After a week-long bench trial, a Montana federal judge ruled that a BP America subsidiary must contribute more than $4.3 million to cleanup efforts of a former aluminum production site in the state under the Comprehensive Environmental Response, Compensation and Liability Act.
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According to an order by U.S. District Judge Donald W. Molloy, BP unit, Atlantic Richfield Co. (ARCO), is responsible for coughing up 35% of the $12.3 million in recoverable costs Columbia Falls Aluminum Co. LLC (CFAC) paid to clean up contaminants from the site of an aluminum smelter facility in the Treasure State.
The court did determine however that ARCO is entitled to collect approximately $787,500 from the sale of the site, which will be deducted from the more than $4 million total they owe. This caveat does state that ARCO must foot 35% of any future costs that arise, but is not entitled to any portion of proceeds in future property sales.
ARCO formed CFAC in 1985. Later that year, another company purchased CFAC. ARCO had argued that the acquisition agreement barred the CERCLA suit, but Judge Molloy disagreed, stating “based on the evidence presented at trial, the contractual bone of contention is resolved in CFAC’s favor.”
CFAC operated an aluminum smelter on the Montana site until 2009. Several years later, the U.S. Environmental Protection Agency analyzed the area and found a slew of contaminants.
CFAC claimed that as of March of this year, it has paid $22 million in response costs, and noted they will likely have to pay more in the future. It argued ARCO was responsible for the bulk of the site’s pollution from its earlier aluminum operations. The court deemed $12 million of the $22 million requested recoverable under CERCLA.
ARCO sought a Judge Molloy ruling that CFAC violated the 1985 acquisition agreement by bringing the suit and owed it $3.4 million for what it spent defending against the lawsuit that CFAC launched in 2018. It argued that CFAC waived its right to sue through that acquisition agreement, but Judge Molloy disagreed, finding that CFAC agreed not to make a claim for indemnification from ARCO.
“As both sides agree, CFAC is not making a claim under the indemnification provision here,” the court said. “Rather, CFAC’s claims are based on independent statutory obligations that could form the basis of suit regardless of whether CFAC had a contractual right of indemnity against ARCO.”
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Source: https://www.law360.com/articles/1416297/bp-unit-owes-4-3m-for-its-share-of-aluminum-site-clean-up
