Filed with the court 2/21/2012 is our motion in opposition of the DEQ entry of a consent judgment regarding Frontier Leather and Ken Foster Farms in Sherwood, OR
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Intervenor Opposition to DEQ motion for Entry of Consent Judgment
1. 2 Judge Donald R. Letourneau
3
4
5
6
7 IN THE CIRCU IT COURT FOR TH E STATE OF OREGON
8 FOR THE COUNTY OF WASHINGTON
9 PACIFIC III , LLC, an Oregon limited Case No. C I1 5 183CV
liability company,
10
Intervenor, INTERVENOR PACIFIC III, LLC'S
II RESPONSE IN OPPOSITION TO
v.
PLAINTIFF'S MOTION FOR ENTRY OF
12
STATE OF OREGON, ex reI. DICK CONSENT JUDGM ENT
13 PEDERSEN , DIRECTOR, DEPARTMENT
OF ENV IRONMENTAL QUALI TY,
14
Plaintiffs,
15
v.
16
CRAlG E. BOWEN, PAMELA A.
17 BOWEN, MICHAEL C. GIBBONS,
PATRICK D. HUSKE, IRON WOOD
18 HOMES, INC., LINKE ENTERPRI SES OF
OREGON, INC., tka FRONTI ER
19
LEATHER COMPANY, DONALD W.
20 NELSON, WELLS FARGO BANK, N.A.
and JAMES M. WIL SON,
21
Defendants.
22
23 I. INTRODUCTION
24 Intervenor Pacific III , LLC ("Pacific IJI") responds in opposition to Plaintiff State of
25 Oregon's ("D EQ") Mot ion for Ent ry of Consent Judgment in a continuing effort to protect
26
Page I - INTEVENOR PACIFIC 111, LLC'S RESPONSE IN OPPOSITION TO PLAINTIFF 'S
MOTION FOR ENTRY OF CONSENT JUDGMENT
SU N f}E NnSON STA NFOHI> U .C
III SW 51h Avellue. Suite 1740
]'onland. OKgon 9720-1
p. 503.4 17.7777: f. 503.417.4250
2. Pacific Ill 's contribution claims and rights to recover the over $ 1,200,000 in remedial action
2 costs incurred by Pacific III as a result of Pacific III partnering w ith the DEQ and cleaning up
3 land contaminated by polluter defendants Linke Enterpri ses of Oregon, Inc. ("Linke"), Donald
4 W. Nelson ("Nelson"), Well s Fargo Bank, N.A. , ("Well s Fargo"), and James M. W ilson
5 ("Wilson").
6 Pacific Ill 's claims and ri ghts are the subject of a pending lawsuit fil ed by Pacific III
7 against Linke, Nelson, Wells Fargo and Wi lson to recover the remedial action costs Pacific III
8 incurred voluntaril y cleani ng up a portion of the old Frontier Leather Tannery Site ("Tannery
9 Site"). J The DEQ (Pac ifi c lII 's fo rmer cleanup partner) and the polluter defendants, however,
10 are unjustly and purpose fully seeking to destroy Pacific III 's claims and rights through an overly
11 broad proposed Consent Judgment- relating to the Tannery Site and the Ken Foster Farms Site
12 ("KFF Site,,)2- so that the DEQ can receive a fina ncial windfall (to use cntire ly within its own
13 discretion) in exchange for the polluter defcndants escaping liability to Pacific III lVilholll
14 reimbursing Pacifi c III the costs (or even a fraction of the costs) it incurred cleaning up their
15 mess at Tannery Site.
16 As set forth below, the proposed Consent Judgment should be rejected because it is
17 unreasonable, procedurally and substantially unfair, an unmitigated sacrifice of Pacific III 's
18 interests and contrary to the public interest in light of the particular and unique circumstances of
19 this case and the related actions of parties involved herein .
20 II. EVID ENCE RELIED UPON
21 In support of this Response in Opposition brief, Pacific III re li es on its briefing and
22
23
I See, Pacific /11, LLC 1'. Wells Fargo. el al. , Washington County Circuit Court Case No. Cl 1203 1CY.
24 2 See DEQ 's Complaint in this action ("Com plaint). See also July I, 20 11 proposed Consent Judgment (a
copy of which is attached as Exhi bit A to Declarat ion of Bruce Gilles in Support of Plaintiff's Moti on for
25 Entry of Consent Judgment, ("G illes Declaration"). The KFF site is locatcd approximately one-half mile
from the Tannery Site, both of which are situatcd in Sherwood, Oregon.
26
Page 2 - INTEVENOR PACIFIC Ill, LLC ' S RESPONSE IN OPPOSITION TO PLAINTIFF'S
MOTION FOR ENTRY OF CONSENT JUDGMENT
S!.INm : NELSON ST ""'fORD !.I.e
J J J SW 51h Avenue. Suite 1740
POr1Jand. Oregon 97204
p. 503.4 J 7.7777: f. 503.4 J 7.4250
3. affidavits of John Patrick Lucas ("Lucas Affidavit Re: Molion to Intervene") and Christopher M.
2 Veley ("Veley Affidavit Re: Motion to Intervene") previously submitted to the Court in support
3 of its Motion to Intervene and Motion to Allow Discovery; Pacific Ill 's briefing and supporting
4 affidavits/declarations prev iously submitted in support of Pacific Ill 's Motion to All ow
5 Di scovery; Plaintiffs Complaint filed in this action; PlaintifF s prev iously fil ed Motion fo r Entry
6 of Consent Judgment ; the Administrative Record compi led by Plaintiff for the proposed Consent
7 Judgment ; the Declaration of Bruce Gill es submitted by Pl aintiff in support of its Motion for
8 Entry of Consent; the Second Declarati on of Bruce Gilles submitted in support of Plaintiff s
9 Motion for Entry of Consent Judgment; the originaJly proposed March 9, 2011 Consent
10 Judgment; the current ly proposed July 1, 20 11 Consent Judgment ; Pl aintiff DEQ 's Response to
II Interrogatory, dated January 18,20 12 (on fil e with Court); the February 2 1, 2012 declaration of
12 Christopher M. Ve ley subm itted in support of thi s response brief("Yeley Declaration"); all other
13 records and papers on fil e with the Court for thi s action ; Pacifi c Ill 's Compla int filed in Pacific
14 II/, LLC v. Wells Fargo, el a/., Washington County Circui t Court Case No. CI l 203 1CV; and the
15 points and authorities set-forth below.
16 III.POI NTS AND AUTHORITIES
17 A. Rclcvant Factual and Procedural Background
18 To properl y understand the unique facts and circumstances warranting the deni al of the
19 DEQ ' s Motion for Entry of Consent Jud gment, a detai led chronological iteration of the same is
20 warranted.
21 1. Pacific III and the DEQ Partnered Together to Cleanup a Specific
Portion of the Old Frontier Leather Tannery Site ])olluted by Wells
22
Fargo, Linke, Nelson , and Wilson
23
The Tannery Site is located at or about 15 104 SW Oregon Street (formerly 12 10 NE
24
25
26
Page 3 - INTEVENOR PAC IFI C III, LLC'S RESPONSE IN OPPOS ITION T O PLAINT IFF'S
MOTION FOR ENTRY OF CONSENT JUDGMENT
S U NDt: N .: I-SON" STANFOR I> U .C
111 SW 5th A'C1Juc, Suile 1740
I'onland, Oregon 97204
p. 503.4 17.7777: f. 503.417.4250
4. Oregon Street) in Sherwood, Washington County, Oregon.) The entire Tannery Site, includes
2 Tax Lots 500, 600, 602 (fonnerl y Tax Lot 503), 900, 1000, and 1100 in Section 29, and Tax Lot
3 400 in Section 28, in Township 2 South, Range I West of the Willamette Meridian, in the
4
4 southeast quarter of Section 29 and the southwest quarter of Section 28. The Tannery Site was
5 formerl y owned and operated by Linke and Wells Fargo. 5 In addition to Linke, de fendants Well s
6 Fargo, Wilson and Nelson also exercised control over the operations at the Tannery Site,
7 including operations pertaining to the di sposal of hazardous substances at the Tannery Site.6
8 Linke no lo nger owns any property located within the Tannery Site except for Tax Lot 600,7
9 because of a Trust set up by Well s Fargo.
10 It is undi sputed that hazardous substances and material s generated fro m the Tannery Site
11 were deposited and released on the Western HalJand on the Easlern HalJof the Tannery Sitc.8 It
12 is further all eged that hazardous substances from the Tannery Site were also transported and
13 deposited on portions of the KFF Site, including portions subsequently owned by defendant
14
15
J See Complaint. See also July 1,20 11 proposed Consent Judgment, Exhibit A to the Gi lles Declarat ion;
16 See also Affidavit of John Patrick Lucas, dated October 11 , 20 11, previously fil ed in support of Paci fi c
Il l's Motion to [ntervene and/or for Joi nder and Motion for Consolidation of Actions (" Lucas Affidavit
17 Re: Motion to Intervene") (a courtcsy copy of which is provided to the part ies and the judge in support of
th is response brief).
18 4 See July 1, 2011 proposed Consent Judgment, Exhibit A to the Gilles Declaration. See Lucas Affidavit
Re: Motion to Intervene. See also generally the Comp laint. As discussed ill/ra, Pac ific 111 perfonned
19 cleanup acti vities, pursuant to a Prospective Purchaser Agreement with DEQ, on Tax Lots 500, 900,
1000, and 1100. Tax Lots 900, 1000, 1100 were fonnerly known as Tax Lot 400 of Sect ion 29,
20 Township 2 South, Range I West of the Wi llamette Meridian, before being subdi vided into the
aforementioned three parcel s by Pacific Ill. See also Lucas Affidavit Re: Motion to Intervene.
21
~ See Comp la int, and July 1, 201 1 proposed Consent Judgment (Exhi bit A to the Gi lles Declaration).
22 6 1d.
23 7Thi s is undisputed but see also July I, 20 I I proposed Consent Judgment, Exhibit A to Gilles
Declaration.
24 S See July 1, 20 11 proposed Consent Judgment, Exhibit A to Gilles Declaration. Wh ile defendants Linke,
Nelson , Wells Fargo, and Wilson deny these allegations, they are never the less willing to pay large slims
of money to the DEQ (but not to Pac ific III) to resolve these allegations-and all re lated past and future
liability- without having to face these issues head on at a tria l, includin g Pacifi c lII 's pending lawsu it.
