Appeal from the United States District Court for the District of Montana. D.C. No. CV-92-00036-PGH. D.C. No. CV-91-00002-PGH. Paul G. Hatfield, District Judge, Presiding.
Before: James R. Browning, Eugene A. Wright, and Thomas G. Nelson, Circuit Judges.
A group of water users along the Clark Fork River in southeastern Montana*fn1 appeal the dismissal without prejudice of their claim under Montana law against Atlantic Richfield Company ("ARCO") for compensatory damages for diversion of water from the River. ARCO cross-appeals because the dismissal was without prejudice. We reverse the dismissal and order the district court to remand the case to state court.
ARCO's corporate predecessor discharged mining wastes into the Clark Fork River for many years. The United States Environmental Protection Agency ("EPA") ordered ARCO to clean up the resulting contamination pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq. To implement the cleanup, the EPA ordered ARCO to divert the water into tailing ponds where the waste could settle to the bottom, allowing cleaner water to flow back into the River. The order specified that ARCO was not to cause any injury to vested water rights, and that the order did not alter any obligation ARCO might have to pay for use of the water.*fn2
Plaintiffs contend the diversion diminished the amount of water available to downstream users. They filed suit in state court alleging ARCO illegally and negligently appropriated water from the River in derogation of their senior water rights, and seeking compensatory damages for crop loss, lost profits, and property devaluation. West Side also sought an injunction.*fn3 ARCO removed to federal court and moved to dismiss.
The district court held plaintiffs' claim against ARCO for damages constituted a claim against the United States for inverse condemnation over which the Court of Federal Claims had exclusive jurisdiction.*fn4 Alternatively, the district court held that, to the extent plaintiffs alleged ARCO had violated the EPA's order by injuring plaintiffs' water rights, plaintiffs' claim constituted a "challenge" to the cleanup and was therefore barred by CERCLA's "timing of review" provision, 42 U.S.C. § 9613(h).
We conclude from our examination of the complaint that plaintiffs do not assert a claim for inverse condemnation, nor a "challenge" to the cleanup effort. Rather, plaintiffs seek to recover damages under Montana law for violation of their water rights, a claim over which the district court lacks jurisdiction.
Plaintiffs do not allege a takings claim. They expressly allege a cause of action based purely on state law. Even if "the facts stated also [might] have sustained a [takings] claim . . . had [the plaintiffs] elected that remedy, . . . [they] did not do so, and [they] cannot be compelled to do so." Koratron Co. v. Deering Milliken, Inc., 418 F.2d 1314, 1317-18 (9th Cir. 1969).*fn5 Contrary to the district court's assumption, the fact that plaintiffs might have a takings claim against the United States for diversion of water by ARCO in conformity with the terms of the EPA's order would not in itself preclude plaintiffs from having a state law claim against ARCO for diversion other than in conformity with the EPA's order.*fn6 Cf. Myers v. United States, 323 F.2d 580, 583 (9th Cir. 1963).
Plaintiffs' damage claim does not "challenge" the CERCLA cleanup plan and is thus unaffected by CERCLA's provision limiting such challenges. 42 U.S.C. § 9613(h). Although determination of whether ARCO's diversions were "wrongful," Tucker, 250 P. at 15, may require examination of the EPA's orders,*fn7 resolution of the damage claim would not involve altering the terms of the cleanup order. If the plaintiffs prevail, the remedy would be financial compensation for lost crops and lost profits. Id. at 18. Such a remedy would not interfere with ARCO's implementation of the cleanup.*fn8 Cf. McClellan Ecological Seepage Situation v. Perry, 47 F.3d 325, 331 (9th Cir. 1995), petition for cert. filed, 63 U.S.L.W. 3819 (U.S. May 1, 1995) (No. 94-1807).
Because plaintiffs' damage claim is based entirely on state law, the district court lacks jurisdiction unless it has jurisdiction because of West Side's claim for injunctive relief. Although the district court dismissed this claim, and West Side Ditch does not appeal that dismissal, we consider all of the claims asserted in the complaint to determine whether the district court has jurisdiction. Harrell v. 20th Century Ins. Co., 934 F.2d 203, 205 (9th Cir. 1991). We conclude that the district court does not have jurisdiction over West Side's claim for injunctive relief because that claim constitutes a "challenge" to the CERCLA cleanup effort over which the district court would not have jurisdiction until the cleanup was completed. 42 U.S.C. § 9613(h); see McClellan, 47 F.3d at 328-30.
Because plaintiffs' claims are based solely on state law, and inclusion of the Montana Department of Fish, Wildlife, and Parks as a defendant destroys diversity, 28 U.S.C. § ...