Mulberry Phosphates: Alafia River Restoration
In December 1997, approximately 50 to 56 million gallons of acidic process water from a Mulberry Phosphates fertilizer plant spilled into the Alafia River in Polk County, Florida due to the failure of a guarding wall. The contamination of the watershed with hazardous chemicals caused a fishkill and a variety of shoreline, vegetation and other natural resource damages. The spill ultimately traversed to Tampa Bay.

After Mulberry Phosphates declared bankruptcy in 2001, the Florida and the United States Departments of Environmental Protection together with associated agencies looked to Mulberry’s environmental liability coverage for a source of funds to provide future cleanup and monitoring of the spill site. Throughout the course of negotiations, working relationships developed between the Justice Department, defense counsel Patton Boggs, LLP, the bankruptcy Trustee and structured settlement analyst Michael Murphy. Ultimately, a structured settlement was proposed as a means to provide payments uniquely tailored to coincide with the government agencies’ future needs for planning, implementation and oversight of natural resource restoration actions. Those needs were expressed in a Restoration Plan, with the final structured settlement accepted by the government funding the Plan by providing immediate cash and a series of future payments over a period of six years.

Procedurally, the structured settlement was put in place under a Consent Decree requiring Mulberry’s insurance carrier to purchase a Reinsurance Agreement from a highly-rated life insurance company. To facilitate the government’s ongoing restoration plan, the Consent Decree requires that the reinsurer notify the Department of Commerce and Secretary of the Interior of the United States each time it wire transfers one of the payments due under the Reinsurance Agreement. Further the Consent Decree provides for direct enforcement of the Reinsurance Agreement if necessary, with the payments secured both by the contractual liability of the highly-rated life insurance company as well as a contingent guarantee of the reinsurer from Mulberry’s environmental liability carrier.

Additional information regarding the December 1997 spill and the ongoing interplay of the funds provided by the structured settlement for the restoration of the Alafia River watershed is available as follows:

Restoration plan [PDF: 1100K]

US Environmental Protection Agency

Florida Department of Environmental Protection

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