26
Page 4 - INTEVENOR PACIFIC Ill , LLC' S RESPONSE IN OPPOSITION TO PLAINTIFF'S
MOTION FOR ENTRY OF CONSENT JUDGMENT
SUNm: NELSO.... STANI'OH[) [,L C
III SW 5lhAvcnu c. Suile ]740
Port]lll1d, Oregon 97204
p. 50).417,7777; f. 503.417.4250
5. 9
Patrick D. Huske and his business, Ironwood Homes. lnc.
2 In 2002, Pacific III partnered with DEQ to clean up a port ion of the Tannery Site, and in
3 so doing, Pacific III entered into a Prospective Purchaser Agreement ("PPA") in conjunction
4 with Paci fi c JII ' s purchase of the "Western Hair' of the Tannery Site (i.e., Tax Lots 500, 900,
5 1000 and 1100 only) and subsequent cleanup of those parcels.
lo III e:(challge for reserving all
6 rights ami causes of actioll to recover Pacific II/'s cleanup costs (including Pacific 11I 's
7 contribution claims) and for a release from liability to the DEQ (upon total completion of the
8 remedial action/cleanup), Pacific II/ executed the PPA, purchased the Western Half of the
9 Tannery Site, and then incllrred over SJ,200,OOO ill ellvironmentlll remedilll actioll costs
10 cleaning lip Ihe JIIeslem Ha/ffrom 2002 until 2008. 11 Pacific III never owned or cleaned up
11 Tax Lots 600, 602 , or 400 of the Tannery Site, otherwise known as the Easlern Half of the
12 Tannery Site.
13 It is undi sputed that Pacific Ill 's cleanup work included , but was not limited to, Pacific
14 III successfu lly removing extensive lead contaminated so il left from over 300,000 buried car
15 batteries that had burnt in a fire decades ago, thousands of tons of buried Chromium laced leather
16 hide splits, arseni c soil s, contaminated wells, asbestos, and an extensive cleanup of a previously
17 unknown buried rai lcar filled with highly hazardous oils and so lvents. 12 An April 3, 2008 "No
18
19 9 1d.
20 10 Lucas Affidavit Re: Motion to Intervene. See Exhibit A to the Lucas Aflidav il Re: Motion to
Interve ne. See a/so, Adm in istrati ve Record, No. 18 (Prospecti ve Purchaser Agreement DEQ No 02·0 I
21 between DEQ and Pac ific III), a copy of which is attached as Exhi bit A to the Lucas Affidavi t Re Motion
to Intervene. For reasons unknown, the DEQ has not provided the Court with a copy of the
22 Administrative Record.
II Id.
12 Lucas Affidav it Re: Motion to Intervene. See a/so, Admi nistrative Record , No. 54 (Frontier
24 Leather/Ken Foster Sites - Proposed Sett lement Agreement Public Meeting (Power Point Presentat ion»
and No. 6S (Front ier Leather/Ken Foster Sites - Proposed Settlement Agreement Public Meeting (Power
25 Point Presentation» , copies of whieh are attached as Exhi bits A and B to the Veley Declaration (The
Ve ley Declaration supplements the Veley Affidavit Re : Motion to Intervene - both are relied upon by
26 Pacific In in support of its opposition to entry of the proposed consent judgment). The DEQ itself
Page 5 - INTEVENOR PAC IFIC III , LLC ' S RESPONSE IN OPPOSITION TO PLAINTIFF 'S
MOTION FOR ENTRY OF CONSENT JUDGMENT
SUN"': Nt:LSON STANFORI) [,I.e
III SW 5th Avenue. Suite 1740
Ponland. Oregon 97204
p. 503.417.7777; f. 503.417.4250
6. Further Action Lener" from the DEQ to Pacific III confinned that Pacific III completed the
2 required cleanup work. 13
3 No further cleanup work is necessary for the Wes tern Half of the Tannery site (although
4 use conditions and restrictions remain in place). In fact, the DEQ has already admitted that "[a]1
5 the time the DEQ approved the Consent Judgment, it was not aware of any need for further
6 remediation on the Western Property" (aka the Western Halj). 14
7 2. Defendant Patrick Hu ske, Ironwood Homes, and the DEQ Partnered
Toget her to Clean Up a Portion of th e Ken Foster Farms Site Polluted by
8 W ell s Fargo, Linke, Nelson and Wilson
9
It is undisputed , or at least alleged by the DEQ, Huske and Ironwood Homes, that
10
hazardous substances from the Tannery Site were transported and deposited on portions of the
II
KFF Site by defendants Wells Fargo, Linke, Nelson and Wilson, including portions subsequent ly
12
owned by defendant Patrick D. Huske and hi s business, Ironwood Homes, Inc. 15 It is also
13
undisputed that in 2007, Ironwood Homes entered into a Voluntary Agreement with the DEQ fo r
14
15
16 ackn owlcd gcs that Paci fi c IIJ complclcd clca nup which includ ed: (J ) Rcm o,'al of 4,300 Ions of Icnd
a nd arscnic conta mina ted soil from fo r me r ba ttery plant a rea; (2) RCmO d of 2,200 Ions of a nimal
'1
17 hides; a nd (3) Removal of 175 tons of conta mina ted soil llssocia ted w ith underground storage ta nks
at the s ite. See Exhi bits A and B to Veley Declarat ion.
18 IJ ld. ; See also April 3, 2008 "No Further Action Lener" from DEQ to Plaintiff, attached as Exhibit C to
the Lucas Affidav it Re: Motion to Intervene . See also, Administrative Record, No. 26 (No Further
19 Action Determ inat ion Tax Lot 500, Fonner Frontier Leather Site, Sherwood, Oregon, ECSI # 116), No. 28
(No Further Acton Determi nation Lots I and 2, Tax Lot 400. Former Front ier Leather Site, Sherwood,
20 Oregon ECS J # 116), and No. 34 (Conditional No Further Action Dctenni nat ion. Fonner Fronticr Leather
Site, Tax Lot 1100, 15 104 SW Oregon Strect, Sherwood, Oregon, ECS I #116) (Confinni ng issuance of
21 NFAs for Tax Lots 500, 900, 1000 and 1100 - i.e. the Western Haifoft he Tan nery S ite).
14 See DEQ Response to Interrogatory, page 6, lines 10·1 2, attached as Exhibit C to the Veley
22
Declaration.
23 IS See original March 9, 2011 proposed Consent Judgment, attached as Exhi bit B to the Lucas Affidavit
Re: Motion to Intervene; See July 1,201 1 proposed Consent Judgment. See generally, Admin istrative
24 Record; See a/so, Administrative Record, No. 52 (Written Comments by ECO LLC to the Oregon State
Senator Larry George and Representative Matt Wingard, dated March 22, 201 1, and to the DEQ, dated
25 March 22, 20 11), anached respectively as Exhibits D and E to the Veley Declaration. See also Exhibits A
and B to Veley Declaration.
26
Page 6 - INTEVENOR PACIFIC 111, LLC'S RESPONSE IN OPPOSITION TO PLAINTIFF' S
MOTION FOR ENTRY OF CONSENT JUDGMENT
SUN I" : N.:t.50N STAM 'ORI) t t e
111 SW Slh Avenue , Suile 1740
Ponland. ~gon 97204
p. 503.417.7777: f. 503.417.4250
7. the completion of interim removal actions and remedial investigati on on Huske' s property at the
16
2 KFF site relating to the some o f the aforement ioned hazardous substances.
3 It is further undisputed, or at least alleged by Huske/lronwood Homes, that
4 Huskellronwood Homes incurred over $400,000 to clean up port ions of the KFF Site
17
5 contaminated by defendants Well s Fargo, Linke, Ne lson and Wilson. Ironwood Homes
18
6 received its No Further Action letters in 2008 and 2009. Huske and Ironwood Homes
7 thereafter fil ed suit against Well s Fargo, Linke, Nelson and Wi lson (along wi th a number of
8 other parti es), in part to recover their cl eanup costs, 19 just as Paci fic III is doi ng now.
9 3. The DEQ, Linke and Nelson Conspired to Destroy the Environmental
Claims by I)arties Who Voluntarily C leaned Up Portions of the Tannery
10 Site and KFF Site, Includin g Claims by Pacific lIl, Ironwood Homes and
II Huske, through the Original March 9, 2011 Proposed Consent Judgment
12 After Paci fic III cleaned up the Western Half of the Tannery Site, and after
13 I-Iuskellronwood Homes cleaned up its portion of the KFF Site, the DEQ in concert and co llusion
14 with polluter defendants Linke and Nelson, ami 10 Ihe complele exclusion alUl surprise of
15 Pacific III ami HlIskelIromvood Homes ,20 took action by proposing a consent judgment on
16 March 9, 201 1 relat ing to the entire Tannery Site (including the West ern Half that Pacific III
17 spent over $ 1,200,000 cleani ng up, and not simpl y the contam inated Eastern Half of the
18
19
20
16 For reasons unknown, the DEQ did not include the Voluntary Agreement in the Adm inistrative Record.
21 Said Voluntary Agreement is referenced, however, in Administrative Record, No. 43 and 48 (No Further
Action letters to Ironwood).
22 17 See Exhibits D and E to Veley Declaration. In fa ct, the DEQ itse lf acknowledges that Ironwood Homes
completed contaminated soi l removal at 4 tax lots (-5,500 cubic yards), with the soil being stored in two
23 Engineered Contaminant Cells (ESCs) at the KFF site, covered with clean so il and grass to control
erosion. See Exhibits A and B to the Veley Declaration.
24
IS See, Admini strative Record, No. 43 and 48 .
25 19 Ironwood Homes. el at. v. Wells Fargo. el al., United States Di strict Court, Districl of Oregon, Case
No. C8-0098-BR.
