U.S. v. W.R. Grace & Co.-Conn.
| Decision Date | 19 December 2002 |
| Docket Number | No. CV 01-72-M-DWM.,CV 01-72-M-DWM. |
| Citation | 280 F.Supp.2d 1135 |
| Court | U.S. District Court — District of Montana |
| Parties | UNITED STATES of America, Plaintiff, v. W.R. GRACE & CO.-CONN. and Kootenai Development Corporation, Defendants. |
Sherry S. Matteucci, Victoria L. Francis, Office of U.S. Attorney, Billings, MT, Matthew D. Cohn, Andrea Madigan, David F. Askman, James D. Freeman, Heidi Kukis, Mark C. Elmer, U.S. Dept. of Justice, Denver, CO, John C. Cruden, U.S. Environmental Enforcement Section, Thomas Sansonetti, U.S. Dept. of Justice, Washington, DC, for United States.
Kenneth W. Lund, John D. McCarthy, Linnea Brown, Holme, Roberts & Owen, Denver, CO, Gary L. Graham, Dean A. Hoistad, David C, Berkoff, Terry J. MacDonald, Garlington, Lohn & Robinson, PLLP, Missoula, MT, for Defendants.
In the late 1800s, gold miners discovered a significant body of vermiculite ore in an area located in the mountains seven miles northeast of Libby, Montana. One of the minerals found in the vermiculite deposits is tremolite, a form of asbestos in the amphibole family. Around 1939, the Zonolite Company (originally known as Universal Zonolite Insulation Company) was formed to mine and process vermiculite from the Libby ore deposit into insulating materials and other products. Under an Agreement and Plan of Reorganization dated January 17, 1963, between W.R. Grace & Co., a Connecticut corporation and Zonolite Company ("Zonolite Agreement"), W.R. Grace & Co. acquired "substantially all of the properties and assets of Zonolite" and agreed to
assume and agree in due course to pay and discharge all debts and liabilities of Zonolite existing on the Closing, whether absolute, contingent or otherwise, and whether or not set forth on, reserved against or reflected in Zonolite's Balance Sheet as of December 31, 1962 . . . .
In 1988, W.R. Grace & Co. changed its name to W.R. Grace & Co.-Conn. as part of a complex corporate reorganization, and became a subsidiary of a newly-created New York corporation named W.R. Grace & Co. ("Grace").1 Grace continued commercial mining and processing operations around Libby until about 1990. From 1963 to 1990, asbestos fibers were emitted from the mill at the vermiculite mine. At various times between 1963 and 1990, Grace gave away vermiculite concentrate and/or expanded vermiculite to residents of Libby.
In the mid-1990s, Grace sold several of the properties associated with its former vermiculite operations around Libby. In separate transactions in 1994, Defendant Kootenai Development Corporation ("KDC") purchased approximately 3,600 acres of mountainous land that includes the former vermiculite mine (the "Mine Site") and an approximately 20-acre parcel known as the "Kootenai Flyway" located between Highway 37 and the Kootenai River, part of a former vermiculite processing facility known as the "Screening Plant." In 2000, KDC acquired an approximately 42-acre parcel, known as the "Kootenai Bluffs," situated on the bank of the Kootenai River, also formerly part of the Screening Plant. KDC owns the Mine Site, Kootenai Bluffs and Kootenai Flyway. A portion of the former Screening Plant is owned by Mel and Lerah Parker who, beginning around 1994, used the property for commercial operations and their personal residence.2
In November 1999, the EPA began a series of investigations around Libby. In spring 2000, the EPA determined that a removal action was necessary to address the releases or threatened releases of asbestos at the Screening Plant and another former vermiculite processing facility in Libby know as the "Export Plant." On May 23, 2000, the EPA issued its original Action Memorandum in which it approved a removal action for the Export Plant and the Screening Plant. The original Action Memorandum also approved an exemption from the $2 million/12-month statutory limits on removal actions.
On July 20, 2001, the EPA issued an Action Memorandum Amendment in which it modified the scope of the removal action to include several additional properties and approved an increase in the cost ceiling above $6 million to a total of $20,976,000. Among the properties added were the Brownlee and Seifkie residences, Plummer Elementary School, Libby Middle School, Libby High School, Rainy Creek Road, and similarly situated properties.
On May 2, 2002, the EPA issued a second Action Memorandum Amendment which again expanded the scope of the removal action and approved a cost ceiling increase to $55,635,000. This amendment resulted from "newly identified exposure pathways" and approved the removal of vermiculite insulation from businesses and residences. This approval was based in part on "the highly unusual facts indicating that homes in Libby contain insulation that consists of the asbestos-containing vermiculite mined at Libby that was not inspected, packaged, labeled, warranted, regulated or sold as a commercial product."
