Montana v. Atlantic Richfield Co.

• Decision Date: 13 May 2003
• Docket Number: No. 3:83-CV-317.,3:83-CV-317.
• Citation: 266 F.Supp.2d 1238
• Parties: State of MONTANA, Plaintiff and Counterclaim Defendant, v. ATLANTIC RICHFIELD COMPANY, Defendant and Counterclaimant.
• Court: U.S. District Court — District of Montana

Page 1238

266 F.Supp.2d 1238

State of MONTANA, Plaintiff and Counterclaim Defendant, v. ATLANTIC RICHFIELD COMPANY, Defendant and Counterclaimant.

No. 3:83-CV-317.

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

May 13, 2003.

BACKGROUND STATEMENT, FINDINGS OF FACT, CONCLUSIONS OF LAW, MEMORANDUM AND ORDER

HADDON, District Judge.

INTRODUCTION

The State of Montana (Montana) asserts claims in this case against Atlantic Richfield Company (ARCO) based on the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), 42 U.S.C. §§ 9601, et seq., and its Montana counterpart the Comprehensive Environmental Cleanup and Responsibility Act (CECRA), Mont. Code Ann. § 75-10-701, et seq., to recover damages for natural resource injuries that occurred in the Clark Fork River Basin as a result of mining and mineral processing by ARCO and its predecessors. ARCO pleaded a number of affirmative defenses and counterclaims in response.

BACKGROUND

This case was commenced in 1983. It was then stayed, upon request of the parties, for approximately five years while Montana finalized its Remedial Investigation and Feasibility Study. The stay was lifted in December of 1989. Discovery and motions practice then ensued for approximately two years until the case was again stayed for settlement negotiations. Motion practice and discovery resumed in October of 1994. Trial commenced in March of 1997.

The evidentiary phase of the trial was divided into five segments: (1) aquatic resources; (2) terrestrial resources; (3) groundwater resources; (4) damages; and (5) counterclaims. The first three trial segments were further divided into two subsegments characterized as: (1) liability; and (2) injury/causation. The liability subsegments focused on ARCO's liability for certain releases of hazardous substances. The injury/causation subsegments focused on the determination and quantification of natural resource injuries alleged by Montana, and the causal connection, or lack thereof, between the alleged injuries and the referenced releases.

The aquatic resources' segment was tried before the Court between March 3, 1997, and June 4, 1997. The terrestrial segment was tried between November 3, 1997, and November 19, 1997. The groundwater segment was tried between January 12, 1998, and January 22, 1998. The Honorable Paul G. Hatfield was the presiding judge.

The parties engaged in extensive settlement negotiations following the trial on the first three segments. The negotiations culminated in the settlement of a number of Montana's natural resource damage (NRD) claims and a number of ARCO's counterclaims. The terms of the settlement were embodied in two consent decrees which, after consideration of public comment, were entered by the Court on April 19, 1999. These consent decrees are referred to as the "Streamside Tailings Operable Unit Consent Decree" and the "State Consent Decree."

Some claims were not resolved by either consent decree. These unresolved claims included Montana's claims for restoration costs at the "Upland Areas." The State Consent Decree set forth a three-step procedure for resolving such claims: (1) the Environmental Protection Agency (EPA) was to issue a Record of Decision (ROD) describing the remedial action it proposed to undertake at the Upland Areas; (2) the parties were to review the ROD and attempt to settle Montana's claims for restoration costs; and (3) claims that failed to settle would be set for trial.

In August of 1999, the Court received notice that the parties were unable to settle Montana's claims for restoration costs at the Upland Areas. A Case Management Plan was then developed by the Court and the parties. The plan contemplated that the Court would first make a determination from the existing record on the liability, causation and injury components of the State's claims for restoration costs. A trial on the damage portion of the claims would follow if ARCO was found to be liable.

Judge Hatfield died in July of 2000 before ruling on the liability, causation and injury issues. The case was then reassigned to Judge Richard F. Cebull as magistrate judge, and later to me. In December of 2001, the parties agreed, by stipulation, that it would be appropriate, upon de novo assessment and consideration of the existing record, for this Court to determine whether ARCO was liable for restoration costs at the Upland Areas.

The trial record has been reviewed. Proposed Findings of Fact and Conclusions of Law, supporting briefs and a joint statement of undisputed facts have been submitted by the parties.

From the record, the Court makes the following:

FINDINGS OF FACT

1. Montana holds certain natural resources located within its boundaries in trust for the benefit of the public.

2. ARCO is a corporation currently organized under the laws of the state of Delaware with its corporate headquarters in California.

