The opinion of the court was delivered by: KESSLER
This matter is before the Court on the parties' Renewed Cross-Motions for Summary Judgment. Plaintiff brings this action under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. § 9601 et seq., by the East Bay Municipal Utility District (EBMUD). EBMUD seeks recovery for certain remediation costs it has incurred and may incur in the future to clean up hazardous waste at the Penn Mine. Plaintiff alleges that the U.S. government is liable for these costs because of the involvement of various government agencies with the zinc mining activities at Penn Mine during, and directly after, World War II. By Order of September 14, 1993 (Richey, J.), this case was bifurcated. Accordingly, the issues presented for review in this portion of the bifurcated proceedings relate solely to liability. The parties filed Cross-Motions for Summary Judgment on this issue in April 1994. Judge Richey held a hearing on the Motions in May 1994, but, on May 27, 1994, denied them without prejudice to renewal at trial. The case was reassigned to this Court on July 1, 1994. At a status hearing on September 2, 1994, the Court allowed the parties to renew their motions. At a further status hearing on May 3, 1996, both parties reiterated their positions that the case could be disposed of on the basis of summary judgment and urged the Court to give serious consideration to the pending motions despite the daunting record and the many factual (although not necessarily material) issues in dispute. Upon review of the Cross-Motions, the Oppositions thereto, the Replies, the numerous supplemental memoranda submitted by both parties, and the entire record herein, the Defendants' Renewed Motion for Summary Judgment is hereby granted and Plaintiff's Renewed Motion for Partial Summary Judgment is hereby denied.
I. The Comprehensive Environmental Response, Compensation and Liability Act (CERCLA)
The Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. § 9601 et seq., was signed into law in 1980. It was enacted to address the increasing environmental and health problems associated with inactive hazardous waste sites. CERCLA encourages private cleanup of such hazards by providing a cause of action for the recovery of costs incurred for responding to a "release" of hazardous substances at any "facility." Id. § 9607. Under CERCLA, a person who incurs cleanup costs is entitled to recover from anyone who qualifies as a "responsible person" under the statute. Id. The federal government is deemed a "person" under CERCLA. Id. § 9601(21).
Responsible persons under CERCLA include: (1) the current "owner" or "operator" of the facility; (2) any person who "owned" or "operated" the facility at the time of "disposal of any hazardous substance"; (3) any person who "arranged for disposal or treatment" of hazardous substances at the facility; and (4) any person who accepts hazardous substances "for transport to disposal or treatment facilities, incineration vessels or sites." Id. § 9607(a). Any of these responsible persons is strictly liable for costs incurred in responding to the release of a hazardous substance at the facility, subject only to the defenses set forth in the statute. 42 U.S.C. § 9607; Kelley v. EPA, 304 U.S. App. D.C. 369, 15 F.3d 1100, 1103 (D.C. Cir. 1994), reh'g denied, 306 U.S. App. D.C. 382, 25 F.3d 1088 (D.C. Cir. 1994), cert. denied sub nom., American Bankers Ass'n v. Kelley, 130 L. Ed. 2d 784, 115 S. Ct. 900 (1995). Once responsible parties are identified, the court has the authority to "allocate response costs among liable parties using such equitable factors as the court determines are appropriate." Id. § 9613(f)(1).
The record submitted in this case is voluminous and includes documents dating from the 1800's. However, the parties were able to sufficiently narrow the relevant issues so that they could submit a joint statement of undisputed facts in conjunction with their Cross-Motions for Summary Judgment.
Every fact cited herein, unless otherwise noted, comes from that statement. Although there are a number of significant of facts in dispute,
the Court specifically finds that none of these factual disputes are material to the issues presented in the parties' Cross-Motions for Summary Judgment, and, therefore, they need not be resolved in order to decide the Cross-Motions.
Plaintiff EBMUD is a municipal utility district located in Northern California. R.S. P 1. The Penn Mine is a currently inactive zinc and copper mine located upstream of the Mokelumne River in Calaveras County, California, adjacent to the Comanche Reservoir. R.S. P 3. Copper was discovered in the mine in approximately 1861. Mining began shortly thereafter and continued until 1867. A smelter built at the Penn Mine site in 1863 was dismantled after mining stopped in 1867. Penn Mine's next period of operation lasted from approximately 1899 through 1919. During that time, another smelter was built on the site that operated continuously during those twenty years. The ore mined was primarily copper. Although some zinc ores were removed, they were not recovered and used at that time. Approximately 87% of all the ore ever produced from Penn Mine was produced by 1919. When the mine was shut down in 1919, the on-site smelter was also shut down and dismantled. The mine was kept pumped out until 1926, when the pumps were removed and the mine was allowed to fill with water. Between 1919 and World War II, there were several intermittent but largely unsuccessful attempts at reestablishing mining operations, which produced approximately 2,200 tons of ore. R. S. PP 20-27. There were additional periods of operation during World War II, R.S. P 27, and after the Korean War. R.S. P 98. All mining ceased in or about 1953, and the mine was closed down. Plaintiff's Statement of Material Facts as to Which There Is No Genuine Issue, P 7.
