Freeport-McMoRan 2011 Annual Report Download - page 98

96 | FREEPORT-McMoRan COPPER & GOLD INC.
PDRC, about possible obligations to clean up contaminated
sediments in the creek. In March and April 2010, EPA notied
PDRC and ve others that EPA considers them to be PRPs under
CERCLA. e notied parties began working with EPA to identify
other PRPs, and EPA proposed that the notied parties perform
a Remedial Investigation/Feasibility Study (RI/FS) at their expense
and reimburse EPA for its oversight costs. EPA is not expected
to propose a remedy until aer a RI/FS is completed, which is
expected to take several years. On September 29, 2010, EPA
designated the creek as a Superfund site. Eective July 18, 2011,
PDRC and ve other parties entered an Administrative Order on
Consent to perform a RI/FS to assess the nature and extent of
environmental contamination in the creek and identify potential
remedial options. FCX’s nancial obligation for this matter was
estimated at fair value when it was assumed in the FMC acquisition
and is included in FCX’s aggregate environmental obligations. e
actual costs of fullling this remedial obligation and the allocation
of costs among PRPs are uncertain and subject to change based on
the results of the RI/FS, the remediation remedy ultimately
selected by EPA and related allocation determinations. Depending
on the overall cost and the portion allocated to PDRC, that share
could be material to FCX.
Gilt Edge Mine Site. On July 12, 2010, FCX was notied by the
U.S. Department of Justice, acting at the request of EPA, that it was
preparing to le suit in federal court against two of its wholly
owned subsidiaries (Cyprus Mines Corporation and Cyprus Amax
Minerals Company) and several other parties to recover costs
incurred or to be incurred by the U.S. in remediating hazardous
substances at the Gilt Edge mine site in Lawrence County, South
Dakota. e letter stated that the U.S. would assert that the Cyprus
entities are jointly and severally liable with the other parties for
all response costs incurred by the U.S. at this site under CERCLA.
e letter asserted that the U.S. had incurred approximately
$91 million in response costs and expected to incur signicant
additional response costs in the future.
In September 2011, FCX reached an agreement in principle to
settle this matter and is currently negotiating the terms of a
proposed consent decree with the U.S. If a settlement is nalized
that is consistent with the agreement in principle, the amount
paid would be nancially immaterial to FCX and less than the
amount currently included for this matter in FCX’s aggregate
environmental obligations. If the settlement is not nalized and
the U.S. government les suit, FCX intends to vigorously defend
this matter.
Historical Smelter Sites. FMC and its predecessors at various
times owned or operated copper and zinc smelters in several states,
including Arizona, Kansas, Oklahoma and Pennsylvania. For
some of these smelter sites, certain FCX subsidiaries have been
advised by EPA or state agencies that they may be liable for costs of
investigating and, if appropriate, remediating environmental
conditions associated with the smelters. At other sites, certain
FCX subsidiaries have entered into state voluntary remediation
programs to investigate and, if appropriate, remediate site
conditions associated with the smelters. e historical smelter sites
are in various stages of assessment and remediation. e two most
signicant environmental obligations for historical smelter sites
relate to Blackwell, Oklahoma, and Bisbee, Arizona. In 2011, FCX
increased the environmental obligations for historical smelter sites,
which were estimated at fair value when assumed in the FMC
acquisition, by $36 million, primarily at the Blackwell, Oklahoma,
site (refer to discussion below).
Blackwell. From 1916 to 1974, Blackwell Zinc Company, Inc.
(BZC), an indirect subsidiary of FCX, owned and operated a zinc
smelter in Blackwell, Oklahoma. In 1974, the smelter was
demolished and the property deeded to the Blackwell Industrial
Authority. Pursuant to an administrative order with the state of
Oklahoma, BZC undertook remedial actions in Blackwell in 1996
and 1997, including sampling the nearby residential and
commercial properties, and removing soils on properties that were
found to have metal concentrations above state-established cleanup
standards. From 1997 to 2003, BZC investigated the nature and
extent of groundwater contamination potentially attributable to
the former smelter and evaluated options for remedying such
contamination. In 2003, the state of Oklahoma adopted a cleanup
plan requiring the installation of a groundwater extraction and
treatment system and the closure of domestic groundwater wells
within the groundwater plume area. BZC completed the
construction of a groundwater extraction and treatment system,
with system startup and initial discharge of treated water
occurring in October 2010.
In 2007, FCX, on behalf of BZC, commenced a voluntary
community outreach program by inviting property owners in and
around Blackwell to have their properties sampled for the presence
of smelter-related contaminants, and oering to remediate
properties whose soils were found to have metal concentrations
above state-established cleanup standards. As of January 1, 2012,
residential yard cleanups associated with this outreach eort are
essentially complete, although it is possible that additional
property owners in the surrounding area could request sampling
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