Diamond X Ranch, LLC v. Atlantic Richfield Company

Filing 118

ORDER denying 76 Motion for District Judge to Reconsider Order; granting in part and denying in part 87 Motion to Dismiss; and granting 97 Motion to Amend/Correct Complaint. Signed by Judge Miranda M. Du on 8/13/15. (Copies have been distributed pursuant to the NEF - JC)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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***

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DIAMOND X RANCH, LLC,

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Plaintiff,
v.

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Case No. 3:13-cv-00570-MMD-WGC

ATLANTIC RICHFIELD COMPANY,
Defendant.

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ORDER
(Pl.’s Motion for Reconsideration –
dkt. no. 76; Def.’s Motion to Dismiss or to
Strike – dkt. no. 87; Pl.’s Motion to Amend
– dkt. no. 97)

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I.

SUMMARY

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Before the Court is Plaintiff Diamond X Ranch, LLC’s Motion for Reconsideration

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of the Court’s September 30, 2014, Order (“Motion”) (dkt. no. 76). The Court has

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reviewed Defendant Atlantic Richfield Company’s response (dkt. no. 79) and Plaintiff’s

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reply (dkt. no. 80). For the reasons discussed below, the Motion is denied.

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Also before the Court are Defendant’s Motion to Dismiss or, in the Alternative,

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Motion to Strike (“Motion to Dismiss”) (dkt. no. 87), and Plaintiff’s Motion to Amend (dkt.

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no. 97). The Court has reviewed the relevant opposition and reply briefs (dkt. nos. 88,

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91). The Motion to Dismiss is granted in part and denied in part. The Motion to Amend

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is granted, subject to the Court’s ruling on the Motion to Dismiss.

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II.

BACKGROUND

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A.

Factual Background

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A more thorough discussion of the background facts appears in the Court’s

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September 30, 2014, Order (“September Order”) (dkt. no. 67). To summarize,

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Defendant’s subsidiary owned and operated the Leviathan Mine Site (“the Site”) in

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Alpine County, California, between 1951 and 1962. (Dkt. no. 1 ¶¶ 12-14.) Those mining

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activities produced acid mine drainage (“AMD”), which entered surface and ground

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water flowing from the Site. (Id. ¶¶ 15, 24-28.)

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Plaintiff alleges that its property, which is downstream of the Site, has been

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contaminated by the Site’s AMD discharges. (Id. ¶¶ 31-32.) Because of this

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contamination, Plaintiff claims that its land is unfit for ranching, residential, or any other

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purposes. (Id. ¶¶ 32-34.)

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Cleanup efforts began at the Site in the early 1980s. (See id. ¶ 16.) In 2000, the

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Environmental Protection Agency (“EPA”) added the Site to the National Priorities List

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for remedial action on contaminated sites under the Comprehensive Environmental

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Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. § 9605. (Dkt. no. 1

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¶ 22.) In 2009, EPA and Defendant entered into an Administrative Settlement

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Agreement and Order on Consent for Removal Action in which Defendant agreed that it

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was a successor for purposes of liabilities under CERCLA, and that the Site and its

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AMD discharges fell within certain CERCLA definitions. (Id. ¶ 23.)

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B.

Procedural Background

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Plaintiff initiated this lawsuit in October 2013, alleging ten claims under state and

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federal law relating to past and ongoing pollutant discharges from the Site, and to the

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resulting contamination of Plaintiff’s property. (See id. at 10-18.) Plaintiff seeks

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damages, injunctive and declaratory relief, and civil penalties. (Id. at 18-19.)

