SR107

A Senate Resolution urging relevant federal and State authorities to investigate actions taken by Argentina’s state-owned oil company, YPF S.A., to discharge its Superfund obligations in New Jersey through federal bankruptcy proceedings.

Whereas, The federal “Comprehensive Environmental Response, Compensation, and Liability Act” (CERLA), also known as Superfund, provides for the cleanup of some of the nation’s most contaminated hazardous waste sites; and

Whereas, Due to its long history of chemical and other industrial manufacturing, New Jersey has more Superfund sites than any other state in the country; and

Whereas, Beginning in the 1940s, and continuing for several decades, the Diamond Alkali Company (later Maxus Energy Corporation) owned and operated a facility at 80-120 Lister Avenue in Newark, New Jersey that manufactured agricultural chemicals, including the herbicide known as “Agent Orange”; and

Whereas, In 1983, the United States Environmental Protection Agency (EPA) and the New Jersey Department of Environmental Protection found high levels of dioxin, an extremely toxic byproduct of agricultural manufacturing processes, at the 80-120 Lister Avenue site and in the Passaic River; and

Whereas, The EPA placed the Diamond Alkali site on the Superfund National Priorities List in 1984, beginning a decades-long effort to clean up the site and ensure the cooperation of responsible parties; and

Whereas, Subsequent studies showed that the Diamond Alkali site contains a large number of other hazardous substances including semi-volatile and volatile compounds, herbicides, pesticides, polychlorinated biphenyls (PCBs), and metals, which affected and continue to affect the soil, groundwater, air, surface water, and building structures at the site; and

Whereas, Contamination from the Diamond Alkali site also affected large portions of the Passaic River, leading to prohibitions and advisories on fish and crab consumption for the tidal Passaic River and Newark Bay; and

Whereas, In 1995, Argentina’s state-owned oil company, YPF S.A., acquired Maxus Energy Corporation (“Maxus”), presumably with full knowledge of the environmental liabilities it would inherit with this acquisition; and

Whereas, In March 2016, the EPA announced its Record of Decision (ROD) to remediate contaminated sediments found in the lower 8.3 miles of the Lower Passaic River, a part of the Diamond Alkali site, at a cost of $1.38 billion; and

Whereas, Shortly after the ROD was issued, in June 2016, YPF S.A. placed Maxus into bankruptcy, in an apparent attempt to avoid paying the company’s environmental liabilities; and

Whereas, The bankruptcy proceedings followed a series of transactions in which YPF S.A. stripped billions of dollars in assets out of Maxus, leaving it unable to perform its Superfund obligations for the Diamond Alkali site and other Superfund sites in New Jersey; and

Whereas, In August 2016, YPF S.A. completed a successful bond issuance in which it raised $1.75 billion from investors; and

Whereas, The State of New Jersey has an interest in ensuring that all parties responsible for environmental contamination pay their fair share of cleanup costs; and

Whereas, Federal bankruptcy laws are designed to assist companies and individuals who have a legitimate need for protection from creditors, not to assist or protect profitable companies seeking to avoid environmental liabilities; and

Whereas, Given the scale of the remediation costs at the Diamond Alkali site, and the dangerous precedent YPF S.A’s actions could set for future Superfund sites, an investigation into YPF S.A’s actions, and those of its subsidiary Maxus, is necessary; now, therefore,

Be It Resolved by the Senate of the State of New Jersey:

1. This House urges the New Jersey State Commission of Investigation to examine actions taken by Argentina’s state-owned oil company, YPF S.A., and its subsidiary Maxus Energy Corporation, to use United States bankruptcy proceedings in 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.

2. This House urges the New Jersey Department of Environmental Protection to prepare a report for submission to the 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; and an examination of the precedent that YPF S.A.’s actions would set for other companies facing Superfund obligations.

3. This House urges the United States Congress to request a report from the United States 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. This House further urges Congress to make appropriate changes to the federal “Comprehensive Environmental Response, Compensation, and Liability Act” to prevent foreign corporations from avoiding their Superfund liabilities.

4. This House urges the United States Securities and Exchange Commission to initiate a review of public statements and disclosures made by YPF S.A. regarding the environmental liabilities of its subsidiary, Maxus Energy Corporation, to determine if inaccurate information was provided to shareholders and prospective investors regarding YPF S.A.’s overall financial condition.

5. This House urges 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, but not limited to, any violations of the federal or State racketeer influenced and corrupt organizations (RICO) acts, and pursue all appropriate legal remedies.

6. Copies of this resolution, as filed with the Secretary of State, shall be transmitted by the Secretary of the Senate to the President of the United States, the Speaker and Minority Leader of the United States House of Representatives, the Majority and Minority Leaders of the United States Senate, each member of the New Jersey Congressional delegation, the United States Attorney General, the Chairman of the United States Securities and Exchange Commission, the New Jersey Attorney General, the Commissioner of the New Jersey Department of Environmental Protection, and the Executive Director of the New Jersey State Commission of Investigation.

STATEMENT

This resolution would urge relevant federal and State authorities to investigate actions taken by Argentina’s state-owned oil company, YPF S.A., to discharge its Superfund obligations in New Jersey through federal bankruptcy proceedings.

Beginning in the 1940s, and continuing for several decades, the Diamond Alkali Company (later Maxus Energy Corporation) owned and operated a facility at 80-120 Lister Avenue in Newark, New Jersey that manufactured agricultural chemicals, including the herbicide known as “Agent Orange.” In 1983, the United States Environmental Protection Agency (EPA) and the New Jersey Department of Environmental Protection found high levels of dioxin, an extremely toxic byproduct of agriculture manufacturing processes, at the 80-120 Lister Avenue site and in the Passaic River. Consequently, the EPA placed the Diamond Alkali site on the Superfund National Priorities List in 1984, beginning a decades-long effort to clean up the site and ensure the cooperation of responsible parties.

In 1995, Argentina’s state-owned oil company, YPF S.A., acquired Maxus Energy Corporation, presumably with full knowledge of the environmental liabilities it would inherit. In March 2016, the EPA announced its record of Decision (ROD) to remediate contaminated sediments found in the lower 8.3 miles of the Lower Passaic River, a part of the Diamond Alkali site, at a cost of $1.38 billion. Shortly after the ROD was issued, YPF S.A. placed Maxus into bankruptcy, in an apparent attempt to avoid paying the company’s environmental liabilities. This action followed a series of transactions in which YPF S.A. stripped billions of dollars in assets out of Maxus, leaving it unable to perform its Superfund obligations for the Diamond Alkali site and other Superfund sites in New Jersey. Despite this, YPF S.A. recently completed a successful bond issuance in which it raised $1.75 billion from investors.

The State of New Jersey has an interest in ensuring that all parties that are responsible for environmental contamination pay their fair share of the cleanup costs. Federal bankruptcy laws are designed to assist companies and individuals who have a legitimate need for protection from creditors, not to assist or protect profitable companies seeking to avoid environmental liabilities. Given the scale of the remediation costs at the Diamond Alkali site, and the dangerous precedent YPF S.A.’s actions could set for future Superfund sites, an investigation into YPF S.A.’s actions, and those of its subsidiary Maxus, is appropriate.