B-245482, Apr 8, 1992

B-245482, Apr 8, 1992

DIGEST: Claims Group is advised to certify payment from the Judgment Fund, 31 U.S.C. Sec. 1304 (1988), of Colorado's claim for interest under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (CERCLA), 42 U.S.C. Secs. 9607, 9620 (1988), since the language of that act appears to have waived the government's sovereign immunity and the Justice Department has informally advised GAO that it will no longer defend the contrary position in the courts. B-235986, June 28, 1989, is overruled.

United States v. Shell Oil Co., Consolidated Civil Action No. 83-C 2379, Z-53-26 (B-245482):

The captioned matter involves an appeal by the State of Colorado from Claims Group's previous denial of interest on the government's $1 million share of a settlement between the United States, Shell Oil, and Colorado under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (CERCLA), 42 U.S.C. Secs. 9601 9675 (1988). Colorado claims interest from the date of the entry of judgment on the settlement agreement through the date of the government's payment (125 days after judgment). We conclude that Colorado is entitled to and may be paid interest from the Judgment Fund, 31 U.S.C. Sec. 1304 (1988), on the government's $1 million payment.

Colorado also asks that the United States pay interest owed by Shell Oil on its $1 million share of the settlement. According to Colorado, Shell paid its share, plus interest pursuant to 28 U.S.C. Sec. 1961 (1988), seven days after judgment was entered. It notes that CERCLA uses a higher rate than that was used by Shell when it paid interest under section 1961. Colorado claims that the government and Shell jointly and severally owe post-judgment interest under CERCLA. Thus, Colorado is also seeking payment from the federal government of the difference between the interest paid by Shell Oil on its share for seven days under section 1961 versus seven days of interest at the CERCLA rate. We conclude that the United States is not liable for this amount.

In order to resolve this case, I contacted John Moscato (303-292 2320) and Steven Rogers (514-2219) of the Justice Department. From them, I learned that at the time that this agreement was executed, the government was actively litigating the issue of whether CERCLA waived the government's sovereign immunity with respect to interest assessments.

Since then, the government has lost several decisions on this point, and Justice has now decided that it will no longer oppose the assessment of interest against the government under CERCLA.

Our own review of CERCLA also suggests that the government did in fact waive sovereign immunity with respect to interest. Section 9607, which defines CERCLA liability, specifically includes interest. 42 U.S.C. Sec. 9607(a)(4). Section 9620 states that the federal government is subject to CERCLA "in the same manner and to the same extent, both procedurally and substantively, as any non-governmental entity, including liability under section 9607. ..." 42 U.S.C. Sec. 9620(a)(1). We believe these provisions are sufficiently explicit to qualify as a waiver of sovereign immunity with respect to interest under CERCLA. Cf. Library of Congress v. Shaw, 478 U.S. 310 (1986) (sovereign immunity from interest must be explicitly waived). Because the plain meaning of the words employed by Congress seems clear to us and, according to Justice, the matter is no longer subject to dispute by the Justice Department in the courts, our 1989 denial of interest in this case, B-235986, June 28, 1989, is overruled.

Your staff has informally suggested that, notwithstanding CERCLA's waiver of sovereign immunity with respect to interest, interest should not be payable here because the settlement disposed of this matter with a lump sum payment and does not refer to interest amounts beyond the lump sum. We would normally agree that a lump sum settlement is presumed to include all elements of the claim, including principle and interest, etc. Here, however, it was expressly agreed by the parties in their correspondence and the Satisfaction of Judgment (drafted by the government and signed by Colorado) that the settlement did not resolve or otherwise prejudice Colorado's claim for post-judgment interest against the United States. Thus, post-judgment interest was not included in, or precluded by, payment of the lump sum settlement.

We reject Colorado's claim that the government is also liable for the difference between the interest paid by Shell Oil under section 1961 as compared with that payable under CERCLA. The Justice Department staff has informally advised us that Justice, too, opposes payment of this additional amount. The existence and terms of the separate settlements between Colorado and the other parties suggest that, while the original action may have been initiated on a theory of joint and several liability, it did not conclude that way.

Attached is your Z file in this matter. Given its age, we recommend that you expedite processing of this matter.