GREENBERG TRAURIG, LLP ATTORNEYS AT LAW · PDF file1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17...
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 GREENBERG TRAURIG, LLP ATTORNEYS AT LAW SUITE 700 2375 EAST CAMELBACK ROAD PHOENIX, ARIZONA 85016 (602) 445-8000 Pamela M. Overton, SBN 009062 ([email protected]) Daniel J. Schnee [email protected] Colorado Bar No. 38446, (admitted pro hac vice) EL PASO NATURAL GAS COMPANY, L.L.C. Two North Nevada Colorado Springs, CO 80903 719.520.4337 (Telephone) 719.667.7621 (Facsimile) John Voorhees, [email protected] Colorado Bar No. 21730, (admitted pro hac vice) Christopher J. Neumann, [email protected] Colorado Bar No. 29831, (admitted pro hac vice) Gregory R. Tan, [email protected] Colorado Bar No. 38770, (admitted pro hac vice) GREENBERG TRAURIG, LLP The Tabor Center 1200 Seventeenth Street Twenty-Fourth Floor Denver, CO 80202 303.572.6500 (Telephone) 303.572.6540 (Facsimile) Attorneys for El Paso Natural Gas Company, L.L.C. IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA El Paso Natural Gas Company, L.L.C., Plaintiff and Counterclaim- Defendant, v. United States of America; et al. Defendants and Counter- Claimants. NO. 3:14-cv-08165-DGC EL PASO NATURAL GAS COMPANY’S MOTION FOR PARTIAL SUMMARY JUDGMENT Case 3:14-cv-08165-DGC Document 114 Filed 02/17/17 Page 1 of 24
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GREENBERG TRAURIG, LLPATTORNEYS AT LAW
SUITE 700 2375 EAST CAMELBACK ROAD
PHOENIX, ARIZONA 85016 (602) 445-8000
Pamela M. Overton, SBN 009062 ([email protected]) Daniel J. Schnee [email protected] Colorado Bar No. 38446, (admitted pro hac vice) EL PASO NATURAL GAS COMPANY, L.L.C. Two North Nevada Colorado Springs, CO 80903 719.520.4337 (Telephone) 719.667.7621 (Facsimile) John Voorhees, [email protected] Colorado Bar No. 21730, (admitted pro hac vice) Christopher J. Neumann, [email protected] Colorado Bar No. 29831, (admitted pro hac vice) Gregory R. Tan, [email protected] Colorado Bar No. 38770, (admitted pro hac vice) GREENBERG TRAURIG, LLP The Tabor Center 1200 Seventeenth Street Twenty-Fourth Floor Denver, CO 80202 303.572.6500 (Telephone) 303.572.6540 (Facsimile) Attorneys for El Paso Natural Gas Company, L.L.C.
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
El Paso Natural Gas Company, L.L.C.,
Plaintiff and Counterclaim-Defendant,
v. United States of America; et al.
Defendants and Counter-Claimants.
NO. 3:14-cv-08165-DGC EL PASO NATURAL GAS COMPANY’S MOTION FOR PARTIAL SUMMARY JUDGMENT
Case 3:14-cv-08165-DGC Document 114 Filed 02/17/17 Page 1 of 24
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ii
Table of Contents
TABLE OF AUTHORITIES PURSUANT TO LRCIV 7.2 ........................................................... iii
INTRODUCTION ........................................................................................................................... 1
STANDARD OF REVIEW ............................................................................................................. 2
ARGUMENT ................................................................................................................................... 2
I. The United States Owns Fee Title And Is Liable As The “Current Owner” and “Past Owner” Of The Mine Sites ...................................................................... 3
A. CERCLA Unambiguously Imposes Liability On The United States As The Fee Title Owner Of The Mine Sites ................................................ 4
1. The United States Is A Liable Owner Under The Plain Language Of CERCLA .................................................................... 4
2. Only Fee Title Is Required For CERCLA Owner Liability ............. 6 3. The United States Is A Liable CERCLA Owner Under The
Arizona Common Law Meaning Of Owner..................................... 7
B. The United States’ “Trustee” Status Doesn’t Alter Its Owner Liability ........................................................................................................ 9
C. CERCLA Section 107(n) Does Not Limit The United States’ Liability ...................................................................................................... 12
II. Even Assuming The Friedland “Indicia Of Ownership” Test Applies, The United States Has Exercised Its Ownership Rights Over The Mine Site And Is Liable As The Current And Former Owner ............................................... 14
CONCLUSION .............................................................................................................................. 17
Case 3:14-cv-08165-DGC Document 114 Filed 02/17/17 Page 2 of 24
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iii
Table of Authorities Pursuant to LRCiv 7.2
Federal Cases
Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) ....................................................................................................... 2
Briggs & Stratton Corp. v. Concrete Sales & Servs., 20 F. Supp. 2d 1356 (M.D. Ga. 1998) ........................................................................... 9
Carson Harbor Vill., Ltd. v. Unocal Corp., 270 F.3d 863 (9th Cir. 2001) ..................................................................................... 2, 3
Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ....................................................................................................... 2
Chubb Custom Ins. v. Space Sys./Loral, Inc., 710 F.3d 946 (9th Cir. 2013) ..................................................................................... 3, 4
City of Los Angeles v. San Pedro Boat Works, 635 F.3d 440 (9th Cir. 2011) ................................................................................. 5, 6, 7
City of Phoenix v. Garbage Servs. Co., 816 F. Supp. 564 (D. Ariz. 1993) .............................................................. 3, 4, 5, 6, 7, 9
City of Phoenix v. Garbage Servs. Co., 827 F. Supp. 600 (D. Ariz. 1993) ...................................................................... 9, 10, 12
Coppola v. Smith, 19 F. Supp. 3d 960 (E.D. Cal. 2014) .............................................................................. 5
Edward Hines Lumber Co., v. Vulcan Materials Co., 861 F.2d 155 (7th Cir. 1988) ..................................................................................... 5, 7
