Senator Eliot Shapleigh - El Paso, Texas

For the past 120 years, the ASARCO facility has long been associated with our community. For most of its history, the facility was a source of civic pride. At one point it was the second largest smelter operation in the world. During the industrial revolution of the early 1900’s, post cards from El Paso routinely featured the smelter. It’s no coincidence that the University of Texas-El Paso is known as the “Miners” as ASARCO donated most of the land for University.

But times have changed.

Today, the El Paso facility sits idle, as it has for past five years, a victim of economic Darwinism. It’s not alone. The once proud ASARCO has left a trail of abandoned sites across the country. It is fighting for its very existence. There have been persistent rumors about an imminent bankruptcy filing.

ASARCO has been named as a Principal Responsible Party by the U.S. Environmental Protection Agency on at least nine, count ‘em, NINE, Superfund sites around the country. In Tacoma, Washington the U.S Government was so concerned about ASARCO’s ability to pay the cost of its share of a clean up obligation, that it took the unprecedented step of blocking the sale of one of ASARCO’s wholly owned subsidiaries to an affiliate on the basis that the price to be paid was inadequate. Ultimately, a settlement was achieved wherein a large portion of the sales proceeds was allocated to the Tacoma clean up bill.

Unlike the nine communities that have obtained Superfund status for their ASARCO operations, and have begun, and in some cases completed the clean up process, we in El Paso sit idly by, debating about a permit to allow ASARCO to reopen.

It seems to me that before we have a discussion of the relative merits of reopening the facility, there are some basic questions that need to be asked and answered.

1. What is the environmental status of the facility itself?

While there has been study of the purported effects of emissions from the ASARCO facility on adjacent property and those who live nearby, there has never been an independent study of the facility itself. One can only imagine what is underneath the facility, which operated as a lead smelter for over 100 years with no environmental regulation. Since the 1980’s ASARCO has been “self reporting” to the environmental authorities under its existing remedial orders. While I don’t doubt that ASARCO has been truthful in its reporting, we have the environmental equivalent of “don’t ask, don’t tell.” Clearly, there is no motivation to look for problems. It’s imperative that we have an independent assessment of the facility before any debate over the relative merits of reopening occurs.

2. What is the economic condition of ASARCO?

Because it is now owned by a Mexican conglomerate, Grupo Mexico, there is little financial information about ASARCO. It is not required to file financial disclosures with the US Securities and Exchange Commission (SEC). However, it seems logical that any business that has a direct and substantial impact on the health and safety of its community should be required to file financial disclosures. We as a community need to know whether ASARCO or any other company in a similar circumstance can pay for the cost of whatever its clean up obligations may be.

3. What happens if ASARCO files Bankruptcy?

I am fortunate enough to know a little about U.S. bankruptcy law. Though I am no longer a practicing attorney and cannot dispense legal advice, I spent 16 years in the practice, and was board certified in bankruptcy law. I also had the privilege of serving a bankruptcy trustee for 13 years.

Based upon a 1989 U.S. Supreme Court decision, known as the Midatlantic Bank case, a holder of an established claim requiring environmental clean up is entitled to “priority” status in the bankruptcy case. That is, the available assets of bankruptcy estate must go first to pay for the clean up obligation before other claims are paid. The trustee cannot simply abandon the facility. If ASARCO were to file bankruptcy, the nine communities that have fought and won Superfund designation for their abandoned facilities would be first in line to get paid, and continue the clean up.

For a community like El Paso that does not have an established claim, the legal situation is a bit less clear. In the worst case, we have an unsecured, contingent and unliquidated unsecured claim for clean up which places us precisely at the bottom of the bankruptcy food chain.

So what happens then? We as a community must find the resources for the clean up. Assuming it qualifies, we can look to the Superfund itself or perhaps another state or federal clean up program like Brownfield, but ultimately the clean up occurs with little or no contribution from ASARCO. For a community with limited assets, this will be a real challenge.

I would note that I am not an ASARCO basher. I have no axe to grind, and no political agenda. I am businessman who is simply concerned with the ‘brand’ of our community. I see ASARCO, and more importantly, our response as a community to the challenges it presents as the litmus test for El Paso in the 21st century.

Andy Krafsur is originally from Detroit, Michigan. He arrived in El Paso in 1986 and began his career with the law firm Mayfield and Perrenot. In 1994 he founded the law firm now known as Krafsur, Gordon and Mott. Andy is board certified by the Texas Board of Legal Specialization in both Business and Consumer Bankruptcy, he is listed in the "Best Lawyers of America." In January 2002, Andy became the President of Shoespring, Inc. a shoe technology company that has the potential to revolutionize the footwear industry.

Andy Krafsur, President & CEO
Spira™ Footwear, Inc.
110 Mesa Park Dr. Suite 200
El Paso, TX 79912
www.spirafootwear.com