Argentine energy company YPF reached an agreement with the liquidation trust presiding over Maxus Energy Corporation, avoiding a US$14-billion lawsuit. According to YPF’s press release, if the agreement is approved, both YPF and Spanish company Repsol will pay Maxus US$575 million (US$287.5 million each), totaling 4% of the original demanded sum.

In that case, neither Repsol nor the Argentine majority state-owned oil and gas company will be held legally responsible for polluting a river in New Jersey. 

The lawsuit is divided into two parts, the first related to environmental damages and the second to Maxus’ claims that YPF dismantled the company.

The two parts and the deal

The then-privatized YPF acquired Maxus, an American company, in 1995. Maxus was involved in a conflict over environmental damages in the US before YPF bought the firm.

Maxus had sold its chemical unit in 1986 to the Occidental Chemical Corporation and accepted to compensate it for any environmental liabilities.

In 2005, the state of New Jersey filed a lawsuit against Occidental and Maxus —and then adding YPF and Repsol— for polluting portions of the Passaic River, one of the most contaminated stretches of water in the United States. Six years later, in 2011, a New Jersey Superior Court judge stated that Maxus was liable for the river’s necessary decontamination process.

In 2016, Maxus declared bankruptcy, and two years later, the company’s liquidation trust filed a lawsuit against YPF, Repsol, and other subsidiaries for US$14 billion to assume Maxus’ liabilities, including costs to clean up New Jersey’s Passaic River. The liquidation trust also said that YPF and Repsol had hollowed out Maxus to extract its value.

Yesterday, YPF and Repsol signed a settlement with Maxus’ liquidation trust, Occidental, the United States’ Environmental Protection Agency (EPA), and the states of Ohio and Wisconsin —the companies will not be liable for the pollution of the Passaic River.

In its official press release, YPF said that the agreements will end the litigation if some “conditions” are met. However, no further information about those conditions was disclosed.