Mining companies must be held accountable
The Inland Northwest grew up on mining and continues to benefit economically from the few mines still operating in the area. With increasing global demand for metals of all kinds, chances are that mining activity could expand modestly from its current levels.
But mining has exacted an enormous environmental and human toll, as The Spokesman-Review report Sunday on the ongoing suffering in Libby, Mont., reiterated. Generations will pay the price in illness and death for the jobs created by the mining and processing of vermiculite.
Generations will pay, too, in dollars, to clean up the mess left behind by mine owner W.R. Grace & Co. Rather than face up to its obligations, the company filed bankruptcy to put its assets beyond the reach of families coping with terminal illnesses, and from governments trying to seal the environmental scars.
Seven Grace officials have been indicted for concealing the potential health effects of vermiculite. Their trial has been rescheduled several times, and some of the charges thrown out. They still have a lot of explaining to do.
Grace is not the only company to skip out on its obligations. Before Grace, there was Gulf U.S.A., former owner of the Bunker Hill Mine. Somehow, its assets turned up in New Zealand instead of the pockets of company pensioners. Bunker Hill, of course, was also at the center of Superfund cleanup efforts in the Silver Valley.
Now comes a new twist in corporate asset-shifting, with former Silver Valley mine operator Asarco suing its corporate parent in U.S. Bankruptcy Court.
Grupo Mexico bought Asarco in 1999, and immediately started selling off the U.S. company’s assets to pay takeover expenses. Nothing unusual there. Leveraged takeovers were a favorite of corporate raiders in the 1980s and 1990s.
Grupo Mexico went the raiders one better by playing an internal shell game. Asarco’s most valuable asset was its majority stake in Southern Copper Corp., the owner of valuable mines in Peru. That stake was sold to another Grupo Mexico subsidiary for a sweet $500 million less than its estimated value. In return for its approval of the sale, the U.S. Department of Justice in 2003 settled for just $100 million toward environmental remediation. Asarco’s estimated cleanup bill exceeds $1 billion, including properties in Washington, Idaho and Montana, where other legal action is pending.
Billions more in asbestos-related claims remain outstanding, as well.
Asarco filed bankruptcy two years after the agreement with the Justice Department.
With the Peru mines and other assets gone, there’s little hope Asarco can come up with all the money it will take to contend with the long-term effects of its past mining and processing activity. But a week ago, Asarco’s bankruptcy attorneys challenged the internal sale of Southern Copper assets, alleging the deal was a fraud. They want those properties returned to Asarco.
Even if they win, reclaiming those assets will be tricky.
Much of the corporate chicanery could have been avoided if the U.S. Environmental Protection Agency had done what it was told to do when the Superfund was created in 1980. The General Accounting Office has repeatedly faulted the agency for not developing financial benchmarks mine operators would have to comply with in order to secure a permit. Any some operators have repeatedly defaulted on cleanup obligations.
The EPA, subject to serial budget cuts, says it lacks the money to do what the Superfund law says it ought to do. The agency was stiffed again in President Bush’s new budget.
The Asarco hijinks have been on the radar screen of Sen. Maria Cantwell, D-Wash., since 2002, when she and other senators called for a GAO investigation. Last month, she introduced the Cleanup Assurance and Polluter Accountability Act, which would close some of the loopholes Grace, Grupo Mexico and others have used to leave their environmental debts at the feet of U.S. taxpayers.
“Corporations that pollute our land and water must be held accountable,” Cantwell says. “With even Asarco saying our current bankruptcy laws let corporate polluters skip town, passing this commonsense legislation is now more urgent than ever.”
A reaffirmation of the federal government’s responsibility to assure mining companies are held to their environmental obligations is indeed overdue. Taxpayers alone have carried cleanup costs since Superfund reserves were exhausted. How ironic that a miner-versus-miner lawsuit may refocus attention on the issue.