Environmental Claims in Bankruptcy
Experts at Gnarus provided testimony in some of the largest bankruptcies involving environmental claims in U.S. history, including In re: ASARCO LLC, et al and In re: Tronox Incorporated, et al (as part of the subsequent litigation with Kerr McGee and Anadarko Petroleum). Analysis and testimony included estimation of environmental liabilities and natural resource damages, evaluation of response action consistency with the National Contingency Plan, allocation of liabilities among potentially responsible parties (PRPs), and present valuing liabilities using discount rates.
One such case was analysis and testimony in the ASARCO bankruptcy case, on behalf of the debtor ASARCO LLC. ASARCO had operated for over 100 years as a copper mining and smelting company, and had potential environmental liability at approximately 80 sites across the country. Initial claims by the US government, state governments, and PRPs were in excess of $6 billion.
The Gnarus experts were retained to independently estimate environmental liabilities at 26 of the largest sites. Specific deliverables included the filing of affirmative expert reports for each of the 26 sites, rebuttal expert reports responding to opposing experts for the US government, state governments, and PRPs, and deposition and trial testimony.
Probabilistic cost analysis was used to determine the expected value of environmental liabilities at each of the 26 sites. These analyses included the construction of decision trees, which specified the potential remedial technologies that may be employed at the sites, the costs, timing, and relative likelihood of those technologies, and the liability share of those costs apportioned to ASARCO. Monte Carlo simulation models were utilized to evaluate each of the decision trees and derive an expected value of ASARCO’s environmental liability at each of the sites.
Following over 20 depositions and 4 trials, the parties settled for approximately $1.8 billion, which at the time was the largest bankruptcy settlement in the history of the Superfund program. Settlement of the environmental liabilities was a key factor in allowing ASARCO to successfully emerge from Chapter 11 bankruptcy.