Long Beach Unified Sch. Dist. v. Goodwin Cal. Living Trust, 32 F.3d 1364 (9th Cir. 1994) ..................................................................................... 7, 8
Metro Water Reclamation Dist. v. N. Am. Galvanizing & Coatings, Inc., 473 F.3d 824 (7th Cir. 2007) ......................................................................................... 6
Navajo Tribe v. U.S., 364 F.2d 320 (Ct. Cl. 1966) ......................................................................................... 11
New York v. Shore Realty Corp., 759 F.2d 1032 (2d Cir. 1985) ......................................................................................... 3
New York v. Westwood-Squibb Pharm. Co., 138 F. Supp. 2d 372 (W.D.N.Y. 2000) .......................................................................... 5
Case 3:14-cv-08165-DGC Document 114 Filed 02/17/17 Page 3 of 24
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U.S. v. Friedland, 152 F. Supp. 2d 1234 (D. Colo. 2001) ............................................................ 14, 15, 16
U.S. v. Newmont USA Ltd., 504 F. Supp. 2d 1050 (E.D. Wash. 2007) ........................................................ 15, 16, 17
Nurad, Inc. v. Hooper & Sons Co., 966 F.2d 837 (4th Cir. 1992) ..................................................................................... 3, 6
Osage Tribe of Okla. v. U.S., 96 Fed. Cl. 390 (2010) ................................................................................................. 10
Pyramid Lake Paiute Tribe v. Morton, 354 F. Supp. 252 (D.D.C. 1972) .................................................................................. 11
Redevelopment Agency of City of Stockton v. BNSF, 643 F.3d 668 (9th Cir. 2011) ..................................................................................... 5, 7
Shoshone Indian Tribe v. U.S., 364 F.3d 1339 (Fed. Cir. 2004) .................................................................................... 10
Tohono O’odham Nation v. Ducey, No. CV-15-01135, 2016 WL 7338341 (D. Ariz. Dec. 19, 2016) .................................. 2
U.S. v. R.W. Meyer, Inc., 932 F.2d 568 (6th Cir. 1991) ......................................................................................... 6
U.S. v. White Mountain Apache Tribe, 537 U.S. 465 (2003) ..................................................................................................... 10
U.S. v. Burns, No. C-88-94-L, 1988 WL 242553 (D.N.H. Sept. 12, 1988) ...................................... 6, 9
Wells Fargo Bank, N.A. v. Renz, 795 F. Supp. 2d 898 (N.D. Cal. 2011) ....................................................................... 5, 7
State Cases
Costello v. Cunningham, 147 P. 701 (Ariz. 1915) .................................................................................................. 8
Cutter Aviation, Inc. v. Arizona Dep’t of Revenue, 958 P.2d 1 (Ariz. Ct. App. 1997) ................................................................................... 8
Hackin v. Gaynes, 436 P.2d 127 (Ariz. 1968) .............................................................................................. 8
Hardinge v. Empire Zinc Co., 148 P. 306 (Ariz. 1915) .................................................................................................. 8
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Navajo County v. Peabody Coal Co., 530 P.2d 1134 (Ariz. Ct. App. 1975) ............................................................................. 8
Pima County v. American Smelting & Refining Co., 520 P.2d 319 (Ariz. Ct. App. 1974) ............................................................................... 8
Pinkerton v. Pritchard, 223 P.2d 933 (Ariz. 1950) .............................................................................................. 8
Richey v. W. Pac. Dev. Corp., 684 P.2d 169 (Ariz. Ct. App. 1984) ............................................................................... 8
Federal Statutes
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq. ......................................................................... 1, 4, 5, 9, 12, 13
Indian Mineral Leasing Act of 1938, 25 U.S.C. § 396-396g................................................................................................... 15
Rules
Fed. R. Civ. P. 56(a) ............................................................................................................ 1
LR Civ. 56.1 ........................................................................................................................ 1
Other Authorities
141 Cong. Rec. S2528 (daily ed. Feb. 10, 1995) .............................................................. 13
BLACK’S LAW DICTIONARY 1105 (Sixth ed. 1990) .................................................... 5
COHEN’S HANDBOOK OF FEDERAL INDIAN LAW § 5.05[2] (2012 Ed. & 2015 Suppl.) ...................................................................................................... 10
COHEN’S HANDBOOK OF FEDERAL INDIAN LAW § 5.05[4][a] (2012 Ed. & 2015 Suppl.) ...................................................................................................... 11
III SCOTT ON TRUSTS §§ 265, 265.1 (3d ed. 1985) ....................................................... 9
RESTATEMENT (SECOND) OF TRUSTS § 264 .................................................... 13, 14
RESTATEMENT (SECOND) OF TRUSTS § 265 .................................................... 10, 13
WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 1612 (2002) ............................................................................................................................. 5
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1
Plaintiff El Paso Natural Gas Company, L.L.C. (“El Paso”), by and through its
undersigned counsel, hereby moves the Court for partial summary judgment pursuant
to Federal Rule of Civil Procedure 56 and Local Rule 56.1, on its first, fourth, and fifth
claims for relief and seeks a ruling that the United States is liable as the “current
owner” and “past owner” of the 19 uranium mines involved in this case (the “Mine
Sites”) under the Comprehensive Environmental Response, Compensation, and
Liability Act (“CERCLA”), 42 U.S.C. §§ 9601-9675, stating:
INTRODUCTION
Plaintiff brought this lawsuit to recover from the United States a fair share of
past and future response costs it has incurred or will incur under CERCLA, 42 U.S.C.
