Freedom Industries declares bankruptcy following WV spill
11:50 AM MST | January 24, 2014 | —Lindsay Frost
Freedom Industries has filed for bankruptcy a week after a leak at one of its tanks containing 4-methylcyclohexane methanol (MCHM) forced a water ban in nine West Vriginia counties surrounding Charleston, WV—the state’s largest city. The Chapter 11 petition filed on 17 January in the US Bankruptcy Court of the Southern District of West Virginia lists assets and debts of $10 million each. The filing seeks protection from the company’s creditors and may halt over two dozen lawsuits that residents and business owners have filed over the incident, reports say.
The same day that the Chapter 11 was filed, Freedom filed a debtor-in-possession financing, which would allow it to secure up to a $5-million loan to continue to function in some capacity. A judge approved the loan on 22 January. J. Clifford Forrest, associated with the lender, is the owner of Chemstream Holdings, which acquired Freedom and merged it with its sister companies Etowah River Terminal (Charleston, WV) and Poca Blending (Charleston) on 31 December 2013, just weeks before the spill. The Chapter 11 filings list Chemstream as the sole owner of Freedom Industries. Etowah and Poca are storage, blending, and distribution facilities for the specialty chemical market, according to their Web sites.
Freedom and Eastman Chemical, the maker of MCHM, face class-action suits from businesses and residents who allege that the company concealed toxic components of the chemical, though little health and safety records of MCHM are publicly available in its material safety data sheet. Eastman conducted a total of 18 crude MCHM studies in the past, including acute oral studies and oral feeding studies, the most recent being in 1998.
The West Virginia unit of the American Water Works and Freedom president Gary Southern are among the other defendants in the suit. The Chapter 11 filing lists several major chemical and related companies, including Kemira, BASF, Eastman, and Univar, as the creditors and customers holding the largest unsecured claims. Kemira is owed the most, $286,000.
As a result of the incident, ACC emphasized the need the for passage and reform of the Chemical Safety Improvement Act (CSIA) that will update the Toxic Substances Control Act in order to enhance chemical regulation and promote chemical safety. “The CSIA will help address some of the questions being raised in the wake of the spill in West Virginia by giving EPA more authority to request additional information about chemicals from manufacturers, increasing transparency of information about chemicals, and enhancing cooperation between state and federal regulators,” ACC says.
“The safety of chemical facilities and surrounding communities requires a strong ongoing partnership between industry and government at all levels,” a spokesperson for ACC says. “While this incident did not occur at an ACC member facility, we take every event like this seriously, as each provides an opportunity to learn and improve. ACC fully supports efforts to identify the facts that contributed to the very unfortunate incident in West Virginia and to examine any broader questions they raise about oversight, implementation, enforcement, coordination, and information sharing among state, local, and federal officials.”
On 17 January, backed by West Virginia Governor Earl Ray Tomblin, US Senators Joe Manchin (D., WV), Barbara Boxer (D., CA), and Jay Rockefeller, (D., WV) announced plans to introduce legislation that will help protect Americans from chemical spills that threaten drinking water, according to a statement from Manchin’s office. The Chemical Safety and Drinking Water Protection Act would require regular state inspections of aboveground chemical storage facilities, require industry to develop state-approved emergency response plans that meet at least minimum guidelines established in the bill, allow stats to recoup costs incurred from responding to emergencies, and ensure drinking water systems have the tools and information to respond to emergencies.
“We can work to improve the safety of Americans by ensuring that chemicals are properly managed while also balancing the positive impact the chemical industry has made to our country,” Manchin says.
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