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The Bankruptcy Scam Continues

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The Sierra Club and Sierra magazine have taken the lead in exposing the abuse of bankruptcy laws by major polluters like the American Smelting and Refining Company (Asarco) that want to shirk their responsibility for cleaning up toxic waste dumps by shifting the cost to taxpayers. In its May/June issue, Sierra magazine broke the story that Asarco -- and other companies with major toxic waste liabilities -- were transferring assets to holding companies and then declaring bankruptcy, passing on billions of dollars in liability to the taxpayers. Senator Maria Cantwell followed up with legislation to close the loophole. Now the Wall Street Journal (subscription required) has followed up the Sierra story, finding -- as we reported -- that the Asarco smelter in El Paso that Sierra focused on is far from an isolated case.

In Helena, MT, for example, the Journal found that "After Asarco mothballed its East Helena smelter, it faced a $900,000 fine by Montana's Department of Environmental Quality for illegal handling of toxic materials .... who will pay to remove lead particles that accumulated in yards during decades of production is an open question. It is a job local officials estimate will cost millions of dollars over the next 10 years -- long after Asarco funds previously designated for the job are exhausted. " And the Journal also found that "Asarco's mining and refining operations are being held at least partially to blame for over 90 sites contaminated with lead, arsenic and cadmium across 22 Western states."

The problem isn't just that environmental claims come last in bankruptcy court -- it's that Asarco didn't really go bankrupt. It simply transferred its assets to a new company, Grupo Mexico, and left the liabilities in a shell. This kind of bankruptcy caper, of course, is not available to ordinary citizens who don't want to pay their bills -- if this were a TV program it would carry the warning "do not try this stunt at home." It is akin to the ability of corporations like the airlines to simply refuse to pay their pension obligations to employees, even as they put huge bonuses in the pockets of their executives. America does not have an aristocracy of blood -- but we are developing an aristocracy of corporate power.

Needless to say, the current Congressional leadership is not rushing to fix THIS bankruptcy abuse. Senator Cantwell's bill is languishing, while local communities all over the country continue to be poisoned -- and pay through the nose for the pleasure.