The New Jersey Chemical Spill That Could Pollute U.S.-Argentine Relations

Argentine President Mauricio Macri flew to Washington this week to present a new image of his country. Once mired in debt and feuds with foreign creditors, Macri wants the world to know that Argentina is back open for business. But there’s a big hitch in his sales pitch, and it has to do with a chemical-laden river in New Jersey.

Argentina’s state-controlled oil company, YPF SA, is mired in a heated legal dispute over who foots the bill to clean up a New Jersey river saturated with pollution. The state legislature accused YPF of trying to duck out on its responsibility to help clean up the mess that one of its subsidiaries is legally on the hook for, even though it filed for bankruptcy last year. Both chambers of the New Jersey state legislature have called on Trump’s Justice Department to investigate, and they say the buck stops with Macri.

The legal dispute could cloud Macri’s international campaign to present a new above-the-board face for Argentina’s business climate. It’s also embroiled the state oil company in a potentially costly legal mess at a time when Argentina needs its energy revenues the most. And if YPF manages to avoid footing the bill, New Jersey lawmakers say, it could provide a blueprint for companies to escape future environmental damage claims.

The story dates back to the 1980s, when the Environmental Protection Agency (EPA) first measured off-the-charts pollution levels in New Jersey’s Passaic River, thanks in large part to a spillage from a nearby chemical company, Diamond Shamrock Chemicals, which produced Agent Orange, among other toxic chemicals. In 1983, Maxus Energy Corporation bought Diamond Shamrock, legal liabilities and all, and then YPF bought Maxus for $762 million in 1995, thereby inheriting a share of the Passaic River cleanup burden, New Jersey lawmakers say.

In 2016, the EPA finally completed a plan to clean up the Passaic River, one of the largest of the EPA’s so-called “Superfund” sites requiring hazardous waste cleanup. (New Jersey has 100 Superfund sites — more than any other state in the country).

The cleanup for the Passaic River, dubbed the Diamond Alkali Superfund site, is a massive undertaking that requires dredging 3.5 million cubic yards of contaminated soil. The task could cost $1.38 billion, though other government estimates price the total environmental and economic damage at $5.5 billion.

“The Passaic River has been seriously damaged by over a century of pollution,” EPA Regional Administrator Judith Enck said in March. “Extraordinarily high concentrations of dioxin, PCBs, heavy metals and pesticides have robbed the people of New Jersey from being able to use this natural resource.”

With Trump poised to gut EPA funding by as much as 31 percent, the cleanup effort needs all the outside funding it can get. But when New Jersey turned to YPF to help foot the bill, the company said it couldn’t afford to pitch in at the levels the state wanted. YPF’s subsidiary Maxus…

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