§ 9601 et seq., in connection with the study and cleanup of the Mine Sites. Plaintiff
operated the Mine Sites at the outset of the Cold War as part of the U.S. Atomic
Energy Commission’s (“AEC”) Domestic Uranium Procurement Program, and by law
delivered all of its mined ore to the AEC. During this time, the United States
desperately sought and acquired as much uranium ore as possible to build nuclear
weapons needed to win the nation’s arms race with the U.S.S.R. Now, the government
is seeking to have these Cold War uranium mines cleaned up—demanding that
Plaintiff bear the full cost of this effort, while denying any responsibility for the
AEC’s exploration, mining, and reclamation activities taken on land owned by the
United States and leased to Plaintiff for mining.
“Current owners” and the “past owners” are strictly liable under the CERCLA,
42 U.S.C. §§ 9607(a)(1) & (2), and the United States and its agencies are liable in the
same manner and to the same extent as any private party, id. § 9620(a)(1). The United
States stipulates that it is, and at all times relevant here has been, the fee title owner of
the Indian trust land underlying the Mine Sites.
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For these and other reasons discussed below, summary judgment should enter
in this action in favor of Plaintiff on the United States’ liability as a CERCLA owner.
STANDARD OF REVIEW
A court must grant summary judgment “if the movant shows that there is no
genuine issue as to any material fact and the movant is entitled to judgment as a matter
of law.” Fed. R. Civ. P. 56(a); see also Tohono O’odham Nation v. Ducey, No. CV-
15-01135, 2016 WL 7338341, at *1 (D. Ariz. Dec. 19, 2016) (citing Celotex Corp. v.
Catrett, 477 U.S. 317, 322-23 (1986)). The party seeking summary judgment “bears
the initial responsibility of presenting the basis for its motion and identifying those
portions of the record that it believes demonstrate the absence of a genuine issue of
material fact.” Ducey at *1 (citing Celotex, 477 U.S. at 323). If the moving party
meets it initial responsibility, “the burden shifts to the nonmovant to demonstrate the
existence of a genuine dispute of material fact. Id. (citing Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248-50 (1986)). The court’s function is “to determine whether
there is a genuine issue for trial. . . . [and] the Court must believe the nonmovant’s
evidence and draw all inferences in its favor.” Id. (citing Anderson, 477 U.S. at 255).
ARGUMENT
To prevail in a private-party CERCLA liability action, the plaintiff must
demonstrate the following elements of liability: (1) the site is a facility (in this case,
the Mine Sites); (2) a release or threatened release of a hazardous substance has
occurred; (3) the release or threatened release caused the plaintiff to incur necessary
response costs consistent with the National Contingency Plan (“NCP”); and
(4) defendant is within a class of responsible parties described in CERCLA Section
107(a). See Carson Harbor Vill., Ltd. v. Unocal Corp., 270 F.3d 863, 871 (9th Cir.
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2001). The two classes of responsible parties relevant to this motion are the “current
owner” and the “past owner” (or, “owner at the time of disposal”) of a facility.
The parties have stipulated as to the first three elements of CERCLA liability.
See Stipulation Regarding Issues Presented in El Paso Natural Gas Company’s Mot.
for Summ. J. and Parties’ CERCLA Claims, Dkt. No. 113, ¶¶ 1-4. The parties also
have stipulated that the Mine Sites are located on Indian trust land within the Navajo
Nation Reservation, and that the United States is and has been the sole and exclusive
fee title owner of these lands at all times relevant to this case. See Joint Stipulation of
Facts Regarding Land Ownership, Dkt. No. 83, ¶ 23. Accordingly, all the elements
necessary to establish the United States’ “current owner” and “past owner” liability are
stipulated, and summary judgment is warranted as a matter of law.
I. The United States Owns Fee Title And Is Liable As The “Current Owner” and “Past Owner” Of The Mine Sites
The Ninth Circuit and this Court have recognized that the nature of liability
imposed upon owners of a facility is strict. See, e.g., Chubb Custom Ins. v. Space
Sys./Loral, Inc., 710 F.3d 946, 956-57 (9th Cir. 2013); City of Phoenix v. Garbage
Servs. Co., 816 F. Supp. 564, 567 (D. Ariz. 1993). There is no “fault” requirement for
owner liability under CERCLA. See, e.g., New York v. Shore Realty Corp., 759 F.2d
1032, 1044 (2d Cir. 1985) (“[S]ection 9607(a)(1) unequivocally imposes strict liability
on the current owner of a facility from which there is a release, or threat of release
without regard to causation.”); Nurad, Inc. v. Hooper & Sons Co., 966 F.2d 837, 846
(4th Cir. 1992) (“The trigger to liability under § 9607(a)(2) is ownership or operation
of a facility at the time of disposal, not culpability or responsibility for the
contamination.”). Moreover, CERCLA contains no special exemptions for the
government when it is a landowner holding title, or when it is engaged in providing for
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national defense, or when it is exercising its responsibility as a trustee for the Navajo
Nation, or when it is acting as a regulator. To the contrary, the statute expressly
provides that “the United States . . . shall be subject to [liability] in the same manner
and to the same extent . . . as any nongovernmental entity,” 42 U.S.C. § 9620(a)(1),
and it specifically limits the circumstances under which any holder of fee title will not
be deemed an “owner,” id. §§ 9601(20)(A), (E) (lender exemption). This Court has
previously examined this exception and found that a trustee holding fee title was liable
as a CERCLA owner. See City of Phoenix, 816 F. Supp. at 566-68. This same logic
applies here, and the United States is similarly liable under CERCLA as the fee title
holder of the Mine Sites.
