Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_04-cv-00149/USCOURTS-caed-2_04-cv-00149-20/pdf.json

Nature of Suit Code: 893
Nature of Suit: Environmental Matters
Cause of Action: 28:1331 Federal Question: Bivens Act

---

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

27

28

1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

CITY OF GRASS VALLEY, )

) 2:04-cv-00149-GEB-DAD

Plaintiff, )

)

v. ) ORDER

)

NEWMONT MINING CORPORATION, a )

corporation; NEWMONT USA LIMITED, )

a corporation; NEWMONT NORTH )

AMERICAN EXPLORATION LIMITED, a )

corporation; NEW VERDE MINES LLC, )

a limited liability company; )

NEWMONT REALTY COMPANY, a )

corporation, )

 )

Defendants. )

)

Plaintiff (hereinafter sometimes referred to as “the City”)

moves for summary adjudication on its claim that Defendants

(hereinafter sometimes referred to as the “Newmont entities” or

“Newmont”) are liable under section 107 of the Comprehensive

Environmental Response, Compensation, and Liability Act (“CERCLA”). 

42 U.S.C. § 9607; (Pl.’s Mot. at 2:1-8.) Defendants oppose the

Case 2:04-cv-00149-DAD Document 385 Filed 12/04/07 Page 1 of 13
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

27

28

Oral argument was limited to the question of whether 1

Defendants are present owners or operators of the Massachusetts Hill

Mine and the Drew Tunnel, and the question of whether any Defendant is

exposed to liability under CERCLA for that purported ownership. 

2

motion. Oral argument on the motion was held on November 5, 2007.1

For the following reasons, the motion is denied. 

I. Background

The City owns property upon which it operates a Waste Water

Treatment Plant (“WWTP”). (Pl.’s Statement of Undisputed Facts

(“SUF”) ¶ 15.) In 2000, the City discovered an opening to the Drew

Tunnel on its property. (Id.) The Drew Tunnel is part of the mine

workings of the Massachusetts Hill Mine, which is no longer an

operating mine. (Defs.’ Resp. to Pl.’s SUF ¶ 5.) The Drew Tunnel

discharges contaminated water from the Massachusetts Hill Mine onto

the City’s property; specifically, water containing elevated levels of

iron, manganese, aluminum, copper, lead, zinc and mercury. (Pl.’s SUF

¶ 15; Defs.’ Resp. to Pl.’s SUF ¶ 6; Eickmeyer Decl. Ex. 1 ¶ 1.) The

City asserts that the Drew Tunnel also drains contaminated water from

the surrounding Empire-Star Mines. (Pl.’s SUF ¶ 8.) In 2000, the

City routed the Drew Tunnel discharge through its WWTP. (Id. ¶ 18.) 

The City now seeks reimbursement for the cost of treating this

discharged water under section 107 of CERCLA, arguing Defendants are

liable as owners and/or operators of the Drew Tunnel and the EmpireStar Mines. (Pl.’s Mot. at 2:2-14, 4:18-23.) 

II. Standard of Review

Summary judgment is appropriate if, when viewing the

evidence in the light most favorable to the nonmoving party, there is

no genuine issue of material fact and the moving party is entitled to

judgment as a matter of law. Fed. R. Civ. P. 56(c); Lopez v. Smith,

Case 2:04-cv-00149-DAD Document 385 Filed 12/04/07 Page 2 of 13
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

27

28

3

203 F.3d 1122, 1131 (9th Cir. 2000) (en banc). There is no genuine

issue of fact if the movant shows that, based on the summary judgment

record, a rational trier of fact could not find in favor of the

nonmovant. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475

U.S. 574, 586 (1986). “[A] party seeking summary judgment always

bears the initial responsibility of informing the district court of

the basis for its motion, and identifying those portions of the

[documents] . . . which it believes demonstrate the absence of a

genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S.