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On September 30, 2014, the Court issued the September Order, which granted,

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in part, Defendant’s first motion to dismiss. (Dkt. no. 67.) The Court held that it lacked

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subject matter jurisdiction over Claims 5, 6 and 7, which sought to enjoin pollutant

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discharges and levy civil penalties under the Clean Water Act (“CWA”) and the Nevada

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Water Pollution Control Act (“NWPCA”).1 (Id. at 7-10; see dkt. no. 1 at 13-16.) The Court

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ruled that CERCLA Section 113(h), 42 U.S.C. § 9613(h) — which strips federal courts of

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subject matter jurisdiction to review “any challenges to removal or remedial action”

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selected under the statute — foreclosed review of Plaintiff’s claims for injunctive relief

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and for civil penalties under the CWA and the NWPCA. (Dkt. no. 67 at 7-10.) Those

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claims, the Court held, could interfere with ongoing cleanup efforts at the Site, and

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therefore constituted “challenges” that the Court lacked jurisdiction to review. (Id.)

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III.

MOTION FOR RECONSIDERATION

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Plaintiff asks the Court to reconsider the dismissal of Plaintiff’s claims for civil

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penalties under the CWA and the NWPCA. (Dkt. no. 76 at 2-3.) Plaintiff insists that the

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Court erred in reasoning that Plaintiff’s requested civil penalties would interfere with the

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ongoing CERCLA cleanup at the Site, and in dismissing those claims for lack of subject

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matter jurisdiction pursuant to CERCLA Section 113(h). (Id. at 4-6.) Plaintiff argues that

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the Court committed clear error by relying on an “incorrect assumption” about the

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amount of civil penalties that Defendant could owe for the discharges alleged in the

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Complaint. (Id. at 4.)

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A.

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Plaintiff seeks reconsideration under Rules 59(e) and 60(b) of the Federal Rules

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of Civil Procedure. (Dkt. no. 76 at 4.) The September Order, however, addressed only

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four of Plaintiff’s ten claims. (See dkt. no. 67.) Under Rule 54(b), which applies to orders

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that address fewer than all the claims in an action, district courts “possess[] the inherent

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procedural power to reconsider, rescind, or modify an interlocutory order for cause seen

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by it to be sufficient,” as long as the court retains jurisdiction. City of Los Angeles v.

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Legal Standard

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The September Order also addressed Claim 8, which alleged that Defendant
had wrongfully diverted Plaintiff’s water into evaporation ponds at the Site. (Dkt. no. 1 at
16-17.) The September Order dismissed Claim 8 to the extent it sought to enjoin the
diversion of water into the evaporation ponds. (Dkt. no. 67 at 7-9.) The Court deferred
ruling on Plaintiff’s claim for damages for wrongful diversion until the Court could hear
oral argument on that issue. (Id. at 10.) During an October 15, 2014, hearing, the Court
dismissed the outstanding wrongful diversion claim for damages. (See dkt. no. 92 at 2426.) Upon Plaintiff’s request, the Court gave Plaintiff leave to amend in order to assert a
claim for wrongful appropriation of water due to contamination. (Id. at 26-27.)
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Santa Monica Baykeeper, 254 F.3d 882, 885 (9th Cir. 2001) (quoting Melancon v.

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Texaco, Inc., 659 F.2d 551, 553 (5th Cir. 1981)) (emphasis omitted).

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Nevertheless, a court should generally leave a previous decision undisturbed

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absent a showing of clear error or manifest injustice. Abada v. Charles Schwab & Co.,

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Inc., 127 F. Supp. 2d 1101, 1102 (S.D. Cal. 2000). A motion for reconsideration must

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set forth the following: (1) some valid reason why the court should revisit its prior order;

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and (2) facts or law of a “strongly convincing nature” in support of reversing the prior

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decision. Frasure v. United States, 256 F. Supp. 2d 1180, 1183 (D. Nev. 2003). A

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motion for reconsideration is thus properly denied when the movant fails to establish

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any reason justifying relief. See Backlund v. Barnhart, 778 F.2d 1386, 1388 (9th Cir.

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1985) (holding that a district court properly denied a motion for reconsideration in which

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the plaintiff presented no arguments that were not already raised in his original motion).

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B.

