Atl. Richfield Co. v. Cal. Reg'l Water Quality Control Bd.

• Citation: 85 Cal.App.5th 338,301 Cal.Rptr.3d 316
• Decision Date: 15 November 2022
• Docket Number: C093124
• Parties: ATLANTIC RICHFIELD COMPANY, Plaintiff and Appellant, v. CALIFORNIA REGIONAL WATER QUALITY CONTROL BOARD, CENTRAL VALLEY REGION, Defendant and Respondent.
• Court: California Court of Appeals

85 Cal.App.5th 338

301 Cal.Rptr.3d 316

ATLANTIC RICHFIELD COMPANY, Plaintiff and Appellant,

v.CALIFORNIA REGIONAL WATER QUALITY CONTROL BOARD, CENTRAL VALLEY REGION, Defendant and Respondent.

C093124

Court of Appeal, Third District, California.

Filed November 15, 2022

As Modified on Denial of Rehearing December 5, 2022

Farella Braun + Martel, James H. Colopy, John M. Ugai, San Francisco, Tori Timmons; Davis Graham & Stubbs, Benjamin B. Strawn ; Arnold & Porter Kaye Scholer and Kirk Jenkins, San Francisco, for Plaintiff and Appellant.

Rob Bonta, Attorney General, Robert W. Byrne, Assistant Attorney General, Tracy L. Winsor, Russell B. Hildreth and Jeffrey P. Reusch, Deputy Attorneys General, for Defendant and Respondent.

HOCH, J.

This case returns to us for a second time. In Atlantic Richfield Co. v. Central Valley Regional Water Quality Control Bd. (2019) 41 Cal.App.5th 91, 253 Cal.Rptr.3d 888 ( Atlantic Richfield ), we reversed the trial court's judgment overturning a cleanup order issued by the California Regional Water Quality Control Board, Central Valley Region (Regional Board). ( Id . at p. 100, 253 Cal.Rptr.3d 888.) As the name suggests, the cleanup order directed Atlantic Richfield Company (ARCO) to remediate hazardous waste associated with an abandoned mine in Plumas County. The mine was owned by the Walker Mining Company, a subsidiary of ARCO's predecessors in interest, International Smelting and Refining Company and Anaconda Copper Mining Company (International/Anaconda). ( Id . at pp. 93-95, 253 Cal.Rptr.3d 888.) We held the trial court improperly applied the test articulated in United States v. Bestfoods (1998) 524 U.S. 51, 118 S.Ct. 1876, 141 L.Ed.2d 43 ( Bestfoods ) for determining whether a parent company is directly liable for pollution as an operator of a polluting facility owned by a subsidiary.

Imposition of direct liability under Bestfoods requires the parent company to have managed, directed, or conducted operations related to leakage or disposal of pollution at the facility in question; "[t]he critical question is whether, in degree and detail, actions directed to the facility by an agent of the parent alone are eccentric under accepted norms of parental oversight of a subsidiary's facility." ( Bestfoods , supra , 524 U.S. at p. 72, 118 S.Ct. 1876.) The trial court improperly limited its review of the evidence to International/Anaconda's participation in waste disposal activities at the mine, concluding the Bestfoods standard is met only where the parent company participated in or directed activities directly involving waste disposal or compliance with environmental regulations. ( Atlantic Richfield , supra , 41 Cal.App.5th at p. 96, 253 Cal.Rptr.3d 888.) As we explained, however, "[i]f a parent corporation had its fingerprints all over the activities of a facility that resulted in the spewing of hazardous waste, it does not make sense to insulate it from liability because it eschewed the direction of any efforts the subsidiary might have made otherwise to dispose of hazardous waste." ( Id . at p. 97, 253 Cal.Rptr.3d 888.) We remanded the matter to the trial court for "a determination of ARCO's liability under the proper standard of eccentric control over any category of mining activity resulting in toxic discharge, including the [Regional] Board's claim that the activity itself of disturbing the rock strata can generate toxic waste." ( Id . at p. 100, 253 Cal.Rptr.3d 888.)

On remand, the trial court entered judgment in favor of the Regional Board, concluding "[t]he record supports a determination of eccentric control of mining ‘operations specifically related to pollution, that is, operations having to do with the leakage or disposal of hazardous waste.’ " ARCO appeals, contending: (1) the trial court improperly applied Bestfoods to the facts of this case, resulting in a finding of liability that is unsupported by substantial evidence; (2) the Regional Board abused its discretion by failing to exclude certain expert testimony as speculative; (3) the Regional Board's actual financial bias in this matter requires invalidation of the cleanup order for violation of due process; and (4) the cleanup order erroneously imposed joint and several liability on ARCO.