A. CERCLA Unambiguously Imposes Liability On The United States As The Fee Title Owner Of The Mine Sites
1. The United States Is A Liable Owner Under The Plain Language Of CERCLA
As the current and past fee title owner of the Mine Sites, the United States is a
liable CERCLA “owner” under the plain language of the statute.1 The Ninth Circuit
instructs that the Court’s task in interpreting statutes is “to construe Congress’s intent”
and doing so requires the Court to “begin, as always, with the language of the statute.”
See Chubb Custom Ins., 710 F.3d at 958. “Unless otherwise defined, words will be
interpreted as taking their ordinary meaning. But when a statute includes an explicit
definition, we must follow that definition, even if it varies from the ordinary meaning.”
Id. (internal quotations and citations omitted).
1 CERCLA imposes liability upon “the owner and operator of a vessel or facility”
and “any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of.” 42 U.S.C. § 9607(a)(1) & (2).
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Congress’ approach to the liability of owners was simple: it defined an “owner”
as any “person owning . . . [a] facility.” 42 U.S.C. § 9601(20). While this definition is
circular on its face, its circularity “strongly implies . . . that the statutory terms have
their ordinary meanings rather than unusual or technical meanings.” Edward Hines
Lumber Co., v. Vulcan Materials Co., 861 F.2d 155, 156 (7th Cir. 1988). The ordinary
and common sense meaning of a property “owner” must include the party that holds
legal title, as the United States does in this case. Indeed, “if the term ‘owner’ is to
mean anything at all, it must extend to those parties holding legal title to
property.” New York v. Westwood-Squibb Pharm. Co., 138 F. Supp. 2d 372, 387
(W.D.N.Y. 2000); see also City of Phoenix, 816 F. Supp. at 568. This view is
supported Black’s Law Dictionary, which defines “owner” as “[t]he person in whom is
vested the ownership, dominion, or title of property; proprietor.” BLACK’S LAW
DICTIONARY 1105 (6th ed. 1990) (emphasis added). Similarly, Webster defines
“owner” as “one that owns; one that has the legal or rightful title whether the
possessor or not.” WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 1612 (2002)
(emphasis added).
Courts within this Circuit have interpreted a CERCLA “owner” consistent with
this plain meaning. See, e.g., Coppola v. Smith, 19 F. Supp. 3d 960, 969 (E.D. Cal.
2014) (“An ‘owner’ is someone who holds title to the facility.”) (citing Redevelopment
Agency of City of Stockton v. BNSF, 643 F.3d 668, 679-81 (9th Cir. 2011)); Wells
Fargo Bank, N.A. v. Renz, 795 F. Supp. 2d 898, 915 (N.D. Cal. 2011) (“The Ninth
Circuit has narrowly construed ‘owner’ to mean the holder in fee title to the property
or its equivalent.”) (citing City of Los Angeles v. San Pedro Boat Works, 635 F.3d 440,
450-51 (9th Cir. 2011)).
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Importantly, every federal court of appeals to consider the issue has accepted
the general principle that holding fee title is itself, without more, sufficient to support a
finding of liability under CERCLA. See, e.g., City of Los Angeles, 635 F.3d at 451-52;
Metro Water Reclamation Dist. v. N. Am. Galvanizing & Coatings, Inc., 473 F.3d 824,
829 (7th Cir. 2007); Nurad, Inc. v. William E. Hooper & Sons Co., 966 F.2d 837, 844
(4th Cir. 1992). The United States has, notably, itself advocated for the same
position—that a fee titleholder qualifies as an “owner” under CERCLA—in other
cases. See, e.g., U.S. v. R.W. Meyer, Inc., 932 F.2d 568, 571 (6th Cir. 1991). Even
more importantly, the United States has previously advocated that a trustee holding fee
title is liable as an “owner” under CERCLA. See United States v. Burns, No. C-88-94-
L, 1988 WL 242553, *2 (D.N.H. Sept. 12, 1988).
The United States has stipulated to its fee ownership of the Mine Sites. As
such, the clear and unambiguous plain meaning of the statute applied to the stipulated
facts directs a finding of liability on the part of the United States.
2. Only Fee Title Is Required For CERCLA Owner Liability
In City of Phoenix, this Court held that a trustee who was not involved with the
activities that caused contamination, but who continued to lease the property for
landfill operations, was a liable CERCLA “owner” based solely on its status as the
holder of legal title to the property. City of Phoenix, 816 F. Supp. at 568. In reaching
its decision, the Court considered several factors, including: there is no culpability
requirement for ownership liability under CERCLA; the legislative history of
CERCLA “seems to take for granted that any titleholder is an ‘owner’ under the
statute;”2 commentators uniformly agree that the term ‘owner’ under CERCLA
2 “The House Report . . . states that ‘owner’ is defined to include not only those
persons who hold title to a . . . facility, but those who, in the absence of holding title, possess some equivalent indicia of ownership.” City of Phoenix, 816 F. Supp.at 567.
