Tremont LLC v. Halliburton Energy Services, Inc. (696 F. Supp. 2d 741, 2010)

United States District Court for the Southern District of Texas 2010-03-11

Citations

Full opinion text

MEMORANDUM AND OPINION

LEE H. ROSENTHAL, District Judge.

This case involves allocating responsibility for environmental remediation. The following motions are pending:

• Tremont LLC (“Tremont”) seeks partial summary judgment that Halliburton Energy Services, Inc. (“HESI”) and DII Industries, LLC (“DU”) (collectively, “Halliburton”) must indemnify Tremont for the costs and expenses it has incurred and will incur to remediate environmental contamination at three Texas locations where Gulf Nuclear, Inc. (“Gulf Nuclear” or “GNI”) manufactured, stored, repaired, and disposed of radioactive materials (the “Gulf Nuclear Sites”). (Docket Entry No. 8; 2005 Case, Docket Entry No. 247). The motion includes a request for indemnification for claims raised in a related civil case filed in this district by the Environmental Protection Agency (EPA) against Halliburton, NL Industries, Inc. (“NL”), and other entities. (2005 Case, Docket Entry No. 252 at 1-2). That case is referred to as the “EPA lawsuit.”

• Halliburton has filed a third-party complaint against NL seeking indemnification or, alternatively, contribution under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). NL moves to dismiss Halliburton’s third-party complaint, or in the alternative, for summary judgment. (Docket Entry No. 19).

• NL has filed a motion to stay discovery, (Docket Entry No. 26), and a separate motion for partial summary judgment, (Docket Entry No. 56).

• Halliburton seeks a continuance of both Tremont’s motion for partial summary judgment, (Docket Entry No. 11), and of NL’s motion for partial summary judgment, (Docket Entry No. 58).

• Halliburton moves for leave to file under seal certain exhibits to its surreply to Tremont’s reply to Halliburton’s supplemental response to Tremont’s motion for partial summary judgment. (Docket Entry No. 63).

• Tremont has filed a motion to supplement the summary judgment record, (Docket Entry No. 70), and a sealed motion for leave to file under seal its response to Halliburton’s objection to Tremont’s supplemental evidence and its memorandum in further support of the motion to supplement the summary judgment record, (Docket Entry No. 74).

• Halliburton has filed a motion for leave to supplement the summary judgment record. (Docket Entry No. 86).

This court held hearings and heard oral argument from counsel. Based on the motions, the responses, and the replies; the present record; the arguments of counsel; and the applicable law, this court reaches the following conclusions:

• There is no genuine dispute of fact as to whether NL’s potential liability for the Gulf Nuclear Sites stems solely from NL’s former petroleum services business.

• Issue preclusion applies to the interpretation — made by an arbitration panel in an earlier arbitration — of the relevant contracts. That interpretation places the responsibility for the Gulf Nuclear Sites on Halliburton.

• This court’s own interpretation of the relevant contracts places the responsibility for the Gulf Nuclear Sites with Halliburton.

• NL transferred its petroleum services business to its subsidiary, NL Petroleum Services, Inc. (“NLPS”), in a 1988 restructuring, and then to New Baroid in a 1990 restructuring. Under both the arbitrators’ and this court’s contract interpretation, both restructurings included the transfer of all historical liabilities associated with NL’s petroleum services business, including historical liabilities arising from assets undisputedly New Baroid’s successor, Halliburton is responsible for historical liabilities associated with NL’s former petroleum services business, including historical liabilities associated with assets or operations that NL sold before the 1988 restructuring became effective.

The result of these conclusions is that this court:

• grants Tremont’s motion for partial summary judgment;

• denies Halliburton’s request for a continuance of Tremont’s motion for partial summary judgment;

• grants in part and denies in part NL’s alternative motion for summary judgment based on issue preclusion, and denies NL’s motion to dismiss as moot;

• denies NL’s motion for partial summary judgment based on contract interpretation and motion to stay discovery as moot;

• denies Halliburton’s request for a continuance to respond to NL’s motion for partial summary judgment as moot;

• grants Halliburton’s motion for leave to file exhibits under seal; grants Tremont’s motion to supplement the summary judgment record; denies Tremont’s motion for leave to file one of its responses under seal as moot; and denies Halliburton’s motion for leave to supplement the summary judgment record.

The reasons are set out in detail below. A status conference is set for March 30, 2010, at 2:00 p.m., to discuss a schedule for resolving the remaining issues.

Table of Contents

I. Procedural Background.....................................................747

II. The Legal Standards.......................................................749

A. Summary Judgment...................................................749

B. Motions to Dismiss ....................................................750

C. Issue Preclusion.......................................................751

III. Tremont’s Motion for Partial Summary Judgment..............................751

A. The Facts Relevant to Tremont’s Motion .................................751

1. The 1988 Restructuring.............................................752

a. The 1988 Plan .................................................752

b. The Formation Agreement......................................753

c. The Cross-Indemnification Agreement............................755

d. The Assumption Agreement.....................................756

e. The Indebtedness Agreement....................................756

2. The 1990 Restructuring.............................................756

3. The Evidence in the Arbitration About the Transfer of NL’s Former Petroleum Services Business to Halliburton.........................758

a. The Affidavits of J. Landis Martin, Steven L. Watson, William Lindquist, and Harold C. Simmons.............................759

b. The SEC Information Statement.................................762

c. The New Baroid/Dresser/Halliburton Mergers.....................763

d. Testimony in the Arbitration Proceeding..........................763

i. The Arbitration Testimony of J. Landis Martin ...............764

ii. The Arbitration Testimony of William Lindquist...............766

iii. The Arbitration Testimony of Steve Watson..................767

iv. The Arbitration Testimony of Harold Simmons................768

v. The Arbitration Testimony of Ann Manix.....................768

vi. The Arbitration Testimony of John Karnes...................769

vii. The Arbitration Testimony of John Deering..................770

viii. The Arbitration Testimony of Joseph S. Compofelice...........770

4. The Sale of the McCullough Division to Western Atlas..................772

5. Western Atlas v. NL Industries, Inc..................................773

6. The Sale of Oilfield Service Facilities to Exxon.........................774

7. Tremont’s Request for Indemnification from Halliburton for the Gulf Nuclear Site Liabilities...........................................775

8. The Arbitration Panel’s Decision.....................................777

9. The Evidence as to Whether Liabilities Associated with the Gulf Nuclear Sites Are Part of NL’s Former Petroleum Services Business........................................................781

a. The McCullough Division’s Activities at the Gulf Nuclear Sites.....781

b. Shipping Slips and Receiving Logs Showing Shipments of Radioactive Material from NL and Its Subsidiaries...............782

c. Witness Statements and Testimony of Former Gulf Nuclear Employees..................................................791

d. NL Annual Reports............................................793

e. NL Board Minutes.............................................796

f. The Public Record..............................................796

g. Halliburton’s Discovery Responses...............................797

h. Use of Nuclear Materials in Petroleum Services Operations..........798

i. NL’s Nuclear Division..........................................799

j. EPA Claims Linking NL to the Gulf Nuclear Sites .................802

k. Affidavits and Declarations of Former NL Employees Stating that NL’s Connection to the Gulf Nuclear Sites Was Through Its Petroleum Services Business ...............................807

B. Halliburton’s Request for a Continuance..................................810

1. Background and the Parties’ Arguments..............................810

2. Analysis of the Motion for Continuance...............................814

C. There Is No Dispute as to'Any Fact Material to Determining Whether NL’s Connection to the Gulf Nuclear Sites Was Only Through Its Former Petroleum Services Business ...................................815

D. Issue Preclusion.......................................................820

1. The Parties’ Contentions............................................820

2. Analysis..........................................................821

a. The Application of Issue Preclusion to an Arbitration Award.........823

b. Identity of the Issues...........................................825

c. The Issue Was Actually Litigated in the Arbitration................835

d. The Arbitration Panel’s Findings Were Necessary to Its Award.....838

E. Contract Interpretation ................................................839

IV. NL’s Motion to Dismiss.....................................................852

A. Conversion to a Motion for Summary Judgment...........................852

B. Analysis..............................................................853

V. NL’s Motion for Partial Summary Judgment..................................860

VI. NL’s Motion to Stay Discovery.............................................-. 861

VII. Conclusion................................................................862

I. Procedural Background

In the related 2005 Case, Halliburton sought to recover the money it spent investigating and remediating environmental contamination near the towns of Magnet Cove and Malvern Arkansas (the “Malvern Site”). The relevant background has been set out in previous opinions issued in the 2005 Case and is only summarized here.

Briefly, Halliburton filed the 2005 Case against the Tremont Parties—NL, Tremont, TRE Holding Corporation, and TRE Management Company—M-I, L.L.C., Milwhite Inc., and Georgia-Pacific Corporation, after entering into an Administrative Settlement Agreement in 2000 and a Consent Administrative Order in 2003 with the Arkansas Department of Environmental Quality (“ADEQ”). In April 2005, before the litigation over allocating responsibility for cleaning up the Malvern Site, TRE Management and Halliburton entered into a Cost Sharing, Cooperation, and Final Allocation Process Agreement (the “2005 Cost Sharing Agreement’,’). This 2005 Cost Sharing Agreement included a procedure to,allow the parties to cooperate in funding the response and remediation costs for the Malvern Site by “allocating on an interim basis.” The 2005 Cost Sharing Agreement also set out a procedure for the parties to reach a “Final Allocation” of “their and others’ respective shares of such past, present, and future costs, expenses, liabilities, settlements, recoveries, or unpaid shares relating to the [Malvern] Site .... ” The 2005 Cost Sharing Agreement defined “Final Allocation” as a “full, final, and binding apportionment among the Parties to the Agreement,” by agreement or by arbitration, of defined categories of costs, including future costs. Under the 2005 Cost Sharing Agreement, if mediation did not result in “Final Allocation,” the parties were required to participate in binding arbitration under the Commercial Arbitration Rules of the American Arbitration Association and the Federal Arbitration Act.

In late 2005, Halliburton filed the 2005 Case against the Tremont Parties as prior owners and operators of the Malvern Site when hazardous substances were released, or as suecessors-in-interest to owners or operators. Halliburton also sued Georgia-Pacific, as a prior owner of the Malvern Site, and Milwhite, as a prior owner and operator of the Malvern Site. Halliburton asserted cost-recovery and contribution claims under CERCLA, 42 U.S.C. §§ 9607(a) and 9613(f)(3)(B), contribution claims under the Arkansas Remedial Action Trust Fund Act (RATFA), ArkCode Ann. § 8-7-520, and a right to recover response and remediation costs under a state common-law unjust enrichment cause of action. Halliburton also sought a declaratory judgment that the defendants were liable for future response and remediation costs at the Malvern Site and that Tremont had to indemnify Halliburton for these costs under the contracts used to restructure the corporate predecessors-in-interest. Georgia-Pacific and Milwhite counterclaimed against Halliburton and crossclaimed against each other and against their codefendants, the Tremont Parties, seeking contribution and indemnity-

In March 2006, after the 2005 Case and a related lawsuit in Arkansas had been filed, Halliburton and the Tremont Parties entered into an agreement expanding the entities consenting to arbitrate the allocation of response and remediation costs at the Malvern Site. In this 2006 Arbitration Agreement, the parties agreed to “resolve through binding arbitration all claims between them related to the allocation of response and remediation costs incurred or to be incurred at the [Malvern] Site including the claims that have been asserted in the Texas Case or such claims that may be asserted in [a related] Arkansas Case.” The signatories to the 2006 Arbitration Agreement included HESI, DII, NL, Tremont, TRE Holding, and TRE Management. The arbitration was to be conducted under the 2005 Cost Sharing Agreement.

The arbitration between Halliburton and the Tremont Parties was conducted in two phases and resulted in two awards. Among the parties to the arbitration, the arbitration panel allocated all response costs at the Malvern Site to Halliburton. This court confirmed the arbitration awards on March 31, 2008, and later entered final judgment under Federal Rule of Civil Procedure 54(b) on the claims resolved in the arbitration. Halliburton appealed the order confirming the awards and the final judgment on the confirmation order. The Fifth Circuit affirmed.

After this court confirmed the arbitration awards in the 2005 Case, Tremont filed the 2008 Case against Halliburton. In the 2008 Case, Tremont asserts a claim for breach of contract and for contractual indemnity, “seeking] to recover from Halliburton costs and expenses that Tremont has incurred and will incur to defend, indemnify, investigate and respond to a number of environmental sites and claims that derive from the former petroleum services business of NL.” (Docket Entry No. 1 at 2, 5-7). The sites and claims for which Tremont seeks indemnity include the “Gulf Nuclear Sites” located in Odessa, Ector County, Texas; Webster, Harris County, Texas; and (Tavenor Street) Houston, Harris County, Texas; the Malone Service Company located in Galveston County, Texas; the Spinks Site located in Laurel, Mississippi; the Potosí and Fountain Farm Sites located in Washington County, Missouri; the ArChem-Thames Chelsea Superfund Site located in Houston, Texas; and the Olen Lee family toxic tort case located in Calcasieu Parish, Louisiana (collectively, the “Sites”). (Id. at 2).

