Opinion ID: 220189
Heading Depth: 4
Heading Rank: 1

Heading: Is the Pakootas-Michel suit for penalties a

Text: “challenge”? [4] The jurisdictional bar applies to “challenges to removal or remedial action . . . .”37 The statute “ ‘withholds federal jurisdiction to review . . . claims, including those made in citizen suits and under non-CERCLA statutes, that are found to constitute ‘challenges’ to ongoing CERCLA cleanup actions.”38 Appellants argue that they make no challenge to the ongoing remedial action pursuant to the contract, because all they seek are penalties for the 892 days of past noncompliance with the withdrawn unilateral administrative order. [5] Congress made a choice to “protect[ ] the execution of a CERCLA plan during its pendency from lawsuits that might interfere with the expeditious cleanup effort.”39 As we held in McClellan, where the EPA works out a plan, and a citizen suit “seeks to improve on the CERCLA cleanup” because it “wants more,” that constitutes interference.40 Such a claim “would second-guess the parties’ determination and thus interfere with the remedial actions selected . . . .”41 True, plaintiffs seek only past penalties, not any additional requirements for the ongoing cleanup. But that demand is still a challenge. 36 47 F.3d 325, 328 (9th Cir. 1995). 37 42 U.S.C. § 9613(h). 38 McClellan, 47 F.3d at 329. 39 Id. 40 Id. at 330. 41 Id. 8908 PAKOOTAS v. TECK COMINCO METALS First, Teck Cominco and the EPA made a deal to accomplish the cleanup. Part of their contract is that the penalties are neither sought nor waived. They are the EPA’s hammer, held over Teck Cominco’s head. The penalties are not Pakootas and Michel’s hammer to wield. The penalties are the EPA’s hammer. [6] Under the agreement, the United States covenanted not to sue for the penalties for the 892 days, “conditioned upon the satisfactory performance” by Teck Cominco of its cleanup obligations.42 That conditional covenant not to sue means that if Teck Cominco does not perform its obligations, the EPA can bring down its hammer, by seeking penalties of up to $27,500 a day for 892 days,43 more than $24 million. The penalties Pakootas and Michel want to enforce are the hammer EPA retained to compel performance of the agreement. If 42 The relevant paragraph of the agreement is as follows: [T]he United States covenants not to sue or to take administrative action against T[eck ]C[ominco] and T[eck ]C[ominco ]A[merican ]I[ncorporated] pursuant to Sections 106 and 107(a) of CERCLA, 42 U.S.C. §§ 9606 and 9607(a) . . . for (i) civil penalties or injunctive relief for non-compliance with the Unilateral Administrative Order issued by EPA to T[eck ]C[ominco] on December 11, 2003, or (ii) for performance of the R[eme- dial ]I[nvestigation]/F[easibility ] S[tudy] costs paid by T[eck ]C[ominco ]A[merican ]I[ncorporated]. This covenant not to sue shall take effect upon the Effective Date of this Settlement Agreement, and is conditioned upon the satisfactory performance by T[eck ]C[ominco ]A[merican ]I[ncorporated] and T[eck ]C[o- minco] of their obligations under this Agreement. United States Environmental Protection Agency, Agreement for Remedial Investigation and Feasibility Study, at 22 (June 2, 2006), available at http://yosemite.epa.gov/R10/CLEANUP.NSF/7780249be8f251538825650 f0070bd8b/f0e551fb8a69dcd288256fac00064739/$FILE/TeckCominco_ SettlementAgreement.pdf. 43 See 42 U.S.C. § 9606(b)(1); see also 73 Fed. Reg. 75,340, 75,340-46 (Dec. 11, 2008) (listing the maximum penalties rate for noncompliance from January 31, 1997 through March 15, 2004 at $27,500 per day, and from March 16, 2004 through January 12, 2009 at $32,500). PAKOOTAS v. TECK COMINCO METALS 8909 Pakootas and Michel were to enforce the penalties, the EPA would be left bare-handed, without this weapon. And if Teck Cominco paid the parties adjudicated before the cleanup was done, it might find it economically advantageous to walk away from further cleanup efforts, an “efficient breach.”44 Also, were the EPA to seek to enforce the agreement at that point, all the risks to its position raised by extraterritoriality concerns and other litigation hazards would rise again.45 Like all litigation, a lawsuit against Teck Cominco could go sour for the EPA. No doubt that risk played into its decision to settle the matter by contract. [7] In addition, penalties exacted before a cleanup is completed may interfere with the ability to perform a cleanup. While Teck Cominco may, for all we know, have the ability