United States v. Sterling Centrecorp Inc.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA; No. 18-15585
CALIFORNIA DEPARTMENT OF TOXIC
SUBSTANCES CONTROL, D.C. No.
Plaintiffs-Appellees, 2:08-cv-02556-
MCE-DB
v.

STERLING CENTRECORP INC., OPINION
Defendant-Appellant,

and

STEPHEN P. ELDER; ELDER
DEVELOPMENT, INC.,
Defendants.

Appeal from the United States District Court
for the Eastern District of California
Morrison C. England, Jr., District Judge, Presiding

Argued and Submitted October 25, 2019
San Francisco, California

Filed October 5, 2020
2 UNITED STATES V. STERLING CENTRECORP.

Before: Michael J. Melloy, * Jay S. Bybee, and
N. Randy Smith, Circuit Judges.

Opinion by Judge Melloy;
Partial Concurrence and Partial Dissent by
Judge N.R. Smith

SUMMARY **

CERCLA

The panel affirmed the district court’s judgment in a case
brought by the United States and the California Department
of Toxic Substances Control against Sterling Centrecorp,
Inc. under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (“CERCLA”) to
recover cleanup costs incurred at a Superfund site – the Lava
Cap Mine located in Nevada County, California.

Strict CERCLA liability arises when four key elements
are satisfied: (1) the site in question is a “facility” as defined
by CERCLA; (2) a “release” or “threatened release” of a
hazardous substance has occurred; (3) the release or
threatened release requires expenditures that are consistent
with a national contingency plan; and (4) the defendants fall
within one of four categories of “covered persons” subject to
liability. “Covered persons” include prior operators of the

*
The Honorable Michael J. Melloy, United States Circuit Judge for
the U.S. Court of Appeals for the Eighth Circuit, sitting by designation.
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
 UNITED STATES V. STERLING CENTRECORP. 3

facility. 42 U.S.C. § 9607(a)(2). Sterling conceded the first
three elements of CERCLA liability prior to trial.

The panel held that the record supported the district
court’s finding that Sterling was an “operator” of the Site
because Sterling maintained pervasive control of the Site.
The record also supported the finding that Jack Gilbert, the
man tasked with directing the response to the Regional
Water Board’s Cleanup and Abatement Order, wore his
Sterling “hat” while doing so. The record also supported the
conclusion that Gilbert acted on Sterling’s behalf. Finally,
the record reflected that Sterling must have made the
environmental response decisions at the Site. The panel
concluded that Sterling was subject to CERCLA liability as
a prior operator of the Mine.

The panel held that the United States was not subject to
CERCLA liability as a prior operator. The record showed
that, through Order L-208, the United States instructed the
Mine to shut down its operations, and that was the extent of
its involvement. The record does not show that the United
States ever managed, directed, or conducted operations
specifically related to pollution at the facility.

The panel held that the interim remedy selected by the
Environmental Protection Agency to supply non-
contaminated drinking water at the Site was not arbitrary and
capricious or otherwise not in accordance with law. The
panel further held that Sterling failed to overcome the
presumption of consistency with the National Contingency
Plan.

Judge N.R. Smith concurred with the majority’s
conclusions that Sterling was liable for response under
CERCLA, and the EPA’s selection of the interim remedy
4 UNITED STATES V. STERLING CENTRECORP.

was not arbitrary and capricious or otherwise inconsistent
with the National Contingency Plan. He dissented from the
majority’s conclusion that the United States was not an
“operator” under CERCLA because the majority
misinterpreted and misapplied controlling Supreme Court
precedent.

COUNSEL

Kaitlyn D. Shannon (argued) and Gary J. Smith, Beveridge
& Diamond P.C., San Francisco, California, for Defendant-
Appellant.

Allen M. Brabender (argued), Patricia L. Hurst, Paul Cirino,
and Peter Krzywicki, Attorneys; Eric Grant, Deputy
Assistant Attorney General; Jeffrey H. Wood, Acting
Assistant Attorney General; Environment & Natural
Resources Division, United States Department of Justice,
Washington, D.C.; Xavier Becerra, Attorney General; Sally
Magnani, Senior Assistant Attorney General; Edward
Ochoa, Supervising Deputy Attorney General; Olivia Karlin
and John W. Everett, Deputy Attorneys General; Office of
the Attorney General, San Diego, California; for Plaintiffs-
Appellees.
 UNITED STATES V. STERLING CENTRECORP. 5

OPINION

MELLOY, Circuit Judge:

The United States and the California Department of
Toxic Substances Control (collectively, Plaintiffs)
designated the former Lava Cap Mine (Mine), located in
Nevada County, California, as a Superfund Site (Site) 1
known to be polluted by elevated and potentially dangerous
levels of arsenic generated through mining operations.
Starting in the mid-1990s, Plaintiffs undertook efforts to
clean up and remediate the arsenic contamination and its
effect on the local groundwater, inhabitants, and
environment. Plaintiffs later sued Defendant, Sterling
Centrecorp, Inc. (Sterling), under the Comprehensive
Environmental Response, Compensation, and Liability Act
of 1980, 42 U.S.C. § 9601, et seq. (CERCLA), to recover
response costs incurred at the Site. Sterling contested
Plaintiffs’ claims and filed a counterclaim arguing the
United States was itself liable for response costs under
CERCLA as a prior “operator” of the Mine during World
War II.