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Plaintiff raises three objections to the September Order. First, Plaintiff argues that

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the Court incorrectly assumed that Defendant would be liable for the maximum amount

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of civil penalties available under the CWA. (Dkt. no. 76 at 5.) Second, Plaintiff contends

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that the Court prematurely assumed that imposing civil penalties would interfere with the

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Site’s ongoing CERCLA cleanup. (Id.) Finally, Plaintiff takes issue with certain authority

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cited

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distinguishable.” (Id. at 6.) Although the Court finds that these arguments fail to

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demonstrate clear error or manifest injustice, see Abada, 127 F. Supp. 2d at 1102, the

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Court will address each objection in turn.

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in

Analysis

the

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September

Order,

contending

that

the

authority

was

“clearly

Amount of Civil Penalties and Interference with the Cleanup

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Plaintiff argues that the Court clearly erred by calculating a hypothetical amount

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of civil penalties that Defendant could owe under the CWA. (Dkt. no. 76 at 5-6.) Plaintiff

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notes that the Court must impose civil penalties upon finding a violation of the CWA, but

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stresses that the Court would have discretion in fashioning those civil penalties. (Id.

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(citing Leslie Salt Co. v. United States, 55 F.3d 1388, 1396-97 (9th Cir. 1995); Nat. Res.
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Def. Council v. Sw. Marine Inc., 236 F.3d 985, 1001-02 (9th Cir. 2000)).) In light of this

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discretion, Plaintiff argues that the Court incorrectly assumed that a maximum possible

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penalty — which was calculated based on the penalties requested in the Complaint —

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could be applied to Defendant’s alleged ongoing violations of the CWA and the

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NWPCA. (Id. at 5-6.)

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Even accepting the Court’s discretion to fashion these civil penalties, Plaintiff has

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not shown that subject matter jurisdiction exists in light of CERCLA Section 113(h).2

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See Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039 n.2 (9th Cir. 2003)

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(noting that a party opposing a factual attack on subject matter jurisdiction bears the

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burden of establishing such jurisdiction). As the Ninth Circuit has explained, Section

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113(h) “is clear and unequivocal” and “amounts to a ‘blunt withdrawal of federal

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jurisdiction.’” McClellan Ecological Seepage Situation v. Perry (MESS), 47 F.3d 325,

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328 (9th Cir. 1995) (quoting N. Shore Gas Co. v. E.P.A., 930 F.2d 1239, 1244 (7th Cir.

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1991)). Section 113(h) bars review of actions that are “related to the goals of the

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cleanup.” ARCO Envtl. Remediation, L.L.C. v. Mont. Dep’t of Health & Envtl. Quality,

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213 F.3d 1108, 1115 (9th Cir. 2000) (quoting Razore v. Tulalip Tribes of Wash., 66 F.3d

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236, 239 (9th Cir. 1995)). These actions would interfere with a CERCLA cleanup,

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MESS, 47 F.3d at 330-31, and have included instances where a plaintiff seeks “to

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dictate specific remedial actions; to postpone the cleanup; to impose additional

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reporting

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Investigation/Feasibility Study] and alter the method and order of cleanup.” ARCO Envtl.

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Remediation, 213 F.3d at 1115 (citations omitted).

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requirements

on

the

cleanup;

or

to

terminate

[a

Remedial

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Section 113(h) states: “No federal court shall have jurisdiction under Federal law
other than under section 1332 of Title 28 (relating to diversity of citizenship jurisdiction)
or under State law which is applicable or relevant and appropriate under section 9621 of
this title (relating to cleanup standards) to review any challenges to removal or remedial
action selected under section 9604 of this title . . . .” 42 U.S.C. § 9613(h). Section
113(h) exempts certain actions from this jurisdictional bar, but those exceptions do not
apply to Plaintiff’s CWA and NWPCA claims. See 42 U.S.C. § 9613(h)(1)-(5).
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But not “every action that increases the cost of a cleanup or diverts resources or

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personnel from it” necessarily constitutes a challenge to an ongoing CERCLA cleanup.

