Going for Broke: Bankruptcy and the Environment

Link: Going for Broke: How corporations are using bankruptcy to evade environmental clean-up costs.

Cleanup should be a cost of doing business, but without secured bonds and other rock-solid forms of financial assurance, it’s easy for corporations to walk away from their obligations. Montana learned this lesson the hard way. (When toxic sites do not receive federal Superfund status, individual states must go after the polluters and pay for cleanup themselves if they are unsuccessful.) In 1998, after Pegasus Gold filed for Chapter 11, the state was stuck with a $40 million cleanup bill for three of the company’s six hardrock mines, then watched helplessly as Pegasus paid out more than $5 million in bonuses to its executives. The state made sure this sort of thing wouldn’t happen again by increasing financial assurances in the form of bonds at nearly every remaining mine site from 50 percent to more than 10,000 percent.

Arizona has not been so prudent. With 2003 estimates of hardrock-mine-reclamation liabilities at nearly $4 billion, the state still allows corporate "self-guarantees," essentially a CEO’s pledge that a company will pay rather than proof that there’s real money behind the promise. Asarco’s word wasn’t worth much to the communities near its Arizona Ray and Mission mines or its Hayden smelter when the company went belly-up. (Reclamation-liability estimates for the Ray and Mission mines alone run close to $870 million, and it is unclear whether Asarco will bear any of these future cleanup costs. If not, the costs will fall to the state rather than the federal EPA because they are not Superfund sites.) [Ed. – If an expense like that is left in a basket by the state legislature’s front door, you just know they’ll take the little scamp in – and charge us up the whahoo for his necessaries.]

"Ultimately, you’ve got to make everybody play by the same set of rules," says David Chambers, executive director of Montana’s Center for Science in Public Participation. If the EPA enforced financial assurances, and disallowed empty promises like Arizona’s corporate IOUs, it wouldn’t be so easy for businesses to skip out on cleanup. "We all know that companies have incentives to minimize their liabilities, and it’s the duty of our regulators to act as a check against that," says Chambers.

Nor is the practice of dumping the costs of environmental pollution onto taxpayers limited to such legal manuevers. Many environmental disasters are explicitly placed upon taxpayers by direct action of our elected officials. Take the cleanup of the fuel additive MTBE leaking into soil and groundwater for the past two decades. The state’s only solution to this one will not to turn to the pollutors to rectify the problem, but like to create a new gas tax for consumers to pay for the cleanup, which could run to hundereds of millions in Arizona alone.

The rock-solid concept of pollutory pays has gone out the window with the GOP; what’s next, murderers getting to designate someone to serve his sentence in his stead? What happened to presonal accountability and abiding by your agreements? Since when did these virtues become alien to the GOP? I hope they aren’t unfamiliar to the GOP’s supporters, who should be reexamining whether the GOP still represents their commitment to presering the environment and acting in a moral and honorable fashion toward others.

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