26
Page 7 - IN T EVENOR PAC IFI C III , LLC'S RES PONSE IN OPPOSITION TO PLAINT IFF'S
MOTION FOR ENTRY OF CONSENT JUDGMENT
SU Nm ; NEI.SON STANFORD LLC
111 SW 5th A" CnllC. S uitt 1740
l'<Inland, Oreson 97204
p. 50lA I7.7777; f. 503.417.4250
8. Tannery),21 and the KFF Site (including the portion of the KFF site that Huske/ lronwood spent
2 over $400,000 cleaning Up).22 The end effect of the origi nally proposed consent judgment would
3 be to bar claims for contribution against Linke and Nelson by panies who incurred costs cleani ng
4 up the contaminated property, i. e. Pacific III and HuskclIronwood Homes. 23
5 In exchange for payment of $600,000 fro m Linke and Nelson, the DEQ offered to
6 absolve Linke and Nelson of any and all li ability relating to the entire Tannery Site, including
7 th e Western Half Pacific III spent over $1,200,000 cleaning up, and the entire KFF S ite,
8 including tile porlioll of th e KFF Site Ironwood Homes spent over $400,000 cleaning Up.24 By
9 doing so, th e DEQ was effecti vely placing itsel f and its interests, along with Linke and Nelson,
10 ahead of Pacifi c II I and Huskellronwood Homes without any remuneration whatsoever to Pacific
II III o r Huske/lronwood Home for the past cleanup work they voluntarily performed. The DEQ' s
12 only excuse or rationale for doing this was that it needed to preserve what was left of Linke's and
13 Nelson's assets for the bene fit of the State of Oregon (as if the voluntary cleanup by Pacific III
14
15
Pacific II] (a nd presumably Huskellronwood Homes) was never includ ed, invited , or allowed to
l()
16 participate in the settlement negotiations between the DEQ, Linke a nd Nelso n, nor was Pacific In
eve r notified that said negotiations were taking place. See Lucas Afiidavit Re: Motion to Intervene
17
21 Lucas Affidavi t Re: Motion to Intervene; See origina l March 9, 2011 proposed Consent Judgment
18 attached as Exhibit B to the Lucas Affidavit Re: Motion to Intervene. For reasons unknown, the DEQ
did not include the original March 9, 201 I proposed Consent Judgment in the Adm inistrati ve Record.
19 Similarly, the current July I, 20 11 proposed consent judgment is not spec ifically listed on the Amended
Ad ministrative Index, nor were the March 9, 2011 or July 1, 2011 proposed consent judgments included
20 in the copy of the Admini strative Record produced to Pacific III counse l by the DEQ.
22See origina l March 9, 20 II proposed Consent Judgment, EXhibit B to the Lucas Affidavit Re: Motion
21 to Intervene. See also Exhi bits D and E to the Veley Declaration .
23 See ORS 465.325(6)(b) (" A person who has resolved its liability to the state in an ad mini strati ve or
22
judicially approved settlement shall not be liable for claims for contribution regarding matters addressed
23 in the settlement. Such settlement does not discharge any of the other potentia lly liable persons unless its
tenns so provide, but it reduces the potentia l liabi lity of the others by the amount of the settlement.")
24 (emphasis added); See also ori ginal March 9, 20 11 proposed Consent Judgment, Exhibit B to the Lucas
Affidav it
25 24 See origi nal March 9, 20 II proposed Consent Judgment, Exhibit B to the Lucas Affidavit Re: Motion
to Intervene .
26
Page 8 . INTEVENOR PAC IFIC Ill, LLC' S RESPONSE IN OPPOSITION TO PLAINT IFF' S
MOTION FOR ENTRY OF CONSENT JUDGMENT
S U '' 'DI:: NELSON STAN"~'OR I) U .C
111 SW 5th A' "l:lluc. S uil e 1740
I'orl lllnd, Oregon 97204
p. 503 .'1 J 7.7777: f. 503.'117.4250
9. and Huskellronwood was not already a benefit to the State)?5
2 Of the $600,000 [he DEQ was [0 cOllec[, i[ further alleged over $393,000 in remedial
3 action costs itself at the Tannery Site and the KFF Site (less than what both Pacific III and
4 Huskellronwood Homes individually incurred),26 leaving just over $200,000 for further cleanup
5 and administrative costs, after the DEQ reimbursed itself. However, the originally proposed
6 consent j udgment Gust li ke the currently proposed consent judgment) provided the DEQ with
7 sole discretion as to the use of the fund s, and as to the nature and extent of any remedial action, if
8 any, it chose to perform on the Eastern Haljofthe Tannery Site and the KFF Site. According to
9 Section 3.0. of the origi nal March 9, 20 11 proposed Consent Judgment:
10 All moneys in the Account27, including interest earned on the
Account shall be used by the DEQ as it deem s appropriate for
II perfonning or payin g for investigation, removal, or remedial
12 actions at the Facility, paying DEQ ' s oversight costs incurred in
connection with such actions, paying DEQ's costs of
13 administrating the Account, and reimbursing outstand ing DEQ
remedial action costs at the Facil ity. Any remaining funds in the
14
Account after implementation of remed ial action at the Facility
15 may be used by the DEQ in its sole discretion. 23
16 The on ly parties that seemingly would have benefited from the originall y proposed Consent
17 Judgment were the DEQ, Linke and Nelson, all to the unmitigated sacrifice of the interests of
18
19
20 2S Notw ithstanding the unfa irness of the DEQ's act ions, it has never produced evidence regarding the
assets of Linke or Nelson, nor the verified, absolute extent of available insurance covering the acts of
21 Linke and Ne lson (and which wou ld be available for cleanup or reimbursing Pacific III or
Huskellronwood Homes the remedial action cost those parties incurred cleani ng up the mess on the
22 Western Half of the Tannery Site and the Huske/lronwood Homes portion of the KFF Site). The
Administrative Record is completely devoid of this information.
23
26See original March 9, 2011 proposed Consent Judgment, Exhibit B to the Lucas Affidavit Re: Motion
24 to Intervene.
27 The "Account" wou ld be a site-specific account within the Hazardous Substances Remedial Action
25 Fund, dedicated to use at the DEQ's sole discretion to fund investigation, removal, or remedial actions at
the Tannery and KFF Sites.
26
Page 9 - INTEVENOR PACIFIC III , LLC' S RESPONSE IN OPPOSITION TO PLAINTIFF ' S
MOTION FOR ENTRY OF CONSENT JUDGMENT
SLlNm: NEI.SON STA NFORD LI .C
II] SW 5th Avenue, Suite 1740
Pon hmd. Oregon 97204
p. 503.417.7777: f. 50).417.4 250
10. Pacific III and HuskelIronwood Homes in favor of an alleged " public interest" (as if the
2 vol untary cleanup by Pacifi c III and Huskell ronwood was not already a benefit to the State).
3 4. Pacific III and HuskefIronwood Homes Object to the Original March 9,
2011 Proposed Consent Judgment On Grounds it Bars Their Claims
4 Against Linke and Nelson, The DEQ Ignores Pacific Ill's Objections, :md
5 Pacific HI Files Suit Against the Polluter Defendants
6 In April , 201 1, Paci fi c III immediately objected upon first learnin g of the DEQ 's and
29
7 defendants' settlement scheme and proposed consent judgment. Until then, however, Pacific
8 III had no idea of the DEQ's intent to destroy Pacifi c Ill 's contribution claims (the same claims
9 Pacific III expressly reserved in its Prospective Purchaser Agreement with the DEQ).
10 Specifically, Pacific lII 's counsel contacted the DEQ and then fonnall y obj ected in writing to the
II DEQ with respect to the original March 9, 20 11 proposed consent judgment. Pacifi c III objected
12 because it would have barred Pacific Ill 's contribution claims by the DEQ purposefu ll y (and in
13 an abuse of discretion) including the Western Half of the Tannery Site and the remedial action
14 perfonned by Pacific III in the mailers addressed portion of the Consent Judgment, and not
IS simply the contaminated Eastern Halfand the KFF site. 3o
16 Pacific Ill 's objections, however, fell on deaf ears. 3l Huskellronwood Homes also
17 objected,32 but unfortunately, the ali gned interests of Pacific 1II and Huske/ lronwood Homes
18 were severed thereafter when the DEQ and Huskell ronwood Homes, along with polluter
19
20
28See original March 9, 20 11 proposed Consent Judgment, Exhibit B to the Lucas Affidavit Re: Motion
21 to Intervene.
29 See Lucas Affidavit Re: Motion to Intervene; See Veley Affidavit Re: Motion to Intervene and Exhibit
22 C attached thereto.
23 30 Veley Affidavit Re: Motion to Intervene. Lucas Affidavi t Re: Motion to Intervene. See ORS
46S.32S(6Xb) ("A person who has resolved its liabi lity to the state in an admin istrative or judicia lly
24 approved settlement shall not be liable for claims for contribution regarding matters addressed in the
set1lement. Such settlement does not discharge any of the other potentially liable persons unless its terms
25 so prov ide, but it reduces the potential liability of the others by the amount of the sen le rnent.")
3L Ve ley Affidavit Rc: Motion to Intervene. Lucas Affidavit Re: Motion to Intervene.
26
Page 10 - IN T EVEN OR PACIFI C III , LLC ' S RESPONSE IN OPPOSITION TO PLAINTIFF 'S
MOTION FOR ENTRY OF CONSENT JUDGMENT
SUNDE Nt: t.50N STA,WORI> !.I.e
111 SW 5th Avenue, Suile 1740
]'onland. Oregon 97204
p. 503.4 17.7777; f. 503.417.4250
11. defendants Well s Fargo, Linke, Nelson and Wilson began to negotiate in secret a way to pay
2 Huskellronwood Homes, obtain morc money for the Consent Judgment, and to cont inue to keep
3 Pacific III from being reimbursed for the over $1,200,000 in remedial action costs it incurred.
4 These sec ret negotiations-to the complete exclusion of Pacific III- ulti mately lead to the
5 current July 1, 20 11 Consent Judgment which is virtually identical to the original consent
6 judgment except for adding add itional money and parties who Pacific 111 will be barred from
7 pursuing contribution claims against.
8 On April 7, 20 11, Pacific III filed suit against polluter defendants Well s Fargo, Linke,
9 Nelson and Wi lson asserting claims for cost recovery and contribution under Oregon's
10 environmental statutes to recover the more than $1,200,000 in remedial action costs Pacific UI
II incurred. )) Whi le Pacific III ' s cost recovery claims were dismissed, Pacific 1I1's contribution
12 claims against th e polfllter defelldants remai" active, with trial currelltly scitedilled for May
13 29,2012. The DEQ and the defendants named in the consent judgment, including Well s Fargo,
14 Linke, Nelson and Wilson, however, are doing everYlhing possible to have the Consent
15 Judgment approved before Pacific Ill 's contribution claims are decided by th is Court at trial (this
16 includes their opposing Pacific Ill ' s request to intervene and to conduct discovery in thi s action).
17 Pacific III ' s contribution claims arise under the Oregon' s Environmental Cleanup laws,
18 and specifically Oregon Revi sed Statutes, Chapter 465, entitled "Hazardous Waste and
19 Hazardous Materials 1.,,)4 While ORS 465.325(6)(b) is what provides contribution protection to
20
21
32 See Exhib its D and E to the Ve ley Declaration.
22 33See, Pacific III. LLC v. Wells Fargo Balik, Nafiol1al Association. el ai , Washington County Circuit
Court Case No. C 112031 CV. A copy of Pacific Ill ' s Complaint in that action is attached as Exhibit E to
23 the Veley Affidavit Re: Motion to Intervene.
