West Virginia government agencies have filed a nearly $1.8 million claim in the bankruptcy of Freedom Industries, seeking repayment of money they spent responding to Freedom’s January chemical leak, which contaminated the drinking water for 300,000 residents in Charleston and counties surrounding Kanawha County.
Lawyers for the state filed claims on behalf of the Department of Health and Human Resources, various agencies with the Department of Military Affairs and Public Safety, and the Lottery Commission.
The claims “cover costs incurred” by those agencies “as a result of the Elk River Spill for the protection of the safety and health of the citizens of West Virginia and visitors and travelers to this state,” the filing says.
The largest single claim was for more than $940,000, filed on behalf of the DHHR. The agency said the amount is to cover costs for employee overtime, water, and meals and other supplies during the water crisis that followed the Jan. 9 leak at Freedom’s Elk River chemical tank farm.
The DHHR also said it incurred costs, along with Gov. Earl Ray Tomblin’s office, for the West Virginia Testing Assessment Project, a program to test the water supply and try to investigate the impact of the leak.
The Division of Homeland Security and Emergency Management at DMAPS said it had incurred expenses of nearly $300,000. The agency said it oversaw the “state-level emergency management of the water crisis” and “provided significant assistance” throughout the event.
The West Virginia National Guard cited expenses of more than $373,000, mostly for its help in collecting water samples.
The Lottery Commission said it lost a projected $93,000 in video lottery proceeds related to the temporary closure of the Mardi Gras Casino and Resort in Nitro.
Department of Environmental Protection officials, who are overseeing the cleanup of the Freedom site, filed a separate claim.
In that filing, DEP general counsel Kristin Boggs said Freedom remains under enforcement orders issued by the DEP and is obligated to continue remediation at the site, and that any obligations under DEP enforcement orders cannot be overridden by the bankruptcy court.
Kanawha County Commission officials filed a separate claim, saying they incurred costs of $260,000 for emergency response work during the water crisis.
The deadline for filing claims in Freedom’s bankruptcy was Aug. 1.
Jim Lane, the court-appointed claims agent, said he could not yet provide a complete accounting of the number of claims or the amount of money involved in those claims.
Lane said that more than 3,500 claims were filed on paper — as opposed to electronically — on the day of the deadline, and that those are still being entered into the court’s computer system.
In bankruptcy court, a “claim” is a right to payment, in this case from Freedom Industries, for any reason. The court will decide which claims are legitimate, and later, whatever funds are left in Freedom’s coffers will be distributed among the claimants.
U.S. Bankruptcy Judge Ronald Pearson has said that, because Freedom is liquidating and there is little money available from the company, there will be only “pro rata” distribution, in which funds from the bankruptcy estate are doled out proportionally to creditors.
Reach Ken Ward Jr. at email@example.com, 304-348-1702 or follow @kenwardjr on Twitter.