United States of America v. Government of the Virgin Islands

PRECEDENTIAL
IN THE UNITED STATES COURT OF
APPEALS FOR THE THIRD CIRCUIT
_______________
NO. 03-1727
________________
UNITED STATES OF AMERICA,
Appellee
v.
GOVERNMENT OF THE VIRGIN
ISLANDS,
Appellant
__________________________
On Appeal From The District Court Of
The Virgin Islands
(No. 84-CV-104)
Honorable Thomas K. Moore, District
Judge
__________________________
Argued December 9, 2003
Before: NYGAARD, BECKER, and
STAPLETON, Circuit Judges.
(Filed April 2, 2004)
HOWARD J. BASHMAN (Argued)
1250 Virginia Drive
Fort Washington, PA
IVER A. STRIDIRON
Attorney General
ELLIOTT DAVIS
Solicitor General
MICHAEL LAW
Assistant Attorney General
Virgin Islands Department of Justice
48B-50C Kronprindsens Gade
GERS Building, 2nd Floor
St. Thomas, VI 00802
Counsel for Appellant
NINA DALE
Office of Regional Counsel
United States Environmental Protection
Agency
New York, NY
THOMAS L. SANSONETTI
Assistant Attorney General
DAVID M. NISSMAN
United States Attorney, Virgin Islands
DAVID RAYMOND LEWIS
Deputy United States Attorney, Virgin
Islands
WILLIAM D. DILLON
Assistant United States Attorney, Virgin
Islands
JOHN A. BRYSON
DONALD G. FRANKEL
KATHERINE J. BARTON (Argued)
United States Department of Justice,
Environment & Natural Resources
Division,
Appellate Section
P.O. Box 23795 L’Enfant Plaza Sta.
Washington, D.C. 20026
Counsel for Appellee

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_____________________
OPINION
______________________
BECKER, Circuit Judge.
This is an appeal by the
Government of the Virgin Islands (the
“GVI”) from an order of the District Court
of the Virgin Islands in a Clean Water Act
enforcement action brought by the United
States pursuant to 33 U.S.C. § 1319(b).
The case was commenced two decades
ago, and in 1985, the United States and the
GVI entered into a consent decree
pursuant to which the GVI agreed to make
certain improvements to its wastewater
systems so as to come into compliance
with effluent limitations in its discharge
permits. The GVI repeatedly failed to
comply with the consent decree’s
requirements, and in 1991, the United
States filed a motion seeking enforcement
of the consent decree. This ultimately
resulted in the parties entering into an
amended decree in 1996 which placed new
requirements on the GVI.
The GVI did not meet the
requirements set forth in the amended
decree, and raw sewage soon was
bypassing the treatment plant and running
down streets in St. Croix. In February of
2000, in response to the noncompliance,
the United States moved the District Court
to order the GVI to halt the discharge of
raw sewage and to make necessary repairs.
Acting on the motion, the District Court
entered an order requiring specific repairs
and restoration of the wastewater treatment
plant, to be completed by deadlines set in
the order.
Following a hearing on September
27, 2001, pursuant to an order of the
District Court requiring the GVI to show
cause why it should not be held in
contempt “for its continued and flagrant
failure” to comply with the decree and
court orders, the Court issued further
orders requiring compliance. The
Governor of the Virgin Islands responded
to these orders by declaring a state of
emergency under 31 V.I. Code §
239(a)(1), which allowed the Virgin
Islands Department of Public Works
(“DPW”) to award contracts by
negotiation rather than by competitive
bidding. During the proclaimed state of
emergency, the GVI entered into a
negotiated contract with a company called
Global Resources Management (“GRM”),
which was to provide the services
necessary to achieve compliance.
After further hearings the District
Court found that the process leading to the
GRM contract was likely tainted by
political corruption, and that GRM itself
was a start-up company with no
equipment, assets, or experience in
construction. The United States filed a
motion to show cause why performance of
the GRM contract should not be enjoined,
and after still further proceedings, the
District Court entered an order in March
2003 enjoining the GVI from proceeding
with or reviving the GRM contract; setting

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deadlines for certain repairs; requiring the
GVI to make a net deposit of $7.4 million
into a trust fund to assure the repairs; and
prescribing procedures for future use of
emergency proclamations and contracting.
This appeal, which challenges that
order, raises several issues. First, the GVI
argues that the District Court lacked
jurisdiction—on mootness grounds— to
enjoin the contract between the GVI and
GRM because the GVI had voluntarily
terminated the contract two days before the
hearing. We reject this contention because
it is well established that the voluntary
cessation of a challenged practice will not
automatically render a case moot, unless
subsequent events make it absolutely clear
that the wrongful behavior will not recur,
a test not met here.
Second, the GVI submits that the
District Court exceeded its jurisdiction,
and in particular the strictures of the
Eleventh Amendment, when it entered an
injunction requiring the GVI to comply
with territorial law in contracting for
repairs to the wastewater system in St.
Croix. In particular, the GVI relies on
Pennhurst State School & Hospital v.
Halderman, 465 U.S. 89 (1984), in
arguing that a federal court lacks
jurisdiction to order a sovereign state or
territory to conform its conduct to state or
territorial law. The United States asserts
two broad grounds for rejecting this
assault on the District Court’s jurisdiction:
first, that the Eleventh Amendment does
not apply to suits brought by the United
States; and second, that the Virgin Islands
is not a state for purposes of the Eleventh
Amendment and hence lacks sovereign
immunity. The United States also
advances a narrower ground: that any
potential Eleventh Amendment problem is
obviated by the fact that the GVI
consented to suit— and enforcement— in
agreeing to the amended decree.
While these first two arguments
have considerable force, we need not reach
them, for we can dispose of the case on the
narrower grounds stemming from the
existence of the consent decree. The order
that the District Court enforces is a federal
decree implementing a federal statute. The
enforcement order, itself entered in the
exercise of broad equitable powers, was
intended to vindicate an agreement made
by territorial officials to comply with
federal law. The District Court’s
construction of territorial law was
therefore not the underpinning of its
remedial order. More particularly, the
Court’s ordering the GVI (1) to factually
and legally justify its future use of
emergency proclamations; (2) to award
contracts for projects exempted from the
statutory competitive bidding procedures
on a competitive basis and via formal
advertising where practicable; (3) to solicit
written offers from other qualified sources;
(4) to consider certain factors in
conducting contract negotiations; and (5)
otherwise to attempt to ensure that contract
prices are favorable and contractors are
responsible, was entirely warranted by the
Court’s findings that the procedures used
by the GVI to negotiate contracts for
projects required by the December 2001
order were likely to frustrate compliance