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includes trustees who hold legal title only;” Congress intended the term “owner” to
have the broadest possible meaning; and the USEPA itself has taken the position that
trustees holding legal title are liable “owners” within the meaning of CERCLA. Id. at
567-68. The Court concluded that “[i]f Congress had meant to exempt uninvolved
trustees from liability as ‘owners’ under CERCLA, it would have said so.” Id. at 568.
The law of the Ninth Circuit is also clear that “owner” under CERCLA means
the fee title owner of real property, regardless of whether that fee title holder had any
involvement in the discharge of pollution. See Redevelopment Agency of Stockton v.
BNSF Ry. Co., 643 F.3d 668, 680 (9th Cir. 2011) (quoting and adopting holding in San
Pedro, 635 F.3d at 450-51); Wells Fargo Bank, N.A. v. Renz, 795 F. Supp. 2d 898,
915-16 (N.D. Cal. 2011) (citing San Pedro in holding that a party who signed an
Assignment of Lease was not a CERCLA owner because, “[t]o be an ‘owner,’ the
person must hold fee title or an equivalent ‘bundle of rights’ in the property. A lease
merely confers a possessory interest in property, as opposed to title ownership.”). In
San Pedro, the Court explained that “the CERCLA framework holds liable both the
passive title owner of real property who acquiesces in another’s discharge of harmful
pollutants on his real property . . . (‘owner liability’), and the active (or negligent)
operator of a facility who holds a possessory interest in the real property but is in fact
responsible for the discharge (‘operator liability’).” San Pedro, 635 F.3d at 451-52.
3. The United States Is A Liable CERCLA Owner Under The Arizona Common Law Meaning Of Owner
The Ninth Circuit has determined that the CERCLA term “owner” should be
given its ordinary meaning, and that the ordinary meaning is informed by its common
law meaning. See Long Beach Unified Sch. Dist. v. Goodwin Cal. Living Trust, 32
F.3d 1364, 1368 (9th Cir. 1994) (citing Edward Hines Lumber, 861 F.2d at 156). In
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examining whether easement holders were CERCLA “owners,” the Court considered
the law of the state where the land at issue was located. The Long Beach case took
place in California. The Mine Sites at issue here are located in Arizona. Thus, the law
of Arizona provides the relevant common law for the purpose of this analysis.
In short, the law in Arizona considers an owner to be the legal title holder. See
Costello v. Cunningham, 147 P. 701, 710 (Ariz. 1915) (explaining presumption is that
holder of record paper title is the owner of the whole estate); Hackin v. Gaynes, 436
P.2d 127, 129 (Ariz. 1968) (same); Pinkerton v. Pritchard, 223 P.2d 933, 937 (Ariz.
1950) (finding allegation of ownership is sufficiently supported by proof of ownership
of legal title); Hardinge v. Empire Zinc Co., 148 P. 306, 312 (Ariz. 1915) (explaining
that holding title through regular chain of title from the “sovereign of the soil” to
defendant is critical to determining owner of real property in a quiet title action);
Cutter Aviation, Inc. v. Arizona Dep’t of Revenue, 958 P.2d 1, 7 (Ariz. Ct. App. 1997)
(explaining that ownership has traditionally meant “ownership in fee” for taxation
purposes); Richey v. W. Pac. Dev. Corp., 684 P.2d 169, 173 (Ariz. Ct. App. 1984)
(finding that “owner” means the “record title holder” in statute creating right to action
for the owner or beneficial title holder of real property); Navajo County v. Peabody
Coal Co., 530 P.2d 1134, 1135 (Ariz. Ct. App. 1975) (holding although lessee
“undoubtedly had some interest in the property,” it was “not tantamount to fee
ownership” and therefore could not be taxed); Pima County v. American Smelting &
Refining Co., 520 P.2d 319, 321–22 (Ariz. Ct. App. 1974) (holding mining company’s
interest in minerals extracted from property pursuant to a lease from federal
government was a leasehold rather than fee interest, and therefore was not taxable).
Because the United States is considered an “owner” under applicable common law, it
is liable as an “owner” under CERCLA as well.
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B. The United States’ “Trustee” Status Doesn’t Alter Its Owner Liability
The United States argues that its trust relationship with the Navajo Nation
somehow exempts it from CERCLA owner liability. As explained above, however,
CERCLA is a strict liability statute and does not contain any exemptions applicable to
the facts of this case. This Court has already examined the liability of a trustee based
on its fee ownership of land and found that fee ownership establishes CERCLA owner
liability. See City of Phoenix, 816 F. Supp. at 568. While this decision is mentioned
above, further discussion is warranted to address the government’s “trustee” defense.
In City of Phoenix, the U.S. District Court for the District of Arizona addressed
a situation where Valley National Bank, acting as trustee for Calvin Estes, purchased a
landfill and entered contracts to manage and administer the landfill for six years until
the landfill closed. The court held that the bank, as trustee, was an “owner” under
Section 107 of CERCLA even though the trustee held only legal title. Id. at 567-68;
see also Briggs & Stratton Corp. v. Concrete Sales & Servs., 20 F. Supp. 2d 1356,
1367-68 (M.D. Ga. 1998). The City of Phoenix court relied, in part, on the similar
holding in U.S. v. Burns, No. C-88-94-L, 1988 WL 242553, *2 (D.N.H. Sept. 12,
1988), a case in which the United States sought to impose CERCLA liability on a
trustee as current owner. In Burns, the district court found that a trustee holding legal
title to trust property could be liable as the current owner under CERCLA based on
trust law principles, even if the trustee did not participate in the conduct that caused
the disposal of hazardous substances. Id. (citing III SCOTT ON TRUSTS §§ 265, 265.1
(3d ed. 1985)).
