exhibit 10 - poisoned veterans · 0 **r»rniirlinrr «mtk t^^ 1ot/ar pft r\artic*c tr\ tvw •...

$: EXHIBIT 10 - Poisoned Veterans · 0 **r»r*niirlinrr «MtK t^*^ 1ot/ar pfT r\artic*c tr\ tVw • r\t*tr ... defines the terms "response" to mean "remove, removal, remedy,$
EXHIBIT 10

1'0302170

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

5 REGION 4? ATLANTA FEDERAL CENTER

61 FORSYTH STREETPflO^ ATLANTA, GEORGIA 30303-8960

July 11, 2005

Mr. Joseph G. NassifHusch & Eppenberger, JJLC190 Carondelet Plaza, Suite 600St. Louis, Missouri 63105-3441

RE: Anniston PCB Superfund SiteDispute Resolution under Partial Consent DecreeEPA Final Decision Resolving Dispute pursuant to Paragraph 26.a.

Dear Mr. Nassif:

This letter constitutes EPA's final decision resolving the dispute pursuant to Paragraph26.a. of the Partial Consent Decree ("PCD") with respect to the dispute raised by Solutia, Inc.and Pharmacia Corporation ("Defendants") on November 17, 2004, under Section VTJJ of thePCD. Although it appears that the Court ruled on the issue in dispute in its June 30, 2005, Order,the Legal Special Master, Mr. Doug Jones, asked EPA to submit its final decision in accordancewith the provisions of the PCD in his July 5, 2005, e-mail which you also received.

The positions and factual and legal arguments contained in the United States' numerouspleadings and memoranda on the issue in dispute, as well as, EPA's June 6, 2005, Statement ofPosition accurately reflect EPA's position on the matter in dispute and shall serve as EPA's finaldecision. As the Division Director of the Waste Management Division of EPA Region 4,1 canunequivocally state that EPA would not have agreed to sign the PCD if EPA was abrogating itsability to pursue and settle with other responsible parties and to obtain additional cleanup work inAnniston. The clear language of the PCD and the CERCLA statute fully support this conclusion.

i

Additionally, you raised a new issue in your June 29,2005, Memorandum to the Court.In your Memorandum, you claimed that the court's decision in United States v. Charter Int'l OilCo.. 83 F.3d 510 (1st Cir. 1996), was relevant to the instant matter. Quite to the contrary, thatdecision is inapposite to the facts here. In that case there was no question that the proposedsettlement document provided contribution protection. Id. at 517. Unlike the present case, therewas no debate that EPA had the ability to settle with other parties that would impact a priorsettlor's "reserved" contribution rights. The only issue before the court was the extent ofcontribution protection afforded by the proposed settlement document. In that case, there wereno "matters addressed" defining the scope of the contribution protection and EPA and the courtagreed as to the appropriate scope of contribution protection to be afforded. Further, that case,did not involve a de minimis settlement as the proposed AOC here does. It was the settling partywho disagreed with EPA and the court.

Internet Address (URL) • http://www.epa.govRecycled/Recyclable • Primed with Vegetable Oil Based Inks on Recycled Paper (Minimum 30% Postconsumer)

In your Memorandum, you characterize the Defendants to the PCD as "early settlors" and0 **r»r*niirlinrr «MtK t^*^ 1ot/ar p<atf1ir>fT r\artic*c tr\ tVw • r\t*tr\ m£*r\t r\£ rP\A"ff*n rlon tol V\\/

' ' ' • ' ' ' ' • - ' • " '

gratuitously offering them a c?e minimis settlement on the Anniston PCB Site." First, as the onlymajor contributors of PCBs to the Anniston area discovered to date, the Defendants are in no wayan "early settlor". The term "early settlor" presupposes that there are other major non-cooperative parties. With respect to PCB contamination, that is not the case. In fact, theDefendants are the only identified potentially responsible party for lead contamination that hasnot settled its lead liability with EPA. Second, the evidence compiled by EPA supports EPA'sdetermination that the settling parties to the proposed AOC are indeed de minimis, and that thesettling parties will be contributing at least their fair share to the cleanup of the Anniston PCBSite. EPA has not gratuitously granted the settling parties anything. CERCLA requires that theybe treated as such. The Defendants have had ample opportunity to submit contrary evidence toEPA and will have an additional opportunity during the public comment period for the proposedAOC.

Pursuant to Paragraph 26. a. of the PCD, Defendants have twenty (20) days from receiptof this Final Decision to file and serve a motion for judicial review of this decision. Should youhave any questions regarding these matters, you may contact Mike Stephenson, AssociateRegional Counsel, at (404) 562-9543, or Bill Weinischke with the Department of Justice at (202)514-4592.

Sincerely,

Winston A. SmithDirectorWaste Management Division

cc:

Bill Weinischke, DOJDoug Jones, Legal Special MasterThomas Dahl, Technical Special Master

EXHIBIT 10

10302171

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

[ REGION 4? ATLANTA FEDERAL CENTER

61 FORSYTH STREET"'-•* PRO^O> ATLANTA, GEORGIA 30303-8960

June 6, 2005

VIA OVERNIGHT COURIERAND FACSIMILE TO (314) 480-1505

Mr. Joseph G. NascifHusch & Eppenberger, LLC190 Carondelet Plaza, Suite 600St. Louis, Missouri 63105-3441

RE: Anniston PCB Superfund SiteDispute Resolution under Partial Consent DecreeEPA Statement of Position pursuant to Paragraph 24.b.

Dear Mr. Nassif:

This letter constitutes EPA's Statement of Position pursuant to Paragraph 24.b. of thePartial Consent Decree ("PCD") with respect to the dispute raised by Solutia, Inc. and PharmaciaCorporation ("Defendants") on November 17, 2004, under Section VILT of the PCD.

EPA continues to maintain that Defendants' Statement of Position was untimely servedpursuant to the express terms contained in Section VLII of the PCD and that the period of disputehas expired with the position advanced by EPA being binding on the Parties.1 Nevertheless, incompliance with the Court's order of June 2, 2005, EPA is providing this Statement of Positionas a protective measure and is expressly reserving and is not waiving its claim that Defendantshave failed to timely serve their Statement of Position on the United States, and that the positionadvanced by EPA is binding.

As stated in the Court's June 2, 2005, Order, the issue in dispute is "the meaning of thecontribution provisions of the Consent Decree." (Emphasis added). Defendants have attemptedin their various pleadings to mischaracterize the issue in dispute as EPA's negotiations with theSettling Respondents to the proposed administrative agreement. The dispute resolution sectionof the Consent Decree "is only applicable to requirements that are contained in the Consent

'The United States' position on the timeliness of Defendants' service of its Statement ofPosition on the United States is set forth in the numerous pleadings before the Court, includingthe United States' Notice of Compliance and Status Report filed with the Court on May 2, 2005.Those arguments are incorporated by reference and are not repeated here.

Internet Address (URL) • http://www.epa.govRecycled/Recyclable .Printed with Vegetable Oil Based Inks on Recycled Paper (Minimum 30% Poslconsumer)

Decree...." PCD, Paragraph 21. EPA's negotiations with third parties are not "requirements" ofthe Consent Decree.

As required by the Court's Order, the dispute addressed by EPA in this Statement ofPosition is "the meaning of the contribution provisions of the Consent Decree." Defendants'interpret the contribution provisions of the PCD to prohibit EPA from settling with otherpotentially responsible parties which may impair Defendants' contribution claims. The PCDcontains no prohibition on the United States from negotiating cleanup agreements v/ith otherPotentially Responsible Parties (PRFs), even if such an agreement impairs Defendants'contribution rights. The rights the Defendants' reserved are provided by Section 113(f) ofCERCLA, 42 U.S.C. § 9613(f), which also contains limitations on those rights. Specifically,Section 113(f)(3)(C) states that Defendants' contribution rights shall be subordinate to the rightsof the United States. Courts that have construed Section 113(f)(3)(C) have all held that whereparties who previously settled with the United States are suing parties in contribution that theUnited States is also pursuing, the rights of the previously settling parties are subordinate to therights of the United States. Additionally, the Defendants' right to maintain a contribution lawsuitagainst parties who settle with the United States is subject to specific limitations in Sections113(f) and 122(g) and (h), 42 U.S.C. §§ 9613(f) and 9622(g) and (h).

EPA hereby incorporates all pleadings, motions, hearing transcripts, and other filingswhich make up the record before the Court pertaining to entry of the PCD (DocumentsNumbered 1, 2, 5, 6, 7, 11, 13, 14, 15, 16, 17, 18, 19, 22, 24, 26, 27, 28, 36, 41, 43, 46, 52, 53,61, 62, 63, 64, 66, 67, 68, and 71 on the Civil Docket for the case), as well as, all of the UnitedStates pleadings, motions, and arguments pertaining to the matter in dispute (DocumentsNumbered 123, 124, 127, 136, 141, and 142 on the Civil Docket for the case and the transcriptfrom the hearing on June 1, 2005). The evidence in the record clearly shows that the PCD,CERCLA, and the caselaw interpreting CERCLA support EPA's position that the PCD does not,in any fashion, limit or prevent EPA from negotiating and/or settling with other potentiallyresponsible parties. Indeed, it is inconceivable that the United States would have agreed to apartial settlement with Defendants that prohibited EPA from settling with other potentiallyresponsible parties for additional environmental cleanup work in Anniston.

The PCD expressly supports EPA's position. Paragraph 32 of the PCD states"Notwithstanding any other provision of this Consent Decree, the RI/FS Agreement, the NTCRemoval Agreement and/or the Removal Order, the United States retains all authority andreserves all rights to take any and all response actions authorized by law." Paragraph 4 of thePCD states "Unless otherwise expressly provided herein, terms used in this Consent Decreewhich are defined in CERCLA or in regulations promulgated under CERCLA shall have themeaning assigned to them in CERCLA or in such regulations." Section 101(25) of CERCLAdefines the terms "response" to mean "remove, removal, remedy, and remedial action;, all suchterms (including the terms "removal" and "remedial action") include enforcement activitiesrelated thereto." Hence, the PCD which Defendants signed on October 16, 2002, almost a yearbefore Defendants filed their contribution action, was absolutely clear that irrespective of any

other provisions in the PCD, the United States had then, and continues to have now, the authorityand right to take the precise enforcement actions against other potentially responsible parties thatEPA now proposes to undertake with the proposed administrative settlement.2 There isabsolutely no mistaking the clear and express terms of the PCD.

Defendants apparently ignore the clear language of Paragraph 32 of the PCD, and rely ontwo paragraphs of the PCD (Paragraphs 38 and 42) that generally state that the Defendantsreserve or retain the:r rights to contribution under CERCLA.3 EPA agrees. The Defendants'rights to contribution, whatever they may be, are granted by Section 113(f) of CERCLA, and arereserved or retained in the PCD. But the PCD did not create a new right of contribution for theDefendants, different than those provided by the statute. That is not possible. The contributionrights CERCLA grants and which the Defendants retained are unquestionably subordinated to theUnited States' rights to pursue other parties and do not include a right for Defendants to maintaina contribution action against parties who settle with the United States. In numerous paragraphsin the PCD, the United States also reserved and retained all of its rights under CERCLA. Thelanguage of the PCD is clear and unambiguous in these reservation sections. In the PCD, bothPlaintiff and Defendants reserved their respective rights to pursue other parties as provided inCERCLA. However, CERCLA Section 113(f)(3)(C) is absolutely clear that when both theUnited States and parties it previously settled with pursue the same other persons, the United

2The Court's June 2, 2005, Order states that the Defendants filed their contribution actiontwo months before the PCD was approved. Defendants signed the PCD over 14 months beforefiling their contribution lawsuit. The PCD was first lodged with the Court on March 25, 2002.(Documents Number 1 and 2 on the Civil Docket for the case) The Revised PCD, which changednone of the provision currently under dispute, was lodged with the Court on October 16, 2002.(Documents 13 and 14 on the Civil Docket for the case) The date of the Court's approval isirrelevant. The Defendants agreed to the terms in dispute and asked the Court to approve thePCD more than 14 months prior to filing their contribution action in June of 2003.

Defendants also rely on language in Section I, Page 2, of the NTC Removal Agreementwhich states that EPA acknowledged that Defendants "may" seek contribution for residentialproperties with lead in excess of 400ppm that Defendants clean up. That is true, but the languageimmediately preceeding that statement provides that "EPA is in the process of identifyingpotentially responsible parties (PRPs) under CERCLA...." This language makes clear thatDefendants knew that EPA was in the process of pursuing other PRPs, and the statutoryconsequences of EPA's enforcement actions on Defendants' potential claims for contribution areclearly spelled out in Section 9613(f)(3)(C) of CERCLA. A final provision relied upon byDefendants is the statement in the Statement of Work to the RJ/FS Agreement which states thatthe RI will be used to "identify any other Potentially Responsible Parties that may be involved."This language supports EPA's position that Defendants had clear knowledge that EPA wasinvestigating other PRPs with the intention to take some action with respect to such parties.

States' rights are superior.4 The case law and the legislative history are equally clear andunambiguous on this point. In sura, the PCD reserved the Parties' statutory rights, not just theDefendants' rights. The rights the United States reserved are superior.

Sections 9613(f)(2), 9622(g)(5), and 9622(h)(4) of CERCLA entitle parties who settlewith the United States to protection from contribution claims for matters addressed in thesettlement. Sections 9613 and 9622 of CERCLA require that settling parties "shall not be liablefor claims for contribution regarding matters addressed in the settlement." Hence, CERCLAgra:i'.s the settling parties to the proposed administrative agreement contribution protection formatters addressed in the proposed administrative agreement. In the PCD, the United States didnot, and could not, bargain away third parties' statutory entitlement to the contribution protectionafforded by CERCLA in Sections 9613(f)(2), 9622(g)(5), and 9622(h)(4). There is no languagein the PCD expressing that parties who subsequently settle with the United States shall not beafforded the contribution protection provided by Section 9613(f)(2), 9622(g)(5), or 9622(h)(4).Even if there was, such language would be in conflict with the statute.

The contribution rights Defendants retained in the PCD are those granted by CERCLA.The contribution rights granted by CERCLA do not include the right to pursue contributionclaims against parties who settle their CERCLA liability with the United States. During thehearing in this case on June 1, 2005, the Court stated that the Defendants and the Court believed"that the Defendants rights to contribution would continue after this consent decree was signedby [the Court] to the same extent and degree as they existed before the decree." Transcript, page22. This is entirely true. Defendants' rights to contribution are the same now as they werebefore the PCD was entered by the Court. However, those rights are clearly limited byCERCLA. See 42 U.S.C. §§ 9613(0(2), (f)(3)(B), (f)(3)(C), 9622(g)(5), and 9622(h)(4). Asnoted above, those rights are explicitly inferior to the right of the United States to pursue thesame person pursuant to Section 9613(f)(3)(c).

With respect to Defendants' claims that they were not aware of the terms of the PCD thatwould allow EPA to pursue other parties, there can be no conclusion other than the Defendantsentered into the PCD with full knowledge of the clear and express terms of the PCD and thestatutory limitations on Defendants' rights to seek contribution.5 The PCD was scrutinized by

"Defendants argue that Section 9613(f)(3)(C) is inapplicable to this matter because thereis no "action" as described in Section 9613(f)(3)(C). Defendants are wrong because Section9613(f)(3) applies to "any action." Hence, section 9613(f)(3)(C) applies equally to judicial andadministrative actions. EPA's proposed administrative agreement is an administrative action andDefendants' contribution action is a judicial action. Both actions satisfy the "any action"requirement of Section 9613(f)(3)(C).

5Although the Court seemed to find in its June 2, 2005, Order that the Defendants wouldnot have agreed to the PCD in the absence of a clause preserving their rights to contribution fromother Potentially Responsible Parties (PRPs) for contamination of the Anniston PCB Site, there

the Court for a year due to allegations by tort plaintiffs that the United States had given theDefendants a "sweetheart deal" in the PCD. TTe United States defended the PCD on the groundsthat the PCD contained all of the relief the United States was entitled to under CERCLA and thatthe PCD gave up nothing inappropriate to the Defendants. Relinquishing the United States'ability to pursue and settle with other parties would have been absolutely inappropriate, not in thepublic interest, and contrary to CERCLA and the purposes behind it. The Defendants clearlyknew what terms were contained in the PCD and understood the statutory scheme underlyingCERCLA. This conclusion is fully supported by the fact that the attorney who negotiated the

..PCD for Defendants, Mr. Allan J. Topol, is the co-author of a treatise entitled Superfund Lawand Procedure in which he discusses the limited nature of the contribution rights afforded byCERCLA. Mr. Topol's treatise cites two cases which the United States has already provided tothe Court regarding the very issue in dispute. Those two cases, U.S. v. Browning-FerrisIndustries. 19 CWLR 436 (M.D. La. 1989) and U.S. v. Bay Area Battery. 895 F.Supp. 1524(N.D. Fla. 1995), stand for the proposition that Defendants' rights to pursue contribution againstother responsible parties are subordinate to the rights of the United States to pursue and settlewith those same parties. Without such subordination, polluters, such as Defendants, couldfrustrate EPA's obligation of protecting public health and the environment.

EPA is not addressing in this Statement of Position the various factual and evidentiaryexhibits attached to Defendants' Statement of Position. Those exhibits relate directly to theunderlying basis of EPA's determination to enter into the proposed administrative agreement andthe merits of Defendants' contribution claims. Those exhibits are not relevant to the issue indispute. EPA has compiled, and continues to compile, an extensive administrative record which,after consideration of public comments, will form the basis of EPA's final decision whether tomake the proposed agreement effective.6 Should a Court determine that EPA's action is subjectto review and requires such, the administrative record supporting such action will be madeavailable to the reviewing tribunal.

Finally, the Court stated in its June 2, 2005, Order that the dispute is proceeding underParagraph 26 of the PCD which entails disputes which are not afforded review on anadministrative record. EPA agrees that the dispute, as stated by the Court and addressed herein,is a dispute of legal interpretation and as such Paragraph 26 is applicable. However, should the

is absolutely no evidence in the record that supports such a finding. While counsel forDefendants, Mr. White, made that statement in response to a question from the Court, Mr.White's statement is not evidence. Statements of counsel are not evidence. Moreover, Mr.White's statement is inconsistent with the fact that the Defendants did indeed enter into the PCDknowing full well that any contribution rights they may enjoy under CERCLA are subject tostatutory limitations.

6In addition to the longstanding rule of law that administrative actions cannot be revieweduntil they are final, EPA believes that Sections 113(h) and 122(g)(ll) limit judicial review of theproposed administrative agreement even when final.

Court determine that the proposed AOC itself and the basis for EPA's entry into the proposedAOC is somehow part of the present dispute, then EPA belie /es that Paragraph 25, relating todisputes afforded review on the administrative record, is applicable.

Pursuant to Paragraph 24.b., Defendants have fourteen (14) days from receipt of thisStatement of Position to submit a reply if Defendants so choose. Subsequently, pursuant toParagraph 26, the Director of the Waste Management Division for EPA Region 4 will issue afinal decision resolving the dispute. Should you have any questions regarding these matters, youmay coiiiact me at (404) 562-9543, or Bill Weinischke with the Department of Justice at (202)514-4592.

Sincerely,

Mike StephensonAssociate Regional Counsel

cc:

Bill Weinischke, DOJDoug Jones, Legal Special MasterThomas Dahl, Technical Special Master

EXHIBIT 10

10302172

FILED2004 Nov-22 PM 02:06U.S. DISTRICT COURT

N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURTFOR THE NORTHERN DISTRICT OF ALABAMA

UNITED STATES OF AMERICA

Plaintiff,

v.

PHARMACIA CORPORATION(p/k/a Monsanto Company)and SOLUTIA INC.,

Defendants.

CIVIL ACTION NO.CV-02-C-0749-E

UNITED STATES' MOTION TO STRIKE LETTER FROM DEFENDANTS TO COURT

I. Introduction

For the reasons set forth below, the United States

respectfully requests that the Court strike the letter dated

November 17, 2004, sent from Counsel for Defendants, Mr. J. Mark

White, to the Honorable U. W. Clemon. In their letter, the

Defendants claim to invoke the dispute resolution provisions of

the Consent Decree under the false premise that the Environmental

Protection Agency ("EPA") is attempting to alter the Defendants'

rights under the Consent Decree.

II. Argument

A. There is no dispute under the Consent Decree

In their letter, Defendants improperly claim that they are

invoking the informal negotiation provisions of the dispute

resolution process under the Consent Decree because settlement

discussions regarding the Anniston Lead Site will alter the

Defendants' rights under the Consent Decree, particularly their

right to claims for contribution. However, the mere fact that EPA

is involved in ongoing negotiations at the Anniston Lead Site

does not in any way give rise to any dispute between EPA and the

Defendant's under the Consent Decree for the Anniston PCB Site.1

Therefore, Defendants' invocation of dispute resolution under the

Consent Decree is improper.

As indicated in Defendant's letter, EPA has been negotiating

a settlement with a group of potentially responsible parties for

the Anniston Lead Site. This group of potentially responsible

parties includes both Solutia and Pharmacia due to releases of

lead into the environment from their corporate predecessor's

(Monsanto) Anniston plant. Until Defendants' November 17, 2004,

letter was received, EPA believed that Solutia and Pharmacia were

likely parties to any settlement that may ultimately be reached

for the Anniston Lead Site. The United States now assumes that

Defendants' letter represents either a decision by the Defendants

not to participate in any settlement for the Anniston Lead Site

or a thinly veiled attempt to improve their negotiating posture

with EPA and the other potentially responsible parties. Clearly,

the dispute resolution provisions of the Consent Decree are not

1 The Anniston Lead Site includes residential properties inand around Anniston, Alabama which contain lead. Many of theproperties that make up the Anniston Lead Site also contain PCBsand therefore, there is some overlap between the Anniston LeadSite and the Anniston PCB Site.

the appropriate mechanism for negotiating a settlement at another

Superfund site.

Further, contrary to Defendants' assertion, EPA is not

attempting to take away Defendants' "bargained for" rights to

contribution under the Consent Decree. By law, any potentially

responsible parties who enter into a settlement with EPA for the

Anniston Lead Site are entitled to protection from contribution

actions.2 While the Consent Decree acknowledges the Defendants'

statutory right to seek contribution, it in no way prohibits EPA

from fulfilling its statutory mandate to force other responsible

parties to conduct additional clean up work in Anniston, Alabama.

Apparently, the Defendants seem to be taking the absurd position

that EPA is prohibited by the Consent Decree from negotiating

clean up settlements with other potentially responsible parties.

In any event, whatever concerns that the Defendants may have

regarding a potential settlement for the Anniston Lead Site,

those concerns are certainly not disputes under the Consent

Decree approved and entered by this Court. Therefore, the

Defendants attempt to invoke dispute resolution under the Consent

Decree is misplaced.

Additionally, EPA has kept the Legal Special Master, Mr.

Doug Jones, generally apprised of EPA's ongoing efforts related

to the Anniston Lead Site, and EPA is amenable to providing

additional information to Mr. Jones if requested.

2 See CERCLA Section 113(0(2) and 122(h)(4).

B. Defendants' NovemberlV, 2004 letter to the Courtundermines the dispute resolution provisions of the PartialConsent Decree

As stated above, there is no current dispute under the

Partial Consent Decree between the parties. However, even if

there was a dispute, the Dispute Resolution provision of the

Partial Consent Decree (Section VIII.) requires the parties to

attempt to resolve any disputes outside the Court, and to only

seek Court involvement as a last resort. Paragraph 23 of Section

VIII. states that

"any dispute which arises under or with respect to this

Consent Decree shall in the first instance be the

subject of informal negotiations between the parties to

the dispute. The period for informal negotiations

shall not exceed twenty (20) days from the time the

dispute arises, unless it is modified by written

agreement of the parties to the dispute. The dispute

shall be considered to have arisen when one party sends

the other parties a written Notice of Dispute."

Defendants never provided the United States such a written Notice

of Dispute as mandated by the Consent Decree.

Furthermore, paragraph 24(a) of Section VIII. states that

"in the event that the parties cannot resolve a dispute

by informal negotiations under the preceding Paragraph,

then the position advanced by EPA shall be considered

binding unless, within twenty-eight (28) days after the

conclusion of the informal negotiation period,

Defendants invoke the formal dispute resolution

procedures of this Section by serving on the United

States a written Statement of Position on the matter in

dispute, including, but not limited to, any factual

data, analysis or opinion supporting that position and

any supporting documentation relied upon by the

Defendants. The Statement of Position shall specify

the Defendants' position as to whether formal dispute

resolution should proceed under Paragraph 25 or

Paragraph 26."

