About Air and Water

Sunday, July 19, 2009

Penalties mean profit for polluters

By RICK CASEY - Houston Chronicle - July 14, 2009
Way back in the bad old days, many prosperous Texas companies made a happy discovery.
They could earn money by not paying their taxes on time.
Under the law, the penalties they faced for being delinquent on their property taxes were less than they could earn in interest over that period of time.
Tax laws have since been changed to take away the profit motive for tax delinquents.
In another arena, however, we still are in the bad old days. Very prosperous corporations understand that the fines they will be charged by the Texas Commission on Environmental Quality for dumping illegal amounts of pollutants into the air are likely to be much less than they would have to pay to upgrade their equipment and limit their emissions to permitted amounts.
There's no secret about this. Back in 2003 a state audit of the TCEQ found that refineries and other polluters were consistently fined less than what the law called for. What's more, the law often capped fines at considerably less than an amount that would deter polluters.
The result, according to the audit:
“Violators often have economic benefits that exceed their penalties, which could reduce their incentive to comply. For 80 fiscal year 2001, 2002, and 2003 cases we tested, the total economic benefit gained by violators during the period of noncompliance was $8,647,005. However, these entities were fined only $1,683,635, which is approximately 19 percent of the economic benefit gained from being out of compliance.”

Last year a study by the Galveston-Houston Association for Smog Prevention, a good organization with an egregiously cute acronym (GHASP), found that little had changed.
“The economic benefit gained and the cost of compliance thus far avoided are not recovered in the majority of penalties,” the report found, noting that violators thus “gain a competitive advantage over those that comply.”

State Sen. Mario Gallegos introduced a bill this spring that would have required that all fines would be equal to or more than the amount the company saved by not installing nonpolluting equipment and procedures.
If you breathe Houston's air, you won't be surprised to learn that the bill was buried early.
Still, some Houston clean-air activists took heart last month when Attorney General Greg Abbot filed a lawsuit against BP Petroleum on behalf of the TCEQ.
The suit seeks more than $100 million in fines, alleging that BP illegally dumped pollutants into the air at least 46 times, starting when 15 people were killed in 2005 at the company's Texas City plant.
The suit was filed after negotiations between BP and the TCEQ failed.
One clean air advocate said the suit against BP is “a big deal” that supports a local perception that in the past year TCEQ staff has been quietly increasing its enforcement activities while trying not to draw the attention of the agency's business-friendly board.
Others are more skeptical.
“I think it's a long time coming,” said Luke Metzger, director of Environment Texas, an Austin-based nonprofit. “I think they're basically piling on after the EPA fined BP with a huge penalty.”

Still, he said he was glad for the suit, if skeptical that it will go far enough.
Metzger has standing to speak. His organization and the Sierra Club last year sued Shell Oil Co. for allegedly exceeding its permitted emissions at its Deer Park plant by 5 million pounds.
They won a settlement of $6 million plus an agreement by Shell to reduce its emissions by 80 percent within three years or face more penalties.
Metzger says more suits are in the works.
Here's a sweet competition for you: Can the TCEQ and the attorney general enforce clean air laws better than a little old nonprofit? Any bets?
Read more in the Houston Chronicle

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