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ASARCO, LLC v. Noranda Mining, Inc.

United States District Court, D. Utah, Central Division

July 11, 2017

ASARCO, LLC, a Delaware Limited Liability Company Plaintiff,
v.
NORANDA MINING, INC., Defendant.

          MEMORANDUM DECISION AND ORDER GRANTING [176] DEFENDANT'S MOTION TO STAY

          David Nuffer, District Judge

         Asarco LLC (Asarco) has paid over $8.7 million to settle environmental cleanup liabilities with the Environmental Protection Agency (EPA) related to a site near Park City, Utah.[1] Asarco's complaint[2] seeks contribution from Defendant Noranda Mining, Inc. (Noranda) pursuant to Section 113(f) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. § 9613(f), for the portion of the environmental damages that Noranda caused.[3]

         Noranda seeks a stay of this action because the full extent of the damages is uncertain until the property is remediated.[4] The EPA has not yet approved a remediation plan for a large portion of the site. For reasons later stated, this case is stayed until the EPA approves a remediation plan for the site.

         Table of Contents

         FACTUAL BACKGROUND ......................................................................................................... 2

         LEGAL STANDARD ..................................................................................................................... 6

         DISCUSSION ................................................................................................................................. 6

         1. TheNature of CERCLA Contribution Claims ......................................................... 6

         2. Asarco's Contribution Claim Depends on a Future Remediation Plan .................. 7

         ORDER ......................................................................................................................................... 11

         FACTUAL BACKGROUND[5]

         In the 1870s, prospectors began mining lead and silver ore from the mountains near Park City, Utah.[6] As the ore was processed, waste “tailings” was created from pulverizing the rock in the process of extracting the metal.[7] The tailings washed down Silver Creek, ultimately coming to rest in an area called “Lower Silver Creek.”[8] Below is a map of the mining site.

         Image Omitted

         Asarco had an ownership interest in Lower Silver Creek for 85 years, from 1925 to 1981.[9] Asarco also leased a separate upstream area from 1970 to 1979 known as Richardson Flat.[10] From 1979 to 1982, under an assignment, Noranda was the lessee of Richardson Flat.[11]

         In the 1980s, the EPA began studying Richardson Flat for cleanup under CERCLA.[12]United Park City Mines Company (United Park), a mining company that owns portions of the site, took a leading role in the cleanup work.[13] Through a judicial consent decree with the EPA, United Park assumed all responsibility for performing and paying for cleanup of Richardson Flat in exchange for United Park's ability to draw compensation from an account funded to the EPA by Asarco.[14] The cleanup plan was selected by the EPA in a 2005 Record of Decision. The cleanup costs for Richardson Flat are relatively certain because a plan has been approved.[15]However, the total cleanup cost for the entire site consisting of Richardson Flat and Lower Silver Creek is dependent upon the EPA also approving a final cleanup plan for Lower Silver Creek.[16]

         On July 26, 2004, the EPA sent letters to Noranda and Asarco concerning their potential liabilities, seeking reimbursement for the costs incurred for remediating Richardson Flat.[17]Asarco filed bankruptcy in August 2005.[18] In March 2006, Noranda settled its liability to the EPA for Richardson Flat for $60, 000.[19] This settlement did not address Lower Silver Creek.[20]

         Around 2009, the EPA expanded its cleanup effort to include Lower Silver Creek.[21] In 2014, United Park entered into an agreement with the EPA taking full responsibility for the cleanup of Lower Silver Creek.[22] In return, the EPA agreed to allow United Park to seek reimbursement from an account funded with $6 million of the funds the EPA received from Asarco in Asarco's 2009 bankruptcy settlement of Asarco's liability as to Richardson Flat and Lower Silver Creek.[23] Pursuant to the agreement between United Park and the EPA, United Park can only seek reimbursement once it begins cleaning up Lower Silver Creek under a plan approved by the EPA.[24] But Asarco filed this case to compel Noranda to contribute toward Asarco's payment.