Paragraph 24(b) then requires EPA, within twenty-eight (28)

days after receipt of Defendants' Statement of Position, to serve

on Defendants its Statement of Position, including, but not

limited to any factual data, analysis, or opinion supporting that

position and all supporting documentation relied upon by EPA. In

addition, EPA's Statement of Position shall include a statement

as to whether formal dispute resolution should proceed.

Defendants then have fourteen (14) days to submit a reply to

EPA's Statement of Position.

Only after the foregoing provisions have been fully

exhausted and the parties have been unable to resolve the

dispute, is it appropriate for the dispute to be submitted to the

Court. The purpose of the Dispute Resolution provisions of the

Consent Decree is to not burden the Court with disputes until the

parties have made every effort to resolve the dispute on their

own. That is precisely why the Consent Decree sets out a

detailed mechanism for resolving disputes. Here, before

notifying EPA, the Defendants have foisted their alleged dispute

on the Court in direct violation of the Dispute Resolution

requirements that they agreed to and the Court approved.

C. This Court previously ordered that no letters shall besubmitted to the Court asking for Court action.

By Order dated March 19, 2004, this Court stated that "Both

parties and interested non-parties shall refrain from submitting

letters to this Court containing legal arguments or requests for

Court action." In their letter, the "Defendants ask the Court

and its General Special Master, Doug Jones, and Technical Special

Master, Tom Dahl, to provide assistance during this informal

negotiation period." Arguably, the Defendants are asking for

court action, and hence, the letter violates this Court's March

19, 2004, Order.

Conclusion

For the reasons mentioned above, the United States

respectfully requests that the Court strike Defendants' letter of

November 17, 2004.

Respectfully submitted,

Thomas L. SansonettiAssistant Attorney GeneralEnvironment & Natural Resources Division

William A. Weinischke, Senior AttorneyEnvironmental Enforcement SectionEnvironmental and Natural ResourcesDivision

U.S. Department of JusticeP.O. Box 7611Washington, D.C. 20044-7611(202) 514-4592

CERTIFICATE OF SERVICE

This is to certify that a copy of the foregoing Motion

to Strike of the United States has been served upon the following

counsel, by mailing the same by first class United States mail,

properly addressed and postage prepaid, on this the of

November, 2004:

Special MasterG. Douglas Jones2323 2nd Avenue, NorthBirmingham, Alabama 35203

Christopher H. Buckley, Jr.Gibson, Dunn & Crutcher, L.L.P.1050 Connecticut Avenue, N.W.Washington, D.C. 20036-5306

Cathleen S. BumbAssistant General Counsel -EnvironmentalSolutia, Inc.575 Maryville DriveSt. Louis, Missouri 63141

William Cox, III

The Clark Building400 S. 20th StreetBirmingham, Alabama 35203-3200

David F. SnivelyDeputy General CounselMonsanto Company800 North Lindbergh Blvd.St. Louis, Missouri 63167

Allan J. TopolCovington & Burling1201 Pennsylvania Avenue, N.W.Washington, D.C. 20044-7566

Mark White2025 3rd Avenue NorthBirmingham, Alabama 35203

William J. BaxleyJoe E. Dillard2008 Third Avenue SouthBirmingham, Alabama 35233

Jesse S. FinlaysonRichard M. CieriGibson, Dunn & Crutcher, L.L.P.200 Park AvenueNew York, New York 10166-0193

Kimberly B. Glass2125 Morris AvenueBirmingham, Alabama 35203

Ira S. Dizengoff590 Madison AvenueNew York, New York 10022-2524

Edward Q. RaglandAssistant United States AttorneyOffice of the United States AttorneyNorthern District of Alabama

EXHIBIT 10

10302173

FILED2004 Nov-24 PM 05:26U.S. DISTRICT COURT

N.D. OF ALABAMA



Plaintiff,


Defendants.

CIVIL ACTION NO. CV-02-C-0749-E

MOTION TO RECONSIDER UNITED STATES' MOTION TO STRIKE LETTER FROMDEFENDANTS TO COURT AND COURT'S NOVEMBER 18, 2004 ORDER

I. Introduction

By letter dated November 17, 2004, Defendants submitted a

letter to the Court asking for intervention by the Court into a

fictional dispute under the Consent Decree. In response to

Defendants' letter, on November 18, 2004, the United States filed

a Motion to Strike. However, prior to the United States' Motion

to Strike being filed, on November 18, 2004, at 12:45 pm(cst) the

Court entered an Order designating the Technical and General

Special Masters for the Consent Decree to "provide assistance

during this informal negotiation period." It thus appears from

the timing of the Court's Order that it was issued without the

Court having the benefit of considering the United States' Motion

to Strike. The Unite.d States respectfully submits that the Court

will wish to withdraw its Order after it has the benefit of the

United States' position.

For the reasons set forth below, the United States

respectfully requests that the Court reconsider the United

States' Motion and the Court's November 18, 2004 Order. In their

letter, the Defendants claim to invoke the dispute resolution

provisions of the Consent Decree under the false premise that the

Environmental Protection Agency ("EPA") is attempting to alter

the Defendants' rights under the Consent Decree. As shown below,

there is no dispute between the parties and, even if there was a

dispute, the Defendants have not complied with the Dispute

Resolution provisions of the Consent Decree.

II. Argument

A. There is no dispute under the Consent Decree

In their letter, Defendants improperly claim that they are

invoking the informal negotiation provisions of the dispute

resolution process under the Consent Decree because settlement

discussions regarding the Anniston Lead Site will alter the

Defendants' rights under the Consent Decree, particularly their

right to claims for contribution. However, the mere fact that

EPA is involved in ongoing negotiations at the Anniston Lead Site

does not in any way give rise to any dispute between EPA and the

Defendants under the Consent Decree for the Anniston PCB Site.1

Therefore, Defendants' invocation of dispute resolution under the

Consent Decree is improper.

As indicated in Defendants' letter, EPA has been negotiating

a settlement with a group of potentially responsible parties for

the Anniston Lead Site. This group of potentially responsible

parties includes both Solutia and Pharmacia due to releases of

lead into the environment from their corporate predecessor's

(Monsanto) Anniston plant. EPA's overall objective is to reach

an agreement with potentially responsible parties that results in

the lead contamination and other contaminants of concern in

Anniston being cleaned up so as to protect public health and the

environment.

Until Defendants' November 17, 2004, letter was received,

EPA believed that Solutia and Pharmacia were likely parties to

any settlement that may ultimately be reached for the Anniston

Lead Site. The United States now assumes that Defendants' letter

represents either a decision by the Defendants not to participate

in any settlement for the Anniston Lead Site or a thinly veiled

attempt to improve their negotiating posture with EPA and the

other potentially responsible parties. Clearly, the dispute

' The Anniston Lead Site includes residential properties inand around Anniston, Alabama which contain lead. Many of theproperties that make up the Anniston Lead Site also contain PCBsand therefore, there is some overlap between the Anniston LeadSite and the Anniston PCB Site.

resolution provisions of the Consent Decree are not the

appropriate mechanism for negotiating a settlement at another

Superfund site.

Further, contrary to Defendants' assertion, EPA is not

attempting to take away Defendants' "bargained for" rights to

contribution under the Consent Decree. By law, any potentially

responsible parties who enter into a settlement with EPA for the

Anniston Lead Site are entitled to protection from contribution

actions.2 While the Consent Decree acknowledges the Defendants'

statutory right to seek contribution, it in no way prohibits EPA

from fulfilling its statutory mandate to force other responsible

parties to conduct additional clean up work in Anniston, Alabama.

Apparently, the Defendants seem to be taking the absurd position

that EPA is prohibited by the Consent Decree from negotiating

clean up settlements with other potentially responsible parties.

In any event, whatever concerns that the Defendants may have

regarding a potential settlement for the Anniston Lead Site,

those concerns are certainly not disputes under the Consent

Decree approved and entered by this Court. Therefore, the

Defendants attempt to invoke dispute resolution under the Consent

Decree is misplaced.3

2 See CERCLA Section 113(f)(2) and 122(h)(4).

3 In fact, the Defendants have a pending contribution action in the District Court for theNorthern District of Alabama against certain alleged responsible parties (Case Number CV-03-PWG-1345-E). It is in that forum that the scope of the Defendants' contribution rights, if any.

Additionally, EPA has kept the Legal Special Master, Mr.

Doug Jones, generally apprised of EPA's ongoing efforts related

to the Anniston Lead Site, and EPA is amenable to providing

additional information to Mr. Jones if requested. The United

States, on November 23, 2004, informed Mr. Jones that we would be

pleased to meet with him (and Mr. Dahl) to discuss EPA's

objectives in cleaning up the lead contamination in Anniston in a

way that it is protective of public health and the environment.

B. Defendants' November 17, 2004 letter to the Courtundermines the dispute resolution provisions of the PartialConsent Decree

As stated above, there is no current dispute under the

Partial Consent Decree between the parties. However, even if

there was a dispute, the Dispute Resolution provision of the

Partial Consent Decree (Section VIII.) requires the parties to

attempt to resolve any disputes outside the Court, and to only

seek Court involvement as a last resort. Paragraph 23 of Section

VIII. states that

"any dispute which arises under or with respect to this

Consent Decree shall in the first instance be the

subject of informal negotiations between the parties to

the dispute. The period for informal negotiations

shall not exceed twenty (20) days from the time the

dispute arises, unless it is modified by written

should be appropriately determined.

5

agreement of the parties to the dispute. The dispute

shall be considered to have arisen when one party sends

the other parties a written Notice of Dispute."

Defendants never provided the United States such a written Notice

of Dispute as mandated by the Consent Decree.

Furthermore, paragraph 24 (a) of Section VIII. states that

"in the event that the parties cannot resolve a dispute

by informal negotiations under the preceding Paragraph,

then the position advanced by EPA shall be considered

binding unless, within twenty-eight (28) days after the

conclusion of the informal negotiation period,

Defendants invoke the formal dispute resolution

procedures of this Section by serving on the United

States a written Statement of Position on the matter in

dispute, including, but not limited to, any factual

data, analysis or opinion supporting that position and

any supporting documentation relied upon by the

Defendants. The Statement of Position shall specify

the Defendants' position as to whether formal dispute

resolution should proceed under Paragraph 25 or

Paragraph 26."

Paragraph 24 (b) then requires EPA, within twenty-eight (28)

days after receipt of Defendants' Statement of Position, to serve

on Defendants its Statement of Position, including, but not

limited to any factual data, analysis, or opinion supporting that

position and all supporting documentation relied upon by EPA. In

addition, EPA's Statement of Position shall include a statement

as to whether formal dispute resolution should proceed.

Defendants then have fourteen (14) days to submit a reply to

EPA's Statement of Position.

Only after the foregoing provisions have been fully

exhausted and the parties have been unable to resolve the

dispute, is it appropriate for the dispute to be submitted to the

Court. The purpose of the Dispute Resolution provisions of the

Consent Decree is to not burden the Court with disputes until the

parties have made every effort to resolve the dispute on their

own. That is precisely why the Consent Decree sets out a

detailed mechanism for resolving disputes. Here, before

notifying EPA, the Defendants have foisted their alleged dispute

on the Court in direct violation of the Dispute Resolution

requirements that they agreed to and the Court approved.

C. This Court previously ordered that no letters shall besubmitted to the Court asking for Court action.

By Order dated March 19, 2004, this Court stated that "Both

parties and interested non-parties shall refrain from submitting

letters to this Court containing legal arguments or requests for

Court action." In their letter, the "Defendants ask the Court

and its General Special Master, Doug Jones, and Technical Special

Master, Tom Dahl, to provide assistance during this informal

7

negotiation period." Arguably, the Defendants are asking for

Court action, and hence, the letter violates this Court's March

19, 2004, Order.

Conclusion

For the reasons mentioned above, the United States

respectfully requests that the Court strike Defendants' letter of

November 17, 2004 and withdraw its November 18, 2004 Order.

Moreover, in any event, the United States will be pleased to

keep the Special Masters fully informed of matters related to the

Anniston Lead Site and to provide them any information they may

need. Additionally, the United States has informed Mr. Jones

that it will be pleased to meet with him to explain the position

of the United States, and to discuss the Anniston Lead Site and

the United States' objectives in getting the lead contamination

in Anniston addressed so as to provide protection of public

health and the environment.



William A. Weinischke, Senior AttorneyEnvironmental Enforcement SectionEnvironmental and Natural Resources

DivisionU.S. Department of JusticeP.O. Box 7611Washington, D.C. 20044-7611(202) 514-4592


This is to certify that a copy of the foregoing Motion to Reconsider the United States'

Motion to Strike and the November 18, 2004 Order of the Court has been served upon the

following counsel, by mailing the same by first class United States mail, properly addressed and

postage prepaid, on this the of November, 2004:

Special MasterG. Douglas Jones23232nd Avenue, NorthBirmingham, Alabama 35203


Cathleen S. BumbAssistant General Counsel - EnvironmentalSolutia, Inc.575 Maryville DriveSt. Louis, Missouri 63141

William Cox, IIIThe Clark Building400 S. 20th StreetBirmingham, Alabama 35203-3200



Mark White2025 3rd Avenue North

Birmingham, Alabama 35203

Will iam J. BaxleyJoe E. Dillard2008 Third Avenue SouthBirmingham, Alabama 35233



Ira S. DizengotT590 Madison AvenueNew York, New York 10022-2524

Ed RaglandAssistant United States AttorneyOffice of the United States AttorneyNorthern District of Alabama

10

EXHIBIT 10

10302174

FILED2004 Dec-14 PM 12:42U.S. DISTRICT COURT

N.D. OF ALABAMA



Plaintiff,

v.


Defendants.


REPLY MEMORANDUM IN SUPPORT OF MOTION TO STRIKEDEFENDANTS' NOVEMBER 17. 2004 LETTER TO THE COURT

I. Introduction

On November 17, 2004, the Defendants submitted a letter to

the Court asking for intervention by the Court into a fictional

dispute under the Consent Decree. In their letter, the

Defendants claimed to invoke the dispute resolution provisions of

the Consent Decree under the false premise that the Environmental

Protection Agency ("EPA") is attempting to alter the Defendants'

"bargained for" rights under the Consent Decree by negotiating a

settlement with other potentially responsible parties (PRPs).

Essentially, the Defendants' contend that the Consent Decree

prohibits the United States from entering into any settlement

with other potentially responsible parties (PRPs) for the purpose

of cleaning up lead and PCB contamination in Anniston, Alabama.

1

No interpretation of the Consent Decree can reach such an absurd

result. There is simply no legitimate dispute between the

parties under the Consent Decree and, in fact, the Consent Decree

and CERCLA expressly reject the position espoused by the

Defendants. The Defendants' outright misreading of the Consent

Decree does not give rise to a dispute.1

II. Argument

A. Defendants' position is contrary to the expressprovisions of the Consent Decree

In their Response, the Defendants continue to mislead the

Court by asserting that they have "bargained for" contribution

rights in the Consent Decree which in turn prohibits the United

States from exercising its authority to enter into settlements

with other PRPs. The Defendants are simply wrong. The

provisions of the Consent Decree cited by Defendants are not

assurances that the Defendants, in fact, have contribution

'Contrary to the Defendants' assertion, the United Stateshas not claimed that the Defendants failed to properly submit anotice of dispute as required by the Consent Decree. Rather, theUnited States argued that Defendants' letter to the Courtrequesting that the Court get involved in the dispute violatednot only the detailed dispute resolution procedures in theConsent Decree, but also violated this Court's prior Orderregarding the submission of letters to the Court. TheDefendants' assertion in their Response that "the approach takenby the Defendants was intended both to inform the Court and tonot raise unnecessary concerns with the community" belies thetruth. In their Conclusion, the Defendants state "The purpose ofthe letter was to request the services of the Special Masters tofacilitate resolution..." Nevertheless, the United Statesmaintains that the foregoing is irrelevant because there issimply no dispute under the Consent Decree.

rights. They are merely references to the fact that their entry

into the Consent Decree did not impair any contribution rights

they may otherwise have.2 The Defendants fail to make any

mention of the fact that the United States reserved all of its

rights under.the Consent Decree. Specifically, Section X

(Covenants Not to Sue by Plaintiff), Paragraph 32, of the Consent

Decree states that "Notwithstanding any other provision of this

Consent Decree, the RI/FS Agreement, the NTC Removal Agreement

and/or the Removal Order, the United States retains all authority

and reserves all rights to take any and all response actions

authorized by law." (emphasis added.) Sections 104, 122, and 106

of CERCLA provide specific authorization for the United States to

enter into agreements with PRPs to conduct response actions, and

no provision cited by Defendants can take away the United States'

statutory rights.3 Despite Defendants' arguments to the

2 Defendants claim that "the right to pursue other-responsible parties is a common negotiated term in CERCLAsettlements." Defendants Reply Brief, pg. 4. So common, in fact,that it is standard boilerplate in CERCLA settlements. Id. atfn. 3. They are right that it is boilerplate language.Therefore, Defendants claim that they specifically "bargained"for it is at best a mischaracterization since it is in fact modellanguage in all CERCLA settlements such as the Consent Decree.The reason it is model language is not because it is "negotiatedfor" by parties, but because it reflects the provisions ofCERCLA. CERCLA Section 113(f)(l) confers contribution rights uponsettling parties. The Defendants did not need to bargain forthem. That provision is model language in CERCLA settlementsonly to clarify that a settling party's entry into a CERCLAsettlement does not take away its statutory rights tocontribution, whatever they may be.

342 U.S.C. §9604, §9606, and §9622.

contrary, it is the Defendants who, through this fictional

Consent Decree dispute, are attempting to curtail the United

States' rights and authority under CERCLA.4 Furthermore, by their

actions, the Defendants are attempting to stop the clean up of

lead contamination in Anniston.

The Defendants' assertions are at odds with the express

language of the Consent Decree. Defendants reliance on several

provisions of the Consent Decree simply do not support: anything

more than the United States' acknowledgment that the Defendants

"may" seek contribution against other parties pursuant to

contribution rights the Defendants "may have". Defendants first

rely on Section XII of the Consent Decree (Effect of Settlement;

Contribution Protection), Paragraph 38, which states that "Each

of the Parties expressly reserves any and all rights (including,

but not limited to, any right of contribution) . . . which each

Party may have with respect to any matter, transaction, or

occurrence relating in any way to the Site and/or the Anniston

4 The Defendants reliance on United States v. Knote 29 F.3d1297 (8th Cir. 1994) is misplaced. If there was a dispute underthe Consent Decree, the United States would certainly comply withthe dispute resolution procedures set forth in the ConsentDecree. In Knote, there was a technical disagreement between theparties over the decontamination of a building. The question forthe court in that case was whether the consent decree coveredthat dispute. Here, however, there is no underlying dispute forconsideration. There is only the Defendants' misreading of theplain language of the Consent Decree and CERCLA. The UnitedStates maintains that the terms of the Consent Decree are soclear that there can be no dispute. "Notwithstanding any otherprovision of the Consent Decree" means exactly that.

Lead Site against any person not a Party hereto." (emphasis

added.) Although that provision states that the Defendants "may

have" contribution rights, it does not guaranty them contribution

rights. The Defendants also rely on Section XIII of the Consent

Decree (Disclaimer), Paragraph 42, which states that the

"Defendants retain their rights to assert claims against other

potentially responsible parties at the Site." However, this

provision, by it own language, much like the provision in

Paragraph 38, only "retains their rights." In their Response,

the Defendants also refer to language in the Non-time Critical

Removal Agreement (Appendix G to the Consent Decree), but that

language too only states that the Defendants "may" seek

contribution from other parties. The last paragraph of Section I

states:

Defendants and EPA acknowledge that residential

properties containing lead in excess of 400ppm are also

part of the Anniston Lead Site and that EPA is in the

process of identifying responsible parties (PRPs) under

CERCLA in connection with the Anniston Lead Site. If

Defendants remove soil from any property having lead in

excess of 400ppm from a residential property pursuant

to this Agreement, the EPA acknowledges that Defendants

may seek contribution for the costs of such removal

from PRPs at the Anniston Lead Site and any other

parties who may be liable.

5

The last sentence of that provision, which is relied upon by

Defendants, is nothing more than EPA's "acknowledgment" that the

Defendants "may" seek contribution. Also, it is important to

note that the first sentence of the cited paragraph states that

"EPA is in the process of identifying responsible parties...."

Why would the EPA work to identify additional responsible parties

if it had bargained away it rights to pursue them as Defendants

suggest?

Finally, the Defendants strangely rely on a statement in the

Statement of Work for the Remedial Investigation/Feasibility

Study which states that the "Site Management Strategy for the

Site includes... [u]se of the RI to identify any other

Potentially Responsible Parties that may be involved." See

Statement of Work, pg. 3, Appendix B to the Consent Decree. That

provision merely states that the RI will be used to help identify

other PRPs. It does not "require" the Defendants to identify

other PRPs as Defendants state in their Response Brief. Further,

that provision supports the United States' use of the RI to help

the United States identify and take enforcement actions against

other PRPs. Defendants seem to be arguing that information

developed during the RI which identifies other PRPs can only be

used by the Defendants in a contribution action.

As shown above, the provisions of the Consent Decree relied

upon by Defendants provide them with nothing more than

acknowledgments from the United States that they "may" assert

6

contribution rights that they "may have". Even if the Court were

to somehow find otherwise, the "Notwithstanding any other

provision" language in Paragraph 32 explicitly retained the

United States' rights and authority to take any actions

authorized under CERCLA. The fact that the Defendants "may have"

contribution rights, in no way diminishes the superior rights and

authority of the United States to fulfill its statutory mandate

by requiring other responsible parties to conduct additional

clean up work in Anniston, Alabama. The Defendants

mischaracterization of the plain language of the Consent Decree

cannot change that fact.

B. Defendants' position is contrary to the expressprovisions of CERCLA

As explained above, in the Consent Decree, the Defendants

retained whatever rights they "may have" to contribution under

CERCLA and the United States likewise retained all of its rights

and authority. It is dispositive of the issue here that the

CERCLA statute, by its clear terms, gives priority to the United

States' rights.

Section 113(f) of CERCLA, 42 U.S.C. § 9613 (f), entitled

"Contribution", is controlling on this precise issue. It reads

as follows:

(3) Persons not a party to settlement

(A) If the United States or a State has obtained

less than complete relief from a person who has

resolved its liability to the United States or the

State in an administrative or judicially approved

settlement, the United States or the State may

bring an action against any person who has not so

resolved its liability.

(B) A person who has resolved its liability to the

United States or a State for some or all of a

response action or for some or all of the costs of

such action in an administrative or judicially

approved settlement may seek contribution from any

person who is not a party to a settlement referred

to in paragraph (2).

(C) In any action under this paragraph, the rightso

of any person who has resolved its liability to

the United States or a State shall be subordinate

to the rights of the United States or the State.

Any contribution action brought under this

paragraph shall be governed by federal law.

(Emphasis added).

Hence, Congress made it absolutely clear that any rights of

contribution the Defendants may have are secondary to the United

States' rights to take actions against other parties.

Providing further support for the United States' position is

Section 122(b)(2) of CERCLA, 42 U.S.C. § 9622(b)(2), entitled

"Actions against other persons", which states that the mere fact

that the United States has entered into an agreement with one

party does not affect the authority of the United States to bring

an action against other persons that were not parties to the

agreement. Hence, Sections 122 and 113 of CERCLA actually

preclude any interpretation of the Consent Decree which would

have the effect of granting the Defendants a veto power over the

United States' authority to take actions against other PRPs.

Additionally, the Defendants argue that the United States,

by negotiating a settlement with other PRPs, is "aborting the

contribution rights" of the Defendants. See Defendants' Reply

Brief, pg. 3. The United States cannot confer or revoke

contribution rights. Sections 113 (f) (2) and 122 (g) (5), and

122(h)(4) provide that any person who resolves its liability to

the United States shall not be liable for claims for contribution

for matters addressed in the settlement.5 Hence, it is CERCLA

itself which confers contribution protection upon settling

parties. Therefore, to uphold the Defendants' position would

mean that the United States is prohibited from entering into any

agreements with other PRPs. Defendants' argument, if upheld,

would mean that the United States is prohibited from entering

into settlements with PRPs at Superfund sites throughout the

country if the United States has previously entered into a

542 U.S.C. §9613(f)(2) and §9622(g)(5).

9

settlement with another PRP.

