GE’s Hudson River PCB Site is Leaking Toxic Chemicals

It has been reported that General Electric’s (GE) Phase I cleanup of the Hudson River PCB site is leaking toxic material. As I recall, GE always wanted to cap the site since it would cost less and be more effective than EPA’s chosen remedy to dredge the site. According to EPA’s website, at the commencement of 2009, GE has reimbursed the government in the neighborhood of $37 million. If GE negotiates with EPA not to commence the phase II dredging plan, GE would be required to pay an estimated $43 million. Granted GE at the end of 2009 had a high stockholder equity ($117,291 million), therefore, a material impact would be 4% of that figure or $4,692 million. However, no one knows for certain if a material impact has occurred since most likely no one has added all the percentages of wastes that GE disposed of over the years at all superfund sites around the country in relationship to the estimated EPA balance owing for the selected cleanup costs. While GE’s annual report mentions that the company is allocating $.4 billion for remedial clean ups for the next two years, in many cases these liabilities extend over 30 years. Extended liabilities to balance sheets should be done for all companies (not just GE) to create transparency and permit stockholders to be aware of these long term off balance sheet liabilities.

Senator Frank Lautenberg (NJ) Proposes "Polluter Pay" Initiative

Just recently learned that Senator Frank Lautenberg (NJ) has introduced an initiative to make Superfund “polluter Pay”. I was confused by this statement since I was under the presumption that Superfund was always polluter pay. The federal government under the stimulus plan has given money to remediate old bankrupt facilities like the W.R. Grace’s facility in Vineland New Jersey. Lautenberg’s initiative would transfer the federal government footing the bill to a tax for all chemicals would be reinstated. Republicans will probably cry out that prices for every commodity will increase since product is derived from chemicals and that this measure is inflationary. This is true, but companies always pass on regulatory expenses to their consumers. What the Bush Administration and the republicans do not understand is that Superfund liability follows the principals of free market economy. If both company A and company B have similar balance sheets, but company A has more superfund liabilities than company B; company A will increase their price per unit to offset the superfund expense. Meanwhile, company B will most likely increase their prices to compete with company A, but this incremental increase will be all profit (from prudence where/how to dispose their waste or from pure luck). I thought this is what conservative republicans desire: survival of the fittest, and the strongest and most efficient companies will survive!