Halliburton Energy Services, Inc. v. Nl Industries
| Decision Date | 31 March 2008 |
| Docket Number | Civil Action No. H-06-3504.,Civil Action No. H-05-4160. |
| Citation | 553 F.Supp.2d 733 |
| Parties | HALLIBURTON ENERGY SERVICES, INC., et al., Plaintiffs, v. NL INDUSTRIES, et al., Defendants. TRE Management Company, Plaintiffs, v. Georgia-Pacific Corporation, et al., Defendants. |
| Court | U.S. District Court — Southern District of Texas |
Donald Everett Godwin, Godwin Pappas Langley, Dallas, TX, for Plaintiffs/Defendants.
Duke K. McCall, III, L Misha Preheim, Robert N. Steinwurtzel, Bingham McCutchen LLP, Washington, DC, James Edward Johanns, Jenny Lanell Martinez, Robert Alan York, Godwin Pappas, et. al., Houston, TX, for Plaintiffs.
Joel L. Herz, Law Office of Joel Herz, Tucson, AZ, Russell Hardin, Jr., Rusty Hardin and Associates, J. Douglas Sutter, Kelly Sutter, et. al., Joe W. Redden, Jr., Robert David Daniel, Beck Redden & Secrest LLP, Houston, TX, Samuel E. Ledbetter, McMath Woods PA, Little Rock, AR, for Defendants.
This opinion addresses motions to vacate and to confirm arbitration awards issued under the parties' postdispute arbitration agreement. The awards resolve which of the parties is responsible for paying response and remediation costs incurred under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. § 9607, and the Arkansas Remedial Action Trust Fund Act (RATFA), Ark.Code Ann., 8-7-513. The following pending motions are resolved in this opinion:
1. The motion filed by NL Industries, Inc. ("NL"), Tremont, LLC ("Tremont"), TRE Holding Corporation ("TRE Holding"), and TRE Management Company ("TRE Management") (together, the "Tremont Parties") to confirm the arbitration awards issued on June 29, 2007 and September 10, 2007.1 (Docket Entry No. 172).
2. The motion filed by Halliburton Energy Services, Inc. and DII Industries, LLC (together, "Halliburton") to vacate the arbitration awards issued on June 29, 2007 and September 10, 2007. (Docket Entry No. 176).
This court has carefully considered the motions in light of the pleadings, the motions and briefs, the record, and the applicable law. Mindful of the fact that the arbitrators have "wide latitude," Am. Laser Vision, P.A. v. Laser Vision Inst., L.L.C., 487 F.3d 255, 257 (5th Cir.2007) (per curiam), and the fact that the awards required the arbitrators to wrestle with what they characterized as "arcane issues of contract interpretation and environmental site allocation," this court grants the Tremont Parties' motion to confirm the arbitration awards and denies Halliburton's motion to vacate the arbitration awards.2 The reasons are explained in detail below.
This court's July 2006 Memorandum and Opinion set out the relevant procedural background in detail. As in the January 2007 Memorandum and Order, that background is only summarized here. Briefly, Halliburton filed this suit in 2005 after entering into an Administrative Settlement Agreement in 2000 ("Administrative Settlement") and a Consent Administrative Order in 2003 with the Arkansas Department of Environmental Quality ("ADEQ"). In this suit, Halliburton alleged that it was entitled to recover money it had spent investigating and remediating environmental contamination at a site near the towns of Magnet Cove and Malvern, Arkansas ("the Site"). The Site was used for barite mining from the 1930s to the 1970s by the Baroid Sales Division of National Lead Company and by Magnet Cove Barium Corporation ("Magcobar").3 (Docket Entry No. 176 at 2). According to Halliburton, the Site was also the location of a National Lead barite milling operation. (Id.). Halliburton explains that Magcobar transported its unprocessed ore off-site to Malvern for milling. (Id.). The mining and milling operations on the Site generated contaminated waste. (Id.). The surface mining operations resulted in an open pit that collected water, including acidic runoff generated from the waste. (Id.). According to Halliburton, the mine pit is a lake "approximately 90 acres in surface area and more than 400 feet deep at its deepest point." (Id. at 3).
