How to Avoid Cleanup Costs

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


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.

We've never been very good at being conservative.

And usually, that serves us well in doing the ambitious, hard-hitting journalism that you turn to Mother Jones for. But it also means we can't afford to come up short when it comes to scratching together the funds it takes to keep our team firing on all cylinders, and the truth is, we finished our budgeting cycle on June 30 about $100,000 short of our online goal.

This is no time to come up short. It's time to fight like hell, as our namesake would tell us to do, for a democracy where minority rule cannot impose an extreme agenda, where facts matter, and where accountability has a chance at the polls and in the press. If you value our reporting and you can right now, please help us dig out of the $100,000 hole we're starting our new budgeting cycle in with an always-needed and always-appreciated donation today.

payment methods

We've never been very good at being conservative.

And usually, that serves us well in doing the ambitious, hard-hitting journalism that you turn to Mother Jones for. But it also means we can't afford to come up short when it comes to scratching together the funds it takes to keep our team firing on all cylinders, and the truth is, we finished our budgeting cycle on June 30 about $100,000 short of our online goal.

This is no time to come up short. It's time to fight like hell, as our namesake would tell us to do, for a democracy where minority rule cannot impose an extreme agenda, where facts matter, and where accountability has a chance at the polls and in the press. If you value our reporting and you can right now, please help us dig out of the $100,000 hole we're starting our new budgeting cycle in with an always-needed and always-appreciated donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate