Asarco LLC v. Atl. Richfield Co.

• Decision Date: 26 June 2018
• Docket Number: CV 12–53–H–DLC
• Citation: 353 F.Supp.3d 916
• Parties: ASARCO LLC, a Delaware Corporation, Plaintiff, v. ATLANTIC RICHFIELD COMPANY, a Delaware Corporation, Defendant.
• Court: U.S. District Court — District of Montana

353 F.Supp.3d 916

ASARCO LLC, a Delaware Corporation, Plaintiff,

v.ATLANTIC RICHFIELD COMPANY, a Delaware Corporation, Defendant.

CV 12–53–H–DLC

United States District Court, D. Montana, Helena Division.

Signed June 26, 2018

Alicia C. O'Brien, Gregory Evans, Keola Whittaker, McGuirewoods LLP, Laura G. Brys, Integer Law Corporation, Los Angeles, CA, Kris McLean, Kris A. McLean Law Firm, PLLC, Florence, MT, Rachel H. Parkin, Missoula, MT, for Plaintiff.

Jason T. Hungerford, Norton Rose Fulbright LLP, London, EN, Benjamin B. Strawn, Kenzo Kawanabe, William J. Duffy, Elizabeth H. Temkin, Pro Hac Vice, Davis Graham & Stubbs, LLP, Denver, CO, Mary Cile Glover Rogers, Randy J. Cox, Randy J. Tanner, Boone Karlberg, P.C., Missoula, MT, for Defendant.

FINDINGS OF FACT, CONCLUSIONS OF LAW AND JUDGMENT

Dana L. Christensen, Chief Judge

INTRODUCTION

This is a civil action for contribution brought by PlaintiffASARCO LLC("Asarco") pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended("CERCLA"), 42 U.S.C. § 9613, against DefendantAtlantic Richfield Company("Atlantic Richfield" or "ARCO") for costs and damages incurred by Asarco at a location in East Helena Montana, known as the East Helena Site, a National Priorities List or "Superfund" site ("East Helena Site" or "Site").The parties are both citizens of the State of Delaware.This Court has subject matter jurisdiction based upon the existence of a federal question, 28 U.S.C. § 1331.Personal jurisdiction is not contested.Venue is proper in this Court as the events occurred in East Helena, Montana.D. Mont. L.R. 1.2(c)(4), 3.2(b).

The Court held a bench trial from May 29, 2018 to June 7, 2018.Asarco was represented by Kris McLean, Gregory Evans, and Rachel H. Parkin.Atlantic Richfield was represented by Randy J. Cox, Kenzo Kawanabe, and Benjamin B. Strawn.Approximately 160 exhibits were admitted and the subject of testimony by 12 witnesses, including 3 expert witnesses.¹Having carefully reviewed the evidence, the applicable law, and the testimony and arguments of the parties as presented at trial and in their written submissions, the Court makes the following findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52.

FINDINGS OF FACT

I.THE PARTIES AND HISTORICAL OPERATIONS AT THE EAST HELENA SITE

1.Plaintiff Asarco is a limited liability company organized under the laws of the State of Delaware.

2.Asarco is the successor in interest to the American Smelting and Refining Company.Asarco is the resulting corporate entity that emerged from the Chapter 11 bankruptcy reorganization of the American Smelting and Refining Company in 2009.

3.Asarco and its predecessors owned a lead smelting facility at the Site, which was in operation from approximately 1888 until 2001.Asarco brought various ores, concentrates, and other materials to the site for smelting, which contained as much as 19% arsenic (190,000 parts per million or "ppm").It is undisputed by Asarco that its lead smelting facility was the largest operation at the site, and that its operations caused significant groundwater contamination.Asarco continued to own and manage the Site until it emerged from bankruptcy in 2009.

4.Defendant Atlantic Richfield is a Delaware corporation.Atlantic Richfield is the successor-in-interest to Anaconda, formerly named Anaconda Copper Mining Company.Atlantic Richfield was also referred to as ARCO throughout the proceedings in this case.

5.On March 1, 1927, Asarco and Anaconda entered into an Option Agreement whereby Anaconda agreed to purchase blast furnace slag produced by Asarco's lead smelting operation, which Anaconda intended to process at the Site for the recovery of zinc fume.

6.On December 20, 1927, Asarco and Anaconda entered into a Lease Agreement whereby Anaconda leased a tract of land at the Site for the purposes of constructing and operating a zinc fuming plant for the recovery of zinc from the slag it purchased from Asarco.

7.Pursuant to these two Agreements, Anaconda constructed and operated a zinc fuming plant on land leased from Asarco at the site for 45 years, from 1927 to 1972.Anaconda's zinc fuming operation was directly adjacent to Asarco's lead smelting operation.