3. Montana seeks to recover restoration cost damages for injuries to terrestrial natural resources on approximately 17.8 square miles of land near Anaconda, Montana, known as ML Haggin, Smelter Hill and Stucky Ridge. These three geographic areas are collectively referred to as the "Upland Areas."

4. The Mt. Haggin Area (approximately 4,000 acres) is located southeast of Anaconda. The Smelter Hill Area (approximately 4,600 acres) is located south of Anaconda; and the Stucky Ridge Area (approximately 2,400 acres) is located north of Anaconda.

5. Copper smelters operated continuously in or near Anaconda from 1884 to July 1, 1980. Smelting began with the construction and operation of the Upper "Old Works" in 1884, and later the "Lower Works" in 1888. In 1902, a larger smelter, originally known as the "Washoe Smelter," and later known as the "Anaconda Smelter," went into operation in Anaconda and the Old Works and Lower Works were shut down.

6. The Anaconda Smelter closed on July 1, 1980. It was demolished between 1983 and 1989.

7. The Old Works Smelter and the Anaconda Smelter were owned and operated by ARCO and its predecessors, The Anaconda Company (TAC) and the Anaconda Copper Mining Company (ACMC), between 1895 and July 1, 1980. The Old Works was operated by ACMC from 1895 until it closed in 1902. The Anaconda Smelter was operated by ACMC, TAC and ARCO, successively, from 1903 until July 1,1980.

8. ARCO has succeeded to the liabilities of TAC and ACMC from the date of ACMC's incorporation in June of 1895.

9. The smelters, during operation and particularly prior to 1970, emitted smoke and fumes containing hazardous substances and large volumes of sulfur dioxide gas. The highest emission levels occurred during the period just before, during and shortly after World War I.

10. Smelter emissions injured the terrestrial natural resources in the Upland Areas between 1895 and July 1, 1980. A substantial majority of the injuries occurred in the early 1900's when the smelters operated without Cottrell precipitators or other pollution abatement devices.

11. Some re-releases of hazardous substances occurred in the Upland Areas both before and after December 11, 1980, as winds redeposited hazardous substances originally deposited on the soil via smelter emissions.

12. Montana produced no evidence that natural resources in the Upland Areas suffered new or additional injuries, destruction, or loss as a result of smelter emissions or re-releases of hazardous substances after December 11, 1980.

13. Conversely, ARCO presented evidence that when the Anaconda Smelter stopped operating in July of 1980, the condition of the natural resources in the Upland Areas stabilized and improved.

From the foregoing, the Court enters its:

CONCLUSIONS OF LAW

1. The Court has jurisdiction over the parties and the subject matter of this action under 28 U.S.C. § 1331 and 28 U.S.C. § 1367.

2. Subsection 107(a) of CERCLA provides, in part, that owners and operators of facilities from which there are releases or threatened releases who cause response costs to be incurred, shall be liable for:

(A) all costs of removal or remedial action incurred by the United States Government or a State ...; [and]

. . . .

(C) damages for injury to, destruction of, or loss of natural resources, including the reasonable costs of assessing such injury, destruction, or loss resulting from such a release[.]

42 U.S.C. § 9607(a),(4)(A), (C)(2000).

3. The term "facility" is defined by CERCLA to include "any site or area where a hazardous substance has been deposited, stored, disposed of, or placed ...." 42 U.S.C. § 9601(9)(B)(2000). The Old Works Smelter and the Anaconda Smelter constitute a portion of a "facility" for purposes of CERCLA.

4. The term "release" is defined by CERCLA to mean "any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing into the environment (including the abandonment or discarding of barrels, containers, and other closed receptacles containing any hazardous substance or pollutant or contaminant) ...." 42 U.S.C. § 9601(22)(2000). Releases of hazardous substances occurred at the Old Works Smelter and the Anaconda Smelter while they were owned and operated by ARCO and its predecessors between 1895 and July 1,1980.

5. The term "injury" is defined in the applicable Department of Interior (DOI) regulations as "a measurable adverse change, either long- or shortterm, in the chemical or physical quality or the viability of a natural resource resulting either directly or indirectly from ... [the] release of a hazardous substance...." 43 C.F.R. § 11.14(v)(2002).

6. The term "damages" is defined by CERCLA to mean "damages for injury or loss of natural resources ...." 42 U.S.C. § 9601(6)(2000). DOI regulations define the term "damages" as: "the amount of money sought by the natural resource trustee as compensation for injury, destruction, or loss of natural resources .... "43 C.F.R. § 11.14(1)(2002).

7. A natural resource...