In 1988, NL entered into a series of transactions under a restructuring plan ("1988 Plan"). Through this plan, NL spun off its petroleum services business and transferred it to a separate entity known as Baroid Corporation ("Old Baroid"). In 1990, pursuant to another restructuring plan ("1990 Plan"), Old Baroid split up the titanium and bentonite business from the Petroleum Services Business, defined as petroleum services operations, including "Petroleum Services Assets" and "Petroleum Services Obligations." Old Baroid retained the titanium and bentonite business, spun off the Petroleum Services Business, and transferred the Petroleum Services Business to a company named New Baroid. Under the 1990 Plan, a subsidiary of Old Baroid ultimately retained the titanium and bentonite business and New Baroid received the Petroleum Services Business. New Baroid is a predecessor of Halliburton. Old Baroid is a predecessor of the Tremont Parties.
Under the 2000 Administrative Settlement with the ADEQ, Halliburton and TRE Management agreed to investigate the Site condition, submit a report to the ADEQ, and complete a feasibility study on ways to remediate the environmental contamination on the Site. In the meantime, Halliburton and TRE Management had to perform "Interim Remedial Measures" under the Administrative Settlement. Under the Consent Administrative Order executed in May 2003, TRE Management Company and Halliburton constructed and paid for a water treatment system to treat and discharge water from the: pit lake.
In April 2005, before this litigation began over responsibility for paying the costs of cleaning up the Site, TRE Management Company and Halliburton entered into a Cost Sharing, Cooperation, and Final Allocation Process Agreement (the "2005 Cost Sharing Agreement"). This 2005 Cost Sharing Agreement included a procedure to allow the parties to cooperate in continuing to fund the response and remediation costs for the Site, "allocating on an interim basis." The Agreement also set out a procedure for the parties to reach a "Final Allocation" of "their and others' respective shares of such past, present, and future costs, expenses, liabilities, settlements, recoveries, or unpaid shares relating to the Site." The Agreement defined "Final Allocation" as a "full, final, and binding apportionment among the Parties to the Agreement," by agreement or by arbitration, of defined categories of costs, including future costs. Under the Agreement, if mediation failed to reach "Final Allocation," the parties were required to participate in binding arbitration under the Commercial Arbitration Rules of the American Arbitration Association and the Federal Arbitration Act. The 2005 Cost Sharing Agreement recognized that there could be both arbitration among the signatories to resolve contribution disputes and contribution litigation involving nonsignatories. The Agreement set out limits on the admissibility in arbitration of any "order, judgment, decree, or decision of any court in any contribution litigation under CERCLA or RATFA involving one or more Parties to this Agreement that allocates to the Parties responsibility, fair share, or liability relating to the Site." Under the Agreement, the result of such contribution litigation
shall be ineffective, invalid, and of no force and effect as between the Parties and shall not be used or admissible as evidence in the Final Allocation Process by any Party or against any Party for any purpose other than establishing the amount of liability that has been finally allocated to non-Parties. All allocation of responsibility, fair share, or liability relating to the Site as between the Parties, and all issues or disputes between the Parties relating to whether a cost or expense is a Shared Cost, the reasonableness of any cost or expense to be allocated in the Final Allocation, and the allocability or collectibility of any cost or expenses under CERCLA or RATFA, shall be determined in the Final Allocation Process pursuant to this Agreement without reference to, or consideration of, any arguments made or conclusions reached in any such contribution litigation.
(Docket Entry No. 221, Ex. D at 10-11). Although the results of litigation could not be used in an arbitration, the results of the arbitration would be admissible in litigation.
In 2005, Halliburton filed this suit against the Tremont Parties as the prior owners and operators of the Site when hazardous substances were released or as successors-in-interest to owners or operators. Halliburton also sued Georgia-Pacific Corporation, which owned property and mineral interests at the Site, and Milwhite Inc., a past owner and operator of the Site. Halliburton asserted cost-recovery and contribution claims under CERCLA, 42 U.S.C. §§ 9607(a) and 9613(f)(3)(B), contribution claims under RATFA, ARK.CODE ANN. §§ 8-7-503 and 520, and a right to recover response and remediation costs under a state common-law unjust enrichment cause of action. Halliburton also sought a declaratory judgment that the defendants were liable for future response and remediation costs at the Site and that Tremont Corporation was obligated to indemnify Halliburton for these costs under the contracts used to restructure the corporate predecessors-in-interest. Georgia-Pacific and Milwhite counterclaimed against Halliburton and crossclaimed against each other and against the co-defendant Tremont Parties, seeking contribution and indemnity.
On December 27, 2005, a few weeks after this lawsuit was filed, TRE Management Company — which was also a party to the 2000 Administrative Settlement Agreement and the 2003 Consent Administrative Order — sued Georgia-Pacific in the federal district court for the Western District...
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