After being pressed by the trustee, the City of Phoenix court later issued a
second opinion analyzing the extent of the trustee’s liability for ownership of
contaminated property. City of Phoenix v. Garbage Servs. Co., 827 F. Supp. 600 (D.
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Ariz. 1993). Relying upon principles set forth in RESTATEMENT (SECOND) OF TRUSTS,
the court rejected the trustee’s argument that its liability should be limited to the extent
of the trust estate, finding that CERCLA was a type of environmental tort and that
trustees are liable for torts. See City of Phoenix, 827 F. Supp. at 603 (citing
RESTATEMENT (SECOND) OF TRUSTS § 265). The court explained that: “if the
contamination of a trust property occurred entirely before the creation of the trust, the
trustee’s liability would be limited to the amount of the assets held in trust.” Id. at
606. By contrast, the court held that: “Where a trustee had the power to control the
use of trust property, and knowingly allowed the property to be used for the disposal of
hazardous substances, then the trustee is liable under subsection 107(a)(2) to the same
extent that he would be liable if he held the property free of trust.” Id. at 605.
While City of Phoenix involved the liability of a bank acting as trustee, the
outcome is no different when the government is acting in trust for the benefit of an
Indian tribe. “Private trust law principles are most often invoked in controversies
involving direct management of tribal resources and funds.” COHEN’S HANDBOOK OF
FEDERAL INDIAN LAW § 5.05[2] (2012 Ed. & 2015 Suppl.) (citing U.S. v. White
Mountain Apache Tribe, 537 U.S. 465 (2003); Shoshone Indian Tribe v. U.S., 364 F.3d
1339 (Fed. Cir. 2004); Osage Tribe of Okla. v. U.S., 96 Fed. Cl. 390, 407 (2010)). “In
these situations, the government’s role is most akin to that of a private fiduciary, and
the common law of trusts provides a rich source of norms governing the basic duties of
a trustee.” Id.
Importantly, in this case the mining activities that resulted in the disposal of
uranium-bearing waste did not occur prior to the United States’ fee title ownership of
the Mine Sites. Rather, they occurred as a direct result of the United States’ execution
of mining leases with El Paso and others, pursuant to which the United States
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purchased all of the uranium ore produced at the Mine Sites. See Statement of Facts
(“SOF”) ¶¶ 11, 22, 29. As a result, under City of Phoenix, which applies the majority
view of the law set forth in the RESTATEMENT (SECOND) OF TRUSTS, the United States
is liable as a trustee and as an owner of fee title to the Mine Sites, as if the Mine Sites
were owned free of trust, and its liability is not in any way limited by the amount of
the trust.
Not only does this result flow from application of the black letter law of trusts,
but it is also appropriate in light of the United States’ apparent conflict of interests in
its management of the Mine Sites. In this case, the government wears two hats, and its
role as trustee often appears in conflict with its national defense responsibilities.
While the Department of the Interior and Bureau of Indian Affairs worked with the
Navajo Tribe on mineral leasing and royalty matters, the AEC operated on Navajo
lands with the singular goal of obtaining as much uranium ore as possible, as quickly
as possible. These conflicting interests on the part of the United States have been
recognized by courts and scholars. See, e.g., COHEN’S HANDBOOK OF FEDERAL
INDIAN LAW § 5.05[4][a] (2012 Ed. & 2015 Suppl.) (“[B]ecause the Secretary of the
Interior is both trustee of Indian property and money and represents other public
interests that often come into conflict with tribes, such as the Bureau of Reclamation,
the Forest Service, and the Bureau of Mines, the application of the duty of loyalty to
the government can be problematic.”). In fact, this conflict may result in a claim for
breach of trust against the United States. See, e.g., Navajo Tribe v. U.S., 364 F.2d 320,
324 (Ct. Cl. 1966) (citing Pyramid Lake Paiute Tribe v. Morton, 354 F. Supp. 252
(D.D.C. 1972)). Regardless, in this case the apparent conflict between the roles of
AEC and BIA are one more reason why the United States should be liable as an owner
under CERCLA notwithstanding its trust relationship with the Navajo Nation—the
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United States acted through the AEC in support of the national defense, even while it
may have acted through BIA as guardian for the Navajo Nation. To the extent the
United States acted outside of its trust relationship through AEC, its liability should be
evaluated simply as a fee title holder, and not as a trustee.
C. CERCLA Section 107(n) Does Not Limit The United States’ Liability
The United States contends that, if it is found liable as an owner, its owner
liability stems from its role as trustee or its fee title ownership of the Mine Sites for the
benefit of the Navajo Nation. In turn, the United States argues that its liability as
trustee is limited to the value of trust assets under Section 107(n)(1) of CERCLA.
These arguments miss the mark for several reasons.
First, the disposal of mining waste did not occur before creation of the trust, but
rather as a result of mining leases signed, approved and managed by BIA. For this
reason, the protections of Section 107(n)(1) do not apply. Id. There is no “safe
harbor” for administering a facility that was contaminated after the trust relationship
began. 42 U.S.C. § 9607(n)(4)(H). Instead, because BIA had the power to control the
use of the trust property and knowingly entered mining leases calling for uranium
exploration and mining, the United States is liable as the former owner to the same
extent that it would be if it held the property free of trust. See City of Phoenix, 827 F.