to pay $24 million in penalties and possibly a great deal of additional money to Pakootas and Michel for attorneys’ fees, and still have plenty of money left for a cleanup, that cannot be assumed for this or for all cases. Many polluters do not have unlimited financial resources. Sometimes the orange is squeezed dry. And if it is, whatever juice going to the government in penalties and to the lawyers in fees cannot go from the polluter to the contractors who perform the cleanup work. 44 See, e.g., Charles Goetz & Robert Scott, Liquidated Damages, Penalties, and the Just Compensation Principle, 77 Colum. L. Rev. 554, 578 (1977); cf. Oliver Wendell Holmes Jr., The Path of the Law, 10 Harv. L. Rev. 457, 459 (1897) (“If you want to know the law and nothing else, you must look at it as a bad man, who cares only for the material consequences which such knowledge enables him to predict, not as a good one, who finds his reasons for conduct, whether inside the law or outside of it, in the vaguer sanctions of conscience.”). 45 See, e.g., Morrison v. Nat’l Australia Bank Ltd., 130 S. Ct. 2869, 2878 (2010) (“When a statute gives no clear indication of an extraterritorial application, it has none.”). The Supreme Court’s recent decision in Morrison shows the Court’s interest in the extraterritorial application of statutes, and this is confirmed by the Court having invited for the views of the Solicitor General on the extraterritoriality issue with the previous petition for certiorari in this case in 2007. 8910 PAKOOTAS v. TECK COMINCO METALS A suit for past penalties always has the potential to interfere with ongoing cleanup efforts, because of its potential effect on the responsible party’s financial ability to perform the cleanup. The $24 million in potential penalties that the contract holds over Teck Cominco’s head not only works as a hammer, but also as a means by which Teck Cominco can perform the cleanup or pay the money to the government. Some polluters, facing a suit for past penalties while cleanup is ongoing, may simply go bankrupt and leave,46 or use the threat of bankruptcy as their own hammer to hold over the EPA’s head. Appellants argue that our decision in ARCO Environmental Remediation, LLC. v. Montana Department of Health & Environmental Quality limits “challenges” to claims that would dictate specific remedial actions or reporting requirements or otherwise alter the cleanup plan.47 It does not. In that case, ARCO, a potentially responsible party, sued a State of Montana agency to get access to documents pertaining to an agreement between the State of Montana and the EPA relating to a cleanup.48 It was not a citizen suit for penalties, nor did it affect in any way the ongoing cleanup.49 We held that the lawsuit to obtain access to documents “involves only the public’s right of access to information about the cleanup,” so it was not a “challenge.”50 Appellants would have us parse the word “incidental” in the decision, and infer a negative pregnant from the distinction ARCO drew between the suit for documents and several cases where we had held that citizen suits 46 See Ingrid Martin, Spark Seeks to Ignite New Markets: Fairbanks Battery-Maker Earl Romans Takes his Expertise to Russia, Alaska Bus. Monthly at 56 (June 1992) (describing how a cold-weather battery manufacturer, faced with a $3.2 million Superfund liability, closed his business, went bankrupt, and left for Russia to manufacture batteries there instead). 47 213 F.3d 1108 (9th Cir. 2000). 48 Id. at 1111. 49 See id. at 1115. 50 Id. PAKOOTAS v. TECK COMINCO METALS 8911 were “challenges.” But our decision in ARCO does not hold, as appellants argue, that no suit is a “challenge” unless it seeks to dictate specific remedial actions, to postpone the cleanup, to impose additional reporting requirements, or to terminate or alter a cleanup.51 These were the “challenges” that ARCO distinguished. The holding of ARCO is that a suit for documents is not a challenge to an ongoing cleanup, not that challenges are limited to the four cases ARCO distinguishes.52 Finally, if suits for penalties are not “challenges,” Congress would not have had to make an exception for EPA suits to recover penalties. The EPA could seek penalties without subsection (h)(2), if penalties were not “challenges.” Subsection (h)(2) would thus be surplusage if a suit for past penalties were not a “challenge[ ].” [8] A citizen suit for penalties is indeed a “challenge[ ] to removal or remedial action selected by EPA . . . .”53