08.05.08

Cantwell Calls on Justice Department to End Use of Bankruptcy Loopholes by Corporate Polluters

Senator Continues Her Efforts to Shield Taxpayers From Paying For Asarco's Toxic Legacy Of Contamination

WASHINGTON, DC – Tuesday, U.S. Senator Maria Cantwell (D-WA) sent the following letter to U.S. Attorney General Michael Mukasey expressing concern about the proposed reorganization plans and settlements of environmental liabilities of the Asarco corporation, the largest environment-related bankruptcy in U.S. history.  Cantwell highlighted the need for the Justice Department to evaluate the environmental, human rights, and labor records of all entities bidding to acquire Asarco’s properties and other assets and to weigh accordingly with the bankruptcy court.  
 
 
 
 [The text of the letter follows below]
 
August 5, 2008
 
 
The Honorable Michael Mukasey
United States Attorney General
U.S. Department of Justice
950 Pennsylvania Avenue NW
Washington, DC 20530
 
Dear Attorney General Mukasey:
 
I am writing to reiterate my longstanding concerns over efforts by corporate polluters to exploit bankruptcy proceedings to avoid environmental cleanup responsibilities. After years of consideration, I understand that a bankruptcy court in Corpus Christi, Texas, is nearing a decision on the largest environmental-related bankruptcy in United States history which will determine who will be responsible for cleaning up nearly 100 sites across 21 states contaminated by the ASARCO corporation. As the legal representative of United States taxpayers, who are the largest creditors in this multi billion dollar case, the Justice Department has an obligation to help ensure whichever entity assumes control of Asarco’s asset will also be obligated to remediate the multi-state toxic legacy of Asarco’s destructive environmental practices.
 
ASARCO has a troubling environmental record in my home state of Washington where it once operated smelter facilities in Everett and at two sites in Ruston, including a 97-acre site on Commencement Bay which was declared a Superfund site in 1983. The smokestack at the Commencement Bay facility also left a thousand square mile plume of arsenic and lead contamination across the south Puget Sound region. In addition to significant cleanup needs remaining on portions of these ASARCO sites, the backyards of hundreds of nearby homes in Ruston and Tacoma still require soil remediation. When ASARCO filed for Chapter 11 bankruptcy in 2005, contractors in the middle of the cleanup abruptly walked off the job, leaving backyards dug up and hazardous materials exposed. 
 
To my knowledge, Sterile Industries, Ltd. of India, a subsidiary of Vedanta Resources, PLC (“Vedanta”), and Grupo Mexico, ASARCO’S parent company are now allowed to submit proposed reorganization plans under the bankruptcy court’s recent orders. It is my understanding that the Justice Department, on behalf of the Environmental Protection Agency and 22 state attorneys’ general, represents claims for ASARCO’s widespread environmental damages across the country. I understand further that the Justice Department has been actively participating in bankruptcy proceedings and will play an important role in the final resolution of this matter. 
 
Considering the harm ASARCO has inflicted on communities in my state and around the world, the Justice Department must thoroughly review each company’s record of environmental stewardship and corporate citizenship, both domestically and abroad, before recommending a preferred plan to the bankruptcy court. Unfortunately, both bidding entities have well-documented histories of environmental and human rights violations which need to be weighed in addition to the cash value of their bids. 
 
I am also troubled by the human rights and labor records of Grupo Mexico. It has come to my attention that a terrible mine explosion in 2006 at a Mexican mine owned by a Grupo subsidiary killed 65 miners. According to press accounts, the Grupo subsidiary abandoned rescue efforts and sealed the mine after only six days. A report by a Mexican government commission found that Grupo was aware of the numerous safety deficiencies and a special prosecutor in Mexico filed negligent homicide charges against Grupo. 
 
In 2002, I wrote to the Justice Department expressing similar concerns about Grupo Mexico’s efforts to undermine Asarco’s cleanup obligations required under a DOJ consent degree. Unfortunately, under Grupo Mexico’s control, ASARCO consistently failed to meet its cleanup responsibilities and instead transferred or sold many of the company’s assets depriving the corporation of cash flow needed to continue ongoing clean up efforts. In one egregious example, Asarco, under Grupo Mexico’s direction, liquidated some of its environmental and asbestos insurance policies to raise cash. 
 
Given the abusive record of these two foreign corporations, I seek your assurance that the Department will carefully consider the environmental, human rights, and labor records of each bidding entity, and take all appropriate actions necessary to ensure that ASARCO’s environmental responsibilities will be fully met as part of any reorganization plan.   As the legal representative for the United States and American taxpayers, the Justice Department has an obligation to make sure that any future owner of ASARCO properties and other assets operates in full compliance with environmental and labor laws, that the maximum amount of funds will be available to clean up ASARCO’s toxic legacy in Washington state and across the country, and that any future clean up commitments are fully met and funded.
 
 
Sincerely,
 
 
 
 
U.S. Senator Maria Cantwell
 
 
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