317, 322 (1986). If this burden is met, then the nonmovant must

counter with “specific facts showing that there is a genuine issue for

trial.” Fed. R. Civ. P. 56(e). All reasonable inferences that can be

drawn from the evidence “must be drawn in the nonmoving party’s

favor.” Triton Energy Corp. v. Square D. Co., 68 F.3d 1216, 1221 (9th

Cir. 1995).

III. CERCLA Liability

Section 107 of CERCLA, as amended by the Superfund

Amendments and Reauthorization Act of 1986, prescribes;

the owner and operator of . . . a facility, [or]

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, . . . from which there is a release, or a

threatened release which causes the incurrence of

response costs, of a hazardous substance, shall be

liable for . . . any . . . necessary costs of

response incurred by any [private party]

consistent with the national contingency plan . .

. .

42 U.S.C. § 9607. To prevail on its section 107 claim, the City must

establish that (1) the site at issue is a “facility”; (2) there has

been a release of a hazardous substance; (3) a Defendant is a present

owner or operator, or a past owner or operator of the facility; and

Case 2:04-cv-00149-DAD Document 385 Filed 12/04/07 Page 3 of 13
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

27

28

4

(4) appropriate response costs have been incurred. Nixon-Egli Equip.

Co. v. John A. Alexander Co., 949 F. Supp. 1435, 1441 n.4 (C.D. Cal.

1996) (citing 42 U.S.C. § 9607(a)).

A. The Facility at Issue

Section 101(9) of CERCLA defines a facility as, inter alia,

“any site or area where a hazardous substance has been deposited,

stored, disposed of, or placed, or otherwise come to be 

located . . . .” 42 U.S.C. § 9601(9)(B).

The City argues that the Drew Tunnel, the Massachusetts Hill

Mine (which is one of the Empire-Star Mines), and the other EmpireStar Mines together constitute a “facility” under CERCLA because water

discharged from the Drew Tunnel contains pollutants which come from

the Massachusetts Hill Mine and the surrounding Empire-Star Mines. 

(Pl.’s Mot. at 3:10-5:24, 6:20-7:28.) Defendants admit that the

Massachusetts Hill Mine and the Drew Tunnel together are a facility. 

(Defs.’ Opp’n at 3:12-16.) Accordingly, the portion of the City’s

motion that seeks determination that the Massachusetts Hill Mine and

the Drew Tunnel together (hereinafter “the facility”) meet CERCLA’s

definition of a facility is granted.

 Defendants argue, however, that the Massachusetts Hill Mine

is not connected to any other Empire-Star Mine and, therefore, the

facility cannot include any of the other Empire-Star Mines. (Defs.’

Opp’n at 4:22-5:3.) The summary judgment record, considered in the

light most favorable to Defendants, supports their position. 

Therefore, the portion of the City’s motion that seeks determination

that the other Empire-Star Mines also comprise the facility is denied. 

Case 2:04-cv-00149-DAD Document 385 Filed 12/04/07 Page 4 of 13
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

27

28

5

B. Release of Hazardous Substances 

The City argues that “[t]he discharge of iron, manganese,

aluminum, copper, lead, and mercury into the environment from [the]

facility through the Drew Tunnel establishes a release of hazardous

substances” under CERCLA. (Pl.’s Mot. at 8:9-21 (citing 42 U.S.C. §

9601(14)(A)-(D)).) Defendants admit that water discharged from the

Drew Tunnel onto the City’s WWTP property contains elevated levels of

those substances. (Def’s Resp. to Pl.’s SUF ¶¶ 5, 6, 7, 8.)

Section 101(22) of CERCLA defines “release” as “any

spilling, leaking, pumping, pouring, emitting, emptying, discharging,

injecting, escaping, leaching, dumping, or disposing into the

environment . . . .” 42 U.S.C. § 9601(22). The discharge of

contaminated water from the Drew tunnel onto the City’s WWTP property

meets this definition of a release. Additionally, “mercury is a

hazardous substance under CERCLA . . . .” United States v. Mirabile,

1985 WL 97, at *18 n.20 (E.D. Pa. Sept. 6, 1985). Therefore, there is

no genuine issue of material fact regarding whether the facility has

released a hazardous substance. Accordingly, this portion of the

City’s motion is granted.

