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State & Local News Vol. 22, No. 2, Winter 2000 ENVIRONMENTAL UPDATEMSW Settlement with EPA Rejected by Court By Lisa G. DowdenA settlement agreement between EPA and four New York municipalities alleged to have arranged for the disposal of municipal solid waste at a Superfund co-disposal site has been rejected by a U.S. district court judge hearing suits over cleanup at the site. This particular settlement was the first EPA had entered pursuant to its Municipal Solid Waste Settlement Policy, which had itself successfully withstood challenge from industry on a generic basis when it was first promulgated. If the judge had accepted the settlement, the municipalities would have been insulated from the pending third-party suits and from further liability. In the New York case, the district court concluded that the application of the policy to the particular facts was not reasonable. The decision came in United States v. Allied Signal, Inc. and Amphenol Corp., 62 F. Supp. 2d 713 (N.D.N.Y. 1999), where a third-party action had been instituted by those defendants against the Towns of Sidney, Masonville, and Tompkins and the Village of Sidney, New York. The district court judge for the Northern District of New York entered his order on August 18, 1999. The district judge concluded that the settlement would not be fair and reasonable because the $5.30 per ton payment to be assessed in accordance with the policy did not fairly represent the costs of closing a solid waste facility similar in size and configuration to the site in question. The court appeared to accept that landfill closure is more difficult and more expensive under New York requirements than under the federal regulations. In particular, the court did not accept that the government had sufficiently supported the application of the settlement policy figure to the current site. It is clear from the opinion that the judge was unimpressed by the testimony of EPA's expert witness, and the decision flatly rejects some of her contentions. The court also appeared uncomfortable that the proposed settlement assigned the municipalities only a very small share of the total cleanup costs at the site, which are fairly well defined, despite the fact that municipal liability is yet to be established. Total site cleanup costs are about $10 million, while the settlement would have allowed the municipalities to pay only about $60,000. While there is some doubt as to whether the municipalities can be held liable as a legal matter as "arrangers" for the disposal of MSW on the particular facts of this case, the court concluded that a trier of fact could reasonably find the municipalities to be liable. The court also rejected a contemporaneous municipal motion for summary judgment on the "arranger" liability question. Of course, EPA's position was that the level of the settlement reflected the uncertainty over liability, but the court felt that a reasonable trier of fact could find liability and that, if it did so, the amount of the settlement was disproportionate to the total site closure costs, and thus unreasonable. The case is presently slated to move to trial on the liability issues. EPA and the Department of Justice have indicated that they will not appeal the rejection of the settlement. However, EPA has reaffirmed its intention to continue implementing the settlement policy in appropriate situations. A second MSW settlement related to the Fultz County landfill in Ohio was accepted by the district court judge presiding over that case, but that settlement included all the potentially liable parties and was therefore uncontested. Several other MSW settlements are in the pipeline around the country, and it remains to be seen how they will be affected by the Sidney decision. The four municipalities sought leave to file an interlocutory appeal, but that request was denied by the court, on the stated grounds that disputes over the facts were more appropriately addressed at trial (1999 U.S. Dist. LEXIS 16738 (1999)). The case is thus slated to go to trial on the merits. The Sidney case has also prompted renewed attention on Capitol Hill to the question of municipal liability for MSW disposal. At least two separate legislative "fixes" were proposed. One would basically codify the MSW settlement policy, while the other would essentially exempt municipalities from MSW liability altogether. Currently, these reforms are part of larger proposals including protection for recyclers and small businesses. While no such reforms were enacted in the final days of this Congress, the issue is still a live one and may well be addressed in future legislative sessions. Interested parties should stay tuned. Lisa G. Dowden practices law with Spiegel & McDiarmid in Washington, D.C.
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