After bifurcating the case between liability and damages,
the district court held a bench trial as to liability and found
Sterling liable for response costs. As to damages, the district
court concluded on summary judgment that Plaintiffs could
recover all response costs because the remedy selected by
the Environmental Protection Agency (EPA) was not
arbitrary and capricious, and that the United States was not

1
Hereinafter, this opinion will use “Mine” to describe the Lava Cap
Mine before it was designated a Superfund Site and use “Site” to describe
the same location once it was designated to be an environmental hazard.
For most purposes, the titles are interchangeable.
6 UNITED STATES V. STERLING CENTRECORP.

liable as an “operator” under CERCLA. Sterling appeals the
district court’s final judgment. We have jurisdiction under
28 U.S.C. § 1291 and affirm the district court’s rulings.

I. BACKGROUND

Between 1934 and 1943, the Lava Cap Gold Mining
Corporation (LCGMC) owned and operated the Lava Cap
Mine. The Mine was located in the foothills of the Sierra
Nevada Mountains and, at the time, was one of the largest
gold and silver mining operations in California. Mining
operations produced two kinds of mining waste: waste rock
and mill tailings. The waste rock was piled up next to the
Mine. The mill tailings required more care. Because mill
tailings are fine-grained materials with high concentrations
of arsenic and are particularly susceptible to being carried
away by water, LCGMC built two log dams to hold the
tailings in place.

The United States entered World War II in 1941. It was
“apparent to those in charge of the Nation’s defense
mobilization that [the United States] faced a critical shortage
of nonferrous metals, notably copper, and a comparable
shortage of machinery and supplies to produce them.”
United States v. Cent. Eureka Mining Co., 357 U.S. 155, 157
(1958). On January 16, 1942, President Roosevelt created
the War Production Board (Board), Exec. Order No. 9024
¶ 2, 7 Fed. Reg. 329, 329–30 (Jan. 17, 1942), to “promote
the national defense” and convert various civilian industry
to wartime production, Limitation Order L–208, 7 Fed. Reg.
7992, 7992–93, 1942 WL 49008 (Oct. 8, 1942). The Board
“issued a series of Preference Orders” classifying copper
mines as essential to the war effort and classifying gold
mines as nonessential. Cent. Eureka Mining, 357 U.S.
at 157. At first, these orders merely prevented nonessential
mines from acquiring new machinery or supplies. Id.
 UNITED STATES V. STERLING CENTRECORP. 7

Eventually, the Board needed to address “a severe shortage
of skilled labor” in the nonferrous metal mines. Id.

To that end, on October 8, 1942, the Board issued
Limitation Order L–208, which provided requirements for
the gold mining industry.

It directed each operator of a gold mine to
take steps immediately to close down its
operations and, after seven days, not to
acquire, use or consume any material or
equipment in development work. The order
directed that, within 60 days, all operations
should cease, excepting only the minimum
activity necessary to maintain mine
buildings, machinery and equipment, and to
keep the workings safe and accessible.
Applications to the [Board] were permitted to
meet special needs and several exceptions
were made under that authority. Small mines
were defined and exempted from the order.
The [Board] did not take physical possession
of the gold mines. It did not require the mine
owners to dispose of any of their machinery
or equipment.

Id. at 158–60. 2 Under subsection (b)(3) of Order L–208,
following the 60-day mark, gold mines were not allowed to

2
See Limitation Order L–208, 7 Fed. Reg. 7992, 7992–93, 1942 WL
49008 (Oct. 8, 1942); see also Cent. Eureka Mining, 357 U.S. at 158 n.4
(providing the full text of Order L–208). In Central Eureka Mining, the
Supreme Court addressed the history and scope of Order L–208 in the
context of a takings claim. It held that the issuance of Order L–208 did
not amount to a Fifth Amendment taking because “the Government did
not occupy, use, or in any manner take physical possession of the gold
8 UNITED STATES V. STERLING CENTRECORP.

“acquire, consume, or use any material, facility, or
equipment to remove any ore or waste from such mine,
either above or below ground, or to conduct any other
operations in or about such mine, except to the minimum
amount necessary to maintain its buildings, machinery, and
equipment in repair, and its access and development
workings safe and accessible.” Limitation Order L–208,
7 Fed. Reg. 7992, 7993, 1942 WL 49008 (Oct. 8, 1942). The
Board amended Order L–208 several times to reflect
additional instructions related to machinery. In a letter dated
May 12, 1943, the Board advised LCGMC that as of June 1,
1943, the Lava Cap Mine would be subject to Order L–208.

On June 30, 1945, the Board revoked Order L–208.
However, LCGMC never resumed mining operations. In
1952, LCGMC was acquired by Sterling, a Canadian
corporation then known as Goldvue Mines Limited, through
its wholly owned subsidiary, Keystone Copper Corporation
(Keystone). Sterling took no actions at the Mine for decades.

