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How to Avoid Cleanup Costs

Over at the Sierra Club site, Marilyn Berlin Snell has a story about how corporations use bankruptcy to discharge their environmental obligations. In particular, she follows the story of Asarco, a massive copper conglomerate whose smelters were poisoning towns. After being found guilty in court and racking up $500 million to $1 billion in environmental liabilities, the company declared bankruptcy in 2005—and the public was stuck with the bill for cleaning up the mess. It's not an uncommon tactic:

Reorganization under the Bankruptcy Code's Chapter 11 helps companies wipe the slate clean of environmental liabilities, giving them a fresh start. In the United States--a country that has based its keystone environmental laws on the principle that polluters, not taxpayers, should pay to clean up the poisons they spew--Asarco is just one example of how corporations use Chapter 11 to slough off massive environmental liabilities, reorganize, and then emerge leaner and meaner to operate another day.

Asarco's parent company, Grupo México, is benefiting too. A few months after Asarco filed for bankruptcy, Grupo México announced that net profits had doubled--largely because Asarco's environmental liabilities had been removed from its books. Of course, the liabilities remain, but now they are borne by U.S. taxpayers.

Last year, Congress cracked down on personal bankruptcy, making it harder for consumers to erase their debts. But legislators have done nothing to get tougher with the approximately 38,500 businesses that declare bankruptcy each year. A 2005 report to Congress spelled out steps the EPA could take to ensure such companies fulfill their environmental obligations. But as that study sits on a shelf, Asarco and an untold number of other polluting enterprises are getting a free pass.

No one really knows how many companies do this. Sen. Maria Cantwell (D-WA) asked the GAO to look into it, and the agency found the following: " While more than 231,000 businesses operating in the United States filed for bankruptcy in fiscal years 1998 through 2003, the extent to which these businesses had environmental liabilities is not known because neither the federal government nor other sources collect this information." Companies with environmental liabilities don't always notify the EPA -- ostensibly a creditor -- when they file for bankruptcy. Snell, for her part, makes some guesses as to which companies are doing just this, however; it's worth reading her whole story.

Posted by Bradford Plumer on 04/13/06 at 3:37 PM | E-mail | Print | Digg this | de.licio.us

Comments

Another example of the Big Business policies of this administration. Loop holes, tax cuts, and bankruptcies all to benefit the rich as they get richer.

Posted by: Mywalea on 04/14/06 at 6:14 PM

So, what's new? Nothing if we stand for it. Blogging is fine, but do the readers and commenters spend any time flooding their Reps and Sens and editors with their views or any other sort of active democracy? We must LIVE our democracy in order to preserve it and make it work. It's not so easy as just voting, as we well know.

Posted by: Electric Lady on 04/14/06 at 7:46 PM

I am a 59 year old grandmother turning 60 this year; a baby boomer who pays a lot more attention to the political scene now than when I was younger.
Now, I do sign up when my email asks for signatures on petitions to make congress aware of the consumers who are interested in pending legislation. I have on occasion written articles to mostly email journals, and even once or twice walked with a sign.
This does not make my democracy safe; our elected officials do and I do not delude myself that much I do will matter. I think we have long lost control of our government.
Way back when corporations became entities without personal responsibilities but with personal rights, the run-away train left the station with the throttle tied down. Elected officials do not make laws in public, only the red herrings get an airing. The politicians evade responsibility due to the fear of a hotly contested election that any opposition to corporate interests will draw. Have you seen the figures of how many of our House are 'permanent'?
I think we are all concerned; but what to do? what will work? In the end the money matters most if what I read means anything and I read a lot!
In the larger view, capitalism seems to be going the way of previous experiments; concentration of wealth in the hands of a few. Ever wonder how castes became the order of the day in India? Did you know when Japan was unified under the Samuri warriors, the Emperor decreed permanent classes: merchants, farmers, samuri, court officials. China had castes much the same before the revolution; sounds like a cycle: peasant uprising, socialist style ownership decaying into capitalism, rise of wealth, entrenched power, revolution.
Somehow in the midst of this knowledge seems to crawl forward. Just think of what we would not have had to repeat if the library at Alexandria was spared destruction. The Piri Ries map? Not aliens but the Chinese fleet of 1421.
Want democracy? Support your local library; Carnagie's guilt over the union lockout that broke the steel worker's union. Microsoft's excesses displayed in computers for public use. Enjoy democracy while you can.

Posted by: katesisco on 04/15/06 at 6:00 AM