24 34 See ORS 465.257( 1), which reads in re levant part, "[a)ny person who is liable or potentially liable
under OR S 465.255 lTlay seek contribution from any other person who is liable or potentially liable under
2S ORS 465.255." Pacific III is adm itted ly a potentially liable party under ORS 465.255( IXb) (only because
it purchased the property subject to a PPA with knowledge of prior re leases of hazardous substance, but
26 Plaintiff did not cause, contribute to, or exacerbate any release at the property). Polluter defendants
Page II - INTEVENOR PACIF IC Ill, LLC ' S RESPONSE IN OPPOSITION TO PLAINTIFF ' S
MOTION FOR ENTRY OF CONSENT JUDGMENT
SU Nil!: NE I-SON STANFORD I.l.e
I II SW 51h Avenue. Suite 1740
Portland. Oregon 97204
p. 50).41 7.7777; f. 50).417.4250
12. the settling parties, any such contribution protection ollly extends to "mallers addressed" in the
2 settlement, as defined exclusively by the DEQ and settling parties. 35 The DEQ 's original March
3 9, 20 11 proposed Consent Judgment (as well as the current Jul y I, 20 11 proposed Consent
4 Judgment) was unjustly overbroad and without any remuneration to Pacific III for the over
5 $1,200,000 in remedial action costs it incurred cleaning up the Weslern Half of the Tannery
36
6 Site.
7 More specifically, the original March 9, 2011 proposed Consent Judgment (and the
8 current July I , 201 1 proposed Consent Judgment) includes the enlire Tannery Site in the
9 "malters addressed" definition in the Consent Judgment and this therefore includes the Western
10 HalJthat Pacific 111 already cleaned up, along with the contaminated Eastern Halfof the Tannery
II Site. 31 However, it is undisputed that only the Eastern HalJofthc Tannery Site, and portions of
12
13 Linke, Nelson, Well s Fargo and Wi lson are liable panies under ORS 465.255(1)(b) and (d), and
potentia lly (e). See also ORS 465.325(6)(c)(B), wh ich reads in relevant pan, "[a] person who has
14 resolved its liability to the state for some or a ll of a removal or remedia l action or fo r some or a ll of the
costs of such in an ad ministrative or judicially approved sett lement may seek contribution from any
15 person who is not a party to the settlement ... [.]" Plaintiff contribution rights also arise under ORS
465.325(6)(a), and under ORS 465.425(6)(c)( B) (Pacilic III sett led its liabi lity with the state through the
16 PPA with respect to its purchase of the propeny and c lean up required under the PPA).
H See ORS 465.325(6)(b) (<<A person who has resolved its liability to the state in an administrative or
17
judicially approved sett lement shall not be liable for cla ims for contribution regard in g, matters addressed
18 in the sett lement. Such settlement does not di scharge any of the other potentially liable persons unless its
tenus so provide, but it reduces the potential liability of the others by the amount of the settlement.")
19 (emphasis added). The forego ing contribution bar is vi rtually identical to the contribution bar provided
by the federal Comprehensive Environmental Responsibi lity, Compensation, and Liability Act, 42 U.S.c.
20 § 9601 , et seq. ("CERCLA") (which Oregon ' s environmenta l laws are modeled after) for federal consent
decrees (aka consent judgments). See, 42 U.S.C. § 96 I3(t)(2) ("A person who has resolved its liabiliry to
21 the Un ited States or a State in an administrative or judic ially approved settlement shall not be liable for
claims for contribution regardi ng matters addressed in the sett lement. Such settlement does not di scharge
22 any of the other potentially liable persons unless its Icnns so provide, but it reduces the potential liability
of the others by the amount of the settlement."). See also Lucas Affidavi t.
23 36See original March 9, 201 1 proposed Consent Judgmen t, Exhibit B to the Lucas Affidavit Re: Motion
to Intervene; See current July 1, 2011 proposed Consent Judgment, attached as Exhibit A to the Gilles
24 Declaration.
25 31See o ri ginal March 9, 20 II proposed Consent Judgment, Exhibit B to the Lucas Affidav it Re: Motion
to Intervene, and current July 1, 2011 proposed Consent Judgment, Exhibit A to the Gi lles Declaration.
26 The " matters add ressed" port ion also includes the KFF s ite. As set forth in the July 1, 20 11 proposed
Page 12 - INTEVENOR PAC IFIC III , LLC'S RESPONSE IN OPPOS ITION TO PLAINTIFF' S
MOTION FOR ENTRY OF CONSENT JUDGMENT
SUNDE I'InsoN STANFORD I,I,C
111 sw 5th A·C1Iuc. Su ite 1740
Portland. Oregon 97204
p. 50HI7.7777: r. 50H I7.4250
13. the KFF site, allegedly need further investigation and remedial action (i.e., clean up). From
2 Pacific lI1 ' s perspective, and as a matter of fairn ess, reasonableness and public interest, the
3 proposed Consent Judgment should only include the KFF site and the Eastern Half of the
4 Tannery Site. The proposed Consent Judgment should not incl ude the Western Half of the
5 Tannery Site or any remedial act ion perfonned by Pacific Ill.
6 It is important to note that the decision as to what will be included- and what would not
7 be included-i n the " matters addressed" was not made by the legislature . Nevertheless, the
8 DEQ and the settling parties continually blame (or rather incorrectly attempt to hide behind) the
9 legislature for barring Pacific Ill ' s claims although nothi ng could be further from the truth.
10 While ORS 465. 325(6)(b) is what provides contribution protection (aka amnesty) to the settling
11 parties, any such contribution protection only extends to "maltel'S addressed " in the settl ement,]8
12
13 Consent Judgment at page 17, Ins 17·20, " Matters Addressed for the purposes of the consent judgment
means a ll in vestigation, removal , and remedial actions taken or to be taken and all remova l and remedial
14 acti on costs incurred or to be incurred at or in connection with a release of hazardous substances at the
Facility." (emphasis added). " Facility" is defined on Page 7, Ins 14· 17, of the proposed Consent
15 Judgment : "Facility" . .. means (a) the "Tannery Site", (b) the " KFF Site"; and (c) the full extent of
existing known or unknown contamination by hazardous substances of any med ia on, above, or below the
16 Tannery Site o r the KF F Site, or that have migrated, may have migrated, or hereafter migrates to
anywhere from th e Tannery Si te or the KFF Site." (emphasis added). Finally, "Tannery Site" is defin ed
17 on page 4, In s. 3·5 of the proposed Consent Judgment as Tax Lots SOD, 600, 602, 900, 1000, 1100 in
Section 29, and Tax Lot 400 in Section 28." (emphasis added). Thus, the " matters addressed" incl udes
18 the remedia l action taken by Pacific Ul on Tax Lots 500, 900, 1000, and 1100 and the remedial action
costs Pac ific UI incurred as a result of its remedia l action. See also original March 9, 2011 proposed
19 Co nsent Judgment (Exhibit B to the Lucas Affidavit Re: Motion 10 Intervene) with identica l overly broad
language and defin itions as to Matters Addressed, Facility, and Tann ery Site.
20 Ji See ORS 465 J 2S(6Xb) ("A person who has resolved ils liabi lity to the state in an administrative o r
judic ia lly approved settlement shall not be liable for claims for contribution regardin g maners addressed
21 in the settlement. Such settlement does not discharge any of the other potentially liable persons unless its
tenns so provide, but it reduces the potentia l liabil ity of the others by the amount of the settlement." )
22 (emphasis added). The foregoing contribution bar is virtually idenlica lto Ihe contributi on bar prov ided
by the federal Comprehensive Environmental Responsibility, Compensation, and Liability Act, 42 U.S.C.
23 § 960 I , el seq. (" CERCLA ") (which Oregon 's environmental laws are modeled after) for federal consent
decrees (aka consent j udgments). See, 42 U.S.C. § 96 I3(f)(2) ("A person who has resolved its liability to
24 the United States or a State in an administrative or jud icially approved settlement shall not be liable for
claims for contri bution regarding matters addressed in the senlement. Such senlement docs not discharge
25 any of the other potentially liable perso ns un less its temlS so provide, but il reduces the potential liability
of the others by the amount of the settlement.").
26
Page 13 - INTEVENOR PACIFIC 111 , LLC'S RESPONSE IN OPPOSITION TO PLAINTIFF ' S
MOTION FOR ENTR Y OF CONSENT J UDGM ENT
S I.I Nm : NEI..50N STANFORD LI.C
III SW5IhA'cnuc.SuiIC1740
I'orthmd. Oregon 97204
p. 50] .4 17.7777: f. 503.417.4250
14. as defined exclusively by the DEQ and settling parties. 39 Simply put, the decisio n as to what w ill
2 be included-and what would not be included-in the "'matters addressed" was nOf made by the
3 legislature. Instead , the deci sion was voluntarily, purposefully and unreasonably made so lely by
4 the DEQ and the settling part ies to the unmitigated and involuntary sacrifi ce of Pacific III.
5 5. The DEQ Withdrew the Originally Proposed Consent Judgment,
Proposed a New Consent Judgment on July I , 2011 With Additional
6 Polluter Defendants (Wells Fargo a nd Wilson), and Continues to
7 Inappropriately Include the Western Half of the Tannery Site in the
Consent Judgment
8
Following the commentary period for the origi nal March 9, 20 11 pro posed consent
9
Judgment, the DEQ and the parties to the Huskellronwood Homes li tigation comm enced secret
10
negotiations in an effort to obtain addit ional fund s and parties to a new consent judgment. Upon
II
completion of their secret negotiations, the DEQ, in concert and co ll usion w ith the polluter
12
defendants Linke, Nel son, Well s Fargo and Wi lson (as well as Huske/ lronwood Homes)
13
proposed a new Consent Judgment on Jul y 1,2011 which was virtually identical to the orig inally
14
proposed March 9, 20 11 consent judgment, except for joining po lluter defen dants Well s Fargo
IS
and Wilson as additional settling parti es who would receive protection agai nst Pacific Ill 's
16
contribution claims, and adding additional moni es to the settlement amount (no ne of whi ch wi ll
17
be paid to Pacific III , and without engaging Pacific III in any settlement negotiations).4o Per the
18
negotiations and ultimate settlement agreement, Huskellronwood Homes would a lso be
19
reimbursed its remedial action costs by the polluter defendants in a companion sett lement
20
41
agreement to the Consent Judgment. Pacific III understands that Huskell ronwood has already
21
22
23 39 See Footnote 37, supra, and the defin itions contained therein.
