EPA Did Nothing To Mitigate Risks Of Dupont-Chemours Spinoff Bankruptcy

EPA protecting Dupont from public scrutiny

Jim O’Neill of the Bergen Record has an important story today about the risks of bankruptcy by Dupont spinoff, Chemours, see:

• Funds for $50M Pompton Lake cleanup may be at risk

But O’Neill managed to miss a critical issue and in doing so he gave the US EPA a huge pass.

We reached out to O’Neill through our friends, the good folks of Pompton Lakes at CCPL, so we’re confident O’Neill was aware of the concerns, yet somehow chose to ignore them.

US EPA has legal power and had at least two specific recent opportunities to use its regulatory authority to reduce or mitigate the risks of a Chemours bankruptcy.

Despite huge known risks – and an EPA Inspector General’s investigation – EPA failed to use that authority – not once, but twice.

This is borderline reckless bureaucratic negligence in this case, especially because EPA’s failure to enforce RCRA financial assurance requirements has been a known and longstanding nation-wide problem for a decade (see this 2005 critical EPA Inspector General’s Report).

First of all, EPA could have imposed special conditions on Dupont’s “Financial Assurance” requirements under the Resource Conservation and Recovery Act (RCRA).

In a January 21, 2015 letter to EPA Region 2 Administrator Enck, we urged EPA to take action to address these risks, see: EPA Conducting National Review of Dupont Chemours Spinoff

January 21, 2015

Ms. Judith Enck

Administrator,Region 2

Re:  DuPont Spin-off (The Chemours Company) – Pompton Lakes DuPont Works Site.  RCRA Financial Assurance

Dear Ms. Enck:

We are writing to you on behalf of the concerned Pompton Lakes residents that are critically worried about our future here in Pompton Lakes.  We have some specific questions in regard to the recent DuPont spin-off request to the US Securities and Exchange Commission which will affect the Pompton Lakes DuPont Works site here in Pompton Lakes under  I.E. DuPont De Nemours and Co.  We are sure you are familiar with the recent news and the various articles that have appeared in a variety of news outlets.  Here is the US Securities and Exchange Commission application for your information. http://investors.dupont.com/files/Chemours/Chemours-Form-10-12-18-2014.pdf.

Our questions are as follows:

1.  What is the dollar amount for the DuPont RCRA financial assurance for the Pompton Lakes DuPont Works site?  Can you provide us with that information?

2.   What specific instrument is DuPont RCRA financial assurance?  Is this instrument guaranteed by DuPont (not The Chemours Company but DuPont specifically)?

3.   Is this instrument liquid?

4.  Will EPA require DuPont (not The Chemours Company) to put money aside in an escrow account for the projected cost of the cleanup?

5. Will EPA ramp up existing DuPont RCRA financial assurance to address risks from The Chemours Company?

6.  Can this spin-off be stopped and if so, who has the authority to take such an action?

Since the above concerns are on the forefront for the residents as they are worried about their future, please respond as soon as possible.

The cleanup obligations at the Pompton Lakes site legally are imposed on Dupont and now Chemours spinoff by the EPA RCRA PERMIT.

EPA RCRA permits are governed by EPA RCRA regulations.

EPA RCRA regulations require that the polluter (Dupont) provide financial assurance for the cleanup, to assure that money is available to cleanup the site completely, including monitoring for a 30 year period after cleanup.

Given all the credible financial and legal criticisms about the potential for bankruptcy abuse of the Chemours spinoff, EPA should have overseen Dupont-Chemours with HEIGHTENED scrutiny and put SPECIAL CONDITIONS in the approval of new RCRA financial assurance.

But they did nothing.

Secondly, EPA had a more recent opportunity to reduce the risks of bankruptcy when EPA legally approved the transfer of the RCRA permit from Dupont to the spinoff Chemours. EPA did this very quietly in a May 20, 2016 letter to Chemours’ corporate counsel. (no link – PDF available upon request).

But if you read the conditions EPA imposed in the Attachment to the approval of the permit transfer, instead of heightened scrutiny and imposing special conditions to prevent abuse, EPA did exactly the OPPOSITE.

EPA LOWERED the level of scrutiny by specifying a lax threshold for monitoring and enforcement.

EPA noted that Chemours would need to be “seriously or repeatedly deficient” in complying with permit requirements before taking enforcement action.

Chemours should be closely monitored and on an EPA early warning list with a hair trigger – much the same way that financial regulators oversee banks in jeopardy of failure. They have a red line or  “watch” list, to closely monitor a bank that might be insolvent and intervene immediately to protect investors and the public taxpayer who insures those deposits via FDIC.

In addition, EPA again allowed Dupont to satisfy the MINIMUM public participation requirements – in this case, NONE –  a long standing abuse that goes back to all the “minor permit modifications” that kept the vapor intrusion issue under the public radar screen.

EPA “minor permit modifications” do NOT trigger public notice, comment and hearings. EPA approved the Chemours financial assurance and the RCRA permit transfer from Dupont to Chemours with no public participation!

We have email from Barry Tornick, former EPA RCRA Program manager and head of the Dupont cleanup for EPA, intentionally using “minor permit modification” procedures to avoid public scrutiny of the original cleanup plan.

The Bergen Record’s readers deserve to know all this.

If Chemours declares bankruptcy and there is no money to cleanup the entire Pompton Lakes site, don’t just blame corporate greed –

EPA would be partially responsible also for failure to prevent the problem and trying to keep it all under the public radar. Their lax oversight practically invites it.

[End Note: My former boss Brad Campbell covered EPA’s ass – he has dirty hands at that site and should not have been a source in this story. I refer to the sweetheart NRD settlement he negotiated with Dupont, which not only provided no compensation to Pompton lakes, it left them with contaminated land. Mr. O’Neill knows this, having written that story, see:

• Dupont deal gave state more tainted soil

Bill Wolfe of the Public Employees for Environmental Responsibility’s New Jersey chapter agreed. “DuPont got a sweetheart deal and DEP didn’t do their homework,” Wolfe said. “The deal must be renegotiated and DuPont forced to pay fair compensation, especially to Pompton Lakes residents who have suffered for decades.”