Fw: GARDEN STATE ENVIRONEWS 020222

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020222

GARDEN STATE ENVIRONEWS

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5 BERGEN TOWNS WANT AIR QUALITY STUDY NEAR TETERBORO

Date: 020222

From: http://www.newsday.com/

Associated Press, February 22, 2002

Teterboro - Five Bergen County communities will spend $5,000 apiece

to try to force the Port Authority of New York and New Jersey to do

another air quality study at Teterboro Airport.

Bogota, Carlstadt, East Rutherford, Little Ferry and Rutherford plan

legal action to require the authority to do the study using a firm the

towns choose.

It would be the third study of air quality near the small but busy

airport. A report commissioned by the towns cost $47,000, but was done

over just two days, which the towns contend is not long enough to get

an accurate reading.

Port authority spokesman Pasquale DiFulco said the airport does not

appear to be a major polluter.

" Numerous studies have repeatedly demonstrated that aircraft

emissions are a relatively minor contributor to the overall air

pollution load in metropolitan regions, " he said.

The port authority plans to spend $92.5 million for improvements

including a new terminal building and more taxiways, which it hopes

will reduce noise and pollution because planes would move in and out

more quickly.

The five towns are part of a 12-town Coalition for Public Health and

Safety that was formed last spring to protect the quality of life of

people who live near the airport.

A study commissioned by the coalition indicated that air surrounding

Teterboro contained high levels of chemicals commonly found in fuels

and could cause health problems. But it was inconclusive about the

airport's role because the facility is near two busy highways that

contribute to air pollution.

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Copyright © 2002, The Associated Press

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AUDITORS: EPA WRONG ON RADON COSTS

Date: 020222

From: http://www.newsday.com/

By Heilprin, Associated Press Writer, February 22, 2002

Washington - The Environmental Protection Agency underestimated by 20

percent the annual costs of reducing radon in drinking water,

congressional investigators said Friday.

The low estimate for meeting proposed new limits on radon " hampered

the ability of interested parties and the public to provide informed

comments to EPA, " the General Accounting Office said in a report.

GAO auditors said EPA's cost estimate of $121 million a year to

upgrade public water systems should be $145 million. They said the

agency underestimated the cost of treatment and testing, overestimated

states' administrative costs and failed to include costs for improving

mixed water systems, which tap both ground and surface water sources.

" The smaller systems are going to have a problem because they don't

have the resources, " said Rick Harmon, a technical programs manager

for the American Water Works Association, whose members include more

than 4,000 utilities. " The larger utilities have the resources, but

they may have to ask the water users to pick up the costs. "

The EPA proposed the new standards in November 1999 but missed a

November 2000 congressional deadline for issuing them. They remain in

limbo.

Ephraim King, director of the EPA's drinking water standards and risk

management division, said Friday the agency is trying to improve the

way it figures costs.

" We've just emerged from a fairly intense focus on the arsenic rule

and its costing and the benefits, and we're proceeding to apply those

recommendations to the radon rule, " he said.

The GAO concurred with EPA estimates on the benefits of proposed

radon standards, reductions in cancer deaths that translate into $362

million a year.

The National Academy of Sciences has estimated that exposure to

radon, a naturally occurring radioactive gas found in soil, rock

formations and water, kills about 20,000 people a year from lung

cancer. Most cases are caused by inhaling radon released to indoor air

from soil and rocks beneath homes.

The academy attributed about 160 of those deaths annually to inhaling

radon evaporated from drinking water. The breakdown of uranium and

radium-containing rock deposits releases radon into soil and rocks

that get picked up by ground water.

Ground water levels of radon are highest in New England, some Mid-

Atlantic states and parts of the Rocky Mountains; they are lowest in

the Mississippi Valley and upper Midwest.

Once a new rule for radon takes effect, utilities would have three

years to comply but could apply for a two-year extension if they must

make major capital improvements.

Small water systems serving fewer than 3,300 people could get up to

14 years to comply, King said.

- - -

On the Net: EPA Office of Water: http://www.epa.gov/ safewater

GAO reports: http://www.gao.gov/reports.htm

American Water Works Association: http://www.awwa.org

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Copyright © 2002, The Associated Press

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COMPANIES TWEAK ACCOUNTING TO HIDE ENVIRONMENTAL DEBT

Date: 020218

From: http://ens.lycos.com/

By Sutherland, Environment News Service, February 18, 2002

Washington, DC - The U.S. Environmental Protection Agency launched a

national campaign in January 2001 to get publicly traded companies to

disclose their environmental debts to shareholders as required by

regulation. Now, more than a year later, a majority of public

companies that have violated federal environmental laws still do not

make those disclosures.

The EPA is attempting to stop the practices of some corporations that

seek by accounting strategies to cover up financial losses and

liabilities so these problems do not bring down share prices.

The findings are based on a 1998 EPA study of corporate compliance

with Regulation S- K issued by the Securities and Exchange Commission

(SEC) which mandates quarterly and annual financial reporting of

corporate environmental liability and debt exposure as part of

reporting legal proceedings on violation of environmental laws.

Three of every four publicly traded U.S. corporations surveyed openly

violated the Securities and Exchange Commission's environmental

financial debt accounting regulations, the EPA disclosed.

Congressional committees trying to unravel the Enron accounting

scandal where hundreds of millions of dollars of debt was hidden

illegally from shareholders do not appear to know about this

concealment of environmental debt.

None of the investigating House or Senate subcommittee personnel

contacted by ENS were aware of the EPA's charge of gross financial

environmental debt departures on the part of companies trading on the

U.S. stock exchanges.

The hiding of corporate environmental debt from shareholders is a

significant issue in the stock market where corporate exposure to

environmental financial costs involving compliance, cleanup, and legal

fees is estimated by the insurance underwriting industry at over 100

billion dollars.

am Best Company, a global insurance service firm with corporate

headquarters in Oldwick, New Jersey, reported in November 2001 they

expect the property-casualty industry to ultimately incur upwards of

$121 billion in net asbestos and environmental losses.

Corporate noncompliance with U.S. environmental laws is being

rewarded when the SEC does not vigorously enforce its environmental

accounting filing regulation, a top EPA legal official says.

" This departure from SEC mandated disclosure puts good companies at a

disadvantage in the absence of reporting EPA legal proceedings, " says

Shirin Venus, attorney for the EPA's Office of Planning, Policy

Analysis and Communications (OPPAC).

" Enforcement would give assurance disclosures are being made

correctly and provide incentives for better performance, " she says.

In January 2001, directors of OPPAC together with Office of

Regulatory Enforcement directors sent the SEC's Division of

Corporation Finance and Division of Enforcement directors notice of

the EPA's national campaign to promote environmental SEC disclosure in

a document entitled, " Notice of SEC Registrants' Duty to Disclose

Environmental Legal Proceedings. "

It is the SEC's job to administer and enforce the federal securities

laws to protect investors and to maintain fair, honest, and efficient

markets. But in the past 20 years the SEC has only once enforced its

Regulation S-K financial environmental accounting regulation, setting

a precedent for other financial debt departures in the stock markets.

Corporations often hide their financial environmental risks from

their SEC filings by stating the costs and claims will not have a

material adverse effect on operations and financial position.

Executives argue that pending litigation cannot be qualified and the

assessed financial risks are too small to spell out given the

company's size.

The U.S. accounting auditing bodies issuing opinions for those firms

agree with that stance.

Currently, all companies publicly traded on U.S. stock exchanges must

file reports on their significant environmental material expenses both

quarterly and annually to shareholders under SEC laws.