In 1979, one of the dams built to contain the mill tailings
partially collapsed, triggering a release of contaminated
waste into the local water system. Following the collapse,
the Central Valley Regional Water Quality Control Board
investigated complaints by the Mine’s downstream
neighbors regarding the pollution and issued a Cleanup and
Abatement Order (CAO) to Keystone, as title holder to the
Site. The CAO instructed Keystone to stop the discharge
immediately and provide a report detailing needed

mines or of the equipment connected with them.” Cent. Eureka Mining,
357 U.S. at 165–66.
 UNITED STATES V. STERLING CENTRECORP. 9

improvements to the structural integrity of the dam. 3
Keystone failed to comply. Neither Keystone nor its parent
company, Sterling, conducted the required evaluation of the
dam. The dam remained in poor condition through the
remainder of Keystone’s ownership of the Mine. Through
Keystone, Sterling eventually sold the Mine to an entity
controlled by Stephen Elder in 1989.

In 1997, catastrophic flooding completely collapsed the
log dam and washed an estimated 10,000 cubic yards of
arsenic-contaminated mill tailings into the local water
system. Following this event, the EPA and the California
Department of Toxic Substances Control (California DTSC)
conducted an extensive response action under CERCLA to
remove hazardous materials from the Site and to protect
local residents from the contamination. The EPA officially
designated the Site as a Superfund site in January 1999. The
EPA split the Site into four operable units, including as is
relevant here, Operable Unit 2 (OU2). In OU2, groundwater
wells were contaminated, and the EPA was concerned with
providing a safe and reliable source of drinking water to
local residents. Because a long-term solution would be years
in the making, the EPA constructed a pipeline to connect
residences to an uncontaminated public water supply as an
interim remedy. Pipeline construction cost an estimated
$3.795 million. To date, total response costs at all four
operable units at the Site have totaled more than $32 million.

3
The California Department of Fish and Game also investigated and
warned of a future catastrophic failure of the decaying dam if not
properly repaired.
10 UNITED STATES V. STERLING CENTRECORP.

The United States and California DTSC sued Sterling
and Elder 4 under CERCLA seeking contribution for
response costs incurred at the Site. In addition to asserting
multiple defenses, Sterling filed a contribution counterclaim
against the United States, alleging Order L–208 made the
United States liable as a prior operator.

The district court bifurcated the litigation into a
jurisdiction and liability phase, followed by a damages
phase. After a four-day bench trial for the first phase, the
court ruled that it had personal jurisdiction over Sterling, and
Sterling was liable under CERCLA for response costs under
three separate theories: (1) Sterling directly operated the
Mine at the time of the disposal of hazardous substances,
(2) Sterling assumed the liabilities of LCGMC, and
(3) Sterling’s acquisition of LCGMC was a de facto merger.

In phase two, proceeding on cross-motions for summary
judgment, the district court concluded Order L–208 did not
subject the United States to CERCLA liability as an
“operator” of the Mine. It found that other than closing the
Mine, the United States had no involvement with the Mine’s
operations or the disposal of mill tailings. The district court
also concluded, again on separate cross-motions, that
Plaintiffs were entitled to recover all response costs. The
district court then issued a judgment of roughly $32 million
against Sterling and Elder. This appeal followed.

II. DISCUSSION

Sterling appeals the district court’s rulings on (1) its own
liability; (2) the liability of the United States; and

4
The companion appeal is also filed today in United States v. Elder,
No. 18-15878.
 UNITED STATES V. STERLING CENTRECORP. 11

(3) response costs related to the EPA’s interim remedy in
OU2. Following a bench trial, we review the district court’s
legal conclusions de novo and factual findings for clear
error. Lentini v. Cal. Ctr. for the Arts, Escondido, 370 F.3d
837, 843 (9th Cir. 2004). We will accept the factual findings
unless we are “left with the definite and firm conviction that
a mistake has been committed.” Id. (citations omitted). We
review de novo the district court’s grant of summary
judgment and interpretation of CERCLA. Carson Harbor
Vill., Ltd. v. Unocal Corp., 270 F.3d 863, 870 (9th Cir. 2001)
(en banc).

A. CERCLA Liability

In 1980, Congress enacted CERCLA as a “response to
the serious environmental and health risks posed by
industrial pollution.” United States v. Bestfoods, 524 U.S.
51, 55 (1998). “As its name implies, CERCLA is a
comprehensive statute that grants the President broad power
to command government agencies and private parties to
clean up hazardous waste sites.” Key Tronic Corp. v. United
States, 511 U.S. 809, 814 (1994). We construe CERCLA
liberally in order to effectuate its two primary goals: “(1) to
ensure the prompt and effective cleanup of waste disposal
sites, and (2) to assure that parties responsible for hazardous
substances [bear] the cost of remedying the conditions they
created.” Carson Harbor, 270 F.3d at 880.

