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Going for Broke
How a copper giant plans to make the public pay for its toxic mess
By Marilyn Berlin Snell

"The scandal is not what's illegal. The scandal is what's legal."
--Michael Kinsley

Sidebar: Arsenic in the Attic
Sidebar: Picking up Asarco's Tab
Sidebar: Sierra Club's CSI: El Paso
(Sidebars will appear to the left of the article.)

At 75, Joe Piñón still wears a crisp white lab coat and fills prescriptions at the pharmacy he's owned in El Paso, Texas, since 1960. His oversize glasses, helpful in deciphering a doctor's chicken scratch, lend him an owlish appearance; his soft voice only hints that he's also a Spanish speaker. In a crowded room, Piñón wouldn't stand out. Yet his mild manner has not kept him from becoming a leader in his community and a threat to polluters.

Over the decades, Piñón has taken on the American Smelting and Refining Company (Asarco), a massive copper conglomerate that has a presence in more than 20 states, environmental liabilities estimated between $500 million and $1 billion, and its name attached to 19 Superfund sites around the country. Concerned that an Asarco smelter in El Paso seemed to be making people sick, Piñón set up a grassroots organization, spoke out when it was unpopular to do so, and fought the company in court. At times, he says, he felt like Don Quixote tilting at windmills in his lonely battle to get the metals giant to clean up a century-old toxic mess.

Today Piñón has plenty of allies. Scientists, environmental groups, city and state officials, and federal regulators all share his fears about the company's pernicious legacy, and public opinion has completely turned around. Yet Asarco holds the trump card: It declared bankruptcy in the summer of 2005. Now, as Piñón says with a slight tinge of disgust, "the company can just walk away without cleaning up."

More precisely, it can walk away and then come back. 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.

PIÑÓN HAS A LOT INVESTED in this fight. Growing up poor in El Barrio del Diablo--"the devil's neighborhood"--near the Asarco smelter, he noticed that neighbors who were employees at the company had developed nerve and respiratory conditions that seemed strange in people so young.

In his pharmacology studies, Piñón pursued the relationship between health and environment. He had a special interest in lead, arsenic, and cadmium--poisons Asarco emitted by the ton into the air above his town. Lead has long been known to be a neurotoxin; children's exposure to it, even at low doses, can damage the central nervous system, cause behavioral problems, and reduce intelligence. Arsenic has been linked to skin and lung cancer, and cadmium has been shown to cause kidney disease and increase the risk of lung cancer.

In 1992, Piñón and his lawyer son, Perry, fought Asarco in court, spending their own time and money to try to stop the company's smelter from expanding. The Piñóns were the only ones to contest the expansion permit: Even the local Sierra Club chapter and the city of El Paso signed letters endorsing it because the company promised to install "state-of-the-art" pollution-control technology. The El Paso Times called Piñón a "gadfly" and complained that his efforts had cost Asarco $250,000 in legal fees. The permit sailed through, but the company did not install the best equipment available at the time. (See "Arsenic in the Attic.")

ASARCO, CREATED IN 1899 to consolidate ownership of smelters, refineries, and mines, was among the nation's first large corporations. When Meyer Guggenheim and his sons took it over in 1901, it helped buttress the Guggenheims' vast family fortune. Yet as the company enriched a few and employed several thousand, it was imperiling millions more. The first of many legal actions against Asarco for threatening human and environmental health was brought in 1910, when farmers in Solano County, California, sued the company for allowing its smelter on San Francisco Bay to destroy crops with its sulfur dioxide emissions. The court granted an injunction, shutting down the smelter; the decision was upheld by the California Supreme Court.

Dissatisfied, one of Asarco's lawyers convinced a judge to appoint a three-member committee, which included a chemist chosen by the company, to reexamine the matter. A settlement was reached within a year in which Asarco agreed to limit its release of sulfur dioxide to 30 tons every 24 hours. No limit was put on lead, even then a known poison. In the decades following the agreement, scores of horses in the area died of chronic lead exposure.

Over the years, Asarco's lawyers have questioned scientific findings and contested cleanup orders. Instead of admitting responsibility and paying for the necessary remediation, the company has gone to court, where civil judgments against it read like a rap sheet: There are United States v. Asarco rulings unfavorable to the company in Arizona, Colorado, Idaho, Kansas, Montana, Texas, Utah, and Washington. When Asarco filed for bankruptcy, more than 100 civil environmental cases were pending against it.

One of the more striking examples is from the 1970s in El Paso, after a study by the Centers for Disease Control found that Asarco was responsible for abnormally high lead levels in children who lived near its smelter. The company denied responsibility, but the city sued and prevailed. Without admitting guilt, "but for humanitarian purposes only," Asarco agreed to implement strict monitoring for lead, zinc, cadmium, and arsenic releases and provide medical examinations and blood therapy to children with lead poisoning.

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