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Chair, Ranking Member of U.S. House Judiciary Committee Urge DOJ to do 'Careful Study' of Environmental Record of Vedanta/Sterlite, Other Would-Be Buyers of ASARCO
Date:7/10/2008

WASHINGTON, July 10 /PRNewswire-USNewswire/ -- Two leading U.S. House Judiciary Committee members -- Rep. John Conyers, Jr., chairman of the House Judiciary Committee and Rep. Lamar Smith, ranking member of the House Judiciary Committee have asked U.S. Attorney General Michael B. Mukasey to have the Department of Justice focus its attention on the environmental records of Vedanta/Sterlite and other companies seeking to gain control of U.S. copper miner ASARCO.

In a letter to Attorney General Mukasey, Conyers and Smith explain: "We understand that ASARCO is associated with approximately 100 Superfund sites in the United States. The media have reported that ASARCO agreed with the Environmental Protection Agency in 2003 to set up a $100 million trust fund to help pay the company's environmental cleanup costs. It is estimated that ASARCO's Superfund liabilities may range up to $1 billion.

Recently, ASARCO's board of directors accepted a $2.6 billion purchase offer from Sterlite Industries (USA) Ltd. (Sterlite USA) to buy substantially all of the debtor's principal assets, subject to approval by the United States Bankruptcy Court. We understand that these assets include ASARCO's facilities in Texas and Arizona. Sterlite USA will also assume certain of the debtor's liabilities. The obligations of Sterlite USA under the purchase and sale agreement are guaranteed by Sterlite Industries (India) Ltd. ...

Prior to the ASARCO board's acceptance of Sterlite USA's offer, the bankruptcy court issued an order requiring the board to consider 'any bidder's and its affiliates' history of compliance or noncompliance with environmental regulations.' Sterlite USA's affiliate, Vedanta, however, is alleged to have a poor environmental record outside the United States. There assertedly have been 'numerous reports that raise serious questions about Vedanta's history of compliance with EHS [environmental, health and safety] laws and regulations.'

We are not aware of whether bidders who competed with Sterling USA before ASARCO's board and their affiliates have environmental records better than, similar to, or worse than Vedanta's. Further, we understand that environmental concerns are implicated, not only by what entity assumes control of ASARCO's assets, but by such other factors as delays in the resolution of ASARCO's Chapter 11 case and delays in plan distributions. Thus, Vedanta's environmental record is not the only environmental factor that the Department confronts as it conducts its representation of the United States in the ASARCO bankruptcy.

We expect the Department to consider appropriately all of the environmental considerations posed by ASARCO's case. Based on recent events in the matter, however, we are not yet sure that the Department is adequately doing so. For example, at a recent hearing held in the ASARCO case before the United States Bankruptcy Court, in which the Sterlite USA and Vedanta issues were presented, an attorney for the Justice Department explained that 'the environmental laws are less strict abroad so we think they're of limited value in determining what the record of compliance would be in the United States.' He added, 'and given the disparity in the bids we think that it was not a dispositive disqualifying factor.' This statement may reflect an attempt to summarize the Department's efforts to assess all of the relevant environmental factors, but we cannot be sure.

Given the considerable federal liabilities associated with ASARCO based on its involvement with contaminated sites, and in light of the above, we believe that Vedanta's environmental track record overseas, as well as all relevant environmental factors bearing on the ASARCO bankruptcy, should be carefully studied before the Department adopts a final position on whether Sterlite USA or any other bidder should be allowed to acquire ASARCO's assets in the United States.

In addition, we ask that you explain in writing the Department's policy with respect to assessing the bona fides of a potential bidder that may present environmental concerns. In particular, we would like to know whether it is the Department's policy to take into consideration factors beyond the cash value of an offer and the potential bidder's environmental track record in the United States and abroad before offering Department support for the consummation of a sale."

For the full text of the Conyers-Smith, go to http://216.250.243.12/ConyersSmithletter.pdf on the Web.


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SOURCE U.S. House of Representatives Committee on the Judiciary
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