Court Opinion

ID: 3066195
Source: CourtListenerOpinion
Date Created: 2015-10-14 23:02:30.529442+00
Date Added: 2024-06-11T11:24:58.295109
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

STATE OF ARIZONA,                      No. 12-15691
                Plaintiff-Appellee,
                                          D.C. No.
                 v.                    4:10-cv-00634-
                                            CKJ
CITY OF TUCSON,
      Intervenor-Plaintiff–Appellee,
                                         OPINION
                 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
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
                    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.
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 Anthony Young, Office of the Arizona Attorney General,
Phoenix, Arizona, for Plaintiffs-Appellees.

Christopher D. Thomas (argued) and Matthew L. Rojas,
Squire Sanders, LLP, Phoenix, Arizona; Patrick J. Paul and
               ARIZONA V. RAYTHEON CO.                   5

Martha E. Gibbs, Snell & Wilmer 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 Dwyer-
Federhar, 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 Defendants-
Appellees.
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
                 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 Defendants-
Appellees. A number of non-settling parties filed comments
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.
                    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
declaratory relief 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 court recognized 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).
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
                 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
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
       [potentially responsible 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
                    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’s response
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].”).
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 may ultimately 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
                 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
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
                   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.
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 seeks judicial
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.
                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 state-
sponsored 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).
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 statutes is 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
concerning the 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).
                     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.
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
                 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 costs that
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 primarily on volume.
Thus, ADEQ allocated each generator a share of liability
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
                 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.
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.
                   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 by industrial 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.
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
                   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 well-
         coordinated 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)).
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
                    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.”).
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.’”5 Id. 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.
         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 second-
guessing 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
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
                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
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 non-
settling 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 by Arizona (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 Components is that
                   ARIZONA V. RAYTHEON CO.                             37

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.
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 arms-
length 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 well-
supported 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.
                  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 perfectly capable of making those
determinations.
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 sponsored-
consent 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” (quoting Cannons, 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.
                    ARIZONA V. RAYTHEON CO.                             41

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.”8 Id. 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.
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 responsibility multiplied
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.”).
                    ARIZONA V. RAYTHEON CO.                             43

    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 responsibility either 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
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 only whether 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’s reasoning 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).
                    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.”).
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.”
                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.