give state agencies as large a role in

CERCLA enforcement as the EPA, Congress still

contemplated extensive state involvement. Moreover, given

the scope of the environmental problems we face as a nation,

6 Although the majority indicates that it finds City of Bangor

“persuasive,” in that case, the First Circuit “accord[ed] some deference to

[the state agency’s] decision to sign onto the Consent Decree.” 532 F.3d

at 94. The majority proclaims that the district court erred by doing so

here.

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38 ARIZONA V. RAYTHEON CO.

as a practical matter, state involvement is absolutely

necessary. Similarly, CERCLA’s policy of encouraging

settlements is not diminished merely because a state entity is

involved rather than the federal government. Furthermore,

just as EPA-sponsored settlements may result from armslength agreements reached by sophisticated parties, so may

those involving state environmental agencies. Thus, most of

the reasons favoring deference to EPA-sponsored settlements

also favor deference to state-sponsored settlements.

In any event, the proper level of deference in any given

case is not strictly dictated by the identity of the

governmental actor involved. As the First Circuit explained

in Cannons, even in cases involving the EPA, there is no set

level of deference. Rather, the level of deference depends

upon the “the persuasive power of the agency’s proposal and

rationale, given whatever practical considerations may

impinge and the full panoply of the attendant circumstances.” 

Cannons, 899 F.2d at 84 (citation omitted). Thus, in all cases

involving CERCLA consent decrees, there is a spectrum of

possible deference that a district court may accord to the

decision to settle, depending on the particular circumstances

of the case. At its zenith, deference will be highest for wellsupported consent decrees involving the EPA. As our sister

circuits have acknowledged, however, it does not follow that

state agencies are not entitled to deference concerning their

decision to sign on to a consent decree. Accordingly, while

the degree of deference may vary depending on the

circumstances of the particular case, state-sponsored

settlements are entitled to deference when a court assesses a

settlement’s fairness, reasonableness, and benefit to the

public.

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ARIZONA V. RAYTHEON CO. 39

D

As explained above, judicial deference to the EPA in

CERCLA consent decrees evolved from the standards courts

use when evaluating consent decrees in general. Instead of

focusing on the grounds for deference, the majority seems to

treat this case as if it presented a statutory interpretation issue. 

Statutory interpretation is the focus of cases such as United

States v. Mead Corp., 533 U.S. 218 (2001), Chevron, U.S.A.,

Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837

(1984), and Skidmore v. Swift & Co., 323 U.S. 134 (1944). 

Similarly, our opinion in Orthopaedic Hospital v. Belshe,

103 F.3d 1491, 1495–96 (9th Cir. 1997), stands for the

unremarkable proposition that state agency interpretations of

federal statutes that the agencies are not charged with

enforcing are not entitled to Chevron deference. But this case

does not turn on a question of statutory interpretation.

Most CERCLA consent decree actions do not present

questions about whether the agency’s implementation of a

particular statutory provision (or filling of a statutory gap) is

entitled to deference. Cf. Mead, 533 U.S. at 229. Nor do

they generally involve an agency regulatory or adjudicatory

rulemaking—or even less formal agency policy statements,

manuals, or enforcement guidelines—which may have broad

implications for third parties and unrelated controversies. Cf.

id. at 233–34. Instead, most cases involving CERCLA

consent decrees focus primarily on whether the agency made

a reasonable and fair assessment in a particular case. This is

not a question of statutory interpretation, but rather of the

exercise of the authority and discretion lodged with the

agency. Considerably more so than judges, state

environmental agencies are perfectlycapable of making those

determinations.

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40 ARIZONA V. RAYTHEON CO.

One of the factors that we use when evaluating consent

decrees is whether they are “consistent with the purposes that

CERCLA is intended to serve.” Montrose, 50 F.3d at 743

(citation omitted). In some cases—but not here—applying

this factor may present questions of statutory interpretation. 

