Diamond X Ranch, LLC v. Atlantic Richfield Company
3:13-cv-00570
D. Nev.Aug 26, 2016Background
- Diamond X Ranch owns ~1,700 acres allegedly contaminated by acid mine drainage from the Leviathan Mine; Diamond X sued ARCO under CERCLA §107(a) to recover response costs.
- EPA issued unilateral administrative orders (UAOs) in 2000 and 2008 directing ARCO to perform an RI/FS and related remediation work at the Mine; ARCO has performed work under those UAOs.
- ARCO filed counterclaims/third-party claims against Diamond X and Park Livestock Company (PLC) under CERCLA §§107(a) and 113(f)(1), and sought declaratory relief under §113(g)(2).
- ARCO alleges Diamond X and PLC operated and maintained flood irrigation ditches that transported contaminated Bryant Creek water and disposed of contaminated sediment on the Property.
- Diamond X moved to dismiss ARCO’s §107(a) counterclaim and portions of the declaratory-relief claim; PLC moved to dismiss the third-party claims arguing it is not a CERCLA PRP and adopting Diamond X’s procedural arguments.
- The court denied both motions to dismiss, holding ARCO may bring a §107(a) claim and that PLC is plausibly alleged to be a former operator under CERCLA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ARCO may assert a §107(a) cost-recovery counterclaim when Diamond X also asserts §107(a) claims | Diamond X: ARCO is limited to contribution under §113(f) and cannot bring §107(a) counterclaims where Diamond X asserts §107(a) | ARCO: Seeks recovery of separate costs (not for which liability has been established) and therefore may pursue §107(a) cost recovery in addition to contribution for other costs | Court: ARCO plausibly alleges distinct, separate costs outside scope of contribution; §107(a) counterclaim not barred |
| Whether EPA UAOs constitute a "civil action" that triggers §113(f)(1) and thus precludes §107(a) relief | Diamond X: UAOs are enforcement "civil actions," so ARCO must seek contribution under §113(f)(1) rather than §107(a) | ARCO: Majority view is UAOs are not civil actions triggering §113(f)(1); UAOs lack finality and appellate procedures of judicial actions | Court: UAOs are not "civil actions" under §113(f)(1); their scope, lack of finality, and limited review distinguish them from judgments/settlements |
| Whether PLC is a CERCLA potentially responsible party (former operator) based on flood irrigation and ditch maintenance | PLC: Flood irrigation/ditch work are ordinary ranching activities, not operations "specifically related to pollution," and do not constitute "disposal" under CERCLA | ARCO: PLC controlled when/where/how contaminated water and sediment were placed and allegedly deposited/ discarded hazardous substances on the Property, satisfying operator and disposal elements | Court: Accepting allegations, PLC plausibly alleged to have operated activities specifically related to pollution and performed ‘‘disposal’’ (placing/depositing contaminated water/sediment); PLC may be a PRP |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading plausibility standard)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (plausibility and Rule 12(b)(6) standard)
- United States v. Atlantic Research Corp., 551 U.S. 128 (distinguishing cost-recovery and contribution remedies under CERCLA)
- Cooper Industries, Inc. v. Aviall Services, Inc., 543 U.S. 157 (statute of limitations triggers for §113(g)(3) and role of judgments/settlements)
- United States v. Bestfoods, 524 U.S. 51 (definition of "operator" — managing, directing, or conducting operations related to pollution)
- Kaiser Aluminum & Chemical Corp. v. Catellus Development Corp., 976 F.2d 1338 (9th Cir.) (operator/disposal analysis; broad CERCLA construction)
- Carson Harbor Village, Ltd. v. Unocal Corp., 270 F.3d 863 (9th Cir.) (analysis of "disposal" and active/passive migration)