ASARCO LLC v. Atlantic Richfield Company, LLC, 091420 FED9, 18-35934

Docket Nº:18-35934
Opinion Judge:NGUYEN, Circuit Judge:
Party Name:ASARCO LLC, a Delaware corporation, Plaintiff-Appellee, v. Atlantic Richfield Company, LLC, a Delaware corporation, Defendant-Appellant, and British Petroleum, PLC, a United Kingdom Corporation; American Chemet Corporation, a Montana Corporation, Defendants.
Attorney:Shannon Wells Stevenson (argued), Benjamin B. Strawn, and Kellen N. Wittkop, Davis Graham & Stubbs LLP, Denver, Colorado; Elisabeth S. Theodore and Stephen K. Wirth, Arnold & Porter Kaye Scholer LLP, Washington, D.C.; for Defendant-Appellant. Gregory Evans (argued), McGuireWoods LLP, Los Angeles,...
Judge Panel:Before: M. Margaret McKeown, N. Randy Smith, and Jacqueline H. Nguyen, Circuit Judges.
Case Date:September 14, 2020
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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ASARCO LLC, a Delaware corporation, Plaintiff-Appellee,

v.

Atlantic Richfield Company, LLC, a Delaware corporation, Defendant-Appellant,

and

British Petroleum, PLC, a United Kingdom Corporation; American Chemet Corporation, a Montana Corporation, Defendants.

No. 18-35934

United States Court of Appeals, Ninth Circuit

September 14, 2020

Argued and Submitted April 27, 2020 Seattle, Washington

Appeal from the United States District Court for the District of Montana Dana L. Christensen, District Judge, Presiding D.C. No. 6:12-cv-00053-DLC

Shannon Wells Stevenson (argued), Benjamin B. Strawn, and Kellen N. Wittkop, Davis Graham & Stubbs LLP, Denver, Colorado; Elisabeth S. Theodore and Stephen K. Wirth, Arnold & Porter Kaye Scholer LLP, Washington, D.C.; for Defendant-Appellant.

Gregory Evans (argued), McGuireWoods LLP, Los Angeles, California; Benjamin L. Hatch, McGuireWoods LLP, Washington, D.C.; Kris A. McLean, Kris A. McLean Law Firm PLLC, Missoula, Montana; Rachel H. Parkin, Milodragovich Dale & Steinbrenner P.C., Missoula, Montana; for Plaintiff-Appellee.

Before: M. Margaret McKeown, N. Randy Smith, and Jacqueline H. Nguyen, Circuit Judges.

SUMMARY[*]

Environmental Law

The panel affirmed in part and vacated in part the district court's judgment, after a bench trial, in favor of the plaintiff in a contribution action under the Comprehensive Environmental Response, Compensation, and Liability Act.

Plaintiff ASARCO LLC entered into a consent decree with the Environmental Protection Agency to clean up environmental contamination at several sites, including a Superfund Site in East Helena, Montana. Asarco, former operator of a lead smelting facility, then brought a CERCLA contribution action against Atlantic Richfield Co., successor in interest to the operator of a zinc fuming plant The district court found that Asarco had incurred $111.4 million in necessary response costs for the cleanup of the Site and that Atlantic Richfield was responsible for 25% of that sum.

Vacating and remanding in part, the panel held that the district court erred in its determination of the necessary response costs incurred by Asarco. Specifically, the district court erred when it counted the full settlement amount, including about $50 million of funds that had not been, and might never be, spent on the Site cleanup, as response costs subject to contribution at this stage of the Site cleanup. The panel remanded for further consideration of what response costs were sufficiently concrete and non-speculative such that they would be eligible for contribution under CERCLA.

Affirming in part, the panel held that the district court did not err in allocating responsibility for 25% of the response costs to Atlantic Richfield. The panel held that the district court property exercised its discretion in its consideration of appropriate equitable factors and did not clearly err in its factual findings supporting its allocation decision.

OPINION

NGUYEN, Circuit Judge:

In June 2009, ASARCO LLC ("Asarco") agreed to settle with the government and enter into a consent decree to clean up environmental contamination at several sites, including a Superfund Site in East Helena, Montana (the "Site"). Asarco then brought a contribution action under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. §§ 9601-9675, against Atlantic Richfield Company, LLC ("Atlantic Richfield"). Following a bench trial, the district court entered judgment in favor of Asarco, finding that Asarco had incurred $111.4 million in necessary response costs for the cleanup of the Site and that Atlantic Richfield was responsible for twenty-five percent of that sum. Atlantic Richfield appealed. We have jurisdiction pursuant to 28 U.S.C. § 1291. We hold that the district court erred in its determination of the necessary response costs incurred by Asarco, but the court did not err in allocating twenty-five percent liability to Atlantic Richfield. We therefore vacate and remand in part, and affirm in part.