C. Owner and Operator Liability 

The City argues that “Newmont is the owner and operator of

the Empire-Star Mine ‘facility,’ including the Massachusetts Hill Mine

and the Drew Tunnel.” (Pl.’s Mot. at 9:20-21.) Defendants rejoin

that “[t]he only Defendant who has any interest of any kind at the

City’s WWTP Property is New Verde Mines LLC [“New Verde”],” and that

the City owns the entire fee estate at the property, while New Verde

only owns “the limited right to mine, extract and take minerals lying

more than 50 feet beneath the surface, as well as a surface access

Case 2:04-cv-00149-DAD Document 385 Filed 12/04/07 Page 5 of 13
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

27

28

6

right to extract and explore for such minerals.” (Defs.’ Opp’n at

6:3-22.) 

CERCLA extends liability to a current owner or operator of a

facility, and to a past owner or operator of a facility at the time of

disposal of a hazardous substance under CERCLA. 42 U.S.C. 

§ 9607(a)(1),(2). Each category of liability is considered. See

Commander Oil Corp. v. Barlo Equip. Corp., 215 F.3d 321, 328 (2d Cir.

2000) (noting that owner and operator liability are distinct and

separate concepts).

1. Current Owner

The City has shown that New Verde currently owns the mineral

rights to the Massachusetts Hill Mine and the Drew Tunnel. The Empire

Star Mines Company operated the Empire-Star Mines, which included the

Massachusetts Hill Mine, from 1929 to 1956. (See Bardwick Decl. Exs.

9, 10, 11, 12, 16.) Defendants admit that in 1957 the Empire Star

Mines Company merged into Newmont Mining Corporation. (Bardwick Decl.

Ex. 12 (Defs.’ Resp. to Req. for Admis. (“RFA”), Set One) at RFA 12.) 

Defendants further admit that in 1957 Newmont Mining Corporation

conveyed the Empire-Star properties to New Verde Mines Co.; New Verde

Mines Co. later transferred its assets to Newmont Exploration Limited

in 1963. (Id. at RFAs 14, 15.) Newmont Mining Corporation published

a report in 1975 which described Newmont Exploration Limited, a wholly

owned subsidiary of Newmont Mining Corporation, as owning the mineral

rights to the Massachusetts Hill Mine. (Bardwick Decl. Ex. 40 at 1,

2, 8.) Another report prepared for Newmont Mining Corporation in 1986

listed the Empire-Star Mine as a Newmont interest for sale and noted

that the Empire-Star Mine included the Massachusetts Hill Mine. 

(Bardwick Decl. Ex. 44 (Versar Report) at 1.) Another report

Case 2:04-cv-00149-DAD Document 385 Filed 12/04/07 Page 6 of 13
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

27

28

In addition, in a May 1, 2007 Draft Cleanup and Abatement 2

Order for Drew Tunnel, the Executive Officer of the California Regional

Water Quality Control Board Central Valley Region found that “New Verde

Mines LLC, a subsidiary of Newmont, retains certain mineral rights in

the area, including mineral rights at the Massachusetts Hill Mine and

the Drew Tunnel.” (Eickmeyer Decl. Ex. 1 (Draft Cleanup and Abatement

Order, Drew Tunnel Nevada County) at ¶ 15.) (See also id. ¶¶ 2, 1, 14;

Eickmeyer Decl. Ex. 2 (July 25, 2007 California Water Code § 13267

Order) at 2 (adopting the above mentioned findings from the May 1, 2007

Draft Order).)

