Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

FMC Corp. v. Shoshone-Bannock Tribes

United States Court of Appeals, Ninth Circuit

November 15, 2019

FMC Corporation, Plaintiff-Appellant/ Cross-Appellee,
v.
Shoshone-Bannock Tribes, Defendant-Appellee/ Cross-Appellant.

          Argued and Submitted May 17, 2019 Seattle, Washington

          Appeal from the United States District Court for the District of Idaho D.C. No. 4:14-cv-00489-BLW B. Lynn Winmill, Chief District Judge, Presiding

          Gregory G. Garre (argued), Elana Nightingale Dawson, and Genevieve P. Hoffman, Latham & Watkins LLP, Washington, D.C.; Ralph H. Palumbo, Yarmuth Wilsdon PLLC, Seattle, Washington; Lee Radford, Parsons Behle & Latimer, Idaho Falls, Idaho; Maureen L. Mitchell, Fox Rothschild LLP, Seattle, Washington; for Plaintiff-Appellant/Cross-Appellee.

          Douglas B. L. Endreson (argued) and Frank S. Holleman, Sonosky Chambers Sachse Endreson & Perry LLP, Washington, D.C.; William F. Bacon, Shoshone-Bannock Tribes, Fort Hall, Idaho; Paul C. Echo Hawk, Echo Hawk Law Office, Pocatello, Idaho; for Defendant-Appellee/Cross-Appellant.

          Before: Michael Daly Hawkins and William A. Fletcher, Circuit Judges, and David C. Bury, [*] District Judge.

         SUMMARY[**]

         Tribal Court Jurisdiction

         The panel affirmed the district court's judgment enforcing a judgment of the Shoshone-Bannock Tribal Court of Appeals, which ruled that FMC Corporation must pay an annual use permit fee for storage of hazardous waste on fee lands within the Shoshone-Bannock Fort Hall Reservation, as required under a consent decree settling a prior suit brought against FMC by the Environmental Protection Agency under the Resource Conservation and Recovery Act.

         The panel held that the tribal court had regulatory and adjudicatory jurisdiction over the Shoshone-Bannock Tribes' suit against FMC under two "Montana exceptions." Under the first exception, a tribe may regulate the activities of nonmembers who enter into consensual relationships with the tribe or its members. Under the second Montana exception, a tribe retains inherent power to exercise civil authority over the conduct of non-Indians on fee lands within its reservation when that conduct threatens or has some direct effect on the political integrity, the economic security, or the health or welfare of the tribe. The panel held that, under the first Montana exception, the Tribes had regulatory jurisdiction to impose the permit fees because FMC entered into a consensual relationship when it signed a permit agreement with the Tribes. The panel held that FMC's conduct of storing hazardous waste on its fee lands within the reservation fell within the second Montana exception. The panel held that the district court erred in refusing, as a matter of comity, to enforce the judgment of the Tribal Court of Appeals under the second exception. The panel held that, in addition to regulatory jurisdiction, the Tribes had adjudicatory jurisdiction.

         The panel also held that the Tribal Court of Appeals did not deny FMC due process through a lack of impartiality.

          OPINION

          W. FLETCHER, CIRCUIT JUDGE:

         For over 50 years, FMC Corporation ("FMC") operated an elemental phosphorus plant on fee land within the Shoshone-Bannock Fort Hall Reservation ("Reservation") in Idaho. FMC's operations produced approximately 22 million tons of hazardous waste that is currently stored on the Reservation. The waste is radioactive, carcinogenic, and poisonous.

         In 1990, the U.S. Environmental Protection Agency ("EPA") declared FMC's plant and storage area, together with an adjoining off-reservation plant owned by J.R. Simplot, a Superfund Site under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"). In 1997, the EPA further charged FMC with violating the Resource Conservation and Recovery Act ("RCRA"). A Consent Decree settling the RCRA suit required FMC to obtain permits from the Shoshone-Bannock Tribes ("the Tribes"). FMC and the Tribes negotiated an agreement under which FMC agreed to pay $1.5 million per year for a tribal use permit allowing storage of hazardous waste. FMC paid the annual use permit fee from 1998 to 2001 but refused to pay the fee in 2002 after ceasing active plant operations. FMC has continued to store the hazardous waste on the Reservation despite its failure to pay the use permit fee.