For environmental and fiscal reasons not relevant here, EBMUD needed to construct a storage and stream flow reservoir, to be known as the Comanche Reservoir, on the Mokelumne River downstream from Penn Mine. Authorization for development was conditioned on EBMUD's acquisition of a small portion of the inactive mine site through condemnation. Although the owner of Penn Mine was directed to take corrective actions to mitigate the effects of acid mine drainage, it did not do so. A regional environmental board then formally requested EBMUD to abate the problem by building an impoundment on the portion of land it owns at the Penn Mine site. EBMUD built the impoundment, known as the Mine Run Dam. Plaintiff's Statement of Material Facts as to Which There Is No Genuine Issue, PP 14-19.
For over sixteen years, EBMUD has conducted investigations and studies concerning the environmental problems of the Mokelumne River, the Comanche Reservoir, the Mine Run Dam, and the Penn Mine site. In 1993, pursuant to Section 309 of the Clean Water Act, the Environmental protection Agency ("EPA") issued several orders requiring EBMUD to take steps to mitigate the adverse environmental effects from any hazardous releases, including the construction and operation of a system to treat and discharge waters in the Mine Run Dam Reservoir. In December 1993, the EPA issued an order requiring EBMUD to perform detailed studies regarding proposed remedies and to submit plans to the EPA for remediation of the Penn Mine site. R.S. P 19. EBMUD sued to recover costs related to the cleanup from the United States government.
The Defendants are the United States Department of Commerce ("Commerce"), the Secretary of Commerce in his official capacity, and the United States of America. The Department of Commerce is the successor in interest to three wartime organizations: the War Production Board ("WPB"), an agency of the United States created to assist in the war production and procurement efforts during World War II; the Reconstruction Finance Corporation ("RFC"), a government organization that made loans to assist in the war effort; and the Metals Reserve Company ("MRC"), a subsidiary of the Reconstruction Finance Company, whose mission was to purchase strategic metals for the United States. R.S. PP 28, 36.
At issue here is the government's involvement in the activities and operations of Penn Mine. Plaintiff claims that this involvement stems from the combined activities of the WPB, the War Manpower Commission ("WMC") (responsible for dealing with labor supply problems arising in critical industries), the Office of Price Administration ("OPA") (a government agency that, in conjunction with the WPB, established and administered price controls), and the MRC. Plaintiff alleges that these agencies issued numerous regulations and orders related to Penn Mine's production of zinc, a non-ferrous metal used to make armaments for the World War II effort. These regulations and orders allegedly controlled the type and quantity of ore to be mined, production schedules, prices, and marketing and labor issues. Plaintiff alleges that, beginning in 1942, the United States exercised sufficient control over Penn Mine to incur liability as an "operator" of the mine or an "arranger" of waste disposal at the mine. Defendants contend that the activities at issue cannot expose them to liability.
A. War and Post-War Regulation
In response to the necessities of war, the WPB was given special authority and powers. Its broad mission was to direct the government's procurement and production efforts. The WPB was given the power to take all lawful steps to assure an adequate supply of materials essential to production for the defense effort. Prior to 1943, the WPB's powers included the ability to direct the Army or Navy to seize production facilities of plants that could supply necessary defense goods but either refused to do so or refused to do so at reasonable prices. After 1943, seizure was authorized only for those facilities unable to produce because of labor stoppages. R.S. P 28-33.
As part of the wartime regulatory scheme, the WPB ascertained zinc supply requirements. It also located zinc mines, investigated them, and then recommended them for federal funding available through the RFC or MRC. All funding recommendations had to be approved by the WPB and the Secretary of Commerce. As of November 1943, The RFC and MRC had approved fourteen mining projects to receive federal funds, including Penn Mine.
R.S. PP 34, 40.
