Bankrupt Corporation Must Still Undertake Asbestos Removal

Phoenix-based mining company Asarco LLC sought bankruptcy protection in 2005 as it was facing hundreds of lawsuits over asbestos poisoning. Nonetheless, the U.S. Department of Justice has ruled that the corporation must still assume responsibility for the cleanup and removal of asbestos and other pollutants leaking from the Yak Tunnel section of its Black Cloud mine in Leadville, Colorado.
In mid-June, the DOJ released documents that outlined the ongoing public health danger due to the leakage from the mine in question. According to these documents, release of asbestos and other poisons have continued. There is legitimate concern that a “massive release” from the Yak Tunnel is imminent. Representatives for Asarco have argued that the corporation is not responsible for leaks from the Black Cloud Mine because that particular mine is owned by a joint venture dating back over fifty years. The DOJ rejected that argument, and has ruled that bankruptcy protection under Chapter 11 does not relieve the company of its responsibilities for the cleanup. The Black Cloud Mine was the last operating mine in Leadville, which has a rich history and a mining tradition going back to 1860, sixteen years before Colorado became a state.

The Black Cloud Mine, which opened in 1968, was closed in January of 1999. The mine produced zinc, lead, silver and gold, and employed 105 miners and mill hands. The closure was a major blow to the mountain town’s economy. Asarco itself has a long history as a polluter; the first environmental lawsuit against the company was filed in 1910. Today, Asarco is associated with 19 Superfund sites across the U.S. One interesting fact about the company is that between 1901 and 1957, it was controlled by the Guggenheim family, whose resultant fortune financed the famous Manhattan art museum that bears its name. Today, Asarco faces asbestos claims totaling $2.6 billion, and other creditors are seeking another $13.5 billion. Tom Aldrich, VP of Environmental Affairs for Asarco, says that the price tag for the Black Cloud Mine cleanup has shot up by 25% since the company filed for bankruptcy two years ago. In the meantime, the company is attempting to reach settlements with the federal government and the State of Colorado.