         The Tribes sued FMC in Tribal Court, seeking inter alia payment of the annual $1.5 million use permit fee for waste storage. Under Montana v. United States, 450 U.S. 544 (1981), there are two potentially relevant bases for tribal jurisdiction in this case-two of the three so-called "Montana exceptions." First, "[a] tribe may regulate, through taxation, licensing, or other means, the activities of nonmembers who enter consensual relationships with the tribe or its members, through commercial dealing, contracts, leases, or other arrangements." Id. at 565. Second, "[a] tribe may also retain inherent power to exercise civil authority over the conduct of non-Indians on fee lands within its reservation when that conduct threatens or has some direct effect on the political integrity, the economic security, or the health or welfare of the tribe." Id. at 566. After years of litigation, the Tribal Court of Appeals held in 2014 that the Tribes have regulatory and adjudicatory jurisdiction over FMC under both Montana exceptions. The court held that FMC owed $19.5 million in unpaid use permit fees for hazardous waste storage from 2002 to 2014, and $1.5 million in annual fees going forward.

         After the decision of the Tribal Court of Appeals, FMC sued the Tribes in federal district court. FMC argued that the Tribes did not have jurisdiction under either of the Montana exceptions; that the Tribal Court of Appeals denied FMC due process because two judges on the Tribal Court of Appeals were biased against FMC; and that the judgment by the Tribal Court of Appeals was unenforceable. The Tribes counterclaimed, seeking an order recognizing and enforcing the judgment of the Tribal Court of Appeals. The district court held that the Tribes had regulatory and adjudicatory jurisdiction under both Montana exceptions, that the Tribal Court of Appeals had not denied FMC due process, and that the Tribal Court of Appeals' judgment was entitled to comity, and was therefore enforceable, under the first but not the second Montana exception.

         FMC appeals the district court's judgment in favor of the Tribes. The Tribes cross-appeal the district court's decision that the Tribal Court of Appeals' judgment is not enforceable under the second Montana exception.

         We affirm the judgment of the district court. We hold that the judgment of the Tribal Court of Appeals is enforceable under both Montana exceptions.

         I. Factual and Procedural Background

         The Shoshone-Bannock Tribes are a federally recognized Indian tribe comprising the eastern and western bands of the Northern Shoshone and the Bannock, or Northern Paiute, bands. The Tribes are organized under the Indian Reorganization Act of 1934, 25 U.S.C. §§ 5101 et seq., and are governed by the Fort Hall Business Council, a legislative body consisting of seven elected members. Shoshone-Bannock Tribes, Tribal Government, http://www2.sbtribes.com/government (last visited Sept. 19, 2019). The ancestral lands of the Tribes included land in present-day Idaho, Oregon, Nevada, Utah, Wyoming, Montana, and parts of Canada. See Shoshone-Bannock Tribes, http://www2.sbtribes.com/about (last visited Sept. 19, 2019). Pursuant to the Fort Bridger Treaty of 1868, 15 Stat. 673, and related executive orders, the Tribes today have sovereign authority over the Fort Hall Reservation. The Fort Hall Reservation originally encompassed approximately 1.8 million acres, or 2, 800 square miles. See id. The Reservation now encompasses approximately 544, 000 acres, or 840 square miles, in what is now southeastern Idaho. Ninety-seven percent of the Reservation is tribal land or land held in trust by the United States for the benefit of the Tribes and their members. Approximately three percent of the Reservation is fee land owned by non-members.