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MESS, 47 F.3d at 330. Rather, as the D.C. Circuit has explained, courts examine “the

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nexus between the nature of the suit and the CERCLA cleanup: the more closely

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related, the clearer it will be that the suit is a ‘challenge.’” El Paso Nat. Gas Co. v.

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United States, 750 F.3d 863, 880 (D.C. Cir. 2014) (citing MESS, 47 F.3d at 330)). For

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example, a suit to enforce the minimum wage during a CERCLA cleanup would not

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constitute a “challenge” under Section 113(h) because it is not adequately related to the

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underlying cleanup. MESS, 47 F.3d at 330. Nor would a suit for civil penalties under the

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False Claims Act, where the suit alleges fraud associated with a CERCLA cleanup. See

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Costner v. URS Consultants, Inc., 153 F.3d 667, 674-75 (8th Cir. 1998).

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Plaintiff insists that the civil penalties it seeks under the CWA and the NWPCA

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lack an adequate nexus with the ongoing CERCLA cleanup, and, accordingly, do not

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constitute a challenge to the cleanup. (See dkt. no. 76 at 5-6.) Plaintiff sees its request

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for civil penalties as analogous to a fraud claim arising from a CERCLA cleanup —

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according to Plaintiff, civil penalties under the CWA and the NWPCA “simply pertain to a

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cleanup without actually affecting it.” (Dkt. no. 76 at 7 (discussing Costner, 153 F.3d at

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675).) At the same time, however, Plaintiff agrees that “the purpose of civil penalties is

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to compel compliance with statutory requirements.” (Dkt. no. 80 at 6 (quoting dkt. no. 79

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at 7) (alterations omitted).) The statutory requirements of the CWA and the NWPCA

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prohibit unpermitted discharges into certain waters; here, Plaintiff alleges that

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Defendant either lacked a permit to discharge AMD from the Site, or violated a permit (if

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Defendant had one) by discharging AMD. (Dkt. no. 1 at 13-16 (citing 33 U.S.C.

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§§ 1311(a), 1342; NRS § 445A.465); see dkt. no. 80 at 6.) Plaintiff also alleges that

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Defendant’s violations are ongoing. (Dkt. no. 1 at 13-16; dkt. no. 80 at 5); see Gwaltney

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of Smithfield, Ltd. v. Chesapeake Bay Found., 484 U.S. 49, 59 (1987) (“[T]he harm

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sought to be addressed by the citizen suit lies in the present or the future, not the

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past.”). Taken together, Plaintiff’s allegations indicate that its request for civil penalties is
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designed, at least in part, to compel Defendant to stop discharging AMD, either with a

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permit or without.

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The CERCLA cleanup at the Site involves the same ongoing AMD discharges

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that give rise to Plaintiff’s request for civil penalties. (See dkt. no. 1 ¶¶ 18, 24-29, 74, 81,

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88; dkt. no. 28-2 at 10, 17-18, 20-23, 28-29 (describing cleanup work related to AMD

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discharges and compliance with other federal, state, and local laws); dkt. no. 28-1 at 13

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(same).) If the Court determines that these discharges violate the CWA, then civil

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penalties must be imposed for each day of the violation, notwithstanding the Court’s

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discretion to determine an appropriate penalty amount. 33 U.S.C. § 1319(d); Leslie Salt

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Co., 55 F.3d at 1396-97; see NRS § 445A.700(1) (a person who violates the NWPCA

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“shall pay a civil penalty . . . for each day of the violation”). Thus, absent some change

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to the ongoing cleanup — which involves AMD discharges that, according to Plaintiff,

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violate the CWA and the NWPCA — Defendant would be subject to civil penalties. The

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civil penalties are intertwined with the goals of the ongoing CERCLA cleanup, and this

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relationship constitutes a challenge to the cleanup that is barred by Section 113(h). See

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MESS, 47 F.3d at 330.

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Plaintiff has failed to show that the Court erred in holding that Section 113(h)

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forecloses review of the civil penalties Plaintiff requests under the CWA and the

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NWPCA. The Court will not grant Plaintiff’s Motion for Reconsideration on this basis.

