arsenic, accounting, environment, hazardous waste, CERCLA, Superfund, EPA, cleanup, cancer, mining, contingent liability, asbestos, lawsuits, gold, responsible party
Arsenic (As) is not just a poison found in mystery novels. Arsenic may be the asbestos of the near future.
Attorneys have made millions on asbestos, and arsenic could generate cases of similar magnitude. Lawsuits in Bryan, Texas in a two year period have already cost one company over $150 million. Their highest gross revenue in any one year did not exceed $40 million.
About 80% of the Superfund sites have arsenic problems, and there are several thousand arsenic sites throughout the U.S. Many are ongoing operations such as mining smelters, wood treatment plants, chicken operations, and pesticide operations. Many of these businesses continue to contaminate our waterways and air supply. Long abandoned California and Montana gold mines have left the toxic byproduct in concentrations up to 50 times higher than deemed safe levels. Homes have become worthless; no one will buy them, and banks will not write mortgages.
Recent studies have shown that arsenic can cause cancer in humans, such as skin cancer and lung cancer. Arsenic is a cancer promoter, causing cancerous cells to multiply more rapidly. Arsenic attacks the immune system, making us susceptible to other types of diseases, liver damage, kidney problems, skin abnormalities, and chronic rhinitis.
Accountants may be involved with arsenic in two major areas: due diligence and environmental audits. Investigation of environmental factors is an important stage in the due diligence process for the purchase of real estate or before a merger or acquisition is finalized. Many laws can impose significant environmental liabilities on sellers, purchasers, and lenders involved in transfers.
Environmental audits will become more frequent as purchasers and lenders attempt to avoid significant environmental liabilities. Many lenders have been "stuck" with cleanup costs after foreclosing on properties which, unbeknownst to them, were environmentally disasterous, leaving them to pour hundreds of thousands, and sometimes, millions of dollars into those properties for cleanup. Contingent Liabilities may include Superfund sites, underground storage tanks, hazardous wastes, PCB transformers, and other toxic substances. Local, state and Federal environmental regulations are complex. Organizations that do not comply with environmental regulations such as the Clean Air and Clean Water Acts risk huge penalties and public relations nightmares. Auditors are in an ideal position to perform environmental management system audits for their clients. They can help identify and overcome potential environmental risks and liabilities.
For example, alarming costs and unlimited liability may be imposed by the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA). Since CERCLA liability is joint and several, individual investors and owners may be personally liable for the entire cost of hazardous waste cleanup merely because they are the sole solvent responsible party. The term "responsible party" is broadly defined by the law. For more detail, see P.G. Neal, "Trustee and Corporate Officer--Potential for Unlimited Liability Under CERCLA in Natural Resource Development," Oil, Gas & Energy Quarterly, March, 1996, pp.309-323.
Educational institutions need to educate students to be responsible for the ecological impacts of their lives. For example, auditing the campus environment is an excellent first step in training environmental problem-solvers.
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D. Larry Crumbley
Last Updated: 19 May 2001