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with that order. Thus, the District Court
could require that the GVI follow certain
contracting procedures when awarding
contracts for projects required pursuant to
the amended decree. Under these
circumstances, neither Pennhurst nor the
Eleventh Amendment are implicated,
much less offended.
Concluding that the District Court
properly exercised jurisdiction, we reach
the merits issues. The GVI asserts that the
District Court abused its discretion in
issuing an injunction because: (1) the
emergency proclamations were valid; (2)
the Court failed to defer to Virgin Islands
agencies’ contracting decisions; and (3)
the Court lacked the legal authority to
enter the specific injunctive relief granted.
We disagree, and conclude that the District
court did not abuse its discretion in
enjoining the GRM contract or in ordering
the GVI to comply with territorial
competitive bidding law in future contracts
under the amended decree or December
2001 order. In view of the long and sorry
history of noncompliance and the seamy
circumstances of the GRM contract, the
District Court’s order was surely within
the ambit of its broad discretion. Indeed,
the District Court correctly found that the
GVI’s award of the contract to GRM—a
company “with no equipment, no
experience, no assets, and no construction
performance bond”—was likely to
frustrate compliance with the amended
decree and the December 2001 order, and
that the “flawed contract” would not
“protect the health and safety of the public
. . . by insuring that the sewer repairs
would be done competently, on time, and
at a reasonable cost.” 248 F. Supp. 2d at
439. In view of the foregoing, the order
enjoining the GRM contract and requiring
the GVI to comply with territorial
competitive bidding law in future contracts
under the amended decree or December
2001 order was within the scope of the
District Court’s broad authority and did
not constitute an abuse of discretion.
The final merits issue with which
we must deal is whether the District Court
abused its discretion in requiring the GVI
to deposit an additional $7.4 million into
the District Court’s wastewater repair
account. This was not among the relief the
United States sought in its motion for an
injunction, but the Court, at the behest of
the United States Attorney, decided to tack
on this additional relief to vindicate an
earlier order with which the Court believed
the GVI had fallen out of compliance.
That order directed the GVI to complete
compliance with certain provisions of the
December 2001 order, and required the
GVI to deposit into the trust fund the
amount needed to implement the projects
listed in an exhibit attached to the order, an
amount subsequently estimated by the GVI
to be $16 million. The GVI did not appeal
the December 2001 order then, and it does
not challenge its validity now, and hence it
is bound by the order. However, the $7.4
million consists of $4 million more than
had previously been estimated or required
(to cover additional projects and increased
costs for projects not included in the
original estimate), and the record seems
devoid of any explanation of why the $4

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million increase was necessary. We will
therefore vacate that portion of the order,
and remand so that the District Court can
make findings of fact as to whether the $4
million increase is actually justified and
conclusions of law as to whether it is
proper. In all other respects, the order of
the District Court will be affirmed.
I. Facts and Procedural History
As we have noted, this case derives
from a suit originally filed by the United
States against the GVI in March 1984 for
violations of the Clean Water Act
(“CWA”). In 1985, the United States and
the GVI entered into a consent decree, in
which the GVI agreed to make certain
improvements to its wastewater systems
and to come into compliance with the
effluent limitations in its discharge
permits. The United States contends that
the GVI repeatedly failed to comply with
the consent decree’s requirements, and the
GVI itself admits that there was a “long
period of inaction in complying with the
terms of the consent decree.” In 1991, the
United States moved for enforcement of
the consent decree, which ultimately
resulted in the parties entering into an
amended decree in 1996 that placed new
requirements on the GVI.
Despite the entry of the amended
decree, the GVI continued repeatedly to
violate CWA effluent limitations due to its
failure to properly operate and maintain its
wastewater treatment plants. In addition,
there were persistent pump station failures
and broken sewer lines, particularly on St.
Croix. The GVI has conceded that its
failure to comply with the amended decree
caused “nearly a complete and total
breakdown of the St. Croix Waste Water
Treatment facilities in 1999,” so that
sewage was bypassing the treatment plant,
and raw sewage was running down the
streets. The senior manager responsible
for compliance with the amended decree
stated that, upon starting her position in
1999, she was “shock[ed]” at the duration
of the raw sewage bypasses. In addition,
the St. Croix Waste Water Treatment Plant
(“WWTP”) was discharging “dangerously
septic” effluent into the Caribbean Sea,
threatening permanent damage to the reef.
As a result of the failed compliance,
in February of 2000, the United States
moved the District Court to order the GVI
to halt the discharge of raw sewage and
make necessary repairs. In response to the
motion, the District Court issued an order
on February 12, 2000 requiring specific
repairs and restoration of the wastewater
treatment plant, to be completed by
deadlines set in the order. On March 13,
2000, at the GVI’s request, the District
Court granted an extension of the
deadlines set in the February 12, 2000
order. On April 28, 2000, the District
Court found that the GVI had failed to
comply with several aspects of its order
and that the discharge of raw sewage had
not been halted, and so on May 30, 2000,
the District Court once again entered an
order revising the deadlines. In issuing
both the April and May orders, the District
Court warned that contempt hearings
would be held if the deadlines were not
met.

