Case Summary: ASARCO 2009 Bankruptcy Settlement

As a result of the largest environmental bankruptcy in U.S. history as of 2009, EPA, along with other federal and state agencies pursued and received $1.79 billion to fund environmental cleanup and restoration under a bankruptcy reorganization of American Smelting and Refining Company LLC (ASARCO). EPA, along with the departments of Justice, Interior, Agriculture announced the settlement on December 10, 2009 following the bankruptcy and district courts approval of ASARCO's Plan of Reorganization.

In total, the payment will address environmental cleanup and restoration at more than 80 sites around the country. Much of the money paid to the United States will be placed in special accounts in the Superfund to be used by EPA to pay for future cleanup work. It will also be placed into accounts at the Department of Interior and the Department of Agriculture to pay for natural resource restoration.

On this page:

General Information on the Bankruptcy and Environmental Claims
ASARCO Company Information
Bankruptcy Milestones
Settlement Agreements with EPA

General Information on ASARCO Bankruptcy and Environmental Claims

For EPA, which is receiving approximately $1 billion for future cleanup of Superfund sites, it represents the largest bankruptcy settlement in the history of the Superfund program as of the date of the announcement, December 10, 2009.

"Today's landmark enforcement settlement will provide almost one billion dollars to clean up polluted Superfund sites. This will mean cleaner land, water, and air for communities across the country."

The amount represent full payment of EPA's claims, plus interest. Funds are being distributed pursuant to settlement agreements approved in 2007, 2008, and as most recently as June 2009. Of the almost $1 billion, $436 million was a cash payment toward future cleanup costs at the Bunker Hill & Metallurgical Complex site in Idaho, the largest "cashout" amount ever for the Superfund enforcement program, to date.

The cost recovery settlement for the Omaha Lead site in Nebraska provides payment of $130.4 million for past costs incurred by the Agency, the largest cost recovery amount achieved by the Superfund enforcement program for a single site.

Five settlement agreements were approved by the Bankruptcy Court in June 2009, but the bankruptcy and district courts had to approve ASARCO's Plan of Reorganization before funds from all the settlement agreements could be distributed. Funds were distributed December 9, 2009. An overview of the 2009 agreements is below.

ASARCO Company Information

ASARCO is a fully integrated miner, smelter and refiner of copper in the United States. ASARCO's domestic mines annually produce approximately 350 - 400 million pounds of copper. Significant copper mines include the Mission, Silver Bell and the Ray open-pit mines, all three in Arizona.

ASARCO was originally organized in 1899 and has operated for over 100 years, first as a holding company for diverse smelting, refining, and mining operations throughout the United States and now as a Tucson-based integrated copper mining, smelting, and refining company.

ASARCO is a subsidiary of ASARCO Inc., itself a subsidiary of Americas Mining Corporation, which is owned by Grupo Mexico.

Bankruptcy Milestones

• On August 9, 2005, ASARCO filed for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas, Corpus Christi Division.

• On August 1, 2006, the United States filed a bankruptcy proof of claim on behalf of EPA with the United States Bankruptcy Court for the Southern District of Texas, Corpus Christi Division in the ASARCO Chapter 11 bankruptcy.

• In March 2008 the Bankruptcy Court for the Southern District of Texas, Corpus Christi Division approved the process by which ASARCO would pursue the selection of a plan sponsor and sale of its operating assets.

• After a bidding process for the purchase of ASARCO's assets, Sterlite (USA), Inc., a subsidiary of Vedanta Resources plc (an Indian corporation), on May 30, 2008, executed a purchase and sales agreement in the amount of $2.6 billion for ASARCO's assets. After the purchase and sales agreement was executed, copper prices began to decline, and on October 14, 2008, Sterlite representatives informed the United States Bankruptcy Court for the Southern District of Texas, Corpus Christi Division that the company could not honor the contract.

• The Debtor and Sterlite, however, were able to execute another purchase and sales agreement in March 2009.

• On June 5, 2009, the Bankruptcy Court for the Southern District of Texas, Corpus Christi Division approved five settlement agreements which provided recovery on environmental claims at numerous Superfund sites throughout the country. See section on settlement agreements below

• ASARCO's Parent submitted its own plan of reorganization to the Bankruptcy Court for the Southern District of Texas, Corpus Christi Division.

• On November 13, 2009, the District Court for the Southern District of Texas, Corpus Christi Division accepted the Bankruptcy Court's Recommendation to confirm the Parent Plan.

2009 Settlement Agreements with EPA

Custodial Trust Settlement Agreement
Miscellaneous Federal and State Sites Settlement Agreement
Montana Sites Settlement Agreement
Residual Sites Settlement Agreement
Texas Sites Settlement Agreement

The Custodial Trust Settlement Agreement

The settlement resolves claims pertaining to past and potential future work performed at approximately 18 ASARCO-owned sites in 11 states by transferring to this custodial trust certain real property that ASARCO owns but is not operating, and funding the trust with over $70 million. The settlement agreement provides funding in the amount of $70,955,493 million to clean up the sites and to fund the administrative expenses associated with the custodial trust. More information is available on the Custodial Trust Settlement Agreement information sheet.

The Miscellaneous Federal and State Sites Settlement Agreement

The settlement addresses 26 federal and state sites. It resolves claims filed against ASARCO by EPA, USDA's Forest Service (FS), the United States International Boundary Water Commission (IBWC), and four states. The settlement agreement provides funding in the amount of $104,814,679 to clean up the sites and to fund the administrative expenses associated with the trust. More information is available on the Miscellaneous Sites Settlement Agreement information sheet.

The Montana Sites Settlement Agreement

The settlement establishes a custodial trust for 5 ASARCO-owned sites in the State of Montana. The settlement agreement requires the creation of a trust, with separate accounts for each site, and provides funding in the amount of $138 million to oversee cleanup and redevelopment of the sites. More information is available on the Montana Sites Settlement Agreement information sheet.

The Residual Sites Settlement Agreement

The settlement resolves claims pertaining to past and future cleanup costs associated with the following three sites:

1. The Coeur d'Alene Superfund Site, Northern Idaho ("Coeur d'Alene");
2. The Omaha Lead Superfund Site, Omaha, Nebraska ("Omaha Lead"); and
3. The Tacoma, Washington Environmental Site (a state site) ("Tacoma").

More information is available on the Residual sites agreement information sheet.

The Texas Sites Settlement Agreement

The settlement agreement sets up a trust for funds to cleanup the El Paso Smelter and the Amarillo Smelter. The State of Texas is overseeing this trust and receiving the funds. EPA is a signatory to this agreement. More information is available on the Texas Sites Settlement Agreement information sheet.

Contact Information

For more information, contact

Robert Roberts
Attorney Advisor
U.S. Environmental Protection Agency (MC2272A)
1200 Pennsylvania Avenue, NW
Washington, D.C. 20460
(202) 564-4267
[email protected]