Natural resource damage settlement funds for the Upper Clark Fork River Basin PDF
Preview Natural resource damage settlement funds for the Upper Clark Fork River Basin
s MONTANASTATELIBRARY 363.7325 L72NRD 3 0864 0015 2466 2 2001 Legislative Audit Division State of Montana Report to the Legislature September 2001 Status Report ST/ITF DOniFMFNTS COLLECTIu 2002 • MONTANA SI ! | HELEN' ' Natural Resource Damage Settlement Funds for the Upper Clark Fork River Basin Department ofJustice Department of Environmental Quality Direct comments/inquiries to: £?~t Legislative Audit Division Room 160, State Capitol PO Box 201705 MT 01-SP58 Helena 59620-1705 Help eliminate fraud, waste, and abuse in state government. Call the Fraud Hotline at 1-800-222-4446 statewide or444-4446 in Helena. LEGISLATIVE AUDIT DIVISION Scott A. Seacat, Legislative Auditor Deputy Legislative Auditors: John W. Northey, Legal Counsel Jim Pellegrini, Performance Audit Tori Hunthausen, IS Audit & Operations James Gillett, Financial-Compliance Audit September 2001 The Legislative Audit Committee Ofthe Montana State Legislature: This is a status report on the use ofNatural Resource Damage Settlement Funds for the UpperClark Fork River Basin. The funds are administered by the Department ofJustice and the Department of Environmental Quality. This report provides updated information to the committee. Prior information was in the form oflegislative requests to individual legislators. The report contains no recommendations. This report is informational only and requires no action by the departments involved. We appreciate the professionalism, cooperation and assistance ofagency staff. Respectfully submitted, ji^^jtZ<^r~^ Scott A. Seacat Legislative Auditor Room 160. StateCapitol Building PO Box 201705 Helena. MT 59620-1705 Phone (406)444-3122 FAX (406)444-9784 E-Mail [email protected] Introduction Legislative Audit Committee members requested the Legislative Audit Division update legislative request work to inform members of the state's progress in litigating natural resource damage claims against Atlantic Richfield for the Upper Clark Fork River Basin. The request also asked for an update on the use offunds already received by the state under terms ofthe current settlements and the effect flooding in the Berkeley Pit might have on remediation efforts. Background In 1983, Montana filed suit against Atlantic Richfield (State of Montana v. Atlantic Richfield Company, USDC for Dist. ofMt, Case no. 83-317-HLN-PGH) to recoverdamages for injuries to natural resources in the UpperClark Fork River Basin caused by over a century of mining and mineral processing. The Clark Fork River Basin corridor stretches approximately 120 miles from Butte downstream to Milltown,just east ofMissoula. Following some preliminary legal discovery proceedings, in 1984 the U.S. District Court ordered the proceedings in the case temporarily stayed. In 1989, the court granted Atlantic Richfield's motion to lift the stay, after which Montana proceeded to develop a natural resources damage assessment documenting injuries to natural resources and damage claims for such injuries. In 1993, at the request ofthe parties, the court again stayed the proceedings in this case for the purpose ofsettlement negotiations. The negotiations were unsuccessful. After further discovery, the trial ofMontana vs. Atlantic Richfield began in 1997. At trial, Montana presented evidence regarding Atlantic Richfield's liability and natural resources injuries that were incurred due to the release ofhazardous substances from Atlantic Richfield's and predecessors' mining and mineral processing operations. Settlement negotiations continued throughout the trial and, on June 19, 1998, the parties announced a proposed settlement set forth in a consent decree. The Settlement The settlement establishes a two-step process for the settlement ofall ofMontana's natural resources damage claims against Atlantic Richfield. The first step settles a majority ofMontana's damage claims, including its claims for assessment and litigation costs Page 1 through December 31.1997, ail of its compensable damage claims, and restoration damage claims for six areas in the Upper Clark Fork River Basin. Atlantic Richfield paid to Montana, through direct payments and a land transfer, a total ofS215 million, plus interest. Under the settlement terms, Atlantic Richfield paid: S15 million to reimburse Montana for its damage assessment and litigation costs through December 31, 1997. $118 million in cash for natural resource damages to be used for restoration or replacement ofinjured resources or lost services. Convey real property along Silver Bow Creek valued at $2 million. S80 million to be used for the remediation ofthe Stream Side Tailings Operable Unit (Silver Bow Creek -extends from the West end ofButte 22 miles to the Warm Springs Ponds - see Appendix 1). Pay interest to the state on each ofthe above amounts from April 6, 1998, through the dates ofpayment. In consideration ofthe $15 million payment, Atlantic Richfield received a release ofliability for Montana's claims for assessment and litigation costs incurred through December 31, 1997. The second step ofthe settlement process addresses the state's restoration damage claims for three remaining sites (not included in the $215 million). These claims are not settled because at the time the settlement was reached, the record ofdecision setting forth the U.S. Environmental Protection Agency's (EPA) chosen remedy for each ofthe sites had not been issued. These sites relate to natural resource damages in the Anaconda Smelter Hill upland area, the Clark Fork River area, and the Butte area alluvial aquifer. The total damage estimate for these three sites is approximately $180 million. The Smelter Hill upland area amount is $15.5 million. Claims for the Clark Fork