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East Bay Mun. Util. Dist. v. Department of Commerce

ELR Citation: 28 ELR 21293
Nos. 97-5079, 142 F.3d 479/46 ERC 1560/(D.C. Cir., 05/01/1998) Aff'd

The court holds that the U.S. government is not liable as an operator under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for hazardous waste cleanup costs at an abandoned mine site. The court first holds that CERCLA clearly exposes the federal government to suit and potential liability for at least some cases in which it operated a facility that discharged hazardous waste. CERCLA §120(a)(1) waives the government's immunity at least insofar as the municipal utility district's claim is grounded in such typically private activities as the financing of mines and the purchasing of zinc. The court next rejects the government's argument that it would be liable when it exercised the sort of direct and detailed control that renders someone an operator through contract and property arrangements but not when it exercised identical control powers through coercive, administrative powers. By providing that the government is liable in the same manner and to the same extent, both procedurally and substantively, as any nongovernmental entity whenever it satisfies the criteria of CERCLA §107, CERCLA §120(a)(1) does not on its face suggest a distinction between the exercise of private or regulatory powers.

The court then holds that the government's actual involvement did not constitute operation of the mine under either the prevailing "actual control" or the alternative "authority to control" test. The court finds that there is not exercise of any managerial control by the government. First, the price restrictions imposed by the government on the zinc market, while intended (in part) to protect its own efforts to acquire zinc for munitions production, did not amount to operation of any mining facility. Second, the government's regulations governing labor mobility and hours, while they may have made continuation of operations easier for the mine operators by reducing the miners' potential rewards in alternative fields, and conceivably by extracting more work per dollar than would otherwise have been extractable, did not give the government the kind of direct managerial or supervisory authority over the mine's workforce that is a crucial component of operator liability under the actual control test. Third, the government's financial backing of the mine was not sufficient to suggest control. Fourth, entering into an output contract does not make the government an operator. Whether taken separately or jointly, these factors do not support the district's claim of actual government control. Further, whatever the scope or statutory validity of an "authority to control" test, it could not encompass a contingent authority that was never triggered, as in the present case. Also, contractual rights to inspect the mine and to ensure that a producer follows some agreed plan are hardly authority to control operations. In addition, an argument from duress does not work on the record here, and it seems that a threat by the government's War Production Board's seizure power never loomed. Indeed, it appears from the record that the mine's operator sought out government financing on its own initiative in order to reopen the mine. This view of the operations as consensual is of course further confirmed by the government's offers of increased prices. The differences in the government's actions here, and those of any buyer who is determined to elicit a supplier's production, are not enough to make it an operator under CERCLA.

[A prior decision in this litigation is published at 27 ELR 20643.]

Counsel for Appellant
Andrew L. Lipps
Swidler & Berlin
3000 K St. NW, Ste. 300, Washington DC 20007
(202) 424-7500

Counsel for Appellees
Joan M. Pepin
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Before Henderson and Garland, JJ.