Reducing Environmental Risk

Tolling Agreements between PRPs Cannot Negate Settling PRP’s Entitlement to Benefit of its Settlement

After settling with EPA and having its settlement upheld in court, a potentially responsible party (PRP) is free from liability to all other PRPs given notice of that proposed settlement under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, or Superfund). This principle, long recognized as key to CERCLA’s successful performance, was recently affirmed by the United States Court of Appeals for the Eighth Circuit in its ASARCO, LLC v. Union Pacific Railroad Company decision. 

Beginning in the mid-1800s, the Omaha Smelting Company, and later the American Smelting and Refining Company (now ASARCO) operated a large smelter outside of Omaha, Nebraska, on lands originally owned by Union Pacific and later purchased by ASARCO. The smelter produced lead, copper, gold, silver, and other materials; until the late 1950s, it has the largest lead refining capacity of any smelter in the nation.

Operation of the smelter came at a significant cost. A high incidence of lead poisoning was apparent in workers as early as 1912, and airborne pollutants from this facility were perceived as a health hazard by 1974. However, it was not until 1994 that limitations were placed on the facility’s discharge of pollutant-laden wastewater into the Missouri River. Soon after, airborne lead emissions from the smelter were linked with soil contamination in downtown Omaha, which caused elevated blood lead levels in children. The smelter was shut down in the late 1990s.

In 2003, the EPA declared approximately 27 square miles surrounding the former smelter a federal Superfund site. It named ASARCO and Union Pacific, among other entities, as PRPs.

In response to EPA’s enforcement action, Union Pacific made numerous FOIA requests aimed at proving that airborne contamination from the smelter was not the main source of the Omaha lead soil contamination. During the pendency of these FOIA requests and associated appeals, Union Pacific and ASARCO agreed to toll the statute of limitations on contribution claims between the two parties.

ASARCO had settled its Omaha site liabilities with EPA in 2005, for $214 million. Eventually, Union Pacific settled with EPA for quite a bit less, only $25 million. This settlement was approved by the district court in August 2011.

In May 2012, ASARCO brought suit for contribution, alleging that Union Pacific’s contribution to the cost of remediation of the Superfund site was too small. ASARCO asserted that its tolling agreement with Union Pacific preserved its contribution claims, despite Union Pacific’s recent settlement. However, the district court disagreed, noting that Union Pacific had not specifically waived its right to be protected by its settlement, and dismissed the suit.

On appeal, the Eighth Circuit upheld this ruling, stating that once a party has settled its CERCLA liability, it is protected from further claims related to the Superfund site. This protection applies even where a settling PRP is engaged in contribution litigation at the time of its settlement, or where an agreement between the PRPs purports to alter the traditional structure of contribution protection.

This is because under CERCLA, any settlements must be reviewed by the court to ensure that they are fair and reasonable, and in the public interest. This gives finality to the settlement process, and allows remediation of Superfund sites to proceed unhindered by additional litigation or challenges. Before judicial approval is granted, the public is given notice and an opportunity to comment on the settlement, and interested parties are allowed to intervene in the settlement review.

In this case, ASARCO’s remedy would have been to object to Union Pacific’s settlement in court while the proposed settlement was under review by the district court, not to launch a collateral attack on Union Pacific’s consent decree and settlement with EPA. Since ASARCO failed to follow the appropriate channels to voice its disapproval of the proposed Union Pacific-EPA settlement, of which ASARCO had notice, the Court of Appeals affirmed the dismissal of its suit.

The lesson here is unclear: perhaps a more clearly drafted tolling agreement, making explicit reference to its purported impact on the ongoing EPA litigation, might have changed the result of this action, but perhaps not.

A copy of the Eighth Circuit’s decision is available here.



FindLaw Network