Did Argentinian Firm Bankrupt Subsidiary to Avoid $1.4B Cleanup?
State wants YPF investigated to see if it drained Maxus Energy of resources to wiggle out of paying for Passaic River dioxin contamination
- Credit: NJTV News Online
The state is seeking multiple probes of an Argentinian company after it drained a subsidiary of its assets and filed for bankruptcy, a ploy lawmakers say is designed to avert paying for a $1.4 billion cleanup of contamination in the Passaic River.
In a rare joint legislative meeting of the environmental committees, a resolution was adopted urging investigations by state and federal authorities into the actions of YPF S.A. and its subsidiary Maxus Energy Corp. involving liabilities at the former Diamond Alkali Superfund site in Newark and related pollution along an eight mile stretch of the Passaic River.
If successful, the maneuvering by the Argentinian venture, a state-owned oil company, could set a dangerous precedent that would leave polluters off the hook for cleanup of toxic waste sites and saddle taxpayers with the expense, according to lawmakers, environmentalists, and business lobbyists who spoke at the hearing in Lyndhurst.
For the public, it could also mean new delays in dealing with a long-festering problem, a recurring theme at Superfund sites in New Jersey and the rest of the nation. Widespread dioxin contamination was discovered at the former 80 Lister Ave. site in Newark in 1984, which later led to finding massive pollution in sediments of the Passaic River in succeeding years.
“YPF is attempting to avoid significant environmental liability,’’ said Sen. Bob Smith (D-Middlesex), the chairman of the Senate Environment and Energy Committee and sponsor of the resolution. “We don’t want this precedent to stand.’’
YPF is drawn into the Superfund case by the intricacies of the landmark law, which can hold hundreds of companies responsible for cleanup costs — even if the pollution occurred after they owned the business or never discharged any contaminants. YPF acquired Maxus Energy (formerly the Diamond Alkali Company) in 1995 long after the plant shut down.
YPF did not speak at the hearing, but handed out a statement after its conclusion. The statement noted the company never polluted the Passaic, and during the bankruptcy proceeding offered to pay $130 million in additional cleanup costs.
In its statement, it pins blame on Occidental Chemical, another big corporation drawn into liability at the Superfund sites. “This entire matter could be resolved amicably if Occidental would fulfill its obligations, rather than wasting money on pointless litigation and pointing fingers at a responsible corporate citizen,’’ read the statement.
Frank Parigi, a vice president of Glenn Spring Holdings, Inc., an Occidental subsidiary, told the committee there is no question Maxus is responsible for the site, but its parent has stripped it of its assets. “Today, Maxus has nothing left, but its liability,’’ Parigi said.
That prospect concerns lawmakers. “Companies that engage in environmental contamination should not be able to hide behind bankruptcy laws,’’ said Assemblyman Tim Eustace (D-Bergen), the chairman of the Assembly Environment Committee.
Smith noted an extensive 1996 memo by a Texas law firm that lays out in detail how to strip assets from Maxus to avoid paying its environmental liability. He said the state needs to send a clear message that it will not allow companies to sidestep their obligations or cheat residents.
Dennis Hart, executive director of the Chemistry Council of New Jersey, agreed. “They are just brazenly walking away from their responsibility,’ he said. “This isn’t what bankruptcy is designed to do.’’
To that end, both committees unanimously approved resolutions calling for various probes of the actions by YPF. Among other things, the committee wants the State Commission of Investigation to examine whether any environmental crimes were committed by the company’s actions, as well as probes by the New Jersey attorney general and U.S. attorney general’s office.
In addition, the resolution asks the Securities and Exchange Commission to look at YPF’s financial disclosures relating to capital financing it has lined up in the U.S. to see whether they are accurate. The state Department of Environmental Protection also is being asked to submit a report to the Legislature detailing all Supefund sites where Maxus has potential liability in the state.