Financial Assurance Mandates: No Substitute for Agency Expertise and Oversight

• Date: 01 August 2018

8-2018 NEWS & ANALYSIS 48 ELR 10669

COMMENT

Financial Assurance Mandates:

No Substitute for Agency

Expertise and Oversight

by Rachel Cleetus, Ph.D.

Rachel Cleetus is the Lead Economist and Policy Director for the Climate and Energy Program at the Union of Concerned

Scientists, where her research focuses on the impacts of climate change and climate and clean energy solutions.

I. Introduction

Arnold’s article highlights an important issue of growing

urgency: the exposure of industrial facilities—ma ny with

toxic products or by-products—to risks of ooding exacer-

bated by sea-level rise and storm surge. His proposal to use

nancial assurance mandates (FAMs) is a compelling one,

and he provides substantive details, including a d raft local

ordinance, to help implement this type of policy. However,

the article is far too sa nguine about the ability of this one

policy tool to protect communities located in proximity

to these industrial facilities, and it is overly dismissive of

the role of complement ary policies including robust chem-

ical regulation, disclosure, a nd standards for pre-disaster

mitigation measures and post-disaster response. Rather

than pit these policies against one another using pejorative

terms li ke “command-and-contr ol,” a more thoug htful and

comprehensive approach would be to combine elements

of these to implement a suite of policies designed to help

build the resilience of industrial faci lities to climate and

extreme weather impacts while prioritizing t he safety and

well-being of local communities. Finally, to enact any of

these policies at the national level will require political will

from Congress and the admin istration—both of which are

sorely lacking with respect to addressing climate change.

II. Lessons From Houston After

Hurricane Harvey

e example of Houston that Arnold cites repeatedly is

particularly poigna nt considering the destruction wrought

upon the city by Hurricane Harvey in August 2017. (His

article was written prior to that signa l event.) e ood

damage to the Arkema chemical storage plant in Crosby,

Texas and subsequent explosions, res, and toxic pollution

epitomize the dangers of industrial facilities that Arnold

attempts to address. Yet, that example provides a caution-

ary note to the limits of FAMs as a sole means of add ressing

risks. at incident highlights t he need for robust chemi-

cal safety standards, monitored and enforced by the Envi-

ronmental Protection Agency (EPA) and Occupational

Safety and Health Administration (OSHA), as well as the

importance of the Chemical Sa fety Board, an independent

agency charged with investigating chemical accidents.

Strikingly, Arkema had been enga ged in lobbying EPA and

Congress to delay implementing key chemical safet y regu-

lations and found a sympathetic ear in EPA Administrator

Scott Pru itt.1

ere were more than 100 toxic spills after Harvey,

many more incidents than were initially reported, and the

full extent of the health burden of that pollution is still

unclear.2 A recent New York Times analysis of the Toxic

Release Inventory found that there are more than 1,400

facilities using toxic chemicals in high ood risk areas a nd

an additional 1,100 in moderate ood risk zones as des-

ignated by the Federal Emergency Management Agency.3

III. Need for a Suite of Policies

e challenge of safegu arding coastal industrial facilities is

not simply one of robust building standards, back-up power

systems that can w ithstand ooding, and other protective

measures—it requires specia lized knowledge of chemical

1. David Sirota et al., Texas Republicans Helped Chemical Plant at Exploded

Lobby Against Safety Rules, I’ B. T (Aug. 31, 2017, 1:20 PM),

www.ibtimes.com/political-capital/texas-republicans-helped-chemical-

plant-exploded-lobby-against-safety-rules.

2. Frank Bajak & Lise Olsen, Silent Spills Part 1: In Houston and Beyond, Har-

vey’s Spills Leave a Toxic Legacy, H C. & A P

(2017), https://www.houstonchronicle.com/news/houston-texas/houston/

article/In-Houston-and-beyond-Harvey-s-spills-leave-a-12771237.php.

3. Hiroko Tabuchi et al., Floods Are Getting Worse, and 2,500 Chemical Sites Lie

in the Water’s Path, N.Y. T (Feb. 6, 2018), www.nytimes.com/interac-

tive/2018/02/06/climate/ood-toxic-chemicals.html.

Copyright © 2018 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120.