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2.

Cited Authority

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Plaintiff also argues that the Court erred in referencing Pakootas v. Teck

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Cominco Metals, Ltd., 646 F.3d 1214 (9th Cir. 2011), in dismissing Claims 5, 6 and 7.

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(Dkt. no. 76 at 6-7; see dkt. no. 67 at 9-10).) In Pakootas, the Ninth Circuit held that the

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plaintiffs’ claims for civil penalties under CERCLA were barred by Section 113(h).

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Pakootas, 646 F.3d at 1220-23. As Plaintiff emphasizes, the court reasoned that the

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CERCLA civil penalties were EPA’s “hammer” to enforce compliance with a settlement

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agreement it had reached with the defendant. Id. at 1221. But as Plaintiff also notes, the

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court stated that “[a] suit for past penalties always has the potential to interfere with
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ongoing cleanup efforts, because of its potential effect on the responsible party’s

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financial ability to perform the cleanup.” Id. at 1222; (see dkt. no. 76 at 7 n.1). In light of

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this potential effect, the court refused to assume that the defendant was financially able

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to pay “$24 million in potential penalties” — the maximum penalties available for the

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defendant’s period of noncompliance — and continue the cleanup. Pakootas, 646 F.3d

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at 1222.

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While Plaintiff is correct that Pakootas involved civil penalties sought in a

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different context, Plaintiff has not shown that this Court erred in citing the decision.

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Plaintiff’s disagreement with the Court’s reading of Pakootas is not an adequate basis to

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compel reconsideration of the September Order. The Court therefore denies Plaintiff’s

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Motion for Reconsideration (dkt. no. 76).

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IV.

MOTION TO DISMISS OR TO STRIKE

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After the Court resolved Defendant’s first motion to dismiss through the

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September Order and a subsequent hearing, Plaintiff filed an amended complaint. (Dkt.

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no. 81.) Plaintiff re-alleges its claims for civil penalties under the CWA and the NWPCA,

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and a claim for wrongful diversion of water that the Court previously dismissed. (Id. at

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16-19.) Additionally, pursuant to the Court’s grant of leave to amend (dkt. no 92 at 26-

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27), Plaintiff adds a claim that Defendant wrongfully appropriated Plaintiff’s water by

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causing contaminants to enter the water. (Dkt. no. 81 at 19.) In addition to damages,

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Plaintiff seeks “replacement water” for the wrongfully appropriated water. (Id.)

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Defendant moves to dismiss or to strike Plaintiff’s re-alleged claims for civil

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penalties under the CWA and the NWPCA, Plaintiff’s re-alleged claim for wrongful

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diversion, and Plaintiff’s request for replacement water as a remedy to both the wrongful

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diversion and wrongful appropriation claims.3 (Dkt. no. 87 at 9.)

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The Court notes that Plaintiff’s practice of re-alleging previously dismissed
claims makes this case more complex than it ought to be at this stage in the
proceedings. As Plaintiff notes, there is no requirement to re-allege claims in order to
preserve them for appeal. (Dkt. no. 88 at 4 (citing Lacey v. Maricopa Cty., 693 F.3d 896,
928 (9th Cir. 2012) (en banc)).) Rather, Plaintiff states that it reasserted these claims
out of “an abundance of caution,” given the pendency of Plaintiff’s Motion for
(…fn. cont.)

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Because the Court denies Plaintiff’s Motion for Reconsideration, the Court

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dismisses Plaintiff’s re-alleged claims for civil penalties under the CWA and the

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NWPCA. Furthermore, the Court previously dismissed Plaintiff’s wrongful diversion

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claim — which was based on water distribution — in its entirety for lack of subject

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matter jurisdiction. (Dkt. no. 67 at 9; dkt. no. 92 at 25-26.) To the extent Plaintiff re-

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alleges a wrongful diversion claim based on water distribution, the re-alleged claim is

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dismissed. It is not clear to the Court, however, whether Plaintiff’s request for

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replacement water attaches to its distribution-based claim. (See dkt. no. 88 at 5

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(describing both the wrongful appropriation and wrongful diversion claims as “the

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Diversion claim”).) If it does, then the Court will dismiss Plaintiff’s request for

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replacement water under a distribution-based theory, consistent with the Court’s prior

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rulings.