7

published in 1993 discussed Newmont Exploration Limited’s continued

ownership of the properties listed in the Versar report. (Bardwick

Decl. Ex. 45, (Fleming Report) at 7, 15.) In 1998, Newmont

Exploration Limited sold its Empire-Star properties to Newmont North

America LLC. (Bardwick Decl. Ex. 12 (Defs.’ Resp. to RFA, Set One) at

RFA 25.) Newmont North America then changed its name to New Verde

Mines LLC. (Id. at RFA 26.) New Verde also owns the Drew Tunnel 2

because it is part of the subterranean workings of the Massachusetts

Hill Mine. See W.C. Crais III, Right of Owner of Title to or Interest

in Minerals Under One Tract of Use Surface, or Underground Passages,

in Connection with Mining Other Tract, 83 A.L.R.2d 665 §§ 2, 6[a]

(1962) (“[O]wnership of minerals in place necessarily carries with it

ownership of the space remaining after their removal . . . .”). 

Defendants have provided no evidence to dispute New Verde’s ownership

of the mineral rights at the Massachusetts Hill Mine and the Drew

Tunnel. (See Defs.’ Resp. to Pl.’s SUF ¶ 1.)

Defendants counter by arguing that New Verde’s mineral right

ownership interests do not make New Verde a liable party under CERCLA

because “a mineral right” and the “right to use underground tunnels”

are “akin to [] easement[s], which ha[ve] specifically been held

insufficient to establish ‘ownership’” as that term is used in CERCLA. 

(Defs.’ Opp’n at 7:10-21 (citing Long Beach Unified Sch. Dist. v.

Case 2:04-cv-00149-DAD Document 385 Filed 12/04/07 Page 7 of 13
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

27

28

8

Dorothy B. Godwin Cal. Living Trust (Long Beach), 32 F.3d 1364, 1368-

69 (9th Cir. 1994), Clayborn v. Camilla, 128 Va. 383, 389-90, 392

(1920)).) The City rejoins that the mineral rights at issue and New

Verde’s interest in “the underground workings and spaces made by the

removal of the minerals” are not easements because they constitute

separate estates in land. (Pl.’s Reply at 7:20-8:8.)

“CERCLA gives no definition of ‘owner’[; therefore,] the

statutory terms have their ordinary meanings . . . and we read the

statute as incorporating the common law definitions of its terms.” 

Long Beach, 32 F.3d at 1368. While “defendant’s status as an owner

under common law [is] necessary to being an owner under CERCLA[,]” it

must be determined whether the nature of that ownership is sufficient

for purposes of CERCLA liability. Id. at 1369 n.5. 

To determine what New Verde owns, the court looks to

California law. See United States v. Burlington Res. Oil & Gas Co.,

2007 WL 773716, at *1 (W.D. La. Mar. 9, 2007) (looking to state law to

determine the common law ownership of a facility). Under California

case law, it is clear that a mineral right is not an easement since

mineral rights constitute a “separate fee simple estate[] in the land 

. . . .”) Nevada Irrigation Dist. v. Keystone Copper Corp., 224 Cal.

App. 2d 523, 524, 526-27 (1964); see also Callahan v. Martin, 3 Cal.

2d 110, 116-18 (1935) (noting that solid mineral rights created an

interest in reality, with an absolute title to the mineral rights,

unlike oil and gas mineral rights, which are in the nature of a profit

a prendre — an interest in land similar to an easement); Gerhard v.

Stephens, 68 Cal. 2d 864, 878, 880 (1968) (noting that solid mineral

rights are a “definite corporeal real property” unlike profits a

prendre, or easements). Therefore, Defendants’ argument that New

Case 2:04-cv-00149-DAD Document 385 Filed 12/04/07 Page 8 of 13
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

27

28

9

Verde’s mineral rights ownership interests do not make them liable

parties under CERCLA since those rights are akin to easements is

rejected. 