40 Lucas Affidav it Re: Motion to Intervene. Compare the ori ginal March 9, 2011 proposed Consent
24
Judgment (Exhibit B to the Lucas Affidavit Re: Motion to Intervene) to the current July 1, 2011 proposed
25 Consent Judgment (Exhibit A to the Gilles Declaration).
41 See Gilles Declaration, Exhibit B, page 10.
26
Page 14 - INTEV ENOR PAC IFIC 111, LLC'S RES PONSE IN OPPOS ITION TO PLAINTIFF ' S
MOTION FOR ENTRY OF CONSENT JUDGMENT
S U ,'IIDE NElSON STAi"i ~'OIU> U .C
II I SW Slh A·cnue. Suile 1740
I'onl and. Oreson 97204
p. 503.4 17.7777; r. 503.4 17.4250
15. been paid.
2 Once again, the newly proposed Consent Judgment inappropriately included the entire
3 Western Half of the Tannery Site, and not just the Easfern Half that allegedly remained
4 contaminated. 42 The Western Half was included even though the polluter defendants We ll s
5 Fargo, Linke, Nelson and Wilson would not be paying any money whatsoever with respect to the
6 Western Half or any portion of the over $ 1,200,000 in remedial act ion costs Pacific III incurred
7 cleaning up their mess. 4)
8 As before, Pacific III was never invited, notified of, or otherwise allowed to participate in
9 any settlement negotiations with the DEQ and the polluter defendants with respect to the new
10 July 1,2011 proposed Consent Judgment. As if the originall y proposed Consent Judgment was
II not enough in temlS of cutting off the amlS of Pacific III 's contributi on claims against Linke and
12 Nel son, the newly proposed Consent Judgment cut Pacific Ill 's legs off by add ing the deep
13 pockets of Well s Fargo and Wi lson to the mix of parties who would receive amnesty from
14 Pacific Ill's contribution claims (which at that point, were in active litigation with Linke, Nelson,
15 Wells Fargo and Wilson). In fact, documents recently produced by defendant Linke in Pacific
16 Ill 's contribution action,44 confinn that by at least July, 2009 Gust one-year after Pacific III
17 completed its cl eanup activities), the DEQ was secretly seeking money from the polluter
18 defendants for the eastern half of the Tannery Site and the KFF Site, to the severe detriment of
19 Pacific III. 45 Specifically, from the very beginning, the DEQ was offering to include, or
20
21 ~2 See July 1, 20 11 proposed Consent Judgment, Exhibit A to the Gilles Declaration (here inafter, the use
of the " proposed Consent Judgment" or "consent judgment" refers to the July I, 201 1 proposed Consent
22 Judgment currently before the Court for review).
23 ~3 Jd. See also Lucas Affidavit Re: Motion to Intervene . See also Footnote 37, supra (defin itions of
"Matters Addressed", "Fac ility" and "Tannery Site" set forth in the proposed Consent judgment).
24 44Pacific Ifl. LLC v. Linke Enterprises of Oregon. et al., Case No. C 11 203! CV , Exhibit E to the Veley
Affidavit Re: Motion to Intervene.
25
See Exhibits A and B to the Declaration of Christopher M. Veley in Support of Intervenor Pacific III,
4S
26 LLC's Reply Brief in Support of Motion to Allow Discovery ("Veley Reply Declaration") (Said Veley
Page 15 - INTEVENOR PACIFIC lll , LLC'S RESPONSE IN OPPOSITION TO PLAINTIFF'S
MOTION FOR ENTRY OF CONSENT JUDGMENT
SUNOl:: Nl::LSON STANfORD 1.I.C
111 SW 5th Avenue. Suite 1740
Portland. Oregon 97204
p. 503.417.7777: f. 503.417.4250
16. otherwi se negate, the polluter defendants' "responsibility for past response costs" incurred by
2 Pacific III for the Western Half, in exchange for reso lving the DEQ 's dispute with the polluter
46
3 defendants relatin g to the eas/ern half of the Tannery Site and the KFF Site. Pacific III 's
4 fonner partner, the DEQ, kept all of thi s hidden from Pacific 111.47
5 Pacific III objected in writing to proposed Consent Judgment, but Pacifi c Ill 's objections
6 once again fell on deaf ears.48 The DEQ 's scant response to Pacific III 's objections explained
7 nothing and dodged the issue that the DEQ and the settling parties- not the legislature-have
8 ignored Pacific Ill 's rights. The DEQ's purported position- for ignoring Pacific Ill 's ri ghts and
9 in detennining that " public comments did not disclose facts or considerations indicating that the
10 proposed consent judgment is inappropriate, improper, or inadequate as to warrant withho lding,
II withdrawing or modifying the proposed consentjudgment"- was limited to the following:
12 DEO' s Response [to Pacific Ill 's Objections): Pacific III also
asserted its claim tllat DEQ wou ld breach the PPA in a lawsuit
13 against the DEQ and settling parties. Pacific Ill, LLC v. Wells
14 Fargo Bank, el 01. , Washi ngton Co. Circu it Court Case No.
C1 1203 1CV. On August 8, 201 1, the coun ruled that Pacific 111
IS had failed to state a claim against DEQ and its action against DEQ
should be dismi ssed. DEQ's position before the court was that
16
entry of the proposed consent judgment is consistent with the
17 DEQ 's ri ghts against other liable parties for cleanup at the Frontier
Leather site, and that contribution protection is granted by statute
18 to parties settling with DEQ.49
19
20 No further ex planation or reasoning was given as to why the DEQ concluded it was fair,
21
22 Rep ly Declaration is not being filed since it was already fil ed with the Court but cou rtesy copies are being
provided to a ll counse l and the judge with the submission ofthi s response brief).
23 461d.
24 47 See Lucas Affidavit Re: Motion to Intervene.
48 Ve ley Affidavit Re: Motion to Intervene and Exh ibit D attached thereto; Lucas Affidav it
25 Re: Motion to Intervene.
26 49 Gilles Declaration, Exhibit S, page 10. See also, Gilles Declaration, Exhibit B, page 4.
Page 16 - IN TEVENOR PACIFIC 1Il, LLC ' S RESPONSE IN O PPOSITION TO PLAINTIFF ' S
MOTION FOR ENTRY OF CONSENT JUDGMENT
S U N DE N .: LSON STAN.·ORD LLC
I II SW 51h A·cnuc. Suitc 1740
I'ortland. Oregon 97204
p. 50).417.7777: f. 503.417.4250
17. reasonable and equitable to include the clean Western Half of the Tannery Si te in the proposed
2 Consent Judgment (and any remedial action perfonned by Pacific III on that portion of the site)
3 and ultimately destroy Pacifi c Ill 's claims in the process.
4 Of the $2,600,000 the DEQ was to collect under the newly proposed Consent Judgment,
5 the DEQ again a ll eged over $393,000 in remedial action costs it incurred that it would reimburse
6 itself off the top, leaving $2,207,000 for the DEQ. so And just as the ori ginall y proposed consent
7 judgment did, the new July 1, 201 1 proposed Consent Judgment provided the DEQ with so le
8 discretion as to the use of the funds, and as to the nature and extent of any remedial action it
9 chose to perfonn, ifan y, on the Eastern Ha(fofth e Talmery Site and the KFF Site. According to
10 Section 3.E. of the original Ju ly 1,2011 proposed Consent Judgment:
II Upon receipt of payment fTom OOOJ pursuant to Section 3, DEQ
shall deposit the payment into a site-specific account within the
12
Hazardous Substances Remedial Action Fund dedicated to use at
13 OEQ 's sole discretion to fund investigation, removal, or remedial
action at the Fac ility. All moneys in the site-specific account,
14 including interest earned on the Accowlt shall be used by the OEQ
as it deems appropriate for perfonning or paying for invest igation ,
15
removal , or remedial act ions at the Facility, paying DEQ's
16 oversight costs incurred in connection with such actio ns, paying
DEQ's costs of admini strating the Account, and reim bursing
17
o utstanding OEQ remedial action costs at the Facility. Any
18 remaining fund s in the Account after implementati on of remedial
action at the Facility may be used by the DEQ in its sole
19 discretion .SI
20
The proposed Consent Judgment also provides the option for the OEQ to purchase Tax Lot 600
21
(contained within the Eastern HalJo fthe Tannery Site) for a mere $50, who can then tum around
22
and sell the property (presumably for more than $50) and use that money for anything it wants
23
24
25 50 See July 1, 20 I I proposed Consent Judgment, Exhi bit A to Gil les Declaration.
SI Jd. (emphas is added).
26
Page 17 - INTEVENOR PACIFI C III , LLC'S RESPONSE IN OPPOSITION TO PLAINTI FF'S
MOTION FOR ENTR Y OF CONSENT JUDGMENT
S U l'1m : NELSON STA M " OR!) l.l C
111 SW 5th Avenue. Suite 1740
Portland, Oregon 97204
p. 503.417.7777: f. 503.417.4250
18. for its own internal benefit. 52 It would al so allow the DEQ to force the buyer, through a
2 Prospective Purchaser Agreement, for example, to pay to cl ean up the property, even though the
3 DEQ would have already received funds fo r cleanup through the proposed Consent Judgment.
4 Presentl y, it is undi sputed that there are no offi cial pl ans set in place with respect to
5 specific fu rther invest igation or remediati on at the Eastern Half of the Tannery Site or KFF Site.
6 Any such pl ans are still undec ided and coul d very like ly lead to a cash-windfall to the DEQ
7 without any remuneration to Paci fic III. From a fac tual standpoint, the DEQ's estimates as to
8 potential costs have been wide ly inconsistent, and are suspi cious to say the least. For example,
9 in its August 26, 20 11 Memorandum, the DEQ estimated remedial action costs for the Eastern
10 Half of the Tannery Site at $540,000 to $2,600,000. 53 At the same time, however, the DEQ also
11 stated that the "DEQ expects th at the $2 .6 milli on [it coll ects from the Consent Judgment] will
12 be adequate to fund cleanup of both sites to protective standards as well as reimburse DEQ's
13 outstanding remedial action costS.,,54 If this stands true, it is unknown how the DEQ wiil
14 reimburse itself $390,000 fro m the $2,600,000 and then remedime the Easfern Half and the KFF
15 Site if it est imated it could cost $2,600,000 to remediate the Eastern Halfalone. On the fli p side,
16 however, the $2,600,000 payment coul d result in a cash windfa ll for the DEQ if its remedial
17 action costs for the Eastern Half are only $540,000 on the low-end as estimated above, or
18 $550,000 as it estimated in 2007.55 Thus, with no plan yet in place, it is entirely possible fro m a
19 factual standpoint that the DEQ- with its sole discretion as to the use of fun ds and ability to
20 purchase and sell Tax Lot 600 56- will be left with an enonnous cash-windfall, while Pacific 111
21 will be left without any abil ity to recover the over $1,200,000 is spent cleaning up the Western
22
23 52
I d.
