Gordner- Spring 2023

Polluter Pays Principle

Jillian Gordner

The Polluter Pays Principle is a commonsense regulatory approach to managing the costs of pollution. The idea is that the industries that produce and profit from pollution should be responsible for the cost of cleaning it up.[1] Throughout the world, polluter pays policies have become an effective way of curbing and cleaning up pollution[2], but it’s often difficult to find and hold accountable the company responsible for any given amount of pollution.

Despite sizeable industry opposition,[3] Congress recently enacted one of the most significant polluter pays policies in the country. Polluter pays taxes on the oil and chemical industries went into effect in 2022 and at the beginning of 2023,[4] which will fund the cleanup of the most dangerous toxic waste sites across the United States.[5] These toxic waste sites are on the National Priorities List, a list of the most hazardous sites across the country, identified and managed by the Environmental Protection Agency’s “Superfund” toxic waste cleanup program.[6] The program, which was originally funded by these polluter pays taxes, has been running on fumes since they expired in 1995.[7] As a result of the reduced funding, fewer cleanup have been conducted each year, leaving more people living in close proximity to toxic waste for longer.

The reinstatement of the ”polluter pays” taxes will not only speed up cleanup at hazardous waste sites across the country, but it underscores the idea that we can and should hold polluting industries responsible for the cost of pollution. The blog post will look evaluate the effectiveness of this policy applied to the Superfund and then suggest that “polluter pays” taxes be applied to other realms of environmental law.

The Superfund toxic waste cleanup program was enacted in 1980 after notorious toxic waste disasters such as Love Canal and Valley of the Drums brought the issue of toxic waste to the national forefront.[8] The program was named Superfund because of taxes on polluting industries that went into a “Superfund” Trust to pay for the cleanup.[9] The creation of the Trust meant that even though many of the individual companies that caused the pollution at these toxic waste sites have since dissolved, the industries most responsible for that pollution would be held responsible for the cost of cleanup, rather than taxpayers.[10]

Unfortunately, those taxes were only in effect for 15 years. The polluter pays taxes sunset in 1995. By 2003, the Superfund Trust was bankrupt.[11] The program instead had to rely on appropriations from general taxpayer dollars to fund cleanup at over 1,000 toxic waste sites identified by the EPA as the most in need of cleanup.[12] Even with general taxpayer dollars going to cleanup, there wasn’t enough money to make up the shortfall from the lost tax revenue.[13] The result has been decades of slowing toxic waste cleanup at the country’s most dangerous toxic waste sites.[14]

However, in the Infrastructure Act, passed November, 2021, the original two excise taxes on chemicals and hazardous substances were updated and reinstated to fund the Superfund toxic waste cleanup program.[15] In the Inflation Act, Congress passed the final of the three original excise taxes, this one on crude oil and petroleum.[16] By January 2023, all three taxes are in effect.[17] The taxes are estimated to raise $14 billion dollars over the next decade for the Superfund program.[18] Not only will it enable the EPA to do more cleanup quicker, but it also means that polluting industries, rather than taxpayers, will be bearing the cost.

The polluter pays taxes applied to the Superfund likely don’t have as much of a deterrence effect as polluter pays policies in other industries. The taxes are broad across the entire oil and chemical industries, most of the toxic waste sites are old, and being careful with one’s own hazardous waste doesn’t have an effect on whether one pays the tax. The main draw of the polluter pays taxes applied to Superfund is the mere fact that someone needs to pay to clean up these incredibly dangerous sites. The tax provides essential money to clean up these sites and protect people from exposure to toxic chemicals, many of which can cause serious illnesses.

However, other polluter pays taxes do have a significant deterrence effect. One type of polluter pays policy called Extended Producer Responsibility (“EPR”) is gaining traction as a way to hold the plastics industry accountable for their waste and encourage them to reduce it.[19]

Producer responsibility laws require plastics manufacturers to provide money for end-of-life disposal of their plastic.[20] By increasing the cost of the waste these companies produce, it increases the incentive for them to use recycled plastic, instead.[21]

This makes far more sense than leaving the cost of pollution and the responsibility for minimizing it to the consumer, who has far less capacity to make change. Once the product is on the store shelf, there’s not much hope. Despite messaging from the oil and chemical industries that make plastic, most plastic that we use isn’t recyclable. Between 80-90% of plastic that we put in a recycling bin goes from the recycling plant to the landfill.[22] The plastics industry has little incentive to work on that because making new plastic, rather than recycling, is cheaper.[23] Unfortunately, we the taxpayers pay for that failure with our wallets and with our health. We pay for disposal of more and more piles of trash. We live with poor air quality from plastic manufacturing.[24] All in all, the plastics industry, and by extension the oil and chemical industries, get to pollute as much as they want, within the bounds of generous regulations, and profit off it.

Addressing pollution requires an approach that doesn’t leave consumers with the bill. The manufacturers who profit off pollution should bear the cost of cleaning it up. Most importantly, these policies protect people. The reinstatement of the polluter pays taxes to fund the Superfund toxic waste cleanup program means renewed efforts to clean up our most dangerous toxic waste sites. For the one in six Americans across the country living within three miles of Superfund site, that money is hope for cleaner and safer environment for themselves and their families.