Defendants further argue that New Verde’s ownership of

mineral rights only exist in an area where minerals could be extracted

that is deeper than fifty feet below the surface at the City’s WWTP

property, and contend there is no evidence that “any portion of the

Drew Tunnel or Massachusetts Hill Mine lies below fifty feet within

the physical boundaries of the WWTP property.” (Defs.’ Opp’n at 6

n.4.) The deed to the WWTP property, however, provides New Verde “the

perpetual right and ownership of all veins [from which minerals could

be extracted more than fifty feet below the surface, including] the

apexes of which may be found on the surface of the real property . . .

and all extralateral rights in connection with such veins. . . .” 

(Thayer Aff. Ex. C (1972 Deed).) Accordingly, New Verde’s mineral

rights ownership includes the contours and substance of such veins,

even those that might exist on the surface and/or within fifty feet

thereof. 

2. Current Operator 

The City also argues that Newmont Mining Corporation is

exposed to liability as a current operator. 

CERCLA liability may turn on operation as well as

ownership, and nothing in the statute’s terms bars

a parent corporation from direct liability for its

own actions in operating a facility owned by its

subsidiary. 

United States v. Bestfoods, 524 U.S. 51, 64 (1998). 

The City argues that “Newmont’s decision-making authority,

its active environmental investigations, evaluations of potential

profitability, and transfers of portions of the Empire-Star Mine

Case 2:04-cv-00149-DAD Document 385 Filed 12/04/07 Page 9 of 13
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

27

28

This evidence consists of Newmont Mining Corporation studies 3

assessing control and treatment options for the Drew Tunnel discharge,

and evaluations of environmental impairment risks at the Massachusetts

Hill Mine and other properties. (Eickmeyer Decl. Exs. 4, 3, 44 at

ESMC17146, 17154, 17155.) 

10

facility, establish Newmont’s operator liability under CERCLA.” 

(Pl.’s Mot. at 11:9-13:20.) Defendants rejoin that “the Massachusetts

Hill Mine workings, closed in 1901, and has not been operated for more

than 100 years.” (Defs.’ Opp’n at 9:17-20.)

[A]n operator is simply someone who directs the

workings of, manages, or conducts the affairs of a

facility. To sharpen the definition for the

purposes of CERCLA’s concern with environmental

contamination, an operator must manage, direct, or

conduct operations specifically related to

pollution, that is, operations having to do with

the leakage or disposal of hazardous waste, or

decisions about compliance with environmental

regulations.

Bestfoods, 524 U.S. at 66-67. 

The City has not shown that the facility includes more than

the Massachusetts Hill Mine and the Drew Tunnel; therefore, the

question is whether the City’s evidence of operation of the facility

is sufficient to establish operator liability under CERCLA. The 3

evidence the City presents is insufficient to sustain its position

that Newmont Mining Corporation is liable as a current operator. 

Accordingly, this portion of the City’s motion is denied. 

3. Past Owner or Operator

The City also argues that Newmont Mining Corporation is

liable as a past owner and operator of the facility because Empire

Star Mines Company operated the Empire-Star Mines, which included the

Massachusetts Hill Mine, from 1929 to 1956; Empire Star Mines Company

later merged into Newmont Mining Corporation; Newmont flooded the

Case 2:04-cv-00149-DAD Document 385 Filed 12/04/07 Page 10 of 13
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

27

28

11

Empire-Star Mines in the 1950s; and “Newmont’s decision-making

authority, its active environmental investigations, evaluations of

potential profitability, and transfers of portions of the Empire-Star

Mine facility, establish Newmont’s operator liability under CERCLA.” 

(Pl.’s Mot. at 9:21-26, 13:18-20; Pl.’s SUF ¶ 4.) Defendants rejoin

that the Massachusetts Hill Mine closed in 1901, and that “[n]o

Defendant ever operated the facility,” and no Defendant managed or

controlled Empire-Star properties. (Defs.’ Opp’n at 9:19-21; Defs.’

Resp. to SUF ¶¶ 3, 4.)

