United States v. Federal Resources Corp.
691 F. App'x 441
9th Cir.2017Background
- FRC appealed the district court’s grant of summary judgment for the United States under CERCLA concerning contamination at the Conjecture Mine Site and the North Dump.
- The United States entered into an Exploration Project Contract with Funnell & Majer (F&M), paid 50% of exploration costs, and received royalties on net smelter returns.
- The USFS inspected, advised, and knew mine tailings were stored on-site; evidence showed the government was indifferent to tailings disposal but did not intend to dispose of F&M’s wastes.
- FRC sought to apportion cleanup liability among potentially responsible parties and challenged the USFS removal action as inconsistent with the National Contingency Plan (NCP).
- The district court found the United States was not an "arranger" under CERCLA, that FRC failed to show a reasonable basis for apportionment/divisibility, and that the USFS’s removal action complied with the NCP; the Ninth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Arranger liability under CERCLA §9607(a)(3) | US intentionally arranged for disposal by funding and encouraging mill construction | US did not intend to dispose of hazardous substances; only knew tailings existed and was indifferent | No arranger liability: intent to dispose not shown |
| Apportionment / divisibility of harm | Harm at site is divisible; FRC contributed a measurable portion warranting apportionment | FRC offered no evidence linking its waste volume to site contamination | Denied: no reasonable basis or evidence to apportion liability |
| NCP compliance for North Dump removal | USFS removal was inconsistent with NCP procedures | USFS followed site evaluation and mandatory NCP factors supporting removal | Denied: USFS action complied with NCP; not arbitrary or capricious |
Key Cases Cited
- Burlington N. & Santa Fe Ry. Co. v. United States, 556 U.S. 599 (arranger liability requires intent to dispose)
- Team Enters., LLC v. W. Inv. Real Estate Tr., 647 F.3d 901 (insufficient mere knowledge for arranger liability)
- United States v. Burlington N. & Santa Fe Ry. Co., 520 F.3d 918 (harm for CERCLA apportionment defined as contamination traceable to each defendant)
- United States v. Hercules, Inc., 247 F.3d 706 (volumetric/geographic evidence can support divisibility)
- In re Bell Petroleum Servs., Inc., 3 F.3d 889 (need evidence linking volume of waste to release and harm)
- United States v. Chapman, 146 F.3d 1166 (plaintiff must raise genuine issue that response costs were inconsistent with NCP)