Halliburton Energy Services, Inc. v. NL Industries

648 F. Supp. 2d 840, 70 ERC (BNA) 1708, 2009 U.S. Dist. LEXIS 73026, 2009 WL 2568291
District Court, S.D. Texas·Decided August 18, 2009·No. Civil Action H-05-4160, H-06-3504·Published·Cited by 8 cases

Opinion

MEMORANDUM AND OPINION

LEE H. ROSENTHAL, District Judge.

This opinion addresses motions for partial summary judgment filed by Georgia-Pacific Corporation (“Georgia-Pacific”) and Milwhite Inc. (“Milwhite”). Georgia-Pacific and Milwhite assert that, as a matter of law, they are not liable to Halliburton Energy Services, Inc. (“HESI”) and DII Industries, LLC (“DU”) (together, “Halliburton”), or to each other, under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 1 or under the Arkansas Remedial Action Trust Fund Act (RATFA). 2 The parties filed lengthy briefs and a large record, and this court heard oral argument on the motions.

Based on the pleadings, the motions and briefs, the record, the arguments, and the applicable law, this court rules as follows:

• Georgia-Pacific’s motion for partial summary judgment, (Docket Entry No. 189), is denied.
• Milwhite’s motion for partial summary judgment, (Docket Entry No. 228), is denied.
• Halliburton’s related motion for leave to file supplemental evidence in opposition to Georgia-Pacific’s motion for *843 summary judgment, (Docket Entry No. 332), is also denied.
■ Milwhite’s motion to supplement its summary judgment motion, (Docket Entry No. 363), is granted.

The reasons for these rulings are explained below. A scheduling conference is set for September 18, 2009, at 10:00 a.m., to set deadlines for the work needed to resolve this ease.

I. Factual and Procedural Background

This court’s July 2006 Memorandum and Opinion set out the relevant background in detail. Only a summary is provided here. Briefly, Halliburton filed this suit in 2005 against the Tremont Parties — NL Industries, Inc. (“NL”), 3 Tremont, LLC (“Tremont”), TRE Holding Corporation (“TRE Holding”), and TRE Management Company (“TRE Management”) — and against MI, L.L.C. (“M-I”), Milwhite, and Georgia-Pacific. Halliburton filed this suit after entering into an Administrative Settlement Agreement in 2000 (“Administrative Settlement”) and a Consent Administrative Order in 2003 (“Consent Order”) with the Arkansas Department of Environmental Quality (“ADEQ”). Halliburton seeks to recover the money it spent investigating and remediating environmental contamination near the towns of Magnet Cove and Malvern, Arkansas (the “Site”). The Site consists of approximately 600 acres located north of Magnet Cove, Arkansas, situated in Sections 10,11,14, and 15 of Township 3 South, Range 17 West in Hot Spring County. 4

The Site was used for barite ore mining and milling by the Baroid Sales Division of NL and by Magnet Cove Barium Corporation (“Magcobar”). 5 (See Docket Entry No. 189, Ex. 2 at 1; id, Ex. 3 at ES-1). According to the Consent Order, “[n]o mining activity has been conducted at the Site since 1977.” (Id., Ex. 2 at 1). A Site Investigation Report prepared for Halliburton and TRE Management states that “[a]ll mining or milling activity at the Site had ceased by 1982.” (Docket Entry No. 189, Ex. 3 at ES-1). The mining produced a large open pit, (id, Ex. 2 at 1), as well as “a number of piles of mining spoils of unknown acreage ...,” (id, Ex. 1 at 1). According to the Consent Order, “[s]ubsequent to the cessation of mining activities at the Site, the mine pit began to fill with water.” (Id., Ex. 2 at 1). The pit “now *844 forms a lake (‘Pit Lake’) that is approximately 90 acres in surface area and more than 400 feet deep at the deepest point.” (Id., Ex. 2 at 1). Some of the water in the Pit Lake “may pass over or through certain of the mining spoil piles.” (Id., Ex. 1 at 2). “The water in the Pit Lake has a low pH and contains dissolved metals and minerals.” (Docket Entry No. 189, Ex. 2 at 1). The Consent Order states that without remedial action, “the Pit Lake will overflow in the near future and release untreated water into Chamberlain Creek and subsequently into other downstream waters to which Chamberlain Creek is a tributary.” (Id., Ex. 2 at 1).

In 1988, NL entered into a restructuring plan (the “1988 Plan”). The 1988 Plan stated that NL was a holding company that conducted it operations through its wholly owned subsidiaries NL Chemicals, Inc. (“NLC”) and Baroid Energy Services, Inc. (“Baroid Energy Services”). NLC owned and operated NL’s titanium and dioxide pigments and specialty chemicals businesses, principally through subsidiaries. Baroid Energy Services owned and operated NL’s petroleum services business, principally through subsidiaries. Through the 1988 Plan and related agreements, NL spun off Baroid Energy Services into a separate publicly traded company, first called NL Petroleum Services, Inc. (“NLPS”) and later called Baroid Corporation (“Old Baroid”). Through a related Amended and Restated Formation Agreement, NL agreed to transfer to Old Baroid all assets related to the petroleum services business or to Titanium Metals Corporation of America (“TMCA”), including the outstanding shares of TMCA capital stock and the subsidiaries engaged in NL’s petroleum services business.

Another restructuring followed in 1990. Under the 1990 Plan, Old Baroid split its titanium and bentonite business from its “Petroleum Services Business.” The 1990 Plan stated that “[NL] has heretofore indirectly owned and operated its petroleum services operations (the ‘Petroleum Services Business’) principally through its subsidiaries ....” Under the 1990 Plan, Old Baroid agreed to assign to a new entity called New Baroid Corporation (“New Baroid”) its properties and assets attributable to its Petroleum Services Business, defined as the “Petroleum Services Assets,” and its properties and assets attributable to its bentonite mining operations (the “Bentonite Business”), defined as the “Bentonite Assets.” New Baroid agreed to assume the liabilities and obligations of Old Baroid arising out of or attributable to the past, present, or future ownership or operations of the Petroleum Services Business, defined as “Petroleum Services Obligations.” Through a series of transactions, the Bentonite Business was transferred back to Old Baroid. Ultimately, Old Baroid retained both its titanium metals operations, defined as the “Titanium Business,” and its Bentonite Business. New Baroid retained the Petroleum Services Business. New Baroid is a predecessor of Halliburton. Old Baroid is a predecessor of the Tremont Parties.

Under the 2000 Administrative Settlement with the ADEQ, HESI, TRE Management, and M-I agreed to investigate the Site condition, submit a report to the ADEQ, and do a feasibility study on ways to remediate the environmental contamination. (See Docket Entry No. 189, Ex. 1). In the meantime, HESI, TRE Management, and M-I had to perform “Interim Remedial Measures” under the Administrative Settlement. (Id., Ex. 1 at 2-4). Under the May 2003 Consent Order, TRE Management and HESI constructed and paid for a water-treatment system for the Pit Lake.

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Halliburton Energy Services, Inc. v. NL Industries, 648 F. Supp. 2d 840, 70 ERC (BNA) 1708, 2009 U.S. Dist. LEXIS 73026, 2009 WL 2568291 (S.D. Tex. 2009).

648 F. Supp. 2d 840 (Halliburton Energy Services, Inc. v. NL Industries) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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