Fansteel files lawsuit to cover costs of remediation

·3 min read

Jul. 29—Fansteel Metals Inc. filed a lawsuit seeking to recover a portion of more than $25 million the company alleges it has spent to clean up or contain hazardous substances at its contaminated site in Muskogee.

Muskogee City-County Port Authority is one among more than three dozen defendants from whom the company seeks to recover past costs or future contributions. Fansteel alleges the authority is liable as an owner of one of the four parcels that make up the 110-acre Fansteel site.

Fansteel alleges the remaining defendants must share in the cleanup and containment costs as vendors — companies that sold materials used by Fansteel that contributed to site contamination. Fansteel's claims, filed in the U.S District Court of Eastern Oklahoma, are based on the Comprehensive Environmental Response, Compensation and Liability Act of 1980.

The federal law imposes "cradle-to-grave liability" for management of hazardous material. Liability, which is limited by certain defenses, attaches at the moment of generation and continues through transportation, treatment, storage and disposal.

Lawyers representing Fansteel state in a complaint filed in late May that "hazardous substances at the Fansteel site have contaminated the soil, sediment, surface and ground water." Those substances, according to the complaint, threaten "the public health and environment."

Waste residual material generated by Fansteel's metal processing facility from 1957 until it closed in 1990 was treated and discharged into onsite ponds. The complaint, along with documents filed with the Nuclear Regulatory Commission, notes "several significant releases of materials" occurred while Fansteel operated, "impacting the groundwater and soil onsite."

Fansteel and FMRI, a subsidiary that owns two of the four parcels at the site adjacent to the Port of Muskogee, allegedly has spent more than $25 million "to perform various required response activities." Fansteel alleges the port authority, as owner of a 20-acre parcel, is responsible for at least some of past and future costs because it has failed "to satisfy the requirements of the innocent landowner defense" available pursuant to CERCLA.

Former Port Director Scott Robinson, who will retire at the end of the year but retains an executive post, said the port authority "did everything we should have done under CERCLA to limit our liability." Robinson said due diligence was done when the parcel was acquired.

Seven years passed before a groundwater plume was discovered beneath the tract acquired by the port authority. NRC documents show that was about the same time FMRI initially was scheduled to complete its first phase of its decommissioning, which has yet to be completed.

According to NRC, Fansteel's inability to fund FMRI's operations and regulatory hurdles slowed remediation efforts. A series of forbearance agreements with state and federal officials were followed by a second bankruptcy, during which time "Fansteel stopped funding FMRI, and the site was at imminent risk of abandonment."

State and federal regulators struck an environmental settlement agreement in 2020 during Fansteel's bankruptcy that will govern how proceeds from any insurance policies or property sales will be allocated for the eventual decommissioning of the site.

Erin Hatfield, communications director for the Oklahoma Department of Environmental Quality, said then it was unlikely the bankruptcy would "yield assets sufficient to fund cleanup" of the contaminated site. The proposed settlement agreement provides for an allocation of proceeds from insurance policies and sale of property at the Muskogee site among state and federal regulatory agencies.

Proceeds distributed to ODEQ and NRC, Hatfield said, "will be placed in the decommissioning trust." Those funds will be used to secure the site and continue treating the contaminated wastewater.

Estimates for decommissioning the site range from $80 million to $100 million in 2020. CERCLA provides a funding mechanism and federal authority to clean up sites when there are no viable parties responsible for the contamination for site remediation.

Superfund site authority is granted for the purpose of protecting public health and restore contaminated land to a productive use.

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