The good and bad of a resurrected Superfund
Update November 16, 2021: Congress passed a bipartisan infastructure bill 221 to 213 in the early hours of November 6, 2021. According to the White House, it contains a provision that will "deliver the largest investment in tackling legacy pollution in American history by cleaning up Superfund and brownfield sites." President Biden signed the bill into law on November 15. More details to follow.
The Superfund — formally known as the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) — just might be awakened from a 27-year sleep. And like so many government directives, it entertains both advocates and opponents
The Carter administration established the Superfund in 1980 to offset the high price tags associated with remediating uncontrolled or abandoned hazardous waste sites. John Beaty, Avalara’s excise tax general manager, confirmed that 44,000 waste sites currently exist, and 1,300 sit on the national priority list. The excise tax was applied to a list of 42 chemicals used predominantly in the oil, gas, and chemical industries. The Reagan administration renewed the tax for another round, but in 1995 Congress allowed it to lapse.
Funding through taxpayers' pockets
Since the fund’s termination, the cost for hazardous waste clean up has been put upon U.S. taxpayers. Now, the current administration has proposed reviving the excise tax to help subsidize the exorbitant infrastructure bill forging its way through Congress. Should it be reinstated, the fund would reportedly raise $3.5 billion. So, many government officials are in favor.
However, others are concerned that the Superfund’s previous impediment on the gas, oil, and chemical industries would also come to pass. The tax devastated many industry-related companies, and insiders fear it would again hit with a far-reaching reverberation beyond just legitimate offenders.
Super costs to follow
According to the American Chemistry Council (ACC), the Superfund could slap the American chemical industry with $1.211 billion additional costs per year and risk more than a thousand industry-related jobs. The council also issued a warning that “for specific chemicals and specific plan operations, the added costs from the taxes could exceed profit margins.
If reinstated, the excise tax would double the 1995 rates, and chemical sales would incur a tax rate range between 44 cents and $9.74 per ton. Of the 42 chemicals on the fund’s roster, 10 are top players in the petrochemical industry and are used to manufacture many consumer goods.
One of the chemicals with the highest tax, benzene, is used to produce a vast spectrum of products, such as plastics, dyes, spray paint, detergents, and drugs. Potassium hydroxide is another chemical on the list used to make soap, alkaline batteries, fabric, wart treatments, and diagnose fungal infections. So, the tax would “hit home” for consumers.
Taxing a troubled economy
The timing for the Superfund’s resurrection isn’t good, either. The tax would most likely further trample an economy saddled with high and increasing inflation. The events and continuing fallout of 2020 have already struck a blow to the oil and gas industries’ revenue.
Despite the potential consequences, the Superfund holds support on both sides of the political aisle. The proposal got through the Senate and is sitting in the House. The Environmental Protection Agency (EPA) faces mounting pressure to address cleanups for the 1,300 priority sites. So, it’s likely that Superfund will pass if the infrastructure bill passes.
If revived, the Superfund would mandate companies to declare all the chemicals they use that are on the list. They will also need to identify chemical volumes in their blended products — if a product contains five chemicals and two are on the list, the organization must reveal the individual volumes of the two.
Companies can begin now to prepare for the potential changes by assessing their inventory. Automated solutions can help streamline complicated inventory tracking and ensure excise tax is calculated appropriately.
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