Halliburton Energy Services, Inc. v. Nl Industries
| Decision Date | 18 August 2009 |
| Docket Number | Civil Action No. H-06-3504.,Civil Action No. H-05-4160. |
| 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, Bruce W. Bowman, Jr., James E. Johanns, Jenny Lanell Martinez, Robert Alan York, Godwin Ronquillo PC, Dallas, 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, for Defendants.
This opinion addresses motions for partial summary judgment filed by Georgia-Pacific Corporation ("Georgia-Pacific") and Milwhite Inc. ("Milwhite"). Georgia-Pacific and Milwhite assert that, as a matter of law, they are not liable to Halliburton Energy Services, Inc. ("HESI") and DII Industries, LLC ("DII") (together, "Halliburton"), or to each other, under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA),1 or under the Arkansas Remedial Action Trust Fund Act (RATFA).2 The parties filed lengthy briefs and a large record, and this court heard oral argument on the motions.
Based on the pleadings, the motions and briefs, the record, the arguments, and the applicable law, this court rules as follows:
• Georgia-Pacific's motion for partial summary judgment, (Docket Entry No. 189), is denied.
• Milwhite's motion for partial summary judgment, (Docket Entry No. 228), is denied.
• Halliburton's related motion for leave to file supplemental evidence in opposition to Georgia-Pacific's motion for summary judgment, (Docket Entry No. 332), is also denied.
• Milwhite's motion to supplement its summary judgment motion, (Docket Entry No. 363), is granted.
The reasons for these rulings are explained below. A scheduling conference is set for September 18, 2009, at 10:00 a.m., to set deadlines for the work needed to resolve this case.
This court's July 2006 Memorandum and Opinion set out the relevant background in detail. Only a summary is provided here. Briefly, Halliburton filed this suit in 2005 against the Tremont Parties—NL Industries, Inc. ("NL"),3 Tremont, LLC ("Tremont"), TRE Holding Corporation ("TRE Holding"), and TRE Management Company ("TRE Management")—and against M-I, L.L.C. ("M-I"), Milwhite, and Georgia-Pacific. Halliburton filed this suit after entering into an Administrative Settlement Agreement in 2000 ("Administrative Settlement") and a Consent Administrative Order in 2003 ("Consent Order") with the Arkansas Department of Environmental Quality ("ADEQ"). Halliburton seeks to recover the money it spent investigating and remediating environmental contamination near the towns of Magnet Cove and Malvern, Arkansas (the "Site"). The Site consists of approximately 600 acres located north of Magnet Cove, Arkansas, situated in Sections 10, 11, 14, and 15 of Township 3 South, Range 17 West in Hot Spring County.4
The Site was used for barite ore mining and milling by the Baroid Sales Division of NL and by Magnet Cove Barium Corporation ("Magcobar").5 (See Docket Entry No. 189, Ex. 2 at 1; id., Ex. 3 at ES-1). According to the Consent Order, "[n]o mining activity has been conducted at the Site since 1977." (Id., Ex. 2 at 1). A Site Investigation Report prepared for Halliburton and TRE Management states that "[a]ll mining or milling activity at the Site had ceased by 1982." (Docket Entry No. 189, Ex. 3 at ES-1). The mining produced a large open pit, (id., Ex. 2 at 1), as well as "a number of piles of mining spoils of unknown acreage . . .," (id., Ex. 1 at 1). According to the Consent Order, "[s]ubsequent to the cessation of mining activities at the Site, the mine pit began to fill with water." (Id., Ex. 2 at 1). The pit "now forms a lake (`Pit Lake') that is approximately 90 acres in surface area and more than 400 feet deep at the deepest point." (Id., Ex. 2 at 1). Some of the water in the Pit Lake "may pass over or through certain of the mining spoil piles." (Id., Ex. 1 at 2). "The water in the Pit Lake has a low pH and contains dissolved metals and minerals." (Docket Entry No. 189, Ex. 2 at 1). The Consent Order states that without remedial action, "the Pit Lake will overflow in the near future and release untreated water into Chamberlain Creek and subsequently into other downstream waters to which Chamberlain Creek is a tributary." (Id., Ex. 2 at 1).
In 1988, NL entered into a restructuring plan (the "1988 Plan"). The 1988 Plan stated that NL was a holding company that conducted it operations through its wholly owned subsidiaries NL Chemicals, Inc. ("NLC") and Baroid Energy Services, Inc. ("Baroid Energy Services"). NLC owned and operated NL's titanium and dioxide pigments and specialty chemicals businesses, principally through subsidiaries. Baroid Energy Services owned and operated NL's petroleum services business, principally through subsidiaries. Through the 1988 Plan and related agreements, NL spun off Baroid Energy Services into a separate publicly traded company, first called NL Petroleum Services, Inc. ("NLPS") and later called Baroid Corporation ("Old Baroid"). Through a related Amended and Restated Formation Agreement, NL agreed to transfer to Old Baroid all assets related to the petroleum services business or to Titanium Metals Corporation of America ("TMCA"), including the outstanding shares of TMCA capital stock and the subsidiaries engaged in NL's petroleum services business.
Another restructuring followed in 1990. Under the 1990 Plan, Old Baroid split its titanium and bentonite business from its "Petroleum Services Business." The 1990 Plan stated that "[NL] has heretofore indirectly owned and operated its petroleum services operations (the `Petroleum Services Business') principally through its subsidiaries . . . ." Under the 1990 Plan, Old Baroid agreed to assign to a new entity called New Baroid Corporation ("New Baroid") its properties and assets attributable to its Petroleum Services Business, defined as the "Petroleum Services Assets," and its properties and assets attributable to its bentonite mining operations (the "Bentonite Business"), defined as the "Bentonite Assets." New Baroid agreed to assume the liabilities and obligations of Old Baroid arising out of or attributable to the past, present, or future ownership or operations of the Petroleum Services Business, defined as "Petroleum Services Obligations." Through a series of transactions, the Bentonite Business was transferred back to Old Baroid. Ultimately, Old Baroid retained both its titanium metals operations, defined as the "Titanium Business," and its Bentonite Business. New Baroid retained 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, HESI, TRE Management, and M-I agreed to investigate the Site condition, submit a report to the ADEQ, and do a feasibility study on ways to remediate the environmental contamination. (See Docket Entry No. 189, Ex. 1). In the meantime, HESI, TRE Management, and M-I had to perform "Interim Remedial Measures" under the Administrative Settlement. (Id., Ex. 1 at 2-4). Under the May 2003 Consent Order, TRE Management and HESI constructed and paid for a water-treatment system for the Pit Lake. (See id., Ex. 2 at 1-2).
In April 2005, TRE Management and HESI entered into a Cost Sharing, Cooperation and Final Allocation Process Agreement (the "2005 Cost Sharing Agreement"). (Id., Ex. 6). This 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." (Id., Ex. 6 at 1-2, 13-14). The 2005 Cost Sharing 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 . . . ." (Id., Ex. 6 at 2, 6-9). The 2005 Cost Sharing 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. (Docket Entry No. 189, Ex. 6 at 6). Under the 2005 Cost Sharing Agreement, if mediation did not result in "Final Allocation," the parties would participate in binding arbitration under the Commercial Arbitration Rules of the American Arbitration Association and the Federal Arbitration Act. (Id., Ex. 6 at 7).
The 2005 Cost Sharing Agreement recognized that there could be both arbitration among the signatories to the 2005 Cost Sharing Agreement and litigation with nonsignatories to resolve contribution disputes. The 2005 Cost Sharing 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 . . . ." (Id., Ex. 6 at 10). 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...
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