In the 2008 Case, “Tremont also seeks a declaratory judgment that Halliburton is contractually liable to Tremont to indemnify and hold Tremont harmless against all costs and expenses arising out of or otherwise attributable to NL’s former petroleum services business ..., except those [liabilities] specifically retained in the 1990 Plan of Restructuring .... ” (Id.; see also id. at 7-8). Tremont alleges that because the arbitration panel found that Halliburton is contractually liable to indemnify Tremont for all costs and expenses arising out of NL’s former petroleum services business, issue preclusion prevents Halliburton from relitigating that issue here. (Id. at 2). Tremont also asserts a contribution claim under CERCLA. (Id. at 8-9).

Halliburton filed a third-party complaint against NL, asserting that as the former owner of the Sites, NL is contractually and statutorily obligated to indemnify Halliburton for all liabilities associated with the Sites. (Docket Entry No. 13). Halliburton asserts a claim for breach of contract, claiming that as part of the 1988 restructuring, NL agreed to indemnify NLPS and its successors for liability associated with operations not transferred to NLPS in that restructuring. (Id. at 6-7). Halliburton argues that many of the obligations arising from the Sites are attributable to operations not transferred to NLPS in 1988. (Id. at 7). Halliburton also seeks a declaratory judgment that NL is obligated to indemnify Halliburton for expenses arising out of businesses that NL transferred before the 1988 restructuring. (Id. at 8). In the alternative, Halliburton asserts a claim for contribution and cost recovery under CERCLA. (Id. at 8-9).

Tremont has moved for partial summary judgment that Halliburton is responsible for all costs and expenses that Tremont has incurred in connection with the Gulf Nuclear Sites. Tremont argues that it is entitled to judgment based on the relevant contracts and based on issue preclusion. NL asserts that the third-party complaint against it should be dismissed based on issue preclusion and also seeks partial summary judgment based on contractual interpretation.

These motions, and the parties’ arguments and responses, are considered below.

II. The Legal Standards

A. Summary Judgment

Summary judgment is appropriate if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c)(2). “The movant bears the burden of identifying those portions of the record it believes demonstrate the absence of a genuine issue of material fact.” Triple Tee Golf, Inc. v. Nike, Inc., 485 F.3d 253, 261 (5th Cir.2007) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-25, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).

If the burden of proof at trial lies with the nonmoving party, the movant may satisfy its initial burden by “ ‘showing’ — that is, pointing out to the district court — ’that there is an absence of evidence to support the nonmoving party’s case.” Celotex, 477 U.S. at 325, 106 S.Ct. 2548. While the party moving for summary judgment must demonstrate the absence of a genuine issue of material fact, it does not need to negate the elements of the nonmovant’s case. Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir.2005) (citation omitted). “ ‘A fact is ‘material’ if its resolution in favor of one party might affect the outcome of the lawsuit under governing law.’” Sossamon v. Lone Star State of Texas, 560 F.3d 316, 326 (5th Cir.2009) (quoting Hamilton v. Segue Software, Inc., 232 F.3d 473, 477 (5th Cir.2000) (per curiam)), petition for cert. filed, 77 U.S.L.W. 3657 (U.S. May 22, 2009) (No. 08-1438). “ ‘If the moving party fails to meet [its] initial burden, the motion [for summary judgment] must be denied, regardless of the nonmovant’s response.’ ” United States v. $92,203.00 in U.S. Currency, 537 F.3d 504, 507 (5th Cir.2008) (quoting Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (en banc) (per curiam)).

When the moving party has met its Rule 56(c) burden, the nonmoving party cannot survive a summary judgment motion by resting on the mere allegations of its pleadings. The nonmovant must identify specific evidence in the record and articulate how that evidence supports that party’s claim. See Baranowski v. Hart, 486 F.3d 112, 119 (5th Cir.2007) (citation omitted). “This burden will not be satisfied by ‘some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence.’” Boudreaux, 402 F.3d at 540 (quoting Little, 37 F.3d at 1075). In deciding a summary judgment motion, the court draws all reasonable inferences in the light most favorable to the nonmoving party. Deville v. Marcantel, 567 F.3d 156, 163-64 (5th Cir.2009) (per curiam) (citing Hockman v. Westward Commc’ns, LLC, 407 F.3d 317, 325 (5th Cir.2004)).

B. Motions to Dismiss

Rule 12(b)(6) allows dismissal if a plaintiff fails “to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). In Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and Ashcroft v. Iqbal, — U.S. -, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), the Supreme Court confirmed that Rule 12(b)(6) must be read in conjunction with Rule 8(a), which requires “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R.Civ.P. 8(a)(2). Twombly abrogated the Supreme Court’s prior statement in Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957), that “a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” See Twombly, 550 U.S. at 562-63, 127 S.Ct. 1955 (“Conley’s ‘no set of facts’ language ... is best forgotten as an incomplete, negative gloss on an accepted pleading standard ....”). To withstand a Rule 12(b)(6) motion, a complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570, 127 S.Ct. 1955; see also Elsensohn v. St. Tammany Parish Sheriffs Office, 530 F.3d 368, 372 (5th Cir.2008) (quoting Twombly, 550 U.S. 544, 127 S.Ct. at 1974).

In considering a Rule 12(b)(6) motion to dismiss, a court generally must limit itself to the pleadings, with an exception. In Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir.2000), the Fifth Circuit approved the district court’s consideration of documents the defendant attached to a motion to dismiss. The Fifth

Circuit made it clear that such consideration is limited “to documents that are referred to in the plaintiffs complaint and are central to the plaintiffs claim.” Scanlan v. Tex. A & M Univ., 343 F.3d 533, 536 (5th Cir.2003) (citing Collins, 224 F.3d at 498-99). When other “matters outside the pleadings” are submitted in support of or in opposition to a Rule 12(b)(6) motion to dismiss, Rule 12(b) grants courts discretion to accept and consider those materials, but does not require them to do so. Prager v. LaFaver, 180 F.3d 1185, 1189 (10th Cir.1999); Isquith ex rel. Isquith v. Middle S. Utils., Inc., 847 F.2d 186, 193 n. 3 (5th Cir.1988). A court exercises this discretion by determining whether the proffered material, and the resulting conversion from the Rule 12(b)(6) to the Rule 56 procedure, is likely to facilitate decision. Isquith, 847 F.2d at 193 n. 3 (quoting 5C Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1366 (1969)). If the court decides to consider such material, then the court must treat the Rule 12(b)(6) motion as a motion for summary judgment under Rule 56. Fed.R.Civ.P. 12(d). If the court accepts matters outside the pleading and converts the motion to dismiss into one for summary judgment, the court must give the parties notice of the changed status of the motion and a “ ‘reasonable opportunity to present all materials made pertinent to such a motion by Rule 56.’ ” Festa v. Local 3 Int’l Bhd. of Elec. Workers, 905 F.2d 35, 38 (2d Cir.1990) (quoting former Fed.R.Civ.P. 12(b)).

C. Issue Preclusion

The Fifth Circuit has set out the following elements for applying issue preclusion, or collateral estoppel:

Collateral estoppel precludes a party from litigating an issue already raised in an earlier action between the same parties only if: (1) the issue at stake is identical to the one involved in the earlier action; (2) the issue was actually litigated in the prior action; and (3) the determination of the issue in the prior action was a necessary part of the judgment in that action.

Petro-Hunt, L.L.C. v. United States, 365 F.3d 385, 397 (5th Cir.2004) (footnotes and citation omitted). “Collateral estoppel does not preclude litigation of an issue unless both the facts and the legal standard used to assess them are the same in both proceedings.” Copeland v. Merrill Lynch & Co., Inc., 47 F.3d 1415, 1422 (5th Cir.1995) (citation omitted). Issue preclusion may apply even if the claims and the subject matter of the suits differ. Next Level Commc’ns LP v. DSC Commc’ns Corp., 179 F.3d 244, 250 (5th Cir.1999) (citation omitted). In addition, “ ‘[u]nlike claim preclusion, the doctrine of issue preclusion may not always require complete identity of the parties.’ ” Id. (alteration in original) (quoting Meza v. Gen. Battery Corp., 908 F.2d 1262, 1273 (5th Cir.1990)).

III. Tremont’s Motion for Partial Summary Judgment

A. The Facts Relevant to Tremont’s Motion

Tremont’s motion seeks to resolve liability for the Gulf Nuclear Sites, which include three locations — Odessa, Webster, and Houston (on Tavenor Street), Texas— at which Gulf Nuclear manufactured, stored, repaired, and disposed of radioactive materials. Liability turns on whether the transfer of certain liabilities and indemnification obligations under the 1988 restructuring of NL and the 1990 restructuring of (Old) Baroid Corporation included the liabilities associated with the Gulf Nuclear Sites. The relevant facts include the restructuring contracts and related documents, evidence that was presented to the arbitration panel, and evidence as to whether NL’s connection to the Gulf Nuclear Sites was solely through its former petroleum services business. Although this court ultimately concludes that extrinsic evidence is not necessary because the relevant agreements are unambiguous, the evidence presented to the arbitration panel is included in the factual background because it is relevant to understanding the scope of the arbitration proceedings, which is relevant to the issue preclusion analysis.

1. The 1988 Restructuring

a. The 1988 Plan

In 1988, NL entered a series of transactions under a restructuring plan (the “1988 Plan”). (See 2005 Case, Docket Entry No. 247, Ex. 1). Through the 1988 Plan and related agreements, NL spun off its petroleum services business and transferred it to NLPS, which later became Baroid Corporation (“Old Baroid”). NL retained its chemical business. According to an August 12, 1988 memorandum from J.L. Martin, then President and Chief Executive Officer of NL, to NL’s Board of Directors, the 1988 restructuring sought to separate the two businesses. (See id., Ex. N). The memorandum recommended that NLPS become a “separate, publicly-traded company, comprised of [NL’s] existing petroleum services business .... NLPS would assume the ... environmental liabilities unique to the petroleum services business.” (Id., Ex. N at 7).

As Tremont points out, the 1988 Plan was an unsigned outline of the restructuring that relied on the related agreements to set out the specifics. (2005 Case, Docket Entry No. 252 at 8). Several documents were executed in connection with the 1988 restructuring in addition to the 1988 Plan. The documents included an Amended and Restated Formation Agreement (the “Formation Agreement”), an Amended and Restated Cross-Indemnification Agreement (the “Cross-Indemnification Agreement”), a General Assignment and Assumption Agreement and Bill of Sale (the “Assumption Agreement”), and an Amended and Restated Outstanding Indebtedness Agreement (the “Indebtedness Agreement”).

b. The Formation Agreement

In the Formation Agreement, dated September 16, 1988 and effective as of December 31, 1987, NL agreed to transfer to NLPS “all of its properties, assets and rights of any kind, whether tangible or intangible, real or personal,] related to its petroleum services business or Titanium Metals Corporation of America (‘TMCA’) (collectively, the ‘Assets’) .... ” (2005 Case, Docket Entry No. 247, Ex. J, § l.l). The Formation Agreement states that the transfer from NL to NLPS excluded the assets on an “Excluded Assets Schedule” and “all goodwill and going concern value of NL that [wa]s not associated with TMCA or the petroleum services operations of NL.” (Id., Ex. J, § 1.2). The Excluded Assets Schedule includes a subheading entitled “Section 1.2,” apparently referring to Section 1.2 of the Formation Agreement. (Id., Ex. J at 6). The Schedule lists: shares of the capital stock of NL Chemicals, Inc. (“NLC”) and its subsidiaries, Enenco, Inc., and Schraubenfabrik Newstadt Goetz & Cie. GmbH; a note receivable from NLC; and surplus property. (Id., Ex. J at 6).

In the Formation Agreement, NLPS agreed “to assume, pay, discharge or perform when due all liabilities and obligations, known or unknown, of NL, associated with its petroleum services business ..., including without limitation those liabilities listed on the attached Liabilities Schedule, but excluding” specifically named liabilities. (Id., Ex. J, § 1.3 (emphasis added)). Among the liabilities expressly excluded from the transfer to NLPS were “any and all liabilities of NL specified in the Amended and Restated Outstanding Indebtedness Agreement between NLPS and NL dated September 16, 1988 ... except as provided in the Indebtedness Agreement,” (id., Ex. J, § 1.4(a)), “any claims of liability at sites or facilities or with respect to operations not transferred to NLPS pursuant to this Agreement, including claims arising out of or relating to the offsite deposit, placement or disposal by NL of any materials of any character whatsoever generated at the sites or operations not transferred to NLPS pursuant to this Agreement,” (2005 Case, Docket Entry No. 247, Ex. J, § 1.4(c) (emphasis added)), and “any claims relating to products the manufacture of which, or accounts receivable relating thereto, not transferred to NLPS pursuant to this Agreement,” (id., Ex. J, § 1.4(d)).

Under the Formation Agreement, NL was required to “transfer and deliver to NLPS good and valid title to the Assets to the extent such Assets are transferable on the Effective Date without violation of any applicable laws or agreements and in conformity with any required third-party or governmental consents or other approvals for transfer.” (Id., Ex. J, § 3.1). NLPS agreed “to assume and fully pay, perform and discharge each and all of the Assumed Liabilities in accordance with their terms.” (Id., Ex. J, § 3.1).

The Formation Agreement recognized that other agreements would be executed to transfer the assets and liabilities:

The transfer of the Assets and the assumption of the Assumed Liabilities shall be effected by the execution and delivery of a General Assignment and Assumption Agreement and Bill of Sale, an Assignment of Intangibles, Rights and Proceeds, a Patent Assignment, a Copyright Assignment, a Patent Quitclaim Assignment, Trademark Assignment, and Assumption of Liabilities substantially in the forms of the documents attached hereto as Exhibit A, Exhibit B, Exhibit C, Exhibit D, Exhibit E, Exhibit F and Exhibit G respectively, together with such deeds or other instruments as may be required to transfer all interest in the Assets to NLPS and for NLPS to assume all of the Assumed Liabilities.

(Id., Ex. J, § 3.1). The Formation Agreement also required execution of the Cross-Indemnification Agreement and the Indebtedness Agreement. (Id., Ex. J, § 3.4).

c. The Cross-Indemnification Agreement

The Cross-Indemnification Agreement was dated September 16, 1988 and effective as of December 31, 1987. NL and NLC agreed “to indemnify and hold NLPS harmless from, against and in respect of all indebtedness, obligations or liabilities of NLPS, of any kind and nature, whether accrued, absolute, contingent, asserted, unasserted, due to become due, known, unknown and whenever arising, which are not expressly assumed by NLPS pursuant to the Formation, and costs and expenses related thereto.” (2005 Case, Docket Entry No. 247, Ex. K, § 1.1 (emphasis added)). NL and NLC also agreed to “indemnify and hold NLPS and each of its directors, officers, and employees harmless from and with respect to any and all claims, liabilities, losses, damages, costs, and expenses, including attorneys’ fees, from or related to ... (a) all liabilities not expressly assumed by NLPS in connection with the Formation Agreement; [and] (b) claims of liability at sites or facilities or with respect to operations not transferred to NLPS pursuant to the Formation, including claims arising out of or relating to the offsite deposit placement or disposal by NL or NLC on or prior to the date of this Agreement of any materials of any character whatsoever generated at the sites or by operations not transferred to NLPS pursuant to the Formation. ” (Id., Ex. K, § 1.2(a)-(b) (emphasis added)). NLPS agreed “to indemnify and hold the NL Parties [ (NL and NLC) ] harmless from, against and in respect of, the failure of NLPS to pay or otherwise perform when due the liabilities, obligations or commitments of NL assumed by NLPS pursuant to the Formation.” (Id., Ex. K, § 2. 1).

In addition, NLPS agreed to:

indemnify and hold the NL Parties, their affiliates, and each of their directors, officers, and employees harmless from and with respect to any and all claims, liabilities, losses, damages, costs, and expenses, including attorneys’ fees, from or related to ... (a) all liabilities of NL assumed by NLPS pursuant to the Formation Agreement; [and] (b) claims of liability at sites or facilities or with respect to operations transferred to NLPS pursuant to the Formation, including claims arising out of or relating to the deposit, placement or disposal of any material of any character whatsoever on such sites or facilities.

(Id., Ex. K, § 2.2(a)-(b)).

d. The Assumption Agreement

The Assumption Agreement was dated April 11, 1988 and effective as of December 31, 1987. Under that Agreement, NL conveyed all its assets to NLPS, including NL’s right, title, and interest in contracts to which it was a party, related to its petroleum services business. (Id., Ex. L at 1-2). The transferred assets included “all real property (including all property affixed thereto) now or heretofore used primarily in NL’s petroleum services business including without limitation the real property set forth in Exhibit A.” (Id., Ex. L at 1). Exhibit A to the Assumption Agreement lists certain real properties, labeled by city, state, and division. A number of the properties on Exhibit A are labeled as part of the “MCC” Division, (see 2005 Case, Docket Entry No. 247, Ex. L at 5-6), which Tremont represented during the hearing on its motion stands for NL’s McCullough Division (the “McCullough Division” or “NL McCullough”). As discussed in more detail later, the McCullough Division has been linked to waste shipments to the Gulf Nuclear Sites.

NLPS agreed “to perform the obligations of NL under the contracts, leases and other agreements or undertakings that [wejre included among” the assets transferred; “to pay, discharge or perform when due all of the Assumed Liabilities set forth on the Assumed Liabilities Schedule attached to the Formation Agreement”; and “to conduct, in a diligent and proper manner, any litigation arising from the Assumed Liabilities.” (Id., Ex. L at 3). But the Assumption Agreement provides that NLPS did not “assume and shall not be liable for any of the Excluded Liabilities,” as defined in the Formation Agreement. (Id., Ex. L at 3).

e. The Indebtedness Agreement

The parties also executed the Indebtedness Agreement, dated September 16,1988 and effective as of December 31, 1987. That Agreement notes that “NL transferred to NLPS all of its domestic and foreign petroleum services business, except for certain of NL’s obligations ... and certain other properties of NL.” (Id., Ex. M at 1). NLPS agreed to “assume and unconditionally guarantee to NL: ... (b) the performance of discharge by NLPS on behalf of NL of any and all obligations, covenants and agreements of NL contained in the documents and instruments described on the Debt Schedule”; and “(c) the performance or discharge by NLPS on behalf of NL of any and all other indebtedness and obligations of NL which are attributable to NL’s petroleum services business.” (Id., Ex. M, § 1(b)-(c)).

2. The 1990 Restructuring

The 1990 restructuring of NL’s former petroleum services business was effectuated through a 1990 Plan of Restructuring (the “1990 Plan”), effective as of August 31,1990. Under the 1990 Plan, Old Baroid (formerly NLPS) was to retain the bentonite and titanium businesses and their associated liabilities. A company called New Baroid Corporation (“New Baroid”) was to receive the “Petroleum Services Business” — a defined term — and its liabilities. The 1990 Plan states that “[NL] has heretofore indirectly owned and operated its petroleum services operations (the ‘Petroleum Services Business’) principally through its subsidiaries .... ” (Id., Ex. A at 1). The 1990 Plan explains that its purpose was for Old Baroid to “separate the Petroleum Services Business and the Titanium and Bentonite Businesses into two publicly-traded companies.” (2005 Case, Docket Entry No. 247, Ex. A at 1 (emphasis added)).