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During an August 29, 2000
inspection, the District Court noted that
although the GVI had complied with
portions of the Court’s orders, the
discharge of raw sewage continued, and
again the Court set new deadlines. In an
order dated December 13, 2000, the Court
noted that, while some improvements had
been made, the treatment system “is only
marginally functional and continues to
teeter on the edge of collapse as a result of
inadequate attention from successive
government administrations.” 248 F.
Supp. 2d at 425. The District Court once
again issued revised deadlines that the
GVI promised it could meet.
Nevertheless, the GVI did not
comply with the amended decree and the
District Court’s orders. On September 27,
2001, the Court found that the GVI had
allowed the St. Croix facilities to fall into
a “state of dismal repair” and ordered it to
show cause why it should not be held in
contempt “for its continued and flagrant
failure” to comply with the decree and
court orders. At the show cause hearing
on October 18, 2001, the Governor of the
Virgin Islands conceded that the GVI had
not complied with the Court’s orders, that
“things haven’t been done right” for
fifteen years, and that the GVI “ha[sn’t]
done what [it’s] supposed to do.” The
Virgin Islands Attorney General admitted
that the GVI had been merely “chicken-
fixing” the sewer system. The Governor
also reported to the Court that although the
GVI had come into a $100 million
windfall due to an advance tax payment by
a large taxpayer, only $250,000 of those
funds had been allocated to wastewater
treatment.
On December 19, 2001, the District
Court issued an order requiring the Virgin
Islands Department of Public Works (the
“DPW”) to complete certain repairs and
projects by specific deadlines. The order
also directed the GVI to determine the
amount of funds needed to complete the
projects and to deposit those funds into a
trust fund dedicated to funding projects
under the amended decree. Meanwhile,
on October 9, 2001, the Governor had
declared a state of emergency under 31
V.I. Code § 239(a)(1). This emergency
proclamation allowed the DPW to award
contracts by negotiation rather than by
competitive bidding. The proclamation
declared a state of emergency for a ninety-
day period and was followed by three
subsequent proclamations that extended
the state of emergency through mid-
January 2003.
After the Court issued its order, the
DPW had some discussions with two
companies, Perma-Liner Industries, Inc.
a n d A z u r i x , I n c . , c o n c e r n i n g
implementation of the sewer repairs but
did not competitively bid or advertise the
contracts and did not receive bids for the
scope of work eventually contained in the
GRM contract. Rather it pursued a
contract with GRM . The District Court, in
findings of fact unchallenged by the GVI,
found that the effort to obtain the contract
was initiated by Ohanio Harris—a special
a s s i st a n t t o G o v e r n o r C h a r l e s
Turnbull—who also served as president of
GRM until March 2002. Harris initiated

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contract negotiations with DPW without
ever revealing his personal association
with GRM .
The Court found that the process
leading to the GRM contract “reek[ed] of
politics and political influence, and quite
possibly of political corruption.” 248 F.
Supp. 2d at 422. It found that while the
DPW staff disputed the scope of work in
the contract and tried to include contract
terms that would allow DPW to keep
control of the quality, scope and cost of the
work, they were “no match for the
corrupting political pressure from the
Turnbull Administration.” Id. The Court
particularly cited the involvement of
Ohanio Harris, who not only initiated
contract negotiations with GRM while he
had a conflict of interest, but also kept
pressure on DPW staff to move the GRM
contract through the negotiation process.
The District Court found that the
final contract was stripped of DPW’s
attached specifications for the work,
contained no firm deadlines for the
included projects, and had no effective
liquidated damages clause to enforce
compliance with the vague deadlines that
were included. In addition, the Court
found that the contract contained an open-
ended provision for cost overruns that was
added after Ashley Andrews, an influential
lawyer and also a GRM principal,
proposed such a provision directly to the
Governor. Finally, the Court found that
GRM was a new company; lacked even
operating licenses at the time negotiations
were started; and had virtually no
equipment, assets, or construction
experience, let alone the specialized heavy
civil construction experience required for
the repairs.1
The GRM contract, in the amount
of approximately $3.6 million, was signed
by the Governor on December 20, 2002.
DPW recommended that the Governor
sign the contract but not release it, because
GRM had not obtained a performance
bond. On January 23, 2003, the United
States filed a motion to show cause why
performance of the GRM contract should
not be enjoined. The motion made
reference to the history of GRM and of the
contract described above, and pointed out
the lack of assurances that the contract
would be performed in accordance with
the contract specifications and the Court’s
December 2001 order, as amended. The
United States’ motion further asserted that
the contract posed a risk of project failure
and delay, which would result in an even
greater risk of discharges of raw sewage
and accompanying threats to the
environment and human health. It is
noteworthy that none of the sewer repairs
required by the December 2001 order had
been performed at the time the District
1We note in passing that a federal
grand jury has recently indicted Harris,
Andrews, and several other participants
in GRM for, among other federal and
territorial offenses, bribery, conspiracy,
wire fraud, and violation of territorial
conflict of interest laws. See Lee
Williams, Five Charged with Corruption
over St. Croix Sewer Contract, V.I. Daily
News, Feb. 21, 2004, at 2-3.