         The remediation at Lower Silver Creek requires that United Park submit to the EPA an Engineering Evaluation and Cost Analysis.[25] Because the cost to remediate Lower Silver Creek is still being calculated, the total cost to remediate the area is not yet known.[26]

         Asarco's Bankruptcy and Settlement

         On August 9, 2005, Asarco filed a voluntary petition for relief under Chapter 11 in the Bankruptcy Court for the Southern District of Texas.[27] Asarco sought protection from over $3.6 billion in environmental claims related to 52 sites across the country, including the site in this case.[28]

         In 2006, the EPA filed a Proof of Claim for approximately $607, 000 in cleanup costs related to Richardson Flat.[29] In 2008, after learning of Asarco's ownership history at Lower Silver Creek, the EPA filed a Supplemental Proof of Claim and sought to recover a total of $50 million to account for Asarco's liabilities at Lower Silver Creek, in addition to the $607, 000 it had previously sought.[30] The EPA settled its claims against Asarco related to Lower Silver Creek and Richardson Flat for $7.4 million.[31] The Bankruptcy Court approved Asarco's settlement with the EPA.[32]

         On December 9, 2009, Asarco paid the EPA the $7.4 million with interest of $1, 307, 455.57 for total of $8, 707, 455.57.[33] The EPA has yet to spend $8, 576, 455.16 of the $8, 707, 455.57.[34]

         The total cleanup costs for Richardson Flat have been reasonably known since 2005 when the EPA approved its ROD.[35] Although some work remains to be done at Richardson Flat, the anticipated costs are set.[36] The anticipated cost for the Lower Silver Creek portion of the site, however, is uncertain.[37]

         LEGAL STANDARD

         “[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants.”[38]

         Factors relevant to the court's decision are: “(1) whether the stay would promote judicial economy; (2) whether the stay would avoid confusion and inconsistent results; and (3) whether the stay would unduly prejudice the parties or create undue hardship.”[39]

         DISCUSSION

          1. The Nature of CERCLA Contribution Claims.

         CERCLA was enacted to address threats to human health and the environment.[40] The EPA functions as the lead federal agency with responsibility for site cleanup. “[After] a site has been identified as hazardous, the EPA undertakes a Remedial Investigation/Feasibility Study to develop various options for cleanup and to determine the scope of remedial action.”[41] “After completing its investigation, the EPA prepares a record of decision (ROD) describing the remedial action it selected and the action's anticipated costs.”[42] “[After] the EPA has incurred response costs or determined that an imminent release of hazardous contaminants would initiate a government response, the EPA can bring a CERCLA action against potentially responsible parties (PRPs).[43]

         Section 107 of CERCLA imposes joint and several liability for parties who contributed to contamination at a site. Section 9613(f)(1) of CERCLA provides that “the court may allocate response costs among liable parties using such equitable factors as the court determines are appropriate.”[44] “A person who has resolved its liability to the United States or a State for some or all of a response action or for some or all of the costs of such action in an administrative or judicially approved settlement may seek contribution from any person who is not party to [the settlement].”[45]

         2. Asarco's Contribution Claim Depends on a Future Remediation Plan

         Asarco seeks contribution to its settlement payment of remediation costs for Lower Silver Creek, for the extent of the environmental damages caused by Noranda.[46] To succeed on a claim for contribution, Asarco must establish that it paid more than its fair share.[47] Noranda contends that it would be difficult to determine whether it has paid less than its fair share of remediation costs at the Site because the cleanup work for Richardson Flat and Lower Silver Creek is currently in progress and no formal plan for Lower Silver Creek has been approved by the EPA.[48] Because the final cost of remediation is not yet known, Asarco seeks to prove its contribution claim by having experts estimate remediation costs and allocate fault.[49]

         Asarco's case is procedurally unusual because Asarco settled the EPA's claims in a Chapter 11 bankruptcy proceeding. Being under the pressure of the Chapter 11 proceeding may have caused the EPA to settle its claims earlier than it might have otherwise.[50] Because of the large number of claims Asarco settled in the Chapter 11 proceeding, other courts have faced similar issues in other locations ...


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