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In re Tutu Water Wells Cercla Litigation

April 08, 2003

IN RE: TUTU WATER WELLS CERCLA LITIGATION COMMISSIONER OF THE DEPT. OF PLANNING & NATURAL RESOURCES, DEAN C. PLASKETT, IN HIS CAPACITY AS TRUSTEE FOR NATURAL RESOURCES OF THE TERRITORY OF THE UNITED STATES VIRGIN ISLANDS
v.
ESSO STANDARD OIL S.A., LTD.; ESSO VIRGIN ISLANDS, INC.; ESSO STANDARD OIL COMPANY (PUERTO RICO); TEXACO CARIBBEAN, INC.; TEXACO PUERTO RICO; THE SUCCESSOR PANEX INDUSTRIES STOCKHOLDERS' LIQUIDATING TRUST; MICHAEL D. DEBAECKE, ESQ., IN HIS CAPACITY AS TRUSTEE OF THE SUCCESSOR PANEX INDUSTRIES, INC. STOCKHOLDERS LIQUIDATING TRUST; PANEX CO.; THE ESTATE OF PAUL LAZARE BY ITS EXECUTORS, NORMAN HALPER AND OLIVER LAZARE; ANDREAS GAL; L'HENRI, INC. D/B/A O'HENRY CLEANERS ANDREAS GAL; THE ESTATE OF PAUL LAZARE BY ITS EXECUTORS, NORMAN HALPER AND OLIVER LAZARE; PANEX CO., APPELLANTS AT NO. 01-4176 THE SUCCESSOR PANEX INDUSTRIES, INC. STOCKHOLDERS' LIQUIDATING TRUST AND MICHAEL D. DEBAECKE, ESQ., SUCCESSOR TRUSTEE, APPELLANTS AT NO. 01-4204



On Appeal from the District Court of the Virgin Islands Division of St. Croix D.C. Civil Action Nos. 98-cv-00206 & 96-cv-00054 (Honorable Raymond L. Finch)

Before: Scirica, Alito and McKEE, Circuit Judges

The opinion of the court was delivered by: Scirica, Circuit Judge

PRECEDENTIAL

Argued: September 20, 2002

OPINION OF THE COURT

This is an appeal of the approval of a consent decree under the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C. §§ 9601 et seq., substantially resolving more than a decade of litigation involving contamination of the Tutu Water Wells aquifer in the United States Virgin Islands. Three non-settling parties *fn1 appeal the District Court's approval of the consent decree, contending that the consent decree is arbitrary and unreasonable in its damage assessments and that the District Court erred in not conducting a full evidentiary hearing prior to its decision.

I.

This matter has been in litigation for several years. We have reviewed different aspects of this case on three separate occasions. In 1995, we dismissed claims against since-dissolved corporations. In re Tutu Wells Contamination Litig., 74 F.3d 1228 (3d Cir. 1995) (table). In 1997, we reversed sanctions imposed upon defendant Esso by the District Court. In re Tutu Wells Contamination Litig., 120 F.3d 368 (3d Cir. 1997). Finally, in 2000, we denied without discussion a petition for a writ of mandamus.

Before us now is the District Court's approval of a consent decree resolving the underlying litigation. The consent decree resolves two lawsuits arising out of the Tutu site contamination. *fn2 The first suit was filed by the Commissioner of the Department of Planning and Natural Resources, Dean C. Plaskett, in his capacity as Trustee for the Natural Resources of the Territory of the United States Virgin Islands, against Esso, Texaco, Gal, Lazare, and certain other parties under the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C. §§ 9601 et seq., and territorial statutory and common law. In the second lawsuit, Esso and Texaco sought to recover contribution under CERCLA for remediation costs incurred under prior Environmental Protection Agency administrative orders.

In support of their joint motion to the District Court, the Settling Parties filed a two-volume appendix, including the consent decree and various EPA and other expert reports. The Trustee retained Industrial Economics to conduct a damage assessment, one of two nationally known firms that performs these assessments. Comm'r of the DPNR v. Esso Standard Oil, Civ. No. 1998-206, at 20 (D.V.I. filed Oct. 15, 2001). The assessment here examined two types of losses: "use related loss" represented the cost to rehabilitate the contaminated portions of the Tutu aquifer; and "non-use related loss" assessed the lost value to the public from non-use of the aquifer. Industrial Economics calculated the use related loss at $16.9 million and estimated the non-use related loss at approximately $19 million. Its work was peer-reviewed by Dr. Raymond J. Kopp, a senior fellow at Resources for the Future, and Dr. Kevin J. Boyle, a professor of environmental economics at the University of Maine.

In March 1999, all parties convened a settlement conference where the Trustee disseminated the Industrial Economics assessment to all defendants, including the Laga Parties. In conjunction with the EPA and the United States Department of Justice, the Trustee also prepared a spreadsheet to allocate fault percentages to the various parties. Based on relevant factors, including the volume and toxicity of the parties' contamination, their financial resources, and their degree of cooperation, the Trustee allocated a 38.89% share to Esso, a 26.98% share to Texaco, and a 19.84% share to the Laga Parties. *fn3

The Laga Parties elected not to participate in settlement discussions beyond the initial March 1999 meeting. In contrast, Esso and Texaco participated in settlement negotiations with the Trustee between March and September 1999. These negotiations were conducted at arm's length and in good faith. They resulted in the parties agreeing in principle to a consent decree, with Esso agreeing to pay $6.1 million and Texaco $3.195 million to settle the Trustee's claims.

On February 14, 2001, the District Court heard the Settling Parties' joint motion to enforce the consent decree and permitted all parties to submit evidence and make arguments. Both the Settling Parties and the Laga Parties presented the court with proposed findings of fact and conclusions of law. On October 15, ...


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