Under the 1990 Plan, the parties agreed to the following arrangement:

[Old Baroid] and New Baroid shall execute a General Assignment and Assumption Agreement whereby (i) [Old Baroid] assigns to New Baroid all of its right, title and interest in all of [Old Baroid’s] properties, assets and rights, of any kind, whether tangible or intangible, real or personal, which are attributable to the Petroleum Services Business (the “Petroleum Services Assets”) and the Bentonite Business (the “Bentonite Assets”); and (ii) New Baroid assumes and agrees to discharge all indebtedness, liabilities, obligations, claims, covenants, losses, damages, costs, penalties and expenses, of any kind and nature, whether accrued, absolute or contingent, asserted or unasserted, known or unknown, and whether existing as of the date of this Plan or arising thereafter (collectively, “Obligations”), of [Old Baroid] arising out of, or which are otherwise-attributable to, the past, present or future ownership or operations of the Petroleum Services Business (the “Petroleum Services Obligations”); and (iii) [Old Baroid] endorses in blank and delivers to New Baroid certificates representing all of the outstanding capital stock of all of its direct subsidiaries engaged in the Petroleum Services Business, including without limitation the Petroleum Services Subsidiaries.

(Id., Ex. A, § 1(a)).

In addition, New Baroid and BDFI, a Petroleum Services Subsidiary, agreed to execute a General Assignment and Assumption Agreement. New Baroid would assign to BDFI all of its right, title, and interest in all of the Petroleum Services Assets and the Bentonite Assets (with a few exceptions not relevant here), and BDFI agreed to discharge all “Obligations” of New Baroid arising out of or otherwise attributable to the past, present, or future ownership of the Petroleum Services Assets. (Id., Ex. A, § 1(b)). BDFI was then to transfer the Bentonite Assets to a wholly owned subsidiary, Bentonite Corporation (“BC”), which would assume all “Obligations” arising out of the Bentonite Business. (Id., Ex. A, § 1(c)). BDFI would endorse in blank and deliver to New Baroid a certificate representing all the outstanding capital stock of BC. (Id., Ex. A, § 1(f)). New Baroid would then endorse in blank and deliver to Old Baroid a certificate representing all the outstanding capital stock of BC. (Id., Ex. A, § 1(g)). Old Baroid would then transfer to BC all its assets, other than the capital stock of New Baroid and BC, and BC would assume all “Obligations” arising out of the ownership or operation of those assets. (See 2005 Case, Docket Entry No. 247, Ex. A, § 1(h)). Old Baroid agreed to effect the merger of its wholly owned subsidiary, Tremont Corporation, into Old Baroid, and to change Old Baroid’s name to Tremont Corporation. (Id., Ex. A, § 1(k)). New Baroid agreed to change its name to Baroid Corporation. (Id., Ex. A, § 1(l)).

The 1990 Plan contains an Exhibit A listing various assets and obligations. The 1990 Plan states that none of the assets or obligations on that Exhibit would constitute Petroleum Services Assets or Petroleum Services Obligations. (Id., Ex. A, § 2). The 1990 Plan also contains an Exhibit B and states that all the assets on that Exhibit would constitute Petroleum Services Assets. (Id., Ex. A, § 2). The 1990 Plan further provides that as of the effective dates of the various transactions, “New Baroid shall be deemed to have acquired complete, sole and beneficial ownership of all of the Petroleum Services Assets, including without limitation, the Petroleum Services Subsidiaries, together with all of the rights, powers and privileges of [Old Baroid] incident thereto, and shall be deemed to have assumed all of the Petroleum Services Obligations.” (Id., Ex. A, § 3). Old Baroid would “likewise be deemed to have acquired complete, sole and beneficial ownership of all of the outstanding capital stock of BC together with all of the rights, power and privileges of New Baroid incident thereto.” (2005 Case, Docket Entry No. 247, Ex. A, § 3).

The 1990 Plan describes the indemnity obligations assumed by both Old Baroid and New Baroid. Old Baroid would indemnify and hold New Baroid harmless from all Obligations attributable to Old Baroid’s “past, present or future operations, other than those Obligations which constitute Petroleum Services Obligations.” (Id., Ex. A, § 11). Specifically, Old Baroid agreed to indemnify New Baroid for “all Obligations arising out of, or which are otherwise attributable to, sites or facilities or with respect to operations not attributable to the Petroleum Services Business, including claims arising out of or relating to the offsite deposit, placement or disposal by [Old Baroid] or the Titanium or Bentonite Businesses of any materials of any character whatsoever generated at such sites or by such operations.” (Id., Ex. A, § ll(i)). New Baroid agreed to indemnify Old Baroid for Petroleum Services Obligations. (Id., Ex. A, § 12). Specifically, New Baroid agreed to indemnify Old Baroid for “all Obligations arising out of, or which are otherwise attributable to, sites or facilities or with respect to operations attributable to the Petroleum Services Business, including claims arising out of or relating to the deposit, placement or disposal of any material of any character whatsoever generated at such sites or by such operations.” (Id., Ex. A, § 12(i)).

3. The Evidence in the Arbitration About the Transfer of NL’s Former Petroleum Services Business to Halliburton

Tremont argues that “Petroleum Services Business” in the 1990 Plan encompassed all of NL’s historical petroleum services business. As Tremont notes, the 1990 Plan states that “The Company [Old Baroid] has heretofore indirectly owned and operated its petroleum services operations (the ‘Petroleum Services Business’) principally through its subsidiaries .... ” (Id., Ex. A at 1 (emphasis added)). Tremont points to testimony from the arbitration by John Karnes, the drafter of the 1990 Plan, stating: “ T think petroleum services business is defined as all of the activities that took place up to this time that were petroleum services operations,’ ” and that “ ‘heretofore backs and whatever forward up to this time petroleum services operations, that is petroleum services business.’” (2005 Case, Docket Entry No. 252 at 13 n. 2).

a. The Affidavits of J. Landis Martin, Steven L. Watson, William Lindquist, and Harold C. Simmons