If the Court accepts the Defendants' argument, then EPA

would be prevented from addressing contamination in Anniston

which poses a threat to public health and the environment simply

because these polluter Defendants have some pecuniary interest

which may be impacted. The Defendants' pecuniary interest cannot

trump the clear language of CERCLA and should not override the

interest of the people of Anniston in obtaining necessary clean

up actions.

C. The Defendants already have an appropriate forum inwhich to address their contribution rights

The Defendants have already instituted a contribution action

in another court. Whatever contribution rights the Defendants

"may have" will ultimately be determined in that action. The

Consent Decree before this Court is not the appropriate forum for

determining what contribution rights the Defendants "may have".

The Defendants have already asserted those rights, whatever they

may be, in another action. The Defendants are attempting to

inappropriately use the dispute resolution provisions of the

Consent Decree to hijack the ongoing negotiations aimed at

achieving a settlement to cleanup lead and PCB contamination in

Anniston. The Defendants' actions threaten to delay and

jeopardize the substantial cleanup actions that would be required

by such a settlement. As discussed above, Congress enacted

specific provisions of CERCLA to avoid such a scenario. The

10

proper forum for Defendants "dispute" is in their pending

contribution action, not under the Consent Decree.

Conclusion

For the foregoing reasons, the United States asks that the

Court strike Defendants' November 17, 2004 letter withdraw its

November 18, 2004, Order, and grant any other relief the Court

deems appropriate.



William A.^Weinischke, Senior AttorneyEnvironmental Enforcement SectionEnvironmental and Natural Resources


11


This is to certify that a copy of the foregoing Reply

Memorandum of the United States' in Support of its Motion to

Strike Letter and the November 18, 2004 Order of the Court has

been served upon the following counsel, by mailing the same by

first class United States mail, properly addressed and postage

prepaid, on this the (O *^~ of. December, 2004:



Cathleen S. BumbAssistant General Counsel -EnvironmentalSolutia, Inc.575 Maryville DriveSt. Louis, Missouri 63141




12






Edward Q.R*glandAssistant United States AttorneyOffice of the United States AttorneyNorthern District of Alabama

13

EXHIBIT 10

10302175

FILED2005 May-02 PM 04:06U.S. DISTRICT COURT

N.D. OF ALABAMA



Plaintiff,


Defendants .

CIVIL ACTION NO.1:02-CV-0749-UWC

NOTICE OF COMPLIANCE AND STATUS REPORT

The purpose of this pleading is to notify the Court of the

United States' activities in compliance with the Court's Orders

dated November 17, 2004 and March 8, 2005; inform the Court of

.EPA's efforts to secure expeditious cleanup of lead contamination

in Anniston through an anticipated administrative settlement

agreement; and present the United States' position regarding its

authority to enter into an administrative agreement with other

parties for additional cleanup of lead and PCBs in and around

Anniston, Alabama.

I. Background

A. Anniston PCB Site Consent Decree

On August 4, 2004, this Court entered a Revised Partial

Consent Decree ("Consent Decree") between the United States,

Pharmacia Corporation (p/k/a Monsanto Company) and Solutia, Inc.

("Defendants") following several hearings on the United States'

Motion to Enter Consent Decree. The Consent Decree obligates the

Defendants, inter alia, to cleanup residential properties

contaminated with PCBs that were released from their Anniston PCB

manufacturing plant, and to conduct an RI/FS (Remedial

Investigation/ Feasibility Study) to study the nature and extent of

the PCB contamination.

B. EPA's Cleanup Activities at the Anniston Lead Site.

As a result of the activities undertaken in connection with

the PCB contamination in Anniston, the United States Environmental

Protection Agency ("EPA") became aware of lead contamination in

Anniston.1 Because of the imminent and substantial endangerment to

the public posed by the lead contamination, EPA began a time-

critical removal action before the completion of its enforcement

investigation to identify parties believed to be potentially

responsible for lead contamination. At least 1,782 residential

properties have been sampled for lead. Of the properties sampled,

353 had soil lead concentrations greater than or equal to 400 parts

per million (ppm), the residential action level for EPA Region 4.

This is the level above which EPA has determined that there are

unacceptable risks to humans, particularly children. EPA has

cleaned up approximately 133 of the 353 of the residential

'There are two hazardous waste sites in Anniston coveredunder CERCLA, the "Anniston PCB Site" and the "Anniston LeadSite," which, in some locations, overlap.

properties with elevated soil lead concentrations at a cost of

approximately $11 million. Potentially thousands of additional

residential properties remain in need of sampling, and cleanup.

C. EPA's Enforcement Activities at the Anniston Lead and PCBSites.

In March of 2004, the United States began discussions with

parties believed to be potentially responsible for lead and PCB

contamination ("Potentially Responsible Parties" or "PRPs"). These

PRPs included the Defendants. The Defendants were involved in

these negotiations until November 17, 2004, when they ceased to

participate further. After the Defendants stopped participating,

the negotiations with the other PRPs2 continued. After a total of

12 months of vigorous, arms-length negotiations, counsel for the

United States and the remaining PRPs have prepared, for official

review and execution, a comprehensive administrative cleanup

agreement ("Agreement") that calls for the remaining PRPs, inter

alia, to take over EPA's lead cleanup in its entirety and to

perform additional cleanup of PCB contamination in and around

Anniston.

D. Health Risks Posed by Lead Contamination.

It is imperative that response actions called for in the

proposed Agreement not be delayed, especially in light of the well-

known health effects of lead, particularly to young children.

2The other PRPs are owners or operators of foundries andother industries in Anniston, Alabama.

"Young children are especially vulnerable to the toxic effects of

lead because their nervous systems are still developing and they

absorb more of the lead to which they are exposed." 66 Federal

Register 1206, 1207 (January 5, 2001) (Preamble to Final Rule for

Section 403 Toxic Substances Control Act). The toxic effects of

lead on children include "blood anemia, kidney damage, colic

(severe "stomachache"), muscle weakness, and brain damage which can

kill the child." Toxicoloqical Profile for Lead, Agency for Toxic

Substance Disease Control Registry, July 1999, page 10.3

Additionally, low levels of lead exposure early in life may slow

mental development and lower intelligence later in childhoood, and

these effects may persist beyond childhood. Id. "In light of the

impacts on children and the nature of the health effects, EPA's

goal is to eliminate exposure to harmful levels of lead." 66

Federal Register at 1207.

In view of the known dangers exposure to lead contamination

presents, the EPA is committed to getting the lead cleanup, as well

as the additional PCB cleanup, called for in the proposed

Agreement, underway as quickly as possible. The proposed

Agreement, discussed further below, is the best way to accomplish

3 The toxicologic and adverse health effects of lead aredescribed in the July 1999 toxicological profile for leaddeveloped by the Agency for Toxic Substances and Disease Registry(ATSDR) in response to Section 104 (i) (3) of CERCLA. The July1999 toxicological profile for lead is available at:http://atsdrl.atsdr.cdc.gov:8080/toxprofilesXtpl3.pdf.

that goal . The cleanup level required under the proposed Agreement

for both lead and PCBs is as stringent as any residential cleanup

implemented by EPA in the United States. EPA determined cleanup is

necessary to protect public health and the environment in Anniston.

E. Defendants' Activities in Opposition to the ProposedAgreement

Despite the urgent need to begin the work called for by the

proposed comprehensive cleanup Agreement, Defendants seek to

prevent the proposed comprehensive cleanup from going forward, by

invoking the dispute resolution provision of this Court' s Consent

Decree."1 Specifically, Defendants have argued to this Court that

their contribution claims against other PRPs somehow gives these

Defendants veto authority over any other settlement that the United

States may determine is necessary and appropriate for the

protection of public health and the environment.5

Defendants' arguments to this Court have resulted in two

Orders, one dated November 17, 2004, and one dated March 8, 2005

("Orders") . As set forth more fully in Section IV. below, the

^Paragraph 21 of the Consent Decree states that "[TJhisDispute Resolution Section is only applicable to requirementsthat are contained in the Consent Decree itself . . . " (emphasisadded) EPA respectfully submits that its efforts to reach asettlement with other parties in order to effectuate a cleanup ofhazardous wastes in Anniston do not concern any "requirement" ofthe Consent Decree.

5 The Defendants have a contribution action pending in theNorthern District of Alabama before Judge Greene, Solutia, Inc.v. McWane, Inc. et. al.. Case Number CV-03-PWG-1345-E.

United States believes it has complied fully with the Court's

Orders. The United States does not read the November 17, 2004 or

March 8, 2005 Orders or the Consent Decree as prohibiting EPA from

entering into a settlement with other parties for the purpose of

cleaning up lead and PCBs in Anniston. Therefore, unless

specifically ordered not to, EPA plans to move forward with the

process of finalizing the proposed Agreement, in order to address

the serious public health threat posed by lead and PCB

contamination in residential yards in Anniston. As stated below,

assuming the Agreement is approved by both the PRPs and the United

States, given the requisite public comment period, the Agreement

will not become final until the end of June 2005, at the earliest.

II. The Proposed Administrative Agreement for Lead and PCB Cleanup

In accordance with its authority under Section 122 of CERCLA,

42 U.S.C. § 9622, for approximately a year, the United States has

been negotiating with parties potentially responsible for lead and

PCB contamination in Anniston.6 Those negotiations have culminated

in the proposed Agreement. The work to be performed under the

proposed Agreement, if it is ultimately approved, is comprehensive,

6 The United States believes that the Defendants, inaddition to being liable for PCB contamination, are also liableunder CERCLA for lead contamination in Anniston. Thus, theDefendants were invited to participate and did participate innegotiations related to the Anniston Lead Site for many months.However, after the Defendants wrote the Court on November 17,2004, to invoke the Dispute Resolution provisions of the ConsentDecree, negotiations continued with the other PRPs.

requiring, among other things: [1] the PRPs to take over the

cleanup of the residential properties where EPA's sampling has

already detected soil lead concentrations greater than or equal to

400 ppm, including so-called "commingled" properties which also

contain soil PCB concentrations greater than or equal to 1 ppm;7

[2] comprehensive sampling of other residential properties within

500 meters of 23 current and historic industrial operations; [3]

extensive community outreach that will involve newspaper and radio

announcements, public availability sessions, and informational

flyers to churches, libraries and meeting halls to identify for

sampling additional residential properties that may contain foundry

sand; and [4] cleanup of those properties where sampling detects

soil lead concentrations greater than or equal to 400 ppm,

including any commingled properties. The proposed Agreement also

requires the PRPs to reimburse EPA for millions of dollars of EPA's

past costs of response actions in Anniston, as well as all of EPA's

future response costs overseeing and implementing the proposed

Agreement.

The United States has submitted the proposed Agreement to the

PRPs for their review, approval and signature. If and when the

7 For example, where a residential property contains elevatedlead concentrations in the front yard, and elevated PCBconcentrations in the back yard, the proposed Agreement requirescleanup of both the front and back yards. All PCB cleanup underthe proposed Agreement is required to be done consistent with thePCB cleanup required under the Consent Decree.

7

proposed Agreement has been signed by the PRPs, the Agreement will

be submitted to EPA and Department of Justice management for their

review and approval. The United States anticipates that the

Agreement will be presented to the Acting Assistant Attorney

General for her review and approval no earlier than the week of May

16, 2005.

Following execution by the United States, the proposed

Agreement will be put out for public comment for a period of thirty

(30) days. See CERCLA Section 122(i), 42 U.S.C. § 9622(i). Once

the comments are considered by EPA, EPA will determine whether to

finalize the proposed Agreement in its current form or seek to

modify it based upon public comments. Thus, the proposed

Agreement, even after signature by the parties, does not become

final and effective until the public comment process has been

concluded.3 If the proposed Agreement is ultimately finalized as

stated above, it will provide for stringent cleanup of lead and PCB

contamination in residential properties in Anniston, including

churches, school yards, parks and playgrounds. The proposed

Agreement does not impose any additional obligations on the

sThe Special Master notified the United States during theparties' March 30, 2005, meeting in Birmingham, Alabama, thatunless the United States acceded to the Defendants' demands,Defendants would seek an emergency hearing to hold the UnitedStates in contempt and to prohibit the United States fromfinalizing the proposed Agreement. However, until the proposedAgreement becomes final and effective, any inquiry into theproposed Agreement is premature.

8

Defendants from those contained in the Consent Decree.

Ill. Statutory Background

In considering the Defendants' arguments in opposition to the

United States' efforts to reach a cleanup agreement with other

parties, it is important to recognize the broad remedial purposes

of CERCLA. "Congressional intent behind [CERCLA] was to have

pollution cleaned up as quickly as possible and to see that the

responsible polluters are made to pay for the cleanup." Blasland,

Bouck & Lee, Inc. v. City of North Miami, 283 F.3d 1286 at 1304

(11th. Cir. 2002). CERCLA, as amended by the Superfund Admendment

and Reauthorization Act (SARA), was enacted by Congress "to ensure

rapid and thorough cleanup of toxic waste sites." United States v.

Acorn Engineering Co., 221 F.R.D. 530, 536 (C.D. Cal. 2004).

"Because Congress believed it could never provide the EPA with

adequate money or manpower, the new law [SARA] tried to maximize

the participation of responsible parties in the cleanup." Id. at

537. To do this, Congress provided incentives for PRPs to enter

into cleanup agreements. Id. n.ll, citing, State of Arizona v.

Motorola, 139 F.R.D. 141, 145 (D. Ariz. 1991) ("It is well-accepted

that 'Congress designed CERCLA to encourage early settlement by

parties potentially responsible for cleanup costs.'"). The

incentive Congress provided PRPs to encourage settlements was to

grant them protection from contribution actions. Sections

113 (f) (2) and 122 (g) (5) of CERCLA allow settlors "to pay their

agreed settlement and end their involvement in costly litigation.

. ." Id., citing. Motorola, 139 F.R.D. at 145. Congress believed

it made more sense for money to be spent on cleanups rather than on

protracted litigation, and "Congress passed the SARA amendments to

encourage settlements for this very reason." Acorn, 221 F.R.D. at

537.

As discussed above, unlike other federal environmental laws,

CERCLA contains express provisions concerning and encouraging

certain types of settlements. These provisions are found largely

in Sections 113 and 122 of CERCLA, 42 U.S.C. § 9613 and 9622.

Congress added these sections in 1986, in recognition of the need

to proceed promptly and without time-consuming litigation to clean

up contaminated sites with the active participation of responsible

parties. H.R. Rep. No. 253(111), 99th Cong., 1st Sess. 29,

reprinted in 1986 U.S. Code Cong. & Ad. News 3038, 3052. See

United States v. Motorola, 139 F.R.D. at 148 ("Congress created

CERCLA to encourage settlement thereby reducing the time and

expense of enforcement litigation that necessarily diverts time and

money from cleanup and restoration.").

In Section 113(f)(3), 42 U.S.C. § 9613(f)(3), Congress

recognized that the United States might compromise its claims in

settlement and find itself pursuing, for recovery of costs or

additional cleanup, the same non-settlors that previous settlors

are pursuing for contribution. This is amply demonstrated by the

10

provision of CERCLA that allows both the United States and previous

settlors to pursue non-settlors, but plainly provides that the

United States' rights are superior. Specifically, Section

113 (f) (3) (A) recognizes that if the United States has obtained less

than complete relief in its settlement, it may bring an action

against any non-settlor to obtain additional relief.

Section 113 (f) (3) (B) acknowledges that a person who has

resolved its liability to the United States in a settlement may

seek contribution from any PRP does not settle with the United

States and receive contribution protection pursuant to Section

113 (f) (2) . However, in such action, "the rights of any person who

has resolved its liability to the United States . . . shall be

subordinate to the rights of the United States . . ." 42 U.S.C.

§ 9613 (f) (3) (C) . Thus, CERCLA clearly provides that the United

States' right to be made whole through a cost recovery action

pursuant to Section 107 or to obtain additional site cleanup

pursuant to Section 122 or 106 takes priority over PRPs' rights to

obtain contribution toward amounts they spend or are obligated to

spend under their settlements with the United States.

IV. Defendants' Contribution Rights

The Defendants' interpretation of the Consent Decree would

mean that the United States could not exercise its rights under

CERCLA to ensure protection of public health and the environment

through settlement agreements. The Consent Decree should not be

interpreted in a manner that frustrates the plain language of

CERCLA and usurps Congress' intent that CERCLA be used to

expeditiously and thoroughly cleanup hazardous wastes that pose a

threat to the public health and the environment.

As the CERCLA statute and case law clearly do not support the

Defendants' position, they are left to rely solely on language in

the Consent Decree to sustain their argument that they bargained

for contribution rights which the United States cannot abridge.

However, the Defendants' argument is without merit, and contrary to

the express provisions of the Consent Decree and CERCLA. There is

nothing in the Consent Decree that expressly limits EPA's ability

to sue non-settling PRPs or to settle their claims against non-

settling PRPs. All the Consent Decree does is reserve whatever

rights EPA or the Defendants have. As noted, both have rights, but

Defendants rights are subordinate to those of EPA.

The Defendants rely on three provisions in the Consent Decree

to support their position. The first two are contained in

Paragraphs 38 and 42 of the Consent Decree. Paragraph 38 states

"Each of the Parties expressly reserves any and all rights

(including, but not limited to, any right of contribution) . . .

which each Party may have with respect to any matter, transaction,

or occurrence relating in any way to the Site and/or the Anniston

Lead Site against any person not a Party hereto." (emphasis added).

Paragraph 42, entitled "Disclaimer", states "Defendants retain

12

their rights to assert claims against other potentially responsible

parties at the Site." (emphasis added). Paragraph 38 of the Consent

Decree does nothing more than reserve whatever rights the

Defendants might have, and the disclaimer in Paragraph 42 simply

provides that the Defendants retain, and did not waive, any

contribution rights they might have by entering into the Consent

Decree. The third provision of the Consent Decree relied upon by

Defendants is in the last paragraph of Section I. of the Non-time

Critical Removal Agreement (Appendix G to the Consent Decree) which

states:

Defendants and EPA acknowledge that residential

properties containing lead in excess of 400ppm are also

part of the Anniston Lead Site and that EPA is in the

process of identifying responsible parties (PRPs) under

CERCLA in connection with the Anniston Lead Site. If

Defendants remove soil from any property having lead in

excess of 400ppm from a residential property pursuant to

this Agreement, the EPA acknowledges that Defendants may

seek contribution for the costs of such removal from PRPs

at the Anniston Lead Site and any other parties who may

be liable, (emphasis added)

The language quoted above only acknowledged that the Defendants

13

might seek contribution for lead, not PCBs.9 It did not, however,

limit the rights of EPA to pursue and settle claims against later

settlors. While the Defendants reserved, and did not waive,

whatever contribution rights they might have, as noted above,

Section 113 of CERCLA governs what contribution rights the

Defendants have in the first place. By CERCLA's explicit terms,

the scope of those rights are subordinated to the United States'

superior rights in Section 113(f) (3) (C) and limited by other

settling parties' rights to contribution protection in Section

113(f) (2) .10

The relevant portion of Section 113 (f) of CERCLA, 42 U.S.C. §

9613 (f), reads as follows:

(3) Persons not a party to settlement

(A) If the United States or a State has obtained

less than complete relief from a person who has

resolved its liability to the United States or the

9Even if the Court agrees with the Defendants that thisprovision in the Non-time Critical Removal Agreement guaranteedthe Defendants contribution rights, those rights are extremelynarrow in scope. The provision is limited by its own terms tocontribution for lead in residential properties in excess of400ppm that the Defendants cleanup. Clearly, this provision hasnothing to do with contribution rights for PCBs anywhere inAnniston or for lead outside of residential properties.

'"Section 113 (f) (2) in relevant part states "A person who hasresolved its liability to the United States or a State in anadministrative or judicially approved settlement shall not beliable for claims for contribution regarding matters addressed inthe settlement." 42 U.S.C. §9613(f)(2).

14

State in an administrative or judicially approved

settlement, the United States or the State may

bring an action against any person who has not so

resolved its liability.

(B) A person who has resolved its liability to the

United States or a State for some or all of a

response action or for some or all of the costs of

such action in an administrative or judicially

approved settlement may seek contribution from any

person who is not a party to a settlement referred

to in paragraph (2).

(C) In any action under this paragraph, the rights

of any person who has resolved its liability to the

United States or a State shall be subordinate to

the rights of the United States or the State. Any

contribution action brought under this paragraph

shall be governed by federal law. (emphasis added)

Thus, in Section 113 (f) (3) (C) Congress clearly and unequivocally

gave the United States superior rights as between the United States

and previous settling parties. Caselaw supports this clear reading

of CERCLA.

In United States v. Bay Area Battery, 895 F. Supp. 1524, (N.D.

Fla. 1995), the exact issue before this Court was addressed by the

District Court in Florida. In Bay Area Battery, like here, the

United States entered into a settlement with parties who then

brought a contribution action against other parties. Also, just

like here, in Bay Area Battery, the United States negotiated a

settlement with the defendants in the contribution action and, as

part of the settlement, provided contribution protection that the

previous settlors argued effectively extinguished their

contribution lawsuit against the later settlors.

In deciding who had superior rights between the Government and

the private parties who had previously settled with the Government

and reserved their contribution rights, the court held that

Congress has specified who, between private parties and the

government, has a priority claim. The court stated: "[W]hen, as in

this case, the Government and private parties are pursuing the same

PRPs for reimbursement, the rights of any person who has resolved

its liability to the United States . . . shall be subordinate to

the rights of the United States. 42 U.S.C. § 9613 (f) (3) (C) .

(emphasis added) Thus, CERCLA gives the Government's claim clear

statutory priority over the Group's claim on these settlors'

funds." Id. at 1532. The court went on to say " [I]ndeed, CERCLA

permits the Government to extinguish the Group's claim altogether."

Id. at 1532.

A similar ruling was reached in United States v. Browning-

Ferris Industries, 19 Chem. Waste Litig. Rep. 436 (M.D. La. 1989).

In Browning-Ferris, like here, a party had previously signed a

consent decree with the United States and maintained that a

subsequent settlement between the United States and other

responsible parties would cut-off its rights to sue in

contribution. The court held that Section 113 (f) (3) (C) of CERCLA

subordinates the rights of all others to the rights of the United

States. Id. at 439. (Copy'attached) And, in Alcan Aluminum, Inc.

v. AT & T Technologies, Inc., 25 F.3d 1174, 1184, fn. 14 (3rd Cir.

1994) the court held that Section 113 (f) (3) (C) of CERCLA

subordinates a settlor's contribution right to the government's

right to recover response costs . . . " The court in Alcan further

stated that CERCLA "allows the government to immunize a late

settlor from an earlier settlor's contribution suit by settling

with the government." Id. at 1186.

The Defendants' interpretation of the Consent Decree would

totally undermine the broad remedial purposes of CERCLA of

protecting public health and the environment. In considering the

position asserted by the Defendants, it is important to recognize

that Congress intended, in enacting CERCLA, that responsible

parties, not the general citizenry, "bear the costs of protecting

the public from the hazards produced in the past by a generator,

transporter, consumer, or dumpsite owner or operator. . ." Senate

Comm. on Environment and Public Works, S.Rep. No. 848, 96th Cong.,

2nd Sess. 98, (1980) reprinted in, I CERCLA Leg. Hist, at 405

(1980) . "CERCLA is a broad, remedial statute animated by a

17

sweeping purpose to ensure that those responsible for contaminating

American soil shoulder the costs of undoing that environmental

damage." Monarch Tile, Inc. v. City of Florence, 212 F.3d 1219,

1221 (llth Cir. 2000). Therefore, courts are to construe CERCLA's

liability provisions liberally with a view toward facilitating the

statute's broad remedial goals. Kaiser Aluminum & Chemical Corp.

v. Catellus Dev. Corp., 976 F.2d 1338, 1340 (9th Cir. 1992).

Here, the Defendants have argued that their contribution

rights may not be impacted by the United States' settlement with

other parties, but their pecuniary interest, as Congress clearly

expressed in Section 113 (f) of CERCLA, is not superior to the

rights of the United States. More importantly, the Defendants'

pecuniary interest is not paramount to the health and safety of the

residents of Anniston. As the court stated in Bay Area Battery, ".

. . any agreement that cuts off the Group's right to recover from

these PRPs (potentially responsible parties) is unfair from their

perspective. Unfortunately for the Group, CERCLA 'is not a

legislative scheme which places a high priority on fairness to

generators of hazardous waste.'" Id. at 1534 citing Rohm & Haas,

721 F. Supp. at 686. As the record in this Court already clearly

shows, these Defendants undisputedly generated enormous amounts of

hazardous wastes which were released in and around Anniston.

CERCLA is clear that the statutory right of polluters like the

Defendants to seek contribution from other responsible parties is

18

subordinate to the United States right to seek additional cleanup

in Anniston from the same entity.11

Additionally, the Defendants' arguments regarding the three

provisions of the Consent Decree are not only negated by Section

113(f) (3) (C) of CERCLA and caselaw interpreting that section of

CERCLA, they are also negated by Paragraph 32 of the Consent

Decree, under which the United States protected its superior

statutory rights to take all response actions authorized by law.

Paragraph 32 of the Consent Decree states that "Notwithstanding any

other provision of this Consent Decree, the RI/FS Agreement, the

NTC Removal Agreement and/or the Removal Order, the United States

retains all authority and reserves all rights to take any and all

response actions authorized by law."12 (emphasis added) The clear

and unambiguous language of the Consent Decree itself subordinates

any contribution rights the Defendants may have to the rights of

11 While the case law is clear that fairness to polluters isnot a high priority under CERCLA, the United States maintainsthat the proposed Agreement is fair. EPA has completed anexhaustive review of information regarding releases of PCBs andlead from the settlors to the proposed Agreement, includinginformation provided by Defendants, and has concluded that theterms of the proposed Agreement are in the public interest andfair and reasonable. The Defendants can express any concernsthey have with the Agreement during the public comment period.

12 Response actions include enforcement activities related toremoval and remedial actions, such as an administrativesettlement for removal action and recovery of response costs.See 42 U.S.C. §9601(25). In taking such response actions,settling parties are entitled to the contribution protectionprovided by Section 113(f)(2), 42 U.S.C. §9613(f)(2).

19

the United States, and is dispositive as to which party bargained

for the superior rights under the Consent Decree. Moreover, the

Consent Decree language, when coupled with the subordination

provision in Section 113 (f) (3) (C) of CERCLA, shows there is simply

no merit to the Defendants' position. Paragraph 32 of the Consent

Decree is entirely consistent with the intent and the language of

CERCLA, which states that Defendants' contribution rights "shall"

be subordinate to those of the United States.13

As set forth above, the United States' authority to enter

into the proposed Agreement for lead and PCB cleanup is superior

to any contribution rights the Defendants may have. Neither

CERCLA, caselaw, nor the Consent Decree support the Defendants'

assertion that the United States is prohibited from entering into

a settlement requiring response actions necessary to protect

public health and the environment because of contribution rights

the Defendants claim to have protected under the Consent Decree.

13 Even if the Court agreed with the Defendants that, in theConsent Decree, EPA somehow bargained away the United States'superior rights under Section 113 (f) (3) (C) of CERCLA, suchprotection could not include contribution rights for the finalremedy(ies) which have yet to be selected for the Anniston PCBSite by EPA. It is in this phase of the response action thatDefendants have estimated potentially large remediation costs.However, the Consent Decree does not obligate Defendants toperform such remedy(ies) when they are ultimately selected, andthere is no current agreement with Defendants that they will everperform such future remedial action. Clearly, any contributionrights related to such future remedial actions are speculative atbest and certainly not protected by the Defendants' bargain inthe Consent Decree.

20

Evidently, the Defendants' position is that, unless the Defendants

approve of the terms of any such settlement, they hold a veto

power over the United States' ability to enter into a settlement

with third parties to clean up lead and PCBs in residential yards,

school yards, church properties, playgrounds and parks.

V. The United States has complied with the Orders of the Court

A. November 17, 2004 Order

On November 17, 2004, counsel for the Defendants wrote a

letter to the Court asserting that the negotiations between the

United States and the other PRPs "may alter the rights of the

Defendants under the Consent Decree," and asking the Court to make

the Special Masters available for informal negotiations. In

response to the November 17, 2004, letter from counsel for the

Defendants, the Court issued an Order on November 17, 2004,

stating that the Defendants had invoked the dispute resolution

provisions of the Consent Decree and designating the General

Special Master Doug Jones and Technical Special Master Tom Dahl to

provide assistance during the informal negotiations.

The United States complied with the November 17, 2004, Order

by promptly requesting and attending a meeting with the Special

Masters in Birmingham, Alabama on December 9, 2004.14 At the

HWhile the United States took the position that there was nodispute under the Consent Decree and that Defendants had failedto comply with the requirements of the Decree and had violated aprevious Court Order regarding correspondence to the Court, theUnited States nevertheless met with the Special Masters in

21

December 9, 2004 meeting, the United States presented to the

Special Masters a detailed explanation of the lead contamination

in Anniston and its strategy for getting the lead and additional

PCB cleanup underway expeditiously through an administrative

settlement.

After the December 9, 2004 meeting, the United States did not

hear from the Defendants regarding any issue related to the Order

until February 2, 2005.15 On February 2, 2005, the Defendants

requested a meeting with the United States "to discuss compliance

compliance with the Court's November 17, 2004 Order.

15 This was a full 77 days after Defendants invoked thedispute resolution process. Defendants' method of invoking thedispute resolution stood the dispute resolution process on itshead. Instead of going to the Court as a last resort as setforth in the Consent Decree, Defendants initiated the disputeresolution process by going directly to the Court at the outset.Nonetheless, the United States agrees with the Defendants thatthe dispute resolution process was initiated by their November17, 2004 correspondence and as reflected by the ensuing November17, 2004 Court Order. (Section III of the Defendants' Responseto the Motion to Reconsider states that they gave sufficientnotice invoking dispute resolution.) No written agreement, asexpressly required by the Consent Decree, was entered to extendthe informal negotiation period, which ended, in accordance withthe terms of the Consent Decree, on December 8, 2004. Theposition of the United States, as articulated in its December2004 Reply Memorandum and in its communications with theDefendants is therefore binding on the parties, since theDefendants did not comply with any of the requirements ofparagraph 24.a. of the Consent Decree. Even if, assuming forthe sake of argument, the informal negotiations began with theMarch 8, 2005 Order, the Defendants failed to seek formalprocedures in the time prescribed by the Consent Decree. Thus,in accordance with the terms agreed to by the parties and thisCourt, the dispute resolution process has been concluded and theposition of the United States is binding on the parties.

22

with Judge Clemen's Order and other issues of significance to the

ongoing negotiations among the three companies and the United

States." Two days later, in a letter dated February 4, 2005, the

United States informed Defendants that "EPA and DOJ are willing to

meet with you at an agreeable time to discuss issues surrounding

Anniston. In fact, EPA and DOJ have always been willing to have

such discussions."

The United States made further attempts to set up meetings

with Defendants in letters dated February 17, 2005 and February

22, 2005. A meeting between the United States and Defendants was

finally scheduled for March 1, 2005, and was held via

teleconference because of weather conditions. Following the March

1, 2005 meeting, the United States informed the Defendants that

further discussions were welcome.

B. March 8, 2005 Order

On March 8, 2005, the Court issued an Order denying the

United States' Motion to Reconsider its Order of November 17,

2004.16 In the March 8, 2005 Order, the Court said the parties are

"obligated to at least discuss" the contribution matters. As set

forth above, the United States had already discussed the

16The United States filed a Motion to Reconsider the November17, 2004 Order because the Order had been issued before theUnited States had an opportunity to respond to the Defendants'November 17, 2004 letter, and because the United States believedthat the "dispute" was not one that was covered by the ConsentDecree and that, if it were, the Defendants had not followed thedispute resolution requirements.

23

contribution matters with the Defendants before the March 8, 2005

Order was issued.

In compliance with the March 8, 2005 Order, the United States

initiated efforts to schedule further discussions regarding

contribution matters with Defendants in letters dated March 15,

March 17, and March 21, 2005.17 The United States made itself

available for such discussions Tuesday through Friday, March 15

through March 18, 2005, and Tuesday through Thursday, of the next

week, March 22 through March 24, 2005. On March 21, having

received no response from Defendants to the United States'

entreaties to meet, the United States, through the Special

Masters, made yet another attempt to schedule a discussion

regarding contribution matters with Defendants. Finally, the

Defendants agreed to a meeting in Birmingham, Alabama with the

Special Masters on March 30, 2005.

In compliance with the Court's Order of March 8, 2005, the

United States met with the Special Masters on March 29 and 30,

2005 to discuss, inter alia, the contribution matter. No

agreement was reached between the parties at the meeting nor has

one been reached since then. The United States again met with the

Defendants and Special Master Dahl on April 22, 2005 in Atlanta.

The United States appreciates the efforts made by the Court and

17 Copies of the referenced correspondence are attachedhereto collectively as Exhibit A.

24

Special Masters to bring about a global resolution, but concluded,

following the April 22, 2005 meeting, that there was little, if

any, hope of the parties reaching a settlement. While the United

States is always willing to consider new proposals, because of the

large disparity between all of the relevant parties' positions,

further global settlement discussions would only serve to delay

necessary cleanup actions in Anniston.18

Conclusion

The United States is in compliance with the Partial Consent

Decree and has fully complied with this Court's Orders of November

17, 2004 and March 8, 2005. Unless the Court specifically orders

EPA not to finalize the Agreement, in the interest of protecting

public health and the environment in Anniston, EPA intends to move

forward with that process as described above.


Kelly A. JohnsonActing Assistant Attorney GeneralEnvironment & Natural Resources Division



18 The United States remains open to trying to resolve theDefendants' lead liability in Anniston through a separateagreement.

25

Alice H. MartinUnited States AttorneyNorthern District of Alabama

Sharon D. SimmonsAssistant United States Attorney

s/ Edward Q. RaqlandEDWARD Q. RAGLANDAssistant United States AttorneyBar Number: ASB-7291-G69EAttorney for Defendant1801 Fourth Avenue NorthBirmingham, Alabama 35203Telephone: (205) 244-2109Fax: (205) 244-2181Email: [email protected]

Of Counsel:

Richard LeahyMike StephensonValerie NowellAssociate Regional CounselU.S. Environmental Protection Agency61 Forsyth Street, S.W.Atlanta, Georgia 30303

26


This is to certify that a copy of the foregoing Notice of

Compliance and Status Report has been served upon the following

counsel, by mailing the same by first class United States mail,

properly addressed and postage prepaid, on this the 2nd of May,

2005:


Cathleen S. BumbAssistant General Counsel - EnvironmentalSolutia, Inc.575 Maryville DriveSt. Louis, Missouri 63141






27



Andrew R. RunningKirkland & Ellis LLP200 East Randolph DriveChicago, Illinois 60601

George T. Frampton, Jr.Boies, Schiller & Flexner LLP570 Lexington Ave.16th FloorNew York, New York 10022

Joseph G. NassifHusch & Eppenberger LLC190 Carondolet Plaza, Suite 600St. Louis, Missouri 63105-3441

s/ Edward Q. RaqlandEDWARD Q. RAGLANDAssistant United States AttorneyBar Number: ASB-7291-G69EAttorney for Defendant1801 Fourth Avenue NorthBirmingham, Alabama 35203Telephone: (205) 244-2109Fax: (205) 244-2181Email: [email protected]

28

EXHIBIT 10

10302176

FILED2005 May-23 PM 05:45U.S. DISTRICT COURT

N.D. OF ALABAMA



Plaintiff,

v.

PHARMACIA CORPORATION(p/k/a Monsanto Company) andSOLUTIA INC.,

Defendants.

CIVIL ACTION NO.1:02-CV-0749-UWC

UNITED STATES' RESPONSE TO DEFENDANTS'MOTION FOR AN ORDER TO SHOW CAUSE FOR CONTEMPT

OF THE COURT'S NOVEMBER 17, 2004 AND MARCH 8, 2005 ORDERSAND THE ANNISTON PCB SITE PARTIAL CONSENT DECREE

I. INTRODUCTION

Defendants' Motion for an Order to Show Cause cobbles together two independently

infirm legal theories in an effort to achieve a single result: preventing the United States

Environmental Protection Agency from carrying out its statutorily mandated duty to protect

human health and the environment. Specifically, through invocation of the Court's contempt

power or traditional equitable powers, Defendants seek to enjoin the United States from

consummating an Administrative Agreement and Order on Consent ("AOC") with certain third

parties that would result in the prompt reduction of specific identified risks to public health in

Anniston, Alabama.

First, Defendants have pointed to no violation of a clear mandate in any order issued by

this Court. Thus, there is no basis for the issuance of an order to show cause, much less a finding

of contempt. Second, the Defendants seek an injunction. However, Defendants cannot establish

the black letter requirements for preliminary injunctive relief: irreparable injury in the absence of

an injunction, likelihood of success on the merits, and that an injunction is in the public interest.

Contrary to the Defendants' assertions, the United States has followed all of the

requirements of this Court's Orders. In fact, far from being contemptuous of this Court, the

United States has shown this Court great deference. The United States recently took the

extraordinary step of filing a Notice of Compliance and Status Report ("Notice") with the Court

before moving forward with EPA's AOC. In that filing, the United States explained its

understanding of the requirements of the Court's Orders put at issue by the Defendants' Motion.

In addition, the United States explained to the Court how it has complied with the Partial

Consent Decree ("PCD") and the two Orders and notified the Court that the United States would

delay its execution of the AOC unt i l the week of May 16'h (since extended to after the June 1

hearing) so that, even if the Court construes its Orders to prohibit consummation of the AOC, it

could issue a specific clear directive to that effect.

II. BACKGROUND

Over the last five years, EPA has made a tremendous commitment of resources to address

the environmental problems facing the Anniston community. All of EPA's efforts have been

devoted to a single purpose: making polluters clean up the contamination plaguing Anniston in

the most protective and efficient way possible. The EPA has no other agenda in Anniston. At

every step to a comprehensive cleanup in Anniston, the EPA has been opposed by parties seeking

to advance or protect their own pecuniary interests. EPA has relied on the sound judgment of

this Court to sort through the confusing and often conflicting information facing it, and to rule in

a manner that puts the cleanup of Anniston as the top priority.

As the Court likely well recalls, when the United States moved to enter the Partial

Consent Decree ("PCD") in this case, the United States and EPA were opposed by plaintiffs in

parallel tort actions, alleging the cleanup settlement would impact their cases. Similarly,

Defendants now accuse the Government of contempt for trying to reach a cleanup settlement

which they claim will impact their contribution case.' Throughout the process of entering the

PCD, the United States consistently maintained that EPA had no stake in the tort lawsuits.

Likewise, EPA has no interest whatsoever in Defendants' contribution action. EPA's only

interest is to achieve the most expeditious cleanup, based on sound science and at the expense of

the polluters who caused the problem. EPA's interests in the AOC are the same as they were

with the PCD.

EPA has negotiated a cleanup AOC, which if approved, wil l result in the expeditious

cleanup of residential properties in Anniston, with parties that contributed to the lead and PCB

contamination in Anniston. Defendants were invited by EPA to join that settlement but instead,

in the middle of the negotiations, chose to withdraw from that process and pursue dispute

resolution under the PCD over whether the PCD prohibited the United States from entering into

the AOC with non-parties to the PCD. Now, Defendants seek to have this Court in effect order

through its contempt power that EPA renegotiate the AOC, presumably with terms more

favorable to Defendants. Defendants and the AOC parties have been litigating the contribution

action for years and apparently are not close to settlement. Defendants have also just notified the

court in the contribution case that if they are successful in obtaining further dispute resolution

'Solatia. Inc. v. McWane. Inc.. et al. (Case No. CV-03-PWG-1345-E).

3

proceedings in this case, there wil l be no final decision for months, if not a year. They inform

Judge Green that if further dispute resolution proceedings are required, it could "delay the

comment period indefinitely." Defendants' May 16, 2005 Response to Stay of Discovery and

Protective Orders, CV-03-PWG-1345-E. ( Exhibit A) As discussed below, there is no good

reason in law or equity for the cleanup of Anniston to be delayed while the parties who are

responsible for the pollution that puts citizens of Anniston at risk wrangle over money.

The impact the AOC may have on the Defendants' contribution action is a question to be

addressed in the on-going contribution case. That is the only forum where all the necessary

parties are currently subject to the jurisdiction of a court that can address the rights of each. The

parties to the contribution case will have a full opportunity to litigate over the impact of the

AOC. Because the AOC contains a severability provision, once the AOC becomes final after a

public comment period, Defendants can challenge the contribution protection sections of the

AOC in their contribution case without slowing the cleanup. Because Defendants' rights can be

adequately addressed before the court hearing the contribution claim they seek to protect, and

because the public interest plainly favors advancing the cleanup of residential properties

addressed by the AOC, the United States respectfully requests that this Court deny Defendants'

motion in its entirety.

IE. ARGUMENT

A. The United States is Not in Contempt of Any Order of this Court.

Three separate Orders of this Court are put at issue by Defendants' Show Cause Motion:

the Partial Consent Decree, the November 17, 2004 Order and the March 8, 2005 Order. As

demonstrated below, no action or inaction by the United States can be construed as contumacious

0

of any of these orders.

A party seeking a finding of contempt must in i t ia l ly show, by clear and convincing

evidence, that (1) a valid and lawful court order was in effect, (2) the order was clear, plain and

unambiguous, and (3) the alleged violator had the ability to comply with the order and failed to

do so. Citronelle-Mobile Gathering. Inc. v. Watkins. 943 F.2d 1297 (1 Ph Cir. 1991); Jordan v.

Wilson. 851 F.2d 1290, 1292 (11 t h Cir. 1988). Every civil contempt proceeding is brought to

enforce a court order that requires a party to act in some defined manner. Mercer v. Mitchell.

908 F.2d 763, 768 (1 l'h Cir. 1990). Once the movant has made aprima facie showing that the

respondent did not comply with the court's orders, the burden shifts to respondent to produce

evidence justifying the noncompliance. Citronelle at 1381. The Defendants have utterly failed

to make such aprima facie showing and a hearing is neither necessary nor appropriate.-

The Defendants' specifications of contempt are that the United States: 1) refused to enter

into good faith discussions regarding its plans to settle with non-parties to the PCD; 2) continues

to assert that there is no dispute under the terms of the PCD and thereby indicated that it does not

consider the Court's Order binding; 3) failed to comply with the dispute resolution provisions of

the PCD; and 4) continued to negotiate settlement terms with non-parties to the PCD regarding

the Anniston Lead Site, which terms both impact and negate provisions in the PCD. (See p. 1-2

of Defendants' Motion).

2The United States Supreme Court has held that civil contempt "is a severe remedy, andshould not be resorted to where there is a fair ground of doubt as to the wrongfulness of thedefendant's conduct." California Artificial Stone Paving Co. v. Molitor. 113 U.S. 609, 618, 5S.Ct. 618, 622, 28 L.Ed. 1 106 (1885). "The 'extraordinary nature' of the remedy of civilcontempt leads courts to 'impose it with caution.'" Sandstrom v. Butterworth. 738 F.2d 1201,1 2 0 9 ( l l ' h C i r . 1984).

None of the four actions or inactions by the United States alleged to constitute contempt

violates "clear, plain and unambiguous requirements" of any orders of this Court. In this Circuit,

Defendants' failure to cite specific commands of a court order that were not obeyed is fatal to

their motion. See United States v. Koblitz. 803 F.2d 1523, 1527 (11 l h Cir. 1986); Riccard v.

Prudential Insurance Co.. 307 F.3d 1277 (1 llh Cir. 2002), Mercer. 908 F.2d at 768.

Finally, in deference to this Court, the United States is holding off on signing the AOC

until after the scheduled June 1, 2005 hearing on Defendants' motion to allow this Court to

determine whether to specifically enjoin the United States from signing the AOC. That certainly

cannot be considered contumacious conduct.

1. The United States has Not Violated Any Provision of the PCD.

The Defendants' assertions that the United States violated the PCD revolve around

assertions that the United States failed to comply with the dispute resolution provisions of the

PCD because it did not negotiate in "good faith" over the issue Defendants wanted to discuss,

and that negotiating over an agreement that could affect Defendants' contribution rights is per se

a violation of the PCD. Defendants are wrong on both counts.

As discussed below in addressing the requirements of the November 17 and March 8

Orders, the United States did in fact meet and discuss the AOC with the Defendants and the

Special Masters in a manner consistent with the PCD. In fact, it was the Defendants, not EPA,

who failed to follow the dispute resolution provisions of the PCD by, inter alia, failing to timely

invoke the "formal dispute resolution" they now seek.

Defendants' assertion that it was a violation of the PCD for the United States to continue

to negotiate the AOC with third-parties after Defendants had asserted a demand for dispute

resolution overlooks three basic facts. First, the PCD contains no such prohibition. Second, this

Court's March 8 Order explicitly noted that EPA was currently engaged in the AOC negotiations.

Nothing in that Order suggested that those negotiations themselves were a violation of the PCD

or that the PCD required those negotiations to cease. Third, the United States informed the

Court's Special Masters of the on-going AOC negotiations during the December 9, 2004,

meeting in Birmingham, with no indication from these Court officers that the Court considered

those negotiations to violate the PCD.

More fundamentally, Defendants' charge that the United States violated the PCD is

premised upon the incorrect assumption that the dispute resolution provisions of the PCD allow

them to challenge the United States' entry into other settlements with third-parties. The dispute

resolution provisions of the PCD address only "requirements of the consent decree." PCD^| 21.

EPA's ongoing negotiations with third-parties cannot reasonably be seen as a "requirement" of

the PCD. Even if the dispute resolution provisions of the PCD were held to cover Defendants'

objection to the AOC, the United States complied with the requirements of the PCD.

Although the Defendants assert that the United States failed to comply with the dispute

resolution provisions of the PCD, the facts demonstrate just the opposite. Ironically, it is the

Defendants who failed to properly avail themselves of the dispute resolution procedures that they

invoked. Below, is a chart showing the requirements of the dispute resolution provisions in the

PCD and the undisputed facts.

PCD DISPUTE RESOLUTION REQUIREMENTS (Section VTU)

Paragraph 23 Facts

Dispute arises when a party Notice of dispute was provided

sends written notice of dispute on November 17, 2004

Notice of dispute triggersinformal negotiations not toexceed 20 days

Period for informal negotiationsshall not exceed 20 days unless agreedupon in writing by the parties

Paragraph 24

In the event the parties cannot resolvethe dispute by informal negotiations, theposition advanced by EPA shall beconsidered binding, unless . . .

Within 28 days after informal negotiationsDefendants must invoke formaldispute resolution procedures

To invoke formal dispute procedures,Defendants must serve on EPA a "Statementof Position" along with "factual data, analysis oropinion supporting that position and allsupporting documents."

Informal negotiation period expiredon December 7, 2004

There is no written agreementextending the informal negotiationperiod.

The dispute was not resolved.

EPA's position regarding the disputebecame binding on the parties.

Defendants did not invoke formaldispute procedures on or before

January 5, 2005, which is 28 daysafter informal negotiations expired.

Defendants did not provide aStatement of Position or any of therequired supporting materials withinthe time allowed by the PCD

This Court's November 17, 2004, Order states the Defendants were invoking the informal

negotiations provision pursuant to Paragraph 23 of the PCD.3 The terms of the PCD are explicit

3 Assuming for the sake of argument that the informal negotiation period commenced onMarch 8, 2005, when the Court issued its Order denying the United States' Motion toReconsider, then the informal negotiation period expired on March 29, 2005. There is no writtenagreement between the parties extending the informal negotiation period, as required byparagraph 23 of the PCD. The Defendants, in accordance with the PCD, had until April 26,2005 to invoke formal dispute resolution, assuming that the informal negotiation periodcommenced on March 8, 2005. Defendants did not invoke formal dispute procedures within 28days of the expiration of the informal negotiation period. Thus, whether the informal negotiationswere invoked as this Court stated in its November 17, 2004 Order on November 17, 2004, orwhen the Court denied the United States' Motion to Reconsider, the Defendants failed to complywith the clear and unambiguous requirements of the PCD regarding formal dispute procedures.

8

that the period for informal dispute ends after 20 days unless there is a written agreement to

extend it. See Paragraph 23 of PCD. The PCD is also clear that, if there is no written extension

and the Defendants do not seek formal dispute within 28 days by serving a Statement of Position

on the United States, the position advanced by EPA is binding on the parties. See Paragraphs 23

& 24 of the PCD. The Defendants cannot deny that from November 2004 through February 2,

2005, they made no contact with the United States regarding the dispute. Defendants wrongfully

try to explain this fact away by faulting the Special Masters for not "organizing negotiations

consistent with the Courts' ruling."4 See Defendants' Motion at page 5. That simply is not a

legitimate excuse for letting the dispute deadline expire.5 The Defendants, in accordance with

the PCD, had either unt i l January 5, 2005, or at the latest, April 26, 2005 (See Footnote 3), to

invoke formal dispute resolution.