         A. FMC's Phosphorus Plant, Consent Decree, and Permit Fees

         From 1949 to 2001, FMC Corporation and its predecessors owned and operated an elemental phosphorus production plant occupying 1, 450 acres. Virtually all of the property is fee land on the Fort Hall Reservation. FMC's plant was the largest elemental phosphorus plant in the world. FMC Idaho, Plant History, http://fmcidaho.com/plant-history (last visited Sept. 19, 2019). For most of its operation, FMC obtained or mined raw materials for its plant from tribal and allottee lands on the Reservation. See, e.g., id.

         Hazardous waste from the plant's 52 years of operation contaminates FMC's land on the Reservation. Approximately 22 million tons of hazardous waste are stored in waste storage ponds on the site. Some storage ponds are capped. Some are not. Some ponds are lined. Some are not. Phosphorus, arsenic, and other hazardous materials contaminate an additional 1 million tons of loose soil and groundwater throughout the site. Millions of tons of slag containing radioactive materials contaminate the site. Somewhere between twenty one and thirty railroad tanker cars containing toxic phosphorous sludge are buried on the property. There is no lining underneath the tanker cars and no cap above them. As will be described in greater detail below, the hazardous waste in the storage ponds, tanker cars, soil, groundwater, and air at the site is radioactive, carcinogenic, and poisonous.

         In 1990, EPA declared the FMC plant, as well as an adjoining off-reservation plant owned by a different company, J.R. Simplot, as a National Priority List Superfund Site-the "Eastern Michaud Flats" site-under CERCLA. See 55 Fed. Reg. 35502, 35507. The National Priorities List is a list of the nation's "worst hazardous waste sites." EPA, Superfund Cleanup Process, https://www.epa.gov/superfund/superfund-cleanup-process (last visited Sept. 19, 2019).

         In 1997, EPA charged FMC with violating RCRA. RCRA regulates the disposal of solid and hazardous waste. To avoid litigation, FMC began negotiations with the EPA over the terms of a possible Consent Decree that would settle the RCRA suit. Though not a formal party, the Tribes participated in the negotiations. Among other measures, the proposed RCRA Consent Decree required construction of a treatment facility and additional waste storage ponds on FMC's fee land on the Reservation. As a condition to obtaining the Consent Decree, the EPA required FMC to obtain relevant permits from the Tribes. See Consent Decree, Case No. 4:98-cv-00406-BLW (D. Idaho, July 13, 1998).

         Pursuant to the Tribes' Land Use Policy Ordinance ("LUPO" or "Ordinance") and associated Guidelines, the relevant tribal permits included a building permit for construction of the treatment facility and waste storage ponds, and a use permit for storage of the hazardous waste. FMC and the Tribes met in July 1997 to discuss the permits. During negotiations, FMC consented to tribal jurisdiction. See, e.g., Letter from the Land Use Policy Commission to FMC (Aug. 6, 1997) (stating that following the July meeting, "We understood that FMC would recognize tribal jurisdiction within the exterior boundaries of the Fort Hall Indian Reservation."); Letter from J. Paul McGrath, Senior Vice President and General Counsel and Secretary of FMC, to the Fort Hall Business Council, Shoshone-Bannock Tribes (Oct. 30, 1997) (stating "[i]n connection with the land use permit, we did agree that we would consent to tribal jurisdiction in that area"). FMC applied for the building and use permits in August 1997.

         While negotiations were proceeding, the Tribes considered and then adopted amended LUPO Guidelines for storage of hazardous waste on the Reservation. The Tribes finalized the amended Guidelines in April 1998. The amended Guidelines required an annual use permit for storage of hazardous waste on the Reservation, with an annual fee of $5.00 per ton. Money from use permit fees was to be "deposited in the Shoshone-Bannock Hazardous Waste Management Program Fund," and to be used "to pay the reasonable and necessary costs of administrating the Hazardous Waste Management Program." Amendments to Chapter V: Fort Hall Land Use Operative Policy Guidelines, § V-9-2(B) (1998).

