Union Pacific to Share in $482M Cleanup, 9th Says

(CN) - Union Pacific Railroad is partially responsible for a $482 million environmental cleanup bill in Northern Idaho, the 9th Circuit ruled Wednesday.

The decision reverses a finding that cleared Union Pacific from any further responsibility stemming from a superfund site located in Coeur d'Alene.

Asarco LLC and Union Pacific have participated in mining activity in Idaho's northern panhandle for almost a century. In 1983, the Environmental Protection Agency listed the 1,500-square-mile Coeur d' Alene site as a superfund site on the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) National Priorities List.

After a 78-day trial in 2003, Asarco was found at least 22 percent responsible for the environment damage. The company filed for Chapter 11 bankruptcy protection in 2005 to resolve more than $6.5 billion in environmental liabilities at 53 sites throughout the United States.

Asarco and Union Pacific came to a 2008 settlement containing a "mutual release" agreement that purportedly cleared the company of any further cleanup cost responsibility.

Asarco agreed in a separate settlement with Coeur d'Alene to settle for $482 million. The bankruptcy court approved the settlement in June 2009.

In June 2012, Asarco filed a contribution action seeking to have Union Pacific pay a share of the bill.

Union Pacific moved to dismiss on the basis that the claim was barred by the statute of limitations and the 2008 settlement. U.S. District Judge Edward Lodge in Boise ultimately found Asarco's claim timely but barred by provisions of the 2008 deal.

Reversing Wednesday, a three-judge panel with the 9th Circuit in Seattle found that the 2008 settlement was "ambiguous."

"Reading the contract the way Asarco suggests does not, as the district court found, render the release 'anything but mutual,'" U.S. District Judge Cormac Carney wrote for the court, sitting by designation from Santa Ana, Calif. "To the contrary, the release of both parties' claims regarding response costs incurred by Union Pacific - the subject of the parties' settlement - has the effect of preventing both parties from later claiming that their compromise amount as to those costs was too high or too low in light of later developments.

"We therefore conclude that the UP settlement is ambiguous because it can be reasonably understood to release only claims involving Remaining Sites Costs incurred by Union Pacific. It was error for the district court to conclude otherwise." Circuit Judges A. Wallace Tashima and Mary Murguia concurred.

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