Cyprus Amax Minerals Co. v. TCI Pac. Commc'ns, LLC

CYPRUS AMAX MINERALS COMPANY, Plaintiff, v. TCI PACIFIC COMMUNICATIONS, LLC, Defendant.

Case No. 11-CV-0252-CVE-CDL

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OKLAHOMA

March 31, 2021

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Plaintiff Cyprus Amax Minerals Company (Cyprus) filed this case seeking contribution from TCI Pacific Communication, LLC (TCI) under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq. (CERCLA). Cyprus' claims concern the historical operations of two zinc smelting facilities near Collinsville, Oklahoma, and Cyprus seeks to recover a share of the costs that it incurred as a part of a soil sampling and cleanup program in Collinsville to remove hazardous substances associated with historical zinc smelting operations. The complaint (Dkt. # 2) alleged cost recovery claims under CERCLA against TCI Pacific Communications, LLC (TCI) under theories that TCI was a former owner or operator of a smelting facility (count I) and that TCI arranged for the disposal of a hazardous substance (count II). Cyprus also sought contribution from TCI under former owner or operator (counts III, V) and arranger (count IV, VI) theories of liability under CERCLA. Cyprus requested a declaratory judgment (count VII) that TCI is liable for a share of future costs that Cyprus will incur for the remediation of hazardous substances in Collinsville, and Cyprus also alleged a claim for unjust enrichment (count VIII). Viacom, Inc. (Viacom), CBS Corporation, and CBS Operations, Inc. were also named as defendants in the original complaint.

TCI filed a motion (Dkt. # 53) seeking a determination that Kansas law or federal common law applied to Cyprus' request to pierce the corporate veil of a predecessor company of TCI, New Jersey Zinc Company (NJZ). The Honorable Gregory K. Frizzell granted the motion and determined that Kansas law governed the issue of piercing the corporate veil. Dkt. # 89. The case was reassigned to the Honorable John E. Dowdell. Cyprus filed an amended complaint (Dkt. # 106) naming TCI and CBS Operations, Inc. as defendants, but the amended complaint did not add any new claims. Defendants filed a motion to dismiss CBS Operations, Inc. as a defendant and to dismiss certain claims against TCI. Judge Dowdell ruled that CBS Operations, Inc. should be terminated as a party, and that counts I, II, and VIII of the amended complaint should be dismissed. The case was randomly reassigned to the undersigned after Judge Dowdell recused.

Following the ruling on the motion to dismiss, the claims remaining for adjudication are counts III through VII of the amended complaint. Cyprus seeks contribution under a theory that TCI is liable as a former owner or operator of a facility where a hazardous substance was released, and counts IV and VI seek contribution under a theory that TCI is liable as an arranger of the disposal or treatment of a hazardous substance. Count VII requests a declaratory judgment for a share of future response costs that Cyprus may incur. The Court issued an opinion and order (Dkt. # 183) finding that the former Tulsa Fuel and Management Company (TFMC) was the alter ego of NJZ, and TCI does not dispute that it is the successor in interest to NJZ. The Court subsequently denied both parties' motions for summary judgment. Dkt. # 244. A non-jury trial was held February 26 to March 2, 2018. Having considered the evidence and submissions of the parties, the Court hereby enters its findings of fact and conclusions of law.

FINDINGS OF FACT

I. Background of Historical Zinc Smelting Operations Near Collinsville

1. The Bartlesville Zinc Smelter (BZ Smelter) operated from 1911 to 1918 and was located approximately one mile from Collinsville. Cyprus admits that the BZ Smelter was owned by the Bartlesville Zinc Company, which is a former subsidiary of a corporate predecessor of Cyprus. Dkt. # 106, at 5.

2. The Tulsa Fuel and Manufacturing Company Zinc Smelter (TFM Smelter) was owned by TFMC, and the TFM Smelter was located approximately a quarter-mile from the BZ Smelter. The TFM Smelter was located about one and one-quarter miles from Collinsville, and it operated from 1911 to 1926. Id. The Court determined in a prior opinion and order (Dkt. # 183) that TFMC was the alter ego of NJZ and that Cyprus could assert CERCLA contribution claims against TCI for any liability for the release of hazardous substances at the TFM Smelter site.

3. The BZ Smelter and the TFM Smelter used horizontal retort furnaces to extract zinc from zinc ore. Dkt. # 302, at 3. The raw material was first placed in a roaster to remove sulfur and sulfur dioxide, and the material was then placed in a furnace block for the extraction of the zinc. Dkt. # 310, at 20. Retorts were placed against the furnace block and condensers were used to cool the zinc vapor into molten zinc. Id. at 21. Each retort was approximately four feet long and eight inches wide, and a retort was about one inch thick. Dkt # 310, at 22.