J. Landis Martin, a current Halliburton board member and a member of Halliburton’s audit committee, was involved in the 1990 restructuring and was the chairman of New Baroid at the time of the 1990 Plan. He executed an affidavit in October 2005. The affidavit was included in the evidence submitted to the arbitration panel. The affidavit states: “The goal or purpose of the restructuring was to separate Baroid Corporation’s petroleum services business, including the historical operations of NL Industries, Inc., from Baroid Corporation’s titanium metals business, the Titanium Metals Corporation (‘TI-MET’).” (2005 Case, Docket Entry No. 247, Ex. O, ¶ 6). Martin also states that “the revised intent and purpose of the 1990 Plan of Restructuring of Baroid Corporation was to transfer TIMET and Baroid’s bentonite business to a new separate entity, and leave with Baroid Corporation all other businesses and liabilities, including all of Baroid’s petroleum services businesses and liabilities.” (Id., Ex. O, ¶ 11). Martin explains that “[a]t no point, in any planning or implementation of the 1990 Plan of Restructuring of Baroid Corporation, did we ever contemplate or intend that old Baroid Corporation would retain any historical environmental liabilities of the petroleum services business of NL Industries, Inc.” (Id., Ex. 0, ¶ 13). Instead, Martin states that “[t]he intent and purpose of the 1990 Plan of Restructuring ... was to have New Baroid Corporation (which I understand is now controlled by Halliburton), take responsibility for all liabilities associated with the past, present and future operations of the petroleum services business of NL Industries, Inc., including the historical barite mining liabilities of the petroleum services business and all environmental liabilities associated therewith.” (Id., Ex. O, ¶ 19).

In a 2007 affidavit that was also submitted to the arbitration panel, Martin explains his understanding that historical obligations associated with the Petroleum Services Business transferred to New Baroid, including obligations relating to leases that had been terminated even before the 1988 restructuring. Martin states:

With regard to leases that were terminated prior to the 1988 Restructuring, it was my understanding that any liability relating to such leases, or liability deriving out of any operations or disposal on such formerly leased property, was transferred to New Baroid Corporation — even if the lease was terminated prior to 1988. To clarify, if a parcel of leased property was used in the NL petroleum services business in the 1940s at Magnet Cove for mining operations or disposal, and the lease for such property was terminated by NL in 1965, any liability for any petroleum related operations or contractual liabilities in the leases were to be transferred to New Baroid Corporation via the 1988 and 1990 Plans of Restructuring.

(Id., Ex. P, ¶3).

Martin explains that he had the same understanding about historical liabilities arising from property sold before the 1988 restructuring:

My understanding with regard to owned property that was sold prior to 1988 is the same. That is, if the property was used in the historical operations of NL’s petroleum services business — and even if no longer owned by 1988 — -all liability with regard to that property that derived from historical petroleum services operations or disposal was to be transferred and assumed by New Baroid Corporation.

(Id., Ex. P, ¶ 4).

Tremont points to similar testimony by other witnesses in the arbitration that the 1990 restructuring was intended to separate the Petroleum Services Business from the titanium and bentonite businesses, including separating their historical liabilities and obligations. (See 2005 Case, Docket Entry No. 247, Ex. Q, ¶ 6 (affidavit of Steven L. Watson, dated July 26, 2007, describing his understanding that “New Baroid Corporation was responsible for all claims relating to the historical petroleum services business of NL begun in 1926, and not just the current assets owned in 1988”); id., Ex. R, ¶ 6 (affidavit of William Lindquist, dated July 26, 2007, stating the same); id., Ex. S, ¶ 5 (affidavit of Harold C. Simmons, dated July 26, 2007, stating the same)).

b. The SEC Information Statement

Tremont also points to the cover letter accompanying Baroid Corporation’s Securities and Exchange Commission Information Statement in October 1990. The letter explains the 1990 transactions, as follows:.

The Board of Directors of [Old] Baroid Corporation (the ‘Company’) has unanimously approved the separation of the Company’s petroleum services businesses and its titanium metals and bentonite mining businesses into two publicly-traded companies. In connection with the separation, you are receiving, er each share of Company Common Stock which you now own, one share of common stock in a newly formed company, which will operate the petroleum seiwices businesses and will bear the name “Baroid Corporation.” You will continue to own stock in the Company, which will conduct the titanium metals and bentonite mining business, and will change its name to “Tremont Corporation.”

(Id., Ex. T at l). The Information Statement continues: “[Old Baroid] has contributed to New Baroid all of [Old Baroid’s] assets attributable to its petroleum services businesses, including all of the stock of its petroleum services operating subsidiaries, and New Baroid has assumed all of [Old Baroid’s] liabilities attributable thereto.” (Id., Ex. T at 2). The Information Statement also states that “New Baroid was incorporated in 1990 and is the successor to the NL petroleum services business begun in 1926.” (Id., Ex. T at 5).

Tremont also points out that the Form 10 filed with the SEC about the 1990 transactions clarifies that all liabilities Old Baroid assumed in its indemnification agreement with NL were assumed by New Baroid in the 1990 restructuring. {See 2005 Case, Docket Entry No. 252 at 16). A draft of the Form 10 states that “New Baroid assumed certain of the [Old Baroid’s] obligations under the NL/Company Indemnification Agreement in connection with the Distribution.” (2005 Case, Docket Entry No. 247, Ex. U at 3 (emphasis added)). The SEC told New Baroid that this language was vague and needed clarification. {See id., Ex. V at 3 (“The ‘certain of the company’s obligations’ referred to in the penultimate sentence of the first full paragraph on page 71 should be explained.”)). The revised Form 10 states that New Baroid would take on all petroleum services obligations that Old Baroid had assumed under the Cross-Indemnification Agreement. {See id., Ex. U at 5 (“New Baroid assumed all of [Old Baroid’s] obligations under the Indemnification Agreement attributable to [Old Baroid’s] petroleum services business.” (emphasis added))).

New Baroid’s listing application to the New York Stock Exchange similarly explains the 1990 transactions, as follows:

Effective August 31, 1990, [New Baroid] and [Old] Baroid entered into a Plan of Restructuring ... pursuant to which, among other things, (i)[01d] Baroid will contribute to [New Baroid] all of [Old] Baroid’s assets attributable to its petroleum services businesses, including all of the stock of its petroleum services operating subsidiaries, and [New Baroid] will assume all of [Old] Baroid’s liabilities attributable thereto ....

{Id., Ex. W at l).

c. The New Baroid/Dresser/Halliburton Mergers

A subsidiary of Dresser Industries, Inc. (“Dresser”) merged with New Baroid in 1993 and 1994. (See 2005 Case, Docket Entry No. 274, Ex. M). Dresser assumed all New Baroid’s obligations in 1997. (See 2005 Case, Docket Entry No. 247, Ex. B; id., Ex. Y at 2). Halliburton is the successor-in-interest to New Baroid, (see id., Ex. Z at 1; id., Ex. Y at 3). Halliburton asserts that in the New Baroid/Dresser merger, New Baroid failed to disclose liabilities related to the McCullough Division or the Gulf Nuclear Sites, despite a representation that there were no undisclosed material liabilities. (See 2005 Case, Docket Entry No. 274 at 13-14). Halliburton also argues that around the time of the Dresser/Baroid merger, NL agreed to indemnify New Baroid for losses arising from a lawsuit captioned Western Atlas v. NL, evidencing NL’s understanding that it, not Halliburton was responsible for historical liabilities arising from the former petroleum services business assets or operations not transferred in 1988. (Id. at 12-13).

d. Testimony in the Arbitration Proceeding

Tremont has submitted testimony from the arbitration proceeding that obligations and liabilities associated with NL’s former petroleum services business, including historical liabilities, were transferred from NL to Old Baroid, from Old Baroid to New Baroid, from New Baroid to Dresser, and from Dresser to HESI.

i. The Arbitration Testimony of J. Landis Martin

Martin testified as follows:

Q There’s been some dispute in this case that I can tell you about. Essentially the Halliburton side has said that just current liabilities were being moved forward. Do you have an understanding as to whether — is that correct? Was it supposed to be just current liabilities or was it all the historical — what was going to happen in your mind, in your discussions with Mr. Simmons and the executive team, as to the historical environmental liabilities of the petroleum service business?

A Both the — all the historical liabilities would go with Baroid Corporation, the ones relating to the Baroid — the oil field services business.

Q Is there any doubt about that in your mind? Is that something—

A No.

Q That was clear to everyone?

A I thought I made it clear to everyone, yes. It certainly was clear to me.

(2005 Case, Docket Entry No. 247, Ex. AA, Testimony of J. Landis Martin at 11:3—21). Martin further testified:

Q In connection with your discussions with Mr. Simmons and your intent, did you have discussions with Mr. Simmons about what was going to happen to the historical environmental liabilities that were created under NL with regard to petroleum service business that was part of NL historically from 1926 till the time of the 1988 transaction and then what happened thereafter?

A Well, as I said before, when we spun off Baroid Corporation, we intended to put the petroleum services assets and liabilities, you know, all of them in that company, and we had originally intended to spin TIMET out and keep all those assets there. So what we wanted to do in creating a new company that was going to be spun off in the reverse transaction was putting all the historical petroleum service assets and liabilities.

(Id., Ex. AA, Testimony of J. Landis Martin at 16:15-17:7). Martin also testified that he discussed this understanding with Simmons, the board members, and the employees and attorneys involved in the deal. (Id, Ex. AA, Testimony of J. Landis Martin at 17:8-18:5). Martin further testified that Dresser understood that it was receiving the historical liabilities of NL’s petroleum services business as part of the merger with (New) Baroid. (Id., Ex. AA, Testimony of J. Landis Martin at 36:19-37:3).

ii. The Arbitration Testimony of William Lindquist

William Lindquist, an executive involved in the 1988 and 1990 restructurings, explained the transfer of the historical environmental liabilities, as follows:

Q. [D]id you and the rest of the people understand that NL’s petroleum services business had historical environmental liabilities from the time it was formed in 1926 going forward to what was then that present day? A. I did.

Q. In your involvement with the 1988 transaction, did you have an understanding as to what was supposed to happen with all of those historical petroleum services business obligations from 1926 to the then present time?

A. Yeah. The goal was to spin off the historical business of the petroleum services, so it included both the historical assets of petroleum services businesses as well as the liabilities.

Q. Were you ever involved in any decision or did you ever hear any discussion where anybody told you that historical environmental liabilities of the barite mining business were supposed to stay on the NL side of the equation?

A. No.

Q. Did you hear that with regard to anything else in terms of environmental liabilities that related to the historical petroleum services business?

A. No. Any liabilities that were historically related to the petroleum services business went to the [Old] Baroid side of the spinoff.

Q. Was the exact opposite true, and that is with regard to the chemical business, was the chemical business and all of its liabilities to be retained by the NL side?

A. That’s correct. It’s a spinoff, and what you particularly do is you separate the two lines of businesses.

Q. Is it true — -was it your understanding that the company that was then called [Old] Baroid, would today be called Tremont, was going to give NL a contractual indemnification for all of those historical petroleum services liabilities?

A. Yes.

Q. And is that your understanding as to the way the transaction was carried out?

A. Yes.

Q. Did anybody tell you anything to the contrary?

A. No.

(Id., Ex. BB, Testimony of William Lindquist at 84:13-86:14). Lindquist further testified:

Q. Okay. And you said that when New Baroid was formed, that the assets were to go to Tremont and the liabilities were to go to New Baroid. Do you remember that?

A. I don’t. I think what I said was the historical — the petroleum services historical assets and liabilities went to petroleum services, went to New Baroid, and the historical assets and liabilities of Bentonite went to old— stayed with Old Baroid as well as the TIMET stock and then the surplus properties.

(Id., Ex. BB, Testimony of William Lindquist at 185:20-186:6).

iii. The Arbitration Testimony of Steve Watson

Steve Watson, a senior executive involved in the 1988 and 1990 restructurings, testified similarly:

Q [W]hat was the discussion about what was supposed to happen with the historical liabilities of the petroleum service business in the 1988 transaction?

A Okay. The separation was to completely separate these businesses and both of them had been in the business for a very long period of time. Probably close to 100 years.'

Both petroleum service-I’m not sure if it’s 100, but it was a very long period of history.

The chemical business, the titanium dioxide business had been in business for almost 100 years now.

So there was [sic] long, long histories with these businesses in their respective markets.

The concept was is [sic] that it’s a separation, and everything to do with petroleum service went this way, and everything to do with the chemicals business went this way.

And most — what I started saying was some of it was fairly easy because some of these businesses, and there are sub-businesses to some of this, like petroleum service had many subsidiaries. So those were pretty easy because they were already captured inside of another corporation that was a subsidiary.

And then there was other stuff that wasn’t and it was maybe in the wrong company or it was up at the parent company where there were other miscellaneous businesses in there that were not strictly petroleum service or chemicals. And those would have to all get sorted out, but the clearer distinction was the two big businesses, petroleum services and chemicals, that that was the dividing line. Whatever happened for the prior 100 years on one went this way and whatever happened and the other one went the other way. And that was the — that was the determination.

(2005 Case, Docket Entry No. 247, Ex. CC, Testimony of Steve Watson at 262:11-264:3). Watson testified that his understanding of the transactions came from discussions he had with Simmons and Martin. He testified that the board approved 'the 1988 restructuring based on that understanding. (See id., Ex. CC, Testimony of Steven Watson at 264:11-14).

With respect to the 1990 transactions, Watson testified:

Q [D]id you have an understanding based upon your conversations with M