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Court ruled on the United States’ motion,
save for cleaning the manholes at one
location. The unperformed work included
repairs to one site from which tens of
thousands of gallons of sewage per day
had been flowing for two years, and
another where a hole had been open in a
sewer pipe for seven years.
On January 28, 2003, five days after
the United States filed its motion for
injunction, the Governor ordered that, “in
the best interest” of the GVI, the contract
should be terminated. The next day, the
GVI moved to cancel the show cause
hearing on the basis of mootness. The
District Court denied the motion and held
hearings on January 30 and February 3,
2003. On February 13, 2003, the Court
held another hearing, on the status of the
amended decree projects, which also
addressed some matters pertaining to the
GRM contract and the December 2001
order. In its March 2003 ruling on the
motion to show cause (which is the subject
of this appeal), the District Court found
that the GRM contract would likely
frustrate compliance with the December
2001 order. In brief, the Court concluded
that the contract was entered into in
violation: (1) of Virgin Islands law
because the Governor had improperly
invoked the state of emergency exception
to the competitive bidding requirements,
id. at 436-39; and (2) of the December
2001 order, id. at 439. The Court enjoined
the GVI from proceeding with or reviving
the GRM contract, set deadlines for certain
repairs, and required the GVI to deposit
$7.4 million into the trust fund.2 The $7.4
million supposedly made up the deficiency
in the original $16 million that the GVI
had estimated was required to fund the
projects identified in the December 2001
order, plus an additional $4 million to
cover additional projects and increased
costs not included in the original estimate.
This appeal followed.
II. Jurisdiction
The District Court had federal
question jurisdiction under 48 U.S.C. §
1612(a). We have appellate jurisdiction
over this interlocutory order pursuant to 28
U.S.C. § 1292(a)(1). However, the GVI
contends that the District Court lacked
jurisdiction to enjoin the contract on two
separate Article III grounds. First, it
contends that the Governor’s voluntarily
termination of the GRM contract prior to
the hearing rendered the injunction
proceeding moot. We exercise plenary
review of a District Court’s ruling on
mootness. See Ruocchio v. United Transp.
Union, 181 F.3d 376, 382 (3d Cir. 1999).
Second, the GVI contends that the
Eleventh Amendment or other related
principles of sovereign immunity barred
the District Court from directing the GVI
to comply with territorial law. We also
exercise plenary review of a District
Court’s ruling on immunity. See Koslow v.
Pennsylvania, 302 F.3d 161, 167 (3d Cir.
2This figure is the net of $9 million
that the District Court actually ordered
the GVI to deposit, and $1.6 million that
had already been deposited.

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2002). The parties dispute whether the
immunity defense was ever raised in the
District Court, but we need not resolve the
issue as Eleventh Amendment immunity is
relevant to jurisdiction and may be raised
at and considered by the Court of Appeals
in the first instance. See Sullivan v.
Barnett, 139 F.3d 158, 178 (3d Cir. 1998),
rev’d on other grounds sub nom. Am.
Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S.
40 (1999).
A. Mootness
Under Article III, section 2 of the
U.S. Constitution, federal judicial power
extends only to cases or controversies.3 If
a claim does not present a live case or
controversy, the claim is moot, and a
federal court lacks jurisdiction to hear it.
See United States Parole Comm’n v.
Geraghty, 445 U.S. 388, 396-97 (1980).
As the United States points out, voluntary
cessation does not automatically render the
case moot. In Friends of the Earth, Inc., v.
Laidlaw Environmental Services, 528 U.S.
167, 189 (2000), the Supreme Court held
that “it is well settled that ‘a defendant’s
voluntary cessation of a challenged
practice does not deprive a federal court of
its power to determine the legality of the
practice’” (quoting City of Mesquite v.
Aladdin’s Castle, Inc., 455 U.S. 283, 289
(1982)). The standard for “determining
whether a case has been mooted by the
defendant’s voluntary conduct is stringent:
A case might become moot if subsequent
events made it absolutely clear that the
allegedly wrongful behavior could not
reasonably be expected to recur.” Id.
(citing United States v. Concentrated
Phosphate Export Ass’n, 393 U.S. 199,
203 (1968)). Moreover, the party alleging
mootness bears the “heavy,” even
“formidable” burden of persuading the
court that the challenged conduct cannot
reasonably be expected to resume. Id. at
189-90.
In our view, the GVI has failed to
meet its heavy burden of demonstrating
that there is no reasonable expectation that
it would again enter into a contract similar
to the one at issue. The GVI submits that
the record would not support a finding that
it terminated the contract because of this
litigation and that there was no probability
that the contract would be reinstated. It
also contends that the type of public
statement made by the Governor is “quite
weighty evidence that the Government of
the Virgin Islands would not simply
change its mind and attempt to reinstate
the challenged contract after the district
court dismissed the federal government’s
request for an injunction as moot.” We are
unpersuaded.
The timing of the contract
termination—just five days after the
United States moved to invalidate it, and
just two days before the District Court’s
hearing on the motion— strongly suggests
3 The District Court of the Virgin
Islands is an Article IV court, but is
authorized by statute to exercise
jurisdiction equivalent to an Article III
court. See 48 U.S.C. § 1612(a); In re
Jaritz Indus., Ltd., 151 F.3d 93, 96-98
(3d Cir. 1998).

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that the impending litigation was the cause
of the termination. Additionally, the
Governor’s sole justification for the
termination of the contract was that “such
termination is in the best interest of the
Government.” But this statement is
extremely general, and surely does not
provide any assurance that a similar
contract would not be entered into again.
Cf. Pennsylvania v. Porter, 659 F.2d 306,
313 (3d Cir. 1981) (en banc) (holding that
a case was not moot where city failed to
provide assurance that policeman charged
with misconduct would not be rehired or
that challenged conduct would not be
resumed). In short, the mere fact that the
Governor has terminated a contract in this
one instance with litigation lurking a
couple of days away gives no assurance
that a similar contract will not be entered
into in the future.
Additionally, the GVI’s continued
defense of the validity and soundness of
the contract prevents the mootness
argument from carrying much weight. See
Sasnett v. Litshcer, 197 F.3d 290, 291-92
(7th Cir. 1999) (a voluntary alteration of a
regulation does not moot case where State
vigorously defends old regulation). In the
District Court, the GVI proffered
numerous factual findings to the effect that
the contract was a “good deal,” reasonable
in price and scope of work, not untimely
given the pressures on the GVI, and
entered into in a legal manner. This stance
does not bespeak of a genuine belief that
the contract was of a type that would not
be contemplated again.
This case is much like Dow Chem
Co. v. United States EPA, 605 F.2d 673,
679 (3d Cir. 1979), where we held that
when a party does not change its
“substantive stance” as to the validity of
the contract but merely terminates it for
allegedly purely practical reasons (such as
avoiding litigation), the termination of the
contract does not render the case moot.
Because we agree with the United States
that the voluntary termination of this
particular contract did not clearly indicate
that the GVI would not reenter this
contract or enter a similar one in the
future, we hold that the District Court did
not err in determining that the issue was
not moot.
B. Sovereign Immunity
As noted above, the GVI maintains
that the District court exceeded its
jurisdiction when it entered the injunction
because of the strictures of the Eleventh
Amendment in general and the Supreme
Court’s decision in Pennhurst in
particular. The United States first counters
that the Virgin Islands is not a state for
purposes of the Eleventh Amendment.
Territories are subject to the ultimate
control of Congress, United States v.
Wheeler, 435 U.S. 313, 319 (1978), and
Congress exercised its authority to regulate
and define the government of the Virgin
Islands through the Organic Act, originally
passed in 1936, and substantially revised
in 1954 (when it became known as the
Revised Organic Act (“ROA”)). See 48
U.S.C. § 1541 et seq. The keystone of the
government’s argument is that while the
ROA lists the specific provisions of the
United States Constitution that are

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applicable to the Virgin Islands, it omits
any mention of the Eleventh Amendment.4
The United States argues that the
deliberate omission of the Eleventh
Amendment expresses Congress’s intent to
exclude the Virgin Islands from the
protections afforded by that Amendment.
See Gov’t of V.I. v. Bryan, 818 F.2d 1069,
1072 (3d Cir. 1987) (recognizing that any
attributes of sovereignty the Virgin Islands
has derive from the Revised Organic Act).
The GVI counters with cases such
as Harris v. Boreham, 233 F.2d 110, 114-
16 (3d Cir. 1956), and Jackson v. West
Indian Co., 944 F. Supp. 423, 429 n.6
(D.V.I. 1996), suggesting that these cases
establish that the Virgin Islands possesses
Elev enth Am endm ent i m m uni ty.5
Resolution of this question would have
important consequence: If decided for the
United States it would free suitors against
the GVI from the strictures of Ex parte
Young, 209 U.S. 123 (1908), with respect
to suits for retroactive relief. Cf. Edelman
v. Jordan, 415 U.S. 561 (1994).
Fortunately, however, we need not decide
4The relevant section of the ROA
reads:
The following provisions
of and amendments to the
Constitution of the United
States are hereby extended
to the Virgin Islands to the
extent that they have not
been previously extended
to that territory and shall
have the same force and
effect there as in the United
States or in any State of the
United States: article I,
section 9, clauses 2 and 3;
article IV, section 1 and
section 2, clause 1; article
VI, clause 3; the first to
ninth amendments
inclusive; the thirteenth
amendment; the second
sentence of section 1 of the
fourteenth amendment; and
the fifteenth and nineteenth
amendments.
48 U.S.C. § 1561.
5The United States would discount
these cases. Harris merely established
that Congress could create a territorial
government for an unincorporated
territory and confer upon it any
autonomy similar to that of the states,
and that the territorial body politic thus
created may be endowed with attributes
of sovereignty, such as nonliability to
suit without its consent. It held that by
the Organic Act of June 22, 1936,
Congress did the same with respect to the
two municipalities which then
constituted the Virgin Islands. Jackson
is a non-binding district court case in
which the Court simply declared that
“the Government of the Virgin Islands
has an autonomy similar to that of a state,
including such attributes as sovereign
immunity.” It is clear on the face of
these cases that neither speaks to the
Eleventh Amendment sovereign
immunity question.