Section 107(a)(2) of CERCLA creates liability for “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)(2) (emphasis added). 

Whether a disposal occurred at the Massachusetts Hill Mine

after 1901 involves genuine issues of material fact which must be

resolved at trial. Accordingly, this portion of the City’s motion is

denied. 

4. Subsidiary Liability 

The City further argues that Newmont Mining Corporation is

liable for the acts of its subsidiaries (the other named Defendants)

because those subsidiaries are “controlled and operated by Newmont

Mining Corporation whether as subsidiaries, divisions, or agents” and

“both a principal and an agent are liable for the agent’s acts within

the scope of the agent’s authority.” (Pl.’s Mot. at 11:3-16.) 

Defendants respond that “the activities [purportedly establishing

control] pointed to by the City fall within . . . corporate norms” of

control of a subsidiary by its parent. (Defs.’ Opp. at 11:13-19.) 

Since genuine issues of material fact exist as to whether any

Case 2:04-cv-00149-DAD Document 385 Filed 12/04/07 Page 11 of 13
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

27

28

12

Defendant other than New Verde is an owner or operator of the

facility, the only issue that needs to be addressed with regard to

subsidiary liability is whether Newmont Mining Corporation is liable

for the acts of New Verde. 

A “parent ‘corporation is [itself] responsible for the

wrongs committed by its agents in the course of its business . . . .” 

Bestfoods, 524 U.S. at 65 (quoting Mine Workers v. Coronado Coal Co.,

295 U.S. 344, 395 (1922)). The City, however, has provided no

evidence that New Verde acted as an agent for Newmont Mining

Corporation when it acquired the mineral rights to the facility. 

Accordingly, subsidiary liability has not been established on this

ground, and this portion of the City’s motion is denied.

D. Response Costs

The City argues that an order should issue requiring

Defendants to reimburse the City for necessary response costs it has

incurred in the amount of $2,100,000 to date, and for future costs. 

(Pl.’s Mot. at 14:12-21.) Defendants rejoin that the City’s evidence

“is clearly insufficient at a summary judgment sta[g]e to prove such

costs were incurred or reasonable or necessary” in part because it

appears to include attorneys fees and settlement costs that Defendants

argue are not compensable under CERCLA. (Defs.’ Opp’n at 12:22-27.)

The City has the burden of showing that its response costs

are “necessary” and “consistent with the national contingency plan.” 

42 U.S.C § 9607(a)(4)(B); Carson Harbor Vill. Ltd. v. County of Los

Angeles, 433 F.3d 1260, 1265 (9th Cir. 2006). Since the City has not

satisfied this burden, its motion on this issue is denied. 

IV. Summary

Case 2:04-cv-00149-DAD Document 385 Filed 12/04/07 Page 12 of 13
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

27

28

13

The City has satisfied the first three relevant elements of

its CERCLA section 107 claim as to New Verde, but fails to satisfy the

fourth element; hence, summary adjudication on its CERCLA claim is

denied. However, no genuine issue of material fact has been shown to

exist on the following issues and therefore they are “deemed

established, and the trial shall be conducted accordingly”: (1) The

Massachusetts Hill Mine and the Drew Tunnel together meet CERCLA’s

definition of a facility; (2) “a release of a hazardous substance” has

occurred from the facility; (3) New Verde Mines LLC currently owns the

mineral rights to the Massachusetts Hill Mine and the Drew Tunnel and

such ownership interests are sufficient to meet CERCLA’s definition of

an “owner.” Fed. R. Civ. P. 56(d); In re Gen. Corp. Antitrust Litig.,

490 F. Supp. 1089, 1102-03 (N.D. Cal. 1980).

IT IS SO ORDERED.

Dated: December 3, 2007

 

GARLAND E. BURRELL, JR.

United States District Judge

Case 2:04-cv-00149-DAD Document 385 Filed 12/04/07 Page 13 of 13