Tenth Circuit Rejects "Indicia of Ownership" Test to Hold Title Owner Liable Under CERCLA
On July 19, 2017, the Tenth Circuit Court of Appeals held that the United States, as the title owner of a former mine, was a Potentially Responsible Party (PRP) under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), despite the fact that it did not have a possessory interest in the property at the time of the disposal of hazardous substances. The opinion in Chevron Mining Inc. v. United States, No. 15-2209, 2017 U.S. App. LEXIS 12959, at *1 (10th Cir. July 19, 2017) thus appears to put to rest a defense often asserted, primarily by governmental entities, that “bare legal title” is insufficient for CERCLA liability to attach and instead that some other and additional “indicia of ownership” is required.
Beginning in 1919 and through the early 1950s, a predecessor-in-interest of Molybdenum Corporation of America (“Molycorp”) conducted limited underground mining at what became the Questa Mine Superfund Site in New Mexico pursuant to unpatented mining claims which conveyed a possessory right for the extraction and development of underlying mineral deposits but left title to the land in the United States. In 1950, the United States passed the Defense Production Act (DPA) to “ensure the vitality of the domestic industrial base” and to supply necessary materials for the national defense, and in 1957, through the DPA, Molycorp acquired a loan from the federal government to finance further mineral exploration. That exploration lead to discovery of additional mineral deposits which in turn resulted in extensive open pit mining through 1983, with Molycorp repaying its government loan through production royalties. Beginning in 1984, Molycorp and its successor Chevron Mining, Inc. (“CMI”) conducted further underground mining at the Site, finally ceasing all such activity in 2014.