Chevron Mining Inc. v. United States
| Decision Date | 28 June 2022 |
| Docket Number | 1:13-cv-00328-PJK-JFR |
| Citation | 609 F.Supp.3d 1202 |
| Parties | CHEVRON MINING INC., Plaintiff/Counter-Defendant, v. UNITED STATES of America, United States Department of the Interior, United States Department of Agriculture, Defendants/Counter-Claimants. |
| Court | U.S. District Court — District of New Mexico |
Ellen Crisham Pellegrini, Gordon D. Todd, Mark Hopson, Peter D. Keisler, Pro Hac Vice, Quin M. Sorenson, Pro Hac Vice, Benjamin M. Mundel, Sidley Austin LLP, Washington, DC, Sherrie A. Armstrong, Kirsten L. Nathanson, Crowell & Moring LLP, Washington, DC, James K. Vines, Pro Hac Vice, King & Spalding, Washington, DC, Peter J. Schaumberg, Pro Hac Vice, Beveridge and Diamond, PC, Washington, DC, Alex Cameron Walker, Megan Muirhead, Jeremy K. Harrison, Jennifer G. Anderson, Modrall, Sperling, Roehl, Harris & Sisk, P.A., Albuquerque, NM, for Plaintiff/Counter-Defendant.
Michael Augustini, Washington, DC, Simi Bhat, Tsuki Hoshijima, U.S. Department of Justice, Washington, DC, Bryan James Harrison, United States Department of Justice ENRD, Environmental Defense Section, Washington, DC, Eric G. Hostetler, Kimere J. Kimball, U.S. Department of Justice, Environment & Natural Resources Division, Washington, DC, Ruth Fuess Keegan, DOJ-USAO, Albuquerque, NM, for Defendant/Counter-Claimant United States of America.
Michael Augustini, Washington, DC, Simi Bhat, Tsuki Hoshijima, U.S. Department of Justice, Washington, DC, Bryan James Harrison, United States Department of Justice Enrd, Environmental Defense Section, Washington, DC, Eric G. Hostetler, Kimere J. Kimball, U.S. Department of Justice, Environment & Natural Resources Division, Washington, DC, for Defendants/Counter-Claimants United States Department of the Interior, United States Department of Agriculture.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
This case concerns the operation of a molybdenum mine near Questa, New Mexico by the predecessor in interest of Plaintiff/Counter-Defendant Chevron Mining Inc. (Chevron) — Molycorp, Inc. (Molycorp) — from 1919 to 2014. Chevron asserted claims under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) against the government for cost recovery, contribution, and a declaratory judgment related to the remediation of waste generated by the mine. Am. Compl. at 30–33 (ECF No. 32). The United States asserted counterclaims for contribution, contractual indemnification, and a declaratory judgment. Am. Countercls. at 8–10 (ECF No. 140).
In 2013, this court bifurcated proceedings into two phases: (1) a phase to resolve the liability of the United States; and (2) if needed, an equitable allocation phase.1 ECF No. 34, at 3. In 2015, this court granted summary judgment for the government holding that it was not liable under CERCLA either as a past owner or arranger. Chevron Mining Inc. v. United States, 139 F. Supp. 3d 1261, 1282 (D.N.M. 2015). On appeal, the Tenth Circuit affirmed in part and reversed in part, holding that although not liable as an arranger, the government is strictly liable for its share of equitably allocated response costs as a past owner. Chevron Mining Inc. v. United States, 863 F.3d 1261, 1278, 1283–84 (10th Cir. 2017). In so ruling, the Tenth Circuit noted that "CERCLA is remedial legislation, [and] it should be construed liberally to carry out its purpose." Id. at 1269 (quoting Atl. Richfield Co. v. Am. Airlines, Inc., 98 F.3d 564, 570 (10th Cir. 1996) ). The case was remanded to determine the United States’ equitable share of the clean-up costs, if any, of the Questa Mine Superfund Site (Questa Site). Id. at 1266. The Environmental Protection Agency (EPA) estimates that the clean-up costs will total slightly over $1 billion. ECF No. 215, at 2.
The parties agreed to certain pre-trial procedures including the submission of written direct testimony and the admission of exhibits cited therein. See ECF No. 221, at 2–4. The parties also agreed to live cross-examination and redirect at a bench trial. See ECF No. 249, at 4–5. The bench trial in this phase of the case was held on March 14–16, 2022, and April 21, 2022. See ECF Nos. 288–91 (Trial Transcripts). Based on the parties’ stipulations and written submissions, the evidence presented at trial, and the deposition testimony designated by the parties, the court makes the following findings of fact and conclusions of law.
1. Chevron has admitted its CERCLA liability at the Questa Site as an owner, operator, and arranger. Am. Compl. at 3 (ECF No. 32). The United States is a potentially responsible party (PRP) as an owner under CERCLA and is strictly liable as a matter of law for an equitable allocation of the eligible response costs. Chevron Mining, 863 F.3d at 1266.