In their Motion, the Defendants belatedly attempt to invoke the formal dispute procedures

under the PCD. They are too late. As shown above, Defendants were required to invoke the

formal procedures on or before January 5, 2005, in accordance with the requirements of the PCD.

George Frampton, an attorney for Pharmacia, recognized the PCD requirements related to timing

in his March 16, 2005, letter when he said "Under Paragraph 23, we have twenty days from the

time the dispute arises to conduct informal negotiations unless otherwise agreed by the parties."

4The United States believes this is an unfortunate mischaracterization because of theextraordinary efforts the Masters have made to resolve these issues between the parties.

5Defendants were quite aware of the need for a written extension because, only monthsbefore, the United States and these same Defendants had gone through the informal DisputeResolution process regarding a late payment to the Educational Trust fund. In that previousdispute, Defendants and the United States agreed several times to written extensions of theinformal dispute period. See Exhibit B which is comprised of four separate written agreementsextending informal negotiations to specific dates.

(See correspondence attached to the Notice.) He then asked if the United States would agree to

extend the informal period from the March 8, 2005, Order, even though this Court and his co-

counsel stated that the dispute arose and the informal negotiation period had been invoked on

November 17, 2004.6 The United States expressed its willingness to continue to talk to the

Defendants, but did not agree to extend the already expired informal negotiation period.

The dispute resolution provisions of the PCD on these points are crystal clear.

Defendants invoked the dispute resolution process, but they failed to follow it. In attachments to

their Motion, Defendants contend that the informal negotiation period expired when the United

States rejected their April 7, 2005, proposals or following the last meeting between the parties.

The Defendants' position is contrary to the clear requirements of the PCD and equates to a

unilateral modification of the PCD. The PCD does not say that the informal negotiations shall

end after the United States last meets with the Defendants or on the date the United States rejects

a proposal from the Defendants. Nor does it say that if the United States continues to talk with

the Defendants that the informal negotiation period is extended beyond the time stated in the

PCD. It says that "the period for informal negotiations shall not exceed twenty (20) days from

the time the dispute arises, unless it is modified by a written agreement of the parties to the

dispute." (emphasis added) In short, the United States has complied with any arguably

applicable portion of the PCD dispute resolution provisions.

Finally, as explained in its previous filings, even if the United States had finalized the

AOC and the contribution protection afforded the AOC Respondents adversely affected

6Mr. NassiPs February 2, 2005, letter attached to the Notice; p. 6 of Defendants'Response to Motion to Reconsider filed Dec. 7, 2004; and the November 17, 2004 Order.

10

Defendants' contribution claims against those parties, the entry into the AOC would not violate

the terms of the PCD. As discussed more fully below (Likelihood of Success on the Merits), the

right to contribution that the Defendants reserved in the PCD was always subject to the United

States' rights reserved in Paragraph 32 of the PCD to take further "response actions" which

specifically includes additional enforcement actions against other parties. See Section 101(25) of

CERCLA, 42 U.S.C. §9601(25). Contribution protection follows from settlements of such

enforcement actions as a matter of law. See Sections 113(0 and 122(g)(5) of CERCLA, 42

U.S.C. §§ 9613(f), 9622(g)(5). Hence, the response action proposed to be taken by the United

States through the AOC is specifically contemplated in, and consistent with, the terms of the

PCD. Defendants could never have reasonably expected otherwise in light of the clear line of

cases holding that EPA's rights to pursue additional parties for cleanup is superior to a prior

settlor's contribution rights.7

2. The United States Fully Complied with the Court's November 17, 2004 Order.

The November 17 Order states that the Court was advised that the Defendants were

invoking the informal negotiations provision (Paragraph 23 of the PCD) because ongoing

negotiations "might alter the rights of the Defendants under this Court's Consent Decree." The

Order designated the Special Masters to provide assistance during the informal negotiation

period. The Order further directed the Special Masters to advise the Court of the impact any

7Akzo Coatings. Inc. v. Aigner Corp.. 30 F.3d 761, 768 (7'h Cir. 1994)(Congress gavesweeping power to EPA to extinguish contribution rights parties would otherwise enjoy); AlcanAluminum. Inc. v. AT & Technologies. Inc.. 25 F.3d 1174, 1184 (n.!4)(3id Cir. 1994): U. S. v.Bay Area Battery. 895 F. Supp. 1524(N.D. Fla. 1995): U.S. v. Browning-Ferris Industries. 19Chem. Waste Litig. Rep. 436 (M.D. La. 1989). Also see §7.15 Topol and Snow, Superfund Lawand Procedure (1992); Legislative History, Exhibit C hereto.

11

proposed agreement has on provisions of the Court's Consent Decree.

In compliance with the November 17, 2004 Order, the United States met with the Special

Masters on December 9, 2004, in Birmingham. The United States fully advised the Special

Masters of its position regarding the dispute raised by the Defendants. The Special Masters did

not request that the United States provide any additional information nor did they ask for any

follow-up meetings.

Defendants now seek to expand this Court's November 17 Order, claiming that the

United States was required to inform the Court whether any proposed agreement has the potential

to impact the PCD. (See p. 5 of Defendants' Motion.) Even if the Order could be construed to

require the United States to directly advise the Court of the proposed settlement and its potential

impact on the PCD, it did so by informing representatives of the Court. The United States'

Notice also informed the Court of its proposed actions.

3. The United States Fully Complied with the Court's March 8. 2005 Order.

The March 8, 2005 Order noted that EPA was negotiating "with other potentially

responsible parties (PRPs) concerning the Anniston Lead Site." The Court further stated that

"since the Defendants would be adversely impacted by any such agreement, the parties in the

present action are obligated to at least discuss this issue." (emphasis added) As required by the

March 8 Order, the United States discussed this issue with the Defendants on several occasions/

8 The Notice details the dates for these meetings. See page 24 & 25 of Notice.Correspondence attached to the United States' Notice shows that it was the United States whichundertook concerted efforts to meet with the Defendants, contrary to how the Defendantscharacterized matters at p. 7 of their motion. In fact, the United States urged meeting with theDefendants in advance of meeting with the Special Masters. The Special Master concurred withthis proposal, but the Defendants declined to meet with the United States. See Exhibit D/ «m a 11 c ̂(emails).

12

The March 8, 2005 Order placed no further obligations on the United States. Thus, the United

States fully complied with the only "clear, plain and unambiguous" mandate imposed on it by the

March 8, 2005 Order. Mercer v. Mitchell. 908 F.2d at 768.

Defendants attempt to manufacture a violation of this Court's Order by arguing in the

Motion that the requirements of the Court's March 8 Order "implicitly suggest that the United

States must comply with the dispute resolution provisions of the PCD before entering into

negotiations with other parties. Defendants' use of the term "implicit" in their Motion to

describe this alleged requirement of the Order undermines their charge of contempt because, as

previously cited, the legal standard for contempt is that a party must violate a "clear, plain and

unambiguous" order. It is undisputable that the United States complied with the sole mandate of

the March 8 Order to "discuss the issue." Moreover, no one could reasonably read into the

Court's common sense admonition to "at least discuss the issue" an injunction prohibiting the

United States from entering into settlement negotiations with other parties. To read such a

requirement into this Court's Order is to write into the PCD a provision granting the Defendants

absolute veto power over any settlement agreement with third parties that would affect

Defendants' contribution claims. Given the fact that the provision of the PCD cited by

Defendants is essentially model language, Defendants' argument is tenuous in the extreme as a

proposition of contract interpretation. But, as a basis for seeking imposition of contempt it is

patently frivolous.

B. Relief Sought by Defendants is Legally Inappropriate.

The Defendants' Motion is for an Order to Show Cause for Contempt of the Court's

Orders and the PCD; however, the relief that they seek goes far beyond what they are entitled to,

13

even if they were able to sustain their burden of proof by presenting clear and convincing

evidence that the United States violated this Court's Orders or the PCD.9 Defendants ask this

Court to enjoin the Government from entering into any agreement that would affect their

contribution rights and to order the United States to re-open dispute resolution proceedings

which have already been concluded in accordance with the PCD. Ordering further proceedings

under Section VIII of the PCD is tantamount to an injunction, since those proceedings have

already been concluded and further proceedings will only delay cleanup perhaps, as the

Defendants informed Judge Green, for an indefinite period of time.10

Defendants are not entitled to an injunction. Defendants do not and cannot satisfy any of

the requirements necessary for such relief. There are four factors that must be considered by the

court in determining whether the issuance of a temporary restraining order is appropriate: (1)

there is a substantial likelihood that the moving party wil l prevail on the merits; (2) there is

substantial threat that the moving party will suffer irreparable injury if the injunction is not

granted; (3) the threatened injury to the moving party outweighs the threatened harm the

proposed injunction may cause the opposing party; and (4) the injunction, if issued, would not be

adverse to the public interest. Suntrust Bank v. Houghton Mifflin Co.. 252 F.3d 1 165, 1166 (11 l h

Cir. 2001); Johnson v. U.S. Department of Agriculture. 734 F.2d 774, 781 (11 th Cir. 1984);

9Civil contempt power may be used to coerce a party into compliance with the court'sorder, and to compensate the complainant for losses suffered. Mercery. Mitchell. 908 F.2d 763,768 (11 t h Cir. 1990).

'"Given that the United States' position is supported by the PCD, Section 113(f) ofCERCLA, caselaw, Legislative History and a Hornbook by the attorney (Allan Topol) whonegotiated the PCD, the United States is not going to change its position as to its superior rights.Further discussions under Section VIII of the PCD will not change the law or the United States'position. If the Court is inclined to rule on that issue, it is ripe right now.

14

FED.R.Civ.P. 65(b). An injunction is an extraordinary remedy not to be granted unless the

movant clearly carries the burden of persuasion as to the four prerequisites. Snook v. Trust Co.

of Georgia Bank of Savannah. N.A.. 909 F.2d 480 (1 l'h Cir. 1990); United States v. Jefferson

County. 720 F.2d 1511, 1519 (1 llh Cir. 1983).

1. Defendants Cannot Demonstrate a Substantial Likelihood That They Wi l l Prevailon the Merits.

As the United States has shown, Defendants' contribution rights are subordinate to the

rights of the United States. The United States' position is supported by the language of the PCD,

Section 113(f) of CERCLA, 42 U.S.C. §9613(f), caselaw, and legislative history. Defendants, on

the other hand, have cited no statutory provision or caselaw which supports their position. The

Defendants' positions are simply mischaracterizations of the plain language of the PCD

supported by nothing more than the hope that this Court wi l l concur with their misreading of the

PCD. There is simply no basis to find that the Defendants have any likelihood of prevailing on

the issue, much less a substantial likelihood of prevailing, as required for an injunction."

As the United States has shown herein and in previous pleadings , the PCD made clear

that the United States has the superior rights under the PCD. Moreover, Section 113(f) of

" In determining the meaning of language in a consent decree, the court should look atthe statute and the circumstances surrounding the formation of the consent order. Moreover, theconsent decree must further the objectives of the law upon which the complaint was based.Local Number 93 v. City of Cleveland. 478 U.S. 501, 92 L.Ed.2d 405, 106 S. Ct. 3063, 3077(1986). In considering Defendants' interpretation of the PCD, it is important to recognize thebroad remedial purposes of CERCLA. "Congressional intent behind [CERCLA] was to havepollution cleaned up as quickly as possible and to see that the responsible polluters are made topay for the cleanup." Blasland. Bouck & Lee. Inc. v. City of North Miami. 283 F.3d 1286 at1304 (11 t h . Cir. 2002). Defendants' interpretation of its contribution rights is inconsistent withCERCLA's objectives, and would, if the Court agrees with them, frustrate Congress' mandate toEPA to expeditiously cleanup hazardous wastes.

15

CERCLA and the cases interpreting that provision plainly establish that the contribution rights of

the Defendants are subordinate to those of the United States. While Defendants claim they

bargained for superior rights, that assertion is undermined by the fact that it was the United States

that reserved the superior rights since paragraph 32 of the PCD states that "Notwithstanding any

other provision of this Consent Decree, the RJ/FS Agreement, the NTC Removal Agreement

and/or the Removal Order, the United States retains all authority and reserves all rights to take

any and all response actions authorized by law." (emphasis added) Furthermore, the rights the

United States retained are consistent with the superior rights it has under Section 113(f)(3)(C) of

CERCLA. Legislative history supports the position advanced by the United States. According to

the Judiciary Committee, new subsection 113(f)(3)(C) (formerly 113(g)(3)(C)), "provides that

the United States' rights against nonsettling parties under the section are superior to the rights of

private settlors, but should not necessarily be superior to the rights of the States against

nonsettling parties." P. 20 of H. Rpt. 95-253. (See Exhibit C.)

Further eroding the Defendants' arguments is the fact that the so-called bargained-for

contribution rights the Defendants claim to have under the PCD are the same rights all settling

parties obtain through CERCLA settlements. In fact, Defendants, in a previous brief, claimed

that "the right to pursue other responsible parties is a common negotiated term in CERCLA

settlements." So common, in fact, that it is standard boilerplate in CERCLA model settlement

documents. Defendants' claim that they specifically "bargained" for model language is at best a

mischaracterization. Those provisions have been in EPA's model consent decree published in

the Federal Register all the way back to 1991. See Exhibit E. The reason it is EPA model

language is because it reflects the provisions of CERCLA. CERCLA Section 113(f)(l) and

16

(f)(3)(B) confer contribution rights upon settling parties. The Defendants did not bargain for

them, and the United States did not give up its statutorily superior rights. Sandra Connors was

previously accepted by this Court as an expert "in the area of national enforcement and policy

under the Federal Superfund (CERCLA) statute." Her testimony, attached as Exhibit F, proved

that the PCD was entirely consistent with CERCLA and EPA's "model documents." She further

testified that it contained all of the necessary reservations of rights to protect EPA. (See p. 163 of

Exhibit F.) Also see Exhibit G which contains numerous reservations contained in the PCD and

attachments thereto of the United States' rights, all undermining Defendants' position.

Additionally, because Section 113(f)(2) entitles settling parties to contribution protection

as a matter of law, there is no final settlement the United States could reach with other parties

that would not impair, in some manner, previous settling parties' contribution claims. If the

Defendants' position were correct, then there would only be one settlement at each Superfund

site because prior settling parties could prevent the United States from entering into subsequent

cleanup agreements. Section 113(f) shows that Congress anticipated that the United States and

parties who had settled with the United States could both be seeking recovery from the same

parties. Under those circumstances, Congress made it clear that the private parties' rights shall

be subordinate to the rights of the United States. See 42 U.S.C. §9613(f)(3)(C).

In their contempt Motion, the Defendants argue that the United States does not have the

authority to bargain away their contribution rights. (P. 9 of Defendants' Motion) The United

States does indeed have such authority pursuant to paragraph 32 of the PCD and Section

113(f)(3)(C). Many courts have addressed this precise issue and held that the United States does

17

in fact have the authority to immunize a late settlor from an earlier settlor's contribution action.12

In fact, at the time of the PCD settlement, Defendants' counsel was well aware that his clients'

contribution rights were subordinate to the United States. In his treatise Superfund Law and

Procedure, Topol and Snow (1992) §7.15 at 174, Allan Topol, who negotiated the PCD for the

Defendants, discussed the amendments to CERCLA that allowed settlors to file contribution

actions against other PRPs who had not settled. Mr. Topol recognized that a private party's

contribution rights were limited by Section 113(f)(3)(C) of CERCLA, citing U.S. v Browning-

Ferris Industries Chemical Services. Inc.. 19 CWLR 436, 439 (M.D. La. Nov. 15, 1989), which

the United States has previously cited to this Court, for the proposition that, under the terms of

the statute, claims for contribution by settling parties against non-settling parties are expressly

subordinated to the rights of the United States.13 Defendants have not cited any statutory

authority or case law which dissents from these cases or Section 113(f) of CERCLA, and

therefore, Defendants cannot show a likelihood, much less a substantial likelihood of prevailing

on the merits.

2. Defendants Cannot Show a Threat of Irreparable Harm.

The anticipated injury must be actual and imminent. Siegel v. LePore. 234 F.3d 1 163

(11 t h Cir. 2000). There is no substantial threat that the Defendants wil l suffer irreparable and

imminent harm if an injunction is not granted, because the Defendants will have their day in

12See footnote 7.

'3The attorneys now arguing that the Defendants "bargained" for these rights were notpresent at any of the negotiations regarding the PCD. Mr. Topol was present at all of thenegotiations.

Judge Green's Court to challenge the AOC's impact on their lawsuit.14 In Snook, the court stated

that adequate compensatory or other corrective relief at a later date weighs heavily against a

claim of irreparable harm. Id. at 487 Additionally, unt i l the AOC becomes final after public

comment, there can be no harm much less imminent irreparable harm.

The time to litigate over the impact of the proposed AOC on the contribution action is

after the proposed AOC becomes final because the proposed AOC contains a standard

severability clause. At that time, the impact of the proposed AOC on the contribution lawsuit

can be litigated in Judge Green's Court without putting the cleanup requirements under the

proposed AOC at risk.

3. The Threatened Injury to the United States and the Citizens of AnnistonOutweighs any Threatened Harm to the Defendants.

The potential financial impact of the AOC on the Defendants does not outweigh the

injury to the United States if an injunction is granted. A polluter's financial interest does not

outweigh the need for enforcement of environmental laws to protect public health and the

environment. See United States' Notice, Sections ID and IV.

4. If an Injunction is Issued it Would be Adverse to the Public Interest.

Finally, enjoining the AOC would be directly adverse to the public interest. The AOC is

specifically designed to ensure the rapid cleanup of lead and PCBs in residential properties for

the benefit of the Anniston, Hobson City, and Oxford communities. Enjoining the AOC or

ordering further proceedings under Section VUI of the PCD would result in a clear public health

HThe Defendants admit that they have an adequate remedy at law in their contributionaction. In Ex. F to their Motion, the Defendants state that they have at least four legal grounds tochallenge whether the AOC settlors are entitled to contribution protection, including underSection 308 of CERCLA.42 U.S.C. § 9657. (p. 12, 13, 14, 16, 25 Legal Position Paper)

19

threat to the people of Anniston, particularly the children.

IV. Conclusion

Defendants have utterly failed to show by clear and convincing evidence that the United

States has violated the PCD or this Court's November 17, 2004 and March 8, 2005 Orders.

There being no prima facie case of contempt or basis for an injunction, the United States

respectfully asks that the Court deny the Defendants' motion and enter the attached proposed

order. The United States asks that the Court issue an Order stating that dispute resolution

proceedings under Section VIII of the PCD have been concluded.

Respectfully submit ted,

Kelly A. JohnsonActing Assis tant Attorney GeneralEnv i ronmen t & Natura l Resources Divis ion

W i l l i a m A. Weinischke, Senior AttorneyEnvi ronmenta l Enforcement SectionEnvi ronmenta l and Natural Resources

DivisionU.S. Department of Just iceP.O. Box 7611Washington, D.C. 20044-7611(202) 514-4592

Alice Mart inUnited States Attorney

s/ Edward Q. RaglandEDWARD Q. RAGLANDAssistant United States AttorneyBar Number: ASB-7291-G69EAttorney for Defendant1801 Fourth Avenue NorthBirmingham, Alabama 35203Telephone: (205) 244-2109Fax:(205)244-2181Email: [email protected]

20

Of Counsel:

Richard LeahyM i k e StephensonValerie Nowel lAssociate Regional CounselU.S. Environmental Protection Agency61 Forsyth Street, S.W.At lan ta , Georgia 30303


This is to certify that a copy of the foregoing Response to Defendants' Motion for an Order

to Show Cause for Contempt of the Court's November 17, 2004, and March 8, 2005 Orders and

the Anniston PCB Site Partial Consent Decree has been served upon the following counsel, by

mail ing the same by first class United States mai l , properly addressed and postage prepaid, on this

the 23rd of May. 2005:


Special MasterThomas DahlDahl Environmental2930 Simms DriveLakewood, Colorado 80215

Cathleen S. BumbAssistant General CounselEnvironmental

Solutia, Inc.575 Maryville DriveSt. Louis, Missouri 63141

William Cox, HIThe Clark Building

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400 S. 20"1 StreetBirmingham, Alabama 35203-3200




Wil l iam J. BaxleyJoe E. Dillard2008 Third Avenue SouthBirmingham, Alabama 35233

Kimberly B. GlassMorris Avenue


Tra S. Dizengoff590 Madison AvenueNew York, New York 10022-2524

Andrew R. RunningKirkJand & Ellis LLP200 East Randolph DriveChicago, I l l inois 60601

George T. Frampton, Jr.Boies, Schiller & Flexner LLP570 Lexington Ave.16lh FloorNew York, New York 10022

Joseph G. NassifHusch & Eppenberger LLC190 Carondolet Plaza, Suite 600

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St. Louis, Missouri 63105-3441

s/ Edward Q. RaglandEDWARD Q. RAGLANDAssistant United States AttorneyBar Number: ASB-7291-G69EAttorney for Defendant1801 Fourth Avenue NorthBirmingham, Alabama 35203Telephone: (205) 244-2109Fax:(205)244-2181Email: [email protected]

23

EXHIBIT 10

10302177

IN THE U N I T E D STATES DISTRICT COURTFOR THE N O R T H E R N DISTRICT OF A L A B A M A

U N I T E D STATES OF AMERICA

Plaint iff ,

v.

PHARMACIA CORPORATION(p/k/a Monsanto Company) andSOLUTJA INC.,

Defendants.


FILED2005 Jun-16 PM 03:46

U.S. DISTRICT COURTN.D. OF ALABAMA

MEMORANDUM OF THE UNITED STATES WITH RESPECT TO THE JUNE 1. 2005HEARING AND THE COURT'S JUNE 2. 2005 ORDER

I. Introduction

In the Court's June 2, 2005, Order, the Court stated that the issue in dispute under the

Partial Consent Decree ("PCD") between the United States and Defendants is "the meaning of

the contribution provisions of the Consent Decree." At the June 1, 2005, hearing the Court found

that the United States had changed its position regarding these provisions and queried whether it

had the power to set aside the PCD. As shown below, the United States has not changed its

position with respect to the meaning of the contribution provisions, and the meaning of those

provisions is derived from the language in the PCD and express terms of CERCLA.

II. Discussion

A. Overview

The United States maintains that the meaning of the provisions of the PCD is absolutely

clear and the United States' position regarding their meaning has never changed. It is

indisputable that in the PCD, both the United States and the Defendants retained and reserved

their rights under CERCLA. The United States rights under CERCLA are superior to the

Defendants' rights under CERCLA by the unequivocal, express terms of the statute, and pursuant

to Paragraph 32 of the PCD. CERCLA created the contribution rights Defendants retained in the

PCD, and at the same time, CERCLA limited Defendants' contribution rights by plainly making

the right of contribution it created subject to the protection from contribution claims that

CERCLA grants to settling parties.

The United States expressly reserved its rights to settle with other parties in Paragraph 32

of the PCD.1 It is inconceivable that the United States would have agreed to a partial consent

decree with Defendants that prohibited EPA from settling with other parties for additional

environmental cleanup work in Anniston. The Partial Consent Decree with Defendants is just

that, "partial" - it is not a complete cleanup agreement. The United States and Defendants spent

more than a year proving to this Court that the PCD was fair and reasonable and consistent with

the requirements and purposes of CERCLA. The PCD would not be consistent with the

requirements of CERCLA if EPA had agreed jiot to pursue other parties for additional

environmental cleanup work in Anniston in a settlement with Defendants that was only partial,

'Paragraph 32 states "Notwithstanding any other provision of this Consent Decree, theRJ/FS Agreement, the NTC Removal Agreement and/or the Removal Order, the United Statesretains all authority and reserves all rights to take any and all response actions authorized bylaw." Paragraph 4 of the PCD states "Unless otherwise expressly provided herein, terms used inthis Consent Decree which are defined in CERCLA... shall have the meaning assigned to them inCERCLA...." Section 101(25) of CERCLA defines the terms "response" to mean "remove,removal, remedy, and remedial action;, all such terms (including the terms "removal" and"remedial action") include enforcement activities related thereto."

and indeed, there is no such provision in the PCD. There was no incentive for the United States

to make such an enormous concession since the Defendants are clearly liable under CERCLA for

the release of PCBs in Anniston. Defendants were the only manufacturer of PCBs in America,

and Anniston, Alabama is one of two places in the country where PCBs were manufactured.

