US found to be an operator and arranger under CERCLA for its role as a mining regulator

A March 4, 2011 decision in Nu-West Mining, Inc. v. United States of America, (D. Idaho March 4, 2011) Slip op. 09-431 by U.S. District Court Judge B. Lynn Winmill found that the United States government can be found potentially liable under CERCLA’s “owner, operator and arranger” liability provisions at 42 U.S.C. § 9607(a) when it acted as a landlord for a mining lease. The case does not really expand the known parameters of owner or arranger liability, but it does serve as a reminder that when a landlord gets involved in the handling of hazardous waste generated or transported by a tenant that it can be tagged under CERCLA.

In this case, the Government had leased land in the Caribou National Forest to Nu-West for phosphate mining. Part of the mining operation included adding a layer of shale on top of the reclaimed area in order to encourage vegetation. This shale contained selenium which leached into the environment, creating potential CERCLA liability for the cleanup. Nu-West agreed to clean up the selenium contamination but sued the US Government to recoup the costs.

The U.S. argued that its role as a regulator of the mining operation did not create liability under CERCLA. The district court cited U.S. v. Shell Oil Co., 294 F.3d 1045, 1055 (9th Cir. 2002) for the proposition that there is no “regulator” exception as 42 U.S.C. § 9620(a)(1) sets forth an explicit waiver of sovereign immunity when it acts in a governmental capacity. Next, the court found that the U.S. Government was a “very active participant in designing and locating the waste dumps, in inspecting mining operations, and in ensuring compliance with all rules and plans.” The court found that “even if the Government’s directions could be called “suggestions,” those suggestions often got instant results.” The court therefore entered summary judgment on Nu-West’s motion and found the U.S. liable as an owner, arranger and operator.

The case is curious from one aspect. The judge was particularly moved by testimony that when the inspector suggested that something be done that the miners would do it instantly. That this obedience would be translated into something other than regulatory oversight begs the following question. Would the U.S. have avoided liability had the miners refused to follow the suggestion? Does this suggest that the more obedient a regulated industry is, the more likely it is that, under CERCLA at least, the regulator will be found to be an “operator or arranger”?

I have actually worked as an attorney on mining reclamation projects inspected by government inspectors. In my case, the inspectors worked for the Mines and Minerals division of the Iowa Department of Agriculture, though federal inspectors sometimes visited. True to the testimony in the Nu-West case, the inspector had the final word and my contractor would dutifully follow every suggestion even when the suggestion was lacking any merit whatsoever. As one example, one inspector demanded that all berms be compacted and smoothed so they “looked nice.” As any farmer could have predicted, this made it nearly impossible for grass seed and thatch to stay on the slope in a rainstorm. This led to erosion and failure of the berms. But the point is that the government may deserve some responsibility for its decisions when it knows that it has absolute command of the reclamation decisions. With the authority comes the responsibility.

About James Pray

Attorney with BrownWinick Law Firm in Des Moines, Iowa.
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