Environmental Bankruptcy Costs Mining Company Billions

James Laughlin, Managing Editor

I read an interesting article last month about the largest environmental bankruptcy in U.S. history. As part of its bankruptcy reorganization, American Smelting and Refining Company (ASARCO) paid $1.79 billion to help fund environmental cleanup and restoration of mining sites around the country that are contaminated with hazardous waste.

American Smelting and Refining has operated for nearly 110 years -- first as a holding company for diverse smelting, refining, and mining operations throughout the United States and now as the Arizona-based copper-mining, smelting, and refining company. By the time it filed for bankruptcy, the company’s core operating assets were limited to operations in the states of Arizona and Texas. However, it owned many non-operating properties that were highly contaminated and the company was also held responsible for environmental claims at sites that were not owned by the company.

The article did not mention any violations of law or specific wrongdoing on the company’s part. I have to wonder if the company complied with the laws of the period during the years it operated.

In this month’s RegReport, Washington Correspondent Patrick Crow discusses EPA’s approval of mine that will remove the top of a mountain in West Virginia. While the project does meet the letter of the law, you do have to wonder about its long-term impact on the environment.

We have seen an evolution of environmental law over the past 100 years and those laws continue to evolve. What was a legal and accepted waste discharge 50 years ago could very well result in jail time for a plant manager if discharged today.

Along with the evolution in law, we are also seeing an evolution in the science of detection. Pharmaceutical wastewater discharges that are legal under the Clean Water Act today may not be tomorrow. There is a growing concern across the country about pharmaceutical and personal care products and other emerging contaminants of concern. In most case, these pollutants are at such low levels in the environment that they were undetectable just a few years ago. But now they are, new regulation may soon follow.

I’m also reminded of the MTBE controversy of a few years back. MTBE was added to gasoline to help with air pollution. It was not only legal, it was part of a Congressional mandate. Unfortunately for the oil industry (and water utilities), even low levels of MTBE can make drinking water supplies undrinkable due to its offensive taste and odor. Although Congress considered shielding the oil industry from liability as part of the Energy Policy Act of 2005, water utilities and environmentalists mounted stiff opposition to the proposal and it was eventually dropped from the legislation.

Whatever industry you’re in, I urge you to pay close attention to what’s in your wastewater. Meeting local, state and federal discharge rules are a given. However, you should also be paying close attention to contaminants that aren’t currently regulated. The savvy manager should identify and evaluate even the smallest constituents of his discharge. You never know what might come back to haunt you in the years ahead.