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12
the matter on this ground, or on the other
broad ground asserted by the United
States—that the Eleventh Amendment
does not apply in suits brought by the
United States6 — beca use w e fin d
jurisdiction on a narrower basis, which
revolves around the fact that this action
springs from a consent decree.
As we have explained above, the
order that the District Court enforces was
a federal decree implementing a federal
statute. The enforcement order, itself
entered in the exercise of the District
Court’s broad equitable powers, was
intended to vindicate an agreement made
before the Court by territorial officials to
comply with federal law. The Court’s
construction of territorial law was
therefore not the underpinning of its
remedial order. More particularly, the
District Court’s order—which we set out
in the margin7—was warranted by the
District Court’s findings that the
procedures used by the GVI to negotiate
contracts for projects required by the
December 2001 order were likely to
frustrate compliance with that order.
Thus, the District Court could require that
the GVI follow certain contracting
procedures when awarding contracts for
projects required by the amended decree.8
U nder these circumstances
Pennhurst and the Eleventh Amendment
simply are not implicated. This ground of
decision is supported by the Supreme
Court’s recent opinion in Frew v.
Hawkins, 124 S. Ct. 899 (2004). In Frew,
the question before the Court was whether
t h e E l e v e n t h A m e n d m e n t b a rs
enforcement of a federal consent decree
entered into by state officials. The
petitioners, mothers of children eligible for
services under a federal benefits program
in Texas, filed a civil action on behalf of
their children pursuant to 42 U.S.C. §
1983, alleging that the Texas program did
not satisfy the requirements of federal law,
and seeking injunctive relief against
6The United States relies on cases such
as Arizona v. California, 460 U.S. 605
(1983), and United States ex rel. Santa
Ana Indian Pueblo v. University of New
Mexico, 731 F.2d 703 (10th Cir. 1984).
7The Court ordered the GVI (1) to
factually and legally justify its future use
of emergency proclamations; (2) to
award contracts for projects exempted
from the statutory competitive bidding
procedures on a competitive basis and
via formal advertising where practicable;
(3) to solicit written offers from other
qualified sources; (4) to consider certain
factors in conducting contract
negotiations; and (5) otherwise to
attempt to ensure that contract prices are
favorable and contractors are
responsible.
8Though not critical to our analysis
here, we note that this is true a fortiori
when (1) the suit is brought by the
United States, a greater sovereign, in its
own courts, and (2) the injunctive decree
is not only consistent with territorial law,
but affirmatively incorporates it.

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13
various officers and agencies of the State
of Texas. The individuals were sued in
their official capacities and were
represented throughout the litigation by the
Texas attorney general. The claims
against the state agencies were dismissed
on Eleventh Amendment grounds. The
state officials remained in the suit, and the
District Court certified a class consisting
of children in Texas entitled to services.
F o l l o w i n g e x t e n s iv e s e t tl e m e n t
negotiations, the petitioners and the state
officials agreed to resolve the suit by
entering into a consent decree. The
District Court conducted a fairness
hearing, after which it approved and
entered the consent decree.
Two years after the consent decree
was entered, the petitioners moved to
enforce it in the District Court, alleging
noncompliance. The officials denied the
allegations and maintained that the
Eleventh Amendment rendered the decree
unenforceable even if they were not in
compliance. The District Court rejected
the Eleventh Amendment argument, but
the Court of Appeals disagreed, reasoning
that: (1) the program was good enough to
comply with the general mandates of
federal law; and (2) because the petitioners
had not established a violation of federal
law, the District Court lacked jurisdiction
to remedy the consent decree violations.
The Supreme Court reversed,
rejecting reliance on Pennhurst. Justice
Kennedy wrote:
Jurisdiction [in Pennhurst]
was improper because “[a]
federal court’s grant of
relief against state officials
on the basis of state law,
whether prospective or
r e t ro a c t iv e , d o e s n o t
vindicate the supreme
authority of federal law.”
Here, by contrast, the order
to be enforced is a federal
decree entered to implement
a federal statute. The decree
d o e s i m p l e m e n t t h e
Medicaid statute in a highly
detailed way, requiring the
state officials to take some
steps that the statute does
not specifically require. The
s am e cou l d be sa id,
however, of any effort to
implement [a] general . . .
statute in a particular way.
The decree reflects a choice
among various ways that a
State could implement the
Medicaid Act. As a result,
e n f o r c i n g t h e d e c r e e
vindicates an agreement that
the state officials reached to
comply with federal law.
Id. at 904-05 (quoting Pennhurst, 465 U.S.
at 109) (second alteration in original)
(citation omitted). He added: “In
exercising their prospective powers under
Ex parte Young and Edelman v. Jordan,
federal courts are not reduced to issuing
injunctions against state officers and
hoping for compliance. Once issued, an
injunction may be enforced . . . .” Id. at

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14
905 (quoting Hutto v. Finney, 437 U.S.
678, 690-91 (1978)) (alteration in
original).
Finally, addressing the concern that
enforcement of consent decrees can
undermine the sovereign interest and
accountability of state governments,
Justice Kennedy explained that “when a
federal court has entered a consent decree
under Ex parte Young, the law’s primary
response to these concerns has its source
not in the Eleventh Amendment but in the
court’s equitable powers and the direction
given by the Federal Rules of Civil
Procedure.” Id.
These principles apply here. The
remedial order entered by the (Federal)
District Court was designed to enforce the
consent decree, which remedied violations
of the CWA, a federal statute. The
order—which does not offend territorial
law— to perform o r refrain from
performing certain acts was a reasonable
exercise of the Court’s equitable powers to
enforce a federal decree to which the GVI
had consented. In the barest terms,
“[o]nce entered, a consent decree may be
enforced.” Id.9 In view of the foregoing
analysis, we see no Eleventh Amendment
obstacle to our jurisdiction, hence we turn
to the merits.
III. The Merits
A. Enjoining the GRM Contract and
Ordering the GVI to Comply with
Territorial Competitive Bidding Law
The District Court found that
allowing the GRM contract to go forward
“would likely frustrate compliance and
promote further noncompliance” with the
December 2001 order for two alternative
reasons: (1) it was entered into in violation
of Virgin Islands law because the use of
emergency proclamations to waive
competitive bidding requirements was
illegal; and (2) GRM “lacke[d] the
experience and wherewithal” to perform
the scope of work under the contract. 248
F. Supp. 2d at 437. The GVI contends that
the District Court abused its discretion in
making these findings because: (1) the
emergency proclamations were valid and
the District Court misconstrued the
meaning of the word “emergency”; (2) the
District Court failed to defer to the
contracting decisions of Virgin Islands’
agency personnel; and (3) under the CWA,
the District Court lacked the legal
authority to enter the specific injunctive
relief it granted.
Given our conclusion that territorial
law was not the basis for the injunction,
the GV I’s contention s about the
emergency nature of the proclamation are
not techn ically material to our
determination of the effect of the GRM
contract on the consent decree. However,
9Indeed, even if the GVI were able to
benefit from Eleventh Amendment
immunity in the original action, it waived
that immunity when it agreed to the
amended decree and failed to appeal the
District Court’s entry of judgment. See,
e.g., Del. Valley Citizens’ Council for
Clean Air v. Pennsylvania, 678 F.2d 470,
475 (3d Cir. 1982).