         The Land Use Policy Commission ("LUPC" or "Commission"), the Tribes' administrative and enforcement body for the Ordinance, notified FMC of the amended Guidelines. FMC estimated that the $5 per ton storage fee would cost over $110 million per year. FMC sought to negotiate a compromise with the Tribes. FMC Corp. v. Tribes, No. 4:14-CV-489-BLW, 2017 WL 4322393, at *2 (D. Idaho Sept. 28, 2017).

         In May and June 1998, the Tribes and FMC negotiated an agreement under which FMC agreed to a one-time fee of $1 million and an annual use permit fee of $1.5 million to cover FMC's storage of its hazardous waste on the Reservation. See Letter from LUPC to FMC (May 19, 1998). The parties agreed that FMC was required to obtain a use permit and to pay the $1.5 million fee even if FMC capped and closed the eleven hazardous waste ponds that were subject to the RCRA Consent Decree (the "RCRA ponds"). See id. (stating that FMC agreed to pay the annual use permit fee "beginning on June 1, 1999, and for every year thereafter"); Letter from J. Paul McGrath, Senior Vice President and General Counsel and Secretary of FMC, to LUPC (June 2, 1998) ("[I]t is our understanding that the permit covers the plant and that the $1.5 million annual fee would continue to be paid for the future even if the use of ponds 17-19 was terminated in the next several years."); Affidavit of Robert J. Fields, Division Manager of FMC (Oct. 20, 2000) (stating that he participated in the negotiations with the Tribes and that the June 2, 1998 letter from FMC was intended to confirm FMC's shared understanding that the use permit covered the entire facility and that FMC's agreement to pay $1.5 million per year would not end when Ponds 17, 18 and 19 were closed pursuant to the Consent Decree). FMC paid its first fee on June 1, 1998.

         A few months later, FMC and the EPA agreed to a Consent Decree to settle the RCRA suit. FMC Corp. v. Tribes, 2017 WL 4322393 at *3. Paragraph 8 of the Consent Decree memorialized the Decree's requirement that FMC obtain permits from the Tribes: "Where any portion of the Work requires a . . . tribal permit or approval, [FMC] shall submit timely and complete applications and take all other actions necessary to obtain all such permits or approvals." See Consent Decree, No. 4:98-CV-00406-BLW, ¶ 8 (D. Idaho July 13, 1998).

         Pursuant to the Consent Decree, FMC agreed to pay a fine to the U.S. government of $11.9 million, to install a range of upgrades in its handling of waste, and to cap nine of the eleven RCRA ponds covered by the Consent Decree. FMC Corp. v. Tribes, 2017 WL 4322393 at *3. Between 1999 and 2005, FMC capped and/or closed the RCRA ponds. Id. at *4. In 2005, FMC certified that the last of the RCRA ponds had been capped and/or closed.

         B. Prior Federal Court Proceedings

         From 1998 to 2001, FMC paid the Tribes the annual use permit fee of $1.5 million pursuant to its 1998 agreement with the Tribes. In December 2001, FMC stopped all active phosphorus processing operations at the site. When the $1.5 million use permit fee came due in 2002, FMC refused to pay it.

         After negotiations failed, the Tribes filed a motion in the RCRA Consent Decree action in federal district court, seeking a declaration that FMC was required by the Consent Decree to obtain tribal permits for waste storage on the Reservation. Id. The district court held that "(1) the Tribes had jurisdiction over FMC under the first Montana exception . . ., (2) FMC was required to apply for Tribal permits based on FMC's agreement to submit to tribal jurisdiction in ¶ 8 of the RCRA Consent Decree, (3) the Tribes were intended third-party beneficiaries of the Consent Decree and therefore had a right to enforce its terms, and (4) FMC was required to exhaust tribal remedies over any challenges to the Tribal permit decisions." FMC Corp. v. Tribes, 2017 WL 4322393 at *4; see United States v. FMC, No. CV-98-0406-E-BLW, 2006 WL 544505 (D. Idaho 2006).

