An insurer of Fruit of the Loom, which filed for bankruptcy in 1999, has agreed to pay $42.5 million to clean up four hazardous waste sites the underwear-maker once owned.
The American International Specialty Lines Insurance Company Inc. had filed suit, challenging the Environmental Protection Agency's right to seek cleanup money from it. The settlement with the Department of Justice, announced Wednesday, ends that suit.
"Insurers should take note that they may be liable for the cost of cleaning up their bankrupt clients' environmental messes," Granta Nakayama, assistant administrator for EPA's Office of Enforcement and Compliance Assurance, said in a prepared statemtn. "EPA will keep pursuing companies who pollute the environment."
Fruit of the Loom filed for bankruptcy in 1999 and the court set up two trusts to receive and distribute the company's remaining assets, including its environmental insurance policies. The trusts subsequently tried to collect environmental cleanup costs from AISLIC, a member company of AIG Insurance, under the insurance policy which covered response costs and natural resource damages under the Comprehensive Environmental Response, Compensation, and Liability Act. It refused payments, and brought suit in 2005.
Under the settlement agreement, AISLIC will make an initial $30 million payment plus interest from May 15, 2007 and ten annual payments of $1.25 million to the Fruit of the Loom trusts. Most of the money will be used to clean up contamination at the following hazardous waste sites:
The first three sites are highly contaminated. The St. Louis plant, for instance, is contaminated by DDT, chlorobenzene, carbon tetrachloride, trichloroethylene and other chemical solvents.
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