Cases & Deals

Kaiser Aluminum plan to transfer surface mine responsibility to non-profit trust wins Pennsylvania DEP approval

Clients Kaiser Aluminum and Chemical Corporation

In the context of its chapter 11 reorganization, Jones Day represented Kaiser Aluminum & Chemical Corporation in the structuring and negotiation of a complex set of transactions among Kaiser, the Pennsylvania Department of Conservation and Natural Resources ("DCNR"), the Clean Streams Foundation, Potato Ridge LLC, and the Pennsylvania Department of Environmental Protection ("DEP"). The transactions allowed Kaiser and DCNR to each convey inactive mine properties to the Clean Streams Foundation, a non profit trust, together with funds to prepay the projected costs of constructing, operating and maintaining a single post-mining water discharge collection and treatment system to serve both mines.  The responsibility for performing all of these activities was also transferred to the Clean Streams Foundation and Potato Ridge LLC.  The respective contributions of Kaiser and DCNR to the sub-trust established by the Clean Streams Foundation were substantially less than the projected costs to each party of complying with the long-term environmental liabilities for post-mining discharges from their respective mine properties.  The objective of this transaction was to transfer unwanted assets and environmental liabilities prior to the effective date of Kaiser's chapter 11 reorganization plan. 

Over the course of this matter, which required more than two years to negotiate, Jones Day was able to overcome initial resistance from DCNR and DEP by (1) obtaining support for the combined treatment system from a regional watershed association and a statewide environmental advocacy group, (2) persuading DCNR and DEP of the mutual cost savings and other positive environmental policy attributes of the transaction, (3) soliciting a proposal from and negotiating the terms of the transactions with the Clean Streams Foundation and Potato Ridge LLC, and (4) negotiating the regulatory documentation of the transactions with DEP.