Articles

Liability Transfer of Asarco New Jersey Site from Bankruptcy to ELT

[September 18, 2009]

Bankrupt mining giant Asarco LLC has agreed to sell a 70-acre New Jersey property for $5.1 million, releasing the embattled copper company from remediation responsibilities at a site with a long history of environmental issues and finalizing a settlement with the New Jersey Department of Environmental Protection. Judge Richard S. Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas approved the settlement Sept. 11, ruling that the property will be conveyed to Environmental Liability Transfers Inc. ELT will assume all obligations for the environmental cleanup, and liens or claims against the property will attach to the proceeds of the sale, but will not be actionable against ELT in the future, the judge also ruled. The property in question is a portion of a 175-acre site adjacent to the Arther Kill waterway that has been tabbed by the city of Perth Amboy for redevelopment and revitalization. Asarco operated a nonferrous metals refinery on 70 acres, known as the Phase II property, from 1894 through 1978, that contributed, in part, to environmental contamination in the area, the settlement agreement said. The New Jersey DEP and others filed claims against Asarco for past and future costs for investigation, demolition removal, cleanup, and remediation to address the contamination, as well as post-remediation operation and maintenance costs, costs related to off-site remediation for migrated contamination, natural resource damage and restoration, and the regulation costs of the NJDEP. Many of these requests have already been resolved, but NJDEP claims for future costs for response actions on the property remained outstanding, the agreement said. “The settlement agreement will allow the full resolution of Asarco's liabilities relating to past and future response costs at the Phase II property by transferring all such liabilities to ELT,” the agreement said. By removing a troubled property from the debtors' estate, promoting the interest of the creditors by saving money in future attorneys' fees for continuing litigation, and by satisfying environmental regulators in securing the remediation of the property, the settlement is beneficial to all parties, the agreement said. ELT must obtain a consent order from the NJDEP within 60 days or the purchase and sale agreement will terminate, the agreement said. Asarco, which filed a voluntary petition for relief under Chapter 11 on Aug. 9, 2005, has settled a string of environmental liability claims this year, agreeing to pay out over $1.1 billion to clean up pollution at approximately 50 sites nationwide. Representatives from Asarco and the NJDEP did not immediately respond to requests for comment Monday.
Asarco is represented by Baker Botts LLP and Jordan Hyden Womble Culbreth & Holzer PC. The case is In re: Asarco LLC et al., case number 05-21207, in the U.S. Bankruptcy Court for the Southern District of Texas.