4. The smelter operations generated three types of waste. First, the roasting facilities and furnace blocks generated air emissions that were vented from the smelter through roof vents or smokestacks. Dkt. # 302, at 3; Dkt. # 310, at 21. Second, the smelting process also resulted in the creation of solid waste in the form of used or broken retorts, condensers, and refractory bricks. Id. at 21-22. Another form of solid waste was retort residue generated by the smelting process, and the retort residue would have been scraped from retorts and left in a residue pile on site. Id. at 22.

5. Defendant's historical expert, Jennifer Stevens, Ph. D., testified that there was a high demand for zinc in 1912, but the industry took a downturn in 1913. Dkt. # 313, at 22. However, the demand for zinc increased in 1914 at the beginning of World War I, because European smelting facilities closed during the war and the United States increased zinc production to meet the increased demand. Id. at 23.

6. The Bartlesville Zinc Company owned a 220 acre tract of land located about one mile from Collinsville, and the BZ Smelter occupied approximately 40 acres of the site. Dkt. # 307, at 132; Defendant's Ex. 166, at 166.0002. According to a report issued by the United States Geological Survey (USGS), the BZ Smelter was the largest zinc smelter operating in the United States for the year 1912, and it had a smelting capacity of 8,604 retorts. Defendant's Ex. 12, at 012.0006. The BZ Smelter retort capacity increased by 2,688 retorts in 1915, and the USGS reported that the BZ Smelter was the largest zinc smelter in the world. Defendant's Ex. 45, at 045.0040.

7. The TFM Smelter was located on a smaller parcel of land and, in 1912, the TFM Smelter had a smelting capacity of 6,232 retorts. Plaintiff's Ex. 93, at CA-C0086233. The smelting capacity of the TFM Smelter remained relatively consistent until 1922 when there was a sharp drop in the demand for zinc, and the TFM Smelter gradually cut production until it closed permanently in 1926. Dkt. # 311, at 101-02.

Cleanup of Smelter Sites

8. In the early 1990s, the Oklahoma Department of Environmental Quality (ODEQ) began to investigate whether the BZ Smelter site would be eligible for the federal Superfund program and, in September 1995, it issued a site inspection narrative report for the BZ Smelter site. Dkt. # 307, at 52; Plaintiff's Ex. 267. The report notes that the BZ Smelter is close in proximity to the former TFM Smelter and that both smelter sites "share a common surface water pathway and a common air/particulate dispersion pathway." Plaintiff's Ex. 267, at CBS_OPS-107027. The report identified Cyprus as the potentially responsible party (PRP) for the BZ Smelter site. Soil sampling found elevated levels of metals in the soil within the boundaries of the BZ Smelter and also within a nearby residential neighborhood. Id. at CBS_OPS-017031. The report noted that it was not possible to attribute offsite contamination to the BZ Smelter or the TFM Smelter, because the smelters shared common pathways of dispersion and both facilities generated the same types of waste materials. Id.

9. In May 1996, Cyprus and ODEQ entered into a consent agreement in which Cyprus agreed to perform a focused remedial investigation and feasibility study (RI/FS) of the BZ Smelter site, and TFMC and its successors were identified as PRPs for contamination on or near the BZ Smelter site. Plaintiff's Ex. 270, at 1-3. Cyprus' contractor, Exponent, prepared a Focused Remedial Investigation Report, and the primary exposure pathways for contaminants included "incidental ingestion of soil, inhalation of airborne particulates from soil, and dermal contact with soil (quantified for cadmium only)." Joint Ex. 5, at CBS_OPS-019452. The report concluded that exposure to contaminated soil was the primary "medium of concern" from the perspective of preventing harm to people on or nearby the BZ Smelter site. Id. at CBS_OPS-019453. The feasibility study focused solely on remedial actions for the cleanup of contaminated soil. Joint Ex. 6, at CBS_OPS-016894.

10. In 1992, the Oklahoma State Department of Health opened an investigation into potential contamination at the TFM Smelter site, and a site inspection report issued by ODEQ in September 1994 found that no measures had been taken to prevent the offsite migration of contaminants from the TFM Smelter site. Plaintiff's Ex. 263; Plaintiff's Ex. 264, at TFDEQ014723. The report noted the potential for offsite aerial migration of contaminants, but this was not within the scope of the site inspection. Id. at TFDEQ014738. Soil and water sampling revealed elevated levels of arsenic, lead, and cadmium on-site, and there was a substantial volume of smelter waste that had been left at the site after the TFM Smelter ceased operations. Id. at TFDEQ014723.

11. The United States Environmental Protection Agency (EPA) conducted its own Hazard Risk Scoring for the TFM Smelter site and...