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15
to avoid the risk of staging Hamlet without
the Prince, and to clarify the law for future
reference, we dispose of (and reject) the
GVI’s contentions about the emergency in
the margin.10
1. Deference to the Agency Decision
The GVI contends that the District
Court erred in not deferring to the GVI’s
discretion in selecting its own contractor.
The United States responds on several
grounds. First, it claims that the GVI
cannot possibly request deference to an
agency decision that its own Governor has
reversed as “not in the best interest” of the
Virgin Islands. While this line of
reasoning has appeal, it is undermined by
the fact that the United States also claims
that this was a pretextual statement made
in order to terminate the contract in order
to avoid litigation.
The United States does, however,
advance a number of cogent arguments
that demonstrate why no deference was
10The GVI argues that the District
Court somehow supplied an erroneous
definition of the word “emergency”
when determining that the Governor had
misapplied the proclamation of a state of
emergency. We disagree. In
determining whether an “emergency”
existed such that the Governor could
declare a “state of emergency,” the
District Court correctly applied the
definition of “emergency” as it was
employed in an earlier District Court
case which, like this action, involved an
emergency exception to competitive
bidding requirements under Virgin
Islands law. In General Engineering
Corp. v. Virgin Islands Water & Power
Authority, 636 F. Supp. 22, 45 (D.V.I.
1985), aff’d 805 F.2d 88 (3d Cir. 1986),
Judge O’Brien, also construing the
competitive bidding requirement for
public expenditures in the Virgin Islands,
defined an “emergency” as “[a] sudden
unexpected happening; an unforeseen
occurrence or condition; perplexing
contingency or complication of
circumstances, a sudden or unexpected
occasion for action; exigency; pressing
necessity. Emergency is an unforeseen
combination of circumstances that calls
for immediate action.” (quoting Black’s
Law Dictionary 469 (rev. 5th ed. 1979)).
We accept that definition. The
conditions here were hardly
“unexpected”; rather they were the result
of nearly twenty years of neglect and
noncompliance with court orders to fix
the growing problems in the Virgin
Islands wastewater system. It was
therefore not an “emergency” that led to
the proclamation of the state of
emergency and to the contract with
GRM. Despite the GVI’s creative
attempts to demonstrate that nothing
would ever be an emergency if we
adopted this reasoning, we agree with the
District Court that, given that the Virgin
Islands had been under court order since
1985 to construct, repair, and maintain its
wastewater facilities, the complete
deterioration that occurred could not be
construed as surprising or unexpected.

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16
due. Strongest among them is the fact
that, as the GVI itself explains, deference
is due only where “the negotiation was
essentially fair.” In this case, the District
Court made numerous factual findings
establishing that the negotiation was
fraught with political influence and
possibly corruption. These findings are
supported by the evidence. Under these
circumstances, we do not see on what
basis deference could be owed, given the
District Court’s conclusion that there was
bad faith in the contract negotiations. See
Scanwell Labs., Inc. v. Shaffer, 424 F.2d
859, 874 (D.C. Cir. 1970) (opining, in a
government contracting case with
overtones of illegal activity, “[w]hen the
bounds of discretion give way to the
stricter boundaries of law, administrative
discretion gives way to judicial review”).
Additionally, regardless of any
finding of bad faith or conflict of interest,
deference is not due in the absence of a
reasoned administrative explanation or
interpretation. See Dist. 1199P, Nat’l
Union of Hosp. & Health Care Employees
v. NLRB, 864 F.2d 1096, 1098 (3d Cir.
1989) (review is possible only when the
agency provides a reasoned explanation of
its actions). Here, the emergency
proclamations at issue were devoid of any
justification for why a state of emergency
existed with respect to the repairs that
were required to be undertaken under the
December 2001 order.
2. Scope of the CWA’s Grant of
Authority
Section 309(b) of the CWA
provides that: “The Administrator is
authorized to commence a civil action for
appropriate relief, including a permanent
or temporary injunction for any violation
for which he is authorized to issue a
compliance order under subsection (a) of
this section.” 33 U.S.C. § 1319(b). The
GVI argues that the CWA does “not grant
the federal government the power to order
a State or Territory not to enter into a
contract with a given contractor, nor does
it empower the federal government to
order a State or Territory to adhere to state
or territorial law.” It is true that subsection
(a) does not provide detailed guidance on
what types of relief are, in fact, affordable.
Nonetheless, we are unpersuaded that the
lack of an explicit grant of power to enjoin
the contract in this case means that the
power is, in fact, lacking.
Since the CWA does not define the
scope of a District Court’s authority to
enforce a decree and a Court’s orders
issued pursuant to it, the question shifts
from what the CWA does or does not
explicitly permit to what the Court’s power
is to ensure that its decrees and orders are
obeyed. See Local No. 93, Int’l Ass’n of
Firefighters v. City of Cleveland, 478 U.S.
501, 522 (1986) (“[I]t is the agreement of
the parties, rather than the force of law
upon which the complaint was originally
based, that creates the obligations
embodied in a consent decree.”); see also
United States v. Local 359, United Seafood
Workers, 55 F.3d 64, 69 (2d Cir. 1995)
(“[A] consent decree . . ., by its very
nature, vests the court with equitable
discretion to enforce the obligations

