Burden Of Pollution

The Environmental Protection Agency is considering new regulations that will require chemical companies to have adequate resources to clean up environmental damage that may result from their operations. In a late-December announcement, EPA said it is taking the first step to ensure that plant owners—not taxpayers—foot the bill for cleaning up pollution under the Superfund law.

In explaining its concern, the agency cited the case of Vertac Chemical, in Jacksonville, Ark. When the firm went bankrupt in 1986, it left behind 29,000 drums of chemical waste and a $127 million cleanup bill to be paid by the federal government. EPA also singled out a Delaware chlorinated-benzene manufacturer that folded in 2002, sticking federal taxpayers with a cleanup tab that is expected to reach $100 million.

EPA has spent some $2.7 billion of taxpayer dollars through 2009 to clean up pollution from bankrupt chemical company plants. In the past, a Superfund tax on chemicals paid for the cost of cleanups when companies could not, but that tax ended in 1995.

By law, EPA must require facility owners to show “evidence of financial responsibility consistent with the degree and duration of risk” from plant operations, the agency noted. But chemical plants, which often handle large quantities of toxic chemicals, can sidestep these requirements by a change of ownership, EPA explained. The agency’s view is supported by a 2005 Government Accountability Office report warning that chemical companies are at risk of incurring huge environmental liabilities but can avoid this liability through bankruptcy.

At this time, EPA said it is seeking comments only on the need for new financial assurance requirements and the form they might take. EPA’s announcement affects not only chemical companies but also petroleum refineries, gas and coal-related industries, and electric power generation companies.

Future requirements are yet to be determined, an EPA official stressed, but options could include insurance or establishment of a dedicated cleanup fund. The American Chemistry Council, an industry trade association, is monitoring the issue and meeting with member companies to gauge the impact the requirements could have, an ACC official said.