The U.S. Army Corps of Engineers is inviting you to let them know what you think about the environmental impact of extending phosphate mining in Central Florida. The Sierra Club already let them know by filing suit in federal court and winning one battle with a nice settlement back in February. I started to read the draft document that the Army Corps had put together, and it just smacked of a whitewash. I stopped reading, probed my memory for phosphate mining disasters, did some research, and prepared the following comment.
The environmental downsides of the phosphate industry have been well-enumerated over the years. The horrendous pollution, the intense water usage, groundwater contamination, radioactive discharge, and the inability to restore the land are all well-documented. No amount of whitewashing by the phosphate mining industry can cover this up. If you think they make a strong case and that miracle-solutions are available, then you have not reviewed the history of phosphate mining in Florida nor the more recent finding, this past spring, of two-headed fish in Idaho streams contaminated by selenium runoff from phosphate operations.
The Army Corps of Engineers has produced an environmental report – its “Draft Areawide Environmental Impact Statement on Phosphate Mining in the Central Florida Phosphate District.” It is over 1,000 pages in length. The Sarasota Herald Tribune reports that "parts of the document even suggest that mining, which leaves behind waste-holding ponds, improves the environment by providing more forage areas for birds." Several years ago, the EPA said that what was needed was an analysis of the cumulative impact of current and future mines for the entire watershed, including downstream counties. Several years and over 1,000 pages later, the Army Corps did not examine the cumulative impacts within the region as suggested by the EPA, but rather promoted some environmental benefits of mining activities.
When a government agency that has regulatory or review oversight over an industry comes to be dominated by that industry, rather than pursuing the overall public interest, that agency is said to be "captured". For example, the Minerals Management Service (MMS) was thoroughly captured by the oil industry that it was supposed to regulate, and thus did not perform proper due diligence to prevent the catastrophic 2010 BP oil spill in the Gulf of Mexico. The obvious question is - how was the Army Corps captured by the phosphate industry? According to the Sarasota Herald Tribune, the environmental report was developed by CH2M Hill and funded by Mosaic and CF Industries — the same mining companies seeking permits from the Army Corps. The Army Corps may have put their name on the final document, but the financial trail points to a tainted document.
That means that it is up to outside reviewers to determine whether the suggested environmental mitigation is up to snuff. I believe that a look at the financial incentives and the business model of the phosphate industry is required in order to perform effective environmental analysis. And for that, I start with a look back at history. Phosphate companies want us to trust them and claim that they have the technology needed for proper mitigation and that they have learned from their mistakes. So, what were their mistakes?
In 2001, I read with dismay about the Piney Point phosphate operations in Manatee County. Due to financial problems, they could not pay their electric bill to keep pumps running, let regulators take over the plant, and then declared bankruptcy. The Florida Department of Environmental Protection (DEP) had paid over $200 million in clean-up costs for the treatment of acidic wastewater at this plant. The environmental costs were also high. The DEP dumped millions of gallons of waste into Bishop Harbor in late 2001. And after a subsequent failed clean-up attempt, the DEP started dumping in the Gulf of Mexico in 2003. At one point, the Florida Wildlife Federation suggested that the DEP get federal Superfund designation.
Then there's CF Industries (CFI). Between December 2004 and January 2005, inspectors from the Environmental Protection Agency (EPA) and the DEP discovered that CFI was treating, storing and disposing of hazardous wastes in the stack and associated ponds at its Plant City facility without a permit and failing to meet land disposal restrictions required by the Resource Conservation and Recovery Act (RCRA). In addition, they had not provided sufficient financial assurance for closure, long-term care, and liability for this facility. Their civil penalties for violating RCRA were $701,500 and they were required to put up $163.5 million in financial assurances toward the proper closure and long term care of the facility. Additionally, they were required to spend $12 million to reduce and properly manage hazardous waste at their facility.
And how about Mosaic. Prior to Hurricane Frances in 2004, both DEP and Hillsborough County directed Mosaic (then Cargill) to address problems with wastewater storage capacty and the stability of the stack at their Riverview fertilizer plant. Warning letters were issued after heavy rains lowered the wastewater storage capacity. Then came the winds and rains of Hurricane Frances, resulting in a breach, resulting in a 65 million gallon wastewater spill into Tampa Bay, resulting in a massive local fish kill. A settlement with the EPA and the DEP resulted in a $270,000 penalty for water quality violations. Subsequent investments of $30 million were required to reduce on-site wastewater. And more was required to improve the wastewater treatment itself.
Based on these case histories, the business model seems to be to take the minimum measures required by law to protect the environment. When possible, wait until enforcement commences to take these measures. Extract the phosphate and bring in profits, before reclamation begins. If possible, avoid reclamation activities by selling the operation, declaring bankruptcy, or some other legal avenue. I do not know whether these are representative of all the companies involved. Regardless, they are totally rational from a financial perspective. The less the environmental oversight and regulation, the greater the financial bonanza. And what a financial bonanza it must be. Here is some general data from Mosaic.
Mosaic Net Profit
- 2011: $2.51 billion
- 2010: $ .83 billion
- 2009: $2.35 billion
Who Owns The Environmental Risk?
To minimize the environmental impact and avoid potential ecological disasters associated with phosphate mining, the phosphate companies must own the environmental risk. If a company can go bankrupt and avoid reclamation efforts, they do not own the risk. If a company can hire subsidiaries to do their dirty work (such as BP did at the time of the Gulf oil spill in 2010), then the parent company does not own the environmental risk. When it costs millions to prevent a wastewater breach, but a wastewater breach only results in a $270,000 penalty, the company does not own the environmental risk. If all of the stakeholders of Mosaic lived within five miles of one of their mines, especially those who profit handsomely, they might own the environmental risk. But this is not the case. Mosaic's CEO brought home $7.7 million in pay in 2011 and he lives in Minnesota, no where near these Florida facilities. Requiring financial assurance is a big step in the right direction. But consider agency capture. If the Army Corps of Engineers signs off saying that the environmental impact is not so bad, then they will not require much in the way of assurance. In order for a company to own the environmental risk, the incentives must be very large and very real.
Consider the difference in a company's financial calculations, if a permit to mine a new area were based on the environmental reclamation of the area currently being mined. If there were insufficient reclamation, no new mining would be permitted. Or, what if all profit had to be reinvested in a mining facility, until the facility had been returned to an appropriate environmental state. Only after reclamation would a company be allowed to realize a net profit. I don't know the best, most-enforceable approach. But, I don't see much hope in the environmental impact review process, unless mining companies own the final results. And in the current environment, they do not.
From the Sarasota Herald Tribune, "The study managed by the U.S. Army Corps of Engineers concludes that the environmental damage from strip mining more than 55,000 additional acres, including 12,000 acres of wetlands and 86 miles of streams, will be insignificant." Let's go with that. If a year from the onset of mining (or perhaps a month), the damage is insignificant, let the phosphate companies keep on mining and keep their profits. If not, they should be required to fix the damage, until it really is insignificant. Only then would they be allowed to continue mining and profit from their enterprise. Here's the bottom line. If a company wants to mine for phosphate, they must own the environmental review and its consequences or lose their permit to mine. Reassess frequently. In such a context, it would behoove a company to eschew the fantasy of insignificant phosphate mining damage in favor of a realistic impact assessment and mitigation plan.
What is missing from this report is a mechanism for tying the proposed impacts to the actual impacts in order to hold the mining companies accountable. Please include such a mechanism.