Local authorities fear IP has found exit strategy as negotiations on Superfund site fail
City of Libby officials and their legal representative are at an impasse in negotiations with a multi-billion dollar company over a deal that would continue to subsidize municipal water for residents due to long-standing groundwater pollution dated.
Since January, talks between the city and International Paper Company, the world’s largest paper maker, over a new contract have largely stalled, said Allan Payne, counsel representing Libby in the case.
“There has been a lot of back and forth to get IP to agree to meet with the city and they’re not even willing to do that,” Payne said in an interview on Nov. 22.
Richard J. Angell, an attorney representing IP declined to comment, saying he could not speak to the current legal issues.
The deal being debated would ensure that IP would continue to compensate residents for the cost of not being able to use the wells due to creosote and other chemicals that seeped into an aquifer below the city during past operations. wood treatment. Since the city passed an ordinance prohibiting residents from using groundwater due to pollution, IP and a company previously responsible for the contamination have subsidized the cost of providing residents with irrigation water from the Flower Reservoir. Creek.
After the previous agreement expired in June 2020, city officials and Payne claimed that IP had breached its legal obligation to compensate residents. Local officials, including Mayor Peggy Williams and City Councilor Kristin Smith, also criticize the EPA’s decision to withdraw from negotiations, as intellectual property is subject to a federal binding order to combat contamination. local groundwater.
Andrew Schmidt, the EPA repair project manager overseeing the Libby Ground Water Contamination Superfund site, said federal officials avoided talks because the agency was not a party to the deal. In addition, Schmidt said in a Nov. 29 statement, Payne had “specifically asked [EPA] not to be involved in negotiations.
Payne said the EPA may have misinterpreted its position on a separate but related issue. Regarding the new water deal between IP and the city, he said he would like to see the agency help with the talks.
“Without the involvement of the EPA, IP has no incentive to come to a deal, as IP’s ridiculous offer to date has demonstrated,” he said in a statement from the EPA. December 7.
While the EPA intends to stay out of negotiations, Schmidt said it was important for the city and IP to come to an agreement on the new water contract given that city officials have asked to postpone. talks on a Controlled Groundwater Zone (CGA) project until after the completion of negotiations.
âThe proposed CGA is a new institutional control that expands the city’s current ban on wells and is necessary to ensure that citizens are not exposed to groundwater that has been affected by the site,â he said. .
The CGA would expand restrictions on groundwater to protect residents of the neighboring county from contamination. Within the CGA zone, the future installation of wells would be prohibited. Landowners not connected to city water could receive compensation from IP for abandoning their wells and connecting to the municipal system. Landowners who currently use city water would receive offers from IP to abandon their wells. In the event those homeowners used well water for irrigation purposes, the company would offer compensation for the increased cost of using the city’s water, according to EPA documentation.
City officials fear the CGA proposal was initiated by IP as a way to bypass legal responsibility to treat and remedy groundwater and soil contamination. Williams, who became mayor after years on Libby City Council, said IP could then pay residents an upfront amount to shut down their wells rather than continually subsidizing the city’s water payments.
âThere would be no ongoing payment for their water or something like that,â she said.
IP’s legal advisor hinted that the CGA would not prevent a new water deal. In a September 2019 correspondence, Angell said that although the CGA and the water agreement relate to the impacted groundwater, “they perform separate functions.”
Compensation for companies for groundwater contamination in Libby dates back to 1985, when Champion International Corporation instituted a âWater Purchase Planâ. That year, Champion purchased St. Regis Co., which, along with J. Neils Lumber Co., was responsible for leaching wood processing fluids into aquifers below the city from 1946 to 1969, according to court documents. After detecting the chemicals in the water that owners in the Libby area were drawing from their wells, Champion offered to provide an alternative supply to affected residents.
Champion’s plan was expanded the following year as part of an appeals decision dossier for the groundwater site. Along with a 1986 Libby ordinance prohibiting residents from installing wells for human consumption and irrigation, Champion struck an agreement to pay the city directly “a fixed amount of irrigation water per household,” according to court documents.
“The main reason for [the] the installation of new wells by the residents of Libby was to avoid the increasing costs of the town’s water, âthe 1986 decision record reads.â Water use is the highest during the summer irrigation season for lawns and gardens. “
Beginning in October 1986, Champion began paying the town $ 30,000 per year for 10 years. In 2008, a few years after the acquisition of Champion by IP, the City signed a new agreement requiring payment of $ 400,000 for the 2008-2009 and 2009-2010 fiscal years. Under the city’s last agreement with IP, signed in 2010, IP was responsible for making annual payments to the city until at least June 2020.
Payments started at $ 250,000 and have been adjusted annually for inflation. The contract also required IP to pay a lump sum of $ 1.15 million to cover years in which the city had not received compensation.
Talks on the new deal began in June 2019 when an IP executive told city officials the company would not renew the 10-year contract.
In initial correspondence, Payne thanked lawyers representing the company for the opportunity to renegotiate the deal and suggested increasing IP’s contribution slightly. Payne noted in an August 2019 letter that the two previous IP contracts with the city were based on a compromise that the company would cover 23% of the expected operating costs of the city’s water system. After the city undertook a costly repair of the Upper Flower Creek Dam, which Payne said was in the neighborhood of $ 15 million, he proposed to increase IP’s contribution to 25%.
“Considering the significant expenses the city was forced to incur under the last water agreement, a slight increaseâ¦ is more than justified,” Payne wrote in the letter.
In response, Angell argued that the water deal was not intended to subsidize the water supply system, but rather to provide “a reasonable amount of free irrigation water to landowners,” according to a September 2019 letter. Angell also argued that Payne overstated the costs of the dam replacement project and claimed the CGA was irrelevant to negotiations on a new water deal.
Payne responded by saying he hoped his interpretation of Angell’s claim that the CGA would not replace the city ordinance would prove to be true. He said that “the course of these negotiations and the conduct of IP will eventually materialize or destroy this hope,” in a letter from November 2019. Payne again pointed to the previous agreements, which did “not mention the replacement of the ‘irrigation water as their sole or even partial objective’.
Opposing IP’s reliance on media accounts to assess the cost of the dam, Payne again asked the company to cover a quarter of the costs of the city’s water system.
As the end of the 2010 agreement neared, correspondence between the two parties began to stagnate.
âWhat is causing this deadlock is that IP doesn’t want to continue with the past payments,â Payne said. âIP is presenting itself as an innocent party because it did not operate the site it purchased from Champion. The way I see it is when they bought it from Champion, they knew there was contamination here.