         On appeal from the district court, we addressed only the third of the district court's holdings. We held that the Tribes were incidental rather than intended beneficiaries of the Consent Decree and therefore had no right to judicial enforcement of the Decree. United States v. FMC, 531 F.3d 813, 815 (9th Cir. 2008). We remanded to the district court with instructions to dismiss the Tribes' suit. Id. at 824. However, we noted that during the pendency of the appeal to our court "FMC began the process of applying for tribal permits, which is the main relief that the Tribes have sought in this action." Id. at 823. We explicitly noted and relied on a representation by FMC. We wrote:

At oral argument, the Tribes expressed their concern that, if we were to hold that the Tribes lack standing to enforce the Consent Decree, FMC would withdraw its permit applications and undo the progress made to date on the proper resolution of this dispute. In response to questioning from the panel, FMC's lawyer represented to the court that FMC understands that it has the obligation to continue, and will continue, with the current tribal proceedings to their conclusion. We accept that statement from counsel as binding on FMC.

Id. at 823-24.

         C. Tribal Proceedings

         In 2006, after entry of the district court's order but while FMC's aforementioned appeal to our court was still pending, FMC applied to the Tribes' Land Use Policy Commission for a building permit for demolition activities and a use permit for continued storage of the waste. Following notice and a public hearing, the Commission granted FMC's applications for the two permits. See Findings of Fact and Decision on FMC Application for Building Permit for Activities at the FMC Pocatello Plant (Land Use Policy Commission, Apr. 25, 2006); Findings of Fact and Decision on FMC Application for Special Use Permit for Activities at the FMC Pocatello Plant (Land Use Policy Commission, Apr. 25, 2006). The Commission concluded that it had regulatory jurisdiction under both Montana exceptions to require FMC to obtain the permits. The Commission assessed a one-time building permit fee at $3, 000 for demolition activities during that year. The Commission also assessed FMC's use permit fee for storage of hazardous waste at the previously agreed $1.5 million annual rate. The Commission provided, as an alternative, that FMC could choose to pay the higher $5 per ton fee based on the weight of the waste stored on FMC's property on the Reservation, pursuant to the Tribes' amended Guidelines. Id.

         FMC appealed the Commission's decision to the governing body of the Tribes, the Fort Hall Business Council ("Council"). On July 21, 2006, the Council affirmed the Commission's decision. Fort Hall Business Council Decision Regarding FMC's Appeals of the April 25, 2006 Land Use Permit Decisions (July 21, 2006). On February 8, 2007, the Commission issued a "letter resolution" setting the use permit fee at the agreed-upon $1.5 million. FMC again appealed the Commission's decision to the Council. On June 14, 2007, the Council affirmed the Commission's decision.

         FMC appealed the Council's and the Commission's decisions to the Tribal Court. (The Shoshone-Bannock tribal court system consists of a trial court and an appellate court-the "Tribal Court"and the "Tribal Court of Appeals.") The Tribal Court held inter alia that, pursuant to the Tribes' laws, the Tribes were required to submit their Land Use Policy Guidelines and the Hazardous Waste Management Act of 2001, upon which the tribal use permit requirement was premised, to the Secretary of the Interior for approval. FMC Corp. v. Shoshone-Bannock Tribes' Fort Hall Business Council and Land Use Policy Commission, Case Nos. C-06-0069, C-07-0017, C-07-0035 (Shoshone-Bannock Tribal Court, Civil Division, May 21, 2008). The Tribal Court found that the Guidelines and the Act had not been approved by the Secretary of the Interior, and therefore, were unenforceable as a matter of tribal law.

         In June 2008, the Tribes and FMC cross-appealed to the Tribal Court of Appeals. The members of that court were Judges Fred Gabourie, Mary Pearson, and Cathy Silak. None of them is a member of the Shoshone-Bannock Tribes. Judge Gabourie is a former California state court judge, former Chief Judge for the Kootenai Tribe of Idaho, and a former prosecutor and city attorney. Judge Pearson is a former Chief Judge for the Spokane Tribe and the Coeur d'Alene Tribe. Judge Silak is a former Justice of the Idaho Supreme Court.