In those cases, all other things being equal, a state sponsoredconsent decree would be entitled to less deference than an

EPA-sponsored consent decree. But most often, determining

consistency with CERCLA will only require a rote

assessment of whether the decree complies with CERCLA’s

well-pronounced goals and is in the public interest.7 Cf.

United States v. Charles George Trucking, Inc., 34 F.3d 1081,

1086 (1st Cir. 1994) (indicating that the “overarching goals

of CERCLA” include “accountability, the desirability of an

unsullied environment, and promptness of response

activities” (quotingCannons, 899 F.2d at 91)). State agencies

are equally capable of undertaking this assessment as is the

EPA. Thus, a state agency like ADEQ is entitled to some

deference concerning its determination that a particular

agreement is “fair, reasonable, and consistent with

CERCLA’s objectives.”

III

Applying the proper level of deference owed to a state

environmental agency, I would hold that the district court did

not abuse its discretion in approving the consent decrees here. 

The majority’s reliance on Montrose to reach the opposite

conclusion is misplaced. In Montrose, 50 F.3d at 743, we

vacated the district court’s approval of the consent decree and

7

Indeed, we, along with our sister circuits, have occasionally formulated

this factor as whether the settlement is consistent with “the public

interest.” Montrose, 50 F.3d at 747; Esso Standard, 326 F.3d at 206.

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remanded. We explained that the district court had to

compare the proportion of projected costs to be paid by the

settling defendants with the proportion of liability attributable

to them, taking into account “reasonable discounts for

litigation risks, time savings, and the like that may be

justified.” Id. at 747 (citing Charles George Trucking,

34 F.3d at 1087). The district court had “no evidence at all”

upon which to base any assessment of the government’s

estimates of responsibility and damage, and thus it could not

evaluate the reasonableness and fairness of the decree. Id. at

746–48. In particular, the district court had largely relied on

a special master’s assessment of the settlement without

independently evaluating the damage estimate. Id. at 746. 

Thus, we found that the district court had neglected its

“obligation to independently ‘scrutinize’ the terms of [the]

settlement.”8Id. at 747. We accordingly remanded for the

district court to:

determine the proportional relationship

between the [amount] to be paid by the

settling defendants and the governments’

current estimate of total potential damages. 

The court should evaluate the fairness of that

proportional relationship in light of the degree

of liability attributable to settling defendants.

Id. at 747 (citing Charles George Trucking, 34 F.3d at 1087). 

Notably, as the Seventh Circuit recognized, see United States

v. George A. Whiting Paper Co., 644 F.3d 368, 373 (7th Cir.

8 The majority repeatedly suggests that the district court here failed to

independently scrutinize the agreements, citing this language. Unlike

Montrose, where the district court had relied on the special master almost

completely, the district court evaluated the agreements itself in this case.

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42 ARIZONA V. RAYTHEON CO.

2011), Montrose remains the only example of a circuit court

reversing a district court’s approval of a CERCLA consent

decree for lack of a factual basis before the majority’s

decision in this case.

Here, the record before the district court shows that under

ADEQ’s formula, each settling defendant paid damages

directly corresponding to ADEQ’s estimated degree of

liability. It does not appear that ADEQ provided the settling

defendants with any discount for litigation risks or time

savings, even though such discounts are permissible under

Montrose, 50 F.3d at 747. A settlement corresponding

precisely to the settling defendant’s estimated share of

liability is necessarily reasonable. See Charles George

Trucking, 34 F.3d at 1087 (noting that a settlement was

favorable to the government agencies where the payment

corresponded to the group’s share of responsibilitymultiplied

by the highest estimate of clean-up costs). Moreover,

although ADEQ did not specifically set forth the settlement

amount and share for each settling defendant, it did provide

the district court with a basis for evaluating its estimates by

explaining its methodology in detail and setting out the total

value of the settlements and anticipated costs. Requiring

ADEQ to list the settlement amounts and share of liability for

each settling defendant would be pointless when there is no

dispute that the estimate and settlement share are the same. 

