8th Cir. Holds that Union Pacific’s CERCLA Settlement with EPA Trumps Tolling Agreement

On August 8, 2014, the U.S. Court of Appeals for the Eighth Circuit issued a ruling affirming the lower court’s holding that Union Pacific (UP) did not breach the tolling agreement it entered into with ASARCO, LLC while a Freedom of Information Act (FOIA) dispute was being resolved with EPA. At the conclusion of the FOIA matter, UP settled its CERCLA liability for $25 million with EPA at the Omaha, Nebraska Lead CERCLA Site by means of a court-approved consent decree.

ASARCO, as owner and operator of this large lead smelting site, paid $214 million to settle its liability as it emerged from bankruptcy. ASARCO did not file any objections to UP’s separate settlement, but later argued that UP breached its tolling agreement with ASARCO by settling with EPA. However, the courts have now ruled that UP’s settlement with EPA provided UP with statutory protection under CERCLA against any further claims by ASARCO, with the courts noting that the tolling agreement, while it tolled the statutes of limitation, reserved to the parties all other rights and defenses. Accordingly, the separate CERCLA settlement essentially trumped the tolling agreement, which the courts narrowly construed according to Nebraska law.

Interestingly, the Court of Appeals noted that it had resolved an earlier business dispute between the parties regarding the smelter nearly 100 years ago. See American Smelter and Refining Company v. Union Pacific Railroad Company, 256 F.737 (8th Cir. 1919).

The case is ASARCO, LLC v. Union Pacific Railroad Company, No. 13-12830.