Eviscerating the longstanding principle of CERCLA: Part 2

The problem with the Bill that HuffPost linked to is that it does not give the reasoning for the Bill.  For that, I had to go to House Report.  Here is what they have to say about the Bill

Here is the Purpose and Summary:

The legislation removes unnecessary and outdated deadlines for certain rulemaking activities to be conducted by the Environmental Protection Agency (EPA) under the Solid Waste Disposal Act (commonly referred to as the Resource Conservation and Recovery Act or RCRA) and the Comprehensive Environmental Response Compensation and Liability Act (CERCLA).

The legislation requires EPA, before promulgating financial responsibility requirements under CERCLA, to evaluate existing State or other Federal financial assurance requirements to determine whether additional requirements are necessary.

Should EPA determine that additional financial assurance requirements are necessary to prevent the United States from incurring response costs under section 104 of CERCLA, the legislation protects the existing State or Federal requirements by requiring that EPA accept compliance with the existing requirements in lieu of compliance with the new EPA requirements.

The legislation also requires that the owner or operator of a facility that stores chemicals on the Department of Homeland Security Chemicals of Interest that are flammables or explosives above the identified threshold, to report the presence of such chemicals to the State emergency response commission.

The issue one could make revolves around this:

...by requiring that EPA accept compliance with the existing requirements in lieu of compliance with the new EPA requirements.

My read on that is if financial assurance requirements are found necessary by the EPA, that same EPA must accept compliance with existing requirements already in place.  Whereas before, under CERCLA, EPA (the President) could say we need this amount, this new law says that the only way to get that is to raise the financial assurance requirements in place under other federal, and now state laws.

Basically, it makes it unlikely that any change in the financial assurance requirements in place at this time will change in the future.  Although this gives more certainty for businesses in terms of that particular cost, it also makes it much more difficult - as I read it - to obtain "additional financial assurance requirements are necessary to prevent the United States from incurring response costs under section 104 of CERCLA."

That's not good for the taxpayer - in my opinion - but only if the taxpayer is left cleaning up the mess.  I am not sure how to look at this in terms of that impact to the taxpayer is actually there.  On one hand, it is doubtful that you could ever provide enough financial assurance to cover the response costs possible - look at the BP spill in the gulf.  That is, the taxpayer will always be on the hook because at some point the financial assurance will not be enough no matter how high you set it.

On the other hand, and I think most businesses would agree, you could, because of this financial assurance requirement, price a lot of companies out of business because they could not meet it or find and insurance company to offer them that amount of protection. Like it or not, there is a limit of what can be afforded and what an insurer is able to provide (that's why CERCLA says; "To the maximum extent practicable, the President shall cooperate with and seek the advice of the commercial insurance industry in developing financial responsibility requirements").

There is also something else that may be driving this.  If you want to stop something from taking place, say a pipeline for example, you could make that financial assurance so high as that it cannot be met.  This serves the purpose of an agenda.  This also works in stifling competition, by making it so costly that only the big boys can meet it.  It works both ways.

Other than this one issue, Title One of this Bill gives me no heartburn.  I think the senate could reconcile the possible burden to the taxpayer by requiring a minimum financial assurance equal to the median of what is required in all 50 states.  This way California does not dominate on the high side and Texas on the low.  Businesses would also have an idea of what the top amount they need would be.  This could be looked at every three or five years, giving some measure of certainty.

Eviscerating the longstanding principle of CERCLA: Part 3

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