CERCLA authorizes the EPA to finance cleanup efforts
at hazardous sites that meet certain statutory criteria,
42 U.S.C. § 9604; Bestfoods, 524 U.S. at 55, and to recover
costs from liable parties. Strict CERCLA liability arises
when four key elements are satisfied: (1) the site in question
is a “facility” as defined by CERCLA; (2) a “release” or
“threatened release” of a hazardous substance has occurred;
(3) “such release or ‘threatened release’ will require the
12 UNITED STATES V. STERLING CENTRECORP.

expenditure of response costs that are ‘consistent with the
national contingency plan’”; and (4) the defendants fall
within one of four categories of “covered persons” subject to
liability. See Cose v. Getty Oil Co., 4 F.3d 700, 703–04 (9th
Cir. 1993). Relevant here, “covered persons” include prior
operators of the facility, defined as “any person who at the
time of disposal of any hazardous substance . . . operated any
facility at which such hazardous substances were disposed
of.” 42 U.S.C. § 9607(a)(2).

1. Liability of Sterling

After conducting the bench trial, the district court
concluded Sterling is liable for response costs as a prior
“operator” under CERCLA because it directed operations
related to pollution at the Site. Sterling appeals this ruling.
We agree with the district court. 5

Sterling conceded the first three elements of CERCLA
liability prior to trial. Therefore, only one element was
contested and is contested on appeal: whether Sterling was
an “operator” of the Site when hazardous substances were
disposed there. See 42 U.S.C. § 9607(a). CERCLA defines
“operator” circularly as “any person . . . operating [a]
facility.” 42 U.S.C. § 9601(20)(A)(ii). We look to common
law for additional guidance. City of Los Angeles v. San
Pedro Boat Works, 635 F.3d 440, 443 (9th Cir. 2011).

In Bestfoods, the Supreme Court defined “operator”
when determining whether a parent corporation was liable
under CERCLA for a subsidiary’s actions. Looking to the
5
Because we do so, Sterling’s argument as to a lack of personal
jurisdiction is no longer viable. Indeed, the parties agreed in briefing
that if Sterling was found liable as an operator, Sterling’s contacts with
the forum would be sufficient to establish personal jurisdiction.
 UNITED STATES V. STERLING CENTRECORP. 13

ordinary meaning of the term, Bestfoods, 524 U.S. at 66, and
the context of CERCLA’s environmental focus, the Court
stated that “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,” id. at 66–67. Bestfoods
emphasized that any determination as to whether an entity is
liable as an operator must turn on the relationship between
the potentially responsible party and the waste-producing
facility at issue. Id. at 68. Such liability may be inferred
from the totality of the circumstances; it need not be proven
by direct evidence. Tosco Corp. v. Koch Indus., Inc.,
216 F.3d 886, 892 (10th Cir. 2000).

Whether Sterling is liable as a prior operator under
CERCLA is a fact-intensive inquiry, and we therefore
review the district court’s post-bench trial determinations for
clear error. See United States v. Depew, 210 F.3d 1061, 1067
(9th Cir. 2000) (indicating that a “fact-intensive inquiry”
will generally be reviewed for clear error). The record
supports the district court’s finding that Sterling was an
“operator” of the Site because “Sterling maintained
pervasive control over operations at the [Site], including
direct management of the environmental response to the
1979 partial dam collapse and disposal of arsenic
contaminated tailings and water.” The factual record
supports the district court’s finding that Jack Gilbert, the
man tasked with directing the response to the Regional
Water Board’s Cleanup and Abatement Order (CAO)
regarding the hazardous substances at the Site, wore his
Sterling “hat” while doing so. Gilbert directed compliance
with the CAO using Sterling letterhead, received
communications related to the response addressed to him in
his capacity as a Sterling official, and rarely mentioned
14 UNITED STATES V. STERLING CENTRECORP.

Sterling’s subsidiary in his correspondence regarding the
CAO. The record also supports the district court’s
conclusion that Gilbert acted on Sterling’s behalf since
Gilbert’s actions “benefitted Sterling, to Keystone’s
detriment,” and were thus “contrary to the interests of the
subsidiary yet nonetheless advantageous to the parent.” See
Bestfoods, 524 U.S. at 70 n.13. Sterling’s involvement is
further shown by the fact that compliance reports regarding
the monitoring orders were sent directly to Sterling for a
time. Finally, the record reflects that Sterling must have
made the environmental response decisions at the Site,
because Keystone did not have the financial wherewithal to
do so. Therefore, Sterling is subject to CERCLA liability as
a prior operator of the Mine. 6

2. Liability of the United States

Sterling also challenges the district court’s summary
judgment ruling as to whether, by issuing Order L–208, the
United States acted as an “operator” and is therefore liable
for response costs. Sterling argues that the United States was
an operator because of the all-encompassing nature of Order
L–208. This argument proves too much. The definition of
“operator” in Bestfoods clarifies that actual participation in

