CFAC, ARCO continue to dispute who should clean up plant site

A federal judge ruled earlier this month ruled the Columbia Falls Aluminum Co.’s lawsuit against the Atlantic Richfield Co. should move forward.

The two companies dispute who should have to pay for the bulk of the cleanup of the former aluminum plant Superfund site at the base of Teakettle Mountain just north of Columbia Falls.

CFAC has already paid for demolition of the buildings and an extensive investigation of the site, which used to house the now defunct and removed aluminum smelter. Portions of the site are contaminated with high levels of cyanide and fluoride as well as other contaminants.

CFAC’s investigation has found that the bulk of the environmental contamination of the property is found near some old landfills and other dumps that were just north of the plant. It claims that waste, like spent potliner, was dumped there from 1955 to 1985 by the previous owners — the Anaconda Aluminum Co. and ARCO. As such, it shouldn’t have to foot the bill to clean it up.

CFAC filed suit against ARCO last year under the provisions of Comprehensive Environmental Response, Compensation, and Liability Act — more commonly known as the Superfund Act.

But ARCO in March argued that CFAC’s case against it should be dismissed, claiming, among other things, that when it sold the plant to the Montana Aluminum Investors Corp. on Sept. 10, 1985 for $1, the buyer agreed to “indemnify and hold harmless ARCO for all contingent liabilities relating to the operation of the smelter business post closing.” Under the purchase deal, CFAC couldn’t seek liabilities more than five years after the sale, which was 1990.

But U.S. District Court Judge Donald Molloy ruled on April 11 that wasn’t necessarily the case.

“CFAC’s indemnification obligation could reasonably be interpreted not to include pre-existing environmental conditions,” Molloy found.

He cited a case in which the Stimson Lumber Co. sued International Paper Co. In that case, the parties disputed liability related to polychlorinated biphenyls found in cooling ponds at the Bonner Mill site in Montana. Stimson was not found to expressly assume the environmental liabilities of International Paper Co. under the Superfund law.

Molloy’s ruling doesn’t settle the CFAC suit, however. He just notes that the indemnity provision in the original sale contract is “ambiguous” and it’s “not possible to ascertain the intent of the parties at this stage of the proceeding.”

So the case will continue.

In addition, ARCO has filed a counterclaim for attorneys’ fees of about $160,000. It also argues that if it does clean up the dumps, CFAC would then be able to turn around and sell the property at a profit.

“CFAC will benefit from any increase in the value of the property above the $1 attributable to any cleanup. It therefore should be allocated a share of the response costs accordingly,” ARCO attorneys argue.

But CFAC claims it ahas already spent about $7 million of the site and more is sure to follow when actual cleanup begins. This is a case that pits industry giants against one another. CFAC’s parent company is Glencore, a global commodities firm, and ARCO’s parent company is British Petroleum, a global energy firm.