Defendants' own documents show releases of millions of pounds of PCBs to the environment in

Anniston and Defendants had already been found by a jury to be guilty of the tort of outrage as a

result of the egregious pollution they caused. The language of the PCD, the facts of this case, the

record before the Court, case law, and the legislative history all support the United States'

position that nothing in the PCD prevents it from moving forward with the proposed

Administrative Settlement Agreement ("proposed AOC").

B. The United States Did Not Change Its Position Regarding Defendants'Contribution Rights Under the PCD .

During the June 1, 2005, hearing, the Court found that the United States had changed its

position with respect to the Defendants' contribution rights which were reserved and retained in

the PCD. The Court stated that the Defendants and the Court believed "that the Defendants

rights to contribution would continue after this consent decree was signed by [the Court] to the

same extent and degree as they existed before the decree." Transcript at 22. The United States

agrees entirely. The Defendants' rights to contribution are the same now as they were before the

PCD was entered by the Court and the United States has never taken a contrary position.

Defendants' contribution rights were created by CERCLA and limited by CERCLA. The

PCD merely "reserved" and "retained" the rights of the parties under CERCLA, but did not

expand these rights. The plain meaning of the terms "reserve" and "retain" is to keep what you

already had. Black's Law Dictionary defines "reserve" to mean "to keep back, to retain..." and

defines "retain" to mean "to continue to hold, have, use, recognize, etc., and to keep." Hence, the

reservation and retention of rights in the PCD clearly means that after entry into the PCD the

Parties "continued to hold" the rights they entered with. The PCD simply maintained the status

quo between the Parties. The rights that each Party continued to hold are not defined by the

PCD, but by CERCLA.

C. Defendants' Rights Under CERCLA Are Limited And Subordinate.

Since both the United States and the Defendants reserved their respective rights, the

appropriate inquiry for the Court is what rights CERCLA provides to the Parties. The Parties'

respective rights under CERCLA are absolutely clear. Section 113(0 created the right to seek

contribution against other parties, which rights the Defendants reserved and retained in the PCD.

However, Section 113(f) also contains limitations.2 Specifically, Section 113(f)(3)(C) states that

the Defendants' contribution rights shall be subordinated to the rights of the United States when

pursuing the same parties.3 All courts construing Section 113(f)(3)(C) have held such.

2Given that Congress, rather than the common law, provided the right to contributionunder CERCLA, Congress may place limits on that right without implicating the FifthAmendment. United States v. Cannons Engineering Corp.. 899 F.2d 79 at 92 n.6 ( l s l Cir. 1990)(since federal common law provides no right to contribution, CERCLA's contribution protectionprovision does not deprive any party of a "constitutionally protected interest").

3Section 113(f)(3)(C) states "In any action under this paragraph, the rights of any personwho has resolved its liability to the United States or a State shall be subordinate to the rights ofthe United States or the State...." Defendants argue that Section 9613(f)(3)(C) is inapplicable tothis matter because there is no "action" as described in Section 9613(f)(3)(C). Defendants arewrong because Section 9613(f)(3) applies to "any action." Hence, section 9613(f)(3)(C) appliesequally to judicial and administrative actions. EPA's proposed AOC is an administrative actionand Defendants' contribution action is a judicial action. Both actions satisfy the "any action"requirement of Section 9613(f)(3)(C).

Additionally, CERCLA plainly makes the contribution rights it creates subject to the protection

from contribution claims granted to settling parties in Sections 113(f)(2) and 122(g)(5) and

(h)(4). These contribution protection sections all require that "[a] party who has resolved its

liability to the United States... shall not be liable for claims for contribution regarding matters

addressed in the settlement...." Hence, the contribution rights that the Defendants reserved and

retained were always, and continue to be, subject to the United States' superior right to take

actions against parties that the Defendants are also pursuing. The United States' position on this

issue has been consistent and in accord with the language of the PCD and CERCLA.

C. Defendants Knew The Law When They Signed The PCD

In the Court's June 2, 2005, Order, the Court stated that "the Defendants would not have

agreed to the PCD in the absence of a clause preserving their right to contribution from other

Potentially Responsible Parties ("PRPs") for contamination of the Anniston PCB Site." As

explained above, the Defendants did preserve their rights to contribution; their rights to

contribution as expressly set forth in CERCLA. Those rights, however, are not without

boundaries. They were always subject to the statutory limitations set out in CERCLA, and they

remain so today. Despite the Defendants' allusions to the contrary, they were well aware of those

limitations and entered into the PCD knowing full well of the limitations on their reserved and

retained CERCLA contribution rights.

This conclusion is fully supported by the fact that the attorney, Allan Topol, who was

lead counsel for the Defendants and participated in every single negotiation, is a co-author of a

treatise entitled Superftmd Law and Procedure.4 Thus, Defendants were represented by a

Superfund expert who clearly knew that the Defendants' contribution rights were limited and

were subordinate at the time they asked this Court to approve the Consent Decree.

In addition to Mr. Topol's expertise, several seminal CERCLA cases which predated the

PCD negotiations are directly on point. In Alcan Aluminum, Inc. v. AT & T Technologies, Inc..

25F.3d 1174, 1184, fn. 14(3 r<1Cir. 1994), the court held that Section 113(f)(3)(C) of CERCLA

subordinates a settlor's contribution rights to the government's right to recover response costs...."

The court in Alcan further stated that CERCLA "allows the Government to immunize a late

settlor from an earlier settlor's contribution suit by settling with the government. Id. at 1186.

Also preceding the PCD is Akzo Coatings. Inc. v. Aigner Corp.. 30 F.3d 761, 768 (7 th Cir. 1994),

in which the court said that Congress gave EPA sweeping authority to extinguish contribution

rights parties would otherwise enjoy. Nothing was hidden from the Defendants. At the time the

Defendants entered into the PCD, the law was clear and well established that their reserved and

retained contribution rights were subordinate to the rights of the United States, as well as limited

by Sections 113(f)(2), 122(g)(5), and 122(h)(4).

Even more demonstrative of the Defendants' knowledge of the limitations placed on their

reserved contribution rights in the PCD, is the position Pharmacia advanced to the Eighth Circuit

4 In his treatise, Mr. Topol cites two cases, U.S. v. Browning-Ferris Industries. 19 CWLR436 (M.D. La. 1989) and U.S. v. Bay Area Battery. 895 F.Supp. 1524 (N.D. Fla. 1995), whichthe United States has already submitted to the Court in which those courts held that thecontribution rights of parties who had settled with the United States were subordinate to therights of the United States. Those cases predated the PCD.

in United States v. BP Amoco Oil PLC. 277 F.3d 1012 (8'h Cir. 2002).5 In that case, Defendant

Pharmacia Corp. was in the position of the foundry settlors to the proposed AOC and took the

exact opposite position that it has in this matter. In BP, the United States proposed to settle with

several potentially responsible parties, including Pharmacia, even though a contribution action

had already been instituted by Dico, Inc. against Pharmacia. In arguing in favor of its settlement

with the United States, the Customer Group, including Pharmacia, said:

"That the prospect of contribution protection may have enticed the Customer

Group to settle with EPA was Congress' intent and the Customer Group's right..."

Appellee Customer Group's Brief on Appeal, pp. 17-18.

Dico objects to the Consent Decree because it contains a contribution bar. (Dico

brief, p. 40) Dico's argument is misdirected. It is not the Consent Decree that

creates the right of contribution protection, but CERCLA. . . As can be seen from

the above language, Congress provided for automatic contribution protection

when a party has resolved its liability to the United States.

Appellee Customer Group's Brief on Appeal, p. 27.

Despite its vehement disapproval of the Consent Decree, and the statutory

foundation upon which it is based, Dico refused to participate in negotiations.

Dico now regrets that decision and wants to force EPA to start over.

Appellee Customer Group's Brief on Appeal, p. 10.

5This case was taken on appeal from the Southern District of Iowa, Civil Action No. 4-99-cv-10671, titled U.S. v. BP Amoco Oil, PLC; BP Amoco, PLC, Chevron Chemical Company;Bayer Corporation; Monsanto Company; Shell Oil Company. (Emphasis Added) According toPharmacia's 2003 10K, Part 1, Item 1, Monsanto Company was renamed Pharmacia Corporationand Pharmacia Upjohn, Inc. on March 31, 2000.

Thus, Pharmacia absolutely knew when it signed the PCD that EPA, under CERCLA. had

the right to settle with persons Defendants planned to sue in contribution and that any such future

settlement by EPA would limit their ability to maintain their lawsuit. In addition to establishing

the fact that the Defendants were aware that the government had the statutory authority to cut-off

their contribution rights, this Court should judicially estop the Defendants from asserting a

position which is entirely inconsistent with pleadings filed in the BP case.6 The only th ing that

is different here from BP is the financial interests of the Defendants. When it suited their

financial interests, they recognized that Congress created limitations on contribution rights under

CERCLA. Now that those same contribution limitations may impair the Defendants' financial

interests, they ignore the plain meaning of the PCD, the statute, legislative history and case law.

Under the doctrine of judicial estoppel, the Defendants cannot assert a position which is

diametrically opposite to one they asserted in another federal case. This Court should not

countenance such duplicitous conduct.

Finally, Defendants are veterans of many environmental cases. Defendants and their

predecessor, Monsanto, have signed dozens of CERCLA Consent Decrees with the United

States. See attached list of environmental cases involving the Defendants and Monsanto

Company, Exhibit A hereto. Defendants are involved in scores of CERCLA sites across the

6 Judicial estoppel protects the integrity of the judicial process by prohibiting partiesfrom deliberately changing positions in pleadings according to the exigencies of the moment.Birmingham Steel Corp. v. Tennessee Valley Authority. 353 F.3d 1331 (11 t h Cir. 2003). Underthe doctrine of judicial estoppel, the court invokes the doctrine where the alleged inconsistentpositions were made under oath in a prior proceeding, and such inconsistencies were calculatedto make a mockery of the judicial process. New Hampshire v. Maine, 532 U.S. 742, 750, 121S.Ct. 1808, 1815, 149 L.Ed. 2d 968 (2001): Parker v. Wendy's Intern. Inc.. 365 F.3d 1 2 6 8 ( 1 1 t h

Cir. 2004).

8

country. Solutia's bankruptcy filings indicate that it alone has potential CERCLA liabili ty of

over $1 billion dollars.7 There can be no doubt that the Defendants were clearly experienced in

CERCLA law and knew full well what rights they reserved in the PCD.

D. The Defendants Admitted the PCD is Consistent with CERCLA

In "DEFENDANTS' MEMORANDUM IN SUPPORT OF PLAINTIFF'S MOTION TO

ENTER REVISED PARTIAL CONSENT DECREE," submitted to the Court in January 2003,

the Defendants stated that "The Revised Partial Consent Decree is consistent with the

requirements and purposes of CERCLA. is in the best interest of the public, and is a fair and

reasonable settlement based upon good faith, ami's length negotiations between the United States

and Defendant's." (emphasis added). With that pleading, the Defendants admitted that the terms

of the PCD are entirely consistent with CERCLA and that it was negotiated in good faith, arms

length negotiations. If the United States agreed to waive its right to pursue additional cleanup in

Anniston against other persons in the PCD, as Defendants now claim, the PCD would be entirely

inconsistent with the purposes and requirements of CERCLA and would be at odds with all EPA

model documents, policies, and guidances .

E. This Court Approved the PCD Based on Representations from the UnitedStates and Defendants That it was Consistent With CERCLA

The United States asks that the Court recall that the entry of the PCD was vigorously

challenged by persons claiming that the PCD was a collusive agreement between the United

States and the Defendants. Through 14 months of hearing and briefings, this Court put the

7See Solutia's Revised Statement of Undisputed Material Facts Pursuant: to LocalBankruptcy Rule 7056-1. (Fact #14) "The ful l extent of the environmental liabilities that Solutiawas required to assume from Pharmacia is not known, however, the total costs of environmentalremediation ultimately could exceed $1 billion."

United States and Defendants to the test to prove to its satisfaction that the terms of the PCD are

entirely consistent with CERCLA. In support of its efforts to have this Court enter the PCD, the

United States argued in its pleadings regarding entry of the PCD that:

"There is not one piece of credible evidence which substantiates any of amici's

allegations of collusion. To the contrary, the information before this Court, including

hundreds of pages of documents and testimony and argument from two hearings, clearly

demonstrates that the Consent Decree the United States is asking this Court to enter is

fair, reasonable, consistent with CERCLA, in the public interest and the product of

legitimate arms length dealings. Amici have failed to substantiate their allegations of

collusion - because there has been none. Likewise, amici have failed to point the Court to

any aspect of the revised Consent Decree which violates CERCLA or gives Defendants

preferential treatment - again because there is none. The evidence before this Court

shows that the terms of the Consent Decree follow EPA's model documents, and that the

only differences require the Defendants to provide more benefits to the community than is

typically provided at this phase of the CERCLA process."

As discussed in Section D above, Defendants concurred that the PCD was entirely consistent

with CERCLA. Given that CERCLA place specific limitations on Defendants' contribution

rights and both the Defendants and the United States represented to the Court that the PCD was

entirely consistent with CERCLA, the Defendants should be estopped from now asserting that

the PCD should be interpreted in a manner that is inconsistent with CERCLA. It would have

been plainly contrary to CERCLA and clear evidence of collusion between the United States and

Defendants for the Parties to have attempted to circumvent the express provisions of CERCLA

10

which authorize the United States to seek additional cleanup from other parties in Anniston.

F. Defendants Entered into the PCD Knowing That Their Contribution RightsCould be Cutoff.

At the hearing, the Court asked whether the United States had any information that would

lead to the conclusion that if Solutia and Pharmacia knew that the United States would cut off

their contribution rights they would have nonetheless have entered into the consent decree?

Transcript at 27. As counsel for the United States said at the hearing, the answer to that inquiry

is "yes."8 The statute is crystal clear on the limitation of the Defendants' contribution rights and

given the established caselaw and legislative history on the limitation of those rights, all of the

parties knew, or certainly should have known, the limitations Congress placed on the

Defendants' contribution rights. The United States did not, nor could it, hide the statute,

legislative history, or the cases interpreting the statute from the Defendants. Further, the Court

should look at the circumstances surrounding the formation of the PCD to see that the

Defendants would have, in fact, signed the PCD even knowing of the statutory limitations on

their contribution rights. The circumstances in the instant case show that the Defendants had no

alternative but to resolve their liability through the PCD. The Defendants were the sole

manufacturer of PCBs in the United States. They manufactured them at two locations, one of

them being Anniston, Alabama where they produced hundreds of millions of pounds of PCBs

and generated tens of millions of pounds of PCB wastes at the Anniston PCB Site. The United

States looked to the Defendants, under CERCLA, to partially address the PCB contamination in

8As already shown, counsel who negotiated the PCD for the Defendants knew thatDefendants' contribution rights were subordinate to the rights of the United States. Furthermore,as also shown above, Pharmacia's position in the BP case shows that it was fully aware that theUnited States could settle with other parties and thereby cut-off their contribution lawsuit.

Anniston. CERCLA is a strict l iability statute with three very narrow and limited defenses.

CERCLA is to be construed liberally in order to ensure the polluters pay for the mess they

created. Defendants either had to settle or be faced with being ordered to perform work.

Furthermore, at the time of the PCD negotiations, Defendants were being sued by approximately

20,000 plaintiffs in state and federal courts. A jury verdict had already been rendered against

them including, inter alia, a finding that they were l iable of the tort of outrage. Certainly, going

into the PCD negotiations, the Defendants were not in an enviable position. In truth, Defendants

had little option but to enter into the PCD. There is absolutely no evidence in the record to

support a contrary finding. While Mr. White made a contrary statement in response to a question

from the Court, Mr. White's statement is not evidence. Statements of counsel are not evidence.

Moreover, as shown above, Mr. White's statement is inconsistent with the fact that the

Defendants did indeed enter into the PCD when the law as to the limitations of their contribution

rights was clear and well settled. Mr. White was not present at any of the PCD settlement

negotiations. His statement is neither evidence nor is it correct.

G. The Defendants Agreed to the PCD and Urged the Court to Enter the PCDOver a Year Before Filing Their Contribution Action.

In the Court's June 2, 2005 Order, footnote 1 states that two months before the PCD was

approved, the Defendants commenced a contribution action against other responsible parties

(PRPs). See Solutia. Inc.. at al. v. McWane. Inc.. at al. (N.D.A.L. Civil Case #l:03-cv-1345-

PWG). While that is factually correct, it gives the appearance that the Defendants filed their

contribution action before they agreed to, and sought this Court's approval of, the provisions in

the PCD. It is true that the Court did not approve the PDC until August 2003. However, the

Defendants had signed and sought approval of all the provisions they now say prevent the United

12

States from settling with other parties over a year before they filed their contribution case. The

United States, with the full support of the Defendants, lodged the PCD with the Court on March

25, 2002. In October 2002, the United States, again with the full support of the Defendants,

moved the Court to enter the revised PCD. The Defendants agreed to the terms at issue and

asked the Court approve the settlement 14 months prior to filing their contribution action in June

of2003.

H. CERCLA's de minimis provisions instruct EPA to settle with de minimi'sparties as soon as possible.

During the June 1, 2005 hearing, the Court asked "what was the need to address the PCB

issue in the lead contamination case." Transcript at 26. The answer is simple. The proposed

AOC addresses the settlors' liability for both the Anniston Lead Site and the Anniston PCB Site,

not just the Anniston Lead Site. It is quite common for EPA to address a PRP's responsibility

for several sites in one document. If finalized, the settlors to the proposed AOC wil l conduct

cleanup of the Anniston Lead Site as well as part of the Anniston PCB Site. Further, in the

proposed AOC, EPA is determining that the settlors are what is known as de minimis parties

under CERCLA. Section 122(g)(l) of CERCLA requires EPA to enter into final settlements

with de minimis parties "as promptly as possible."9 De minimis settlements are settlements

designed by Congress to get small volume contributors out of the Superfund process as quickly

9See generally, CERCLA Section 122(g). Also see EPA guidance regarding settlementswith de minimis parties. See:http://www.epa.gov/compliance/resources/policies/cleanup/superfund/deminsecl22-rpt.pdf;http://www.epa.gov/compliance/resources/policies/cleanup/superfund/app-deminimis-rpt.pdf;http://www.epa.gov/compliance/resources/poIicies/cleanup/superfunuVaip-demin-i22g-04.pdr.

13

as possible. 10

I. The Defendants Did Not Bargain for Language Reserving and Retainingtheir Contribution Rights.

The lynchpin of Defendants' position is that they bargained for the specific provisions in

Paragraphs 38 and 42 of the PCD which reserved and retained their rights to seek contribution

under CERCLA." As previously explained by the United States, those provisions are boilerplate

statements preserving the status quo between the Parties. The Defendants have admitted as much

in their pleadings. The Defendants have plainly misrepresented the facts to the Court regarding

what they bargained for in the PCD. The Defendants averred as early as their November 17,

'"Defendants intimated that they wanted time to review the proposed AdministrativeAgreement to "point out things. . ." In anticipation that the Defendants wil l submit a pleading tothis Court regarding the proposed Agreement, the United States wishes to point out that thisCourt lacks jurisdiction over the proposed Agreement. First, it is not a final agency action.Second, CERCLA also limits judicial review of such Agreements. See Sections 122(a)(l),122(g)( 11), and 113(h). In Dravo Corporation v. Zuber Company. 13 F.3d 1222, 1224 (8th Cir.1994), a party wanted to conduct discovery to determine whether settling parties had contributedto the contamination of a site in more than a de minimis way as EPA had concluded. The court,citing Block v. Community Nutrition Inst.. 467 U.S. 340, 104 S. Ct. 2450, 81 L.Ed. 2d 270(1984). held that a non-settling party may not invoke the judicial power to invalidate a deminimis agreement that is embodied in an administrative order on the ground that the settlingparty is not eligible for such an agreement. Specifically, the court held that there is no right tochallenge the validity of a de minimis administrative agreement. The court noted that CERCLAallows EPA to enter into settlements either judicial ly or administratively and that EPA's decisionto enter into a settlement pursuant to Section 122 is not subject to judicial review. Id. at 1228.See 42 U.S.C. §9622(a). The court further stated that this conclusion does not leave a partywithout recourse, since they will be provided an opportunity to file written comments on theproposed settlement. If EPA finds, based upon the comments, that the agreement isinappropriate, improper, or inadequate, EPA may withdraw or withhold consent to the proposedagreement.

"Paragraph 38 of the PCD states that "Each of the Parties expressly reserves any and allrights (including but not limited to, any right to contribution), defenses, claims, and causes ofaction which each Party may have with respect to any matter, transaction, or occurrence relatingin any way to the Site and/or the Anniston Lead Site against any person not a Party hereto."Paragraph 42, entitled Disclaimer states "Defendants retain their rights to assert claims againstother potentially responsible parties at the Site."

14

2004, letter to the Court that they were being required to relinquish "the Defendants' cost

recovery contribution rights, which were bargained for in the [PCD] negotiations and a critical

condition to the Defendants agreeing to perform the work identified in the [PCD]." Further, the

Defendants claim in their Legal Position Paper attached to their Statement of Position

"...[Pharmacia/Solutia] was particularly careful in negotiations to make sure that the PCD

protected its contribution claims on the Anniston PCB Site." Legal Pos. Paper, pp. 9-10. The

Defendants post hoc fantasies about what they "negotiated" are absolutely false. As proof and

attached as Exhibit B is EPA's August 28, 2001, letter to Mr. Allan Topol, counsel for the

Defendants, wherein EPA invited the Defendants to participate in negotiations for the PCD.

Attached to that letter is EPA's draft of the PCD. Placed in Paragraphs 86 and 90 of EPA's Draft

Consent Decree were the exact provisions that ended up in the final PCD as Paragraphs 38 and

42, the provisions now relied upon by Defendants. (First 3 pages of the Draft PCD and pages

containing paragraphs 86 and 90 are attached to Exhibit B.) The language that Defendants claim

to have "bargained" for and been so "particularly careful" to negotiate was in fact proposed by

EPA in its Draft Consent Decree to the Defendants. Defendants' actions before this Court have

been nothing more than artful manipulation of the facts and the taith. They bargained for

nothing more than CERCLA provides.

J. The June 2, 2005 Order Mistakenly Requires the Parties to Resort to theFormal Dispute Resolution Procedures.

In its June 2, 2005, Order, the Court ordered the parties to proceed with formal dispute

proceedings under the PCD. However, the deadline for the Defendants to invoke the formal

dispute procedures of the PCD has long past. For the reasons set forth in detail in previous

pleadings, the time for invoking formal dispute procedures expired on January 5, 2005.

15

Therefore, the position advanced by the United States is binding on the parties.12

Under the clear and express requirements of the PCD, the dispute resolution process has

concluded. Any other interpretation of the dispute resolution provisions is a modification of the

PCD without the consent of the United States.

K. The United States' Position on the issue in Dispute will not change throughfurther Dispute Resolution Procedures.

Further discussions with the Defendants on the issue in dispute wil l not result in a

resolution of that dispute, unless the Defendants' concede that their contribution rights are

subordinate, as set forth in Section 113(f)(3)(C) of CERCLA, 42 U.S.C. § 9613(f)(3)(c). The

issue in dispute is whether the United States can enter into a cleanup settlement agreement with

other Potentially Responsible Parties that may impair the contribution rights of the Defendants.

As already shown, under the PCD, the United States reserved all of its rights to take any response

actions it deemed necessary, notwithstanding any other provision of the partial consent decree or

any of the attachments. (See PCD, Paragraph 32.)1 3

L. The Court Should Not Set Aside The PCD

At the June 1, 2005, hearing the Court asked the United States whether there was any

authority for the Court to set aside the PCD because the Court had found that the United States

had changed its position. The Court is simply wrong in its determination that the United States

changed its position. There is no evidence to support that finding by the Court. In fact, there is

l2See United States' Notice of Compliance and Response to Defendants' ContemptMotion and Section VID of PCD.

^Nevertheless, in respect of this Court's June 2, 2005, Order and to advance the issue indispute as quickly as possible, EPA submitted its Statement of Position to the Defendants onJune 6, 2005.

16

substantial evidence that the United States' position with respect to its superior rights has never

wavered. When the United States first moved for entry of the PCD, it represented to this Court

that the PCD was consistent with CERCLA, contained all of the reservations the United States

needed to protect its rights, and offered no preferential provisions to the Defendants. As the

Court will recall, Amici opposed the PCD arguing that it represented a "sweetheart" deal

between the United States and the Defendants. Consequently, the United States and the

Defendants focused on showing the Court that the PCD was as stringent as it could possibly be at

that stage in the CERCLA process.