         1. Conference Remarks by Judges Gabourie and Pearson

         While the case was pending before the Tribal Court of Appeals, Judges Gabourie and Pearson spoke at a conference entitled "Tribal Courts: Jurisdiction and Best Practices" convened by the University of Idaho College of Law on March 23, 2012. In the audience were law students, tribal court practitioners, other lawyers, and members of the public. The conference was videotaped. FMC's counsel attended the judges' presentation.

         Judge Gabourie described the manner in which tribal appellate court decisions come before federal courts, and he noted that very few federal court judges have experience with tribes. He stated that "every court has-should be impartial" and "a good opinion comes [from] both sides, both parties. Because both parties rely on a good opinion, strong opinion." He stated that a tribal appellate court decision should discuss the tribe's tradition and culture so that judges in the federal system have some context when they read the decision. He stated that an appellate judge has a responsibility to remand the case for testimony from expert witnesses if there is a weakness in the record. He discussed limitations on tribes' sovereign powers under current law, and how, in light of Supreme Court decisions like Montana, "which has just been murderous to Indian tribes," it is important for tribes to support good appellate courts that can issue strong opinions in the event issues are heard in a federal court. He discussed Nevada v. Hicks, 533 U.S. 353 (2001), and Strate v. A-1 Contractors, 520 U.S. 438 (1997), noting that the tribal appellate court decisions had not been good, and that, as a result, the U.S. Supreme Court did not have vital information about the tribes' cultures and traditions.

         Judge Pearson discussed the importance of tribal attorneys creating a record at the tribal trial court level. She stated tribal attorneys should involve the tribe in the "big cases." She noted that they had a big case at that moment that they knew was "going to go up," so they were saying prayers, reading cases, and "trying to do . . . the history." She described Bugenig v. Hoopa Valley Tribe, 266 F.3d 1201 (9th Cir. 2001), as a case where the tribal lawyers had effectively laid out the history for the tribal trial and appellate courts. She discussed the importance of this responsibility-how "[you] just need to make sure that you do the job right"-since non-Indian federal judges were reviewing the decisions.

         In response to questions, Judge Gabourie discussed the value of anthropologists and scientists testifying in tribal court cases. He stated that the use of experts in Bugenig was a model for tribes seeking to protect their sovereignty, traditions, and cultures. Expanding on his earlier discussion of experts, Judge Gabourie stated:

You know, there's one area, too, there are tribes that have had mining and other operations going on, on the reservation, you know, and then the mining company or whatever, manufacturing company, disappears. They leave, you know. They've . . . either dug everything they could, and then the ground is disturbed, sometimes polluted beyond repair. And you sit as . . . an appellate court justice, and you're starting to read the cases that come down from the tribal court. And you're saying to yourself, you know, we know that . . . there's pollution, that the food that they're eating is polluted, the water's polluted, but nobody proved it. And while John Jones said that it is polluted, you know, John Jones don't count. But the tribal courts have got to realize that you need expert witnesses. You need chemists and whatever to get out of testifying. It may cost a little, but so the appellate court is in a position of remanding that case back and say "do it."
You know, you made-and you're really being fair to both sides. . . . That's why you need the expert witnesses to cover those loose ends, you know, so when it finally goes to the-whatever circuit it may go to, they can see that there's been some experts testifying on behalf. Maybe experts that testify on behalf of the mining company, but experts nonetheless. Well, you can be damn sure that the mining company's going to spend the money to protect their interest, you know.
So the appellate courts have got to step in and in their own way, make a good, balanced decision, a hundred-percenter for both sides, but be sure to protect the tribe. And that's my own opinion, that last sentence.

         Judge Pearson clarified, "We're not guaranteeing anybody anything." Judge ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.