A consent decree requiring the steel company Blue Tee and three of its executives to pay $75.5 million, spread across seven states, three federal agencies and seven tribes, was filed Oct. 31 by the federal government in the Western District of Missouri in Joplin, along with an accompanying civil lawsuit. The consent decree must first be approved by a federal judge after a 30-day public comment period before taking effect.
According to the decree, Oklahoma’s share of the funds would be about $870,000 made in annual payments over five years. The Ottawa Tribe would receive close to $3.4 million, and the funds are required to be spent on environmental damage assessment and restoration projects agreed to by a consensus of the seven tribes listed in the consent decree.
The settlement covers numerous other sites in other states where operations by the now-defunct mining company American Zinc Company caused environmental destruction.
In addition to the state of Oklahoma and the Ottawa Tribe, the U.S. Environmental Protection Agency, the U.S. Department of Interior, the U.S. Department of Agriculture, the Cherokee Nation, the Eastern Shawnee Tribe of Oklahoma, the Peoria Tribe, the Seneca-Cayuga Nation, the Wyandotte Nation, the Miami Tribe, and the states of Colorado, Missouri, Kansas, Tennessee, Illinois and Montana are also listed as plaintiffs in the suit and parties to the consent decree.
The decree would also require Blue Tee and the of its three executives — David P. Alldian, president and chief financial officer; Richard A. Secrist, former officer and director; and William M. Kelly, a board member of Blue Tee — to pay the U.S. EPA a combined $5.9 million and the U.S. Department of Interior $4.7 million just for the Tar Creek site in Oklahoma alone. The agreement also requires tens of millions in payments for other sites in the Tri-State Mining district, including in Cherokee County, Kansas, located just north of the Oklahoma border near the abandoned town of Pitcher.
American Zinc operated lead and zinc mines and smelters in the Tri-State Mining District between 1924 and 1975, leaving enormous piles of toxic mining waste known as chat — sometimes as high as 200 feet — on the surface. In the 1970s, ground and rain water filled the abandoned mines, and water severely polluted with heavy metals overflowed and went into Tar Creek. It is considered one of the worst environmental disasters in Oklahoma history, and tens of millions of dollars have been spent attempting to remediate the 40-square mile site.
The state, tribes and EPA have previously entered into consent decrees with other companies to try and recoup the more than $300 million spent on cleanup in Tar Creek, though the most recent consent decree also covers sites around the nation.
Over the years, different companies purchased the assets and liabilities of American Zinc Company, including Blue Tee in 1985 when it was formed as part of a leveraged buyout of Gold Fields American Industries, a subsidiary of Gold Fields American Corporation that had merged with American Zinc years earlier.
Later, Gold Fields American Corporation agreed to indemnify Blue Tee’s liability costs related to the cleanup and remediation required for the American Zinc sites under the Comprehensive Environmental Response, Compensation and Liability Act, though Blue Tee itself was also listed as a potentially responsible party at some of the sites listed by the EPA. But in 2016 the company, through its affiliate Peabody Energy, filed for bankruptcy protection, and it stopped paying for remediation and settlements on behalf of Blue Tee.
According to the accompanying civil suit, in 2015 Blue Tee, which had already been the target of lawsuits related to Tar Creek, transferred most of its assets to a newly-formed company, Brown Strauss. The transfer was done by Blue Tee’s and Brown Strauss’s parent company, BSI Holdings.
Brown Strauss had the same shareholders, employees, owners, directors, assets, products, services customers and clients as the Blue Tee, the suit states. Following the transfer, Blue Tee “had no active business operations, few assets, only one full time employee, and was intended to be dissolved or rendered inactive,” the suit states.
The suit alleges that between 2012 and 2015, Blue Tee “transferred significant money” to Secrist, Alldian and Kelly through the company’s Executive Stock Ownership and Retirement Plan and its Supplemental Executive Retirement Plan.
Shortly after Peabody Energy filed for bankruptcy protection, the suit alleges that Blue Tee transferred nearly $6.8 million to Secrist, about $6.4 million to Kelly, and $7.3 million to Alldian, though the company by that time was considered insolvent since most of its assets had been transferred to Brown Strauss and the cost of remediation and settlements owed to the government for cleanup of the American Zinc sites far exceeded the company’s value, the suit states.
Under the consent decree, Alldian, Secrist and Kelly would be required to each pay a $3 million total toward the settlement.
In a statement sent to The Frontier, Secrist said Brown Strauss is an environmentally responsible company, and the claims being settled were based on the corporate history of Brown Strauss, rather than pollution created by the company.
“Brown Strauss is an environmentally responsible distributor of structural steel, not a mining company. We are stepping up and paying for a problem we did not create,” Secrist said. “Despite a large settlement amount Brown Strauss remains financially sound. With this issue being resolved, we will continue to build upon our position as a leading supplier of structural steel in the country.”
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