By the summer of 1942, the WPB recognized that the labor shortage in the western mining regions was acute. In September 1942, the WMC issued an Employment Stabilization Order declaring all 12 western states critical labor areas. At the same time, all non-ferrous metal mining and related activities, as well as lumbering and logging, were deemed essential war production activities. No worker engaged in these activities was allowed to seek other employment without obtaining a "Certificate of Separation" from a representative of the United States Employment Service. An employer within the critical areas was prohibited from employing any worker who had been engaged in mining operations who did not have a Certificate of Separation. In August 1942, the WMC issued new regulations that allowed employees engaged in essential war production to change employment under certain conditions. Those employees were given a "Statement of Availability" to prove that they were authorized to change jobs. The U.S. Employment Service had the authority to sanction non-complying establishments by issuing "Statements of Availability" to all of their employees. Those employees could then leave the offending employer and seek new employment. However, the Order was deemed to be "completely ineffective," according to one government study which reviewed its history. R.S. PP 51-53.
On October 8, 1942, the WPB issued an Order closing nonessential gold mines. After this Order, at least 1,600 men who had worked in gold mines were referred for employment in non-ferrous mines, although they were not obligated to take such employment. In 1942, local draft boards began granting occupational deferments for essential workers. In July 1943, the Director of the Selective Service System strongly encouraged local boards to grant deferments for workers in the non-ferrous mining industry in critical labor areas. If a worker left employment in an essential industry, his deferment would be revoked. R.S. PP 55-58. The WMC also began requiring a minimum work week of 48 hours for all employees in western mines. R.S. P 60.
Labor regulation did not end there. Several priority systems relating to the labor supply were implemented, three of which are relevant here. First, beginning in June 1943, the WPB classified mines into four categories, depending on their importance to the war effort, their relative productivity, and their priority for recruiting new workers. Class I was the highest priority. Second, in 1945, the WPB established a system of "production urgency orders" for determining manpower priority ratings. Facilities were rated I through VII depending on the relative need for their product and the extent to which production was lagging. Urgency Rating I, for example, was reserved for projects such as the atomic bomb. R.S. PP 61-64.
Third, in 1944, the WMC established a nationwide, uniform system for priority employment referrals. Seven categories were established. Regional, state, and area directors were authorized to assign ratings to work orders in categories two through seven, but only the Chairman of the National Manpower Priorities Committee could assign a Category 1 rating. The U.S. Employment Service was required strictly to adhere to these priority ratings when making worker referrals. Thus, a facility whose work orders carried a priority rating of Category 1 received referrals for needed workers before facilities in any other category. R.S. PP 65-66.
To further direct production for the war effort, the Office of Production Management, the predecessor of the WPB, and, later, the WPB, worked with state governments to determine which mines in each state were active, producing mines. Those mines were issued serial numbers that enabled them to obtain priority assistance for supplies and equipment. The Mining Division of the WPB established field offices to implement these priority allocations. In addition, the government issued allocation orders that controlled the distribution of many materials. The parties dispute when these allocation orders were in effect with respect to the zinc industry, but do agree that, at some time during World War II, zinc allocation orders were issued under the direction of the WPB. A zinc producer could deliver zinc only on the presentation of an allocation certificate issued by the WPB, specifying the grades and amount that could be shipped. No person could accept delivery of zinc except as authorized by government regulation. A willful violation subjected the offender to a fine or imprisonment. R.S. PP 38-39.
Price controls and subsidies were also implemented. Following the outbreak of the war in Europe, metal prices were unstable. The price of zinc rose from 5-1/2 cents per pound in January 1940 to 7-1/4 cents per pound in September 1940. In September 1940, the predecessor to the OPA reached an agreement with the principal zinc producers informally freezing the price of zinc at 7-1/4 cents per pound. In October 1941, OPA raised the ceiling price to 8-1/4 cents per pound. R.S. PP 42-43.
Production levels were still below those required to sustain the war effort. In January 1942, OPA and the WPB put into effect a Premium Price Plan. Under the Plan, each mine producing zinc prior to the war was assigned a "quota" reflecting its prewar production level. Mines, such as Penn Mine, which were not operating in 1941 and therefore had no prewar metal production level, were assigned a "zero quota." Producers were paid an established ceiling price of 8-1/4 cents per pound for all zinc produced up to their "quota" amount. All production over that quota was purchased at a premium price, initially 11 cents per pound. Under the Premium Price Plan, all zinc produced at zero quota mines was purchased directly by the MRC or by private entities, who were reimbursed by MRC at prevailing premium prices. This series of price supports encouraged the owners of previously unexploited zinc deposits (who would receive a zero quota) to open deposits and begin production. R.S. PP 42-47.
