The Environmental Protection Agency (EPA) has been sued by the environmental groups, Sierra Club, Great Basin Resource Watch, Amigos Bravos and Idaho Conservation League, to enforce Section 108(b) of the Comprehensive Environmental Response Compensation and Liability Act (CERCLA), i.e., companies must prove financial assurance requirements for hazardous releases. In short, prove to EPA that they can afford to pay the clean-up of hazardous release from today’s operations years in the future.
The first industry that must comply with the enforcement of 108 (b) is the Hard Rock Mining Industry, which is and has cost the EPA billions of dollars to clean-up Superfund sites. These clean-up costs are presently paid for with taxpayer dollars.
The Hard Rock Mining Industry compliance with 108 (b) will be followed, within a year, by Electric Power Generators, Power Transmission and Distribution Industry, and the Process Industries: Chemical, Petroleum Refineries, and Coal Producers.
EPA will require an acceptable financial vehicle to prove financial assurance such as guarantee, surety bond, stand by letter of credit, insurance, self or insurance company generated, all with terms and language incorporated and approved by the EPA.
The financial assurance instruments will protect the taxpayer against future costs in case of bankruptcy.
All of the aforementioned industries have asbestos in their facilities and all of the aforementioned industries have asbestos liabilities, whether they are in their facilities, in a landfill or have caused exposure to humans who have contracted asbestoses or mesothelioma.
Self-insurance against asbestos diminishes the stock value, because of the long latent period for the diseases asbestoses and mesothelioma, along with the perpetual liability asbestos carries when stored in a landfill. I say stored, because the generator of the asbestos still owns asbestos cradle-to-grave under CERCLA.
To add to these costs, public companies have to deal with the Security and Exchange Commission’s Accounting Board Standard’s: Fin 47 and Statement of Position 96.1, both require CERCLA enforcement.
The herculean efforts and funding required to clean-up these Superfund sites has driven congress to determine the reinstatement of the polluter pays tax; the reinstatement is strongly supported by EPA. This tax would quickly bring revenues into the Superfund clean-up efforts and quicken clean-up.
The implementation of CERCLA Section 108 and the reinstatement of the polluter pays tax will take a good deal of pressure off the taxpayer and put it where it belongs, on the polluter.
In my experience, when it comes to asbestos, the attitude is: if it is cheaper and easier to send to a landfill, although asbestos is a regulated waste --- it is still a hazard, which makes it a hazardous release.
The attitude: we will deal with it in the future, if and when it becomes a Superfund site.
It is not undeniable that sizeable environmental liabilities and risks cause a blunt blow to a company’s bottom line, shareholders equity and its stock price. Therefore many companies do not distinctly specify detailed environmental liability by delaying quantification, saying they can not accurately predict future environmental costs, hide information in the foot notes, do not amass liabilities at one time, or avert recognizing future costs.
The above tactics divert divulging future costs that should be in present financial statements. Consequently, the profit margin will be higher, the shareholder equity greater, and the stock price higher.
The enforcement of Section 108 and the strong possibility of an environmental tax reinstatement, will force future environmental liability costs to be carried on the books of a company today, leaving room for non of the above financial statement deterrents .
Appropriately, a CEO of the above mentioned companies will have to ask their environmental department heads to start looking for alternative solutions to permanently rid the company of hazard releases. Preferably ones that do not allow the hazard release to leave the premises.
When hazards are being released from a site, CEOs should require a constant vigilance by their environmental department heads to find technologies that will constructively support their environmental initiatives that will mitigate the financial responsibility of Section 108 (b), and if passed, the environmental tax.
Where asbestos is concerned, there is a non-thermal, EPA approved process, simple process that destroys the asbestos on-site as it is being removed: The ABCOV METHOD of asbestos destruction.
CEOs should always seek out technology for feasible environmental solutions, avoiding future liabilities. Once the aforementioned regulations are put into effect they will become extremely costly to manage with no way to financially disguise environmental cost of a hazard release.