Supp. at 605-6.
Second, to the extent El Paso demonstrates that AEC rim stripped the Mine
Sites, AEC would also be liable under CERCLA as an operator.3 This liability would
trigger Section 107(n)(2), which provides that the liability limits in Section 107(n)(1)
do not apply “to the extent that a person is liable under this chapter independently of
3 The United States disputes these facts, and analysis of this issue must await trial.
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the person’s ownership of a vessel or facility as a fiduciary or actions taken in a
fiduciary capacity.” 42 U.S.C. § 9607(n)(2). The actions taken by the AEC were
independent of its ownership of the Mine Sites, and were not taken in a fiduciary
capacity, but rather to promote the development of uranium resources for the national
defense. For these reasons, the liability limitations of Section 107(n)(1) do not apply.
Third, the legislative history of Section 107(n) indicates that it was developed
to protect lenders who inherit contaminated land as trustees, and not the United States
as the fee owner of tribal trust lands. See, e.g., 141 Cong. Rec. S2528 (daily ed. Feb.
10, 1995) (statement of Sen. D’Amato) (“This bill addresses an urgent issue facility
America’s banks and lenders today—the imposition of massive liability for the
cleanup of property they hold . . . that is later discovered to be contaminated.”).
Fourth, the United States’ argument that it cannot be liable because trust land
would not be available to satisfy a judgment in this matter is specious. Under the law
of trusts, the United States must satisfy any judgment directly, and would then be
entitled to be indemnified by the corpus of the trust, to the extent it is available. See,
e.g., City of Phoenix, 827 F. Supp. at 605 (explaining where trustee is liable as a
current owner or a former owner with no power to control use of the property, “the
trustee’s liability is limited to the extent that the trust assets are sufficient to indemnify
him.”) (citing RESTATEMENT (SECOND) OF TRUSTS § 265) (emphasis added). The
unavailability of trust assets would not justify non-payment of any judgment by the
United States. In fact, the RESTATEMENT (SECOND) OF TRUSTS § 264 provides a
comment and an “Illustration” that are instructive on this point. This section, which
was relied upon by the City of Phoenix court as a basis for imposing liability, provides
that: “The trustee is subject to personal liability to third persons for torts committed in
the course of the administration of the trust to the same extent that he would be liable
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if he held the property free of trust.” RESTATEMENT (SECOND) OF TRUSTS § 264
(emphasis added). Comment c to this section provides that: “If the liability was
incurred by the trustee without fault, he is entitled to indemnity out of the trust estate.
The rule stated in this Section [, i.e., the trustee is liable as if it held property free of
trust], however, is applicable whether or not the trustee is entitled to indemnity out of
the trust estate, and whether or not the trust estate is sufficient to indemnify him.”
RESTATEMENT (SECOND) OF TRUSTS § 264 cmt. c (emphasis added). By way of
further explanation, Illustration No. 5 to this section provides the following: “A is
trustee of a wood lot. A employs woodcutters to fell timber and owing to their
negligence B is hurt by a falling tree. A is personally liable to B . . . . The value of the
wood lot which is the only subject matter of the trust is $10,000. B obtains a verdict
against A for $20,000. B is entitled to judgment against A personally for $20,000.”
Id. § 264, Illustration No. 5. In other words, under the RESTATEMENT (SECOND) OF
TRUSTS §§ 264 and 265, a trustee is personally liable for a judgment regardless of
whether the corpus of the trust is available or sufficient to indemnify the trustee.
Finally, because the AEC acted in a capacity other than a fiduciary during its
mining activities at the Mine Sites, and benefitted from the uranium produced under
permits and leases approved by BIA by receiving uranium ore needed to win the Cold
War, any limitations on liability are abrogated under Section 107(n)(7)(A) (providing
that liability limitation of Section 107(n)(1) does not apply where trustee acts in a
capacity other than that of fiduciary, and benefits from a trust relationship).
II. Even Assuming The Friedland “Indicia Of Ownership” Test Applies, The United States Has Exercised Its Ownership Rights Over The Mine Site And Is Liable As The Current And Former Owner
The United States urges based upon U.S. v. Friedland, 152 F. Supp. 2d 1234
(D. Colo. 2001), that it does not possess sufficient “indicia of ownership” to be liable
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as an owner. However, even assuming Friedland is relevant here, which it is not, the
United States is liable for the following reasons.
First, the mining permits and mining leases approved by BIA and issued to
El Paso were under the authority of the Indian Mineral Leasing Act of 1938
(“IMLA”), 25 U.S.C. § 396-396g. The IMLA, including its implementing regulations,
“is a detailed and comprehensive act that imposes extensive responsibilities on the
federal government when executing tribal mineral leasing . . . .” U.S. v. Newmont USA
Ltd., 504 F. Supp. 2d 1050, 1070 (E.D. Wash. 2007). Among other things, the IMLA
provides authority for BIA to offer mining leases to the highest bidder in certain
instances, to lease tribal land for mining, to require corporate surety bonds for mining,
and to promulgate rules governing mining activities. Id. at 1070-71. The United
States’ general trust responsibilities, combined with these more specific
responsibilities set forth in the IMLA, reflect, in part, the United States’ “indicia of
ownership.” Id. at 1072.