6
The district court concluded Sterling could also be liable under two
separate theories: (1) the transaction between Sterling and its predecessor
was a de facto merger, thus subjecting Sterling to successor liability; and
(2) Sterling expressly assumed its predecessor’s environmental
liabilities. We agree that the evidence at trial also supports these theories
as alternative bases for holding Sterling liable for response costs.
However, our analysis focuses only on direct operator liability as that is
the typical basis for CERCLA liability in these circumstances, and it is
dispositive of the issue. See McMurtrey v. Ryan, 539 F.3d 1112, 1132
(9th Cir. 2008) (noting that where one issue is dispositive, the court need
not address the remaining issues).
 UNITED STATES V. STERLING CENTRECORP. 15

decisions related to pollution is necessary for a finding of
operator liability. We have similarly held that “[t]o be an
operator of a hazardous waste facility, a party must do more
than stand by and fail to prevent the contamination. It must
play an active role in running the facility, typically involving
hands-on, day-to-day participation in the facility’s
management.” Long Beach Unified Sch. Dist. v. Dorothy B.
Godwin Cal. Living Tr., 32 F.3d 1364, 1367 (9th Cir. 1994).
The Bestfoods standard confirms that operator status has a
nexus requirement. That is, it requires that an operator’s
relationship to the facility at issue must, at least in part, focus
on “operations specifically related to pollution.” Bestfoods,
524 U.S. at 66. Therefore, operator liability requires
something more than general control over an industry or
facility. It requires some level of direction, management, or
control over the facility’s polluting activities.

The record shows that, through Order L–208, the United
States instructed the Mine to shut down its mining
operations. That is the extent of its involvement. The record
does not show that the United States ever managed, directed,
or conducted operations specifically related to pollution at
the facility. Nor does the record show that the United States
even had knowledge of the Mine’s mill tailings disposal or
the log dam structures that held the mill tailings. Cf. PPG
Indus. Inc. v. United States, 957 F.3d 395, 404 (3d Cir. 2020)
(stating that “knowledge of a practice is not the same as
undertaking that practice for the purposes of operator
liability under CERCLA”). Order L–208 included no
requirements as to “operations specifically related to
pollution.” Bestfoods, 524 U.S. at 66. Its terms cannot make
the United States liable as a prior operator.
16 UNITED STATES V. STERLING CENTRECORP.

Further, the record does not show that the United States
ordered the abandonment of existing pollution controls.
Rather, subsection (b)(3) of Order L–208 specifically
allowed for the Mine to continue minimal operations “to
maintain its buildings, machinery, and equipment in repair,
and its access and development workings safe and
accessible.” 7 This exception makes clear that, while Order
L–208 was in effect, the Mine retained control over its own
maintenance and safety operations. It had the ability to
maintain structures such as the mill tailings dams and
otherwise keep its own investment safe. This included
taking necessary steps related to pollution and waste.
Therefore, while the United States had general regulatory
authority over the mining industry during World War II, by
issuing Order L–208 and applying it to the Mine, it did not
“manage, direct, or conduct . . . 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.

Taking into consideration, as we must, the broad
remedial nature of CERCLA, the undisputed facts in the
record show that, by issuing Order L–208, the United States
did not “manage, direct, or conduct operations” specifically
related to pollution at the Lava Cap Mine Site. Bestfoods,
524 U.S. at 66. Therefore, the United States is not subject to
CERCLA liability as a prior operator.

7
Limitation Order L–208, 7 Fed. Reg. 7992, 7993, 1942 WL 49008
(Oct. 8, 1942); see also Cent. Eureka Mining, 357 U.S. at 158 n.4
(providing the full text of Order L–208).
 UNITED STATES V. STERLING CENTRECORP. 17

B. Remedy Selection

Finally, Sterling challenges the district court’s ruling as
to the EPA’s interim remedy in OU2. Sterling argues the
decision to create a pipeline to provide residents with safe
water was arbitrary and capricious because the pipeline
failed to achieve its primary objective, and a cheaper
alternative existed. Sterling argues the EPA should have
installed point-of-use wellhead treatment instead of
constructing the pipeline, thus saving nearly $3 million in
response costs. Sterling also argues the EPA improperly
weighed certain criteria under 40 C.F.R. § 300.430.

The National Contingency Plan (NCP) holds “the
organizational structure and procedures for preparing for and
responding to . . . releases of hazardous substances.” Wash.
State Dep’t of Transp. v. Wash. Nat. Gas Co., Pacificorp,
59 F.3d 793, 799 (9th Cir. 1995) (quoting 40 C.F.R.
§ 300.1). A party subject to CERCLA liability is responsible
for “all costs of removal or remedial action incurred by the
United States . . . or a State . . . not inconsistent with the
[NCP].” 42 U.S.C. § 9607(a)(4)(A). Once Plaintiffs
established a prima facie case that their response costs were
incurred in connection with the release of hazardous
substances from the Site, such costs were presumed to be
consistent with the NCP, and the burden shifted to Sterling
to prove otherwise. United States v. Chapman, 146 F.3d
1166, 1170–71 (9th Cir. 1998).

The interim remedy selected by the EPA to supply non-
contaminated drinking water at the Site was not “arbitrary
and capricious or otherwise not in accordance with law.”
See 42 U.S.C. § 9613(j)(2) (providing the standard of
review). The EPA’s interim remedy achieved its
objective—to provide clean drinking water to the impacted
residents—and was not contrary to the evidence. See
18 UNITED STATES V. STERLING CENTRECORP.

Chapman, 146 F.3d at 1170–71; see also Wild Fish
Conservancy v. Salazar, 628 F.3d 513, 521 (9th Cir. 2010)
(explaining that the court’s role is to confirm that the
agency’s decision is rational and based on the record).
Further, the response costs were not inconsistent with the
NCP. Based on its careful evaluation of the required criteria,
the EPA concluded the comparative benefits justified the
higher cost of the selected remedy because the pipeline
“provides much greater protectiveness by permanently
removing the exposure pathway,” and by “eliminat[ing] the
requirement for long-term federal and state management of
individual residents’ drinking water.” Although the pipeline
was the more expensive alternative, the EPA met its
obligation to consider the cost-effectiveness of each
alternative and to, in the end, select a cost-effective remedy.
40 C.F.R. § 300.430(f)(1)(ii)(D) (“Each remedial action
selected shall be cost-effective.”); see also Franklin Cty.
Convention Facilities Auth. v. Am. Premier Underwriters,
Inc., 240 F.3d 534, 546 (6th Cir. 2001) (affirming the
selection of a more expensive, yet cost-effective alternative
as consistent with the NCP).

Contrary to Sterling’s arguments, the EPA did not
improperly weigh the statutory criteria under 40 C.F.R.
§ 300.430. Instead, the record shows that the EPA
conducted the required comparative analysis before
concluding that the pipeline “provides the best balance of
tradeoffs in terms of . . . balancing criteria, while also
considering . . . State and community acceptance.” For these
reasons, and because there was a rational connection
between the record and the EPA’s selection of the interim
remedy, Sterling fails to overcome the presumption of
consistency with the NCP.
 UNITED STATES V. STERLING CENTRECORP. 19

III. CONCLUSION

We affirm the rulings of the district court.

AFFIRMED.

N.R. SMITH, Circuit Judge, concurring in part 1 and
dissenting in part:

Because Supreme Court case law makes clear that the
United States is an “operator” at the Site, I cannot join the
majority opinion on this issue.

I.

To promote the national defense during World War II,
the Office of Production Management and its successor, the
War Production Board, issued a series of orders prioritizing
the acquisition of certain nonferrous metals, notably copper.
See United States v. Cent. Eureka Mining Co., 357 U.S. 155,
156–157 (1958). These orders gave “those mines, which
were deemed important from the standpoint of defense or
essential civilian needs, a high priority in the acquisition” of
mining machinery. Id. at 157. “Gold mines were classified
as nonessential and eventually were relegated to the lowest
priority rating” for obtaining mining machinery, meaning
that these mines had to use only the machinery and supplies
they had on hand. Id. The Lava Cap Gold Mine, the Site at
issue in this case, was thus not deemed important from the

1
I agree with the majority’s conclusions that (1) Sterling is liable
for response costs under CERCLA, and (2) the EPA’s selection of the
interim remedy was not arbitrary and capricious or otherwise
inconsistent with the National Contingency Plan.
20 UNITED STATES V. STERLING CENTRECORP.

standpoint of defense or essential civilian needs and
therefore could not obtain machinery.

The shortage of supplies for the war effort soon spread
beyond machinery as the “expanding need for nonferrous
metals,” together with the “depletion of mining manpower
as a result of the military draft and the attraction of higher
wages paid by other industries,” caused a “severe shortage
of skilled labor.” Id. at 157. To remedy this labor shortage,
the War Production Board issued Limitation Order L–208 in
1942. Id. at 158. The Order was addressed exclusively to
the “nonessential” gold mining industry and directed all
operations to cease, “except to the minimum amount
necessary to maintain its buildings, machinery, and
equipment in repair, and its access and development
workings safe and accessible.” Limitation Order L–208,
7 Fed. Reg. 7992, 7992–93 (Oct. 8, 1942) [hereinafter Order
L–208]. Although the “[War Production Board] did not take
physical possession of the gold mines,” Cent. Eureka
Mining Co., 357 U.S. at 160, it just as well have; it expressly
prohibited the “use [of] any material, facility, or equipment
to remove any ore or waste” from the mine, or the
conducting of “any other operations in or about such mine,”
Order L–208 at 7993 (emphasis added).

The Order became specifically applicable to the Lava
Cap Gold Mine on May 12, 1943, when the War Production
Board sent a letter stating that “operation of the Lava Cap
Gold Mine is no longer essential to the war effort. Your
Serial Number 31-197-T is cancelled, effective June 1,
1943.” Under threat of imprisonment, those charged with
operating the Mine were thus directed to cease removal of
“any ore or waste from such mine,” Order L–208 at 7993
(emphasis added), until the Order was revoked in 1945, see
 UNITED STATES V. STERLING CENTRECORP. 21

Limitation Order L–208, Revocation, 10 Fed. Reg. 8110
(June 30, 1945).

In its counterclaim to the government’s claims below,
Sterling argued that, through the issuance of the Order, the
United States is potentially subject to CERCLA liability as
an “operator” of the Site. The district court entered summary
judgment for the United States on Sterling’s counterclaim,
finding that the Order did not render the United States an
“operator” of the Site. We review that conclusion de novo.
See Cal. Dep’t of Toxic Substances Control v. Westside
Delivery, LLC, 888 F.3d 1085, 1090 (9th Cir. 2018).

II.