The United States filed this action seeking costs it incurred at the Libby Asbestos Site through December 31, 2001, in the amount of $55,166,026.56; prejudgment interest that has accrued since May 23, 2000; and a declaratory judgment on the liability of Grace and KDC for response costs or damages that will be binding in any subsequent action or actions to recover further response costs or damages.3
In general, Defendants maintain that the EPA's response actions and the costs incurred are inconsistent with the National Contingency Plan ("NCP"), 40 C.F.R. Part 300; the EPA has not accurately accounted for its costs as required by 40 C.F.R. § 300.160; the EPA's response actions included responses to a release or threatened release of "a naturally occurring substance in its unaltered form, or altered solely through naturally occurring processes or phenomena, from a location where it is naturally found" or "from products which are a part of the structure of, and result in exposure within, residential buildings or business or community structures" as proscribed by Section 104(a)(3) of CERCLA, 42 U.S.C. § 9604(a)(3); and the releases or threatened releases of asbestos in Libby, Montana were caused by an act of God, act of war, or act or omission of a third party other than an employee or agent of the Defendants, or than one whose act or omission occurs in connection with a contractual relationship, existing directly or indirectly, with the Defendants.
The parties have stipulated that: (1) asbestos is a hazardous substance as defined in Section 101(14) of CERCLA, 42 U.S.C. § 9601(14); (2) Libby vermiculite ore deposits contain measurable quantities of asbestos; (3) there has been a release or threatened release of asbestos at the Libby Mine Site, Screening Plant (including the Flyway and Bluffs), and Export Plant; and (4) these sites are "facilities" as defined in Section 101(9) of CERCLA, 42 U.S.C. § 9601(9).
CERCLA provides that
[w]henever (A) any hazardous substance is released or there is a substantial threat of such a release into the environment, or (B) there is a release or substantial threat of release into the environment of any pollutant or contaminant which may present an imminent and substantial danger to the public health or welfare, the president is authorized to act, consistent with the national contingency plan, to remove or arrange for the removal of, and provide for remedial action relating to such hazardous substance, pollutant, or contaminant at any time (including its removal from any contaminated natural resource), or take any other response measure consistent with the national contingency plan which the President deems necessary to protect the public health or welfare or the environment.
The ability to respond to a release or threatened release is limited when the response is to that
(A) of a naturally occurring substance in its unaltered form, or altered solely through naturally occurring processes or phenomena, from a location where it is naturally found;
(B) from products which are part of the structure of, and result in exposure within, residential buildings or business or community structures; or
(C) into public or private drinking water supplies due to deterioration of the system through ordinary use.
42 U.S.C. § 9604(a)(3). However, even in the situations listed in § 9604(a)(3), a response is permitted if, in the agency's discretion, it determines that the release or threatened release "constitutes a public health or environmental emergency and no other person with the authority and capability to respond to the emergency will do so in a timely manner." 42 U.S.C. § 9604(a)(4).
As set forth in CERCLA, and more defined in the regulations promulgated thereunder, two different response actions to a release or threatened release of a hazardous substance are permitted: a removal4 action or a remedial5 action. If the agency determines that a release or threatened release is a threat to the public health or welfare, the agency "may take any appropriate removal action to abate, prevent, minimize, stabilize, mitigate, or eliminate the release or the threat of release." 40 C.F.R. § 300.415(b)(1). To proceed with a removal action, the agency must first consider the following factors (the "mandatory factors"):
(I) Actual or potential exposure to nearby human populations, animals, or the food chain from hazardous substances or pollutants or contaminants;
(ii) Actual or potential contamination of drinking water supplies or sensitive ecosystems;
(iii) Hazardous substances or pollutants or contaminants in drums, barrels, tanks, or other bulk storage containers, that may pose a threat of release;
(iv) High levels of hazardous substances or pollutants or contaminants in soils largely at or near the surface that may migrate;
(v) Weather conditions that may cause hazardous substances or pollutants or contaminants...
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U.S. v. W.R. Grace & Co., 03-35924.
...vermiculite — a mineral containing a type of asbestos called tremolite — at a mine approximately seven miles northeast of Libby. See Grace I at 1138-41 (describing factual background in an order granting the EPA's motion for summary judgment). Processed ore was trucked to screening plants a......
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Acts of God, War, and Third Parties: The Previously Overlooked CERCLA Defenses
...the ires, loods, and winds were so extreme in severity to be unforseeable by the Defendants.”). 41. United States v. W.R. Grace & Co., 280 F. Supp. 2d 1135, 1148 (D. Mont. 2002), af’d , 429 F.3d 1224 (9th Cir. 2005). 42. Id. ; see also State of N.Y. v. Green, No. 01-CV-196A, 2004 WL 1375555......
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Case summaries.
...cursites/csitinfo.cfm?id=0801744 (last visited June 28, 2006). (92) United States v. W.R. Grace & Co., 280 F. Supp. 2d 1135, 1148 (D. Mont. 2002). Under 42 U.S.C. [section] 9607(a)(4) (2000) responsible parties are liable for "all costs of removal or remedial action incurred by the Unit......