24 53 Gi lles Declarat ion, Exhibit B, page 7.
25 54 Gilles Declaration, Exhibit S , page I I.
55 See Veley Declaration, Exhi bit F.
26
Page 18 - INT EVENOR PAC IFI C IJI, LLC' S RESPONSE IN OPPOS ITI ON TO PLAINT IFF ' S
MOTION FOR ENTRY OF CONSENT JUDGMENT
S U NDt Nt:U;ON STANFO RD U .C
LL1 SW 5th An:nuc. S uitc 1740
I'onland, Oregon 972().1
p. 503.4 17.7777: r. 503.417.4250
19. Halfunder its agreement with the DEQ.
2 6. In Li ght of the DEQ Failing to Provide Any Rationale for Including the
Westem Half of the Tannery Site, the Court Allowed Pacific III to Issue
3 an Interrogatory to the DEQ
4
A lthough highly opposed by the DEQ and polluter defendants Well s Fargo, Linke,
5
Nelson and Wilson, the Court allowed Pacifi c 1lI to conduct discovery through an interrogatory
6
to the DEQ in the following Court authori zed fo nn:
7
"Expl ain why the Western Property. and the remedial acti on
8 perfonned by Pacific III and remedial acti on costs incurred by
Paci fic III at the Western Property, were included in the Consent
9 Judgment and the definiti ons contained therein when ( 1) the
10 Western Property was prev iously remediated by Pacifi c III to " no
further action" status under the PPA; (2) the Consent Judgment
11 does not identi fy any environmental cleanup, removal or remedial
action to be taken at the Western Property; (3) no money paid by
12
the Consent Judgment Paying Parties will be used to remed iate any
13 porti on of the Westem Property; (4) no money paid by the Consent
Judgment Payi ng Part ies wi ll be used to reimburse Pacific III for
14
the remedial action costs it incurred at the Western Property; and
15 (5) the Eastern Property and K FF site are the onl y properties
identifi ed in the Consent Judgment to be remediated w ith mo nies
16 paid by the Consent Judgment Paying Parties."s7
17
As discussed fu rther in the Argument section below, the DEQ con fi nned in its
18
interrogatory response that it-as a matter of hi storical practice-has carved 0 111 contribution
19
protection for a porti on of the property included in the consent j udgment pellliillg further action
20
by the polluter defendants as a condi tion precedent to contribution protection (for example,
21
completing remediati on of the contaminated carved out property or comp lying with agreement
22
23
24 S6 (coupled with the DEQ's ability to detenn ine the level of cleanup, i.e. write iI'S own ru les)
S7 A copy of th e DEQ's Interrogatory Response is attached as Exhibit C to the Veley Declaration. Per the
25 Interrogatory approved by the COllrt, the DEQ " Director shall include in his answer an appl ication of the
statutory criteria and factors set forth in DRS 465.325 ." Id.
26
Page 19 - INTEVENOR PAC IFIC III , LLC'S RESPONSE IN O PPOS ITI ON TO PLA INTIFF ' S
MOTI ON FOR ENTRY OF CONSENT JUD GMENT
SI.l I'."I)E N ELSON STA r" FORI> I,I,C
II I SW 5th Avenue , Suite 1740
l'or1 land. Oregon 97204
p. 503.417.7777: f. SO A 11.4250
J
20. with or order by DEQ with respect to the carved out property, or in thi s instance by analogy,
2 payment of past remedial action costs of panies like Pacific 111).58
3 In facl, the DEQ has hi storicall y carved out property similar to the Western Half property
4 pending furt her action by the poll uter defendants, while providing for contribution protection for
5 other property included in the consent judgment (similar to the Eastern Half and the KFF S ite
6 here) for whi ch the consent judgment settlement fun ds went towards (similar to funds here which
7 will allegedly be used to clean up the Eastern Half and the KFF Site).59 Thi s is exactly what
8 Pacific III sought from the beginning but the DEQ and the polluter defendants refused to
9 negotiate with Pacific III, thereby forcing Pacific III to li tigate its claims.
10 The six consent judgments-complete copies of which are attached as Exhibits G through
II L to the Veley Declaration-read in relevant part, and confiml the historical "carve outs," as
12 follows:
13 9. Contribution Actions
14 A. The parties agree that this Consent Judgment is a judicial
sen lement within the meaning of ORS 465.325(6)(b), pursuant
15
to which Defendant has resolved its liability to the Slale of
16 Oregon regarding Matters addressed for the Faci lity to the
ex tent provided in Sect ion 7. Effective upon satisfaction of the
17 payments required under Subsections 3.A and 3.B above,
Defendant shall not be liable for clai ms for contribution
18
regarding Matters Addressed for any portion of the fac ility
19 other thall th e Uplauds portiolls of th e Facility. Effective
upon entry of thi s Consent Judgment by the Court, amI subject
20
thereafter to Defendallt 's satisfactory performance llIuler lilly
21 existing or future DEQ agreement, order, NFA, or cOllse"t
judgmellf related to remedial actioll at Uplallds portiolls of
22
23
58 See Exh ibit C to Veley Declaration (DEQ's Interrogatory Response) and the six 2008 Consent
24 Judgments submitted ex parle by the DEQ attached as Exhibit F to said Interrogatory (See Consent
Judgments Nos. 3 through 6). Complete copies of the a forementioned Consent Judgments Nos. 3 through
25 6 are attached as Exhibits G through L to the Ve ley Declaration .
59 See Exhibits G through L of the Ve ley Declaration.
26
Page 20 - INTEVENOR PACIF IC III , LLC' S RES PONSE IN OPPOSITION TO PLAINTIFF ' S
MOTION FOR ENTRY OF CONSENT JUDG MENT
S U Nm : Nn.SON STANFO RD l. lC
III SW 5th Avenue. Sui te 1740
Ponllllld. Oregon 97204
p. 503.417.7777; f. 503.417.4250
21. the Facility alld 'he reservations ill Subsectioll 7.B,
De/elida,,! shalf 1101 be liable for claims for contributioll
2 regardillg Mailers Addressed for the Uplautls portiolls of th e
3 Facility.
4 Despite the DEQ's past carving out of property simi lar to the Western Half (as shown
5 above), it nevertheless arbitrarily and unreasonably refuses to carve out the Western Hal/in the
6 current Consent Judgment despite having the power to do so. Under the factual circumstances of
7 thi s case, its failure to do so is an abuse of discretion.
8 B. ARG UMENT
9 1. Nature, Scope, and Standard of Review Applied to the Proposed Consent
Judgment
10
There are no specific provisions in Oregon 's Envi ronmental Cleanup Law (ORS Chapter
II
465), and no Oregon case law, setting forth the scope of review to be applied by the trial court in
12
determ ining whether to approve a proposed consent judgment filed pursuant to DRS 465.325.
13
Oregon 's Environmental Cleanup Laws, first adopted in 1987, including its settlement
14
provi sions, are modeled federal Comprehensive Environmental Responsibility, Compensation,
15
and Liability Act, 42 U.S.c. § 960 1, el seq. (" CERCLA"). It is undisputed that because
16
Oregon 's Environmental Cleanup Laws are modeled after CERCLA , including the sett lement
17
provisions, that federal decisions under CERCLA provide appropriate guidance for the Co urt
18
here .60
19
iii
20
iii
21
22
23 60Newell v. WeslolI, 150 Or App 562, 571-72 (1997) (ci ting Badger v. Pail/SOli /Ilveslmelli Co.. Inc. 31 1
Or 14, 21 (1991) (" In situations involving Oregon laws in large measu re drawn from a federal
24 counterpart, it is appropriate to look for gui dance to federal court decisions interpreting s imilar federal
laws"); See also, Cale/lus Developmel1l Corporatioll v. L.D. McFarlalld Compau)', 910 F Supp 1509,
25 1516 (D. Or. 1995) (" Because the interpretation of cost recovery scheme under federa l CERCLA
similarly applies to the interpretat ion of the Oregon CERCLA statute").
26
Page 21 - INTEVENOR PAC IFI C Ul , LLC'S RESPONSE IN OPPOS IT ION TO PLAINTIFF' S
MOTION FOR ENTRY OF CONSENT JUDGM ENT
S UNDE: NE LSON STA NFORt) LLe
I] 1 SW 5th Avenue. Suitt 1140
]'ortland. ORson 91204
p. 503.411.1777: f. 50).417.4250
22. a. " Informed Discretion" is the Co re Principal Applied by the
Reviewing Trial Cou rt
2
61
It is universall y agreed upon that a review of a consent decree is committed to the
3
informed discretion of the trial courl. 62 The DEQ and settling parties do not dispute thi s core
4
principal. Because the consent decree "places the power and prestige of the court behind
5
compromise, the consent decree wi ll therefore not be approved where the agreement is illegal, a
6
product of collusion, inequitable, or contrary to the public good,63 And when reviewing a
7
consent decree, the court must not "eschew any rubber stamp approval in favor of an
8
independent evaluation .,,64 In fact, in the CERCLA consent decree context, the court has an
9
"obligation to independently scrutinize the terms of a setllemenl.,,65
10
A tri al courts review is not limited to the ad ministrati ve record created by the DEQ. In
II
fact, "a reviewing [trial] court may consider materi als supplemenlGlY 10 the administrative
12
record in order to determine the adequacy of the government agency's decision. ,,66 Likewise, a
13
reviewi ng court may consider additional evidence beyond the administrative record as
14
background infonnation to aid the court's understanding, or to detenn ine if the agency examined
15
16
17
18
19 61 Under federal law, a consent judgment is referred to as a consent dec ree.
62 See e.g., United States v. Hooker Chemical & Plastics COl]). , 776 F2d 410, 411 (2"d Cir. 1985); UI/ited
20 States /. Jones & Laughlin Steel Corp., 804 F2d 348, 35 1 (6 th Cir. 1985); Officer!; for Justice v. Civil
Service Commission, 688 F2d 61 5, 625 -26 (9 'h Cir 1982) ("The initial decision to approve or reject a
21 settlement proposal is committed to the sound discretion of the trial judge").
