Pinal Creek Group v. Newmont Min. Corp.

• Decision Date: 27 March 1996
• Docket Number: CIV-91-1764-PHX-ROS.
• Citation: 926 F. Supp. 1400
• Parties: The PINAL CREEK GROUP, consisting of Cyprus Miami Mining Corporation, Inspiration Consolidated Copper Company, and Magma Copper Company, Plaintiffs, v. NEWMONT MINING CORPORATION, et al., Defendants.
• Court: U.S. District Court — District of Arizona

926 F. Supp. 1400

The PINAL CREEK GROUP, consisting of Cyprus Miami Mining Corporation, Inspiration Consolidated Copper Company, and Magma Copper Company, Plaintiffs, v. NEWMONT MINING CORPORATION, et al., Defendants.

CIV-91-1764-PHX-ROS.

United States District Court, D. Arizona.

March 27, 1996.

Charles J. Muchmore, Nicholas J. Wallwork, Muchmore & Wallwork PC, Phoenix, AZ, for Pinal Creek Group.

Gerald S. Maltz, Miller Pitt & McAnally PC, Tucson, AZ, Shane Ray Swindle, Karl M. Tilleman, Dalton Gotto Samson & Kilgard PLC, Phoenix, AZ, Scott W. Rodgers, Osborn Maledon, PA, Phoenix, AZ, for Newmont Mining Corporation.

Michael P. Berman, John Dunning Titus, Lowe & Berman PA, Phoenix, AZ, for Occidental Petroleum Corp. and Canadianoxy Offshore Production Co.

Steven B. Weatherspoon, Chandler Tullar Udall & Redhair, Tucson, AZ, Michael John Gallagher, Davis Graham & Stubbs, Denver, CO, Sherry Marie Purdy, Atlantic Richfield Co., Denver, CO, for Atlantic Richfield Company.

John Marquette Rochefort, Patrick Ward Dennis, Michael David Young, Tiffany R. Hedgpeth, McClintock Weston Benshoof Rochefort Rubalcava & MacCuish, Los Angeles, CA, for Phelps Dodge Corp.

ORDER

SILVER, District Judge.

The Pinal Greek Group ("Plaintiffs") filed this action to recover expenditures involved in remediating groundwater contamination in the Pinal Creek drainage basin in Gila County, Arizona. Plaintiffs' Second Amended Complaint ("Complaint") contains three counts: Count I — cost recovery and declaratory relief pursuant to Section 107 of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. § 9607; Count II — cost recovery and declaratory relief under the Arizona Environmental Quality Act, A.R.S. § 49-285; and Count III — contribution pursuant to Section 113(f) of CERCLA, 42 U.S.C. § 9613(f).

The following motions are pending before the Court: Defendant ARCO's Motion to Dismiss Plaintiffs' Cost Recovery Claims,¹ Defendants Newmont Mining Corporation, Occidental Petroleum Corporation, and CanadianOxy Offshore Production Company's Motion for Judgment on the Pleadings as to Plaintiffs' Cost Recovery Claims, and Defendant ARCO's Motion to Dismiss Inspiration's Contribution Claim. Having considered the parties' briefs and oral arguments, the Court denies these motions.

Factual Background

The Pinal Creek drainage basin is located near the towns of Globe and Miami, Arizona. Mining and mineral processing activities have occurred in the Globe-Miami area since approximately 1883. These activities resulted in the production of hazardous substances, which have contaminated the groundwater in the shallow aquifer underlying Pinal Creek. Left unabated, the contaminated groundwater could reach the perennially flowing segment of Pinal Creek, and then the Salt River, and from there Roosevelt Lake, a major water source for residents of Maricopa County.

On May 8, 1989, the Director of the Arizona Department of Environmental Quality ("ADEQ") executed a Decision Record authorizing the use of monies from the Arizona Water Quality Assurance Revolving Fund "for purposes related to the investigation and remediation of the Pinal Creek site," in accordance with the Arizona Environmental Quality Act, A.R.S. §§ 49-281 to 49-287. The Decision Record states that this action was taken in response to "contamination of groundwater with acid mine drainage, containing acids and heavy metals, in the Pinal Creek Area."

On November 20, 1989, Plaintiff Cyprus Miami Mining Company ("Cyprus") provided ADEQ with a proposed interim Remedial Action Plan ("RAP") describing preliminary measures for responding to the contamination. ADEQ approved the RAP in May 1990.

On May 17, 1990, Cyprus entered into a "Group Agreement" with Plaintiffs Magma Copper Company and Inspiration Consolidated Copper Company, pursuant to which the "Pinal Creek Group" was formed and the individual group members agreed to share remediation costs. With the approval and under the oversight of ADEQ, Plaintiffs began implementing the RAP, incurring costs relating to sampling and analytical tests and services, time of Group personnel, costs of expert consultants, legal representation, identification of potentially responsible parties, investigation, and reimbursement of ADEQ for oversight costs. Plaintiffs have spent more than $1 million.² They will continue to incur response costs, possibly running into the millions of dollars, arising out of the cleanup.

