DISEASE CHARACTERISTICS:

• Pathologically confirmed diagnosis of adenocarcinoma of the rectum by biopsy technique that does not completely excise the lesion (e.g., fine needle aspiration, core needle biopsy)

  • Located up to 12 cm from the anal verge with no extension of malignant disease into the anal canal

  • Stage IIIB-IIIC disease (T3-T4, N0-2, M0)(i.e., without evidence of distant metastases) tumor as determined by the following assessments:

    • Colonoscopy and biopsy within the past 8 weeks
    • History/physical examination (including medication history screen for contraindications) within the past 8 weeks
    • Contrast-enhanced imaging of the abdomen and pelvis either by CT, MRI, or PET-CT (whole body preferred) within the past 8 weeks
    • Chest x-ray (or CT) of the chest within the past 8 weeks to exclude distant metastases (except for patients who have had whole body PET-CT)

    • Transrectal ultrasound (TRUS) within the past 8 weeks required to establish tumor stage

      • TRUS not required if clinical exam, CT of the pelvis, and/or MRI demonstrates T4 lesion
• No synchronous primary colon carcinoma
• No evidence of distant metastases (M1)

PATIENT CHARACTERISTICS:

Inclusion criteria:

• Zubrod performance status 0-2
• ANC ≥ 1,800/mm³
• Platelet count ≥ 100,000/mm³
• Hemoglobin ≥ 8.0 g/dL (transfusion or other intervention to achieve hemoglobin ≥ 8.0 g/dL allowed)
• AST < 2.5 times upper limit of normal (ULN)
• Alkaline phosphatase < 2.5 times ULN
• Bilirubin ≤ 1.5 times ULN
• Creatinine clearance > 50 mL/min
• Not pregnant or nursing
• Negative pregnancy test
• Fertile patients must use effective contraception
• No prior invasive malignancy except nonmelanoma skin cancer unless disease free for a minimum of 3 years

Exclusion criteria:

• Severe, active comorbidity, defined as follows:

  • Unstable angina and/or congestive heart failure requiring hospitalization within the past 12 months
  • Transmural myocardial infarction within the past 6 months
  • Acute bacterial or fungal infection requiring intravenous antibiotics
  • Chronic obstructive pulmonary disease exacerbation or other respiratory illness requiring hospitalization or precluding study therapy within the past 30 days
  • Hepatic insufficiency resulting in clinical jaundice and/or coagulation defects
  • AIDS
  • Evidence of uncontrolled seizures, central nervous system disorders, or psychiatric disability judged by the investigator to be clinically significant, precluding informed consent, or interfering with compliance of oral drug intake
  • Known, existing uncontrolled coagulopathy, unless clinically stable on anticoagulation therapy for ≥ 2 weeks
  • Evidence of peripheral neuropathy ≥ grade 2
• Prior allergic reaction to oxaliplatin or capecitabine
• Lack of physical integrity of the gastrointestinal tract (i.e., severe Crohn disease that results in malabsorption; significant bowel resection that would make one concerned about the absorption of capecitabine) or malabsorption syndrome that would preclude feasibility of oral chemotherapy (i.e., capecitabine)

PRIOR CONCURRENT THERAPY:

• No prior systemic chemotherapy for colorectal cancer (prior chemotherapy allowed provided it was for a cancer other than colorectal cancer)
• No prior radiotherapy to the region of the study cancer that would result in overlap of radiotherapy fields
• More than 28 days since prior major surgery (other than diverting colostomy without tumor resection)
• More than 28 days since prior participation in any other investigational drug study
• No concurrent cimetidine, amifostine, and/or depot Sandostatin