United States: Owner Means Owner: Tenth Circuit Finds US Liable Under CERCLA Based On Title In Lands Subject To Unpatented Mining Claims

Last Updated: July 31 2017
Article by Robert C. Kirsch, Rachel Jacobson and Nathaniel Custer

Introduction

The Tenth Circuit on July 19, 2017, in Chevron Mining, Inc. v. United States,1 reversed a decision by the District Court for the District of New Mexico and held that the United States is liable as an "owner" under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) at a series of mining waste disposal sites on former federal land in New Mexico (Questa Site) because it has "owner" liability. While the appellate court's decision may seem obvious at first blush, the United States had prevailed in avoiding Potentially Responsible Party (PRP) status below, and in an earlier case in the District of Colorado (United States v. Friedland), by arguing that where a private party has an unpatented mining claim on federal land, the government's ownership interest is diminished to the point that it should no longer be considered an "owner" under CERCLA.

The Tenth Circuit's decision is good news for private PRPs who are on the hook for cleanups at mining waste disposal sites on federal land, but a word of caution is warranted. The court expressly declined to address the question of what the United States' equitable share of the costs should be for the Questa Site cleanup, including whether it is possible for a PRP to have an equitable share of zero. The decision also affirmed the District Court's determination that the United States does not have separate "arranger" liability under CERCLA because it did not own or possess the relevant hazardous substances.

Mining and Waste Disposal at the Questa Site

Chevron Mining, Inc., and its corporate predecessors operated a series of molybdenum mines, both underground and open-pit mines, at the Questa Site beginning in 1919. Initially, Chevron's predecessor, R&S Molybdenum Company of Denver, conducted those operations pursuant to unpatented mining claims under the General Mining Act of 1872. That Act provides claimholders "exclusive right of possession and enjoyment of all the surface included within the lines of their location,"2 while the United States retains fee title in the land. The United States retained title to the Questa Site until 1974, when R&S's successor, the Molybdenum Corporation of America (Molycorp) acquired the property through a land exchange with the United States.

The operations between 1919 and 2014, when the last mine closed, generated over 328 million tons of waste rock and 100 million tons of mine tailings. The waste rock, in particular, was disposed of in the immediate vicinity of the mines, on land that was owned by the United States until the 1974 exchange.

CERCLA Owner Liability

Section 107 of CERCLA imposes liability on parties that "owned" a "facility" during the disposal of hazardous substances.3 The United States had successfully argued before the district court that it was not liable under this provision, notwithstanding its prior ownership interest, because (1) the rights of R&S and Molycorp to "possession and enjoyment" reduced the United States' interest to "bare legal title," to which CERCLA owner liability should not attach, and (2) although the United States owned the land, it did not own the "facility" because the "facility" should be understood as the structures and equipment associated with the mining operation itself.4

The Tenth Circuit rejected both rationales. First, the court said, "We conclude that, at a minimum, the term 'owner' covers fee title holders for purposes of CERCLA liability, irrespective of any additional indicia of ownership."5 This reversed the district court's ruling6 and the decision of the United States District Court for the District of Colorado in United States v. Friedland,7 where courts held that the indicia of federal ownership in lands subject to unpatented mining claims are so diluted that the United States is no longer an "owner" within the meaning of CERCLA.8 Distinguishing between "ownership" and "control," the Tenth Circuit avoided a complex, "indicia of ownership" analysis by adopting the simpler principle that a fee title holder is always an "owner."

Second, the Tenth Circuit quickly dispensed with the notion that the United States did not own the relevant "facility" for CERCLA purposes. The Court pointed to CERCLA's broad definition of facility, noting it reaches "'any site or area' (i.e., land)."9 Limiting the "facility" definition to the industrial equipment involved in mining was too narrow.

Equitable Allocation and Arranger Liability

The July 19 decision and the arguments the parties advanced to the court have significant implications for the allocation of liability. The United States is now a PRP at the Questa Site, and the principles announced by the Tenth Circuit mean that it is all but certainly a PRP at every other mining site within that jurisdiction where hazardous mining wastes were disposed of on federal land subject to unpatented mining claims.

However, how much private parties will be able to recover from the government in a CERCLA cost recovery or contribution action at a mining waste site remains an open question for future courts to address. The Tenth Circuit decision suggests that the degree of US involvement at the Questa Site is a relevant consideration for the equitable allocation phase of the proceedings.10

The extent of federal responsibility for costs to clean up old mining sites on federal land may also be limited by the Tenth Circuit's ruling on the second question before it. The court upheld the district court's determination that the United States did not have CERCLA "arranger" liability.11 Chevron argued that by selling federal land to Molycorp knowing hazardous substances would be disposed of there, and by approving federal permits allowing the transportation of hazardous substances by pipeline across federal land for disposal, the United States "intentionally arranged for the disposal of hazardous substances."12 The court disagreed, holding that arranger liability attaches only if a party "own[s] or possess[es]" the relevant hazardous substances, which the United States did not.13 As the court acknowledged, its finding that the United States does not have arranger liability "may affect the determination of [its] equitable allocation of the response costs."14

Conclusion

In rejecting the reasoning of two lower courts, the Tenth Circuit has created broad liability for the federal government at mines where hazardous substances were disposed of on federal lands, even when those lands were subject to unpatented mining claims. Although the decision clarifies federal CERCLA liability, the practical impact of the decision remains unclear, as principles of equitable allocation will govern the amount the United States must contribute to the ultimate cleanup costs.

1. No. 15-2209 (10th Cir. 2017).

2. 30 U.S.C. § 26.

3. 42 U.S.C. § 9607(a)(2).

4. Chevron Mining, No. 15-2209, slip op. at 22, 27.

5. Id. at 27.

6. Chevron Mining, Inc. v. United States, 139 F. Supp. 3d 1261 (D.N.M. 2015).

7. 152 F. Supp. 2d 1234 (D. Colo. 2001).

8. Both cases relied heavily on a Second Circuit decision that establishes the "indicia of ownership" test for determining CERCLA owner liability. Commander Oil Corp. v. Barlo Equipment Corp., 215 F.3d 321 (2d Cir. 2000). It bears noting that Commander Oil addressed the question whether a lessee, not a fee title holder, could be considered an "owner" for CERCLA purposes.

9. Chevron Mining, No. 15-2209, slip op. at 27 (quoting 42 U.S.C. § 9601(9)).

10. Id. at 3 & n.1.

11. See 42 U.S.C. § 9607(a)(3).

12. Chevron Mining, No. 15-2209, slip op. at 33.

13. Id. at 41.

14. Id. at 30.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Robert C. Kirsch
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions