US Attorney – Lyondell Chemical Company to Pay $162 Million in Bankruptcy to Settle Environmental Liabilities

LawFuel.com –
PREET BHARARA, the United States Attorney for the
Southern District of New York, ROBERT DREHER, the Principal
Deputy Assistant Attorney General for the Justice Department’s
Environment and Natural Resources Division (“ENRD”), CATHERINE R.
McCABE, the Principal Deputy Assistant Administrator for the
Office of Enforcement and Compliance Assurance with the
Environmental Protection Agency (“EPA”), DAVID M. KENNEDY, the
Acting Assistant Administrator of the National Ocean Service of
the National Oceanic and Atmospheric Administration (“NOAA”) of
the Department of Commerce, and RACHEL JACOBSON, the Principal
Deputy Solicitor for the Department of the Interior (“DOI”),
announced today that the United States has settled environmental
claims of the EPA, the Department of Commerce, and the Department
of the Interior, brought against chapter 11 debtors, LYONDELL
CHEMICAL COMPANY, and its corporate affiliates (“LYONDELL”),
under the Comprehensive Environmental Response, Compensation and
Liability Act (“CERCLA”).

Under the Settlement Agreement filed late yesterday in
Manhattan bankruptcy court, LYONDELL will pay approximately $162
million in cash for the cleanup of 15 properties and sites in
various states contaminated with hazardous waste. Approximately
$108.4 million will be placed in a custodial trust created by the
Settlement to fund the cleanup of nine polluted properties in
seven states, of which approximately $2 million will be allocated
for restoration of wildlife and habitat injured at one of the
trust properties. The remaining approximately $53.6 million will
be paid to the United States to settle LYONDELL’s outstanding
EPA
CATHY MILBOURN, MICK HANS
(202) 564-7849, (312) 535-5050
DOI
JULIE C. RODRIGUEZ
(202) 208-6416
DOJ
ANDREW AMES
(202) 514-2007
NOAA
KEELEY BELVA
(301)713-3066

obligations at six toxic waste sites in five states, also known
as Superfund sites. In addition, the United States will receive
allowed general unsecured claims against LYONDELL collectively
exceeding $1.1 billion to settle environmental claims at certain
other sites and facilities, which will be paid at a significantly
reduced amount to be determined through the bankruptcy. In
total, the Settlement will resolve LYONDELL’S environmental
liabilities at 23 sites and facilities nationwide.
In January 2009, LYONDELL, one of the largest chemical
manufacturers in the United States, filed chapter 11 petitions in
the United States Bankruptcy Court for the Southern District of
New York. In June and August 2009, the United States filed
claims against LYONDELL in the bankruptcy seeking to recover past
and future environmental cleanup costs and natural resource
damages for sites presently or formerly owned or operated by
LYONDELL, or where LYONDELL had disposed of hazardous waste. The
United States also sought civil monetary penalties for violations
of the Resource Conservation and Recovery Act (“RCRA”) and the
Clean Air Act.

Under the Settlement, a custodial trust will be
established to take ownership and possession of nine
environmentally contaminated properties owned by LYONDELL.
LYONDELL must pay approximately $108.4 million to the trust to
fund the cleanup of the nine properties, plus administrative
costs of the trust. The nine properties and their locations are:
1) Allied Paper Mill in Michigan; 2) Beaver Valley property in
Pennsylvania; 3) Bully Hill Mine in California; 4) Charlotte
property in North Carolina; 5) Excelsior Mine in California; 6)
Morris Gypsum Pile property in Illinois; 7) Rising Star Mine in
California; 8) Saint Helena property in Maryland; and 9) Turtle
Bayou property in Texas. Approximately $2 million will be set
aside to restore and rehabilitate injured natural resources at
the Allied Paper Mill.

More than half of the cleanup funds to be paid to the
custodial trust concern the Allied Paper Mill property, a waste
disposal area that is part of the larger Allied Paper/Portage
Creek/Kalamazoo River Superfund Site in Michigan. The United
States alleged in bankruptcy filings that LYONDELL’s corporate
predecessor operated a paper mill at that site from approximately
1954 to 1985, where it disposed of hazardous waste containing
polycholorinated biphenyls (also known as PCBs) in landfills on
the property. Approximately $53.7 million of the trust funds
will be dedicated to the cleanup and restoration of the Allied
Paper Mill property.

The Settlement also requires LYONDELL to pay the United
States approximately $53.6 million to resolve liabilities at six
Superfund sites: 1) the 68th Street Dump Site in Maryland; 2) the
Allied Paper/Portage Creek/Kalamazoo River Site; 3) the Barefoot
Disposal Site in Pennsylvania; 4) the Berks Landfill Site in
Pennsylvania; 5) the Diamond Alkali/Lower Passaic River Study
Area Site in New Jersey; and 6) the French Limited Site in Texas.
Approximately $49.5 million of these settlement funds will be
allocated to cleanup work at the Allied Paper/Portage
Creek/Kalamazoo River Site.

The United States’ remaining claims against LYONDELL
for cleanup costs, natural resource damages, and civil penalties
for violations of RCRA and the Clean Air Act with respect to 13
sites and facilities, including other portions of the Allied
Paper/Portage Creek/Kalamazoo River Site, will be allowed in the
bankruptcy in the amount of $1.1 billion. The United States
anticipates that these claims will be paid out at a substantially
reduced rate applicable to other general unsecured creditors as a
function of bankruptcy law and LYONDELL’s plan of reorganization.
The Settlement Agreement will be lodged with the
Bankruptcy Court for a period of 15 days before its entry to
provide public notice and to afford members of the public the
opportunity to comment on the Settlement.

U.S. Attorney PREET BHARARA praised the efforts in the
case by the Environment and Natural Resources Division of the
Department of Justice, EPA, and the Departments of Commerce and
Interior.

Assistant United States Attorneys PIERRE G. ARMAND,
JEANNETTE A. VARGAS, ALICIA SIMMONS, and BRANDON H. COWART are in
charge of the case, with KEVIN LYSKOWSKI of the Environment and
Natural Resources Division of the Department of Justice.
10-106 ###

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