The SEC threshold reporting requirements of Item 5 of SEC Regulation

S-K mandates disclosure of:

all environmental proceedings, including governmental proceedings,

which are material to the business or financial condition of the

registrant damage actions, or governmental proceedings involving

potential fines, capital expenditures or other charges, in which the

amount involved exceeds 10 percent of current assets governmental

proceedings, unless the registrant reasonably believes such

proceedings will result in fines of less than $100,000

Critics say these definitions do not catch debts, fines and capital

expenditures for smaller amounts which can pile up to the point where

they make a real difference in the worth of a company that whould be

reflected in its share price if disclosed.

Corporations are allowed too much leeway for interpretation of what

is financially material when it comes to disclosure of environmental

liability and cleanup costs to shareholders according to the Corporate

Sunshine Working Group.

The nationwide coalition of more than 60 organizations is

spearheading an effort to have the Securities and Exchange Commission

strictly enforce and improve securities law requiring corporate filing

of environmental material expenses.

The coalition includes from money management firms such as Kinder

Lydenberg & Domini, to labor organizations such as the United

Steelworkers of America, to environmental groups such as Friends of

the Earth.

The Corporate Sunshine Working Group cites a class action lawsuit

filed by shareholders of U.S. Liquids against the firm for concealing

material environmental information which resulted in an artificially

inflated share price.

" This company claimed that its liquid waste management services,

which generated more than 90 percent of the U.S. Liquids revenue,

would result in 20 percent earnings per share growth, " said

Chan-Fishel, international policy analyst for Friends of the Earth.

" Little did investors know that the company was concealing its

illegal dumping activities, " she says, " and when one of the company's

most important facilities was heavily fined and temporarily shut down,

share value fell by over 50 percent. "

The World Resources Institute (WRI), a nonprofit research

organization based in Washington, DC, released reports in 2000 that

support the contentions of the Corporate Sunshine Working Group

showing pulp and paper companies reviewed are not disclosing

environmental risks that may significantly affect their financial

performance.

" This lack of disclosure infringes Securities and Exchange Commission

rules and directly threatens investors in pulp and paper companies, "

said WRI economists Repetto and Duncan Autin in their reports,

" Coming Clean: Corporate Disclosure of Financially Significant

Environmental Risk, and " Pure Profit: The Financial Implications of

Environmental Performance. "

In February 1997, three environmental groups - Friends of the Earth,

the Sierra Club, and Citizen Action - sent a letter to the SEC,

demanding an investigation of the entertainment giant Viacom Inc. for

failing to report an alleged $300 million in Superfund clean up

liabilities in their annual report to shareholders.

Price Waterhouse LLP, whose personnel audited Viacom's annual report,

issued a clean opinion for Viacom's financial report to shareholders

without including the questionable Superfund liability figures.

Viacom executives claim the EPA and environmental groups were

overstating the cleanup costs.

Freedman, professor of accounting at the College of Business

and Economics at Towson University in land, believes Viacom's

Superfund accounting departure is not unusual.

" My 1996 study of the Environmental Protection Agency's list of 900

publicly traded potentially responsible parties listed on the National

Priority [superfund] List found most companies make little or no

disclosure effort on environmental expense/liability reporting, " he

says, " and it's getting more and more overt. "

In 1998 the Securities and Exchange Commission issued a bulletin

asking companies to abide more strictly by SEC rules requiring

complete reporting of corporate material expenses.

" The SEC sees a growing problem with a lot of companies just passing

off required generally accepted accounting principles (GAAP) as

immaterial right in front of our faces, " said Bob Burns, chief counsel

in the SEC's Office of Chief Accountant.

" It's an attitude which comes across as telling us keeping good books

is immaterial, and right now our primary focus isn't the environment,

but in preparing financial statements in general, " said Burns in 1998.

Illegal storm sewer discharge to an unnamed tributary of the Cuyahoga

River (Two photos courtesy Ohio EPA)

Four years after release of the bulletin, SEC officials are still

reluctant to review corporate failures to file 10-K form filings

detailing significant environmental material expenses.

" The Office of the Chief Accountant has not recently reviewed and is

not in a position to comment on the Environmental Protection Agency

study, " says sey, deputy chief accountant for the SEC.

" The Commission's Division of Corporation Finance selectively reviews

filings with the Commission for compliance with the SEC's disclosure

requirements, including disclosure related to environmental legal

proceedings, " says sey.

Under current federal securities law, " material " information is

anything that an average investor ought reasonably to be informed of

before buying a security.

The definition of environmental materiality as anything affecting

air, land, water or public health is considered an old fashioned

definition in many corporations.

Instead, many auditors and their business clients today define

environmental materiality as any event or news which will affect a

company's revenues by a 10 percent threshold level.

Burns says, " Senior management in a lot of firms excuses departures

from GAAP at three to 10 percent levels. "

The Corporate Sunshine Working Group claims that under these

reporting conditions shareholders are often left out of the loop. They

never learn of unreported controversies which can ultimately effect

the company's financial position, and therefore its share price.

Attorney Sanford , co-chair of the Corporate Sunshine Working

Group, says, " Our objective is to have the SEC uniformly enforce their

current environmental accounting regulations and create more

clarification for existing rules. "

" Part of the problem with the current SEC regulations is there are

inappropriate threshold reporting requirements in Regulation S-K which

limits SEC 10-K annual and 10-Q quarterly reporting to shareholders of

ongoing legal controversies and citizen actions, " says .

" These financial environmental accounting departures effect the EPA's

operations, " says Venus. " Market mechanisms which require full

transparency are undermined by these departures, and it sets a

disincentive for others to comply if competitors aren't, " she says.

* * *

© Copyright 2001, Lycos, Inc.

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NAFTA'S CHAPTER 11 THREATENS THE ENVIRONMENT AND DEMOCRACY

Date: 020222

From: http://enn.com/

By Gerdes, February 22, 2002

A decade ago the North American Free Trade Agreement (NAFTA) burst

onto the scene in the United States. The complex trade pact between

the United States and its two neighbors became an issue in the 1992

presidential election, and its ratification ignited a vociferous

debate in the Senate.

But amid the din of voices fighting to be heard in the struggle -

Ross Perot's warning of a " giant sucking sound " of jobs fleeing to

Mexico, stirrings of the nascent antiglobalization movement,

environmentalists forecasting assaults on bedrock legislation, free-

traders trumping the rise of a world marketplace - something was

missed.

Overlooked by NAFTA opponents and proponents alike, something

virtually ignored in congressional deliberations on the agreement, was

one inconspicuous provision: Chapter 11, a clause so important Dan

Seligman, director of the Sierra Club's Trade Program, argues that it

may lead to a " fundamentally different world in the degree of power

corporations hold on democratic governments. " Written in the

ambiguous, innocuous-sounding prose that makes clever attorneys rich,

the chapter spells out terms under which investors (i.e.,

multinational corporations) can be compensated for losses incurred by

expropriation - government action.

The crafters of Chapter 11 included these " investor-to-state "

protections out of a fear of political or economic instability in the

Third World. Their intent, as Canner of the Unites States

Council for International Business (USCIB) explained it, was to ensure

that " U.S. investors abroad receive the same type of protection that

foreign investors get in the United States with or without a treaty. "

The concern with Chapter 11 - and what has engendered protest from

state and federal legislators and environmental activists alike - is

the danger the clause poses to environmental protection efforts.

In the United States the assets of property holders are protected by

the Fifth Amendment ( " ... nor shall private property be taken for

public use, without just compensation " ). This constitutional safeguard

shields parties from direct expropriation, also referred to as

takings. If a government wants to build a freeway or football stadium

and your home happens to be in the way, the government can force you

out but they have to compensate you for your loss. Chapter 11

recognizes this precedent and goes much further.

Under Chapter 11 the signatory nations are prevented from " directly

or indirectly nationaliz[ing] an investment " or taking measures

" tantamount to nationalization or expropriation " (emphasis added), and

therein lay the distinction. By expanding government responsibility

for compensation beyond direct takings, the architects of Chapter 11

have enabled foreign corporations doing business in Mexico, Canada, or

the United States to seek reimbursement for any government law, rule,

or regulation that impinges upon the company's profits. An

illustration of the implications of this seemingly minor alteration of

language is a feud between the Methanex Corporation and the state of

California.

