Asarco, LLC v. Union Pac. R.R. Co.

• Decision Date: 08 August 2014
• Docket Number: No. 13–2830.,13–2830.
• Citation: 762 F.3d 744
• Parties: ASARCO, LLC, Plaintiff–Appellant v. UNION PACIFIC RAILROAD COMPANY, a Utah corporation, Defendant–Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

762 F.3d 744

ASARCO, LLC, Plaintiff–Appellant

v.UNION PACIFIC RAILROAD COMPANY, a Utah corporation, Defendant–Appellee.

No. 13–2830.

United States Court of Appeals, Eighth Circuit.

Submitted: May 13, 2014.

Filed: Aug. 8, 2014.

Gregory Evans, argued, Los Angeles, CA (David Alan Blagg, Terry J., Grennan, Omaha, NE, Laura G. Brys, Los Angeles, CA, on the brief), for appellant.

Carolyn McIntosh, argued, Denver, CO (William Maxwell Lamson, Jr., Jason W. Grams, Omaha, NE, Christa Lee Rock, Denver, CO, on the brief), for appellee.

Before RILEY, Chief Judge, BEAM and SMITH, Circuit Judges.

RILEY, Chief Judge.

Two companies with a business relationship dating back to the nineteenth century call upon us to resolve their dispute about environmental liability for a lead refinery and smelter—once among the world's largest—which polluted Omaha, Nebraska, for over a hundred years. The former American Smelting and Refining Company, today known simply as ASARCO, LLC (Asarco), claims the Union Pacific Railroad Company (UP) has contributed too small a share of the clean-up cost. Asarco paid approximately $200 million to settle with the Environmental Protection Agency (EPA), which named lead-contaminated areas of Omaha a “Superfund” site. UP settled with the EPA for $25 million.

Under the complex statutory structure erected by Congress in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA or Act), 42 U.S.C. §§ 9601–9675, settling with the government protects a party from further liability claims. See id. § 9613(f)(2). Despite receiving notice of UP's settlement, Asarco did not object before the district court ¹ issued the consent decree. Asarco waited until after entry of the consent decree and brought this collateral case. According to Asarco, UP breached the two companies' agreement to toll the statute of limitations while “reserv[ing] all [other] rights and defenses.” The district court ² granted UP's motion to dismiss, ruling UP did not breach the agreement and the consent decree protected UP from Asarco's claims. Having duly considered Asarco's assignments of error, we affirm.

I. BACKGROUND

The history of this case is an archetypal tale of industrial boom and environmental bust.

A. The Smelter

About a year after the Golden Spike linked the coasts in 1869, the Omaha Smelting Company began construction on land leased from UP near the eastern terminus of the Transcontinental Railroad. See 1 Omaha: The Gate City and Douglas County Nebraska 226 (Arthur C. Wakeley ed., 1917). Both Omaha and the smelter grew rapidly; within two decades the smelter's initial capital stock of $60,000 increased to $2.5 million, with over 65,000 tons of ore (then worth $14 million ³) smelted in 1890. See Lawrence H. Larsen et al., Upstream Metropolis: An Urban Biography of Omaha & Council Bluffs 118 (2007); Nebraska: A Guide to the Cornhusker State 232 (1939). Control of the smelter passed to the American Smelter and Refining Company in 1889, and by the 1920s it “was reputed to be the nation's largest lead refinery,” “produc[ing refined lead,] copper, gold, and silver,” and employing hundreds of immigrants who “spoke a total of fourteen languages.” Larsen, supra, at 118, 206; see Nebraska, supra, at 232. Amid the Great Depression, the smelter continued to produce 150,000 tons of “desilverized lead” a year, making it “one of the largest smelters in the world.” Nebraska, supra, at 220, 232. In 1958, the smelter still had the largest lead refining capacity in the United States: 180,000 tons per year. See United States v. Am. Smelting & Ref. Co., 182 F.Supp. 834, 851 (S.D.N.Y.1960).

Beneath the smelter's soaring smoke-stacks—one of which in 1939 was “said to be the highest self-supported metal stack in existence,” Nebraska, supra, at 232—lay a darker story. An early twentieth century study of the “chief centers of the [lead] industry,” including Omaha, found the lead poisoning rate for workers in 1912 was “a little over twenty-two for every 100 employed.” Alice Hamilton, Lead Poisoning in American Industry, 1 J. Indus. Hygiene 8, 10 (1919). Approximately sixty years later, we upheld a finding by the Occupational Safety and Health Review Commission “that airborne concentrations of inorganic lead at” the Omaha smelter seriously threatened the lives and health of employees. Am. Smelting & Ref. Co. v. Occ. Safety & Health Review Comm'n, 501 F.2d 504, 506 (8th Cir.1974). The smelter “historically discharged wastewater containing lead and other pollutants directly into the [Missouri] river”—potentially “several thousand pounds of lead and other heavy metals and pollutants ... annually.” Armstrong v. ASARCO, Inc., 138 F.3d 382, 384 & n. 3 (8th Cir.1998). Not until 1994—after lawsuits by citizen plaintiffs and the EPA—did Asarco agree to “limitations on the levels of pollutants [the smelter] was permitted to discharge into the river.” Id. at 384–85.

