Environment

Published — March 20, 2009 Updated — May 19, 2014 at 12:19 pm ET

Corporate bankruptcies leave taxpayers holding the tab for Superfund cleanup

Introduction

The financial crisis may be spilling over into new quarters, affecting the cleanup of toxic Superfund sites across the nation, activists warn.

Yesterday, the Center for Health and Environmental Justice released a report citing fear that in today’s teetering economy, more Fortune 500 companies that are responsible for the sites will declare bankruptcy. Such a move allows companies to dodge the obligation to pay for hazardous waste cleanups. In doing so, it’s likely they’ll force taxpayers to pick up the tab.

The most recent high profile case is the American Smelting and Refining Company (ASARCO), which filed for bankruptcy in 2005. Currently, the company faces some $7.9 billion in environmental claims. While last week, ASARCO offered to submit payments for $1.1 billion for toxic cleanups, when it comes to the rest of its liabilities, says CHEJ’s Anne Rabe — thanks to years of Congressional inaction — the federal government will likely be left holding the bag.

It wasn’t supposed to be this way. In 1980, when Congress first created the Superfund program, the EPA was ordered to issue regulations that would require businesses handling hazardous substances to maintain evidence of their ability to pay for any contamination cleanups, even in the event of bankruptcy. Yet over a quarter-century later, the EPA has taken no action. Over the past decade, as the Center reported in 2007, companies declaring bankruptcy have managed to evade over half a billion dollars in pollution cleanup costs.

To make matters worse, for years Congress has sat idle while the Superfund program’s intended funding collapsed. Starting in 1980, companies releasing hazardous chemicals were required to pay so-called “polluter pays” fees into a fund to support toxic cleanups. But in 1995, the authorization to collect such fees expired, and Congress never reinstated it. Taxpayer money has supported the program since its funding ran out in 2003, with Congress tapping general revenue for an annual $1.2 billion to clean up company messes.

Some signs of change are flickering. President Obama is pushing Congress to reinstate polluter pays fees. Meanwhile, last month, federal Judge William Alsup ruled that the EPA must close the loophole that allows polluting companies to avoid paying for hazardous waste cleanups by declaring bankruptcy. The EPA has until May 4 to respond.

In the case of ASARCO, though, any new regulations may come too late, Rabe said. “We’ve all been shocked by creative accounting by the likes of people employed by Madoff,” she said. “Where’s the outrage over companies like ASARCO that can unload billions of dollars [in liabilities] onto taxpayers?”

When contacted this afternoon, an ASARCO spokesperson had no comment.

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