I. BACKGROUND

A. Operations at the Site

Asarco and its predecessors owned and operated a lead smelting facility at the Site from 1888 to 2001. Asarco's lead smelting facility was the largest operation at the Site. This operation recovered lead and other metals by smelting a variety of foreign and domestic concentrates, ores, fluxes, and other non-ferrous, metalbearing materials and byproducts. Those materials contained arsenic concentrations as high as 190, 000 parts per million ("ppm"). The smelting operation produced slag as a waste product, which contained small residual quantities of metals and arsenic. It is undisputed that Asarco "released significant amounts of arsenic into the environment" from its smelting facility.

Atlantic Richfield is the successor in interest to Anaconda, which leased a portion of the Site from Asarco to construct and operate a zinc fuming plant. Using a blast furnace fueled with coal, Anaconda reprocessed slag that it purchased from Asarco to recover zinc. Anaconda used and produced several arsenic-bearing materials in its fuming operation, albeit with a lower arsenic concentration than Asarco's primary materials. Anaconda operated the zinc fuming plant from 1927 to 1972, at which point it sold the plant to Asarco. Asarco then operated the zinc fuming plant for another decade.

B. EPA Involvement and Remediation

In 1984, the Environmental Protection Agency ("EPA") added the Site to the CERCLA National Priorities List, targeting it for environmental remediation. The primary environmental concern at the Site was arsenic contamination of the groundwater. In the years that followed, Asarco entered into a series of agreements with the EPA to begin the process of remediation.

In 1990, Asarco and the EPA finalized a settlement agreement and consent decree in CERCLA litigation concerning the contamination of the process ponds at the Site. Pursuant to the consent decree, Asarco agreed to undertake a cleanup of the process ponds, which it substantially completed by 1997.

In 1998, Asarco and the EPA entered into another settlement agreement and consent decree, this time resolving claims brought by the EPA under the Resource Conservation and Recovery Act and the Clean Water Act. The settlement did not raise any claims under CERCLA.

On August 9, 2005, Asarco filed a Chapter 11 bankruptcy petition. In connection with the bankruptcy proceedings, the United States, the State of Montana, and the State of Montana Department of Environmental Quality all filed proofs of claim for Asarco's projected liability under CERCLA. Asarco, the United States, and the State of Montana reached two complementary settlement agreements and consent decrees in February and June 2009, resolving Asarco's outstanding environmental liabilities at several Montana sites, including the Site at issue in this case.

The June 2009 consent decree established a custodial trust for the affected sites, and the Montana Environmental Trust Group ("METG") was appointed as the custodial trustee for the East Helena Site. The June 2009 consent decree also designated the EPA as the lead agency for the Site, placing it in charge of selecting, approving, and authorizing all work performed and funds expended by METG. Pursuant to the June 2009 consent decree, Asarco paid approximately $111.4 million1 for cleanup of the East Helena Site-accounting for comprehensive damage done to the Site by all responsible parties. That sum included: (a) $99.294 million into the East Helena Custodial Trust Cleanup Account for a groundwater remedy;2 (b) $6, 403, 743 toward the establishment of the Custodial Trust and the funding of the Custodial Administrative Account to be used for trust administration expenses; (c) $706, 000 to the U.S. Department of the Interior for natural resource restoration and future oversight costs for the Site; and (d) $5 million to the State of Montana for compensatory natural resource damages at the Site.

METG has begun its remediation work at the Site. So far, it has fully implemented three interim measures to curb the spread of contaminants and further environmental degradation at the Site. METG also has implemented institutional controls for the Site and the surrounding areas, designed to prevent property owners from using their domestic water wells to avoid contact with contaminated groundwater. METG proposes one additional future project: capping the portion of the slag pile at the Site that consists of unfumed slag. METG has not instated and does not plan to install a pump-and-treat system.

As of the most recent accounting available, METG had spent a little less than half of the trust funds at its disposal, leaving it with approximately $50 million for further remediation efforts. Atlantic Richfield's expert estimated the ongoing costs for operations and maintenance at $9.2 million, and METG estimated the cost of covering the unfumed slag at $3.7 million. Adding those sums to the dollar amount already expended by METG, the total cleanup cost for the Site would approximate $61.4 million. Asarco contends that Atlantic Richfield's expert vastly understates how costly the cleanup would be. Asarco's expert opined that METG's proposed remedies would be insufficient to address the groundwater contamination and that more substantial remediation work would be necessary.

C. Procedural History

In 2012, Asarco brought this contribution action against Atlantic Richfield under CERCLA §§ 107 and 113. The district court granted summary judgment in favor of Atlantic Richfield, finding the action barred by the statute of limitations. Asarco appealed, and we concluded that Asarco's contribution claim was, in fact, timely. See...

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