At the recommendation of the WPB and OPA, the Premium Price Plan was expanded, effective January 1, 1943. This Plan provided for an additional subsidy above the 11 cents per pound previously authorized. The WPB and OPA were authorized to assign special quotas, with additional subsidies, to producers who would not otherwise receive adequate revenue to maintain needed production. The "B" quota authorized an additional subsidy of 5-1/2 cents per pound; the "C" quota, 8-1/4 cents per pound. R.S. PP 48-50, 80-81.
B. Wartime Activities and Penn Mine
In March 1942, the Penn Mining Company, which owned Penn Mine, applied for federal financial assistance to return the mine to operation as a zinc mine. Although the funding was authorized, the project never went forward.
Eagle Shawmut Mine ("Shawmut") operated a gold mine located within 75 miles of Penn Mine. On October 8, 1942, the WPB ordered the closing of all non-essential gold mines, including Shawmut's. Shawmut originally intended to close its gold mine. However, the gold mine was not closed and continued to operate throughout World War II.
Seven months after the WPB Order to close its gold mine, but while the mine was still operating, Shawmut leased Penn Mine from the Penn Mining Company and applied for federal assistance to rehabilitate Penn Mine for zinc mining purposes. The WPB authorized financial assistance to Shawmut in the amount of $ 80,000, which was later increased to $ 120,000. Penn Mine was one of fourteen zinc mining projects approved to receive federal funds. R.S. PP 40, 55, 70-71.
In June 1943, the MRC entered into a contract with Shawmut to purchase the entire output of zinc concentrates produced by Penn Mine, up to 10,000 tons. The contract between the parties provided that the "Seller is willing to sell . . . provided Buyer advances to Seller the sum recommended by the War Production Board." Shawmut retained the right to prepay its WPB loan at any time and to cancel the contract. If Shawmut breached the contract in any way, the MRC's only remedy was cancellation of the contract. The contract specified price variations according to the zinc metal content and provided for minimum metal content in the ore. It also specified the subsidies to be paid by the smelter under the Premium Price Plan, and the delivery schedule. Shawmut was required to establish a 48-hour work week in compliance with the WMC Order. The contract required that Shawmut furnish MRC with a copy of the lease for Penn Mine and gave MRC the right to request information and data concerning Shawmut's operations and to inspect or audit its books. The contract stated that the mine's rehabilitation and operation were to be carried out by Shawmut. The contract did not provide for government supervision or operation of rehabilitation or mining activities. R.S. P 75; Documents PMD 6407-6412 and PMD 6876 (Attached as Exhibits to Plaintiff's Motion for Partial Summary Judgment).
Shawmut began pumping water out of the inoperative Penn Mine in the summer of 1943. Shawmut's lease with the Penn Mining Co. obligated it to dispose of waste water to avoid stream pollution or environmental damage. R.S. PP 76-77. The Penn Mining Co. (not Shawmut) had indicated that, during normal mine operations, waste water could be lawfully discharged after being passed through a copper precipitating plant. A provision in the Shawmut-Penn Mining Co. lease, provided to the MRC under the terms of the zinc sales contract, indicated that waste water from mining operations contained chemicals that could be harmful to the nearby Mokelumne River. However, the lease also required that Shawmut take the necessary steps to purify the water to such an extent that there would be no complaint from state officials or other users of the river. R.S. P 103.
Penn Mine received a "zero" quota under the Premium Price Plan. Thus, every ton of zinc concentrates produced from ore mined at Penn Mine was paid for by government subsidies. More than one-half of all domestic zinc production received such premiums. Mining began in 1944 and, by July 1944, the WPB authorized the additional "B" quota premium. Finally, in January 1945, the WPB authorized a higher premium to be paid for Penn Mine zinc under the "C" quota. Shawmut thus received twice the ceiling price for its zinc concentrates. Penn Mine was one of 57 zinc mines to receive the "C" quota rating. R.S. PP 79-82.
Poor housing conditions in the area and poor working conditions in the mines led to high worker turnover at Penn Mine. There is no evidence as to whether any referrals to Penn Mine were made by the U.S. Employment Service prior to 1945, or the effect of any such referrals. The U.S. Employment Service referred fifteen workers to Penn Mine in January 1945, thirteen in February, and five in March. All were hired. Despite these referrals, quits still exceeded hires. By April 1945, there was still a shortage of workers and the mine lagged behind its production schedule. After an on-site visit, a WMC official reported that the labor shortage was affecting production. The U.S. Employment Service referred nineteen more workers in April and eighty in May. Only twenty-seven of these workers were hired and the WMC continued to list Penn Mine as in need of additional labor. R.S. PP ...