The United States believes it would be in error for the Court to now determine that the

United States changed its position since that would mean that the United States had actually

intended to give the Defendants rights that no other CERCLA defendant had ever received

through a CERCLA settlement. The United States has never agreed in a CERCLA settlement

that settling polluters' contribution rights are superior to the rights of the United States. More

particularly, the United States has never entered into a CERCLA settlement wi th the

understanding that a defendant's contribution rights can be used to prevent the United States

from entering into cleanup agreements with other parties to protect public health and the

environment.

As Sandra Connors, an expert on CERCLA policy and enforcement, testified, the PCD

contained all of the necessary reservation of rights to ensure that the United States could take any

actions needed to protect public health and the environment.

The United States urges the Court to recognize the absurdity of the Defendants' current

interpretation of its reserved contribution rights. If the Defendants' interpretation is correct, then

17

the United States can only turn to these Defendants to cleanup all of the PCB contamination in

Anniston. Under their interpretation, the United States cannot enter into any agreements with

other parties because doing so, as a matter of law under Sections 113(f)(2), 122(g)(5), and

122(h)(4), would mean that the Defendants' contribution rights may be impaired. Such a result

would completely undermine the broad remedial purposes that CERCLA was intended to

address. Congress enacted Sections 113(f)(2), 113(f)(3)(C), 122(g)(5), and 122(h)(4), to avoid

such an outcome. Presumably, that is why every single case that has addressed the issue has held

that the Defendants' contribution rights are subordinate to those of the United States and that the

United States has the authority to extinguish a settling party's contribution rights.

M. The Court's Authority to Set Aside the PCD

At the June 1, 2005, hearing the Court asked the United States to provide authority

regarding the Court's power to set aside the consent decree when the Court finds that the

government's position has changed. The Court then stated:

My feeling is that on a motion of the defendants, I should set asidethis consent deree that I ordered and let you go forward with yourproof, and then if the government prevails at trial, the appropriaterelief wil l be ordered; but, in the meantime, the clean up will stop.

Transcript at 37. During the hearing, the Court suggested that the United States had changed its

position with respect to Defendants contribution rights under the PCD and hence, there was some

sort of mutual mistake with respect to the Parties' understanding of the PCD language. However,

as stated herein, the United States has never changed its position and made no mistake in

representing to the Court that the PCD was consistent with CERCLA, model CERCLA

settlement documents, and that it reserved all of the United States' rights.

As to whether the Court has the power to set aside the PCD, the Unites States submits

18

that Fed. R. Civ. P. 60(b) would govern that determination. Under different circumstances,

mistake is one of several categories of grounds for relief from a judgment under Rule 60(b), but a

motion seeking relief based on the categories set out in Rule 60(b)(l) through (b)(3), including

mistake, inadvertence, surprise, excusable neglect, newly discovered evidence, or fraud, must be

made within one year of the judgment. More than a year has elapsed since the Court entered the

PCD. It should also be noted that a mistake as to the law is not grounds for action under Fed. R.

Civ. P. 60(b). Bohlin Co. v. Banning. 6 F.3d 350 (5lh Cir. 1994)(Ignorance of the rules or

contemplating the breadth of a stipulation is not sufficient to obtain relief from a judgment.)

There is also a 'catch-all' category for relief from judgment in 60(b)(6), which allows

relief from a judgment for "any other reason justifying relief from the operation of the judgment."

"It is well established, however, that relief under this clause is an extraordinary remedy which

may be invoked only upon a showing of exceptional circumstances." Griffin v. Swim-Tech

Corp., 722 F.2d 677, 680 (11th Cir. 1984). As explained herein, there are no such extraordinary

circumstances in this case. In addition, this 'catch-all' category, Rule 60(b)(6), "is unavailable

when the relief sought is within the coverage of some other provision of Rule 60(b)." William

Skillings & Assocs. v. Cunard Transp. Ltd.. 594 F.2d 1078, 1081 (5th Cir. 1979);'4 United States

v. Real Property and Residence Located at Route 1, Box 111. Firetower Road, Semmes, Mobile.

Ala.. 920 F.2d 788, 791 (11th Cir. 1991) (stating that Rule 60(b)(6) "applies only to cases that do

not fall into any of the other categories listed in parts (l)-(5) of Rule 60(b)."). Indeed, '"the

maximum time limitation of one year that applies to clause (1), (2) and (3) would be

HFifth Circuit decisions handed down prior to October 1, 1981, are binding precedentupon the Eleventh Circuit. Bonner v. City of Pritchard. 661 F.2d 1206, 1209 (11th Cir. 1981).

19

meaningless, if after the year period had run the movant could be granted relief under clause (6)

for reasons covered by clauses (1), (2) and (3V" Real Property and Residence Located at Route

1. Box 1 1 1 . 920 F.2d at 791. quoting. 7 J. Moore, Moore's Federal Practice. 1f 60.27 at 60-266

(2d ed. 1987), citing. Klapprott v. United States. 335 U.S. 601 (1949).

The United States submits that there are no legitimate reasons to set aside the PCD.

Nothing in the PCD or the record supports such a decision. In fact, a decision by the Court to set

aside the PCD would only delay cleanup and be detrimental to public health and the

environment.

III. Conclusion

For the reasons mentioned above, the United States respectfully requests that the Court

withdraw its June 2, 2005 Order. The United States further requests that the Court Order that

either: 1) the United States may proceed with the proposed AOC; or 2) the United States may

take no action to approve and finalize the proposed AOC.

Respectfully submit ted,

Kelly A. JohnsonAct ing Assistant Attorney GeneralEnvi ronment & Natura l Resources Division

Wi l l i am A. Weinischke, Senior AttorneyEnvironmental Enforcement SectionEnvi ronmenta l and Natura l ResourcesDivis ion

U.S. Department of Just iceP.O. Box 7611Washington, D.C. 20044-7611(202)514-4592

Alice H. Mart inUnited States Attorney

20

Sharon D. SimmonsAssistant U.S. Attorney

s/ Edward Q. RaglandEDWARD Q. R A G L A N DAssistant Uni ted States AttorneyBar Number : ASB-7291-G69EAttorney for Defendant1801 Fourth Avenue NorthBirmingham, Alabama 35203Telephone: (205)244-2109Fax:(205)244-2181Emai l : [email protected]


This is to certify that a copy of the foregoing Memorandum of the United States with

Respect to the June 1, 2005 Hearing and the Court's June 2, 2005 Order as well as the attached

Exhibits A and B have been served upon the following counsel, by mailing the same by first class

United States mail, properly addressed and postage prepaid, on this the 16th of June, 2005:



Cathleen S. BumbAssistant General CounselEnvironmental

Solutia, Inc.575 Maryville DriveSt. Louis, Missouri 63141

21

William Cox, IJJThe Clark Building400 S. 20'h StreetBirmingham, Alabama 35203-3200










Joseph G. NassifHusch & Eppenberger LLC

22

190 Carondolet Plaza, Suite 600St. Louis, Missouri 63105-3441

s/ Edward Q. RaglandEDWARD Q. RAGLANDAssistant United States AttorneyBar Number : ASB-7291-G69EAttorney for DefendantEmai l : [email protected] H. Mar t inUnited States Attorney

23

EXHIBIT 10

10302178

FILED2005 Jun-29 PM 04:45

U.S. DISTRICT COURTN.D. OF ALABAMA


UNITED STATES OF A M E R I C A

Plaintiff ,

v.

P H A R M A C I A CORPORATION(p/k/a Monsanto Company) andSOLUTIA INC.,

Defendants.

CIVIL ACTION NO. 1:02-CV-0749-UWC

UNITED STATES' REPLY TO DEFENDANTS' JUNE 15, 2005MEMORANDUM REGARDING THE EFFECTS OF THE UNITED STATES1

PROPOSED ADMINISTRATIVE ORDER ON CONSENT ("AOC") ON THISCOURT'S PARTIAL CONSENT DECREE ("PCD")

I. Introduction

The United States files this Reply Memorandum within the time afforded by the Court

(Transcript at 37) to the pleading filed by the Defendants on June 15, 2005 ("Memorandum").

Defendants' Memorandum is equal measure misstatement of fact, misapprehension of law, and

irrelevant argument. When all their rhetoric is boiled away, Defendants demand this Court stop

EPA from entering into the proposed Administrative Settlement Agreement ("proposed AOC"),

set aside the Partial Consent Decree ("PCD"), and somehow find that the Defendants caused

litt le or no pollution in Anniston. In this case, neither the facts nor law supports any of the

Defendants' positions.

As discussed herein, this Court lacks jurisdiction over the proposed AOC, and therefore,

the United States will not burden the Court with a detailed response to all of the many factually

incorrect and legally deficient allegations contained in the Defendants' Memorandum. Instead,

the United States requests this Court not renew its injunction prohibiting, or otherwise inhibiting,

EPA from continuing with the administrative process regarding the proposed AOC so that it can

be put out for public comment. The proper forum for all of Defendants' attacks on the proposed

AOC is the public comment process. EPA must by law, evaluate all comments, including those

submitted by the Defendants, and then make a final determination of whether to proceed with the

proposed AOC.'

The United States does acknowledge, as it did at the June 1, 2005, hearing, that the

proposed AOC is l ikely2 to impair the Defendants' contribution action, but the proposed AOC

will have no impact whatsoever on Defendants' contribution rights as their rights were always

subject to the limitations placed on them by CERCLA. However, the issue before this Court is

not the details or merits of the proposed AOC or its exact affect on the Defendants' contribution

case. The sole issue presently before this Court is whether, under the PCD and CERCLA, the

United States has the authority to enter into settlements with other parties which may impair the

Defendants' contribution action. For all of the reasons set forth in its five previous pleading on

this issue, the United States believes it clearly has that authority. The Defendants disagree.3 This

'Contrary to Defendants' assertions, EPA has reviewed and developed substantialinformation supporting the proposed AOC. EPA intends to prepare written responses tocomments received during the public comment period for the proposed AOC.

2 The United States says "likely" because ultimately a Court will have to issue a ruling onthis issue. Presumably, that Court would be Judge Green's Court where the Defendants havefiled their contribution case.

3The Defendants were certainly aware that EPA was contemplating addressing PCB andlead contamination in a subsequent settlement with other responsible parties as is evidenced bytheir Memorandum (p. 5) wherein Defendants state "Last, but not least, the definition of theAnniston Lead Site in the PCD recognized that the other potentially responsible parties' releasesof PCBs and other hazardous substances would be addressed in the Anniston Lead Site."

Court must now decide.'4

The proposed AOC requires the settling parties to immediately conduct sampling and

cleanup of lead and PCBs in Anniston to EPA's strictest levels. EPA has determined that this

cleanup is necessary to protect public health and the environment. EPA estimates the potential

value of the cleanup to range towards $100 million dollars. This important cleanup is now being

delayed. The Court, at the June 1, 2005 hearing and under the June 2, 2005 Order, maintained

the status quo for thirty (30) days from June 2, 2005. Therefore, approximately thirty (30) days

from the June 2, 2005 Order, the United States will proceed with the administrative process for

the proposed AOC so that it can be put out for public comment, unless the Court specifically

enjoins EPA from doing so.5

(Emphasis added) That is precisely what the proposed AOC does; it addresses the settlingparties' potential liability for lead and PCBs. Yet, since November 2004, the Defendants havebeen arguing to this Court that the PCD prohibits EPA from doing precisely what they now say intheir Memorandum the PCD envisioned all along.

4In their June 20, 2005, Reply to EPA's Statement of Position, the Defendants changedtheir position and now claim, not that they reserved greater rights, but that the United States'bargained away it's superior rights to settle with other responsible parties. See Defendants'Reply, page 3. The United States has already pointed out to the Court that in addition toParagraph 32 of the PCD, numerous other provisions of the PCD completely belie any suchassertion by the Defendants. See Exhibit G to the United States' Response to Defendants'Motion for an Order to Show Cause for Contempt.

5As we have informed the Court in the past, the administrative process requires thatgovernment officials with delegated authority must approve the proposed AOC, and that itsubsequently be published in the Federal Register. Following publication in the Federal Register,the public will be afforded at least thirty (30) days to submit comments on the proposed AOC.EPA will then consider all of the comments and decide whether to proceed with the AOC in itscurrent form or to withdraw from it or seek modifications to it. EPA wil l prepare writtenresponses to the public comments.

II. Discussion

A. The Proposed Agreement is Not a Final Agency Action

As a matter of basic administrative law, the proposed AOC, which the Defendants devote

full attention to in their June 15, 2005, Memorandum, is not a final agency action. It has not yet

been signed by the Federal Government officials with delegated authority to approve and sign it.

After that process has been concluded, the proposed AOC must be presented to the public which

then has an opportunity to submit comments on it. EPA must then evaluate all of the comments

and determine if the proposed AOC should go forward in its current form, be withdrawn, or

modified. In short, the administrative process is not final at this time. See Georgia Power

Company v. Teleport Communications Atlanta. Inc.. 346 F.3d 1047 ( 1 1 l h Cir. 2003) (Only final

agency actions can be subject to judicial review); Sundar v. INS, 328 F.3d 1320, 1323 ( 1 1 l h Cir.

2003)("The exhaustion doctrine embodies a policy of respect for administrative agencies, which

allows them to carry out their responsibilities and 'to discover and correct [their] own errors.'" )

Furthermore, this Circuit only recognizes exceptions to the exhaustion doctrine in exceptional

circumstances. Perrino v. Southern Bell Tel. & Tel. Co.. 209 F.3d 1309, 1315-16 (1 llh Cir. 2000).

In Perrino. the court said that this circuit has recognized exceptions only when resort to

administrative remedies would be futile or inadequate, or where a claimant is denied meaningful

access to the administrative review scheme. Id. at ] 316.6 That is not the case here. The

6Also see U.S. v. Louisiana-Pacific Corp.. 569 F.Supp. 1141, 1144 (D.C. Ore. 1983) ("Itis well established, however, that courts will not review agency actions which are not "final"under the APA, see 5 U.S.C. § 704, and are not ripe for review. "Judicial intervention inuncompleted administrative proceedings, absent a statutory mandate, is strongly disfavored."Bakersfield City Sch. Dist. v. Bover. 610 F.2d 621, 626 (9th Cir. 1979). This principle, oftendescribed as the "exhaustion doctrine," applies where an action is not ripe for judicial reviewbecause no final adverse action has been taken, because a full factual record is still being

CERCLA process allows the Defendants, as well as the entire interested public, a meaningful

opportunity to fully address their concerns as to the proposed AOC. EPA must then carefully

consider all of the comments and determine whether, based on the comments, to proceed, or

modify the proposed AOC, or withdraw from it.7 The Eleventh Circuit has found that the

CERCLA public comment process provides parties such as the Defendants an adequate

opportunity to voice their concerns with respect to the proposed AOC. Broward Gardens Tenants

Association v. United States Environmental Protection Agency. 311 F. 3d 1066, 1075 ( 1 1 l h Cir.

2002).

B. CERCLA Precludes Judicial Review of the AOC at This Time

Even if the requirements for judicial review under the APA had been met, including final

agency action and exhaustion of administrative remedies, judicial review of the proposed AOC is

still prohibited by Section 113(h) of CERCLA, 42 U.S.C. §9613(h). See Alabama v. EPA. 871 F.

2d 1548, 1561 (11"1 Cir. 1989)("The APA creates a presumption that individuals can challenge

agency actions that cause legally cognizable injuries, but if Congress expressly foreclosed or

postponed judicial review of these agency actions, then the presumption is rebutted.") Under

Section 1 13(h) of CERCLA, federal courts have no jurisdiction to review challenges to removal

or remedial actions until such actions are complete, or EPA takes action to enforce them. The

Defendants' June 15, 2005, Memorandum, regardless of what label the Defendants put on it, is a

generated, or where further agency action could render a challenge moot or result in piecemealchallenges and review. Association of Nat. Advertisers. Inc. v. FTC. 627 F.2d 1151, 1156-1157(D.C.Cir.1979), cert, denied, 447 U.S. 921, 100 S.Ct. 3011, 65 L.Ed.2d 1113 (1980)").

7As this Court will recall, EPA and the Defendants made a number of substantialmodifications to the Partial Consent Decree approved by the Court based upon comments EPAreceived from the public.

challenge to the removal action selected by EPA and contained in the proposed AOC and is

prohibited under Section 113(h) of CERCLA, 42 U.S.C. § 9613(h).8 The proposed Agreement

provides for removal action with respect to cleanup of lead and PCBs and this Court is barred

from reviewing such action.

The Eleventh Circuit set forth the breadth of the Section 113(h) bar in Broward Gardens

Tenants Association v. United States Environmental Protection Agency, 311 F.3d 1066 (1 llh Cir.

2002). The court noted that CERCLA provides for a comprehensive scheme for the purpose of

cleaning up hazardous waste sites. As part of that scheme, the court observed that Section 104 of

CERCLA gives EPA the authority to undertake response actions where there is a release or threat

of release of hazardous substances, and that response actions fall into two categories: removal

actions and remedial actions. Id. at 1071. Congress authorized EPA to order parties to undertake

the cleanup or for the Agency to conduct the cleanup itself, and that Congress further authorized

EPA to negotiate settlement agreements under Section 122 of CERCLA.9 Id. To avoid the pre-

enforcement review bar established by Section 113(h), the plaint iffs in Broward Gardens argued

that the bar did not apply to their constitutional claims. They also claimed that since they were

not a PRP, but an injured party, that the bar did not apply to them. The court held that any

challenge, if it interferes with the implementation of a CERCLA remedy, is a challenge to EPA's

remedy selection. Id. at 1072. The purpose of CERCLA is to protect public health and the

8The jurisdictional bar set out in Section 113(h) was briefed and argued at length in thiscase and the United States respectfully refers this Court to those pleadings. See Documents #6through #16 in the Civil Docket for this case.

9 The proposed AOC is issued under the authority of Sections 104, 106(a), 107 and 122 ofCERCLA. 42 U.S.C. §§ 9604, 9606(a), 9607, and 9622.

environment against the improper disposal of hazardous waste. Id. at 1075. "Section 113(h)

furthers that objective by preventing EPA remedial actions from being delayed by litigation." Id.;

See also Dickerson v. Administrator EPA. 834 F.2d 974 (11"' Cir. 1987); Clinton County

Commissioners v. EPA, 116 F.3d 1018(3rd Cir. 1997); McCellan Ecological Seepage Situation v.

Perry. 47 F.3d 325. 330-1 (9th Cir. 1995): and Schalk v. Reillv. 900 F.2d 1091 (7Ih Cir.

1990)(Citizens' challenge to the remedy had to await completion of the remedy).

Defendants' judicial challenge in this Court to the proposed AOC is delaying a cleanup

which EPA selected and which is designed to protect public health and the environment. The

Defendants1 judicial challenge to EPA's cleanup, which is embodied in the proposed AOC, is

precisely the type of litigation which Section 113(h) is intended to prevent. Challenges to

removal or remedial actions are barred even where impending irreparable harm is alleged. See

Alabama v. EPA at 1157 and Clinton County Commissioners v. EPA at 1024. The court in

Broward Gardens further noted that "Congress provided a way for the public to voice concerns

through the pre-remediation public review and comment procedures, assigned the states a role in

the enforcement of the substantive standards established for remedial actions, and also left

citizens the option of bringing a nuisance action in state court." Broward Gardens at 1075. As

mentioned previously, the Defendants are welcome to submit their concerns to EPA. EPA will

review all of the public comments before it determines whether to proceed with the proposed

AOC. Thus, under the law of this circuit, Defendants have ample opportunity to be heard on the

proposed AOC through the public comment process.

EPA's actions in the proposed AOC, including the de minimi's settlement contained

therein, comprise removal actions and enforcement actions related thereto.10 Hence, the proposed

AOC is subject to the Section 113(h) jurisdictional bar. In Reardon v. U.S.. 947 F.2d 1509, 1512-

1513 (I51 Cir. 1991), the First Circuit held that the filing of a lien constituted an enforcement

activity subject to the Section 113(h) jurisdictional bar, and in Voluntary Purchasing Group v.

Reillv. 889 F.2d 1380 (5th Cir. 1989), the Fifth Circuit held that an EPA letter to potentially

responsible parties ("PRPs") demanding payment and requesting a settlement was enforcement

activity also subject to the Section 113(h) jurisdictional bar. Directly on point is the court's

decision in Avnet. Inc. v. Allied Signal, Inc.. 1994 WL 705433 (D.R.I.), wherein the court, relying

on Reardon and Voluntary, held that "EPA's settlement with de minimus PRPs is 'removal or

remedial action selected under section 9604....' Those claims are subject to §9613(h), CERCLA

§113(h)." In fact, as the Eleventh Circuit held in Broward Gardens, any challenge, including

constitutional challenges, that has the effect of interfering with the implementation of a CERCLA

response action is barred under Section 113(h) of CERCLA. Broward Gardens at 1072.

In addition to the general Section 113(h) jurisdictional bar to review of the Proposed AOC,

the Court also lacks specific jurisdiction over EPA's determination that the parties to the proposed

AOC are entitled to de minimis treatment under CERCLA for the Anniston PCB Site. EPA is

tasked by CERCLA to reach de minimis settlements "as promptly as possible".1' 42 U.S.C. §

'°Section 101(25) of CERCLA defines the terms "response" to mean "remove, removal,remedy, and remedial action;, all such terms (including the terms "removal" and "remedialaction") include enforcement activities related thereto." (Emphasis added).

"According to Congress:de minimus settlements are intended to relieve the covered partiesfrom prolonged and costly litigation. Thus, new subsection122(g)(3) requires [EPA] to reach settlements in these cases assoon as the necessary information is available to establish the

9622(g)(l). Much of the Defendants' June 15, 2005, Memorandum is an attack on EPA's

decision to characterize the respondents to the proposed AOC as de minimis with respect to PCB

contamination.12 The Defendants may be unhappy with EPA's determination, but Congress gave

EPA the sole discretion to make de minimis determinations. 42 U.S.C. § 9622(a) and (g). This

precise issue was addressed in Dravo Corporation v. Zuber Company, 13 F.3d 1222, 1224 (8'h Cir.

1994). In the Dravo case, a party wanted to conduct discovery to determine whether settling

parties had contributed to the contamination of a site in more than a de minimis way as EPA had

concluded. The court, citing Block v. Community Nutrition Inst., 467 U.S. 340, 104 S. Ct. 2450,

81 L.Ed. 2d 270 (1984), held that a non-settling party may not invoke the judicial power to

invalidate a de minimis agreement that is embodied in an administrative order on the ground that

the settling party is not eligible for such an agreement. Specifically, the court held that there is no

right to challenge the validity of a de minimis administrative agreement. The court noted that

CERCLA allows EPA to enter into settlements either judicially or administratively and that

EPA's decision to enter into a settlement pursuant to Section 122 is not subject to judicial

review.13 Id. at 1228. See 42 U.S.C. §9622(a). The court further stated that this conclusion does

party's de minimus status. It is the clear intention of thisCommittee that such settlements should be expedited and thatevery effort be made to reach them at the earliest possible moment.

H. Rpt. 99-253(111) at 31 (1985), reprinted in 1986 U.S.C.C.A.N. 3038, 3054 (emphasis added).

12Contrary to Defendants' assertions, EPA has carefully evaluated the settling parties'potential contribution to the Anniston PCB Site, including the review of information provided bythe Defendants. Of course, as indicated, EPA will also review and consider any new informationsubmitted as part of the public comment process.

13The Defendants' contention that the United States acted outside of CERCLA byproceeding administratively, as opposed to judicially, is a plain misreading of the law. CERCLA

not leave a party without recourse, since they will be provided an opportunity to file written

comments with EPA. Id. at 1228-29. If EPA finds, based upon the comments, that the

agreement is inappropriate, improper, or inadequate, EPA may withdraw or withhold consent to

the proposed AOC.14

In addition, Congress clarified that EPA's de minimis determinations were not subject to

judicial review in enacting new Paragraphs 122(g)(7) - (11) , 42 U.S.C. §9622(g)(7) - ( 1 1 ) , which

were added to the de minimis provisions of CERCLA in 2002.l5 Sections 122(g)(10) and ( 1 1 )

expressly state that if EPA determines that a potentially responsible party is eligible for an

"expedited final settlement" under Paragraph (1), then EPA's determination "shall not be subject

to judicial review."

