Freeport-McMoRan 2011 Annual Report Download - page 99

2011 ANNUAL REPORT | 97
and remediation of their properties. All of these soil sampling and
remediation activities are being coordinated with, and supervised
by, the state of Oklahoma.
On April 14, 2008, a purported class action was led against FCX
and several of its direct and indirect subsidiaries, including BZC,
entitled Coey, et al., v. Freeport-McMoRan Copper & Gold, Inc., et
al., Kay County, Oklahoma District Court, Case No. CJ-2008-68.
e suit alleges that the operations of BZC’s zinc smelter in
Blackwell, Oklahoma, from 1918 to 1974 resulted in contamination
of soils and groundwater in Blackwell. e complaint seeks
unspecied compensatory and injunctive relief and punitive
damages on behalf of current property owners as of December 19,
2011, for alleged environmental contamination and other damages
to real property. On December 19, 2011, the parties submitted a
proposed class settlement to the court for approval, and the court
entered a preliminary approval order. Because this is a class action,
the settlement requires public notice, opportunity for class
members to object or opt out, and a judicial fairness hearing,
which is scheduled for March 22, 2012. ere is some community
opposition to the settlement, so it is possible that it will not be
completed as agreed. If the settlement is approved, FCX will pay
approximately $70 million (of which the relevant amount is
included in environmental obligations and the remaining portion
in accounts payable and accrued liabilities) for monetary payments
to class members, additional environmental remediation of
certain properties in the class area, class counsel’s attorneys’ fees
and settlement administration expenses.
On December 7, 2009, 18 individuals led a related suit, entitled
Brown et al. v. Freeport-McMoRan Copper & Gold Inc., et al.,
Kay County, Oklahoma District Court, Case No. CJ-2009-213,
alleging personal injuries resulting from exposure to lead and
seeking compensatory and punitive damages. e case was settled
in December 2011 for an immaterial amount.
In January 2012, FCX was advised by representatives of Kay
County, Oklahoma (the county where the BZC smelter was located),
of plans to assert claims for damages against BZC for permitting
large quantities of smelter waste to be used as road building and ll
material throughout Kay County over a period of decades. Kay
County claims that it will seek nancial assistance for removing or
covering much of the material and damages for the alleged
public nuisance created by the presence of the material. FCX is in
the process of assessing these claims.
Bisbee. From the 1880s until 1975, FMC and certain predecessor
and subsidiary entities operated a copper mine near Bisbee,
Arizona. A series of smelters operated in Bisbee from approximately
1879 through 1908. In 2000, FMC entered the Bisbee area into
the Arizona Voluntary Remediation Program (VRP) administered
by ADEQ. In 2008, FMC expanded the VRP project to include
other communities near Bisbee and commenced a voluntary
community outreach program inviting property owners to have
soils at their properties sampled for the presence of smelter and
mine-related metals. For property owners whose soils are found to
have metal concentrations above ADEQ-established cleanup
standards, FMC has oered to remove the impacted soils and
replace them with clean soils. As a result, FCX increased its
environmental obligation for Bisbee soil cleanup by $31 million in
2009. For those property owners that requested sampling,
approximately 42 percent require some level of cleanup. As of
December 31, 2011, approximately 30 percent of the currently known
residential cleanups were completed.
Uranium Mining Sites.During a period between 1940 and the
early 1970s, certain FMC predecessor entities were involved in
uranium exploration and mining in the western U.S. Similar
exploration and mining activities by other companies have caused
environmental impacts that have warranted remediation, and
EPA and local authorities are currently evaluating the need for
signicant cleanup activities in the region. To date, FMC has
undertaken remediation at a limited number of sites associated
with these predecessor entities. An initiative to gather additional
information about sites in the region is ongoing, and information
gathered under this initiative was submitted to EPA Region 9
during the second and third quarters of 2008 and the fourth quarter
of 2009 in response to an information request by EPA regarding
uranium mining activities on Navajo Nation properties. FCX
utilized the results of FMC’s remediation experience, in combination
with historical and updated information to initially estimate
the fair value of uranium-related liabilities assumed in the FMC
acquisition. During 2011, FCX decreased the environmental
obligations estimate by $53 million to reect the remedial approaches
and timing decisions from EPA and the Navajo Nation on sites
that are associated with other parties. ese obligations are included
in FCX’s aggregate environmental obligations.
Asset Retirement Obligations (AROs).FCX’s ARO cost estimates
are reected on a third-party cost basis and comply with FCX’s
legal obligation to retire tangible, long-lived assets.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS