United States v. Federal Resources Corp.

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAY 25 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 15-35192
Plaintiff-counter- D.C. No. 2:11-cv-00127-RCT
defendant-Appellee,
v. MEMORANDUM*
FEDERAL RESOURCES
CORPORATION,
Defendant-counter-claimant-
Appellant,
BLUM REAL ESTATE TRUST; BENTLY
J. BLUM, Trustee of the Blum Real Estate
Trust; CAMP BIRD COLORADO, INC.,
Defendants.
Appeal from the United States District Court
for the District of Idaho
Richard C. Tallman, Circuit Judge, Presiding
Argued and Submitted May 16, 2017
Seattle, Washington
Before: GOULD and PAEZ, Circuit Judges, and LEMELLE,** District Judge.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Ivan L.R. Lemelle, Senior United States District Judge
for the Eastern District of Louisiana, sitting by designation.
Federal Resources Corporation (FRC) appeals the district court’s grant of
summary judgment in favor of the United States on the issues of (1) the United
States’ liability as an “arranger” under the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. § 9607(a)(3);
and (2) the apportionment and divisibility of the clean-up costs; and (3) that FRC
did not create a genuine issue of material fact as to the United States Forest
Service’s (USFS) compliance with the National Contingency Plan (NCP) at the
North Dump. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
(1) The United States is not liable as an “arranger” under CERCLA. The
statute imposes strict liability for environmental contamination on, among others,
“any person who by contract, agreement, or otherwise arranged for disposal . . . of
hazardous substances owned or possessed by such person, by any other party or
entity, at any facility . . . owned or operated by another party or entity and
containing such hazardous substances.” 42 U.S.C. § 9607(a)(3). “[A]n entity may
qualify as an arranger under § 9607(a)(3) when it takes intentional steps to dispose
of a hazardous substance.” Burlington N. & Santa Fe Ry. Co. v. United States, 556
U.S. 599, 611 (2009). Although knowledge that a hazardous substance will be
dumped “may provide evidence of the entity’s intent to dispose of its hazardous
wastes, knowledge alone is insufficient to prove that an entity planned for the
disposal.” Id. at 612 (internal quotation marks omitted). The entity must have
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entered into the agreement with the intent that there be a “disposal.” See id.Here, there is no evidence that the United States entered into the Exploration
Project Contract with the Funnell and Majer Mining Company (F&M) with the
intent of disposing of hazardous substances. The evidence shows: First, that the
United States was interested in the mill and may have encouraged F&M to build it
because of the anticipated economic benefits; second, that the United States paid
50% of the total cost of F&M’s exploration mining project in exchange for
royalties on “the net smelter returns or other net proceeds realized from such ore,
concentrates, or metal produced”; third, that the United States could—and
apparently did—inspect and advise F&M on their operation; and finally, that the
United States knew mine tailings were being stored on-site and was indifferent to
the disposal of hazardous substances. Missing is any evidence that the government
intended to dispose of waste for the operator of the mine. At most, the evidence
recited above establishes that the United States knew the mine produced tailings
that were stored at the Conjecture Mine Site and was indifferent to the disposal of
hazardous substances. This is insufficient to establish arranger liability, which
requires intent to dispose of the waste. See Burlington N., 556 U.S. at 612; Team
Enters., LLC v. W. Inv. Real Estate Tr., 647 F.3d 901, 909–10 (9th Cir. 2011).
(2) FRC did not provide the court with a reasonable basis for apportioning
the harm at the Conjecture Mine Site. See Burlington N., 556 U.S. at 614. The
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“harm” in a CERCLA case is “the contamination traceable to each defendant.”
United States v. Burlington N. & Santa Fe Ry. Co., 520 F.3d 918, 939 (9th Cir.
2008), rev’d on other grounds by Burlington N., 556 U.S. 599. FRC did not offer
any evidence showing the amount of contamination its waste material contributed
to the Conjecture Mine Site, as compared to the amount of contamination the waste
of other potentially responsible parties contributed to the site. Divisibility can be
established by volumetric evidence and geographic distinctness, see United States
v. Hercules, Inc., 247 F.3d 706, 719 (8th Cir. 2001), but there must be “evidence of
a relationship between the volume of waste, the release of hazardous substances,
and the harm at the site,” In re Bell Petroleum Servs., Inc., 3 F.3d 889, 900 (5th
Cir. 1993). Here, there is no evidence of that relationship, and there is no
reasonable basis for apportionment.
(3) The removal action at the North Dump was not inconsistent with the
NCP. See 42 U.S.C. § 9607(a)(4)(A). Because FRC does not contest that the
United States has established a prima facie case to recover its response costs, the
burden shifted to FRC to create a genuine issue of material fact as to whether
USFS’s response action at the North Dump “was inconsistent with the [NCP].”
United States v. Chapman, 146 F.3d 1166, 1169 (9th Cir. 1998). FRC did not
carry its burden. The record shows that USFS considered the site evaluation, and
the relevant mandatory factors outlined in the NCP. 40 C.F.R. § 300.415(a)(1),
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(b)(2). It determined that five factors warranted a removal action. USFS’s
removal action was not “arbitrary and capricious or otherwise not in accordance
with law.” 42 U.S.C. § 9613(j)(2); see also Chapman, 146 F.3d at 1172–73.
AFFIRMED.
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