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Cantwell Reintroduces Legislation to Keep Corporate Polluters from Evading Cleanup Obligations

Location: Washington, DC

Cantwell Reintroduces Legislation to Keep Corporate Polluters from Evading Cleanup Obligations

Superfund bill would close loopholes that polluters have used to stick taxpayers with the bill for cleaning up toxic sites

Wednesday, U.S. Senator Maria Cantwell (D-WA) introduced legislation to help ensure that polluters, not taxpayers, pay to clean up contaminated sites. The Cleanup Assurance and Polluter Accountability (CAPA) Act is based on lessons learned from Asarco Superfund sites in Washington state, as well as recommendations made in an August 2005 Government Accountability Office (GAO) report requested by Cantwell, Senator Barbara Boxer (D-CA), and other senators in 2002. The report analyzed corporate polluters' use of bankruptcy loopholes and other gaps in Superfund regulations to evade cleanup responsibilities. Cantwell's legislation would close these loopholes and could have prevented Asarco from shirking its billion-dollar cleanup obligations at more than 90 polluted sites across the country.

"Closing the loopholes and stopping the lax enforcement that let corporate polluters off the hook is simple commonsense," said Cantwell. "We need to put an end to the practice of letting dishonest polluters manipulate bankruptcy laws to get out of their cleanup obligations. My bill will make sure that it's the responsible party who pays to clean up toxic sites, not American taxpayers."

"The best way to protect our families and communities from the dangers of toxic waste sites is to prevent those sites from being created in the first place, and Senator Cantwell's bill will help accomplish that goal," said Boxer. "By making the riskiest facilities ensure that funds will be available for future cleanups, this bill encourages companies to reduce pollution and use the latest technology to make their operations cleaner."

"When someone makes a mess they should be responsible for cleaning it up, and so should corporate polluters who have left millions of Americans exposed to sometimes very dangerous chemicals," said Senator Frank Lautenberg. "There are more Superfund sites in New Jersey than any other state, and I have been working for years to take the financial burden for their cleanups off the backs of taxpayers, and instead forcing those corporations responsible to pay the tab."

The CAPA Act is cosponsored by Senate Environment and Public Works Committee Chair Barbara Boxer and Senator Frank Lautenberg (D-NJ).

After Asarco, which once operated highly contaminated sites in Everett and Tacoma, Washington first threatened to file for bankruptcy in 2002, Cantwell requested a GAO investigation to determine if companies were exploiting existing laws to avoid their cleanup responsibilities. The GAO report, released on August 18, 2005, confirmed that corporate polluters were using bankruptcy laws to evade environmental responsibilities and that the Environmental Protection Agency (EPA) could do more to make sure liable parties meet cleanup obligations. The report also noted several factors pointing to a rise in the number of companies without adequate financial resources to clean up their own pollution.

The CAPA Act, based on the GAO report's findings, would make the following changes to the current system:

- Requirements for Financial Assurance: When the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) passed in 1980, it directed the EPA to develop regulations requiring businesses that handle hazardous waste substances to prove their ability to pay for cleanup of spills or other environmental contamination that could result from their operations. The CAPA Act would reassert this requirement—which the EPA has failed to implement for 21 years—and establish additional guidance on the proper use of financial assurance mechanisms by the EPA. Specifically, the Cantwell legislation would:

+ Require the EPA to write financial assurance regulations for high-risk facilities within 18 months, giving the highest priority to facilities with un-reimbursed costs of $12 million or more.

+ Direct the EPA to adjust the current threshold a company must meet (currently $10 million in tangible net worth) for inflation since 1982.

+ Ensure that compliance with this section is tracked by the EPA. Currently, this information, including the amount and source of financial assurance included in settlements, is not collected.

+ Direct companies declaring bankruptcy that are required to provide financial assurance under CERCLA to estimate their cleanup liabilities and explain current and former corporate relationships to the facilities in question. 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 Agency is listed as a creditor.

- Illegal Avoidance of Environmental Liabilities: Under current law, the individual appointed by the court to supervise the affairs of the bankrupt business may only examine—and void if appropriate—the previous two years of transactions between a parent company and its subsidiaries when determining if the companies transferred assets to avoid environmental cleanup obligations—as Asarco is suspected to have done. The CAPA Act would extend this period during which fraudulent transaction could be voided from two years to ten years.

- Upholding Polluter Responsibilities in Bankruptcy: Under current law, the EPA faces challenges in trying to hold bankrupt companies responsible for their cleanup obligations in part because of the often conflicting goals of bankruptcy laws 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.

In 1980, Congress established the Superfund Trust Fund to cleanup hazardous sites when the liable party cannot be identified or is unable to pay. The Superfund Trust was funded by excise taxes on crude oil and chemicals and by a corporate environmental income tax until 1995. Since then, taxpayers rather than polluters have funded Superfund cleanup when the responsible party cannot be identified or cannot pay. Currently, many companies are using the Bankruptcy Code's Chapter 11 to clear their plate of all environmental cleanup responsibilities, dropping cleanup costs onto the taxpayers.

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