area are estimated at $86.4 million. Claims for the Butte area alluvial aquifer are estimated at $79.5 million. Page In addition to the Step Two sites, Montana reserves the right to sue Atlantic Richfield to recover damages for injury to natural resources caused by the release ofhazardous substances due to unanticipated, extraordinary actions such as the failure ofthe Warm Springs ponds dam or the Milltown reservoirdam. Settled for Less Than The state's original total estimate ofdamages was $765 million. Estimated Damages This amount was compiled from the state's evaluations ofpossible claims. These claim amounts were used in the lawsuits to obtain a settlement. Department ofJustice documents indicate that Montana would have preferred to recover the full amount ofthe damages claimed against Atlantic Richfield, but there are several reasons why it settled for less. First, there are no guarantees any litigation would produce an eventual recovery or would produce the recovery sought. In this complex case, there were litigation risks associated with claims and defenses. While the Department ofJustice believed in all aspects ofits case, the department stated it would have been derelict in its responsibilities not to recognize the possibility the court, orcourts, would not completely concur in Montana's view ofthe facts and law. Recovering set amounts, and interest on those amounts, via a settlement removed the uncertainty associated with litigation. Second, any recovery ofdamages through litigation could be years away, depending on rulings from the District Court and then, in all likelihood from an appellate court. The recovery of moneys in the near-term enabled Montana to start making definite plans to address natural resource injuries sooner rather than later. The settlement also ended some ofthe need for the state to fund future litigation costs. As mentioned previously, the settlement is only partial. Montana is reserving three ofits restoration cost claims, valued at a total of approximately $180 million. Page 3 The following summarizes the dollar amounts ofthe claims and what was actually received. The total damage claim requested (as of January 1, 1997) was $764.5 million. Breakdown Enforcement and Assessment Costs: $ 12.3 million Compensable Damages Claimed: $410.5 million Restoration Cost Damage Claim: $341.7 million Total: $764.5 million Compensable Damages Various studies were used to calculate compensable damages. Each ofthe studies used different techniques and analyzed all forms of compensable damages. Because there was overlap in the uses and services that were evaluated, the sum ofall the reports could not be used. The state considered all the studies and removed overlapping damages. The total amount was $410.5 million. Restoration Cost Damages Step One Sites ($135.38 million) : Butte Hill - (replacement ofwater sources): $ 54.50 million Milltown Dam - (remove contaminants using natural recovery): $ 1.20 million Silver Bow Creek - (restore aquatic and riparian resources): $ 57.80 million Montana Pole (Butte) - (removal ofstructures and soil): $ 19.47 million RockerTimber Plant - (natural recovery and monitor): $ .67 million Opportunity Ponds - (natural recovery): $ 1.74 million Step Two Sites ($206.30 million) : Smelter Hill Upland Area - (re-vegetation, planting, natural recovery): $ 40.37 million Clark Fork River - (remove contaminants; restore riparian resources): $ 86.42 million Butte Ground/Surface Water - (remove waste sources; reduce releases): $ 79.51 million Total: $341.70 million Page 4 : Comparison of Claimed to There cannot be an "apples-to-apples" comparison ofthe amounts Actual claimed to the settlement amounts. The claims were estimates ofthe damage amounts. The settlements are based on testimony, discussion, analyses, and negotiation. The settlements are also affected by settlements in other areas (i.e. settlements in Step One sites could affect claims in Step Two sites). A general comparison can be made. In summary: Settlement* and Amounts Initial Estimates Current Estimates : : : Compensable Damages $ 410.50 million $ 215.00 million* Restoration Cost Damage $ 135.38 million (included in $215 million) Enforcement/Assessment $ 12.30 million (included in $215 million) StepTwo Sites $ 206.30 million $ 180.00 million Total $ 764.50 million $ 395.00 million plus interest Payments In November 1998, another consent decree was entered into between the state ofMontana, the United States, the Atlantic Richfield Company (ARCO), and the Confederated Salish and Kootenai Tribes. This decree settled certain additional claims and provided for implementation ofthe remedy for the Streamside Tailings Operable Unit (Silver Bow Creek/Butte Area). The Tribes became parties due to the Hellgate Treaty which granted the Tribes use ofusual and customary fishing areas that included the UCFRB. Page 5 f The settlement involves, among other things, payment by ARCO of $80 million, over a period ofthree years. Those funds and the earnings from the investment ofthose funds are to be used by the state and EPA for the purpose ofremediating the mine waste contamination at the Streamside Tailings Operable Unit over an estimated twelve-yearclean-up period. Any funds, including earnings, which are not ultimately required forthe remediation ofthe Streamside Tailings Operable Unit can be used by the state for natural resource restoration purposes. The scheduled ARCO Streamside Tailings Operable Unit payments into the "Tailings Fund" are: March 1999 $15 million (paid) July 1999 $15 million principal plus interest (paid) July 2000 $25 million principal plus interest (paid) July 2001 $25 million principal plus interest (paid) ARCO Interest payments by on these amounts totaled $12,785,534. In addition to payment ofassessment and litigation costs in the Page 6
The list of books you might like
