Government Reaches Agreement with Asarco

The United States Federal government reached an agreement to clean up Asarco’s smelter sites in Tacoma and Ruston, Wash. The agreement, between the government and Asarco, calls for the company to sell the Asarco Smelter property to Lacey Wash.-based developer Point Ruston LLC. This ensures that the cleanup work required on the approximately 97 acquired acres of contaminated land will be completed.

Under this agreement, Point Ruston will assume all cleanup obligations on the property owned by Asarco and assume significant cleanup obligations on adjacent land which was also contaminated by Asarco's past operations.

Point Ruston intends to undertake residential and commercial development on the purchased property and will clean up the land to residential environmental standards. Along with the purchased property, Point Ruston has agreed to clean up the non-residential adjacent, contaminated property which due to the development will have significant public access.

The land is the former site of a smelting facility operated by Asarco from 1912 to 1985. Slag, a byproduct of the smelting process, was used by Asarco as fill material throughout the facility and was also poured into Commencement Bay to extend the shoreline of the smelter site by about 500 feet. According to current estimate, as much as 15 million tons of slag exists on the site today.

In 1997, a consent decree between EPA and Asarco mandated cleanup of the uplands portions of the smelter property and the adjacent properties. In 2000, EPA issued an administrative order requiring Asarco to perform the sediment and groundwater work. While Asarco has performed a substantial amount of the work required, much of the cleanup has yet to be implemented.

On Aug. 9, 2005, Asarco filed for bankruptcy protection under chapter 11 of the bankruptcy code in the United States Court for the Southern District of Texas. On Jan. 30, 2006 the Bankruptcy Court approved the sale of the property to MC Construction and the sale agreement was subsequently assigned to Point Ruston.

As part of pre-conditions of the sale set forth by the Bankruptcy Court, Point Ruston was required to reach an agreement with the Environmental Protection Agency regarding the cleanup of the property it is attempting to purchase. The United States has also agreed to release a CERCLA lien against the property in exchange for $1.5 million at closing and contingent payments over time that may reach $4 million so that the property can be sold free and clear of any encumbrances. These funds will be placed into a special account to be used to clean up contaminated sediments in areas not covered by this agreement. As part of the settlement, Point Ruston will also pay EPA's oversight costs.