Jillian Gordner is a Junior Editor with MJEAL. Jillian can be reached at jgordner@umich.edu.

[1] What is the polluter pays principle? The London Sch. of Econ. and Politics Sci., (July 18, 2022), https://www.lse.ac.uk/granthaminstitute/explainers/what-is-the-polluter-pays-principle/.

[2] Michelle Nichols, Polluters must pay, says UN chief, urges taxes to help climate victims, (Sept. 20, 2022), Reuters, https://www.reuters.com/business/environment/polluters-must-pay-says-un-chief-urges-taxes-help-climate-victims-2022-09-20/; See also Scilla Alecci, Tax Chemicals Industry to Help Curb Pollution Internationally, Experts Propose, International Consortium of Investigative Journalists, (Dec. 1, 2020), https://www.icij.org/inside-icij/2020/12/tax-chemicals-industry-to-help-curb-pollution-internationally-experts-propose/.

[3] Genevieve Douglas & Kellie Lunney, Superfund Tax Revival Renewing ‘Polluter Pays’ Debate, Bloomberg Tax, (June 25, 2021), https://news.bloombergtax.com/daily-tax-report/superfund-tax-revival-renewing-polluter-pays-debate.

[4] Reinstatement of Superfund Excise Taxes, KPMG, https://tax.kpmg.us/services/excise-tax/superfund-excise-tax.html

[5] Superfund, Environmental Protection Agency (EPA), https://www.epa.gov/superfund

[6] Superfund: National Priorities List (NPL), Environmental Protection Agency (EPA), https://www.epa.gov/superfund/superfund-national-priorities-list-npl.

[7] As Tax Expires, EPA Struggles to Clean Up Superfund Sites, NPR, (Aug. 6, 2010), https://www.npr.org/templates/story/story.php?storyId=129034359

[8] Kennedi Hewitt & Alexis Durham, Environmentalists say the EPA’s efforts to clean up toxic waste fall short, Climate News 360, (Aug. 23, 2021), https://climate360news.lmu.edu/environmentalists-say-the-epas-efforts-to-clean-up-toxic-waste-fall-short/.

[9] Superfund, National Geographic, https://education.nationalgeographic.org/resource/superfund/.

[10] Id.

[11] Jonathan L. Ramseur et. al., Cong. Rsch. Serv., Superfund Taxes or General Revenues: Future Funding Issues for the Superfund Program RL31410, (2008), https://www.everycrsreport.com/files/20080204_RL31410_0836e5a178cb9592e7b99f37adcfe5600d0b8871.pdf 1244 NPL sites in 2003 https://www.epa.gov/superfund/number-npl-sites-each-status-end-each-fiscal-year

[12] Bryan Anderson, Taxpayer dollars fund most oversight and cleanup costs at Superfund sites, Wash. Post, (Sept. 20, 2017), https://www.washingtonpost.com/national/taxpayer-dollars-fund-most-oversight-and-cleanup-costs-at-superfund-sites/2017/09/20/aedcd426-8209-11e7-902a-2a9f2d808496_story.html.

[13] Cheryl Hogue, Declining funds slow US hazardous waste cleanup, Chemical & Engineering News, (Feb. 10, 2021), https://cen.acs.org/environment/pollution/Declining-funds-slow-US-hazardous/99/web/2021/02.

[14] Id.

[15] Chase Dressman & Michael Meyer, Reinstated Superfund Excise Tax Now in Effect, but Questions Remain as to Calculation of Tax Rates for Certain Substances, Taft Law, (July 26, 2022),https://www.taftlaw.com/news-events/law-bulletins/reinstated-superfund-excise-tax-now-in-effect-but-questions-remain-as-to-calculation-of-tax-rates-for-certain-substances.

[16] Rachel Smith et. al., The Reinstated Superfund Excise Tax, ABA, (Dec. 21, 2022), https://www.americanbar.org/groups/taxation/publications/abataxtimes_home/22fall/22fall-pop-smith-excise-superfund/#:~:text=The%20Chemicals%20Superfund%20Tax%20and,%2C%20effective%20January%201%2C%202023.

[17] Id.

[18] Lynn Mucenski Keck, Superfund Excise Tax Is Catching Many Companies By Surprise, Forbes, (July 25, 2022), https://www.forbes.com/sites/lynnmucenskikeck/2022/07/25/superfund-excise-tax-is-catching-many-companies-by-surprise/?sh=904586a598ab.

[19]States Continue Efforts to Hold Producers Responsible for Plastic Pollution, National Caucus of Environmental Legislators, (Feb. 4, 2022), https://www.ncelenviro.org/articles/states-continue-efforts-to-hold-producers-responsible-for-plastic-pollution/

[20] Id.

[21] Beyond Plastics, Extended Producer Responsibility,https://www.beyondplastics.org/epr.

[22] Laura Sullivan, Recycling plastic is practically impossible – and the problem is getting worse, NPR, (Oct. 24, 2022), https://www.npr.org/2022/10/24/1131131088/recycling-plastic-is-practically-impossible-and-the-problem-is-getting-worse#:~:text=While%2052%25%20of%20recycling%20facilities,is%20put%20into%20a%20landfill.

[23] Id.

[24] Center for Biological Diversity, The Plastic-Production Problem, https://www.biologicaldiversity.org/campaigns/plastic-production/index.html.

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