According to the EPA and the State of Nebraska, lead emitted from the smelter also blew downwind and landed in residential areas of Omaha, contaminating soil. Screening in 1997 and 1998 found approximately 21% of children in the area had elevated blood lead levels—associated with lowered IQ, troubled behavior, impaired hearing, and stunted growth. See Agency for Toxic Substances & Disease Registry, Dep't of Health & Human Servs., Public Health Assessment for Omaha Lead 11, 15 (2005). Asarco closed the smelter in the late 1990s, paying for remediation and donating the land to the City of Omaha to use as a riverside park. Yet approximately 10% of children in the area still had elevated levels of lead between 2000 and 2002. See id. at 23.

B. Superfund Litigation

In 2003, the EPA designated approximately 27 square miles around the former Asarco smelter as a Superfund site. The EPA took enforcement action against Asarco, alleging liability of $400 million for the cost of removing lead from the affected area. Faced with crushing environmental liabilities for “many of the largest, oldest, and most complex Superfund sites in the country, including the two largest,” Asarco filed for bankruptcy in 2005. In re ASARCO LLC, No. 05–21207, 2011 WL 2974957, at *9 (Bankr.S.D.Tex. July 20, 2011). In 2009, the bankruptcy court approved Asarco's approximately $214 million settlement of the EPA's claims related to the Omaha site.

The EPA also named UP as a potentially responsible party. UP owned the smelter site, leasing it to Asarco until the late 1940s when Asarco bought the land. The Act extends liability to any “owner” of “any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located,” 42 U.S.C. §§ 9601(9), 9607(a)(1), with the only time limit on recovery beginning to run once “remedial action” begins, id. § 9613(g)(2)(B). “Liability under the statute is generally strict and subject to very narrow defenses.” Stewman v. Mid–S. Wood Prods. of Mena, Inc., 784 F.Supp. 611, 615 (W.D.Ark.1992) (M.S. Arnold, J.). Once the government proves liability, “all of the defendants are jointly and severally liable, unless a particular defendant can establish that his harm is divisible, a difficult proposition.” Control Data Corp. v. S.C.S.C. Corp., 53 F.3d 930, 934 n. 4 (8th Cir.1995).

UP took the position that peeling lead-based paint—rather than airborne lead from the smelter—was “the main lead source” in the Superfund area. To obtain evidentiary support, UP filed numerous requests for EPA documents under the Freedom of Information Act (FOIA), 5 U.S.C. § 552. UP discovered e-mails indicating some EPA officials were withholding evidence which UP believed could support its position. Learning of this possibility,Asarco sought to intervene in UP's FOIA case in the hope that material hidden by the EPA could provide a basis to void Asarco's settlement with the EPA. Yet Asarco also wanted UP to contribute a share of the $214 million already paid. To facilitate Asarco's intervention in the FOIA case, UP agreed to toll the statute of limitations applicable to any contribution action for “two years after a final judgment is obtained in the FOIA Litigation and any appeals therefrom are exhausted.” Apart from the statute of limitations, the “Tolling Agreement” expressly “reserve[d] all rights and defenses which [Asarco and UP] may have ... to contest or defend any claim or action [by] the other.” Using information obtained by UP, Asarco succeeded in reducing its EPA payment by $15 million.

Meanwhile, UP and the EPA agreed to settle their respective FOIA and CERCLA claims: without admitting fault, UP would pay $25 million. Asarco's counsel received direct notice of the tentative agreement, and notice of the CERCLA consent decree appeared in the Federal Register, seeNotice of Consent Decrees, 76 Fed.Reg. 33,364 (June 8, 2011). Asarco did not comment or object during the thirty-day public comment period, and the district court approved the settlements on August 9, 2011. The resulting consent decree provided UP with “protection from contribution actions or claims” relating to the Superfund site. See42 U.S.C. § 9613(f)(2).

C. This Case

On May 30, 2012, Asarco filed a complaint against UP, alleging breach of contract and seeking contribution. UP moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), asserting the consent decree precluded Asarco's claims. Resisting dismissal, Asarco claimed the tolling agreement preserved the contribution claims “unaltered” throughout the tolling period. According to Asarco, “UP promised not to do anything to ‘alter’ Asarco's Contribution Claim—or Asarco's ability to pursue that claim—for up to two years,” and UP breached that supposed promise by settling with the EPA.

The district court disagreed and granted UP's motion to dismiss. Based on the plain language of the UP consent decree, the district court found “no one can sue [UP] for ‘costs incurred’ in relation to the [Superfund site].” Because...