In the instant matter, despite clear law to the contrary, the Defendants are challenging

EPA's removal action. CERCLA, as the Eleventh Circuit has held, prohibits any such challenges.

C. Neither the PCD Nor the Complaint Lifts the Section 113(h) Jurisdictional Bar

While the statute does provide for pre-enforcement review where EPA has brought an

action under Section 106 or 107 of CERCLA, EPA and the Defendants, along with this Court's

approval, expressly ensured that the action and PCD filed in this case would not l i f t the 1 13(h)

bar. In the PCD, Defendants and the Court agreed that neither the PCD nor the complaint lifts the

expressly authorizes EPA to enter into administrative settlement agreements. See Section

MAs noted by the Defendants in their legal statement of position, Section 308 ofCERCLA also provides them with recourse if they believe they are aggrieved by the AOC.

15 The de minimis provisions of CERCLA are contained in Section 122(g). The "SmallBusiness Liability Relief and Brownfields Revitalization Act", Pub.L. 107-1 18, amendingSection 122(g), was enacted January 1 1, 2002.

10

113(h) jurisdictional bar. Specifically, several paragraphs in the PCD prohibit Defendants from

seeking judicial review of the very response actions called for in the proposed AOC.

Paragraph 43 of the PCD states:

Defendants agree not to assert, and may not maintain in this action or any

subsequent administrative or judicial proceeding for injunctive relief, recovery of

response costs, or other appropriate relief relating to the Site that this Consent

Decree, or the complaint filed with it, grants a court jurisdiction pursuant to 42

U.S.C. § 9613(h) to review any challenges to any removal or remedial action

selected under 42 U.S.C. § 9604, including, but not limited to, the remedy selected

in the ROD, or to review any order issued under 42 U.S.C. § 9606(a).


This Court retains jurisdiction over both the subject matter of this Consent Decree

and the Defendants to effectuate or enforce compliance with its terms. However,

nothing in this Consent Decree, nor the complaint filed with it, shall provide this

Court jurisdiction pursuant to 42 U.S.C. $ 9613(h) to review any challenges to any

removal or remedial action selected under 42 U.S.C. § 9604, including, but not

limited to the remedy selected in the ROD, or to review any order issued under 42

U.S.C. § 9606(a), including, but not limited to, the RI/FS Agreement, the Removal

Order, or the NTC Removal Agreement. (Emphasis added)

Section I.C. of the PCD states:

Nothing in this Consent Decree, the RI/FS Agreement, the Removal

Order, the NTC Removal Agreement, or the complaint filed with

this Consent Decree shall be construed to grant the Defendants or

any other party the right to seek judicial review of the ROD, or any

other response actions taken by EPA at the Site. (Emphasis added)


Subject to the reservations in Paragraph 36, Defendants hereby covenant not to sue

and agree not to assert any claims or causes of action against the United States...

including, but not limited to... b. any claims arising out of response actions at or in

connection with the Site, including any claim under the United States Constitution,

the Alabama Constitution, the Tucker Act, 28 U.S.C. §1491, the Equal Access to

Justice Act, 28 U.S.C. §2412, as amended, or at common law.

Thus, the parties agreed, and this Court approved, provisions which ensured that the pre-

enforcement review bar under CERCLA would not be lifted based upon the PCD or the complaint

filed with it. All of the paragraphs cited above preclude the Defendants from seeking judicial

review of the proposed AOC in this action.

D. The United States Did Not Modify Defendants' Obligations Under the PCDThrough the Definition of the Anniston PCB Site and Anniston Lead Site in theProposed AOC.

As explained above, because the proposed AOC is not subject to judicial review by this

Court, it is not appropriate for the United States to delve into a provision by provision justification

for the terms in the proposed AOC. However, for the Court's benefit, the United States feels

compelled to address the most glaring of Defendants' errors as they relate to the proposed AOC's

impact on the PCD, as discussed in Defendants' Memorandum.

The Defendants are absolutely wrong that by defining the Anniston PCB Site and

12

Anniston Lead Site differently in the proposed AOC from the definitions contained in the PCD

that the United States is "attempting to modify the scope of [Defendants'] responsibilities under

the PCD." Defendants' Memorandum, p. 2. As Defendants acknowledged in their Memorandum,

the PCD definition of the Anniston PCB Site states that it "shall mean, for purposes of this

Consent Decree" and the PCD definition of the Anniston Lead Site states that it "shall mean, for

purposes of this Agreement." Hence, it is indisputable that the definitions of the Anniston PCB

Site and Anniston Lead Site in the PCD apply only to the PCD. In fact, the United States had no

choice but to change the definitions in the proposed AOC. The definition of the Anniston PCB

Site in the PCD states that the Anniston PCB Site "consists of the area where hazardous

substances, including PCBs associated with releases or discharges as a result of the operations,

including waste disposal, of the Anniston plant bvSolutia Inc., Monsanto Company, and their

predecessors have come to be located...." PCD, Sec. IV, FF (Emphasis added). Thus, the

Anniston PCB Site definition in the PCD only covers PCBs and other hazardous substances from

the Defendants' Anniston plant. Likewise, the definitions of the two Sites in the proposed AOC

include the statement "for the purposes of this AOC" and also link the Sites' definitions to the

settling parties' releases. It is illogical to assert, as Defendants do, that EPA could have

negotiated a settlement with other parties requiring them to address only the Defendants'

contamination, rather than their own contamination, which would have been the result had EPA

used the exact same PCB Site definition in both the PCD and the proposed AOC. Regardless, the

definitions of Anniston PCB Site and Anniston Lead Site in the proposed AOC are limited by

their terms only to the proposed AOC, just like the definitions in the PCD are limited to the PCD.

Therefore, the definitions of the two Sites in the proposed AOC have absolutely no impact on the

13

definitions contained in the PCD or the Defendants' obligations under the PCD.

E. The United States Addresses Misstatements in Defendants' Memorandum

The Defendants also identify several differences between the proposed AOC and the PCD

that they assert illustrate some unfairness to the Defendants. These issues are more appropriately

reserved for the public comment period for the proposed AOC. However, because these

comparisons could mislead the Court or the public, the United States briefly addresses them here.

First, Defendants note that EPA is not requiring the settling parties to the proposed AOC

to pay all of EPA's past costs for the Anniston Lead Site, yet the Defendants paid all of EPA's

past costs for the Anniston PCB Site. Defendants incorrectly imply that this is unfair to them.

The settling parties to the proposed AOC represent only some of the many industrial operations

that operated in and around Anniston, yet, under the proposed AOC, they are agreeing to cleanup

lead and PCBs from all of the industrial operations, including the "orphan" parties. EPA has

what is called an "Orphan Share" policy whereby EPA may reduce its total cost recovery claim in

recognition of insolvent and defunct parties.16 The past costs recovered in the proposed AOC

reflect the application of the Orphan Share policy with respect to the Anniston Lead Site and, in

fact, represent a greater recovery of past costs than the policy would allow. The fact that

Defendants agreed to pay all of EPA's past costs for the Anniston PCB Site as defined by the

PCD is only evidence of the fact that the Defendants' l iabil i ty is clear and that their bargaining

position in the PCD negotiations was limited. In fact, on February 22, 2002, only one month

before the PCD was entered into between the Parties, and as a result of Defendants' releases of

'6 EPA's Orphan Share guidance can be found athttp://www.epa.gov/compliance/resources/policies/cleanup/superflind/orphan-share-rpt.pdf

14

PCBs, the Defendants were found liable in the Circuit Court of Etowah County, Alabama, for tort

plaintiffs' claims of wantonness, the tort of outrage, suppression-of-the-truth, negligence, trespass,

nuisance, and public nuisance.

Second, the Defendants suggest unfairness in the fact that while they provided for an

Educational Trust Fund in the PCD, no such monies are provided for in the proposed AOC. As

EPA previously informed the Court during the year long inquiry into the propriety of the PCD,

CERCLA does not expressly provide for such relief. It is unprecedented for the United States to

obtain such relief in a CERCLA settlement. Hence, the only thing unusual here is the fact the

Trust Fund was provided for in the PCD, yet another fact evidencing the Defendants' weak

bargaining position and the dire situation they were facing.

Third, the Defendants assert that there is no "premium" payment by the settling parties to

the proposed AOC and that PCB cleanup under the proposed AOC is only indirect. Both

statements are false and show Defendants' misunderstanding of the facts. It is EPA's position that

the sampling and cleanup work required by the proposed AOC will more than cover the settling

parties' share of responsibility for the Anniston PCB Site, hence, it includes a "premium" in the

form of work, as authorized by the de minimis settlement policy. While EPA could have

negotiated for money instead of cleanup, EPA chose to require the settling parties to perform

work. The settling parties will be contributing to the Anniston PCB Site in several ways; first, by

sampling thousands of properties for both lead and PCBs. Sampling for PCBs is approximately

thirty times more expensive than sampling for lead. Second, the proposed AOC requires the

settling parties to cleanup hundreds, and potentially thousands of residential properties where a

discrete part of a yard has both lead and PCBs above action levels. Third, the proposed AOC

15

requires the settling parties to cleanup potentially thousands of residential properties where a

discrete part of a yard contains only PCBs above action levels.17 Thus, the AOC signatories are

indeed paying a premium.

Fourth, the Defendants maintain that EPA's stated position in the proposed AOC that the

Defendants are PRPs for lead contamination at the Anniston Lead Site was made in an effort to

somehow deliberately thwart the Defendants' CERCLA Section 107 claims against other PRPs.

EPA made it clear to the Defendants well over a year ago that EPA believed they had liability for

the Anniston Lead Site which is why the Defendants were part of the Anniston Lead Site

negotiations in the first place. The United States also expressly stated its position that the

Defendants had l iabil i ty for the Anniston Lead Site in its pleadings filed with this Court in

November 2004. The Defendants conducted a foundry like process at their Anniston plant during

its early operations and used large quantities of lead to manufacture PCBs. The Defendants admit

their potential liability for the Anniston Lead Site in their Memorandum wherein they state at page

6 that "P/S challenges EPA to present technically valid evidence of meaningful releases of lead

from P/S's Anniston Plant." (Emphasis added) The Defendants should be unhappy with the facts,

not EPA's recitation of them. In any event, should the United States elect to pursue the

Defendants for their potential lead liability, the United States will be required to substantiate its

claim under CERCLA. The fact that EPA made a statement in the proposed AOC regarding the

'7Under the PCD, each residential property is subdivided into discrete yards (i.e. front,back, side, etc.) Where only one discrete yard, the front yard for example, contains PCBs aboveaction levels, the Defendants clean up only the front yard even if the other discrete yards havelead above action levels. However, under the proposed AOC, if any discrete yard has lead aboveaction levels, then the settling parties are required to clean up all other discrete yards containingPCBs above action levels, regardless of the presence of lead. EPA has determined this to be asignificant, direct contribution to the Anniston PCB Site.

16

Defendants' potential liability at the Anniston Lead Site is not legally binding on the Defendants

or their contribution action but is an accurate reflection of EPA's finding of fact for the proposed

AOC.

Fifth, Defendants suggest an absurd conspiracy regarding the timing of the AOC by stating

on page 4 of their Memorandum, that "[t]he timing of the AOC is not a coincidence" and

insinuating that the United States is proposing the AOC as part of some scheme to interfere with

the Defendants' discovery process. Defendants know this is untrue because they were involved in

the AOC negotiations as early as the spring of 2004 and continued until they took the unilateral

path of involving this Court in the matter. Defendants are well aware that the proposed AOC was

developed over the course of more than a year of intense negotiations. Their attempt to suggest

that the United States produced the AOC on short order to affect Defendants' discovery schedule

has no basis in fact or rational conjecture. Moreover, it is at odds with the simple fact that they

were informed in November of 2004 that the United States was close to a deal with AOC

signatories. When Defendants left that process they had to have known the United States would

move forward with an AOC. The predictable happened and the timing is no mystery.

Finally, throughout their memorandum, the Defendants repeatedly make negative,

conclusory statements regarding the EPA's technical support for the proposed AOC. For

example, Defendants state: "At no point has the United States made an effort to ascertain what

hazardous substances are historically in foundry waste"; "The United States has consciously

attempted to remain ignorant of settling parties' actual contributions ..." see page 4 of Defendants'

Memorandum ; "the technical data arid evidence do not support the United States assertions (that

Defendants released over 90 million pounds of PCBs") ; seepage 10; and "the United States does

17

not even bother to figure out settling parties proper shares" See page 12. The United States'

response to each of these baseless claims is the same - they are simply untrue. As discussed in the

June 1, 2005, hearing, EPA has developed a record, though not final until the administrative

process is complete, that is comprised of well over 50,000 pages and includes extensive technical

analysis and factual findings supporting EPA's decision to enter into the proposed AOC. At the

conclusion of the administrative process, the record wil l be available to the public.

F. Defendants Admit the PCD Contemplated That the United States Was Planning toPursue Other Parties for PCB and Lead Contamination.

Defendants, on page 5, show that they were well aware that EPA was contemplating

seeking CERCLA relief from other responsible parties. At page 5 of their Memorandum,

Defendants' state that "the definition of the Anniston Lead Site in the PCD recognized that the

other potentially responsible parties' releases oFPCBs and other hazardous substances would be

addressed in the Anniston Lead Site." (Emphasis added) This is a remarkable admission given

Defendants' contrary argument to the Court that when they signed the PCD they believed their

contribution rights were sacrosanct and that EPA had waived its right to pursue other parties. In

this one sentence, Defendants completely undercut their entire position because they admit they

knew that under the PCD the United States was planning to take action against other PRPs for

their liability for PCBs and other hazardous substances. That is exactly what the United States

has done in the proposed AOC. Defendants cannot argue on the one hand that under the terms of

the PCD they fully expected the United States to pursue other parties for PCBs and other

hazardous substances when it addressed the Lead Site, and on the other hand that they never

contemplated that the United States might try to settle with other parties for PCBs and lead in

Anniston, or that they bargained for terms in the PCD that prohibit these obvious possibilities.

18

Additionally, in their Memorandum on page 14, Defendants further undercut their argument by

admitting that "at the time the PCD was entered, the United States and P/S were actually working

together to identify other PRPs on the Anniston Lead Site and the Anniston PCS Site." This

sentence is also absolutely true - the United States had already begun to investigate the liability of

other PRPs for both the Anniston PCB Site and Anniston Lead Site before this Court had even

entered the PCD. Defendants knew this and in i t i a l ly cooperated with EPA. It defies common

sense to suggest that the United States would investigate and even require the Defendants in the

PCD to pay for further investigation of PRPs -if, as Defendants argue, the United States had just

bargained away its rights to pursue other PRPs.ls The answer is clear - the United States never

bargained away its rights and Defendants were always aware of this.

Conclusion

Defendants' opposition to the proposed AOC, based upon their legally incorrect

interpretation of the PCD and CERCLA, has already thwarted the process of getting cleanup

actions contained in the Proposed AOC underway. Defendants at the June 1, 2005, hearing said

that they did not want the public to believe that they were responsible for delaying cleanup in

Anniston. However, that is precisely what has happened. But for the actions taken by the

Defendants in this Court, the process for getting the cleanup called for in the proposed AOC

underway would have already begun.

If the Court concurs with the position advanced by the Defendants, the United States

Isln fact, both of the paragraphs in the attachments to the PCD (Paragraph 4 of the NTCRemoval and page 3 of the SOW for the RI/FS), that Defendants say support their position thatthe United States bargained away its rights, actually make clear reference to the fact that theUnited States always planned to pursue other parties. Moreover, the PCD was signed by theparties well before the Defendants filed any contribution action.

19

respectfully asks that the Court issue an Order prohibiting it from proceeding with the proposed

AOC. The United States further requests that the Court l imit its review of the proposed AOC in

accordance with the binding law of the 1 llh Circuit, CERCLA, and the provisions of the PCD.

Respectful ly submit ted,

Kelly A. JohnsonActing Assistant Attorney GeneralEnvironment & Natural Resources Division

Will iam A. Weinischke, Senior AttorneyEnvironmental Enforcement SectionEnvironmental and Natural Resources

DivisionU.S. Department of JusticeP.O. Box 7611Washington, D.C. 20044-7611(202)514-4592

Alice H. Mar t inUni ted States Attorney

Sharon D. SimmonsAssistant U.S. Attorney

s/ Edward Q. RaglandEDWARD Q. R A G L A N DAssistant United States AttorneyBar Number : ASB-7291-G69EAttorney for Plaintiff1801 Fourth Avenue NortliBirmingham, Alabama 35203Telephone: (205)244-2109Fax: (205)244-2181Email: [email protected]

Of Counsel:Richard Leahy, Mike Stephenson, Valerie Novvel lAssociate Regional CounselU.S. Environmenta l Protection Agency61 Forsyth Street, S.W.Atlanta, Georgia 30303

20


This is to certify that a copy of the foregoing UNITED STATES' REPLY TO

DEFENDANTS' JUNE 15, 2005 MEMORANDUM REGARDING THE EFFECTS OF THE

UNITED STATES' PROPOSED ADMINISTRATIVE ORDER ON CONSENT ("AOC") ON

THIS COURT'S PARTIAL CONSENT DECREE ("PCD") has been served upon the fo l lowing

counsel, by mail ing the same by first class United States mai l , properly addressed and postage

prepaid, on this the 29th of June, 2005:


Special Master (also served my email)Thomas DahlDahl Envi ronmenta l2930 Simms DriveLakewood, Colorado 80215todahl@comcast .net

Cathleen S. BumbAssistant General CounselEnvi ronmenta l

Solutia, Inc.575 Maryv i l l e DriveSt. Louis, Missouri 63 141

Wil l iam Cox, 111The Clark B u i l d i n g400 S. 20lh StreetBi rmingham, Alabama 35203-3200

David F. SnivelyDeputy General CounselMonsanto Company800 North Lindbergh Blvd.St. Louis, Missouri 63 167

21

A l l a n J. TopolCovington & B u r l i n g1201 Pennsylvania Avenue, N.W.Washington, D.C. 20044-7566 •

Mark White2025 3 rd Avenue Nor thBirmingham, Alabama 35203

Wil l i am J. BaxleyJoe E. Dillard2008 Third Avenue SouthBi rmingham, Alabama 35233




Andrew R. R u n n i n gK i r k l a n d & El l i s LLP200 East Randolph DriveChicago, I l l i no i s 60601

George T. Frampton, Jr.Boies, Schi l ler & Flexner LLP570 Lexington Ave.16th FloorNew York, New York 10022


s/ Edward Q. RaglandEDWARD Q. RAGLANDAssistant United States AttorneyBar Number: ASB-7291-G69EAttorney for P la in t i f fEmail : [email protected]

EXHIBIT 10

10302179

FILED2005 Aug-05 PM 03:25U.S. DISTRICT COURT

N.D. OF ALABAMA



Plaintiff,

v .


Defendants .


UNITED STATES' RESPONSE TO DEFENDANTS' MOTION FOR JUDICIAL REVIEWOF THE DECISION OF THE DIRECTOR OF THE WASTE MANAGEMENT DIVISION.EPA REGION 4 PURSUANT TO THE DISPUTE RESOLUTION PROVISIONS OF THE

PARTIAL CONSENT DECREE

I. Introduction

On July 29, 2005, the Defendants filed a Motion for Judicial

Review of the Decision of EPA Region 4's Director of the Waste

Management Division on the issue o'f whether, under the Partial

Consent Decree ("PCD"), EPA relinquished its rights to settle

with other parties to obtain additional cleanup in Anniston.

Under the Dispute Resolution provisions of the PCD, the United

States is allowed to submit a response to the Defendants' request

for judicial review. This is the United States' Response.

II. DISCUSSION

The Division Director's July 11, 2005 decision adopted the

positions asserted by the United States in the pleadings and

memoranda filed with the Court. In addition, the Division

Director's decision letter stated "I can unequivocally state that

EPA would not have agreed to sign the Partial Consent Decree if

EPA was abrogating its ability to pursue and settle with other

responsible parties and to obtain additional cleanup work in

Anniston. The clear language of the PCD and the CERCLA statute

fully support this conclusion."

In their July 29, 2005 Motion, the Defendants maintain that

this Court's June 30, 2005 Order resolved the issue in dispute

and that they are not seeking any "further relief at this time."

The United States is unclear whether the June 30, 2005 Order

decided the issue that, the Defendants placed in dispute on

November 17, 2004.a Although the Division Director opined that

he believed the June 30, 2005 Order decided the issue, after the

June 30, 2005 Order was issued, the United States was directed by

the Court, through the Special Master, to submit the Division

'The United States respectfully points out that the issuethat was placed in dispute was whether, under the Partial ConsentDecree, EPA was prohibited from settling with other parties. Infact, the Defendants asked the Court in their May 9, 2005 Motionto "Enjoin the Government from entering into any agreement thatwould affect P/S's contribution rights." As to the issue ofwhether the Defendants could pursue their contribution claims,the United States has consistently agreed that the Defendants hadcertain statutory contribution rights, but they are limited byterms in the PCD and provisions of CERCLA and that theappropriate forum for addressing those matters is the pendingcontribution action before Judge Greene. See the United States'Motion to Strike (November 17, 2005) Letter, and pages 10 and 35of the Transcript from the June 1, 2005 hearing.

Director's decision on the disputed issue in accordance with the

Dispute Resolution process. Therefore, in accordance with the

direction from the Court to submit the Division Director's

decision and out of an abundance of caution, the United States

submits this response to the Defendants' Motion to complete the

dispute resolution process.

The United States continues to believe that the PCD, CERCLA,

case law and legislative history clearly permit EPA to settle

with other parties even if such settlement may impair a previous

settlors' contribution action. The United States recognizes that

the Court appears to have rejected the United States' arguments.

Nevertheless, the United States reiterates that Paragraph 32 of

the PCD states that "Notwithstanding any other provision of this

Consent Decree, the RI/FS Agreement, the NTC Removal Agreement,

and/or the Removal Order, the United States retains all authority

and reserves all rights to take any and all response actions

authorized by law." The administrative settlement that EPA

negotiated with other PRPs under Section 122 of CERCLA is a

response action; therefore, the United States submits that

Paragraph 32 is dispositive of the dispute before the Court.

In view of the PCD, the legislative history, CERCLA, and all

of the cases to address the issue in dispute, the United States

respectfully requests that the Court issue a final order

recognizing the United States' rights to settle with other

parties, even if such settlement extinguishes a previous

settlor's contribution rights, and that the Court modify or

vacate all prior orders to the contrary. Specifically, the

United States requests that the Court modify its June 30, 2005

Order which stated that the United States repudiated the PCD, and

which allows the Defendants to move to suspend their obligations

under the PCD. The United States, as explained in detail in its

Notice of Compliance and Status Report, submits that it has fully

complied with the PCD and, therefore, has not, repudiated the

PCD. The United States also specifically urges the Court, in the

interest of ensuring that work proceeds so as to protect public

health and the environment, to vacate its open invitation to the

Defendants to file a motion seeking to have their obligations

under the PCD suspended. In the alternative, the United States

asks that the Court set a deadline of forty-five days for the

Defendants to move the Court to suspend their obligations under

the PCD.2


KELLY A. JOHNSONActing Assistant Attorney General

2The Defendants have been informed that the administrativesettlement process is going forward. The agreement was approvedand signed by the Acting Assistant Attorney General on July 25,2005. In the near future, notice of the agreement will bepublished in the Federal Register and the agreement, which theDefendants have had for well over a month, will be put out forpublic comment. The Agreement will not become effective untilthe public comment period has concluded.

Environment & Natural Resources Division

ALICE H. MARTINUNITED STATES ATTORNEY

S/Sharon D. SimmonsAssistant U.S. Attorney# 2 0 8 21801 4 c h A v e . N .Birmingham, AL 35203205-244-2140205-244-2181 fax




This is to certify that a copy of the foregoing United

States' Response to Defendants' Motion for Judicial Review of the

Decision of the Director of the Waste Management Division, EPA

Region 4 has been served upon the following counsel, by mailing

the same by first class United States mail, properly addressed

and postage prepaid, on this the 5th day of August 2005:



Cathleen S. BumbAssistant General CounselEnvironmentalSolutia, Inc.575 Maryville DriveSt. Louis, Missouri 63141

William Cox, IIIThe Clark Building400 S. 20 t h StreetBirmingham, Alabama 35203-3200





Kimberly B. GlassMorris AvenueBirmingham, Alabama 35203





s/ Sharon D.SimmonsAssistant United States AttorneyOffice of the United States AttorneyNorthern District of Alabama

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