Manko Gold Katcher & Fox LLP
Diana A. Silva
January 9, 2017
Last week, the United States Court of Appeals for the Tenth Circuit ruled that a PRP’s bankruptcy settlement of its CERCLA liability did not bar that PRP from later seeking contribution for a share of the settlement – despite the bankruptcy court’s determination that the settlement represented the PRP’s “fair share” of CERCLA liability.
The case – Asarco, LLC v. Noranda Mining, Inc., Dkt. No. 16-4045 (10th Cir. Jan. 3, 2017) – involves the Lower Silver Creek / Richardson Flat Site located near Park City, Utah, which had been used as a lead and silver ore mine since the 1870s. In August 2005, Asarco, a mining, smelting, and refining company, filed for Chapter 11 reorganization bankruptcy, which included approximately $6.5 billion environmental claims for 52 sites in 19 states. To approve Asarco’s settlement of these environmental claims, the bankruptcy court was required to determine that the settlement was “fair” and “reasonable,” under both bankruptcy law and CERCLA. Because parties that settle their CERCLA liability with the federal government receive protection from third-party contribution claims, to satisfy the “fair and reasonable” standard, the settlement must be “roughly correlated with some acceptable measure of comparative fault” for the settling party. To support its argument that the settlement for the various sites was “fair and reasonable,” Asarco’s former director of environmental services submitted a declaration with the bankruptcy court stating that the settlement was roughly equal to Asarco’s share of liability at the various sites, including the Lower Silver Creek / Richardson Flat Site.