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Sherwin Can't Abandon Toxic Red Mud Beds, Texas Says

Texas environmental regulators urged a Texas bankruptcy court Tuesday not to let Sherwin Alumina Co. LLC desert thousands of acres of caustic waste stored in "red mud beds" as the bankrupt company moves to sell more valuable assets to an affiliate of its corporate parent, Glencore PLC.
The Texas Commission on Environmental Quality launched the adversary complaint in Sherwin’s Chapter 11 case, saying the company's 3,200 acres of red mud beds — repositories for waste from bauxite refining — pose public health and environmental risks. Despite this, the TCEQ said, Sherwin apparently plans to leave behind the red mud beds with the assetless estate as the debtor plans to sell off its port and processing facility.
“Should defendants be allowed to desert these red mud beds, the state may be responsible for bearing the financial burden of paying to close these units and maintain them once closed,” Texas wrote. “TCEQ respectfully requests this court enjoin defendants from avoiding their environmental responsibilities.”
The regulator asked the court to compel Sherwin to close the 3,200 acres of red mud beds under TCEQ oversight and regulation.
According to the complaint, the red mud beds produce dust that blows into neighboring communities when it gets dry or windy, causing “numerous and ongoing local complaints” due to the fact that it can cause respiratory problems. The regulator said despite past attempts to abate the problem, the company has failed to stop the red mud dust discharges.
The red mud beds, contained by a series of dikes, also pose water quality risks to wetlands and the adjacent Copano Bay, an estuary that is home to the endangered whooping crane, a shrimp nursery and oysters, the TCEQ said.
“If left unattended and not maintained, these dikes could fail,” the regulator wrote. “Since some of the red mud beds contain water and not fully solidified red mud, such a failure could result in red mud contaminated water being discharged into waters of the state or onto neighboring properties.”
The TCEQ also said that the beds have the potential to overflow from large rain events.
The regulator asked the court to block any further red mud discharges, abate the threat of future discharges, ensure the closure and “continued maintenance” of the facilities.
The TCEQ is not seeking any monetary damages or civil penalties, but in the complaint reserved the right to do so in the future.
The aluminum-oxide maker had filed for Chapter 11 in Texas bankruptcy court in January, after a precipitous fall in the price of the company's core product and a yearlong union employee lockout.
Sherwin filed with a prepacked Chapter 11 plan, which contemplated the sale to senior lender Commodity Funding LLC, which is owned by Glencore Ltd.
Counsel for Sherwin did not respond Wednesday to a request for comment.
Sherwin is represented by Zack A Clement of Zack A. Clement PLLC, Christopher Marcus, Gregory F Pesce, Joshua A. Sussberg and Nate Taylor of Kirkland & Ellis LLP, Scott Thomas Staha of Herrman Herrman LLP, and Jeffrey Michael Thompson of Meagher and Greer PLLP.
The Texas Commission on Environmental Quality is represented by the Texas Attorney General’s Office.
The case is Sherwin Alumina Co. LLC, case number 2:16-bk-20012, in the U.S. Bankruptcy Court for the Southern District of Texas