22 63Kelly /. Thomas Solvenl Company, 7 17 F Supp 507, 515 (1989) (ci ting to Williams v. Vllkovich.720
th
F2d 909, 920 (6 Cir. 1983) and United Slales v. Jacksoll , 519 F2d 11 57, 1151 (S'h Cir. 1975».
23 601 id.
24 6S United States v. Montrose Chemical Corporatioll o/California, 50 F3d 741 , 747 (9 th C ir. 1995) (Held
that distTict court abused its discretion in detemlining that CERCLA consent decree was substantively
25 fa ir).
66 Abo Coatings 0/ America, inc., 949 F2d at 1427·28 (em phasis added).
26
Page 22 - INTEVENOR PACIFIC 111, LLC'S RESPONSE IN OPPOS ITION TO PLAINTIFF ' S
MOTION FOR ENTRY OF CONSENT JUDGMENT
SU Nm : N.:LSON STA1'o'FORI) l.LC
III SW 5th Avenue, Su ile 1740
POflland, On:gon 97204
p. 503.417.7777; f. 503.417.4250
23. 67
all relevant factors or adequately expl ained its decision. In fact,
2 [i)! wi ll often be impossible, especiall y when hi ghly technical matters are
involved, for the court to detenninc whether the agency took into
3 consideration all relevant factors unless it looks outside the record to
68
detennine what matters the agency should have considered but did no1.
4
5 Given the unique factual circumstances of thi s case, and the grave unfairness to Pacific
6 III , the Court should look at each and every factual aspect of this case with a fin e tooth comb.
7 Until now, the DEQ has enjoyed the freedom from infonned d iscret ion and judicial scrutiny,
8 because-as the DEQ ad mits-thi s is the first time in Oregon history that the DEQ has proposed
9 a consent judgment where a non-settling party (here, an ignored party) intervened and objected
10
to the consent judgment. As counsel for DEQ noted at the October 24, 20 11 hearing, the DEQ
II
has been accustomed to presenting its proposed consent j udgment via a qui ck ex parle hearing.
12
In fact, each of the six consent judgments referenced in DEQ's Response to Interrogatory
13
(Exhibit C to Veley Decl aration), and attached as Exhibits G through L to the Ve ley Decl aration ,
14
were submitted to the COllrt by mail for ex parte entry wUhoul a supporting molioll, oral
15
argument or questions from lite COllrl, leI alolle llll)' objection from a third_parly .69 Based on
16
the forego ing, the Court should engage in a detailed review of the facts and circumstances of this
17
case and the materials s ubmitted in reaching its decision to approve or reject the consent
18
j udgment.
19
b. The Court Reviews the Consent Judgment with an Arbitrary and
20 Capricious and/or Abuse of Discrction Standard
21 It is undi sputed- notw ithstanding the foregoing general principals-that the court applies
22
23
67 AscarcQ, Illc. v. EPA , 616 F.2d 1153, 11 59-60 (91h Ci r. 1980) (" It is both unreali sti c and unwise to
24 straightjacket the reviewing court with the administrative record ... [and] The court can not adequately
discharge its duty to engage in a substantial inquiry if it is required to take the agency's word that it
25 considered all relevant matters.").
68 1d. , at 1160.
26
Page 23 - INTEVENOR PACIFI C III , LLC 'S RESPONSE IN OPPOS ITION TO PLAINTIFF 'S
MOTION FOR ENTRY OF CONSENT JUD GM ENT
S U NIn: NELSON STANFORD LI .C
III SW 5th Avenue , Suile 1740
!'ortland. Oregon 972O..f
p. 503.417.7177: [ 503.417.4250
24. additional standards when reviewing a proposed CERCLA consent decree, or here, a proposed
2 consent judgment under ORS 465.325. Specificall y, the court is to review whether the agency's
3 (here, the DEQ) deci sions and determinations with respect 10 the consent decree were arbitrary
7o
4 and capricious and/or whether the agency abused its discretion. If so, then the consent decree
5 must be rejected and the analysis ends.
6 Under the circumstances of this case, the admi nistrati ve record is insufficient for the
7 Court to apply the above standard because ( I) the DEQ's treatment and consideration of Pacific
8 III is minima l and conc1usory at best, (2) no explanation or justifi cation is provided in the
9 administrative record for in the deci sion to include the separate Western Ha!Jofthe Tannery Site
10 in the Consent Judgment and the related contribution protection afforded the po ll uter defendants,
11 and (3) notwithstanding the foregoing, the extreme and clear unfairness that the proposed
12 Consent Judgment poses to Pacific III.
13 Faced with the lack of clarity contained within the Administrative Record, the Court
14 allowed Pacific III to conduct di scovery through an interrogatory (see Fact Section No.6 above).
15 In its response, the DEQ claimed that it was the DEQ' s consistent practice to not carve out
16 property fTom its consent judgments, even though the DEQ has historically carved Ollt portions
17 of the property from contribution protection, pending further act ion by the polluter defendants. 71
18 Specifically, in the six consent judgments rel ied upon by the DEQ to incorrectly support its
19 reliance on hi storical consistency, the DEQ carved Olll an "Uplands" portion of the property
20 where contamination origi nated (similar to the Western Half) while providing contribution
21
22
23 69 See Exhibits C, G, 1-1, I, J, K. and L to Ve ley Declaration.
70 See, In re Tutu Water Wells, 326 F3d 201 , 207 (3'd Cir. 2003) (abuse of di scretion); U"ited Stares v.
24 COl/nons Engineering Corporation, 899 F2d 79, 84 (1 '1 Cir. 1990) (abuse of di scretion); Un ited Stares v.
Akzo Coatings of America. IIIC. , 949 F2d 1409, 1424 (6111 Ci r. 1991) (arbi t'rary and capricious).
25
71See Exhibit C to Veley Declaration (DEQ Response to Interrogatory); See Exhibits G through L to the
26 Ve ley Declaration (Six past consent judgments-relied upon by the DEQ-where the DEQ expressly
Page 24 - INTEVENOR PACIFIC 111, LLC'S RESPONSE IN OPPOSITION TO PLAINTIFF' S
MOTION FOR ENTRY OF CONSENT JUDGMENT
SUNDE NELSON STANFORD u .e
III SW Sih A'cnue, Suile 1740
POflland. Oregon 97204
p. 50H I7.7777; f. 503.417.4250
25. protection for downstream property where the contamination may have migrated to and fo r
2 which the po ll uters paid to clean Up. 72 In the fonner consent judgments prepared by and agreed
3 to by the DEQ, the polluter defendants could only obtain contri bution protection for the
4 "Uplands" on ly upon the sat is/acIDlY pelformance of additioualllclS related to the carved Olll
5 Uplands property, including remedial action. In review, those past six consent j udgments
6 provided carve outs and contribution protection as follows:
7 "9. Contribution Actions
8 A. The parties agree that thi s Consent Judgment is a judicial
settlement within the meaning of ORS 46S.325(6)(b),
9 pursuant to which Defendant has resolved its liabi li ty to the
IO State of Oregon regarding Matters addressed for the Facility
to the extent provided in Sect ion 7. Effective upon
II satisfaction of the payments required under Subsections 3.A
and 3.B above, Defendant shall not be liable for claims for
12
contribution regarding Matters Addressed for any portion of
13 the Faci li ty otller tllall the Up/am/s portious of the Facility.
Effective upon entry of this Consent Judgment by the Court,
14 all(/ subject tllereafter 10 Defendant's satisfactory
IS pet/ormall ce Ululer auy existing or future DEQ agreement,
order, NFA, or cOllse1l1 judgmellt related to remedill/llctioll
16 at Up/allds portions of the Facility amI tile reservations ill
Subsectioll 7.B, Defendant shall 1I0t be Iillbie for claims for
17
cOlltribution regarding Matters Addressed for 'lie Up/amis
18 portiolls of tile Facility."
19
By analogy here, any such further act ion of the poll uter defendants (if the Western Half,
20
were carved out), would he payment to Pacific III for its remedia l action costs by way of an
21
agreed settlement or payment in satisfaction of any judgment Pacific III were to obtain again st
22
the polluter defendants in the pending Pacific II/ v. Wells Fargo, ef al. act ion, scheduled for trial
23
24
carved oul a portion of the propcrty subject to thc consent j udgmclll, pcnding furt her action by the
25 polluter defendants as to the carvcd out port ion or property.
72 Id.
26
Page 25 - INTEVENOR PACIFIC III, LLC'S RESPONSE IN OPPOSITION TO PLAfNTlFF'S
MOTION FOR ENTR Y OF CONSENT JUDGMENT
SUNDE NEI.SON STANFORD u .e
III sw Slh Avenu e. Suile 1740
l'ortl1Uld. Oregon 97204
p. 503.4 11.7777: f. 50).4 11.4250
26. on May 29, 20 12.
2 Unfortunately. the DEQ arbitrari ly broke away from its tradition of carving out property
3 and inappropriatel y included the Western Ha/fofthe Tannery Site, knowing full we ll that it had
4 previously partnered with Paci fi c III in its e ffort s to clean up the Western Half(and its incurring
5 over $ 1,200,000 in remedial action costs). There is no reasonable or fair rational e for includin g
6 the Western Half under the circumstances o f the casco Any such decision to do so was arbitrary
7 and capricious, and an extreme abuse of the di scretion given to the DEQ by the legi slature.
8 Moreover, in light of the remedial action costs already incurred by Pacific III , as opposed to
9 remedial action costs not yet occurred by a third-party in the future, carving out Pacific III and
10 the Western Half from the Consent Judgment is the only reasonable decision that passes the
II arbitrary/capricious and abuse of di scretion tests.
12 The DEQ further argued in its interrogatory response that without incl uding the Western
13 Half, it would not have been able to settle with the polluter defendant s, because according to the
14 DEQ: "DEQ considered the likel ihood that no sett lement and no fi nancing would be provided for
15 final clean-up at the Tannery and KFF Sites if the settlement did not encompass all of the hi storic
16 property.,,73 There is absolutely no support for this in the record, nor any indicat ion that bona
17 fid e attempts were made to settl e with a "carve out" of the Western Property. Instead the DEQ
18 took the easiest route out, and in doing so, ignored Pacific Ill' s ri ghts it reserved unde r the
19 Prospecti ve Purchaser Agreement. So lo ng as the DEQ is allowed to partner w ith a party to
20 voluntari ly clean up property, on ly to later go behind that parties' back and destroy their ri ght to
21 recover their cleanup costs, no one in their right mind would ever vol untaril y partner with the
22 D EQ to clean up property. And if it is the policy of the State of Oregon to encourage early,
23 vo luntary response, nothing more could be at odds with that policy than the actions of the DEQ
24 w ith respect to Pacific Ill .
25
26
Page 26 - IN TEVENOR PACIFIC Ill , LLC ' S RESPONSE IN OPPOS IT ION TO PLAINTIFF 'S
MOTION FOR ENTRY OF CONSENT JUDGM ENT
S U NOl: N .:I SON STANFOR D LLC
111 SW 51h A"cllUc. S uilc 1740
P0r11and. Oregon 97204
p. 503.417.7777: f. 503.417.4250
27. There is simply no tenable basis for not carving out Paci fi c III fro m the Consent
2 Judgment, just as there is no tenable basis for the DEQ to conspire in secret with the polluter
3 defendants and to compl etely ignore and exclude Pacific III from any and all settlement
4 di scussions and negotiations regarding the Tannery and KFF Sites. The DEQ ' s decisions in thi s
5 regard were arbitrary at best, and an extreme abuse of its di scretion. For these reasons alone, the
6 Court should reject the Consent Judgment.
7 The di scussion does not end here, however, because the Consent Judgment also fails to
8 meet to the additional mandatory requirements that it be reasonable, procedurally and
9 substanti vely fair, and in the public interest (as discussed below).
10 c. The Consent Judgment Must be Reasonable, Procedurally and
Substantively Fair, and Consistent with the Environmental Law's
11 Objectives
12
In addition to reviewing the proposed consent decree under an arbitrary and capricious,
13
and/or abuse of discreti on standard, the Court also reviews the consent decree to determine
14
whether it meets the mandatory condition precedents of being (I) reasonable; (2) procedurall y
15
and substantiall y fair; and (3) adequate for the purposes it serves, i.e., consistent with the
16
objecti ves of CERCLA (o r here, wiullhe similar objectives of Oregon's Environmental Cleanup
17
Laws to clean·up contaminated property and to ensure the consent judgment is in the publi c
18
interest, among other things). 7 The DEQ and polluter defendants ignore thi s mandatory and key
4
19
review standard.
20
III
21
/II
22
23
73 Veley Declaration, Exhibit C, page 10
24 74E.g. , MOlltrose Chemical Corporation o/Califomia, 50 F3d at 743 (9 th Cir. 1995) (Held that district
court abused its di scretion in detennining that CERCLA consent decree was substantive ly fa ir); Callnolls,
25 899 F2d at 85; III re Tulu Water Wells CERCLA Litigation 326 F3d 20 1, 207 (3'd Cir. 2003); See also.
United States v Aerojel General Corp., 606 F3d 1142, 1150·5 1 (2010).
26
Page 27 - INTEVENOR PACIFIC III, LLC' S RESPONSE IN OPPOSITI ON TO PLAINTIFF'S
MOTION FOR ENTRY OF CONSENT JUDGMENT
SUNDE N n SON STANFORD U £
I II SW 5th Avenue, Suit e 1740
I'ortland. O regon 9 7204
p. 503.417.7777; f. 503.4 17.4250
28. I. The Consent Judgmenl is Unreasonable
2 "The evaluation of a consent decree 's reasonab leness will be a multifaceted exercise,,,75
3 and includes, but is not limited to, examining whether the settl ement includes satisfactory
4 compensation of the pub lic for anticipated costs of clean up, the relative strengths of the parties'
5 litigating positions, and the risks of liti gat ion.76
6 The DEQ alleges and argues that the " payment under the proposed Consent ludgment is a
7 reasonable settlement amount, based on: (a) infonnation disclosed to DEQ regarding insurance
8 coverage and these amounts; (b) infonnation disclosed to DEQ regardi ng available assets of
9 private individual settling parties; (c) estimates of likely costs of final remedies; and (d) DEQ
10 avoiding cost of litigati on for cleanup enforcement or cost recovery."n The DEQ asserts these
11 arguments, however, without any support or evidence whatsoever in the record other than the
12 foregoing conclusions. The DEQ has not offered any evidence, let alone any support in the
13 Administrative Record, regarding the " insurance coverage and these amounts" of any of the
14 parties, nor has it provided Pacific III or the Court with "infonnation ... regarding available assets
15 of private individual settling parties." With respect to " likely costs af fin a l remedies," the DEQ
16 "has not yet se lected a fina l remedy fo r the remainder of the Tannery Site [i. e. the Eastern HalfJ
17 or for the parcels comprising the KFF Site.,,78 Thus, it is unknown whether the settlement
18 amounts are reasonable in thi s regard.
19 Likewi se, based on the DEQ 's own inconsistent estimates, a wind-fall or short-fall is
20 quite possible. As discussed above, for example, the DEQ has estimated remedial action costs
21
22
23
7S Canl/QIIS, 899 F2d at 89.
24 76 Id. , at 89-90.
25 71 Pla int iff's Motion for Entry of Consent Judgment, page 8; G illes Declaration, Exhibit B, page 4.
78 Th is is undisputed, but see, for example, Plaintiff' s Motion for Entry of Consent Judgment, page 8.
26
Page 28 - fNTEVENOR PACIFIC Ill , LLC 'S RESPONSE IN OPPOSITION TO PLAfNTIFF 'S
MOTION FOR ENTRY OF CONSENT J UDGMENT
S U NDE NE I-SON Sl'ANI'O IUJ LLC
III SW 5111 A.'enuc. Suite 1740
I'onhmd. Oregon 97204
p. 503.4 17.7777: f. 503.411.4250
29. 79
for the Eastern Half of the Tannery Site at $540,000 to $2,600,000. At the same time,
2 however, the DEQ also stated that the "DEQ expects that the $2.6 million [it collects from the
3 Consent Judgment] will be adequate to fund cleanup of bot" sites to protecti ve standards as we ll
4 as reimburse DEQ 's outstanding remed ial action costs."so (f thi s stands true, it is unknown how
5 the D EQ w ill reimburse itself$390,000 from the $2,600,000 and then remediate the Eastern Haif
6 and the KFF Site if it estimated it could cost $2,600,000 to remediate the Eastern Half alo ne. On
7 the flip side, however, the $2,600,000 payment could result in a cash windfall for the D EQ if its
8 remedial action costs for the Eastern Half are only $540,000 on the l oV~end as estimated above,
9 or $550,000 as it estimated in 2007. 8 1 With no plan yet in pl ace, it is entirely possible from a
to factual standpoint that the DEQ could be left with either an enonnous cash wi nd· fall or short·
11 fa ll. A cash wind· fa ll with no remunerati on to Pacific III would be contrary to the public
12 interest, and a far cry from declaring the Consent Judgment settlement as being reasonabl e.
13 Likewise, a cash short· fa ll , particularl y in light of the extremely deep pocketed polluter
14 defendant Well s Fargo, would be anythi ng but reasonable.
15 With respect to lit igation strengths and risks, the DEQ has not d isclosed its strengths and
16 weaknesses with respect to its claims against the polluter defendants. This infonnat ion is not
17 included in the Administrative Record or in any of the documents offered by the DEQ in s uppo rt
18 of its motion. Pacific 1II agrees, however, that there are certainly ri sks 10 any litigati on regarding
19 env ironmental contamination clai ms, but the DEQ has simply fa llen short in providing ev idence
20 to meet the strengths, weaknesses, and ri sks face t of the reasonableness test.
21 Lastl y, Pacifi c III does not argue that obtaining money to clean up contaminated property
22 is unreasonable, but the means and methods employed by the DEQ and polluter defendants to
23
24 19 G illes Declarat ion, Exhibit B, page 7.
25 so G illes Declaration, Exhibit B, page II.
11 See Veley Declaration, Exhibit F.
26
Page 29 - lNTEVENOR PACIF IC Ill , LLC' S RESPONSE TN OPPOS IT ION TO PLAINTIFF ' S
MOTION FOR ENTRY OF CONSENT JUDG MENT
S U NOE NELSON STANFO RO l.tC
III SW 5th Avenue. Suite 174 0
Portland. CreSon 9 7204
p. 503.4 17.7777: f. 503.417.4250
30. this end are completely unreasonable. This is particul arl y true because Pacific III voluntaril y
2 incurred remedial action costs and expressly reserved those claim s in its Prospective Purchaser
3 Agreement to recover those costs in the future . The DEQ ignores Pacific Ill 's past remediation
4 and benefit to the publi c, and instead, seeks to destroy Pacific III for its own selfish interest Gust
5 as it tried to do with Huske/ Ironwood Homes in the ori ginal March 9, 20 11 proposed Consent
6 Judgment). While it may be reasonable to provide contribution protection against the claims of a
7 recalcitrant potent iall y responsible party (i.e. one who refuses to engage in seulement
8 negotiations or to contribute to remedial aClion), the same does nol ring true with respect to a
9 cooperative, voluntary responder such as Paci fi c 111 who has cooperated and attempted to
}0 negotiate o nly to be rebuked by the very parties who control the lenns of the Consent Judgment.
11 2. The Consent Judgment is Extremely Unfair
12 Fairness is evaluated not just from the consent decree signatories ' standpoint, but fro m
13 the non-parties standpoint as well (i.e., fTom Pacific Ill 's standpoint).82 When reviewing whether
14 a consent decree is "procedurall y fair," the court looks to the "negotiation process and attempt to
15 gauge its candor, openness, and bargaining balance. ,,83 These procedural considerations include
16 whether non-settli ng parties had an opportunity to participate in the negotiati ons (Pacific III had
17 no such opportunity and was specifically excl uded from any and all negotiations), and whether
18 the settlement was negotiated in good faith .&4 In fact, allowing a non-sen ling party, such as
19 Pacific III, an opportu nity to participate in consent judgment-related negotiation, and to join the
20 settlement, is cri tical in the Court finding procedural fairness.85 In the absent of the foregoing,
21 the Consent Judgment fail s to meet the mandatory procedural fairness standard, notwithstanding
22
23
82 Abo Coatings of America, fIlC., 949 F2d at 1435.
24 Sl Call1lolls, 899 F2d at 87.
25 M Id., at 86-87.
8S See, Jd., al87.
26
Page 30 - INTEVENOR PAC IFIC III, LLC'S RESPONSE IN OPPOS ITION TO PLAINTIFF'S
MOT ION FOR ENTRY OF CONSENT JUDGMENT
SU 1'10F. N F.I.sON STANFORD LLC
II I SW 5th Ave nue. Su ite 1740
]'ortlnnd. Oregon 97204
p. 503.417.7777: f. 503.4 17.4250