Second, the United States has taken many specific actions to facilitate mining
activities on the Mine Sites at issue here. Among other things, the United States,
through BIA, approved and extended resolutions issued by the Navajo Nation from
1949 through 1957 authorizing the AEC to “perform such geologic investigation and
exploration for the discovery of uranium ores on the Navajo Reservation as it deems
advisable on any part of the Navajo Indian Reservation.” SOF ¶ 8. The United States
approved and signed mining permits and mining leases, and eventually assigned these
permits and leases to El Paso’s predecessors, authorizing mining activities to be
performed on the Mine Sites. SOF ¶¶ 11-13, 21-23. These mining permits were
issued on BIA forms and called for royalties to be paid “to the Treasurer of the United
States . . . for deposit to Navajo Tribal Funds.” SOF ¶¶ 14, 15. The mining permits
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also prohibited assignment without BIA approval, and allowed BIA to revoke the
permit for failure to diligently develop the mine. SOF ¶ 17. BIA was allowed to
suspend, cancel or forfeit mining operation in some instances, and to conduct
inspections. SOF ¶¶ 18-20. The mining leases were also issued on BIA forms and
called for royalties to be paid to the Navajo Nation or individual Navajo. SOF ¶¶ 22,
27, 28. The mining leases also prohibited assignment without BIA approval, and
allowed BIA to cancel or forfeit the lease in certain instances, and to conduct
inspections. SOF ¶¶ 24-26.
Lastly, and importantly, the AEC was the sole and exclusive purchaser of all
uranium ore produced at the Mine Sites. SOF ¶ 29. This provided a significant benefit
to the United States—a source of uranium for the nation’s nuclear weapon needs
during the Cold War. See, e.g., Newmont, 504 F. Supp. 2d at 1074.
While the United States’ role in holding title to unpatented mining claims as in
Friedland is almost entirely passive, here the AEC was intensely involved in
exploring, permitting and leasing the Mine Sites for uranium mining activities. As the
following comparison shows, each of the factors used to vet the “indicia of ownership”
arising from Friedland’s unpatented mining claims (the “Claims”), counsel in favor of
owner liability on the part of the United States for the mining permits and mining
leases (collectively, the “Leases”) at the Mine Sites.
Friedland El Paso
Claims possess vested property rights, i.e., right to sell.
Leases may not be assigned without approval by Secretary of the Interior (“Secretary”). SOF ¶¶ 16, 24.
Claims subject to taxation. Leases not subject to taxation. See, e.g., Pima County v. American Smelting & Ref’g Co., 520 P.2d 319 (Ariz. App. 1974).
Case 3:14-cv-08165-DGC Document 114 Filed 02/17/17 Page 21 of 24
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Claim owner cannot be divested of rights if comply with mining law.
Leases may be terminated by Secretary. SOF ¶ 20, 26.
Claims don’t benefit US financially. Leases benefit US as sole purchaser of uranium for Cold War. SOF ¶ 29.
US lacks power to retain title to Claim land if claimant seeks title.
US controls fee title, only treaty or Act of Congress can divest. 25 U.S.C. § 177.
US has no ability to set boundaries of Claims, terms of sale.
US developed, approved Leases, incentive schedules. SOF ¶¶ 11-15, 22, 23, 27, 28.
US can’t exclude individuals from Claims.
US issued Leases to individual Navajo, assignment requires approval by Secretary. SOF ¶¶ 16, 24.
US has no notice of initiation of possession of Claims.
US has notice, Secretary signs Leases. SOF ¶¶ 13, 23.
US has no contractual relationship with possessor of Claims.
US has contractual relationship, Secretary signs Leases. Id.
Claims protected by Fifth Amendment against uncompensated takings.
Leases may be terminated without compensation. SOF ¶¶ 20, 26.
For these reasons, the United States’ bundle of ownership rights, along with its
fee title to the Mine Sites, is more than sufficient to establish owner liability under
CERCLA. See, e.g., Newmont, 504 F. Supp. 2d at 1067-74.
CONCLUSION
For all of the reasons described herein, as the current owner and past owner of
the Mine Sites, the United States is liable under section 107(a)(1) of CERCLA.
Accordingly, El Paso respectfully requests that the Court grant its Motion for Partial
Summary Judgment.
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Respectfully submitted this 17th day of February 2017.
By: /s/ Pamela M. Overton Pamela M. Overton GREENBERG TRAURIG, LLP 2375 Camelback Road, Suite 700 Phoenix, AZ 85016 602.445.8000 (Telephone) 602.445.8100 (Facsimile)
Daniel J. Schnee (admitted pro hac vice)KINDER MORGAN, INC. Two North Nevada Colorado Springs, CO 80903 719.520.4337 (Telephone) 719.667.7621 (Facsimile) John Voorhees (admitted pro hac vice) Christopher J. Neumann, (admitted pro hac vice) Gregory R. Tan (admitted pro hac vice) GREENBERG TRAURIG, LLP The Tabor Center 1200 Seventeenth Street Twenty-Fourth Floor Denver, CO 80202 303.572.6500 (Telephone) 303.572.6540 (Facsimile)
Attorneys for El Paso Natural Gas Company
Case 3:14-cv-08165-DGC Document 114 Filed 02/17/17 Page 23 of 24
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CERTIFICATE OF SERVICE
I hereby certify that on February 17, 2017, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants:
Michael C. Augustini Michael C. Martinez
Paul Cirino UNITED STATES DEPARTMENT OF JUSTICE
Environment and Natural Resources Division P.O. Box 7611
Washington, D.C. 20044 [email protected]
[email protected] [email protected]
/s/ Kevin Collins
DEN 99286679v1
Case 3:14-cv-08165-DGC Document 114 Filed 02/17/17 Page 24 of 24