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The Court will not, however, dismiss Plaintiff’s claim for wrongful appropriation

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based on contamination and the associated remedies of damages and replacement

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water. Defendant contends that the replacement water remedy is an attempt to re-allege

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a previously dismissed claim for injunctive relief. (Dkt. no. 87 at 7; dkt. no. 91 at 3-5.)

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Defendant misconstrues the Court’s September Order — while the Court found that

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CERCLA Section 113(h) foreclosed Plaintiff’s request to enjoin the diversion of water

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into evaporation ponds, the Order did not address replacement water as a remedy for

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wrongful appropriation due to contamination. (See dkt. no. 67 at 7-9.) The Court also

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disagrees with Defendant’s argument that Plaintiff’s request for replacement water to

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compensate for wrongful appropriation constitutes a challenge to the CERCLA cleanup.

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(fn. cont…)

Reconsideration. (Id.) Such caution is unnecessary. The Court’s September Order
controls the proceedings unless the Court grants reconsideration. Plaintiff’s practice of
re-alleging dismissed claims while the Motion for Reconsideration was pending has
required the Court to “pars[e] old claims and reiterat[e] its prior rulings[;]” Lacey, 693
F.3d at 928, thereby generating needless work for the Court and the opposing party and
leading to further delays.
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(See dkt. no. 91 at 3-5.) Defendant has not shown that this remedy is directly related to,

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or interferes with, the goals of the CERCLA cleanup. See MESS, 47 F.3d at 330.

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Accordingly, Defendant’s Motion to Dismiss (dkt. no. 87) is granted in part and

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denied in part. The Court dismisses Plaintiff’s re-alleged claims for civil penalties under

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the CWA and the NWPCA, and Plaintiff’s re-alleged claim for wrongful diversion under a

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water distribution theory. To the extent Plaintiff seeks replacement water under a

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distribution theory, the Court dismisses that claim. The Court will not dismiss Plaintiff’s

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claim for wrongful appropriation due to water contamination.

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V.

MOTION TO AMEND

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Plaintiff seeks leave to file a Second Amended Complaint (“SAC”). (Dkt. no. 97.)

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Defendant does not oppose the Motion to Amend, except to the extent that Plaintiff

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reasserts claims that the Court previously dismissed. (Dkt. no. 109 at 2 & n.1.) After

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considering the parties’ notices to the Court regarding the Motion to Amend (dkt. nos.

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109, 110), the Court will grant the Motion to Amend, subject to the ruling on Defendant’s

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Motion to Dismiss (dkt. no. 87).

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VI.

CONCLUSION

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The Court notes that the parties made several arguments and cited to several

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cases not discussed above. The Court has reviewed these arguments and cases and

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determines that they do not warrant discussion because they do not affect the outcome

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of these Motions.

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It is therefore ordered that Plaintiff’s Motion for Reconsideration (dkt. no. 76) is
denied.

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It is further ordered that Defendant’s Motion to Dismiss or to Strike (dkt. no. 87) is

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granted in part and denied in part. Plaintiff may proceed with its wrongful appropriation

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claim based on a contamination theory. The Court dismisses Plaintiff’s re-alleged claims

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under the CWA, the NWPCA, and for wrongful diversion based on a water distribution

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theory. To the extent Plaintiff requests replacement water under a distribution-based

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theory, the Court dismisses that claim for relief.
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It is further ordered that Plaintiff’s Motion for Leave to Amend (dkt. no. 97) is

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granted, subject to the Court’s ruling on Defendant’s Motion to Dismiss or to Strike (dkt.

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no. 87).

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DATED THIS 13th day of August 2015.

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MIRANDA M. DU
UNITED STATES DISTRICT JUDGE

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