Methanex, a Canada-based company, produces methanol, a crucial

ingredient in the gasoline additive MTBE. Because MTBE improves air

quality by enabling gasoline to burn cleaner, it was added to fuel in

cities throughout the United States. The problem, as California

residents soon realized, is that MTBE causes cancer in laboratory

animals. By 1995 MTBE, a chemical almost impossible to remove from

groundwater, had infiltrated 30 public water systems in the state. Out

of concern for public safety, the California Legislature authorized

the governor to ban MTBE if further testing of the substance confirmed

its deleterious health effects. In 1999, after additional laboratory

testing, Gov. Gray authorized the phase out of the chemical.

Faced with the prospect of losing a significant market for one of its

products, Methanex sought a remedy to replace the revenue to be lost

to the California ban. It found its answer with Chapter 11. Claiming

that Gov. ' action amounted to a taking of the company's future

profits and market share, Methanex filed suit against the United

States seeking $970 million in compensation. Yet because of rules that

are a departure from protections afforded in the United States'

courts, California cannot even participate in its own defense.

As specified in NAFTA, investor-state disputes such as the one

between Methanex and the United States are not heard in a courtroom in

front of a judge or jury. Instead, the parties convene in a tribunal

before a three-member panel of arbiters. The arbiters, usually experts

in international trade law, are appointed by the parties themselves.

The arbitration sessions are held with no public access behind closed

doors at the United Nations and the World Bank. In the Methanex case,

California has no role in the proceedings - even the state attorney

general is not permitted to speak before the tribunal.

This challenge to the sovereignty of the state of California and to

the ability of its elected officials to legislate in the public

interest has not gone unnoticed. State Sen. Sheila Kuehl formed the

Senate Select Committee on International Trade Policy and State

Legislation, a body she now chairs. Sen. Kuehl has become a formidable

voice in the effort to reconcile the benefits of free trade with

safeguards for state sovereignty and environmental protection.

Sen. Kuehl has emerged as a thorn in the side of the U.S. Trade

Representative, Zoellick, as an exchange of letters between the

two of them attests. In one such letter, dated Jan. 31, 2001, Kuehl

and her senate colleagues cautioned Zoellick, " that as presently

administered, NAFTA - diminish[es] the sovereignty of states such as

California and, in doing so, shift decision-making power from

elected officials to unelected international trade officials. " They

warned that they do not wish to see environmental standards " disrupted

by trade negotiators who may not have fully comprehended the potential

implications of open-ended language. "

Trade Representative Zoellick responded in a March 2001 letter

reminding the California legislators that under NAFTA governments

" continue to have an absolute right to set workplace, environmental,

health, and safety safeguards at the levels they consider

appropriate. " Wagner, the director of International Programs at

Earthjustice Legal Defense Fund, regards this as a " misleading

statement. " He concedes it is true that language in NAFTA denies

tribunals the power to overrule state or local laws but says that

doesn't mean the laws are completely safe.

In 1997, in a case similar to Methanex v. the United States, an

American company, the Ethyl Corporation, brought a suit under Chapter

11 against the Canadian government. Canadian authorities had

implemented a ban on an Ethyl product, the gasoline additive MMT. The

tribunal hearing the case found for Ethyl, and Canada was forced to

pay the company US$13 million. Canada subsequently withdrew its ban of

MMT.

The trend appears to be that if significantly large monetary damages

are awarded in Chapter 11 cases or if corporations simply threaten to

bring Chapter 11 suits, governments confronting a potential damage

award of several million dollars (or, as in the case of Methanex,

close to $1 billion) may yield under the financial pressure.

