1. Introduction

In a series of early 2016 decisions issued in Atlantic Richfield Co. v. U.S., et. al., Case No. 1:15-cv-00056, the U.S. District Court for the District of New Mexico dismissed claims for cost recovery and contribution asserted by Atlantic Richfield Co. ("ARCO") against the United States, the Laguna Pueblo ("the Pueblo"), and Laguna Construction Company ("LCC"), a federally-chartered tribal corporation formed by the Pueblo.  The claims resulting in the decisions arose from Environmental Protection Agency ("EPA") investigations into inadequate remediation efforts undertaken decades ago at the Jackpile Paguate uranium mine in the Grants Uranium Belt in west-central New Mexico.  The decisions provide insights into the Comprehensive Environmental Response, Compensation, and Liability Act's ("CERCLA") statute of limitations, certain potential pitfalls in pleading CERCLA claims, and the ability of an Indian Pueblo to assert a sovereign immunity defense in the context of CERCLA and contract claims.

  1.  Background

In the 1940s, the federal government was in the market for uranium concentrate for enrichment to weapons-grade materials, and encouraged private entities to mine and mill uranium for sale to the government at prices it set.  Uranium was discovered on Laguna Pueblo lands in 1952, and Anaconda Copper Mining Company entered into mining leases for uranium approved by the Bureau of Indian Affairs ("BIA"), acting pursuant to its trust responsibility to the Pueblo.  Productive operations occurred at the Jackpile Paguate mine under the leases until 1982. 

In 1986, the Pueblo and ARCO, Anaconda's successor, entered into an agreement to terminate the leases and perform remediation.  ARCO agreed to pay the Pueblo to perform remediation, and the Pueblo agreed to assume all liability and release ARCO.  The United States Department of the Interior approved the agreement and, pursuant to proceedings under the National Environmental Policy Act, BIA and the Bureau of Land Management issued a Record of Decision that established requirements for the remediation.  ARCO paid $43.6 million to the Pueblo to perform the remediation. 

LCC, the Pueblo and the United States all were involved in varying degrees with the remediation.  The BIA had responsibility to approve key remediation decisions according to a cooperative agreement with the Pueblo.  But the BIA and the Pueblo saw ARCO's $43.6 million payment as an economic development opportunity.  The Pueblo formed LCC to conduct the remediation, and BIA ceded certain oversight of the remediation work to LCC.  Beginning in 2007 the Pueblo, followed by the EPA, investigated the site and found inadequacies in the cleanup work.  In 2012 the EPA proposed listing the site on the National Priorities List, and in 2014 it asserted that ARCO should fund the CERCLA Remedial Investigation/Feasibility Study.  EPA has brought no litigation.

  1. Summary of ARCO's Claims

Asserting that the remediation was mishandled, ARCO brought CERCLA claims against the United States, the Pueblo and LCC, seeking cost recovery, contribution, declaratory relief, and damages for breach of contract.  ARCO sought to recover two categories of response costs: (1) the $43.6 million it paid to the Pueblo in 1986 in exchange for the Pueblo's agreeing to be responsible for the remediation and release ARCO from all responsibility for it; and (2) significant costs ARCO incurred in responding to the EPA's efforts to shift responsibility to ARCO.

  1. The Court's Decisions

Senior United States District Judge, James A. Parker, entered a trio of memorandum decisions and orders in February and March of this year.  The Court dismissed all of ARCO's CERCLA and declaratory claims against the United States, the Pueblo and LCC.  Breach of contract claims against the Pueblo survived motions to dismiss. 

The dismissal of ARCO's claims against the United States was based in part on the CERCLA statute of limitations and in part because ARCO's pleadings were deficient.  The Court dismissed ARCO's claims for cost recovery and contribution for the 1986 settlement payment as time-barred.  The Court dismissed ARCO's cost recovery and contribution claims to recover the costs in responding to EPA and associated investigation as inadequately pled to establish that the expenditures constituted "necessary costs of response."  Post-judgment contribution claims were dismissed as premature because ARCO has not been sued.  Finally, the court ruled that claims against the United States for declaratory judgement warranted dismissal, finding that ARCO could not bring a claim for declaratory relief since it failed to establish a valid underlying contribution or cost recovery claim.

The dismissal of ARCO's claims against the Pueblo and LCC was somewhat more complicated as a result of sovereign immunity defenses raised by those entities.  The Court considered the sovereign immunity defense asserted by both the Pueblo and LCC, the Pueblo's federally-chartered tribal corporation.  The Court concluded that both the Pueblo and LCC are entitled to assert sovereign immunity as a bar to ARCO's CERCLA claims, but that the Pueblo and LCC each had separately waived sovereign immunity with regard to ARCO's breach of contract claims.  The Court found that the Pueblo waived sovereign immunity as to the breach of contract claims in the 1986 Agreement to Terminate Leases, but determined that the waiver as constituted did not extend to the CERCLA claims.  The Court found that LCC, meanwhile, waived immunity as to the breach of contract claims through Articles of Merger associated with the merger of LCC from a New Mexico corporation to a federal LCC to take advantage of the liability limiting provisions of 25 USC §477.

  1. Takeaways

Although the facts of Atlantic Richfield are relatively unique, its lessons are broader.  First, in pleading a CERCLA claim for cost recovery, care should be taken to allege in some detail facts which support all elements of the claim, including facts showing that necessary response costs within CERCLA were incurred.  Second, without adequate waiver of sovereign immunity, the settlement and payment in exchange for a release and commitment by a tribe or tribal corporation to assume full responsibility for clean-up may leave the door open for CERCLA liability in the future without recourse through CERCLA-based contribution and cost recovery claims.  Finally, although the court's decision confirmed that the defense of sovereign immunity applies to CERCLA contribution and cost recovery claims brought by private parties against sovereign Indian tribes and their federally chartered corporations, the court's analysis confirms that under the right circumstances, a tribe may waive its sovereign immunity protections.