ADEQ has asked Defendants — who, like Plaintiffs, presently or in the past have owned or operated mining facilities in the Pinal Creek area — to participate in the cleanup and reimburse ADEQ for investigative and oversight costs. To date, Defendants have refused to participate in the cleanup or reimburse the state.

Plaintiffs filed this action on November 5, 1991. Defendants asserted contribution counterclaims pursuant to 42 U.S.C. 9613(f).

Governing Legal Principles

In considering a motion to dismiss for failure to state a claim upon which relief can be granted, all factual allegations in the complaint are taken as true and all reasonable inferences are drawn in the plaintiff's favor. Iolab Corp. v. Seaboard Sur. Co., 15 F.3d 1500, 1504 (9th Cir.1994). A complaint may be dismissed pursuant to Fed.R.Civ.P. 12(b)(6) only if the plaintiff can prove no set of facts which would entitle it to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957).

Similarly, in considering a motion for judgment on the pleadings, all factual allegations in the nonmovant's pleadings are assumed to be true and all contravening assumptions in the movant's pleadings are taken to be false. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1550 (9th Cir.1989). Judgment on the pleadings is proper where the moving party clearly establishes on the face of the pleadings that no material issue of fact remains to be resolved and that it is entitled to judgment as a matter of law. Id.

Standing to Assert Cost Recovery Claims

Defendants' cost recovery motions turn on the resolution of a hotly-debated legal question: May Plaintiffs, who are potentially responsible for groundwater contamination in the Pinal Creek basin, proceed under CERCLA's cost recovery provision, Section 107 (codified as 42 U.S.C. § 9607), or are they limited to an action for contribution pursuant to Section 113(f) (codified as 42 U.S.C. § 9613(f))?³

The resolution of this issue will have a significant impact on this litigation. Under Section 107, liability is joint and several, the range of possible defenses is sharply limited, and the statute of limitations is six years. In contrast, under Section 113(f), liability is several only, an array of equitable defenses are permitted, and the limitations period is three years.

To resolve the parties' dispute, the Court will first provide an overview of CERCLA's text and history. The Court will then summarize the parties' contentions and evaluate them according to CERCLA's text, policies and other important factors.

I. CERCLA Overview

CERCLA Section 107(a)(4)(A) provides a cause of action for the government and Indian tribes to recover costs incurred in responding to environmental contamination. Section 107(a)(4)(B) allows the recovery of "any other necessary costs of response incurred by any other person consistent with the national contingency plan ..." (Emphasis added.) The latter provision creates an implied cause of action for private parties to seek recovery of cleanup costs. Key Tronic Corp. v. United States, 511 U.S. 809, ___, 114 S.Ct. 1960, 1966, 128 L.Ed.2d 797 (1994).

A cost recovery action under either provision may be brought against any potentially responsible party ("PRP"), defined as a party falling into one of the following classes: (1) the owner and operator of the facility; (2) any person who owned or operated the facility at the time of disposal of any hazardous substance; (3) any person who by contract, agreement, or otherwise arranged for disposal or treatment of hazardous substances owned or possessed by that person; and (4) any person who accepted any hazardous substances for the transport to disposal or treatment sites selected by that person. 42 U.S.C. § 9607(a)(1)-(4).

Cost recovery actions are subject only to three enumerated defenses: (1) an act of God; (2) an act of war; (3) an act or omission of a third party. 42 U.S.C. § 9607(b)(1)-(4). See Velsicol Chem. Corp. v. Enenco, Inc., 9 F.3d 524, 530 (6th Cir.1993) (equitable defenses do not apply to Section 107 actions because Congress explicitly limited available defenses to those provided in Section 107(b)).

Section 107 defendants are strictly liable — that is, liability may be imposed without proof of causation — if there was a release or threat of release of a hazardous substance at a facility and a person incurred necessary response costs consistent with the National Contingency Plan. 42 U.S.C. § 9607(a); 42 U.S.C. § 9601(32); United States v. Monsanto Co., 858 F.2d 160, 167 (4th Cir.1988), cert. denied, 490 U.S. 1106, 109 S.Ct. 3156, 104 L.Ed.2d 1019 (1989).

The scope of PRP liability is not defined by the text of Section 107. The legislative history, however, indicates that the federal courts should establish a uniform rule of liability in accordance with "traditional and evolving principles of law." United States v. Chem-Dyne Corp., 572 F.Supp. 802, 806-807 (S.D.Ohio 1983) (quoting statement of Rep. Florio, CERCLA's sponsor in the United States House of Representatives) (reprinted in 126 Cong.Rec. H11787 (Nov. 24, 1980)). With near unanimity, courts have found that section 107 liability is joint and several unless the defendant can demonstrate that the harm is divisible. E.g., United States v. Alcan Aluminum Corp., 964 F.2d 252, 268-69 (3d Cir.1992).

To alleviate the potentially unfair burden that joint and several liability may cause, courts in CERCLA's early years created...