Going for Broke
How a copper giant plans to make the public pay for its toxic mess
By Marilyn Berlin Snell
Cantwell Superfund Legislation
The Problem: The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly known as Superfund, was enacted in 1980. Administered by the Environmental Protection Agency (EPA), the Superfund program manages contamination from abandoned or closed hazardous waste sites. Superfund relies on the "polluter pays" principal, requiring parties responsible for pollution to pay for environmental cleanup at Superfund sites. In the August, 2005 Government Accountability Office released a report finding that corporate polluters are using the bankruptcy code to escape their environmental liabilities.
The Cantwell Legislation: Based on the findings of the GAO report, Senator Cantwell developed legislation to ensure that polluters pay for cleanup whenever possible - not tax payers. The Cantwell legislation would protect tax payers from unjust corporate maneuvering to evade cleanup responsibility at polluted sites. The Cantwell legislation has five sections:
Sec 101. Current law allows a parent company to avoid responsibility for environmental cleanup by acting through subsidiaries. The Cantwell bill would direct EPA to write regulations making the parent corporation liable for the environmental liabilities of its bankrupt subsidiary (e.g., if the parent influences or exerts control over the affairs of the subsidiary it would be responsible for environmental liabilities).
Sec 102. Under current law, the Trustee in the bankruptcy case may only examine the past year of transactions between a parent company and its subsidiaries when determining if the companies transferred assets in order to avoid their environmental cleanup obligations (as Asarco is suspected to have done). In cases where the debtor has cleanup liability of $50 million or more (which would have included Asarco), the Cantwell bill would extend this allowed review period from one to three years of transaction history.
Sec 103. Under current law, EPA faces challenges in trying to hold bankrupt companies responsible for their cleanup obligations in part because of the often conflicting goals of Bankruptcy Code and CERCLA. Building on the August 2005 GAO report, the National Bankruptcy Review Commission would be required to reconvene and evaluate the inconsistencies between bankruptcy code and CERCLA. Within a year, the Commission would report on findings and conclusions together with recommendations for legislative or administrative action. For completion of work, $1.5 million would be authorized.
Sec 201. Under current law, The EPA was mandated to require that businesses handling hazardous waste substances maintain financial assurances, providing evidence of their ability to afford cleanup of spills or other environmental contamination that could result from their operations. The Cantwell legislation would reassert this requirement - which EPA has failed to implement for 26 years - and establish additional guidance, per GAO's recommendations, on the proper use of financial assurance mechanisms by EPA. Also, EPA would be required to adjust the current threshold a company must meet to qualify for a financial test (currently, $10 million in tangible net worth) for inflation since 1982.
Sec 301. Under current law, the EPA learns of bankruptcy filings from the business itself, other agencies, or from a bankruptcy court, although bankruptcy courts only notify the EPA if the EPA is listed as a creditor in the filing. The Cantwell legislation would require EPA to identify industries at high risk of (1) having environmental liabilities and of (2) going bankrupt. Within a year, EPA would write a rule requiring companies in "high-risk" industries to report bankruptcy declaration to EPA headquarters and to the region in which the company is located. In their reports, companies would have to estimate their cleanup liabilities and explain current and former corporate relationships to the facility.
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