Cf. Cannons, 899 F.2d at 87 (“The logic behind these

concepts dictates that settlement terms must be based upon,

and roughly correlated with, some acceptable measure of

comparative fault, apportioning liability among the settling

parties according to rational (if necessarily imprecise)

estimates of how much harm each PRP has done.”).

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The Intervenors’ arguments here resemble arguments that

the First Circuit rejected in Charles George Trucking. In that

case, the First Circuit affirmed a settlement even though the

appellants contended that the district court had failed to

explain the allocation of responsibilityeither within or among

the classes of defendants. 34 F.3d at 1086–88. The First

Circuit observed that it is not always possible to explain an

allocation of liability in minute detail given an incomplete

historical record. Id. at 1088. Although we did not

specifically discuss these arguments, we repeatedly cited

Charles George Trucking with approval in Montrose, 50 F.3d

at 746–47.

The question here is whether the PRPs are entitled to

know specifically how ADEQ developed its estimate for the

shares of liability attributable to each settling defendant. As

the First Circuit explained in Cannons, however, this is an

area where the courts will typically defer to the EPA in light

of its expertise. 899 F.2d at 87 (“[W]hat constitutes the best

measure of comparative fault at a particular Superfund site

under particular factual circumstances should be left largely

to the EPA’s expertise.”). Indeed, at an early stage in the

process, some of the state’s allocations are necessarily based

on qualitative information and expert experience rather than

strict quantitative analysis. Accordingly, the district court

properly deferred to ADEQ’s choice of measuring

comparative fault, which was adequately explained and

supported.9

9 Even the majority concedes that ADEQ may have similar expertise to

the EPA. Indeed, among other things, ADEQ is statutorily charged with:

protecting the environment; protecting the quality of the air and water;

abating air and water pollution; restoring and reclaiming polluted areas;

regulating the storage, handling, and transportation of pollutants; ensuring

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44 ARIZONA V. RAYTHEON CO.

Instead of following our precedents, the majority takes the

district court to task for failing to “substantively engage with

the parties’ proposed agreements.” The majority requires the

district court on remand to wade deep into the abyss of

liability allocation and decide not onlywhether the settlement

amounts are fair and reasonable, but also gauge the accuracy

of ADEQ’s allocation against a 100,000 page record and

technical guidelines. As a practical matter, requiring a

district court to delve into the details of how an agency

allocated responsibility within a category of PRPs based on

factual information concerning a variety of measures (e.g.,

volume, toxicity, etc.) will consume considerable resources

and require expertise that most judges do not possess. See

Gen. Elec. Co. v. Joiner, 522 U.S. 136, 148 (1997) (Breyer,

J., concurring) (noting that “judges are not scientists and do

not have the scientific training that can facilitate the making

of such decisions”). A district court should not have to

that state environmental laws and regulations are consistent with

corresponding federal laws; and approving remediation levels. Ariz. Rev.

Stat. § 49-104. More specifically, as it relates to ADEQ’s work on this

case, Vargas averred that she has 23 years of experience at ADEQ and

was the same engineer who performed the analysis at issue in Nucor. 

Notably, when we affirmed in the district court’s decision in Nucor, we

took no issue with the district court’s deference to ADEQ. See

Components, 66 F.3d at 215.

For recognizing the factual and legal backdrop underlying the district

court’s decision, the majority accuses me of undertaking a de novo review

and usurping the district court’s role. Not so. Although I have the benefit

of a post hoc perspective that necessarily comes with appellate review(not

to mention knowledge of the majority’s newly-fashioned legal standards),

I have simply evaluated the district court’sreasoning in light of the record

as a whole, which we are required to do when reviewing a decision for

abuse of discretion. See, e.g., McKinley v. City of Eloy, 705 F.2d 1110,

1117 (9th Cir. 1983).

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ARIZONA V. RAYTHEON CO. 45

undertake the equivalent of an expert deposition every time

it is asked to approve a state-sponsored CERCLA consent

decree.10

Here, the Intervenors have not suggested that the

information in the record points to some other estimate of the

settling defendants’ liability; they simply claim that the

record was inadequate. This is insufficient to carry the

“heavy burden” that the Intervenors bear to show that district

court’s approval of the consent decree was an abuse of

discretion. See Esso Standard, 326 F.3d at 207. It is obvious

that the Intervenors are contesting the consent decrees

because they do not like the deals they were offered by

ADEQ. As is their right, they refused ADEQ’s settlement

offers. But they have no right to a settlement offer of their

choice. Indeed, the purpose of judicial review is to ensure

that proposed settlements further the public interest by

holding polluters responsible for the damage that they

caused.11 It is not to guarantee PRPs a good deal.

The Intervenors’ intent appears to be to hold up fair and

reasonable consent decrees with settling PRPs in order to

10 To the extent that the majority’s opinion merely requires the district

court to further explain its findings that are obvious from the record, it is

promoting form over substance.

11 See United States v. Rohm &Haas Co., 721 F. Supp. 666, 680 (D.N.J.

1989) (“The court’s core concern in deciding whether to approve this

proposed decree is with ensuring that the decree furthers the public

interest as expressed in CERCLA.”); H.R. Rep. No. 99-253, pt. III, at 19

(1985) (indicating that the primary reason for judicial review was to

“protect against improper or ‘bad faith’ settlements.”); H.R. Rep. No. 99-

253, pt. I, at 59 (1985), reprinted in 1986 U.S.C.C.A.N. 2835, 2841

(stating that judicial review was intended to guard against “[s]weetheart

deals” and ensure that agreements were “in the public interest.”).

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46 ARIZONA V. RAYTHEON CO.

create more leverage in their negotiations with ADEQ.12

Such delay is not in the public interest. Cf. United States v.

Asarco, Inc., 430 F.3d 972, 983 (9th Cir. 2005) (noting that

the purpose of a consent decree is “to enable parties to avoid

the expense and risk of litigation while still obtaining the

greater enforceability (compared to an ordinary settlement

agreement) that a court judgment provides”). The majority’s

approach gives polluters more power in their negotiations

with the states and is more likely to push the states to bypass

judicial approval and opt for administrative settlements (as

they are entitled to do under 42 U.S.C. § 9613(f)(2)), denying

the judiciary the opportunity to protect the public interest by

ensuring that the states are not cutting sweetheart deals with

those polluters.

IV

The majority’s conclusion appears to be founded upon the

flawed premise that state environmental agencies entering

consent settlements under CERCLA are entitled to no

deference concerning their conclusion that a settlement is fair

and reasonable. In doing so, the majority fails to appreciate

the origins of CERCLA deference. Moreover, the majority

12 The Intervenors claim that they fear being held jointly and severally

liable for the settling parties’shares of liability should those shares exceed

the settlement amounts. However, the consent decrees provide that if the

settling parties’ shares are eventually deemed to be greater than the

settlement amount, “the difference shall be deemed an orphan share of

liability pursuant to” Arizona Revised Statutes § 49-281(10). Under state

law, Arizona is responsible for funding orphan shares. See Ariz. Rev.

Stat. § 49-282(E)(2)(e). At oral argument, the Intervenors expressed a fear

that the law could change. However, the consent decrees provide that the

terms “have the meanings assigned to them under WQARF and CERCLA

as of the date this Consent Decree becomes final.”

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ARIZONA V. RAYTHEON CO. 47

vastly and unwisely expands the required level of judicial

scrutiny for CERCLA consent decrees. The majority’s

decision will significantly restrict state agencies’ ability to

enter into early CERCLA consent decrees to the detriment of

the environment, the statutory framework envisioned by

Congress, and PRPs seeking to resolve their liability early in

the process. I respectfully dissent.

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