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17
imposed upon the parties.”); EEOC v.
Local 580, Int’l Ass’n of Bridge, Structural
& Ornamental Ironworkers, 925 F.2d 588,
593 (2d Cir. 1991) (“Where equitable
remedies which exceed the confines of the
consent judgment are reasonably imposed
in order to secure compliance of the
parties, the court has not overstepped its
bounds, and its orders must be obeyed.”).
The District Court found that the
GRM contract would frustrate compliance
because the lack of competitive bidding
was responsible for an inadequate contract
with a company that was not equipped to
do the work. We need not rescribe the
District Court’s supported findings about
GRM and the circumstances of the
contract, but incorporate them here. See
generally 248 F. Supp. 2d at 426-36.
The forward-looking component of
the District Court’s injunction—in which
it enjoined the GVI to comply with various
territorial law competitive bidding
provisions— presents a somewhat different
question, but here again we are satisfied
that the District Court acted within its
sound discretion. As we explain above,
the analysis concentrates on ends, not on
means: The question is not whether
territorial officials are, as a literal matter,
enjoined to comply with territorial law, but
rather whether such an injunction serves to
enforce the amended decree. And as the
Court explained in Frew, this is measured
by the traditional rules about the court’s
equitable powers and the process granted
by the Federal Rules of Civil Procedure.
124 S. Ct. at 905-06. Thus, we must ask
whether an order directing the GVI to
comply with territorial competitive bidding
law will vindicate the amended decree.
We conclude that it is reasonably
calculated to do so.
Simply put, Virgin Islands law
articulates sound procedures that result in
contracts that serve the public interest.
The District Court was right to enjoin the
GVI to follow territorial law not because it
was the law, but because it was a good set
of procedures suited to the problem at
hand and familiar to the enjoined party.
As the District Court explained, Virgin
Islands competitive bidding procedures
“are designed to prevent . . . precisely what
r e s u l t e d h e r e w h e n t h e y w e r e
circumvented.” 248 F. Supp. 2d at 439.
The District Court determined that Virgin
Islands law was the best medicine for the
persistent noncompliance afflicting the
GVI. After two decades of litigation,
years of flagrant violations, and too many
promises with no real progress, the Court
was correct in concluding that the GVI
needed clear guidelines to set it on a steady
course to fulfill its obligations under the
amended decree. Territorial law provided
a suitable source for such guidelines.
M o r e o v e r , t h e D i s t r i c t C o u r t ’ s
incorporation of territorial competitive
bidding law preserves a measure of
federal-territorial comity, because a
custom-written decree might have
subjected the GVI to inconsistent
territorial-law and federal injunctive
obligations.
In view of all this, and in terms of
the question as we have framed it, we are
satisfied that the District Court did not

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18
abuse its discretion in enjoining the GRM
c o n t r a c t o r i n s e t t i n g f o r t h
procedures— here com plianc e w ith
territorial law—that the GVI would have
to follow in awarding future projects
pursuant to the amended decree.
B. The Trust Fund Deposit
The GVI contends that the District
Court lacked power to order it to deposit
money in the trust fund, because a federal
court cannot order obligation of funds for
which there is no appropriation. See
Rochester Pure Waters Dist. v. EPA, 960
F.2d 180, 184 (D.C. Cir. 1992). The GVI
also argues that the order is improper
because the party being sued, the executive
branch of the government, cannot obligate
or appropriate funds since that is the
exclusive province of the legislative
branch.
Whatever the merits of these
contentions may be, the United States
convincingly argues that the order to
deposit $7.4 million was made not
pursuant to its motion for injunctive relief,
but rather to force compliance with the
District Court’s earlier order of December
2001. The GVI did not appeal the
December 2001 order then, nor does it
challenge its validity now, and the United
States submits that because the GVI did
not appeal the December 2001 order, the
GVI is bound by its terms, barring its
challenge to the deposit requirement. See
Del. River Port Auth. v. Fraternal Order
of Police, 290 F.3d 567, 572 (3d Cir.
2002) (“[I]ssue preclusion prevents
relitigation of the same issues in a later
case.”); United States v. Millstone Enters.
Inc., 864 F.2d 21, 23 (3d Cir. 1988)
(holding that res judicata precludes
relitigation of issue that was or could have
been decided in enforcement order that
was not appealed). We agree.
Furthermore, at the October 2001 hearing
which resulted in the December 2001
order, the Virgin Islands Attorney General
said: “I think setting up that kind of
account would help tremendously.” Thus,
there is no basis on which to challenge the
existence of the trust fund or the order to
deposit money into it.
What is also significant, however, is
that the $7.4 million the District Court
ordered the GVI to deposit in the trust
fund includes $4 million more than had
previously been estimated or required.
The United States argues that the extra $4
million was necessary because the original
$16 million estimate proved to be
insufficient to fund all the work required
by the order. It describes the additional
sum as funding to cover “additional
projects” and increased costs for projects
not included in the original estimate.
However, we agree with the GVI that the
record is devoid of any cogent explanation
of why the $4 million increase was
necessary. Moreover, it is not clear
whether the increase can be legally
justified. Thus, although the GVI cannot
now challenge the original order requiring
the $16 million deposit, we must remand
as to the requirement to deposit the
additional $4 million so that the District
Court can make findings of fact and
conclusions of law which may (or may

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19
not) support the $4 million increase.
IV. Conclusion
For the foregoing reasons, the order
of the District Court will be affirmed,
except to the extent that it ordered the
deposit of $4 million more than had
previously been required. To that extent,
the order will be vacated and the case
remanded for further p roceedings
consistent with this opinion.

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