We affirm. As we explain, the evidence in the record is more than sufficient to support the trial court's conclusion that agents of International/Anaconda, wearing no hat other than that of the parent company, exercised eccentric control over mining operations at the Walker Mine, resulting in the discharge of toxic waste.¹ ARCO's evidentiary claim also lacks merit. The Regional Board did not abuse its discretion in considering the challenged expert testimony because that testimony was not "based on a leap of logic or conjecture"; nor was it " ‘clearly invalid and unreliable’ expert opinion." ( Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747, 772, 149 Cal.Rptr.3d 614, 288 P.3d 1237 ( Sargon ).) We also reject ARCO's assertion that its due process rights were violated because the Regional Board was not a fair and neutral arbiter of whether or not a cleanup order should issue in the first instance. ARCO has not carried its appellate burden of showing the Regional Board possessed a financial interest in issuing the order. Finally, nothing in the statutory scheme prevents the Regional Board from ordering ARCO, and ARCO alone, to clean up the site contaminated by its predecessors.

BACKGROUND

We previously provided an overview of the historical facts and summary of the Regional Board's cleanup order in Atlantic Richfield , supra , 41 Cal.App.5th 91, 253 Cal.Rptr.3d 888 :

"J. R. Walker began developing the Walker Mine in 1909, located to the north of Quincy and Portola in Plumas County. It is within the drainage of a watershed feeding ultimately into the north fork of the Feather River.

"The Walker Mining Company took title in 1915 and commenced mining in 1916. At one point in the 1930s, this was the largest copper

mine in California.

"International Smelting and Refining Company was a wholly owned subsidiary of the Anaconda Copper

Mining Company, which later swallowed International in a merger. International/Anaconda acquired a controlling interest in the Walker Mining Company in 1918. Ultimately, ARCO became a successor through Anaconda's merger with an ARCO subsidiary in 1977 and the subsidiary's merger with ARCO in 1981. [Citation.]

"The mine ceased production in 1941 and ceased all operations in 1943, after producing six million tons of ore. The assets of the Walker Mining Company were sold in bankruptcy proceedings in 1945 and transferred to subsequent owners over the decades; the [Regional] Board reached a settlement with the current owner of the property in 2004, which at present appears to be an inactive and insolvent corporation. By virtue of this and an earlier settlement against a previous owner, the [Regional] Board has a right of access to the property under which it can authorize ARCO to conduct remediation activities.

"The mine has 13 miles of flooded underground workings, comprising a total void volume estimated at 543 million gallons. The mine openings and tailings on the site discharge soluble copper

and acidic mine drainage into surface waters, at times eliminating aquatic life 10 miles downstream from the mine. In 1987, the [Regional] Board installed a concrete plug at a mine opening that was a primary source of mine leakage, which has eliminated most of the direct discharge but is causing a buildup of contaminated water inside the mine that is leaching into groundwater, and the mining waste on the surface also continues to be a source of water pollution.

"The [Regional] Board concluded that the mine and its tailings ‘have discharged metals and acid mine drainage’ into the watershed ‘from at least the time production ceased in 1941, if not earlier.’ The ARCO predecessors ‘concurrently managed, directed, or conducted operations specifically related to the leakage or disposal of waste’ in tandem with the Walker Mining Company. The activities ‘included exploration, ore location, mine development work ..., and removal of ore, all of which directly resulted in the condition of discharge ... at the mine and tailings.’ This involvement ‘went well beyond what is normally expected of a ... corporate parent.’ The [Regional] Board also concluded that the ARCO predecessors directly discharged waste from their own mining activities from 1916 to 1918. It therefore ordered ARCO to investigate and remediate the hazardous waste associated with the Walker Mine." ( Atlantic Richfield , supra , 41 Cal.App.5th at pp. 94-95, 253 Cal.Rptr.3d 888.)

The Regional Board's cleanup order was issued in March 2014. ARCO petitioned the trial court to overturn the order. The trial court granted the petition in January 2018. ( Atlantic Richfield , supra , 41 Cal.App.5th at pp. 93-94, 253 Cal.Rptr.3d 888.) As stated previously, in Atlantic Richfield , we reversed and remanded the matter to the trial court to determine "ARCO's liability under the proper standard of eccentric control over any category of mining activity resulting in toxic discharge," not just activity involving waste disposal or environmental regulation compliance. ( Id . at p. 100, 253 Cal.Rptr.3d 888.)

On remand, the Regional Board relied on the following evidence in the administrative record to support its conclusion that International/Anaconda exercised eccentric control over ore extraction at the Walker Mine, resulting in the toxic pollution described above:

In a September 1923 letter from Paul Billingsley, a geologist at Anaconda, to J. O. Elton, who served both as general manager of International's smelter in Utah and as vice president of the Walker Mining Company, Billingsley expressed concern that the Walker Mining Company's manager, V. A. Hart, was not following the "recommendations" of Anaconda's geological department. As the Regional Board's industrial...