Dioxin: State Developments

April 27, 2017 | Commercial Litigation | Complex Torts & Product Liability

New Jersey Legislators Seek Investigation of Impact on Superfund Sites of Argentinian Company’s Bankruptcy

Two resolutions primarily sponsored by New Jersey Senators Christopher “Kip” Bateman and Bob Smith and New Jersey Assemblyman Timothy Eustace urge federal and state authorities to investigate actions taken by an Argentinian state-owned oil company, YPF S.A., to discharge Superfund obligations through United States bankruptcy proceedings.

Background

YPF S.A. acquired Maxus Energy Corporation (formerly the Diamond Alkali Company) in 1995. In June 2016, YPF placed Maxus into bankruptcy following the announcement by the U.S. Environmental Protection Agency (“EPA”) of its Record of Decision in March 2016 to remediate contaminated sediments found in the lower 8.3 miles of the Passaic River, a part of the Diamond Alkali site, at a cost of $1.38 billion.

The Legislation

The New Jersey resolutions, SR-107 and AR-219, urge the New Jersey State Commission of Investigation to examine actions taken by YPF S.A., and its subsidiary Maxus Energy Corporation, to use United States bankruptcy proceedings in what they characterize as an apparent attempt to avoid responsibility for environmental liabilities related to the cleanup of the Diamond Alkali Superfund site, the Passaic River, and other Superfund sites in New Jersey.

The resolutions also call on the United States Attorney General and the New Jersey Attorney General to investigate any potential violations of federal or state law by YPF S.A. and Maxus, including any violations of the federal or state racketeer influenced and corrupt organizations (“RICO”) acts, and to pursue all appropriate legal remedies.

Additionally, the resolutions urge the New Jersey Department of Environmental Protection to prepare a report for submission to the New Jersey legislature that would include a listing and description of all Superfund sites where Maxus Energy Corporation is a potentially responsible party, an assessment of the potential impacts a bankruptcy declaration may have on the pace of the remediation at those sites, and the added burden this declaration would place on other potentially responsible parties and taxpayers.

The report called for in the resolutions also would include an examination of the precedent that YPF S.A.’s actions would set for other companies facing Superfund obligations.

In addition, the resolutions call on the U.S. Congress to request a report from the U.S. Government Accountability Office that would examine current Superfund obligations tied to foreign, state-owned corporations and any actions those corporations may be taking to avoid paying their environmental liabilities in the United States including, but not limited to, the use of bankruptcy proceedings. The bills also urge Congress to make appropriate changes to the federal Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) to prevent foreign corporations from avoiding their Superfund liabilities.

The resolutions have cleared the Senate Environment and Energy Committee and the Assembly Environment and Solid Waste Committee unanimously.

Sponsors Comment

The bankruptcy filing “is a clear attempt by YPF S.A. to avoid responsibility for this immense clean-up and to shift the cost to New Jersey taxpayers,” Senator Bateman (R-Somerset, Hunterdon, Mercer, Middlesex) said in a statement. “We’ve worked for years to advance measures that preserve our invaluable open space and ensure future New Jerseyans can live in a clean and healthy environment. We cannot allow businesses that have profited by creating some of the most polluted sites in our state to avoid their financial obligations to clean up the messes they created.”

“We have an obligation to hold those responsible for environmental contamination and for dumping toxins into our ground and water accountable for paying their fair share of the cleanup costs,” said Senator Smith (D-Middlesex, Somerset), chair of the Senate Environment and Energy Committee. “Bankruptcy laws are designed to help those who have a legitimate need for protection from creditors, not to assist companies or individuals to avoid paying for environmental damages that they caused. We need to hold these bad actors accountable and set a precedent that New Jersey will not allow this to happen now or in the future. This is about protecting our environment for future generations of New Jerseyans and sending a clear message that we will not allow any company to cheat our residents or sidestep its obligations.”

“Companies that engage in environmental contamination should not be able to hide behind bankruptcy laws. These laws are meant to protect companies and individuals who have a legitimate need for protection from creditors; not lucrative companies that want to avoid responsibility for the damage they have caused,” said Assemblyman Eustace (D-Bergen/Passaic). “If a company engages in reckless actions, there should be consequences. We need to send a clear message that such irresponsible behavior, and devious tactics to avoid liability will not be tolerated.”

* * *

New Jersey Councilman Explains “No” Vote on Spraying for Gypsy Moths

Mike Hensley, a councilman in West Milford, New Jersey, recently voted against a resolution to spray certain areas of the community for gypsy moths.

Councilman Hensley told a local reporter that his primary concern was the safety of the Bt. pesticide that was to be used. “Sometimes man thinks he has the answer, the solution to a problem, and actually ends up creating a bigger problem,” Councilman Hensley said.

He also said that some companies state that their products are safe, but then the public finds out that they are not.

The councilman reportedly also was concerned about the cost of the spraying to West Milford, which would be about $34,000; the state would pay the same amount.

For further information, please contact James V. Aiosa, Paul V. Majkowski, Lawrence S. Han, or your regular Rivkin Radler attorney.

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