As a result of the largest environmental bankruptcy in U.S. history, $1.79 billion has been paid to fund environmental cleanup and restoration under a bankruptcy reorganization of American Smelting and Refining Company LLC (ASARCO), the Justice Department, U.S. Environmental Protection Agency, Department of the Interior and Department of Agriculture announced last week.

ASARCO is a leading producer of copper and one of the largest nonferrous metal producers in the United States. It is based in Arizona and is responsible for sites around the country that are contaminated with hazardous waste.

The money from environmental settlements in the bankruptcy will be used to pay for past and future costs incurred by federal and state agencies at more than 80 sites contaminated by mining operations in 19 states. Those states are Arizona, Alabama, Arkansas, California, Colorado, Idaho, Illinois, Indiana, Kansas, Missouri, Montana, Nebraska, New Jersey, New Mexico, Ohio, Oklahoma, Texas, Utah, and Washington.

“Today’s landmark enforcement settlement will provide almost one billion dollars to clean up polluted Superfund sites,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “This will mean cleaner land, water and air for communities across the country.”

“The effort to recover this money was a collaborative and coordinated response by the states and federal government. Our combined efforts have resulted in the largest recovery of funds to pay for past and future clean up of hazardous materials in the nation’s history. Today is a historic day for the environment and the people affected across the country,” said Associate Attorney General Tom Perrelli.

“This settlement exemplifies government at all levels working effectively for the American taxpayer to recover damages from polluters and restore and protect important national landscapes and significant wildlife resources that have been injured,” said Interior Assistant Secretary Tom Strickland. “In consultation and collaboration with our state and tribal co-trustees, this money will be used exclusively to restore, replace or acquire the equivalent of resources injured at more than a dozen sites where ASARCO operated and we have identified natural resource damage.”

“I would like to thank the Department of Justice, the Environmental Protection Agency and USDA Office of General Counsel for their diligence in reaching this comprehensive settlement that will so benefit restoration of public lands,” said Joel Holtrop, Deputy Chief for the National Forest System, U.S. Forest Service, Department of Agriculture. ”This settlement provides significant resources to address land restoration from past mining activities on National Forest System lands in Arizona, California, Idaho, Montana and Washington.”

Under the terms of the plan, all allowed claims were paid in full along with interest. Funds were distributed as follows:

The United States received approximately $776 million, which will be distributed in accordance with the underlying settlements to address 35 different sites; The Coeur d’Alene Work Trust was paid $436 million; The three custodial trusts which address the owned but not operating properties of ASARCO and involve a total of 13 states and 24 sites were paid a cumulative total of approximately $261 million; and Payments totaling in excess of $321 million were paid to 14 different states to fund environmental settlement obligations at 36 individual sites.

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.

ASARCO filed for protection under Chapter 11 of the U.S. bankruptcy code on Aug. 9, 2005. American Smelting and Refining Company or ASARCO has operated for nearly 110 years—first as a holding company for diverse smelting, refining, and mining operations throughout the United States and now as the Arizona-based integrated copper-mining, smelting, and refining company.

By the time it filed for bankruptcy, ASARCO’s core operating assets were limited to certain operations in the states of Arizona and Texas. However, it continued to own numerous non-operating properties that were highly contaminated and was subject to environmental claims at sites that were not owned by the company.

In August 2009, following lengthy litigation, the U.S. Bankruptcy Court for the Southern District of Texas held a two-week hearing on competing plans of reorganization for ASARCO that would allow the company to be purchased out of bankruptcy. During this hearing, two competing plans emerged that proposed to pay creditors in full with interest.

On Aug. 31, 2009, Judge Richard Schmidt of the U.S. Bankruptcy Court in Corpus Christi issued a recommendation to the U.S. District Court for the Southern District of Texas to confirm the plan proposed by ASARCO’s parent company—a subsidiary of Grupo Mexico. U.S. District Judge Andrew Hanen in Brownsville accepted Judge Schmidt’s recommendation and confirmed Grupo Mexico’s plan on Nov. 13, 2009.

On Dec. 9, 2009, Grupo Mexico met its funding obligations and the plan was consummated. Additionally, the environmental payment and property transfer obligations outlined in the numerous settlement agreements, which had been approved by the bankruptcy court over the course of the litigation, were complied with.

The full payment of environmental claims, plus interest, will facilitate the cleanup of contamination and restoration of natural resources at numerous sites across the country. The reorganized company remains liable for environmental liabilities at the properties that it will continue to own and operate.