CERCLA imposes liability for incurred response costs to
“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). In this case, it is uncontested that the Site is a
“facility” under 42 U.S.C. § 9601(9). Furthermore, we
assume based on the parties’ representations that there was a
“disposal of hazardous substances” at the facility when the
Order was in effect. 2 Thus, if the United States is an operator
of the Site, it is subject to CERCLA liability.

The majority concludes that the United States is not an
“operator” under CERCLA. The majority’s analysis is
wrong, because it misinterprets and misapplies controlling
Supreme Court precedent. Let me explain.

2
Though the district court did not address this question, counsel for
the United States conceded that point both in the briefing, and at oral
argument.
22 UNITED STATES V. STERLING CENTRECORP.

The Supreme Court’s opinion in United States v.
Bestfoods, 524 U.S. 51 (1998) outlines what actions are
required to be an “operator” under CERCLA. “[T]o operate”
under CERCLA “mean[s] something more than mere
mechanical activation of pumps and valves, and must be read
to contemplate ‘operation’ as including the exercise of
direction over the facility’s activities.” Bestfoods, 524 U.S.
at 71 (emphasis added). Thus, the Bestfoods Court
elaborated, an “operator is simply someone who directs the
workings of, manages, or conducts the affairs of a facility.”
Id. at 66. Under Bestfoods, then, a party that merely
“direct[s] . . . operations specifically related to pollution”
would be an “operator.” Id. Or, to use the majority’s
definition, “operator liability . . . requires some level of
direction, management, or control over the facility’s
polluting activities.” Maj. Op. 15.

The majority concludes that the United States cannot be
held liable as an “operator” in this case, because it merely
“instructed the Mine to shut down its mining operations.” Id.
Thus, the majority posits, “[t]he record does not show that
the United States ever managed, directed, or conducted
operations specifically related to pollution at the facility.”
Id. The majority errs, because it attempts to draw a
distinction where there is none. To “instruct,” as the United
States did, literally means “[t]o give orders to; direct.”
Instruct, American Heritage Dictionary (5th ed. 2012).
There can be no dispute that the United States exercised
direction over the facility’s activities. Thus, there is no real
distinction in this case between “instruct[ing] the mine to
shut down,” and exercising “some level of direction,
management, or control over the facility’s polluting
activities.” Maj. Op. at 15.
 UNITED STATES V. STERLING CENTRECORP. 23

By directing the mine to cease operations and prohibiting
the removal of ore waste from the facility, the United States
(through the issuance of the Order) prohibited the very
activity which led to the pollution at the Site; it expressly
prohibited the “remov[al] of any ore or waste” from the
mine. Order L–208 at 7993. The United States thus
“direct[ed] the workings of . . . a facility[’s] . . . operations
specifically related to pollution.” Bestfoods, 524 U.S. at 66.
Accordingly, the majority’s assertion that “Order L–208
included no requirements as to ‘operations specifically
related to pollution,’” Maj. Op. 15 (quoting Bestfoods,
524 U.S. at 66), is flatly wrong; shutting all operations down
necessarily involved the direction of “polluting activities.”
The Order directed the Lava Cap Gold Mining Corporation
(“LCGMC”) to cease removal of any waste from the mine.
Order L–208 at 7993. Shutting down all operations certainly
exercises direction over the activities of the facility. Indeed,
it is hard to imagine a circumstance where a party could
exercise more authority over a facility’s operations related
to pollution than to completely shut down those operations
as the United States did here, specifically forbidding the
removal of toxic ore waste from the mine.

The majority argues that the United States should not be
held liable, because Lava Cap Gold Mining Corporation
(“LCGMC”) retained authority over “existing pollution
controls.” Maj. Op. 16. To be sure, LCGMC may have
retained some authority over safety and any leaks at the Site.
But that fact does not absolve the United States from
liability, because the United States still directed operations
having to do with the disposal of hazardous waste. Indeed,
regardless of what limited authority LCGMC retained,
operator liability extends to all those who “direct . . .
operations having to do with the leakage or disposal of
24 UNITED STATES V. STERLING CENTRECORP.

hazardous waste.” Bestfoods, 524 U.S. at 66–67 (emphasis
added).

Moreover, it is inconsequential that the authority of the
United States was “general” or “regulatory” in nature. Maj.
Op. 16. Any reliance on the nature of the United States’s
action in determining that it was not an “operator” of the Site
is misplaced, as we have held that the capacity in which the
government acts is irrelevant to determining whether it is an
“operator” under CERCLA. See United States v. Shell Oil,
294 F.3d 1045, 1053 (9th Cir. 2002) (noting that there is no
“distinction between the [government’s] exercise of private
. . . and regulatory powers” in determining whether the
United States is liable under CERCLA (second alteration in
original) (quoting East Bay Mun. Util. Dist. v. United States
Dep’t of Commerce, 142 F.3d 479, 482 (D.C. Cir. 1998))).
Rather, the “relevant . . . question under CERCLA” is simply
“whether [the government’s] activities, however
characterized, are sufficient to impose liability on the
government as an owner, operator, or arranger.” 3 Id.
(alterations in original) (quoting FMC Corp., 29 F.3d at 841–
42). We have thus disposed of any distinction between
regulatory actions and other actions in the context of
CERCLA liability. 4 294 F.3d at 1053 (noting that we align

3
“This is true even if no private party could in fact engage in those
specific activities.” FMC Corp. v. United States Dep’t of Commerce,
29 F.3d 833, 840 (3d Cir. 2002) (in banc) (noting that “the government
can be liable when it engages in regulatory activities extensive enough
to make it an operator of a facility . . . even though no private party could
engage in the regulatory activities at issue”).
4
This language from Shell Oil indicates that we should reexamine
our approach to determining CERCLA operator liability in light of
Bestfoods. Pre-Bestfoods, and in addition to the Long Beach Unified Sch.
5 Dist. v. Dorothy B. Godwin Cal. Living Tr., 32 F.3d 1364, 1367 (9th
 UNITED STATES V. STERLING CENTRECORP. 25

our approach with the Third Circuit’s analysis in FMC
Corp., 29 F.3d at 841–42 and the D.C. Circuit’s analysis in
East Bay Mun. Util. Dist., 142 F.3d at 482). Regardless of
the capacity in which the government acts, it is an operator

Cir. 1994) standard (which is not necessarily at odds with Bestfoods), we
applied an incredibly expansive “authority to control” standard for
CERCLA operator liability. See Kaiser Aluminum & Chem. Corp. v.
Catellus Dev. Corp, 976 F.2d 1338, 1341 (9th Cir. 1992). While
Bestfoods does not require hands-on participation in day-to-day
operations, Bestfoods does make clear that an “operator” must take some
action—“an operator must manage, direct, or conduct operations
specifically related to pollution”—and not merely possess the authority
to do so. 524 U.S. at 66 (emphasis added). Moreover, in light of Shell
Oil Co., 294 F.3d at 1053, Kaiser’s “authority to control” standard would
subject the United States to CERCLA liability as an operator nearly any
time there was a disposal of toxic substances whether it actually acted or
not, merely because it had (as it almost always has in the case of
environmental contamination) the “authority to” step in and control the
substance or facility.

Our decision today does not turn on Kaiser. However, our circuit’s
post-Bestfoods restatement of Kaiser’s “authority to control” standard in
City of Los Angeles v. San Pedro Boat Works, 635 F.3d 440, 451 n.9 (9th
Cir. 2011) creates confusion as district courts seek to apply the correct
standard for determining CERCLA “operator” liability. Particularly
because we restated Kaiser’s standard in dicta—indeed, the issue of
CERCLA operator liability was not at issue in either case, see id. at
443—we should make some effort to clean up these inconsistencies; any
confusion resulting from them falls on our shoulders for failing to
critically analyze how our circuit’s pre-Bestfoods precedent comports
with Bestfoods before summarily restating that case law in dicta. See
Barapind v. Enomoto, 400 F.3d 744, 759 (9th Cir. 2005) (en banc)
(Ryder, J., concurring in the judgment in part and dissenting in part) (per
curiam). Therefore, we should reexamine Kaiser’s “authority to control”
standard to the extent it is inconsistent with Bestfoods, and ensure that
the standard we do articulate comports both with the direction we have
been given by the Supreme Court in Bestfoods and our precedent.
26 UNITED STATES V. STERLING CENTRECORP.

so long as it “directs the workings of, manages, or conducts
the affairs of a facility.” Bestfoods, 524 U.S. at 66.

Put differently, had a private entity exerted control over
the Site coextensive with that exercised by the United States
through the issuance of the Order—completely shutting
down mining and waste disposal operations at the Site—it
would assuredly be considered an “operator” under the
Bestfoods standard. Merely because the Order was issued by
the War Production Board in furtherance of the national
defense during World War II does not protect the United
States from liability. As we have stated in a similar context,
“placing ‘a cost of war on the United States, and thus on
society as a whole, [constitutes] a result which is neither
untoward nor inconsistent with the Policy underlying
CERCLA.’” Cadillac Fairview/California, Inc. v. Dow
Chemical Co., 299 F.3d 1019, 1029 (alteration in original)
(quoting FMC Corp., 29 F.3d at 846). Thus, the United
States cannot escape that same fate merely because it
operated pursuant to its general regulatory authority. See
Shell Oil, 294 F.3d at 1053.

Finally, the majority’s reliance on PPG Industries Inc. v.
United States, 957 F.3d 395 (3d Cir. 2020) is misplaced. See
Maj. Op. 15. In fact, that case actually supports the
proposition that the United States should be held liable here.
In PPG Industries, the polluter was forced to argue that there
was some “nexus” between the government’s activities and
waste disposal activities at the site, because there was “no
evidence that the Government specifically controlled
operations related to pollution.” 957 F.3d at 403. There is
no such attenuated relationship in this case. Indeed, it cannot
be denied that the United States “specifically controlled
operations related to pollution” and thereby involved itself
with the pollution-creating waste dumping. See id. Thus,
 UNITED STATES V. STERLING CENTRECORP. 27

unlike in PPG Industries, the United States exercised direct
control over “operations specifically related to pollution” at
the Site. Bestfoods, 524 U.S. at 66. Under the Bestfoods
standard, the United States is therefore subject to CERCLA
liability as an “operator” of the Site.