DENVER (CN) — The 10th Circuit ruled Wednesday that the United States must pay part of Chevron’s $1 billion bill to clean up hazardous waste at an old mine site in New Mexico.
Reversing in part and remanding to decide how much the government owes, the unanimous panel found the government a “potentially responsible party” under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, or CERCLA, which requires it to pay part of Chevron’s cleanup costs at the site near Questa, New Mexico.
Under CERCLA, the owner of a property where hazardous waste has been dumped, or a person who arranges for the dumping, can be held liable as a potentially responsible party, or PRP, for cleanup costs.
The three-judge panel held that the United States is an owner of the Questa mines because it owned some of the land when Chevron disposed of hazardous waste there, rendering it a PRP.
The panel also found that the United States did not arrange for the disposal.
“It is undisputed that the United States held legal title to relevant portions of the Questa mining lands at the time of significant hazardous substance disposal,” Chief Judge Timothy Tymkovich wrote for the panel.””The United States is a PRP with respect to the Questa site and is strictly liable to contribute its equitably allocated share of Chevron’s response costs.”
Chevron and its corporate predecessors mined molybdenum, an essential mineral for military-grade steel, at the Questa site for nearly a century until the mines were shut down in 2014. During that time, roughly 428 million tons of rock waste were dumped on land acquired from the federal government and New Mexico.
The mining generated tons of hazardous substances that required cleanup, and Chevron began remediating the site as a PRP under orders from the Environmental Protection Agency.
Cleanup is expected to take decades and cost more than $1 billion. So Chevron sued the government, seeking a declaration that the United States is also a PRP liable for cleanup costs, as both an “owner” and an “arranger.”
Though it affirmed that the United States was not an “arranger,” the 10th Circuit reversed the “owner” ruling, finding that it owned legal title to some of the land at the Questa site when the waste was dumped there.
The government argued on appeal that owning “bare legal title” to the Questa land did not mean it was an owner under CERCLA. It asked the panel to adopt an exception to owner liability based on United States v. Friedland (2001, U.S. District of Colorado.)
In Friedland, the judge used an “indicia of ownership” analysis to determine whether the government possessed an indicia of ownership in an unpatented mining property that would render it an owner under CERCLA. The judge found that the United States was not an owner.
But on Wednesday Tymkovich wrote of the Friedland ruling: “This analysis has no basis in the statute.” He found that the term “owner” applies to fee title holders under CERCLA regardless of an indicia of ownership.
Tymkovich noted that the government sold some of its land to Chevron’s predecessor Molycorp, including 2,885 acres for waste disposal. Moreover, the government encouraged mining on its lands and gave Molycorp a loan to fund its molybdenum exploration and mining.
“For decades after that, the United States knew that Chevron was depositing millions of tons of waste rock and tailings on the surface estates, land over which the United States still held, at minimum, ownership via legal title,” Tymkovich wrote. “Regardless of whether contracting out mining activities might, or might not, shield a party from operator liability, it cannot shield a landowner — here, the legal titleholder — from owner liability.”
The Department of Justice declined to comment on Wednesday.
In a small victory for the government, the panel held that the United States is not liable as an arranger under CERCLA because it did not own or possess the hazardous substances dumped at the site, and Chevron has not shown that it did.
Although the “arranger” finding does not change the panel’s conclusion that the government is a PRP liable for cleanup costs, it may reduce the amount the government is ordered to pay.
Senior U.S. Circuit Judge Bobby Baldock and Tenth Circuit Judge Mary Beck Briscoe joined Tymkovich on the panel.
Chevron was represented by Peter Keisler with Sidley Austin in Washington, D.C. Neither he nor Chevron responded to requests for comment Wednesday.