8.Anaconda had two sources of slag at the site.One source was molten slag which Anaconda conveyed from Asarco's lead smelter to its zinc fuming facility.The second source was hardened, cold slag stockpiled on the Site which Anaconda mined and transported to its zinc fuming facility.Both sources of slag were then fumed by Anaconda in its facility for the purposes of recovery and sale of zinc.Anaconda placed this molten and cold slag into its zinc fuming blast furnace, which heated the slag to approximately 2,000 degrees Fahrenheit, resulting in zinc fume.The molten and mined cold slag which was transported, purchased and utilized by Anaconda contained arsenic.

9.Anaconda used coal to fuel the blast furnace.Coal contains 0.0006% (6 ppm) arsenic.The coal was delivered to the facility by railcar.The coal arrived in relatively small pieces and first needed to be dried before it was used in the furnace.This process was accomplished through the use of a coal or kiln dryer.The kiln dryer utilized a horizontal turning heater that served to drive off the moisture in the coal.The dried coal was then passed from the kiln dryer to a pulverizer, which involved a milling process that reduced the coal into fine pieces so that it could be conveyed by high pressure air to the blast furnace.

10.As a protective measure, the blast furnace was completely surrounded with water jackets.Cooling water was pumped through the water jackets under pressure to route the water around the furnace.In the furnace, coal and air were injected into the molten slag material, and as that oxygen made contact with the zinc, it created zinc oxide dust, which was then conveyed through a series of cooling flues into a large building referred to as the bag house.

11.Once in the bag house, the zinc oxide dust was collected on a row of large woolen bags.The remaining air and particulates which were not collected on the woolen bags were then released through vents in the bag house into the atmosphere outside the bag house.The woolen bags would be shaken to dislodge the material into a series of augers, which would then convey the white zinc oxide material to a series of other augers and eventually into open-top railcars, and later to close-top railcars.

12.Anaconda's zinc fuming plant operated 24 hours a day, 7 days a week, 355 days per year.

13.Anaconda sold the zinc fuming operation to Asarco in 1972.Asarco then operated the zinc fuming plant for 10 more years, until 1982, at which time it ceased operations.

14.Two other entities operated at the Site.American Chemet Corporation("ACC"), at various points in time, conducted operations at the Site, including a zinc oxide plant and a zinc fuming process, and produced a number of products, including roasted zinc dross, talc and copper oxides.Burlington Northern Santa Fe ("BNSF") operated railway lines on and near the Site.BNSF and its predecessors transported ores and other feed materials from mines and other facilities to Asarco's lead smelter beginning in 1888.

II.THE SITE AND CLEANUP EFFORT

15.The Site is located in Lewis and Clark County in the State of Montana.The Site is south of the City of East Helena, and separated by US Highway 12.The majority of the Site is at a higher elevation than the City of East Helena.Prickly Pear Creek is a naturally occurring stream that originates at a higher elevation south of the Site, and travels in a northerly direction along the eastern and northern boundaries of the Site, under US Highway 12, through a portion of the City of East Helena, and ultimately into Lake Helena.

16.In 1984, EPA added the Site to the National Priorities List of sites under CERCLA that require environmental remediation pursuant to federal law.

17.The groundwater underneath the Site is contaminated with arsenic and selenium.

Arsenic is the primary contaminant of concern.Although passing mention of selenium was made during the course of the trial, neither party offered any testimony, expert or otherwise, or evidence regarding the presence or absence of selenium in the groundwater, the source or sources of any selenium contamination, what costs are associated with the selenium contamination, or who should bear responsibility for any such costs.Thus, the focus of this order is the same as the focus at trial, arsenic contamination in the groundwater.

18.Atlantic Richfield does not dispute that Anaconda's operations may have caused some contamination at the site, but it does dispute that Anaconda's operations are the source of the arsenic found in the polluted groundwater under the Site that is the subject of the cleanup.In fact, as will be explained later in these findings of fact, Anaconda and its successor, Atlantic Richfield, have historically been consistent and steadfast in denying any contribution of arsenic to the groundwater from its operations at the Site.In contrast, Asarco has never denied that its operations at the Site contributed to the presence of arsenic in the groundwater, which is evidenced by the forthcoming approach it has taken with the State of Montana and the Environmental Protection Agency during the cleanup process.Thus, based on these diametrically opposed positions, it is no surprise that the focus of the cleanup effort has been on the Site activities of Asarco, and not Anaconda/Atlantic Richfield.

19.Asarco's acceptance of responsibility at the Site was manifested through three CERCLA consent decrees and one Resource Conservation and Recovery Act ("RCRA") consent decree, which are described in more detail below.

A.The 1990 CERCLA Consent Decree

20.In 1990, the district court approved and entered a Settlement and Consent Decree between Asarco and EPA...