Wagner argues that the financial burden may threaten environmental

statutes and regulations as governments will be " unlikely to maintain

them if it costs them too much money. "

In testimony before the Subcommittee on Trade of the House Committee

on Ways and Means in May 2001, Price, the principal architect

of Chapter 11, spoke in defense of his creation. Price beseeched

members of Congress to recognize that investor protections " ... foster

the development of the rule of law, respect for private property, and

a market-based free enterprise system that are essential hallmarks of

a democratic society. " Price expanded this argument in comments made

to Greider in an Oct. 15, 2001, article in The Nation. He

said, " Governments recognize that it would be unfair to force an

investor to bear the entire cost of a change in social policy. These

costs, at least under certain circumstances, should be borne by

society as a whole. "

Price's thoughts on Chapter 11 are shared by the U.S. Council

for International Business (USCIB), a collection of some 300

multinational corporations. This shared vision is no coincidence, as

Price was speaking on behalf of the USCIB before the House Ways and

Means Committee. The USCIB has not been timid in its own defense of

Chapter 11 provisions. In an April 19, 2001, letter sent to Trade

Representative Zoellick, signed by 29 business heavyweights, including

General Motors, Honeywell, and Texaco, the group asserted its support

" for the inclusion of effective investment provisions in the proposed

Free Trade Area of the Americas (FTAA). "

The Free Trade Area of the Americas would in effect expand NAFTA to

31 other nations in the Western Hemisphere, creating the largest free

trade zone in the world. Participating nations have set a January 2005

deadline to complete a draft of the new trade document. However,

preliminary drafts reveal that the section on investor disputes in the

FTAA looks strikingly similar to that in Chapter 11 of NAFTA. In a

report on the investment chapter of the FTAA titled " NAFTA Investor

Rights Plus, " the Hemispheric Social Alliance concluded, " Although

virtually the entire draft is enclosed in brackets (indicating areas

where there is not yet official consensus), the draft text closely

mirrors NAFTA Chapter 11. "

While business interests mobilize to defend Chapter 11, and even

expand its reach, opposition is emerging - sometimes from the most

unlikely places. Documents recently posted online at the U.S. State

Department Web site reveal the dubiousness with which factions, even

inside the federal government, hold for investor protections found in

Chapter 11.

In the government's Statement of Defense in the Methanex case,

attorneys for the United States write that Methanex's claim " does not

remotely resemble " the type of grievance for which NAFTA parties

created Chapter 11. They deem " absurd " the notion that " whenever a

state takes action to protect the public health or environment, the

state is responsible for damages. " Even a participant in the NAFTA

negotiations, Esty, a professor of environmental law and policy

at Yale University who was the EPA's lead negotiator, now believes

that Chapter 11 " could have been and should have been more tightly

crafted " and that these " significant negative precedents " should not

be replicated in the FTAA.

In his State of the Union address, President Bush urged Congress to

grant him " trade promotion authority " to expedite the completion of

trade agreements like the FTAA. Yet in the fight over construction of

the FTAA, unlike the debate over NAFTA, environmentalists believe they

are ready to thwart investment conditions that threaten the sanctity

of environmental legislation.

They need to convince Congress to include restrictions on investment

that protect environmental, health, and safety laws in the

authorization it grants the president to negotiate trade agreements.

As Dan Seligman of the Sierra Club puts it, environmentalists need to

ensure that they " hold negotiators accountable to listen to a broad

array of public interests. " Wagner, the Earthjustice attorney, is

cautiously optimistic about the inclusion of the safeguards and

believes that at this point legislators would have to be " blind or

completely in the pocket of the corporate lobby " to allow FTAA to pass

with investment conditions intact.

The long-term ramifications of Chapter 11 are uncertain, but the

danger it poses to environmental standards, our judicial system, and

to democracy at large has convinced its detractors to argue for its

demise. Sen. Kuehl from California said, " If I were a smart United

States, I would move to amend NAFTA. " Dan Seligman went further,

saying, " If we knew then what we now know, NAFTA would have been

defeated. "

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Copyright 2002, Environmental News Network .

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