2. Chevron has incurred "some" response costs for purposes of this CERCLA allocation determination. See ECF No. 223-9, at 2.
3. Chevron and its predecessors have cooperated with the EPA in the cleanup effort ordered and directed by the EPA. ECF No. 160, at 1.
4. Chevron and its predecessors have not violated any then-applicable environmental standard of care or acted in disregard of any then-applicable environmental statute, regulation, or standard during the operation of the Questa Mine. ECF No. 160, at 1–2.
5. The parties have agreed and stipulated that Chevron will not seek to allocate any percentage of costs required to remediate any release of hazardous substances from or in the tailings pipelines or the Eastern Tailings Pond. ECF No. 185, at 1; see also USX 020 at 5 ().
6. Molybdenum was first discovered at the Questa Site in 1916, and the first mining claims were located by R&S Molybdenum Company in 1918. Fredley Direct at 27 (ECF No. 256-4); Quivik Direct ¶ 87 (ECF No. 255-1).
7. In 1919, molybdenum production began, and in 1920 Molycorp acquired R&S Molybdenum Company. Fredley Direct at 27.
8. Molycorp patented its first mining claims at the Questa Site in 1922. Fredley Direct at 28. Thus, Molycorp obtained fee title to the land used in connection with the First Underground Mine. Quivik Direct ¶ 87.
9. This original mining operation consisted of an underground mine that pursued veins of high-grade molybdenum. Fredley Direct at 28.
10. The known veins of high-grade molybdenum were exhausted by 1956, and the First Underground Mine closed in 1957. Fredley Direct at 28.
11. The United States was not actively involved in the development of the First Underground Mine. Quivik Direct ¶ 11.
12. The First Underground Mine generated approximately 150,000 tons of waste rock. Quivik Direct ¶ 93; USX 477, at 1.
13. In 1954–1955, molybdenum production began to slow dramatically. Rigby Direct at 14 (ECF No. 223-2); CX 416. Molycorp managers were convinced that there was more high-grade ore at the Questa Site, so they began their own exploration program. Fredley Direct at 28–29; CX 046.
14. This exploration program utilized the same mining techniques as the First Underground Mine, which included drifting and cross cutting. Fredley Direct at 29; Rigby Direct at 14–15.
15. After its exploration program failed to discover any additional high-grade ore veins, Molycorp applied for financial assistance from the Defense Minerals Exploration Administration (DMEA) in 1956. Fredley Direct at 29; Rigby Direct at 16; see CX 046.
16. The DMEA was established to encourage mining companies to explore for valuable minerals that could supply the United States with minerals deemed critical for national defense. Quivik Direct ¶ 101.
17. Molybdenum was one such mineral deemed critical for national defense. See Cryderman Direct at 11 (ECF No. 223-4); Brigham Direct ¶ 16 (ECF No. 255-3).
18. Molycorp's initial loan application to the DMEA proposed more underground tunneling for high-grade molybdenum veins. Fredley Direct at 30; Dewey Direct at 22 (ECF No. 256-3); Trial Tr. at 235:7–21 (Rigby Redirect); CX 046.
19. Molycorp's application stated that as of December 1956, CX 046, at 6.
20. Upon review of Molycorp's loan application, the DMEA found that its proposal to look for more high-grade veins "was not based on known geologic data and was therefore not warranted in its entirety." CX 048, at 6; Fredley Direct at 31; Rigby Direct at 17–18; Trial Tr. at 236:6–19 (Rigby Redirect).
21. However, the DMEA noted "[t]he strategic importance of molybdenum and the limited known commercial deposits," and recommended that a Field Team consisting of a U.S. Geological Survey Geologist and a U.S. Bureau of Mines Mining Engineer be sent to the Questa Site to further assess the viability of the proposal. CX 048, at 10; DMEA Dep. at 209:1–20 (ECF No. 256-2); Fredley Direct at 31; Rigby Direct at 18, 22; see also CX 054.
22. The DMEA Field Team visited the Questa Site on December 14, 1956. It recommended looking for low-grade molybdenum because it "believe[d], from the evidence seen during the mine inspection, that a large and significant body of low-grade molybdenite may be present." Fredley Direct at 32; Rigby Direct at 19; CX 048, at 7.
23. Ultimately, the DMEA recommended that Molycorp pursue this low-grade ore body through diamond drilling and location-specific channel sampling, two techniques not previously used at the Questa Site in its exploration efforts. Fredley Direct at 32–34; Rigby Direct at 18–19; Dewey Direct at 22; Trial Tr. at 137:18–138:3 (Dewey Redirect), 228:15–25, 230:12–20 (Rigby Redirect), 354:11–14 (Fredley Redirect), 520:3–23 (Quivik Cross); CX 048, at 7; CX 054.
24. The DMEA knew that a low-grade ore body could only be recovered through open pit mining techniques that would generate significantly more waste than...
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