ELR Citation: ELR 20643
No(s). 93-1715 (GK) (D.D.C. Dec 4, 1996)

The court holds that although sovereign immunity does not shield the United States from liability under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for regulatory activities at a zinc mine during World War II, it is not liable as an operator or arranger for remediation costs a municipal utility incurred in cleaning up hazardous-waste contamination caused by the mine's operations. As part of the war effort, the federal government issued regulations and orders that allegedly controlled the type and quantity of ore to be mined, production schedules, prices, and marketing and labor issues. The court first holds that sovereign immunity does not protect the federal government from liability for regulatory activities that cause environmental damages if the government otherwise meets CERCLA liability standards. Section 120(a)(1) specifically indicates that liability is to be imposed fully on the government under §107. In turn, §107 specifically indicates that liability is imposed notwithstanding any other provision or rule of law, and none of the defenses set forth in §107 is an immunity or regulatory defense. The court then rejects the utility's contention that but for the government's wartime regulation, the mine would not have been rehabilitated as an active zinc mine. No court has held that CERCLA's statutory operator test is a simple but-for test. The court next holds that the government's conduct at the mine does not meet the standard for CERCLA operator liability under the actual or substantial control test. The court rejects the utility's argument that government regulation of the mine during World War II constituted actual or substantial control. The government's regulatory efforts were not directed specifically at the mine, but rather were aimed at directing the wartime economy in general. The government did not have control over what products would be produced at the mine, except to the extent that the mine owner had contracted to sell zinc to the Department of Commerce's predecessor. The government only encouraged production of particular metals on a macro-economic scale and did not dictate the mine's production levels. And although price regulations were in effect, they applied to the ferrous metals industry as a whole and not specifically to this mine. Further, none of the government's involvement rises to the level of day-to-day government interaction with the mine. The government did not seek out the mine's operator and force, or even ask, them to reestablish mining operations, and although a government loan funded the mine's reopening, such funds were provided to other nonferrous mines. The fact that government programs were made available to all mining entities, and then taken advantage of by the mine's operation to reopen the mine for zinc mining, does not convert the government into an operator within the meaning of CERCLA. The court next holds that the government cannot be held liable as an operator under the authority to control test. The fact that two government representatives visited the mine site and could have seen waste on the premises cannot serve as the basis for familiarity with waste-disposal operations at the mine. Further, the government did not dictate how the mine operator was to allocate resources in its mining operations or specify how to control pollution caused by mining activities. Moreover, no member of the government sat on the board of directors of either the mine operator or the mining company.

Turning to the issue of whether the government arranged for disposal of waste at the mine, the court first rejects the utility's argument that authority to control the handling and disposal of hazardous substances is the only requirement for arranger liability. Although ownership or possession of hazardous waste need not be actual, some constructive control over the physical waste itself is required. The court then holds that the government's contract with the mine operator did not give it constructive possession of hazardous waste at the mine site. The contract was a purely voluntary output contract that provided the government no special remedies if the mine operator failed to perform. The court then holds that the government cannot, under the applicable CERCLA standards, be held liable as an arranger of waste disposal. Although a party need not be actively involved in waste disposal to be an arranger, there must be a nexus between the allegedly liable party and the actual disposal. In this case, the government was not involved in any decisions regarding how the mine should be readied for production, nor did it assume any obligation to dispose of waste water during the readying of the mine for production or during mine operations. Moreover, the government was under no obligation to dispose of waste and its failure to require the mine operator to do so in the absence of an affirmative contractual requirement does not make it liable.

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

Counsel for Defendants
Martin F. McDermott
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000