Stewardship

[Jonathan Buhacoff]

Proposal:

Enact a law that obligates companies operating hazardous or dangerous facilities to careful and responsible management of those facilities until their safe and orderly closing and cleanup is complete. The law must prevent the sale or transfer of such facilities to another company without the government’s approval. The law must require the government to approve such sales or transfers only after a careful evaluation of the proposed recipient’s ability to assume the stewardship obligation.

One technique that can be used to make a recipient more qualified to receive a facility is for government to require the seller and recipient, in any combination agreeable to them, to fund an adequately sized cleanup trust as a condition of sale. This fund would then be used to cover any closing and cleanup costs that may be incurred by the government if the recipient is unable to fulfill its obligation.

The government may also require a cleanup trust to be funded by the company that develops the facility as a condition of granting the permit. If such a fund already exists, then as a condition of sale the government may re-evaluate the fund’s size and require additional funds to be added to approve a sale.

The people, through government, are the beneficiaries of such cleanup funds. Therefore, funds must be administered by a government official and never disburse money back to the private companies that funded them. The government should invest the funds in what are considered safe investments in order to allow them to keep up with inflation. However, if it seems a fund’s purchasing power is decreasing compared to inflation, the government may require the company to deposit additional money into the trust in order to renew its permits. When a facility has been properly shut down and cleanup completed, as indicated by a thorough inspection, any remaining money in the fund can be returned to the companies that funded it according to their relative percentage when funding it. For example if the developer funded 70% of the fund and the recipient funded 30% of the fund, any money that remains would be distributed 70% back to the original developer and 30% back to the recipient of the sale or transfer. If any of the private entities is no longer in operation, the refund is forfeited and the money is transferred to the treasury.

Discussion:

This proposal aims to prevent the practice of a company extracting profit from a facility, such as an oil well, and then selling that facility to a shell company that is designed to go bankrupt, and absolves itself of responsibility to close and cleanup the facility, leaving the people — either individually or through government action — responsible for the effort and cost of the cleanup.

[Author]

Posts